Welcome to the BiggerPockets Money podcast show number 62.
‘Anna: Change is good, right? If I am going to end up with a different department or whatever it is, I am still going to be excited but we are on our way towards financial freedom and what it is for us, it is not necessarily a stop working, it is just the ability to do whatever we want to do.’
It is time for a new American dream, one that does not involve working in a cubicle for 40 years, barely scraping by. Whether you are looking to get your financial house in order, invest the money you already have or discover new paths for wealth creation, you are in the right place. This show is for anyone who has money or wants more. This is the BiggerPockets Money Podcast.
Scott: How is going to everybody? I am Scott Trench. I am here with my co-host, Ms. Mindy Jensen. How are you doing today, Mindy.
Mindy: Scott, I am having a fantastic day. The Sun, I guess, is not shining. It was when I got in this morning and it is Girl Scout cookie season so my girls are selling Girl Scout cookies and really just going crazy with them. I found a triplex I want to buy just around the corner from my house and getting ready to make an offer tonight. Very much a lot of excitement going on in my life right now. How are you doing? You are always asking me how I am doing and I never returned the favor because I am rude. Scott, how are you doing today?
Scott: I am doing good. Been watching a little bit of nuggets basketball lately which is pretty fun. They have been pretty good this season. I have recently joined a cross fit gym. I am now one of these like total cross fit tech bros which everybody hates. There you go. Guess that is what is up with me I guess. Katie just asked me on Monday if you look like you lost weight.
Scott: There you go.
Mindy: Scott who is already super fit is now even more so, good for you, good for you. I am very excited about today’s guest. She is a listener who sent me an email and said, ‘Hey, I have this story that I would like to tell. I looked at her email address, she actually used to… She works for the company that my dad worked for when he retired and I thought, wait a second, that is weird. I wonder if she knows him. It turns out she does not but her story is really really interesting. She is not from America originally. She moved here and to the land of opportunities and took advantage of absolutely every opportunity she could. Oh wait, we are spoiling her story.
She tells it better, but it is… It is a story of perseverance, but usually when I hear that word, it is a story of perseverance. That means that she is like slogging through all these really horrible things. She is not really, she just has opportunities that she takes advantage of and I think her story is really relatable and applicable to anybody who is listening. It is applicable to their life because here is things that she is doing that you can take inspiration from. You are probably not going to buy a $1,000 Saturn, but you might. But hey, she bought a low cost car, I am going to buy a low cost car too. Do not take inspiration from the fact that she took a third of her savings and spent it on a car. Take inspiration from the fact that she bought a low cost car.
Scott: What I think is also really cool about her story is that there are several points in her life where she goes through what I think is basically every middle class to upper middle class Americans’ worst nightmare which is a forced moderate reduction in lifestyle where you go from earning $90,000 a year to earning $75 and have to make some cutbacks. It is a really the hassle. For some reason, I think that this is like the worst fear of people in the fire community or people in the middle of class. It is like it is not that bad. It just takes grit and perseverance and willingness to like say, you know what?
People are there to make a comment about the fact that I have this job and now I have to work this one that is a little bit less glamorous for a little bit and get through that. On the other side of that, by having been through that a couple of times and taken it in stride her and her remarkable husband as well then kind of getting through that, I think that set them up for the fantastic financial success that they have seen in recent years and back up there will other way to financial independence and feel comfortable taking on the world in spite of uncertainty that could come in the future.
Mindy: Yes, if somebody makes a comment on a situation that happened in your life and it is maybe not a positive situation and somebody makes a negative comment about that, those people do not matter. I wish there was a way to put an asterisk in front of my words because obviously if it is your mom, she matters, but her opinion of you having a lesser job should not affect your life because you are there for you and your family and go on and do what you need to do to put food on the table, to further yourselves down the path. If it is delivering pizzas like Patrice Washington’s husband, did he deliver pizzas?
Scott: He worked at Taco Bell.
Mindy: He worked at Taco Bell. He was some highfalutin guy with this great job, not highfalutin guy, highfalutin job, and he went and worked at Taco bell because they had health insurance and that is what he needed. He needed to put food on the table, he needed to provide health insurance for his family so he did. Do not be too proud to just take something that is there.
Scott: Yes, I mean if you spend up to the amount that you earn when, when and not if, you are forced to make a reduction in your lifestyle, you really only have two choices. You can allow that to unravel your marriage, your life, your social relationships or whatever or you can suck it up, take the next job, then get on with it, right? The way you prevent that from ever happening in the first place is by listening to our BiggerPockets podcast, of course, and spending less than you earn and building up the significant nest egg and always just kind of perpetually increasing your passive income to the point where you are just never going to be an issue, that you are going to potentially run out of money or have that force reduction money style in the first place.
Mindy: I cannot add to that at all. That is perfect. But before we get to Anna, let us hear a note from today’s show sponsor.
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Mindy: Okay, huge thanks to today’s show sponsor. Scott, should we bring in Anna?
Scott: Let us bring her in.
Mindy: Anna Li, welcome to the BiggerPockets Money podcast. How are you today?
Anna: Good, thank you. Thank you for having me.
Mindy: Thank you for reaching out to be a guest on the show. I really like your story and I would love to share with our listeners. Let us start where you think your story with money begins.
Anna: My story begins probably from the childhood. I was born in Soviet Union. When I was eight, Soviet Union collapse. Our republic became its own independent country, Uzbekistan. I grew up in this country in the midst of a lot of changes. I witnessed my parents, my grandparents going through a lot of changes. It sort of went from stable, predictable environment to everything collapsing and everything restructuring and everyone around us was essentially going through the same change. It was a humbling experience for all of us. Also gave us an opportunity to learn and I think my dad, I really look up to him, he took this opportunity to be very entrepreneurial. He used up every opportunity to show us that you can take any change and turn it into your own advantage. I think when he realized that Soviet Union was collapsing and the inflation was going to go through the roof.
He was one of the last people to probably take a government loan to build a house and by the time the house was built and had to return the payment, it was basically equivalent of a two loaves of bread. The inflation was just so crazy that he kind of saw that in a way that helped him. Most of the stories are actually not as happy as this is. The cultural too was very different. We would save for 10 15 years to get a car, to get a house. I think the environment of having a mortgage or auto loan was not so popular so people kind of technically say about for a lot of the big expenses. I think that also helped us when we moved to us and I think what my dad also instilled in me is kind of this entrepreneurial spirit.
I remember being a 10 year old and going to the nearest parking lot by our house and try to offer people to wash their cars to just earn bucks. I was always trying to find a way to go to work or find a way to make money. I think my dad was always encouraging and he even tried to help me set up this private stock to start as soda business in school. I mean it kind of failed. When I tried to explain what the stock and options and investing in my school but it was a whole learning experience for me just to know what stocks are and how it can sell investors on trying to start something out. From that point on, I was lucky to go to college in Uzbekistan actually still but we had this pilot program. It was very new, it was first non-government school that partnered with the University of Michigan actually and we had either American teachers or are teachers who went to Ivy League schools and they were all teaching us in English.
We had an equivalent of a Bachelor’s Degree in Finance equal to United States’ Degree. That helped me a lot when we finally moved to us. Not only that it helped me with the language but it also helped me with actually relating to the economics of us. After I graduated, I worked for about a year in the international company in my home country. I think that is when I first became millionaire because the salary that I was offered, it is very funny talking about it now, but it was $350 a month but that meant that if I made more than $4,000 a year, that meant in local currency that was 4 million sums. I was a millionaire when I was just graduated college. Then my husband wanted, at the time we were dating, but he want a green card and we decided to move. I think United States does offer the opportunity of stability.
In our country, I think our last president, dictated president was there for 20 some years and it was never stable. We decided to move because we knew that in the United States, based on some of our friends or relatives who are there already, you can have that opportunity for stability. We borrowed $3,000 from my parents and moved. We started with minus 3K. It was a very humbling experience. Again, it was again a big change but we used $1,000 to buy a very old Saturn which we actually later two years down the road traded him for $800 which I thought was the best deal it could possibly have. We started looking for jobs and it was very hard. I thought that with my education I can probably get an entry job in the corporate, but I do not know why. I never got a call back.
I started working in a shoe store because I said, I do not care, I just need to work somewhere. My husband started working in the warehouse is a textile company. But I think with a lot of grit and a lot of enthusiasm, people at my husband’s office saw that you are not supposed to be working at warehouse and he quickly moved up to the office and he had a nice progression on his career there. I was lucky to just accidentally landed myself a job in Vanguard and I love my time there and I live and breathe Vanguard, I am supporter of the company. Slowly but surely I now work in a company but I kind of moved up the ladder too. I mean, my husband was later laid off from his company and that was a couple of years ago. I think that was another big change for us but I feel like every time we were taking the change is an opportunity for something new. One door closes, the other door opens. We kind of stopped and said what is next? Yes, that is how we started out our venture into real estate.
Scott: Going back a little bit here, one of the things that… A big part of the story I feel like has to be your upbringing in the Soviet Union. The collapse of the Soviet Union, growing up in is Uzbekistan and all those changes and stuff and coming over to the US. One of the books that is mentioned on the show a lot, one of my favorite books is called The Millionaire Next Door, right? This author did a study of millionaires in America and he found that households with Russian ancestry, maybe we can extrapolate that to Soviet ancestry, makeup less than 1% of us households, but nearly 6% of millionaire households. This is in 2009, he came up with this data statistics.
Anna: Is that the statistics?
Scott: Yes. What that says is that households with Russian or, again extrapolating Soviet ancestry, have significantly higher likelihood of accumulating wealth. I wanted to kind of get your thoughts on are there things that you might have seen amongst your upbringing and in maybe in social circles of folks with similar ancestry who are in United States? Do you think that there is any qualities there that would back up that statement or do you kind of find that want to be coincidental?
Anna: If anything I think that has to be grit, I mean we are all brought up with movies about the World War II, this is kind of our core thing. We brought up with a huge history. People went through a lot of struggle with Stalin, a lot of struggles through the war time and our grandparents would always tell us a story how they had sustained line to just get this one piece of bread and that was their allowance for a day, right? A lot of the perseverance and grit, I think that is what helping a lot of us, a lot of my grandparents’ stories were I was the first one to ever go to college and that is after the war. Hearing that is almost inevitable that you have to try as hard as they are. Maybe that is what is causing it.
Scott: How does that impact? How do you kind of apply to the word grit to your relationship with money? Is that a work ethic thing? Is that in the income front? Is that is a grit in terms of denying yourself luxuries and spending less than you earn and spending well below your means? What does that kind of means to you in terms of your relationship with money?
Anna: I think I personally went through evolution of my relationship with money. I think the very cultural thing for us to do is to actually save up a lot. I think that is how we started. But again, being exposed to US with all the consumers. You do want to spend, right? We were guilty of that too. We knew to never have a credit card balance, that part we could never accept. We always paid off our balances for credit cards. But still, spending money when we earn them, I think that was a change when we moved to the United States.
Now, honestly because of your show I was introduced to financial independence concept in general. I think I just got this inspiration and just planted itself was just everything is possible and it kind of formed into actual framework, right? Before I knew that saving is… Before I knew that being financially independent is great but it was almost like a make believe story. But now, hearing a lot of these stories from you guys and every guest that you bring to the show, it is almost like, okay, there is a framework, there is a path. We can just follow it and it magically kind of aligns. You sort of know what you want and the opportunity presents to you one after another.
Mindy: Scott seemed to really relate to the grit part of your answer, but I liked the perseverance comments better. But what I like, what I am really latching onto is the fact that you had a college degree and a US equivalent college degree in finance and you did not say, ‘I am not going to take any job except the finance job.’ You said, ‘You know what, I need to work so I am going to work at a shoe store because they are who is calling you back?’ My husband, what is his degree in?
Anna: Absolutely, his degree is in IT but it is such an old school. He went through a lot of different jobs too. The last job he had was actually he was Radio DJ producer.
Anna: He was ready to do anything.
Mindy: You know what? That, right there, he is ready to do anything on the path to financial independence, on the path to living in life in a new country. You need to be open to all the opportunities that are there. If the shoe store is the only opportunity that is there, hey, that is money coming in. I cannot remember who I know that did this but they lost their job in a tiny little town and he would not go and accept a job that took him outside of his town. He said, ‘Nope, I am just going to live here and nothing’s available so I will just be on unemployment..’ Well, that runs out eventually and why would you want to just sit there and not do a job? Why would you not want to work? I do not know.
Anna: I mean, my husband, as I said eventually my husband actually lost his job because the company close but we took that as a great opportunity. I think we both realize that one of us would eventually want to have our own business because the United States is best country to actually have your own business. We decided on really estate and on the flipping but we did not have enough money to start. He said, I mean, I am going to go and ride Uber. Again, he went from being this manager and a very nice company, but she said I do not care. If that is what it takes to start a new business, that is what we want, I am going to do that. He enjoyed every minute of it.
Scott: You know, I think that that mentality is just very powerful. I think a lot of people struggle with that. I think that mentally it seems almost harder for people to go from a reduction of a $200,000 a year lifestyle to $100,000 a year lifestyle or job or whatever than it is to have almost like total collapse. Like for whatever reason, that seems to be so mentally devastating to so many people to have any forced reduction in their standard of living. It is fantastic. I think a testament to where you guys are today that you have had that happen multiple times and each time have taken it in stride, rebounded, hustled, and got back. It sounds like to me, is that accurate?
Anna: Yes, yes. I mean, I am going to always remember that feeling when I got my first job and they offered me $350 a month and I thought I made it. This is it. This is like the end of my story because this was amazing achievement. I think I made more than my dad was making at the time with all of his experience. I always have an anchor of $350 a month and that humbling experience would always be my anchor. I can survive on a $350 a month. I think that helps me a lot.
Scott: Let us go into your financial journey a little more detail here. You come to the US and you are working in the shoe store and your husband is working in the factory and you have -$3,000, right? That is your $3,000 in debt, right? That first year, what is your like income, expenses and wealth accumulation looked like after a year there? What was driving that?
Anna: We spend a $1,000 on a car, probably $500 for some expenses. We lived for a few months at my relative’s house, which was amazing support and then we just found our own place and we just started budgeting. This is how much we make, this is our rent and this is how much we have left. That was enough for food at first, maybe some clothing, we never went out. I do not think we even had like a desire to go and out. It was not really that… We did not even know where to go out to be honest. Then slowly but surely, when we started moving up the ladder and I actually found that job at Vanguard guard, that was another great experience. I was at the very very bottom and I got $13 an hour and I said, ‘Oh my gosh, I made it again.’ That was a great experience. It was very helpful.
Scott: What year was that?
Anna: That was 2005, November, 2005 I remember that.
Scott: You made it.
Anna: Yes, yes. We made it again. My husband got into the office. We both started working sort of like an entry level corporate jobs and I think that was plenty. I actually felt like we make too much money because again, we come from the experience of not having that much. We already were shown by another fellow immigrants where to shop to save up. We never struggle financially from that moment on.
Scott: Let us go in 2005, right? In 2005, when did you move to the US, what year was that?
Anna: May 2005 we moved. A few months it took for us to find the jobs and then up outside the corporate.
Scott: Okay. Once you moved out of your relative’s house, right, and we are renting that was also justified after a few months.
Scott: Okay. How much were you paying for rent and like what do you think your overall lifestyle costs the two of you guys?
Anna: Well, first of all to save up, I think my parents moved to United States right after together with my sister, who was at the time in high school. We did not care. We said, why do not we live together to save up. We rented a two bedroom apartment, one bedroom for each couple and my sister was living in the living room, which was fine. I mean I used to live with 10 people in the two bedroom apartment, that again, that was totally fine for us. I think that rent was $1000 dollars a month.
Scott: You split that for between the two couples?
Anna: Yes, I mean we cook together. We had fun, I do not think that our grocery budget was more than $400 a month to be honest for all of us. But that was 2005 too. You said that other immigrants could have showed you where to shop to save money. What was that and how is that different from how maybe non-immigrants were shopping? What were some of the tips that they gave you that you thought? What is your advantage there?
Anna: I know that old [inaudible][25:02] community goes to ALDI now but that is kind of… That was a secret for immigrants, that is where you would go for shopping, right?
Scott: Costco, yes.
Anna: I think 2005, maybe not so much, either we did not know about Costco or maybe it was not so popular but we would go to specific Asian stores or there is actually a very big Russian community in Northeast, Philadelphia. We would go to a Russian grocery store and very surprising they would have cheaper prices there too. Yes, I mean navigate some secondhand stores maybe even for the first time but then we also realized the clothing, surprisingly in the United States, clothing is way cheaper than it was in Uzbekistan which is amazing. I was making $350 a month and I had to send probably, I do not know, $50 on any given clothing item which was just a mediocre quality, right? That was nothing fancy.
Scott: Okay. Let us fast forward a year or two, right? What do you consider to be the next milestone that you make in your financial journey after you are living in that apartment with the family and you are working at Vanguard, those types of things? What is like the next step and what is your net worth change too? Right, you go from -3000 just to deposit at some point there when you can begin thinking about that number and how do you think about the next stage of your journey there?
Anna: After we live together with my parents for about a year, we decided to rent our own place. I think at that time both my parents and us were better financially suited for that situation. We rented an apartment for another year and I think we were saving up but nothing very significant. I want to say maybe a couple hundred dollars a month and even though I was tracking the budgets always, we did not have… Example, I think the first two years for any immigrant is more like a survival mode, right? You are just trying to figure it out, you are trying to just go, go, go, right?
You go for no apparent reasons, you just go. For that reason, I do not think that I even remember how much we would save up but by the end of that year that we spend in that apartment and when you may be in three months, the rent is, or I can say renewal for the lease is due. Both my husband and I were actually playing in a pool league and we really needed to practice and then my husband said, ‘Well, we should probably…’
Scott: At what league?
Anna: A pool league, like a billiard pool league.
Scott: Oh, billiards, yes.
Anna: Then he said, ‘We have to have a billiard table because we go to the bar and we have to spend a lot of money to just practice and exercise. I feel like it is a good investment.’ I said, ‘Nobody would let us have a billiard table in an apartment building.’ I mean like it is just impossible to what he said, ‘Well, maybe it is time to buy a house,’ which was not a good idea to buy a house just to have a pool table in it but that is how we started looking for our house. I think maybe six or nine months later we actually ended up buying a house and our only condition for a realtor was is there enough room to fit in a pool table?
Mindy: The condition, that is going to be easy to find out. For my husband, that was just a must. For me, I mean I brought up, well, it would be nice to have a yard, it would be nice to have a couple of bedrooms. I mean honestly we knew that at some point we are going to have kids, we have not even thought of like do we have enough room to even expand in this house? Which is that enough room for the pool table. Not the best decision over our life but we made it and we bought a house in 2008. From one end, it was the worst time to buy the house price wise but from the other hand we did get the, what was it, the government’s program that gave you a credit of first time home…
Mindy: First time home buyer.
Anna: Yes, at least we got some help with that. Going back to your question, how much we saved up? Well, we only had probably $2,000 or $3,000 saved up and somehow our mortgage agent said, ‘Well, you can afford to buy $250,000 house.’ I mean we just lengthy followed that advice. Well, if we can afford it, we must buy $250,000 house. We just did not have enough money for down payment for even 3.5 FHA down payment. We did not even have enough money for that. My husband said, ‘Okay, after work I am going to deliver pizza. We will get some cash, we will have enough money for down payment.’ He saved up, we had enough money for a down payment. We moved to the house in 2008.
Scott: Awesome. What did that mortgage payment looked like for you at that point? What did your rent to mortgage changed too?
Anna: That was actually quite a lot. We went from $800 rents to probably $1,500 mortgage on top of all these utilities and maintenance that comes with that. We made another decision to actually live with my parents again. They help with half of that mortgage and at that time I was pregnant with my twins, it was another surprise, another added expense. We thought we would need some help and we would not need some help both financially and with kids so we decided to make that call and they lived with us for a couple more years.
Mindy: Were you still making $13 an hour when you got this $200,000 mortgage and doubled your housing? Well, did you really double your housing expense because you went from $800 to $1,500 but then your parents moved in and paid half, so now you are actually less?
Anna: Yes. I think overall it probably did not feel that big of a difference because we moved in with them and they were helping out with a half of that. I did go through, by 2008, I probably went through these one or two promotions at my work, so as my husband. I think maybe at that time, I was making some around $40,000 to $45,000 and my husband was making probably $50,000 or so.
Mindy: I would say with those numbers, you could share fairly comfortably afford this mortgage. It is just such a jump in cost.
Anna: Yes. One thing we did not anticipate that we were going to have to put our kids to daycare and putting two kids in daycare at the same time was not something that we anticipated. We did not realized how much expensive daycare cost was and double that was probably the largest expense for us.
Mindy: How much was daycare? Do you remember?
Anna: I remember, it was actually $1,000 a month for a kid but we made up a deal with the daycare center where we would pay $18,000 for both kids if we prepaid the whole thing in advance which was a great savings for us at $6,000 but we had to make that payment in advance. That was my first introduction to a 0% APR credit card and so we racked up with some points and we prepaid our whole daycare bill and just slowly paid the credit card bill every month.
Scott: That is an awesome hack, I never heard that one before.
Mindy: I have not heard that one either. Did they suggest that to you or did you suggest that to them?
Anna: I think it was somewhere that they had in their rules and probably only because the daycare was just launching. They build up a huge facility and they needed to feel that daycare with probably at least a hundred kids if not even more. They needed to build it up very fast. I think that is why they offered up that opportunity for folks who are just starting out.
Mindy: Wow. Yes, that is a really excellent hack because you are saving what 25% on your daycare costs. You put it on a credit card which is like you said you got points and then you have, well, back in 2008, Scott, I do not know if you even had a… Had you graduated from Grade School yet, Scott?
Scott: It is about that.
Mindy: Back in 2008, you could get a credit card with 0% annual fee for like six months or a year. They had balance transfers, promotions where you could transfer a balance to a 0% balance and also pay nothing to transfer the balance, which is, boy, did you hop it around or did you pay it off before you had to hop it around?
Anna: I did not. It was 12 month promotions so that was perfect. I was paying off the monthly bill, just not in daycare. I was paying it to a credit card company.
Mindy: That is awesome. Okay, so you are making 90, you have got two kids at daycare now, and your parents, how long did your parents lived with you?
Anna: For about a couple of years until they were ready to actually buy a house too. Maybe even actually, now I am thinking about maybe less because I remembered when my kids turned one, we had to send them to daycare, we had to come up with that amount of money together with my parents leaving and we had to come up with the rest of the mortgage payment. I think that was another kind of big push for us where my husband made everything that he could possibly do and actually asked his boss to get on the track to be promoted because he needed the money and I did the same thing. But in Vanguard, I would have to jump probably three levels just to make up how much money we needed to come up with.
I made the call to look outside of Vanguard which was a very sad experience for me because I did not want to leave that company at all. That is when I found a job with the company that I am working with right now and we were able to both, that same year, to make up the gap in how much we needed to pay simply because there was a problem, we had to fix it. We found the ways to come up with extra money.
Scott: You have got basically $1,800 divided by 12 is what? Like a $1,500 a month in childcare expenses plus $1,500 a month in mortgage expenses, three grand right there and cash coming out of your pocket before you get to all rest of life’s expenses, right?
Scott: How much were you spending on a monthly basis at this point?
Anna: Good question. I probably will not be able to say how much I was spending every month but I knew that when I switched the jobs, I did get $20,000 extra. I remember that that was whatever my husband got from his promotion was just enough to cover all the new expenses that were associated with kids and our parents leaving.
Scott: After this transition, where you guys just kind of maintaining the status quo and able to kind of get by for a couple of years? Like what is the next kind of leap forward in your financial journey looked like where you begin to maybe start begin accumulating wealth?
Anna: Right. I think we were always sort of kind of catching out, right? Because we would stretch ourselves because we did not know any better. I mean with the same… Where the house was exactly the same thing. The next couple of years, we were both growing in our companies and both kind of gradually making more money but then my husband brought over his mom and his daughter, they both started living with us so there was some additional added expense to this. We are kind of catching up to all the adventures life thrown at us and all the family members that we wanted and needed to help.
Probably the biggest savings time for us is happening in the last couple of years and the reason for that is, again, my husband, when he was laid off and decided to work in real estate, the amount of money that he made in Uber was definitely not enough to cover what he was making in his corporate job but we knew that we were making the sacrifice for him to learn and work in his first flip. We were ready to either break even or even lose the money. That was his real estate university life school but we made that conscious choice because we knew once he learns on one flip, from that on it is just going to be a geometrical progression going forward. With him losing a job, it also created another opportunity.
Scott: What year was this that he lost his job?
Anna: That was 2015.
Scott: Okay, 2015. How much do you have? 2015 sounds like a big milestone, your husband loses his job, he begins to Uber and you are like what do we do next? We turned to flipping, right? I got two questions about that one, why did you decide on flipping and then two, how much cash did you have that you have set aside to get started in that pursuit?
Anna: Okay. We had probably $30,000 saved up by then and that was just our only liquid cash available. Whether it is emergency fund whatever but that is how much we had. We decided on flipping because somebody that we knew was doing that very successfully and he introduced us to that and was something that did not require any education, like formal education going to school, and it was also a part of working for yourself. It was part of having your own business. We decided if one works hard, it might as well be a business that brings you when you work for yourself.
Yes, I mean that is how we started. I think we worked hard on saving up a little bit more because his first flip that he bought, he bought it for $45,000. We literally put everything. We thought hard and long time before we made that decision to finally invest in the first flip. But we sort of covered the worst case scenario that we would be down to $40,000. I think me being in finance, I tried to calculate all the worst case scenario is possible.
Scott: When was this deal? That deal was 2015, 2016, I want to say. That was a transitional. We bought at 2015 and sold at 2016.
Scott: It sounds like this is the turning point for you guys, right?
Scott: This is the mental turning point.
Scott: In 2015 and 2016, your husband gets laid off and I would bet, and tell me if I am wrong, that while he is driving Uber, you are also this is like now you are getting really serious about the budgeting and you start cutting back on some of the expenses as well. He starts picking up some side jobs like Uber and finding creative ways to make extra money and you really aggressively accumulate that last $1,500, is that right?
Anna: That is correct. I actually remember one or the other, if you can call it a daycare hack. Then we did. We found out from our neighbors who would send their kids to Catholics school that Catholic school daycare was half the cost of our usual daycare. We have to check this out then. We went to school, we loved it. There was really amazing. We said, ‘How can nobody else told us about it? We could have saved so much more money.’
Scott: We are Catholic now.
Anna: Catholic school accepted kids and families of any religion. You did not have to belong to a parish or anything. I mean we are Russian Orthodox and they said, ‘We welcome anyone.’ It was half the price and I think it is because they are not for profits so you kind of cut down from the profit margins that they have to make. We cut the costs by doing that. We probably did a couple of things when it comes to grocery budget, typically we are trying to do organic for the kids and maybe we did not go out at all but we did everything that is necessary at the time. I never remember this being a struggle. It is like this is what we have to do, we are going to do it.
Scott: Yes. Fair enough, but it sounds like you got a little tighter, you figured it out in order to get that last step bit up, right. How did this flip go?
Anna: It took him probably a good seven or eight months to build.
Scott: He did the work himself?
Anna: No, he wanted to but knowing that we are building a business, I told him right away, I said if you are going to start working on that, and I am sure he could, he is very handy. I said, ‘You are going to then get into the means of actually doing it yourself and now becomes you have got yourself another job.’ If you want to run business, you have to run and manage, right? He hired a crew, he had to learn a lesson. Sometimes you have to watch their quality, sometimes you have to watch their time, sometimes they would just work on other projects in parallel to his product.
He learned a ton and I learned a ton from him telling all the stories. I also realized that having a real estate license, is a huge saving factor on both the buying and the selling point. I said, ‘Why don’t you just study for the real estate agent test and he did. This is another thing, when I look at the opportunity cost of having a real estate license, I said, you probably spend a couple hundred hours at most. But then the savings of every hour that you spend is exponentially higher and higher, the more houses that you flip and sell because then you do not have to spend as much on the real estate agent schools. He did that, he passed the test fairly easy. It took him nine months to finish it and he sold it then he made $12,000 which I felt was an amazing achievement. We were ready to just break even just to learn.
Mindy: Wait, he made $12,000 on his first flip?
Mindy: That is like you hit the gold mine again. You made it, I did it, I am here, I am a millionaire.
Anna: We did, yes. Be it as a gift.
Scott: Now, during this period of time, was he bringing in an income other ways? Was he also Uber-ing when he was not working on the flip?
Anna: He is also Uber-ing. I remember, he you would wake up 4:30 or 5:00 in the morning because the best clients that he realized he would have would be like corporate customers that would need an Uber ride to an airport. He would get up very early, Uber until seven o’clock and drop the kids to the daycare and then go control all of his contractors at the job site. I am sure he was doing something, maybe at least to cleanup. I just know him, he just likes to do that. Then bring the kids home, have a dinner and 8:00 or 9:00 PM, he will go again and Uber. Sometimes, he will do, he will go in over the weekends too. We had a target in how much he needed to make and I would say sometimes maybe you have to take it easy or have some rest for yourself but he was very determined and kudos for him. I mean, I felt like he was doing a great job.
Mindy: He did not have a traditional job and it does not sound like this where you are coming from, but I know that there are some people who would maybe resent that their husband is not working a traditional job while they are working. Oh, you are just Uber-ing, you are just driving around, how hard is that? But I mean I have sat in traffic, it can be really frustrating. You guys sound like you are both on board, like on the same wavelength when it comes to finances and like you are in this together. I think that is really important to point out that when you and your partner are not on the same wavelength, then you are not partners on it, it really just makes your life struggle even more.
Anna: I agree and I have to give my husband a huge huge credit. We come from a culture where even his mom would make a comment, how can you just go from being this manager director to being a driver? Are you not supposed to support your family? It is hard. A lot of the stereotypes are there in your face and we had a different upbringing too.
We have our old culture that we brought and that is how it was. Huge kudos for him to be able to just change that mentality and you are right, we both agreed on that is what we need and that is how we are going to get there. If I already had a corporate job and I had a medical insurance that we needed for all of our kids and the whole family, we made the right choice. That was his time to do something towards our common goal.
Mindy: Yes. That is great. That is… I am not Russian so I only know what I have heard from friends, but there is this you have to provide for your family mentality towards men. I am like, well, frankly, so it is the most patriarchal societies, including America but it does not matter if your husband does not have a job as long as you are on the same wavelength. I love that you were supportive of him and I loved that he was like, ‘You know what? This is what I am going to do and I do not care what other people think.’ That is really has got to be in your mind especially on this financial independence journey. You are going to quit your job, how could you just walk away from such a great job? Well, because I want to live the life that I want to live and that is flipping houses or being completely retired and not having a traditional job so I can spend time with the kids or work on my projects or whatever.
Anna: Exactly. When we talk about it, when I say when one door closes, the other one opens, with him not having a job that was stable. My company opening an office in Switzerland and I was kind of contemplating and I said maybe we should consider, maybe I should apply. At the time when he had a job, he said, ‘Well, we have two stable incomes. Why would we ever do that?’ Because then I would have to lose my income and we would have to go through totally new country and make it from the beginning. Now, he did not have a stable job. It was not Uber but he started doing real. We had an iron conversation, whether we should consider or apply in line and it was a perfect opportunity. I have applied, I got a job, we took it then we moved to Switzerland. I think if that did not happen, it would have been harder but all the cards were kind of just getting into our hands.
Scott: Before we get to this move… Well, actually, in conjunction with this move, you make $12,000 in this flip.
Scott: What is the timeline for the completion of the flip to your new job opportunity? Do you complete another flip in the meantime or is it just the one?
Anna: It was just the one. It was kind of hard to find another one. It was probably three months after we sold it, that is when I got the job offer. It was also a little bit of a hard decision because we said he started briefing and it is showing a good result, how can we do that when we move? I think the mentality of instead of saying we cannot do that now, asking yourself a question on how you can do it helped us to actually for him to continue to do that, even here from Switzerland.
Scott: I love that mindset of just how can we do it, right? That is the whole goal, right? Whenever I am talking to somebody about personal finance or whatever on the show, like I hope that we can convince people to stop saying like, I cannot do this or whatever and instead go how can I achieve this result rather than I cannot or I am not going to or it is too hard or whatever.
Scott: To that point, you moved to Switzerland. How did you then begin to continue moving towards financial freedom and what is the next turning point for you guys?
Anna: Well, first of all, going into even exploring this opportunity, we did not know what comes with having an expat job. This is one of the things that I want to probably highlight because I do not think that it was ever mentioned the benefits that come with being an expat. All the corporations or even the government jobs offer that, they realized that they moved the old family overseas so you do not have the support so they have to provide for that. What helped us is that we got the housing allowance, we were able to rent our own house in US and in Switzerland, we have a house with the rent allowance and they cover utilities which is amazing opportunity for us to save. They provide the car allowance, including insurance and maintenance and even gas. There is a school allowance and our kids are going to the international school which is another tremendous benefit that our kids get to learn with kids from all over the world. They get to learn geography for real.
It is not something that you learn at school anymore but know that they have friends from Egypt, Belgium, Japan, Korea, your name it, and they all learned out those cultures just by being exposed to the children around us. That in itself just brings so much savings because we are done with our US expenses, we are actually making money on our house that we rented and we do not have to pay anything here. I really want to highlight that having an expat job can actually boost up your savings and can allow you to maybe shorten your journey in the five of pursuits from, I do not know, 10 years to five years.
Scott: What are the numbers here? What were your expenses previously to run your life and what did have come? What are they now?
Anna: We had two car payments, probably $300 each. We had insurance for each car, another $200 for each car. We had mortgage payment of about $1,400. We had utilities, $250 a month. I want to say overall the expense that we cut in US is now down to we had about $2,200, $2,500 that we no longer have. We were able to just instantaneously saved that much out. I do not even count gas or anything else that just comes along with those larger expenses that you normally have.
Scott: I assume this came with a race to in terms of money income?
Anna: Yes, it comes with a raise and every time we moved to another country, if you go from the low cost of living to a high cost of living, they just pay you extra depending on that difference.
Scott: Okay. You wiped out $20 to $2,500 a month in fixed expenses, get array and you just completed a flip. While you made $12,000 in the flip, you have $12,000 plus the 45 you put into it. You have got nearly $65, $60,000 in cash and your expenses are cut. I assumed after you settled in, sounds like at a tenant in your home that you had the less and you have all this cash and savings, right? Is this a turning point for you? Is this when you begin to kind of consider financial freedom or when does that come in?
Anna: I think that actually came in at the same time. We are in Switzerland now, 18 months, and I want to say that is probably when you guys started the show. Either 18 months or two years ago or something like that.
Mindy: It was last January. Just a little bit.
Anna: Yes. I just remembered that on my commute to work, I always listened to BiggerPockets podcast and then I have heard that you guys are starting and you will one and I said, I have to check this out. Then when I listened to the first one, it is just that whole world of oh my gosh, how did I not know about this? Open up for me. Through you, I got exposed not only to your guests, but then I started looking into overall FI movement with Mr. Money Mustache and everyone else in the field.
I have learned so much, I said oh my gosh there are so many tools and there are like sheer breadth of knowledge is available. How come that everyone is not doing this? Now, knowing all of this, I feel like we have tools in our toolkit, we have intent and everything is just normal now. At this point, it is fascinating how much has changed in just the last two years. The savings rate that we are now at in comparison to what we had three years ago is just tremendous. All it is just now we have an intent.
Scott: What is that intent drive? What is your picture at this point? What are you doing right now for work? What is your husband doing for work? Let us start with the income. What does that look like?
Anna: My husband continues to flip. Since we moved, he flipped successfully one more house. We have my dad who is helping that.
Scott. These are in the US, right?
Anna: He is in the US, yes. My dad is helping manage the project. Our goal is to find a deal, finance the deal and my husband is a real estate agent but we have good relationship with his broker. My dad just uses power of attorney to just close this on the deal. We do not want to have to fly on the closing. Everything is done internationally. On that last flip, they made $50,000 and that is not counting the real estate agent income that my husband got from buying and selling that house. In the arrangement with my dad and with him, since my dad is doing most of the work managing it, he does not bring the cash to the table but he gets 50% of the profit. Well, for us, it does not matter.
My husband spends maybe an hour, a couple hours a night to just be on the phone with him and maybe a broker or somebody else that he needs to follow up but he has all this time to support out family here at home because we have kids, we have all this extra curriculum activities. He is spending the whole day with children and a couple of hours at night because we have a time difference, which is a perfect timing for us to call the US. Yes, I mean that is his line of work right now. He has been an amazing father and amazing husband, a supporter for all of us and he is making money while doing all of that which is actually this is amazing.
Scott: Okay. That is awesome about the flips there, what are you doing to invest outside of that? Is that your major piece of your investing philosophy or are you investing elsewhere in stocks, bonds, other types of investments or?
Anna: Right. Through my job, I have 401K because of you guys and the knowledge that I am getting now, I have heard about the solo 401K. All the flip profits are going into the solo 401K because the LLC that we are flipping under is included in me and my husband. We both get to open solo 401K and we just pretty much max out a employee contribution as well as the employer profit sharing. We also bought a condo last year. Our role is to buy and hold properties and have as much of the past thing from responsible. He is working on another slip right now which is about to be finished probably in end of March.
We just bought another house for flip and yes, I mean just maxing out the profits from the flips and going into more rentals which just understand that maybe managing rentals right now from overseas is not maybe as easy but we are looking for a team that can help us manage it from the project management perspective. As soon as we find it, we are definitely tapping more into that.
Mindy: Have you thought about taking these flips and turning them into rentals instead of selling them?
Anna: Well, the ones that we had so far, they would probably be 0.3%, right? It would not be 1% rule, right? It would be 0.3%. But if you sell it, I think our target right now is to just make $50,000 to $60,000 per flip. It is a way bigger opportunity to save that much up. Then possibly when we will go back, and my husband is able to fly locally within the United States, we will do more of a… We started looking into the Carolina or maybe in Florida and maybe doing some sort of smaller multi-unit investment.
Mindy: That would be for rental income?
Anna: Yes, yes.
Mindy: Do you have a timeline for how long you have to stay in Switzerland?
Anna: Yes. My contract is just three years and we just cross our midterm. We have until summer of next year then we are going home.
Scott: This is awesome by the way. Just to kind of like put in some more color into what you kind of were talking about there, we talked about what the solo 401K means, right? You can flip a property. Let us say that you do two flips a year in each one makes $50,000, right? This is oversimplifying things, right? That solo 401k, you can literally put up to like somewhere close to $50,000 each as a married couple in solo 401k to max that thing out, right? All of that flipping income is not taxed, right? You are deferring it by putting it into the solo 401k, right?
Anna: We have to pay self-employment. The biggest difference between the passive income and real estate and flipping is we still have to pay self-employment but we do not have to pay our federal tax, yes.
Scott: That is right. It is a huge tax savings, right? This means that overall, you guys are gener… Are you then redeploying that solo 401k money into more flips? Is that what you are doing with that money?
Anna: Yes. For now, we are actually looking into the notes investments and that is my way of tapping into, again, education within real estate but still diversifying it somehow. I am trying to find a way because I have heard that on average, smart investing it brings you 18% so that would be amazing if we could make that much.
Scott: Here is why I love all the things that you do it right now, right? You have very low expenses, you have this great income coming in from overseas, you are making this work overseas, you are taking your active self-employment income and sheltering it from taxes in a very effective way to this solo 401k strategy, right? Then you are going to use that money to invest in notes which is also a very smart strategy because that note income if you are getting 18% interest rates or whatever is taxed at a very high rate but not if it is in a solo 401K, right?
Anna: No. Then it is just a straight investment and you are not paying UBIT tax on that. UBIT…
Scott: Yes, deferred taxes, so you do pay taxes eventually on this, right? But it is.
Mindy: Way down the line.
Scott: It means a very effective approach to doing that, right? That means you are saving up additional money outside of that which you are then going in all of that, you are going to invest in real estate for long-term buy and holds, which is a very tax effective real estate investing strategy. I mean this is a fantastic plan that is just really aggressive at every direction it seemed and I imagine has already paid huge dividends literally and typically.
Anna: For sure, the other way with the other view within the solo 401K is there a reason why we do it now. Right now, we are bringing, I am not going to call it too much money, but we are at the very high income level right now and of course our federal tax rate is higher. But when we do achieve that financial freedom, when we can do something different and not have as high of an income, that would be a perfect time for us to tap into the solo 401K. We plan for what is coming and that is why we are deploying the strategy right now.
Scott: Love it. These are all things you have learned about in the past year, a lot of this, is that right?
Anna: Yes, yes. I mean BiggerPockets, I cannot say enough. I met my tax advisor through BiggerPockets. I mean through you guys, there are so many avenues that I just went and explore further on my own and it is just you kind of opened the door and I think that is what matters.
Scott: Well, it is fantastic. We always love compliments about BiggerPockets.
Mindy: Yes, we always love compliments. Scott, you said something just a moment ago. You said this is a very aggressive way to invest. I want to point out that this is aggressive but not that risky. She is investing in solid assets in the form of real estate, in a market that she knows well, her husband knows well. I am assuming you have another exit strategy should the market just collapsed tomorrow. You could rent it out. It is not a huge profit, but still renting it out, you are not going to lose your shirt.
Anna: The beauty of a flip is that in general notion, it is a short term in and out investment. My goal when I got to be in a finance nerd, my goal is to calculate enough profits that if the market is going to turn that much, I mean the last house we sold was $350,000 but we made 60 or 50 on that rate. We are talking about a significant reduction in price for us to lose money, right? Going in, we are already contemplating that at the market drop tomorrow, we are still going to break even because we are putting so much profit into the assumption.
Scott: What do you think your position is going to be when you go back to the States and your contract is up?
Anna: Well, part of the benefit as an expat, you are guaranteed to get a job within your company. I am probably going to still continue to work for my company and I honestly do not know where I end up going to be but I am open for anything. If life is life taught me a lesson is change is good, right? If I am going to end up with a different department or whatever it is, I am still going to be excited. But we are on our way towards financial freedom and what it is for us it is not necessarily stop working, it is just the ability to do whatever it wants to do. I do want to spend more time with my kids. So that card is definitely weighing in. Any corporation only gives you that much of a vacation time. I am going to try to find this balance between work and life.
Scott: What is the number that you want to be at in order for that financial freedom to be a reality for you? Is that a passive cash flow number, that net worth number? What does that look like to you?
Anna: Before we actually, we actually had two metrics. We did one goal for passive income through real estate, but we… When we found out about 4% rule, rules to set, how much do we need, what is the equivalent of that in cash too? In order to cover our expenses and live comfortably, I think that we need probably $80,000. I want to say for now that the kids are growing because most of our expenses are going towards their education and it is not a private school but we do value all the extra activities that we can possibly provide for them. I do not want to save on that. Probably that is how much we would need to be financially free but $80,000 means we need $2 million in the savings account.
That being said, I think listening more and more people that are on this journey, I am leaning towards just having enough for a few years because I felt like we can figure this out, right? If I am no longer working for corporate, we always figure something out. With my husband growing more and more in his flipping business, eventually he can come up with enough money to cover our expenses. I mean I can either join him or we can start another business but we are opportunistic in what we can do. As long as we can feel that the worst case scenario we will go back and get ourselves jobs, then we will be okay. I am not sure that we are aiming for a number anymore. It is more so being comfortable too.
Scott: No, I think that is great. Looking at the fact that you guys are flipping houses and you are going to move back to the states and you have this uncertainty, how do you think about how much cash to have on hand and your bank account rather than investments in stocks, bonds, whatever. Do you like to have a large amount of cash?
Anna: Yes, I want to say yes. I think by the time we go back, I am not going to count the equity that we have in our rentals but would probably anticipate to be at probably $400,000, right?
Scott: In after tax liquidity, like this stuff in your bank account, right?
Scott: That is a huge number, right? I think that that is I want to get on this point because I think that is very important given what you are trying to do, right? A lot of people in the FI community do not like to have that much cash. I think it is under efficient utilization of capital. But you used the word opportunistic, you used the word we are ready for anything, we are going to start businesses, all that kind of stuff.
Scott: I think that it is very interesting that you say that and then you also have this large cash position. I think that that is probably correct for someone that is looking to do what you are trying to do, right?
Anna: I mean the nature of flip is that you will have to sit on the cash and you cannot invest it because it goes through cycles. But I figured out another hack in this can this case. I think that we are going to use at least two $250,000 or $300,000 of that and just pay off the house that we are going to live in. Some people will say it is stupid, why would you do that? It is like you can deploy that cash. I realized with the new tax reform, we can no longer deduct the interest on our own house. What we can do, we can get a HELOC on our house that we paid off and we can use that in our flip projects. Well, HELOC interest turns out is deductible. We can use that and use it towards our expenses and flips. We can still have an access to the cash that we have. On top of everything else, we are not going to have mortgage payments and that is another… When you are looking at the budget, when you know that, you need to cut down your annual budget as much as you can. I think not having $1,500 to $2,000 a month, that is a huge savings.
Scott: Yes, I cannot argue with that.
Mindy: No, I did not realize that I did not pay attention to it because we had recently got somebody to do our taxes for us. But I did not realize that mortgage interest is no longer deductible but that a HELOC still is.
Anna: I mean it is deductible but most people will fall into the standard deduction for a couple is $24,000, I think, and lot of people will not have enough of their itemized deductions to actually exceed the $24,000. For us, in our situation, it becomes pointless to carry a mortgage note. We thought we need access to cash, we cannot invest this cash anywhere else because we need to use it in flips. That is our working capital. But we can always asset it for HELOC.
Scott: Then you can self-finance your flips. Then once you pay up, once you keep going along, you may have a paid off flip that you keep as a rental and you can HELOC that out and do the same and kind of do twice as much or whatever.
Mindy: Get the HELOC before you stop working.
Anna: Oh, yes. That is for sure.
Scott: If you are interested in, sorry, this is for the listeners, right? I am talking to you, the listener, right now. If you are listening to the show and you are interested in these real estate kind of stuff, right? There is a recent podcast on the BiggerPockets Real Estate podcast with Jay Scott, I forgot which number it is.
Mindy: I will look that up while you are describing it.
Scott: But he talks about some things going into a recession. One of his tips is go out right now and think about just getting the cards lined up to get a HELOC, right, on these things. You can take the money out, you could just set it up or have it there but if there is anything coming forward, there is no harm in having this liquidity if you have got it in a home equity to present yourself with some options to kind of do some of this other investing should opportunity present itself. Should Jay, be right? There is a recession coming and it is right around the corner. That is not a bad step to take. That could be a pretty low cost insurance to help you see some opportunity. I would encourage you to go listen to that episode and consider his advice. It sounds like that is something that whether you are intending to or not, Anna, you are doing that in a way that your timeline is kind of played out over the next 18 months as you come back to the US.
Anna: Yes, yes. That is for sure. I actually listened to that podcast. Lots of good information.
Mindy: I believe that is episodes 311 of the BiggerPockets Real Estate Investing podcast. You can find that of course, where you found this podcast, or you can go to biggerpockets.com/show311 to listen online.
Scott: I just loved the way that your story kind of came together right as you moved, right? Just complete the flip, all is hard work, years of grinding it out, and then it all comes right together as you make this one big change and you discover FI at a perfect time right when you have all this liquidity, right when your husband has completed his self-education on his first flip. You are going to come back from this three year stint, I am sorry, is it is Sweden or Switzerland?
Scott: Switzerland, yes, sorry. You come back from your three years stint in Switzerland and be in just such a phenomenal position to grab life by the horns and go after it for financial freedoms, businesses, whatever you want. It is amazing and it is so intelligent and so tax optimized and aggressive.
Mindy: I like how she is taking advantage of opportunities. There are opportunities that pass people by every single day because they are not grabbing life by the horns. Like you said, they are not taking advantage, oh I wish I could. I was guilty of that. Earlier, I said I do not want to say I cannot. I want to ask how I can. I was guilty of that two weeks ago. A triplex came up literally around the corner from my house and like oh it is not the right time, I cannot do that. It went under contract and popped back out and now I am like, okay, how can I do this? If it is out of contract, if it fell out of contract, it is a sign to me from the universe that I have to own this house.
Mindy: Yes, how can I do it? I am talking to a lot of different people and I am figuring it out and I am taking advantage of it. But it is so easy to say I cannot do that. Anna, I do not know that you have ever said I cannot.
Anna: Oh, I probably did. Everything is not so perfect but I feel like just listening to other people’s stories is always another opportunity for us to say that person could do it, then I could do it too. It is always nice to hear from other people.
Scott: To round this out and to circle all the way back to the beginning, right? What does it feel like to you now? What do you consider to be the situation you have to be in to say, ‘I have made it.’
Anna: To be honest, I feel like I have made it no matter what. At this point, I feel like it is just comes with time to just realize that no matter what life throws at you, everything is possible and I am so so grateful that we actually came to the United States. United States allows you to have so many different opportunities that at this point, whatever we are going to have, we still need it.
Scott: Love it.
Mindy: I love it. That is perfect. Okay, is there anything else you would like to share before we move on to our famous four questions?
Anna: Well, just one tip. Since we live in Europe, I actually found out that a lot of universities in Europe are free or very cheap. In other college hacks, if you are thinking about sending your kids to school, consider Europe because I think the most expensive that I heard was $1,000 per semester.
Mindy: What? It is a $1,000 a course here. I think, I do not know, I have not looked into it yet. Well, let us talk about that for a minute. How do I send my kids to college in Europe? Let us say we are going to England or some other the country where they speak English because that is the only language my kids speak right now. How do I get in? How do I qualify for that?
Anna: I was just looking this up, just prepping for the podcast, I looked up online and I think Germany is probably the country to go for that. They actually offer undergraduate programs, all levels of programs that are actually available in English and there are free so you only have to pay for, they call it like a registration fees or something like that.
Scott: To non-citizen.
Anna: Non-citizens. Just actually go online and just look up American studying free abroad in Europe or something like this and you will have list. People actually write about this. I know a lot of people that I met here, a young kid that go to school here in a Brown University and they told me they literally pay a thousand francs a year which is the same as $1,000.
Scott: Ha, that is the first I have ever heard of this. I got some research to do on this.
Mindy: I do too because my kids are older than your no kids yet, Scott. They are going to be in college a little sooner than yours are.
Scott: Yes. This is way better than my real estate plan, Brandon’s real estate plan.
Mindy: Yes, Brandon thought he got a good deal. I guess Rosie could still go to Germany. We will share that tip with him. I have not heard that before. That is two tips that we have heard from Anna. The American study free abroad and the childcare hack. Childcare is one of the biggest questions that we get, that and insurance. Do you have any insurance tips?
Anna: No, no. No insurance, that is for that. We are still going to have to figure out. That is on my list to figure out for basically when we go back, if we ever not worked for a corporate job. Yes, we just need to find out what to do.
Anna: It is one of those mysteries in US. Anywhere we go, people do not have that issue. Like in US, it is definitely a problem.
Scott: Listen to this. I just typed it into Google. Sorry for not paying attention guys 30 seconds here. This is a website. It says, ‘All public colleges in Iceland are free for American students. International students make up 5% of all students. Let us see, if you are an American in France, then we have some good news. It will cost almost nothing. University tuition at public institutions in France encourages only a small fee of $208 per year for an undergraduate degree and $290 per year for masters.
Mindy: Plus you get to live in France or Iceland.
Scott: Norway has got great.
Mindy: America is great but I have been here for a while.
Scott: Czech Republic, Germany. Yes, like you said, I mean this a whole rabbit hole to begin exploring. We will have to kind of think if we can get a guest that can come on and talk through some of this stuff at some point.
Anna: Yes. I highly encourage probably too. I have heard of those folks and I got formation from him too. Our Reach Journey blog, I think, our reach journey and they were sharing some information on even where to find expat jobs. The listeners are interested. A lot of the corporations right now in US, Google, hotels, Pharma companies, you name it. They have a lot of international assignment jobs. US government always some jobs overseas. I think it is USAjobs.gov, where you can look for those teachers or any profession associated with school, librarians, coaches, counselors.
I think the website is a, I made a not for myself teach, teachyourweight.com. The other interesting part that I found out from them is Woof. It is Worldwide Opportunities on Organic Farms. It is almost like a house hacking, it is not an actual job. You do not get paid for that but you get to live somewhere internationally and you work on the organic form and they provide you with food and they host you in their homes. If you want to go for somewhere and enjoy a summer without any expense in Europe, I think that is another good opportunity for a lot of young folks.
Scott: Huh. Very cool. We will link all those in the show notes.
Mindy: Yes. What is his name from show 55, the couple that travels around Bryce and Kristy. Bryce from Millennial Revolution. Sorry, Bryce. It has been all day. Bryce from Millennial Revolution has some great tips, like I said on episode 55, for getting health insurance and expat health insurance for any place other than America is dirt cheap on several websites. You go and you work at the WWOOF Farm and you have got most of your expenses covered and now your health insurance is covered too. It is like something like $30 or $60 a month.
Anna: Yes, has to be not that… Maybe not in Switzerland, but I think everywhere else it is pretty cheap.
Mindy: Yes, it was definitely very inexpensive. This is awesome. Thank you, Anna, for those extra tips. Okay. Are we ready for the Famous Four?
Anna: I am ready.
Mindy: Okay. These are the same four questions and one command that we ask all of our guests. The first one up is what is your favorite finance book?
Anna: I would not probably call any finance book specifically but I think it is really good in perspective. The recent one I read was the Big Leap by Gay Hendricks. I think that books really helps to just grow exponentially. It is just the setup from a mentality to grow whether it is financially, health, or any other ways so I will probably use that.
Scott: I love that and I think that it is a different perspective than we often will get on the show here where some folks are very formulaic about how they are going to approach financial freedom. I think that the problem with modeling it out is not that kind of level of detail and not being opportunistic is that if you kind of have taken approach that you are taking, where are you kind of optimizing all friends and take some business chances at the same time, you can really make the unintended big leap here and move really quickly toward financial freedom if you are allowing for that opportunity, that outsize performance to come in certain ways.
Anna: Yes, that is true.
Scott: Alright, what was your biggest money mistake?
Anna: Probably buying a house when the only intent was to have a billiard table at our house. I think that is probably the worst mistake. I mean it all turned out for good. We rented that house. That is the house that we actually still live in and that is what we ended up renting. But yes, that is probably not the best decision.
Scott: Do you still play a lot of billiards?
Anna: Not as much. It is funny because we moved into that house and then we had twins. There was just not enough hands to play billiards.
Scott: So funny.
Mindy: What is your best piece of advice for people who are just starting out?
Anna: I say the same thing that just helped us, framework, intent. As long as you know what you want, everything else is just going to fall through and how you want it. You just have to be ready to accept it.
Scott: On that subject, do you have like a goal setting mechanism? Do you write down goals or what does that process look like for you?
Anna: I do. I actually write down goals for everything. I have our personal budgets and being in finance, I even build long range plans. I am doing everything very nerdy and financially. I put goals for flips, for investments, even for my job. I think everything that we just outlined for ourselves and also education and health. I just have a journal by my bedside and I always write in it.
Scott: How frequently is that? Is that once a week, every day?
Anna: Some goals, I get back to them maybe every quarter. Others could be even weekly or daily so is just depends.
Scott: No, I just mentioned that because you mentioned the word intent and for me in my head, intent goes along with having written goals and just like consciously deciding to make progress towards them as the one of the major points of my day where my day is not productive. If I just did a bunch of stuff but did not actually take progress towards my top three goals even if it is small.
Anna: Yes. I think the biggest thing too is to set up the goal and I feel like for me it helps me a lot, just let it go. Because everything else is just naturally… You already have an intent. You already have a goal, everything else, the right people. The right opportunities slip just probably come along with.
Scott: Alright, what is your favorite joke to tell at parties?
Anna: Okay. All of my jokes come from kids so this is very kid friendly. Ham Sandwich walks into a bar and orders a severe. The bartender says, ‘Sorry, we do not serve food here.’
Scott: I like it.
Anna: Sorry, that is all I have.
Mindy: I am going to tell that to my kids. Okay. Where can people find out more about you?
Anna: I mean I do not have a blog, I do not have anything to promote. Feel free to reach out to me on BiggerPockets. Just for this podcast, I anticipate if people have any questions, I would love to just pay for it. I am all for helping out with any kind of advice that I can. If you have questions on extra jobs or education in Europe, let me know. create an email today and I came up with this boring name, but that is all I could find on emails. It is [email protected]
Mindy: [email protected] Awesome. We will put links to this and your BiggerPockets profile in the show notes which you can find at BiggerPockets.com/moneyshow62. Anna, this is fabulous. I love your story, I love the perseverance, I love the willingness to accept new opportunities because that is really how you break out of the status quo is doing something that nobody else is doing.
Anna: Thank you.
Mindy: Thank you for reaching out. This was great.
Anna: Thank you so much for listening.
Mindy: Watch out because I am betting you are going to get a lot of emails.
Anna: I am glad to answer all the questions.
Mindy: Awesome. Thank you so much and I really appreciate your time today. We will talk to you soon.
Anna: Thank you, you too.
Scott: Alright, big thanks to Anna Li. Mindy, what do you think?
Mindy: Oh my goodness. I just love this show. I have a hundred people I want to send it to. Especially there is somebody in my life I brought up in the show who would not change jobs, would not move away once they lost their job because they did not want to leave this life. Okay, like Anna said, do not say I cannot. Ask how can I. I am also taking this I cannot, and turning into a how can I? Fingers crossed that I get the duplex but yes, this is a really really really great episode and I love her story and I am so happy she reached out.
Scott: Yes, I mean I think it is just great perseverance, those things came up several times. Then the big though is intent, right? It is amazing how behavior and the financial position just dramatically explodes without any reduction in happiness or how people are approaching their life or whatever. Once they discover the concept of financial independence and it clicks. I mean how many times have we heard that come up in the show where somebody… People are tagging along and they would be doing the right thing. Some right, some wrong in terms of managing their portfolio. They discover FI, nothing changes about their happiness level but their wealth just balloons and it is a really short period of time and really effectively. I mean look at what she is done in the past year and a half. It is amazing.
Mindy: Oh, it is. She said in the show today, she said, ‘I never remembered this being a struggle. This is what we wanted so this is what we are going to do. That people from outside the financial independence space, when they first are presented with this, there is a very common response of I could never do that, oh I could never give up and I do not know what they think this is. Beans and rice and peanut butter and Jelly and living in a hobble on the side of the road and dressing in rags and never having anything. That is not what this is about. If you are really really struggling and you are hating it, you are doing it wrong.
Scott: Yes. I mean it is coming back to the very very simple premise. At the end of the day, it is like what do you want? Is what you are doing getting you to where you want, right? I think that very tiny fraction of the population goes through that very simple thought exercise, right? I mean all people just seem to be doing whatever to do whatever. It is just not like an intentional, like how do I want my life to look and how do I back into that?
Mindy: Yes. Do you remember, Scott Rieckens from a couple of weeks ago, episode 59.
Mindy: He said, ‘When he was talking to his wife and getting her on board, instead of just saying, hey this is what we should do, he asked her what does your life look like? What is your ideal life?’ She wrote down the things that she wanted and some of the most expensive things they were doing did not even make her top ten. What life do you want? Sit down and really… Anna talks about goals. I know you have a goal list that you go through every day, every week, every month, make me feel like a total slacker, Scott. Thanks. But you have goals and you are constantly pushing yourself towards your goals which could be why you are the youngest CEO in BiggerPockets’ history. I do not know.
Scott: Setting goals takes time, right? It takes some time and thought and it is imperfect. Like I do not know what I want. What I think I want now is way different than what I thought I wanted three or five years ago, right? But I set what I wanted and I worked towards it intentionally, aggressively, all that kind of stuff with written goals and then you move towards it and then it will evolve over time. It is always a work in progress what you want, right? It is always going to evolve in real life but I just think that it is just that simple with a lot of this stuff and financial freedom is just such an effective way to allow you to get whatever it is that you want regardless of what you want. Financial Freedom is probably going to be a useful set up in order to get you there.
Mindy: Well, let us say you have financial freedom and then your goal changes, okay. Now, you have the freedom to go and…
Scott: Follow your dreams.
Mindy: Follow your dreams, to pursue. Yes, that is it. When you have financial freedom, you have the ability to pursue whatever you want.
Scott: Yes, I think like if you know what you want, if you know what your dream is and you are not in position to pursue it, financial freedom will help you get there. If you do not know what your dreams are and you are not really sure what to do, financial freedom is a great placeholder goal while you are figuring that out. The only people who should not be really pursuing financial freedom are like people who have like a very short time window or they need to pursue something. For example, one of my buddies is a aspiring musician, right? For him, getting a job, saving up 50% of his income and all that kind of stuff, not a good idea right now. He can come back to that in three to five years. He should be following his dream while his window exists, right?
But basically, except for this kind of unique situations, I think that this is a very useful tool to go after for just about everybody, right? If you are going to be a baseball player, whatever, go be a baseball player and do that while you can and then go figure out financial freedom afterwards. But those are the exceptions, I think, to the rule.
Mindy: I do not know, if you are a baseball player you get financial freedom by not spending every dime of your $5M salary or whatever you are getting.
Scott: Oh yes, talking about the biters and that whole lot of stuff.
Mindy: Okay, I do not know anything about that.
Scott: Well, we will get to that another time. Regardless, financial freedom is a pretty good pursuit and if Anna can pursue it from Switzerland in the way that she is doing it, I mean that has got to be inspiring and door opening for a lot of people here that are here in the US.
Mindy: I do not see how you cannot be just absolutely excited to jump into this with both feet after listening to Anna’s story.
Scott: Love it. Should we get out of here?
Mindy: We should. From episode 62 of the BiggerPockets Money podcast, this is Mindy Jensen and Scott Trench signing off.