Hey BP! I'm still quite new around here so I know I'm risking outing myself as someone who "doesn't get it yet" by asking this, but I've been consuming everything I can to try to educate myself - podcasts, books, forum conversations. (I have yet to get out to a local meet-up, but I'll get there.) I think of this as part of what it takes for a new investor like me to get up to speed. One thing that keeps coming up - particularly as I read my way through some of the titles folks on the podcast identify as their favorite business books - is the idea of drastically minimizing expenses. I guess the volume and frequency of the "you must live an exceptionally modest lifestyle" message has surprised me and I'm curious if you have tips for how to accomplish the spirit of what they're saying without drifting into self-deprivation. Live below you means, sure, but some of this advice...I dunno. Of course I get that living on $20,000 a year, for example, would provide a big boost to my wealth building but I've lived on that income before, as I'm sure many of us have, and I don't recall it being very pleasant. I don't need to splash money all over the place, but what's the point of using real estate as a tool to build passive income and increase my long-term wealth if it doesn't also improve my standard of living as I go along? Sure my retirement would be GREAT if I save 50% of my income, but... What am I missing here, BP?

I can see how just saving for retirement would not be a very big why. The folks I know that 'do without' have a stronger reason than to have a big nest egg someday. We and others you have listened to I'm sure just prioritize things differently. I've never been impressed by or been driven to purchase brand new cars or phones or clothes or exotic vacations, etc. I'd rather have freedom. Not yearning for things that drop in value has allowed me to not have had to clock in anywhere for 17 years. We still have wonderful experiences and fun. My boys and I might play frisbee golf and go for a Costco hotdog afterward for a treat where others may do something costing far more than $8, but we don't feel we are doing without at all. Another favorite we do is kids bowl free, a national thing. I'll get a pass all summer for $20 to bowl 2 games a day if I want. The kids are completely free. Great memories can be built without large dollar signs. I don't have to be very frugal anymore, but it's hard not to be. It's what we like and what we are used to. I now have a car that goes too fast and is too small to carry tools or kids. Big whoop. Got it at a steal with no payments. If purchased years ago with payments when I was broke, it would have delayed my semi-retiement 10yrs. Our priorities are still in the correct order I think. It's up to you. Would you rather pay retail for things that will be worth less (wothless) later? Or change how you define fun and important for freedom? 90+% of workers run on a wheel well into their 60s. Be normal if you want to.

@Ryan Pozzi, I think it matters a lot where you are at. If you have several thousand sitting in savings why cut back? If you have 3 unpaid credit cards owing $10K each you really need to cut back. If you are in your 60s and well set compared to being in your 20s or 30s it matters a lot. If you don't have a lot saving now and having your investment grow for 30 more years can a major source of income later. Having only a few years until retirement a few thousand might not mater much. I have done buy and hold for well into 20 years. I started slow, and had very little to invest. We added when we could afford it, and often sold to be able to put money down on several more properties. Despite turning 60 next year I am still buying. I am more interested in gaining sudden equity or good cash flow rather than long term payout now. If I can value add $20K, then I go for it. I no longer think about a good payoff in 20 years. I am beginning to pay properties off. Your investing strategy depends on where you are at financially and time wise. You won't see me not eating out or not buying the new tool I really like. I did that over 30 years ago to graduate with less than $10K debt after 10 years of college.

@Ryan Pozzi Frugality has been very good to us. We're moving down to around $33K a year for a couple with no kids. So first of all, it's a LOT easier when you're married and both agree that this is what you want. Secondly, the expenses you need to go hardest after are typically not related to things that you would necessarily see as daily lifestyle pick-me-ups. The two largest expenses of the American household are housing costs and transportation. Do you have a car payment, like 90% of Americans? Well, you should go after that a lot harder than you should go after the latte you buy down at the corner ever Friday morning. Where do you live? Since I'm something of the perfect example of that, let me tell you where and how I was living before I realized how much money I was throwing away. This isn't the first time on BP. When my mother and I moved here from Europe, my brother decided that the best place for my mother was a townhouse condo in a very nice part of my area. So we sold our house in Europe and moved in, buying the condo outright. At the time, the condo payment was something around $160/month. You go snow removal, trash removal, cable, exterior maintenance, and sewage expenses for that amount. You got access to tennis courts and a private pool. It seemed like a reasonable deal. The years passed, my mother died, I got married, my wife bought my brother out, and I have still NEVER used to the pool. I have never played a game of tennis in my life. The condo is very far from my wife's work. I telecommute to my current W2 job, so it doesn't matter where I live. The TV in my house hasn't worked for almost five years now. The snow removal turned out to be a joke and not worth it -- they only do something when it gets heavy and then they do it grudgingly. Sewage costs have risen and risen because the whole development's underground infrastructure is falling apart. The HOA assessment is now up to $400/month, and I own this place outright. There was a "special assessment" last year of $2000 to repave the roads of the development. Only an idiot would live here, my wife and I have long understood. This place eats money and gives us very little. What it did do for us starting out was give us a place that we could borrow money on easily, and we took full advantage of that. We have been working hard to GTFO since that realization, and we're succeeding, flexing our frugality muscles intelligently. To get back to the car payment, my wife and I bought three RAV4s in six years, switching them out like furnace filters. Once we got on the financial freedom wagon, we finished paying off the last one, found a mechanic we liked, and now we're car-payment free. The third biggest line item in the American household budget is food. We live within easy driving distance of two Aldis, and now do most of our food shopping there instead of the local overpriced supermarket chain and the even more outrageously overpriced Whole Foods a few minutes away. We have finally accepted that the only way we're going to get reasonably good food in our area for a reasonable price is to cook it ourselves, after years of trying new restaurants and being disappointed. About the only eating out we still do is a once-a-month outing to a local Chinese buffet. This, for us, has been a major lifestyle change that took time and work to get right, as well as a bit of investment in cooking equipment. But it's saved us quite a bit of money. Credit cards! 60% of Americans pay interest on a balance every month. Is that you? If so, STOP! That's a wonderful gift you're giving yourself. You can quickly cut expenses down to the bone and only eat dried ramen and drink coffee from ground you've run water through three times. That's what most people think about when they think about frugality. But getting to the cheapest possible food is not what you should be focusing primarily on, and doing it down to ramen and coffee is not going to be fun for you, as you pointed out. Look at your housing situation first, then your transportation, then go after low-hanging fruit like vampire-like outstanding personal credit, then think about how to change your food budget intelligently. Frugality takes time and analysis when it's done well, and it's done with a steady hand on your household budget. What we're working on to finally get out of this housing situation is moving to a large duplex in another part of town and renting out the upstairs. I bought the duplex very cheaply and have been renovating it steady for quite some time now -- it would have been wiser to invest in something else or to carry out this reno differently, but the something else was an opportunity that did not come along and I was working within my skill set on the reno. When we're in the duplex, and this townhouse is sold off and our home equity loans are paid off, and our rental business continues to grow, my estimates indicate that we'll be down $42K a year from the lifestyle we once had, in the paid-off condo with the car payment and the out-of-control living expenses. Yes, we were spending $75K/year back in the day on some really, really didn't need. If you want to understand how this process works better, I can't recommend @Scott Trench's book Set for Life and the BP Money Podcast enough. I only managed to read that pretty late in the game, however. The book that changed a lot of things for us, really did resonate with is, was Thomas J. Stanley's The Millionaire Next Door, which Scott frequently mentions is high among his own personal favorite finance books. Since reading that book, I've read everything Stanley wrote before he died, and it's all based around the same topic. His daughter has recently published an update on Stanley's research that'a also worth reading. I am most definitely happier now with a wife I never but never fight about money with and a household budget we understand every single last little thing about, than we were back in the days when we were wondering where-oh-where $75K a month was going and why it was so hard...so very hard...just impossibly hard to get ahead with our W2 income muzzled as a wealth-building tool. We've also been pretty lucky (if not to say incredibly lucky) in our real estate investments at the same time, pumping our money into investments that makes money for us instead of liabilities that aren't good for our financial and personal well-being. It takes time. But it's worth it. It's not easy, but every little win reinforces the last one.

Smart spending is not about frugality at all. It's about knowing exactly what you value and being intentional about spending. "I value time with my family" but I have a big house and costly cars so I have to work tons of hours... "I want to be healthy" but I eat bad and have not seen the gym in years... These are challenges we all have. Show me your checkbook (and calendar) and I will tell you what you value. What people 'say' and what they 'do' are two different things. When your checkbook is wired to your goals, life is good (and you are in the minority). For the record, mine is not yet there.

One of the keys that will make your journey easier to is to get a great paying job. That way you can put aside some money while still having fun and enjoying life. Alas, it takes money to make money *unless you're well connected* . I agree with you that it doesnt make any sense to be super frugal for many years if you are going to miserable in your prime years. At the same time though, you may not always need to buy the newest iphone, always get $5 coffees in the morning, etc. and find ways to put aside a bit of extra cash that adds up.

Live the lifestyle you want to live with the understanding you are responsible for paying for it. Then go out and pay for it with you investments. Contrary to what many believe and say, you CAN have your cake...and eat it too. You just have to decide on the cake, and plan how to get it....and taking steps backwards (reducing your lifestyle), although is a way that can get your there, isn't the only way to get there.

It is whatever you want it to be. I personally don't care much for luxury items so I live a modest life style. If my properties brought in a million/ year in cash flow I wouldn't change much about myself. When my wife and I increase our yearly income each year not much changes if your watching us in our everyday life. It comes down to what you personally want and what you personally want to do with what you earn.

@Ryan Pozzi Haven’t read the responses, but I’ll just give you a short and sweet answer. It’s not “the” answer, but an answer. I avoid credit card interest. I bought a personal home for half the price my banker said I could buy. And I never buy brand new cars. And I avoid lifestyle creep. I still take 1-2 vacations a year, but the above simple advice is what I’ve told my kids they need to do to “get ahead”. None of that is real estate advice. Just life advice. Oh, and choose your life partner very carefully (financially speaking).

My opinion is yes. The the more you save the more you have for investments. It's that simple. How quick do you want to be financially independent?

Is it really about not spending the money you make?

Heidi Kenefick

Rental Property Investor · Hartford, CT · Member since 2017 · 168 posts · 163 votes

7y

@Ryan Pozzi

Well, I think you answered your own question without realizing it. Truth is, if you inflate your lifestyle to keep up with your income, you will not increase your wealth. I think what the podcasts are talking about is keeping your lifestyle the same, so that you can build your wealth as your income grows. Wealth is created between the gap of what you earn and what you spend.

That said, enjoy the things you enjoy but pay attention to your spending! Find hobbies that are free or low cost, and ENJOY your life, no matter your income!

Good luck and happy investing!

3 Reply

Bob B.

Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes

7y

As a landlord we have an opportunity to see first hand how a large percentage of the population lives paycheck to paycheck and by obseriving them we can be encouraged to do the opposite.

A wise ruler once wrote: The rich rules over the poor, And the borrower becomes the lender's slave.

Many will argue that debt isn't bad and there are cases where it's good and necessary but it probably hinders more families from reaching financial independence than it helps. Without these families most of us would be in a different business.

Live beneath your means and marry over your head.

2 Reply

Bryce StewartPro Member

Investor · Bethlehem, PA · Member since 2018 · 7 posts · 20 votes

7y

A lot of people advise investing in real estate and saving money so that you can eventually "do what you love" or "pursue what you want to pursue", with the assumption that everyone's preferences are different and that there are nearly an infinite number of 'dreams' that achieve human happiness. If this were true, there would be good data to back it up. In studies measuring self-reported happiness, you'd expect a wide distribution and scatter-shot graph of the priorities of individuals, spanning a multitude of life trajectories.

But it's not true - plenty of scientific studies have attempted to identify and isolate the factors that lead to human happiness. Study after study keeps landing on the SAME factor as the perennial leader, year after year - transcending culture, gender, creed, party, race, etc. Not only is it the runaway #1 contributor to happiness, it's apparently a key contributor to longevity. The results of this Harvard study, although unique, have been confirmed by various other shorter endeavors. https://www.youtube.com/watch?v=8KkKuTCFvzI

Real estate investing, like all human endeavors, should have the purpose of improving the lives of the people who engage in it. Because good, close, human relationships are the key driver of happiness (not an opinion; a data conclusion), real estate investing should be used to prepare for or buttress, protect, and enrich what ought to be our primary objective: loving those around us well, and being loved accordingly. Consumption of material things measures fairly low on the happiness scale - especially if done in isolation, without friends or family.

For this reason, it makes sense to sacrifice needless consumption (call it frugality if you must) in order to create a passive income stream as quickly as possible, which should have the primary purpose of freeing up our time in order to devote more of it to the primary pursuit of good, healthy, relationships - and freeing up our minds so that we can be emotionally "present" when around those we love.

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2 Reply

John Meyers

Real Estate Broker · Park Ridge, IL · Member since 2013 · 30 posts · 9 votes

7y

Usually with buy and hold investing, you are basically putting enough down to then have the renters buy the property for you over the next 30 years.

As someone mentioned earlier in this thread, you should also find a good job so you can live a comfortable lifestyle as well. -- You shouldn't have to live on Ramon Noodles and clothes from Goodwill so that you can afford repairs when things breakdown.

Many of the investors who are posting advice like that are probably not making much at their day job and hence suggest that you live a humble life for the sake of building up your next egg of rental properties. -- Which is fine too if you are in that position.

Retiring before 65 with a few paid off rental buildings is the way to go (you can still manage them for monthly income or sell the buildings and add the proceeds to your retirement fund).

Good luck,

John

2 Reply

Max T.

Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes

7y

Originally posted by @Jay Hinrichs:

Originally posted by @Randy E.:

Originally posted by @Steve Vaughan:

Great memories can be built without large dollar signs.

This should be printed 100 point bold with flashing letters.

A few years ago, I had a discussion with another father of young children who said he could not imagine depriving his children of the necessary things in childhood that create wonderful childhood memories. His example was a yearly trip to DisneyWorld (or DisneyLand, I can't remember which) where they stayed a few days at a lodge inside the park. I mentioned that I could create great memories for my kids by going to a big lake in a small town, or to the beach near the end of the season, for a fraction of the cost. The other father insisted that it took a $3500 Disney vacation to create such memories. To each, his own.

If someone can spend like that and still save enough money to invest, that's great. If someone who spends like that complains that they simply "can't" save enough to invest, well that's a different story. Someone who doesn't earn enough to spend big and save big has to make a decision on what's really important to themselves. If you want to invest, really want to invest, then you will save. If you want to live a lifestyle that prevents you (on your current income) from saving enough to invest, that's a choice you can also make. Neither is right or wrong, but one will help you become an investor more quickly than the other.

a 10 dollar rod and reel combo and some worms or grub worms and go fishing for blue gill or crappie tell me what 3 to 7 year old would not dig that.. and many times they dont need a license. :)

3-7 year old?

I'm 32.

Sign me up!

1 Reply

Christopher Lombardi

Developer · Point Pleasant Beach, NJ · Member since 2015 · 303 posts · 216 votes

7y

@Ryan Pozzi worry about making more money. Not living like you are a pauper. Clipping coupons is fine if your time is worth 50 cents there and a dollar here. I recommend focusing on things that will make you big bucks and don’t worry about the little expenses that make life more enjoyable.

2 Reply

Scott P.

Rental Property Investor · Indiana...mostly · Member since 2019 · 468 posts · 245 votes

7y

HI Ryan, I agree with @James Ma and @Joe Villeneuveand @John Meyers

Everyone find what works for them. It sounds like you might be more like me, looking for a balance between building wealth while living in the here-and-now and giving to community and while making life enjoyable for my family and friends in the here-and-now.

2 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

Originally posted by @Christopher Lombardi:

@Ryan Pozzi worry about making more money. Not living like you are a pauper. Clipping coupons is fine if your time is worth 50 cents there and a dollar here. I recommend focusing on things that will make you big bucks and don’t worry about the little expenses that make life more enjoyable.

although the reality is what do they do for a living.. I have clients that work for high tech ( bay area companies) make 250k a year salary and 500 to 750k bonus each year. they can afford to invest or invest in my deals. If your working a job that makes combined 100k a year or less you MUST drastically control expenses. SO on this thread I am guessing you have those that dont make a ton of money monthly but have the will power to save and invest.. those are investors who are relying on real estate to float their boat..

I dont personally dont need any rental income.. have really never had it. and we do just fine.. the 350 homes I owned I never took a dime out of those.. I did get a 7 figure buy out when i left. that to me is making money

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JLH Capital Partners51 Review

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1 Reply

Bryan Clement

Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes

7y

@Ryan Pozzi so I have struggled with the same thing! My wife and I make around $40k but I have a lot of term debt ($1,200 per month, ouch!). I've come to the conclusion that cutting back for most people depends on how extravagant their life was to begin with. For example, we didn't cut the cable, but we did downgrade from DirecTV premium package to our local cable basic package. Saved me $100/month, and the only thing I'm missing out on is Monday/Thursday Night Football, which we can go to a friends whenever the Pats are playing. Also, instead of paying for Netflix/Hulu/HBO/Amazon Prime, we use our family's, each of us pays one and we all use their login. We get everything we were getting at $50.00 per month at $10/month. So, if you're like me and can't really cut back on too much, think more of the VALUE than the actual amount, try to do things smarter. I have basically the same product, but at literally $140/month less.

2 Reply

Bryan Clement

Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes

7y

Just a side note to the above, my wife came to me last week and said, "Babe, since we've been trying to spend less on our food budget, I've gotten so used to being on a budget that I literally can't spend more than $100.00 a week. I tried, bought almost two weeks worth of groceries and it came to $99.95!" We eat almost exclusively vegetarian, non-GMO or Organic. Not exactly a budgeter's diet! Yet just because we look for the value, we eat healthier than most everyone we know, at a cost lower than most people who buy manufactured crap!

1 Reply

Craig Jeppesen

Rental Property Investor · Chubbuck, ID · Member since 2018 · 532 posts · 466 votes

7y

I recommend you read the millionaire next door and rich dad poor dad. No one says you have to live on $20 k a year; only you can decide your budget. The best way to get started as a successful re investor is to first have your financial house in order and second use your income to purchase things that go up in value instead of down. If I can save up $20 k a year for example I can buy 5 $100 k houses in five years with leverage. If I only save $2k a year it will take me 10 years to buy one house. See how my net worth and cash flow will increase significantly by sacrificing a little and saving an extra $18 k a year. Most people waste that $18 k anyway and have no idea where it went.

You have to decide your standard of living and what % you spend and what you invest each month. Some of us want financial freedom sooner so we sacrifice more now. I consider myself pretty frugal, but I definitely have chilled out and spend a little more money now that my income, assets and net worth is up, but I am still meeting my savings and investment goals each month. It is easier with higher income.

0 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

7y

Originally posted by @Jeff C.:

How much you'll have to "deprive" yourself to achieve a decent savings rate is of course largely dependent on your income. If you're looking to put away $30k a year and all you're making is $30k, then no degree of asceticism is going to do the trick. Your time and effort would probably be better spent looking to increase your income. Now if you're making $300k a year and consistently have nothing left over, then yes you probably have a spending problem and it's time to analyze that and do some realignment.

I don't focus so much on not spending money as I do on extracting maximum value from every dollar I spend. There's a right way even to spend a lot of money. I like nice things. However I'm not a retail buyer of anything.. from my home, to cars, right down to my socks. For example I own, and have owned, quite a few high end swiss watches. I wait until I spot great deals, buy and wear them for a few years, sell them and get my money back (and often times more). My aggregate cost of owning them over the years is less than zero (other than the opportunity cost of funds). I bought my house, which was certainly more house than I needed at the time, at a trustees sale well below market. I take quite a few vacations (roughly 40 countries so far), with the airfare mostly being paid for by miles accumulated through putting business expenses on my credit cards and collecting sign up bonuses for said cards. I accumulate hotel points in the same way. I also never buy new cars. I prefer to let some other sucker drive them 10-20k miles first and lose 40% of their money.

I save most of my income, but I don't feel deprived in the least.

Yup miles and points one of the great equalizers of those in the business. I get nervous when i have less than a million miles banked. and less than 2 million hotel points. I have not paid for a business class trip abroad in 20 some years or paid for the hotel.

Not sure I have been to 40 countries.. but been to all continents but OZZIE land which is next. we go to Hawaii a bunch since its close to us.. 2 to 3 times a year for the last I dont know 30 years or so..

Travel to me is a must .. I could not even fathom just sitting at home day in day out.. be that no where ville middle America or even living like I did in the Napa Valley or Palo Alto or Portland .. and now Vegas which a lot of people like those spots.

Its why we do what we do right ????

However I see the flip side of very conservative folks that will die with millions in real estate and cash and if that make them happy that is cool too.. but just not for me. I would rather live on the edge a little and have all these great life experinces.

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2 Reply

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

7y

@Bryan Clement You saved $100/month on cable? I thought my cable and internet were pricey for what I got and combined they are just over $100 a month.

I agree that it is all relative, but if you never had it, you don't miss it. Don't worry about keeping up with the neighbours or family, chances are what you see isn't the whole story.

1 Reply

Bryan Clement

Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes

7y

@Theresa Harris DirecTV premium package with Showtime, HBO, NFL Sunday Ticket, etc. Etc., ended up being about $150. When I combined the TV with my internet provider it worked out to be about $40 more than the $60 I was already paying for my internet service. So dumb! Better now, thankfully my cable service pays out contract cancelation fees or I would have been stuck for another year!

0 Reply

Eric Schultz

Investor · San Diego, CA · Member since 2016 · 265 posts · 305 votes

7y

Ryan Pozzi The abundance mindset thinks “expand your means” and the scarce mindset thinks “live below your means.” One simple example of expanding your means: Buy the new car you want, just make sure you bought the positive-cash flowing asset first so the new car payments are covered.

3 Reply

Maria Subbotina

Specialist · Member since 2019 · 10 posts · 4 votes

7y

It all depends on the lifestyle you are accustomed to and your perception of money in your life.
Personally, I'm really passionate about the idea of stable future and certain benefits for my children. It seems to me much more important than splaching out carelessly today.
I mean, I can't say I have a modest lifestyle or spin out money, but I don't purchase brand new cars or eat in pricey restaurants, as I just can't see any point in it.
And I'm sure that it is worth having peaceful old age and knowing our children will still have savings , in case they have financial trouble.

0 Reply

Jim D.

Investor · United States · Member since 2015 · 415 posts · 487 votes

7y

Great responses here from everyone.

My feeling is that if you hit the big items out of the park (cars, mortgage payments, credit cards), you don't need to worry so much about the small stuff. All of our friends spend $1200-2000/month paying their rent or mortgage, while we pay $200/month because we live in one unit of our duplex.

That's a lot of lattes.

1 Reply

Wesley WhiteheadPro Member

Rental Property Investor · Depends on where my employer sends me · Member since 2018 · 171 posts · 142 votes

7y

@Ryan Pozzi Please keep in mind that self deprivation is a subjective term that varies from person to person. Sure sone of the stories from FI people are not the strategy that I would take but that’s is their path no mine. The best financial strategy for you is similar to the best exercise plan you can take.....it’s the one you can do consistently. If saving 50% of what you make does not fit in your strategy then find strategy that requires that you save less. I’m sure you’re aware that saving less will mean being able to invest less and hitting the FI mark in a greater amount of time but if you’re ok with it, all the better.

0 Reply

Jeffrey Grieshop

New to Real Estate · Coldwater, OH · Member since 2018 · 105 posts · 61 votes

7y

Originally posted by @Jay Hinrichs:

Did you sell all 350 homes at once for that 7 figure buyout? just curious because that does not make sense as 9,999,999.99(max for 7 figs)/350 = $28,571. I know your homes were worth more than that apiece :)

0 Reply

Ian WalshBusiness Member

Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes

7y

Reducing my expenses and investing my money was the biggest lifestyle turning points in my life and I would never look back. And ego is expensive. So much can be saved when you strip it away.

0 Reply

Payton Pearson

Member since 2019 · 114 posts · 111 votes

7y

To put it in perspective, I live in Ohio. You can typically get a house for $70,000, and a halfway decent one at that. That comes to around $450/month with a 30-year mortgage.

Working at $15/hour, 40 hours per week, you will make about $2100 after taxes per month. Including ALL expenses (groceries, car gas, electricity, internet, gas, etc...), you can expect to spend about $750-800/month if you're a normal person. That means you will save about $1350/month which is $16,200/year. This can be a 20% down payment on an $80,000 duplex around here (typical price) which you can use as an investment property.

It's clearly about how much you spend, because you don't need to make that much money to buy properties.

2 Reply

Patrick Menefee

Real Estate Coach · Charlotte, NC · Member since 2016 · 399 posts · 341 votes

7y

@Ryan Pozzi I like the thought of your post and the conversation it sparked. It’s very very easy for a lot of people to use the classic argument about your $5 latte and similar items that you may or may not enjoy. Thats all well and good and can add up, but the biggest thing I’ve found is just being aware. I put everything on a credit card that i pay off in full every month (get out from under that debt ASAP), but more than that I’ve started spending more time paying attention to what comes out each month. When I suddenly analyzed my spending and realized how much money I was spending lazily eating out, it was very eye opening.

Totally agree with you about your things like the symphony, though that’s not my personal flavor. But be aware, cut back and save where you can, but still enjoy your life. You only get one

0 Reply

Jorge Marte

Member since 2019 · 7 posts · 0 votes

7y

There are lot's of great and interesting points of view.
For me it is a balance of saving and spending or better said reinvesting the money I do earn.

0 Reply

Brandy Carrero

Philadelphia, PA · Member since 2019 · 21 posts · 1 vote

7y

@Ryan Pozzi That’s exactly it! I’m a new investor myself so I struggle with these same questions, but what I’ve learned is everyone’s journey is different. Some come into this with less leverage, or better - it’s definitely about life style prioritization and what your goals are. If you want to be aggressive, then it may take living below your means but it’s a “sacrifice” for now, to enjoy your money later. Again, some of us work a 40hours + a week job and has money invested into our 401k for retirement, but some of us do this to have that retirement money because they’re doing this full time and have not invested into a 401k. Big take away, is that everyone’s journey is different so taking a look at where you see you and your wife in the next 5-10 years will be is important :)

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Krishnan T.

Real Estate Professional · Tampa, FL · Member since 2017 · 104 posts · 47 votes

7y

Save and live below your means and what you can afford to lose..invest and take a chance. Take care of your health and your relationships as much as possible because if you have 10 million net worth and for example you become diabetic because of your life choice, you are basically poorer. Lot of people would be happier being broke than diabetic ...

Make a movement around this concept and it becomes FIRE...start a successful financial show/training around this concept and you get a Dave Ramsey show..write a successful blog around this and you get Mr Money Mustache.

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Is it really about not spending the money you make?

Is it really about not spending the money you make?

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