Afford Anything - Life After Financial Independence - with millionaire investor Emma Pattee

Episode Date: August 3, 2018

#143: Emma Pattee became a millionaire at age 26. But she hates it when I describe her like that. Here are other ways that Emma would prefer to be known: She's thoughtful. She's hilarious. She's kind. Emma is the child of hippies. She grew up in a tent in Oregon, at least for a portion of her childhood. She has a BFA in writing from Emerson College. She bought her first house at age 21. At the time, Emma was juggling a demanding full-time job with her ambitions of becoming a writer. This balancing act felt too tough. She felt motivated to quit her job as quickly as possible, so that she could devote her time to writing. She moved in with her boyfriend's parents, saved 70 percent of her income, and contemplated what to do next. She decided to "buy a small house in a not-so-nice neighborhood, and live for free by renting out enough rooms to cover my mortgage and make a little money on the side." But then she developed an addiction to real estate. She kept buying houses and converting them into rental properties. She DIY'ed some projects and hired contractors for other projects. She improved the homes and raised the rents. She reinvested the cash flow into buying more houses. She borrowed against the equity and bought even more houses. And that's how Emma, by age 26, became a millionaire. Her seven-figure net worth -- and more importantly, the cash flow that accompanied it -- allowed Emma to reach financial independence. She could stop trading her time for a paycheck. Emma quit her job at age 26 and dove into the world of self-employment, starting a lucrative one-woman enterprise as a professional ghostwriter. She writes books and articles, for which her clients receive authorship credit. In exchange for this effort, Emma makes a substantial amount of money. So who is Emma Pattee? She's a financially independent millionaire real estate investor who started a lucrative self-employment business as a writer. (Sound familiar?) Among the many words in that sentence, the most important word, to Emma, is the word "writer." That's why she started down this path. She wasn't trying to become wealthy. She wanted to become a self-funded artist. She wanted, simply, to write. __ Emma is a close friend. She was my guest of honor, my Plus One, when I delivered my keynote speech at the World Domination Summit last month. She's my travel buddy and real estate investing companion; we visited Alabama last year to check out potential investments in Birmingham and Montgomery. She and I have talked about meeting occasionally for writing retreats. In today's episode, Emma and I sit down at her dining room table, plug in a microphone, and hit "record." In the 30-minute conversation that follows, we talk about how and why we reached financial independence -- and what comes next. Enjoy. Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every decision that you make is a trade-off against something else. And that doesn't just apply to your money. That applies to your time, your focus, your energy, your attention. It applies to anything in your life that's a scarce or limited resource. Every yes to something is an implicit no to something else. And so the questions become twofold. Number one, what's most important to you?

And number two, how do you align your behaviors to reflect those priorities? answering these two questions is a lifetime practice, and that's what this podcast is here to explore. My name is Paula Pant. I'm the founder of Afford Anything.com and the host of the Afford Anything podcast. Normally we're a show that airs once a week every Monday morning, but once a month on the first Friday of every month, we air a bonus episode. This is the August 2018 first Friday bonus episode, and today I'm going to do something a little unusual. I've invited Emma Patti to join me on the show. Now, if you're a long-time listener, you'll remember Emma from episode 66, which was one of our most popular and most controversial episodes. Popular because Emma and I, I mean, because of what that was, I'll go into it in a minute.

Controversial because Emma cusses a lot. But don't worry, we've bleeped her out in today's episode. So today's episode is family-friendly. Now here's the background behind today's episode. Emma and I are good friends. She lives in Portland, and about a month ago, at the end of June, beginning of July, I went to Portland to give a speech, a keynote speech at the World Domination Summit. Now, because I was a keynote speaker, they gave me an extra ticket, so I was allowed to bring one guest, a plus one. And I invited Emma to be my plus one.

So, Friday, Saturday, Sunday, we spent these three days together at the World Domination Summit, going to sessions, going to meetups. She saw my speech before I delivered it on stage. she witnessed the dress rehearsal. She gave me pointer. She gave me feedback. We went to dinners together. We went to happy hours. And during that time, we talked a lot about money, about financial independence, about real estate investing, about business and careers and meaning and work and life. And at the end of all of that, on Monday right before my flight home, I said, you know what, Emma, we've got to just talk and hit record. And that's exactly what we did. Now, if you don't know Emma's backstory. It's incredibly impressive. Emma became a millionaire at the age of 26.

She didn't do it by starting a company or anything like that. She did it the old-fashioned way, investing. She worked a nine to five job. She lived extra frugally. She lived frugality to an extent that most people would not, to an extent that would make most people very uncomfortable. She did that. And then everything that she made, she plowed into investments. And her investment of choice like mine happened to be rental real estate. And so building a portfolio of rental properties, Emma became financially independent and a self-made millionaire at the age of 26. At that point, she quit her 9 to 5 job and started her own business. And now, now that she is the ripe old age of 28, that business has gone on to become wildly successful as well.

So Emma is incredible. She's smart. She's accomplished. She's funny. And she has achieved some astounding things in her life. And the reason that she and I connect, there's a few reasons. Number one, it's rare for me, for either of us, to find another young, even though Emma is six years younger than I am. She's 28 and I'm 34.

But in spite of that six year age gap, she and I have done a lot of the same things. We've both built seven-figure real estate portfolios, and we both built those in our 20s. We're both women. We're both artists. We're both creatives. We're writers. We're both people who came to the world of finance because we wanted money that could support our creative endeavors, our art, our writing. And we are both people who, now that we have reached financial independence, have, for better or for worse, the time and the ability to really take a hard look at our inner emotional life. and to start drudging up the junk that's inside of it. I'm not going to give away this interview because you're about to hear it, and it gets real and it gets raw, and it gets deep. And so that is what's in store for you in today's episode. Now, if you're new to this podcast, please be aware that this is not a normal episode.

And also, regardless of whether you're new to this podcast or a longtime listener, I think I should probably give the disclaimer that interview was not the right word for what's about to unfold. Emma and I had a conversation and we hit record. So it's not actually an interview, quote unquote. It's just us connecting as two people who are very much in a similar place in life. So in today's episode, in today's conversation, Emma and I talk about life after financial independence. What comes next? After you've done the thing, after you've made your million, what comes next?

During our conversation, we use the acronym FI. If you're not familiar with it, that acronym stands for financial independence. We also use the acronym Fire, which stands for financial independence and retire early. Right now, we're going to hear a quick word from our sponsors. And then we'll have this conversation with Emma Patti, the 26-year-old millionaire. Would you like to earn up to a 7.5% annualized return while supporting the growth of solar energy in the U.S.? Check out Wonder Capital. Wonder Capital wants more businesses to have solar energy,

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W-U-N-D-E-R-CAPTAL.com slash Paula. Wondercapital.com slash Paula. And remember, wonder with a you. Wondercapital.com slash Paula. If you're listening to this podcast, you love thinking about your long-term financial future. You spend a lot of time thinking about retirement and how you're going to pay for your children's college and all of those other long-term financial goals, which are super important. but there's something else that often doesn't get talked about enough.

Let's think for a moment about creating a will or creating a revocable living trust. Now, both of these options can be expensive, they can be time consuming and daunting, and even a little bit frightening. But don't worry. There's an app for that. Tomorrow.me is an app that makes creating a will or creating a revocable living trust quick, easy, accessible, and free. Now, for a lot of people, this process can be lengthy, it can be emotionally draining, and it can be expensive. Estate attorneys usually cost a few thousand dollars.

Tomorrow.me made a free app and offers a free will and trust to every American family, regardless of your income. And so they've turned something daunting into something simple, easy to understand, and fun even. Most people take less than half an hour to complete their will using tomorrow. Give them a try, create your free will in minutes at Tomorrow. slash Paula. Again, that's tomorrow.m.m.m. slash Paula. Tomorrow. Tomorrow. Dot me slash Paula. So, Emma, one thing that you and I have in common is that both of us were financially independent now. You were, what, 26 when you got there? Yeah, I was 26 when I hit the number that I set out for myself initially. Yeah. Dude. You were, I'm going to say it, you were the 26-year-old millionaire.

Oh, that, right? Right. Oh, my goodness. I do not call myself. that. That's a Paula only term. But it's true. You hit the double comma club. Yep. That is true. And I think, you know, with real estate, as probably a lot of people listening understand, things can happen, you know, really, really fast. And then combine that with a good market. Something else that I hear is this idea, and this was true for me, that you have the goal at the beginning. At the beginning, I was 100% clear, right? I was 18. And I knew for a fact, I would always spend $24,000 a year for the rest of my entire life. And I was going to have three kids. And I had all these other things planned, of course. This was an 18 year old, Emma believed. Right. Yeah. So, of course, that made perfect sense at 18.

And if I'd hit it then, I would have known exactly when. But by the time I got close, you know, then you fast forward eight years. By the time I got close, my whole life had changed. And it was just so much less relevant. And I was doing work that I loved so much that really all I needed to know was, do I have enough money coming in that I'm okay taking X, XYZ giant risk? That, became sort of the new marker, which I know to those of you just starting out, is maybe hard to believe or feels kind of disenchanting. But I hear that all the time from people. By the time they get there, they just don't care as much because they feel, I guess, a lot more free. Yeah. Brandon said that, a mad scientist. He said the same thing. He thought that it was going to be

a really big deal to reach FI. And then he got there. And he was like, oh, I actually regret saving as much money as I did. I actually regret being as obsessed with this as I was because if I had just been a little bit more chilled out, being more chilled out wouldn't have cost very much more. And it would have allowed me to just enjoy the lead up to this a lot more. That's for me very much so. Like the goal, when you have this one central goal, you know, you're climbing this mountain and then it's like you realize that you walked in the wrong direction. That was my experience very much. You know, around 24, 25, I started realizing that I did didn't feel like I had a lot of purpose. I wasn't doing the art that I wanted to do. And I felt

like I didn't have a lot of intimate relationships. And a huge reason for that was money. Or I always let money be the reason. And so then I just became obsessed with how can I create more intimacy and connection in my life? And the money felt so much less relevant. So by the time I hit it, it was almost in some ways a reminder, I think, of all that I had given up to get there. I know, Paula, you and I, like, one of our most meaningful conversations was when we, gosh, okay, we were drinking. That happens a lot. There we go.

We were drinking. We were like in this swanky hotel and we started talking middle of the night, like on a weeknight. And we started talking about all the things we regret that we didn't do because of money. Yeah. Sort of all the experiences. And it was such a sad moment. And for me, a moment that just so much solidified my connection to you. Because what a truth.

all the things we haven't done because of money. Yeah, like for example, the childhood home that I grew up in in Cincinnati, Ohio, my parents sold that home. Before they sold it, I did not fly back to see it one last time, to walk through it one last time because the cost of that airline ticket was like $200 and I didn't want to pay the $200. And because of that, there was stuff that I was hoping that they would save in the move, like journals, handwritten journals, from my... childhood that just somehow got lost in the shuffle because, you know, of course they didn't

know to look out for it. I knew. And if I had paid the $200 to go there, I would have set that stuff aside, but I didn't want to spend the $200. And now, would I spend $200 to get those journals back? I would spend $20,000 to get that back. God, it's such a beautiful point, I think, because the truth, though, also is that maybe that was a time when the $200 was more like $2,000.

Right? Like the whole thing is so kind of surreal because you do what the best you can in the moment. Right. And then later, you know, you think about money so differently. The numbers, it's almost like they're different numbers. The whole context has changed. Right, right. The idea of what you think of as a lot of money is very different. Very different. Yeah. I have a memory like that. I remember a good friend of mine, someone I really wanted to be closer to, invited me to her bachelor's party. It was like five women, a weekend in New York, and I felt so anxious about the idea that it would maybe be $400 or $500 and that they would want to go to nice dinners. And I was so overwhelmed with anxiety that I didn't go. And I told her I couldn't go. And I always regretted it. And, you know,

we've kind of since just fallen out of touch, you know, not because of that, but I've always wondered. In those moments when I could have leaned into a relationship, I would so often use money as the thing that kept me from it. And Emma, you and I, one of the things that really motivated both of us, like we both built big real estate portfolios at a young age. That's one of the reasons that we've connected. Actually, I take that back. That's not really one of the reasons that we've connected.

That's a biographical similarity. Yeah. But the reason that you and I connect is because both of us were motivated by the same thing. And for both of us, that was largely anxiety. We did it not because of us. we wanted a big house with a fancy car or whatever, we did it because we were just anxious people who wanted the psychological security of a safety net in order to relieve some of that anxiety that we felt.

That was our motivation. And so you have this behavior. It's funny because being in a very emotionally unhealthy place led to a behavior. that had a lot of positive reinforcement, right? Being in an emotionally unhealthy place led to saving and investing and building a real estate portfolio and becoming millionaires in our mid-20s to early 30s. It's funny because there's been a lot of external validation to just being a basket case. When I think about this is kind of one of the reasons I don't hang out with a bunch of real estate people. And I know you and I have.

I've sort of talked about this same kind of frustration. But when I talk to people getting into the real estate game, even that term. I know. I hate real estate. And it's always like kind of really smart, really ambitious young dudes. And I just don't see myself in that at all. They're like, here's my plan. I'm going to buy a single family home.

And then in two months another one. And then in two months another one. And then I'm going to flip them. And then I'm going to sell them. And I'm going to buy a multifamily. And I'm going to have an apartment complex. And then I'm Donald Trump. Like it becomes as insane and awesome and well thought out.

world domination plan via real estate. And I just have no, and they're like, you know, just like you've done. That just so much, I can remember the exact moment. Actually, I'm almost at the six-year anniversary of buying my first property. Oh, happy anniversary. Thank you. And I can remember the exact, right, moment of sort of I bought the cheapest possible house. I swear to God in all of Portland.

And it was so sketchy and it was so falling down and I was so scared. And there was no part of me that was like, I'm going to be a real estate mogul or like, you give me six months and I'll flip this. It was just, yeah, complete anxiety. Complete, like, I just want to have a little home and I'm going to pay it off. And I'm going to have roommates and I'm going to live for free. And, like, I'm a little squirrel. I was just always a little squirrel.

And so it's funny because I often don't really see myself in people that I meet in the real estate community, even though I know that they see themselves in my story. Right. Is that somewhere real? Totally the same. my motivation with the first property was, I'm just going to live for free. That was the extent of my ambition. There were five people sharing a three-bedroom apartment.

So Will and I were paying $200 per month each to share one bedroom within this three-bedroom apartment that we were splitting with a bunch of randos from Craigslist. Literally, the extent of my ambition was instead of paying $200 per month for rent, I want to pay zero. So that was as big as my thinking was. And not like so I can become rich, but so that I can save more and either save up to travel or to do something or, you know, save more to protect myself kind of from the future, to protect myself from this anxiety. Yeah, you're right. It's a fear of the future.

Right. You know? It's not excitement. That's exactly at all. Like, it's not an excitement of the future that drove us like, I'm going to become rich. And this is, look at me, get started. It's a fear of the future. Like, I don't know what's going to happen.

So I'm going to prepare for that now. Exactly. Exactly. And Emma, that's why you and I connect so well is because that was what motivated both of us. Right. That's why we've done what we've done. And the external validation is there. What resulted from that was a lot of financial success. And it's hard sometimes to communicate that because when you write a blog post that says, here's the house I bought, here are the numbers, here's the cap rate, here's the this, here's the that. You get comments. from people. You know, it's just like, one of the reasons I like podcasting is because I can go into this level of depth and both with a podcast or with a YouTube video, I think just by the nature of talking. Right. It's, you can give yourself an authentic disclaimer. Yeah. Sometimes you just can't. When you talk about real estate and the numbers look so good and it's sometimes you can't give the full story. Yeah. Or I mean, you can try, but this tone that's in my voice,

maybe I'm just not a good enough writer. I don't know. But it's sometimes it's hard to express that with writing. No, that's a really good point. It's super interesting because I actually was just talking to this guy named Brad Klontz. Oh, he was a guest on this podcast. Oh, holy shit. Yeah. Oh, my God.

Okay. I'm obsessed with Brad, number one. And I think I really scared him because I got so excited when he started talking that I was like, Brad, this is the best phone conversation I've had all year. And he was like, okay, nice meeting you. Thank you. Super awkward. Yeah, he was totally a guest on this podcast.

That is so cool. Oh, my goodness. Well, we were talking about this. And I was telling him, like, I'm this complete hot mess. And I'm writing an article about this and about, well, my husband and I went to get a breakfast sandwich and I had like a complete meltdown because it was $13. And I just felt like I could never, ever, ever spend that kind of money on a breakfast sandwich the same morning writing a $6,000 check for like an HVAC system or something.

But like, that doesn't matter. $13 for a breakfast sandwich will bankrupt me. So I was telling him about this and kind of how embarrassing this is. He was like, you know, we've done all the research. And he was like, the way you are, that belief I need to say for the future, something bad might happen, is statistically proven to be connected to being very financially successful. And that felt like, like, are you serious? Like, what a catch-22. So we had to be scared of Armageddon our whole lives and that's going to make us wealthy?

That's the key to being wealthy is to be scared? Well, it's not the only key. Of course. Yeah. Of course not. But I hear what you're saying, which is that in the world of money and in the world of investing, sometimes being in an emotionally unresolved, emotionally unhealthy place can be the impetus for action that results in a massive improvement of your life. I mean, this is so, I love that this is the advice that we're getting.

Combined together, we've sat, we've thought this through, and sometimes being really emotionally messed up. is the key, you guys. But no, I mean, when you look at our paths, it's really hard to argue with that. Yeah, it's certainly true that for both of us, our anxieties were the thing that motivated us to do what we've done. Money Magazine did a big article on me recently, and I was telling the reporter for Money Magazine, because I think he was, he kept trying to ask, what's next. That's what everybody goes to, like, what's next, what's next? And I was like, no, you don't understand. This isn't about growth.

This is about building a safety net. That's what I've done. This was about building a foundation. My rental properties last year, they brought in $125,000 gross and $43,000, right? So that net income from the rental properties last year, $43,000, that's higher than the highest amount that I ever earned as a W2 salaried employee. Wow. Right? As a W-2-saried employee, the most I ever made was $31,000 a year. And that was in 2008. That was exactly 10 years ago. So my rental properties now are bringing in more than the highest amount I ever earned as a salary. And what that says to me is that I now am protected from having to go back into the workforce. I now am protected from having to have it have to have a job. That's what this was all about. It was my fear and anxiety. of one day being forced to go into a job that I hate. That was the thing that motivated it. And I think

it's sometimes hard for people to understand that because they think that you're motivated by, I don't know what, like a Lamborghini or whatever, I don't know. Or their landmark of wealth is so different than ours. Right. That it's very, it's hard for them to kind of connect that the thing we have we consider enough. Right. You wouldn't want a little more, a little more or a little more. It's not that I would mind more. Certainly. I'd take a Lamborghini. Yeah. Well, I wouldn't take a Lamborghini, but I would certainly take the money that I could sell that for. But it's not that I'm against more. I'm pro. I'm very pro more. But what I explained to this money magazine reporter, this entire thing was an extremely elaborate anxiety reduction measure. I probably could have just learned to meditate, but I did this instead. And I think a piece of that that's hard is that then the anxiety doesn't really shift after. I mean, that's been so kind of proven, right? Like when you're anxious about something. solving for that thing, which incredibly intuitive, right? Like, I'm anxious about, you know, about having enough money. So I'm going to save enough money and then I won't be anxious.

It doesn't actually work that way. So I think there's that challenge. But I also think there's a piece of this. Okay, I'm going to say something that I definitely have not thought through. And so maybe then I'm going to regret it. But let's just roll with it. So I think there's a piece of this about committing to be financially independent that almost gives you, Paula, feel free to disagree with me, but almost gives you the obligation

that when you hit that point, you take a moment and you try to figure out what your life is actually about. And so when this man is asking what's next, he's really sort of, he's asking you in the narrowest of terms, right? What's next for houses and for money and for income? Our lives are so much bigger than that. And I noticed that when I hit that mark, my inclination was to keep working. I was scared to stop and take that kind of wider look. I was scared of the independence. I was happy with the financial and scared of the independence. Whoa.

Okay. Elaborate on that. What is it about the independence that scared you? I think for me personally, because I was very motivated by this idea that I wanted to be a writer, but I didn't want to be a starving writer. And people always, I didn't want to be a copywriter. I didn't want to be any kind of a, I didn't want to have to write for money. I wanted to be an artist that a self-funded artist is how I kind of explain it to myself.

And so I think that I got to the point and then I was still avoiding it. I was still avoiding writing. I was still wasn't sure what was next. I think I spent so much time, God, and this is such a like an often repeated thing. I think I spent so much time trying to get to financial independence. And I really did think it would be the answer to all of my. I mean, I just imagined myself like frolicking in a field. I woke up every day.

I worked out. I wrote a novel like practically a day. I just popped out a little novel, had a million friends, all just conveniently free Monday at noon. And I think when I got there, it just looked so different. And I didn't know what to do. And so your solution to that was to keep working? I think I'm so figuring out the solution, and I don't know that I have it. There's a lot of us who pursue financial dependence because we want a neat answer.

We want something that fits in a spreadsheet. We want a plan, right? A plan that the Trinity study says works 98% of the time. And life is not like that. life is very different and money's one element in life. And so I think that realization caught me by surprise, right? There's no Trinity study for friendships. There's no Trinity study for health. There's no, I mean, okay, I'm saying this, but of course there is a ton of research in those elements. But I didn't spend any time thinking about any of that. And then here I am. And I have a

million dollars and I have rental real estate and I did the thing. And it was like, oh, holy I have a whole rest of my life to figure out. I have a whole week to fill. What am I doing? Yeah, I think you're totally correct. And so when the Money Magazine reporter is like, well, what's next? You're right. He's asking about a very, very narrow sliver of life. And it might be that what's next is that I learn how to f***ing meditate. There you go.

Yeah. And maybe the easier thing is to say, oh, I'm going to buy 17 more properties. And maybe that's the easier thing for all of us is to keep doing, right? We want to keep marching. We've already arrived at the destination. And we're like, I think I'll just take another spin around the block. I think I'll just keep on walking. Pete refers to this as the Just One More Year Syndrome.

Right. It calls this Just One More Year Syndrome. And he means that in the regard of staying at your salaried job. Totally. But, you know, for – actually, Emma, you were like me, right? You did not quit a salaried job when you reached FI because you already were not – I did. Oh.

You did. Okay. When I got there, potentially a couple months before or maybe a couple months after, the timing was actually not connected to reaching FI because, you know, it's a rental income thing, so we were already, it didn't really click. But it was connected to having enough rental income for sure. And so I did quit my job. I felt I was ready to take the risk. But I now work as much, if not more than I did before. So I would say that I'm definitely a failed FI. Oh my God. I'm going to start a new club. Failed FI. Yeah. Failed fire. Failed. Failed.

No, but I disagree. You're not because you're financially independent. You just failed at retiring. Definitely failed at retiring. But you never intended to retire. So you can't fail. something that you never tried to do. I mean, I genuinely believe that the majority of this community, this is probably something I shouldn't say. I meant to say anyways. Do it. I genuinely believe the majority of us are not retired. I mean, I could probably, it would be hard for me to think more than I right now can think of one person who is actually retired and does not have any kind of a project that's not gardening, like a project or a blog or a business or an idea that they're actually working on. Wait, I'm going to whisper in your ear who I think this person is.

That's exactly the way. Yeah. Okay. I knew yes. I got it. Think about how many people, Paula and I know in this community. Right. And I can say there's one person and she can immediately know who it is. You guys, this proves our point. Okay. Nobody is retired. Think about that now because that's the thing I was in denial about until I got there. What do you think? Is that, were you in denial? Oh, I never wanted to retire. That was the thing. I never, ever, ever had, the ambition of retiring because I was, I've always been at type A. You know what it is? Is I've always kind of very deeply, this is going, we're going deep here, right? Let's go.

I've always felt kind of this deep sense of unworthiness that I have to combat by constantly proving myself. And so if I were to be retired, then that would merely take away my ability to do the one thing that I'm always driven to do, which is prove my worth. And I tend to prove my through achievements. And those achievements aren't necessarily financial. I mean, it could be having a blog with an email list of 52,000 people, having a podcast that has three and a half million downloads. I mean, those metrics are not financial per se. Those are all just ways that I prove I'm worthy. I can achieve things. And even if the achievement is something like learn how to speak fluent French or whatever, I have this drive to constantly be achieved.

achieving things. So the type of person like me who's driven to constantly achieve is not the type of person who's motivated to retire because that seems like the opposite. My motivation purely was to not have to work for somebody else. And really what that was rooted in was that I knew that I could achieve more working for myself than I could working for somebody else, being a cog in a machine in somebody else's business. So I knew that I could achieve the most if I were self-employed, but I also knew that self-employment would cause, you know, there would be volatility and there would be the income roller coaster and there would be cash flow issues. And so we talk about we'll see entrepreneurship. I wanted to create a safety net so that I could become an entrepreneur

and I could take bigger risks and still have that safety net that would protect me from having to go back to being a cog in a machine. So that was a very long way of answering your question that I never, ever, ever had the goal of retiring. And to this day, people often ask me, somebody asked me the other day. They're like, when do you want to retire? And I'm like, never. When I am 200 years old, if my health is still good, I want to still be working. And they were like, why? And I was like, well, I don't know. Why else would I be alive? I don't know. I mean, it's so lovely that you, like, I'm so happy you just went there. Because hearing you say that, I'm like, God, isn't that really the truth at the heart of all that we're saying,

which is that people don't look at that. You can be financially. free, but until you deal with your issues, you're not free. Your issues keep you trapped. And I think that is maybe the thing we're both really trying to say. And what you just said is so lovely, because I really felt that in my bones. Oh, God, that's so true for me. I work is external validation. And the work I want to do with my life, which is writing, you know, doesn't really, it gets external validation like once every four years, right? Like when you're trying to write a book, it's different than working for money and working for sort of the collapse and the client love. And I think, yeah, when you only see yourself as successful, if the person next to you looks you and thinks you're

successful, you are trapped. And that's a trap that's as real as a financial trap. And I do see a lot of people who don't think about that aspect. They think FI will solve that. Or they're like, ooh, I'm going to win at FI. And then other people, then people will know that I'm FI. And look, that's another accomplishment I can have. And if that's why you're doing it, I think it can feel empty unless you can find some deeper meaning to it. FI doesn't solve your problems. FI, if you think about this, all you're doing is just building a stream of passive income. Yeah, like you're paying your rent.

Just imagine you with the same problems, but your rent's paid. That's it, guys. You're just going to be alone with your problems and a paid off rental. We'll return to the show in just a moment. Are you sick of paying bank fees and are you looking for a bank that's not going to nickel and dime you? Check out Radius Bank. They have an account called Radius Hybrid. checking, which is a free high interest checking account, which means that you have the flexibility

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Again, 30 days, free, unrestricted free trial by going to freshbooks.com slash Paula. And when they ask, how did you hear about us, mention afford anything? That's freshbooks.com slash Paula for a free 30-day trial. If you think about building a stream of passive income, because it happens incrementally, let's say that you build your first $100 per month of passive income. Does that mean that your problems have then reduced proportionately to that? No. It just means now you have an extra hundred a month in passive income coming in.

Right? And then you just scale that up. Now instead of 100 a month, now it's 1,000 a month. Does that mean that your problems have reduced incrementally by that amount? No, of course not. It just means that you are you with an extra thousand a month in passive income coming in. And then you keep scaling that up. And to be clear, that's not to say that you shouldn't achieve this or that you shouldn't

strive for this because, Emma, as you and I were talking about, I'm like, if I think about all of the worries and fears and anxieties and all of the crap that I just deal with in my day-to-day life, if I didn't have this passive income coming in, I would be either the same, at best to the same, or at worst, even more of a basket cake. See, I know, I'm, yes, there is, of course, a deeper and more positive spin to this, which I know you and I were talking about, which is like, I thought if I could hit FI, the challenge will be over. And now that I'm here, I see that FI was the training, it was the training grounds for the biggest challenge that's to get ahead. And for me, that's obviously pursuing my art. But also figuring myself out.

That's what's next, right? And FI, it pays my rent. And when your rent is paid, it's one less thing for you to worry about. and sometimes what you then have more time to worry about is sort of your own dysfunction. The other things you want to achieve and what your life means and who you are as a person and what your legacy is, I didn't think about any of that stuff when I was painting rentals and working at night as a copywriter. And now I have more time to think about it. So I do see it.

It is still a challenge. It is still terrifying. But it's such a gift to have even the opportunity to step into that ring with those enormous life challenges. Maybe what we're saying is that achieving financial independence allows you to ascend up the Maslow hierarchy of needs. Once those bottom levels are taken care of, once security and basic health and just your basic cost of living is taken care of, then you do ascend up that Maslow pyramid of needs. And at the very top of that pyramid is self-actualization. And just because at the top of the pyramid, it's a little bit smaller than at the bottom, it doesn't make it any easier.

Right. Right. Right. It's the same, the challenge has the same weight. It just happens to be at the top of the pyramid. Right. Exactly. No, I definitely thought I was going to like whip out self-actualization. Like I could be like FI for 10 minutes and like, bam, got it. Self-actualized. Like I really took the pyramid seriously. It's like that's a very small little top. I got that. Did not understand it. In five minutes, I need to catch an Uber to the airport. Do we have any core takeaways to the people who are listening? I think my key takeaway would be about finding someone else that you can connect with and talk honestly about. I think before I met Paula, I felt like to say these things was to throw shade at the FI community. And maybe I wasn't like a real person in the FI community.

And I was poking apart other people's dreams and bursting the bubble. And then when I met Paula, it was, oh, let's just be real. Let's just talk about what's real for us. And so I think find your Paula. That's my. Go out in the world and find your Paula, but you can't have mine. What about you? Oh, I would say, think about how much money you need in order to BFI. Whether that number is 40,000 a year, or 50,000 a year, or 30,000, whatever it is, 60,000 a year,

depending on where you live and the size of your family and whatever it is you want to do. Now, imagine that you got some sort of a job that was a really, really easy walk-in-the-park, total cakewalk job that just paid you that money. Because sometimes it's easier for people, if you're used to the framework of being paid from a job, sometimes it's easier to wrap your head around this kind of example. So imagine, imagine that tomorrow you quit your normal job and your spouse or partner quits their normal job and that in place of that, you have some other super easy cakewalk walk-in-the-park job that pays you, whatever, 60 grand a year, whatever it is that you need in order to be financially independent.

Think about what that would look like for your life. Would it mean that you got to travel a lot more? Yeah, totally, because there's nothing keeping you from it. Would it mean that you would probably be a lot more chilled out about whether or not you bought paper towels on sale? Yeah, totally. You probably wouldn't be too worried about the minutia of day-to-day life. life. That's all it would mean. And that's basically what financial independence is. And it's

just that in the case of financial independence, that cakewalk in the park job might be managing your index funds or it might be managing your rental properties. But it would be managing your money rather than trading your time for money in the form of labor. But that's basically what FI is. And it doesn't actually change you that much. Right. Like it gives you, I mean, this is going to be very cheesy. But FI gives you wings and then you still have to decide where you want to fly. Like all you have is wings and wings are like this amazing, beautiful thing and what a privilege to have them. Now where are you going? All right. Any other core takeaways before we wrap this up? I don't think so. I honestly feel like we left it all in the field. Eva, if people want to know

more about you, where can they find you? I occasionally write email newsletters and articles on my site, Emma Patti, E-M-M-A-P-A-T-T-E.com. And I also have an article coming out in the New York Times about money anxiety. So definitely check it out and let me know if you think that I'm a total whack job. Yeah, of course. Of course you're a whack job. But who's not, really? Who's not?

Some of us are just more honest about it than others. Yeah, exactly. Exactly. And we will link to all of that in the show notes. Cool. Thanks, Emma. Yeah, thanks, Paula. Thank you to Emma for spending that time with us.

As you could probably tell from this conversation, Emma and I are very good friends. She's probably the person I relate to the most because it's so rare. That's the thing about doing what we've done. The thing about becoming a real estate investor, reaching financial independence, all of that, is that it can be very isolating. Because the average person on the street has never done this, has never even thought about this. And so you have to develop relationships with other people who are also pursuing financial independence or have reached financial independence because it's the only way that you can connect with other people who understand what you're going through, who can relate to you. Emma and I, I think, have a fairly special bond in that, like I mentioned in the intro, in that we are about the same age-ish and have done the same things. We can pretty confidently say, hey, yeah, we're financially independent.

We have solved for X. Now what? Emma and I very much connect over that, and we've become very good friends over the years. She was the one who flew with me, for those of you who are long-term listeners, you probably remember me telling the story. About a year ago, she and I flew together to Birmingham, Alabama, to look at some rental properties. Both of us are still interested in buying in Alabama. I think both of us think that that's where we're going to make our next move. So anyway, normally at the end of these shows,

I go into key takeaways, we kind of wrapped up that conversation by talking about some of the key takeaways. So there's one more thing that I'm going to touch on, and that is the Maslow hierarchy of needs. For anyone who is not familiar with it, in 1946, a psychologist by the name of Abraham Maslow wrote a paper called A Theory of Human Motivation, which was published in psychological review. And in this paper, he proposed the idea that there is a hierarchy of needs. that people have. And he illustrated this by drawing a pyramid. So at the very bottom of the pyramid, there are physical needs, such as shelter, food, water, air, adequate sleep. Those are our physical needs. And that forms the foundation of everything. And if we don't have that, then nothing else

matters. If you don't have air and you can't breathe, nothing else matters until you get that, right? Same with if you don't have shelter over your head. If you don't have clean drinking water, If you don't have enough food to eat and you're constantly hungry all the time, if you don't have those basic physical needs met, then you can't progress up this hierarchy of needs. You can't progress up this pyramid, right? But once you have that foundation taken care of, then the next level above that is security.

So that's the need for safety and stability. And once you have that taken care of, once you feel as though you are in a safe and stable environment, then you go up one more level into social needs. And so social needs, and this is the middle of the pyramid, is the need to be loved, the need to belong to a group or to a tribe, the need to feel included within your family or within your friend group or within your community.

Those are all of your social needs. And then once you have those taken care of, then the next level up are your ego-driven needs. So the need for self-esteem, the need for recognition, the need for prestige, the need for acclaim. And then once you have that under control, once you feel satisfied with what you've done there, then the top of the pyramid is self-actualization. So the need for personal development, for creativity, for becoming a self-actualized and perhaps spiritual human being. So that is this hierarchy of needs that Abraham Maslow theorized in the 1940s. And that's

what Emma and I were discussing at the end of our conversation. When you talk about financial independence, FI solves for the very bottom of the pyramid. And the point that Emma and I were making, what we were talking about during our conversation, is that just because you're moving further up the pyramid, that doesn't make it any easier. The fact that it's drawn as a pyramid might give you the impression that you can take a those steps a little faster, but you can't. So I don't know, perhaps a pyramid isn't the best analogy. Maybe it's a ladder of needs, with each rung being equally long. Or heck, I mean, for all I know, maybe it's an inverted pyramid. I don't know. I don't know what shape this thing should be in. But what I can tell you, and what I think is maybe the core takeaway of this conversation,

is that FI isn't going to solve all of your problems. FI is going to bring you enough money that you don't have to worry. about paying the electricity bill or filling the refrigerator. And the type of contribution that you make to the world and the type of achievements that you achieve? And your whole definition of the word achievement in the first place, all of that is up to you. That's why I think it's a huge mistake to call it fire. I think it's a huge mistake to lump retiring early in with financial independence.

Because it presupposes that retirement is the goal of financial independence. And retirement isn't necessarily. the goal. The goal may just be to have enough investments that you know that no matter what, even if there are big train wrecks ahead in the next 40, 50, 60, 70 years of your life, that no matter what, at a minimum, your basic needs will be met. That's what FI is about. FI is about knowing that no matter what you have established the bottom rungs of the Maslow Pyramid. Financial independence will give you that. Oh, P.S., I just wanted to add one more thought.

We've talked a lot about financial anxieties and worries. Do you know what gives me a lot of peace of mind? It's not just having money. That's great. But it's also the fact that I have extremely low standards. There's a massive amount of freedom that comes from that. I know that if things got rough, I would be perfectly happy living in a cheap RV parked at some RV park. I have a camper that I bought for $5,200 on eBay.

If things got really rough, I could rent out my condo and just live in that camper. I would park it at an RV park so that it would have electricity and air conditioning for when it's hot, and my housing costs would be $200 a month. It would be the cost of whatever I have to pay the RV park. Add to that the cost of some groceries and some health insurance, and I could be living for less than a grand a month. And there's a lot of freedom that comes from that knowledge. It's not that I want to live like that all the time.

It's that I know I could. There's a certain sense of relief that comes from imagining what frugling down would look like and thinking, yeah, that's not so bad. And that thought comes from having low standards, I suppose, being perfectly happy with the prospect of at least for a year or two going back to living the same. lifestyle that I used to live in my early 20s, knowing that I, maybe it's a bit of a stoic philosophy, knowing that I could do that creates a very large sense of relief. And that knowledge coupled with having a source of passive income, I mean, that's the one to punch. And to me, that's what financial independence is largely all about.

I define financial independence as the point at which your passive income, typically through investments, is enough such that it relieves your financial stress. Or perhaps more broadly, financial independence to me is being in a position in which your financial stress relief isn't dependent on an employer and isn't dependent on a time for. money exchange. To me, and we all have our different definitions of FI, and as you know, I do not even remotely associate it with retirement. To me, FI is when you reach that point at which you just don't feel as though you have to sell your soul anymore. Your soul is yours to keep. So yes, point being, a big part of my relief comes from the rental income, but another big part of my relief comes from knowing that I would be perfectly happy living in a camper or living in an RV for a year or two, not forever, but for a bit. If I needed, if I absolutely had to do that,

I would. And I'd go somewhere beautiful and I'd have a grand old time doing it. I would love to know what your thoughts are. Did this conversation make you more interested in financial independence, less? Did it introduce new ideas or new concepts to you? How did this strike you? How did this resonate with you. I would love to know. Please go on Instagram and let me know. You can find me on Instagram at Paula Pant. That's P-A-U-L-A, P-A-A-P-A-N-T. So again, head to Instagram. Let me know what you thought of today's episode. Now, there are two other things that I would also love to ask you to do. One is to please subscribe to this show in whatever podcast playing device you use. Whether that's Apple, Stitcher, Spotify, whatever it is, please subscribe to this show. So,

so that you can get future episodes. And then the final thing that I'll ask you to do is I'll put a shout out for a fundraiser that we're doing for a nonprofit called Charity Water. So speaking of the Maslow Pyramid of Needs, at the very bottom of that pyramid is having access to fresh, clean drinking water. There are about 700 million people in the world who do not have access to running water from a tap. They don't have access to drinking water that won't make them sick. And so my goal with the Afford Anything community is to raise enough money this year in 2018 that we as Afford Anything can sponsor a water project somewhere in the world. There are two ways you can support it. One is you can make a donation to Charity Water on behalf of the Afford Anything community, and you can do that at afford anything.com slash water.

Again, that's affordanthing.com slash water. The other thing is that we are selling T-shirts and 100% of the profits from the sale of the sale of the money. these shirts go to Charity Water. So you can pick up a shirt by going to afford anything.com slash store. That's afford anything.com slash store. Buy a shirt and know that 100% of the profits from the sale of those shirts will be given as a donation to Charity Water. Let's help some people also establish the bottom of that Maslow hierarchy.

Let's help some people somewhere in the world get that physical need met. Thank you so much for spending this time with us. My name is Paula Pant. I'm the host of the Afford Anything podcast. I'll catch you on Monday.