BiggerPockets Money Podcast - 160: 6 Income Streams with a W2 Job and 4 Kids: Finance Friday with Cort Johnson

Episode Date: January 8, 2021

Many listeners of the BiggerPockets Podcast network are resourceful when saving and earning money, but maybe not quite as resourceful as Cort Johnson. Not only does he have a full-time engineering job, which he uses to support his family, he also has 5 other streams of income on the side! From contract welding projects, to dropshipping, renting out his trailer, and even raising rabbits (seriously!), Cort has done almost everything under the sun to build up his assets. The main problem: some income streams are taking up too much time, while providing too little in return. This is a constant problem that entrepreneurs and FIRE members face, too many options! Mindy and Scott go through Cort Johnson's income, budget, expenses, and general finances to see where he should allocate his time for maximum return. This episode goes deep on the importance of scalable income and following your passions to develop side income streams that you enjoy. Cort dreams big about starting his own business, investing in multifamily property, and living financially free. As you’ll hear in this episode, he’s not far off! In This Episode We Cover How to focus on side income streams that are worth the time Budgeting and expense tracking so you spend less Calculating the value of your time (so you don’t waste it) Why you should “do what you know” if you’re going to start your own business Turning a large single family property into a multi family for house hacking  Why dropshipping is such a great side hustle for busy people And SO Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Check the full show notes here: https://www.biggerpockets.com/moneyshow160 Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast, show number 160, Finance Friday edition, where we interview Court Johnson and talk about FI with a big family. It's really, it's playing to your strengths if you are going to do something like that. It's, you don't just do it and buy a bunch of cheap headphones or something, right? That's the thing that people do a lot of when it comes to that. It's you play to what you know, where have you worked, how can you help people? Because while you worked, you knew that this was a problem. So when I worked as a welder, there were certain things that I knew would make my job easier.

And now I've found those things and I've tried to get them to those people. And so I think that's when it comes to maybe growing a business or doing something. It's what's a problem that you personally have had? And how do you solve that? Because someone else probably has the same one. Hello, hello, hello. My name is Mindy Jensen. And with me, as always, is my index fund investing co-host, Scott Trench.

Ah, that's only an average introduction, Mindy. We'll return with a better one next time. Okay. Scott and I are here to make financial independence less scary, less just for somebody else, and show you that by following the proven steps, you can put yourself on the road to early financial freedom and get money out of the way so you can lead your best life. That's right.

Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business, or simply get ahead with a family of six. We'll help you build a position capable of launching yourself. towards those dreams. Scott, we are back with our second episode of the Finance Friday edition of the Vinker Pockets Money podcast.

I'm super excited for these because this shows listeners how other people are handling their finances. We go through and we look at your income, your expenses, where you are investing, and make suggestions based on our multiple decades of experience handling money. My attorney makes me say, the contents of this podcast are, informational in nature and are not legal or tax advice. And neither Scott nor I nor Bigger Pockets is engaged in the provision of legal tax or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal, tax, and financial

implications of any financial decision you contemplate. That's right. Mindy and I are just entertaining you, not informing you. Now, let's go talk to court about how he should manage his money. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your

entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code Pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves the needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple.

Use the code Pockets at Monarch.com for half off your first year. That's 50% off at Monarch.com code Pockets. I love Matt, said no one ever. Nobody starts a business thinking, you know what would make this. more fun, calculating quarterly estimated taxes. But somehow every small business owner ends up doing it. Your dreams of creating, selling, and growing get replaced by late nights chasing receipts, juggling invoices, and wondering if that bad sushi lunch with Scott counts as a write-off. Change all that with Found. Found is a business banking platform built to take the pain out of managing money. It

automatically tracks expenses, organizes invoices, and even preps you for tax season without you doing the heavy lifting. You can set aside money for business goals, control spending with virtual cards, and find tax write-offs you didn't even know existed. It saves time, money and probably a few years of life expectancy. Found has over 30,000 five-star reviews from owners who say, Sound makes everything easier, expenses, income, profits, taxes, invoices even. So reclaim your time and your sanity. Open a found account for free at found.com.

That's F-O-U-N-D.com. Found is a financial technology company, not a bank. Bank. Banking services are provided by Lead Bank, member FDIC. Don't put this one off. Join thousands of small business owners who have streamlined their finances with Found. Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audiobook completions on Audible alone, and I still regularly

re-listen to the highest impact titles. Lately, I've been listening to Bigger Leaner Stronger for Fitness, the Anxious Generation for Parenting Perspective, and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful as its breadth. Beyond audiobooks, you also get Audible Originals, podcasts, and a massive. back catalog across business, health, parenting, and more, all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years.

Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BP Money. Court Johnson, welcome to the Bigger Pockets Money Podcast Finance Review episode. I'm so excited to talk to you today. How are you? I'm great. Thanks for having me on the show. This is going to be a lot of fun.

Cort Johnson is a married father of four. He is an industrial engineer. And to correct Scott from episode 149 where he says that nobody likes to track their money, court positively lives for it. Court's wife is a stay-at-home mom, but they have six sources of income. Let's take a look at your finances. Let's talk about your income and those six streams of additional income or five streams of additional income. I guess you count one is your W-2.

Yeah. So when I first read the quote or the saying that the average millionaire has seven sources of income, I thought, okay, well, if I want to be a millionaire, I have to have seven sources of income. And so I made that to be a goal. And one of the things that we've tried to do is to diversify where our income is coming from. And those are really small sources. The majority of our income does come from my W2 job as an industrial engineer. But we do a lot of things on the side. So my wife is just absolutely remarkable. And she's like, I'm going to be a stay-at-home mom. This is something I want to do to our four children. But I want to be a stay-at-home mom and earn some money. So what are some ways that we can earn some money? And so we have done, it seems like everything under the sun. But one of our, it's kind of funny, one of our prime sources of income or primary source

of income outside of my W-2 job is we actually raise rabbits for 4-H. And in doing that, we've been able to have some months where we make a couple thousand dollars just depending on four eight shows now with the pandemic here they've kind of slowed down but other other months we've been able to um earn just a few dollars and we use that as to some of our fund money so that's one of our other sources of income the next source of income that we have is we actually started an online drop shipping business and so we recently did that during the pandemic when we thought well people are switching to online what's something we can do while we're sitting in bed after we put the kids to bed that doesn't entail us just sitting there watching TV.

How can we improve our life? And so we've been able to earn a little bit off of that, although it's still kind of getting started. And so it's a little bit of a slower one. Third source of income that we have is I, before I got a degree, I was a welder. And so still on the side, I post on Facebook in Craigslist and I say, I offer welding services to people. And so that technical skill that I learned way back in high school, I've been able to use on the weekends and I use it to get us a little bit of extra fund money. And then the next source of income that we have is we started saving some money and using it to invest. And we've earned a little bit in dividends. And when I talk about the seven sources of income or the six that we have,

most of them are very, very small amounts, but we're hoping that those will add up. And then we also rent out a trailer. And this is something new that we started because we live in Idaho. So we rent out a camp trailer. And the reason why we do that is because I have a friend who once the pandemic started, everybody went camping. And he made $6,000 this summer. And so we decided to rent out our trailer. So we have a lot of sources of income.

Most of it comes from my W-2 job. But we do a lot of little things on the side that contribute to the kind of life we like to live to. So they're not really burdens for us to do those. Awesome. And can we get a ballpark understanding? of your income from your W-2? Yeah, I make about $70,000.

Great. And then what are your expenses? How would you, can you walk us through those and let us know on annual or what does that 70,000 translate to monthly and what are your monthly expenses? Maybe that's the better way to think about it. Yeah, so monthly, just under $6,000 a month. I do sometimes get bonuses and usually, I can my bonuses have made my income a little bit higher recently.

But then as far as our expenses, we, are typically right around $5,000 a month for our expenses. And I keep track of all of our expenses in an Excel file that goes back three years. And so I can say that pretty confidently that we are about $5,000 for expenses. Wonderful. And do you feel that within those expenses, are there, you know, we want to have to dive too deep into them because of the fact that you track them implies to me that you have pretty good command over your budget and your spending if it's that consistent. But is there, do you feel that there's any leverage that we should dive into there or any areas that you think are important to understand in the context to your personal

finances? Yeah, one of the things I've always wondered about is when you start looking at a lot of the numbers provided by, I think the government has some different census numbers and things. The cost to raise a family, it seems so, it's really hard to find information about what other people are doing. And that's one of the reasons why I wanted to be on the show is it's really hard to find out, okay, I've got four kids. How are other people with four kids living? Because when I tell people a little bit about like our grocery budget or things are like, oh, wow, how do you do that? You know, and so I would like to know a little bit more about how other people are spending when they have a large family. Okay. So you do think that there's leverage and your

spending in particular that will help you drive your wealth position forward. Is that, is that right? Yeah, I do think there's some areas that we can cut for sure. sure. Okay, great. Great. That will be, that's good there. Then we'll spend a lot of time on that. I also want to walk through some of these income ideas and help with the framework around that because it seems like you're dedicating a lot of energy to that. And there's probably some leverage there between you and your wife as well. Can you walk us through your assets and debts? Yeah, so pretty typical family, I would say. We consider one of our bigger assets to be our 401K. and that's something we do max out every single year.

And I haven't spent a lot of time learning about investing all the last three years. And so I still don't exactly know. So 401K, we have about $140,000 in that, I think. And then we have about $20,000 in a betterment account. Again, one of those things, I didn't know a lot about investing. I found this is a nice easy way where I could just put money in and not have to think about it.

So do have about $20,000 in the Betterman account. And then I don't know if we want to call it an asset depending on, but we have our house with about $100,000 in equity in our home, sometimes assets, sometimes liability, just depending on who you're talking to right there. So that's what our asset allocation looks like. And then as far as cash in the bank, we keep about three months. The reason why we keep a pretty low amount is because we live in an area with about a 2% unemployment rate.

And because we do have so many skills, I can get a job. almost anywhere as a welder and still maintain our family. Great. That's awesome. Any debts against that? Yep. So we have our mortgage. And then we do have one car payment that is about, I think it's $286 a month.

And then we do have a payment on our camper. And again, we have the cash maybe to pay both of those off. But because of our kind of financial situation, we got such low interest rates. We were trying to decide if it was worth paying those off or not. Because we do use the camper as an asset, since it is sitting there and it does earn us money some months, we decided not to pay that off right away. Great. Last kind of, I guess the big question here is like the specific goal, what is it that you're looking to achieve and what's your kind of timeline for that with your finances? Yeah, so I discovered the fire community about three years ago. So I was

a little bit late to the game. I discovered it when I was 30. I'm 33 now. I already had three kids at that time and I thought, oh boy, I don't know if I can do all the things that the fire community is doing, but I was like, but this sounds really, really cool. These are my kind of people, even if I'm late to the game. I discovered it maybe a little bit late. And again, not that late because I'm only 33. But what I'd like to do is be able to spend more time with my family. That's, that's my priority is, okay, how can I spend more time with my family and make sure that my children have the kind of life that maybe I didn't have growing up because I grew up in a single-family or a single-income,

a single-parent family where my mom didn't have a lot of time with me as a kid. And so I want to be able to have time with my children is my number one goal of my finance journey. Awesome. Love it. So I have some questions. You said that you have a rabbit breeding business for 4-H, and 4-H has been affected by COVID. Is there any opportunity to increase this to other? avenues. I know that some people eat rabbit. So is there any opportunity to breed rabbits for

local restaurants or something like that? Is Samwise Gamji? I'm sorry, I'm just, I do a lot of people eat rabbit? I don't know. Some people eat. I don't eat it, but some people do. I'm not here to judge people who eat rabbits. I'm here to help court find more places to generate income. Or is there another animal that you could breed to generate income? So because I live in city limits and I live on about a quarter of an acre lot, I can't get a lot of other animals, but I'm glad you brought that up, Mindy, about possible meat sales. I didn't want to say that maybe without somebody bringing it up first, but yeah, so I make a lot more off of the 4-H animals, and I like that because then it gets the kids involved. But the ones that I don't sell to 4-H, I actually have a local person who takes them to a

butcher and he will take them for about a dollar 50 a pound. So no matter what, I do make money off of them, but I'd rather sell them for $30 or $40 to a 4-H person that's going to use them and win prizes than tell them to the butcher. But yes, the butcher will actually buy them from me. So no matter what, I can at least earn about 5% over my costs at the lowest. Okay. You look, I've been, I've been, I made a couple of mistakes here. I'm humbled here with that. I'm sorry. I didn't realize that was a thing. And wow. Yeah. Scott's a city boy. Yeah. What about chickens?

Are there any restrictions on your house in your area for chickens? Because eggs are a big source. I mean, I don't know about Idaho, but in Colorado, I can get farm fresh eggs for the low, low price of $7 a dozen, which is, yeah, ridiculous in my opinion. So I'm not getting farm fresh eggs. And I live in a neighborhood that doesn't allow chickens. So I actually petitioned our city council to allow chickens. Unfortunately, they only allow four. So we do have five because we just had one that I assume would die.

But yeah, we do chickens as well, actually. But the eggs are such a small amount that I almost didn't consider the income. Okay. Do you sell the eggs? We do. Okay. We'll have more trade them. But yeah, we sell more trade them for other things.

Oh, that's a good tradeoff. I didn't even mean to make a joke like that, Scott. And you said that you're drop shipping items on online. What is it that you're drop shipping? So we've mostly started with outdoor gear. A really cool thing about drop shipping that we learned, and we just picked this up during the middle of this pandemic because we just thought, wow, this is where the market is headed.

It's e-commerce. The really cool thing that we've learned is that you really want to just, when it comes to drop-shipping, drop-ship what you know. So we do outdoor items because we live in an outdoor area, and then I do welding supply items. And I've actually had a lot of good success selling welding supply type stuff and industrial stuff because of really. what I know. I know outdoors and I know welding. So those are the things that we found do well.

My wife knows things that mother's like. And so she's doing well with that. That is probably the best piece of advice if you're looking to start a business or like a drop shipping business. Do what you know. Don't try to go do something weird that you've never heard of, but you think it might make money because you could be stepping into a big pile of rabbit dung. Sorry, I'm not as good as Scott. I think it was great. I'm trying to think that was kicking out the jokes. Moving on from these bad rabbit puns. On the income front, if I'm zooming back out here and thinking through this, it seems to me you have the right mentality.

I love it around wanting the seven income streams and getting towards those. I personally have about seven income streams with that, and I think it's a great goal to move towards that. but it appears to me, and I want to get more context in this, that it might be better serving to focus really heavily on one and getting that to be meaningful, stabilizing it, and then moving on to the next one and the next one and the next one at that. Is that how you're approaching it, or are you kind of try in your hand at a bunch right now and seeing what sticks? What's kind of the goal there with these income streams? I would say, Scott, you're probably right. The way we should do it, we should probably focus on one. we tend to kind of move around with those quite a bit.

Now, the rabbits, we've been doing that for about 11 years. The welding, obviously, I've been doing that all throughout. So these are things that I feel like I've kind of mastered but not learned how to scale. And that's the really critical part. These are all things that, yeah, I can do them, but if I stop doing them tomorrow, there goes the income. So they're really not very passive. Which one of your income streams that you're approaching right now? Or do you think it has the potential to be scale?

and made passive within the next year or two? Within the next year or two, I wouldn't say maybe any of them. Ultimately, one of the things I kind of failed to mention in my goals is I'd like to own my own fabrication shop. And so that's one that I think within the next 10 years has a really good chance of becoming a lifelong way of earning money, having people work for me, teaching people, and doing some fabrication there. So that's probably the one that has the biggest potential.

in the shortest amount of time, I would say, due to my circumstances. Great. So what I'm gathering here is that your main source of income is your job. Everything else can contribute. And sometimes you do get nice boost from it. But it's not really your path out. It's not really your path towards accelerating FI in a meaningful way. This potential business is really what you think is your potential to accelerate your financial wealth

as your big bet at some point in the future. Is that a good summary? Yeah. So what I'm trying to do is develop enough to replace my W-2 job now so that I don't have to worry if I were to go out on my own and be like, oh, I can't feed my family because that's the most important thing to me right now. Walk me through with the welding. What is that?

Is that effectively trading your time for money in doing welding, like specifically? Yeah, absolutely. So, you know, I charge people generally an hourly rate. And it does really want. well, but it would be really nice if I was the one teaching other people how to do the welding so that they could be the ones to go out and trade their time for the money. Love it. And so let me ask you this, if you were to do welding full time right now, what would that look like from an income perspective? Have you thought about that?

Yeah, if it was just me, good chance I could go out there and probably make $80,000 to $90,000 a year. So just me by myself, that's a pretty realistic number there. that's about the limit you're going to get with that. Okay. Great. Thank you for that. So it sounds like you do have multiple career options right now. And then again, I just asking about the income side because it seems like there's some leverage here, but not a chance to double it in the near future meaningfully or whatever. And that the way to do that would be to begin working towards this potential goal of starting that business that you just outlined. Is that right? Am I right in thinking that in terms of how you're assessing the situation?

Yeah, yeah, I think you're right there. Okay, great. So I think for my perspective, that brings us back to the expense side of the equation. And the reason for that is it seems like if that's the goal, if the goal is spend more time with the family and potentially build this business, you know, or build towards a business, then by cutting back on the expenses and building up that nest egg and making sure that you are very comfortable with the, that, you know, moving towards that thing of like, when is I, I don't know, I'm making this up right here. but I'm assuming several things. But it sounds like there's a trajectory coming together of moving generally over the next couple of years in the direction of being able to start that business and piling up enough funds to have a good capitalization for something like that.

Is that generally right? Am I putting that together correctly? Yeah, yeah. And so part of the reason why we do so many little things, right, is we're trying to contribute all of these little things either in cutting our expenses or increasing our income slightly so that we have enough so that, you know, you talk about in your book, the financial runway basically,

so that if I start a business that doesn't work for the first year or two, which is pretty standard, we wouldn't be left out on the street. Love it. That's a really crystal clear vision, and I think that's fantastic with that. And so from that, I love it. You're doing all the right things conceptually with this on both sides of these. We've just dived into the income front, and it sounds like you kind of know what to do there in order to optimize your income,

keep trying these different things, really think of through what's scalable, what you can focus on, what can either generate a ton of income in the short run or provide scalable income in the long-term to offset that and keep saving up that money. Do you want to turn to expenses here and walk us through what you think, what you're spending there and how we can get going on that? Or Mind you have a question. Yeah, I want to jump in really quick here because I think that we might be missing a bit of an opportunity in the drop shipping aspect.

the rabbit thing seems to have been put on hold, but it also seems like you recognize this and aren't investing a lot in baby rabbits or however you get rabbits to continue selling them right now. But drop shipping, for those who aren't listening, and correct me if I'm wrong, court, but drop shipping means that you don't take possession of the product. You sell it through some other third-party website

and then somebody ships it to that person. And you don't have like a garage full of welding supplies that you're trying to sell. Is that correct? Correct. So you talk to wholesalers and manufacturers and then they will ship it out for you. And you set up kind of a business need with them. You have to set up an LLC and be official. And once doing that, then you set it up and just say, hey, I'm going to be fulfilling

orders. What's your minimum order quantity? And if it is one, then you can use that wholesale. seller or that manufacturer to send that to somebody else. And they'll buy it off of eBay, Amazon, Facebook. Those are the big places where people are buying stuff or a Shopify store. Okay. So it seems like you do the setup once and then it just keeps repeating the sales afterwards.

You don't have to continually set up the product and continually interact with customers, correct? Yep, that is correct. And so that's a lot more scalable than just some of the other side things that we're doing. Yeah, that seems like an opportunity to really look into that. And what does it cost you to add one product to your line on eBay or Amazon? I'm assuming that it costs very little or almost nothing to add another product. Yeah, just to add the item typically is a dollar or two.

Okay. And then that just continually sells. It's not a dollar every time you sell it. It's a dollar to add the item. And then they take the fee if it sells, but just to make a posting or a listing or something like that, it typically costs you anywhere from 20 cents to maybe $2. Okay.

So that seems like an opportunity for your wife, who is a stay-at-home mom, to add things. Maybe you make the welding decision. So you add widgets one through five. hey, honey, I would like these added to the list. She adds those every week. She adds five more items or ten more items. And that's just another thing that could be sold that you're not touching, that you're

not doing anything with, but is still potentially generating income. Scott, I don't know any place to go research this information. Do you know of a drop shipping course? My instinct tells if I Google it, I'm going to find a lot of people offering to sell information on that topic and it's going to be hard to tell who's how do you find information court so far trial and error because there is a lot of people that are selling courses we actually bought one to start and got lucky with it um but it was a hundred dollars but then i've seen a lot of other ones where people say they got burned really bad and so i wouldn't really say go and buy something on the interview

because like you said scott there's so many people out there that that think that they're doing it semi-successfully and, you know, I wouldn't feel comfortable making a course about it even now, but there's a lot of people out there that definitely will say something that may or may not work. Yeah, I'm not familiar enough with the concept by a specific drop shipping business line there. But I am interested to see, Cort, how you feel about the scalability of that business line. I think of all of the things that we're doing, that is the most scalable thing that we are doing right now that we could turn into something. And another reason why it works for us is because I failed to mention earlier, but I actually used to manage a welding supply store. So I already

knew contractors and wholesalers and people. And so again, it's sticking kind of what you know a little bit that gave me maybe a little bit more edge than somebody who's just researching this for the first time. Great. Well, my encouragement here would be to, look, you're doing all these different things, which are sucking a lot of time. And your time is valuable. You're, you're an engineer and you have multiple sources of income with this stuff, make sure that you're really being calculated about that and saying, hey, this drop shipping business, I'm investing my time in it because it's scalable and it's more or less valuable than these other income streams that I'm working on right now. I'm going to make sure that my time is being directed towards

this. We just had a similar conversation about the value of time recently as well on show 158, but it's about really understanding like, hey, if my time is worth, I don't know, $35, $40 an hour, and I'm not going to do $10 an hour work unless it is, I might work for free to build a scalable income stream later because, you know, I'm not getting value. I'm not getting paid right now, but I'm going to get paid downstream. But understanding like, hey, if some of these income streams are taking too much time and the dollar per hour is too low, how do you translate that to the ones that you think are the best opportunities and set really specific measurable goals for those income streams, perhaps job shipping.

I also want to explore the welding a little bit. Is this like industrial welding, repair type welding, or is this artistic welding? So the welding that I do is kind of anything and everything for people. Generally, though, it's more artistic. When you get into industrial, you have to have insurance and other, you actually have a business set up, you know, have insurance and licensing and other things. And so the welding that I do is generally just people needing minor repairs or some artistic things. Do we want position to the expense side of things? Yes, let's look at your expenses because you can't change your finances if we don't look at your expenses first and see if there's anything to cut. Yeah, I think that that's beneficial to look at the expenses because, again, not a lot of resources out there for people that have four children to understand, okay, what do these kids really cost me and reduce some of that?

So tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going and more importantly where your tax refund can make the biggest impact. Because the goal isn't just to look backward. It's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop.

Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code Pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in Edle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code pockets at Monarch.com for half off your first year. That's 50% off at Monarch.com.

pockets. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed's sponsored jobs helps you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored posts. The best part? No monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring

right now with Indeed. And listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash bigger pockets. Just go to Indeed.com slash bigger pockets right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash bigger pockets. Terms and conditions apply. Hiring, indeed, is all you need. When you want more, start your business with Northwest Registered Agent and get access to thousands of free guides, tools, and legal forms to help you launch and protect your business all in one place.

Build your complete business identity with Northwest today. Northwest Registered Agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They're the largest registered agent and LLC service in the U.S. with over 1,500 corporate guides, who are real people who know your local laws and can help you and your business every step of the way. makes life easy for business owners. They don't just help you form your business. They give you the free tools you need after you form it, like operating agreements, meeting minutes, and thousands

of how-to guides that explain the complicated ins and outs of running a business. And with Northwest, privacy is automatic. They never sell your data. And all services are handled in-house, because privacy by default is their pledge to all customers. Visit Northwest Registeredagent.com and start building something amazing. Get more with Northwest Registered Agent at Northwest registered agent.com slash money free. At Desjardin, our business is helping yours. We are here to support your business

through every stage of growth, from your first pitch to your first acquisition. Whether it's improving cash flow or exploring investment banking solutions, with Desjardin business, it's all under one roof. So join the more than 400,000 Canadian entrepreneurs who already count on us

and contact Desjardin today. We'd love to talk. Business. Let's start with the big housing, transportation, and groceries. Can you walk us through what you're doing for housing? Whether you think there's opportunity to cut that is, have you considered house hacking and other types of things, or what's on the table and what's not worth your housing for you?

Yeah, so when it comes to housing, we do live in a six-bedroom house, and because of where we live in Idaho, a six-bedroom house costs about $180,000. And so for most people, I don't think that they're going to be able to something that's quite priced that low. But one of the reasons why we got our house as cheap as we did is we chose to live on the busiest street in town. And so we, because of our credit scores and things, we were able to purchase a house

probably twice as much of what we did buy for. So we bought a house on a busy street where it's a little bit less desirable. And I feel like that has helped to decrease our housing expense pretty significantly. Okay, great. So, I mean, look, you have four kids. I don't think that there's a lot more. can really do on the housing expense that occurs to me on that front in the short run. But Mindy, what are you thinking about that?

No, I think that that is probably going to be the best. I mean, you could house hack. You can. I mean, do you want to move into a smaller house? No. And frankly, when did you buy the house? About three years ago. Okay.

So it's probably appreciated in the last three years, meaning other houses have also appreciated. so you're not going to be able to get another house for less now. It doesn't make any sense to do anything with this house right now other than continue to live in it. I am not a big fan of buying on a busy street simply because it is less desirable and it is more difficult to sell. You will most likely sell for less, but also you bought it for less. So, you know, there's a tradeoff. Do you have a big backyard for the kids to play in? We do.

Okay. And that's, you know, that's better than play. playing in the street. Yes, exactly. Your, let's see, food, I would expect a family of four to be, I'm sorry, a family of six to be having a lot of food and you've got a $700

grocery budget? Yeah, and that's groceries and like toilet paper and bath soap. That's $175 a week. How do you live off of that? What are you eating rice and beans and peanut butter and jelly? No, we actually eat pretty good. You know, you guys were asking me because I sent my food bill over there and said, well, what happened in July? We bought a beef cow. And so in doing that, we were able to buy beef for roughly, I think I spent $2.80 a pound. And that will last us for about

six to nine months. And so definitely the buying in bulk is a big thing there for us. The other thing is we do live in Idaho. So potatoes are free. You can find potatoes literally anywhere. So a lot of meat and potatoes in our family. Fair enough. So look, it looks like you've very kindly provided a lot of this detail. And so I was able to kind of look through it and say, hey, home, you've got some home expenses, you've got some mortgage expenses, you've got pets, you've got taxes, utilities. And that all adds up to about 33, 35% of your overall spend there.

And it seems like you're very reasonable with what you've chosen for your housing. in terms of cost and very cost-conscious went well below your means in those types of things. There's always ways to hack that off by even downgrading or house hacking or those types of things. But it sounds like, you know, what is your thoughts on that? Are you feeling pretty good about that? Or do you feel like that's something that you about your current housing situation? Or do you feel like that's something you want to explore in more depth? Yeah.

You know, like our current housing situation, we could move into something smaller. And we've actually considered possibly just buying a new house every year or two and using that and then saving the other house because we are able to save as much as we save. And so we've thought about that as a house hacking strategy that we can get them all at, you know, that five to 10% down as opposed to putting maybe 20% down. And so we're in the process right now of trying to find that great deal so that we could possibly do that and then keep this next house as a rental. I got to check my assumptions here because it seems like everything's on the table. table for you. And that is one. And I love that. That's a potentially great strategy. You're going to have a unique set of characteristics as a landlord with six bedroom houses, for example, in places like that. So I would just encourage you to do some research, look around and say, who else is renting properties with that

many bedrooms in this area? How is that different or more difficult or less difficult? There's going to be advantages and disadvantages too. Yeah. And one of the things that we were looking at doing while we are here in the house is actually splitting because we have an upstairs in a basement, splitting those into two different levels because most people don't need that much room. And then we could go ahead and split this and make it into a multifamily and do the same thing. And so that's what we're looking for with our next property currently is we're looking for a property that we could split into another multi-family because most people don't need the rooms that we have. You rock. That's something that a lot of people, I wonder if a lot of people

with large families would be willing to consider. And I think that's a fantastic thing. That, you know, again, doing the big pie chart of your expenses, this is the big one on it. And if you can find a way to get a tremendous amount of that back by converting the house into an asset every time you move, that's going to make a major difference over a period of three, five, ten years after you do this a couple cycles. And that causes me to rescind my comment about not liking busy streets because multifamily properties are typically found on busy streets. and zoning I have found is more lenient on a busy street.

The city will be more lenient with allowing you to rezone the property in most cases. I don't know. Have you checked the zoning on this property? Yeah, yeah, I have. And it's something that we could do. Like I said, I'm trying to find a way to convert it. We have a upstairs and a basement. So I would have to add a kitchen to the basement.

And in looking at our next house, we've been here for three years. like I mentioned, our next plan is to find the next house and we won't settle for a house that we can't also split into a multifamily. So that's our next goal. Wonderful. That's a fantastic plan there. Are you going to do the work yourself? Yes, and with a friend, but I am pretty handy. Like I said, I come from a welding and somewhat construction background when I was right out of high school. Nice. Love it. That's going to have an, you know, I would be interested to see, you know, Maybe that's something to use where you do an analysis on your home or whatever and you see,

what is it worth today? What's it going to be worth after I make these changes? What's the cash flow going to be? There might be a really high dollar per hour leverage of your time in that conversion process as well. So that might be a really, when you're thinking about ways to concentrate your time on these income streams, wow, turning your housing into an income stream could be a particularly big one for you. I would also look into bartering your welding services with other trades men who don't have the welding services. So an electrician, if you don't do electricity or plumbing, but I think you would do plumbing. Do you do plumbing?

I've never really tried it. I unclogged the toilet a lot because I have four kids and unfortunately a lot of toys end up in the toilet. Don't tell Scott. He thinks kids are easy. That's right. No problem. No toys have ever ended up in the toilet. Never.

Oh, geez. Yeah, Scott, it's super easy. You know, bartering your skills and services with tradespeople who don't have the same skills or services is an excellent use of your time. Then you start to grow your network. And then when you have an issue, you can contact an electrician who will actually call you back. It's nice. Scott and I were just having this conversation earlier about how it's difficult to get a contractor to call you back. Yes.

I think you've got a great plan for housing. And I wouldn't add too much to it, frankly, from my perspective about it other than kind of the great points Mindy made. but at the highest level, your strategy seems incredibly sound and I think is really effective. And I think your kids are going to learn a lot as you do this about why you're doing it and the power that it has over your lives. Let's move on to car and transportation here. That seems like another big one for you. Do you do a lot of commuting for work? No, I go about three miles.

So I do generally ride my bike most places. You know, I know that's a big one that people talk about. But unfortunately, we haven't figured out. We figured it out. We just haven't wanted to get rid of the second car yet. With a large family, of course, comes a large vehicle. And my wife is a big fan of minivans. I'm not.

And so, unfortunately, I should sell my SUV, but I haven't yet because we use it to pull the trailer. But we have such a small camp trailer that our minivan could pull it. So I do plan on possibly getting rid of that SUV because when I go to work, it's just me. And on the days where I don't ride my bike, I'm driving a huge vehicle, even though it's only three miles. That three miles back and forth to work adds up to, I think I've done the math on it. And I think it ends up being close to because of how much spent about $3 a day. Okay. So it sounds like there's some room for improvement here.

But, you know, walk us to the SUV. it sounds like the minivan is necessary for the family. Walk us to the SUV and the numbers on that and how you think that's what are the, what do you have a debt associated with that, for example? Do you have a value associated with it? No debt associated with it. We just paid cash for it. And a two-wheel drive vehicle in Idaho is usually not recommended.

And so that's why we got it as cheap as we did. But also, again, it kind of goes back to what Mindy was saying about housing. We bought a cheap house. We'll sell it cheap. Same goes for the vehicle. It's probably not worth much here in Idaho, but I've thought maybe I take it down to Las Vegas and sell it down there or something because it's a two-wheel drive expedition, which in Idaho does not really work for most people. It could be worth it to drive it down to Las Vegas and sell it, although you have a Ford expedition? Yeah. That's not a small vehicle.

No, it's not. Okay, I'm telling you, sell that. Get rid of that liability. Yes, you do not need that. that you can sell that in Las Vegas where they don't need four-wheel drive. Sell it and buy yourself a little Honda Accord from 1992. I'd even go even better than that. I'd probably just get an e-bike because I ride my bike in snowstorms and hot summer days alike. Oh, okay. Well, then ride your bike all the time.

Have your wife drop you off if it's a really, really, really awful day. Yeah. Okay. Yes, sell that car. And let me take another one here. I'm looking at the rest of your budget here. And I've got, sorry, I'm trying to break this out. But we've got categories for camping clothes, eating out, kids' expense and kids,

wife, fun, those types of things. And I would lump those all together. And I'm trying to get this all out here in one thing. But like we've got wife fun, kids fun, kids' expense. Yeah, his kids' expenses, things like school-related costs mostly. Okay, so that's not fun. Those are necessities. Yeah, yeah, it's more school-related costs as opposed to, like, kids' fun would be things like toys.

Okay, so I think, I think, look, looking at your numbers, I'm about, I think I'm just, I think I got the A key discussion point here, but we've got gifts, family fun, entertainment, eating out, and clothes. and I'm seeing those as a significant set of expenses here in your overall budget. Can you walk me through kind of how you break those out or whether you budget for those or how you think about those categories? Yeah, so the reason why, you know, this is our actual expenses here that you're, but that you're looking at. And, you know, when it comes to those categories, we're pretty minimal. You mentioned eating out pretty minimal there, roughly $2.50 a month to $1,000.

to feed a family of six is pretty reasonable, I feel like. And then same clothing. We buy a lot of the kids' clothing at second-hand stores just because my kids are young and they don't care. They do not care what they wear. But then, yeah, when you get to the gifts, those are usually gifts for other people outside of our family. We do have a little bit of expense there.

And then some of the kids' fun and some of the family fun things are areas where I feel like we could cut because we don't have to spend a lot just because of the area that we live. we have a lot of fun, maybe not going out and spending a lot of money, but just going to parks, going to the mountains, doing things like that. So we could definitely cut some areas there. I think what would be helpful there is to, well, I'm struggling here because you're so

optimal in a lot of cases and you seem like you're doing so many reasonable things and leveraging the big ones that I'm struggling with what's the best way to give you advice on how to do it other than kind of keep going. That's what being my wife talked about all the time. We're like, we're doing everything right. Yeah. But you mentioned in your book again, we're doing everything right. And we will achieve financial independence probably by the time we're 50. So to have quite a bit of money saved by then. And I think maybe one of the things that people call with the fire movement or anything like that, they think, oh, I've got to do this by the time I'm 30. Well, I'm already past 30. And so really it's going to happen. And I just, me, I'm like, if I'm a small, doing it. these optimals for a period of 10 or so years, the nest egg builds. You know, I mentioned that $120,000, I think that we have in our 401K.

We only started contributing to that about three and a half years ago. And so it's actually grown pretty quick. And so with the expenses, I think the number one is you look at it and realize, hey, tracking these expenses works because as we've tracked them, we're still able to save money, making, you know, 70,000 to 80,000, a little bit more, depending on our side hustles. But we're still able to save money for the future. It's going to come a little bit slower when you have four kids, but it's still something that will come.

And I think that's kind of the message that I see right now. But like you said, it's difficult to cut more when you have so many responsibilities. Yeah. Look, I think you're doing an admirable job here, bringing in $70,000 a year. and accumulating what appears to be $30,000 or $40,000 a year in wealth. Is that, am I wrong on that directionally? Or is that what you're doing with the 401K contributions and that kind of stuff? Yeah, you're absolutely right.

It's about $30,000 or so that we're saving with that. I think that's incredibly impressive and that your budget here is pretty tightly kept and pretty reasonable. I don't know what you're thinking. I think there's tips and tactics and you should continue diving in those. And I'm sure you'll be able to find even more to car. carve out of there over time and to continue to accelerate that. But I think you're on the right track with all that kind of stuff. And that brings us back to the income generation side of things and

thinking and just being creative and continuing to take the correct shots, but with the right amount of concentration. So you're balancing that time with your family and the income generation. I love that you're putting all the money in the 401k and that you're starting to invest outside of that. You've got a reasonable emergency reserve with those types of things. And yeah, I'm just incredibly impressed with how you run your household from my seat. I don't know. What's your reaction, Mindy? Yeah, I'm looking and I don't see a lot of opportunity to cut expenses. I do see some opportunity for income generation with the drop shipping and the welding that we were talking about. I really like the drop shipping business model because it's so not hands off, but like light hands.

You don't really have to do much. And you never have to take possession of the product, which is huge. I would like to see you expand your offerings. And, you know, just look at what other people are selling on their welding supply companies. There was, oh, I am drawing a blank who I was talking to. They sold this one little widget for this one little tiny thing, like this one little tiny niche of business. But they were the only one who sold it. So they sold a ton of it.

Is there a product that's difficult to get that other people are having a hard time getting that maybe you could find a supplier for and crank that out? Well, I think you're right, Mindy, there's a lot of products like that, right? There's customers, people that want a lot of things. I know a guy who became a millionaire selling flagpole holders for ATVs. And it's just that was his, he just took a piece of metal and he bent it and folded it. and that was that. And it worked out really well for him. And so, yeah, it's finding that thing, right? That's the real challenge there. It's finding that. You know, my neighbor has an American flag

outside his house. It's about 12 feet. And I've been wanting to get one that's 14 feet high for a really long period of time. So if you could sell something that's just like, hey, a little bit taller than you're, I don't know. That's called Keeping Up with the Joneses, Scott. I don't recommend it. That's right. Yeah. I'm not taking my own medicine there. No, look, I think that's right. I think it's about finding that creativity there and playing to your strengths and being really conscious about the time and thinking about that. I love that we have a good idea of that that sparked some creativity around selling the products that you and your peers are making around that on Etsy or wherever there might be opportunity for that. But yeah, I think I think that's the key. I don't have big changes I'd make to your investors. approach to your budget again. And it sounds like you're in a great income and have a high set of skills here. It sounds like you run a really tight ship and have a wonderful family and life with it. And so I think you're doing all the right things. As much as I'd love to give you the secret

sauce that will turn the corner next year, I mean, you're going to get rich pretty quick. And if you apply this formula and if you hit a lucky stroke, not even lucky stroke, if you bring some discipline and find the right scalable business model, you might achieve that FI that much faster than your base rate implies. And get rid of that truck. Got it. But yeah, that's the biggest percentage, I think, change you can make in your budget right now. But it's what?

It's going to be like a four or five or six percent boost to your savings rate, something like that. Yeah, possibly around there. Yeah. Yeah, I don't think there's much to cut. But I think that your drop shipping idea is, it can explode and go really, really far. Your wife does, what did you say? She does mom.

How did you phrase it? Things that other stay-at-home moms like. I don't exactly know. And again, you know, we talked about with that, it's really, it's playing to your strengths. If you are going to do something like that, it's you don't just do it and buy a bunch of, you know, cheap headphones or something, right?

That's the thing that people do a lot of when it comes to that. it's you play to what you know, where have you worked, how can you help people? Because while you worked, you knew that this was a problem. So when I worked as a welder, there were certain things that I knew would make my job easier. And now I've found those things and I've tried to get them to those people. And so I think that's when it comes to maybe growing a business or doing something. It's what's a problem that you personally have had and how do you solve that? Because someone else probably has the same one.

Yes, yes, yes. Exclamation point behind all of that. That was fabulous. Okay, Cort, this was really fun. This was really interesting to look into the different ways that you have started to generate income and the different, like the mindset that you have that you need to have more income streams, I think is really important for other people who are on the Pathify. Don't just count on your W-2 job.

Look at other things that you know to add income and add stability to. your financial future. Yeah. Look, I think this is great. I'm almost kind of like, I'm impressed, I'm amazed, I think you do it, and all the right things. I'm almost, you know, frustrated at how disciplined and how wonderful your approach to personal finance is. And that by digging through it, I'm not able to find much that I think you could do to optimize it outside of what you're currently doing, given the circumstances. that you presented. I think you've got it all in the right track. It's going to be some tweaks.

And if you stay disciplined on this front and continue to focus on that income side, that things are going to work out really, really well for you and your family with this approach. Yeah, I appreciate that because, yeah, my wife and I, we talk about this and we talk about, okay, what does our future look like? How do we get there? And what can we do while we still maintain the life that we want to live right now? And when I told her, I said, hey, I'm going to be on the Bigger Pockets Money show, she said, oh, that's awesome. She's like, they're probably not going to be able to tell you a whole lot. And I said, no, these are experts.

They're going to be able to tell us everything there is to know. And just in talking to you, Mindy, you've helped me to open my eyes and same Scott, you help me realize, oh, wait a minute, what are the things I'm doing that are linear versus the things that I can change exponentially where I hadn't thought of that approach before? And, you know, just one of the things I think that's been so key to this success that's maybe dumbfounded you guys a little bit is just, detracking it. You know, when people want to lose weight, they count calories. When you want to

become a millionaire, you count pennies. And you just kind of see where they're going. And then you can find a place to put them to work. So, love it. I love that. And I love the exponential thing. That's a key. Your formula right now, you should project it like an engineer linearly as if it's nothing's going to change and see how that run rates and make sure that you're on track with that. But know that if you keep doing what you're doing, raises incoming other, sources of income, investment opportunities outside of the norm, those types of things are all going to contribute to accelerate this. So you're not as far as your model will suggest away from FI, and you will get some tailwinds, I believe, over the next couple of years if you keep doing what

you're doing and applying that creative mindset to your problems here. You know, I think we have kind of discounted the fact that he is so laser focused on keeping track of what's going on. When you're not paying attention to where your money's going, it kind of just goes wherever. But when you know that it has to go here and it has to go here and it has to go here, or when you're tracking it and you're writing down, oh, I just spent how much at the grocery store?

I really need to pull back next week. When it's conscious in your mind, you will continue to think about it and you will continue to act appropriately with your finances, just like the losing weight thing. That was great, counting pennies. I love that. I just made it up, so I'm glad you loved it.

Yeah, no, that's fabulous. But yeah, when you're on a diet, all you can think about is being on a diet. And, oh, I can't eat that butterfinger because that's, you know, it's this big, but it's got 400 calories in it. And I can't drink that Coke and I can't, you know, do all of these things. It's always conscious in your mind. And when you're paying attention to your finances, it's going to be conscious in your mind. And it isn't so much, you know, oh, I can't spend money on that. It turns into an, oh, how much money can I not spend this week?

how can I cut my expenses more? It starts to become a game. And I think you've really done a good job with your game. You've won. I appreciate that. Yeah, I feel like maybe we haven't won yet, but we've got a good strategy that's a winning. You're almost there.

Yeah. You will win. You're in this grind period. You know, you've optimized, you've got everything together. And now it's just a matter of letting some years go by on terms of your overall formula and see if you can't speed that up with with additional these layered things are layering in. And in the meantime, make sure that you, I think, enjoy stopping smell the roses.

Something I didn't do by first few years of five as I went all out. Of course, I didn't have a family at that point. But yeah, I think that that's the key is you're on the right track with this, man. I think it's only a matter of time. Yep. Cort, thank you so much today for sharing your financial picture with us and your expenses and your different philosophies. I think this is going to be very helpful to a lot of people who are listening and thinking, how can I reach financial dependence with even just one kid? Well,

you can do it. You just have to be conscious and track your spending. Yeah. Thank you so much, Court. Yeah. That was Cort Johnson. Scott, what did you think? I thought it was a wonderful show and a frustrating show for me because what I look forward to at these is I love it when there's a problem to uncover and to figure out and like, oh, yeah, there it is. We're able to identify the big problem in the picture and make a big change on it. And you know what? I think court is really on top of it. And there's a couple of things that we were able to uncover that will help tweak his position potentially and maybe give him some ideas to move him forward. But there wasn't like a big set of like new frameworks that we were able to hand court, I think, in terms to overall his financial

situation. So I'm just impressed at the way he manages his finances. I think he's on the right track with a lot of these things. And I don't know, you know, I think that that's, that he's, he's going to become wealthy pretty quick here. I agree. And I think the word tweak is the right word to describe the advice we gave him. I think little tiny tweaks here and there are going to have huge impacts on his finances. Absolutely. Yeah. So I think I think it's great. And I think it was, it was very good to review someone's finances who's in such good shape with that. You learn a lot. He's probably more disciplined than me on a lot of his spending by a lot, actually. It probably is. Yeah. So great, good for court and very impressive. And yeah, I think hopefully that helps a lot of people.

I mean, if you can save $30,000, $40,000 or build that kind of wealth annually with the family of six, I think a lot of other people can too. I could not agree more. Scott, towards the end of the episode, we told some ninja jokes, but I don't really like ninja jokes because I never see them coming. Oh, man, you just snuck that right in there. I love it. This was our second finance review episode, and we had a really great time chatting with court. If you would like for Scott and I to potentially review your finances, please apply at biggerpockets.com slash finance review. Scott, should we get out of here today? Let's do it.

From episode 160 of the Bigger Pockets Money podcast, he is Scott Trench and I am Mindy Jensen, and we are going to hit the trail, Little Snail.