BiggerPockets Money Podcast - 211: From -$28k in Debt to $107k Net Worth by Cutting Out the Unnecessary

Episode Date: July 5, 2021

It’s nice to hear a fan of the BiggerPockets Money Show talk about how they are on the path to financial freedom. It’s even nicer when we hear that the fan, Melissa Yi, went from a negative net worth to now $100k+ due to some simple tips from Scott and Mindy. Melissa had stints in her childhood where she was facing homelessness, not knowing where her next meal was coming from. She worked hard after high school and ended up at a job that offered to pay for her college education. A year away from graduating, she made the decision to quit, without savings, another job lined up, or a way to pay for school. She took out student loans, auto loans, and sunk into credit card debt. At one point, Melissa looked around and realized she had a lot of stuff. Stuff that wasn’t doing anything for her, except for filling up her garage. She sold what she could, started bringing in side income streams, and stopped eating out. These small changes allowed her to slowly pay off her debt and get to a positive net worth. Now, she’s at the $100k+ point and slowly coasting her way to financial independence!  In This Episode We Cover The importance of financial education when growing up  Taking advantage of company-sponsored tuition reimbursement  Why you should never cash out your 401(k) or other retirement accounts  Credit card debt and why it’s so bad for uninformed consumers  Using a live in flip to make a killer profit while paying $0 in taxes Setting up retirement accounts and maxing them out whenever possible And So Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Scott's Instagram Mindy's Twitter Melissa’s Facebook Post Cutting Your Grocery Bill in Half with Erin Chase from $5 Dinners  Check the full show notes here: https://www.biggerpockets.com/moneyshow210 Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast show number 211, where we talk to Melissa, a listener who has completely changed how she handles money and is well on her way to financial independence simply by making a few key changes to her finances. I think it kind of just became something that because I had nothing, I was so focused on having things. You know, being homeless, not having a home, you know, not knowing where your next meal is going to come from. I definitely got more. focused on having nice things, then, you know, creating a sustainable life, which is, you know, where I'm at now. Hello, hello, hello.

My name is Mindy Jensen. And with me, as always, is my standing on solid ground co-host, Scott Trench. Thank you for cementing my reputation with that lovely intro, Mindy. You don't even know about these in advance. You're so good. Scott and I are here to make financial independence less scary. Less just for somebody else. one like 10 seconds ago.

We got that one. But that was really fast. I was thinking about a shovel or, I don't know. Scott and I are here to make financial independence less scary, less just for somebody else to introduce you to every money story because we truly believe that financial freedom is attainable for everyone, no matter when or where you're starting. 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, or dig yourself out of a $50,000. whole in debt. We'll help you reach your financial goals and get money out of the way so that you can launch yourself towards your dreams. Scott, I am so excited to talk to Melissa today because she is the embodiment of all that we preach on this show. She has taken the idea of getting your spending under control and run with it and completely turned her finances around. We first became aware of Melissa when she posted in our Facebook group, which can be found at facebook.com slash groups slash BP money. And she said, I stumbled across the BP money podcast about two years ago. At the time, I was roughly negative $25,000 net worth. I listened to the first five episodes

and realized I had to make some serious changes to my lifestyle. And then she included a screenshot, which is her net worth at positive $107,000. I am so excited for her to share her story today. Yeah. This is one of the best episodes we've ever recorded on the Bigger Pockets Money podcast, in my opinion. Melissa is just phenomenal. If you have struggled with money in the past, you're going to relate to Melissa. If you have had the aha moment, you're going to relate to Melissa. If you've gone all out in the pursuit of financial independence and improving your financial

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dot com slash BP money. Melissa Yee, welcome to the Bigger Pockets Money podcast. I cannot wait to hear your story. Thank you. I'm so excited to be here. It's very surreal. So Melissa is a listener who reached out on our Facebook group to tell us that she stumbled across us a couple of years ago, and we have since changed her life completely 100%.

Is that a good gist of your story, Melissa? Absolutely. All of the credit to you. both. We did not do any of the work. We gave suggestions and you did the work. So let's start with your money story. Where does it start and where are you right now? So I guess I'll start just kind of with growing up. Growing up our, you know, kind of the money story was I didn't know really anything about money except for the fact that we just didn't have any. There really wasn't a lot of conversations about money, about, you know, budgeting or, you know, this is a checkbook and, you know,

this is how you pay these bills. It was really just surviving. I grew up with a single mom. She was usually working two jobs. And at certain points in our lives, we were living in, like, assisted housing, like affordable housing, you know, kind of subsidized. And a certain couple of points in our lives, we ended up in homeless shelters because the, you know, housing can be expensive and being a single parent is not an easy task. So kudos to any single parent. It is very, very difficult. So just all kind of growing up, all throughout up into kind of almost right at the start of high school, it was just very much that we just didn't have any money. And when I finally became old enough to work. My mom said, well, you know, if you want anything other than just the basics, you know,

some shampoo, some conditioner, then you're going to have to go out and work for it. You're going to have go get a job. And so I did. So I was in high school and I worked part time and bought my first car, 500 bucks, a little Pontiac Sunbird. And I just really just kind of started to just work part time. And, you know, buy things, savings at that point, and for even still a long time after that, really wasn't a, wasn't really a goal. You know, retirement wasn't a thing. It was just how do I buy, you know, the Nokia cell phone and how do I afford my, you know, my cell phone card? You know, I got to re-up my minutes and things like that. So, but during high school, both my mother and my grandmother decided that they were going to go back to college.

And I think that was kind of an interesting moment for me. My mom was in her 40s and my grandma was in her 60s. And it was really adorable to see them both go back to school together. They went to a little local college and both got their associate's degree. And it was really cute to see them walk together and graduate together. So that was kind of a really kind of, I mean, a seed that was planted at that point. because we never really talked about college really either growing up. It wasn't really something that I thought was ever going to be in my cards. So that was a really cute moment.

And how old were you at this point? I was probably 16. I was still in high school at that point when they were in college and they had graduated. And you're literally homeless for a while. And then you're you're working a job in high school and that's how you fund your car. What kind of job are you doing? I worked at a collection agency doing. paperwork. Like filing all the paperwork for the collections and there was the tellers that were calling out doing the automated dialing. But I was in charge of their paperwork and some data entry at 16. That's a lucrative job, isn't it? I mean, especially for being 16. Yeah, I mean, you're making minimum wage. I mean, so really anything at that point,

you know, at 16 is a, you know, is a, you know, decent job. I wasn't, you know, making. 20 bucks mowing a lawn, but. Did that impact your thoughts on accumulating debt at all or anything like that? Unfortunately, I don't think it did because I didn't, I wasn't scared of debt, as we'll kind of get into later, but I just, it was more of a, I just didn't know a lot about debt and how impactful, you know, credit card debt could be, because I definitely fell into, to that, it was just kind of a, I think it kind of just became something that because I had nothing, I was so focused on having things. You know, being homeless, not having a home, you know,

not knowing where your next meal is going to come from. I think I got more, I definitely got more focused on having nice things than, you know, creating a sustainable life, which is, you know, where I'm at now. So what happens after your 16 and your mom and your grandma both graduate? What happens next? So about that. So 16, working part-time job, really nothing, basically in like 2004, I graduate high school, graduate with no debt, but really no savings.

I had a car that was paid off. I'm living at home. And just trying to kind of think about what adult life looks like. and in beginning, I really didn't have any plans of going to college. I mean, my parents definitely didn't have the funds to pay for me to go to college. I didn't have good enough grades for grants or scholarships. So, I mean, I didn't have money safe to afford to put myself into college. So I thought I was going to be a massage therapist.

And that's not what ended up happening. But that was when I graduated, that's kind of what, my what my plan was. But yeah, so graduated, got my first full-time job at a company. And, but again, still had no debt, no savings. My car was paid off. So I was kind of in a nice little neutral space at graduation. Unfortunately, I didn't stay there. But, you know, things happen. So let's go, let's go through that. So you're in this nice, you're in this nice, stable, neutral space after graduation. Sounds like you do rack up some debt from there. How does that come to pass?

So that, it basically comes into, comes into kind of a college. So at 19, I move out of my parents' house. I move out of state to what I thought was going to be to join a massage therapy academy. And I quickly came to realize that massage therapy was actually not for me. So I got a full-time job at a local, like, remax office. and I started to become kind of their data entry person there at 19 and got an apartment. And I got a new car, or not a new car, but I had a car payment and started kind of my first time out of the home. But at this point, I still had no idea how to budget.

I had no idea to think, okay, well, if my rents $700, my utilities are going to be, you know, $100. if I'm making this much, how much do I have left over? I just really had no concept of budgeting. And I started bouncing checks and was kind of scrambling to kind of figure out how to live this adult life. So I was working at the Remax office and someone told me, you know, what's your, what are you going to do with your life? And I said, well, I don't really know what I'm going to do. and they told me that they had some friends that worked at Verizon Wireless and that if you work

there full time, they will pay for a business degree. I thought, well, that's interesting. I never really had any plans of going to college, but if they're going to pay for it, it sounds like that would be a fantastic opportunity for me. So that was June 2011. I got hired on Verizon Wireless and sure enough, they will pay for a business degree if you work full-time as long as you have passing grades. And that was their, and their benefits were very generous to where, I believe it was $8,000 to $10,000 a year in tuition and books that they will pay. That's not bad.

That's great. Yeah. So that was really great. So it sounds like you took advantage of this? I did, absolutely. I started in, I went, I got my associate's degree and then moved on and got my bachelor's degree as well. I worked there for about five years. And then during that time, too, I was contributing to a 401k during that point, which was great.

They joined, kind of started saying it wasn't too much, but, you know, two to three percent or so. So, but that, I mean, thankfully, I'm very, very thankful that I got that job as difficult as it was at certain points. Because it's not, you know, it's a call center job. So you're, the hours are not great. You're working weekends. So it's, you know, not. And you're attending school full time. Right.

Yeah. And I, yeah. So I was working full time and going to school part time. Okay. Yeah. So it took me a few years to get the bachelor's degree, but. What's your position upon graduation? Do you have, have you accumulated some debt? Are you, what's your, what's your, can we get an idea of maybe about your

income level and that kind of stuff? So, yeah, so June 2011 is really where I started my downward slope and made several, several big mistakes, uh, that I took a long time to get out of. But, uh, so the first, the first, uh, or kind of where it started. So I was, uh, had about a year and a half left to finished my bachelor's degree and getting this bachelor's degree in finance. And I am working still for Verizon Wireless and I'm not really getting along with the management. They're very micromanaging and really tough on their employees, making it known, you know, they don't really trust their employees very well. And I just didn't really, I had a hard time with it. And I had this day, this moment where I had just had enough.

And I walked into my manager's office and I said, you know what? I quit. This is my two week notice. I can't do this anymore. I can't work for you anymore. I'm going to go to school full time. I'm going to figure this out. And I quit.

I can't do this. And it's not my finest moment. Let me guess. They didn't continue to pay for school when you didn't work there anymore. Absolutely correct. Yes. And how far into this semester were you? Luckily, at that point, I was on a break. Okay. So they had already paid for everything that you had taken. Okay. Because that, I've been there. I have been in that, I am so angry at my job, I am just going to quit. Yeah. And then you quit and then you're like, oh, wait a second. Yeah. There were all these things. Okay. So, you quit your job at Verizon. Yes, I quit my job. Luckily, I'm in between. I was in the summer semester when this happened. So this is, yeah, June 2011. I just finished my spring semester and

was trying to get everything lined up for, you know, my last year and a half of college. So I've got to figure out, okay, so now I quit. How am I going to pay for school now? You know, how am I to, you know, pay for living. I don't, you know, really have much savings or anything saved up. And so I signed up for student loans. So, which I'm, yeah, so I signed up for student loans. And, you know, so that covers, you know, tuition and things like that. And I'm sitting there with my roommate. And I think, I don't, what am I going to do? How do I mean, how am I going to pay for rent? How am I going to pay for food. How am I going to pay for gas to get to and from school? And she goes, well, why don't you just get a credit card? And then you can just pay it off when you're done with school.

We'll have more money then, right? I thought, that's a perfect idea. Why did I think of that? Worst friend ever. I know. I love her, but dang it. So I did that. So I opened a credit card and got my Discover card and started using that for living expenses. And then this is, I think this, this is definitely the next big step for me for what I shouldn't have done. But I looked at my 401k account that I had accumulated for the five years at Verizon Wireless and I cashed it out. That was about $18,000 that I had in there. in June 2011. So had I left it in there,

I mean, I would have a lot of money in there at this point. You know, that's 10 years of taking on this really strong market that we've had. And June 2011 was kind of, like, when was the low point? Was it like 2010, Scott? I think it was like September of 2010. Maybe I'm just making that up. But yeah, then it started going up again. Okay.

So we are not here to chastise you for any past money mistake. don't cash out your 401k if you're listening yeah don't do that don't do that also don't take out a credit card just to pay for you know food at the at the cafeteria college either not a good idea so at the end of this at the end of this one and a half so you have one and a half years left to school do you finish in a year and a half I do are you in this position of like I have no 401k left I have no cash I have a little bit I have student loan debt and credit card debt is that is that kind of where we're ended up absolutely So I graduated with a bachelor's degree in finance in 2012.

And at that position, I have about $16,000 of student loans. I have about $14,000 in credit card debt. And then I have this car loan. It was during college. I decided it would be a brilliant idea to buy a brand new vehicle that I couldn't afford. and I ended up rolling over some significant amount of negative equity into this loan. So not only do I have credit card debt, student loans, I have a $430 car payment. I have no job.

Really no savings, no 401K at this point. But I have my bachelor's degree. And this is 2012? Yeah, this is 2012, yeah. Oh, geez. That was the best year to start looking for a job, right? Yes, yeah, that was my best year. So what happens?

So from that point, I get why I call my first kind of big girl job. Get my first big girl job at a bank. And I'm making, I think I signed on making like $40,000 was my salary. I signed up for their 401K to start kind of adding and trying to, you know, kind of get that back, back up and going. but yeah so I mean so that's I kind that's when I kind of start to try to try an attempt to dig myself out of this whole but at the same time I'm not I'm not really making the you know the changes that I need to I'm still spending spending more than I than I have I'm still buying things that I have no business buying I'm just kind of putting off this credit card debt to

future, is this future me's problem. It's not going to be dealt with right now. So there was kind of just several years of that of, you know, going all the way up until like probably September 2015 where I'm just working and really adding to, you know, adding to this debt and going on vacations. I'm buying expensive brand new clothes. So, you know, I had an Ipsy subscription. I had a stitch fix subscription and really just kind of adding, if anything broke down. I had anything on my vehicle broke down. It all ended up going on to these credit cards. And it really just kind of steamrolled into that of this huge, huge debt that I just wasn't, it was going the wrong direction. So I think September 2015 is when I kind of had an epiphany

moment where I got a new apartment and I didn't even have the money to pay for the security deposit and I had to take a cash advance off of a credit card to pay for this security deposit. And I thought that was kind of my breaking point of this isn't, I'm going backwards. I have this business degree. I've been working in a bank. You know, I have a finance degree, and I have nothing to show for it. You know, I have at that point, I had about $25,000 in credit card debt in September 2015, still really only making about $40,000 in salary. And it's like, I've got to figure this out. This is not working.

Like, it's not what me forgetting about this for the last, you know, four years isn't working. It's still there. I can hear people listening to this show right now saying, oh, my God, that's me. Or oh, my God, that was me. I was in this space. I am in this space. 2015 sounds like a turning point for you.

It was. What happened in September 2015? So September 2015 was, I just, I really had a kind of a bad, a bad summer. And I had lost a very close family member of mine. And I think that was a very humbling experience. for anyone to go through when you lose an immediate family member. And it really, I think, just kind of brought me back down to earth a bit of realizing that I was trying to live this lifestyle that I couldn't afford, you know, with these expensive hair

appointments, you know, that every time you go get your hair done, it's $120. And I just thought, like, I'm like, who am I fooling? am I joking. Like, no one cares if I have my hair done. No one cares if I have a stitch fix or an Ipsy subscription. Like, no one, no one cares these things. And it, I mean, it's definitely still took me a while, but I thought, okay, so how do I, where do I start? So at that point, I started to try and make extra money. Okay, I got to, I have to do something because what I've been doing hasn't been working. And so that's when I tried it. I started lift. I tried lift for a little while. I tried postmates. I tried Rover. But really just at this point in my life, I'm trying to bring more

money to the table to save and start making small dents in this massive amount of credit card debt that I have. So how does that go? I mean, I attempted some similar stuff back in 2013. And, and found it unsuccessful for me that, you know, it's really a very inefficient way to generate money is with these things on the side after the full-time job. At least I found that to be the case. Were you able to find success with some of those, that moonlighting and the second jobs there with Lyft?

I, you know, I really wasn't. At first, I just tried to just hang out downtown, you know, around to pick people up. I wasn't comfortable with... Where is downtown? This is in Portland, Oregon. So, and I had moved to Oregon in 2014, and that's when I couldn't afford a security deposit on an apartment because it's more expensive to live there. So I just kind of went downtown to try and pick up people in the lift, and it seems like

I really had to have a strategy. So I tried the airport, where I would go get in the airport queue at Lyft and, you know, take people home from there. So I tried that, but I tried that for a few months, and it just didn't really seem like the amount I was making. I mean, I think the most I made in a day was like 50 bucks. And driving people from the airport to their home, you know, is barely breaking even, you know, with the gas, you know, to just, it's an hour drive sometimes from the airport. So I tried Postmates, and Postmates was kind of something was pretty similar where I wasn't really making. a bunch. I mean, again, I probably made 50 or 75 bucks in a day, you know, and that's not net of

gas or expenses or anything like that. I tried Rover. Rover was, I think Rover was probably the best one of them as far as making money and not, you know, not having your expenses come out as well, since it's, you know, you're just going over to someone's house and, you know, babysitting their dog or, you know, you're walking their dog or their dog. coming over to your home. So that was probably the best one, but even still, that's maybe $80 in a weekend. So I didn't really, you know, feel like anything was really making that big step, you know, making a big dent.

It was, you know, $20, $30, $50 here and there of me spending, you know, all the time I could trying to make additional money. How long does this continue and what's the next kind of inflection point? So my now husband at that point, he said, you know, he saw me just, I was doing all these part-time jobs and trying to make all this extra money. And he thought, an Amazon package got delivered to our house. And he goes, well, instead of trying to make more money, why don't we focus on spending less money? And it was kind of this light bulb. And I was like, you know what? what the package that had just arrived from Amazon was a vegetable cutter. I did not need a $20

vegetable cutter, you know, and that was what I had just made the night before doing the postmates was, you know, $20 or $30. And I thought, oh, okay, yes, that seems easier. So I still kind of, it still took me a couple of years of kind of trying to, you know, find. is at that point I was listening to the Bigger Pockets, original podcast, listening to all of these real estate success stories. And Brandon Turner had said at one point, you know, if you're, you need to listen to the money podcast to get, you know, this is kind of pre get to real estate.

And I thought, okay, well, that's where I need to be. I need to be listening and following these steps of advice before I can get into doing some kind of, you know, real estate investing. So this is, I finally, this is May 2018 that I am kind of just really just kind of trying to struggle through of trying to spend less, but I wasn't really doing the work. Can we go back to one part in the story here? So in 2015, when do you get married?

I got married in 2019. In 2019. Yes. Okay. Yep. And in 2015 is when you're having this epiphany moment about, hey, I need to start earning more money. And it sounds like you grind a lot with these side hustles and maybe fits and starts for two, three years. And that chips away a little bit at the debt,

but your approach changes in 2018 or 2019. Is that what I'm hearing? Yeah, that is. Absolutely. Yeah, I was just grinding, trying to make any extra dollar that I could, you know, trying to get raises at work, you know, really trying to bring more money to the table. But it wasn't until in that process leading up to 2018 because I want to spend a lot of time there but in that process were you able to chip away at the debt moderately in that three-year period not really no to be honest it really i mean it was really stayed about the same during that time because even though i was still trying to be more aware of it my my habits and my spending habits hadn't changed so i was more aware of it but i was still you know getting my hair done i was

was still, you know, spending too much on clothing and, you know, makeup and in car payments and things like that. I still, it still hadn't really sunk in. Like, I was more aware of this spending, but it didn't change my patterns and my habits yet. I hadn't gotten to that point. So 2018, we, I still, this and this is still kind of evidence of that it still hadn't really sunk in at this point as far as it's kind of the frugal lifestyle that, you know, that we're at now. But 2018, we buy two brand new vehicles. I buy a 2018 outback and my now husband buys a 2018 Tacoma. And granted, his work was paying for his, so that helped with that payment. But at that point, I still have, you know, $20,000 of credit card debt. I am, we do have

savings at this point that we have saved up because we were trying to buy a house. and I'm making about, you know, $60,000 in my salary, and I still have about $14,000 to $15,000 in student loans at this point. And I've got about $15,000 in my 401k at this point that I had accumulated and kind of just let that go in there. And so, 2018 is when I found the, you know, the money. podcasts and started reading books. And the first book that I read was your money or your life. And that was a really big shift in my mindset of spit this consumerism, spending all this money was, it was a total shift of doing, making things yourself and doing things yourself and living this minimalistic, frugal lifestyle, you know, grow your own vegetables and things. And these were all

all so concepts so far away from what I had ever really thought about or even tried to implement in my life. So it definitely took a few months and I, and then also on the original podcast was where I had heard an episode that Mindy was on for Live and Flips. And that is where I got my live and flip idea on the original Bigger Pockets money podcast. So that's when we really started and We got a Mint account at that point, you know, in 2018. And that was really eye-opening to see where our money was going, to really sit down and look at the hard numbers and go, wow, we spent $1,000 one month on restaurants, a thousand dollars, that that money could have gone to credit cards or

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of me. I'm going to need you to sign this, assuming you don't have superpowers. I'll never work again if anyone found out. My lips are sealed. Marvel television's Wonder Man. All eight episodes now streaming, only on Disney Plus. The tracking of your spending is the number one thing that I suggest. And one of the most common, what is your best advice for people who are just starting out, comments is, you know, start knowing where your money's going.

because when you can see it in hard numbers, it is sometimes so shocking. I like to think I'm good with money, but the first time I started tracking my spending, I've said this before, I was shocked at where it was going because when it's part of your life to go to McDonald's every day for breakfast, you don't think about it. You just do it. And there goes $5 or $8 or however much it cost there. And that's no big deal one day. But every single day, let's say it's $5.

That's $25 a week, unless you're going seven days a week. And then that's $35 a week. And that's, you know, $70, $140 a month. And that adds up over time. And if that's not your only stop, you know, then you go and get good coffee instead of McDonald's coffee for breakfast. And then you go here and you go out to lunch. And that's $12 at your favorite place.

And I mean, you could conceivably. spend $25 to $35 a day on food at restaurants just absent-mindedly, which adds up to way more than $1,000 a month. But because it's a habit, because you did it, oh, you know, oh, on Mondays, I go out to lunch with the girls. Okay, no big deal. And then I went on Tuesdays. And then now it's every single day.

And all of a sudden, you're like, why am I broke all the time? I make good money. Or I don't even make good money and why am I broke all the time. And I just, I love. I mean, that I have a sneak preview with your story. That seems to be like really the thing that got you whipped into shape was just, that sounds mean and judgy and I don't mean it that way, but like just I. But it's honest.

I'm seeing how much money I'm spending and this is not where I want my money to be going. So why am I allowing it to go there? How influential is you got married? Is your husband interested in this as well at the same time as you? or are you leading the charge? I'm leading the charge. Yeah, it's definitely, he, thankfully, he was better with money than I was in the sense of when we met, he didn't have, you know, credit card debt, but he also didn't have really

knee savings. He was definitely more of the spender in the beginning of our relationship. But he was really, he was very on board with it. Well, he became more on board with it. But in the beginning, it was, I just started cutting kind of everything out. I just kind of went full into this budgeting and cutting all these things and we're not doing this. And, you know, we're getting rid of prime and we're getting rid of cable and we're going to, you know, we're getting rid of all these things. And, you know, we didn't really sit down and

have a conversation together about, you know, where should our money go? It was just more of, you know, we're spending $1,000 a month on restaurants and we're going to die broke. We need to figure this out. So it definitely took, took some time, you know, over, over the time of, you know, sitting down once a month and going, you know, this is where we ended up. You know, we spent $600 in gas this month and, you know, how are we going to make changes? And so eventually got to that point where we, you know, figured it out together and had monthly kind of dinner budget nights. Ooh.

Okay. I heard a couple of things that, well, the monthly budget I love, but I heard something that I've never heard before. Scott, did you hear her say, we cut out everything. We got rid of prime. How easy is it to order something from Amazon because you get free shipping? I don't even look at anything that isn't prime. But I can guarantee you, if I had to pay for shipping, it would make me.

think twice about ordering that product, even though shipping's only three bucks or five bucks or whatever. If I have to pay for shipping, I think about the purchase. If I don't have to pay for shipping, click buy the end and I'm done. And that is, ooh, I like that a lot. Okay, if you're listening to this and you want to make changes in your shopping and you seem to be spending a lot on Amazon, get rid of prime and see what happens. Yeah, it really made me really think about things. It made me physically go out and search for things and go to Walmart. You know, Walmart had, Walmart has a similar service and they don't charge for it. It may take a few extra days to get there.

It's not going to be a next day delivery, but it really made me sit and plan out things instead of kind of that impulse buying that I was so used to doing. It's so easy to do. It sounds like there's a hard lifestyle reset that happens in 2000. Does this reset happen over the course of a month, like right away, right after you read that book and start getting into this? Or is it a process that takes a few months? It's definitely a process. I mean, you know, I started with, you know, with a book and then listening to, you know, the first 10 episodes of the money, you know, the money podcast. And, you know, it started with trying to cut everything out, you know, looking at our expenses. And the next thing that I focused on was, you know, you know, was our grocery bill. And that's when I'd heard Aaron Chase's $5 dinner episode. And I thought, that's brilliant because I'm spending so much money on groceries. Now that we're not going out to

restaurants, I have to, you know, we have to start meal prepping, making things at home. And it was really exhausting sometimes sitting down every week, trying to figure out, what are we going to eat this week? And sometimes I would almost get lazy with it. And we would end up going to you know, fast food or talk about or something like that because we hadn't planned ahead for our meals and for our food or anything like that. And that just took so much of the headache out of it. So I did that and then that was a process. But it definitely was a process of then, you know, also I heard an episode with Aaron or the Brooke Millennial. And she introduced me to the buy nothing group for local buy nothing groups and that was a huge you know next huge step was

you know instead of buying things to ask people if they have things that they don't need it anymore and that was a huge change and then that kind of led into more of this minimalistic lifestyle that we're living and look at all this stuff I have that I don't need I don't haven't touched any of these things. You know, have a garage full of stuff of things that, you know, I don't need. So it was definitely a process of, you know, kind of one thing after the next of, you know, penny pinching and, you know, really taking a look at the budget, you know, every month, seeing where we're spending, where can we cut out more, you know, where do we want our money to go? What do we value in life? With this, how much are you able to cut your spending and

begin accumulating on a monthly basis. Sounds like you were paying very little on average before this to your debt every month. How much are you able at the end of this process, you know, it's maybe three, six months or however long it takes to really reset the spending in a lot of ways of that. How much are you able to save the month? I mean, I think between the restaurants, I mean, everything, I think we were able to cut out anywhere from, you know, a thousand to $2,000 a month that we were spending on things that we didn't, you know, that we didn't need to.

It was probably on average. And where do you apply that money? What's your debt paid on approach? We applied that money initially towards getting our house to put it into savings. We had a goal to buy a house. And then the rest of it all kind of just went into, went into savings knowing that we, the house that we were going to buy was going to be a live and flip. Okay, so you chose, you actively chose to cut your spending and then pursue a live and flip

strategy rather than pay down your debts. Correct. With this. I like it. That's interesting. That's a highly aggressive approach. It probably worked out really well for you, I bet, or it is on the track to. I mean, it did.

I mean, it definitely was, I thought that would be the fast. this way for, uh, for us to get, wipe out all the credit card debt. And this is in Portland. Yes. Yeah. Okay. So can you tell us about this project? Yeah.

So it was, uh, 2019 is, or April 2019 is we buy our first house. Um, and we bought, uh, you know, we bought the, the live and flip. Um, at that point I'm, I'm making work, my husband and I are, both making about $70,000 a year. We still have about, you know, $20,000 in credit card debt, so it really hasn't moved that much. And I still have about $14,000 in student loans. But we get our first house and we do the 3.5% down for an FHA loan on this house. And the rest of the money, we have set aside.

How much money do you have set aside? we have set aside about $15,000, total. Okay. That we've been able to save throughout this time. And so we $10,000 of that went into the down payment of the house that we got. And then the rest we had set aside for starting to renovate the house and also for getting married. We got married in August of 2019. And we had a budget of $10,000.

for the whole wedding for everything combined. I tried to talk my husband into just getting married in the woods and he wasn't having it. So we had to compromise somewhere. He wanted the actual wedding. He wanted to celebrate us. And so, like, okay, if we're going to do this, we need to do this cheaply, you know, as inexpensive as we can. And so we set the $10,000 budget.

And I think our total was just a hair over. $10,000 at the end of it. So I was pretty proud that we didn't, we didn't completely blow through that. All right. And so, so you're, you're, you're, you're, you're, you're, you're, you're, you're, you're working on the, the, the, the, the, the live and flip. How do things progress into 2020 and 2021? So, uh, 2020, uh, was finally when my, our net worth went to, broke even. We can finally dug herself out of a negative net worth. And that was a huge goal of mine was just to get, just, just to get to a break-even point. And so I was so proud of ourselves for doing that. We're still doing, you know, at that point, you know, the very frugal, you know,

minimalist lifestyle, you know, we're going to goodwill for, you know, for buying clothes secondhand. You know, we're, you know, buying things off of Facebook marketplace. So we didn't go buy a brand-new furniture. We went to Facebook marketplace and bought, you know, a dining table for $400. and, you know, a new couch for $500, you know, off of the marketplace. It was used. So all during that time, we're trying to still spend as less as we absolutely could and putting that money back into the house. So any money that we saved was going back into the house to get this live and flip

done. And this is work you're doing or hiring out? So we actually did 90% of the work ourselves. So we spent countless hours on YouTube watching how to do things. We, you know, we did all the demo ourselves. We did the tiling ourselves. We did the drywall, mudding, paint, flooring, all of those things we did ourselves. In the context of 2019, 2020, 2020, 2021, this is,

really high dollar per hour activity that you're describing here. You realized it, Mindy's realized it with that. But like that is stuff that you're probably making a killing on doing it yourself rather than hiring it out, given your household income and all that kind of stuff. So I think that's a, that's how much more effective is this as a wealth generator than driving lift for you guys over that same period, right? He's so huge. And that's a secondary benefit, Scott. The primary benefit is not having to try and find a contractor and deal with the headache and hassle of, oh, yeah, I'll come over and then they never do or they don't even answer their phone or, I mean, that's the number one reason why Carl and I started doing all the work ourselves is

because we couldn't get anybody to answer the flip-flap and phone. Are you a contractor? You want to make a killing as a contractor? Answer your phone. Number one thing that sets you apart. You don't even have to be good. They don't have to answer their phone to make a killing. So, but so what are the, what are the numbers on this, on this, uh, once the project is completed? How much do you put it? How much do you buy it for? How much do you put it put in? And how much do you sell it for? Yeah. So we bought the house in April 2019 for 274. And we ended up putting about, uh, we're about $45,000 into the project. And this is we took a three two house and made it into a four two. And that was a huge.

difference, you know, in the price. But again, we did almost, I mean, everything ourselves. We completely gutted the bathrooms, redid the bathrooms. We gutted the kitchen, redid the kitchen, took a wall out. I actually painted the entire exterior of the house myself. Yay! That was, it was actually kind of fun. I, like, I enjoyed it. But, I mean, the only things that we ended up hiring out is when we bought the house, we knew we had to get a new furnace because it was cracked. So that was $8,000 right at the gate was a new furnace. It didn't have air conditioning, and we knew we needed to have that to sell the house and have a good price. So that was, you know, $8,000 more than what we were originally planning to spend on the house to begin with. So we

definitely went over on our budget, but it ended up working out in the end. So then, And so we were in the house for two years. So just in April of 2021, we sold the house for 433. All right. I like it. That's $100,000 in profit after your expenses over the two years, right? That's like adding another full income and a half for your household. Tax-free.

I was just going to say, how much you pay in taxes on that? Zero. We all paid the same amount of taxes on that. $100,000 in your pocket. for the next, the next big adventure. So, you mentioned you are now at zero net worth and then you sold the house. So what is your net worth right now? So right now, like I had the goal of, you know, reaching $100,000 and we met that a couple,

see, we met that. I think that was back in April or March for a net worth of $100,000. So right now we are credit card debt free. we have zero in credit card debt. Now, over this period, are you paying off the credit card debt in addition to cash flow and the repairs? Or what's your position at the moment you sell the house? Do you still have debt remaining?

Do you use the proceeds to pay off remaining debt? How does that work? Yeah. So during the renovation, I had taken all the credit card debt that we had had and basically kind of transferred it all to zero interest credit cards. and did kind of a balance transfer there. But we were still paying some towards the credit cards while still using most of our extra excess cash flow to go into the house.

So we were kind of doing both, you know, simultaneously. But once we sold the house, any dollar of credit card debt was completely wiped out. That's the first thing I did. I was in tears. I was so happy when we sold the house and I was sitting there with my husband paying off all the all the credit card debt that we had. And that was just such a huge, huge relief, you know, this huge weight lifted off of my shoulders. And we finally paid off every dollar of the credit card debt and still had, you know, more money in the bank account that I'd ever seen in my life. And that was a huge, really huge moment for us.

All right. So we're recording this now in June of 2021. So two months after you sold the house. What's your plan now? What are you doing? What's the go forward look here? And congratulations, by the way, on that huge milestone. It's, I feel like the world just kind of opened up for us at that point, you know, with not having that credit card debt. So now we're looking for our next live and flip. And our realtor is really great. And she's helping us with that. She's, we're hoping. We're hoping that we've narrowed down and found a property off market, just to buy from someone directly. And so hopefully that goes through because we'll go into it with about $40,000 of, of equity into that one, because they're wanting to sell it to us under market values. They don't have to worry

about, you know, selling it, you know, out to the market and getting it ready to list. So I'm fingers crossed that that happens. And, but for now, So that's kind of our next step. And then now we're going to be focusing on maxing out both of our 401 case and our Ross will be kind of the second step as well. I love that. You guys are absolutely crushing it here with this. I have a couple of tactical questions about your current situation. First, how much do you have in cash after you put this down payment down?

How are you thinking about your liquidity, your access to liquidity right now, given that you're about to do the next? So, so we have, we still have about, after we paid off all the credit card debt, we still have about $90,000 of cash, just sitting in the bank account. We are planning on putting 20% down onto the next house, and then we'll still have enough money to use to renovate the house. I'm hoping that we'll, if we don't have enough still left, I want to buy an out-of-state rental as well. That was my goal with some of the proceeds of the house is to buy an out-of-state rental, but we'll, I might just have to start saving for that to buy, to buy the out-of-state rental,

hopefully before the end of this year, but we'll see if that happens. Love it. So, so you put, you put that $45,000 into the house, and now you've, you've generated $150,000 or so on in cash. Part of that went to debt pay down. Part of that's going to go to the next house. Part of that's going to go towards your emergency fund to fund the repairs for the next house, And if there's anything left over, you're going to put that into out-of-state rentals. And over the next two years, you're going to be continuing to sustain your high savings rate. So that's going to enable you to cash flow. That's another yet huge conservative piece of your overall asset allocation that will allow you to either finance more repairs or fully fund your 401ks and Roths.

I mean, this is just a super strong financial position that you've constructed for yourself remarkably over the last two years, given from one. I would call that the starting point from your journey two years ago with all that debt and what sounds like, you know, some overextension on the spending habits side. Okay. Absolutely. My second question for you is mechanically, what are you doing right now to live while you're in between houses? Like, where do you live and how do you, how do you structure that for the short term?

So right now we live, so right now we actually live out of an RV trailer. So we bought, when we sold the house, we bought a, an RV trailer that we're living out of. We put almost everything into storage and we've got basically just our essential. So we're kind of living a little bit of a gypsy summer right now, just kind of traveling around in this trailer that we have. Right now we're staying for a couple weeks at a friend's house to kind of give ourselves a little break. But we're going to be basically leaving campgrounds until we get into this next house. All right. I'm glad I asked that because that's, That's, I think, a big question.

And I think the fact that you're willing to do that temporarily is why you're going to be hundreds of thousands of dollars richer than you would be otherwise because you're willing to be flexible like that in the short term here in a way that a lot of people wouldn't be willing to do, especially not two people with full-time jobs making $70 plus $1,000 a year. So kudos to you on that. I think that that's going to be a big contributor to your being a millionaire very, very shortly here. Oh, man. I can't even fathom that right now.

Oh, I can see it in the cards in... I can... Yeah, we'll be interviewing you in three years. Yeah, I was going to say six to eight years. Somewhere in that range. I can see it in the car in six to eight years just continuing what you're doing. But if the real estate market continues to go insane like it has been, and if you can, I mean, getting in an off-market deal, that's huge. Not having to fight with somebody about, you know, get into a...

a bidding war and then overpaying significantly. I do have a suggestion when you, you said that you wanted to put 20% down on the new house. Ask your lender what PMI would cost if you went with a lower down payment. Sometimes PMI can be really, really low. Jake Simon was on the show a few episodes ago, and he is the one that had asked his lender, hey, how much is PMI? It was like $50 a month or something? something, $17 a month, I think. Maybe it was $67 and then it went down to 50 when he refinanced.

But it was like, it would have cost him more to sell his stocks and pay taxes on that to get the 20% down. If you can get a really low PMI, maybe you put down 10%, you have more liquid cash for repairs for the new purchase for a rental property, et cetera. So, you know, it might be too much. It might not be worth it, but just have that as an option because I think a lot of people think really binary. I either have to put down 20 percent or I have to pay a lot of PMI. And I was actually really surprised when Jake told me how low his PMI was. I'm like, oh, that actually makes sense to not do that. Yeah, I'm hoping that since we're buying this deal off market that we'll have the option to

not put as much down. But initially, our realtor was saying that because the market is so competitive, if we do have to fight for a house. It looks stronger on paper if, you know, when we put in an offer, that we have a 20% down offer for a home. So you're right, though, if we don't have to compete for this house, and I think we might, you know, reexamine that situation. So here is a little bit of not so widely known information about that. When you make an offer and you say, I will put, I will get a loan for 80% and I'll put down 20%. You don't have to stick to that.

You can't cancel the contract because you can't get a loan for 90% when you said you were only going to get an 80% loan. But you can cancel the contract if you can't get the 80% loan. But the loan is between you and the lender and doesn't really have anything to do with the seller. The seller gets a lump sum of money when he sells no matter what. Right. So if your lender will approve you for a lower down payment, as long as you can make the offer, as long as you can put 20% down, then you can work it out with your lender in a different way. So does that make sense?

I'm trying to, I'm hacking that description. Right, yeah, because the seller doesn't have, the seller doesn't care. Yeah. Right? Like they're still going to get their money. It's just what the bank's comfortable with. Yep. So that's an option.

You can still write the offer like that. and then just work it out with your lender. So, yeah, like I said earlier, I see millionaire status within 10 years and probably significantly less than. And this is from a girl who... I think if they keep going at this pace with the creativity they approach,

it'll be three to five. Scott says three to five. I would love to be proven wrong. I would love Scott to be correct. So we'll make a calendar appointment three to five years from now. We're going to call us up and say, I'm a millionaire.

Oh my gosh. That's so wild. It is doable. I just can't even imagine. It's doable. Okay. Yeah. I think this has been an absolutely phenomenal episode.

Thank you for sharing your story. You are just phenomenal. Your story is phenomenal. And you knew all the questions you were going to ask ahead of time with like, what was your, you know, debts and assets at this inflection point, at that inflection point. So that made it really easy for us. We appreciate it. And what a phenomenal story?

and journey here. Thank you. I like this. I think this is the end, the end point, the, the hard part, that slog of getting over that hump. I think you've just completed it and you now have to, you have a formula or a set of skills that you can apply to whatever you want to do in the future. You're, you're going to crush it. Thank you.

It's, uh, it definitely feels like the world is opened up and it's kind of, it's, you know, it's just this huge, huge thing just to not, you know, I told my husband these. other day, I said, you know, we don't do anything else significant. You know, if we just take this launching pad that we've just created for ourselves and just sustain that, we're going to be great. But the fact that we're continuing to go into this, going to do another live and flip, you know, do these rentals. It's just, you know, I'm, I've set a goal of I'm hoping that I can get, get us to a point where he can retire within five to six years. I think, I think you have a very fair shot at achieving that. Yeah. Yeah. That's awesome. Well, I think we're at a really good place here. Do you,

would you think it's time for the famous four here, Mindia and Melissa? I do. I think that we have shared a really great story. And I think the next step is the famous four. The same four questions we ask of all of our guests. Melissa, are you ready? I am. What is your favorite finance book? I think I know the answer to this one. I would probably say your money or your life. was really the biggest, the biggest mind shift for me. Recently, I've been, I'll, this I'll give you two, but the one that I've recently read that was also kind of, to help me get forward from where we're at now,

is I'll teach you to be rich from Rimate Sadie. I really love his no kind of BS approach. And especially now that we're trying to figure out how to capitalize you know, where high-yield savings and maxing Ross and IRAs out and the A4-0-1-Ks, that was a really great pathway steps of how to go, how, you know, where to go from here. Love it. What was your biggest money mistake? Oh, man, you guys, they made so many.

Look at where you are now. There are so many. There's so many, you know, with brand-new cars. And, I mean, I think that the biggest one, though, that hurts. hurts the worst would be cashing out my 401k in 2011. That was definitely my biggest, biggest money mistake, because that could be,

had I left it in there and figured out other ways to survive, I mean, we would be in such a different financial position right now. What I think is so awesome about you and your story here is you had a rough 2011 with a number of problems there, with the quitting the job, then having the student loans, the credit card debt, the advice from the friend, the cashing out the 401K. And that sets you up for a lot of problems over the next seven, eight years of your life

right there with that. And you were able to just completely annihilate those problems and get yourself into a launching pad over the last two or three years. That is remarkable. And I think a lot of people are going to benefit from hearing that because I bet you a lot of people have a similarly tough situation or similar circumstances to what you just described that they're starting from. It's, you know, I feel like I've made every financial mistake in the book and buying

brand new cars, cashing out 401k's, winning jobs, you know, with no money. And, you know, if I can get through this, I think anyone can do this. So I hear you say that. Oh, I feel like I made every financial mistake. You made every financial mistake when you were young. And now look at all the time you have to grow your. your finances and your, you know, your net worth now because you have fixed every financial mistake that you have made. There are people who are way older than you who are 10 years ago,

you and five years ago you, who are still continuing to make these same money mistakes. So I know that we have a tendency to be really hard on ourselves, but you're doing really, really well. You're doing, what is the, what is the statement Scott? 40% of Americans can't cover a $1,000 emergency. And you're better than 40% of Americans, probably better than a lot more than 40%. Yeah, you're in great shape. Well, it was, it was a very humbling 10 years of realizing what I've done and, you know, really looking at the spending uncomfortable time looking at the numbers and making the sacrifices, you know, with a frugal lifestyle, it's not, you know, it's, it's, it's not easy. It's especially going from where I was to this hard, hard, you know,

U-turn boat, you know, that we had to, we had to turn around. It was, it was difficult, but I'm very happy with what we've done. And tagging off of that, what is your best piece of advice for people who are just starting out? So, you know, I, and this is exactly what you said, Mindy, of, of you know, going, of just sitting down and looking at the numbers. You know, that was the biggest mind or eye-opening time was when I sign up for a Mint account and log put all of our information in there, all of our debt, all of our, you know, credit cards and our investments and everything. And just looking at our spending was such an eye-opening experience to see, you know, there was some months we spent over $1,000 just on restaurants, and that wasn't including

groceries and fast food and convenience stores and gas stations. And it was, that was, you know, I never would, if someone would have told me, oh yeah, you spent $1,000 on restaurant, like, you're joking. I spend maybe $400, maybe if that. So to really look at the, look at the data is, it's a big pill to swallow. And it's a, exactly what I needed. Well, we certainly agree with that advice, and that's probably 30, 40% of the people, if we were to do the data, well, I actually go back and look now that she said to review the data.

But I think that's about 30 or 40% of people say just that. So if you haven't started tracking your spending and you're listening, go do that and take a look back at the last three to six months and see what the numbers say. Right. So what is your favorite joke to tell at parties? Oh, Scott. I knew this one. It's like, oh, like, okay, he likes dad jokes.

So I came up with a dad joke because I don't, if when I, when I thought of this, there's just like, I don't really tell jokes at parties. But, but I found one that I thought was fitting. And it's, I never buy anything that has Velcro with it because it's a total ripoff. Oh, I love it. I'll think of something great to say to that later. We'll put it in the outro. That's awesome.

Thank you. Melissa, where can people find out more about you? You can find me on Facebook. Just Melissa Yee. I'm in the Facebook group, the Money Facebook group. That's been a fantastic group. And I'm on Instagram as well, but that's more of just kind of my hobby lifestyle. If anyone's into hiking and backpacking and things,

and I'm at Mellie Ray 23 on Instagram, but mainly on Facebook. All right. Well, we will link to the BP Money Facebook group and your Instagram and all that kind of stuff in the show notes at biggerpockets.com slash money show 211. Melissa, this was so much fun. Thank you for sharing your story. I know there's a lot of people listening who identify with many parts of your story. So I think it's really, really helpful to share every money story.

I appreciate your time today. Yeah. Thank you so much for having me both. It was a privilege to be here. Okay, we'll talk to you soon. Thank you. Thank you. Holy cow, Scott.

That was Melissa, and she is amazing. What did you think of her show? I thought she was amazing. I thought that, you know, this, like I said in the intro, this is what it was all about here at Bigger Pockets Money. I'm so proud to have been doing the show with you and to have been some small part of the influence in Melissa's journey. I'm so proud that the BP Money Facebook group was helpful to her. I'm just astonished at her journey from literally being growing up homeless to having these opportunities and challenges and setbacks and then getting serious about the journey here about two years ago.

And man, over $100,000. She is past that snowball tipping point where she can just allow things to happen and she will become rich over the next five to ten years. And she can really accelerate it in the next two to three years by just keeping up what she's doing. She's willing to be flexible. Sounds like she's got a wonderful, wonderful husband with all this. And they're just crushing it.

It's awesome to see. It is awesome to see. I'm so excited for her future. And she's just, she went from, and I don't want to, I sound. mean when I say this. She went from doing literally everything wrong to doing literally everything right. And that switch didn't happen overnight. She knew she was supposed to do different things and just didn't. And then finally one day she said, I'm done. I am going to stop this. And I am going to start doing all the financially right things that I need to do to set myself up for the best future

possible. And once you flip that switch, once you start doing the work, no, it's not any easier, but it's so much better. Well, should we get out of here, Mindy? We should. From episode 211 of the Bigger Pockets Money podcast, he is Scott Trench and I am Mindy Jensen saying, signing out, Sourcrow.