BiggerPockets Money Podcast - 232: Finance Friday: What Would You Do With an Extra $100k Per Year?

Episode Date: September 17, 2021

Kari and her wife made some big moves over the past few years. They packed up their stuff and left the San Francisco Bay Area for a relocation in the midwest. Unlike the Bay Area, the Midwest has many affordable housing options with plenty of chances to house hack. So, that’s exactly what the couple did! They bought a duplex in rough condition, put in close to $80,000 of renovations, and now get $900 a month from the side they’re renting out. Although this renovation allowed them to live for free, it put a $66,000 hole in their pockets, which they recently just paid off. Without much retirement savings or investments in general (save the house hack), Kari is wondering what she can do to maximize the extra $100,000 in after-tax income she and her wife bring in every year. Should she go the index funds route, buy another rental, or help her wife pursue her dreams by investing in a restaurant? Scott and Mindy give Kari a lot of ideas in this episode, many of which could help you as well! In This Episode We Cover Using “strategic debt” to grow your investments and income  Planning your future finances when trying to start a family  Investing in your 401(k), Roth IRA, Self-Directed 401(k), and other investment accounts Using the “Live in Flip” model to avoid paying capital gain taxes  Why you shouldn’t diversify when you are in a low to moderate net worth category And So Much More! Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast show number 232, Finance Friday edition, where we interview Carrie and talk about how to turn dreams into reality. We will hit a million in 10 years. So that is really exciting, but it almost again doesn't feel real yet because we're in the beginning of this journey. Hello, hello, hello. My name is Mindy Jensen. And with me, as always is my big picture co-host, Scott Trench. Thanks, Minnie. It's always great to be here with you. You always zoom in on these clever intros. 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, start your own business, or make a decision between three really good options. We'll help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams. Scott, I am super excited to talk to Carrie today. She and her wife are having a great problem. They have just paid off a ton of debt, $66,000 to be exact, and are now looking at what the future holds for them. And I think they're at a crossroads that a lot of our listeners find themselves in. Which amazing life decision do I make next? Yeah, I think there's a lot of folks out there who earn a good income or have recently begun earning a good income and are not sure what to do with, you know, all the extra cash that's coming in with that and how to think about that strategically. They've done a really good job of, I think, cleaning up their spending over the last year or so and are out of a lot of bad debt and now have big decisions to make. They're good problems, but they're very high stakes and important problems as well.

I think we had a great discussion around them. Yes. We give Carrie a lot of research opportunities today, things that she should look into that are specific to her situation, but that also people who are listening can find themselves in this similar situation. They need to go research this themselves as well. So my attorney makes me tell you that the contents of this podcast are informational in nature and are not legal or tax advice, and neither Scott nor I nor bigger pockets are engaged in the

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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. Carrie and her wife have big, big dreams. Coming up with big plans for their future isn't the issue. It's the strategy and the process where they find themselves having questions. Today, we are going to look at where they've come from, recently paying off $66,519 in debt. Hooray!

And where they want to be in five to ten years. Carrie, welcome to the Bigger Pockets Money podcast. Hi, thank you for having me. I am super excited to talk to you. I think this is going to be a really great episode. Carrie, let's jump right into this. Let's talk about your income statement. Let's look at what's coming in and where's it going?

Okay, perfect. Okay, so as far as our income, income. We have $900 a month that we have in rental income. Currently, we're doing the house hack model. So we're living in one unit and we're renting out the other. And so in addition to that 900, my wife roughly brings in between four and $5,000 a month. And then I'm roughly bringing 10 in some change with my just regular income. And then occasionally we'll have some win falls of a bonus that I get twice a year once in August and another in February. Are these after-tax numbers or pre-tax numbers?

These are all after-tax. Awesome. So we got about $15,000 in after-tax income hitting your bank account every month. Correct. Wow. That's awesome. Well, let's go through to expenses. Okay.

So for expenses, we have, if I just, just do like the big bucket items. The mortgage right now has gone up from just a few months ago because of a tax situation that happened. I don't know if you're familiar with like different tax issues from real estate, but basically they do things different here in the county that I live in and our taxes were raised. So that is currently $1,400 a month on our mortgage.

part of that is some tax repayment pieces of it, but for at least the next year, that's what it's going to be. We have roughly $60 that we give between different, oh, no, not 60, sorry, 120 that we give between different charitable sources. For other expenses, we do pay about 115 toward a HELOC, which is a smaller loan that we kind of had at a low interest rate, just to kind of help with some of the house repayment. that kind of came up during this big debt paydown journey that we recently embarked on. And then, let's see, bigger items, we have a $628 car payment that is actually a lease, not an owned vehicle.

So even though we have six grand left to pay on that, it's not like, you know, we come out of the other end of that or anything. roughly 182 toward a phone bill. We have a small loan for $222 a month towards, we put in AC, actually two AC units in our duplex that we live in. And then, let's see, Comcast is 150. And then utilities pretty much adds up between, let's see, water, lights, and gas, something around just doing some quick math here, but probably about 500.

A little under 500. And that's, whenever we put these numbers in, we always give really conservative estimates. We always anticipate paying more so that we have a little bit of wiggle room in our budget kind of later on. But if you were to add all of those up together, it would be roughly in monthly bills, 3,426. And then I have other kind of what I call variable necessities, which is like groceries, dog food, gas. And then there's like subscriptions too. So the necessities that are like variable are groceries. We spend roughly $900 a month in groceries, although I will say that is like

not just food. It's also, you know, shampoo and like all those other things that kind of of come with it, but we grab at the grocery store. Dog food is $244 a month. We have two very big lab mixes, and they kind of eat us out of house and home. We also give them pretty fancy food. So that's one of the other variable expenses. And then gas is roughly $150 a month. And then we have subscriptions like Amazon.

We have a true green subscription because we're trying to get our lawns. looking nicer than they had been. Netflix, things like that, kind of fall into that category. Also, I do a wine subscription, so that's probably the bulk of that one. So the total that kind of comes between all of the monthly bills plus the variable necessities and subscriptions comes out to be about $5,000 a month. So I guess when I think about like, you know, the number that you would need to have six months of, you know, emergency savings or whatever based off of, that's kind of the number that I'm kind of going around somewhere between four and five for those like very necessity kind of items. And then in a, what we had been doing for the most part of this year was had a discretionary spending amount between like 800 and a thousand.

and that's from anything like things that pop up with the dogs, like a vet bill. We hadn't really patted our emergency savings for most of the year, but $1,000 was really just kind of like a cover-all, like, oh, we need a new pair of jeans or whatever, want to go out to eat or something like that. That would sort of encapsulate all of that. So we were, you know, mostly spending about six grand a month in all of kind of the bills plus necessities plus, you know, discretionary. spending. Over the summer, though, we have been spending a little bit more, and that was actually

intentional because we had a couple trips planned, et cetera. So that discretionary spending amount went up by a couple grand. So all in, we have been spending over the past three months, about eight grand, but that was after a big chunk of the debt pay down journey happened. So there was kind of some wiggle room there. We figured for that to happen. Thank you for a lot of that detail. That was fantastic with that. I think we will definitely have to spend a lot of time in the expenses on this because there's a lot to unpack there. But let's let's continue through and talk about net worth now. What are your current debts and investments right now? Let's see. So debts, I have, which is I know going to be probably a bigger topic of conversation. I have $18,000

in student loans. That is at a, they're like a bunch of tiny little loans, but they average out be 5.5%. So I know that's kind of like in your, you know, gray area, five to seven percent. What do you do with that kind of thing? So that's 18K there. The window loan is 9,000. I don't want to pay that off early just because it's a zero interest, kind of same as cash deal if we pay it before July of next year, which we already have a plan to do. And then the other one is the HELOC. So that's at about 10K right now. And that really came from, we had a little mini disaster in March where our sewer line broke under our house. And then they had to like excavate our front yard. And it was a whole mess. So that really covered that so that we wouldn't have to add anything to our debt that we

were already trying to pay off. That's a pretty low interest rate too at 4% the HELOC. So again, I'm not like super rushed to pay that off. And then the only other one is the mortgage, which is at 155. Awesome. And what about your investments? So investments is I think where we're going to, that's kind of our next step. So we don't have a lot in terms of investments. I mean, I guess if you were to include the equity that we have in our house right now, since we've fixed that up and also saw appreciation in the market, we have roughly between 80 and 100K in equity on our home. Another question in this session today from us is going to be whether or not we sell the house because we are probably not looking at living where we're currently living in the long

term. So kind of thinking through that strategy. But other than that, I have like some stock in my company that because we're not public right now, it's, I'm pretending it's not there. Like if I, if I get that windfall eventually one day, that's cool, but I'm not going to bank on that. So that's what I would say in terms of our investments. How about emergency reserves? How much do you have? Oh, emergency reserves. Sorry, I forgot about that. Emergency reserves, we are at 15K right now.

We decided to, like, basically whittle that down to nothing as we were going through the debt paydown journey. And then we only recently, just in the past couple months, started to build that back up. I love it. I think a huge part, so I'm gathering here, is you have a modest net worth, probably just positive, probably in that 50 to 100, maybe zero to $50,000 range? Is that sound about right? Yeah, I would guess, yeah, not very much, no. Yeah, but something around there, yeah.

But what I'm gathering is that you just went through a remarkable debt paydown journey. Could you fill us in on the backstory of your debt paydown and recent events? It sounds like there was a move from California to where you're currently located. Can you walk us through maybe the last year or two or whatever that story is? Yeah, yeah. So there has kind of been this trend, I think, in the tech space. I work in tech. But there's kind of in this trend in the tech space, this great migration out of the Bay Area into kind of lower cost areas. And so my company was opening up an office in kind of that Midwest, kind of eastern region. And as a part of that, they asked me to move to help open up that office. And so we did relocate in a part of that relocation. we wanted to really capitalize on the fact that, like, hey, we couldn't afford real estate where we were coming from. So, like, let's do that here.

And so that's where we bought this duplex that needed a ton, a ton, a ton of work. And we're like, oh, great. My wife's very handy. And she actually was a carpenter in what I call a past life. She's had many lives, many career kind of areas that she's been in. But we decided to purchase the duplex. We completely renovated it top to bottom and all inside and out. And so that was a really big part, I think, of what brought us into that debt was actually, it was more of strategic debt, I guess.

It wasn't just some of it, as I think Mindy had kind of mentioned, is like some of it was, you know, like just going to gap and, you know, buying some things or whatever. But I think the majority of it really did come from having to buy things for the house. or pay things like material costs, that kind of stuff. And then also, you know, eating out, buying pizza because you're so tired at 2 a.m. in the morning and you're like, you know, I just need to eat something, you know, kind of quick and fast. And so you're doing like drive-thrus and things like that. So that all sort of added up. How old are you guys?

So this is going to be another time. There's so many topics I have for you. We're a 12-year age difference. So I'm 30 years old and she is 42 years old. Actually, she just turned 43 and I'm going to be turning. 31. But there is an age difference there. And part of what I maybe wanted to talk about as well on this show is like, how do we think about that in terms of retirement? If, you know, one of, like my 401k is only going to be helpful for like when I'm that 59 and a half or whatever.

So there is an age difference there as well. When did the discussion, we'll definitely get to that. I'm sorry, I'm just rapid fire peppering here with questions. When did the discussion about building wealth kind of get serious in either your life or your joint life with this. Yeah. Okay. So we have always wanted to invest in real estate and that was really like appealing to us. So the decision to move out of the Bay Area was what was a financially motivated one. And then buying the house was also a financially motivated decision. I can't say that we, you know, put pen to paper and actually we're tracking our expenses and doing budgeting and all of that stuff. It was kind of just like a shoot from the hip kind of thing.

So when we actually got serious and started tracking spending, doing all that, that was January of this year. You've been undergoing a process for the last year or two of getting more serious about money that has had multiple jumpstarts. And it's paying off. You're saving a ton of money right now and completely overhauling your financial position. But this is still relatively recent and you're still kind of picking up a couple of things. Let me ask you this. were both of you equally excited about the move away from California to the current location? There was definitely some hardships there.

She was a managing owner of a restaurant, and so she had to essentially give that up for this move. And so there was a little bit of a slow start for her to kind of find work here. And so she's just now kind of getting on her feet with that. But I would say her two main skill sets are really in kind of restaurants and all anything that has to do with that. And then carpentry. So right now she's doing carpentry work. But we do eventually, and this is another topic of conversation, we do also want to look at owning a restaurant one day too as a possible small business venture. Last question for me until we get back into more of the specifics of this.

What are your goals or what's what are you looking to achieve from our call today? Yeah, so I think goals for the call are just to really help us to create more focus and a better strategy for what we're trying to accomplish here. I think you kind of hit the nail on the head. There's been a lot of starts, but they all seem to not go in the same direction. Like there are many different philosophies that we've had over even just the past few years on building wealth. And I think that has slowed us down. And so what I would really like to get all of your take on is how we can build that in the right path, accelerate that wealth, and trying to get to the kind of bigger goals that we have in sort of the time range that we're hoping to achieve those by. Well, let's start with what you're doing really well right now is you're saving a tremendous amount of money each month.

And that is the number one fundamental that makes all the other decisions right now relatively less important, I think. The decisions about where you allocate investment capital and those types of things, we'll get into that for sure about whether to pay off debt or invest and that kind of stuff. But you have an incredibly strong position of like eight grand in cash per month that is hitting your bank account after expenses. Right. And so that makes this discussion very easy in a lot of ways and gives you a little bit. lot of luxury where you could like you just do that problem and that masks the impact of a lot of these these other investment decisions because you're going to get rich quick either way if you keep that up on that but i think that you still have more room there and that may be the most important

place to focus so why don't why don't we start with those expenses and dive into a couple ones that stood out to us yeah sounds good okay yeah i think that one thing scott before we jump into her expenses. One thing we don't do enough of on this show is commend people when they have paid off a huge amount of debt. You paid off $66,000. That's fantastic. Hooray, hooray. I'm so excited for you. That should be, and it seems like it is, like a huge motivator to continue that. You have a loan for Windows that you said is the same as cash. So you have a plan to pay it off during that same as cash. period, which I think is fantastic. Why pay it off if you don't have to? It doesn't cost you anything. It's not negatively impacting you to have this money out and you have the ability to pay it off.

So I love that. Some of the expenses that popped up that I had questions about were the utilities. Are you able to split those out at all and charge the tenants for utilities? Is that a thing in your area. I know sometimes in this market utilities are included with all the rents. So in other markets, it's common to build the tenants. So is that an option to get a little bit of help with the utilities? Yeah. Actually, our tenants do have a separate meter. So this is just our gas, electric, and well, the water bill we have to pay because that's for the whole house. So the water bill is 65 of that. And then I budget high for things because I feel like if I just put the number in of the highest I've ever seen it, then like it will be lower than that. So that's kind of how I do

budgeting. Maybe that's not necessarily the right approach. But the highest I've ever seen the lights is 120. The highest I've ever seen the gas is 300. And that's typically in the winter time. So it's usually less than that. That's the highest basically. But we usually have. But we usually have. have a little bit of cushion. Yeah. Okay. I like that idea. Sometimes budgeting can be really daunting. So if you just use these high numbers, then you're coming in less every month. Hooray, you win. If it continues to come in super high, I'm wondering if there's a way to mitigate it. Like if you're both not working from home, can you turn it down during the day in the wintertime when it's really cold, get some sort of programmable thermostat so it starts to warm up

again before you get home? Because I hate walking into a house. It's 40 degrees. the car payment is it's a lease so now there's things to think about i'm not going to tell you that a six hundred and twenty eight dollar a month lease is a really great idea i'm not going to harp on it because there's nothing we can do to change that but what are you going to do with the car when the lease is up in next summer do you need two cars can you get rid of it um and cars are really expensive right now. I don't have a lot of experience with leases. When you sign the lease, do you have an opportunity to buy it at a specific price at that time? Or do they set the price when you bring it back? Yeah. So, they're good questions. I actually, that's something that we have

to look into. I don't know. I know that you do have the option to buy it, right? Like when you bring it back. And so I don't know if that in the paperwork, it was like already agreed upon price, and then we can, you know, buy it at that cost when we, you know, instead of doing a trade-in kind of thing. I am on the slow offensive front of trying to just get us to have a cheaper car. My wife is a very big car nerd. And so that is like, that has been a journey. She has said on a couple of occasions, if we can think about X, then we can, she'll settle for a less expensive car. So I'm just trying to like, I'm trying to massage that in.

But yeah, I think it's expensive. I think it's high for a car. But then again, I don't really care that much about cars. I could drive a beat up carola and be fine. But we, I will say that we, I did get her to sell one of our cars. So once I became like 100% remote with COVID. and everything. We had two cars, and she was really driving. The SUV is the one that we have. That's the $600 payment. And so I got her to sell her car that she had, which is kind of impractical for where we're

living now anyway. It was kind of like a small, almost like a race car of sorts. It was just not necessary. And so we did sell that. So we don't have that car payment anymore. And we did give a little bit of windfall that we put towards debt. So right now with COVID and supply chain interruptions, cars are really in short supply. I would look at your lease documentation now while you have the opportunity. If there's already a set cost where you can pay for it and get the car, it might be so low that you could buy it for that price and then immediately turn around and sell it. But cars are in short supply. Use cars are in short supply. I only know enough about this to be dangerous. So I'm going to make you do all the work and go learn about that.

But definitely read your lease documentation way in advance. And then if you don't have the opportunity to buy it at an already set price, it may be really, really expensive to purchase this car, in which case it's a better option to give it back at the end of the lease. But then what are you going to do for a car? So you have a little less than a year to decide on these things. hopefully the supply chain is back up to speed by then and your options are greater, but, you know, just something to think about as you're going through this. Yeah, it's a great idea. I wrote that down.

One other thing that I see is your cell phone bill. What was that again? Was that 180? Or was that? Because I have 290 and maybe you have. I got that down. Actually, after watching or listening to your show, I called them up. And it turns out that, which I didn't even know this was a thing, my wife used to live in Chicago.

She's lived all over the country. But apparently in Chicago, you pay higher taxes for self. I didn't even know this. But that was adding something to our bill. And then I guess the other thing was that our phones, because we had purchased new phones, and there was like a payment that was like as a part of that bill, we're not planning on getting new phones. Thankfully, that's not something that she nerds out about. So we're going to keep our phones until.

they basically die, but the 180 is what we were able to get it down to from the 290. That does have an unlimited data package, which I have tried unsuccessfully to get us lower, but we do use a lot of data, and it's kind of difficult for us to peer back on. There are less expensive options. I know that Republic Wireless has a like $10 or $15 a month plan, and Mint Mobile has a $10 or $15 a month plan. Those are options to look into. They run on different networks. I think they run on the Sprint network or the T-Mobile network.

So, you know, make sure that that network comes in where you're living and where you're spending a lot of time making phone calls. But there are ways to get your cell phone down. Now, this is all assuming that you don't have a contract. If you have a contract that you have to break, that can be very expensive. So, again, just some homework to do is to read all of those. of that information and make sure that you aren't uh make sure that you aren't costing yourself money you know to break a contract to go down uh scott what else did you see in the expenses

you know i i i know that i'm looking at when we discussed him i think the car one was a big one um if you make it a different a different decision there long term that could be hundreds of dollars um and then a cell phone was one i don't think there's a lot of in your discretionary spending. I mean, you can you can probably knock some of that down by being very disciplined, but then that's going to impact your quality of day-to-day life in there. And you don't need to in order to create an enormous surplus of dollars that you can deploy how you will. Literally, $100,000 annually is being created. And that's a conservative estimate here, not including the bonuses you're going to get a few times a year. And,

potential equity from your company. Yeah. Yeah. Yeah. I don't include bonuses in any of that. So I think you're, I think you're spot on in terms of our savings rate here. Yeah. Okay. Well, I think, I think based on that, let's let's go to what should we do with this hundred grand annually that you're going to begin generating and, and all that. What do you think? What are your instincts telling you that you want to do and with that? Um, so we have to, we have to get into the stock market at some point soon. I feel like, a little bit of FOMO, the fact that we have not invested in the stock market yet. I think just how we go about doing that, like I mentioned that 401k option versus an after

tax brokerage account. That's what I kind of need a little bit of help with. I do want to finish patting our emergency savings. I mentioned we have about 15 grand in there right now. According to my little sheet here, we should be closer to 22, no, 20, yeah, a little under 23 by the end of this month. That's with that savings rate that we have between that, that 7 and 8K that we're producing right now. So I feel like that would make me feel a little bit better to then start maybe investing in the October-ish time frame. But yeah, I'm thinking index funds. Other than that, I don't really know enough to say. What do you want? Do you want to retire early? Do you want to build a lot of wealth and just save for retirement?

Like, what is it? What is your, like, can you re-state your end goal? Yeah. Okay. So this is one thing I think was probably pretty well captured in Mindy's summary. But like, we have a lot of goals. We have a lot of dreams. And there's like never an end to like, you know, coming up with what we want in life.

It's a matter of like what's more important. And then like in what order do we, do we have those things? happen. So maybe if I just like say the big ones and then we could kind of like reverse engineer it from there and figure out what the right kind of financial strategy is. I will say this with a caveat. Like the stock market piece is like the nice passive, you know, way of investing. But we are also like pretty handy, right? Like we know how to fix up homes. We know how to, you know, run restaurants. Like so so that is an option for us as well. But I would say goal wise, My wife is getting to the point where, like, we start, we need to start actually thinking about kids sooner than later because I don't want her to be, you know, 80 and sending our kids off to college.

So, so having kids is one thing. Having a single family home is a goal for us eventually. If it doesn't make sense in the short term, I think we're both fine with that. But we do want a nice home eventually. And I would say probably other thing is it really is a goal for us to start that restaurant or have that kind of small business. So in terms of like the short term things where we probably wouldn't want to put that money in the stock market, like that that's the that's the cash. I guess we would we would need to think about the cash to get to those goals kind of in the shorter term. So you want you want financial flexibility right now and you believe that you are.

ready, willing, and able to repair properties and start businesses? We are capable of doing it. We're not in the financial position to do it, if I understood your question correctly. You'll be in financial position in one year to do that if that's what you want based on what you just told us about your savings rate with that. You'll have $100,000. You can accumulate $100,000 in liquidity. That would be plenty to purchase a restaurant, most likely, or at least finance a restaurant,

buy and then finance a restaurant or buy and finance a one or two rental properties with that. Okay. From that perspective. So, and let's also just pull out like you are also in position right now to easily cover the cost of raising children, even if one of you stays home. At least if your wife stays home since you earn the higher income with that. Yeah. So that's also something that I'm observing about your, you won't save $8,000 a month. month following that, but you can still build wealth and do that from there.

So I think what you're saying is like, you know, how do we kind of envision our family, like once we do bring in children? And that is exactly how we did envision it. She would stay home with the kids and I would be working. I think in the next 10 years, like a 10 year goal for us is for me to also like not necessarily retire, but have the option to if I wanted to. And so when I think about like what do we do first, I'm kind of thinking this like next year or two in my mind is like the continue to hustle hard. And then like and then maybe that's when we start to, you know, reap the benefits of what we've been doing. But we're at this weird point in time. We're like we just came from a super high cost area where we weren't really able to save anything.

We come to a low cost area, put in a bunch of money in this like, you know, investment that, you know, hopefully is going to pay off. And then now we have paid that down and now, like, debts down and now we're like on this. So I'm not really used to having money in the way that you're talking about it in the future sense, if that makes sense. Like I see it on paper, but I kind of don't believe it. That's because you just crushed your debt and you've only been doing this for a year

and you have no money right now. But if your accumulation is the way you just articulated it, that will be 100,000, You have the option to accumulate $100,000 in your bank account after tax and probably have incredible credit in those types of things, which will allow you the option to either invest in stocks through a 401k or through after tax brokerage accounts to either buy a rental property or to buy a small business with that. Those are three good options. Which one you choose depends on your goals.

And I think that that's where my advice would be. be to have a money date and plot that out and say, here are three things we can do next year. If I crush the debt, we can be debt free and have 40 grand left over outside the mortgage with that. If we invest in stocks, we can have 36, 37,000 inside our 401ks plus our matches or those types of things. Or maybe if I have a Roth 401k option that or whatever, I can have. somewhere in that ballpark of money inside retirement accounts, tax-advantaged,

and then also have this amount of cash left over, or we can have, you know, or we can have cash, and we can just not invest or pay off the debt and just have this much cash and buy a rental property and a restaurant or buy a restaurant. But I think those are the options available to you inside of one year to 18 months, And I think that having that conversation now and learning a little bit more about that will be hugely advantageous because you'll be able to say, oh, that's how much it costs to buy a restaurant or a franchise or whatever it is. That's how much it will cost to buy a rental property in one of these several locations we might consider moving in or a small portfolio. Or if we want to move, if we want to do the completely passive route, here's what that looks like. Yeah.

The good news is because you accumulate $100,000 annually without doing anything tax advantaged, you're going to accumulate a million dollars over 10 years. And if the market does even close to average returns after that, you're going to have well more than a million dollars in 10 years, which is likely to achieve most of your goals in your 10-year plan. So you don't have any bad options, but I think those are the – why don't you react to those three options I presented and maybe see if there's other options as well that I haven't thought of here?

Yeah, well, first of all, I'll just say, like, my wife and I come from very, very humble. We were raised with modest, you know, living. And so to say, you know, that we'll be, and I told her that before, I was like, you do realize we just save the money, just like, not even talking about, you know, any kind of rates of returns in the stock market. We just save it. We will hit a million in 10 years. So that is really exciting, but it almost, again, doesn't feel real yet because we're in the beginning of this journey. In terms of, so I guess when you say like these are the options, I mean, to me, I just am a little confused of, or not confused, but like I'm challenged to figure out what should come first. Because if I think about accelerating wealth in like a real way, I don't see it being in the stock market.

or the 401K. That said, the stock market and the 401K feel like safer bets. So I don't want to, you know, just go, you know, all out on rental properties and small businesses and then these things could potentially tank and that's like all of our wealth. So is there some maybe combination of doing all of those things, but then at a slower rate of getting to that small business goal slash, you know, more rental properties kind of thing? I don't think you can do all of those things. And I think this is the struggle everyone goes through when they're starting to invest. is if you diversify at this point, you guarantee yourself a mediocre return and you delay on those things. You don't have like that's a diversification is a luxury you have once you get past the several hundred thousand dollar mark in network.

You can do it. You can buy a rental property and invest in stocks and buy a business in the next two or three years with that. But you can't do all three in the next six months. Right. Yeah. And you can diversively. But so you're going to have to pick one. to start with that. And I think which one you pick should be based on those goals, right? If you start a

business right now in a restaurant, you know, that could be, I don't know all the difficulties and all those types of things, but that might take you a year or two to stabilize before it is now a good idea to begin your family with that. I want to jump in here, Scott, before you talk about investing in the stock market. I want to jump in. Right now, it is very important. It is very important. It is a so difficult to find people to work in restaurants. This is, I don't want to get into political commentary. I just want to say that restaurateurs are having an almost impossible time finding workers. So what sort of restaurant does she want to open up? Maybe now is the time to put that on the back burner, not because it's not a valid goal or a, you know, a valid desire, but because

it's going to be an uphill battle with getting it. up and finding a place or finding people to work there. Now, if she's going to be a personal chef and all she has to do is rely on herself, that's a different story. If she needs one other person, that's a different story. But I went out to breakfast this weekend and it was a super long wait. You went out to breakfast, Mindy? We host a money show. I know. I know. You can send all of your nasty comments to Scott at Biggerpockets.com. But no, we walked downtown, had a great, breakfast, but it took forever to get a seat. It took like 45 minutes for our food to come out, not because they were so busy, but because there was nobody to work. So I don't want to throw

cold water on your plans. I want to throw realistic content or realistic things to consider towards you. That's some lukewarm water. A little, a little chilly water. It's a difficult time to invest in or to open up a restaurant right now. On the other hand, if so, many people are having such a hard time finding workers, maybe now is a great time to, you know, buy a restaurant. I don't know. I'm just, again, throwing this out there for you to consider. I think it's a research opportunity with that. I think Minnie makes some great points. There you go. And I was going to bring in the point about maybe now that is a reason, like she says, that this is now a great time to buy restaurants because people are selling them at very low

low prices or going out of business with that. And so it may be that that's actually a really good opportunity depending on those types of things. But bottom line is like you and your wife need a line on the goals that you have and what you think is the best opportunity and make a play on that best opportunity. That's option one. Mindy, but now go ahead and go ahead with option two that you're about to go. Well, no, Scott suggested a money date.

Scott and I sat down at the end of last year and kind of laid out. a great way to have a money date with your spouse. So I suggest listening to episode 157 of the Bigger Pockets Money podcast together with no expectations, not, you know, hey, we have to do this. Just let's listen to this show. Let's take notes as we're listening and let's have a conversation so that we're both on the same page. Because I think that's a really great idea because you're, you've paid off a chunk of debt

that is awesome and we really need to celebrate that. Yay! Like the Dave Ramsey debt free scream is really awesome. We should have a you paid off. Your debt. Yay! Scream.

But anyways, woohoo! It's interesting that you say the money date because we actually did do... I listened to your show like all the time. If she were here and not at work, she would say that I'm slightly obsessed. But the money date we did do together.

this was at the start of like our debt paydown journey. So this was just like the we need to actually prioritize what we want because we're going in 85 different directions. And it's causing us to like accumulate debt at a rate that like is honestly shameful for our income. So that that has happened. It hasn't happened recently. And that's I think what probably is a good idea for this particular point in time like re. Recalibrating on everything. You have good options, but the stakes are huge, right?

You have the option to realize the life that you want years in different directions based on how you approach this with that. And it's not like there's one right option, right? Let's suppose you say buying a restaurant's the right option for the return perspective. Well, maybe it's the wrong option for the family perspective with that. And stocks are the better option with that, right? Because it's passive and allows that to just continue over the next five, ten years. with your current state and still build up. So there is no right answer to that,

but that's the kind of discussion that if you guys have, I think your outcome will become much clearer. You'll at least have some instincts about where to look and dive in much further to investigate. Yeah. And then I guess on the, so I agree with both of your assessment on the small business front. Like we have sort of seen the struggle that small restaurant tours

are kind of running into and with regard to the, you know, shortage of labor in that particular area. When it comes to rentals, I almost feel like there's a similar challenge that, like, it's kind of hard to find good deals on rentals because the housing market is like up so much. And so that is also, you know, like, do we maybe want to sit out on that a little bit? Or should we stop trying to time the market and just jump in when, you know, when we're ready? I mean, I don't know how to think about that.

That might lead into the next question around like what we do with this place. but just pause for any thoughts there from you. I don't know how you can make that call on rentals versus the stock market right now, right? They're both up. That's really high. It's 2021. Where's the asset class? Is it cash?

Oh, wait. There's going to be a lot of inflation. So I can't put money in cash. Is it Bitcoin? Is that a viable investing strategy? But, you know, to offset inflation with that. Is it real estate? You know, real estate prices are through the roof.

Is it stocks? Stocks are through the roof. Is it small businesses? You know, business, oh, business valuations are through the, the roof with that. So I don't know how you can make a call on which, you know, do I pay off debt? What if I get, what if inflation happens and salaries continue to skyrocket? And I'm paying off debt with dollars that are very expensive today and that are going to be really cheap tomorrow. Yeah.

And so I don't know how you can make a market-based decision on a lot of these things right now, other than continuing the fundamentals of what is the best asset class based on what I think the long-term outlook is of it. What gives me the, best probability of achieving my goals over the next five to 10 years with that by concentrating more heavily in that area with that. Or do I want to build a diversified portfolio over 10 years, slow and steady with that? I think you're going to have to make that decision with that, but I don't think you can say, I want to hold on real estate because I have another alternative, unless you feel confident in your analysis of all those other alternatives with it, which I think

is impossible. Yeah, that's definitely a good point. Everything is hot right now. Yeah, like, where are you going to put it instead? I think that's got to be the thought process. And there's problems with all the areas if you look for them. Yeah. Wow, Scott, that's not happy at all. Okay. It is happy.

It's telling her, hey, she can be freed from having to worry about the market with this. It's a good problem to have, I guess. Yes, you have a great problem to have. But not choosing where to put the money, it's just going to sit there and lose. lose value that way because inflation is most likely coming. We haven't talked about any sort of 401k match. Do you have any match at your work? So we don't, but as of January of 2022, we will. We will start having a 3% match of our salary. Or yeah, 100% of our contributions up to 3% of our salary. So I planned to start doing that at least. But like there's a real question of like,

you know, do we reduce our taxable income right now by like we could we could literally by the end of the year max out my 401k. Like that's the cash flow that we have right now. But is that smart considering that we're 12 years apart and we're not going to see that $19,500 until I'm 59 and a hat or you know, it'll be more. 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 taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to

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That's why I remember 988, Canada's suicide crisis helpline. It's good to know just in case. Anyone can call or text for free confidential support from a train responder anytime. 988 suicide crisis helpline is funded by the government in Canada. So another question is, does your wife have any sort of for a option. I believe she's self-employed. You said something about contract work. Yeah. So that is another question that I had for you all is like should she so she's not she's doing contract work. She doesn't have an LLC and I know that there's some benefits to doing that. And so should should she officially

do that? And then I think I've heard on your show that there's a way to do like a 401K for like a small business or I think you can even do it for an individual right if you're LLC. So like, Should we do that and max that out there? What I did, my husband is unemployed and then has a blog and some self-employment income. He has no other employees besides me. I do some work through the LLC as well. So we created an LLC. We have a self-directed solo 401K plan for each of us because he is the primary member of the

LLC and has no full-time employees other than his spouse, me, we are able to contribute up to 19,500, which is the traditional 401 contribution, personally, each one of us. And then the LLC, the company, can match our contributions up to 25% of our income. The total amount, and I can't I ever remember if it's 52 or 54, but I could have $52,000 or $54,000 contributed to my 401K every single year. And the 195 comes out of my income. So that's tax deductible. I'm sorry, that's text.

What am I trying to say? That's, I'm reducing my taxable income by that 195. And then additionally, the company. kicks some in. So if she has the, does she have any 401k right now? No. Like, does she have any money in any sort of 401k or IRA or tax deferred retirement plan of any kind? No, and honestly, I don't have much either in the way of that. Like, I think I maybe have six or seven K, which is kind of very nominal. Okay. So that could be an option. Again, this is something to, a research opportunity to look into, you know, that's a great way to reduce your taxable income.

Your adjusted gross income is too high right now to contribute to a Roth option. Is there any benefit for you guys to contribute to a Roth self-directed solo 401K? Because that's an option if you set it up that way. Does your company have a Roth option? We talked to Kyle Mast on episode 200. about how he feels that the Roth option is going to be one of the easiest places for Congress to cut to help increase income for the government coming in because we've just been writing checks for the last year and a half. So we have to pay for that somehow. So he thinks that the Roth option could go away in the future.

So right now, contributing to a Roth might be the best choice. And again, you have to weigh my taxable income reduction versus the tax-free growth in the Roth. But those are things to look at. Ask your company if they have a Roth option. I think I'm not eligible to contribute to that. No, like isn't my salary above the threshold. You're not eligible to contribute to a Roth IRA on your own. I'm wondering if your company has a Roth 401k option.

Scott, do you know if there's a contract? an income limit on the Roth 401k contributions? I don't think there is, right? I don't think there. I don't think there is. I max out a Roth 401k through my employer. Yeah. Okay.

Got it. Okay. I think I was mistaken then on how that kind of works. Or maybe I was getting that confused with the IRA. Okay. Yeah. I think it's hard to say don't take the match. Like you definitely should take the match in there and contribute enough to do that.

That should be your. policy on an annual analyzed basis. And then after that, I think it again comes back to the discussion that you need to have with your wife about like, what is the goal here? What are we trying to back into? What's our timeline for those different types of things? World Zero oyster. How do we want to approach this with that? And if it is, we want to go and start, I'm making this up, but we want to go and start our family in the next six months. There's no reason you can't do that right now and be responsible financially with that, you know, that might, that might be a good way to be like, okay, then we're going to just crush our 401K contributions right now and reduce

taxable income and back into that wealth over a 10-year period or 15-year period with that because it's totally passive in there, right? So I think that that's where, you know, and but if you're going to, if you said, because you told me earlier, Mindy and I earlier, that you, you. feel very handy and competent around rental properties and those types of things. If you feel that way, you may be able to get a better return depending on where you move and where you live, which is another part that's going to come out of the money date with this, where that may be a better option for you than putting the money into an index fund inside of the even a tax

advantaged retirement account with this. So I think it's hard to argue don't take the match. and maybe consider things like a HSA, if you have that, or those types of things. But then with the huge amount of money that's going to be left over after those contributions, it could be that real estate or the restaurant is a better option. It's just going to depend on your goals and timeline with that. Okay. So here's something that I just looked up. Your modified adjusted gross income under 198, 198.

$198,000, you can contribute to a Roth IRA if you are married filing jointly. If you are married filing separately. She's going to be way above that if she brings home 15K a month after tax for household. What I'm, I did 15 times 12 is 183. But she's making 250 on that. I don't, I didn't include my bonuses in that. And that's after tax. Oh, okay.

So, well, if you both contribute, you both max out your 401K, you reduce your taxable income. And now you're, I mean, that's almost $40,000 you could reduce it by. So that's another research opportunity to go in and see if there's an opportunity to max out your, your Roth IRA or to even be able to contribute to a Roth IRA. With children on the horizon, my love for the real estate, for the restaurant is even less. And I don't mean to discount this goal. I just know how much energy it takes to run a restaurant. And I know how much energy it takes to raise kids.

And it just seems like, I mean, index fund investing, stock market investing is really, you put the money into the stock or the index fund. And then that's the limit of your involvement in it. You have to, I mean, the best, the best thing to do is not have any more involvement in it at all. The trade-off with it, though, in your context is that you're setting yourself up for mathematically, you know, if long-term averages hold true a 10-year grind where your position will improve, but you will not really become that much more free, you know, from that perspective over that 10-year period. That's the trade-off with the index fund investment with that. You guys have a great situation because you spend so much less than you bring in. So you'll be able to do lots of things and have that luxury of choice there.

But you will not generate a large amount of passive income that can fund your lifestyle passively for about 10 years if you decide to go in that direction with the index funds. Right. And I'm thinking, okay, so for the rental option, can we maybe double click into that a little bit more? Because I think the biggest point of contention right now, we disagree on whether or not we should hold on to this property or sell it. So it's a little bit of a tangled thing. So what I hear you saying is that you want to invest in more rental real estate. And if that's the case, how long have you owned this property? Your mortgage probably has a 12-month residency requirement. Once you've lived there for 12 months, you can move out.

You don't have to refinance your property if you choose not to. you can move out buy another property and get the same owner-occupied lower down payment, lower interest rate, and do it again. Find another house hack and rent out apart and live in a part for 12 months and do it again and again and again if that's what you want. Or do it one more time and then by the single family home that you mentioned. So there are options for like if you're okay continuing to move, there's options to find, like if you find a good deal, you had mentioned before, you know, should we even bother because the market's so hot right now? Yes, the market's hot, and I think you should absolutely be keeping an eye on the market, continue to look for something

when it works out. But having the ability to move into another property as an owner-occupant is a good, can help you get in there sooner than if you had to save up 25%. set down. Yeah. So here, here's, I think, the nuance to this, because we were kind of all over the place when we were first getting into this real estate investment journey, we bought the house, we fixed it up. Okay. The thing that we were going to initially, what we initially planned on doing is refinance it, take money out of it, and then buy the next one. And then we quickly realized, oh, wait, with all this debt, that's not smart. And a lot of that insight actually came from your show, so thank you. But I stopped feeling comfortable with that, and I think she did as

well. And so we kind of put the brakes on that. And so now what we have is this HELOC where, you know, we were originally planning to pull money from the refinance cost nine grand. Okay. We were also not very great at like keeping, so these are lessons learned of a novice, novice real estate investor, but we also weren't tracking the spending of what all those costs were adding, up to. I think it's somewhere in the ballpark of 75 to 80. I think that we spent in total of everything. I mean, this is a complete renovation of a duplex, right? So I fear that I know that the market's hot and we could sell high, so to speak, but I think that's probably not as likely that you're going to sell super high to someone who's buying to invest in real estate versus someone who's buying their forever home that

they're going to, you know, dream about having kids in and stuff. So I just worry that we're not going to get the return. Like, it's hard for me to stomach that we would get the, not a good return on this, right? As much as we've put into it. But the caveat here is that we're moving five hours away. That's already a decision that's been made. We need to be closer to my parents. There's a lot of reasons health-wise. And so would we keep a real estate, would we keep real estate five hours away when we, this is the only one? one we have. Do you have a bigger pockets pro membership? Actually, I think we do. Yep. Okay. You should what here's what you should do. Run the numbers on your duplex as a rental

property in the calculator. Just put them in, put in conservative assumptions, put in property management, put in your utility bills, what you think rents will be in the side you have when you move out and say, I am purchasing, quote unquote, this rental property with right now, if you sold the place and you have $100,000 in equity, how much is it worth? So when we got it appraised, which was a year ago, it was $2.25, but all indicators from other duplexes, which ours are nicer than those are like $250-ish. We're kind of in a hot area, though. So if you sell it for $250, we don't need the specifics of that. But if you sell it for $250, let's call it, let's assume you will need the specifics in your analysis.

But if you sell it for $250, you're going to incur, you're going to incur, you know, seven to eight percent in closing costs to get your money out on that. And that will be, um, one percent is 2,500 times, it'll be about 20 grand. And so if you have $100,000 in equity, you'd be left with $80,000 after selling it. So say, I'm putting down $80,000 in cash, uh, on, on this property. I have no buyer closing costs because you already own the property and run the analysis as a investment duplex. and see what I make that investment right now, or would I take the $80,000 and apply it somewhere else to get a better return? And you'll have your answer about what you should do with the property with that.

My instinct is that because you already own the property and because to sell it, you'd have to incur those closing costs. And because it's a duplex and an investment property, my instinct says it's likely going to be turn out, hey, that's probably a reasonable investment and you've got to install property management and you're going to do just fine. you're probably also going to be surprised at how much rents have increased over the last year and be pleasantly surprised with that and that will, I think, help some of the income situation. But I think running that analysis will give you your answer. How long have you lived in the property? We have been here September of 2019, so we'll be two years now. Oh.

If you sell the property, you may – go ahead, Mindy. This is your trick. I was going to say, if you sell the property after two, years of owning it, you'd pay no capital gains taxes on the portion of the property that has been your primary residence. So I'm not exactly sure because I've never done a duplex personally, but I know that you would pay capital gains and depreciation recapture on the part that you've been writing off with your depreciation that you've been renting out. But you pay no capital gains on the part of your unit that has contributed to the increase in the property value.

Mindy, I think we've actually discovered our first best investment for Carrie here, where you should talk to a CPA because you have a house hack, and that's a very complicated situation. And all the analysis I just gave you was pre-tax, did not factor in taxes. And the tax side of the equation is going to be treated. Your primary versus your secondary residence is going to be treated differently. And so your decision, an $80,000-plus-dollar decision right now, at least, is going to be heavily impacted by tax strategy. So there's no higher use of money than spending $500 to $1,000 to consult with a CPA or whatever that turns out to be for a few hours for advice on how to handle that situation from a tax angle. And then you can make it from, you know, figure out your investment decision first without the tax situation and then layer in the taxes on top of that and see if that changes the game for you.

would be my advice there. Okay. Yes. And all of my suggestions I had missed when you had said that you were moving five hours away. On that level, having one property five hours away doesn't necessarily make a lot of sense. I certainly wouldn't advise you to buy this property five hours away from where you're going to live. But since you already own it, running all the numbers in all the different ways is a really great research opportunity. That's my new catchphrase for this episode.

Just to see what makes the most financial sense. If you want to continue to own real estate and this property works out, then, yeah, keep it. Going forward when you move to the new property or to the new area, it sounds like you're moving to a place that you're semi-familiar with. Yeah, I would have a good lay of the land and like where. we should invest. By the way, we don't do this enough. Congratulations on your great problem. Because you house hacked, you now have a very good problem. And we're talking about it very seriously, all business. I'm all business today with this. But like that's a good, you have a very good issue on your hands with this particular property. And likely that you have a great investment

as a rental property or a tidy profit if you sell. So that's good. Yeah. Are you moving to a low cost of living, another low cost of living area? Or is it more of a high cost of living area? It's about comparable. It's about comparable. I would even say where we're living is maybe even a little bit higher, just slightly, though. It's not that much of a difference. But I guess the thing that I'm worried about is that if we were to, if we were to sell, I'm worried that appreciation hasn't had enough time to do its magic for this to have been like a good return. I think we would like not, we'd do a little bit better than break even, but if you just think of like how much money we put in, because we put in 80, like that's what we put in. And then with closing costs and everything,

I feel like we'd kind of just break even. And that breaks my heart because like literally blood, sweat, tears went into this house. So it's not possible for you to do this, or at least if you're a normal human being. But because we're looking in, it is possible for us to say this. That is what we call sunk cost, right? And, and theoretically, we should not worry about those costs. Okay. What's done is done. What I put in is put in.

The situation is what it is. Going forward, here's my current situation, and here's what I expect to happen in the future. I'm going to make a decision based on that. That may be not possible for you because you've put so much blood, sweat, and tears into the property, lived there, and had all that. So I want to acknowledge that.

But I think from a purely rational decision standpoint, if you can, if you can pop out and just think of it as a piece of property that is what it is with it, that will help you in your analysis, at least in running the numbers with it. Because I think, you know, that appreciation could be better the same in your new town and you'll have more cash flow on it or whatever that is, right? And so that's something you need to think about with that. But I also recognize that it's not really quite as, that sounds great to say,

and it's much harder to translate into practice in reality. Yeah. Well, I think it makes a lot of sense, though. I mean, in some ways, that's what Victoria has been kind of saying. It's like, you know, we, if hiring a property management company for one property and we're five hours away is not going to get, like, we don't want to cause an issue where it's like we're losing out over the long term. So if we have to maybe lose out a little bit now or less than what we would hope to have made, then maybe that's better than just drawing it out for

however long. So let's see. So. then if I was in your position in the new location, I would find a real estate agent who is knowledgeable about the area, knowledgeable about investments, and start seeing what's available. Maybe you get a really amazing property right off the bat. Maybe you're going to need to rent for a little bit. Do you have an imminent time that you need to be there? Or is it just you know that very soon you're going to move there? I think we had put the, goal out to like a year-ish. We said we would do too if necessary. But I think from both my wife and my perspective, it's like we don't want to continue to put down roots in here if we're going

to have to move eventually anyway. And so things like, you know, investing in real estate and all of that stuff. It's like, I mean, let's get there and then do it. Like that's kind of how we're thinking about it, like just speeding up the process a little bit. But yeah, about a year time frame. Okay. So you've got a lot of options. I mean, what I love so much about every part of your story is there's a lot of optionality. You can start looking now, but you don't have to be there tomorrow. You can start keeping an eye on the market. And Scott has a really great way to look for properties where you don't look at what's available. You look at what has recently sold. If you know that you want a duplex or a triplex or a fourplex, look at what has recently sold in the

area. Oh, there's a lot that's old. Hey, there's no multifamilies there. Maybe I should just look for single families. Seeing what has sold in the last three months based on what you're looking for, your price range, et cetera, can give you an idea of where you should start looking, can show you how much those properties are actually going for. So when a good deal pops on the market, you can act very quickly. We discussed that in, our book, first time home buyer. So if you don't have a copy, I would love to send you a copy. Looks like this.

Awesome. Yeah. But there's a really, Scott details it in a really, really great way. But looking at what is on the market now, you may see only not great deals. By looking at what has sold, you can see what these properties are selling for, what people are valuing them at, and make a better educated decision. I agree. I think it comes back to you're going to have to research, you're going to have that discussion with your wife and figure out what you want to do, and then heavily research the options available to kind of figure out, hey, what is the best one for us?

What's going to achieve our goals the best across the three large categories of decisions we discussed around buying rental property, investing in stocks, or whatever? You're going to have the option to do all of the above in the next two or three years. But you're going to have to start somewhere and likely go hard in that area. Or you can just keep paying down debt as a fourth option with that. But I think that will come out of that discussion. And then that research, I think, will kind of further help you decide than that. Maybe you say, hey, real estate's perfect. And we're going to because we feel confident in the new market and our ability to repair

and manage the properties, or maybe you decide that's not for you. But I think it comes down to that discussion and researching all the alternatives. I think it comes back down to you're going to have to have that. money date with your wife and then figure out where do we want to go with our lives from here and heavily researched the options we discussed here we had three around a tax advantaged index style fund investing approach or other stock market approach there that would be mostly passive we have the real estate option which is going to be semi passive but may play to your skills as you know in remodeling properties and and your interests in learning about that and could drive more cash flow or better

returns than other alternatives. And then third, you have the kind of entrepreneurial restaurant option that might play to your wife's skill set and experiences and be the highest upside opportunity, but the most work. You also have the option to just keep paying down debt. You have good options because of your income and your savings rate and your home equity with that. But I think those are big decisions and the strategy will be impacted based on what you want and when you want it with that. And so research will come into play no matter what. Yeah.

And just from a purely number standpoint, that fourth option that you're mentioning with like the rest of the debt that we have, considering that the rest of the debt is pretty low interest rate debt and considering what our goals are, would that be a viable fourth? Or is that kind of like down here in comparison to, you know, the top three that we had kind of talked the majority of the time about? It doesn't seem to be a high priority based on your, philosophy and what I've picked up based on our conversation, you don't seem in an urgent

in a rush to get completely debt-free right now, and you seem much more interested in getting a better mathematical return. But the right answer for many folks we've had on the show is pay off that debt and knock it out and be debt-free because that's just much cleaner. It doesn't seem to be the way you're wired. But if it is, and I'm wrong, then that becomes a much higher option or a much better option. I guess the approach that I had just had been taking is we wanted to pay off any high interest debt, but anything that was kind of like below or just at that like 5% threshold is like what we kind of have been ignoring. And that and that is what we're left with anywhere

between zero and 5.5. So that's what I do in your situation. Yeah. Okay. Okay. That's that's what I wanted to hear. So whatever that's worth. I think I think that's right. Okay. Okay. This was really helpful. I think we have three very clear directions that we can go into. It sounds like, you know, picking one of them and kind of concentrating hard in one area, maybe contributing to at least the kind of 401K and doing a little bit of stuff with the stocks is what I'm hearing from the conversation. But I think, that money date is probably way past due. Great. That's awesome. Yeah, I think the money date, having it regularly is going to help keep you on track and keep you both discussing it together because you're coming from

slightly different positions and slightly different mindsets having the conversation. And hey, remember, this is what we want to do. Oh, yeah, yeah, yeah. It just keeps you excited about it. We have my husband and I have ongoing money discussions. Like all we do is talk about money. My kids are like a mom. I don't want to hear it anymore. Yeah. Yeah.

I do think also just because we presented a few options here does not mean that in discussion with your wife on the money date, more options won't present themselves. You're not limited to those, but those are three that seem apparent based on the discussion you gave us today. So so many good options right now. Yeah. And those are the three main ones for sure. I think anything else would probably be.

less either playing to our skill sets or less in our passions or interests. So I do think it's between those three. And I think right now we're just in this place where we had a very high momentum for about eight or nine months as we were on this debt paydown journey. And now we're at just like, okay, we don't have any debt, yay, but we also don't really have any money right now. So like this up, we're at the valley of all of this. And now we're like kind of headed back up to actually seeing some of that kind of

hash coming in. And I think we'll start getting more excited for the trajectory once we start to actually build some of it up. So, well, thank you so much. Carrie, thank you for joining us today. This was a lot of fun. I agree. Thank you so much. Okay, we'll talk to you soon. Okay, Scott, that was Carrie. And those were some really great decisions she has made in the past and some really awesome opportunities she has headed her way. And now she just needs to kind of figure out which way she wants to go. Yeah, again, I think it was a great discussion, like we mentioned in the introduction here. And I think I think that she's and her wife are going to be very wealthy over time if they continue to have such a strong fundamental position that they have with their

income less expenses there, the savings rate that they've achieved. I think they're going to have a lot of good options. And they're going to get wealthy one way or another, as long as that fundamental remains in place. But it is a matter of several years and certain lifestyle outcomes. depending on which strategy they choose from an investing standpoint. So I think it's still a great discussion with that. And good on them for getting into that position. It's kind of eye-opening, I think, for some folks to think about, oh, yeah, I've never had money before.

But in a year, I'm going to have $100,000. Wow. Like, how do you, I think it's a wake-up call to some folks who are maybe in a similar position. Like, hey, you may, just because you're coming out of a grind right now and have gotten the fundamentals right, all of a sudden you're going to have more cash than you know what to do with or maybe more than you've ever had if you're applying the fundamentals that we talk about on BP money week after week within a year or maybe two from today. And how are you going to set that up? Because how you do that can have major ramifications for your life in a really

positive way, depending on your goals and your circumstances. Yeah, I'm excited for all of their opportunities. And after we stopped recording, we had a bit more of about how, you know, she has had this kind of life-changing event where now the debt is gone and now she's looking to the future. And one of the things that came up is she's like, you know, we make all this money, but we don't have a ton of cash. So something she's focusing on is building up her cash reserve so she can look at that and see, oh, I am doing great. I am having success now. And, you know, I just wanted to add to the recording of the actual show that, you know, this is, now she's in kind of this, this mind shift and psychological game where she needs to have psychological wins that allow her to see the growth that she's, the phenomenal growth that she is, is experiencing.

And I'm just really excited for all the things that have. her future holds. Yeah, they're going to be millionaires really, really easily. And they could be millionaires quickly if they tightened their belt just a little bit more. Should we get out of here, Mindy? Okay, Scott, now we should get out of here. From episode 232 of the Bigger Pockets Money podcast, he is Scott Trench and I am Mindy Jensen saying, I'll give you a call, baby doll.