BiggerPockets Money Podcast - 537: Late Start, Early Retirement: A Step-by-Step Guide to Get On Track to FI

Starting point is 00:00:00 The financial independence community is filled with stories of young people who have reached financial independence and retired early. But what about boomers or Gen X? Today, we are going to arm you with the four steps you need to know when you're getting a later start. Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen and with me, as always, is my Young at Heart co-host, Scott Trench. Bigger Pockets has a goal of creating one million millionaires. You are in the right place. If you want to get your financial house in order because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting, even if you're getting a later start on your financial independence

Starting point is 00:00:39 journey. Today, we're joined by later start experts, Jackie Cummingskosky and Bill Yount, hosts of the podcast catching up to five. We'll be talking about everything from backwards budgeting to Social Security. This episode is the 101 level, talking about the foundations you need to support your later start when your runway is a little bit shorter. Jackie and Bill have so much to share that we're bringing them back on episode 538 to share 201 level, the tactics to help you reach your financial goals. Today's show is sponsored by Bam Capital, your path to generational wealth with premier real estate investment opportunities. See why over a thousand investors have invested with Bam Capital at biggerpockets.com slash bam.

Starting point is 00:01:26 That's biggerpockets.com slash BAM. Jackie Cummings, Kosky and Bill Yount from the podcast, Catching Up to Fye. Welcome to the Bigger Pockets Money podcast. I am so excited to talk to you guys today. Oh, it's great, Mindy. Thanks for having us on the show. Yeah, we're glad to be here. You know, catching up to FI is like Ben.

Starting point is 00:01:44 Bill developed it. We're making it even better because there's so many late starters. So we are thrilled to come and chat with you guys today. Gen X is behind on retirement. The average Gen Xer has something like $40,000 saved for retirement. So it seems like most people in that generation are getting a very late start. There's a lot of reasons for this. But Jackie, can you give us your thoughts on that stat?

Starting point is 00:02:06 What is going on here? Why are so many people getting started late? Yeah, I think that that stat is right on. And it's not just the Gen Xers. That is the biggest chunk. But things like if someone immigrated to this country, that could get them a late start. sometimes divorce, even kids sometimes can cause people to get a late start. But we tend to end up in this late 30s, 40s, and 50s when we're just waking up.

Starting point is 00:02:34 Like for me, I just woke up at 38. And some people might not consider that late, but I knew I was way behind. So when you're finally waking up because you didn't get the stuff early on, that gives us a late start. And then for me, especially, I was running really, really hard to try to catch up. and I ended up getting, you know, having a late start, but finishing a little bit early. So there's a whole lot of people in this bucket of late starters. Jackie, one of the things that we see in bigger pockets when we're talking to people about their money story to early financial freedom is this concept of the aha moment.

Starting point is 00:03:10 Oh, I discovered that I could retire earlier and build wealth. And then a very dramatic behavioral change that incorporates saving, investing, building one's financial position. Is that what you mean by wake up in the context of moving towards retirement? Yeah, I do because for a big chunk, you are just sort of floating through and doing what you've heard other people say or maybe having the wrong world models around you. But when finally you get curious, you start digging, you start educating yourself and things start clicking, you're like off to the races. And I know for me, once I found one nugget that was helpful to me, I wanted to keep digging and digging and digging and finding so many other things that helped me.

Starting point is 00:03:56 And I tell you what, there's a unique type of motivation that you have once you get going. And so I deal people all the time, you will surprise yourself at how fast you move once you wake up and you start seeing that some of the things that you're doing different after you wake up, looking at the movement, that is so much motivation for you to keep going, to go faster. you know it, you're way further along than you thought you ever could be, even if you got a late start. Absolutely. I could not agree more with you, Jackie. And what I think a lot of late starters maybe don't know or don't really focus on is there are some advantages to being a late starter. There are some opportunities that they have that their younger counterparts don't. And we're going to get into that a little bit later. But Bill, I've heard. heard you say the average American is a late starter. And I love that because it's so inclusive.

Starting point is 00:04:58 You know, you see these articles that are written about, you know, the 25-year-old that got to financial independence in two minutes. Yay for him. But that's not the average person. That is absolutely the outlier. But when you see so many of these comments over and over again, you start thinking, oh, maybe something's wrong with me because I'm 50 and I'm not retired. So I love that phrase, the average American is a late starter. Well, you know, I don't know how I came up with that, but it seems to ring true. You know, in our audience, in our show, in our podcast, they all wonder what happened. You know, you get caught up in life.

Starting point is 00:05:37 You get caught up in the funnel of life. You come out of school. You come out of residency. You have big debt. You start a family. You buy a house. You buy a car. And then you get into this paycheck-to-paycheck lifestyle.

Starting point is 00:05:50 and all of a sudden, you're 50. And you've lived life, but you wake up and you go, wait a minute, nobody's taking care of me. I have to take care of myself. And I better get started. And getting started is really the hardest part. And as Jackie says, once you dive in, it's amazing how fast you can turn your mindset around and turn your money around. So we haven't even gotten to the steps here to actually address. going towards, you know, like catching up to retirement and beginning to move our financial position

Starting point is 00:06:25 forward. But I think these are two critical precursors here. We can call them, you know, 1A and 1B on this journey. One is wake up and acknowledge like, hey, this is like an important part of life and nothing's going to come and save me. I got to go and go after this and get this done. And two, you know, like rationalize or understand or empathize that you're not going through this loan. This is a most people are kind of in the same boat as you when you're maybe getting a late start and trying to catch up to retirement. How am I doing there? Is that, would you agree with that as like step one A and one B here before we even get into the actual work of moving our financial position forward? Yeah, for sure. I think you hit the nail on the head. You know, it's just kind of,

Starting point is 00:07:08 you know, waking up, acknowledging, you know, you didn't know these things and just moving on. the acknowledgement part is really important because, you know, if the mind isn't there, it's hard for you to get your feet moving. And then when you wake up, you feel like you're alone. I mean, you think you're the only person in the world that has done this. And, you know, that's why I call it the silent majority because we live in a consumption society. We live in a society that is not, you know, promotes savings. It promotes consumption and spending. It's almost an afterthought in our society. Yeah. You are. You're not alone.

Starting point is 00:07:45 We are here with you. We need to tell Mindy not to give up her day job. Is that right? You're such a great podcaster. That's the new intro music for Bigger Pockets Money. We're putting that right in there. Bigger Pockets Music. Yeah.

Starting point is 00:07:59 Not high school musical, bigger Pockets musical. But you aren't alone. And these headlines that you see, these sensational headlines, absolutely make you feel like you're alone, which is why I love the catching up to Fy podcast so much. because you're sharing stories of people who are doing it, who have done it with a later start. 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

Starting point is 00:08:33 is going, and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch's subscription with the code pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking.

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Starting point is 00:11:13 What would you say, Jackie, to somebody who reached out to you and said, Jackie, I've heard about this concept of financial independence. I would like to do it, but I'm older. What is my first step? Yeah, to me, the first step, we talk about the psychological part. I like to say, give yourself a little grace. It's probably a lot of the reason why you're getting a late start probably is not your fault. We're not taught about these things.

Starting point is 00:11:38 It's a taboo topic. And even schools don't teach it. A lot of us didn't have good role models at home. So just give yourself a little grace. Okay. Once you do that, you have to know where you're starting. Like, how can you even decide, okay, should I start kicking up my investing first? Should I pay off my debt first?

Starting point is 00:11:55 You don't know which piece is really more critical until you start laying out your finances and determining like what your numbers are. Things like, you know, your net worth, you know, maybe your finance. number, which is 25 times your expenses. What's your true income? You know, what taxes are you paying? So all those things are important to see where you're starting. I know there's that inclination to, let's just do it all at once at the same time and just get going so quickly. But just figure out where you're at and lay things out so that you have a very clear picture of where you're starting, because as you see progress, it's going to be really, really valuable to you to see where you're

Starting point is 00:12:38 started. Even if your first net worth is in the red, if you start to see it moving in the right direction, it's motivating and you can see that you're making progress. So that's how I would get it started. Yeah, even if your net worth is in the red, you need to acknowledge that. That is what I call a fact. It is not judgmental. It is. I have brown hair. Jackie has black hair. Those are facts. I have X number of dollars. I have negative X number of dollars. Those are facts. So once you have an idea of where you're starting, that's so, I love that because then you can move forward. I don't know how much my net worth is.

Starting point is 00:13:16 Well, then how much are you spending? How much are you budgeting? How much? I mean, you don't even know how much you're budgeting until you start tracking your expenses and see where it's going. But yeah, so Jackie, this is awesome. I've given myself some grace. I have, I want to diagnose my starting point.

Starting point is 00:13:34 How do I do that? Yeah. So as we, some of the numbers that I mentioned, you can't even get to until you do a budget. Now that scares a lot of people and a lot of people hate budgeting. I personally, I have to admit, I'm not one of those that love budgeting, but you have to know how much your expenses are. So what did I do? I did the backwards budget, which I kind of think is better.

Starting point is 00:13:55 Bill may disagree with me because I think he does a much better job of the budgeting piece. I do it backwards because I think that leaves less chance of something being less. left out. So here's how the backward budget will work. Basically, you take everything that you're saving and investing and then you take everything that's your paying and taxes and whatever's left, that's your expenses. Now, if you do it the other way, we're going to forget stuff. Like, did you include the dog grooming? You know, did you include, you know, fees for this and fees for that? And I think it's so much more room to forget things in a budget when you're doing it the front way, sort of doing line item by line item. Inevitably, you're going to forget something. By

Starting point is 00:14:35 doing it backwards, you probably include it the most your budget can be once you subtract out the taxes and your investment and savings. So I don't know, Bill, what do you think? You're pretty good with budgeting way better than me. Well, I actually do it the exact same way. I save till it hurts, maximize my savings rate or the gap, and then, you know, everything else is spending, but I got to spend on a value-based method. You do have to track your expenses because there's a lot of little things and big things that you can get wrong and, you know, you can have a lot of holes in the bucket that you've got to plug as well. I just want to observe here that I've been, you know, tracking my finances and my net worth for 10 years here pretty regularly. And this is

Starting point is 00:15:27 not a fun task for me. I don't enjoy it. It is a large amount of work to tab. my expenses on a regular basis, plan for consumption, investments, taxes, those types of things. It doesn't take me 10 hours a month, but it takes me too. And it took me a couple to get it set up. And it was confusing and painful in those types of things. Is that what you guys found getting this started and how you find it going forward? Or is it much easier than that? Like, I guess I'm wondering, I think for someone listening, this sounds like a lot of work. It sounds very painful to acknowledge reality. And it sounds like. something I have to keep up with for the next 10 years. Is it really worth it in your view?

Starting point is 00:16:06 No, it's absolutely worth it. And I made it easy for myself by using a couple of apps. And if I may plug them a little bit, I use Monarch money and I use Empower. I use Empower to track my net worth and monetary to track my expenses. It makes it easier. You've got to want to plug your accounts in and you have to be comfortable with that. But you get reports and you can find the holes in the bucket and, you know, find a way to maximize your savings. And the reports are very helpful. And I look at them on a monthly basis. And I go, oh, my God, there's an unexpected expense that I may have been hacked. And then there are ones that I'm like, I don't use them anymore. So, and then the net worth piece, empower is really powerful. And it's fun to look at. I look at it more than I probably

Starting point is 00:16:52 should. People talk about monthly, quarterly, or even annually. It's oftentimes you're better off, once you get your plan together, sticking your head in the ground and not looking at it, and then 20 years later, you have a massive amount of money. But that's what my sister did. And just for the record, Monarch is about $100 a year as a subscription. So that would be an expense that one would incur, but I also heavily recommend Monarch. Empower is another great tool. I don't use that one personally, but that one, I believe, is free for users. Is that correct, Bill? That's correct. And you're correct on the Monarch, expense as well. It's you get it back in spades if you spend that on an app like that.

Starting point is 00:17:35 And they do sponsor our show. So maybe I can help you out. Oh, yeah. Please give us an intro because I love BonarCath. That's free. That's free for BonarCath. And another thing, you guys, as far as like, you know, keeping up with your expenses, we've got the app. So technology's there in our favor. But remember, it doesn't have to be anything complex. So you may use a yellow pad and paper. I use a spreadsheet for a lot of tracking a lot of my, not just my expenses, but my other financial life. And I've been doing that for like, you know, 15 or 20 years and I've customized it like crazy. So I would be totally spoiled and anything else that I use. I don't know if it would, you know, be satisfactory enough because I've customized it so much. So no matter how you do

Starting point is 00:18:19 the expenses and the budget, in particular, if you're just starting and you feel like you're going to have to make some adjustments. Having that those expenses and the budget in place is going to be helpful for you to identify areas that. And I say adjustments and not cutting because you can save plenty just by making some tweaks here and there. You know, I did like Bill was saying, you know, the value spending where you're like, you know, what, why am I spending, you know, this much on my Netflix? I am, you know, busy with my business. I haven't watched it in six months. So little things like that up to the big things like, you know, maybe not right now, but, you know, back in the day, refinancing your house, you know, made a big deal or maybe you're in a position to pay your car off when it has a high interest rate. So there's so many, you know, changing insurance companies.

Starting point is 00:19:10 So just don't forget about the ability that you have to make adjustments versus just cutting out things. You know, don't do things that are not going to make you happy. Don't do things that are going to make you miserable. That is huge because if it makes you miserable, you're not going to stick with it. Yeah. So Netflix just canceled their sponsorship based on this one. But I think, but the bottom line is like there's all these tools. Spreadsheets great.

Starting point is 00:19:38 Pen and paper is great. Monarch's great. Empowers great. There's always a new one popping up that's got a new experiment. Just do the work, which is not fun work at first. And we'll be very painful for someone who's starting out late to see bad numbers maybe on the page. but you got to stare them down, do the work, get this thing, get it, get it over with, and then continue to do it and come back to it every month, every quarter,

Starting point is 00:20:02 whatever the cadence is that's helpful for you because it's so critical to understand where your numbers are and where you're at, where you're going at the highest level in order to get started here. All right, step 1A, wake up. Step 1B, give yourself some grace. Step 2 is diagnose. When we come back, we're going to talk about how to analyze those numbers and make decisions based on them. Tax season is one of the only times all year when most people actually look at their

Starting point is 00:20:26 full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch

Starting point is 00:20:59 subscription with the code Pockes. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in Edle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code Pockets at monarch.com for half off your first year. That's 50% off at monarch.com code pockets. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed's sponsored jobs helps you stand out

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Starting point is 00:24:08 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. Welcome back to the show. Let's talk buckets and goals and how you can incorporate them into your journey. Jackie, Bill, now that we've got this analysis done, this slog of at least several hours and probably a few, you know, a month or two that's gone by for us to collect some data and understand our financial position,

Starting point is 00:24:38 what do we do with this information? You know, first we pause, and as I say, then we plan, and this is the planning phase. And only after the planning phase, do we pivot and take action? And as far as the planning phase, you've got to look at your cash flow is one of the first things, I think. You've got to know what's coming in, what's going out, all the categories, and you've got to start creating your cash flow waterfall. But to take a step back first, I think everybody should make an investor policy statement. They have to go through because your financial life isn't just the numbers of, front, your budget and whatnot. You've got to plan for insurance. You've got to plan for an estate

Starting point is 00:25:22 plan. You've got to plan for several things in your financial life. And there are formats out there where you can go through this. You've got to think. And you don't know where you're going unless you have a map. And you won't reach your goal without a map. So I think the investor policy statement is important. And then I went in to cash flow. Okay. So step three here is make a plan, map out a plan. And it makes sense why this is coming after the previous step, because we need to know where you're at. You are here before you can make a plan to get somewhere else, right? And so I love this. You said an investor policy statement. You said a will. What are some other components of this plan that you think are critical, Bill and Jackie?

Starting point is 00:26:05 Oh, gosh, there are so, and I don't want to say there's too much. And the whole key is that you don't have to do it all at once. You don't have to do it all in one day. I like to to be able to sort of take a moment to dream, to think about like what you want your life to look like. You know, sometimes we are in a terrible job where we just want to get out of it or whatever. And maybe that's our reason for wanting to, you know, do something different. But you could think about things like, hey, I just want peace of mind. I don't want to punch someone's clock every day. I've always had a dream that I wanted to, you know, educate people on their finances or whatever that is because in your head, if you have some idea of what you want to move towards and the stuff

Starting point is 00:26:48 that you're like, no more, that could be a lot of fuel for you wanting to make these changes. And sometimes it does help to write down these goals, not just the tangible goals, but the intangible goals. And that makes a difference as well. So I would definitely keep something like that. You know, some people call it a vision board or something like that. But kind of, you know, have your little dreams and the things that you want to move. towards. So Scott said something that I thought was really important for people to hear. If you're on this later start journey, this is not a five-minute exercise. Scott said this might be a couple of weeks or a couple of months that you have taken to start off looking at your starting point,

Starting point is 00:27:33 diagnosing your starting point. This dream and plan and goal section is also not a five-minute exercise. You want to take the time to really think about it. And all of this is a fluid document. This is not, well, I said I was going to do this. So I guess that's all I get to do. If your goals change, if your dreams change, change your document too. But I love that you're writing this down. I love that investor policy statement. That's so important. And this, your dream statement, you know, all of these need to be, uh, need. to be written down so you can come back and revisit them because I don't know about you, but I'm over 50 and things fall out of my head. I actually just brought up my written financial

Starting point is 00:28:22 plan for Karen and Bill. And the components of it are fairly straightforward. You know, we outline our present nest egg and our present net worth. And then as far as the gold go, just like Jackie, you know, you have to have your personal goals first. And then as far as things like your financial goals. I mean, we said our investments will provide an income of $160,000 while still growing at the rate of inflation, providing us with financial independence by July 4th, 2028. I mean, you've got to be very specific. And we'll reach a net worth of X. And then we talk about our savings goals and then all the insurances that need to be in place to protect you. You've got to play defense before you play offense.

Starting point is 00:29:07 Most people want to play offense. I love this. And just to share how aligned they am with this, every quarter starting on her honeymoon, my wife and I have a little vision document. It's just a piece of paper. There's nothing fancy to this. This isn't part of my $500 goal setting retreat summit program or whatever. This is just like a word document, right?

Starting point is 00:29:30 And we write down 10 things we're grateful for after a cup of coffee and a workout. Well, then we write out what our life looks like at the end of 2025 and this one and then 2028, just two in five years. And we say, we live here. This is what our day looks like on the weekdays. This is what our day looks like on the weekends. This is what our physical health looks like. This is what our family life looks like.

Starting point is 00:29:53 This is what, you know, we do for fun here. This is what our career outcomes have been, those types of things. And we just write that down. and we've edited it every quarter for the last eight years, many years, basically, on this thing. And it moves a little bit. That's okay. But we know where we're going, and it stopped moving quite as much in the last

Starting point is 00:30:19 couple of years as we kind of really locked in. Like, yeah, that's what we want. That's what we're going to work towards. And that dreaming exercise for us works really well. There's so many different variations of that that you can do, but it's just a piece of paper. I would encourage you if you're going to do this exercise to do it when you're feeling good. This is not an activity to do after a really hard week on Friday after four glasses of wine when you're really beating yourself up.

Starting point is 00:30:43 This is an activity to do on Saturday morning after you've had a nice workout and a cup of coffee and the weather is nice and the sun is shining and you're feeling good and your spirits are high. But I don't know. I don't know if you guys have any reactions to that. Yeah, no, I love all of that, Scott. I mean, all of that is so amazing. and you and Bill are making me realize I need to do more writing things down. But the whole key is it's not written in pen, right? It's in pencil where you can make changes, you can make adjustments, you can tweak it.

Starting point is 00:31:11 We weren't taught how to put this stuff together. So give yourself a little bit of grace, a little bit of a buffer to be able to work and massage these to make sure that it makes sense. And I feel like the trial and error is really valuable as well because you're going to learn something about yourself every time you make a change. Absolutely. And a quick tip here, if you have a significant other, it is always a good idea, and you come to them with this, it's a good idea to label it draft for the first time on there. That will help a lot of things in that first conversation. Yeah, and just to be clear, so everybody here is partnered up and married. I'm the only single person here, okay? I got divorced, you know, and most of my fire journey has been since I got divorced, I have one daughter. So situations a little bit different, but there's plenty of single people that are late starters. And part of the reason is they might be divorced or they went through some relationship issues or there's so many different reasons. But whether you are married, partnered up or single. a parent or someone with no kids, these same things apply.

Starting point is 00:32:18 Yeah, I mean, in our community, and we have a large Facebook community, 75% of them are women. And a lot of them seem to be divorced, you know, financial catastrophe. And they're very engaged, very motivated. There is a large female component to this. Maybe men are more ashamed. And maybe the women are more able to embrace their mistakes or challenges and move forward positively.

Starting point is 00:32:42 I don't know. What do you think, Mindy? You know what? I see a lot of women now taking control of their finances. And this has been a man's game. Oh, men take care of the finances. My husband does all the work. My husband, like, I hear that a lot.

Starting point is 00:32:59 And I see a lot of women either through divorce or just simply wanting to do it, being empowered to do it and say, I want to learn about this. I am going to figure. to fix my finances so that I'm not going to fall under that other headline that we see so much, oh, you'll never be able to retire ever. And I think that ties back into step one B, which we kind of glossed over. And I'd like to focus on that for a minute. Give yourself some grace. I'm looking for tips for people to help themselves come to terms with the fact that they weren't perfect before. That is also a fact. We'll just put it over here.

Starting point is 00:33:39 You weren't perfect before. Now we're going to fix that. How do you give yourself some grace? Awesome. So we've got wake up. We've got give yourself some grace. We've got diagnose your starting point and we've got a dream. So we know our end point.

Starting point is 00:33:52 We know where we're starting now. Well, what comes next, Jackie and Bill? Yeah, I think two powerful things are curiosity and, you know, willing to, you know, shift and make some changes. So I say curiosity because it really, when I think about a lot of the mistakes that I made, some of them was either because of curiosity or I solved those mistakes because of, you know, how curious I was about things. So just use that to your advantage. Like, for instance, if you are so confused about how, you know, Roth IRAs work, you know,

Starting point is 00:34:32 what part is contribution? Do I have to wait five years? What are the nuances? You know, be curious about things. and then start digging. It's a powerful thing. And then fear is another really powerful thing. For me, I had a big fear.

Starting point is 00:34:48 I grew up in poverty. I had this big fear about being thrust back into poverty. So a big part of my wake-up call was when I got divorced. And I realized there was a huge disparity between what I had in my retirement account and what my husband had in his retirement account. And that was a huge mistake that I didn't even know that I was making. We didn't talk about the money. We didn't talk about investments.

Starting point is 00:35:10 But finally, when the divorce was set and done, I said, you know what? I don't want to ever feel this financially ignorant again. And the main thought was in my head was that I didn't ever want to be back in poverty again. And I never wanted my daughter to know poverty the way that I did. So I became so curious. I was curious about the stock market. I was curious about how did that big disparity exist. And I started figuring some of those things out.

Starting point is 00:35:33 And in the process, I'm getting my finances together. I ended up joining an investment club to learn more about the stock market and investing. I started understanding how my 401k work, understanding compound growth, all these things because I was really, really curious and I was very afraid of being in poverty again. So I was doing something about it. One of the big mistakes I made was, you know, you guys are real estate guys. So you made this come into my head again. But it was like around 2010 or whatever.

Starting point is 00:36:08 I ended up buying a rental property. It was a condo near Charleston, a great area. You know, everybody had short sales and, you know, foreclosures and stuff like that. Well, I needed to get this, I wanted to get this property, trauma-handed landlording, right? And it was a crazy time where they didn't even want to give me financing. So you know what I ended up doing? I ended up taking a loan for my 401K, the maximum, $40,000. Again, I wasn't using it as a piggy bank or anything.

Starting point is 00:36:36 I was just sort of in my mind shifting the investment, came up with $30,000. I ended up buying this condo for $80,000. And I was a landlord for two years, learned something about myself, wasn't too crazy about landlording. And I sold it about two years later. I made money off of it. It was totally fine. But I found out that, you know, I wasn't too crazy about being a landlord.

Starting point is 00:36:58 But the funny thing was a few years later, I'm like, you know, I wish I would have held on to it. Well, that $80,000 condo, I think I sold it for like maybe $140, $150, something like that. Well, right before I got at this podcast, I looked up that property to see what it's worth today. I got it back in 2010 and it's worth $345,000. And I'm like, oh, my gosh, that's a big mistake. But I learned from it. But it was just kind of crazy.

Starting point is 00:37:27 I went and looked at it because honestly, if we ever had any kind of opportunity like we had in 2009, 2010, 2011, I would be willing to do it again. So just making those mistakes, it just, I don't even really call them mistakes anymore. I like to call them lessons. So I'm not, you know, beating up on myself by looking at how much this condo's worth now. It's a lesson to remind me that if the same opportunity came along, I now will approach it different because my head is in a different place. I think that's a really great point to acknowledge that you have made some mistakes and then instead of calling the mistakes, call them lessons, because that's what they are, especially if you actually learn something from them. If you didn't learn anything from them, then it is just a great big

Starting point is 00:38:11 mistake. But having the, having, giving yourself grace is letting go of these things. I've made mistakes too. I also think just a couple of things, you know, for folks that are looking to learn from what you said, Jackie, I saw some tools in there that are really powerful for that folks can use to repeat that, right? Acknowledging and thinking through these mistakes, labeling emotions that you felt along that journey as well is really powerful. That's just a general psychological tip, right? If you're feeling an emotion, label it, it helps you control it and react to it, write it down.

Starting point is 00:38:45 And then using that emotion to inform the plan, right? Part of moving towards a brighter financial future isn't just moving towards your vision. It's totally okay to be like, I don't want to feel that pit of fear in the corner of my stomach all the time whenever I think about money and the next decade or whatever as well. Those are all absolutely critical ingredients in being able to form a plan, hint, hint, one of the next steps coming up that we're going to talk about here. So just some tools there that I think are really powerful that I observed that you used. I'd like to caution people a little bit because I made what I would call the trifecta of mistakes right around 2007, 2008. We had renovated a house

Starting point is 00:39:26 to the nines, basically rebuilt a house. soon after 2000, we were upside down in our house. We had a very low savings rate. And our financial advisors that were not advisors at all allowed us to sell out at the bottom of the market and go to a low risk. And with our low savings rate, being house poor and having sold out at the bottom, we didn't get into much later. And we missed out on, you know, two-thirds of the longest bull market ever. So you've got to manage the big rocks. And you've got to be intentional about these things.

Starting point is 00:40:01 The first thing we did after, one of the first things we did after waking up was downsize, which is a very painful thing for late starters, especially with regards to housing. But it made all the difference if you take care of these big rocks and get back to what's realistic, then you can increase your savings rate exponentially. We went from single digit to 10% percent. savings rate to about 30, 35% savings rate within the first year of waking up. This is absolutely possible. Awesome. Well, this has been a really fun discussion here. I think this is a great stopping point. Jackie, Bill and Mindy, thank you so much for the good discussion. We have our first four

Starting point is 00:40:45 steps here. Wake up. 1A. Wake up. 1B. Give yourself some grace. Diagnose a step two, dream and reflect. And this is all the soft stuff that absolutely has to be done before you. you can actually make a hard financial plan and start determining how you're going to allocate your capital that you have, if you have an investment portfolio or resources today, and how are you going to allocate the income streams that are going to come into your life, which is what we're going to really get into very prescriptively on the next show here, Bigger Pockets Money podcast 538. So thank you so much. So we'll see you in a few days.

Starting point is 00:41:22 All right. This was part one. Make sure to listen to episode 538, where we'll be back with. Jackie and Bill to talk strategy for later starters and some of those five levers you can pull, especially if you are getting a later start. My name is Mindy Jensen. He is Scott Trench saying later start. Don't worry, Pop-Tart. Bigger Pocket's Money was created by Mindy Jensen and Scott Trench. This episode was produced by Eric Knutson, copywriting by Calico content. Post-production by Exodus Media and Chris Micken. Thanks for listening.

BiggerPockets Money Podcast - 537: Late Start, Early Retirement: A Step-by-Step Guide to Get On Track to FI

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