BiggerPockets Money Podcast - 69: From Near Death To Debt Free With Liz from Chief Mom Officer

Episode Date: April 22, 2019

Liz has always been a frugal gal and self-proclaimed personal finance nerd. Discovering The Wealthy Barber as a teen cemented her course down the financial independence path, even if there wasn’t a formal name for it at that time. And it’s a good thing for her family that she was so frugal - a botched surgery for her husband turned a routine procedure into a nightmare that involved a coma, a month in the hospital and years of recovery. Without her financial savvy, her family could have been financially ruined! Now, 7 years later, she has paid off her house and replenished her emergency fund using a Tiered Emergency fund that allows her maximum liquidity while also maximizing her earnings on those funds. Her unique plan combines online savings with CD ladders, savings bonds and money market funds. Liz explains just how important it is to her family to have the peace of mind a paid-off mortgage can provide, and how planning for unforeseen events is truly the best course of action.   In This Episode We Cover: Liz’s background story On being smart with money throughout her 20s and 30s What happened after her husband's surgery On her work and immediate debt consequences while working towards financial independence On having the mindset of saving for retirement, for college, and for an emergency fund Having various accounts: Flexible Spending Account, High-Deductible Health Plan, Health Savings Account, & Health Reimbursement Account Learning financial independence through the book "The Tightwad Gazette" How she cuts off their expenses and the free entertainment they did Paying off their house for financial security The importance of not depending on stocks Tiered emergency plan On the concept called college compact Her philosophy on paying his son's college Financial independence retirement elective And SO much more! Links from the Show Mad Fientist HSA - The Ultimate Retirement Account BiggerPockets Money Podcast 64: Scholarships and Other Ways to Pay for College with Zach Gautier Harvard Business Review - Case Study BiggerPockets Podcast Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money Podcasts show number 69 where we interview Liz from chiefmom officer.org. That's one of the benefits of constantly saving money and having a practice of constantly saving and investing money is that if something bad happens in your life, you can dial back on saving money and basically instantly create extra room in your budget to cover some of these emergency expenses. Whereas when you live paycheck to paycheck, you can't because there is no extra room that you've been investing. It's time for a new American dream, one that doesn't involve working in a cubicle for 40 years, barely scraping by.

Whether you're looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation, you're in the right place. This show is for anyone who has money or wants more. This is the Bigger Pockets Money Podcast. How's it going, everybody? I'm Scott Trench. I'm here with my co-host, Miss Mindy Jensen. How are you doing today, Mindy? Scott, I'm having a great day. I am super excited for Liz. to come on the show today. I can't say I like her story because it involves her husband almost dying after a surgery gone wrong. So that's not something to get excited about. Yay. But the fact that that massive life event changed her whole outlook on finances and job and just in general how she

runs her life is a really great story. And if you've never been through something so traumatic like that, you really don't know how difficult it is to get through. And it just makes financial independence so much more rewarding when you realize, hey, now I do have the time to spend with my family. And now I can really focus on things that matter the most to me. And going through that from a position of not financial independence, but from a position of financial strength, really helped her get through this in the first place. Yeah. You know, one of the things I took away from the show today is how difficult the situation was for her, but how much more difficult it would have been

if she hadn't had strong financial foundation in place going in. I think it just shows that the stuff that we're talking about week in a week out on the show, they can really save you from problems and tragedies the same way that they're going to help you move toward financial freedom and potentially early retirement down the line as well. And I think that a lot of her choices that she made and the fact that she had a strong financial foundation in place,

you know, really highlight that in today's episode. Right. And, you know, I hear from people in my life who are not interested in financial independence. I hear from people who say, you know, oh, I really like my job. Well, that's great. I'm really glad you like your job. But you also need to be prepared for the fact that maybe you can't do your job. You can still love your job and be financially independent.

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for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BP Money. Well, should we bring her in? Liz from Chief Mom Officer, welcome to the Bigger Pockets Money podcast. I'm so excited you're here today. Oh, I'm so excited to be here. Thank you for asking me.

Thank you for coming on. So I saw your recent tweet about paying off your mortgage, which is super exciting. But before we get to there, I want to go back to the beginning and figure out where your story with money begins. Sure. So I've actually been a personal finance nerd. I call myself since I was a teenager and I first read a book called The Wealthy Barber at the library when I was about 16 or 17.

Almost no one nowadays knows about it, but it was a great read for a teenager because it talked all about different things, personal finance, saving money, budgeting, investing, saving for retirement, buying properties. And it was all in a story format of friends that go visit their barber every month and they get wiser throughout the year.

So I thought it was really interesting. I gave actually a top. in a public speaking class I had about investing in compound interest and actually inspired some of my fellow college students to start investing. And so I'd always been kind of smart with money throughout my 20s and 30s, saved for retirement, save for college, but nothing too extreme. And about seven years ago, when my husband went into the hospital for a planned surgery, unfortunately, some things went wrong and he went into septic shock. And we had a very large medical ordeal at that point in time. It was away from home for over a month in the hospital and

rehab. And that was just generally a difficult financial time for us, even though I was probably better prepared than most people. So after we got through all that, we decided to get really ultra-serious about finances and really ramped up our savings rate, as well as it became very important to become totally debt-free because when you have debt, it's unfortunately a big weight on your shoulders when something bad happens. Well, going back into that, how would you describe your financial position, maybe in a little bit more detail, going into that, the medical event where your husband fell ill? Yeah. So I'd always been saving for retirement and for my kids college and a little bit in an investing fund, had some emergency funds sitting around. So we were in pretty good financial shape for

most people our age. I was 31 at the time and he was 37. We were still on the young side. What were you doing for a profession at that time? I was working as an IT business analyst, and my husband, unfortunately, he'd been laid off in the Great Recession in 2009 when the place he was working closed. So he'd been looking for work the past couple years before that surgery event. He'd been collecting unemployment because during that time, if you were laid off, you received unemployment for a longer period of time, which, unfortunately, too, those unemployment payments stop when you can't look for work because you're sick. So I was an IT business analyst at the time, so I was supporting our family then of four. We had two boys who were eight and four at the time. And like I said, generally I'd say our situation was good for most people our age, not great, not super fantastic,

had a bit of a car loan, had some student loans from an MBA I was in the middle of getting, had a bit of credit card going on where we'd kind of bring the balance up and then pay it all off and then balance it creep up again and paid it all off. So even though we had savings and investments, we also had a little bit of debt. And then, of course, the mortgage. So what sort of amount of debt are we talking about? Like a ballpark?

So total, if you include the mortgage, it would have been just under $300,000. Okay. And without the mortgage? So without the mortgage, it would have been more about $35,000 roughly. Okay. That's a good thing.

Mortgage was a bulk of it. Okay. So that's, I mean, 35,000 in debt when you're 31 with two kids and you're making an IT business analyst. That's still, I mean, what kind of salary were you making then? High five figures? Yeah, it would have been high five figures and then an annual potential for a bonus. Okay.

Sometimes put me in the higher five figures or low six figures. Depends on the year. Okay, so then your husband had a planned surgery as went awry, let's say. Were you able to work during that time? Or were you off? So I had some time off after he had the initial surgery because we planned he was going to be in the hospital a few days, then I'd go back to work. We had actually planned it as well during my MBA time off.

So spring break. So the surgery was planned for that time so that I could be with him in the hospital. And then over the weekend, come home. Then he would be at home and recover. And his mother and or my parents would come over and help him out if needed for a little while. And then unfortunately, the surgery on a Wednesday, on the Sunday evening, they discovered he needed an emergency surgery. And following that, he went into septic shock and went into the ICU on a ventilator for about almost a week. So in the immediate time, no, I couldn't work during that week.

I called my work actually on Monday morning in tears, basically telling them, I'm not coming to work today. And this is what's going on. And I will just update you and goodbye. I need to get to the hospital. Can I spoiler alert and say that it had a happy ending in that he did not pass? Probably a good idea. Otherwise, people are probably wondering, where is this going? Yeah, why are you talking about this?

Why do you keep asking about this? No, he did make a full recovery? Yes, I'd say the last seven years, there's been a lot of ups and downs, but he's essentially made a full recovery. If you met him today and talked to him, you'd never have any idea what happened to him. I did check out your Peep's Creamer video. So, no, I wouldn't think anything had happened. He's always been just the man you see today.

We are recording this a couple of weeks in advance, and Liz just checked out, they have creamer that's flavored like peeps, which just sounds revolting to me. Peeps the marshmallow Easter treats. It also sounds revolting to me because I drink black coffee, but my husband was willing to be a guinea pig because everyone on Twitter was wondering how on earth

does peeps creamer taste like? So we found out it does make your coffee taste like peeps. That's not what I want my coffee to taste like. Okay, I'm going to invite everybody to skip over to the YouTube channel right now and see Scott's face where he is making a very, I don't want to ever try peeps creamer face. I'm out of the peeps creamer. I drink my coffee black.

Yeah, same as I. It's interesting. Most, I'd say about 90% of people say, Oh my God, no, why does that exist? And 10% of people say, oh, yeah, I really would like to try that. And they want to know where I bought it, which is Target, by the way. So if you're hearing this after Easter, they may have it on clearance, if not a lot of people picked it up.

I bet they have a lot on clearance. So one of the reasons why I think this is so important, why we're talking about this catastrophic event that happened in your family, is because of how it impacted your financial journey. and how you were able to kind of overcome that and continue to move toward financial freedom in spite of some of the challenges that arose from that. So could you walk us through maybe some of the work

and immediate debt consequences of this event? Sure. So it's interesting. And one of the reasons I write about and talk about what happened is to try to help people prepare for something like this happening in their own lives because it's always unexpected. You never think something's going to happen. and it happens to two people.

But at the same time, too, I want to show people it's possible after something like this to still pursue financial independence, even if it takes you longer. So immediately after, as I mentioned, his unemployment stopped because he couldn't work. And then, of course, our expenses went way up. Since he had been staying at home, since he had been out of work for a little while,

he was watching our four-year-old son and taking care of dropping off our eight-year-old son at school. And of course, once he's in the hospital, could no longer do that in the immediate times of the week or so afterward, I was able to get my mother, my grandmother, my mother-in-law, who were all around to help watch the kids, coordinate drop-offs, et cetera. But eventually, I had to put my four-year-old in daycare. So our income went down, our expenses went up, had to put the eight-year-old as well in aftercare as well as summer camps. So a lot of costs went up, not even counting all the medical costs. We had a high deductible plan with a high out of pocket,

which we, of course, hit. And then there's also a ton of non-medical costs that happened with something like this. You don't even think about, like you have to remodel parts of your house. You have to add railings where there aren't railings because he had difficulty walking up and downstairs. So our expenses went way up. But I was able to cover them more easily than someone else because I'd always been saving for retirement and saving for kids college, as well as an emergency fund. I was able to tap the emergency fund, but was also able to dial back for about a year or so on college and on retirement to give more cash flow every month to pay these extra bills. So at the end of the year, when we finally stabilized and managed to get rid of those extra costs

and get everything paid off, then was able to ramp those back up and start getting rid of the debt. Okay, so if I'm thinking about this, you had a strong financial position going forward. You spent well below your means and were able to stockpile a bunch of money. So a major part of the impact from this from a financial sense was just a little bit of a large amount of expenses that kind of came up and then an inability to continue saving at that high rate. But then after a year went on, you're kind of able to make up that difference and get right back on track in terms of what you were in relation to where you'd been before. Is that right? Exactly. Exactly, exactly. And that's one of the benefits of constantly saving money and having a practice of constantly saving and investing money is that if something bad happens in your life, you can dial back on saving money and basically instantly create extra room in your budget to cover some of these emergency expenses. Whereas when you live paycheck to paycheck, you can't because there is no extra room that you've been investing. That's beautiful. That is so amazing. That should be, that's going to be the quote. That's fantastic. Yeah. What do you do?

when you've got all these expenses and you have no extra money, you can't do anything. You just go into debt and it becomes this like massive avalanche of just, oh my goodness, how can I recover? Right. You're adding money stress on top of all the other kinds of stress you already experience in something like that. How much medical debt was your responsibility? You said you had a high deductible and a high out of pocket and all of that. What was your, is there an end amount that you figured out? So in that year, it would have been $8,000 because it's, it was kept. So the out-of-pocket maximum is essentially how much total you have to pay before then everything's covered 100% for those that aren't familiar with it. So that year it was $8,000. But with something like this,

there are ongoing expenses, right? So essentially every single year since for about four to five years, we always hit the deductible, which was $3,500. And then we would some years come very close again to the out-of-pocket maximum. So all in, it's probably been at several tens of thousands of dollars of medical costs over the last seven years. And how about the remodeling component? What do you estimate the total expense was related to this? That was about $7,000 between.

We had to remodel a bathroom so he could have a walk-in shower. We had to remodel some of the stairs, as I mentioned, to add railings because we didn't have railings on all the stairs. And then there's also a bunch of miscellaneous costs that, you know, parking at hospitals, driving back and forth to appointments, special clothes that he had to wear because of the particulars of some of the issues that he had, special food, protein drinks, various things that aren't covered by insurance. Got it. Do you still have a high deductible plan? Yes. Okay, because the HSA is the darling of the financial independence world and even the mad scientist. who I think is just superhuman in his ability to understand all these tax.

I don't want to see a tax dodge, but like these tax optimized and tax advantage, like all these like weird little tricks that nobody knows about. He's amazing with that. And he calls it the ultimate retirement plan. He has a whole article about it. But I'm on an HSA plan for the first time this year. And I'm like, oh, this is going to be the year that everybody breaks a leg or something. So you still have the high deductible plan.

Do you still have the HSA and you? Do you max that out every year? So I've only had an HSA the past two years. Before that, with the high deductible plan, I had something called an HRA, health reimbursement account, which is not at all the same thing. It doesn't have any tax strategies.

It's just an employer contributes to it. When I ran the numbers, it worked out more in our favor than having an HSA at that point in time. So we had the HRA for, I think, five years, and I contributed to an FSA, because you can do that with an HRA. And then the last two years, I have had an HSA and I have not tapped it for medical costs.

But for a family like ours, so we're a family of five now. My husband does have high ongoing medical expenses. And then, of course, we've got three kids who are just walking high ongoing medical expenses. So contributing to the HSA and leaving it alone and paying for the medical costs out of pocket is still an option. But it gets a lot more difficult when you usually come close to hitting the deductible or you come close to hitting it out of pocket max, it can become more difficult to just leave it there to grow to retirement, depends on your budget, of course. Moving back to the discussion around kind of your overall financial position, were you pursuing

the concept of financial independence prior to this, to your husband's accident or the surgery gone wrong? So I would say yes, but on the slow path. So I had first learned about financial independence and kind of early retirement through a book called the Tightwod Gazette in the early 2000s by a woman named Amy Decision, whose name is spelled. It doesn't look like it should be pronounced decision. But she had written a little blurb in her book about a book called Your Money or Your Life

by Vicki Robin and by Joe Dominguez. So I had seen that blurb, thought it was interesting, went and checked out the Your Money of Your Life book. This would have been the original one. And it would have been back in the mid-2000s. So I love the concept. I thought it was great. It really clicked with me talking about the time value of money and trading your life energy or your time for money and is it really worth that much of your life to trade for

that thing. So I would say yes, but since our income was not ultra high and we had two kids, one of my kids was born just two months after I finished college when I was 23. So we had young kids. And so I didn't think an ultra-high savings rate was going to be achievable for us at any point in the near future, but still generally the idea of financial independence and making sure that you're making really focused decisions about how you spend your money and your time. That had always been something that was important to me. Did that change or evolve in the years leading up to or the years following? Oh, yes, definitely. So once we passed kind of the crisis time of the year afterward where things finally financially stabilized,

then it became really important to both of us to create a much more stable financial future and really reach financial independence much sooner than we would have otherwise. Awesome. So what steps did you take toward, like what changed when you kind of made that decision to more aggressively pursue it? So a couple of different things. So first, I'd say, that got focused on paying off the non-mortgage debt. So got rid of that within, I think, four months or so of the end of that year period. Did you do that by diverting funds away from other savings accounts, or did you do that by cutting further back on your savings or a combination? So I did it mostly by not ramping up the savings rate quite back to what it had been before

everything happened, as well as I know I got a work bonus. I was able to put some of that money toward that and then we cut back on our expenses. So during that year, there was a lot of focus on cutting back on expenses from where we had been to create even more room in the budget. And any of that went to debt pay off immediately. So like I said, it probably wasn't considered huge in most people's minds, about $30,000. But getting rid of it was important because those monthly payments, even if they're not much, are still painful when you are in a situation like we were in. So what did your spending rate look like, or your savings rate, I should say your savings rate, what did your savings rate look like before the surgery? And how did you, like you said

you focused on cutting back expenses. What did you cut out? So there was several different things, I'd say. So we looked into getting better insurance and better priced insurance. I started doing coupons, a lot of the kind of not quite extreme couponing, but a lot of couponing to get the grocery costs down. Did a lot of shopping sales. Cut out, we had had a landline phone, so we replaced that with an OMA. We cut down on various entertainment expenses, which we weren't in the year following the surgery. We weren't really going out and doing a lot of entertainment, but still it was very far cut from what it had been. We sought a lot of free entertainment. So we didn't ramp that back up again. We went out and did a lot of free things together as a family.

And just generally, we didn't change our cars. I kept the cars, paid it off and just continued to drive it. I'm trying to think back now. It's been a while. If there's anything else in particular that we cut out, I think those were the big ones. And then getting rid of the debt, of course, created more room and monthly budget because we didn't have to have a car payment. We didn't have to have, well, I never ended up having the student loan payment, but we didn't have that debt. Okay, you said free entertainment. What kind of things did you guys do as a family? Because I know that a lot of people are looking to cut stuff out of their budget.

And I used to have, what was it, the red box? Not red box. The movie thing, movie pass. It had a red logo. Oh, I had movie pass. And then when it went away, I went to the movies and like $20. Looks like I'm not seeing any more movies. Oh, yeah.

It's crazy. Especially when you have a family of five like we do. Tickets get really expensive. So I did a lot of research for things that were free in my state. So museums, beaches, just things to see, parks to go to. And we spent a lot of time exploring near our state. So we would go to the beach and then we would go and pack a lunch and have a picnic. And then we would go to a park or we'd go to a museum that had a free admission day.

We went to the library. So our local library had a lot of library passes, two places that we could go to. So we would get those and go see various events. I would kind of track online our state had, I live in Connecticut. So there's a lot of things going on this weekend that get posted for what's going on in the state and many of them are free. So I would always kind of stalk that and see what's going on this weekend. Anything interesting happening in the evenings. Colleges had some free things going on.

So it just became a lot more intentional about seeking out free or very low-cost entertainment. and we spent a lot of time together at home doing kind of creative things around the house. So making crafts and doing art and just generally having fun together with things we already had. Did your kids feel like they were missing out? Did they ever say anything like, wow, mom, we never get to go to the movies? Or did they kind of understand or did they just not even notice? So my kids didn't really notice very much, but we hadn't been a tremendous going out to lots of places family. we would, you know, every couple months we would go and do something. So we hadn't really done it a ton.

So I think they didn't really miss it. And then also they were so young when he got sick that because basically a year passed pretty much before he was able to go out and do much of anything, they kind of adjusted to not doing anything for a long time. And then once they had adjusted to that, I think they didn't really miss any of the going to a theme park or whatever it was that we might use to do over the summer. They were just so young and so much time passed with dealing with the illness that I don't think they noticed. What happened to on the income front during this period? So during this time frame in 2013, I finished my MBA. So I'd been going part-time evenings and weekends to get an MBA. Reimbursed from my company for the most part. I did have a bit of student

loans from that that I had borrowed to cover a transition period where I left one company and joined another, so a little break in reimbursements. But I graduated in 2013 with that MBA. And so with that, I was able to seek out some different positions within my company. And from then to now, my income has increased about 50%, but my total compensation has doubled because I get other forms of compensation besides salary. So that's awesome. So that's obviously been a big contributor to your ability to kind of pursue financial dependence, I would imagine, right? Oh, yes, definitely. If it weren't for the increasing of income after finishing my MBA, then our savings rate would probably still be higher than most people our age, but would not be probably as high as it can be otherwise, I'd say.

So when you, you know, this combination, this dual effect of you increasing your income over the, you know, it seems, it sounds like a lot of that came. I imagine you are probably earning some small increases in salary over the years. And then in 2013, you're able to really see a nice little jump in the months or year, you're following that. Is that accurate? I'd say it's been more steady over the last seven years for me. And that's mostly because I stayed with my company after graduating. So I didn't shift immediately into another job or into sometimes people will get an MBA and then they'll switch fees. or they'll join a new company, get a big bump in salary. But for me, I stayed in my field and basically got a couple of new kinds of positions, but still within IT. So I was able to see some increases from that, but not a direct jump is finishing my MBA. Got it. So with the new MBA and the doubling your income, you sold the house, bought a bigger one, bought a new car,

now you drive a Beamer, new fancy vacations, right? Of course. That's what everyone does. That's what everyone does. Yeah, but now we still live in the same house. I still drive the same car that I got in 2009. My husband did end up getting a new car in, I think it was 2012, but that's because his old car was totaled. So we paid cash for that.

And we stayed in the same house. And for the most part, our vacations the last seven years, when we take them have been local. Or we did go to Disney once, but we've mostly done road. trips and things together as a family over the last seven years. Do people in your company hassle you for not having a brand new car or a status car? I was at a ladies lunch yesterday and there's a woman who just joined our group and she said, yeah, there's people that make fun of me for my car.

I'm like, show them your bank account. Luckily, no, but that's because I park in the parking garage and no one sees my car, right? So it's a large parking garage and I don't know. I that anyone sees what it looks like. So I think when I do talk about what kind of car I have, sometimes people are like, it's a 2009 Honda Accord. I mean, it's got only 125,000 miles on it, and a Honda Accord will last at least 200,000, if not more. 500,000. Yeah, exactly. So that's going to be my car until I'm 50, probably. Would you rather have a brand new car or no job? No. I don't like getting new cars. I don't like

the whole experience. I'd rather just drive my Honda Accord until, you know, its engine falls out. or something. So what was your approach to asset management if it wasn't buying bigger cars and bigger houses and fancy due debts? I know you pay down the $30,000 or so in debt. How did you kind of apply the increase in cash accumulation after that? So a couple different things. One is in 2013 right around the Tomogami MBA. I also refinanced into a 15-year mortgage for the house. So interest rates at that time where a historic low is at 2.75% for a 15 year. So the payment ended up being the same, but obviously you cut way back on when the end of the loan came. So did that, put the extra money toward catching up on traditional retirement and maxing that out, college for my kids, the three boys,

obviously medical expenses as they came up, investing outside of retirement and saving a good emergency fund and then eventually focused on paying off the mortgage to get rid of that. What are you investing in outside the retirement plan? So primarily index funds, that's what I do. So I've been an index fund investor since the early 2000s. So I have a mixture of stock and bond index funds. Wait, wait, wait, it hasn't been cool that long. I know. I've been doing it since before it was cool. I used to hang out on various forums when they were invented, there was a forum called the Morning Star Die Hards that eventually became Bogleheads one day.

So I used to actually just kind of lurk on that forum in my early 20s. It's an early 20s woman. I kind of feel out of place here, but I'm going to read this all because it's really interesting stuff. I love it. So going into this, it sounds like you had a very, a great approach here, max out the retirement accounts, all that kind of stuff. And then you have this after-tax chunk of money, even after all that's taken care of because you're very responsible

and have a strong savings rate and earning a good income, what kind of triggered the decision to pay down your house versus invest in index funds, right? I assume that being a boglehead, you assume a certain rate of return on your index fund investments over time, which would be, I presume, higher than a 2.75%. So you walk to that thought process? Yes. So that was a decision that we made for two reasons. One is, and the biggest one to us is security, right?

financial security. So being an investor, as long as I have, I've been through the dot bomb. I've been through the Great Recession. I know what happens to stocks. I invested in the S&P 500 from the year 2000 through 2010 when it did nothing. So I have lived through the fact that stocks do not always go up. They do not always go up over a very long period of time. And you have to be holding them for the long term, right? Whereas paid off house, it's paid off today, it's paid off tomorrow, paid off in five years. So for us, financial security became very important and not depending upon stocks, which can be a volatile investment class, was important to us. Because if something like what happened to him before ever happens again to him or to me, having a paid off house is important

to us because then we won't have any debt. So it's more of an emotional decision than a math decision. And that case. And then also for us, we've got a cash flow decision as well because my older son will be in college in two and a half years. Got it. So the decision to pay off the house is really a security one, which I think is great. I mean, it's got to be a wonderful feeling to have a paid off house and have that luxury that goes along with that. Does that philosophy extend to a very large emergency reserve in cash as well? I would say yes. I think I have about a year. especially without the mortgage anymore, but at least a year in what I call a tiered emergency fund.

So some in savings accounts and then some in saving bonds that I can tap if something really bad happens. So it definitely does. So bad things actually happening to you has a big impact on the way you view money and security. I love that. I think that's fantastic. Can you walk us through how you, you know,

I am also building up a sizable emergency fund to shore up my first. financial position. How do you structure that, you know, it sounds like you have a tiered approach so you could probably maximize or get a little bit of return out of that emergency fund. Is that what I'm hearing? Yeah. Well, yes, although I don't know that savings bonds have a tremendously high return compared to... Yeah, better than like your 0.1%. Yeah, no, so they're definitely, um, the ones that I have anyway are definitely higher. They range between two and a half and five point something percent for the savings bonds. But the way that I thought about emergencies after what happened to us is basically having a tiered emergency plan as opposed to just a fund of money. So I've got some money in

just an online savings accounts and get at least the 2.25% there. And then after that, which would be a couple months of expenses usually, then after that, if I ran out of that money, then I know what I would tap next. And then if I ran out of that money, I know what I would tap next. So, you, usually if you're a good saver and investor, you can have multiple pools of money that are making different returns. So a Roth might be part of an emergency plan where if you run out of cash and you run out of savings bonds, then you'll tap your Roth contributions. And then, you know, kind of so on down the line, having an idea of what order you would tap your different savings and investment vehicles can just help if you end up in a bad situation because then you don't

have to think about it. You already have a plan. Is this a written out plan or is it just more in your head. I'm just thinking because we don't have a plan, like, written out like that. And I've got a job right now, but look, you could have surgery and go into sepsis. So, you know, have you conveyed this to your husband in case you get sepsis? Yes, we've talked about it. We meet about money every quarter. I'm the money nerd. He's not. So every quarter we meet and talk about that. And what part of that is what would we, what would we do if something bad happens? I think we could still do a better job of it, though. I probably should write it down for him.

I think I wrote it down on the website once, but he would probably have trouble finding that article if something happened to me, I'd imagine. So you mentioned two things. You put some in an online savings account about two months of expenses. A Roth is part of an emergency plan. Do you have any other specific suggestions

for tiered emergency plan that other people could take inspiration from? Yeah, so a couple different ideas. If you want something more secure, you could create like a CD ladder, especially since rates from CDs are starting to creep up, although I think they're creeping down again recently. But you could create just a tiered CD ladder

where you have CDs of smaller amounts that mature at different durations. You can get a 12-month CD at maybe a promotional rate. So if you have 12 months, say, expenses in an emergency fund, then extra money in a CD, that would become available once you ran out. I use savings bonds. I like inflation index savings bonds. They've been kind of not paying so well. Recently, the older ones were better where they had a good fixed component.

But their rate varies depending on inflation. So they should always keep up with inflation, at least. And often it's more than you can get in an online savings account. Not always, but often money market funds are starting to be better as well. But I would definitely say that once you have a good amount within a savings account or stable savings vehicle, then you can start looking at, okay, so should I invest this in something, maybe a more conservative investment, and then, you know, not count the whole amount necessarily as part of your emergency plan. If you have an extra $20,000 say, you could put that in a

more conservative investment and say that you're only going to count on 15,000 of it being there at the most. Or you could then invest it very riskily, but you run the risk that, obviously, when you need it, the market's down. I think this is all great. How recently did you pay off your house? Last Saturday. That's awesome. Okay. So you've paid off the house and you've got this tiered emergency plan. And it seems to you got that built out. You have two years before your son goes to college, it sounds like. Is that right? Yep. Two in a bit. Yep. And you're pursuing financial independence. So what's your plan going forward to continue moving towards financial independence with this foundation in place.

So my next financial goal, just personally for us, is to finish saving for what we want to pay toward our kids' college. We have specific targets. I have a concept that I call a college compact where just I've thought out what I'm willing to fund under what circumstances for my kids and made sure to write that down so that I'm clear and we don't enter the whole, well, you know, I'm going to pay whatever college costs conundrum because I'm not going to pay whatever any college that they want to go to costs. But I want to make sure they're clear on what I'm going to pay for and that also that I know how much

to target saving based on what I'm willing to fund. So we have some specific goals there in addition to continuing to max out retirement. And then once that's done, then I'll more aggressively turn to saving for more after tax, I'd say. 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 actually make progress. Simplify

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

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So what I've targeted is being able to fund four years at our state's flagship public school, which is Yukon in Connecticut. So what that did for me is give me a dollar amount to target. And in the past, when I wasn't earning quite as much and just had kind of lower goals, I was thinking I'd pay for half or maybe a quarter. But right now I'm targeting having enough to pay for that school for four years for each kid. So not five years, not a fancy private school, not an out-of-state public school, but our state's flagship public school four years.

And like I said, what that I did is it gave me an actual dollar target because when you talk about saving for college, what I've found is when you go to any of these online calculators, they all just spit out ridiculous numbers or ridiculous ranges at you to say it could cost anywhere from $5 in a stick of gum to $5 million. And how do you save that, right? I'll front to the stick of gum. Exactly. How do you even begin to target something like that

when they just give you these ridiculous ranges? So actually having a school and a percentage target in mind lets me actually track my progress to that goal and lets me communicate to my kids. You know, this is what I'm willing to fund up to. So if you want to go someplace that costs more, that's great. That's on you. Do you want to go to someplace that costs less? Then I've also kind of noted out some ideas on ways that the difference could be used,

assuming I didn't have to use it for the other kids. So I'm assuming that you have spoken to your oldest son about college. Have you gone over costs? And what have you done to prepare him besides just saying, hey, I'll pay for four years? So we've talked quite a bit since I'd say he was ending middle school. Okay. Talked about college. Not in like a sit-down.

Let's formally talk about college all the time kind of way, but more about when I'm reading articles about things with college or in high school now. He's been to a couple of college tours. His high school has college flags hanging up. So it can be a natural point of conversation. And so we've had a number of. of conversations over the years about the cost of school. He went once to visit Wesleyan. I don't know if you've heard of Wesleyan, like a fancy private school here in Connecticut, private college.

And after he came home, I had us go look up how much that school cost just so that he could see what it cost per year and talked to him about the cost of college and then how the actual cost of attendance can be different in ways you can bring down college costs. So it's been an ongoing topic of conversation the last two and a half years, just not, like I said, not formally, but informally as time's gone on. And he's approaching now the end of his sophomore year. So soon he'll be a junior, he'll be actually going and checking out more colleges and getting more serious about figuring out where he wants to go. So it'll probably be even more next year. Does he know what he wants to be when he grows up at the ripe old age of 14, 15, 16? I don't know. I don't remember how old you are. 15.

So he wants to be an artist of some sort. He actually goes to an arts magnet school. Okay. So he likes the visual arts and graphic design kind of things, but he's not exactly sure. So it'll be interesting to see where he ends up over the next couple years if he ends up actually going into the arts or into something different or is still undecided because I know, I didn't know what I wanted to do when I was 15.

I mean, who does? Right. I think it's kind of unfair. that we ask these kids to know what they want to do. Luckily, most people I know who got college degrees don't ever end up working in the field. They got their degree in anyway. And some do, but most don't.

So it's not going to be, you know, if he goes to school for one thing and ends up doing another, that'll be pretty much normal. Well, I would like to remind everybody that our episode 64 with Zach Gautier talks about a lot of different ways to fund college scholarships, of course, but also great. and programs, buying college credits by taking dual credit classes in high school.

There's the Klepp test. I can't remember what Klepp stands for. College level entrance appropriate? I don't know what. I just make that up. But Klepp test, you take a test. That counts for a whole course in college. And it's like a $70 course or $70 test instead of like a $400 course or whatever.

I don't know how much college costs. It's been a couple of years. More than $400. For one class. Most of them. More than $400 for one class. Oh, okay. It's been a while.

I did some time at community college. So yeah, definitely. Also did I. I do too. That's also a valid way to get some of these, knock out your general education courses. English 101. You don't need to pay top tier college level prices for an English 101 class.

It's just a regular old class. Yep. That's what I did. Yeah. That's what I did a lot of those. I also did a lot of dumb classes. too, so don't follow everything. Okay, so, well, let's look at you.

Where are you now in your financial independence journey? How far are you away from your fine number? I'm assuming you've calculated your fine number. And do you like your job once you hit your financial independence number? Are you just going to leave or are you going to stay on? So to me, this is always a tricky thing, right? So, yes, I've run calculations and tried to figure out what the fine number would look like. But, you know, first, there's a lot of uncertainty, I'd say, in our lives, particularly with medical costs.

And for us, those are much more important than they probably are to maybe some others. So insurance costs and medical costs will probably always be high for us. And those can be tricky to predict. So I've done some projections that it looks like which should be financially independent in, I'd say, my early to mid-40s, most likely. once I get the college savings, the rest of that out of the way and can really focus solely on that as the only goal. That's about when I've predicted that we'll hit that. And, you know, I've thought a lot about the working question. So for me, reaching financial independence is much more important than the early retirement part.

So I like to call it financial independence retirement elective because I want to make it an option. Sure, that would be great. But I don't necessarily want to retire in the traditional sense at all. I probably would stay at my work, at least for a while. There's nothing in, I don't yet, and I know how much life can change over seven years. So believe me, I know that between now and then, lots could be different. But as of right now, if you ask me, I wouldn't retire from work. I would likely stay on and keep working in what I'm doing because I like it.

And then also in continuing my website, because I like that too, gives me a sense of personal fulfillment. I don't get at work. But at work, I get to tackle some complex. business challenges, and I really like doing that, too, be honest. I mean, I used to read Harvard Business Review case studies for fun about how to run a business. It's just always been, I know, I'm a nerd. You know how to tell me. What is your current job? What is your current role and responsibilities? So I'm an IT pro. Well, not IT so much in this current role, but I'm a program manager. So I run very, very large projects at a very large company. And you enjoy it. I do. I like the

complexity. I like the challenges. I like working with different people. I'm working in our international area right now. So I get exposed to a lot of people from different countries and business complexities coming from different countries. And I just find it very interesting to try to put all those puzzles together and to figure out how to get things done when things go wrong. I just, I like it. I think that gets lost in this whole financial independence retire early community is that you can still like your job. I think some, the majority of people who are searching for financial independence or on this path really don't like their job. I've had a lot of jobs that I don't work at anymore because they sucked. And now I have a job that I love. I don't need this job. And I feel like such a

snot saying that I don't need this job. But we have reached financial independence. But I get to talk about real estate and money all day every day. And that is what I love. I get emails for people all the time. You changed my life. Your website changed my life. I'm now financially independent because of the things that I learned at BiggerPockets.com. So that is something that's so rewarding. And I've got small kids who are in school 35 hours a week, 40 weeks a year. Do you think that people sometimes don't pursue financial independence because they like their job? I hear that a lot too. Oh, well, I like my job. I do. I mean, I think sometimes people don't pursue financial independence or people think that you have to hate your job to want to be pursuing financial independence.

And that's never the way that I've seen it. I've always thought, first, you should strive as much as you can to find a job situation that's good for you, even when you need a job. Because if your current job's not working out, it can be difficult to find, but there are other jobs out there and other career paths and other situations. And it might take you a while to nail down what really works for you. But that can be worth it if you're stuck there for a while. And sometimes doing that and reaching for financial independence at the same time is a good whole life happiness strategy,

as opposed to staying miserable in a job for a while because you want to reach it faster. And yeah, I think it gets lost sometimes because some people do hate their job or just generally hate working and want to stop working forever. And that becomes people's only focus, which it's interesting. Most people, most media pieces, I'd say, that I see on the financial independence movement. stress the early retirement and the retire at 30 factor because it's cool and it sounds like fun. But most people I meet and to talk to online in forums and meet at meetups and things like that, they're not looking to leave work forever at 30, right? I mean, I was just at a Chusify, Connecticut meetup this weekend. And there were two women there in their 60s. Oh, nice.

So they're really looking for financial independence to help them retire a bit or a few years early or have the security to know that their money can last in retirement by learning these concepts and these ideas. And sometimes people just want to learn tools to retire on time. And if they've not been saving for retirement until their late 40s, early 50s, mid-50s, there's lots of people like that out there. And the lessons of this community teaches can help those people who are playing catch-up to be able to retire to some kind of financial security period. So I think that gets lost sometimes in the overall movement with an emphasis on early retirement when it's really, for a lot of people, it's on financial independence.

And anecdotally, I've found that when I have conversations with folks who are tending to start out on the journey to financial independence, maybe have very few accumulated assets and have a very low savings rate, that there seems to be, that's where a lot of the, I hate my job, I want to quit, this is terrible. I'm really motivated because I want to, again, I want to quit my job. I want to leave work. But as people are farther along the journey, you keep hearing people say, I like my job, I don't mind my job. I just, I think that that trend kind of goes along there. And I think that that, you know, again, that's anecdotal. I don't know if this would apply if you surveyed everybody in the community and found this out. But my suspicion is that if you've got ahead and, you know,

behave responsibly with your money for a period of five, 10 years, pulled up a sizable retirement nest egg, have a lot of cash and some passive income, maybe a thousand or $2,000 of passive income, that you're no longer going to put up with a terrible work environment, and you're going to make a move if you need to, something that you do enjoy and that you do like, and that transition is going to occur naturally at some point along that continuum.

So I wonder if that's at play here with your situation a little bit. It could be, and there's a story from your money or your life, that you reminded me of that kind of emphasizes that fact was about, I don't know if it's in the new version, but I know it was in my original version. So it's about a guy who's approaching the crossover point where the money he has saved is going to be enough to fund his lifestyle. And he would come home from work ecstatically happy because he was totally bulletproof. He could go in and say whatever he wanted to whoever he wanted.

He didn't need to care about politics or, you know, is this person going to get mad at me? Are they going to fire me? none of that had to matter anymore. So he could just go in and do his job however he thought that he needed to and he would come home really happy, you know, smile into his wife talking about how he's bulletproof because that stress was removed.

He didn't need to keep his mouth shut anymore out of fear of being fired. Because if he was, he had a good stash of money, go find another job and kind of top him off, but he could live for a while on what he'd accumulated. So he was able to focus on the parts of the job that he enjoyed and push for what he thought was really needed without worrying about the consequences. That is a really powerful position to be in. I don't want to say I take advantage of that, but I definitely enjoy that now as opposed to the, I'm thinking back, I have had a few jobs

where I really enjoyed what I did, but I didn't necessarily enjoy who I worked for. But you can't just, when you've got a mortgage to pay and you've got bills to pay, you can't just be like, don't talk to me like that or hey why do you take credit for all my great ideas and blame me for everything that goes wrong you're a terrible boss and she'd be like see ya you got to just bite your tongue i mean i'm i also don't work for a horrible person anymore which is kind of nice that's always nice but yeah it's it's true right so if you feel like you don't need the income that you're at right now or that you have other options then you can speak up and say you this isn't working out, I'd like to go transfer to another area. And if they say, no, we can't do that,

then you have, again, you have options. You become more in charge and you don't necessarily feel the stress that I need to stay quiet because otherwise I could get fired and then I can't pay my mortgage next week. Okay, I love it. I love it. We are now approaching the time in our show where we come across the famous four questions. But before we get there, I want to ask if there's anything else that you want to cover or mention before we move on? No, I think we've had a lot of great conversations here. I think so too. I really enjoyed talking to you guys.

This is awesome. I mean, I'm not like, I feel bad saying that. This is so great. You're your husband had sepsis. Is that the same thing? Is septic the same as sepsis? Septic shock is when you go into shock because you have sepsis. So sepsis is basically a full body.

response to an overwhelming infection when your body starts to cut down. Okay, well, I'm not happy about that, but I'm very happy that it spurred you into this thing because this was a very, very fun conversation. Okay, so then it is time for our famous four questions. These are the same four questions and one command, demand that we ask of all of our guests. Are you ready? I'm ready. Okay.

What is your favorite finance book? You dropped a bunch of books in here. I did. I'm an avid reader. You could probably tell because I've mentioned something. many. But I have to say that probably my favorite one is the millionaire next door. So I've actually read everything that Dr. Thomas Stanley has written and the new version, of course, but I have to give props to the original because it really changed how I thought about wealth, I'd say. Yeah, I love that

book as well. And I do want to shout out that I've also read The Wealthy Barber, which is a nice fun read. You've read The Wealthy Barber. So few people have ever read that book. Yeah, it rarely comes up. And it's kind of like, it's very specific in a lot of things. with a lot of specific kind of advice in there almost with a lot of that. But it is easy to read, kind of easy to adjust, understanding of personal finance, I think, to a large extent. So I thought it was cool that you mentioned that. Yeah, I haven't heard a lot of people mention that either.

It's because I actually own it now, even though I took out of the library, I got it as a Christmas gift because I asked for it. And it's very outdated now because he never, he went back and he wrote like, A Next Wealthy Barber or something, but everyone always says that it's not as good as the original. And the original, when you read it, It's very specific with tax advice and mortgage rates and mortgage advice for the situation that things were in like the early 90s.

So large parts of it are unfortunately outdated because it was so specific. But some parts of it certainly aren't. And I enjoyed rereading it. Yeah. All right. Well, what was your biggest money mistake? I'd say it's the time I bought a motorcycle. That would be because I discovered that I don't like to ride a motorcycle.

So it was one of those things I thought I would like and I got my motorcycle license and I still thought I'd like it. And then I bought a used motorcycle and went on the road a couple times and discovered I really don't like riding a motorcycle. So I'd say that that's probably the biggest money mistake. And how much was that money mistake? Probably a little under $3,000 if you count the motorcycle and the helmet and jacket and licensing and all that, probably $3,000. Well, that's not a really, that's a good money mistake. A good money mistake. What is your best piece of advice for people who are just starting out?

So I would say my best piece of advice is to first just figure out where you are. Because when you're just starting out, oftentimes you don't really know what you're spending every month. You don't really know how much your net worth is. What's your total assets? What's your total debts? You might know generally how you're doing month to month or how you're doing month or how much is in your checking account. But usually most folks that I've seen who are just getting started don't have a good sense of their overall financial picture. So I'd say to the most important

thing is to figure out what are your assets, where are they, what are your debts, where are they, what interest rate, how long do they have left to go? And then also, what are you spending every month? So not necessarily what do you ideally want to spend, but first, what are you actually spending every month for at least a month or so? Because once you know where you are and then you know where you want to go, then you can figure out a plan to get there. That's great. I love that quote. All right. What is your favorite joke to tell at parties? Okay. So I'll be honest with the audience. As soon as I saw this question, my mind immediately blanked from every joke that I've ever known in my whole life because when someone asks you for a joke,

you can never think of one. So then I went on Google to try to search for money jokes. But a lot of them, Funny thing is that most of the ones that I come across at first are usually jokes at the expense of women. But I found one that I thought was good. So what Wall Street investment do traders call 007? Ooh, I don't know. Something, a bond of some sort of? A bond. There you go.

Yes. There you go. I thought that one would be good. Nice. I like it. That is a good one. I was looking at pizza jokes the other day, but they were all really cheesy. So, hey.

Don't encourage you. Okay, Liz, where can people find out more about you? So online, I hang out at chiefmom officer.org, where I write all sorts of things about money and work and financial freedom. I'm on Twitter more than I should be at Liz Officer. And I'm also on Instagram quite a bit at Liz underscore Chief Mom Officer. So if you go to one of those three places, you can find me and I hope you'll reach out. I follow you on every account that I have on Twitter. I didn't know you were on Instagram.

I follow you on Twitter. I think you are hilarious. You posting that you just paid off your loan or your mortgage is the whole impetus behind you being on this episode because I love your Twitter account. I'm like, I should have Liz on. Boom. I have a date. I've got Liz. Yes, you do.

And I love following you on Twitter too. I think I follow both of your profiles on Twitter. At least there's only two I know about it. If there's other ones, I may not know about it. I'm a very active tweeter here. You don't have Twitter, Scott? I have Twitter, but I think I've tweeted once or twice. Oh, but it's where lots and lots of cool money nerds hang out, like thousands of them.

So you want to talk about money and it's a perfect place to pop on and ask some questions. Yeah, Scott, how are you going to learn about money if you're not on Twitter? Yeah. I don't know. Somehow I manage. Yeah. Okay. She is Liz from chiefmom officer.org and we

will talk to you soon. Thank you so much for your time today. This was a lot of fun and I learned a lot about insurance that I didn't know and I didn't even know what an HRA was, the FSA, the high deductible. I like that you're still participating in the high deductible plan. Do you have an option for a lower deductible plan at work, or is it just the HSA?

No. I only have high deductible plans, but I can still pick between the HSA and HRA. Okay. I have the HSA now. Okay. So it is truly the ultimate retirement plan. Is that what he calls it? Yeah. What does Brandon call it the ultimate retirement account? There we go. Okay. So the end. Thank you so much, Liz. And we will talk to you soon. Thank you for having me. Have a great day. All right. That was Liz from Chief Mom, Officer. Minda, what do you think? Oh, my goodness. I love the preparation that she has taken in her life to make sure that she is still going

to be come financially independent and still possibly be able to retire. Honestly, I like that she likes her job. I like that that's not her focus. I think when you really hate your job, it kind of taints everything else about your life. You know, when you're miserable for eight hours a day, where do you spend most of your waking hours? You spend them at work. So when you hate your job, it's really difficult to just like function.

And I love that she loves her job. I love that that's the focus of her story. I don't choose to pay off my mortgage, which is a 15 year at a whopping 3.25% as opposed to her 2.75%. But I totally understand why she does it, why she did it. And, you know, personal finance is personal. And if it makes sense to you to be completely 100% debt-free, then pursue it. And don't listen to the people who point out that you have such a low interest rate. They're not there to pay your bills if something goes wrong.

And if you don't want to pay off your mortgage, if you are more in my camp, then don't pay off your mortgage. I have enough set aside that should something happen, I can pay it off and not worry about it. But for right now, that's not my focus. And I think that you can take something from this story no matter what side of that camp you're on. Yeah, and I thought that she just had a remarkably grounded and foolproof plan to get there. And you know what? Like maybe you could argue that there's ways to get better investment returns, right?

I mentioned in the show, hey, there's, you know, maybe you assume a 10% return in the stock market, why are you paying down your 2.75% mortgage? But you know what? The meat of this whole deal of achieving financial independence is your savings rate, right? That's what is driving you toward financial freedom or not. A few percentage points on your investment allocation portfolio in exchange for security and a rock-solid foundation. that can't be knocked over. I mean, that is, it's immaterial.

She is doing everything and a really intelligent and sophisticated and smart way to move her family toward financial freedom and deliver a great life and lots of optionality to her family and her kids. I mean, I just think it's a great way to go about things. Yep. And I really glad you asked that question

because I know I've been a listener of podcasts and the guest will say something and then the subject just goes someplace else. I'm like, no, ask this question. So I know that there are people who are listening to her say, oh, I paid off my 15-year 2.75% mortgage. And they're thinking, why did you do that? Or why don't you take that money and invest? And that was a really great question.

I'm glad you asked that. Yeah, I just thought it was, I thought it was a great perspective. There's no right or wrong answer there. I think it's just what a strong position she finds herself in now. And what a relief did not pay a mortgage anymore, huh? Yeah, yeah. And now she can take all of that mortgage money and throw it at something else. Throw it at retirement, throw it at her kids' college, throw it at wherever she wants to

because she doesn't have to throw it at the mortgage anymore. Absolutely. Okay, Scott, should we get out of here? Let's do it. From episode 69 of the Bigger Pockets Money podcast, this is Mindy Jensen and Scott Trench, and we are gone, baby gone.