BiggerPockets Money Podcast - How Can Paul Fast Track to FIRE by 45? ($1.6M Net Worth)

Episode Date: November 7, 2025

Paul has a $1.6 million net worth at 40 years old—impressive by any standard—but he's stuck wondering: Can I retire in the next 5-6 years? In this episode of BiggerPockets Money, Paul shares his journey from debt payoff to building substantial rental income during COVID-19. Now he's sitting on significant equity, strong cash flow, and a critical question: What's the fastest route to FIRE? Hosts Mindy Jensen and Scott Trench dive deep into Paul's complete financial picture—his income, expenses, real estate portfolio, and debt—to map out his optimal path to early retirement. Should he pay down mortgages? Buy more properties? Pivot to index funds? They explore every angle to help Paul retire by 45-46. This episode covers: Paul's complete financial breakdown: income, expenses, assets, and liabilities How Paul pivoted to real estate investing during COVID-19 and built rental income The mortgage payoff vs. investing debate for someone close to FIRE Whether Paul should buy more rental properties or shift to index funds Optimizing Paul's portfolio to retire in 5-6 years Tax strategies and withdrawal planning for early retirement The trade-offs between cash flow and equity in a real estate portfolio Bridge account strategies to access wealth before 59½ If you're wondering how to accelerate your own FIRE timeline when you're already doing well financially, this episode is packed with actionable strategies you can apply to your situation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Paul's net worth is $1.6 million, which is impressive by any standard, but he's stuck wondering, when can I actually retire? Sound familiar? Today, we're analyzing his complete financial situation and mapping out the fastest route to fire. Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen, and with me as always is my very observant, optimistic, you know, V-O-O-O-co-host, Scott Trench. Oh my gosh, Mind, Mind, you just have an index full of these creative intros here. Paul, thank you so much for your willingness to join us again here on Bigger Pockets Money and share all of your numbers for this episode of Finance Friday.

We're super excited to explore your options today and go through all of this. Welcome. Thank you. I'm excited to be on. Obviously, watch all the episodes, really respect, you know, your opinions and everything that you've shared. So I'm excited to have you guys kind of crunch our numbers and see where we're at. All right. Paul, before we get into your numbers, can you give me like a two-minute review of how you got to where you are,

day? Yeah, sure. We look at the fire journey, honestly, started with paying off debt at a young age. We kind of transitioned from there to traditional 401k accounts and building up raw fire and then during COVID, we got really excited about real estate. We were reading books and kind of educating ourselves and just saw the cash flow coming off of that was much better than just dividends from the stock market. So that's when we kind of pivoted into real estate. And we've been growing ever since. And Paul, what does your retirement timeline look like, your ideal retirement timeline? Yeah, our ideal retirement timeline is five to six years. Let's look at what those numbers actually are. So we have a total net worth of about $1.6 million. Yay, that's awesome. Remind me

how old you are again, Paul? Just turned 40. Just turned 40. Okay, 1.6 at 40, doing pretty good. That is broken down into 11,000 in cash, 600,000 in a 401k, 61,000 in a Roth IRA, 27,000 in a taxable brokerage, 15,000 in an HSA, and drum roll, please, $1.5 million in rentals, but 800,000 in mortgages against those rentals, so about 700,000 in rental value, and about 300,000 in home equity. Your current income is a whopping. $295,000 with about $2.30 coming from you and your spouse's jobs and $51,000 in rental income. Yay! $5,000 in private lending payments. So I like that you have a bunch of different buckets where the money's coming in. Your current expenses, you have broken down into two different sections.

You have firm monthly bills and fun money, pay yourself first, your remit seti rich life category. So your firm numbers are about $4,700 a month or $57,000 annually, and your fund money is $3,100 a month or a total of $7,800 or $94,000 annually. Your debts are non-existent outside of your mortgages for your rental properties, which comes to about $6,300 a month. I'm assuming that those are not included in your personal numbers. They are in your business numbers. Rental properties you own. It looks like six rental properties. And your wife has a small pension that she'll be able to get when she's 65. I really wouldn't take much of that into consideration, although it is still like grocery money. Paul, where are these rentals located again? Yeah, so all the rentals are here

with us in Sheboygan, Sheboygan County. So we got three of them in Sheboygan Falls where we live, which is like a little suburb. And then the other three are in Sheboygan, the actual city. And is that Sheboygan, Wisconsin or Sheboygan, Michigan? Sheboygan, Wisconsin. I didn't know there was a Sheboygan, Michigan until a friend moved there. All right. Next up, the biggest single position in your portfolio is going to be this rental portfolio. It's comprised of six rental properties.

Those six rental properties are valued at an aggregate $1.57 million. It's very precise. So it looks like you really know your numbers down cold. Perhaps the best ever we've had on a Finance Friday in terms of specificity and organization of this. Your primary and one rental is at 2.8. and 4.25%. Otherwise, the mortgages are all in the upper fives or low sixes, 6.5, 5.875, 6.875, 6.375, those types of things. The rental properties look like their average value is about 300,000, 250 to 300,000. So we have a very consistent approach here. Looks like a kind of lower

cost or middle cost of living area here in Sheboygan, Wisconsin. You're levered at almost 50, 50, maybe 55% debt to equity across the portfolio. You've got really good estimates and conservative approximations to me, what looks like in terms of accounting for all of the major expenses in a rental property portfolio, and you're producing really solid cash flow. So this tells me you have a very consistent, strong thesis in this area, and you've been really diligent about building this rental property portfolio. So congratulations on everything you've got here. This is a really fantastic position. Could you maybe preview some of your top questions for us today? Here's where we're at, kind of high level. With the 401k position being at, I don't know,

600, 630,000 somewhere there and being 40, my kind of thought, and we pulled back last August, we actually stopped contributing to our 401K. And the thought process, I've been reading a lot of books like, died with zero and different things of that nature and kind of starting to pivot, But my wife is definitely more focused on we need to enjoy today and not pile everything into retirement. And, you know, my thoughts are if that 600,000 in 10 years turns out to 1.2 million and then in another 10 years by the time where 60 gets to a little over 2 million, that should really be enough for us to retire alone with that money, plus what's sitting in the Roth IRA and

our HSA. So if we just leave that sit and almost view that as coast-fi, then the next problem that I need to solve, which is kind of what I want to get out of today's episode, is let's say I can retire at 45. How do I bridge the gap then from 45 to 60? You know, using that term middle-flash trap, I know there are things that I could do to pull out of 401Ks, but I'd really like to leave that money alone and find out what the best way is to bridge that gap. Because ideally, my oldest will graduate high school in six years. I'd like to get to a spot where my wife and I could retire at that point. Awesome. And so tell us about this.

You said your oldest. How many children do you have? We've got two kids. One is 12 and the other is nine. Awesome. And they're going to, so you talked about graduating high school, are there intentions or plans to fund college for or to some degree for either of these children? So we do have 529 accounts.

And I'm saying we probably have saved up for them right now, probably 30,000 between the two. So let's just call it 15,000 each 10,000 in 529s, 5,000 in just custodial brokerages and all that stuff sitting in VOO. So I think to some extent we would help them out. But I think another thing, too, is kind of introducing them to this world of real estate and rentals and see what we could do to get them involved in an early age with maybe house hacking. and things of that nature to help get them started. Okay, so the challenge is we want to retire in five years and we kind of bridge to that portfolio. And I always start the analysis of something like this

with two kind of big building blocks. One is we have our current portfolio and what it will grow to in a range of outcomes over the next five years. And then we have the additional income stream, the additional cash you're going to accumulate over those five years if you keep on your current trajectory.

Right. So we have a $1.6 million portfolio. We can drag that out and compound that probably somewhere in the $2.4 to $2.5 million range if things go pretty well in there or at least adhere to historical standards over that time period. You're going to amortize your debt. You're going to get a little bit of appreciation. You're going to get a little bit of increase in rental rates if historical averages play out those kinds of things. The second big building block is going to be the cash you accumulate from your jobs, right, and your income overall here. And that's about 300 grand a year. minus the $100,000 you spend a year minus taxes. So if I'm ballparking that, it seems like you ought to be able to accumulate $100,000 to $125,000 in cash if you're not maxing out these 401Ks or retirement accounts. Does that sound right? Is that what's happening in your life last year or so in the most recent past? Yeah, it's interesting you say that. So those numbers are pretty spot on. So I started last year.

We track every penny that hits our checking account. And then what percentage of that actually goes towards saving and investing? versus what percent are we spending? And last year we saved about 52 percent of our income. So it came out to maybe 110,000, a little less than that. And honestly, this year we're on track to do about 63 percent of that. I do think as we get into the holidays, it'll probably fall off a little bit. But kind of my goal is if we did 52 last year, right, you get annual increases. We've got more rentals making more, even if we could take that 55 or anything above, as long as we're moving that number in the right direction. So I would say we're probably going to save somewhere between 120 to

130,000 this year. And to be honest with you, it's not like we're, I mean, it's crazy. You can fathom these numbers, but we're not like living really frugally, right? I think we've whittled out most of the expenses we can years ago. And we still are living like a good lifestyle. It's just as that income has grown, we've been able to save so much faster. We are going to take a quick ad break But more from Paul when we're back. 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.

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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. All right, we're Shabwegging back in. I think this is a classic millionaire next door, you know, a type situation, right? I mean, you've just, you've been diligent and building a career over, I assume, your entire adult life to get to this point from an income perspective. You earn a good income here, and so does your wife here, to combine for $235,000 in household

income from your jobs. You don't live in a coastal city in an Uber expensive house. Your house is worth $400,000 today, you said here. And you have a really diligent planning. mechanism clearly here if you're able to get this precise with your take-home pay savings rate projection you know last year analysis and projections for this year so it's fun how this is a surprise to folks who have been doing it for a while like oh wow we have some really good options and it's it's not surprising to us at all i think mindy and i for that you're in the situation and going to have

some really good options here what i think is really powerful about this analysis though bringing it back to what do we do for the next five years is you've got your big chunk of wealth here and what's going to happen to that. And you've got this $500,000 easily, if not much more, unless something goes very poorly, that you're going to accumulate and be able to deploy. And so that brings us to the question of what does that dream portfolio look like in five years? That would make you feel really comfortable retiring. And you've got multiple options here because that's such a big chunk of accumulation that you can deploy to rebalance your portfolio or lean into what you're most comfortable with. Yeah. So what I'm seeing in this overview is a question.

of I want to retire in about five, six years, and you make around, I had it as $200,000 more than your spending. So Scott says $125. I'm not factoring taxes, right? So there's going to be a big tax bill. This is a high income or all ordinary income household. So I was doing some very ballpark math. I haven't precisely calculated as tax bill. I said it's going to be at least $100,000. Well, even let's say you can accumulate $125,000. Your rental income says $1,4,000. $44,000 in annual income before debt service and expenses and all of that. So if you paid off your mortgages or most of your mortgages, you're spending $100. You've got $144 coming in. That right there is the play, like the most obvious play, take all of this extra, in air quotes, extra money that you are not

putting into your 401k, that you're just generating from your salaries and your rental properties right now, and start paying down these mortgages. And you see that annual rental income increasing. And then once that matches what you're spending, you're kind of done. So to that point, there are, there's this bar graph that I have that we look at every single month, even though it doesn't change every month. But I'm looking at what is my cash flow today on my rental properties? And what would it be if the properties are paid off in full?

The number we want to achieve has now hit what they would be if they're paid off in full. So where my head goes is even though we have a good system and we could keep acquiring more rentals, right, I don't want to trade in one job for another and have a portfolio of 50 properties to get there. If I paid these off, we'd be there. So the question kind of that's going through my head is, is that the best approach to just pay down the mortgages quicker? And as I do that, it's going to lower the interest payments. It's do I arbitrage and put that money into, let's say, VO and let that sit and grow. And once it gets to a spot that's big enough, start paying off the rentals or, you know, there's different ways to look at that.

I wasn't thinking that either, but it's still an option that's out there. And I even, you know, I asked Chad GPT and put all my numbers and plugged it in there to see what it would give me just as another basis or, you know, a point to bounce an idea off of. You know, and I kind of said, hey, all these mortgages that you've got north of 6%, pay them off as quickly as you can, once you start getting into ones that are maybe at 4 or 5%, then you might want to invest and then let that money grow and then use that to pay off the portfolio. Or my other option is, is it best to just take all this cash, put it in the market, not pay the mortgages off? And now you've got that market portfolio plus the rental portfolio. I just don't know what's the best way to get there. Based on your stated goal of being retired in about six years, I don't like the idea of taking all of this additional money that you're not spending and putting it into the stock

market because I keep hearing that we're going to have a correction. And I've been hearing it for the last 11 years, 12 years, eventually they will be right. And it would be, I think because your timeline is six years, it would be rather soul crushing to put all this money into the stock market. And then in five years, maybe the stock market goes down and your five or 800,000 is now four or 200,000. How much time do you spend on your rentals every month? And do you actually like being a landlord? Honestly, I do really like it. And how much time we spend, it varies.

But I'm going to say an hour or two. obviously if something breaks or something, we go to fix something, like, that can take a couple of hours, but that's not happening that often. Based on those stated, all of your stated goals in your situation, I would start looking at these rental properties with these six and above percent mortgages and pay those off. You're not in this mindset where you need the win to really get you over the hump. so I would do the avalanche method and pay them off highest interest rate so you're saving the money. So I think first, there's no need for us anymore. ChatGPT has taken our jobs on there. I kind of agree with what it's spat out to a very large extent in your case here.

I think that from a principal's perspective, again, we have our per position, we have our accumulation, we have the philosophy around retirement planning and portfolios, right? When you are building up in the accumulation phase, you want to be very aggressive. Your portfolio is perfect, right? It's essentially stocks and real estate that's pretty levered to get you to this position in the accumulation phase. Once you're 80% of the way to your goal are five years from your goal, right, per Frank Vasquez, I love that as a really good line in the sand there.

It's arbitrary, but it's good. You begin the pivot to the more conservative retirement portfolio. And so it's just, I think that chat GPT has nailed it in this case. One component for that is I think that in your case, all the debts are pretty close in size. You have $187,000 mortgage. Everything else is $120,000 to $180,000. So I would go with the avalanche method here and pay off the highest balance ones. Maybe I might chunk out that $87,000 mortgage first, even though it's a little lower interest,

just to knock out one and kind of get that freeing feeling of cash flow. This is all subjective, very minor tweaks in the context of the strategy here. One consequence of this approach, however, is that your retirement portfolio is going to be heavily weighted to Sheboygan real estate in five years, right? You're going to put another several hundred thousand dollars into paying off these mortgages on these properties. I think it's the right move based on what you said here, but that is a risk you need to kind of have eyes wide open for as you approach that goal if you do start paying off

those properties. Does that line up with what you've been thinking here, Paul? That's definitely what I'm thinking. And the only, I guess, watch out that I have is that, you know, if we pay off the rental properties and I say that my max cash flow could hit what our goal is, right? That's again, assuming that we don't have things breaking or that there aren't major repairs. Now, today, life is good and I don't have to worry about that because worst case scenario if a major repair comes up, our savings rate is so significant that it doesn't really have to come out of the rental

portfolio. Like, it's fine. I think once I go to living off that portfolio, that'll change the game a little bit. But honestly, my wife and I love our jobs. We're not in a spot that, oh, my God, five years comes up and we can't work another year. And I think the other thing is, is there businesses and opportunities that we want to try and go after once we get to that spot. So I really don't think that, oh my God, five years comes, I have to live off the rental portfolio. There's never going to be any more income coming in. I don't know where it's going to come from or what that's going to look like, but I really highly doubt it's going to be zero. Yeah. Well, I think the answer to an implied question in that statement is building a cash position, which is not really necessary right

now because of the stability of your situation overall and the liquidity of a portion of your portfolio. When you actually, you know, begin to move off both jobs in some future state, you will want, I think, a cash position, probably six to 12 months, maybe even a little more since you're a real estate investor and, you know, when it rains, it pours with these things. So that would be one of the last pieces, I think, to put into play in your position before you do that. And you might kind of do that one more year syndrome there to make sure that that's in place because of the wonkiness of planning as a real estate investor compared to, you know, these very long-term studied retirement portfolios and stocks and bonds.

So I would certainly want to put that in place as one of the last pieces to your portfolio in the six to 12 months before you step back. The other thing that's interesting, and generally you two have different opinions on this, but, you know, when I get to the end, because I've thought a lot of the same things you just said, Scott, my home mortgage is at 2.85. If I get to that spot where the rentals are paid off, do we just pay off the home mortgage? I've had planning that's gone back and forth both ways. One is get rid of it because you don't have that hanging over your head when you're, you know,

in essence, I'm living off the rental portfolio. on the other hand, it's like, man, it's 2.85. Like, when am I going to get a loan like that again? Do you plan on moving? No. Then if I was living in this house with a 2.85 mortgage, I would keep it. I would, maybe you've got about $195,000 left on this mortgage. I might put money into a savings account, a high-yield savings account, not the stock market,

that equals the $194,000, just so you could pay it off if you decided I am just done with this mortgage. But with a $900 mortgage payment, I personally could take that $194,000. If I was living there, I actually would put it in the stock market because I feel that I can get a better return in the stock market. Even if it goes down, I believe in the long-term viability of the American economy. So that's what I would personally do. But I know that Scott would probably say otherwise. I think what's going to happen.

And again, I get dinged for being too optimistic sometimes on this. But I do think that optimism has generally played out. much better than the conservative case in many of the folks we've talked to over the years. Like their income grows a little faster than they expected because they're spending their free time. You're spending your free time listening to bigger pockets and self-improving and otherwise upgrading your knowledge about personal finance. I think what's going to happen here most likely is your incomes are going to grow both of you guys a little faster than you projected over the next five years.

I think you're going to reach your goals a little faster than you, you, expected from your base case, probably very conservative financial planning model here. And I think you're going to end up in that position well north at $2.5 million, somewhere in that $2.5 to $3 million range with an ultra-conservative portfolio that does really well. I think that that's actually a likely outcome for you, Paul, over the next five years. I think you're going to start a business after that to some degree, some kind of self-employment or whatever. And you're going to find, huh, that's actually going quite well.

and I think you're going to have the accumulation option to continue building your portfolio, and you're just going to want to eliminate your mortgage at that point as another box to check because you have the option to do so, and it's going to be relatively immaterial. So that's what I think is going to happen. You can come and laugh at me about how overly optimistic that was in five years in your situation, but I think that's what's going to happen. I think that from a planning perspective, no, don't pay off the mortgage. That's not part of your core plan.

You don't need to. It's so low, in this case, at 2.85%. And the payment of $1,000 is so relatively small compared to your income and your portfolio's generation capability that I would leave it in place. It's not a good plan to make that a primary thing to pay off before you reach retirement. The other mortgages are literally two to three times the interest rate. So that would be my stance on this one. Ultimately, I would say, ask your wife and see what she thinks. If she wants to pay it off, I'm going to go with happy wife, happy life.

Yeah, I like that answer. Something Scott said made me think. He said your entire net worth then is going, well, not entire, but your rental portfolio is going to be dependent on the Sheboygan market. Does Sheboygan have a main employer? You know, one of the things, honestly, David Meyer was here and I talked to him about this too, with him and Henry. I love the Sheboygan area because we have, we've got a lot of big employers. And a lot of the industry that's here is private companies that kind of have ties to. the area. You know, so I think of like one of the biggest employers here, Kohler Company. It's in Kohler, Wisconsin, where the family is and the town is named after them, where the, you know, places. It's not going to up and leave. Or I think of, you know, we've got rockline industries. They do a lot of like private label things and that's a privately health company. We have Acuity, which is a huge insurance company. We've got Ballrath Company.

We've got Sargento Cheese and Satori and the manufacturing really strong in this area, which is a really good job market. And then we also have a lot of things kind of unique to the area with Whistling Straits, right? That golf course has one of the courses that are in the top five for public golf courses. We've got Rhode America. We've got the lake front. There's just a lot of things to do in a really strong job market. So, yeah, I'm lucky that I live here. But I think a lot of the fundamentals for what are going to keep people here and have income growth over time are also here, which also supports the rental market. So it's not just, oh, shoot, this is where I started investing.

So this is where I have to stay. I want to stay invested in this because I think it's going to be really strong long term. I love that. And I think that you're so advanced, Paul. So I'm going to give you an advanced homework assignment on this, which is I would write a thesis, a two-page thesis. Put it in Microsoft Word. and I always, if I'm thinking about a rental market, there are kind of three variables here. One is going to be supply, right?

So everything you said is great about, is underlying demand. These are reasons why you think the area is going to boom. But how many people are building properties in that area, right? This is what killed Austin, Texas investors in the last couple of years. Austin, Texas investors would have said the same thing you said about how great Austin is. And then they built 10%, they increased their housing stock by 10% in a single year. and that crushed Austin, Texas sales values and rents. And so you can just kind of look at that.

It's so easy to find that information. It's all permitted. You can find it with a simple Google search, maybe even pay like a few hundred bucks for a subscription or something like that. And you won't get your demand analysis, your subjective, but there and invalid demand and side analysis, overwhelmed by something that you can easily prevent. I doubt you're going to have that problem in Chippewigan.

I doubt you're going to be way overbuilt. but that's a good sanity check item. So I think you should do that, and just review it once a year. If you see that the Sheboygan markets got, you know, 50,000 multifamily units, and they're adding 5,000 in one year, okay, we're going to be a little more conservative with our projections for the next year or whatever. You're not going to see that, but that I'll put your mind at ease, and this will professionalize the headliner behind your all-in-bed-on-bed-on-real-estate.

Second is the demand thesis. All the great things you have there are perfect, but I would go in and look for, you know, some sort of professional opinion about what population growth is going to look like in Sheboygan or the, or whatever the MSA is attached. I'm not really familiar with the Sheboygan market, but whatever, what is that county, somebody has a projection about what that county is going to look like from a population growth standpoint over the next couple of years and just kind of use that to sanity test what you're seeing with your eyes on there. You may disagree with some of them, but if you get two or three of those, that'll help you out.

And then third, you got to have an opinion about interest rates, but in your case, that's very unimportant because, you know, you're going to be paying off these properties. So it's really more about the supply and demand dynamics. So I think you should have that opinion in there and be like, I'm going to be good even if interest rates go up a lot because that will have a dampening effect on price appreciation, but I'm going to pay these properties off and that should presumably give a tailwind to rents. But I think if you put a one to two page thesis together, you'll professionalize that and maybe

catch a couple of blind spots because you'll have some hard numbers to back. what you're saying there. How's that? Is that helpful? Yeah, no, I like that. You know, I love all that stuff. I just, I've heard some Florida and Texas people saying very similar stuff to you three, four years ago. And that didn't turn out so well. Not because people aren't moving to Florida and Texas. They certainly are. And there are certainly good businesses there. It's just no, no metro, no area grows at 10% in a year. Yeah, that's true. Sheboygan is about an hour north of Milwaukee, and it's right on the lake. So there's a, there's a lot of lakefront properties there. There's a lot of, it's such a cute little town.

I have a friend who lives there too. It's actually called like the Malibu of the Midwest. Like people wouldn't think this, but we're big for surfing here. And then, yeah, like you said, it's like right in between Green Bay. So going to Packer Games, things like that. You've got the bucks and the brewers in Milwaukee. You're about, oh, we're from Fondalak and Appleton and that area. So it's a good place to be.

Awesome. Yeah, but that would be my last piece is just professional. that portfolio. And I think there's a similar, very easy exercise of just, hey, you know, if things go reasonably well the next couple of years and I don't have one of those big gotches in there, these property is going to appreciate it to, three percent a year, maybe a little more. And that's going to give you a portfolio balance. I'd have to drive that out, probably in the $1.8 to $2 million range by the time you have your state of goal, mostly have a paid and a paid off portfolio. You're also going to have assets in these other accounts. What does that portfolio

you look like. Are you comfortable with those being highly aggressively invested in stocks and just just keep it that, letting that ride until retirement? Yeah, because the more and more that I read and do all the self-education, I mean, as funny as it sounds, it's not that complicated. Just keep it in the index funds and let it ride and there's going to be volatility in there and that's fine, but that's part of what you get paid for, right? You don't get paid to just take the upslope and pull it out. But over the next 20, 30 years, I'm pretty confident that all. that stuff is going to go up. And I don't care what happens in between because I'm not drawing on it. Yeah. So that's great. And if you were going to draw on it, if you were saying, hey, I do actually

need to draw on pieces of that portfolio, that might change what you just said there. You might need some part of a different portfolio. But if you're going to let it ride for a very long period of time, 25, 30 years, then that's perfect. I completely agree. Scott, I have another wrinkle to throw in here. Since Paul said that he likes being a landlord, I wonder if it would be advantageous for him to keep an eye on the market for a smoking hot deal, not for a mediocre deal, but for a smoking hot deal that just pops up. And he's like, you know what, that would make a great addition to my portfolio. And yes, he might have to get a loan for it, but he could throw that money at paying down the loan. The Fed just reduced interest rates by a quarter point yesterday, woohoo, with no

information because the government is currently still shut down as we record this on October 30th. Hopefully, by the time this episode airs, we will be back open, but whatever. Because you're so good at finding good deals and you know your market, you know your area, I might keep an eye out just on a great deal. And if it pops up, that's just another bunch of money that's going to come into your bank account that you can then throw at the other properties and try to pay down those mortgages or pay down this mortgage. And that's just more income for you when.

you are in retirement. Or you don't have to pay off all the mortgages because so much more income is coming in. Does that make sense? Like you're spending 100 and if you paid off all your mortgages, you'd be making 144. So you don't have to pay off all the mortgages in order to cover everything that you're spending right now. I've thought through that piece because honestly I went and I was looking at a duplex the other day, even though I promised my wife we would not buy right now. She's used to that at this point. But that's where paying down the mortgages gets interesting because if I'm going to aggressively say, hey, every single week when I'm getting paid, that excess money is going to go towards those mortgages. Now when this deal comes up, all that money is tied into the pay down of that mortgage, which is great because

the instant that I pay it, my interest starts going down and what I've got to pay an interest. But now when that smoking hot deal comes, I still have a heat lock that I could draw from. And there's some places I could get money, but I don't have a huge cash position. down the sidelines to jump in and get a property. That changes things for me a little bit here. And this is why I biased so heavily towards cash, right? And I think cash is a drag in any financial model, right? It just says, hey, you're going to earn much less than you would be earning otherwise

in these assets. But if you're at all entrepreneurial or opportunistic, then the return is incalculable, right? Like, for example, my cash position, my large cash position allows me to do many things that are very interesting in my life. Like, for example, my paid off properties, I have a huge deductible on all of the insurance policies. It's not possible on properties with a mortgage. But I can put like literally a $20, $20, $30,000 deductible on my insurance policies, which brings them down to just maybe $1,000 or two on properties that have significant value in

hundreds of thousands or into a million dollar range. And that's a major cash flow advantage. Yes. Whenever I do have to file an insurance claim, I will have to shell out a significant pile the cash and deductible, but I've never filed an insurance claim as a real estate investor. I don't know if you have, you know, I will eventually, but I can capitalize for that with my cash position. And what's the return on that? I don't know. That cash position also allows me to make opportunistic investments in a rental property or whatever. What's the return on that? I don't know.

But it's not zero. It's not the zero that the cash is collecting in the bank account. There's some value to the more aggressive stance that allows me to take in many other parts of my financial portfolio. So if that's at all speaking to you, then maybe you can prioritize building up a cash position that would allow you that flexibility and peace of mind to be more aggressive in all these other positions. You can kind of think about that, hey, that's not going to model super well on my spreadsheet, but if I am going to be opportunistic, that's going to allow me these items here. In terms of your question about rental properties, you are one of the last people to use our old financial spreadsheet. So I'll send you this one if you have any interest in it.

But I've built a new real estate schedule here for properties that's all simpler to look at. It kind of condenses some of this information to give us a simpler view here. I do got to add an interest rate now that I'm thinking about it. So this is work in progress. But I think there's a little factor here that I haven't been considering quite as much in rental property analysis, which is how annoying is your portfolio on a property by property basis? One being not annoying at all. Three being terrible. And if you want, you could add a four or four.

this one just sucks my soul out of me and consumes a large amount of time and cash on an ongoing basis. And then there's a prospects component here. So, and these are subjective calls for you, but that may change the analysis here. And so if you do buy an opportunistic property, you also have the option to then sell one of your existing properties to not get into that overly complex or sprawling real estate portfolio in there. So you might consider doing some kind of very simplistic analysis where you just quantify how annoying your existing portfolio is. And if you have the opportunity to upgrade one of the properties over time, there will be transaction costs associated with that, but it might make your ultimate portfolio that much

more enjoyable. Now because of some of the stuff that we are doing, you know, historically, if I look at kind of how we've lived in that cash position that we're talking about, I've never held on to a large cash position just because I haven't thought it's been optimal. But that 30, $100 when you look at our budget, all that stuff is sitting in a high yield savings account building up until eventually it's going to get spent, right? Whether it's Christmas money or escrow for property taxes or any of those things. And that buffer's been nice from time to time if stuff comes up to say, okay, maybe there's $10,000 in there that I could pull from really

quickly because escrow's not due till the end of the year and then I go in and replace it. And that's actually worked really good, similar to what you're talking about. But that's for like everyday expenses. Now when you're talking about cash position that's laying around for down payments on rentals and stuff, you know, five to 10,000 ain't going to cut it for stuff like that. So maybe that is something that we should just increase just to give us a little buffer because, you know, we talked about what our savings rate is. It's not going to take us very long to get to that spot. Now we can get right back on track with our goals. I don't have the hard date in front of me, but I would guess that appears with a similar net worth hold two to five percent of their position in cash. And you

are on the low end of that, nothing wrong with that. Your savings rate is so high, you can certainly do that. But that might be one area that would give you a little bit more power, flexibility or control, given your goals in the next couple years. And another benefit of the cash position building up might be, you look up in two or three years instead of five and say, you know what, this cash position makes me feel really good about starting that self-employment component on this or stepping down a little bit if that opportunity at work comes up. So you can kind of have a hybrid approach to starting that business or self-employment activity that you had mentioned earlier on the call, maybe a little sooner. So I know I wouldn't be comfortable, you know, doing something self-employment

if I didn't have a big cash position. That would be hard for me mentally. One of the things that I've thought about recently trying, and it's all, it's a mental thing or a psychology thing, but of taking potentially my wife's paycheck in the very near future and just say, we don't have it, right? Put it in a different checking account and live. solely off of my paycheck. And ultimately, at the end of the day, it's just going to be a little bit of numbers game with how do we pay the bills and all of those things, but starting to like, get comfortable adjusting to what that would look like without that pay there. Because if truly we live off, let's say, my paycheck to do all living expenses, we know we're good there,

we'll just take all of our money and put it towards investing and savings. So really, net, net, when you look at the numbers, it's not be different. But it would be an adjustment to just how do we manage our money and get comfortable with that to the point that you're making, if an opportunity came up, we could say, okay, we know that we're fine doing it this way. Maybe you could make the pivot. All right. This will be our final ad break. We'll be right back after this.

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And your position is wonderful, but not flexible today. And you can easily remedy that in a pretty short, short order if you so chose. You know, the other big thing to me that was nice was just walking through this and seeing at the end of the day, the feedback that you guys are giving in the mindset you're sharing is very similar to the path that we plan to go down and, you know, even the path that, like we said, chat GPT recommended, I wasn't sure if sitting down, you're going to say, well, I understand, but like you should be taking the free contributions from your 401K, you're not doing that, or that you should pivot it with the HSA or any of those things.

And I kind of feel like, man, with our situation and looking at what our goals are, which aren't typical. I'm not saying, how do I get to 60 and retire? It's how do we do this at, you know, between 45 and 50. I think that changes the game for what we're doing. And with the portfolio that we have, it kind of changes the game a little bit. I think you guys are kind of aligned to similarly the way that we were thinking. And the fact that you're interested in self-employment and business building,

you're not going to have a zero on your income at that time, which you should really noodle on because if this is your approach to personal finances, whenever you do go into business, it'll take you a year or two. But you're not going to get a zero on there. And you may have a whole lot more income than at least, year and individually today, you know, after a one to two year, the one to two year struggle to get your whatever, whatever that looks like, it may be a whole lot faster than that. And last, if you do get to that point, guess what's going to happen is you're going to have a whole bunch

of surplus there that you're going to spend some of it and you're going to be able to shelter a ton of it in pre-tax retirement accounts because the cheat code in terms of shoring up more money, more wealth in your retirement accounts comes then. So that these are all, again, this is my wildly optimistic case. But why wouldn't I be wildly optimistic? optimistic for somebody who spends, I don't know, but 1,000, 5,000 hours consuming content about how to better their financial position, build their business mind, build their investing skill set. I mean, you can't take your foot off the gas on that, right? There's absolutely things could go poorly, but the odds are that things will go much better

than base case scenarios, at least from an income or opportunity perspective for you, relative to peers. So I think that that's something you and your wife should, probably sit down and talk about too is should we be more aggressive about some of these things in the meantime here, given that we do have more than reasonable odds of succeeding relative to other folks in our same situation because of our diligence, how clearly aligned we are at all of our financial goals, how much more we make than we spend, and, you know, the fact that we could live off just your income or just my income. That's a, but it's an incredible position. And I think

that there's a, that component, you have your conservative case modeled out here. You're going to fine in almost any situation we can imagine here. But are you not being, are you not envisioning the potential power of your position to realize benefits even sooner or, or take that shot sooner? I think part of it too is we haven't gotten lazy with what we've done from a savings perspective, not if we're in the mid 50% range of all of our income, but we have definitely gotten to a place where we're very comfortable, right? So then you take that. And that's something that we weigh out too with the kids and enjoying life and go, right.

Like, are we ready to pull the rip cord there and jump into starting a business and all the stuff that goes into that? Like, I think it'll be fun and I think we're still going to do it. Once again, you're speaking of all these languages that say, you could lose. Like, you could lose. There's nothing. There's no certainty. A lot of businesses fail.

But, I mean, gosh, you know, you're one of the best positioned minds and guests we've had to be a successful in business or self-employment, if that's what you so choose that I've talked to in a while. I mean, you can certainly lose, but these are all the characteristics of somebody who has a great shot at success in those categories. And so I certainly continue to only increase my bias towards that as something that you explore seriously over the next five years. And, you know, your original plan of waiting five years to do it would put you on rock solid footing in there, but there's every reason to believe that you could shorten that and not have to pay off all five, you know, of these high interest rate mortgages before feeling comfortable doing that.

You could take that leap a little sooner. And I wouldn't do it with $10,000 in the bank, what you currently have. I think that would have to change for me to be personally, psychologically comfortable with that. You're only increasing my bias that that's something to seriously talk about and explore in the next couple years. If that's also where your heart is and what you'd be doing in retirement anyways. All right, Paul, let's summarize where we're at, I think, after this conversation. So I think Mindy and I are actually taking two different paths here. Mindy is suggesting keep going on the real estate front.

I think you won and either start paying them off or consider moving towards that vision that you have for that retired life, maybe a little sooner, especially if it involves business, which is a better, in my opinion, a really good risk-adjusted choice for one of you while the other one works for a period of time. I think that that's the end situation. I think we both agree that it's great to, let that money ride in the retirement accounts, especially if the plan is not to touch it until traditional retirement and to generally speaking, de-leverage the portfolio. But if you're feeling very confident about your Schauboigan market, you're not getting spooked by the supply.

There's a big imbalance, you know, plenty of more people moving in than people building. Yeah, keep going and buying some properties and keep doing what makes sense here. So I think that's the summary in a nutshell. Is that right, Mindy? Do you agree with that? I do accept I'm saying continue, look. looking for smoking hot deals, not just random properties. Paul, before we go, where can people find out more about you? Yeah, the easiest way to find me, I try to stay somewhat active on the forums, just to reach out to me on bigger pockets.

Awesome. We will include a link to your profile in the show notes. Paul, thank you so much for being so transparent with us for sharing your numbers on the show because our audience really appreciates a look at the actual numbers. I really appreciate you being willing to share with us, and it's always lovely to talk to you. Very exciting to be on. All right. Well, we will talk to you again soon.

All right, Scott, that was Paul, and that was another fantastic story. I love that he shared his numbers, first of all. But what I love most about Paul is that he tracks everything. It can seem a little obsessive, but look, he's going to retire in his 40s, not in his 60s. And that's what you have to do when you are looking to retire early is do things like tracking your money obsessively. You can't manage what you can't measure. Have you ever heard that phrase before? He has a clearly stated goal, an achievable timeline.

He's not starting off with $100,000 and saying, I want to retire next year. That's not going to happen. He's got a clear picture of what his financial situation is. And because he's so diligent with his tracking and he has such a high savings rate and such low expenses, he's got so many options. I want to point out that the document that we were reading off of is available for anybody to get their whole entire financial picture. at biggerpocketsmoney.com slash DIY.

We'll be updating those documents. Biggerpocketsmoney.com slash DIY is going to evolve to be a resource library. We're going to be uploading this personal financial statement, an updated version of that goal setting documents, and then each of the financial plans for the people that we are building them for, like Barb, for example, broke at 50, millionaire at 60, or, you know, a Joe who is starting at 22 and wants to get to a million over a 10-year period. So we'll be building lots of those and building that resource library again at biggerpocketsmoney.com slash DIY all free for BiggerPockets Money listeners.

Yep. So, Scott, what did you think about Paul's story? Well, I thought it was hilarious that we opened up the interview and you asked if it was Sheboygan, Michigan or Sheboygan, Wisconsin. Mindy, that was the most obvious Wisconsin accent you've ever had on the show. And you're from the Midwest. You should know that. I am.

I do. I was just wanting to give a shout out to Sheboygan, Michigan. It's a smaller city. Awesome. Well, I agree with everything you said. This is a man with a plan. This is a guy who has built a substantial net worth. Everything speaks to consistency over a long period of time, diligence, tracking, planning, and things. And we see this time and again in the personal finance and fire community where people apply themselves for many years in a row, slowly mastering all of these concepts, slowly getting control of their financial position. And then it's a really strong, really easy to believe story of growth for the next couple of. of years. And I think that the challenge that I have in that situation is conservative consistency gets you to that point. And it allows you the option to be a little bit more aggressive and take a couple more risks, especially in the business and entrepreneurial front, which I think he's fantastically prepared for. Oh, yeah, he's got to crush that. I think he's got a lot of options.

Whatever he decides to do is going to work over the next couple of years. His base plan of paying off the properties is great. I think he has the option to realize his vision a little sooner because of the odds of success in business he has. I absolutely agree. I think Paul has. himself up very well, and that has come from kind of an entire adulthood of focusing on the goal. All right, Scott, should we get out of here? Let's do it. That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench.

I am Indy Jensen saying, bye-bye, butterfly.