BiggerPockets Money Podcast - The Best Investing Order of Operations for FIRE (2025)

Episode Date: July 8, 2025

In this episode of the BiggerPockets Money Podcast, hosts Mindy Jensen and Scott Trench discuss the order of operations for investing your money to achieve FIRE. They outline the steps for both traditional early retirees and those looking to invest in real estate (or start a business).  If you’re a beginner in the FIRE movement, start here and work through these steps to FIRE the fastest. If you’re close to FIRE already or at a significant financial milestone, don’t worry. We have tips you can use right now to retire earlier and avoid the “middle-class trap” that kills so many FIRE dreams.The episode dives deep into why each step is essential and provides actionable tips for maximizing your investment strategy based on your personal goals. What We Discuss: Investing Order of Operations for FIRE Invest Order of Operations for Real Estate Investors Why we prioritize a Fully Funded 401(k) over a Roth IRA And SO much more! Learn more about your ad choices. Visit megaphone.fm/adchoices

When it comes to investing your money, there are a lot of opinions on the best way to do it, especially if you're hoping to achieve financial independence and retire early. So today, Scott and I will help you take the guesswork out of how and when you should be investing your money. Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen. And with me as always is my investing in the right order co-host Scott Trench. Thanks, Mindy. In today's episode, we're going to take some steps to teach you what the

steps are in terms of what you should do with your money. Today's episode is an attempt to answer the question, what should I do with my money as I accumulated? And there are two orders of operations we're going to present to you here today. One is going to be for a traditional early retiree or traditional retiree, someone who's going to go down the ladder of these tax advantaged accounts and the order that we think is best in terms of maximizing the advantages that these accounts offer for the typical listener of Bigger Pockets money. The second order of operations we're going to discuss is one that's geared towards somebody who is thinking about investing in real estate or starting a business, somebody who needs after-tax, cash, and liquidity because they've got better alternatives

than the very powerful benefits offered by these tax-advantaged accounts. With that, let's get to it. The first order of operations for fire, and the first step here is to build a $1,000 emergency fund. The second is to attack bad debt, which we define as debt-weigh. with an interest rate of 8 to 10% or higher. The third step is to take the 401k match, the free money offered by your employer. The fourth is to take advantage of an employee stock purchase plan, purchasing the stock at your company at a major discount.

The fifth step is to fully fund your emergency fund, which we're defining as a $10,000 minimum, or three to six months of spending, whichever you're more comfortable with. The sixth step is going to be the HSA, funding the HSA, which we believe is the ultimate early retirement account, because money goes in tax-free, grows tax-free, and it can be spent tax-free, unqualified medical expenses. The seventh step is going to be to fully fund the 401K.

Eighth step is going to be to fully fund the Roth IRA. Some people will flip those. We're fine with that if you want to flip those. That's the order that we're going with is the default for most people. The ninth step is going to be to fund the 529 plan. The 10th step is to fund your taxable brokerage accounts. These are the after-tax brokerage accounts where you can invest in stocks, bonds, and all the other classic investments once you have maxed out all the opportunities that you want to

in these tax-advantaged accounts I just discussed. And then the 11th last and optional step is to pay off low-interest rate debt, which may include your home mortgage. This is a very popular step among people who actually become financially independent, but it is by no means required. Many people choose to opt out of it. Okay. The second order of operations is going to be very similar to the first one through the first five steps. We still recommend that you, you build out a $1,000 emergency fund, we still recommend that you pay off high interest rate bad debt as step number two. We always would take free money before attempting to make even more in real estate or business

by taking that employer match. I continue to believe that the employee stock purchase plan, if you have one, if you have the ability to buy stock at a significant discount through an employer, trumps most different investments you can make, even in business and real estate. And last, fully funding an emergency fund is critical. You may even want to increase the amount you put in to an emergency fund if you're going into real estate or business for yourself. But after that, we are going to knowingly forego maxing out the 401k, the Roth, the HSA, our 529 plans, and other investments, because we're going to amass liquidity for that down payment or to fund the business bank account for our business.

After that, once the business is off and running or once we've purchased all the real estate that we want, we can resume maxing out the investment accounts for the classic approach and fire, although you may not be able to do that for at least several years on your journey. Okay. How did I do there, Mindy? I thought that was great, Scott. I would like to dive a little bit deeper into each one of these to explain why we feel this is the correct order of operations.

Let's go back up to the one for fire for early retirement. your first step was to build out a $1,000 emergency fund. Why? This is a buffer against disaster, right? And there's nothing new with this. This has been around for a long time. This is baby step number one if you go to Dave Ramsey. Almost anybody that talks about money will discuss this as the very first step.

And for good reason. If you don't have a thousand bucks or something, you can pick $2,000, you can pick $500. Some buffer between you and the world every day is an emergency. And any problem that strikes later in life or later in your, financial journey at least you won't even think about as an issue. That can just totally derail what's going on here. And we need to have this insulation from the daily challenges that we all face in life like a windshield replacement or, you know, a flat tire or whatever that is. Mindy, what do you think about the second step here? The second step paying off your bad debt, I totally

agree with this, although I can see where some people would say, no, I don't want to do that. Episode 35 with Craig Curlop showed how he used real estate to full. fund the payoff of his debt down the road, and he didn't start here. But I think for most people paying off that high interest rate debt, 8 to 10% or more, is going to give you the best bang for your buck. It's kind of like a guaranteed return. The amount that you're paying an interest is a guaranteed return for how much when you pay it off. Absolutely. Yeah. And I would also say that bad debt, and typically in a lot of these situations, is something that people are not deducting. So it's even worse than that because if you were to earn an 8 to 10% interest rate return on some sort of

investment, you'd pay tax on that kind of gain. This is a 8 to 10% after tax guaranteed return. If you've got debt of this type, there's really nothing in life that will beat it. It's an emergency. It's not so bad at an emergency that we want to forego our $1,000 buffer against the world, but it's the whole reason that I'd want to build out the $10,000 emergency fund in step five here, it would be to avoid bad debt of this type. Exactly. That's why we've got the $1,000 initial and then payoff debt is number two. The third one, Scott, is your 401k match. Talk about that. Free money. If I'm able to contribute to a 401k, you know, 3 to 5% of my salary,

it'd say I make $100,000 and I'm able to contribute $5,000 to my 401k and my employer will match 5,000 or even if it's a 50% match at, you know, $2,500, I mean, that's an incredible return. and that year one return is going to trump almost anything else that you could possibly do with your money in that first year. I think you've got to take that gift to make sure that you are taking advantage of that benefit if your employer offers it. It's usually also, again, not super small. Three to five percent is not meaningless, but most people should be able to take advantage of an opportunity like that pretty easily without noticing a big problem in their lives. I want to point out that every employer's 401k matching is different. So you definitely

want to talk to your HR department, just to make sure that you, sure that you're not front-loading it and then not getting all of the match. I've seen people where they put, you know, $10,000 into their 401k in January to get the growth throughout the whole year, only to discover that their employer will only match 3% per paycheck over the course of the entire year. So definitely talk to HR about how your plan works. All right. We're going to match you with the next steps on your journey to financial independence right after this. 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

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Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BP Money. Welcome back to the show. All right, Scott. Next up is the employee stock purchase plan. I have never worked at a company that gave me an employee stock purchase plan. So this is not something I'm super familiar with. Why do you like it so much that you put it here on step number four?

This will apply to probably a minority of people watching this, but you have to put it into the order of operations because if you do have access to one of these things, you've got to take advantage of it. At my first employer, we were given the option to participate in the employee stock purchase plan where we could purchase shares of the company, it was a publicly traded company, at a 15% discount once per quarter. And you could then immediately sell the shares for a 15% gain. And this was incredible. I think the limit was something like $30,000 per year. And this is another $3,000, bucks. And if we're going to say, take your 401k match, why would you not also take the

$3,000 or $4,000 in free money, basically, that you can get from just paying an employee stock purchase plan? I did not choose to keep this stock, so I just sold it, and yes, I had a capital gain that I paid taxes on. It's amazing how many times people push back on this. It's like, yeah, you also have to pay taxes on the raise that you get. You can turn out your raise and not pay taxes on that. You can give me the extra money. I'll pay taxes on it. But yeah, so you take the 15% or whatever this discount is and you resell it. It's free money. It's almost as good.

It's not quite as good as a 401k match. And it comes before, I think, any other investment protocol that I'm doing because I can then take the excess dollars that I just generated with this ESOP and use that to help fund all these other opportunities that we're going to discuss. ESOP being the employee stock purchase plan for those of us who don't know. That's right. The ESOP, yes. Okay.

Number five is my favorite. Fully Fund Your Emergency Fund. $10,000 minimum. or three to six months of spending. I think that this is so important because it's an emergency fund. This is for the things you are not planning for. You run over a piece of metal in the road and you now have to pay for four new tires and some damage underneath your car.

You slide into a snowbank like I did and break your ball joint and you have to now pay to get that fix because I don't know what that does, but it makes the cargo and it's really important apparently. What if you lose your job? What if you get sick or your spouse gets sick and you have to take time off work to heal? There's no accounting for what's going to happen. I don't have a crystal ball. If anybody has a crystal ball, you know, let us know. Mindy at biggerpocketsmoney.com. Scott at bigger pocketsmoney.com. See that? We have new email addresses. We can't see the future. So this is covering the future. This helps prevent you from swiping a credit card in the heat of the moment. There are multiple major benefits that come from having a fully funded emergency fund, and it's not just this cash sitting idle necessarily. It is your buffer against the world.

It is the ability to leave a toxic work environment or take that risk on that next job opportunity that comes up. All of those things will feel more palatable to most people watching this as that cash position grows. You don't have to take this to extremes and get one, two, three, five years of cash cushion, although a good chunk of the people that we talk to who actually retire early, for example, will have a one-year-plus cash position in there. Not everyone, but a good chunk of them do. But as you build up that cash position, you'll see those options. They will feel more like opportunities to you instead of risks or threats.

Furthermore, a large cash position allows you to do things like perhaps what I do with insurance, where I'm able to say, I'm going to take a high deductible plan. My deductible, my home policy, something like 20 or 30 grand. that keeps my premium super low. It sends a clear message to my insurance provider, hey, I'm not going to be calling you unless the house burns down or I got a big problem with it because I'm going to be covering all those other things. I have such a high deductible. That's powerful. The savings that can accrue to you by having a large cash position are absolutely part of the returns of a flexible position like this. So definitely encourage

that before we move on to something like the next retirement account here, the superpower plan, the HSA. Mindy, why do you like this one so much? I love the HSA for the reason everybody else loves the HSA. It's triple tax advantage. And what that means is I'm not paying taxes on the money that goes into the account. It grows tax-free. And when I withdraw it, I am also not paying taxes so long as I am withdrawing it for qualified medical expenses.

These are things like Dr. co-pays. These are things like your prescription co-pays. Random things like contact lenses and band-aids, there's a huge list of I that are coverable. But what I also like about this is I can invest this money as I see fit. I opened up an account at Fidelity and I put all of my HSA money in there. I invested in whatever stocks, index funds, whatever I want. And so that allows me to kind of supercharge this money's growth. Then I just cash flow all of my medical expenses right now. Oh, braces. If you have two teenagers who both went through two rounds of braces, that's not cheap. I think I bought my orthodontist a new car or boat or

house or all three. So those are all qualified expenses. You just go to your HSA and you say, here's my receipt. I would like this much money, please. And they give it to you. And you pay no taxes on it. So you're reducing your taxable income. You're growing tax-free, investing wherever you want within reason, and then paying no taxes when you pull it out. I completely agree. It's a superpower account. You got to fund this one first. A couple of other. notes on this are like Mindy said, keep all your receipts for every medical expense and that can include personal care items as well. So make sure you understand what that scope is because you can reimburse yourself for expenses in 20 years. You can reimburse yourself from your

HSA for expenses that you incur today. So keep all those receipts in a big folder. This is a practice that I started a couple of years ago because of Mindy's coaching. The other thing to note here is that you must have a high deductible health care plan in order to qualify. for an HSA. These usually come with high deductibles and high out-of-pocket maximums. Not everybody has access to one of these or can access one of these, but if you can, and you believe that you have a reasonable likelihood of not hitting, you know, your high deductibles or high out-of-pocket maximums in any given year, you may want to opt for that higher deductible or higher out-of-pocket maximum plan that your employer offers or pick one

on the exchange if you're able to do that because those are the plans that qualify you for an an HSA. One kind of fun story on this is seven, eight years ago. bigger pockets did not offer a HSA compatible plan because we offered a really excellent health care plan that had very low out-of-pocket maximums and low deductibles. And Mindy comes up to me and says, Scott, I want an HSA-compatible plan. I'm like, Mindy, if we do that, we're going to give you worse health care coverage. She's like, I don't care. I want an HSA-compatible plan.

So we have the option now where people can choose the high-deductible plan, which is the worst plan, the cheaper plan. for the employer or the lower deductible and lower out-of-pocket maximum plan, which is not HSA compatible. So Mindy saved the company a lot of money and gave us all more options, which I ended up choosing, of course, the HSA plan the next year as well. I love when it looks like I'm saving the company money, but it's actually I'm just doing it for me.

Yeah. So lesson learned, if your employer does not offer an HSA compatible plan, suggest that they do because it would be cheaper for them and for you if you're paying any portion of that premium and you'll have an HSA compatible plan. which is, again, the superpower retirement account. Speaking of superpowered retirement account, Scott, next up is the fully funded 401K. So in 2025, the contribution limits are $23,500 for somebody who is under 50. If you're over 50, that goes up by an additional $7,500.

And if you are age 60, 61, 62, or 63 under the Secure 2.0 Act, you can contribute your Hatsup up to $11,200 over the $23,500. I can't wait till I turn 60. One note that I'll call out here is there's a longstanding debate about whether the 401k or the pre-tax account, so if you are military or public employee, you'll have different abbreviations for these. If you're a Canadian listening to this, you'll have different abbreviations for these accounts. But for the 401k, the pre-tax versus the Roth, the post-tax account, we debated going into this episode, which one we should prioritize. I am a Roth guy, and I've prioritized the Roth guy,

despite being in a higher income tax bracket for the last several years, because I like that the idea of having everything grow tax-free and just knowing what my number is going to be. I'm a little wary that the tax code will change in the coming decades, and they will increase taxes on high-income earners, which I expect to be, even when I go to withdraw from my 401. However, we said, what is the answer, the textbook answer for the classic retiree or the classic early retiree? And for those folks who are going through this order of operations, it is much more likely that you're going to be contributing to these accounts in your high income earning years and withdrawing in your lower income earning years. But if for some reason you think you're

going to stay in higher income earning years in the future, or you're in a lower income earning tax bracket today, but are still able to max out all these accounts somehow for whatever that is going on in your situation, then you may want to flip the order here and fund the Roth instead of the 401k. But for the typical person watching this, we think that the 401k and then the Roth is the right order of operation. Do you agree with that, Mindy? I do agree with that. I am contributing to the traditional because I'm trying to reduce my taxable income. I'm also over 50, so I have that extra $7,500 that I can put in there. And because of my real estate agent license and self-employment income,

I have a self-directed solo 401K, so my company can match my contributions up to 25% of my salary. So I have the ability to put in more, which just ultimately reduces my taxable income by so much that it is worth it to me for that. But, Scott, this is a point that I want to make. You are doing Roth. 401k because you've thought about it, you've weighed the options and you've made this choice consciously. I have done the same thing just with the traditional. I've weighed the choices and I want

to reduce my taxable income now. It's not like Scott's right or I'm right. I'm right for my circumstance and Scott's right for his circumstance. So we just want you to think about why you're doing it, not just, oh, well, Scott does it so I'll do it too. It might not be your best option to do the Roth. It might not be your best option to do the traditional. You just have to do the math yourself. And I think if you're, if you listen to this, the most common answer will likely be max out that 401k. Speaking of Roth, Scott, next up is the Roth IRA. Also, the backdoor or mega backdoor Roth IRA. Why are we making this number eight? The Roth is an awesome account because we'll grow, again, tax free, and you can withdraw from it tax free, all of your contributions

tax free and all the gains tax free once you hit retirement age at 59.5. So it's a really powerful account. And I think that even if you're you're skeptical of tax brackets in the future, I think there's reason to be very hopeful that there will be no changes to the rules around the Roth IRA, and that money will truly be yours to spend without tax or penalty in future years of retirement. It's also a really great estate planning tool. So, you know, I think the goal, in a general sense, long term, and we've talked about this at length in much more depth when we talk about Roth conversion ladders and other episodes here on Bigger Pockets Money, one of the goals of the that 401 plan is if we can get the money into that in the high tax years, in the low tax years

of early retirement, can we convert that money from the 401k into a Roth and let it season there so it can actually get into a Roth? So when we talk about contributing to the 401K, one of the reasons why I like that and have put that higher up in the ladder is because there is the, you retain the option to get that into a Roth and a tax advantage way. But once you've maxed out that 401k and the other items that we've talked about, you've taken care of steps of, I guess, one through seven, then everything else should go into the Roth. And if you earn over the limits to contribute to a Roth IRA, you can use these tactics that men you referenced, called the backdoor Roth or the mega backdoor Roth, which sounds like complicated strategies, but they're

remarkably simple and easy exercises. You can Google them and learn how to do them in moments in there, and they should not intimidate you or be overwhelming. Yeah, and those income limits for the Roth IRA are $150,000 if you're single and $236,000 if you are married. So if you make that much or more, you can't contribute to a Roth IRA directly. You have to do the backdoor or the mega backdoor Roth IRA. But that's also kind of a nice problem to have. And those are really easy mechanical exercises. Do not think that those are in any way meaningful blockers to you putting money into a Roth IRA by using the backdoor or mega back door. Okay, Scott. Next up is the 529 plan. If you you want to help fund a child's college education or education at all, I should say it's not just

for college. You can use it for other expenses as well. Yeah, we had a big discussion about this a few weeks ago as well. The idea here is you got to have some kind of ballpark guess about what you think college or general education expenses, if that would include private school, for example, for your children is going to look like and use this account to fund that. The 529 allows the investments to grow tax-free. and then to be distributed and spent tax-free on qualified educational expenses like tuition, for example. This does not count for child care or the things that, you know, you think you'd like to make an argument count as qualified educational expenses. You've got to get to know those.

But for college, specifically, for example, which is the main use, I think most people have in mind when they think about the 529 plan, they're a really great tool. Because they grow tax-free, the benefit of the 529 plan is really weighted. to early planners. So if you can fund these plans early in your children's lives and be way ahead of it, you know, 10, 15 years, you're going to get the most benefits. So the best time to start is when your kids are young. The second best time to start is today, if you're thinking about using these accounts. One other caveat here is I at least am a little bit of a skeptic that college tuition costs are going to continue to grow in excess of inflation over the next 15, 20 years.

So I am certainly going to set aside money for my children's education, but I'm not going to plan on them compounding at 5, 7% a year like they have been for the last 20, 30 years. I think that college could be cheaper in real and inflation or just a dollars by the time my two-year-old goes to college, if she chooses to go to college, in 18 years or so. Well, I hope you're right. I also thought that, and now here we are with my 18-year-old going off to college. And nope, they've just continued to increase at quite the clip. Combined with the fact that I did not save for the 529 plans for my kids, because I misunderstood or misread the plan guidelines. I wish that I could go back 18 years and fund those a lot.

But you know what? We didn't have bigger pockets money back then, so I didn't know. Next up, Scott, taxable investments. After tax investments, your brokerage account, what are other ways that people call these? These are the accounts that you have at Fidelity and Vanguard and, you know, wherever else you have your, Charles Schwab, wherever you have your investments. This is the money that you take. after you've invested everything else, you still have money left over. I don't like that word.

There's no such thing as leftover money. There is money that just has not been directed yet. You put them in your after tax brokerage account. There's so many benefits to having an after tax brokerage account. Carl and I have one and we borrow against the value of that. We did that once and got into a little bit of hot water, but we did it knowing what we were doing. You can sell these investment accounts and access that money at any time. It's not a retirement account. So you don't have to wait to any particular age. You can just have access to this money. You can invest in anything you want, really, with your after-tax accounts. We've run out of ways to invest that are tax-advantaged at this point for the typical W-2 worker who is pursuing a traditional path to financial independence.

So everything else gets dumped into your after-tax brokerage account. And again, this should be with a big name, I believe, like a Schwab or a fidelity, like Mindy mentioned, mine's with Schwab. We have no affiliation with Schwab. It's just a long, longstanding, reputable brokerage firm in the space. So, you know, this is where you would mechanically transact and purchase any investment you like. Mindy and I are big fans of broad-based, low-fee stock market index funds. Yeah, on episode 350 of the Bigger Pockets Money podcast, Carl and I sit down and talk about the advantages and some disadvantages of borrowing against your stock portfolio. But it's a really interesting option to take out a line of credit against your after-tax portfolio. It's just yet another tool in your

arsenal. So if you're interested in potentially learning more about that, check out episode 350 for some do's and don'ts. Last up, we have our optional, a step here, which is to pay off low-interest rate debt, which could include the home mortgage. And this is a debate. There's no right answer to this question. For a reference, I have chosen to not pay off the low-interest-rate mortgages on rental properties that I own, but I did choose to purchase my home without a mortgage because I purchased my home in 2024 after rates had risen. So I like the idea of a guaranteed six plus percent interest rate that I was saving on that by not having a mortgage. I don't like the idea of paying off the three or four percent interest rate mortgages on my rentals, especially

since 100 percent of the interest on those mortgages are deductible against the rental income. So there's no right answer to these questions, but I will say that we do find it to be a very popular choice among people who actually retire early to either not take on any additional debt or proactively pay off remaining mortgage balances, including low interest ones. Yep, that's a personal decision. And if you feel strongly one way or the other, then go that direction. I have chosen not to pay off my mortgage, although Carl and I are building a house and that house will technically not have a mortgage by the time we are done building it. So that's not a conscious decision. That's just how everything is shaking out. All right. We look forward to resuming the show in a few minutes,

talking about these special properties. 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 tax refund can make the biggest impact. Because the goal isn't just to look backward. It's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard

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diverge from the HSA to the saving for a down payment. Why do we suggest this instead of the HSA because the HSA is such a powerful account? I think that it's good that we had the discussion about the HSA, the 401k, the Roth and the 529 because those are really powerful. If you're just investing in stocks and you're not using those accounts, you know, the types of investments that you can get access through through a brokerage account, and you're not using those accounts first, you're foregoing huge tax advantages. It's a real problem. You should not do that, in our opinion. That would be a violation of this order of operations for good reason. So if you're going to amass cash outside of those investments, you should believe that you're going to get something very powerful, some much

better return, like something like a like a 15, 17% plus return over the first couple of years, for example, in a real estate investment. My favorite way to think about that is, is a house hack, for example. If you're going to buy a three or four hundred thousand dollar house hack and you're going to put down five percent, fifteen, twenty thousand dollars on that house hack, you might be able to live for free. You're going to get a very high leverage investment that is relatively low risks relative to the amount of leverage you're using because you're moving into the property. and you're going to be able to fix things up. That's what I did when I was 23, and I reaped huge advantages from that because it propelled my real estate career and allowed me to amass a lot

more cash because tenants were paying down my mortgage and allowing me to accumulate much more rapidly over the course of my life. So by doing that for one, two, or three years, you can really set yourself up, but you're absolutely taking a huge opportunity cost because you can't accumulate liquidity in most cases. Most people cannot go neatly down the stack, fully funding the $8500 in the HSA, putting 235 into the 401k, maxing out the Roth with another 7,500, maxing out the 529 with what, $29,000 or whatever the huge limit on that one is on an annual basis, and then still have enough cash left over to actually make meaningful investments in real estate. You must make a choice at some point, and it's a hard choice. There's real opportunity

cost in both areas. And I would just encourage you, if you're going to go into real estate, you're going to go into business, know that you really need to get probably in that 15 plus percentage points of return in order to justify foregoing the advantages that you're giving up by not using the taxable accounts. And that's why I think the discussion or operation is so important. And for me, that was absolutely worthwhile on a house hack. I think most live-in flips will be absolutely worthwhile for that. I think the average real estate investment where you're putting 25% down on, you'll really need to know what you're doing and have high conviction because it's going to be so close with these taxable accounts. And I think that's what a lot of investors struggle with if they're being honest about what the right option is for them.

Okay, great. And after that, Scott, we are saving an emergency fund for the property or properties that you have. What kind of emergency fund do you personally have for your real estate properties? I'm actually thinking through this right now, but I think the right answer for the first property is to have a three to six month of the mortgage payment. or a minimum of $10,000 depending on the condition of the property. If you know you're going to have to replace the roof and the furnace and remodel the kitchen and whatever, obviously you need to save more. But if you think you have a reasonably well-maintained property that is not about to have a gotcha, I think a $10,000 cash cushion for that business plus whatever you have on your personal

reserve will help you, you know, weather most types of storms that'll come your way. Okay. After you have saved for your down payment and you have saved for your emergency fund for your property, then we jump back into the HSA, the fully funded 401K, the Roth IRA, the 529s, the taxable investments, and then the optional low interest rate debt, maybe your primary mortgage. Once you're done buying real estate, resume the order of operations that we just discussed, absolutely. All right, Scott, this was super fun.

I love how we just marched down these items so that people can get an idea of where we're thinking about your money should be going. Before we stop, Scott and I have new email addresses. I am Mindy at biggerpocketsmoney.com. And Scott is Scott at biggerpocketsmoney.com. Please send us an email and let us know how you like the show. And we're going to be building out biggerpocketsmoney.com. So if there's any resources or things that you'd like us to build out on there, that is going to be free.

So we look forward to building that out and having people access it. Let us know what tools, resources, or new content we can produce. that would be most helpful to you in guiding decisions on your journey to financial independence. That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench. I am Mindy Jensen saying until next time, Lyme.