BiggerPockets Real Estate Podcast - Late Start, Early Retirement: A Step-by-Step Fast Track to FI

Starting point is 00:00:05 Well, this is it. We have reached the last full Bigger Pockets podcast episode of 2024. So let me just take one quick second and thank you all so much for watching and listening and being a part of the Bigger Pockets community in 2024. It means the world to me and the entire Bigger Pockets team that you all come enjoy our content and apply it to your own lives and help pursue your financial goals. As we wrap up the year, we are republishing some of our favorite episodes from podcasts across the whole Bigger Pockets Network. The show we're playing for you today comes from the Money podcast where hosts Mindy Jensen and Scott Trench talk all about optimizing your personal finances to reach goals like financial freedom and early retirement. And in the specific episode that we're sharing today, which was originally published back in June, it features Mindy and Scott interviewing Bill Yount and Jackie Cummings Koski from the Catching Up to Five. podcast. And this episode is a great primer for how to get started on the road to financial independence, especially if you're already in your 40s or 50s or even older, and we're realizing

Starting point is 00:01:13 that you might need to make some changes in your spending or your savings and investing habits to achieve the retirement that you're dreaming of. But even if you're not at that stage of life, I think the advice that the hosts and the guests give in this episode, like creating a budget and giving yourself some grace can help anyone at almost any stage of life. So I really think you're going to enjoy this episode. And if you do, make sure to give Bigger Pockets Money a subscribe on YouTube. We on this podcast will be back next week with more new episodes. But for now, here's Mindy and Scott.

Starting point is 00:01:47 The financial independence community is filled with stories of young people who have reached financial independence and retired early. But what about boomers or Gen X? Today, we are going to arm you with the four steps, union. need to know when you're getting a later start. Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen and with me as always is my Young at Heart co-host, Scott Trench. Bigger Pockets has a goal of creating one million millionaires. You are in the right place if you want to get your financial house in order because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting, even if you're

Starting point is 00:02:25 getting a later start on your financial independence journey. Today, we're joined by later start experts, Jackie Cummingskoski and Bill Yount, hosts of the podcast catching up to five. We'll be talking about everything from backwards budgeting to Social Security. This episode is the 101 level, talking about the foundations you need to support your later start when your runway is a little bit shorter. Jackie and Bill have so much to share that we're bringing them back. back on episode 538 to share 201 level, the tactics to help you reach your financial goals.

Starting point is 00:03:02 Jackie Cummings-Coskey and Bill Yount from the podcast, Catching Up to FI. Welcome to the Bigger Pockets Money podcast. I am so excited to talk to you guys today. Oh, it's great, Mindy. Thanks for having us on the show. Yeah, we're glad to be here. Catching Up Defi is like Ben. Bill developed it.

Starting point is 00:03:19 We're making it even better because there's so many late starters. So we are thrilled to come and chat with you guys today. Gen X is behind on retirement. The average Gen Xer has something like $40,000 saved for retirement. So it seems like most people in that generation are getting a very late start. There's a lot of reasons for this. But Jackie, can you give us your thoughts on that stat? What is going on here?

Starting point is 00:03:41 Why are so many people getting started late? Yeah, I think that that stat is right on. And it's not just the Gen Xers. That is the biggest chunk. But things like if someone immigrated to this country, that could get them a late start, sometimes divorce, even kids sometimes can cause people to get a late start. But we tend to end up in this, you know, late 30s, 40s, and 50s when we're just waking up. Like for me, I just woke up at 38. And some people might not consider that late,

Starting point is 00:04:12 but I knew I was way behind. So when you're finally waking up because you didn't get the stuff early on, that gives us a late start. And then for me, especially, I was running really, really hard to try to catch up. And I ended up getting, you know, having a late start, but finishing a little bit early. So there's a whole lot of people in this bucket of late starters. Jackie, one of the things that we see in bigger pockets when we're talking to people about their money story to early financial freedom is this concept of the aha moment. Oh, I discovered that I could retire earlier and build wealth. And then a very dramatic behavioral change that incorporates it's saving, investing, building one's financial position.

Starting point is 00:04:55 Is that what you mean by wake up in the context of moving towards retirement? Yeah, I do because for a big chunk, you are just sort of floating through and doing what you've heard other people say or maybe having the wrong world models around you. But when finally you get curious, you start digging, you start educating yourself and things start clicking, you're like off to the races. And I know for me, once I found one nugget that was helpful to me, I wanted to keep digging and digging and digging and finding so many other things that helped me. And I tell you what, there's a unique type of motivation that you have once you get going. And so I deal people all the time, you will surprise yourself at how fast you move once you wake up and you start seeing that some of the things that you're doing different after you wake up, looking at the movement.

Starting point is 00:05:49 is so much motivation for you to keep going, to go faster, and before you know it, you're way further along than you thought you ever could be, even if you got a late start. Absolutely. I could not agree more with you, Jackie. And what I think a lot of late starters maybe don't know or don't really focus on is there are some advantages to being a late starter. There are some opportunities that they have that their younger counterparts don't. And we're going to get into that a little bit later.

Starting point is 00:06:22 But Bill, I've heard you say the average American is a late starter. And I love that because it's so inclusive. You know, you see these articles that are written about, you know, the 25-year-old that got to financial independence in two minutes. Yay for him. But that's not the average person. That is absolutely the outlier. But when you see so many of these comments over and over again, you start thinking, oh, maybe something's wrong with me because I'm 50 and I'm not retired. So I love that phrase, the average American is a late starter.

Starting point is 00:06:58 Well, you know, I don't know how I came up with that, but it seems to ring true. You know, in our audience, in our show, in our podcast, they all wonder what happened. You know, you get caught up in life. You get caught up in the funnel of life. You come out of school. You come out of residency. You have big debt. You start a family.

Starting point is 00:07:19 You buy a house. You buy a car. And then you get into this paycheck to paycheck lifestyle. And all of a sudden, you're 50. And you've lived life. But you wake up and you go, wait a minute, nobody's taking care of me. I have to take care of myself. And I better get started.

Starting point is 00:07:40 And getting started is very. really the hardest part. And as Jackie says, once you dive in, it's amazing how fast you can turn your mindset around and turn your money around. So we haven't even gotten to the steps here to actually address going towards, you know, like catching up to retirement and beginning to move our financial position forward. But I think these are two critical precursors here. We can call them, you know, one A and one B on this journey. One is wake up and acknowledge like, hey, this is like an important part of life and nothing's going to come and save me. I got to go. go after this and get this done. And two, you know, like rationalize or understand or empathize

Starting point is 00:08:18 that you're not going through this alone. This is a most people are kind of in the same boat as you when you're maybe getting a late start and trying to catch up to retirement. How am I doing there? Is that, would you agree with that as like step one A and one B here before we even get into the actual work of moving our financial position forward? Yeah, for sure. I think you hit the nail on the head. You know, it's just kind of, you know, waking up, acknowledging, you know, you didn't know these things and just moving on. The acknowledgement part is really important because, you know, if the mind isn't there, it's hard for you to get your feet moving. And then when you wake up, you feel like you're alone. I mean, you think you're the only person in the world that has done this.

Starting point is 00:09:00 And, you know, that's why I call it the silent majority because we live in a consumption society. We live in a society that does not promote savings. It promotes consumption and spending. It's almost an afterthought in our society. Yeah. You are not alone. We are here with you. We need to tell Mindy not to give up her day job.

Starting point is 00:09:23 Is that right? Mindy, you're such a great podcaster. That's the new intro music for Bigger Pockets Money. We're putting that right in there. Bigger Pockets Music. Yeah. Not high school musical, Bigger Pockets Musical. But you aren't alone.

Starting point is 00:09:37 And these headlines that you see, these sensational headlines, absolutely make you feel like you're alone, which is why I love the Catching Up to Five Podcasts so much. Because you're sharing stories of people who are doing it, who have done it with a later start. You've upgraded how to buy properties. But did your insurance get the memo? When investors start scaling, insurance can't be an afterthought. Most policies were designed for a single property, not multiple rentals, LLC ownership, short-term stays or properties mid-rehab. That's where blind spots can creep in.

Starting point is 00:10:09 N-Reg works exclusively with real estate investors. They understand portfolios, how risk compounds as you grow, and why insurance should protect your upside, not just a checkbox. One uncovered claim can undo years of progress. Before your next acquisition, review your insurance. Talk to N-R-R-R-S-specific coverage from specialists who actually understand real estate at N-R-EG.com slash B-P pod. Managing properties can feel like a full-on circus.

Starting point is 00:10:38 You're juggling vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident. One delay can throw everything off, and suddenly your day is all clean up, no progress. That's why hundreds of property managers rely on bill to streamline their finances. Bill for property management lets you add all your properties, assign permissions, pay bills, and receive payments quickly and efficiently without the usual bottlenecks. It syncs with platforms like QuickBooks,

Starting point is 00:11:10 Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties and HOAs. Choose flexible payment methods like Same Day ACH, international wires, card or check, and set custom roles in approval policies. There's even a dedicated bill inbox for each property to keep everything organized.

Starting point is 00:11:32 Ready to simplify your workflow? Book your free demo at bill.com slash bigger pockets and get a $100 Amazon gift card. That's bill.com slash bigger pockets. Thinking about wholesaling or flipping your first property, but not sure where to start. The truth is, deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million properties nationwide.

Starting point is 00:11:58 Use 20 pre-built lead lists such as pre-foreclosures, tax delinquencies, and vacant homes to find motivated sellers fast. And now PropStream has integrated batch leads and batch dialer to provide you with a complete all-in-one solution. That means you can not only find motivated sellers, but you can also reach out right away. SkipTrace phone numbers free on select plans, then send postcards, emails, or call sellers directly. Don't worry if you're new. PropStream also gives you AI-powered insights and comps that are over 99% accurate. So you know you're making smart offers. Plus, you'll have access to PropStream Academy to guide you step by step. Start your seven-day free trial. and get 50 free leads at Propstream.com slash BP.

Starting point is 00:12:37 That's P-R-O-P-S-T-R-E-A-M dot com slash BP. Don't just dream about real estate. Make it happen with PropStream. A lot of property managers think their job is answering tenant emails and coordinating repairs. That's not the job. The job of a property manager is protecting and growing your operating income and earning your trust

Starting point is 00:12:58 while they do it. And that comes down to three numbers. occupancy, delinquency, and net promoter score. If those numbers slip, your income slips, and your trust slips too. And most PMs don't hold themselves to performance standards. They focus on activity, not outcomes. Mind is different. They obsess over the metrics that actually grow your cash flow.

Starting point is 00:13:22 Go to mind.com slash show me to see how mine performs and get a month of management for free. Because if you're going to hire a property manager, hire one that manages your investment, like an investment. What would you say, Jackie, to somebody who reached out to you and said, Jackie, I've heard about this concept of financial independence. I would like to do it, but I'm older. What is my first step? Yeah, to me, the first step, we talk about the psychological part.

Starting point is 00:13:51 I like to say, give yourself a little grace. A lot of the reason why you're getting a late start probably is not your fault. We're not taught about these things. It's a taboo topic. and even schools don't teach it. A lot of us didn't have good role models at home. So just give yourself a little grace. Once you do that, you have to know where you're starting.

Starting point is 00:14:11 Like, how can you even decide, okay, should I start kicking up my investing first? Should I pay off my debt first? You don't know which piece is really more critical until you start laying out your finances and determining what your numbers are, things like your net worth, you know, maybe your fine number, which is 25 times your expenses. You know, what's your true income? You know, what taxes are you paying? So all those things are important to see where you're starting.

Starting point is 00:14:40 I know there's that inclination to, let's just do it all at once at the same time and just get going so quickly. But just figure out where you're at and lay things out so that you have a very clear picture of where you're starting because as you see progress, it's going to be really, really valuable to you to see where you started. even if your first net worth is in the red, if you start to see it moving in the right direction, it's motivating and you can see that you're making progress. So that's how I would get it started.

Starting point is 00:15:10 Yeah, even if your net worth is in the red, you need to acknowledge that. That is what I call a fact. It is not judgmental. It is. I have brown hair. Jackie has black hair. Those are facts. I have X number of dollars.

Starting point is 00:15:24 I have negative X number of dollars. Those are facts. So once you have a number of. idea of where you're starting, that's so, I love that because then you can move forward. I don't know how much my net worth is. Well, then how much are you spending? How much are you budgeting? How much? I mean, you don't even know how much you're budgeting until you start tracking your expenses and see where it's going. But yeah, so Jackie, this is awesome. I've given myself some grace. I have, I want to diagnose my starting point. How do I do that?

Starting point is 00:15:56 Yeah. So as we, some of the numbers that I mentioned, you can't even get to until you do a budget. Now, that scares a lot of people and a lot of people hate budgeting. I personally, I have to admit, I'm not one of those that love budgeting. But you have to know how much your expenses are. So what did I do? I did the backwards budget, which I kind of think is better. Bill may disagree with me because I think he does a much better job of the budgeting piece. I do it backwards because I think that leaves less chance of something. something being left out. So here's how the backward budget will work. Basically, you take everything that you're saving and investing, and then you take everything that's your paying and taxes and whatever's left, that's your expenses. Now, if you do it the other way, we're going to forget stuff. Like, did you include the dog grooming? You know, did you include, you know, fees for this and fees for that? And I think it's so much more room to forget things in a budget when you're doing it the front way, sort of doing line item by line item. Inevitably, you're going to forget something. And I think you're going to forget something. By doing it backwards, you probably include it the most your

Starting point is 00:17:01 budget can be once you subtract out the taxes and your investment and savings. So I don't know, Bill, what do you think? You're pretty good with budgeting way better than me. Well, I actually do it the exact same way. I save till it hurts, maximize my savings rate or the gap, And then, you know, everything else is spending, but I got to spend on a value-based method. You do have to track your expenses because there's a lot of little things and big things that you can get wrong. And, you know, you can have a lot of holes in the bucket that you've got to plug as well. I just want to observe here that I've been, you know, tracking my finances and my net worth for 10 years here pretty regularly. And this is not a fun task for me.

Starting point is 00:17:50 I don't enjoy it. It is a large amount of work to tabulate my expenses on a regular basis, plan for consumption, investments, taxes, those types of things. It doesn't take me 10 hours a month, but it takes me too. And it took me a couple to get it set up and it was confusing and painful and those types of things. Is that what you guys found getting this started and how you find it going forward? Or is it much easier than that? I guess I'm wondering, I think for someone listening, this sounds like a lot of work. It sounds very painful. to acknowledge reality, and it sounds like something I have to keep up with for the next 10 years. Is it really worth it in your view? No, it's absolutely worth it. And I made it easy for myself by using a couple of apps. And if I may plug them a little bit, I use Monarch money and I use Empower. I use Empower to track my net worth and monarch money to track my expenses. It makes it easier.

Starting point is 00:18:43 You've got to want to plug your accounts in and you have to be comfortable with that. But you get reports and you can find the holes in the bucket. and, you know, find a way to maximize your savings. And the reports are very helpful. And I look at them on a monthly basis. And I go, oh, my God, there's an unexpected expense that I may have been hacked. And then there are ones that I'm like, I don't use them anymore. So, and then the net worth piece, empower is really powerful.

Starting point is 00:19:11 And it's fun to look at. I look at it more than I probably should. People talk about monthly, quarterly, or even annually. It's oftentimes you're better off sticking. once you get your plan together, sticking your head in the ground and not looking at it, and then 20 years later, you have a massive amount of money. But that's what my sister did. And just for the record, Monarch is about $100 a year as a subscription.

Starting point is 00:19:35 So that would be an expense that one would incur, but I also heavily recommend Monarch. Empower is another great tool. I don't use that one personally, but that one, I believe, is free for users. Is that correct, Bill? That's correct. And you're correct on the Monarch expense as well. It's you get it back in spades if you spend that on an app like that. And they do sponsor our show.

Starting point is 00:20:00 So maybe I can help you out. Oh, yeah. Please give us an intro because I love BonarCath. That's free. That's free for BonarCath. And another thing, you guys, like as far as like, you know, keeping up with your expenses, we've got the app. So technology's there in our favor.

Starting point is 00:20:13 But remember, it doesn't have to be anything complex. So you may use a yellow pad and paper. I use a spreadsheet. for a lot of tracking a lot of my, not just my expenses, but my other financial life. And I've been doing that for like, you know, 15 or 20 years and I've customized it like crazy. So I would be totally spoiled. And anything else that I use, I don't know if it would, you know, be satisfactory enough because I've customized it so much.

Starting point is 00:20:39 So no matter how you do the expenses and the budget, in particular, if you're just starting and you feel like you're going to have to make some adjustments, having that those expenses and the budget in place is going to be helpful for you to identify areas that. And I say adjustments and not cutting because you can save plenty just by making some tweaks here and there. You know, like Bill was saying, you know, the value spending where you're like, you know, what, why am I spending, you know, this much on my Netflix? I am, you know, busy with my business. I haven't watched it in six months.

Starting point is 00:21:16 So little things like that up to the best. big things like, you know, maybe not right now, but, you know, back in the day, refinancing your house, you know, made a big deal, or maybe you're in a position to pay your car off when it has a high interest rate. So there's so many, you know, changing insurance companies. So just don't forget about the ability that you have to make adjustments versus just cutting out things. You know, don't do things that are not going to make you happy. Don't do things that are going to make you miserable. That is huge because if it makes you miserable, you're not going to stick with it. Yeah, so Netflix just canceled their sponsorship with their podcast money based on this one.

Starting point is 00:21:54 But I think, but the bottom line is like there's all these tools. Spreadsheets great. Pen and paper is great. Monarch's great. Empower's great. There's always a new one popping up that's got a new experiment. Just do the work, which is not fun work at first. And we'll be very painful for someone who's starting out late to see bad numbers maybe on the page.

Starting point is 00:22:14 But you've got to stare them down, do the work. Get this thing. get it, get it over with, and then continue to do it and come back to it every month, every quarter, whatever the cadence is that's helpful for you because it's so critical to understand where your numbers are and where you're at, where you're going at the highest level in order to get started here. All right, step 1A, wake up. Step 1B, give yourself some grace. Step 2 is diagnose. When we come back, we're going to talk about how to analyze those numbers and make decisions based on them. There are two kinds of real estate investors, those who have reviewed their insurance,

Starting point is 00:22:47 and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns.

Starting point is 00:23:07 If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing at NREG.com slash BPOD. That's N-R-E-I-G.com. thinking about wholesaling or flipping your first property, but not sure where to start. The truth is, deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million properties nationwide. Use 20 pre-built lead lists such as pre-foreclosures, tax delinquencies, and vacant homes to find motivated sellers fast.

Starting point is 00:23:42 And now PropStream has integrated batch leads and batch dialer to provide you with a complete all-in-one, That means you can not only find motivated sellers, but you can also reach out right away. Skip trace phone numbers free on select plans, then send postcards, emails, or call sellers directly. Don't worry if you're new. PropStream also gives you AI-powered insights and comps that are over 99% accurate. So you know you're making smart offers. Plus, you'll have access to PropStream Academy to guide you step by step.

Starting point is 00:24:09 Start your seven-day free trial and get 50 free leads at propstream.com slash BP. That's P-R-O-P-S-T-R-E-A-M. dot com slash BP. Don't just dream about real estate. Make it happen with PropStream. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed, sponsored job posts help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored post.

Starting point is 00:24:52 The best part, no monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of the show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com. slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. Real estate investors, the April 15th tax deadline is coming fast. If you own rental property and haven't done a cost segregation study yet, you could be handing thousands of dollars to the IRS that you

Starting point is 00:25:41 don't have to. These studies let you write off as much as 25. percent of your building and generate huge tax deductions. Costsegregation.com is an online self-guided software that makes cost segregation fast and affordable. So it finally makes sense for smaller rental properties purchased for as low as $100,000. With pricing under $500 and an average savings of over $25,000, it's just a no-brainer. What's more, audit support is included by the number one cost segregation company in the U.S., but you must complete it before the tax deadline. Go to costsegregation.com and use code tax deadline to get 10% off your first report.

Starting point is 00:26:21 Don't overpay the IRS. Head to costsegregation.com before April 15th. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS compliance strategy that lets you accelerate depreciation. on your properties, which means you're paying less in taxes this year and keeping more cash

Starting point is 00:26:48 in your pocket for your next deal. Cost segregation guys is the go-to firm, having done over 12,000 of these studies with $500 million in total depreciation identified. Head to costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. Welcome back to the show. Let's talk buckets and goals and how you can incorporate them into your journey. Jackie, Bill, now that we've got this analysis done, this slog of at least several hours and probably a few, you know, a month or two that's gone by for us to collect some data and understand our financial position, what do we do with this information? You know, first we pause, and as I say, then we plan, and this is the planning phase. And after the plan, only after the planning phase, do we pivot and take action? And as far as the planning phase, you've got to look at your cash flow is one of the first things, I think.

Starting point is 00:27:41 you've got to know what's coming in, what's going out, all the categories, and you've got to start creating your cash flow waterfall. But to take a step back first, I think everybody should make an investor policy statement. They have to go through, because your financial life isn't just the numbers up front, your budget and whatnot. You've got to plan for insurance. You've got a plan for an estate plan. You've got a plan for several things in your financial life, and there are formats out there where you can go through this. You've got to think, and you don't know where you're going unless you have a map, and you won't reach your goal without a map. So I think the investor policy statement is important, and then I went in to cash flow.

Starting point is 00:28:29 Okay, so step three here is make a plan, map out a plan. And it makes sense why this is coming after the previous step because we need to know where you're at, you are here, before you can make a plan to get somewhere else, right? And so I love this. You said an investor policy statement. You said a will. What are some other components of this plan that you think are critical, Bill and Jackie? Oh, gosh, there are so, and I don't want to say there's too much. And the whole key is that you don't have to do it all at once. You don't have to do it all in one day. I like to be able to sort of take a moment to dream. to think about what you want your life to look like. You know, sometimes we are in a terrible job where we just want to get out of it or whatever.

Starting point is 00:29:12 And maybe that's our reason for wanting to, you know, do something different. But you could think about things like, hey, I just want peace of mind. I don't want to punch someone's clock every day. I've always had a dream that I wanted to, you know, educate people on their finances or whatever that is because in your head, if you have some idea of what you want to move towards and the stuff that you're like, no more, that could be a lot of fuel for you wanting to make these changes. And sometimes it does help to write down these goals, not just the tangible goals, but the intangible goals. And that makes a difference as well. So I would definitely

Starting point is 00:29:50 keep something like that. You know, some people call it a vision board or something like that, but kind of, you know, have your little dreams and the things that you want to move towards. So Scott said something that I thought was really important. for people to hear. If you're on this later start journey, this is not a five-minute exercise. Scott said, this might be a couple of weeks or a couple of months that you have taken to start off looking at your starting point, diagnosing your starting point. This dream and plan and goal section is also not a five-minute exercise. You want to take the time to really think about it. And all of this is a fluid document. This is not, well, I said I was going to do this, so I guess that's all I get to do.

Starting point is 00:30:38 If your goals change, if your dreams change, change your document too. But I love that you're writing this down. I love that investor policy statement. That's so important. And this, your dream statement, you know, all of these need to be written down so you can come back and revisit them because I don't know about you, but I'm over 50 and things fall out of my head. I actually just brought up my written financial plan for Karen and Bill. And the components of it are fairly straightforward. You know, we outline our present nest egg and our present net worth. And then as far as the gold go, just like Jackie, you know, you have to have your personal goals first. And then as far as things like your financial goals, I mean, we said our investments will provide an income of 160,

Starting point is 00:31:29 $60,000 while still growing at the rate of inflation, providing us with financial independence by July 4th, 2028. I mean, you've got to be very specific. And we'll reach a net worth of X. And then we talk about our savings goals and then all the insurances that need to be in place to protect you. You've got to play defense before you play offense. Most people want to play offense. I love this. And just to share how aligned they am with this.

Starting point is 00:31:59 Every quarter, starting on our honeymoon, my wife and I have a little vision document. It's just a piece of paper. There's nothing fancy to this. This isn't part of my $500 goal setting retreat summit program or whatever. This is just like a word document, right? And we write down 10 things we're grateful for after a cup of coffee and a workout. Then we write out what our life looks like at the end of 2025 and this one and then 28, just two in five years.

Starting point is 00:32:27 and we say, we live here. This is what our day looks like on the weekdays. This is what our day looks like on the weekends. This is what our physical health looks like. This is what our family life looks like. This is what, you know, we do for fun here. This is what our career outcomes have been, those types of things. And we just write that down.

Starting point is 00:32:47 And we've edited it every quarter for the last eight years, or many years, basically, on this thing. And it moves a little bit. That's okay. But we know where we're going and it stopped moving quite as much in the last couple of years as we kind of really glocked in like, yeah, that's what we want. That's what we're going to work towards. And that dreaming exercise for us works really well. There's so many different variations of that that you can do. But it's just a piece of paper. I would encourage you if you're going to do this exercise to do it when you're feeling good. This is not an activity to do, you know, after a really hard week on Friday after four glasses

Starting point is 00:33:26 as a wine when you're really beating yourself up. This is an activity to do on Saturday morning after you've had a nice workout and a cup of coffee and the weather is nice and the sun is shining and you're feeling good and your spirits are high. But I don't know. I don't know if you guys have any reactions to that. Yeah, no, I love all of that, Scott. I mean, all of that is so amazing. And you and Bill are making me realize I need to do more writing things down. But the whole key is it's not written in pen, right? It's in pencil where you can make changes. You can make adjustments, you can tweak it. We weren't taught how to put this stuff together. So give yourself a little bit of grace, a little bit of a buffer to be able to work and massage these to make sure

Starting point is 00:34:07 that it makes sense. And I feel like the trial and error is really valuable as well, because you're going to learn something about yourself every time you make a change. Absolutely. And a quick tip here, if you have a significant other, it is always a good idea, and you come to them with this, it's good idea to label it draft for the first time on there. That will, that will, that will, help a lot of things in my first conversation. Yeah, and just to be clear, so everybody here is partnered up and married. I'm the only single person here, okay? I got divorced, you know, and most of my fire journey has been since I got divorced, I have one daughter. So situation is a little bit different, but there's plenty of single people that are late starters, and part of the reason is they might be

Starting point is 00:34:47 divorced, or they went through some relationship issues, or there's so many different reasons, but whether you are married, partnered up, or single, a parent, or someone with no kids, these same things apply. Yeah, I mean, in our community, and we have a large Facebook community, 75% of them are women. And a lot of them seem to be divorced, you know, a financial catastrophe. And they're very engaged, very motivated. There is a large female component to this. Maybe men are more ashamed.

Starting point is 00:35:21 And maybe the women are more able to embrace. their mistakes or challenges and move forward positively. I don't know. What do you think, Mindy? You know what? I see a lot of women now taking control of their finances. And this has been a man's game. Oh, men take care of the finances. My husband does all the work. My husband, like, I hear that a lot. And I see a lot of women either through divorce or just simply wanting to do it, being empowered to do it and say, I want to learn about this. I am going to fix my finances so that I'm not going to fall under that other headline that we see so much, oh, you'll never be able to retire ever.

Starting point is 00:36:03 And I think that ties back into step one B, which we kind of glossed over. And I'd like to focus on that for a minute. Give yourself some grace. I'm looking for tips for people to help themselves come to terms with the fact that they weren't perfect before. That is also a fact. we'll just put it over here. You weren't perfect before. Now we're going to fix that. How do you give yourself some grace? Awesome. So we've got wake up. We've got give yourself some grace. We've got

Starting point is 00:36:34 diagnosed your starting point and we've got a dream. So we know our end point. We know where we're starting now. Well, what comes next, Jackie and Bill? Yeah, I think two powerful things are curiosity and, you know, willing to, you know, shift and make some changes. So I say curiosity because it really, when I think about a lot of the mistakes that I made, some of them was either because of curiosity or I solved those mistakes because of, you know, how curious I was about things. So just use that to your advantage. Like, for instance, if you are so confused about how, you know, Roth IRA's work. What part is contribution?

Starting point is 00:37:19 Do I have to wait five years? What are the nuances? Be curious about things and then start digging. It's a powerful thing. And then fear is another really powerful thing. For me, I had a big fear. I grew up in poverty. I had this big fear about being thrust back into poverty.

Starting point is 00:37:39 So a big part of my wake-up call was when I got divorced. And I realized there was a huge disparity between what I had in my retirement account and what my husband had in his retirement account. And that was a huge mistake that I didn't even know that I was making. We didn't talk about the money. We didn't talk about investments. But finally, you know, when the divorce was said and done, I said, you know what, I don't want to ever feel this financially ignorant again. And the main thought was in my head was that I didn't ever want to be back in poverty again. And I never wanted my daughter to know poverty the way that I did. So I became so curious. I was curious about the stock market. I was curious about. I was curious about

Starting point is 00:38:14 how did that big disparity exist? And I started figuring some of those things out. And in the process, I'm getting my finances together. I'm, you know, I ended up joining an investment club to learn more about the stock market and investing. I started understanding how my 401k work, understanding compound growth, all these things because I was really, really curious and I was very afraid of being in poverty again. So I was doing something about it. You know, one of the big mistakes I made was, you know, you guys are real estate guys, so you made this come into my head again. But it was like around 2010 or whatever. I ended up buying a rental property. It was a condo near Charleston, great area. You know, everybody had short sales and, you know, foreclosures and

Starting point is 00:39:04 stuff like that. Well, I needed to get this, I wanted to get this property, trauma-handed landlording, right? And it was a crazy time where they didn't even want to give me finance. So you know what I ended up doing? I ended up taking a loan from my 401k, the maximum, $40,000. Again, I wasn't using it as a piggy bank or anything. I was just sort of in my mind, shifting the investment, came up with $30,000. I ended up buying this condo for $80,000. And I was a landlord for two years, learned something about myself, wasn't too crazy about landlording. And I sold it about two years later. I made money off of it. It was totally fine. But I found out that, I wasn't too crazy about being a landlord, but the funny thing was, a few years later,

Starting point is 00:39:46 I'm like, you know, I wish I would have held onto it. Well, that $80,000 condo, I think I sold it for like maybe $1.40, 150, something like that. Well, right before I got at this podcast, I looked up that property to see what it's worth today. I got it back in 2010, and it's worth $345,000. And I'm like, oh, my gosh, that's a big mistake, but I learned from it. But it was just kind of crazy. I went and looked at it because, honestly, if we ever had any kind of opportunity like we had in 2009, 2010, 2011, I would be willing to do it again.

Starting point is 00:40:21 So just making those mistakes, it just, I don't even really call them mistakes anymore. I like to call them lessons. So I'm not, you know, beating up on myself by looking at how much this condo's worth now. It's a lesson to remind me that if the same opportunity came along, I now will approach it different because my head is in a different place. I think that's a really great point to,

Starting point is 00:40:40 acknowledge that you have made some mistakes and then instead of calling the mistakes, call them lessons, because that's what they are, especially if you actually learn something from them. If you didn't learn anything from them, then it is just a great big mistake. But having the, giving yourself grace is letting go of these things. I've made mistakes too. I also think just a couple of things, you know, for folks that are looking to learn from what you said, Jackie, I saw some tools in there that are really powerful that folks can use to repeat that,

Starting point is 00:41:14 right? Acknowledging and thinking through these mistakes, labeling emotions that you felt along that journey as well is really powerful. That's just a general psychological tip, right? If you're feeling an emotion, label it, it helps you control it and react to it, write it down. And then using that emotion to inform the plan, right? Part of moving towards a brighter financial future isn't just moving towards your vision, it's totally okay to be like, I don't want to feel that pit of fear in the corner of my stomach all the time whenever I think about money and the next decade or whatever as well. Those are all absolutely critical ingredients in being able to form a plan, hint, hint, one of the next steps coming up that we're going to talk about here.

Starting point is 00:41:57 So just some tools there that I think are really powerful that I observed that you used. I'd like to caution people a little bit because I made what I would call the trifecta of mistakes. right around 2007, 2008. We had renovated a house to the nines, basically rebuilt a house. Soon after 2000, we were upside down in our house. We had a very low savings rate. And our financial advisors that were not advisors at all allowed us to sell out at the bottom of the market and go to a low risk.

Starting point is 00:42:30 And with our low savings rate, being house poor and having sold out at the bottom, We didn't get into much later and we missed out on, you know, two-thirds of the longest bull market ever. So you've got to manage the big rocks and you've got to be intentional about these things. The first thing we did after, one of the first things we did after waking up was downsize, which is a very painful thing for late starters, especially with regards to housing. But it made all the difference if you take care of these big rocks and get back to what's realistic, then you can increase your savings rate exponentially. We went from single digit to 10% savings rate to about 30, 35% savings rate within the first year of waking up.

Starting point is 00:43:19 This is absolutely possible. Awesome. Well, this has been a really fun discussion here. I think this is a great stopping point. Jackie, Bill and Mindy, thank you so much for the good discussion. We have our first four steps here, wake up. 1A, wake up, 1B, give yourself some grace. diagnose a step two, dream and reflect. And this is all the soft stuff that absolutely has to be done

Starting point is 00:43:43 before you can actually make a hard financial plan and start determining how you're going to allocate your capital that you have, if you have an investment portfolio or resources today, and how are you going to allocate the income streams that are going to come into your life, which is what we're going to really get into very prescriptively on the next show here, Bigger Pockets Money, Podcast 538. So thank you. Thank you so much. So we'll see you in a few days. All right. This was part one. Make sure to listen to episode 538, where we'll be back with Jackie and Bill to talk strategy

Starting point is 00:44:15 for later starters. And some of those five levers you can pull, especially if you are getting a later start. My name is Mindy Jensen. He is Scott Trench saying, later start. Don't worry, Pop-Tart. Bigger Pockets Money was created by Mindy Jensen and Scott Trench. This episode was produced by Eric Canutson. Copywriting by Caliwit. content. Post production by Exodus Media and Chris Micken. Thanks for listening. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show,

Starting point is 00:45:14 Dave Meyer. The show is produced by Ian K. Copywriting is by Calico content. And editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose.

Starting point is 00:45:39 And remember, past performance is not indicative of future results. BiggerPockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.

BiggerPockets Real Estate Podcast - Late Start, Early Retirement: A Step-by-Step Fast Track to FI

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.