How to Quell Your Money Anxiety (Even as a High Earner!)

If you want to know how to save money, just look at your expenses. Odds are, if you’re like most people, you aren’t budgeting or tracking your expenses to a tee. But there’s no need to be so hard on yourself, even our money mages themselves, Scott Trench and Mindy Jensen don’t always write down every cent spent. That being said, if you’re planning for a big trip, different expenses, or a sudden life change (like leaving your job), there is no better time than NOW to start tracking your expenses. Today’s guest, TJ, knows this all too well.

TJ makes a phenomenal income and already has a multi-million dollar net worth. But, he still suffers from money anxiety and not knowing how much he’ll need to step away from full-time work. Not only that, TJ is planning to take his children on a two-year-long expedition around the globe, all while TJ and his wife aren’t bringing in their regular high incomes.

But he isn’t just relying on his salary for monthly cash flow. TJ has also invested in rental properties as well as real estate syndications—both of which are providing him thousands a month in passive cash flow. But, after the globe-trotting ends, will TJ have to find himself another job or can he happily ski his way to early retirement upon re-arrival?

Mindy:
Welcome to the BiggerPockets Money podcast, show number 278 Finance Friday edition. Where we interview TJ and talk about asset allocation and reducing spending.

TJ:
We have so many dynamic things in the future, and we’ve been so aggressive with our investments up to this point that I feel like if we’re going to go on this trip, that I should be more conservative going into it. But in the grand scheme of things, if I continue to invest in real estate over the next few years, that passive income will increase and hopefully help supplement more of the trip and make when we’re gone less of a stressor.

Mindy:
Hello, hello, hello. My name is Mindy Jensen and with me as always is shine bright like a diamond co-host, Scott Trench.

Scott:
That intro really has a nice ring to it. Thank you, Mindy.

Mindy:
Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story, because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business, or make capital allocation decisions at the highest level, we’ll help you reach your financial goals and get money out of the way. So you can launch yourself towards those dreams.

Mindy:
Scott, I’m so excited for today’s episode. I can’t wait for our listeners to hear it. In the beginning, TJ lists his salary and it is extremely high, but I want you to continue listening because at first I was like, wow, what are we going to tell this guy? We actually have a lot to say to him. We give him a lot of things to look into and a lot of things to consider when he is contemplating reducing his work time for the next couple of years or in a couple of years to go on a one or two year trip around the world with his kids. And there are a lot of things for him to consider, including reducing his spending, which is not something that you would normally suggest that to somebody with such a high income.

Scott:
Yeah, I thought this was a fascinating episode. Spoiler, TJ is worth two million bucks and earns over $300,000 in household income. Yet has some challenge is about the basic math of early retirement and what kind of flexibility that position affords him and his family with that. And I think it’s a really good reminder to kind of come back to basics and look at the very simple math of what is my spending, what is my net worth? How does that relate from the 4% rule for my passive income perspective and how do I get control on those things? Where is my lever around spend less, earn more, create or invest? And looking at his situation, I thought for sure it was going to be on the investing front and so did he, but I think it was really back to the basics of spending.
And there was a really important reason for that. It was a multi-million dollar decision as we’ll kind of unpack on the show for his particular financial position. And I think it’s a really… It’s just really fun and exciting to have these kinds of discussions with people who are really smart and really capable and really go looking for that key leverage point to help them achieve their life goals with this. I just had a blast in this one today. I hope it was helpful for TJ and I hope it’s helpful for everyone listening.

Mindy:
Yep. I completely agree. This is a lot of fun. Before we bring in TJ, my attorney makes me say the contents of this podcast are informational in nature and are not legal or tax advice. And neither Scott nor I, nor BiggerPockets is engaged in the provision of legal, tax or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal, tax and financial implications of any financial decision you contemplate.
TJ has invested and saved to prepare for a two year hiatus from work while his kids are still small. The family is to travel around and see the world and then come back and resume work, but in a different capacity. So TJ’s looking for asset allocation advice and commentary on his general plan. TJ, welcome to the BiggerPockets Money podcast. I’m super excited to dump into your numbers.

TJ:
It is surreal to be on this show with you guys. I’ve been following both of you for, I guess since day one, listen to every episode. So it’s awesome to be here.

Mindy:
Well, thanks for listening. Well, let’s share your numbers. What is your salary and where’s it going?

TJ:
Yeah. So on a given month, we bring in about 18 eight. We have a duplex and then we’re invested in some syndications and each of those bring in about a thousand. So just over 20 per month. And then we spend about 12 grand a month over the last 12 months average. So housing is 2,600, taxes I have in there for 2300, that’s the biggest item that was in there. Kids, we spend about 1500. Thankfully that’s on its way down, now that one of our oldest is in public schooling. We spend a lot on travel a month. So it’s like $1,400. That’s probably our non-negotiable, don’t touch it. Don’t talk about it. We love it. And then food is 980, shopping’s 950. Cars, we don’t have any car payments. That’s one of the first things that we got after when we first learned about FIRE. So just gas and driving to work basically and fuel for travel. Bills is 500, entertainments 350, and then just some miscellaneous stuff that gets us to that total number.

Scott:
What is your pre-tax income?

TJ:
Pre-tax, oh, I don’t have it on a monthly basis. Annualized, we’re about 330.

Scott:
Wow. And what general industry are you guys in?

TJ:
My wife is in engineering and I started in engineering and moved into operations management.

Scott:
Nice. Okay. Well, awesome. That’s a huge income with this. And you guys obviously bring in a lot more than you spend, even after fairly high spending in a couple of categories there. Where does the money go once you bring it in?

TJ:
Yeah. So when we first started learning about FIRE, I guess to back up a little bit. My mom was actually a financial advisor growing up, which was like the basis for everything that I even know about being smart with money. So kudos to mom for that. But basically, we had been maxing out both of our 401ks for the more recent time. And then we automatically invest at least for a while after tax and brokerage accounts. So we’ve been a hundred percent in index funds, total stock market basically from the time that we started working. I basically started right in the beginning of the housing crisis. So 2007, 2008, and my mom basically forced me to max out my 401k, like very early on. And obviously, we’ve been marching pretty high ever since then. And then the COVID dip obviously happened and we kept marching forward.
So I think the hard thing for us was we got a pretty high net worth in stocks. And I think it was like 2017, I started listening to BP, actually the regular real estate podcast before yours came out. And that kind of got me interested in real estate, both for diversification and I get a little nervous when you talk about FIRE and selling the principle of your investments. And so, one thing that I’m really interested it in from a real estate perspective is just the passive income that comes in and not having to worry about selling the assets basically to get the income to cover it. So over the last four years, we’ve been focused on diversifying away from just a hundred percent stocks. So we bought a duplex in 2019, did I’d say a pretty poor job of burying it.
I probably could have, but I didn’t know what it meant at the time. So bought it, renovated one side, started leasing both sides out and it’s done super well since then, appreciated a ton. In that timeframe was also when I had two kids. So I’ve got a six year old and a four year old and actively managing a duplex was not something my wife would advise ever again, but she was a trooper and it’s bringing in income. So that’s awesome. So that’s what got me into syndications. I think on BP was looking around trying to figure out other options, note investing, land, all these different things, and syndications came up and I pretty much dove in the deep end to try and learn as much as I could about it. So ever since then, we’ve continued to max out our 401ks and index funds and then all of our after tax money has gone into syndications.
So we’ve been investing in those. And I’ve been over the last few years, basically trying to figure out how to get as much money diversified into real estate compared to what I had in stock. So I refied our house and did a cash out refi with rates being as low as they are. And then I refied our duplex to take out the cash that we had into it to continue invest that equity back into real estate. So I’ve been trying to figure out how to get roughly 50% of our income passively or 50% of our spending covered with passive income. And then basically for the most part, been keeping our equity investments fairly aggressive with a small, like transition to some alternatives like gold, just with some of the things that are going on, but trying to stay away from bonds with how scary the market is right now.

Scott:
So can you walk us through the numbers here in your net worth statement?

TJ:
Yeah, so our cash holding. So I’m not a huge believer in emergency funds. I basically save up whatever I can in cash in our checking account to throw into our next investment, whether it’s a syndication or whatever. So we’ve got about 67 grand in cash and that’s about 50 grand in our checking account. And then I have a $15,000 like safe account for our duplex in case something crazy happens with maintenance. Then taxable accounts, we’ve got about 240, Roth IRA 100, traditional IRA 150, 401k 760, HSA, we’ve got 60, we’ve got about 815 in real estate and that’s equity between or assets like our primary and the duplex. And then we have 370 in syndications.
So on the asset side, we’ve got like 2.5 that doesn’t include our kids 529 accounts or my pension, but I don’t really know how to include those nor, I guess do I want to consider them available to me so I left them out. And then for liabilities, we’ve got roughly five grand in credit cards and then basically the two mortgages on our property and our duplex, which totals about 620. So we’re roughly right about two million for a net worth.

Scott:
Awesome. And you pay off that credit card debt every month, so that’s just like the balance you carry?

TJ:
Yeah. We try to charge absolutely everything we can to our Chase cards, to do some transitions for points and get three to one back on like the CSR rewards and stuff like that.

Scott:
Okay. Well, awesome. It looks like… What I’m hearing you say is… When you said 800 in real estate, was that the equity, your asset value of the primary?

TJ:
Good question. That was the asset value of the primaries and the duplex.

Scott:
So what’s the equity value of your real estate?

TJ:
Just a sec.

Scott:
Because I was going to say, you’re at 50/50 already if that’s the equity, but it’s not.

TJ:
Yeah. So in my primary I have 75 and then in our duplex we have 125. So we’re about 200 in equity.

Scott:
Aside from having 50% of your expenses covered from passive cash flow, what are your goals? What’s the best way you can help you today?

TJ:
Yeah, so I’ve got a trip planned here in like two and a half years. So unfortunately, my dad passed away when I was pretty young. And so I have this like deep perspective that FIRE is the only way you can buy back time. That’s like legitimately how I view FIRE. And so I’ve been marching as hard as humanly possible to maximize my income as has my wife so that we can enjoy our kids’ lives and the time we can get with them before they turn into teenagers and become little monsters, like everyone tells us. So we are planning a year abroad or two years abroad where we’re going to travel around the globe to hopefully just have this outstanding experience. And so we’re trying to figure out, both from an asset allocation perspective and when we come back and transition, hopefully to like more of a FIRE lifestyle where we work what we want, I’m looking for advice from you guys on asset allocation.
And if you have any advice on basically what I should do with my after tax spending. So after tax today, I have basically a hundred percent equities and real estate. And there’s things like I bonds where you can buy up to 10 grand per social security number. And those are fairly conservative, but I don’t really have a conservative after tax position other than the cash flow that I get from real estate. So I think we’ve got a fairly big nest egg after tax, but say we pull the plug in two years in the market tanks, the only thing I’ve got is the cash flow from real estate. So looking for your guys’ advice on what you’d recommend for where to invest the savings that we have over the next couple years to put us into the best position.

Scott:
I’m not fully understanding the question. The question for the next two years is to put yourself in the best position, from what perspective? Like wealth building, stable passive cashflow? Are you going to take a year or two off and then go back to work when your kids hit the monster years in 1516, if we get a little bit more detail, I think we can help a little bit more with that.

TJ:
Yeah. So our plan is to FIRE when we get back. So my hope is that we’re in a good enough financial position that we can afford the year and the two years away. And then when we come back, I want to be a mountain town guy that works as a ski patroller and does local search and rescue stuff. Like that would be my dream. So looking for, I guess, your financial advice for us to turn FIRE when we come back after that two years, but really the next two years, I’ve got 150K a year that I can save. And I don’t really… I can keep marching away at syndications, but I feel like I’m pretty aggressive. So I guess, do you think I’m too aggressive going into FIRE, knowing that I’m probably going to work a little bit when I get back or what would you recommend?

Scott:
Well, let’s start with this, you’re spending right now is 12,500 per month. Is that right?

TJ:
Mm-hmm (affirmative).

Scott:
So 12,000 per month, that’s going to be about $150,000 per year in spending, with what you’re currently spending. So if we extrapolate that out 150 times 25 is… One second, that’s 3.75 million. So you’re not FIRE and you’re still about 1.7 million away from FIRE if you are thinking about the 4% rule as a basic rule of thumb, right? And there’s a lot of reasons to like the 4% rule, which can include your pre-tax and post tax net worth because there’s that 60/40 equity to debt balanced portfolio. It’s proven or it has made it through 98% of historical situations, and it’s a pretty conservative rule of thumb there. So the first question I think we should start with is what’s your spending going to be while you’re doing this year or two abroad and what do you think it’s going to level out to long term post FIRE?

TJ:
Yeah, so I looked at the expenses that we would be able to reduce once my kids come back and they’re not in daycare and it gets down to like 8,500 a month. So our housing price per month is somewhat inflated because we’ve done a fair amount of renovations to our primary. So between our refi and getting our mortgage down and then having kids out of daycare, which is 30 grand a year, we get down to like 8,500 a month as a retirement spend. So that’s kind of what I’m targeting from a spend when we get back. And then we’ve basically budgeted for like $5,000 a month for the two years abroad.

Scott:
Okay. So the $5,000, if you’re saying $5,000 per month for the two year is abroad and are you still going to have your home, your mortgage payment and stuff from here? Are you going to rent it out or?

TJ:
I’m planning on renting it out.

Scott:
Okay. So you’re FIRE at $5,000 a month. You’re way past FIRE at $5,000 a month in spending. But if, again, doing the same basic math, if we’re looking at $8,500 per month in expenses that translates to 2.5 million, right? 8,500 times 12 is a hundred and some odd thousand times 25 is going to be 2.5 million. So you’re still a few hundred thousand dollars short, something that you could potentially come up with over the next two years from this. But just kind of looking at the very, very broad picture of basic back of the napkin math. I think that that spending number is your biggest variable in this journey, right? I mean, if you can get that number down, then the rest of this becomes that much easier, and you have that much better of a shot at being able to just your passive income to cover those expenses.

TJ:
What are your thoughts on how to include real estate income into your net worth statement or what your FIRE number is?

Scott:
Well, I think that… I don’t include real estate income in my net worth statement, I include the equity in that. And one of the great things about real estate is that it typically delivers a bigger yield than an equivalent investment in stocks or bonds. So for example, I think most real estate investors would be very disappointed with anything lower than a six to 10% cash in cash return from their assets with that. And so that’s a mechanism here. In the preview to the show, while we were talking about this before getting started here, I think you had mentioned that you were uncomfortable with spending the principle. Literally selling off portions of your equity position. Real estate’s a popular alternative, because you don’t have to make that choice and you can’t make that choice. You can’t sell off properties one by one to fund retirement, you have to spend just the income.
So in a lot of ways, a well-managerial real estate portfolio is more conservative than a stock and bond portfolio because you’re only spending a minority of the cash or you’re only spending a portion of the cash proceeds that the real estate deals are kicking off.

TJ:
And that’s, I guess when you talk about like the FIRE number, that’s one of the things that I’ve been struggling with is I get to like the roughly 2.5 number, and then I took our thousand dollars syndication income, our thousand dollars duplex income, multiply that by 12, and then multiply that by 25 to basically get a reduction in my FIRE number. At least that’s how I’m roughly thinking about it.
So, part of me in my mind was, you can either look at it at a monthly level and get to that 50 to 75% passive income coverage, or I was trying to figure out, what does the net worth total need to be to try and get to that point? So the hard part for me is I’m trying to really focus on the time of when my kids are a certain age as the point that we transition so that I can essentially have the time with them before their lives get crazy. And if that means that we do our two year trip and come back and need to go back to work, we’re A okay with that. Ideally, I would not want to just because I’ve been grinding pretty hard for the last 15 years, but that’s kind of the method behind why I was trying to drive to this three year out mark. Just so we can get them out and teach them as much as we can before they hit their teenage timeframe.

Scott:
I think it’s a fantastic goal, and I think there’s no reason you can’t achieve that. And most likely have… I think even at this point, right… Let’s talk about the 4% rule. In most scenarios in history if you started out with a portfolio and sort of withdrawing at a 4% threshold, you end up with more wealth at the end of a 30 year period than you began with. So even if you left right now with your current portfolio and stopped working for several years, odds are that you’d actually end up exiting every year period, work hiatus with more wealth or it’d be closer, because you’re probably at like a 5% rule with the $8,500 a month in spending. But it’d be pretty close and you’d probably be break even or substantially better over that period with this.
So I’m still dancing around your primary question here, which is how should you allocate your capital? But I’m trying to think about your overall situation and your goals to kind of come up with that approach. And I think it’s going to be way more art than science in your case, because it’s going to depend on your risk tolerance and how you want to play some certain probabilities with this. Do you want to come in, leave and have a perfectly stable forever financial position? Well, that’s where you de-leverage, you pay off some properties and you shoot past that number or you’re willing to have that part to time work to help supplement some of that. Do you want to play the best long term game? That might work out where you have way more wealth at the end of the period. It also could mean that you’re going to have to go back to work after a four or five year hiatus with that.
So I think those are the philosophical questions you’ve probably grappled with many, many times, and that we’re not going to have, I don’t a silver bullet for on the show today. But it’s fun to think about and we can maybe begin zeroing in a little bit.

Mindy:
Well, I have a lot of questions and Scott, you’ve been doing all the talking, so now it’s my turn. You said you don’t want to sell your assets in retirement. So I’m wondering why you don’t want to sell your assets in retirement and are there any dividends in your after tax stock holdings?

TJ:
Yeah, I’m okay, I guess selling assets. I just, when you look at like the stock market, I never really understood how real estate and passive income actually worked. And now that I have the repeatable income, ideally for me, I’m like, if I can let that ride and have my real estate income be the conservative part of my portfolio, I like having the upside with the stocks. So I don’t have anything heavy into dividends. VTSAX gives you what a quarterly dividend of whatever that is, but I have that kicking out to my taxable account right now, so I can do more real estate with. So for me, I’m mostly interested or driven right now about this syndication space, but I think that’s because it’s new and fresh to me and I’ve been passively investing in the stock market however long. So I’m a little nervous about continuing to run down this syndication space just because it is still pretty new to me, but I do like the diversification opportunities that it provides.

Mindy:
Okay. So some of the issues that I have had personally with syndications is that it can be kind of hard to find a deal. They, the syndicators present this really great picture, but then sometimes when you dive a little bit deeper, what they’re saying actually isn’t all that good or what they’re promising isn’t actually realistic. So I have actually had a hard time finding some syndications. Are you able to easily find syndications that look really good when you start doing research in them? And have you… You said you’ve listened to all the episodes. Have you listened to the J. Scott epic two hour, all about syndications episode.

TJ:
You needed to do that like a year earlier because I had to like, self-educate on everything and then he’d did this super eloquent podcast with you guys and basically walked through it in perfect detail. So yeah, I did listen to that one. I saved it. It’s one of my favorites. So I do have some fairly reliable performing, I would say like syndicators right now. They’ve been very trustworthy and they’ve delivered on their expect so far, but that’s taken three years of research and interviewing people that they’ve invested in and reviewing all their past deals and they are still performing well. So I have no reason to doubt them other than I just, it’s a small group of people so far that I’m trusting enough to invest in.
So I’m basically concerned about branching out even further just because it feels risky knowing… You know, you’ve said it before Mindy and you’ve had some experiences, so I’m like, oh, am I going to get caught on one of these? And so the hard part is it’s like the stock market’s overvalued, real estate’s overvalued, interest rates are increasing. So bonds are kind of a terrible place to put your money. So it’s like, I don’t really like Bitcoin that scares me. It feels like a risk. So for me, it’s like, I’ve put some money in gold, but in the grand scheme of things, there aren’t that many safe places to put money right now. And so, yeah.

Mindy:
Yeah. Well, and that’s the thing, there aren’t that many safe places to put money. If you want safe, we can give you safe options, but those don’t come with exponential growth options too. So that’s where the trade off is. Your syndicates that you’ve been working with, do they have any new deals on the horizon? I would reach out to them and ask them because I’m having a hard time finding new deals that are worth doing right now.
So if you have an opportunity to do that, that’s kind of a, I don’t want to say a no brainer, but that seems like an easy way to continue with your diversification is investing with people that you trust, who you seen firsthand they’re doing great work. I would caution you to make sure that you’re reading through all of the documents just as if you were joining for the first time again, because every deal’s different and you want to make sure that they aren’t promising you the world. And then, oh, wow. That was really attainable when you go back and look at it after you’ve lost money. You’re like, what were they promising? Oh yeah, that wouldn’t have worked. So you mentioned a pension as well. Do you have a government pension or a private pension?

TJ:
It is a private pension.

Mindy:
Okay. Oh, I’m sorry. I meant to say that was episode 219 that we interviewed with J. Scott on the syndications. Episode 259 we talked about pensions with Grumpus Maximus. And this is a private pension that can be a little risky. How stable is the company? Is GE going to go out of business? Is IBM going to go out of business? Is, I guess Apple doesn’t have a pension, but like those old companies that have been around forever could have a pension forever, or they could go bankrupt tomorrow. And the government pensions are more solid and if they go out of business and there’s a whole lot of problems. But do you have the option to buy out your pension? Do you like your pension? Those are things that you’re going to have to look into but I think you said that kicks in at 65.

TJ:
Yeah. It kicks in at 65. It’s 116 year old company. It’s private. And they actually stopped offering pensions the year after I started. So when I started, I didn’t even know what a pension was. My mom, the advisor is like, this is amazing. And I no fricking idea. I was just glad to have a job in 2007 when the market was tanking. And so they do have an estimator that you can basically run simulations as to if I quit right now, withdrew, starting at age 65, what it’s going to be. The pension is currently overfunded, which, makes me feel somewhat good. But it’s hard to know if that’s going to continue, I mean, they’ve got to obviously be obligated to those payments for a long time. But yeah, as of the last few years through COVID, we work in an environment where we’ve done very, very well.
And they’ve used a lot of that profit to put it back into ensuring that our pension is fully funded. So that makes me feel good about it. But everything I hear about non-government pensions makes me kind of think twice about it. But at age 65, that’s like $39,000 a year that it’s projecting back into my pocket, which is an insane amount of money that I can’t even, I don’t even really believe it. But they don’t offer a buyout option. So if I leave the company in two, three years, I need to remember when I turn 65 to sign up and get it going again. So, yeah, I’ve got a big red flag right there to make sure that I follow up on that when it’s time.

Mindy:
Yeah. If you leave the company, could you come back to the company? Would you continue to get the pension because you started, when they still had a pension? When you leave, could you take a leave of absence instead of quit all together? And these are just research opportunities for you.

TJ:
Yeah. That’s a good question.

Mindy:
Because that doesn’t obligate you to come back, but you could come back. Maybe you go around the world and you spend two solid years with your kids and you’re like, that was super fun. Can’t wait till they’re in school and I can go back to work. 24/7 with your kids is amazing and then sometimes it’s nice to have a little bit of a break. And I hope that doesn’t make me sound like a horrible person, but it does. I’ve just spent two years with the kids.

TJ:
Yeah. We tried it out this summer. We did a two week road trip with our kids in a camper van across Canada. And looking back on it was awesome. In the moment, there was definitely some times where we needed to escape into the woods, one parent at a time to escape the craziness that’s for sure.

Mindy:
Yeah. I mean, everybody needs downtime, but that’s just an idea if you can take a leave of absence, because I mean, you said you’ve worked there for 15 years. If you can take a leave of absence and then come back and decide, you know what? I do want to continue on with this job. Maybe that doesn’t put a hiccup in your pension, because I can see them saying, well, you left so now you’re a new hire. So now we don’t give you pensions anymore. So all you have is the 15 years of pension, instead of whatever.
You made a comment about an emergency fund. And I’m going to agree with you. I don’t have an emergency fund, but I also have a lot of buckets I can pull from if I needed to fund an emergency. So I can fund an emergency. Therefore, I don’t need an emergency fund. Does that make sense? I’m not explaining that right. But, yeah. I agree with you, but I do want to caution people who are listening, if you cannot easily fund an emergency, then you should have an emergency fund. And you even said you have $15,000 for your duplex, should something big and wampy, need to be replaced right away.

TJ:
Yeah. And I might need to revisit that once we get closer, because I’ve also got a nice savings rate right now that allows us to float. If something crazy came up, we could float. Just wait a month or put it on a credit card and pay it off the next month and it wouldn’t destroy me.

Mindy:
Yeah. Who’s managing the property right now?

TJ:
We just transitioned to a property manager a year ago because it was the first year was pretty rough. We renovated one side. There was some work that wasn’t done correctly and the tenant had a fair amount of things that needed following up on. And so that was a lot for me. And then for a modest fee now, it’s easily managed and the last two years have been outstanding. It’s been super seamless.

Mindy:
Okay. So are you open to buying more real estate that way? Because with the syndication, you’re making a thousand dollars a month or the syndications, you’re making a thousand dollars a month and you will have the upside whenever they sell, but you don’t really get much of a say when they sell, which is-

TJ:
Correct.

Mindy:
… Kind of my… On the one hand, I’m super excited when the non-performing one sells. But on the other hand, I am kind of bummed when the really well performing one sells. Yeah, I just got a big influx of cash, but those monthly checks you were sending me were really nice, because they were like over and above what I was expecting. So with a duplex that you own, you get to decide when you sell, you get the appreciation, the price appreciation and in your market, is there price appreciation or is it more cash flow?

TJ:
It’s, in the area that I have one in, it’s mostly appreciation.

Mindy:
Okay.

TJ:
So the cash flow like our rent increases haven’t been that significant if you look at like the market rent in the area, but I’ve been struggling with exactly what you’re mentioning Mindy. I’ve got this one duplex and I’ve been getting like an 11 and a half percent return year over year, which has been super reliable. And I have the mortgage in my name and going through these syndications, I don’t necessarily see as much control or direct influence as I can provide on the duplex. But I feel like I’ve done so much research in that space now, that the amount of time it would be to find a good deal in the duplex space is kind of why I haven’t gone that route. I was actually considering selling my duplex to even go more passive, but it’s like, I don’t know what you guys think about that. It’s like, I’m getting an 11% return. Over the last two years I’ve had zero maintenance issues. It seems like I should just set that and forget it and never really deal with it again.

Scott:
And just hearing all of this, I’m kind of, I think I’m putting the pieces together for overall what’s going on here. For you’re spending and I know I’ve already a harp in this. But you’re spending $12,500 a month, which implies a 3.7 million net worth with a 4% rule. It also implies that you need 150,000 or 12 and a half thousand dollars in passive real estate income per month with that. A syndication investing will general and there’s a myriad of op out there. So you can go in a bunch of different directions. But on the one hand you might get a preferred return of like six to eight to 10%, depending on which syndicated you go with. And that’s going to get you a certain yield that you can predictably spend each month with the duration of that investment.
And the second is you’re going to be more like an equity partner where you’re going to get very small yields in the initial years while the property is getting stabilized and turned around and then a big payday when the property is sold for that. And so with one of those, you’re going to need a cash flow situation or a big savings account to be able to weather those periods in between and with the other, you’re going to need a much greater net worth, right? You’re still to need… You’re going to need 1.5 million in syndication equity at 10% yield to get you that passive cashflow. And so that’s where I kind of keep zooming back to the fundamentals with this is. I think what your question is am I close to being done and what’s that conservative way position my portfolio to cover my expenses with that?
And I think my, maybe harsh or blunt reaction to that is you’re not that close to being done with your current situation with this, unless you can change that spending profile to something that is going to make that math a lot easier, right? You have a tremendous net worth, but you earn, you said $330,000 per year in income. And I bet that might be understating it to a certain degree if there’s upside from 401k matches and your rental properties and appreciation and maybe other things that are going on and me… well, I’ll stop there for a second. Am I painting a reasonably close to accurate picture with the situation, TJ?

TJ:
Yeah. Yeah.

Scott:
Okay, great. If that’s the case, then I think we come right back and say, I think it’s back to that as fundamentals and saying, what is my spending truly going to be post retirement, when I come back from this trip and how do I put that in a position that’s at this level? And from there, okay, if I want it to be 8,500 or $10,000 a month, then I need to figure out how or what I can do when I come back, that’s conducive to my goal of being with my family, but it might not be being a ski instructor in the winter. It might be, I’m going to start a small business that has that capacity to generate… I’m going to buy a small business for 200, $300,000 that has that capacity to generate 150, $200,000 in income and gives me that lifestyle flexibility with that. Right? So there’s a lot of really good options. The world is your oyster. You’re crushing it on the income front. You’ve got this fantastic net worth. You’ve got it in all the right places from all these different types of things.
It’s just not quite at that threshold to fund $150,000 in spending or even a hundred thousand super duper conservatively so you’d never have to shut off the worry switch ever again. How’s that for try it first as the overall situation?

TJ:
I love it. I think the hard part is we have so many dynamic things in the future and we’ve been so aggressive with our investments up to this point that I feel like if we’re going to go on this trip, that I should be more conservative going into it. But in the grand scheme of things, if I continue to invest in real estate over the next few years, that passive income will increase and hopefully help supplement more of the trip and make when we’re gone less of a stressor.

Scott:
Well, I think also the conservative side of thing is your plan after retirement is probably, well, it’s almost certainly within one spouse’s income generation threshold with this. You’ve built a net worth of two million already with this. So your position is… Whatever you’re doing is working to a tremendous degree. So I don’t think you’ve taken undue risk with your investments, but that they just mean… They’re not going to… If you repositioned everything into a hyper conservative portfolio, right, you’d have your two million bucks invested in something that might generate a two or 3% safe yield. And at that point, two or 3% safe yield is just not going to come anywhere close to covering the expenses that you’ve outlined for your family or for your long term situation. So I don’t think that would be a good option.
That’s a good option for, we had somebody on the show a few weeks ago, Mindy, who wanted to move to the Midwest and was super clear about that. They were on the East Coast. They wanted to move to the Midwest, buy a home in cash and be done and live in a small town where they grew up and raise their family with that. And like two million bucks conservatively managed with a couple of paid off properties is perfect for that. They’re absolutely, you’re done. Game over, never have to worry again with that. Probably not for Park City, Utah, or whatever you want retire as a ski bum.

TJ:
Yeah. And I think the hard part for me is it’s been so easy to invest aggressively because I believe so much in the market going up. And as we even like remotely come close to this transition, I get like terrified of what had actually me and if the market drops 40% tomorrow. So I just need to continue to focus on the plan that’s going, that’s working and just be confident in the fact that I’ve got three more years. And when we do our trip, if we come back and I need to do another job that is also supplemented with some fun time in the mountains, that it’ll all work out. I just, I’m a very like nitpicky person at all of my decisions that I’ve made with personal finance. So it’s hard for me to make a change because everything’s just been going well. And I’m anxious about making a mistake or going down the wrong path and undoing the last 15 years of acceptable or successful performance. You know what I mean?

Scott:
Well, let me try to psychoanalyze you here on the show, one extra degree here with this, right. I also think you generate such a tremendously high income that it’s just like, that’s always the ace in the hole, in your financial situation is at any point you can generate this $330,000 per year income, perhaps too… I don’t know, whatever you’re earning personally with that. But because you can generate this extraordinarily high income, it just lets everything else kind of fall into place. You can have this nice bucket to spend and why shouldn’t you, your spending is not unhealthy relative to your income, right? And you do a great job on that. And you’re able to still max out your 401k, max out a bunch of after tax buckets, invest in syndications and fund your travel that you like with you and you and your family.
And with that ACE in the whole, why would you invest conservatively? Right? I mean, you’ve got, I don’t know exactly how old you are with this, 50 more years of prime production capability in you with this. So that I think is the challenge with FIRE to a certain degree for someone like yourself is because that income generation is not effortless, but something that’s so clearly within your capability set, and probably you’re not even approaching what you would peak at if you were to stay at the job for another five to 10 years, it just makes that investment situation so difficult. Or not so difficult, it makes it so easy to comfortably invest in really aggressive alternatives. Versus when you leave the job, that’s terrifying because what is the equivalent of a, I don’t know, what’s 25 times 330,000?

TJ:
That’s a lot of money.

Scott:
That’s eight million bucks in income generation over the next 25 years, right. That’s going to evaporate. That’s what’s terrifying and that is scary. And that should be scary. So that’s the trade off or the challenge of FIRE for someone like yourself is you’ve won most of the game, but the trade off is you’re not going to generate that eight and a half million bucks from your income. And you’re going to have to instead get comfortable with living off of a minority of the cash flows from your investment portfolio with it. That’s the philosophical challenge, I think you’re going to have to grapple with on this and game is not over at 12 and a half thousand dollars in spending. It may be over $8,000 in spending, but it’ll be fairly close. It’s definitely over at less spending. And also, it doesn’t have to be over necessarily either. If you like what you do and you want to return to work when your kids reach the monster years as [inaudible 00:43:02].

TJ:
Well, and that’s the hard part is I feel like I’m struggling with giving up this great high side and income opportunity as a trade off for the time with my kids. And I see, and my drive has been to try and come back that trip and really work for a passion. So I’m trying my best to full throttle up until that point. So that when I come back, I can be lower stress and less anxiety. I think I carry a ton of mental health challenges because of my job and how much stress I put on myself. So there’s a health factor to all of this, that I haven’t really come to grips with until lately and it can be terrible.
So it’s like, I’m in this tough spot where I’ve got this amazing income, but I’m scarred from all this history that I have with thinking I’m going to die at 55. So I’m like, kind of in this tough spot where I want to prior prioritize as much time as I can with my kids. And I can’t let go of the fact that I think when I come back, I can’t go back to work. And that’s totally a super easy option. And it’s what everybody does and it’s what I do every day today. So I should be a little less hard on myself that I’m like a hundred miles an hour to this finish line when I’m arbitrarily creating it for myself.

Mindy:
Okay. It sounds like I’m talking to my husband right now.

TJ:
Uh-oh, I don’t own any Tesla.

Mindy:
He did not have this level of income. And I still considered us to be high income and we spent significantly less. And he was having a really hard time coming to terms with quitting this well paying job, because he grew up financially insecure. His dad was a union electrician in Chicago and all summer long he’d work and then every winter he would get laid off. I mean, like clockwork. And at one point his parents sat him and his sister down and said, Hey, dad lost his job again. And they’re like, yeah, whatever. We’re not going to lose the house. And they’re like, well, we don’t think we’re going to lose the house. And he was like, wait, what? I didn’t even know that was a possibility we could lose our house. So he’s like, why would I quit this amazing paying job when I grew up financially insecure?
Why would I… Like who am I to say, no, I don’t need to work anymore? So he really struggled with that. We hit our FIRE number and he continued to work. And I think he worked for another year or year and a half. The numbers are now kind of hazy. And after, I had a job and he was able to leave because I had a job. As soon as he left, like a week later, he’s like, man, I should have done this so much sooner. And I have all these things I want to do. And the money has… I mean, yes, he calls himself wife-fire and which is fine. I do have a job.

Scott:
That’s another good option for you.

Mindy:
Yeah.

TJ:
Yeah. Right.

Mindy:
[Inaudible 00:46:05], maybe you can flip flop. But he wasn’t able to leave until there was a safety net and you have a really good safety net. You make $330,000 a year. That’s a lot of money and it can be difficult to change your thinking to where you feel like, oh, well, why do I need a budget? I make so much money? But I’m right there with Scott. I didn’t get a chance to harp on you about your spending and yet, but I see that as like on the surface, you make a great income, you don’t need to budget. But you don’t want to continue to work forever. I challenge you to start tracking your spending very, very carefully and see what are you spending on that you could stop spending on that doesn’t have any effect on your life?
How often are you going out to restaurants? Can you call that back and not have a difference in your life? I’m trying to see, you’ve got $1,200 for shopping. I don’t know what that is. I’m not judging. I’m judging you, but I’m not judging you. Like this is something you need to look at. Food and dining, 957 for four people. That’s probably going to be okay. Health and fitness, you’ve got almost $500. What is that for? Is that for a personal trainer every single week? Do you really need that? Or is that for like some hoity-toity gym membership? Is there another gym membership that they still have weights there too, or whatever you’re doing. Bills and utilities, that’s probably not going to be able to be something you can cut back on. Entertainment, we’ve got $450. That’s something that could be cut back on. Instead of going out to the movies every Friday night, maybe you have Friday night, we make pizza at home and play games.
Our kids love making pizza at home because then they get to make the pizza and it’s super fun for them. And they love playing the games like board games and stuff, because they’re just sitting there and we’re having fun together. You said, travel is non-negotiable, don’t talk about it. Don’t touch it. I even type that in because that’s $1,400. How much could you cut that back and not change your life? Like, what does that mean? Are you flying someplace every single month? Does that… And these are all research opportunities for you. You’re not responsible… You don’t answer to me. There is something that you put in when you applied, you put uncategorized $2,000. That seems like a really good place to look into. And I’m not trying to make you feel bad. I’m just giving you ways to look at this because I’m looking at my spending.
I’m doing this year long spending tracker, publicly tracking my spending. You could follow along at biggerpockets.com/Mindysbudget. This is my first month. We’re recording this January. This is my first month. And one, two, three, four. I already have five categories that I am over budget in, simply because I haven’t tracked it in a really long time. And some weird things happen. Like I needed a new windshield washer pump, and that’s why my auto is going overboard right now. But there are that like is now it’s a game to me. How low can I get my spending? And it isn’t because I’m in fear of running out of money. It’s because I want to make sure that my FIRE number is actually doable. I planned for this level of spending and last year was this level plus like a whole nother level.
And it happens when you don’t track it all of a sudden just kind of goes away. So I’m wondering what sort of spending you can cut out without changing your life. I mean, you can cut out a whole lot and change your total life. And peanut butter and jelly and rice and beans, you never go anywhere and you don’t have any fun. And that would suck and you wouldn’t want to do it. And you would get a lot of pushback from your family. But I am in agreement with Scott, that I think that there are a lot of things to cut in the expenses that would help you feel better about the delta between what you’re spending and what you’re bringing in and your net worth versus your FIRE number. And you could go be a ski bum in Park City, Utah, where it’s going to cost a lot of money to buy a property. But when that’s your only expense, like you’ve got $3,000 in mortgage payments where you’re at currently, you could get a really sweet house in Park City, Utah for $3,000 a month.

Scott:
At the beginning of this whole conversation for the last couple minute moments here, we talked about margin of safety and your margin of safety is your job. You don’t have a good margin of safety, in my opinion, in your personal financial situation outside of that. You have a four month emergency reserve, which is good, but it’s going to keep you up at night if you’re thinking about quitting your job in that context with this. Your passive income is $2,000 a month outside of your retirement accounts with that. And so that’s also going to keep you up at night, I think overall with that. And there’s two ways to build out that runway component of this. One is to spend less because that allows you to accumulate more and the other is capital allocation, right?
Actually spending less does two things, right? It allows you to… If you cut your spending from 12 to eight, your current emergency reserve goes from four months to six or seven months, right. Just see how you do that. And the other way to do it is to allocate your capital and drive that passive income. And we just said that in order to your expenses here, you need 1.5 million dollars in real estate equity, generating a 10% cash in cash yield, which is either going to take a lot of work or put you into a high risk investment category. If you’re going to get that in a preferred rate in a way that you can kind of predictably rely around. That’s a hard goal. That’s 10 more years or six to 10 more years of kind of what you’re doing with a lot of this stuff.
The other component and directly related to what Mindy was just going through is if you can go line by line through your spending, you don’t have to make all of those changes today. Your situation doesn’t call for it. You earn plenty of income to justify those different types of things. And I get it, right. You can’t take a vacation… You can’t go skiing on Tuesday with your job, right? Like, I’m almost in a pretty similar situation to you in some ways with this. If you want to take a nice long vacation, you’ve got to do it a very prime three day holiday weekend when rates for your travel are going to be through the roof, right? You’re going to go visit your family for Christmas, you’ve got to take the flights, or Thanksgiving, you got to take the flights around those times to make sure you can meet that holiday expectation.
Well, when you retire and become a ski bum in Park City, you can take that… Like that travel expense is going to change because you don’t need to take that vacation on that prime three day weekend, right? You don’t need to take the flights the day before Thanksgiving and come back on Saturday or Sunday of that long weekend. You can do it on your own schedule, combine another trip or something like that. So if you can really go line by line through those expenses and say, no, no. It’s nonnegotiable for me today because I need it to preserve my sanity in the next two years. Fine. Like, I get that, a hundred percent. I can empathize, but also think about what’s in next in two or three years where that budget may be very negotiable, right?
And if that’s the cost of sleeping well at night and feeling you can have those two years or three years or five years, or however long it is with your kids fully present, then maybe that’s the cost of it. And I think that’s, that’s a way to think through that expense category and which I think is the biggest leverage in your peace of mind category. It’s certainly not the biggest leverage in your, how do I get to the maximum net worth in 25 years. But if you’re trying to be done in two years, that will be the case. And then lastly, wrap all that up. I would say that the concept of flexibility, which we’ve talked about a few times on the show, I think is something that you should really internalize and think through because your situation currently is not very flexible.
In spite of the great net worth you’ve built with this, you only have four months of runway, four or five, depending on how you want to think about that passive cash flow. And I think if you could build that out to a year or two years, you’re going to feel a whole lot better looking at the other side of it. Even if it may not be the highest return use of capital you have there, and that flexibility can come in the form of additional cash or equivalence with that, it can come in the form of just slowly building out your passive cash flow, like you just said, and it can come in the form of reducing your expenses. A combination of all three is going to be the most powerful.

TJ:
You guys are awesome. The spending concepts or comments are awesome. I was so focused on like the big three in the beginning. So like paid off our cars and I’m driving like a 2000, I’ve got like a 300,000 mile car on it because I have this like love for cheap vehicles and it still works, so why buy a new one? And I refied our house and focused on like the big things, but then that’s kind of where I stopped. So over the last like four months, I’ve been focusing pretty heavily on trying to get at some of these smaller categories. And I don’t know how familiar guys are with Mint, but they’re is that like view over your net worth. And then you can swipe to the side and you actually see your monthly spending. I have never really looked at that on the spending side.
I’ve always been like looking at the net worth, what can I do to maximize it? And now that I… They’ve got that stupid little dotted line that says you’re $113 more than last month. That’s like what I look at every morning now, so I can see every transaction so I can start to challenge myself. So I’ve been doing really good for four months, but our 12 month average is still the 12 grand. So we’ve got a couple house modeling things that are going to fall off. And then I’m hoping that I can see some continued stability as we focus on being more intentional with some of these things that we’re not on today. We’re just, we’re doing whatever we want. And aside from the big housing, car, and I guess those are the big ones that we’ve done stuff on, we haven’t really made a bunch of effort on the others. So it seems like an awesome two years, I need to keep grinding on understanding exactly where each of those dollars are going.

Scott:
Yeah. And again, you don’t have to have like, oh, I got to cut back tomorrow. You don’t need to do that with your current situation. You just need to do it, you need to be ready to do it when you leave your job and you’re going to be trading, Hey, I’m not going to earn that high income. So I need to be totally in control of my expenses when I leave the job in order to do that. So it may not be practical for you to run a super tight household ship if the hours are crazy long in the short run, I don’t know.

Mindy:
Okay. I have a couple more comments before we get out of here. You asked if you should sell your duplex to fund more syndication investments, or if you should look for more duplexes? And I would say, reach out to your real estate agent and have them set you up to receive listings, because if some smoking hot deal comes on the market and you’re not getting these listings, you’re not going to know about it. I would be prepared to act on something because you know what you for this property, you know what the rents come in at. I would even make it kind of a tight little circle for where you’re looking and just be prepared to act if some amazing deal comes up. And if your duplex is on a street with other duplexes, I would send a letter to all of the owners of all of those duplexes around you, Hey, if you’re thinking about selling, I’m looking to buy and see what happens.
I mean, if they come back and say, Hey, we want four million for you. You’d be like, yeah, I like that, here’s my agent. But if they’re like, hey, we want $4 more than you pay for yours. Okay, that sounds like a great deal. How can we make this… How can we connect? But if you’re not looking for a deal, you’re not going to know there’s a really great deal out there while you continue to look for syndication deals from your trusted syndicators, as well as maybe branching out into other syndicators because maybe somebody has a great deal. I am personally not super excited about syndications right now, but that’s just because I’m not finding these. As soon as we stop recording, I’m going to be like, who’s your syndicator?

Scott:
Yeah. Another thing to consider about the real estate is that when you leave your job or on sabbatical or whatever that is with this, you’re no longer going to be able to as easily get mortgages in the way that you’re used to. So that would be a vote in favor of it doesn’t really change the game, a syndication versus a regular real estate investing, but it might be a small vote in favor of waiting that just a nudge higher in your overall portfolio because that will be an option available to you now very powerfully in a way that it won’t be, or may not be if you carry through your plan in a few years.

TJ:
Yeah, we’ve actually been considering if we could align on the long term location where we want to live, do we buy that property now while our income can cover it and then rent it out for the two years while we’re gone so that we can get some income and then not have to deal with getting a mortgage on it when we move back.

Mindy:
That’s a really good point, too.

Scott:
Great. So you’re already considering that whole thing. So that’s great.

Mindy:
Okay. TJ, is there anything else we can talk about before we let you go today?

TJ:
I don’t think so. This was an awesome conversation, you guys.

Mindy:
This was a lot of fun. Yeah, I feel like we gave you a lot of things to think about, a lot things to talk with your wife about and a lot of things to look into, which is kind of the whole purpose of the show. So this was great.

Scott:
This was, I think it was a great conversation. Thanks for bringing this all to the table. I think it was, it ended up being a tough conversation. I was optimistic coming in that there would be, oh, we just put, invest here. Boom, boom, boom done, done, done. But I think it ended up being a little bit more nuanced than that, but I think… I hope it was helpful. And I think it was honest from my perspective about how I’m reading your overall situation.

TJ:
Yeah, it was hard. I have a lot of like internal challenges with myself and like getting to here and being successful and not letting the family down, being accountable to being successful. So great to have you guys give me some coaching.

Scott:
You’re amazingly successful. You’re crushing it with all this stuff. You’re certainly not letting anybody down and life is good. And you’ve got some fantastic options downstream here. So you almost have… You’re actually not even that far, if your were doing it for five more years, you’d be able to probably get to your goal of just passively funding, the entire thing at 150,000. So you’re doing great and you shouldn’t be worried about anything that will give you an indication to the contrary because this is a crushing it financial position. Doesn’t get much better than this.

TJ:
Thanks to again, guys, appreciate you so much.

Mindy:
Thank you, TJ. We’ll talk to you soon.
Okay, that was TJ and that was a lot of fun. Scott, I have to say, I am actually kind of surprised that you suggested he look at his spending. You were the one who brought it up first and this isn’t something that you frequently suggest. Whereas, it’s something that I’m almost all is thinking of when we are doing these finance Fridays. So I found that very interesting.

Scott:
Yeah. I found that and it might be just a product of the guests who come on the show, right? And it has appeared to me for, a couple for at least for some of the guests in the past that, Hey, before I’m going to apply to be on the BP Money Show, I’m going to really clean up my spending and really get command to that, sit on it for a few months and then apply and then come on with that. And I think that TJ is obviously not spending irresponsibly or anything, but I think he presented a more kind of honest view of his finances than maybe some of the folks… And I don’t mean that anyone’s being dishonest. I just mean that as like that, I would probably want to clean up my expenses before coming on the BiggerPockets Money Show, and then talking about my expenses with that.
And I’m not saying he didn’t, or [inaudible 01:02:54] irresponsible. I just think we got a picture that’s more reasonable for most people who are earning TJ’s income. That’s probably what they’re spending to a large degree.

Mindy:
I agree.

Scott:
And it has major implications in his… He came in and when I was looking the notes prior to the show recording, I was like, okay, this is good. I think this is an investment case here, but when we kind of started talking about, oh, in two years, I want to be done. I want to retire forever with that. Well, then it comes back to the very simple, basic math of early retirement. And it was like, I just don’t think we’re that close on that front. And we could be, if we were able to knock out 50% or reduce the spending by a third. We’re almost there. And it makes a huge, huge difference in the amount of wealth accumulated, the amount of flexibility he might feel about his situation and the amount of passive income or wealth that he needs to sustain permanent early financial independence.

Mindy:
Yeah. I agree. And I really, I can really see where somebody at his level of income is coming from. Well, why would I want to look at my spending? I have so much leftover from my income and I still get to do whatever I want. I’m doing great with my investing, I’m doing great with everything. Why do I need to look at my spending? And that’s when your spending starts to creep up. So, like I said earlier in the show, I am doing a year long spending track and it is very eyeopening. What are we two weeks in, three weeks into the spending tracking? And I’m already over budget in five categories because I have no idea how much I’m spending in these categories. And the reason I don’t have any idea is because I haven’t been tracking it for a long time.
Even though I do this podcast every day for four plus years. And I tell people all the time to track their spending, I haven’t been doing it in a while. So I am a big fat hypocrite. But now that I’m tracking it and I do, I want to do it publicly because I want people to see, it’s not that easy and it’s okay to make mistakes. And you just learn and move on. And sometimes things come up like my pump in my car, my windshield wiper pump broke. Of course, it broke during the public spending tracking. It didn’t break before then when I could have just not showed everybody that I’m going over my budget, but it just, I think it just highlights that the power of tracking your spending. So I’m excited for him to do that too.

Scott:
I mean, Mindy is it work?

Mindy:
Not really.

Scott:
Oh, I thought you were going to say the opposite.

Mindy:
What do you think I was going to say?

Scott:
It’s work tracking your spending. You got to set up a system. It’s going to take you a few hours and maybe if you spins to figure out what, whether you like Mint or YNAB or Personal Capital or a spreadsheet, or your notepad or whatever. And if you like one, maybe your spouse doesn’t like the other one. And then you’ve got to actually go back and track all the expenses. And at first it’s like, you’re not doing it all the time. So at the end of the month, you have to go in and be like, what the heck was that one? And what the heck that was that one? And what was that?
And once you set up a system and do it a few times a week and just click, click, click, click, categorize the expenses, you can look at it in 10 minutes and know where everything’s going, and you’ve got that power. But it’s a good, probably it might take you 30 hours to really figure it out and get into the groove with this kind of stuff. And that’s real work of free time with this.

Mindy:
I didn’t take that much time, although I did have an ace in the hole. So Mr. WoW, from Waffles on Wednesday was actually visiting me over Christmas. And he set up my spreadsheet with all the pivot tables and all the fun things that he set up. So it was very easy for my spreadsheet to display the way that it is displaying at biggerpockets.com/Mindysbudget. That is all Mr. WoW, kudos to Mr. WoW. But I’m also using his mobile spending tracker. So once we sat down and did that, put it on the phone, it is with me all the time. And it’s actually very easy. My husband and I are on the same page. That’s a really good point, Scott, that I didn’t even think of. Because we’ve always been on the same page. It didn’t occur to me that other people might not get on the same page with their spouse about attacking their spending. But I just wanted to be able to track-

Scott:
If I’m not really like really good friends with one of the world’s most prominent budgeting experts on this, who can come over to my house and set me up with a system that is perfect from end to end with, it might be a little more difficult. But we probably can solve that to a certain extent. We should probably put an invite them if they’re willing to help us with a YouTube video on how to set that up and [inaudible 01:07:36].

Mindy:
Oh, yeah. Oh, I will reach out to him and see if he will do a YouTube video for us, for how to set up the spreadsheet. Because yeah, his site’s down right now. He got hacked. Hopefully by the time this comes out, his site is back up and running. Especially since we’re talking about it. I’ll include yet another link [crosstalk 01:07:55].

Scott:
Yeah, I’d hope so. Hopefully, a spreadsheet can’t get hacked either.

Mindy:
Yeah. Oh, huh, don’t take that as a challenge. I don’t know. Yeah, but you can follow along and it is like, it’s just, it’s really eye opening when you see where your money’s going. So you can make changes mid month, midweek. And now it’s a challenge, now it’s a game who can spend the least, how little can we spend this month? I’m actually doing great on my groceries and I’m super excited about that. But I know in future months it’s not going to be so great. So follow along. Okay, Scott, should we get out of here.

Scott:
Let’s do it.

Mindy:
From episode 270 of the BiggerPockets Money podcast. He is Scott Trench and I am Mindy Jensen saying, see you on the slopes.

 

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2022-02-25 07:02:03

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