**Narrator**
Today’s Finance Friday guest is looking to hit financial independence in seven years at the age of 40. But could his timeline be fast tracked to retire even earlier with some slight changes to his investment strategy? Let’s see what’s possible today.
Before we get into Travis’s finances, we want to thank our sponsor. This episode is brought to you by Connect Invest. Real estate investing simplified and within your reach. Now, back to the show.
**Mindy Jensen**
Hello, hello, hello and welcome to the BiggerPockets Money Podcast. My name is Mindy Jensen and with me as always is my blueberry loving co-host, Scott Trench.
**Scott Trench**
Mindy, I don’t know how you always produce such great intros for us.
BiggerPockets has a goal of creating 1 million millionaires. You’re 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.
Today, we’re going to discuss if Travis is on track to reach FI by 40, what to do when you’re at a crossroads with investing, what could fast track Travis’s financial journey, and how can we generate more income. Travis, super excited to welcome you to BiggerPockets money today. Thank you so much for being here.
**Travis**
Oh, thanks for having me. I’m really excited to be here.
**Mindy Jensen**
So Travis, let’s jump into your money story really quick. What does your journey with money look like?
**Travis**
I really have BiggerPockets to thank for my money journey, because it all started just before I went to buy my first house. Um, I stumbled upon the first-time home buyer book from BiggerPockets and I, it just opened so many doors for me, opened my eyes. Um, I learned a ton. And that was really where my money story started because it wasn’t until I read that book that I actually was able to learn what I had and where I could go. Um, so that, that was really only maybe two and a half years ago that I picked that up and read that. So.
**Scott Trench**
Awesome. Yeah. I love that book, but I can never remember what it’s about.
**Mindy Jensen**
Who, who wrote that book, Scott? Do we know?
**Scott Trench**
Oh, that Mindy and I co-wrote that book. So thank you for the, the plug, Travis. Um, well, Travis, could you give us a little bit of background on how you kind of got, you know, you know, after you kind of read that book and how have things gone the last two and a half years and, you know, to get us to this point?
**Travis**
Yeah, things have gone really well. So after reading the book, my wife and I had a better plan for the house we wanted to buy and what we wanted to do with it. Um, and then we also after that learned so much more about index funds, retirement accounts, um, and just kind of ran with all of it. So the last two and a half years, things have been really well for us. Um, we’re really focusing on financial independence. We bought that first house, uh, we’re doing the house hack, um, and things are, are going really well.
**Mindy Jensen**
Yay, I love it. What is your retirement goal?
**Travis**
Yeah, so right now my retirement goal is to be work optional by age 40. So, um, I know financial independence often times is, you know, truly not working at all and that’s not really what my wife and I want. Um, so we chose the age of 40 because it was a nice round number, I think, um, to get there and it was really only then that we would kind of decide what work optional actually looked like for us.
**Mindy Jensen**
And let’s remind our listeners, how old are you right now?
**Travis**
33.
**Mindy Jensen**
33. Okay. Let’s take a quick peek at your numbers. I see income of 208,000. Nice. That’s both you and your partner. Uh, expenses of 8336 a month. The income was annual, that not monthly, although boy, I’d like to talk to you about changing jobs if it was. Uh, debts of $7,000. And then your investments, I see $20,000 in cash, $196,000 in a 401(k), $18,000 in an HSA, 45 in a Roth, $80,000 in a brokerage, negative $7,000 in credit cards, which means you have a credit card debt, but since that matches your debt load, we’re going to talk about that in a minute, and a primary mortgage of $380,000. What is the interest rate that you have on that mortgage?
**Travis**
Uh, 6.3%.
**Mindy Jensen**
So that was a purchase after June of 2022. Um, that stinks, but that’s also like, that’s not horrible considering how high it did get up to. Um, and your retirement goals are work optional. I love that phrasing. Work optional in seven years. Do you like your job?
**Travis**
Not really, no. Uh, I, it’s, it’s hard to say that, but it is the truth. Um, I don’t really have a lot of passion for my work, um, and I don’t feel that it makes a whole lot of difference or helps a lot of people. Um, so I like my coworkers, um, and I obviously like my salary, but the actual work itself is not, not that great.
**Mindy Jensen**
Okay. Is there something else you want to do? Because you said work optional instead of early retirement.
**Travis**
Yeah. Um, so for me personally, uh, two of my biggest hobbies are mountain biking and, uh, gardening. And so a work optional setup for me could be, uh, teaching or guiding mountain biking, um, and maybe doing something with gardening as a side business or a small business or working at a farm here in the local area, maybe part-time. So doing both of those things part-time. Uh, that would be work that I definitely would enjoy more than what I currently am doing.
**Mindy Jensen**
So is your goal in seven years to be financially independent or another flavor of FI like Coast FI, Lean FI?
**Travis**
I think the goal really is true financial independence to where if, um, if the money from the, uh, kind of part-time jobs was almost zero, that, uh, we could fall back on just true financial independence. So financially that is the goal, um, but as far as continuing to work, having no job at all is not the goal.
**Mindy Jensen**
Okay. So how can Scott and I help you today?
**Travis**
I’m here to really to ask for, you know, if you think I am on track or if there are any things I can do that I’m not seeing that would help me for sure reach my goal or maybe even speed up my goal, um, to get to that financially independent, that work optional stage because I’ve spent so much time getting to where we are now and learning so much and making some money moves to get where we are that I am sort of like stuck in what I see. I think a fresh set of eyes or some experienced opinion would really help, um, kind of give me some ideas or at least reassure me that we’re on the right path.
**Scott Trench**
Just a couple of observations that I have here is, you know, one, you’re in a great income. You’re saving and investing a lot, $91,000 a year, but your expenses are also fairly high relative to your current net worth in terms of retirement. So if I just do some simple math, I see $8300 in monthly spend. Um, $8300 times 12 times 25 gets you to 2.5 million. You need $2.5 million in assets in order to retire on the 4% rule with your current numbers. Have you done that math before? Have you, have you ever boiled it up to that level?
**Travis**
Yeah, um, and the, the actual expenses per year of living expenses part of that number is more like $72,000 a year. So what is included in some of my expenses are investments to, or contributions to a Roth account. Um, contributions to the brokerage account. So if I were to roll and stop those and roll that down, truly living expenses is more like $72,000 a year. And I think that comes out to about $1.8 million for the 25x or the 4% rule.
**Scott Trench**
And then, you know, I think there’s something to boil down in Mindy’s, um, question there that I want to, you know, just push a little harder on here because the fact that you don’t like your job and it’s a good job. It’s a very good job. Um, it earns about $100,000 a year, but it’s not an incredible job that is, you know, from an income perspective at this point. I think that for me, you know, that makes me question or want to start the discussion around, is there something active that you can begin doing in real estate or in business to some degree outside of that in the near term that can provide some of those benefits a little earlier and give you that optionality sooner, um, than what you’re doing? Because in another observation that I’m seeing in your overall profile here is that that $91,000 in investments is heavily coming from tax advantaged accounts like the 401(k) and HSA. Um, which can be done around that. But if you’re going to go that route, you’re gonna have very little liquidity until you start setting up some sort of withdrawal mechanism from those 401(k)s. And I worry that you’re, you’re on a path into a trap over the next seven, 10, 10 years where you’ll become a millionaire, but it’ll be hard to access that with that career. It’s like, how’s that sound? Is that any any reaction to that observation or that thought process?
**Travis**
Yeah, um, that is something I’ve thought about. Most of our investments are in the 401(k)s or the Roth IRAs and they’re tied up in those. Um, and I have done some research on like the SEPP 72 or the Roth conversion ladders. I, it’s something I’ve thought about, um, and that’s kind of why I’m here as well is, is to find a way to maybe increase the, the taxable account, the brokerage account. So we don’t have to be locked into some strategic tax-advantaged withdrawal strategy. But it, I guess I’ll follow up with that and saying it’s hard to get away from the 401(k) investing, the Roth investing, HSA investing because the tax advantages right now are so good and it’s so easy to just park the money there. Um, that I, that’s where I’m at kind of this crossroads of like, do we pull back for any particular reason and do I give up those tax advantages now to have more flexibility in the future?
**Narrator**
All right, we need to take a break to pay some of our own bills and celebrate the sponsors who make BiggerPockets money possible. And when we’re back, Mindy and I will discuss how on track you are to meet your goal of retiring in seven years, Travis.
**Mindy Jensen**
Welcome back to the show.
**Scott Trench**
That’s going to be the multi-million dollar question here, I think, as we go go through this. And I think, you know, it comes down to how, how much belief do you have in your job and career? Um, because if you, like, and and the reason I think that that’s a crux question or the first place I want to probe is if you think your career has big upside on that front, then and that income is going to go up, then that makes a lot of sense to do to, to continue doing the strategy that you’re doing right now. But if you’re not passionate about it, don’t like it and are feeling stuck, you know you won’t get to where you want to be in seven years with this approach, right? Because I can just do the math right now, you’re investing $91,000 a year. That’s 637… How do I do… how do I… how… where am I, what am I doing with my math here? 91 times 7 is going to be $637,000 in aggregate contributions to this on top of your $400,000 net current net worth, you’re not going to get quite to where you want to be um at age 40 unless you get a lot of help from your investment portfolio and the market booms on that front. So, and that’s all going to be in those, those retirement accounts. But if you think that income is going to go up and the career is going to accelerate pretty dramatically for you, then that becomes the the kicker and that that number is much higher.
**Travis**
I don’t really see a huge acceleration in the career or in the salary, um, over let’s say the next seven years. Um, it’s not non-existent, and it’s going to stay stagnant, but to say that I can stay in my current career with my current company and maybe, you know, double my income to something that’s really substantial, I don’t really have a belief in that, but I I could see staying and having it rise a bit, but nothing groundbreaking.
**Mindy Jensen**
Is there any opportunity for additional education without a huge expense that can help you get to the next level at your company or going into a contractor role or even taking like a part-time additional job in this same field or similar field?
**Travis**
Um, there could be a possibility I think with some certifications, sort of like uh, non-traditional college schooling, um, teaching and certifications. Um, there could be a possibility to get that and then maybe career hop. Um, it’s one thing I’ve thought about in the past is, um, doing something like that to really up the salary. Um, it’s not something I’ve really dove into, but I think that there is a possibility to get a larger increase in salary from something like that versus just, um, going for a promotion in my current career or my current company.
**Mindy Jensen**
Yeah, we’ve spoken with several people who have uh job hopped their way to doubling their salary and the bottom line is companies have more uh new hire budget than they do retention budget. So that could be something to look into that doesn’t uh, it doesn’t necessarily mean you’re going to double your salary, but if you can get a nice bump and kind of do the same thing, uh that, that could be something that can help propel you further closer to financial independence.
**Scott Trench**
I mis-spoke earlier, so I actually ran the numbers just now on this, I apologize. The… you’re starting with a $400,000 current net worth, you’re adding $91,000 a year, and if you average 7% returns over the next seven years, you will get to $1.55 million by the end of that time period. So you’re pretty darn close with that. Now we gotta adjust for inflation, there’s probably puts there are puts and takes, so you’re not quite there, but you’re pretty darn, you’re much closer than I, my initial incorrect math suggested on that front. So maybe even modest career growth would actually help get you there. Sorry to interrupt there, Mindy, I was just obsessing over the numbers for a second.
**Mindy Jensen**
I’m glad you did because that, I like those numbers better. And he’s, remember, he’s still going to work. He’s just not going to work at this career. He’s going to go do mountain biking. I have no idea what that pays, but even if it brings in half or a quarter of your annual spending, then that changes how much you need. And your partner has a job. Does she also… Does she enjoy her job? Does she want to continue that or is she looking for seven years and out as well?
**Scott Trench**
Oh yeah, you can definitely Wife FI at seven years. Based on this it seems. That, that seems very high probability.
**Travis**
Yeah, uh, my wife, uh, she does enjoy her job. She’s a physical therapist and she really enjoys her current role, her current company and her career in general. Um, and that is really kind of a saving grace for both of us in terms of reaching FI because we do, we are on board together to meet reach this goal. Um, and that actually might be the perfect segue to, um, kind of answering this whole career hopping, slightly increasing the salary, um, to meet this seven year goal is that my wife does have the opportunity to start traveling in her role, um, rather than working at a clinic in our hometown. Um, and traveling would increase her salary by about $20,000 to $30,000 a year. Um, and come with a few other benefits. And so that’s one thing we’re actually weighing right now is that do we do that as sort of a salary boost and a way to kind of pursue FI on the road, doing some more traveling and travel hacking, um, while working at the same time. So that, it’s not something we’ve decided on yet, but.
**Mindy Jensen**
How far away would she be from you?
**Travis**
Uh, we would most likely be traveling together, so I can work remotely.
**Mindy Jensen**
Oh, okay.
**Travis**
Yeah, I, I work remotely, so it would be kind of all around the country that we’d be, uh, 12 weeks for each job, and then you take another contract for another 12 weeks, so.
**Scott Trench**
And you would Airbnb your house, right?
**Travis**
Yeah, so we currently house hack two out of the three rooms in the house, three bed, two bath house, and we would, um, we would find a tenant for our current room, that third room, um, and then we would, you know, obviously be renting a place on the road.
**Scott Trench**
Okay, and that would increase your savings and your income, which would continue to accelerate this. Do you want to do that? Is that sound fun to do?
**Travis**
Uh, it does. Uh, there are some downsides though. Um, so we, uh, we being in Asheville, North Carolina, we just survived Hurricane Helene and I could only imagine the stress level if I was not home when the hurricane hit. So there’s some downside to traveling and that now you’re a remote landlord, the house hack, you’re not here at the house to kind of maintain or deal with things. Um, there’s a lot of logistics in moving, traveling, uh, there’s a lot of logistics in the taxes for a traveling physical therapist. Um, so it’s really something we’re on the fence about because there’s so many ups and downs to it, uh but I think we’re leaning towards doing it, just maybe not immediately.
**Mindy Jensen**
Yeah, I would try it out.
**Scott Trench**
Yeah, I think that sounds super reasonable and, you know, for what it’s worth like, I think those are very reasonable puts and takes. There’s no right answer on this, but I don’t think you should overweight the managing remotely, um, piece. Managing remotely can get you into trouble if you’re buying out of state in Ohio and don’t know what you’re doing from some place, but if this is your house and you’re setting things up and finding the tenants, then, yeah, you’ll have the occasional pain in the rear, but it’s a one property that you know super well, and I think you’ll be reasonably successful with it, with a couple of pains in the rear, that will probably be well worth it, would be my guess. So you can come back on in a year or two and tell me how very wrong that is, uh, on that, but that would be I I I wouldn’t be that worried about managing one property that you house hacked.
**Mindy Jensen**
The two rooms that you’re renting out right now, are those long term rentals or are those Airbnb rentals?
**Travis**
They are long-term rentals. So we currently have a tenant in each room that’s on a one-year lease.
**Mindy Jensen**
Would either of them wish to do a little bit of property management for you? Like, uh, turning over the Airbnb or managing and making sure that the cleaner comes to turn over the Airbnb part of it for you?
**Travis**
Potentially, I haven’t proposed it yet, but I that that is something we thought about as well of maybe uh, them making a little bit of side income or reducing the rent, um, for a little bit of work in kind of doing some of that management. So yeah, that that is an option for sure.
**Scott Trench**
I would probably not pay either of the tenants to do any management work. I would probably find the tenant myself, place them, and then manage the the property remotely. This is not a, you know, what what’s going to, you know, if if there’s a turnover event or a major problem, you fly back. You work remote anyways and go deal with the problem around it. But what’s most likely going to happen is there’s going to be minor maintenance issues. You call the plumber, they come out and fix it. So you’re really going to give one of the tenants the job of of managing, of managing that. I, I would, I would just do it myself in this particular instance, especially since these are 12 week stints and if it’s not working out, you just end the 12 week stint and you have pain for three months and come back. I don’t think you’re going to have a major management issue. If you had a portfolio of 10 properties, then I would hire a property manager or figure something else out, but this is one property with three roommates in it. Um, very, very standard management practice there.
**Travis**
Yeah, totally. I totally understand.
**Mindy Jensen**
And that extra income could go into your after tax brokerage account as opposed to, you know, the 401(k) or whatever. Now, would your wife have a 401(k) through the travel company or does that go away?
**Travis**
She would. Yeah. That that would still exist and we would still, she would still be maxing out her 401(k).
**Mindy Jensen**
Okay. Well, I think we discovered, I think we answered the question of should your wife change her job? Uh, yeah, I would. Cause if she doesn’t like it, she can always go and get a position again. I mean, as I recall correctly, physical therapists are in demand.
**Travis**
Yeah, absolutely. That that is something we’ve talked about is that she she has a good position right now, um, but they’re really a dime a dozen out here, um, because it’s a really in-demand career field.
**Narrator**
Stay tuned after one final break to hear what investment vehicles might be a good fit for Travis’s goals and financial timeline, right after this.
**Scott Trench**
All right, let’s jump back in with Travis.
**Mindy Jensen**
What other questions do you have for us?
**Travis**
Besides the, um, the questions around, you know, slightly increasing the salary or pursuing a different job. Um, is there anything else with money moves or investing that we could make, um, to speed things up or to, to get away from the 401(k) and investing? It’s as I mentioned earlier, it’s so easy and the tax advantages are so nice with the 401(k) that I always gravitate toward that. But I I fear that we’re not seeing an opportunity either in real estate or in investing in the taxable account first, um, that we’re not taking.
**Scott Trench**
That’s the hard question, right? I mean, like, it’s, it’s so textbook to go down the stack like you’re doing, right? I see like I’m looking at your, your statement here and it says 401(k), 46,000. 401(k) match, 4,000. HSA, 8300. Roth IRA, 14,000. Then we have the ESPP, which I imagine is a purchase at a discount, um, 10, 15% off the the market value of the the company stock. Is that right?
**Travis**
Yeah, it’s 15%, yep.
**Scott Trench**
Awesome. So you got to take that from a free money perspective. Um, I you got to take your match, you got to take your ESPP, right? Those are the no-brainers in this stack. You’re just never going to get a better deal, um, than those two things and almost anything else. And then the question is, how much further down this list do you go? Do you continue to max out the HSA? Do you continue to max out the 401(k)? That will free up 25, $30,000 a year after tax to go into your savings account. And I think that that’s just really hard in your situation because you’re doing the textbook play here. You’ve got to have really high conviction that you’ll actually use it for something that will give you freedom in that in a much earlier fashion. Um, so if you wanted to go and flip houses or build a portfolio in Asheville, um, for example, I’d say that’s the time to make that change. But I’m not hearing that from you. I’m not hearing a business idea or an itch to become an entrepreneur, um, or to kind of go into the small business world or just get out of that job way earlier. I’m hearing, I kind of like the situation. I want to travel. I’m thinking about actually traveling 12 months, 12 weeks of a year to different locations, um, from from this and and want to enjoy that. And if that’s the route you want to go, I think what you’re doing is great. Um, you are to your point missing opportunities that you’re probably not even thinking about right now because the cash liquidity in the after tax, um, bucket is not gonna, is not gonna be growing very meaningfully right now and won’t with this approach. But that’s okay. It’s just a matter of knowing that and making that a conscious decision.
**Mindy Jensen**
Yeah, if I was in your position with your numbers and your goals, I would continue to max out the HSA assuming that you are in generally good health and that you are keeping all of the receipts for all of the expenses that you are incurring. And then when you, when you do retire in seven years, your HSA account is gonna be significantly larger. You can start cashing in those receipts and that can supplement your, your income which reduces the amount that you need, that the total amount that you need to retire. Um, and the same with the Roth IRA. That’s just, you pay taxes now and then it grows tax free. The HSA, you don’t pay taxes now, it grows tax free and then you pull it out without paying taxes, which is my favorite kind of account. I wish that limit for contribution was a billion percent. Uh, but it’s not. It’s like $7,400 a year or something if you have if you, if you have a family and it’s less if you don’t and I don’t know what those numbers are, uh, off the top of my head. Um, you’ve got 46,000 that’s going to the 401(k). Have you put any of that into a Roth 401(k)? That gets rid of the, um, the taxable advantage, but then it grows tax free.
**Travis**
I have not, it was really just kind of started with the 401(k) and then followed up with the Roth IRA afterwards.
**Mindy Jensen**
I wonder Scott, he wants to retire in seven years. There’s the Roth conversion ladder, the Roth money has to be in there for five years before you can start withdrawing it. But then if you’re putting money in, you’re paying taxes on it before it can, I’m thinking out loud, I’m sure nobody’s following along. Uh, but you’re you’re… could you start that in a couple of years so that it’s there for you?
**Scott Trench**
I like the 401(k) for Travis, right? I, I put my money into the Roth because I have different goals and different pursuit there. Travis, I think is right to, to go the tax deferred route first. Once that’s exhausted, then to move into the Roth, um, situation because your income’s high right now and it’s going to be lower. That’s your plan. You seem very convicted in that plan, um, after the age of 40. If that’s the case, take the tax deferred now and shift it over, um, at that point in time. Yeah, there’s a risk that tax brackets go up or whatever, um, around that and you’re missing some opportunity the Roth. But I don’t, I think that that’s, I think that based on the information we have today, that’s the logical choice in the, in this route. And once you get to that retirement bracket, you’re, you’re, you’re going to have to do the math. Your, your, your net worth is going to be heavily concentrated in your 401(k) at that point. And you’re going to have to think through one of several options including the, you know, the, the substantially equal periodic payments route, um, or the Roth conversion ladder, but I think that you’re going to get… You’re having, you’re going to need some sort of extra oomph over the next seven years in order to actually finish the play with a good margin of safety to retirement. So something on top of this approach has to be done and that could be something in the physical therapy world. That could be something in the mountain biking space, although I’m very curious to see how you’re going to make money from mountain biking, or I’d love to re-hear that one more time on the on that front. But there’s going to be something, you know, there’s there’s going to be something extra that you’re going to have to do in order to finish this play unless you get lucky with returns over that and that will probably, whatever that ends up being, that will be your bridge um to accessing the money in the 401(k), would be my guess.
**Mindy Jensen**
So you can tell us real quick how you make money on mountain biking real quick and then on to the uh, that overall thought process.
**Travis**
Yeah, uh, so the idea was actually to either be coaching or guiding. Um, either uh, on my own through my own small business or working for a guiding company. Uh, mountain bike tourism is really big here in Asheville. We have a lot of trails. Um, so it’s, it’s a, it’s an industry that does exist out here. Um, so that’s the, the way to make money through that. Not just riding, but coaching and guiding other people. And then to answer, I’ll go back and answer Mindy’s question on, um, the Roth conversions. Um, part of our plan, so you’re right, it is like a five year windows, you mentioned on the Roth conversions. But part of our plan was to start those conversions once we had reached financial independence, um, and that we had really stepped down to our kind of part-time jobs or those work optional jobs, and that our income was much, much lower before we started making those conversions, and then living on the kind of that part-time money, that much lower income while we let those conversions bake. Um, and then Scott to answer your question, uh, the greatest opportunity we have right now, I think is maybe that this traveling kind of physical therapy job, um, because it’s the quickest way to get us kind of that bump in income, that small bump that we need to really give us, uh, that margin of error in the next seven years, that coverage over the next seven years.
**Scott Trench**
Yeah, I mean, maybe that’s it. Maybe it’s as simple as go travel around the country for 12 weeks at a time. You love some, you hate some, um on it, but that that’s the the missing link that gets you that last kind of 300k to that 1.8 million mark that you’re looking for on it. But yeah, I I I think your plan is great and what you’re doing is, is a very reasonable way to go about it. And it seems like you understand the consequences and how what you’ll have to do from a planning perspective to actually use that to fuel retirement at 40.
**Mindy Jensen**
Travis, do you and your wife have children?
**Travis**
Uh, we do not and no, no plans to have any in the future.
**Mindy Jensen**
No plans to. Okay. That could also impact the number that you would need. Um, yeah, I, I really like a lot of these ideas. The only issue I’m thinking is if you look into potentially job hopping, you could get a job that says you need to be in the office, there’s no more remote work and that would hinder your, you traveling with your travel PT wife job. Um, I’m wondering if you could, like, read that Mad Fientist article, how to access retirement funds early. He talks about the Roth conversion ladder and since you have so much time, you you can plan ahead. You know that the Roth conversion ladder takes five years, could you save up money during these next seven years that you could live off of during those five years so that you could do the Roth conversion ladder when your income is much lower and you don’t have to pay all of those crazy income taxes. So I just, I love the opportunities that you have because you have seven years. And, you know, listeners, listen up, if you are thinking, oh, I have seven more years before I can retire. No, you have seven years to plan your perfect retirement. You don’t need to wait, Travis, until you are retired to find a mountain biking job or to look into starting a mountain biking tour company. Um, you can start looking into that now. You can start doing that on the weekends. You know, build up your company now so that when you retire, you’re not starting from scratch. You’ve already got a big loyal following because you’re the most awesome mountain biker in all of Asheville. But yeah, you’ve got all of this time to plan and like Scott said, running the numbers that you’re doing right now, you’re going to be weighted heavily into your 401(k), but you have a lot of options and you can start thinking and running numbers. Have you run any of your numbers on the cFIREsim calculator?
**Travis**
I have not.
**Mindy Jensen**
Okay, that’s another homework assignment. It’s the letter C, F I R E, S as in Sam, I M, like simulator. cfiresim.com. Check that out. That has a lot of different opportunities to run all sorts of numbers and see how it’s going to work for you.
**Scott Trench**
I want to address one last question it seems you had. You you, you mentioned in the, the notes here that you were interested in um, live-in flipping as a strategy. Could you share that interest here and let us know, you know, what how that factors into what we’re talking about, because that was one of the things that I was thinking about when I was talking about extra oomph to get over the finish line.
**Travis**
Something I’ve kind of been doing with the current house and sort of been on the fence about for a while. Obviously, Mindy, I know you are uh, like the queen of the live and flip and that strategy. Um, and I I love it. It is, it is something I do. So I I am handy at the house here. We’ve already been doing a lot of remodeling. Um, so it is kind of a skill set I have to pursue sort of a live-in flip. Um, but at the same time, there’s a lot of cons that come with, uh, kind of the stress of, you know, remodeling or renovating a house. Um, and I’m not 100% sure if I want to be on board for more of that in my future. There’s already been quite a bit, uh, at the the current, the house hack house. Um, but it is another strategy that we’re interested in just again, not maybe 100% sold on it, ready to jump in like tomorrow on another house, you know.
**Mindy Jensen**
Okay, so live-in flipping is awesome and awful simultaneously for all the reasons that you said. You’ve got this like potential to make a lot of tax free money, but you’re living in a construction zone. The good news is you can like vary how much you’re going to be doing in any particular type of flip. You know, you can, you can just paint walls. I mean, I have walked into some houses and been like, what were you thinking painting the walls these colors, but everything else is okay. I mean, there’s various levels of live-in flip. I’ve also popped the top. Don’t do that. That stinks. That is a horrible experience. Both times I did it were horrible experiences. I’m never doing it again. And if I ever say that I want to, please come punch me in the face because it’s the worst experience ever. But if you’re in construction, maybe that’s your jam. Like you can control a lot more if you own a construction company and you know, popping the top. We’re in a property now that is hideously ugly. Every wall, every floor needed to be touched. Uh, we’re not done yet because COVID, thanks, uh really derailed our timeline. But painting isn’t that hard. Installing flooring isn’t that hard. Um, moving walls is a little more work and remodeling a kitchen isn’t that hard. So when you start looking at potential live-in flips, look at what it’s really going to take. Take a, you know, go to an an open house or have a real estate agent schedule a really long timeline and take a notebook in there and just write down in every single room, it needs this much work, it needs that much work. These are the projects I’m gonna have to do. Um, we have replaced electric and plumbing and we have done roofs and new windows and, you know, there’s a lot of things that you can either do yourself or hire out inexpensively. There’s a lot of things you can’t hire out inexpensively and it’s going to cost you a lot of money. So, um, you know, just, and be really honest with yourself, what is it that you like to do? What are your strengths? If painting is really the only thing that you’re handy at, then a live and flip might not be the right choice for you. uh, but if like, I mean, the reason that Carl and I make so much money when with our live-in flips is we do almost all of the work ourselves. We hire out very little. We hired out two people to pop the top. It’s hard to find good contractors, which is why we do everything ourselves. But it also takes longer because we’re doing it ourselves. After work, before the kids get home from school, uh, before bed, over the weekends. I mean, there’s a lot of things that I’m missing out on with my friends because I’m choosing to work on my house. So if I can talk you out of a live-in flip, great. That means live-in flipping is not for you. But if you have a, a, a series of things that you like to do, maybe you love laying tile. My husband loves laying tile. That’s like a large part of the the bathroom remodel is putting down, you know, the floor. Anybody can, well, not anybody, those toilets are really hard. I was, I was about to say anybody can install a toilet by themselves. I actually can’t. I’m they’re so awkward and I’m not strong enough to do it. But, you know, you can paint a bathtub. So that pink bathtub can very easily be turned white. Don’t believe what the box says that it only takes two coats. It takes like 26 coats. But, like, all of these little things are, they’re, they’re, maybe time consuming, but if you have the time to do it, and a live-in flip, you do it over the course of two years. Um, if you’re going to be traveling, I wouldn’t live and flip then. But if you decide that you want to come back to Asheville, or you decide that traveling isn’t for you, a live-in flip with a moderate amount of work could be a great way to boost your your income or your bottom line.
**Scott Trench**
I’ll just chime in on some of the things that Mindy said and frame it where a live-in flip, again, I use that word extra oomph, uh, that can be, that can really get you through to your goals much faster and provide a lot of optionality. The live-in flip is not scalable. You can only do it once every two years if you want to take full advantage of the tax benefits. I don’t know Asheville, but I won… many cities around the country are putting laws in place that say that or you know, rules around short term rentals that don’t allow you to, that, that, that a… that only allow owner occupants to do that. Something is bubbling up from a thought process perspective around is there an opportunity to purchase a live-in flip, shh… turn it into a short-term rental and combine that with these 12 week traveling stints? Is that owner occupant? Like is that your house and you’re Airbnb-ing it for 12 weeks around there, um, at a time coming back, taking a look whatever, spending enough time in Asheville as your primary to make sure that everything is above board and getting some really good benefits that are not scalable, but that a single investment could could put you over the finish line. Is your high income going to be a really nice asset in that world as well, allowing you to do something that’s, you know, going to be a nice quality short term rental um for that area. So I don’t know where that leads, but those are the types of questions that start to come up for me, and I think there might be something there. It will not be as fun as not living in a live-in flip. You’ll have to decide if it’s 200, 300, $500,000 in in more money at the end of seven years, um, from that decision. Is that worth it? Maybe.
**Mindy Jensen**
Yeah, cashing those big checks is super fun. After tax. Mindy, do you, kind of sounds like you were saying that live-in flips can be all variety of levels and flavors. So I would have asked you what makes a candidate for a great live-in flip, but it sounds like the answer is up to the buyer and the amount of work they want to put in.
**Mindy Jensen**
That’s one factor. Another factor is the neighborhood itself. It doesn’t matter if you take this garbage house and make it amazing if it’s surrounded by other garbage houses. Um, I live in a neighborhood where the price point now is starting around $600,000, but there’s a golf course that borders one edge of the the neighborhood and the houses on the golf course are far more expensive. I think there’s like a $1.7 million house in my neighborhood, but the thing is my neighborhood isn’t a $1.7 million neighborhood. So in the middle of the neighborhood, that would be a terrible house to make a $1.7 million neighborhood. On the golf course it’s a little different. People like living on a golf course. Um, so make sure that the house that you’re buying is much less expensive than the other houses in the neighborhood, but that you could make it to the same level as the the house in the neighborhood. Like, uh, if you, if you’re buying a $500,000 house and you turn it into a million dollar house, but you bought it in a $500,000 neighborhood, people who want to live in a million dollar neighborhood aren’t going to buy your $1 million house in your $500,000 neighborhood. So the house has to be, uh, have to have enough of an upside that you can, you can still make money when you sell it, but also when you sell it, that price point is in line with the rest of the neighborhood. Um, in an area that people want to live in. Nobody wants to live in a house that backs up to a busy street or a train track or like a school. You think it’s, it’s great because it’s all, you know, open space, but it’s not. It’s loud. Kids are loud. But yeah, there are, you know, choose the kind of house that you want to do the work in. Um I don’t touch broken foundation houses. I don’t touch houses that have been contaminated with meth. Um, I don’t know anything about that and I don’t want to live in a house that has meth in it. So, you know, call me uh, picky, but you want a house that you can live in too. Now you have 60 days to move in after you purchase the house if you buy it with a mortgage. So you can do all of the heavy lifting, the stinky work in that 60 days if you have that opportunity. That could be another way to live in a live-in flip without living in a construction zone. There’s lots of different ways to do a successful live-in flip, but don’t take on more than you can chew. Don’t tackle a house that isn’t in line with the same with other houses in the neighborhood, uh, and don’t ever buy in a busy street or backing up to train tracks.
**Travis**
Okay. Noted. Thanks for the, uh, the tips.
**Mindy Jensen**
You’re welcome.
**Scott Trench**
Travis, anything else that you want us to cover? I think we’ve gotten through some of the questions that you came in today with. Have any new ones emerged or are there any other areas of your situation that you’d like us to take a look at?
**Travis**
Uh, no. I I think you guys have answered, uh, the questions and looked at the numbers and, uh, I’ve already learned a lot. I’m super grateful and happy to be on. Um, just to have the time to chat, um, and get you guys’ take on everything is, is motivating and really helpful. So no other questions and, uh, I’m really thankful right now.
**Scott Trench**
Awesome. Well, you’re, you’re, you’re in great shape because you’ve save and invest so much every year. So, you’re going to win whether it’s in seven years or 10 years or six years. It’s just a matter of a couple of fine tuning a couple of things and, um, whether how much activity you’re willing to layer on top of the current really strong base that you’ve got here. So congratulations on a great position and look forward to, um, you know, seeing you retire and live that dream life mountain biking in a couple years.
**Travis**
Thank you.
**Mindy Jensen**
Yeah, I think you are really on the right track. Like Scott said, you’ve got your numbers almost there. A few more things will help get you all the way there within about seven years. And don’t do what I did and just like beeline right for it. Make sure you enjoy the journey on the way there because if it takes you seven hard years or eight fun years, eight fun years is better.
**Travis**
Definitely.
**Mindy Jensen**
I mean I wouldn’t know from experience. All right, Travis, thank you so much for your time today and we’ll talk to you soon.
**Travis**
Thanks guys. Bye.
**Mindy Jensen**
All right, Scott, that was Travis and that was a really good set of circumstances. I have some homework assignments for him, but I want to know what you thought of the show.
**Scott Trench**
I think this is a guy who’s well on track for, for early retirement. This, Travis is right up the alley of the average BiggerPockets Money listener. Um, BiggerPockets Money listeners, as we all know, earn more from a household income perspective than the average American. Um, that’s why they’re on track to FIRE, um, to achieve financial independence, retire early, as we’ve discussed in other, other topics there. He saves a good amount of his income. Um, dink, no kids. He’ll get there. Um, it’s just a matter of of speed and degree is, is taking that formula that he has got. He’s going right down the Money Guy or Dave Ramsey or whatever, all these different stacks um, for which retirement account bucket to fill up first. He’s doing it right and making sure to take advantage of the free money and the tax advantages that are coming in there. If, if he wants to get there a few years earlier, layer in a couple of real estate ays or a house hack or a live-in flip on top of the house hack that he’s already got, but he’ll get there no problem, I think to to financial independence, as long as he gets some help or anything close to the historical average from returns perspective in the stock market. So obviously that can throw everything off, but I think the guy’s well on track and controlling what he can control. Um, a couple of fine fiddles with his plan.
**Mindy Jensen**
And, you know, I I like that you made a point of noting that he does not have kids. We get a lot of people with all different scenarios. So if you’ve got a scenario that you haven’t heard before, let us know, Mindy at biggerpockets.com, Scott at biggerpockets.com, you can drop us a line. Um, but we’re also looking for people on the single path to financial independence. So if you’re single and would love to share your numbers, we would love to talk to you. All right, Scott, should we get out of here?
**Scott Trench**
Let’s do it.
**Mindy Jensen**
That wraps up this episode of the BiggerPockets Money podcast. He is the Scott Trench and I am Mindy Jensen saying farewell, snowbell.
