Speaker 1: Welcome to the BiggerPockets Money podcast where we interview Becky and Bill from the catching up to FI podcast and talk about getting to FI as a late starter.
Mindy: Hello, hello, hello. My name is Mindy Jensen and with me as always is my mainland co-host, Scott Trench.
Scott: And with me as always is my Wahoo co-host, Mindy Jensen.
Mindy: Are you on a Wahoo?
Scott: I am actually on the big island right now, but I am flying tomorrow to Kauai.
Mindy: All right. Oh Wahoo, I get that joke now. There’s also a fish here called Wahoo. I don’t know what kind it is though. It’s delicious.
Scott: Well, I also hope that everyone else is ready to tune in to a great podcast today with uh Bill and Becky.
Mindy: Did you just say tuna in? And that’s the end of all the puns. Scott and I are here to make financial independence less scary. Less just for somebody else. To introduce you to every money story and no puns because we truly believe financial freedom is attainable for everyone. For everyone. No matter what time of your life you are starting or where you’re starting from. And because we believe in this so much, we brought on Becky and Bill today and they are going to tell you their stories of reaching financial independence from a very late start.
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, or catch up to fire financial independence, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.
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Mindy: Becky and her husband found themselves at age 50 with a net worth of $0 and no financial literacy. They made some big changes and retired 13 years later. Bill and his wife woke up at age 50, financially illiterate after a paycheck-to-paycheck inflated lifestyle and are about mid journey on their way to financial independence. Becky and Bill, welcome to the Bigger Pockets Money podcast. I am so excited to talk to you guys today.
Guest 2: We are too and thank you for having us today. This is an important topic we think.
Guest 1: Yes, thanks for having us.
Mindy: You are right, Bill. This is an important topic. Uh Becky, let’s start with you. Can you give us a little bit of background about you and your money story?
Guest 1: Well, I grew up probably like most people with no money education, uh, and you know, we we learn from modeling whether it’s good or bad, but I still didn’t really see how my parents handled money. Uh, they were children of the depression. So that kind of puts a different spin on things. My mom was the main breadwinner and decision maker. Um, and my dad just sort of ran on emotion. So, not not a great, uh, modeling. Went to college, got out. Uh, I met Stephen, my husband, while we were in college and we got married as soon as we, as soon as he graduated. And we literally, our first days on our new job, we were making more than our parents were making. So we had grown up with all of our needs met, but not a lot of extras. So we took these paychecks which, uh let me just give you a little perspective. This was 1979, my paycheck was $17,000 a year.
Mindy: Ooh.
Guest 1: My husband’s was $13,000 a year.
Mindy: Ooh, Becky’s making more.
Guest 1: And that was in the oil and gas industry and I was in IT. So it was, you know, a pretty decent salary for a college grad in 1979. Anyway, um, so we we have a little bit of money, you know, as as is everybody is told you should buy a house, that’s the first thing you need to do. So we bought a house and that was stupid. And uh, because of the the market at that time, but anyway, we just started accumulating things, new cars, uh a house, um, some hobbies, some expensive hobbies, and we just kept kicking the can down the road of our future. We never stopped to think about what are we going to do 10 years from now, 20 years from now. What are we going to do when our kids get to college? Uh, we didn’t save anything. That was our biggest mistake was we had no savings, we had no emergency fund. We didn’t have a safety net for when life throws you a curve ball and there was a point in um, uh, sort of mid career for Steven where life threw us a really big curve ball and we just fell off the cliff and it was extremely painful because we had no savings. And we had three kids that were within a few years of that point going to go to college. We hadn’t saved anything for that. So and and the crazy thing is we knew all along he was not in an industry that would have any kind of pension that our retirement was all on us. But we still didn’t do anything about it. And we just, we were just, you know, floating along, letting the tide take us wherever it did instead of being proactive about anything having to do with money.
Scott: So was there a curve ball or was there an event that um, that that that kind of uh had you guys wake up or was this kind of a a realization that was more gradual in the in the making?
Guest 1: There there was an event. Um, uh there was a point where Stephen, my husband was working for himself out of the house and uh the the money he was bringing in was okay, it wasn’t great, but it was okay. And it was really nice to have him at home. He got to go to, you know, the kids’ uh track meets if he wanted to or whatever. It gave him a lot of flexibility, but wasn’t a a big income. And um, about nine years into that, we had one year where two different uh clients of his both for various reasons decided not to pay him. And so we found ourselves uh with no income, we were buying groceries with credit cards and I really didn’t have any idea how we were even going to pay that off. It it became really painful, really quickly because I didn’t see an end to it. I we just kept digging a bigger hole every day and I couldn’t see how we were going to fix it. And uh what turned us around initially was we found Dave Ramsey. And Dave Ramsey will tell you that in a situation like that that the wife is afraid and that the husband feels helpless and hopeless and you know, like a terrible provider. And that’s exactly what happened to us. And rather than fearful, I would have said petrified. and that’s really what described where I was standing. And and Stephen felt uh he he was this was right before he was 50, he felt like a failure, he felt like nobody, I’m too old, nobody’s going to hire me now. Um, but then that’s how we did turn it around initially was uh a mentor of his came alongside him and and sort of helped him emotionally to realize that he did still have value in the workplace and he found a W2 job after that.
Mindy: And what year was this that this big curve ball was thrown at you?
Guest 1: Oh, uh, 2000, it was in the early 2000s. I’d have to stop and think about it. Um, he first went to the W2, the the first W2 job in 2006. So I’d say this was probably 2003, four, five, something like that.
Scott: So what what um, what changed as a result of this situation? Like what what what where were things like before and what happened after? Um and how long did it take to implement those changes?
Guest 1: Well, like I said, the first thing that turned us around was finding Dave Ramsey and getting the W2 job. Um we, and you know, the biggest change it made for us was our mindset. Um, we we realized we didn’t have to keep spending money the way we had been. Uh, and I I mean I didn’t spend a lot of money on what I thought was frivolous things, like I didn’t go have my nails done every two weeks or go have a $100 haircut, but but we were still, you know, spending everything that was coming in and then some. So we uh um we started thinking about what was really important to us. And realized that, you know, we had to set money aside for our future. We needed to set money aside for the uh the kids college and so we just started making different choices about what we purchased and what kinds of things we bought. Um, we didn’t move, we didn’t change, you know, our housing, but we changed, like we had always bought brand new cars because my opinion was, I don’t want to buy somebody else’s problems. And then I realized that, you know what, the the sky is not going to fall, the world would not end if I buy a used car. So there were some some big rocks like that that we made changes on and uh you know, we we realized that, oh, we need to refinance our house and get the the interest rate down and so we we we tried to make as big a change as we could and the job that Stephen had in the last 10 years of his career, the vast majority of his income came in bonuses and his actual uh bi-monthly paycheck was fairly low and we made ourselves live on that and then he was bonus four times a year and every time a bonus came in, we already had planned out what we were going to or where we were going to put that money. We we segmented it out for, you know, immediate needs, for college fund, for retirement fund, whatever it was. So we had a plan at that point where in the past we had no plan. We would just, if money came in, we spent it.
Mindy: So, I think that’s very interesting. At the very beginning of your story, you said, I grew up with no financial education. And I was thinking to myself, you know what, Becky, you’re not special. This is everybody. Everybody listening, everybody not listening, everybody in America grew up with no financial education because nobody is talking about money. And when you don’t know what you’re supposed to be doing, you do what feels good, what feels right, what’s fun. and it isn’t fun to sit there and pay your bills and save money. But it is fun to be retired when all your co-worker, all your peers are working. It sounds like in the beginning, we had this enormous windfall of $30,000 a year, which Scott did the math and is actually like $125,000 a year in today’s dollars, which sounds a lot uh, a lot better. And then it you didn’t pay any attention. You you had this financial windfall and you’re like, oh, money’s here. I don’t really have to worry about it. Because I worried so much, because it was so uh, you know, I didn’t know what I was doing and we had enough, but we didn’t really have extras. And now I have all this extra, I’m going to spend it because I deserve it, because I want that. Why would I buy a used car when I’m buying somebody else’s problems? So, this story, unfortunately, is very, very common. And I’m sure on the catching up to FI podcast, you have heard some variation of this story in every single guest. I had no idea what I was doing. I made money so I spent it, and then one day I had a problem or I realized I have nothing in savings. What’s going to happen when I stop working?
So, you find Dave Ramsey and Stephen gets a job. Were you working at this time?
Guest 1: No, I was for the majority of the time, I was a stay-at-home mom. Um and then in 1999, uh we moved my parents in with us. We built an apartment onto our house with the proceeds of the house they sold and moved them in with us. So I transitioned from stay-at-home mom to stay-at-home daughter and I cared for my mom for like 20 years.
Scott: So what was the what was your household income at the time when you had this revelation and then how how did that translate how how did that translate how how much were you spending, how much were you bringing in, and how’d you how’d you actually get to FI?
Guest 1: Scott, I unfortunately, I don’t have those numbers. It it was way too far back and I didn’t know back then that I was going to wish that I knew what those numbers were. I can tell you that um, when Stephen took the W2 job, you know, I was talking about how his uh bi-monthly income was low, that was in the 70s. So that’s what we were living off of was something in the 70s and in the end, uh not at first with that job, but in the end, then with along with the bonuses, it was probably a little over 200. So it it changed drastically, but but thank God, we were smart enough to uh, to navigate those increases of income a little more wisely than we had in the past.
Scott: Okay, awesome. So we’re spending about $70,000 a year or the take home pay on $70,000 a year, uh, as the baseline, and we’re continuing that for many years in a row, getting bonuses on top of that and just investing those wisely after this event and that’s what carried you to to FI. And what does your portfolio look like today?
Guest 1: Uh, today, when when we retired, it was about uh 1.3. So that does not include the house or the cars.
Scott: Okay, well great. Yeah. I I was more asking about the the where you invested the money. But
Guest 1: Yeah. The spendable uh spendable net worth was 1.3 when we retired at the beginning of 2019 and it that’s about where it is now also. It it uh changed obviously as we uh entered retirement for those first few years, but then of course last year everybody took a hit. So we’re actually about back where we were. Even though we’ve been living on that money. We don’t have any side hustles, we don’t have any, we’re we’re living strictly off of our portfolio. I started my social security almost a year ago now, which I worked enough to get it. It’s not uh, it’s not large, but uh so I’ve got a little extra that comes in from that.
Scott: Awesome. This this is a fantastic uh uh story here and I think really inspirational to a lot of folks that that maybe are are feeling like they’re getting a little bit later of a start. You you were able to basically catch up um um while, you know, while during and after putting kids through college, taking care of your parents, um having one household income earner, um and just kind of investing, you know, wisely and figuring that out. That that this is this is remarkable and now you are financially independent millionaires um on on top of all of that. So um, thank you for sharing that. That’s that’s incredible and I think really, really inspirational.
Guest 1: One thing that I wanted to point out was, yes, we have a net worth that’s over a million and and it took some hard work to get there, but I want people to understand that in order to have a comfortable lifestyle, you don’t need $5 million, which I think some people have that in their head that you need this enormous net worth. I mean, we’re living in a we’re in Colorado, but so we’re in a medium to higher medium cost of living area. We’ve got expensive hobbies. We have three kid, three grown kids that don’t live near us and six grandkids and we do we go and do. And so we’re not sitting here, you know, uh eating beans and rice in retirement. Now, I’m not, you know, traveling all over the world either, but gosh, we’ve got a very comfortable lifestyle.
Mindy: Yeah. And Scott, you said this is remarkable. What you didn’t say is another R word. This is repeatable. Becky’s story, just like I said before, Becky, you’re not special, nobody had financial education. Becky, you’re not special, anybody can do this. This is absolutely a repeatable story.
Scott: If you’re starting at 70 grand with one income and it’s going up to 200 over 10 years, right? I mean, that’s that’s a that’s a repeatable journey for for many folks.
Mindy: And we’ve got another version of this story with Bill. Bill, what is your money journey look like?
Guest 2: The numbers are different, but the journey is not so dissimilar. I was fortunate to be an upper middle class home. My father was a physician, my mother was a stay- at home mom, but I did go to private schools uh for high school and college. Uh, I came out of that debt-free because they subsidized that. And I went into a year between college and med school where I lived abroad, I lived the student lifestyle and that continued for the rest of my 20s. I lost my 20s to uh med school and residency at incomes around $25,000 a year in residency in Chicago. So but what happened there was I deserve vacations and so I lived off my credit card. I came out of uh residency with somewhere around $30,000 of credit card and believe it or not student debt because when I went to med school and this is very hard to believe, tuition was 500 bucks a semester. It was completely subsidized by the state. And so educational costs have skyrocketed since I went to school. So I came out of residency and got my big boy income. and in medicine, what happens is you go from nothing to really something. And I hadn’t learned anything financial from my family, from education and it’s really sad that you can go through all this education and have no financial wherewithal. Med school doesn’t teach it and yet they spring you out into the world with a big boy income, say $200,000. And we started off there and we learned to spend it all very quickly. We bought the house right out of residency. We bought new cars. As far as my car story goes though, I do have a good twist to it. I’ve only had three cars in my life. I may have bought a new truck, I may have bought an Audi sedan, but I’m still driving my Audi sedan at 170,000 miles and 12 years old. So it it it’s not as bad as it think as it’s as it soundss. And so we went on our journey there. My wife is also a high income professional. She’s a psychiatrist. I’m an emergency physician. Uh we had a very treadmill oriented life. Uh we didn’t know we were on thec treadmill. We put ourselves there. We did not partition our paychecks into savings. What we did was, which is very common, we spent first and saved last. It was only what was left over after a year of spending at tax time, we’d say, oh, we got this to save. We were single digit savers and I think that’s not uncommon. Uh and it went on that way for years. There was a 20-year funnel where we didn’t figure out what to do at the beginning. We put our heads in the sand. We lived life. We got caught up in raising a family and we had significant challenges along the way like a lot of people do, unexpected monetary expenses and it just sucked everything up. Our money, you know, fell through the civ of life. We didn’t have any stops. So we woke up about 20 years into this around age 50. Our kids exited uh the house, went on to college and we woke up at 50 said, wait a minute, nobody’s going to take care of us. We did not start from zero. I think we had investible assets at that point of around $700,000, but we had a lifestyle of spending of around $200 to $300,000. It was significant and you know, like I said, the numbers can be different but the problems can be exactly the same. As physicians, we were typically stupid. We did the exact physician lifestyle inflation. worst mistake ever. That was around the great recession. We were house poor. We had renovated a home and completely rebuilt it and put $600,000 into a $400,000 house when we bought it. So we were over a million dollars at the time of the house collapse. We were quickly upside down, had to infuse capital there and we entered the great recession completely house poor with a high mortgage. single digit saving, and to compound this trifecta, we got scared and we sold a lot of our investible stock assets and went to from a, I don’t even know what our portfolio was. I had no idea what net worth was and I had no idea what our net worth was. We’re upside down that way too. We had a negative net worth. Becky may have started from zero, but between our mortgage and our investible assets, it clearly was significantly negative when we started. I don’t even think Becky knows this part of the story.
Scott: And this is 2008 you’re talking that we’re that we’re beginning the the next wave of your journey in?
Guest 2: Right. And we didn’t wake up then. Like I said, we sold a lot of our investible assets and I know that our stock portfolio went to about 30%. So we made, like I said, the trifecta of mistakes, house poor and no savings rate, and we missed a large portion of a bull market that said everybody free, it seems in our community. So we didn’t, you know, we ran out of target instead of running in and buying when things were low. So we got to about 2013 when our expensive lifestyle in Chicago and a big Metropolitan Center, uh we woke up to the treadmill and we realized we’ve got to make some drastic changes. Unconsciously, we actually geographically arbitraged from Illinois to Tennessee, which was a great beginning to unconsciously realizing that we needed to make major changes. So we did geographic arbitrage. We increased our income. We woke up at really about 2016 was the true wake-up, which was about the time that I turned 50. And we realized we had to take care of ourselves. Uh, fortunately, we had a big shovel. Our kids had exited the house. College was actually paid for. We’d had done that right. And we were able to escalate our savings rate from single digits pretty much overnight to 40, 45% of gross. And we’ve been there pretty much ever since. Uh along the way with some fluctuations. Uh we’re very proud of that. It’s made a huge difference. Uh and it’s gotten us to the point where our liquid net worth is just shy of $3 million now. Uh and our total net worth with house included and I should mention that after our kids went to college, we downsized. And the downsize was a big part of this. We took the big doctor house and shrunk it. We went from a 4,500 square foot house to 2,500 square feet and cut our mortgage in about half. soon after that we paid it off. We are debt free and with the house included, our total net worth is around $4 million at this point. Uh so we went from a negative net worth with a major savings rate change, major mindset change, and I wouldn’t consider ourselves, you know, painfully frugal. We didn’t have to go through that. We have a lot of memory dividends. I think for late starters like ourselves, regardless of the numbers, you can get there uh by increasing the gap dramatically. You have to do that pretty much overnight or quickly. And your savings rate is your superpower. We made it our superpower, but we didn’t change our lifestyle. What was amazing was our lifestyle didn’t change so much. So I was like, what where the heck did all this money go? before. And it did go into things. Uh we have a travel habit and we still do. Uh, but we haven’t sacrificed lifestyle in order to increase our savings rate and to dramatically change our financial picture. Uh, uh we are in a position now where we’re about five years away from my being able to retire. I think my wife will work longer. Uh, I am struggled with burnout and I’ve actually cut back my work uh working less to have more time and some more time freedom. So, you know, we could have escalated our path to of fi, but uh we chose to uh mete and balance out the journey. Uh, that’s where we’re at now and like I said, five years from my fi, which will be around uh Becky’s time of fi. My wife will you know work her career a little longer, so that’s going to help as well. uh bridge the gap to uh full retirement age and Medicare and those kinds of things. But uh and surely we have regrets of doing what we did, but if you read Die With Zero and the memory dividends, we definitely did that. And we didn’t suffer uh a lack of balance like a lot of folks that are younger and, you know, want to earn money to the to the detriment of shared experience.
Mindy: So, you just said that your net worth is $4 million including the house, $3 million if you don’t count the house and you’re halfway there. Have you done the 4% rule math to determine what your FI number is or are you shooting for spending like $800,000 a year and FI or whatever?
Guest 2: No, our spend at the present time is between $175 and $200,000 a year, which gives us a number of around $5 million, but we’re at three and a time may dictate what our number really is, and we may be forced to uh to a spend that is less than that because of the time to the finish line for my work, which is a high burnout field. So, we don’t really, it’s a moving target. Those goal posts are are not fixed. We don’t fix it on a number per se. It’s more managing burnout and getting to a comfortable finish line where yes, we can manage our lifestyle and we don’t need that number. Uh it’s just that’s the number goal, but a time goal actually takes precedence.
Scott: Bill, I got a couple of rapid fire questions here. First, what kind of doctor are you?
Guest 2: Emergency medicine. So in that regard, I would say that I learned how to take care of medical emergencies for people, but I had no idea how to take care of my own financial health or financial emergencies. Now I can do that and we want to do that for others.
Scott: Awesome. Um what did you have a financial advisor during any part of your money journey and how did they contribute or or detract?
Guest 2: You’re going now you’re going into all the mistakes I made. So, uh, out of med school, we were sold a a bill of goods. We had financial salesmen as I know now, come to med school and tell us, I’m your I can be your financial advisor. Buy this whole buy this whole life plan.
Scott: These people repulse me and doctors are their primary prey.
Guest 2: They still are and uh thankfully there’s Jim Dolly, the White Coat investor who’s changing this and he was one of my mentors and changed my life as well as choose a fi and other uh platforms that we all go down the rabbit hole on. But yes, we had the quote-unquote financial advisors. Uh we went into a private bank which became our financial advisors. Again, salesmen, huge mistake. uh paying all those fees and we didn’t put in our pockets what they took from us. Their kids went to college on what we paid them. So, yes, we did that and we made many, many, many other mistakes along the way, very typical of doctors. You can only imagine.
Scott: At this point in the great recession, what was your primary emotion around money, um when you were when you were uh in that that period of realizing you have a negative net worth?
Guest 2: I didn’t realize we were negative net worth. That’s part of the problem. I had no idea. And we had an abundance mindset, but it was a not pay yourself first abundance mindset. We lived I mean, our boat was named Yolo.
Scott: Do you still have the boat today?
Guest 2: No, that was part of the downsize. Uh the only good decision we made there was we bought the slip and the equity increase in the slip paid for all of our boat expenses. So, I guess you could say we accidentally covered the cost of a luxury item.
Scott: Real estate investing, love it.
Guest 2: Exactly.
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Guest 2: We woke up, it was scarcity. It was scarcity, regret, shame, isolation, loneliness, and these are the kinds of things we’re trying to combat for the catching up to FI population. Uh, we all have our heads in the sand. I think this is a common story. Some people say that it’s 40% of the population that wake up after 40. I think it’s probably more than that. Um, and I think it’s the the the norm as opposed to the exception to the rule, which is most of the stories we hear in the FI community. It’s the young success, the mid-life success, the early retirement. Uh, you don’t really hear the stories that Becky and I lived and we’re trying to change that.
Mindy: So why do you think people believe financial independence is unattainable?
Guest 2: Well, if you’re asking me, uh, I think it’s because of uh our consumer culture and our addiction to debt. You know, we become numb to it and we’re taught to be numb to it. So, as opposed to accumulating assets, we accumulate debt and we’re paying service to this debt. We’re owned by the debt. And as opposed to taking control of our financial lives, uh realizing that debt can be a lever that increases our path to fi, we don’t use it as a lever. We use it as our shackles, our ball and chain, and we don’t even realize it.
Mindy: You both had a wake-up call, a curve ball in your stories. Do you think people are waiting for that? Do you think people are like, oh, just like you, I’m going to just tole on along, everything’s fine, everything’s fine and then they need that slap to change their story?
Guest 1: I think a lot of people live that way. I mean, I I sometimes I look back and I wonder, I mean the what happened to us was a big deal and it was really painful, but I don’t know if something else would have done it. You know, I I think I almost had to have that pain to wake up and realize that I can’t keep going the way I am. I I’ve often wondered how far down that road would I have gone before I decided that something had to change. So, unfortunately, I think a lot of people do need some sort of wake-up call because we’re there are those of us in the FI community, there are those people in the FI community that are natural savers. I’m not one of them. I have become one, but I didn’t start out that way. And so there’s a few people that are going to save money whether they think they need to or not, but I don’t think that’s most people.
Guest 2: I needed the wake-up call. I needed the slap of turning 50. I think that’s actually a common story. Um after you exit the uh funnel of raising kids, for example, and realizing that you’re empty nesters and you’ve got to get to 65. I had thought that it was, you know, 40 years of a work journey. I kind of had the boomer mentality. My dad worked till he was 80. I mean, this is this is where I came from. But I realized quickly that I had burned out uh on my career largely and how am I going to get there? How am I going to bridge the gap between burnout and financial independence? Uh, there’s stages to this wake up that are different from the financial stages of early prudence with finances. There’s the shock and awe after you have the slap or maybe somebody takes you aside and says, you know, you can do this. uh gently. You can’t lecture at us. You can’t tell people, this is what you need to do because we’re not going to hear it. And with our podcast, we’re trying to put the message out there so that people can digest it at their leisure on their own in a non-shameful way. So, the other stages that I see happen to late starters are after the shock, you have the rabbit hole. You go down this, you know, at the wonder one that everybody goes down at some point in their lives, you can consume everything, you become a consumer of financial information. This can lead to analysis paralysis, which is probably one of the phases of this and people should reach out for help because a lot of people need a coach and I’m not dissing financial advisors. I think a lot of people need one, but you just need to find the right one. You need to find the flat fee, fiduciary advice only advisor. You don’t want a salesman. and we almost succumbed to that again with a large financial firm. So you get through those first two phases and then you get to the phase where I’m at. You get into the muck in the middle, as one of our guests called it, uh the where you got to do the work. You got to do the time, you got to increase the savings rate and you know, pay yourself the gap. And it’s hard. It’s really hard because you watch people say like yourselves that have reached financial freedom, time freedom earlier. You watch people being retired. It’s really painful and you wish you were there, but you can’t wish yourself there. You’ve got to do the work. At some point in your life, you’ve got to do the work. So I’m in the mid-phase. Then, I think and Becky can speak to this, you get to the, I can see the light at the end of the tunnel. I haven’t gotten there yet. I can uh see that, you know, there is a finish line and it may be earlier than I think. Uh and so you get excited again. and you go down the rabbit hole of learning about retirement and how to make the transition to retirement. and then you cross the finish line to your ultimate time freedom, your new life. The one where you can have the freedom to make choices that you couldn’t make before. So I think that’s five, but I think there’s really five phases to late starting and everybody goes through it at different ways. What do you think, Becky? Do you think this is true?
Guest 1: I do. I I think that um, whether you had the the big slap or you just more like you where you kind of hit an age and go, hm, what what am I going to do now? Um, I think everybody experiences the the shame and the guilt and you know, one of the things that I had to come to grips with was I had made a lot of mistakes. and some of those mistakes spilled out on other people. I mean, I look back now and think about what did my children come to adulthood with as far as, you know, baggage from our poor financial choices. And they’ve they’ve all sort of gone in different directions with it. I mean, we have one uh one of our kids had to make his own mistakes. He had to as he said, burn it to the ground. But he turned it around a whole lot faster than we did. But I I had to uh I had to realize that I needed to forgive myself for the the bad mistakes I had made or bad choices I had made and I also had to go to a few other people and ask their forgiveness too. Like I said, it had spilled out on other people. And because if you stay there, then you’re stuck. and you can’t if you’re a late starter, you can’t be stuck. You’ve got to start and you’ve got to start today. And you’re not going to know everything when you start today, but you’ll figure it out as you go. and it is figure-outable. you know, that’s one of the things I want people to understand is you can figure this out and you can can make a plan that works for you and your family and your situation. But you’ve got to, you know, give yourself a little time to process what’s going on and then forgive yourself because you can’t live in the past, you can’t worry about what I did 20 years ago. I’ve got to think about what am I going to do today.
Scott: Becky, you had a 13-year journey to financial independence after around age 50, um, that involved getting cleanly to this one, you know, $1.3 million net worth and Bill, you are two-thirds, three-quarters of the way through your journey to financial independence um, after, you know, starting kind of in 2013, 2016, a ramp there in terms of thinking through how aggressive you wanted to get about moving toward financial independence. Is there such a thing as too late, right? Someone who’s maybe closer to 60, you know, hearing those stories. Maybe they’re thinking I I don’t have enough time. What what what would you say to that person and what’s your thought on um what what when you when you need to get started in order to achieve this goal?
Guest 2: I’ll go first actually and Becky and I disagree on this, uh not fundamentally, but I woke up at age 50 and if I’d woken up later, I think it would have been too late. It would have been too late for our spend. Uh we would have had to reduce our lifestyle more than was comfortable. Uh so yes, I do think you can be too late for a lifestyle that you want to lead, at least initially. However, I do think that it’s great to start. You can start, start now, and you shouldn’t leave your head in the sand because you can make huge changes in your financial future. You can get there. Uh you may not get to where you want to go, but you’ll get to a place of financial freedom and peace uh if you don’t start. So we we want to get people to start earlier obviously. I think you’re always 10 to 15 years away from financial freedom. If you start at 50, you’re going to get there at 65 invariably if you make these changes. You start at 40, you’ll retire early. So we’re trying to get people to start at 40 instead of 50. Becky, your thoughts are a little different, so I’ll let you go.
Guest 1: Well, I I do say that I don’t think it’s ever too late, but like you said, fundamentally we do agree. Um and and the way I put it is, you may not end up where you’d like to be given the time you have left, but every choice you make today is going to make your future self more comfortable, less stressed and you can create a better life than what you have now. You can always do better than what where you are now. And one of the things that that I um and and we may get into them some more specifics of this later, but uh our generation, there’s a lot of people in our generation that don’t think uh they don’t include social security in their plan. And for those of us late starters, I don’t know what’s going to happen in the future. I don’t know what Congress is going to do, but I don’t think that it’s going to disappear. So, I feel like that we uh those of us that are in our 50s and 60s, we’ve got a backstop in addition to what we can do for ourselves. So, I think we have some levers to pull that that people may not really even be considering. So is it ever too late? Uh maybe, but I I say in general no.
Mindy: We did an episode uh 344 with Jeremy Kyle and Emily Guy Burken talking about social security and uh because I have not traditionally counted my social security in my retirement numbers because it’s not going to be there. They’re going to run out of money and this episode explains how yes it is going to be there. No they’re not going to run out of money and explains how the social system actually works. So Becky, I’d love this these comments that you’re making. What advice would you give someone who is in their 50s with a negative or $0 net worth?
Guest 1: My two pieces of information other than what we’ve talked about already of of processing those emotions and getting yourself to a place where you feel like you can start moving forward is I always like to have people look at where they are. When you’re talking about a late starter, we have we have some advantages actually over other, you know, younger people. We’ve got a lot of life experiences. We may have a a larger income, you know, a lot of people are in their higher earning years at this point in time. So, look at where you are, figure out your net worth, what are your expenses? What are your assets? It might not be as bad as you think it is. And then I would say to um, to start learning. uh, get a mentor, uh, dig up, you know, books, podcasts, blogs, whatever it is because you may not know what you need to know today, but it’s out there and we can do this. So, I would say have the the mindset of I can make a change, I can make some improvements in my life to to accomplish the freedom that I would like to have. And you know, in the movie, uh, is it playing with fire? Where they talk about the list of 10 things? I have that has stuck with me ever since I heard that. Um, the list of 10 things is they suggested to sit down and make a list of what would uh your perfect day look like? what brings you joy? what kinds of, you know, what would you like your life to look like if you could build what you wanted? And sometimes you realize those things don’t even cost money. That what you can add to your life isn’t going to cost you a ton of money. Something, some things are, obviously, you know, a vacation’s going to cost something, but figure out what works for you, what’s valuable to you, what’s meaningful to you, and then rather than focusing so much maybe on a number, is what do I need to do to build that life for myself?
Mindy: Oh, I love that.
Guest 2: Bill, what do you what do you think? What what what should someone who’s getting started from scratch in their 50s do first?
Guest 2: They need to assess or assess their risk tolerance. Um, they need to accept the fact that they’re going to work longer. They, you know, for us, we went to a 75-25 portfolio. If you want something tangible. Uh, we needed some security, but at our age, we knew that we needed to take more risk.
Scott: 75% stocks, 25% bonds, right?
Guest 2: Right. Not everyone’s going to feel that way. I think you can take on real estate if you’re willing to take on that risk. Uh we’re talking on bigger pockets. So, if you want to escalate your path to fi, you can use levers uh like real estate and so-called passive income uh to create a base of income upon which you can put your portfolio. Second, you you got to create multiple streams of income. Uh you can start your side hustle. you can do real estate, you can use traditional paper assets. Uh those are the three or four legs of a stool you need to create. You don’t have one lever to pull. You have a lot of options and yes, the risk may be more initially and then you’ll downshift it for sequence of returns risk into you’ll you’ll do all the traditional steps. The plan is no different. The time course may be a little bit, but the plan for a 30-year-old is the same as the plan for a 50-year-old. It’s just that we got to do it faster.
Mindy: I love that. It’s the same plan. It is absolutely the same plan. It is after what is this? 450 episodes of this show, Scott, I see the same thing over and over again. It is spend less than you earn, save, and invest intelligently, potentially start a business. Um there are no there’s no easy button, there’s no way around it. You have to be conscious of your money, you have to save and invest in a way that is going to grow for your future.
Scott: You know, I’ll I’ll I’ll I’ll just chime in and and think it I again, I’m not I’m not there. I’m 32 years old, so I have a different different viewpoint on on a lot of things, I’m sure, but it seems to me that the house hacking concept or housing decision is something that you can also look at with fresh eyes in these situations if, for example, your kids have just left the house. Um maybe that, you know, that Bill, that’s what you did. You you didn’t house hack, you but you downsized your house and that was a major lever, I imagine in terms of being able to um save more. Do you think that’s a a potential place to start for for folks in the situation?
Guest 2: Oh, absolutely. Housing is the big one of the big rocks. You’ve got to address that. There is no option there. You know, somebody wrote a really good book called set for life.
Scott: I’ve heard I’ve heard of this. Go on.
Guest 2: You can follow that path too. You’ve got you know it’s just, you know, that’s written maybe for a younger audience and thank you for that book. I recommend it to my kids. I recommend it to a lot of folks because I think it does lay out a path, not too dissimilar from what older folks like us have to do. Uh we may befied, but we can be fi.
Scott: Gerified. I haven’t heard that one before.
Guest 2: Well, you know. We like catching up to fi better. One of our guests mentioned and this is important. It was a great quote. The emphasis on late starter is often late. and that’s a negative emphasis. Our guest Amy Cruso said, the emphasis should be on start, starting. a positive, forward- thinking emphasis.
Mindy: I’m addicted to saving and that’s where you want to get. You want to get to the point where you’re more addicted to saving than you are to spending.
Guest 1: And you know, we were talking about the path is the same whether you’re 30 or you’re 50. And like Bill said, we just have to do it faster. And you know, sometimes doing it faster means sacrificing deeper. I mean, that’s that’s where we’ve put ourselves. We can get there, but if we had started when we were 25, the sacrifice is is sometimes barely noticeable if if you want to, you know, work until 55, 60, 65. Um but if if you’re condensing the time frame that you have to work with, it’s the same steps, but you’re going to have to make some big decisions and like Bill was talking about the big rocks, you know, you’ve got to think about those big rocks.
Guest 2: One of the things I point everybody to is uh Pianez or Mr. Money Mustache’s uh shockingly simple math of uh retirement. Uh look at that graph and realize that if you can go to a 40 to 50% savings rate, this is the amount of time that will take you to get there. and that ends up being, you know, 12 to 15 years. So, it’s entirely doable. Uh there is no late start to financial freedom, to choices that you want to be able to make with your time.
Mindy: All right, Scott, that was Becky and Bill from Catching Up to Fi and I can’t even like which story do we talk about first? I love Becky’s story. I love how she realized at age 50, we have a zero net worth and we need to change that dramatically or we are never going to retire. And Bill falling into the traps of the the physician lifestyle where, oh, now I’m making a lot of money, I can spend it with reckless abandon and you can but if you want to retire, you’re going to need to make some changes. I love all of the tips they had for us and for their listeners too. You have to make changes in your financial life if you’re going to reach retirement at any age.
Scott: Yeah, I I thought they were fantastic. This is a real problem, right? I mean, and I think there’s a lot of people out there who feel like they’re way off track for retirement and who are in their 50s and feel like it’s, you know, getting late, um maybe maybe even approaching too late. And you know, I thought that one of the tough things that I I really respect from Bill and Becky was, you know, hey, if you want to achieve the concept of financial independence, yeah, you got to start in your early 50s, you know, mid 50s to really have a good crack at it by the time you reach additional retirement age and they didn’t hold back from from stating that. Um you know, it is possible in a 10, 12, 15-year time frame for many, if not perhaps most Americans out there in that in that situation. Uh everyone’s circumstances are different, of course. But uh uh you do need to put in those years and with a high savings rate and really go after it. Um but I did think that their their stories were also inspirational for folks that it can be done. You don’t have to start at 30 or 25 or 18 or 40, you can start in your 50s and achieve success, just like they have.
Mindy: Scott, there is no shortage of new articles that say 40% of retirees or 40% of Americans will never be able to retire and all of these doom and gloom articles, clickbait is clickbait, but also, if you don’t make the changes, you won’t ever retire. And when you are age 50, you don’t have the benefit of time, the the luxury of time to save. But like Becky said, you have different advantages. You have the advantage of most likely having a higher salary than these uh 20-year-old kids that are out there doing it now with the advantage of time. You have the traditionally, you have lower or lowerable expenses because you don’t have kids at home anymore or they’re just getting ready to leave. You have a lot of different different advantages and you just need to figure out what your advantages are and exploit them. But yes, it is absolutely possible to still be able to retire, probably not early, I mean, you’re 50, you’re not going to retire at age 25, if you’re starting at age 50, that’s just math. Um unless you invent a time machine, in which case email me because I want to go too, there’s some things I want to change.
Scott: And then I’ll just kind of reiterate what we what we talked about at the end with uh uh Bill and Becky here in that, you know, the the path of financial independence can take place over decades or over a 5 to 10 year sprint if you will, and that is reflected, I think in the journeys that I’ve gone through, that you’ve gone through, Mindy, that Bill and Becky went through and I just think that, you know, hearing hearing this, it’s both inspirational in that it can be done. You can start at the age of 50. And I hope that for our younger listeners, it also is inspiring to think about, hey, do that sprint now, right? Do that in your 20s or 30s and reap the benefit of that if you can, if that’s an option for you, um for the remainder of your life and have that power uh uh crew to you, um so that you can, you know, buy that boat Yolo with financial freedom dollars, you know, uh uh and your portfolio, uh and enjoy it risk, you know, uh uh guilt-free from then on. So get those get those uh memory dividends, um but if you pay the price up front, I think that there’s a uh a lot of benefit to that throughout the remaining, you know, the the many decades of your of your life, hopefully.
Mindy: Yes, the the bottom line from that is if you haven’t started your journey yet, start today. All right, Scott, should we get out of here?
Scott: Let’s do it.
Mindy: That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench and I am Mindy Jensen saying we gotta go Buffalo.
Scott: If you enjoyed today’s episode, please give us a five star review on Spotify or Apple. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.
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Mindy: Money was created by Mindy Jensen and Scott Trench, produced by Calen Bennett, editing by Exodus Media, copywriting by Nate Wine Troub. Lastly, a big thank you to the Bigger Pockets team for making this show possible.
