Mindy: Welcome to the BiggerPockets Money podcast, Finance Friday edition where we interview David and talk about balancing pet medical bills, starting a new business, and repositioning your retirement contributions to make lifestyle bets.
Mindy: Hello, hello, hello. My name is Mindy Jensen, and with me as always is my rockstar kicker co-host Scott Trench. You might be unaware that Scott is famous as a kicker for the football team of his high school.
Scott: That’s right. I I uh I was on a great high school football team. We won states twice in a row in Maryland, which is not no slouch. came up today because our guest David is from Maryland and went to another local powerhouse football program, high school called Sherwood. My high school was Riverhill and I was all state as a kicker. Uh uh without kicking really any field goals. I kicked one field goal my senior year. We just kicked I just could kick it into the end zone at a high high percentage of the time and get a lot of touchbacks. So, Mindy, thank you very much for the nice intro. And with me as always is my great always has an extra point to make co-host Mindy Jensen.
Mindy: That was a good one, Scott.
Mindy: Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.
Scott: That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate or start your own business, taking fantastic trips around the country to beautiful places and around the world, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.
Mindy: I love that little foreshadowing you do at the beginning of every show, Scott. This one is very interesting. We start off in one place in the show talking about the pet medical bills that our guest has, but quickly pivot to his side business, which is actually rather exciting. I would love to take a trip with him. Um, they run, he and his wife run adventure tours, which sounds like so much fun.
Mindy: Uh, before we bring him in, before we really get into that discussion, I have to tell you, per my attorney, the content of this podcast are informational in nature and are not legal or tax advice. And neither Scott nor I, nor Bigger Pockets is engaged in the provision of legal tax or any other advice. You should seek your own advice from professional advisors including lawyers and accountants regarding the legal tax and financial implications of any financial decision you contemplate.
Scott: Before we bring in David, I do want to have one quick point that I want to make. Um we’re going to talk uh the the issue with his dog and the expense associated with that, um would have been a devastating impact to many other people’s financial positions. We are going to talk about that in detail in the outro and we’re excited to welcome our producer, Kaylen, who is an expert on pet insurance to come in and talk about some of those uh some of the nuances there. So, if you’re interested in that topic, stick around for the outro. We’ll have a little segment on that uh that I think you’ll find very interesting and helpful if you’re a pet owner.
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Mindy: Today we’re speaking with David, part of a high salary couple with a sick dog. Their high monthly income is currently being dwarfed by the higher cost of dealing with the costs associated with severe pet illness. Today, we’re going to talk about rentals, side businesses and debt paydown while pursuing financial independence with this great big asterisk. David, welcome to the Bigger Pockets Money podcast.
Guest: Thanks for having me.
Mindy: Let’s jump in cuz I’ve got a ton of questions for you. I’m showing in your Money Snapshot a salary of approximately $10,000 a month split between you and your wife. Monthly expenses currently total $14,926, and that is because we have a pet cancer expense. Are we going to call this an expense of $6,200 a month for the first four months of this year? We also have $1,100 in groceries, $481, almost $500 in wedding and events every month. You look like you’re about the age where all of your friends are getting married, so that’s always fun. That goes down as you get older, just uh something to look forward to. Uh but, you know, various other expenses. I don’t think anything is extraordinarily high except of course the pet cancer treatments. On the investment side, you are doing fairly well. You’ve got a total of 71,000 in cash split up between 48 in personal, 15 in your real estate business fund, and eight in your uh other business fund. Uh let’s call that your side business. We’ll get into that in a minute. Investments for the future, 203,000, nice job there. 71 in a Roth, 118 in a traditional IRA, and 14,000 in a taxable account. However, we do have some debt. We have 26,000 in credit cards and 14,500 on a car loan. And rounding all of that out, there are it looks like four rental properties?
Guest: Yep, four four properties.
Mindy: I like your diversification right now. But we have a lot to talk about. First off, let’s look at your money story. Give us a brief overview of what’s going on.
Guest: Sure. So uh, you know, I I’m married a couple years ago during the pandemic, and since then my wife and I, uh, you know, we bought a house and we’ve bought four different rental properties. I guess one of them was actually a rental property I was living in, so I kind of did a live in flip. I know Mindy, that’s that’s a big thing for you. So I bought a house, um, fixed it up. It was a foreclosure, you know, redid most of the house myself, uh, other than like the roof I paid someone to do. And then my wife and I moved out of that into our current primary residence, and, um, turned that into a rental. And then we have So that’s also in Maryland where we live.
Scott: Where about in Maryland?
Guest: Oh, we’re up in uh Catonsville, uh near Baltimore.
Scott: All right, it’s the same county as where I grew up. I grew up in Howard County in Columbia, Maryland, so small world there. Clarksville, more specifically.
Guest: Yeah, right down the street.
Scott: Yeah.
Guest: So, you know, so we’ve been into the real estate investing. I have a few properties in the Cleveland area that have been successful. And then recently we’ve kind of been looking at how do we want to design our our lives or around hope hopefully starting a family soon. Um, you know, I don’t think both of us necessarily want to work until we’re 70 years old and then and then stop. Um I think especially with our side business is something my wife kind of wants to move into more and into sort of replace her primary job on as we build a family. Um, and so or you know, we’re we make good income. I think we have some flexibility. It’s really figuring out where we want to put our efforts and what we should invest our time and our money into to to create the future that we want to have.
Scott: Let’s walk through um, you know, part of the money story here. We got to acknowledge is the uh, um your dog, I believe, who is sick. Um, this unfortunate situation. Can you um describe what’s going on with your dog?
Guest: Yeah, so uh our dog Blaze, um we got him one week after my my then girlfriend, now wife moved in with me. Um and he’s he’s amazing. He’s like our child basically since we don’t have kids yet. Um so he was diagnosed with lymphoma in I think it was October of last year and we had no idea he was only three years old at the time. Um we had no idea that it’s the most common cancer in dogs and the average age is like six years old for a dog with lymphoma. Um and at the time we were told there was no cure, so you can try to give him chemotherapy that might prolong his life and then that’s that’s kind of it. Um but we found out that there’s one place in the world, there used to be two but but it seems like NC State is shutting down their program. Um that does bone marrow transplants with a 90% success rate encouraging dogs um if they have a bone marrow donor. Um so we’ve had to we’ve tested I think 14 or 15 different dogs, which was fairly expensive. Um we finally just found out yesterday actually that we have a match for Blaze, so we’re very excited about that. Um and we’ll be flying him out to Washington State from Washington DC um with the donor dog to have his transplant uh next month.
Scott: And and walk us through what this has cost you and um your pet insurance situation because we see there’s a line item in your budget for that.
Guest: Yep, so we had pet insurance for all of our pets um through the ASPCA and it covered $5,000, which when we bought the pet insurance seemed like a lot of money for a, you know, a pet illness. Um but it’s so so far I think we’ve spent about 65 or $70,000 through treatment, diagnosing him which was it was very difficult for some reason at the beginning, and then uh the donor matching and then we expect to spend another 50,000 in the in the treatment um in the bone marrow transplant. And we have found a new pet insurance, the one we’re using now is called Trupanon, a little plug for them because it’s really a similar price and they have no cap on their on their payout. So our other dog Trek has that insurance now. Um so anyone out there with a pet, if you’re if you’re like us, you’ll, you know, you’ll do just about anything for them, get good pet insurance. Uh it can make a really big difference.
Scott: Yeah, I think that that’s that’s a great takeaway here. I think, you know, looking back at the situation, it’s it’s you are, you know, everyone’s different. Some people would say no way um would I would I go through with what you’ve already spent to uh uh for my dog. Some people are I would spend 10 times that amount and put, you know, and pay them off for the next five, you know, decades if that’s what it took. So you just you got to know that about yourself and get the unlimited cap, you know, or a unlimited insurance with the best provider available and shell out for that if that’s if you’re one of those folks that are willing to do that. Um but we’re here what we’re here we’re at. Um thank you for sharing that so that other people um can can can learn from it. And my understanding again is that you’re $60,000 into this and you’ll you’re planning on another $50,000 on top of that for the surgery?
Guest: Yep, that’s about right.
Scott: And do you have any debt associated with this right now or have you been able to cash flow or finance all of it so far?
Guest: We’ve been able to cash flow it. Um not captured in this is I’ve been working a lot of overtime so that’s helped a great deal. Um and then we also had we had some payout from the pet insurance and then we have a GoFundMe that we’ve been able to raise a little bit of money for. Um so we’re right now we’re okay. Um the the transplant’s going to be a bit difficult, but you know, we’ve gotten this far, so we’re going to make sure we get them over over the line.
Scott: Okay. So what are the biggest things that we can help you with here today? Because when I look at that, this is a crazy expense. I’ve I’ve never heard of a pet situation that has cost this much, although I’m sure they’re out there. But you cash flow it so far and you can cash flow it again. You have you by my my calculation, you’ve got $15,000 in real estate cash, $8,000 in your business account, and 40 and 48,000 in your personal account for $71,000. So a couple of quick reallocations and you’re still left with $20,000 in cash to cash flow it. So this is a setback but not a uh not even really the story. We don’t even have to do that much, you know, uh financial gymnastics to get to get past this particular hurdle.
Guest: Yeah, and and we’ve liquidated some I have like a a play investment account that had a little bit of money, things like that. So we’ve made some adjustments and pivots. We’ve kind of I know in my uh in my worksheet that I sent you, we have like, you know, how much we’re investing per month and things like that. We kind of just suspended that while we were um you know, paying for or while we are paying for the bills with the dog. Um I think more, you know, this was a setback but, you know, if if I have to retire a couple years later because we saved our dog, I think I’ll I’ll take that trade any day of the week. Um but the what we’re looking at right now, you know, I think we’re kind of a similar age. Scott, we’re looking to start our family in the near future and just try to design our life the way we want to um and figure out, you know, what’s the best strategy for us to invest? Should should we pursue more real estate? Should we consolidate some real estate? I I have some questions about whether I should continue contributing to the Roth 403B or switch to traditional given our our tax rate. Um and then I think we and and this is not something set in stone, but we have a side business and an idea we’ve had is when we’re raising our kids to if my wife could move from her full-time um job into that side business, it might put us in a situation where instead of having child care, she’s just making less money um and and we might have a a better quality of life for what we want for our family. Um so just kind of figuring out with the situation we have now, what the best strategy, overall strategy is to uh to achieve some of those goals.
Mindy: You have a pretty neat side business. I’m actually really interested in finding out more about that. Uh can you tell us about it and how you got started with it?
Guest: Sure. So uh, it’s uh, we lead bicycle tours, backpacking trips, and we also do like corporate retreats and and some and private trips like that. And so uh, my wife rode her bicycle across the country for uh the Olman Cancer Fund when she was in college. And around a similar time, I rode my bicycle from my aunt and uncle’s house in Los Angeles to my grandfather’s house in San Francisco. And so we both kind of found this bicycle touring thing and then, you know, we got together, we rode our bikes across France, we got engaged backpacking in Scotland is kind of our our big hobby. Um and and during the pandemic, uh, it it you know, we didn’t have anything to do. We were suddenly working from home and so we decided to start a business being outside was about the safest place to be uh with with COVID. And so it’s it’s really a passion of ours. I’m not sure if it’s if I had to pick a business, the easiest one to make money at, there’s there’s some challenges with that. Um but it’s something we’re really passionate about. Um and you know, it’s it’s still work, but I I would much rather be on my bicycle or helping other people hike somewhere really pretty, uh than sitting behind a desk. So, um as as kind of like a retirement quote-unquote job, um which I know a lot of fire folks do where you have a a job that pays a little less money but fits your lifestyle better. I think it’s kind of the ideal job for both my wife and myself.
Mindy: So, what sort of income are we talking about on this job? And what sort of hours are you currently putting into it?
Guest: Yeah, so right now it’s at the really early stages. Um I think this year we’re expecting to profit after taxes around $14,000, so not a huge income. Um and and we’re not really counting on that money. We’re we’re going to be investing that back into the business as we go. Uh it really depends on on how many trips and things we want to run. So if one of the limitations we have now is I only have so much leave from my day job and so does my wife. So we can’t run a trip every week because we’re we’re working. We are working on hiring some guides who will be able to lead trips so that we won’t have to be out all the time. Uh especially for starting a family, you know, we’re not going to be want to be out on the road or or hiking in the back country all the time. Um but right now, I think one of the things that we’re working on is is uh marketing, getting, you know, some some name recognition and building relationships with with other organizations to kind of have have trips. Um you know, there there are businesses that do the stuff that, you know, are, you know, are multimillion dollar gigantic businesses you may have heard of and then there are some smaller niche ones. I think we would tend to fall in the smaller category. Um but I’m I’m kind of thinking if we can make, you know, 50 or $60,000 a year at this leading, you know, 10 trips and and us only leading a few of those, that that could be something that that could work really well.
Mindy: So how… you said 10 trips. How many days in total would you be away from your house during those trips?
Guest: So it it really depends on the trips. Um but I’d I’d say a good average would be four to five days.
Mindy: per year. Sorry.
Guest: Yeah per year. So it’d be so let’s call it 50 days of of actual trips per year. Um with hiring guides um and things like that, I don’t know if we would have to be away all of those days. So one of the things we’re working on now is establishing trips and routes and training guides so that we can be in a position where we’re we’re running a business and we can go out on trips as we want and make a little extra money. Um but we have guides who are actually providing that service, you know, away from our house in the future.
Scott: What does it cost to market for, set up, host, and run one of these trips? How does that how does the cash flow work for an example?
Guest: Yeah, so it it that’s something we’re figuring out. So uh the baseline cost is we have to run a website, our insurance is pretty expensive because if someone gets hurt, um, you know, you have to have insurance for that.
Scott: They don’t just sign their life away on a waiver?
Guest: They you do, but apparently those waivers are meaningless is what I’ve been told. So um yeah, apparently they can still sue you. It just a deterrent for people suing. Um but then we have a few permits we have to get if we’re going to be in national parks or things like that. So it’s a fairly low overhead cost um just for the baseline of the business. Uh where we’re trying to figure out is do we market on Facebook or on Google? Um you know, how we’re we were marketing in person. So we’re uh both life-long tri athletes. We’ve done tons and tons of trathlons, we’re very connected in that community. So being out in the community, talking to people, getting people excited, establishing relationships. It’s really more of a so far it’s been more of a time commitment than a a cost commitment. Um and we’re we’re a bit limited just because we have day jobs and we’ve been taking care of a, you know, a sick dog which has been a time suck as well. Um but but basic thing to answer your question, you know, I think to set up a trip, a 1,000 to $1,500 initial investment is probably a ballpark right now.
Scott: Awesome. And what’s the uh revenue for that trip?
Guest: Um it ranges. So we have trips that might just be an overnight. So your revenue will be somewhere around like $4, 5,000. Um and then we have trips, I I’m leading a trip in in a few weeks that’s nine days long. And so if we’ve filled that trip, the revenue might be 20 to $40,000. So there’s kind of a range. And then the corporate and private trips tend to be around 10 to 20.
Mindy: Ooh, how do you get the corporate and private trips?
Guest: That that’s what we’re really looking at right now. Uh we have another we did one last year, we have another one this year and then private trips as well. We have some people that we’re working with. Um I think that’s the niche that we want to move into because you know, especially the corporate trips, it’s a group, what they want is to to give you a call, not have to think after they make the initial decision, you take care of everything for them and they’re willing to pay for that. Um our costs are a little bit higher to run them but they’ve been they’ve been really rewarding and they’ve been a lot of fun. So I think that’s a direction that we would like to pursue.
Mindy: So how did you get your first corporate or private trip and how can you replicate that? And that’s not really something that I need an answer to, that’s something that you should be thinking about because then you’re not selling trying to get one-off people to sign up. You’re just selling the whole trip and they’re sup they’re supplying the people. Um also people already know each other, so it’s a more it can be a more cohesive trip. It can also be a way worse trip if Betty from accounting doesn’t get along with Bob from sales.
Scott: What what is the seasonality with this business?
Guest: Um so it tends to run our trips tend to run from about May to October. Um although I do have a dream, I I’ve ridden my bike across New Zealand um of taking some Americans out to New Zealand for a cool trip like that which would be our winter. Um but it is pretty seasonal um in mostly summer and fall tends to be when people want to go out.
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Guest: so I’m I’m thinking about moving to a compressed uh work schedule where I’d have Fridays off. Um so right now I’m the director of engineering. We’re a small company and we’re growing. Um there’s a there’s a path which could lead me being to running the company in maybe 10 to 15 years. Um so I’m not really thinking about backing off of my work. I enjoy what I do. Um I I love the people I work with.
Guest: Uh I do think that I’ve been been working on just is getting more just more leave. So working normal hours, but if I have six weeks off during the year or something like that, I can have vacations, I can lead trips and I can have that flexibility. I also have a ton of flexibility with my schedule um just telecommuting. I can telecommute as needed however much I want. They don’t really care if I, you know, if I work extra, take off Friday. It’s it’s a very flexible uh workplace.
Mindy: The more leave is what I was really getting at if you could reduce your time so that you are only working four days a week but then, oh, I’ve got this big trip coming up, can I work five days a week for a month or two months to bank this time if there’s some sort of flexibility there. Also, you said that you could be leading the company in 10 to 15 years. Is that something you want to do?
Guest: Yeah, it is. Um I’ve been working, I’ve been here for, I think, nine years now. And I’m 34, so most of my career so far. Um and I’ve, yeah, it’s something I I really would like to do. And it’s only, I I’ve heard the term kind of like entrepreneur rather than entrepreneur. So I feel like I have some entrepreneurship opportunities now I’m leading my own department, hiring people and you know, kind of building the work that I like the most. So in in that sense, I I kind of almost feel like that’s a a good path for me and then, you know, if there’s an opportunity far further in the future to have like a semi- retirement or a reduced role if I’m financially independent, I can probably work something like that out.
Scott: Well, walk me through what your um wife’s job is and what what what what she wants to do.
Guest: Awesome. So she’s actually also a civil engineer. We had went to the same program in college. Um so she works for the USDA National Resource Conservation Service. So she’s out, um, her job’s out of Annapolis although right now she’s 100% remote. Um and they work with farmers um for a bunch of different programs. It’s a lot for water quality. Um as you know Scott, the Chepeak Bay here is is kind of the big thing. So they’re working on water quality. She’s kind of administering programs and and working kind of at a a state level for regulations. Um I think for her it’s more of a job than a career if that makes sense. Um I think she is more of the mind of she would like to move into the business and make that her full-time thing eventually. Um but she yeah, so she also has a a good paying job with great benefits and and all of that.
Scott: Okay. So, so walk me he here’s my big question. You guys make a combined 225k a year. Um, and you have these aspirations for a business, but neither of you want to quit your job. Um, so like what what what how how do we help you from a directional standpoint with with this. Like, you know, I’m I I I there’s a lot of paradoxes here today. You’ve got this dog that is sick and that seems like a big issue, but you’ve got the cash to cover it and you can just work extra to to cash flow it and that’s where your values are aligned. Um, and then you have this business that seems like a great idea, but you also have these jobs that are a great idea. So we’re kind of choosing between several different good options here and I’m not I’m not really able to tell which way you’re strongly leaning from these, right? Which what what is what is what is your instinct and what what what do you want out of the next phase here?
Guest: Well, if you told my wife she could quit her job tomorrow and do the business and it would be fine, she would say great, see you later. I’m done with my job. So I think there’s a pretty strong feeling there for her that she would much rather be working on the business. Um I think there’s a little bit of our lives are comfortable and we’re making good money so it’s scary to commit more time and energy to the business or like leave the job and work on the business before it’s making money. I think that’s probably a little bit of a fear-based we’re kind of slowly building it. Um and also with everything with the dog going on this year, we cut back from the expansion that we were planning with the business. Um but it really is like I I look at this spreadsheet and it looks pretty good, but we’re not financially independent. I don’t feel like I have a, you know, especially if my wife wasn’t working, we wouldn’t have a ton of extra money to invest and and do all these things. We really only be just about paying our bills. Um, and so I’m trying to figure out how to make that happen in in a responsible way, I guess.
Mindy: I think the big elephant in the room is the dog medical bills. And until those are done, there’s not going to be a lot of flexibility because if she’s not working, you can’t afford those dog medical bills. That’s the bottom line. Um, so that will will have to get past that. But then once we’re past that, you’ve been cash flowing that so far and you do still have a lot of cash on hand for what looks like the remainder of the the bills. It doesn’t look like you’re going to be tackling any taking on any more debt with regards to that unless something else pops up. Does is that accurate?
Guest: Yeah, and the cash numbers are a little deceiving because our credit card is has a high balance right now, so I’d take $26,000 off of that cash total. But I think as a general statement, we can get through the dog bills and that’s I guess really the question for me is, okay, we’ve gotten through the dog bills, we need to rebuild our cash reserve a bit, and you know, now now what do we do? Um I think we both kind of felt trapped for the last year just dealing with this and not being able to do anything else.
Mindy: Yeah, you I don’t want to be like I’m not trying to be mean about it but you are trapped. This is this is a choice that you have made and then in order to fund that, you need to both continue at your job. I think a great thing for her to be working on right now is looking for more of these corporate and private clients. That seems to be a really great way. It’s a high revenue generator. You’re not out there trying to sell individual tickets to everybody you’re just selling one trip. Um if she could add one of those this year, add one, you know, two more next year, you know, slowly start to ramp up, that’ll cushion your cash reserve, help pay off that credit card, which we have not talked about yet, and get you to a point where she could potentially leave her job. Um but until that ramps up and the dog bills end at the same time, I don’t see a path for her to leave.
Scott: I I potentially see a path, Mindy. So look, look, your your situation is you have $71,000 in cash, you got $26,000 in credit card debt. Everything else is good debt. It’s all home mortgages or I presume to be a low-interest car loan. Is that right? $14,000 in?
Guest: Yeah, 0% interest. That’s the only reason we had a loan. It’s also it’s a business vehicle. Um, so we’re be able to depreciate it and then we’ll be able to write off mileage when we’re done. And just to to clarify the credit card balance that we paid it off monthly, we just had a gigantic bill for the dog this month and that’s why it’s 26,000, but it’ll be paid off um with the cash.
Scott: And is that part of the $50,000 coming up or is that part of the $60,000 recently spent?
Guest: That’s part of the $60,000 we already spent.
Scott: Okay. So, so here’s the situation. Absent the dog, you guys are accumulate By the way, your your estimate here of $10,000 a month coming in and 15 going out is incorrect. You are clearly bringing in much more than that. You guys are bringing in $225,000 per year. So you’re bringing in closer to $18,000 a month pre tax and post tax it’ll be higher than 10,000 uh a month. You you’re also not including bonuses, right? And not including the the small amount of income you do have from your trips. Is that correct?
Guest: Right. Yes, so the number of the the 10,000, that’s our take home checks every month after we we because we’re do we’re putting all of our invest thing through our 403Bs and through the TSP is all into Roth. So we’re paying taxes on that. Um and then we also have an FSA and you know, so whatever other things. So that is our actual take home um pay per month, not including bonuses um or overtime or anything like that.
Scott: And that’s that’s mostly after tax and that’s an allocation decision. If if you wanted to, you could be bringing home 14, $15,000 a month post tax, right? So, or 13 to $15,000 post tax. So right now, you’re spending $7 or $8,000 plus the $6,000 a month for the dog, or $6,500 a month for the dog. So that that is going to go away. If we once we factor that out, we say, okay, you have a choice here, but you’re going to accumulate about $50,000 a year in cash between the two of you with your current jobs. And your job alone comes pretty close to paying off, paying for your expenses. So if I if I take all that in mind, you’re going to have in the next 12 months, $50,000 coming out of your position. That knocks your cash position from 71 to $21,000, right? You’ve also got to pay off this credit card debt, that puts you negative $5,000 into the into the red here in terms of total cash. But you’re going to accumulate $50,000 if you so choose, and you can allocate that however you wish to the Roth, to the FSA, to the HSA or to your cash position. And based on your circumstances, my thought is you just allocate that to your cash position right now. Stop the contributions for a little bit. Um you you have a set of a set of choices here instead of priorities, right? You think that this business is a good idea. Your wife would rather do it than work her current job. You’ve got a clear path to making potentially six figures if not the first year, in the second or third year from this business, maybe two to $400,000 and it’s what she wants to be doing. So my my thought is by this time next year, you can be sitting on $50,000 in cash. We’re past, way beyond the the dog situation and we’re gearing up for the first full season in your new business. I don’t see why you can’t do that. You’ve got a great situation there. You cannot do that and max out your 401K and have a strong cash position that’s responsible to do that, and buy another rental property, and contribute to your FSA, you have to choose, but I don’t think that’s an unreasonable set of prioritization if that’s what you if that’s what you wanted to do. Hey, we’re going to save our dog’s life, then we’re going to go and pile up we’re going to stop these contributions, pile up cash, and we’re going to take a bet on this thing that we’ve been noodling on, getting starting to get semi- serious about that’s actually producing revenue and that has a six-month window. If you fail next year and you probably won’t, you probably have a great, great success and it will be a solid income contributor to your house and you’ll probably enjoy it a lot. But if you fail, your wife’s out of work for May to October. And then she goes back, probably by September or August if things are really bad. Um, like that’s not, she won’t have trouble getting another job in the same field, right? For within 10% of her current pay. Is that is that a reasonable statement?
Guest: Yeah, and really in our field right now, if you can, she could get a job in about three seconds. Um so that’s yeah, I I’m I I was surprised to hear you say stop contributing to the retirement accounts because if we did that, we could we could stock away a ton of cash next year or this year.
Scott: I just think it’s a better bet right now, right? Your your business idea passes my sniff test, you guys love it, you’re clearly passionate about it, you take as much time as you can and optimize your careers to the extent that’s reasonable around going on these trips. You’re clearly knowledgeable about them and your unit economics are phenomenal. You spend 1,500 and you make $20,000 in nine days. Uh let’s do more of that please. And and you’re probably enjoying yourself on the trip. Um that sounds that sounds pretty good unless, of course, you know, accountant Su doesn’t like uh uh lawyer Jane uh per Mindy’s earlier comment here. Um, in which case you have a fight in the middle of the woods. That doesn’t sound great. But but like like your business sounds like like that that sounds like a reasonable bet to me. Um, and what’s awesome about it as well is it’s an asset. It’s not going to be an asset that’s going to sell for 10 times profit like a uh a big technology company or anything, but it’s an asset. If you get the business and if you build a brand over three to five years, you could sell it for one or two times profit uh if you can get up to two or 3 or $400,000 in a few years. So that’s an investment. Just saying the investment here is you put $50,000 in your cash position and you delay one year of 10% annualized ROI with this with this uh this business. I I think that’s a good bet to me. I’d make that all day over the Roth and an index fund.
Guest: Yeah, that that sounds good. It’s a lot a lot more camping is a lot more fun than looking at my roth balance uh for sure anyway. Um so, yeah, I like that a lot.
Mindy: I’m going to ask, do you have a social media presence and specifically Instagram?
Guest: Yes, we have an Instagram.
Mindy: Okay, on this next upcoming trip, take a ton of video, take a ton of testimonial videos, take like videos of people riding their bikes past you or hiking or whatever it is you guys are doing and those should be your that should be your offseason work this next offseason is to get good at video editing or hire find somebody who is good at video editing and really make it look like you have the most fun place, the most fun trips, the most fun like why would I sign up with your company versus another company? Maybe your company is the cheapest or maybe your company is the best. What makes it the best? I’ve done one ride and having it supported was the best. I don’t want to carry my own stuff. Um, I do a lot of hikes. I live in Colorado. There’s a lot of things that appeal to a lot of different people. Maybe somebody would want a cheaper ride that they have to pack their own stuff on or, you know, different options. I think an epic brainstorming with your wife, with some of your best guides as you’re going along in the off season could help 2024 be even better. But um I like what Scott is saying. I didn’t consider that you had um I didn’t do the math in my head and consider that that was after your 401K contributions. Um, which is why I said I didn’t see a path for you to be able to do this before the dog was was uh finished. The I’m sorry, the dog uh medical bills were finished. That sounds horrible. This is exciting. I’m excited for you and I’m excited to go on this bike trip. When do I come, when do I come out there? What when does it start?
Guest: June.
Mindy: June. We’ll see you in a month.
Mindy: Oh, wait, I’m in Hawaii. Okay, uh I’ll check your schedule.
Scott: I think what’s fun about this and your story and and be the finance Fridays in general is it’s all about what you want and what the most expedient way reasonable expedient reasonable way to get there is. And you didn’t come in and say I want to have financial independence at the earliest phase possible um or the biggest pile of net worth in my retirement accounts at age 65. You said I want to start we want to my my wife, I want to create a situation where or what we got to was I want to create a situation where my wife can run this business full time and and take it on from a reasonable situation. And your situation is really strong. You guys earn 225,000 an income, probably not inclu not including the the side side income that you have from your business and not including annual bonuses, which I think um are probably a part of this that uh, um, is there an annual bonus for you or your wife?
Guest: Yeah, it’s not a a big number. It’s probably around $5,000, but we I kind of don’t count that and just use it for emergencies that pop up.
Scott: Perfect. Yeah. You’ve also got a real estate portfolio that’s going to amortize over the next 30 years and be worth two to $5 million. Uh, that’s a huge range, but it’ll be worth much something more than it is today and be paid off, right? It’s it’s basically cash flowing and the the payout of your mortgage is there. So your retirement um is not set, but it is you’re like way ahead of probably almost all of your peers in terms of net worth and the investing that you’ve done and it seems like it’s in a sustainable position. So to me, that that screams, yeah, stick it all in cash and bet on yourselves, right? All you got to do is beat a 10% annualized ROI with this with this uh this business. I I think, you know, odds are, you’re going to lose uh half a year of earnings at most if your first year, um uh probably uh that that’s your downside and your upside is within 5 to 10 years, you build a business that generates a few hundred,000 dollars, um or $100,000, a couple hundred,000 dollars a year and is worth two or three times that amount. So that’s a good bet to me. I’d make that all day over the Roth and an index fund.
Guest: Yeah, that that sounds good. It’s a lot a lot more fun, camping is a lot more fun than looking at my roth balance, uh, for sure anyway. Um, so yeah, I like that a lot.
Scott: And then max the roth next year.
Guest: Um I did have I have I’ve heard you say this before, Scott, um I think I have found the best HELOC in the entire world. Um so I’m I I’ll bring that to you. It is a 15-year draw period and a 15-year paydown period.
Scott: And it’s for investment properties?
Guest: It’s uh is for primary properties, so,
Scott: Okay. And which bank can you get this through?
Guest: Mid-Atlantic Federal Credit Union.
Scott: Mid-Atlantic Federal Credit Union. Uh they are not a sponsor of BP Money, but uh David is endorsing them. So go check them out. I certainly will after this episode and see um uh what what what kind of options exist there.
Guest: Yeah, that’s how that’s how I I built the portfolio with my last residence. I fixed it up, took out a HELOC, started buying rentals and buying them. Um so that’s they were they were great.
Scott: Awesome. and you built a nice solid portfolio in Cleveland is what you said I think or?
Guest: Yep, just outside Cleveland.
Scott: Well David, you you’re crushing it. Um lots of good options here. We’re so sorry to hear about Blaze and glad that he is on the path to recovery and you’ve got a a good prognosis here. Um sorry it’s uh so devastatingly expensive. Um and very optimistic for the future with uh to see how this business goes. You have to uh uh let us know how it turns out and what you guys decide to do heading into next year.
Guest: Yeah, we’ll do. And I’ll see Mindy out there pretty soon, right Mindy?
Mindy: Yes. Yes, I’ll be the one that looks like this.
Scott: All right, thank you, David.
Mindy: Thank you, David. We’ll talk to you soon.
Guest: Thanks, guys.
Mindy: Hang up. That was David and that was kind of exciting. But Scott, I think we do need to address the elephant in the room or the giant dog vet bills in the room and talk about pet insurance.
Scott: I think it fundamentally comes down to a choice. It’s either you’re one of those people who can set a limit and say anything over this amount and I’m not going to fund it and and and sorry and and plenty of pet owners have that mentality. Nothing wrong with that. That’s how some people choose to approach that relationship. And other pet owners uh probably like my wife and I, there’s no there’s no limit. Fred, our kitten who we’re smitten with. uh, you know, had a had a uh an issue and we spent $3,000 to uh uh resolve that issue. And so if you’re in our camp, um and probably would be willing to spend whatever it took to restore the health of your family member, you got to have insurance um that can cover it. We didn’t. Um luckily it wasn’t $100,000. Um but I’m excited to learn which insurance to pick because that makes a big difference. And with that, I’d like to welcome Kaylen, uh our producer, onto the show. Kaylen, can you give us an overview of the options that pet owners have with insurance, what you’ve chosen personally, and where you would advise cat and dog owners, for example, specifically to look, um in the in that world?
Guest: So I actually just got a very sweet uh Corgi puppy. So this sent me down the financial rabbit hole of how do I best position um myself and having a new family member? Uh so the backstory here is that my boyfriend has a special needs dog though and so Zoe has uh had is like a $30,000 dog at this point and so he’s only had to pay 10% of that because he chose a really great pet insurance. And so it really varies between breed is what I learned and age and if they’re a mixed breed versus um a pure bread. I do have a pure bread Pembrok Welsh Cory. So they are a little bit more expensive. Um what I found is True panion is great. Um the one that I ended up choosing that I found the most cost effective was healthy paws and for uh for Walter the cory, it’s um 60 bucks a month, uh $250 deductible and it covers uh 90% of his vet bills. So that’s a pretty substantial um amount if he ever were to have an issue like our other dog has had. So I I highly recommend it to people. You can just go in and do a lot of researches. Uh pumpkin is good, True panon is good. Um there’s a lot of them out there. I just found that one to be the most cost effective. Uh just I want to let everybody know, the cost will go up if your dog is older. And so if you’re just getting your pet pet insurance and let’s say they’re six or seven, um that is factored in because that dog is going to have more issues uh as they age.
Mindy: Kaylen, our guest today said that his original pet insurance plan had a cap. Other than a cap, is there anything else that listeners should be looking at in pet insurance?
Guest: Yeah, that’s actually a really good question. So other plans may cover things like dental or it may cover part of wellness visits. Um I looked into some plans that actually did have that. Uh I found that I did the math on it and it was an additional like $30, $40 a month to have that that fact in. And if you if you look at it, you look at the cause of a vet visit, it it didn’t math out over the course of the year. So for me, the biggest thing to look at is an unlimited cap, what do you want your deductible to be and do they actually pay the vet or do they or do you have to fund it and then they pay you in a week or two? Um I ended up choosing the option that I would have to pay out of pocket for and then they pay me back versus um someone directly paying the vet, but that’s because it was less per month and had all the benefits of an uncamped um max.
Scott: Awesome. So it’s like shopping for any other type of insurance, but um perhaps a secret liability or something that is building um for many millions of pet owners out there that they’re not considering. Um and look, you got to know yourself there. Are you the type of person who’s going to say no to a bill like what Blaze had or are you the type of person who’s going to say yes? And you have to factor that in. Um and you might want to, if you’re on the fence, be conservative and go with the I’m probably a person who’s going to, you know, pay to save my dog’s life. Um thing because I think in the moment that will be hard for folks. So at least that’s how it would be for me.
Guest: And like just think about it. You like you’ve chosen to take on this liability and additional responsibility in your life. So it’s up to you to figure out what type of life you want that pet to have. And I think 60 bucks a month, $80 a month, you know, put pet food on top of that. What’s that? $100 a month, $120. I don’t think that’s a big ask uh to extend the life of your pet.
Scott: Great. And we have no financial affiliation as far as I know uh in any capacity. Weve never never talked with anybody from the insurance provider that you chose. Um so this is not an ad, this is just a discussion amongst uh uh the three of us. So that may change in the future one day. We don’t know but that’s not um something that we have any ongoing relationship with.
Scott: Thank you so much, Kaylen. We’ll uh uh pet owners, you’re encouraged to go look at insurance. Healthy Paws may be a good place to start or to include in your search for that. Um so that you don’t have a situation like David’s. David is very fortunate to have the means to be able to cover this and cash flow it within the next year and still move towards his financial goals of starting a um wonderful trip business. Uh other folks, this could have been devastating and set them back a much longer period of time.
Mindy: All right, Scott, should we get out of here?
Scott: Let’s do it.
Mindy: In honor of Kaylen’s cute little Corgi puppy who looks like one of those blow-dried cows, I will say that wraps up this episode of the Bigger Pocket Money podcast. He is Scott Trench and I am Mindy Jensen saying, buy for now fluffy cow.
Scott: That was a very moving outro, Mindy.
Mindy: 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.
Mindy: Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Kaylen Bennett, editing by Exodus Media, copywriting by Nate Winetraub. Lastly, a big thank you to the Bigger Pockets team for making this show possible.
