Welcome to the Bigger Pockets Money podcast where we answer questions that are direct from our Facebook group, which you can find at facebook.com/groups/bpmoney. Hello, hello, hello. My name is Mindy Jensen and with me as always is my fully employed co-host, Scott Trench. Thanks Mindy, that intro is working. Scott and I are here to make financial independence less scary, less just for somebody else to introduce you to every money story and to answer your burning questions because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting. That’s right. Whether you want to retire early and travel the world, go on to make big time investments and assets like real estate, start your own business, or ponder questions we can certainly provide opinions on, but don’t necessarily have right or wrong answers. We’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams. Well, speak for yourself, Scott. I know everything. All right, here is the segment of our show called the Money Moment where we share a money hack, tip or trick to help you on your financial journey. Today’s money moment is, go grocery shopping in the middle of the week. Tuesday, Wednesday, and Thursday are when grocery stores are more likely to have sales. Do you have a money tip for us? Email moneymoment@biggerpockets.com. Scott, I’m excited to answer these questions. You have the first one. Let’s do it. Let’s hear it. So here’s a question from our Facebook group. All right guys, 70% of homes in the US have a mortgage at 4% interest rate or lower. 38% of owner occupied homes are owned free and clear. Estimates show that we are 1.5 million homes short in terms of meeting demand. So aside from a black swan, I genuinely don’t see how the housing market can reasonably crash. Can you get someone to explain? Mindy, what do you think? I get where this comment is coming from. However, you it doesn’t matter what your mortgage payment interest rate is if you lose your job and you don’t have any money. If I have a 4% interest rate or a 3% interest rate and zero income and no savings, I’m not going to be able to make my mortgage payment. So while there are there there is a housing shortage, I could also see somebody in this position saying, I’m not going to sell my house right away. I’m going to just try and get another job so I can keep my interest rate. And I can see foreclosures happening. Um, I I keep hearing all of these inklings about how there’s a recession coming. I keep not seeing a recession coming, but I keep hearing that it’s on the horizon at any moment. So I we absolutely have a shortage of housing and I don’t see a housing crash like 2008, but I can see that the housing market has slowed down because 4% mortgage rates cause sellers not to sell when they’re sick of their house. Whereas four years ago, if you had lived in your house for a while, you could be like, meh, I’m kind of sick of this house. I don’t really want to live through a remodel. I’ll just sell it and buy something new. And because the market kept going up and up and up, it was easy to do that. Now, you’re trading your $1,300 mortgage payment, $2,500 mortgage payment for a 3,000, $5,000 mortgage payment. That’s going to be, I mean, you’re you’re essentially doubling your mortgage payment from where you are right now. So I don’t see a lot of people selling, which means that we will continue to have a shortage. So I don’t see this being a housing market crash, but not for these reasons. Does that make sense? Yeah, I look, I I I I agree with the sentiment. I think that there’s a lot of, uh, uh lot of reason to believe that we’re not going to see single family housing stock nationwide crater in price over the next couple of years. Could be dead wrong on that, but I think there’s a lot of reason to be optimistic that that will not happen. That said, there is going to be a consequence from drastically rising interest rates. And you got to be as an investor or a homeowner smart about this and understand where you could be wrong, right? Now, let’s let’s unpack a couple of things. First, affordability for housing prices. Affordability is historically low right now because of the rising interest rate environment. But some things to consider in that context is that histor- affordability for housing had actually been going up for 20 years and was historically affordable two or three years ago in the low interest rate environment because of the low interest rates you could get a mortgage. This is not very popular. People like to complain about housing prices. They see the price of the house and think that’s the affordability. But from a payment perspective it was actually historically affordable relative to inflation. Um, so that’s a fun fact. That has definitely changed with the rising interest rate environment, but we’re not in crazy land. We’re just historically unaffordable by a couple of percentage points adjusted for inflation. So, note that that’s also a vote in and in confidence for why the housing market may not crash. Now, here’s some reasons why it might. First, you have 700,000 single family homes currently under construction. Those will hit the market by the end of 2024. That is going to put a supply shock in some markets. Those housing those houses that are under construction are disproportionately going to hit the south and the west and that’s also where we’re seeing 900,000 another 200,000, so that’s 1.6 million total units. 900,000 of which are multi-family, 700,000 of which are single family going to hit the market um uh in the next year under new construction. Those absolutely will have an impact on prices over time and you will see regional crashes. I would bet in certain parts of around this country over the next two years. And Mindy, my money would be on you’re going to see some real pain in Florida. You’re going to see some real pain in Texas. You’re going to see some real pain in certain western markets. I’m not sure if Denver will crash, but I’m not super bullish on my home market right now. I’m certainly holding on to my portfolio here, but uh I am very braced for the possibility of a five or even 10% um or potentially greater reduction in uh uh property values from their peak um here in in the Denver market in particular because of all this new construction, you just have to stick your head out the window and see all the cranes. That is supply that will compress or at least slow rent growth um and and housing costs in some in some areas. Um second, you got mortgage rates. People are not, you know, the Fed is going to stop raising interest rates, at least that’s what they say they’re going to do going into 2024. That doesn’t mean they’re coming down. And if rates don’t come down, if the Fed does not reduce the federal funds rate, you will see the yield curve un invert. And that means you’re going to see that 5, 10, 50, you know, 15, 20 year treasuries, you’re going to see the 10 year potentially move past five, five and a half, maybe as high as 6% as that yield curve un inverts and that’s going to put significant upward pressure on mortgages. I I think that people are not giving enough weight to the possibility that mortgage rates can hit um can go well north of 8% uh going into 2024. I I I think um that we’re a coin flip from that possibility, not that it’s a not that it’s a remote one. Uh I don’t see a a world in which interest rates come crashing down other than a deep, deep, painful recession, which by the way results in a housing crash most likely. So, I I I think that those that those are some reasons to be fearful of this of this market, but again, I think that those are over I I and so those are possibilities you need to be aware of and appropriately scared of. But all that said, again, I tend to agree with Josh’s point that there are um there’s a housing shortage overall, um and that a lot of a lot of people um own their homes free and clear. A lot of people have are locked into their low interest rate mortgages and there’s a good reason to believe that that will insulate us in the single family space from a steep, steep crash nationwide. Scott, I think you hit the nail on the head when you said that there’s uh the there’s no guarantee that the markets are or the interest rates are going to start coming down. I have heard from so many people, just random conversations. Oh, when rates drop, when rates drop. As though this is a foregone conclusion that rates have gone up and then are of course immediately going to come back down. And that’s not the case. We could have rates at 7, 8% for a while. There’s no deadline for reducing them. So, I think that’s something that people need to keep in mind if you are buying a house right now, anticipating that rates will come down. I think that rates will come down, but I couldn’t give you any sort of ballpark about when they will come down. So make sure you can afford what you’re buying right now. That that’s it, right? I mean, you can’t predict this stuff. There will be at some point a drop in asset values. You’re seeing it in the multifamily space and commercial real estate right now. They’re this this real estate is cyclical, it will crash at some point. And if you’re ever all in on the market, you should be terrified. in particular now, right? That doesn’t mean you shouldn’t stop, you know, sell your home or sell your properties or whatever with this. You can stick to your long-term strategy and recognize that it’s going to be cyclical, just like you would with your index fund strategy, but you should always, always, always have a healthy fear of the market and know that despite your best guess here around supply being short um and and lots of old home owners having lots of equity and lots of defense mechanisms in the housing market to sustain prices, you could be wrong because there’s multiple factors um that that are non-zero chances of occurring over the next year or two. Yep. All right, let’s go to the next question here. Mindy, go ahead. Okay. Hey there. I’m looking for some guidance. I have $78,000 in credit cards and personal debt. I was self-employed and my business wasn’t doing well, so I decided to shut it down and started a W2 job four months ago. I’m still struggling to keep up with payments. I’m married with two kids and my wife is a stay-at-home mom. The amount of stress this puts on me is overwhelming. Our primary residence is a duplex with $180,000 in equity. Interest rate 3.2%. My question is, would it be wise to sell and pay off the debt, start renting an apartment? We have a $1,300 budget. Have the rest on reserves and start fresh and apply all I’ve learned here and on the podcast. Wow, weren’t we just talking about high interest rates, Scott? Um, $78,000 in credit cards and personal debt. There is no information about the interest rate on these credit cards or debt. So, uh, first of all, let’s commend this person. My business wasn’t doing well, so I decided to shut it down and started a W2 job. I think that’s really important to note that sometimes it’s hard to make this this difficult decision to shut down your your dreams of entrepreneurship and go back and get a W2 job. So I think that was a smart decision at the outset. Again, we don’t know what the business was, but, uh, Scott, what is your initial thought on this? I think there’s a couple pieces of information that I would need and and I’ll I’ll I’ll list them and provide the the the scenarios in my that I’m running through my mind. First off, we have $78,000 in consumer debt. Let’s assume it’s bad debt, it’s high interest. We need to pay it off. If the W2 job less expenses results in a savings of 7,800 a year, you know, 600, 670, 700 bucks a month, then that’s going to take him 10 years to pay off. Right? Um, so that that changes and that change it changes things if he’s saving $35,000 a year and it’s a two-year payoff. right? So I would say what what what what are some scenarios here? Can my wife go to work and earn income here and can we knock this thing out in two years? This duplex, is it a house hack? That wasn’t clear because if if it’s a house hack that’s providing a very, very low cost of living, then that’s going to be, you know, that’s going to stink to to get rid of this low interest rate mortgage, um, sell it, harvest the equity and use it to pay off the these returns when perhaps it’s providing a greater effective cash on cash yield with that low interest rate by keeping their housing costs really low. So we we’d want to know that. My my bias is always to run the scenario and find a way if it if there is to commit to that grind and spend two years and just pay it off and get out of get out of this hole. I understand in those two years, I’m going to enjoy my life. I’m going to set a little bit of aside for fun and family memories, but I’ve got I’ve got to grind here that I can go and knock this out. But if the reality is that this is a 10-year grind, then I think that’s way too long and too much of of of this person’s life is going to be uh uh uh lost to attempting to preserve the duplex when he’s got the answer right there with $180,000 in equity. So if it’s that long of a runnoff to pay this thing off, I would probably sell, start over and reset and rebuild the financi a family living situation in something that’s very sustainable and enables me to have a very high savings rate so I can be restart the journey towards um building long-term wealth, um from a strong financial foundation. Okay, I love what you have to say. I love the the logic behind it looking at how long it’s going to take to pay off the the debt. Um, so if this was your question, let’s, you know, look at how long you can how much can you save up like Scott said, how long is it going to take you to pay off this debt? The first thing that struck me is that your wife is a stay- at- home mom and you have two kids. How old are the kids? Are they going to need child care? Like a two and a three-year-old is very different than a five and a seven-year-old who are in school during the the day and maybe she could get a part-time job at school or something. Um, so if wife works, then they would need child care. How much income can she bring in in relation to what they would pay for child care. That’s something to consider. If we’ve got credit card debt, I’m guessing that this is 18 to 22% interest rates. A helock to take to tap into that $180,000 in equity while still living there is going to be a lot lower than that 18 to 22% credit card interest. So, if it’s going to take you 10 years to pay it off and you have a helock, at least you’re reducing the amount of interest you’re paying, then you pay off all of the other debt and you have one bill to pay instead of personal debt and credit cards and all of that. So, I would look at the interest rates on the different debts. See if there’s any way to refinance these debts. Um sometimes there’s the credit card balance transfer game. That will sometimes come with a fee to transfer your balance, so definitely read all of the fine print, but if you can pay 0% interest, that’s even better than the seven to 10 uh seven to nine on a Heloc. And I ha I’m I’m making these numbers up. I don’t have a Heloc quote recently. Um but even still, if it’s lower than your credit card interest rate, that’s going to be better. Um and a third bit of advice is to look at what the debt is comprised of. Is it truly from the struggling company or is it frivolous spending? Because if it’s frivolous spending, there was just an episode of the uh I will teach you to be rich podcast where they had paid off $130,000 in debt and six months later they’re another $50,000 in debt. That’s not a struggling business. That’s frivolous spending. Where is this debt coming from and are you continuing to add to it? Because if you’re continuing to add to it, that’s a behavior problem that needs to be addressed. I wouldn’t take any big steps until I looked at the behavior problem if there is one, if there is one. and um then look at different ways. I don’t love selling a primary residence, house hack duplex with an interest rate of 3.2%. Um, like you said Scott, if that’s a house hack, that’s probably going to be providing a very nominal amount of housing expense if any. and what kind of apartment can you rent for $1,300? Are you moving out of this house into a studio apartment where you’re going to be cramped with your family and yes, you’ll be out of debt, but you’ll be miserable in your living situation. So, um, I guess my overall advice is to take a step back, take a deep breath and write everything down on a piece of paper. I’m assuming that your spouse is in there talking to you about this. If not, get somebody to watch the kids and have a great big conversation. What can we cut out of our life that we can throw money at this debt. How can we get this debt paid off? All right, let’s go to the next question here. Given the current mortgage interest rates of 7% and the average return of the S&P 500 being 9.75%, 7.03% adjusted for inflation. These are all depending on your source, of course, my context, not the questioners, not not the question askers. Um over the past 20 years. Does it make sense for current buyers to forego investing in the market and put that money towards loan principal? Mindy, what do you think? Gosh, time in the market beats timing the market. And I would even at 7%, I would continue to invest in the stock market. Maybe split the difference. I don’t like paying more towards my mortgage, but I also don’t have a 7% mortgage. Even when I did, I didn’t pay more towards it. I’ll take the opposite on this one. Um, I think that the Fed is raising rates to combat inflation. So I believe the long-term inflation is going to be between 2 and 3%. Maybe I’m wrong on that. Um, I believe that interest rates have a very reasonable shot at staying high um for the long term. and I believe that an after tax return of on a rental property for example, um of of a of of a a 7% um guaranteed, 7.5, perhaps 8% as they get up higher is a guaranteed return or as close to a guarantee as you’re ever going to get in this life. um whereas the stock market is a historical average that probably that I believe is likely to continue uh going into the future. um but again it’s it’s pre-tax um in in most cases. So I I like the guaranteed return of these high uh interest rate mortgages and if I was going to buy a property with with a high interest rate mortgage, I think I’d be very tempted and perhaps would um apply the uh uh additional cash towards paying off a loan early. Okay, Scott, I am interested in your opinion on this one because I know what I would do. My sister is getting a divorce, the house she lived in with her husband has bad juju for her and she wants to sell and be done with it. However, they bought it multiple years ago, she’s got a great interest rate and she’s a teacher, so she doesn’t have a ton of income. Her youngest child is in their junior year of high school. I understand why she wants to sell, but I think her best course of action is to stay in the house. What do you think? Uh, I think that a house is marital property. I think that when this person gets a divorce, they are likely to have a a a challenge where one of them is going to get to keep the house, but the other one ain’t going to be on the mortgage uh with it. Uh, and so I think that there’s a potential that this person may have to refinance the house, which changes the math from a a uh uh uh uh for keeping it and the bad juju associated with the house means it’s not really to their advantage one way or the other financially to keep it or sell it. Now, if I’m wrong on that and they’re able to keep the mortgage in place uh at the lower interest rate, then obviously it makes more financial sense to stay in the house and this is a money podcast and that’s the right financial decision. Um, a potentially better answer is to work on your fi journey aggressively for the prior 10 years of your whole life and have the option when things come up like this to move along with it and make the suboptimal financial decision because it’s better for your mindset and personal life and and lifestyle. Um and you know, you’re not looking at bad memories um or reminders of bad memories uh that whole time. So, that that’s my thoughts on it. Um what do you think, Mindy? I’ve lived in so many houses over the years. Uh I’ve never lived in a house for more than six years in my whole life. So, to me a house is just a house. It has memories, but then also it’s just a structure that you live in. So, I don’t have these same feelings like, oh, we made a life here and then I have to leave. Um I would stay in the house personally because you’ve got such a low interest rate. and I really don’t think we’re going to see 3% interest rates again and I hope I’m wrong. I really want to be wrong about that, but I don’t think I am. I think 3% interest rates were too low for too long and that’s why we’re in this position we’re in now. So, uh, I think that if she could keep this rate, she should do everything in her power to keep this rate. Where are you going to go that you can get a cheaper payment? I mean, if she’s got a super low interest rate and she can’t afford that, what can she afford? At least the, you know, the the a housing, the house payment isn’t going to go up. Your rent is going to go up, your um, you know, but there’s also, I saw something that uh Ramy tweeted the other day. I thought that was very interesting. It said, my rent payment is the most I’m ever going to pay. Your mortgage payment is the least you’re ever going to pay with like repairs and things like that. Um, so that’s, you know, that’s another thing to consider is your sister’s house in good shape? Is it, you know, is she’s staring down a new roof or new windows or new appliances or furnace or air conditioner or all the things. Um, so I guess it depends on the condition of the home, but, you know, these are the these are the times where emotions can really get in your way. and taking a step back and saying, okay, we need to make a logical decision. I need to make a logical decision based on numbers, not emotions. And numbers have it me paying a $1,300 mortgage payment or $3,000 in rent. That’s a no-brainer to me, especially for a teacher who doesn’t make nearly enough money for the job that they do, uh, I think this is this calls for logic and running the numbers first. Oh look, like so let’s assume that the husband also had um an income that was the same or greater than um this person’s sister, who who is a teacher. Okay, now we’re taking over the housing payment that used to be paid for by two income earners. So I think that the where you going to move to thing to maintain it, you know, implied in that perhaps, uh, is are you going to move like how are you going to maintain your standard of living for the same cost? Maybe the other answer to this is you can’t maintain your standard of living uh anymore because you now have there’s two rents that need to be paid for one for each of the parties uh in this divorce. And so you must downsize and the life the for the consequence of having a divorce and the problems in that are that in the personal life that led to this divorce, one of the consequences is a forced reduction in lifestyle um as as part of this. And we have to acknowledge that and say, look, a $2,000 mortgage payment is going to be swapped out for a $1,300 rent payment and I’m going to go from a four bed, two bath house to a, you know, two bed, one bath apartment and that’s going to reduce my cash outlay and be the move I need to make for my financial position. So that could be the painful reality here as well. Well, Mindy, let’s go to the next question here. Hi everybody. I’m looking for how others have made the decision on which path to fire is best. I’m constantly noodling between the maximizing investment accounts approach and saving cash to begin a real estate portfolio approach via house hacking and the multifamily home stack. These two strategies are at odds with one another since one involves locking up my money in tax advantage accounts and dumping money into the market. While the other requires me to save cash, which in my high cost of living city, it’ll be around $80 to $100,000 in cash needed for about a 10% down payment and the other costs associated with buying a property. I’d love any perspective on how others have decided and committed on their paths to fire. Love this question Mindy, you go go ahead and give me your let’s let’s start with you. I love this question because this is one of the most commonly asked questions. and my first response to anybody who I’m having this conversation with is, do you actually want to invest in real estate? Because just because we work at bigger pockets doesn’t mean that we think real estate is the right investment approach for every person. and there are a lot of people out there who are very successful in their investments who don’t invest in real estate. And when I meet somebody who’s like, I’ve heard I should invest in real estate. Those are the people that I a few years later hear saying, I can’t wait to sell my properties. I hate this. It’s such a hassle. And the reason is usually and not in the case of this particular person because I don’t even know who wrote this, but usually they didn’t do everything right. They cut a corner usually with tenant screening because it’s so easy to cut corners with tenant screening. or they bought a house in an area of town that doesn’t lend itself to really super high quality tenants who are going to pay their rent on time and never have any issues. They bought a house that’s falling down and needs a ton of repairs. There’s there’s lots of corners that you can cut in real estate and every single one of them comes back to bite you in the butt. Pardon my French to those of you listening with your kids. So, that’s my first question. Do you actually want to invest in real estate. And if you do, you don’t I don’t really think you have to choose between one or the other, you can do both. We’re in a high interest rate environment right now. So you are going to need a lot of money to buy a property and it’s going to take a lot of money to run that. Are you going to do it she said house hacking and the multi-family home stack. I’d go house hacking first to see if you like it. You can get the lower owner- occupied mortgage and then you can buy a property and have a roommmate or buy a duplex, a small, easier to sell than a multifamily uh when they say multifamily, I’m thinking larger multifamily. A duplex is about as easy to sell as a single family home, whereas like a 10 unit apartment building is more difficult. Um so with this one, I would say maximizing investment accounts approach. Okay, so you’ve got a presumably you’ve got a 401k at your job or a similar account. If your company offers a match, I would absolutely go with whatever the match is. If you’re able to contribute to a Roth IRA, I really like the Roth IRA for the tax-free growth that it provides. The HSA, I love that for the triple tax advantaged opportunities that it has and then save for the house hacking as well. High cost of living city, what sort of rents are you going to be able to get versus the price of the property? Um, just because you want to invest in real estate doesn’t mean that it’s going to be a good idea in the place that you live in. And there’s nothing wrong with renting your own property and owning a house that you rent out to somebody else. Hey Scott, do you know anybody who does that? No, I haven’t met anybody um with that approach. Well, I have. His name is you. Okay, let’s hear your thoughts. Yeah, I I I I love this question. I I I think it’s it’s a fundamental one in in the journey. The question is which path to fire is the best? right? And I have a very clear opinion on this one. I believe that in the early days, starting from zero, for someone um that that is that is wants to fire, financial independence retire early, and I’m talking a decade, two decades, maybe three, if you really hustle early. I think you have a clear choice. You have to accumulate cash outside of the retirement accounts and that has to be your first focus. You have to concentrate there and exploit the opportunities that come with it. Don’t necessarily have to be real estate, but I think you have to focus on, hey, I’m going to forgo the 401K, I’m going to forgo the Roth, I’m going to forgo these other tax advantage retirement accounts, and I’m going to concentrate on building a liquid position and exploiting the opportunities that come from it. And one of the first ones there is a house hack. I think if you, if you’re in a high cost living city and you’re not house hacking, then you need to earn so much money at your job, which is a viable path, to be the elite high-income earner and just live a middle class lifestyle in your high cost living city, then you can, you know, uh, by definition, mathematically achieve fire pretty quickly with that. But if you’re not one of these elite income earners, I think you have to choose. I think you have to choose the map the massing of cash that you can spend. And I think one good way to to deploy it is real estate. Another good way to deploy it would be to go into business for yourself and begin creating that asset at a reasonably early venture, maybe in the first two or three years. Um but I think those are uh I think that’s a break point that you will be confronted with. Now, if fire to you is at 55 and you’re 25, then you and you you you can go the other path here and begin maxing out your 401k, um and and uh go through the retirement account strategy and work on one of those more advanced um uh waterfalls that allow you to build up the pre-tax retirement and then once you fire, uh begin um the Roth conversion process. So it is possible, but I think it provides much less flexibility and if you’re aggressive about it and want a 10-year path or less, I think you got to go with the liquidity. Um, and that’s what I did. Okay, you said forgo the 401k. Do you mean even if there’s an employer match? Or would you do enough to get the employer match? I I think the match can sometimes be a trick question. So like for me, when when I, when I started my career, I had I had a 401k match at uh, at an employer, a Fortune 500 company, but it vested over four years. I was only there for a year because that job was not a clear was clearly not an opportunity to achieve fire in any timely uh, manner whatsoever. So I jumped ship and joined a little startup called Bigger Pockets. So so sometimes I think that can play in. like if you have a guaranteed automatically vesting match, then put your $2,000 or $3,000 in and take your match, but then deploy and then begin concentrating all of your rest of your resources on that liquidity strategy. So it doesn’t have to be all all all for in there. But you do have to choose between the 401K or the Roth and the massing of liquidity uh at some point the person’s question implies and correctly that you do have to make that choice in the early days. Yes, okay, thank you for the comment about vesting. That always slips my mind. I’m glad that you clarified that. I’m glad I asked. Yeah, so, you know, for for the the the opportunity cost of forgoing the $2,000 that were vesting at the 401k was was not close to the opportunity that was available at at Bigger Pockets for me, um, with that particular movement and may be available to many other people if they, you know, you become a real estate agent and you sell one extra house the next year that is way beyond the returns that you’re getting by staying on to wait for that vest that thousand or $2,000 uh vesting event at your 401k at work. That was also a clearly thought out decision. You weighed the pros and cons and you made a choice based on logic, not based on emotion, not based on, you know, oh, I want to spend every dime that comes in my paycheck. It was it was a decision to do something different. That probably gives me a little bit more credit than I had. I look, I I think that there was some and there was some instinct around accumulating cash produces this opportunity that you can’t quite see yet, right? And there’s no calculation to it. There’s no ROI on the 25 or 50 or $100,000 in the first amount of liquidity. But when it comes time to join that startup or comes time to start that business or it comes time to think about the next move, the my lease is ending and the next what am I going to do with the next move, having that cash um presents tremendous opportunities. And I think that the ambitious person going all out in pursuit of fire is uh uh likely to benefit from that more than the tax savings from retirement accounts in the early for first couple of years in particular. And again, trick question here because five years into this journey, this person if they’re serious about fire is going to have their expenses very low, their income is going to grow and they’re going to have the option to fund all of their retirement accounts and have cash left over to be an investing. So you’re really in a practical sense for people who are serious about the fire journey are talking about the first couple of years, um and the decision the decision point, not, you know, a perpetual forever, I’m not going to invest in retirement accounts. Nowadays, I’m out all my retirement accounts. Um, um, because I have the ability to do that and still have some cash left over to invest in real estate and other after tax um cash flow generating opportunities. I think that’s great, Scott. I like the way you think these things through and the way that you explain them. All right, Scott, I think that wraps up this episode of the Ask Mindy and Scott Bigger Pockets Money podcast. He is Scott Trench, as always, the CEO of Bigger Pockets. I am Mindy Jensen, the host of this podcast. saying, buckle up buttercup. 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. Bigger Pockets money was created by Mindy Jensen and Scott Trench, produced by Calen Bennett, editing by Exodus Media, copywriting by Nate Winejob. Lastly, a big thank you to the Bigger Pockets team for making this show possible.
