Mindy: So, you’re 50, you’re broke, you’re in debt, and you’re starting to think to yourself, man, retirement is just never going to happen for me, right? You’re wrong. Today we are breaking down exactly how to get started and become a millionaire by age 65 even if you’re starting from zero or worse from a negative position. We are covering actionable steps to take, mindset shifts, and strategies to build wealth fast, even if you’re getting started later in life. And we are going to share actual numbers to project Nancy’s progress to show you exactly how this can work.
Mindy: Hello, hello, hello and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen and with me as always is my wants to help you catch up to retirement co-host, Scott Trench.
Scott: It’s a great way to broken into this conversation, Mindy. Yeah, we released episode 668 of uh the BiggerPockets Money podcast in August of last year. That was with Bill Yount and Jackie Cummings Koski from catching up to fi. By the way, that is one of our top viewed videos ever. And if you are broke and starting out and trying to catch up to fi, the catching up to fi podcast is one of our favorites. Go listen to them and check them out. They’re going to be very, very helpful for you on your journey. Um and they’re good friends of ours. So we walked through in that episode, how a 50-year-old who starts at zero net worth can become a millionaire at age 60. But there were a lot of comments saying, hey, who’s broken doesn’t actually have debt going on there. So the YouTube commenters like to always point out challenges with any plans that we we approach, this one will be no different. Of course. But we decided, hey, let’s tackle that. Let’s say that this person does have $50,000 in debt when they’re starting out. How does that change things? How can we build them a plan to attack financial independence or at least a more comfortable retirement. And that’s the challenge we’re undertaking today. We of course have a beautiful PowerPoint presentation prepared by Mindy and I using Mindy’s wonderful design skills and my CEO board deck template styling skill set developed over 10 years at BiggerPockets. and we’re excited to dive into it. So without further ado, should we get going?
Mindy: We should, Scott, and this episode is for Nancy. Nancy is in a similar position to Barb. She’s 50 she’s recently divorced, but Nancy has $50,000 in debt. So, if you find yourself a little bit more towards Nancy than Barb’s position, this episode is for you. Scott, let’s jump in.
Scott: Nancy is a fictional person that we made up. We are not financial planners or advisors, we are podcasters. This is our best attempt to help Nancy. Your situation may differ. And even if we were financial planners or advisors, we would not be your financial planner or advisor. So with that caveat, let’s get into it. Nancy is 50 recently divorced and was until recently a stay at home mom. She has $50,000 in debt and zero assets. We selected this persona because we felt like this is one of the most challenging possible starting positions that we could envision for someone in this situation. Now, there are more challenging positions. This’s the most challenging position that we think has a realistic shot of catching up to financial independence because Nancy is able bodied and and able and willing to work. Some people don’t even have that privilege, of course. But we’re going to take this this position and say this is a really challenging spot. Nancy may feel like she does not have hard skills to earn income. She feels like she doesn’t have any resources and she feels like she’ll have to relearn how to build a sustainable life because the skills of basic money management may not have been things that she was responsible for when she was married previously and not working.
Mindy: Scott, this is what we’re going to do for Nancy. First off, we are going to acknowledge all of the negative feelings that she is having surrounding money and her situation in general. We’re going to face the numbers. She has to look at these numbers head-on. We’re going to set some goals for her. These are going to be attainable, but also a little bit on the stretch side. She is going to have to do some hard work. We’re going to make a financial plan for her. We are going to share some different housing hacks and we are going to set her up with a supportive community so that she is on the right path and has the support behind her.
Scott: Let’s jump into it. and let’s also be clear here. You know, this is not a situation where Nancy’s going to get rich. Nancy’s not going to retire early, of course, in this situation. Nancy’s not going to be happy with the first job on this journey. Nancy’s not going to be happy with the cutbacks that we’re going to say are required to make the financial model that we put together work in this situation. And Nancy’s going to be having to temper expectations and eat some humble pie about how her lifestyle is going to look on a go forward basis, especially for the next three to five years. and the first few years of this journey where we got a jump start the compounding of her investment portfolio to get her to financial independence.
Mindy: But Scott, if she makes these changes, then she’s going to see real results down the road. She’s not going to see real results on day one, but she’s going to see some real results and start to figure out, yeah, this is actually doable.
Scott: That’s right. If Nancy is willing to cut back on her lifestyle, if she’s willing to live far below her means, eat some humble pie and take this entry level job that we’re going to suggest she takes and work hard in a world that will be very exhausting mentally and physically. then what she will get as a reward will be the peace that comes with more financial security and independence and a release of this anxiety, this fear, this pit of fear in her stomach that she’s going to retire in poverty in a few years.
Mindy: Okay, what’s her step one?
Scott: Step one is acknowledging the emotions attached to money. And yes, that’s serious, right? We need to build a financial plan, but we cannot build a financial plan if we’re so scared, so apprehensive, so mortified or so angry or frustrated with our financial past that we can’t even begin to face it and acknowledge it. We must actually label those emotions. This is a very common skill. I wish that this had been more commonly taught or practiced or preached when I was growing up. It’s kind of widely known now that it’s a core human skill to label your emotion, seriously, if you’re angry, you’re fear, fearful or whatever, and describe it what’s going on. That way you can begin to control it. It’s the first step in the journey for finances and it’s certainly going to be the first step for somebody like a Nancy where emotions probably overpower the math behind finances or make it impossible to even begin that journey.
Mindy: These are really, really, really powerful. Nancy’s going to have shame and frustration and fear. And Nancy, take a moment, but then we need to move on. I think a lot of people don’t get past that moving on phase.
Scott: And I’m not telling you what emotions to feel or whether they’re right or wrong. Only you can do that. I’m just telling you to label them, write them down, label them, discuss them and own them, acknowledge them, put them in a box that they’re there and then begin to move forward with the hard finances and moving forward, which, by the way, let’s start, we’ll talk about that. The first thing we need to do before we can put together a plan or do anything else like that is we need to measure and track where we’re at financially. So as part of that, Nancy, I want you to create a personal financial statement. This can be a simple or complex exercise depending on what your wealth looks like. But for Nancy, this will likely be very simple. We’re going to list all of the assets, everything we own. We’re going to list all the liabilities we have, everything we owe. We’re going to discuss all the sources of income if we have them. And we’re going to list all of our expenses, everything we’ve spent money on. And those four items, assets, liabilities, income, and expenses will give us a snapshot and time of where we are in our personal finances. A byproduct of this is that done right, this should give us the ability to project over the next 12 months, how much we are likely to earn, how much we are likely to spend and whether there’s going to be a surplus that we can save her invest or a deficit where we will incur more debt over the next 12 months. So it’s really, really important. There’s a lot of ways to do this. You can do this by hand with a piece of paper and a pencil. You can use a spreadsheet, we’ve got a free spreadsheet at biggerpocketsmoney.com/resources. You’ll see a personal financial statement. This is a spreadsheet. You can download it for free. You don’t have to give us your email address or anything like that. Or you can open it in Google drive, also don’t have to give us your email address, but you will need a Google account to do that. And that personal financial spreadsheet looks like this. I’ve gone ahead and done this for Nancy already here. And I’ve just taken a copy of that spreadsheet that you can find at biggerpocketsmoney.com/diy. And I’ve just entered in the basic information for her assets and liabilities. She has no assets, she has $50,000 in liabilities. Those $50,000 in liabilities include a car loan, some credit card debt, medical debt, and student loans. I’ve got the amount of those debts, the interest rate attached to those debts, and the payment, the minimum payment required for each of those debts on a monthly basis. I’ve also got the age of the debt associated with Nancy’s position, because that can be important in some context for considerations, although we won’t be talking about that today.
Mindy: Okay, Scott, we’ve got Nancy’s net worth statement right now. Nancy, I don’t want you to freak out because right now your net worth statement is negative 50,000 and that’s it. We are going to change that, but I think it’s really important to take a look at where you are starting and you are starting in some debt. So Scott, what is next?
Scott: Okay, what do I think the goal should be for Nancy? I think it’s a million dollars in inflation adjusted wealth by age 65. So we have 15 years to build a million bucks. We’re not going to cheat and, you know, a million dollars in 15 years are going to be worth less than a million dollars today. So we’re going to adjust for inflation. But and I think that should provide a fairly comfortable or at least a much better looking prospect for a fairly looking for a fairly comfortable retirement than what Nancy’s looking at today. A $1 million portfolio should allow Nancy to withdraw about 4% per year with very high conviction that you will not run out of money over a 30 year retirement. And once you layer in some social security and lower cost for health care when she qualifies for Medicare, I think that’ll go a fairly long way.
Scott: Our Nancy, we’re going to take a quick break fancy ourselves and we’ll come right back.
Mindy: Let’s jump back in. I think that this will go a fairly long way, but most importantly, it’s giving her a goal that seems simultaneously doable and a little out of reach. But we’re giving her a goal and, don’t worry, Nancy, we’re also going to give you the steps to help you reach that goal. And we’ve even got numbers to show you to make you realize that this is in fact a doable goal. I think giving her an unrealistic goal of five or 10 million dollars when she’s starting from age 50 with essentially no job experience, which is a fallacy, Nancy, but essentially no job experience for your resume, having such a high goal could make her feel like, eh, never mind, I’m not even going to try. So a million dollars is absolutely doable. We’ve got many, many episodes where people have done this exact same thing. They either started at zero or with debt and got to financial independence in 10 or 15 years. So, Scott, what are we going to tell Nancy to do?
Scott: So we’re going to develop a clear plan. This is where the actual approach begins, right? We’ve acknowledged our emotions, we’ve defined a starting point, and we’ve defined our end target. Now, we need to diagnose based on Nancy’s position, what her challenges and opportunities are, and we need to put in place a set of guiding principles to help her bridge those challenges, address those challenges and build wealth. And we need to translate that into specific action that she can take in year one or immediately today to begin moving towards financial independence. There are going to be a couple of pillars here that are consistent with all financial plans, and we’re going to have layer in two additional themes on top of those. Those pillars are going to be one, drastically cutting spending. The second is going to be declaring a starting base for income, and then beginning to ramp that income. And the third is going to be investing aggressively for retirement. That’s consistent across all plans, right? Nothing unique there. What we’re going to layer in here is a little bit of a twist where, you know, Nancy’s position is not going to be conducive. If she just gets a job and saves money on low expenses, she won’t get to a million dollars on her own with that approach. Not the way we’ve modeled it. We have to pursue that formula and use it to get as far along that journey as we can or as close to a million dollars as we can, but we also need to layer in side bets, side hustles, some kind of entrepreneurship, maybe some kind of house hacking where we lower our housing expense or get roommates or live in flip. We’ll talk about those in a little bit, but we’re going to need to do both in this situation. We want to build a million bucks in 15 years from a standing start in debt with no job and no hard skill set in the employer workforce. We’re not going to get there by just by working hard and saving our pennies. We’re going to have to get creative as well. And we’re going to layer in both of those things into this plan. Sound good?
Mindy: That sounds great. And Nancy, we are going to show you exactly what we’re talking about.
Scott: Okay, so remember, we’re going to talk about this in two parts. We’re going to first start with that formulaic approach. How far along this journey can Nancy get if she earns, saves and invests. Let’s talk about that, okay? So the first three years are going to be laying an income foundation and attacking that bad debt. We’ve got to get out of the hole that we’re in here. And the plan is going to consist of a couple of basic parts. On the income front, the first step step 1 A if you will is Nancy’s going to get an entry level job. Mindy and I looked it up and the average salary for an entry level position in 2025 was $43,262 per year. This can change, right? If you’re living in a low cost of living area, perhaps the Midwest or a rural area, you’re going to find numbers that are even lower than that, perhaps in the $40,000 a year range. And you may not need a million dollars in retirement in order to have a more comfortable retirement. If you’re in a higher cost of living area, you’re going to find that those entry level jobs can start as high as $60,000 or $62,000. And you may want a little bit more of a retirement number. You might want to bump that number up if you’re in a high cost of living area. So let’s just take the average here and we’re going to say that she starts at 43,000 bucks. This assumes that she’s going to have a full-time job in a physical office environment. By the way, Nancy, a full-time job in an office environment may be better or less challenging physically than standing up all day as a cashier at the local grocery store. But it’s still exhausting. If you’re not used to that, when you go to that work that first week and you wake up, you know, at at 7:00, drive to work, work 8 hours and come home, you’re going to feel completely wiped and that’s a very normal experience. It was like that for me when I was 22 and getting started and got my first job as a fairly fit young guy at that point and and it will certainly be true for you if you’re starting over your career. That’s the fact of life and we’re going to have to have to overcome that. Those first two or three weeks in particular are going to be pretty tough.
Mindy: Yeah, Scott, when we were preparing this slide deck, I wanted to see exactly what kind of job could I get that would be paying me around $43,000 a year, your average. So I went on glass door and I looked up, you know, receptionist. A receptionist job is a very important job, but it’s also not something that you really have to go to school for and I’m not belittling receptionists at all. I’m trying to say that that kind of job is something that Nancy could easily find. The job posting that I found was for a receptionist in a medical office, they were offering $24 to $27 an hour with full benefits and they wanted one to three years of experience. One to three years of experience is code for entry level applies.
Scott: Yeah, that’s another thing when you’re applying for jobs, right? And this is actually a weird dynamic between men and women when they apply for jobs. Men often will apply for jobs where they don’t meet all the requirements on the application. and women will often want to meet more or all of those requirements before applying. So know that if someone does ask for one to three years of experience in those situations, that is code for entry level. You can apply. You may not get the job. You may have to apply to a lot of these jobs in order to get that first one, but you can apply to jobs even if they require some experience for many of these entry level positions.
Mindy: Nancy, when you’re getting ready to apply for these jobs, you’re going to need a resume and your resume doesn’t have any job experience for the last however many years you’ve been a stay at home mom. I was there too. I wrote a resume to work at biggerpockets because they asked me to write a resume. But my resume was all about things that I had done in my life that pertained to the job I was applying for, not, hey, here’s this job that I have. Absolutely never lie on your resume, but highlight all of the things that make you such a great stay-at-home mom. Your ability to juggle a calendar, which is also qualifies you as a receptionist. You’re doing a lot of different small tasks, keeping the office clean, coordinating with patients, coordinating with providers. So there’s a lot of overlap between being a stay at home mom and running a house and also being a receptionist or an office manager or something like that. I also want you to apply to absolutely any job that you can possibly think of that looks interesting to you that pays you a decent salary. And the reason I want you to apply is because like Scott said, most women don’t apply unless they are fully qualified, have all the checkboxes, but those employers aren’t calling you up, Nancy and being like, hey, did you need a job? They’re only doing that if you apply. So apply to every single job that looks interesting. It’s so easy to apply online now. It’s so easy to just email your resume over. always write a cover letter and just talk about how great you are. You’re the only person that is ting your own phone right now and you want to stand out above all the other people.
Scott: Now we’ve got our job, our entry level job here. Nancy is also going to supplement this with an entry level side hustle because guess what, sneak preview. This is not enough. $43,000 a year is not enough to get to retirement. Even if Nancy saves 100% of $43,000 over 10 years, that’s $430,000 over 15 years, that’s like $635,000, right? It’s just not enough, even if she saves 100% of it to get to financial independence the way we need to and of course she’s going to have to spend a big chunk of that income in order to on her lifestyle, and she’s got to pay off that debt, right? So we need more income, right? And right now, the way to achieve more income is to work a lot more, right? Nancy, this year, this first year, this first two years, they’re going to be tough. You’re going to work 40 hours at your first job and you’re going to work another at least 10 hours making money on a side hustle, whether that’s Uber driving, bartending, freelancing, cleaning or landscaping, babysitting, tutoring or working events. You’re going to find that extra side hustle and you do have skills for sure to be able to find and do these jobs as part of your side hustle income here with many years as a stay at home mom, those certainly qualify you to do many of these items.
Mindy: Yep. And Nancy, I want you to look at this list, but also get creative. What about professional organizing? Maybe you are an amazing organizer based on all of your years of organizing your pantry at home and organizing the kids’ closets and all the things. It is a skill that not a lot of people have. Like I have actually paid people to come to my house and help me organize my house because it is not a skill I possess. And I paid $90 an hour. That is an excellent side hustle. The more money you make at your side hustle, the less amount of side hustling you have to do every week.
Scott: Yeah, there’s an endless list here. You are going to have to get creative or you’re going to have to take the very low dollar per hour rate for these side hustles here. In the beginning, we’re going to just assume it’s brute force that you’re not really earning a big dollar per hour in any of these items here and um, you’re just working and time is being traded for money at at an entry level rate in these first few years. That will change over time there. We promise if you work hard and apply yourself. The next part is we’re going to make the hard choices here to cut back on spending. Nancy, you don’t earn an average income, so you cannot spend what the average one- person household in America spends, which is $47,000 per year, okay? You’re going to have to live well below your means, living like the bottom quartile of one- person households. You’re going to have to do that for a while. The average one- person household as I mentioned, spends about $47,000 per year and about two-thirds of that is spent in just three categories, housing, transportation and food. There is no silver bullet for housing right now. You’re going to have to get a roommate. That is the cheat code to keeping housing expenses low. If you don’t get a roommate now, you may be forced to get a roommate when you’re 65. So I really think that that’s important as the first step here is understanding, hey, we’re going to be sharing housing for a little bit here. I’m going to find somebody like-minded, somebody I like, somewhere I can tolerate and I’m going to do that here and I’m going to eat some humble pie. The second most expensive category for most American one person households is transportation, the bulk of which is made up of vehicle costs. What you’re going to do here is if you have a car, we know you have a car because we have $20,000 in vehicle debt. So we’re going to assume the car is worth $20,000 and that you have $20,000 in vehicle debt associated with that. You’re going to sell that car and you’re going to replace it with an 8 to 12-year-old economy car. My favorite is the Toyota Corolla. I drove that for 12 years. I think it’s a wealth building cheat code for those who are in areas that are car dependent. And then last is food. Food is the third largest spending category. Nancy is going to start by meal planning every week, buying healthy food in bulk, and making those meals in advance so she can keep those costs low and control them in a planned fashion there. She’s going to buy healthy foods. We’re not going to say eat Ramen noodles and rice and beans here necessarily. We’re going to be eat healthy foods, but we’re going to plan it in advance and we’re going to buy it in bulk. And then last we’re going to talk about insurance here. Nancy is going to shift to higher deductible insurance plans for her auto, home, those types of things just have a house because she’s going to want to keep those premiums as low as possible. And I don’t think in this case, Nancy’s going to need to have life insurance. Why not? Well, Nancy, you’re not providing for anybody in this particular situation. You are the one that needs to get your retirement in place here, and so you need to get that set up first and I think we can go without life insurance in this particular situation.
Mindy: Scott, this is exactly the right choice for her. Nancy, you’re going to have to sell that car. It’s probably a nice car. You got a $20,000 loan on it, but because you’re selling it for what you owe, you’re not going to net anything. So you’re going to have to go and get another car loan. It’s probably going to have a higher interest rate and that’s okay, because your total payment is less and therefore your debt load is less and you’ll be able to pay it off quicker. So Nancy is going to start generating income and she’s going to be spending less than she’s generating. And this is on purpose. This is by design because Nancy has some things she needs to do with what we call extra money, except there’s no such thing as extra money. Every dollar has a job to quote Uncle Dave. We are going to make every one of her dollars have a job. This slide shows the investing order of operations. However, Nancy can’t start investing yet because she’s stuck on first number one, build a $1,000 cash buffer and two pay off bad debt.
Scott: So bad debt. What is bad debt? Bad debt is high interest rate debt in this particular example, the way we’re defining it, right? So when we look at Nancy’s debt schedule here, we see a car loan at 5.75%. we see credit card debt at 19%. We see medical debt at 5.45% and we see student loan debt at 6%. Of these, the bad debt is the credit card debt. We also want to eliminate debt in a general sense as much as possible. And in this case because we’re recommending that Nancy sells her car and gets a new car, we’re calling it a $7,000 10- year-old Toyota Corolla. She’s going to get a new loan and that loan is going to be at I think eight and a quarter or somewhere in that range. Eight and a quarter percent. That’s also bad debt. So in this situation, we’re going to have two bad debts for Nancy after she sells her car and gets a new car loan for a smaller balance but at a higher interest rate. And that’s going to be the credit card debt and the car loan. And we’re going to prioritize attacking those and paying those off. And then once those are paid off, we’re going to make the minimum payments on our medical debt and student loans and resume the order of operations.
Mindy: And next up on the order of operations is contributing to your 401K enough to get the company match if it’s offered. Then we want you to start taking any other free money, employee stock purchase plans, for example. We want you to build and maintain a six- month emergency fund. This step is also going to take a while to build up because six months of expenses can be quite a lot. But we want Nancy to have a safety net should something happen. After that, we’re going to have her max out her HSA max out her 401K, maxed out her Roth IRA and then contribute to her after tax brokerage account. And right now this seems like a lot, and she’s not going to get here for several years. We’re going to model all this out with all the numbers in just a minute. But this is the investment order of operations that we want Nancy to have in the back of her mind while she’s at the first two steps, building the thousand dollar cash buffer and paying off her bad debt. So her immediate action steps, Scott are building the $1,000 cash buffer, selling that car and buying another used car that costs significantly less. So we looked up what a 10-ish-year- old car would cost and we found the Toyota Corolla for $7,000. The current interest rate is 8% which is higher than what she had, but her monthly payment is much lower than it was before. We are going to apply every additional dollar to that credit card debt and then start thinking about taking the employer match probably in year two or three. So right after Nancy has sold her car and saved up her $1,000 emergency fund, this is what Nancy’s financial situation looks like now. She has a total net worth of negative $36,000 which is still negative, but it’s $14,000 less negative than it was when she started and all she did was sell her car and save up a thousand dollar emergency fund. So we’re already seeing positive results Nancy just by these two actions that you took.
Scott: But this is something you can achieve in 30 days, Nancy. I believe.
Mindy: Yep, absolutely. This is easy, and this is a win that you are getting. So let’s look at your budget. The average budget for a one person household aged 55 to 64 is on the right. We’ve got total spend of $48,000, which includes 18,000 for housing, 7,000 for transportation, 5,000 for food, 5,000 for pensions, 3,000 for health care, 2,000 for entertainment, and 5,000 for miscellaneous. These numbers are coming from the Bureau of Labor Statistics. We’re not just making those up. On the left side is Nancy’s budget. with a total spend of $32,000 versus $48,000 for the average person and this is because Nancy’s housing is about half the price. Nancy’s transportation is less, her food, essentially everything on Nancy’s side is less, minus the miscellaneous. I do want Nancy to have a miscellaneous category because she’s probably new to budgeting and she’s going to get it wrong. I got to tell you, I’m not new to budgeting and I got it wrong. It’s just it’s a process, but it’s giving you a start.
Scott: Just for those who are serious number nerds out there who are screaming about the insurance and pensions difference here, note that most of the expense of insurance and pensions for Bureau of Labor Statistics data is in the form of social security contributions which are taken out of the paychecks of most wage earners. I’m simply accounting for those differently in Nancy’s budget. Those will come out of her after tax income and I’m not including them in her spending budget here for reasons that are part of my modeling process. So don’t worry, we’re not assuming that you’re not paying social security taxes if you are looking at this and have a very sharp eye for finances.
Mindy: Okay, Scott. So at the end of year one, let’s take a look at Nancy’s position.
Scott: I calculate that if you agree with our assumptions here, that Nancy, you can generate about $55,000 in gross income in year one. You’re going to pay about 9,200 bucks in income taxes and social security and Fca and those kinds of things. You’re going to bring home that means $44,593 after taxes and you’re going to spend $32,377 on your lifestyle. If we believe in those numbers, you’re going to also, you’re going to be able to use that surplus to pay off about $12,000 in credit card debt. And you’re going to have reduced your vehicle debt by $13,000 by downgrading your vehicle. Now, note that there’s a circularity issue here. As you pay down your credit card debt, you’re going to pay less interest. So the faster you can do that and the less interest you’re going to pay in that year and the more you can save. And so that’s a wonderful compounding part of this journey that we’re going to see here. And so in the first year because of that car sale and this math, we’re going to be able to reduce your net worth from negative $50,000 or reduce your negative net worth from $50,000 in the hole to $19,000 in the hole, a $31,000 a year difference. Again, largely driven by that car sale and purchase and then by the compounding nature of beginning to pay off that high interest rate debt.
Mindy: You said if we believe in these numbers, and we absolutely believe in these numbers. Scott and I spent a lot of time coming up with these numbers. We believe that 55,000 in gross pay as an entry level, no experience job is attainable because she’s got 45,000 in her entry level and 10,000 in her side hustle income. We ran the numbers. This is the tax she’s going to pay. We ran the numbers on all of this stuff and we have a spreadsheet. Of course, we have a spreadsheet. You’ve met Scott, right? He loves spreadsheets. We have a spreadsheet that details all of this. So, Scott, you said if we believe these numbers, I absolutely believe these numbers.
Scott: Okay, Scott, how does she look on year two?
Mindy: All right. So in year two, let’s assume nothing really goes that right for Nancy, right? She doesn’t get a big raise or promotion at work. She gets a 3% cost of living adjustment and she continues doing her side hustle, doesn’t get any better at it and keeps having to to trade her money um for time at the same rate there, just just maybe a small inflation adjusted bump there, uh because we are adjusting all these numbers for inflation. If that continues, then Nancy will pay off another $10,000 in bad debt, and she will be done paying off her bad debt. She will not have paid off all of her debt. She will be done paying off her bad debt because that that bad debt again is the credit card loan at 19% interest, credit card debt at 19% interest, and the car loan from the new car that she purchased that we have uh at about 8% interest. And so now she’s just going to be left with her relatively low interest student loan debt and her medical debt. Okay? With the high interest rate debt eliminated, we’re going to continue moving along our order of operations. So in year two, we’re going to actually begin investing. It didn’t take us five years, 10 years to pay off all the debt and begin investing. It took us 18 months or so. Maybe, maybe 20 months depending on how you want to think about the the circularity with with uh interest payments on on the on that debt. And we’re now going to begin investing. So the first thing that Nancy’s going to do after she pays off her bad debt is she’s going to begin taking her 401K match if offered. And our model, we assume Nancy doesn’t even get a 401K match at her employer. She’s one of the the employers that at one of these firms that does not offer a 401K match. But if she does have that, she’s going to take that. Even if she does not have the match, we will still begin contributing to a 401K or tax deferred retirement plan with the additional proceeds which reduces her tax burden modestly and allows her to accumulate that much more. So now at the end of year two, we’re still going to have negative net worth, but we’re going to have begun investing about $5,000 into a tax deferred retirement account which can begin compounding and putting that work going on our side. Our net worth at the end of year two will be negative $9,000.
Mindy: Should we move on to the fun part, Mindy?
Scott: Let’s move on to the fun part. I can’t wait to get into these numbers. Scott. at the grind, right? So we put together this model here where we talk about, you know, what’s going to happen over the future. And if Nancy does nothing else but maintain this situation through retirement age, she will gradually increase her contributions to about $30,000 per year in her 401K and end up with a balance of about $600,000 in her 401K at age 65. adjusting that number for inflation, that’s only going to be about $350,000 in today’s terms, right? And all we’re doing here is assuming that nothing changes about her job other than cost of living adjustments that keep up with inflation. She continues to live this very, very frugal lifestyle, continues to work her side hustle and she grinds for that that point in time and she invests in a passively managed index fund generating about a 10% nominal or 7% real return across that time horizon, okay? So that’s not enough. That’s not enough. And this is I think where a lot of people when they think about finances, it intimidates them because they think that this is how a financial plan or model works, and it doesn’t work like this. Nancy, you are going to get a raise or promotion beyond a cost of living adjustment over a 15-year career where you work hard, show up every day and better yourself. You’re going to be able to find a job after a few years that will offer some bonus potential. You are going to be able to have the option to switch to an employer at some point in the next three to five years that offers you basic benefits like a 401K match. You’re going to get better at your side hustle if you make that a priority in your life and think about ways to improve. You’re going to have an option one day to buy a house or some kind of real estate as long as you’re not in one of these very high cost of living areas. And if you’re living in a high cost of living area, you should have income opportunities that are much better than we’re modeling and you got to turn your brain on and find those, right? And that no other creative opportunities present themselves. That’s not how this works guys. If you begin applying yourself, confront this, build a financial plan and model and really study personal finance, you’re going to find some opportunities. So let’s assume a normal career progression, not anything special, a normal career progression for Nancy here, right? The average U S worker typically gets a three to 4% merit or cost of living increase on an annual basis. We’re going to assume 3% just to be conservative. It just stays in line with inflation. The typical worker will see a promotion every three to five years in many fields and average promotion rates are 6 to 7% company wide. Meaning that a solid performer can expect two to four promotions in 10 to 15 years. Nancy, we’re going to call you a solid or slightly below average employee here, a performer, and we’re going to just give you three promotions over 15 years from your entry level starting point. You’re going to get one promotion in year three, that’s going to be a 12% raise. You’re going to get another in year seven and you’re going to get another in year 12, right? In those promotions are going to come with a 12% bump, a 15% bump and a 10% bump. You’re going to end your career making $88,000 and that is nominal, that’s not adjusting for inflation. This is not a spectacular earner at any point during this career. It’s a normal career progression though, and you need to know that this type of career progression is normal and you should plan on it as part of the case because if you don’t plan on it, you’re going to give up and you’re not going to proceed with a plan that is realistic. A realistic plan does account for this kind of stuff.
Mindy: And I can hear somebody yelling at the computer right now saying, well, but she’s a receptionist, how do you make $88,000 a year as a receptionist? You don’t. You get different types of promotions. Nancy has been running her household for the last 20 years. She is awesome at organization and she is awesome at running the entire office. So Nancy goes from receptionist to office supervisor to office manager. And then all of a sudden because she’s working in a medical field, the doctor she’s working for is like, oh, I want to open up another facility. Nancy, I want you to run the whole thing. This is how you become someone at age 65 with $88,000 in salary. So you do need to take advantage of opportunities, but I think that Nancy is going to have opportunities. Scott, you said she works hard. You used to be a CEO. Did you ever have an employee that didn’t work hard? Sure you did. The people who work hard stand out and Nancy is going to stand out to her employers.
Scott: This is not going to happen every year, every two years, maybe even every three years, okay? But eventually, if you work hard and show up consistently for a very long period of time, you will find opportunities to advance, especially if you’re always on top of your market value. we’re going to talk about ways to make sure that that is that you increase your probabilities there. But we’re going to assume some very basic stuff here, nothing special. Nancy’s going to get three modest promotions over the next 15 years. As part of those promotions, she’s at first and in year three, going to get a 5% annual bonus potential, right? She’s going to be eligible for a 5% annual bonus. The second promotion is going to bump that potential to 10% and the third promotion is going to bump that bonus potential to 15%. We’re not going to assume that Nancy even gets her bonus every year. We’re going to assume that Nancy misses her bonus once every three years. That’s a big miss rate. Many people get will achieve bonuses much more consistently than that over the course of 15 year career. We’re also going to assume that Nancy gets an employer with her job change or promotion in year three that gives her a basic 401K match, which is very common in employment uh situations in America. And that’s going to give her a 3% 401K match uh that’s going to start in year three. If we just assume these things and she keeps her spending consistent, then Nancy will be a millionaire by age 65, right? She’ll have 770 grand in her deferred financial portfolio. Another 53,000 that has grown from her employer matches the 3% stacks up over 15 years. She’s going to have another $143,000 in her Roth. Remember we’re going to max out our Roth after we’ve maxed out our deferred portfolio. And she’s even going to have a little bit left over to invest after tax uh on her after tax portfolio, about $43,000. And that puts us at a million bucks. So Nancy, we’ve got you at a million bucks, but we haven’t adjusted for inflation. That $1 million bucks by age 65 is going to be closer to $650,000 in today’s dollars, right? So we need something on top of it. So remember, at the beginning of this presentation, we said we’re going to earn, save and invest and we’re going to follow a formulaic approach to build wealth. This is it. If you do something like this, you should have the option to build a reasonable nest egg if you are disciplined, frugal and work hard over a 15 year period, but it’s still not enough in your situation to get us to what we promised, a million bucks adjusted for inflation. And now we have to layer in the second component to financial plans that makes a lot of people uneasy, right? Which is the creative part. How do we layer in some additional creative twists that can help Nancy finish that play to a million bucks in net worth. I also want to call out that I think Nancy you must be creative in your situation because you don’t want to live with the freaking roommate for the next 15 years to get to your financial goal, right? You don’t want to like be at the bottom quartile of spend for your age bracket that entire time if you’re willing to work hard, you need to find other ways to boost this journey and get ahead of it. So you can ideally approach a median level of spend for your position and still achieve your goal, right? And again, our model is telling us you can’t do that unless you get creative.
Mindy: So let’s list some of the obvious opportunities here, Mindy, what are some of the obvious opportunities Nancy has to surpass the outputs of our model?
Scott: So some of her obvious opportunities are advancing faster in her career than a normal trajectory and she’s taking her life experience and applying that to her job and making herself look like the rock star employee that she is. Or she’s going to be job hopping because she realizes that this job doesn’t have any growth potential. It’s great while I go find another job with a lot more growth potential. She’s going to develop more skills, more of these in demand job skills in the first one to three years. She’s going to take certificate programs, she’s going to not necessarily go back to school, but she’s going to get education that’s going to signal to her employer. Hey, I need to pay this lady more.
Mindy: One item there that by the way, just to call out on that is you I think you used the example of of a receptionist at a dental office, right? Is there an opportunity for her to study to become a dental hygienist?
Scott: Oh, there sure is. And if we can boost our starting pay to something closer to 70 or $80,000 a year in two or three years after the training is completed, good gosh, that that makes a huge difference on on this model and makes the game much easier uh from an overall standpoint. So that’s a huge one there and that surely is possible for a good number of folks watching this, to use some kind of scrap of their history from education or other skills or begin diving into something that is a true hard skill that will be in demand for the next 15 years. 15 years is a long time, right? So if you spend the first two developing a hard skill to jump start that initial pay, man, that makes a huge difference on this.
Mindy: Scott, would you guess that a dental hygienist is an AI proof job?
Scott: Yes, I ain’t having a robot clean my teeth. Thank you very much.
Mindy: Yeah, there’s a lot of jobs you can get right now that you might not have in 15 years, but everybody’s got teeth and everybody’s going to need to continue to have teeth, well, maybe not your little daughter, Scott, she might not have teeth yet. But everybody’s going to have teeth, everybody’s going to need to get them cleaned. So dental hygienist is a really great job that she can absolutely expect to work in until she’s 65.
Scott: Nancy, this is your life and your career. I don’t know you specifically and your background on this. But I know if you go online and look for, you know, 60, 70, 80, $90,000 a year jobs in your area, if they exist, this is not this is a, you know, I’m assuming you’re in one of the top 50-ish metros for for that particular example. But like go go look, what is it out there that would be reasonably enjoyable to you from a work perspective? Like would you like to fly a lot and be a flight attendant? Is dental hygiene interesting? Is nursing interesting? It like what are these jobs that would be interesting to you. Are you entrepreneurial? Are you sales oriented? Would you want to get your real estate license, right? Think about those things. There are plenty of ways to develop a hard skill that can get you a salary that can be higher than the starting point we discussed. if you invest in the training and actually finish it and see it through, there are other options for the more entrepreneurial inclined, those willing to take some risk or have some at risk compensation or for example, in sales that can boost your income significantly beyond the projections in our model here. You need to know yourself and what you’re interested in, but surely you can find those and if you can’t get that job on day one, probably you can get it in your three, maybe your four.
Mindy: Yeah, Scott, I’m going to push back on a couple of things. Number one, flight attendants don’t really make a lot of money until they’ve been there for a while and are part of a union. And number two, I don’t think you have to enjoy a job. I think that in this particular situation, Nancy needs to do everything she can to generate as much income as she can. So I am so thankful for my dental hygienist. I have no interest in becoming a dental hygienist. I think Nancy doesn’t have that luxury and Nancy needs to look at how fast can I make good money?
Scott: That’s right. The third option we have is increasing your side hustle income. And when people talk about entrepreneurship, I’m going to throw this in the bucket of entrepreneurship or creative creative money making, right? They say nine out of 10 businesses fail. And that’s true, right? But if nine out of 10 businesses fail, I think the wrong reaction is don’t start a business. It’s try 10 ideas and nine of them will fail and one will work out. And if you try those every 90 days, I bet you that in two and a half years, you’re eventually going to hit a winner and it’s going to be it’s going to compound, right? You’re going to say, you know, I didn’t really like tutoring. I hated Uber driving. I didn’t like bartending. Oh, I really liked setting up this event, this 5K event that happens in my my town every year and it actually paid me really well. Can I find more of those? I don’t know what that’s going to look like for you, but if you go in with an experimental mindset and you try new things and are constantly experimenting and tinkering with these, eventually, I think you’re going to find a very lucrative little niche that you can do, right? We’ve had a whole bunch of these things like Christmas light decorating and taking down business, right? We’ve, you know, lawn care, landscaping, organizing. like there’s these are going to appear to you over time. They’re going to be really hard to identify at first. but over the course of three to five years, I think you’re going to be able to find some really good options if you apply yourself in that category, right? That can really be meaningful eventually.
Mindy: Scott, we’ve got a friend Nick Loper over at Side Hustle Nation. He has a podcast with more than 700 episodes highlighting a different side hustle every single week. And our friend J Money over at Budgets Are Sexy has a list of something like 80 or more side hustles that you can do and just really creative ideas. Not all of them are creative. Some of them are like, drive for Uber. Okay, great, drive for Uber, that’ll generate some income. But maybe on one of these lists or one of these podcast episodes, you’re like, oh, that’s the one for me. I know I can crush that. So go and look for side hustle opportunities, not just the the standard ones, but ones that are interesting to you, ones that you know that you can do really, really well on.
Scott: If you listen to Nick Loper’s podcast, you know, one time a week for the next two or three years on your way to work one day, and you try out the best five ideas you hear over that point in time. Do you think you’re going to make some more money than what we put in into our model? I I certainly do and I think that that’s that’s all this is is letting time compound and letting these opportunities compound and learning about them. Okay, the last item for our creativity uh push here is going to be real estate, right? This is a favorite of Mindy’s and mine. We believe strongly that real estate is a cheat code to building wealth towards financial independence. And there are two primary strategies that we recommend Nancy bias herself towards. Those are going to be the live in Flip and or the house hack. A live in Flip is when Nancy buys a property that needs a lot of work, puts in sweat equity by fixing up the place or working on it herself, and then sells it for a gain like a like like a fix and flip project. The catch is that if Nancy lives in that house for two years in a row and sells it within the next five years, you must have lived in the property for two out of last five years. A big portion up to $250,000 if you’re single or $500,000 if you’re married of the capital gain on that flip can be excluded from capital gains tax. That’s huge, right? If Nancy can make 100 grand once or twice in that journey, that can potentially push her over the ledger and get to that million dollars in inflation adjusted wealth. Now, that’s not going to be possible in every area, right? If in New York City, that’s may not be a realistic goal for Nancy for this particular area. Ideally, if Nancy’s in New York City, the income generation or side hustle opportunity will be much greater than what we’ve modeled into our base scenario. But it may be possible here in Denver in years five or six. It may be possible in many Midwestern cities. It may be possible in many Sunbelt cities that are not in California or very expensive, very high cost of living areas. So that’s something we would bias you towards is saying, hey, if I live in one of these places where housing is more accessible and I’m already have a roommate, can I buy a duplex, triplex quadplex or a house with extra bedrooms and move in and rent them out or even better Airbnb that property while I live in additional dwelling unit. Those can be absolute cheat codes on the journey to financial independence. And how many times have we heard a story about someone achieving early financial independence here on the BiggerPockets Money podcast, Mindy and a live in flip or house hack was a core part of that journey.
Mindy: It’s part of my journey. It’s part of how Carl and I built wealth was to buy a house, fix it up over the course of two years, sell it, put a little bit towards the next house and put the rest in the stock market. We really boosted our wealth generation. I did a talk once and I I I added it all up, $700,000 in tax free money I have generated through live-in flipping and I mean some of these are really big flips. but my first flip, I did $25,000 over four years on a condo that wasn’t all that amazing, wasn’t like anything special and I didn’t like overhaul the whole thing or pop the top. It’s a condo. You can’t do that. I just made it so much better than it was when I bought it.
Scott: I gotta go back and calculate that for myself, but I’m up, I’m up several hundred thousand dollars, maybe, maybe closer to a million dollars when I consider reinvested proceeds, uh cost savings, and not just the equity that I’ve built in the house hacks that I did uh for the better part of 10 years.
Mindy: It’s a powerful wealth generation.
Scott: While we’re doing this, one of the things that I think is going to be an undercurrent, that’s going to drastically propel Nancy’s progress here, and allow her to absolutely crush the inputs that we have in our base model is going to be self education. Nancy, you are feeling very disempowered when it comes to personal finances when we started today’s episode, by the end of the first year or two, that should change dramatically. And the way you do that is you buy a pair of headphones or you get a library card and you just pick up a book on personal finance or self-improvement or business basics or economics and you read it. You put it on instead of music on the drive to work, you put it on instead of music on the drive home from work, pick one, right? You put it on when you’re at the gym or walking. If you have downtime at work, you put in your bud and and and do that, if you’re in between tasks, if you’re at lunch break, whatever. And if you can can consume a book every two weeks or even better yet, a book a week, my God, your skill set is going to drastically transform. You’re going to rewire your brain from someone who feels helpless with respect to personal finance, to someone who’s bursting with ideas, making connections and finding opportunities. and that is going to compound to helping you get better at work, at your job and perform better. It’s going to help you find better opportunities when it comes to side hustles. It’s going to help you be more confident when it comes to asking for that next raise or promotion or finding the next job opportunity. It’s going to help you make sure that you’re actually implementing all of the best practices we talked about in personal finances and investing appropriately. It’s going to help you feel empowered to buy real estate or make a better decision one day, if that’s what you choose to do. It’s just an invaluable way to get better every day. and you can do it for free or for very low cost nowadays with the internet, audible, library subscriptions, and the like. Next, we’re going to get to know our market value really well, so related to what I just said. One of the things that I think a lot of people have if they go through a long career and don’t really see the outcomes they want is they’re not aggressive enough or assertive enough at least in understanding what needs to happen for them for them to advance. Nancy, this comes down to you having a crystal clear set of expectations for what is needed for the next promotion or major salary increase at your company at all times. That’s all it is. Mindy, you have a great toolkit for making sure that this happens. Can you share that real quick?
Mindy: Scott, I want Nancy to go and research her market value. There’s a lot of different ways you can do this. Glassdoor lists salary ranges reported anonymously by employees that work at that company. Linkedin salary is a great place to look for location-based compensation data. Indeed salaries kind of aggregates pay information from job postings and employee reports. Uh levels.fyi is especially helpful for tech roles and shows compensation by company and level. Um and in addition to professional associations in your field, and once you’ve gathered all this information, you’re going to want to compare that to where you’re at, where not only the level of comfort you have with the company that you work at, but also the level of comfort that you have with where you’re being paid. If everybody in your field is making between 50 and 60 and you’re at 48 and you just started, that’s a great place to stay. If you are at 28 you need to find a new job. So obviously it’s not going to be that clear cut, but you know what, sometimes it kind of is. So knowing what you are worth in your job is super, super important.
Scott: I I think tell your manager or if it’s a small business, the owner of the company, that you are ambitious to increase your income and that you would like to take on special projects that give you the opportunity to prove your skill set, develop new skills, make the company more money or save the company money that are outside of your job description if they become available. Make that known regularly and ask, hey, what do I need to do to get to the next promotion? Can I get a written set of requirements there on this year’s uh performance plan? And if I hit those, will I know I’m going to be on track to get that next raise or promotion. And if you do that once or twice a year and have those check-ins regularly and are clear, you’re not always going to get your raise. You’re not going to get a nice formulaic model, but you will increase your odds over time and that will compound greatly. Two other things on increasing your income here. In a combination with that, uh self-education. If you spend very little and are amassing wealth fairly quickly, then you are able to take advantage of opportunities that other people wouldn’t even consider. So for example, let’s look at this. Let’s say that it’s year three or four. And Nancy still lives very frugally, but is now debt-free, or has very very low debt has piled up some investments and is spending 30 grand. Let’s say that she’s making 48 to $52,000 a year in total income. But because she spends so little, she can take a job in a sales role that has a base pay of $35,000 and lots of commission potential if she sells. Guess what? That’s a job Nancy can take. But her peer, let’s call her Emily, Emily can’t take advantage of that because she spends all that she makes, right? And so she can’t take a job with a base salary that’s lower than her core expenses because it’s a threat to her lifestyle her her financial position. But Nancy can do that. So keeping your expenses low and being on the lookout for those types of extra opportunities, especially in conjunction with reading and the synopsis and the the connections that that begins to form over time, um can lead to huge opportunities. I think that this all again is the odds of these outcomes coming about increase if Nancy is networking, right? If there is free time and there are are situations that she can take advantage of, can she go to networking events? Can she go to classes that are related to her field after hours? Can she go to these situations and put herself out there in a way that will potentially lead to opportunities. Not 10 of them will be a waste of time or do nothing that that she can directly detect, but every once in a while those network connections will hit and those will compound and pile up over a 10 to 15 year period presenting opportunities she never would have thought of.
Scott: We’re going to catch up with you in a few more minutes after this break. Thanks for sticking with us. I actually really love the idea of sales for Nancy provided that she is at all outgoing and not a complete introvert. uh because I don’t know if you remember way back on episode 32 we interviewed Mr. and Mrs. Pop and Mr. Pop is a salesperson and he has generated so much income just from those sales commissions. I think his base salary is like nothing, but his commissions are hundreds of thousands of dollars a year and he’s selling like office supplies, I think or like something that business people need and is it’s easy to sell because business people need it. So they’ll just like they’re buying it with company dollars that it’s not their own money that they’re buying it with. So sales, I think you even said in this episode, anybody can do sales. Sales is the number one way to jump start your income. So yeah, you’ve got this nominal base pay, but you have this amazing opportunity for the unlimited commission growth.
Mindy: You read 10 books on sales, just what are the best 10 books um for salespersons and you put a list out there and you’re read those, maybe you will reframe your brain to really love that. But if you do that over the course of the year and you then you roll it out, guess what? You’ve taken a real shot at building that skill and you move on to the next thing. That’s the power of self- education on this front. Okay, we talked about house hacking and the power there. We’re not going to go through the detailed numbers here today because we’re so far over on time. But we’ve done plenty of other episodes on this. You can just see that if you have a roommate paying you rent to cover a big portion of the mortgage costs, you’re going to spend less on your housing and actually turn your housing into a wealth generator over time versus the wealth destroyer, the expense that either buying or renting typically is for the average American here. Let’s go back to investment basics here and what as we wrap up. Nancy, there’s plenty more detail out there. You’re going to spend a lot of time self educating, but at the core of your personal finance strategy as you invest in the early stages of your journey, you’re going to be very aggressive. You’re going to have that three to six month emergency reserve in cash and that’s going to be your defensive position. Everything else is going to be fairly aggressive, right? This could look like 100% stock portfolios, it could look like rental properties, especially if you house hack a few times and keep a few of them as rentals. That’s going to, you’re going to use debt, those will be leveraged. You’re going to have a aggressive position that is conducive to building wealth, perhaps more like a young person’s approach these 100% stock portfolios because you have nothing to protect. There’s no reason to protect a very tiny amount of money in year one. But as you approach 80% of your financial goal or are about five years out from your retirement date, you will want to transition or begin transitioning to a more traditional retiry portfolio. That’s going to look like a diversified portfolio where you’re going to include bonds, maybe some international and US exposure, maybe some value and growth exposure uhh in different buckets there. Maybe you’re going to pay off or reduce the the leverage on your rental properties. Maybe you’re going to pay off your home if you choose one day to buy a home in a near, maybe you’re going to expand that cash position to a year or maybe even 18 months to two years in savings, right? That’s going to be the transition approach there. Let’s go over very quickly the overall rationale and theory guiding our approach today, right? The most important thing for Nancy is going to be her savings rate. You increase your savings rate in by via two factors, right? One is increasing your income and the second is decreasing your expenses. Extreme frugality is a must for Nancy to get the ball rolling. You have to do it. You may not have to be extremely frugal for the entirety of your journey, but I think it is a requirement for the first two to three years at the very least to get a roommate and do many of those more hardcore frugal tactics to get that out of that debt hole and begin, you know, at least moving the snowball not working against you. At least begin to push it down the hill um via compounding interest. The biggest medium-term factor. So after we get into the immediate most first and most immediate factor is going to be your savings rate and extreme frugality. The medium-term factor that’s going to make the biggest difference over the next five years is just how far she can push her income generation. Again, we’re assuming she starts with an entry level job, but there are multiple ways to really boost that income by year five, including sales or entrepreneurial um pursuits, side hustle expansion, developing a hard skill that just resets that that starting pay at a much higher level and more. Because Nancy has no assets to protect and is in the hole, we can invest very aggressively in the early years of this journey like a 23-year-old might. Housing is a really important consideration here. And after a few years, as her income rises and her savings rate expands, she may have the option to buy a house and if she is in an area, maybe a medium cost of living area where that could be accessible to her, we highly encourage her to seriously consider a house hack or a live-in flip in order to uh complement that aggressive stock portfolio. And then as we approach that goal, because we’re going to approach that goal, we’re going to approach retirement eventually, there needs to be the education in place to know how to switch from that aggressive portfolio to something more conducive to supporting a long retirement. At the beginning of today’s presentation, we said we’re going to do six things for Nancy. We said that we are going to one, acknowledge where she is emotionally. Two, have a clear starting point. Three, describe a realistic end goal. Four, deliver a specific, detailed and actionable financial plan. Five, layer in additional creative hacks to build wealth, and then six, bring her to community so that she can be supported and not be alone on this very daunting journey, right? What we just presented here is a very daunting journey. And for that, that’s the last step here. um, step six, we have a couple of resources that we really recommend with some friends in the community. Mindy, do you want to talk about some of these?
Scott: Yes. Catching up to phi is a podcast and Facebook group specifically directed to Nancy’s and Barbs. This is a group of people who are getting a later start in life. Bill is a late starter himself. Jackie was a late starter and together they have combined to create this supportive community to let you know, yes, you can still get to a position of financial independence. Yes, you can still do this. Here’s how. It’s their Facebook group is fantastic. The simple path to wealth is a personal finance book that everybody in the entire personal finance community recommends. It is a very clear, easy to read, step by step, how to start investing in the stock market, specifically in index funds. Biggerpockets Money, we have a Facebook group as well, facebook.com/groups/bpmoney, and Choose FI, I love Choose FI. They started, I think in 2017. They started as a main Facebook group. They broke off into local groups once the main Facebook groups got so big. You probably have a local group in your area. Go to choosefi.com/local and you will find a group near you which is so helpful to not only be chatting with online friends, but also in person. Hey, I’m having this problem. Here’s a solution. All right, Scott, we have some immediate action steps. We’re going to include links to all of these episodes in our show notes. But if you’re looking for more stories of people who have actually done this, episode 130, Susan and Norm started from literally negative and became financially independent within 10 years. Episode 152, Kathy from Baby Boomer Super Saver, also late starter. Deb Whitton, Courtney Robinson, Monica Scudieri, Tracy Conan, Becky Heptig, and Bill Yount, the original catching up to fi hosts. And then Jackie Cummings Koski and Bill Yount have been on our show multiple times. Uh catching up to fi episode 100, the late starter’s guide to the galaxy. All of these episode links are going to be in our show notes and these are all excellent episodes to keep reinforcing the idea that yes, you can in fact reach financial independence even when you’re starting late.
Scott: And just to wrap up all this up guys, we are trying to give Nancy hope about how she can move her life forward. Um and so this is our latest iteration of an attempt to do that. We will be doing updates on this show and many others like it every year to incrementally get better based on feedback. So please give us some feedback in the comments section if you’re watching here on YouTube, email us at scott@biggerpocketsmoney.com or mindy@biggerpocketsmoney.com. And you know, and if you liked what you saw or you want to to to begin using this, but want to have any of the access to the resources, go to biggerpocketsmoney.com/resources and that’s where you can find that financial statement template, you’ll find the slides that we just talked about today called Nancy’s financial plan. Um just search for that and you’ll be able to find that and you can download all that for free. You don’t have to give us your email address. You don’t have to pay us anything. It’s just for free for available for you. You are, of course, welcome to join our our our email newsletter and we encourage you to do so, but you don’t need to in order to uh download any of the resources at biggerpocketsmoney.com/resources. We just want them to be a starting point that gives you some ideas or inspiration to move on your financial journey.
Mindy: So excited for people to download these resources that we have for Nancy and start playing with them. Uh these are all going to be available on our site. You will be directed to make a copy so that any changes you make are just for you and don’t mess up Scott’s amazing pivot tables and all of his numbers that are in those.
Scott: It’s a very simple spreadsheet with a with a tax calculation to help you understand what you It is not a very simple spreadsheet. It is a very complicated spreadsheet that’s got spent a ton of time on, but it like making a small change here, you can see all the changes that happen at the end just by these different these different things. So if you don’t think 40,000 is enough and you want to be making 60,000, you can see how that compounds. It’s just, it’s an excellent calculator, it’s an excellent spreadsheet, and I am super excited for people to get in and start playing with it.
Mindy: Well, thank you guys for making it this far. We really appreciate you sticking with us and listening. Um we look forward to your feedback and we will uh continue to iterate and improve on this type of plan um based on your feedback with each passing year and update them for inflation and all those kinds of good all those all those kinds of good things. And Scott, I just want to give one more plug to our 31-day DIY personal Finance challenge. If you find yourself in Nancy’s position or not, and you want to get a better handle on your finances, go to biggerpocketsmoney.com/31 days to enroll in a free 31 day email challenge every day. I email you a task and even though you’re not starting on January 1st, you will still be getting day one’s email. We’re not going to throw you into the middle of it and be like, ah, too bad. Nope, you start right at day one. So this is a really, really awesome challenge. I encourage you to join if you have not already.
Mindy: All right, Scott, should we get out of here?
Scott: Let’s do it.
Mindy: That wraps up this episode of the BiggerPockets Money podcast. He is Scott Trench. I am Mindy Jensen saying, ciao for now, Herford Cow.
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