The Repeatable Steps to Financial Freedom in 4 Years w/TheFICouple

Mindy:
Welcome to the BiggerPockets Money Podcast where we catch up with The FI Couple.

Josh:
So we’re really excited because the things that we started doing four years ago are really starting to pay some pretty large dividends so that in July of next year when we welcome our daughter to this world, we will have the thing that we set out to have, and that was the power of choice and control over our time. And that will be the biggest investment that we’ve ever made.

Mindy:
Hello, hello, hello. My name is Mindy Jensen and joining me today is the She-Wolfe of Wall Street, Amanda Wolfe. What’s up Amanda?

Amanda:
Hey, how you doing? Excited to be here.

Mindy:
I am doing great. I’m so excited you’re here. It has been a minute since we’ve talked. Anything new and exciting in Amanda world?

Amanda:
Just traveling the world, trying to see all of it.

Mindy:
So where are you headed to next?

Amanda:
I’m actually going on my honeymoon, so I’m-

Mindy:
Yay.

Amanda:
Yeah, so we are going on a safari in South Africa. So really excited to get away from the cold and see all the animals and all the adventuring.

Mindy:
That sounds super awesome. I’m jealous. Okay. We should finish up this intro. I didn’t even start with the Amanda and I are here to make financial independence less scary part, so we should do that. But I’m just super jealous of your warm weather Southern Hemisphere trip.

Amanda:
I’m very excited. It’s a bucket list item for sure.

Mindy:
Ah, super jealous. Okay, well, Amanda and I are here to make financial independence less scary, less just for somebody else to introduce you to every money story because we truly believe financial freedom is attainable for everyone. No matter when or where you’re started or what kind of fun trips you have on your bucket list.

Amanda:
Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate or start your own business. We’ll help you reach your financial goals and get money out of the way so you can launch yourself toward your dreams.

Mindy:
Amanda, I am super excited to bring Ali and Josh back on the podcast. We haven’t talked to them in a while and their lives have changed a lot in the last two years. They are living the FI dream, having quit full-time employment and generating income in different ways so that they can live their best life.

Amanda:
Yeah, I’m so excited to see them thrive because I remember when they joined social media, it’s kind of a tight-knit community and they had all of the student loan debt and they were working toward financial freedom and now just seeing all of that play out, all their hard work play out for two really good people has just been really fun.

Mindy:
They’re a great example of the FI journey. You can do this. It is possible to become financially independent even if you have massive student loan debt, even if you have seemingly insurmountable odds. They’re not insurmountable, you can do it. And what are the ways that they did it? They lowered their expenses, they increased their income, they put their nose to the grindstone, and they ground it out. That’s how you do it. There’s no secret sauce. There’s no easy button. I have an easy button.

Amanda:
There is an easy button.

Speaker 4:
That was easy.

Amanda:
It’s not easy. It’s work, but you can do it. Anybody can do it. You just have to actually put in the work. So before we bring in Ali and Josh, let’s take a quick break. We want to welcome back Ali and Josh. When we last spoke with The FI Couple on episode 167, almost two years ago, they were both working full-time, had $30,000 in student loan debt and owned two rental properties. Fast forward and things look a little different or a lot different. Ali and Josh, welcome back to the BiggerPockets Money Podcast.

Ali:
Hey, Mindy and Amanda, thank you so much for having us back. We’re really excited to be here.

Josh:
Yeah, this is the best.

Mindy:
So we’ve got a lot to talk about. Things look way different than the last time we talked. Can you give us a high level overview of what has changed for you guys?

Josh:
Yeah. So when we were last on the show, we were both working full-time still. We still had a lot of student loans. We had just recently purchased our second rental property, which was also a house hack. And since then, we acquired another off-market property. We both left our full-time jobs and now work part-time. We have, what started off as kind of a passion project that has turned now into a really nice online business.

Ali:
We also officially paid off our a hundred thousand dollars of student loans and I am pregnant.

Mindy:
Woo. Yay, babies.

Ali:
Yeah.

Mindy:
And I mean, yay, student loan debt too. I mean, yay, no student loan debt. Yay, babies. Well, congratulations. Wow. Okay, so well let’s talk about the baby first and get that out of the way because that’s the most exciting one. Congratulations. When are you due?

Ali:
We are due in July. We’re going through IVF. We actually have been trying to get pregnant since May of 2020. So this is 30 months in the making. We were very fortunate that our first embryo transfer stuck and we are having a little girl and her name is Zoe and we are very, very excited to be parents.

Mindy:
That is so awesome. We just did an episode about having a baby, planning for a baby episode 357 with Jen Narciso from Investor Mama. All the things you need to know about babies and also Costco baby wipes are the best.

Ali:
Well, we’re going to have to listen to it to get all the tips because we are really a little overwhelmed with all of that. But know that we’ll plan and develop systems like we do for everything else. Between having The FI Couple and our rental portfolio, I’m like, “We’ve had multiple businesses together.” A baby is just the next group project that we have to tackle. So we’re going to be just fine.

Mindy:
Okay. Well let’s hit up on that rental property. You said it was off market. When did you purchase it? Because the market has been a little nuts this whole year.

Josh:
Year. No, it’s been crazy. We actually combined two strategies on this. This was our first year ever using private money to acquire real estate and it was a BRRRR property that we acquired back in April before interest rates really took off.

Ali:
We found the deal in February when interest rates were still relatively low, but then we ended up closing as Josh said in April.

Josh:
Yup. And then we’re not overly handy people. So the property was actually in pretty good condition. We’re big problem solvers and we found an owner who really needed to sell quickly so that they could go on to a new phase of life.

Ali:
It was an owner occupant triplex, so it was in really great condition.

Josh:
Yep. So we had found a private money lender two years ago, stayed in touch with them. They saw everything that we were doing online. And so when the time came to buy the property, they walked it with us and they were happy to be the private lenders. We bought it in April. We did some paint, we changed out the locks and then we steadily leased out the property. At that time interest rates really started going up quickly. And so instead of waiting maybe five or six months after closing to refinance, we decided to do it in July and we completed our first successful BRRRR.

Mindy:
So you refinanced in July? That’s right when rates started going up, up, up. What rate did you get?

Josh:
Yeah, so we ended up locking in a 7% 30-year-rate and when we began the refinance process, we were closer to about a 5.5. We thought we had a little bit more time and then everything started going up quick. So we refinance a little bit sooner than we had originally planned.

Mindy:
So you’re locked in at 7% now?

Josh:
Correct, for a 30-year loan.

Mindy:
Okay. You said you found this off market? How did you find it? So everything that we own so far has been off market. We live in a relatively small city and once you get to know maybe six or seven people in this market who do a lot of the real estate, it makes finding off market deals a little bit easier. So we’ve never been people who had a lot of money or a lot of experience and so we’ve always had to be problem solvers. And so I am constantly networking with small business owners and local investors finding ways to maybe solve problems for other people. And that’s how we both found this deal and the private money to buy it.

Ali:
I think for us it’s always just telling people who we are and what we do. So “Hey, we’re Josh and Ali, we invest in this city. We’re small potato landlords. If you know of anyone selling a property, please keep us in mind. And actually a local landscaping company that we met years ago just messaged Josh on Facebook and was like, “Hey, I know someone that’s selling a triplex, would you be interested?” And we’re like, “Yeah, we’re interested.” We met the guy. It was actually really funny because we’d been featured in our local newspaper about The FI Couple and he’s like, “Oh, I know you guys.” And that name recognition was really helpful too because I think it just solidified credibility because we already had that rapport with the person.

Mindy:
Is this another house hack?

Josh:
No. So this is actually our first time not house hacking, which felt kind of foreign, but it was also relieving to not have to move in the middle of winter.

Mindy:
Yeah. That is quite nice. I’ve done that many times.

Ali:
We house hacked the first one, we house hacked the second one, and then it got to the point like, “Are we just going to keep house hacking here? What’s going on?” We knew we wanted to scale our rental portfolio and house hacking felt really safe because you need a place to live. You move into a property and there you go. But we decided that we really needed to advance our strategy and level up a little bit in order to consistently scale the way we wanted to.
So it was definitely a little overwhelming to not only buy an investment property by using private money, but I think it taught us so much really, really good lessons throughout this. So now it will definitely feel less daunting the next time we do it.

Mindy:
So rates are still really high. Are you looking for your next property or are you pulling back?

Josh:
Yeah. We’re always looking. There’s a little bit of the be greedy when others are fearful kind of approach. So we actually have found technically, or I should say tentatively our next two deals. They’re both duplexes side by side. And this time we’re actually making use of seller financing, which we’re really excited about. And again, it’s a retired couple who has a relatively large portfolio.

Ali:
That they own free and clear.

Josh:
And they really want to start enjoying retirement a little bit more and not managing rentals. And so that’s a problem that we’re happy to help them solve early 2023.

Ali:
Yeah.

Amanda:
I love that. Can you talk us through the seller financing?

Josh:
Yeah. We’re very familiar with the properties. We’re very familiar with the people. They also happen to be our private money lenders. And so kind of finding different ways to work with people. So we are going to be setting up terms. So maybe what people are accustomed to is going to a bank and then having a 30-year loan. The bank basically determines the interest rate. With seller financing, you can get pretty creative. And so we’re in the process now of actually negotiating the terms.
What’s nice too is maybe traditionally you go to a bank and you have to put down say 25% down. On our most recent property, we’ve put down 5%. And right now it’s looking like we’re probably going to put down about 10% on a seller financed four unit.

Ali:
So we’ll put down very little on this property. And the cool part is that the seller is the bank. So we’ll be making monthly payments to the seller until we get to the point where we eventually refinance it on a bank loan. But it benefits in two ways. It benefits us because we’re able to get a rental property with very little money down in a creative way where we don’t have a lot of competition like you would on the regular MLS.
But in addition, it really benefits the seller because they have all of this real estate that they own free and clear and if they were to sell it tomorrow, that would be a really big tax bill. So by doing seller financing on their part, they’re lowering that tax obligation, which helps them as well.

Josh:
And it gives them a nice monthly fixed income so that they can-

Ali:
Without having to manage tenants and toilets.

Josh:
They can enjoy their retirement.

Ali:
Right.

Mindy:
You quit full-time work, which is awesome. Congratulations on your unemployment for part-time employment. What do you do all day long? Because part-time, take that much time. How many hours a week are you working?

Ali:
That’s a great question. I mean last November, November of 2021, I quit my full-time work as an elementary school social worker and I actually dropped down to part-time as an elementary school social worker. We made this move not necessarily for the income, but really for the health insurance benefits, especially going through fertility treatments which are very expensive. I was able to find a part-time job where I work Mondays and Tuesdays school week, school year hours, but it covered three full cycles of IVF, which was incredible. So we have amazing benefits through that job.

Josh:
And then I was a full-time consultant the last time we spoke and since then I have been whittling down my clientele quite a bit. So right now we both work about two days a week, anywhere between 12 to 14 hours. When we’re not doing that, we are very busy with our online brand, The FI Couple with managing rentals and planning to onboard for more units so that we’ll be even busier with that. But admittedly, instead of just trying to fill our time with more work, which almost defeats a little bit of the purpose of why we were so aggressive with paying off debt and achieving financial freedom, we also spend a lot more time, at least when it’s warm out, hiking, traveling, visiting family, kind of all the things that we wanted to do more of back when we had a ton of debt and worked full-time.

Ali:
I think when we first quit our jobs, the expectation was we worked 40 plus hours a week. We’re just going to fill that with 40 hours of new work. I think it took a real mindset shift of real realizing we’re building a lifestyle here and we’re building a lifestyle business. And that doesn’t mean 40 hours of work. It doesn’t translate to just replacing what we already did.
So for us it’s like, “Yeah, let’s go get lunch at 2:00 on a Thursday and hang out and let’s go visit family and help friends when they need help with different things.” So it’s really been powerful for us because we’ve been grinding for so many years. Just grinding it out, busting our butts, and we’re finally, especially with the debt payoff, increasing our incomes, getting rid of full-time work. We’re starting to see those lifestyle benefits of having the real flexibility and time freedom.

Amanda:
So what are some of the benefits of still working part-time? Obviously, you guys have found lots of ways to fill your time, but why work part-time still?

Josh:
Yeah. So I think both of us really enjoy the work that we do. It’s both in the human services profession, Ali being a school social worker and me being the consulting work I do is actually career counseling for workers with disabilities. So we both enjoy it. We just didn’t like doing it as much as we once did it. And then admittedly for me, my job involves going to different locations in the city that we live and inevitably in between appointments, I’m looking at real estate. I am walking neighborhoods and it just helps me get out and about too. So those are some of the benefits.

Mindy:
Does working part-time allow you to qualify for bank loans as well?

Ali:
Yes. Although that number is getting smaller and smaller in terms of the income that we bring home. And it was very interesting to qualify for this most recent bank loan because I’m working part-time. Josh’s Hours were reduced and we had The FI Couple but it wasn’t a two-year old business yet, so we couldn’t count it towards our income. So I think moving forward, it will be a little easier because our business is now two years old, but continuing to work at a W2 is really, really a huge strength and asset for people as they work to scale their real estate portfolio ’cause it’s just much easier to vet that income.

Mindy:
I will say too is originally I think we thought we’re both just going to quit our jobs. We’re just going to do entrepreneurship and real estate. And then we started exploring not only health insurance but health insurance for expecting parents. And the numbers were a lot higher admittedly than we had initially planned for. So by Ali working part-time, not only does it help in terms of qualifying for bank loans, it’s also a more affordable healthcare for us and our growing family.

Amanda:
I love that. So did your student loan final payments, the big hurrah play any part in going part-time?

Ali:
So actually yes and no, but I quit my job a few months before we paid off our student loans. And our initial plan, we have all the plans in the world. We have dozens of whiteboards. We have Excel sheets. We have all of these plans. And the plan was very simple, pay off the debt, buy a certain number of rental properties, then quit the job. But it didn’t transpire like that. 2020 and the entire pandemic was really brutal for a lot of industries and I was feeling really burnt out physically and mentally in my role.
We were going through fertility treatments and I was in situations with students that were not safe. I was getting punched in the stomach as we were going through fertility treatments and it was really to the point where it was my mental wellness and my health or my job and our financial goals. It felt really scary to have to pick, but luckily we didn’t have to because we had set ourselves up in such a position with all of the work that we did to bring our cost of living down to live really frugally and aggressively pay off the debt. So we were able to quit ahead of schedule and then we paid off our loans three months later, which was really cool.

Josh:
I think sometimes when people think of financial freedom, they think of it as a singular thing or some mile marker that you run through, but there’s a lot of checks along the way and there’s a lot of opportunities and benefits along the way. And so while we weren’t financially free at the time that Ali quit her job, we had far more financial freedom than when she started. And so we kind of got back the power of choice. So she was able to step away with confidence.

Ali:
It was a massive privilege to be able to quit my full-time job. It’s not something that most people can do and it’s a direct byproduct of all of the crazy choices we made and all of the sacrifice we made to be able to do that without the real worry of what’s going to happen. We knew we would be okay.

Amanda:
Yeah. I mean, thank you so much for sharing that and congratulations on paying the $100,000, being able to do what was right for you. I mean that’s huge. One of the things that I really like about you guys is that you’re always able to just figure it out. You didn’t have backgrounds in real estate or how to pay off debt and do all of this. So another thing that you’ve been able to just figure out is how to build a business. So how did you grow your online social media from 10,000 to 150,000 followers so quickly?

Josh:
Yeah. So we started The FI Couple in 2020 and it was at that point in time… So I am a voracious reader of books, all things BiggerPockets. If there’s a podcast from BiggerPockets, I’ve listened to it probably twice. And the more and more that we were listening to podcasts and reading books, we were hearing all of these awesome success stories from people who had reached the mountaintop, if you will, of financial freedom. But sometimes you were hearing their story when they had already gotten there, which is really, really inspiring. But for us, it was kind of like we wanted to hear stories of people who were maybe 50% of the way or there, if you will.

Ali:
People that we could relate to. People that were still struggling and maybe making some mistakes along the way.

Josh:
And we weren’t really hearing it as much. And then so Ali had the idea. She’s like, “Well, why don’t we start sharing our story?” And I was like, “Ali, we don’t know social media. We’re not very active on social media. So I don’t know if that’s necessarily a good idea.” I was wrong.

Ali:
Do you want to say that again louder for the audience?

Josh:
So we started sharing our story and admittedly we didn’t really know what we were doing. We just figured you know what we’re going to tell people some of the stuff that we’re up to and maybe our moms will follow and stuff like that.

Ali:
I wish I could say we were tech savvy and had this whole business model planned and knew exactly what we were doing, but we were flying by the seat of our pants. We had zero clue how to do everything. We felt really silly making videos and putting ourselves out there. We got really ridiculed from friends and family, “What are you guys doing? This is stupid.” But we just continued and I think in the beginning, it was not a business, we weren’t making income, but the community that we built of meeting other people that thought like us and made choices that we did, it helped us in our personal life beyond belief because we said, “We’re not the weird ones. We can rely on other people and connect with other people and make real friendships with people that get what we get.”

Josh:
And we didn’t really understand real estate, but that wasn’t going to be an excuse for us to not understand real estate. So we found ways to bring value to people who knew a lot more than us and we took the next step forward and we learned real estate. And social media was no different. So what’s awesome has been a lot of the people whose stories we’ve heard over the years who now also have blogs or Instagram pages or different websites, we’ve now been able to connect with sometimes in real life and then sometimes just on Zoom calls.
They’ve been more than happy to just talk to us about how to actually turn something that starts off as a passion project online into something that’s a viable business. So that has been huge, both in terms of being able to make a living, doing something that we love, but then also creating actionable content, growing our brand and now having, gosh, 150,000 followers is just a really crazy number to say out loud.

Amanda:
It is crazy. But I think to your point, just the relatability, the vulnerability that you brought to your page brought together that community. Right? So I think that’s awesome. So let me also ask though, how is leveraging social media a catalyst to help you quit your jobs or go part-time?

Ali:
Absolutely, yes. So I think that again, when we started social media, we knew that people made income on social media, but I genuinely feel like a social media business is the wild west. There’s no paid transparency. People have no idea how you generate income. People ask us all the time, “Do you make income from just having a page or making videos?” No one knows. So we certainly didn’t know when we first started. So we figured out along the way the different ways that you can generate income from having a social media business.
I remember in the spring, we had made a little ebook. It was a 53-page book about how to start learning about real estate beginners in real estate. I remember before my school year was about to start, we were selling the ebook and we had made more from that ebook sale than I made it a full month of work.
That was the lightning bolt of like, “Wow, we can generate money online that could have the potential to replace my full-time income that is really stressful and challenging and not really filling me up anymore.”

Josh:
And so we kept learning and kept growing and connecting with other people who were doing incredible things. It got to the point where we had a couple months where The FI Couple had made more than what Ali’s job, but without a fraction of the physical and emotional stress. And so even though, again, we still had debt and it was still very early on, we were like, “You know what? I think we have something here and I know how unhappy you are. We’ve done all of these things over the years to give ourselves some flexibility to take a chance on something that we really like doing.

Ali:
It was an unexpected decision for me to quit my job and do all of that before the loans were paid off. But it was very calculated because, again, we had several months under our belt of consistently outearning my job and that told us, “We’re going to be okay. We’re going to figure it out.”

Amanda:
I love that. So you guys have so many different streams of revenue coming in right now, which has allow you to reach financial freedom so much sooner. So do you have any tips for our audience on how they could grow their own social media or grow their own business? Are you just on Instagram? Are you on TikTok too? What platforms are you using?

Ali:
I think in terms of ways to grow and develop revenue, one of the biggest takeaways, I remember someone said it to us, “Don’t start a social media page just with the immediate goal of trying to make money.” Because if it’s really simply for that and you’re not looking to add any value or contribute, I don’t think you’ll have success. So for us it was always like what are the things that we wish we knew that we want to share with other people to help them? So for a really, really long time, it was just like, “What value can we bring? What connections can we make? How can we partner with people on similar shared goals and tasks?”
I think by doing that we developed really organic relationships and a lot of trust within our community. I think that that really helped us with our success. And then once our business started growing and we had more followers and we had more connections, then it shifted of, “Let’s continue to provide educational content, but is there a way that we can get paid for all of the time we’re investing in this?” And then from there it was developing those different streams of income.

Josh:
I always tell people is just figure out what your circle of competence is. There’s a lot of things out there that Ali and I just have no understanding of. And so we stay in our lane. We talk about the basics, fundamentals because I think-

Ali:
Of what we know.

Josh:
Exactly. And they’ll never go out of style and they’re always something that people need to learn more and more every year. So it doesn’t have to be overly complicated. You don’t have to talk about things that you don’t understand.

Ali:
We shouldn’t.

Josh:
We just basically said, “What did we need to know more of two to three years ago before we started this journey?” We started creating content for those people because we figured if Ali and Josh needed to know that maybe 100 people or 1,000 people or 100,000 people would be interested as well.

Ali:
We started our social media journey using one platform. We started with Instagram. We learned the ins and outs of that and felt more mastery level experience at that before we transitioned to other platforms. So that was the strategy that was most effective for us. We have Instagram and Twitter. We have TikTok, which we still don’t know what’s happening there, but we post the videos on it and that’s kind of it.

Amanda:
I love that. So then let me ask you one more question. How do you get over the vulnerability of just putting yourself out there on social media? Because so many people have the vision and the drive to do something like this, but it can be uncomfortable. So how did you get over that?

Josh:
I could tell you. Honestly, it is scary sometimes being vulnerable, sharing all the areas that we’ve made mistakes and there’s just so too many to count. But I’ll tell you sometimes the power of community is incredible because some of the best performing content we’ve done is when we’ve made mistakes. And then we will see in the comment section people being appreciative of being vulnerable and being transparent and not just showing all of the highlight reels and the wins and stuff like that. Because for all of the wins, if you will, we’ve had, there’s probably 10 times as many times as we flat out failed and just said, “What the heck were we thinking?”

Ali:
I will also say, and this is pretty raw, but I feel like there were many times where it’s like, “Oh, this is so stressful. The thing that we have to do.” We have to make a lot of content, or I have to put myself in front of a camera and I feel really embarrassed or were public speaking right now. And then I think, “Do you remember yourself, Ali, when you were a school social worker and the things you were doing then?”
Yeah, that was really hard. And this isn’t. You’re really privileged to be in this position where you can make money from your phone at your home in your sweatpants every day. I never want to take that for granted. I think that we didn’t know the income that we were capable of generating, but we knew that we really desperately didn’t want to be in our full-time jobs.
So we were willing to get so uncomfortable and give it our damnedest even if we failed. It was like, I’m going to try so hard that if I fail, it’s embarrassing. And that was the biggest thing. We had so much to lose. We were trying to build a family. We were trying to build a rental portfolio, all of these things. We had so much to lose that I didn’t care how embarrassing or vulnerable it had to get to be able to find success.

Josh:
I guess the last thing I’ll say too is that we started thrusting ourself into hard situations back in 2018 when we were just completely broke. I had been fired and we had a ton of debt. We saw the decisions we made to get us there. So we said we have to live radically different. And it’s kind of working that muscle. And day after day, week after week, year after year, we choose to lean into hard things because so often on the other side of those hard choices have been some of the best life experiences we’ve had so far.

Ali:
For sure.

Mindy:
One of the things that really helped me was I really like to talk, which is super, super helpful, but also I looked at what other people were saying and I’m like, “What’s the worst that could happen?” I come out here and I talk about real estate because in my real life at the time when I first started here, in my real life, nobody else wanted to talk about real estate. Now everybody wants to talk about real estate and it’s great, but seven years ago I didn’t know anybody who wanted to talk about real estate and I really did.
I thought to myself, “What is the worst that can happen?” Nobody is going to drive up to my house and throw rocks at me because I flubbed a line or I said something wrong. People will either be okay with it or not be okay with it. And if you want to make online content, don’t read the comments. That’s my biggest tip for you. Never ever, ever, ever read the comments because they’re either going to be nice and that’s going to make your day or they’re going to be mean and that’s going to ruin your week. So just assume everybody’s nice and everybody wants to keep watching and don’t read the comments ever.

Ali:
Yeah. I have a folder on my phone of some of the historically meanest comments that people save. I read them, I laugh, I smile.

Josh:
We’ve actually-

Ali:
It’s been very hard to see some of those comments, but ultimately mental health, someone that wants to be mean through the internet, it is what it is.

Josh:
We’ve actually made content out of the meanest comments.

Ali:
Yeah. But ultimately I agree with you, Mindy. What’s the worst that can happen? We have to go back to full-time work. That’s it. And you know what? I’m really not keen to do that. So I’m going to do everything I can to build our portfolio, continue to live, lean, and continue to build our business.

Mindy:
Yeah. What’s the worst case scenario? I go back to work. Your worst case scenario is everybody else’s everyday life. Joel from FI 180, that’s not me. That’s Joel. Give credit where credit is due.

Ali:
Absolutely.

Mindy:
Okay. So you talked about living on 20% of your income. Is that your current part-time income and you’re living on 20% of that?

Ali:
Yeah. So right now between The FI Couple, between our part-time work and between… We have some profit from our rental portfolio, but because we house hack it kind of limits the profitability of it. So we save about 80% of the income that across all of those income streams and we spend about 20% of it.

Mindy:
So what tips do you have for listeners for saving and budgeting?

Josh:
I know for us, when we began this journey four years ago, we were thinking… So we started off kind of on the Dave Ramsey path and teach their own nothing wrong, so on and so forth. But we started off cutting out Netflix and the coffees.

Mindy:
The small things.

Josh:
The small things. We would never go out to dinner and so on and so forth. And that was the year we got married. So that wasn’t too fun. We gave that, the old college try for about three months. But then actually, conveniently we found the book, Set for Life and that’s actually where we discovered the whole concept of house hacking. When we read the book and then we read the book again, we said, “Well, if 65 or so percent of our money is going towards rent, the car payment, which we used to have and then dining out and stuff like that, if we just focus on the big things instead of nickel and diming our way to try to be financially free, we might move a lot faster.”
And so for us, we reference using spoons to get out of debt or save money versus shovels. And for us, finding creative ways to reduce our rent and eliminate car payments, that gave us the shovels. And then from there, oh my gosh, at one point I think we had four or five side hustles between the two of us as well as full-time jobs. And so it’s all well and good to reduce your spending, but you can only save so much. There’s really no limit to how much you can earn.
So we started finding creative ways to make money. We were doing life coaching, driving for Uber, catering weddings. And so that grew the gap and it was that gap that steadily grew and that’s what allowed us to pay off student loans and buy more real estate.

Ali:
I would just say though, for everyday people that are looking to improve their finances, so a lot of the things that you often hear is reduce your expenses, increase your income, grow that gap in between. I would add to that, know your numbers. We were floating around having no idea how much we were spending, how much debt we had. And there’s real power in understanding the numbers of your situation because we talk to people all the time.
Oh yeah, I spend $50 a month on dining out. Actually, track it and tell me if that’s true ’cause I think you’re a liar. I think that our brains have a funny way of rationalizing and compensating things. So it’s like the numbers do not lie, they never lie. So know the numbers and keep track of them and really learn to identify needs versus wants. Because I think we live in a society of I see it, I want it, I like it, I got it. That’s Ariana Grande, right? And you see it, you want it, let’s get it. We have Afterpay. We have credit cards. You can get a personal loan.
I think that that instant gratification society is very, very, the total opposite of budgeting and eating your cereal before the marshmallows. So I think it’s really, really important to say, “Yeah, I want to have a cleaner in my house. That would be a really nice luxury or I want to get my nails done every three weeks, or I really want that fancy car.” But do you know what does your financial situation say that you can have those things? Not always. For us, it meant cutting out a lot of the wants to get us to the point where we were able to integrate them back in a way that didn’t totally screw us.

Amanda:
Yeah. Having an understanding of what’s coming in and what’s going out and just facing the numbers is definitely going to help you get ahead. But you guys had a hundred thousand dollars worth of debt. What would you say to somebody who just feels like they’re drowning in debt so bad that they’re just paralyzed with fear to even look at their numbers? Do you have any tips for those types of people?

Ali:
Absolutely. I think that that was us. We were like the ostrich in the sand. We knew we were living paycheck to paycheck. We knew our finances were good. We knew we had a ridiculous amount of debt, but we didn’t want to acknowledge it. ‘Cause if I don’t check my bank account balance, I don’t know if I’m overdrafting. So I think the thing to really recognize though is that you’re hurting yourself.
It’s shortsighted and it’s a temporary choice to alleviate the anxiety, but the long-term anxiety and just making your life not an easy one, it’s better to make your life a little harder and face the music than to ignore it for a decade. So for us, that’s exactly what we had to do.

Josh:
And then there’s an expression that I’ve always really liked and resonated with and it’s eat the elephant one bite at a time. When we sat and we thought about $100,000 of student loan debt, not including car loans and personal loans, things of that nature, it was overwhelming and it left us feeling paralyzed. What direction do we go in? So it was when we took 100,000, we don’t have 100,000 of debt, we have $500. We have 1,000. And we lived in increments of 500 and 1,000. It felt really slow, but psychologically it was actually really powerful.
It started giving us momentum and so suddenly we started living in $1,500 increments and $2,000 increments. So it was just taking something that felt really big and daunting and zooming in a little bit and saying, “Okay, how can we chunk this out a little bit and still make progress?”

Ali:
If you have that big goal, but then you reduce it and chunk it out, whether it’s paying off debt or saving for a house or wanting to buy your first investment, if you put it into manageable steps and then you celebrate every time you hit that step or that accomplishment, it just really boosts morale and keeps you motivated. That was huge for us.

Amanda:
I love that. Thanks for sharing. So right now you’re living on 20% of your income and then you’re saving 80% of your income. So what are you doing with that 80%? You’re not just sticking it in a savings account, are you putting it toward house hacking or the stock market or what does that breakout look like?

Josh:
Yeah. So it’s a little-

Ali:
Gutters.

Josh:
Yeah, it’s a little bit of everything.

Ali:
Home repairs. We have a 130-year-old homes, so we have had some updated renovations, but I’m being silly. We definitely have a really healthy spread of allocating between different financial goals that we have.

Josh:
So we use a variety of buckets. As long as our personal checking and our personal emergency fund, our rental emergency fund, we have a small account now for our business in case for something happens in our business. As long as all of those buckets are checked, everything else we are putting into. We have a Roth IRA, we also have a taxable brokerage account, which is just filled with index funds and exchange trade funds or ATFs. And then we also saved up for the upcoming real estate acquisition.
So it’s kind of like the surplus that we have every month. We check all of our boxes and as long as our bases are covered and that we’re protected, anything above that, we first prioritize buying more real estate. And then once that account is where we want it to be, which it is now, pretty much everything just funnels then into the taxable brokerage. And then anything beyond that is just kind of like, “Hey, if we want to take a trip or something like that, then we plan for that accordingly.”

Ali:
This comes back to knowing your numbers though, and I really want to emphasize this because we have our buckets. We have our personal, our business and our real estate bucket. We know the number that needs to be in order to be full. So as soon as those buckets are full, we don’t let ourselves have money floating around because that’s how people get into trouble.
So if those buckets are full, the money is immediately invested or it’s in our investment savings account for our next deal. And sure if we have an upcoming trip, as Josh said, we’ll allocate for that and we’ll make that happen. But I think when you start to see more money in your bank account, it’s like, “Oh, that’s free money. I can buy this or do that.” I think that we’re so focused on our goals that, that mindset is eliminated when you just have the systems in place for your buckets.

Amanda:
It seems like you guys are so intentional about every single dollar that comes into your life. Right? So let me ask you then, as far as real estate goes, do you have a goal for a number of doors or total properties?

Josh:
Yeah. So right now it’s 15 units and it kind of goes a little bit against traditional real estate advice if you will. But we’re actually probably, once we get there, we’re probably going to pay off our first rental property pretty aggressively. It will give us about 10,000 to $11,000 a year of more cash flow. And while the math says well that money may otherwise better be utilized in the stock market where you can get say, I mean not 2022, but long term you can get eight to nine, maybe 10%. We’re going to be paying off a property with only a 4.8% mortgage. But for us that’s going to be an extra 10 or $11,000 that we’ll be able to use to cover our expenses, especially when we have a family.
So 15 units, one, maybe two properties paid off, but at least the first one paid off. And then at that point, I don’t know if we have any visions of having this big portfolio where really the small mighty landlords. From there we might explore things like syndications or other avenues because we do really like real estate.

Ali:
We’ll have our stock portfolio.

Josh:
I’m just not sure we want to have some big portfolio per se.

Ali:
People often ask us, why not go bigger? Why not have a big portfolio? And there’s definitely nothing wrong with that. But I think our biggest thing is we want to have just enough to support what we need because we don’t want another job, right? We have a lot of jobs. Our lives are really busy. I don’t need to feel cool by having hundreds of units. That’s not that exciting to me personally. I don’t think that that’s why people do it. But I think that for us, it’s like what fits our life? What fills our budget? What gets our needs met? And then that’s it. That’s all we need.

Josh:
We have a lot of mentors who have a lot more experience from us and we’re learning from this every step of the way. A lot of them have shared with us that they got to a certain point and it became this Frankenstein portfolio that they weren’t really sure of why they built. And so that they’ve spent the last five or 10 years kind of deconstructing it, if you will, to get it to a place that was conducive to the freedom that they started in real estate in the first place to get.

Mindy:
Okay. I didn’t want to interrupt but I wanted to interrupt. Yes, yes, yes, yes, yes. I talk to a lot of people about real estate now and I hear this, “I want to just keep buying forever.” Why? You know that’s a job. Even if you’re managing the manager, you still have to manage the manager. It just seems like there’s this score keeping. It is score keeping. It’s absolutely I want to more and more and more and there’s no rhyme or reason for it. It’s like it comes to a point where you have enough. What is your enough number? Figure out your enough number and then be happy with that. I love that you won 15 units. That’s great. That’s enough. That’s enough. To live off of, that’s enough to give yourself a whole lot of freedom.

Ali:
I think for us too, I think often when you hear about real estate or you see it on social media, it’s like, “The rent checks and I just did this really sexy flip.” It’s just very glamorized and I think, “Okay, but have you turned over an apartment? Because that can be a real process and I don’t want to be doing that all the time. Have you had a tenant call you in the middle of the night because their ceiling is leaking? That’s a process. Well, we love real estate and it’s an amazing wealth generator and it’s going to help us the rest of our lives.” It’s work and sometimes it’s no work and I really don’t think about it unless we’re getting a rent check. But sometimes it’s like there’s stuff going on and you’re solving the problem.
So I think more units, more problems and yes, you can get a property manager, you can outsource. But you’re right, Mindy, you’re always managing something. And I think for us, I want to clear up as much mental bandwidth so that I can spend my life with this person and our aging parents and the people that we love and I’m not constantly spinning a to-do list of things I need. That’s our life now. We’re busy, but we’re slowly trying to distance from that lifestyle.

Josh:
We didn’t know how long it would take, but four years ago we knew one day we wanted to be parents and we wanted to have the flexibility and freedom to be as present for that child or children.

Ali:
No, one and done.

Josh:
when it happened.

Ali:
It’s a hard no for me.

Josh:
And so for us real estate or stocks, they’re not the end. They’re a bridge towards a greater cause, our why if you will. And so we’re really excited because the things that we started doing four years ago are really starting to pay some pretty large dividends so that in July of next year when we welcome our daughter to this world, we will have the thing that we set out to have, and that was the power of choice and control over our time. And that will be the biggest investment that we’ve ever made.

Mindy:
Ali and Josh, this has been a lot of fun and I really appreciate the time that you shared with us today. Do you have any last tips for our listeners before we go?

Josh:
Yeah. I would just say whatever the thing is that you are afraid of starting or seems really scary, just understand that there’s probably hundreds or thousands or even maybe millions of people who are doing it, have done it. I’m so grateful that we live in the time that we do because 50 years ago, Ali and Josh want to learn real estate. That’s going to be really hard. Whereas now, biggerPockets.com is free real estate knowledge.
I’m just really grateful for the internet. So if there’s something that feels really daunting, one, go to Google or go to BiggerPockets, but two, build a community. I mean, I’m so honored and excited to see Amanda there because Amanda has been someone we met two years ago and she is a huge part of our community of people who we’ve met and learned through social media. And so find your community. It makes things a lot easier, especially when times get tough.

Ali:
I would say too, I never think it’s too late. If you’re not happy with your life or the trajectory that you’re on or there’s an area that’s really stressful for you, it’s never too late to make changes. I think we often see pieces of people’s lives. You’re hearing from us today and you’re like, “Wow. Look at what they’ve accomplished. Yeah, it’s five years in the making and we’re still working towards it.”
So I think it’s important to give yourself grace and know that small steps can make really profound changes over the time. We did nothing fancy. We did nothing sexy. We just stayed consistent and dedicated to our goals. So if it’s just remembering I want something to be different, it’s not, “If we did it, you can do it too.” But you do have power to make changes and if you don’t have a circle that supports you with that, grow your circle. As Josh said, “We’re very fortunate to be in the time that we are and there’s so many resources at your disposal.”

Amanda:
I love those last tips and this has been so fun. This has been so fun. So where can people find you?

Ali:
Yes, absolutely. On the internet. With all of these resources at your disposal. We’re on social media. Our handles are The FI Couple everywhere. So we have Instagram, Facebook. People can email us if they have specific questions. The email is [email protected] and we’d love to connect with folks. I mean, BiggerPockets was the catalyst to our journey and we feel forever just grateful and indebted to you guys because it literally transformed and changed our lives in so many ways. So if you’re listening, you’re doing the right thing by tuning into BiggerPockets Money. It’s one of our favorite podcasts and we’re just really grateful to connect with you guys today.

Mindy:
Thank you, Ali and Josh. This has been a lot of fun and we will talk to you soon.

Ali:
Thank you.

Josh:
Thank you.

Mindy:
That was Ali and Josh. Amanda, I really love their story. Like I said in the beginning of the show, there is no easy button. There is no secret sauce to this. It is simply putting in the work. And Ali and Josh I think are a shining example of when you put in the work, you will see the results.

Amanda:
I absolutely agree. When you put in the work, you see the results and then when you work together as a team, to me they are just a shining example of teamwork, really, really working, and really coming through.

Mindy:
Having your partner on the same page financially is a superpower. I wish everybody listening to this to have that same superpower. It is the number one thing couples fight about is money. And when you can remove that from the situation, your life just improves so much. So talk to your spouse about money, get on the same page and put your nose to the grindstone, get all the work done and you will have the same results that Ali and Josh do. Should we get out of here?

Amanda:
Yeah, let’s do it.

Mindy:
That wraps up this episode of the BiggerPocket’s Money Podcast. She is the She-Wolfe of Wall Street, Amanda Wolfe and I am Mindy Jensen saying, see you later, alligator.