How to Use Your Budget Now to Meet Your Future Financial Goals
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So I have written, count them, five books now. But each time I'm in the writing process, I stay at an Airbnb. I love to stay at an Airbnb. When I was actually first launching this show, I was at an Airbnb in Arizona. It was so peaceful. It was stunning. I could be productive and comfortable. The Airbnb was also surrounded by a ton of javelinas. If you know Arizona, you know they're like wild pig javelinas.

creatures, but honestly, I love them too. Being away for work, for fun, or both is a perfect opportunity to host your space on Airbnb. And if you think that hosting is overwhelming, I have a solve for you. With Airbnb's co-host network, it's easier than ever before to host. It's also a great way to earn some extra cash, which I know we all love. Now you can hire a quality local co-host to take care of your home and your guests.

They can do everything from creating your listing to managing reservations to messaging guests and even providing on-site support. So if you've got a secondary property or an extended trip coming up and you need a little help hosting while you're away, you can hire a co-host to do the work for you. Find a co-host at Airbnb.com slash host. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. You have

You have more than one financial goal. How do I know that? Because we all do. The trick is, how do you work toward multiple goals at once? The answer isn't some money move that your future self will need to make. The answer lies within the money moves you're making right now. And I'll show you how to make one of those money moves with the help of Bank of America, whom I partnered with for this episode.

First, you'll meet someone who's debating this question right now, a money rehabber named Sarah. She already has some real estate investments, but she's thinking about buying another house in a few years. Plus, her husband wants to retire early. So how does she balance these two goals? The answer is not waiting around until she's ready to buy a house or until the eve of her husband's wannabe retirement date. She has to put in the work now. She needs to know how much she can save for these future goals and then start saving.

So in this conversation, we do a deep dive into her finances so we can figure out that number together. But like most things in finance, these long-term goals are deeply tied to emotion. So in this conversation, too, you'll hear about how watching her family go through the 2008 crisis has affected Sarah's thinking and how she takes a step toward overcoming that trauma in this very conversation. Whatever goals you're working toward, long-term or short-term, Bank of America Corporation has the tools to help get you there at bfa.com slash financialnextsteps.

But for now, let's get into it with Sarah. Sarah, welcome to Money Rehab. Hi, thanks for having me. I'm so excited to be here. So you want to buy a house in two years. You found yourself in a little bit, it sounds like, of a Goldilocks house situation. Can you tell me about what's going on?

Sure. So it's a little convoluted. So back in like 2016, fresh out of college, got my first big girl adult job. One of my goals was to just buy a house instead of constantly moving apartments every couple of years. So a little saving scrapping, bought a cute little town home where I lived very, very 80s and my family's in the kind of fix and flip construction world. So bought it with a little help from my parents. And then we spent about four years

Gradually renovating it, nothing major like new tile in the shower, new cabinets in the kitchen, very minor, some new paint, better light fixtures type of thing. And then I got married and my husband moved into that house with me. And then once COVID hit with the interest rates being super low and we're both like living at home and thousand square feet was not quite enough for us anymore. So we wanted a bigger house and we were unsure of like where our life was. Like we're newly married, unsure of like, do we want kids? We wanted to live a little bigger. And then we found this huge master plan community that was being built and

Outside the city and like we can go there because it was great deals on houses. We like a couple of floor plans and with interest rates being so low, we just kind of like took advantage of that cash out a key lock on my first property, rented it out, moved there, lived in that for about three years. It had an unfinished basement. Then we renovated that. We turned this three bedroom house into a four bedroom house for two people.

So it just seems like too much house to the two of us. But then he got a job opportunity that then picked us up and moved us out to California where we're currently living and we're renting out both our houses. And we're in this weird limbo of like, we only want to move back and we'll eventually just move back into one of our current houses first. But we're like, one's a little too small. One seems a little too big. So we're trying to like maybe be able to buy another house in a couple of years when interest rates come down a little bit more and just have like our own mini like housing real estate empire is like our new joke of like,

we're going to be those people and we can retire him early and he can out manage them. We can just kind of live off of those instead of having to deal with the uncertainty of the stock market for our retirement or have it supplement our retirement.

in 20 years time when those mortgages are paid off is kind of where we're sitting but now it's like how do we figure out saving for a house because he doesn't want to do the HELOC thing again like that still terrifies him of like why what happened nothing he just didn't let he doesn't like the idea of having debt like he was brought up in those like cash only houses so I had to teach him we got married like here's how credit scores work here's how to get a credit card like I had to help buffer him along and so is he first generation American

Nope. He's been here his whole life. His dad was just like some old accountant. That's just the way he was just brought up. It was like cash only, which was great. We first met, like he was great at savings, bought his first car for like $8,000 when he was 21 years old type thing. So it's a really big hook for me. It's like, Ooh, he's great at savings. I didn't know how to do that at the time. So that was a good hook, but he just had no idea how credit works. And he just hates the idea of getting into debt. I'm like, but you can use this money to your advantage. But since we still have our HELOC for my first home and we're paying that off,

On top of having two mortgages, but all that money comes out of a rental income. So it's not our actual cash out of pocket. He doesn't want to either extend another loan or he's just worried about being dead eyeballs is like the eight, the 2008 recession type thing, I think caught his family off guard as well. I think he just has like this fear of being in over his head at the same time. But he's not saying buy the house in cash, right?

Now, with our big house, we managed to do a 20% down payment because he found out about private mortgage insurance and he's like, that's a scam. I don't want to deal with that.

But like the reality of the market is we probably won't be able to do that again, putting that much down in the house. And so it's his other big issue is like, we spent too much time on Zillow looking at houses and playing around with the numbers. It's like, Oh, we can buy this right now. And I'm like, do we really want to buy that? I'll be the renovate this. Like we, he just went full bore from being like, you buy the one family home and the picket fence. So now I'm just like, we're renovating. We converted his way of thinking with my family's weird.

It's the money you play with it and this and we fix it up. And now he's gone full down that rabbit hole. When we first met, he was totally against the idea of painting a house is too much work type. Yeah, it's like he was against it. I was like, all for this one equity type thing. I don't know. So you guys have renters in both of the houses you own? Correct. Has it been hard to find renters?

No, we've been pretty fortunate where my little townhome is. It's a college town. So there's a lot of influx of like young students. And we've been fortunate because both my mortgages are so low that we can actually rent under the market. So we can be a little bit more choosy with our tenants and also not have someone feel strapped for cash, which makes me feel better knowing that like.

with life uncertainties is like, I don't have someone like missing their rent either. So we were playing a little short with the numbers, but I feel better knowing that someone's in there, the bills are getting paid and I get a little extra in my pocket to cover in case something breaks. And we call that good versus,

gouging out the market on that so it's always been pretty good where other houses it's a huge oil and gas industry out there so a lot of people are moving in and out with um the influx of that and it's just a lot of like the hospitals are nearby being built and those kind of things so we've got a good pool to cover both ends of the market like we have like right now our current one tenants like a college student working on like her doctorate degree and it's a family of like four i think and the husband works in the oil and gas industry and the wife's a teacher and they seem

Pretty happy with staying so far. So I'm like, I have no problem with keeping them on as long as they want to stay. What are your interest rates? You said they were really low. So for big house, we bought it right at the end, like September of 2020. So we were just under that. I think we're like right at that 2%, 2.5% mark.

And then my townhome, I've refinanced a couple of times. When I first bought it, I just wanted to buy a house. So I had an adjustable rate. Then we refinanced and then we refinanced again for the HELOC on it. I think that's at like 3.2%. Okay. Well, sadly, the go-go days of those low interest rates are over. It is kind of like a double-edged sword though. Getting a good interest rate is obviously awesome. But then you end up chasing that high whenever you dip your toe back into the market, which it sounds like

is what's going on with you guys. And as we know, interest rates are coming down, but experts think it would probably take another pandemic, which we would not want for interest rates to go that close to zero again. They were just so unnaturally low for so long that we got used to it. And weaning off, as you have been going through, is really hard to do. Mm-hmm.

So for this husband on that one is like 4% of greatest rate 5% is great. He just won't take it. I'm like, no, you're going to accept that we're going to buy again, like 5% is like the back to the 80s of 20%. The next property that you want to buy in two years is

What's your goal with that property? To live in it for a while? To flip it? Use it as an investment? I think it'd be more of like a live-in long time. I'm a little over moving. I was doing the math and we've moved four times in about four years. And I'm just like a little sick of that. We figured if we moved back to Colorado, we'd probably go back to one of our houses if leasing timing works out. So we can just sit and we can spend six months and hunker down and figure out our budget and then find another place

Probably another townhouse, actually. Less a beef of the maintenance and the landscaping because we're not outdoorsy people, which was a big learning curve. With the first house in the suburbs, our husband realized that he wanted a big yard for that stereotype, and he realized he hated mowing the lawn. I'm like, yeah, and I refused to do it too, and I told him from the jump that I didn't want to mow a yard. So he might go more a townhome type route again just for simplicity's sake. I think it would be more of a permanent home that we can live in under...

under our means and then be they be at retirement homes, we can just live off of our incomes when the other two mortgages get paid off down the road. Okay. So something you can live in that doesn't have a yard that needs to be mowed. Got it. So that's going to help us look at

this house goal against your entire financial picture. We got some of your details in advance. Thank you for sharing because we want to dig into it. Let's talk about income expenses and debt. Start with the debt because that's, you know, not the most fun. So let's just get it over with. You have $128,000 left on your mortgage on your townhouse, $285,000 on the other house,

20K in student loans and that $35,000 HELOC or home equity line of credit balance. Am I right so far? Yep. So that, Sarah, is $468,000 in debt. Again, this isn't bad debt. Mortgages can be considered good debt, but that's in the liabilities part of your assets, liabilities, net worth chart. And then your monthly expenses. I'm going to list those out. Rent, $2,900.

mortgage on your townhouse $867 and the HO fees are $266. The mortgage on the bigger house is $1871. Your HOA fees are $25. That's pretty low. Yeah, it's just the trash. They bill it annually, so I just did the math. It's like $300 for the year and it just covers trash pickup is all it is. I was like, maybe you're missing a zero, but no. Okay, cool. Life insurance is $53 and $37 monthly.

groceries is 150 a week. So that's 600 bucks a month. You said gas is around 110 a month. And for the fun stuff, you said you're between 200 and 300 bucks a month. Let's work with the bigger number, have a little more fun and call it 300 a month. Does that sound right? So you have a total of $7,030 a month going out in expenses. Yeah.

Let's talk about what's coming in so we can see the entire picture. You and your husband make $110,000 pre-tax, but you're also renting out the two properties you own. And the rent you're earning is more than your mortgage payment, which is great. So you're both making a profit there. You said you're net making $1,200 a month from both properties. So let's add $1,440 to your annual income and say you make $124,400 pre-tax.

you live in california like i do so your estate taxes are probably very high but putting state taxes aside and just thinking about federal taxes your take-home pay is probably closer to 95k

perhaps more depending on what you're writing off. So 95K a year is 7,900 bucks approximately a month. And we said that your burn rate is about 7K a month, which leaves you about 880 bucks a month. And that's not counting your debt repayment for your HELOC or your student loans. But would you say after expenses, you're probably keeping around 800 bucks a month?

Yeah, I actually think that sounds higher than what I have been like seeing put in this. If anything left over just goes in the savings, I think we're putting less in the savings. So that seems a really good number. Well, let's talk about those savings. So you have $19,500 in a savings account. You also have retirement savings. You told us that you have $44,000 in your IRA and you're not sure about what's in your husband. So maybe we're going to want to check on that, but you think it's probably near $20,000? Yeah.

So that's $64,000 approximately. When do you think you'll retire? How old are you guys now? I,

I am 34 and he's 33. But you mentioned your husband might want to retire in 20 years. Is that right? Yeah. So he's in the beer industry, which is just very physically demanding on his body. Like one of our like joking things is I can make over 85K a year myself. He can retire and be like a house husband. Like that's one of our low key kind of fun plans because he's just...

this job to have like he loves the industry he loves brewing he enjoys doing it but it's just so hard on his body and I'd rather have him functioning for longer as just like a healthy adult so like we can retire him early or he can do something more like a part-time earlier on in life and then we can stay home and take care of me because he's in like the baking and cooking and like all that stuff so I'm like I have no problem work yeah I'm so spoiled it's great love that for you

Okay, I mean, I'm really gonna zero in on the retirement part of your overall picture. Because I think it's important to look at how that big purchase would affect what that retirement plan is, especially since you want it to be accelerated compared to what people typically think is a retirement age. Is that fair? For sure.

So putting real estate aside, let's say you're keeping about 800 bucks of your paycheck per month and you put that toward retirement savings. Now, for most people, their burn rate in retirement is much lower than when they're working. The fact that you own your property means that you have minimal housing expenses when you're retired. And of course, that would bring down your burn rate dramatically. Or I don't know, maybe you guys want to live in a Four Seasons-esque retirement community when you're older.

That's something you maybe need to get on the same page about. And it's an important thing to consider, especially an important thing to talk about with your husband, getting really clear about what you both envision for those retirement years. Is that something you've started discussing? We have. We kind of go back and forth on like what it could be like. He has some family property that he's supposed to inherit. He's going to share with his brother in like

Sounds more of it. Like, honestly, in like 10, 15 years, he'll come into another house himself that him and his brother will share ownership of. And then my family extended for me is like an LLC where we have seven or eight rental properties that my dad manages along with

realist other like franchise investments and stock markets that my siblings and I will also inherit from them. I know down the line that will also increase and grow as well. So it's hard to like really come up with a hard and fast number knowing we both have like other assets that we will end up inheriting in down the road as well. So I have a hard time being like, oh yeah, we just need our 401ks to hire. I know I have other stuff coming in that could be

Up to like the million dollar plus range, depending on how inflation shakes out in like 20 years time. That sounds awesome. I love the million dollar windfall. I would say it's important, though, to start planning, assuming that that's not going to happen. Yeah, which is a hard part of like I have other weird things like I don't know what it's going to look like.

I think the biggest thing is like our worst case scenario is like life gets hard. We move back into my little town home because it is so small and it is so cheap. And we're doing that by weekly payments on both our houses. So we know the mortgages are going to get paid off in less than their 30 year fixed loans, which is another thing of like we're hoping in like 25 years or once my student loans get paid off, take that extra cash and throw that into the mortgages more to do help.

pay them down so sooner those are cash flow and we can live off of those incomes is our 15 year 20 year plan for sure is to start getting to that point regardless of what our jobs are i mean

Yeah, and you don't know what's coming. And we hope that you get all the windfalls. But God forbid, maybe that doesn't happen. Maybe something else happens. I would kind of view it as a nice to have not need to have and then operate your own plan independently. So if it happens, it's great, but you're not relying on that. Okay.

So I want to double click really quickly on something that you mentioned that you don't know how much your husband has saved for retirement. Are you guys really talking about money? Are you getting granular with each other? We are. I actually asked him like a week ago if he knew what his 401k was. And he said he guessed this. I'm like, oh, you should look into it. He's like, I will. And he just hasn't. So it's not a symptom of you guys not talking about money. You do. Yeah.

Yeah, no, I have a lot of anxiety around money. I check my account multiple times a day to make sure there's no like surprise expenses and things like that, which he gets annoyed by because he can't surprise buy me things, even if we're very cheap, because I will see it within like the day or get notifications on our cell phone. So like, I'm very much like how much we're spending and I'll do our budget like every three months being like...

Like we need to save up more because we want to take a trip to Europe. So I'm like, okay, we got to reassess all our spendings. We can save more so we can do that. Or Christmas is coming. So we're saving money to buy all our extended family gifts. And like, I constantly am recalibrating our budget based on short-term goals.

I just have a hard time doing the longer term thinking that far ahead, like what retirement will look like, because I can't decide what I want to do. Do I want to live in my little house or do I want to live in like those really fancy, like, you know, four seasons retirement communities where you just show up in a little apartment and they have a buffet that they feed you and all the activities. Like I go back and forth on that myself. Yeah.

And that that makes sense. And I'm glad you're driving those short term conversations, but we're gonna think about the long term together. And so the good news, Sarah, is that from my perspective, you have a lot of options here. I would just consider the fact that the golden rule of finance is diversification. And right now you're pretty concentrated in real estate. You know what I mean?

I guess I am. I didn't really think of it that way, but we kind of are compared to like my little, what is it, my brokerage account and my IRA and stuff like that. I didn't really think of that because I feel like it's just always there. But yeah, that old, old, old fashioned thing about all your money's in real estate. I'm like, no, all our money's in real estate, but at least I have, you know,

One of them could be a quick sale. I'm just against the idea of selling them. Like I'm emotionally attached to my first house and I will never, like I told him, I don't care what else we do, but I'm never selling that. And he's like, we could just sell it super quick. I'm like, I know we could. And almost more than double what I paid for it.

type thing. Finances are emotional. I don't want to say tax that I won't give it up. But yeah, I mean, it's definitely emotional. Definitely makes sense that it's anxiety provoking. It happens to a lot of people. But you know, selling a stock is probably not as emotional as buying a house if you need the money. So let's talk about ways you could diversify some of your investments since you've already decided that you really want to buy a house, another house. Have you heard of a 2-1 buy down? I have not. Yeah.

So this is something for your husband when he is missing the 2020 interest rates. This is a way to basically get the seller to give you a credit that effectively subsidizes your mortgage for the first two years of your home. So in a 2-1 buy down, it's standard for the seller to give you a credit that covers your

two percentage points off the first year of your mortgage, and then one percentage point off the second year of your mortgage. So if your interest rate, let's just say is 6.5%, it would be 4.5% in the first year and then 5.5% in the second year. So then the 6.5% would only fully kick in in the third year. So it's important to remember that the interest rate is temporary unless you finance, but it is another option for you.

Okay, yeah, I've been kind of seeing different things online about like, if someone bought their house, I think it's like an FHA versus conventional thing of like, they bought their house during COVID, you can kind of assume the loan under those lower interest rates. I've seen mixed reviews on like that, or versus new stuff about like, if you have a good credit score, you're gonna have to pay more points to get better interest rate. I'm like, how much is that real versus fake? And I just kind of want to like,

prepare myself for that kind of stuff too especially the conventional versus FHA stocks I know if we do the townhome round there are rules around owner occupancy versus tenant occupancy which can prevent you from getting one of those loans I want to say I think it prevents the FHA loan for a townhome like complex and stuff like that too but you wouldn't be first time FHA loans would be for first time homebuyers

Okay. I wasn't sure. I couldn't remember. Well, no, the assumable mortgages, those are often for VA loans or assumable loans that you would take on the interest rate, which is great, but you also have to take care of what they've paid into the mortgage. So you might have to fork over a bunch of cash, but there are definitely options and I'm glad you're considering them. The second

thing I'd consider is tweaking your spending plan so that you can be saving more money over the next two years for that down payment. With your HELOC and your student debt and your two mortgages, if I were you, I feel like that's a lot to juggle. So I'd probably try to make my next down payment through savings rather than with the debt. I'm sort of with your husband on this one. That's just me. That makes me more comfortable.

Yeah, the big thing is like I think I originally had a plan to have a student loan should have been gone by next year like I had a whole plan between COVID and buying a house I procrastinated them and actually last summer I was laid off and I just got back into the workforce full time myself a couple months ago so we, the whole thing.

Like repayment plans changed. So like there's been no interest on them for the last few years, but I don't feel many payments on them either. But for the most part, our rental income covers both our HELOC payments and my student loan payments. So I've been trying to hit those a lot harder now that I'm back employed and we didn't need to actually live off of our rental income for the past eight months or so, which has been nice. I mean, what I would recommend is your house hunting is doing an exercise and

with your husband where you can sit down and make a V1 retirement plan. It's V1, so you're not signing a contract. You can always make changes, but it's always easier to edit than to write, right? So just have something that could be your map for retirement. Just put something down so we could start planning for that. And of

Of course, there are going to be detours and life and you know what else happens all the time. So it can and will change. But having something down gives you more direction than what you have right now. So what I would do is think about what your burn rate would be in retirement, which also involves deciding whether you want to live in one of your properties that you own or if you want to live in the Four Seasons or wherever. And then once you have your burn rate, you're going to have to do something different.

that feels uncomfortable, which is multiply that by how many years you think you'll be in retirement, aka how long you think you're going to live. You'll also want to consider the potential for inflation and increased health care or long-term care to actively prepare for what you might need down the road. You know, it feels really ick and uncomfortable, but this is an exercise that just avoids the situation where you run out of money in retirement. Is that something that sounds feasible? Yeah.

It sounds feasible. I kind of talk about that a lot of just because we have older families. I'm already like, how do we avoid taxes in real estate, all that stuff. And he gets really creeped out by like, no, we got to figure out living trust now. Like talk to your dad of like making sure we don't get settled with the taxes when he passes away. Cause he's not doing well. And my, I got grandparents. I'm like, they're, they own a business. And it's like, my dad's siblings are going to assume this business when they pass away. And like, we start talking about this. Like my family is very medical. So we're like, yeah, we talk about death. Like, oh,

on the regular in injuries and it just grosses him out. I'm like, no, we gotta start thinking about this for ourselves now too. And he just gets very...

very clean it's like you know you don't talk about these things in flight company i'm like but we have to talk about them so it's always me trying to like push those conversations up until he like his breaking point has to walk away i mean it makes sense there are uncomfortable conversations i'm surprised that he feels queasy about them considering you know where he's coming from around debt i think that having a revocable living trust in order you know helps

you from going through probate, which, you know, is probably what you're saying to him. It's not like, hey, babe, let's talk about dying. But it's like, hey, babe, let's talk about how not to get stuck in probate, right? Yeah. Maybe that's a language he can use.

I had to convince him for the life insurance when we got married and he fought that for so long. Like, no, we are young enough. Let's get life insurance early because he works in a tough industry. I'm like, you can get in a car accident and then I'll be screwed. And like, he fought that for months too. Like, it's just like those insurance. Yeah. You guys have low premiums on that.

Yeah, which is great. So once you get to your number, you can then reverse engineer how much you need to get there. But first we need to get to that number. What is that magic number? The V1 magic number. And once you do those calculations, I think things will be a lot more clear where you should put your money, whether it is in the third house or maybe it's in another investment vehicle that's not housing related. How does that sound?

It sounds really good. I still kind of struggle with just, I understand the concept of the stock market. My biggest issue is like, how do I live off my dividends and not get taxed on the capital gains of that? Like the one thing I've not been able to understand conceptually, I've had to mildly cash out some stuff from like old employer stock options to we had some major car issues we had to fix. I'm like, buy a couple thousand dollars. I can cash that out.

An investment is like an emergency fund. We were younger and like we didn't pay taxes on it. So it's just a low amount. But like living off the dividends of my investments, like how how do I do that? How do I know I have enough? I don't want to just be selling stocks. Do I rather live off the dividends of my stocks instead of having them being reinvested? I just don't understand.

how, what that looks like or what that could look like down the road, if they're going to make changes to that process? Well, we don't know what changes might be on the horizon for capital gains, long-term capital gains, or if you hold it for longer than a year. And those could be more favorably taxed. But if we're talking about retirement savings, we're talking about tax-free income. If you're investing in a Roth IRA, for example, or Roth 401k, because you would pay the taxes now, so you don't have to pay taxes later. Do you have a Roth?

I have a traditional IRA. It was from, I rolled over all of my old prior employers 401ks into an IRA. If I got laid off, I didn't want them holding it. So just my bank had an IRA options. Like I can roll it in here. I can divvy it up onto like S&P 500 and a few other stocks that I'm personally just like curious about the companies type thing and a little art, some REITs and things like that. It's where it's all sitting in. So it's currently more real estate, real estate investment. I know.

This is what I was brought up on. Like I'm a product of my own upbringing is all about the real estate. Will you keep us posted with what that magic number that you guys come up with? Oh, for sure. I think we're going to fight over that. Oh no. Well, I'm happy to break up about money. I can do it like both ways. I'm like, Ooh, we can, how cheap can we live and how nice can we live? And like, I can do, my brain does both. That's my biggest issue is like,

I can find a way to make both work. And it's just, and he just kind of, he goes along with a lot of my plans, which is super great. But I'm like, what do we really need and want? Like, we want to travel a lot more, but also live as inexpensively as possible. It's like our two and traveling is expensive. And it's just, those seem two very conflicting ways to do life to me. Well, I think once you make a decision, you know,

Science shows us that we love the decisions that we make. So you'll probably really double down once you just make a call. I think it's going to be more expensive than I anticipated being. I'm a little scared. Well, you don't have to be scared if you have a plan. It's true. I like plans. I like knowing. It sounds that way. So it just seems like this one area, it seems like you have some block around long-term planning, but not short-term planning. Yeah. Do you know where that comes from?

probably family stuff. Like my dad was super, he tried to do long-term planning. So you mentioned he's in the fix and flip industry. So my whole childhood was him,

like from 2000 in the 90s we had like rental properties like i remember being seven years old we're cleaning out apartments we'll be able to pick somebody and scrubbing like cigarette smoke off the walls type stuff but then he got really gone to this up-and-coming area that was like outside of the major city but they were building a new hospital and it was closer to the airport it's like we're gonna buy these little like two-bedroom ranchers

and fix them up. And his whole plan was to sell them to the incoming doctors and nurses for this new hospital that was being built. And it was like long-term plan. It sounded great. But between 2003 and 2008, we did a house a year and it was just my siblings and my dad. Like we were, there's a family of five of us and we were the workforce doing it. And it was like every year, it's like you couldn't sell them. So you'd rent them. And he had some buddies who's borrowing the money from to buy another cheap house for like $80,000. And we renovated on our weekends and school holidays. And it

Year after year is doing that and then 2008 hit, and all of our money was in real estate and it crashed and like it's, it's paid off now they actually know they now live in that area where they were renovating these houses. Back in 08 and the prices these houses are just absolutely insane. It's like the long term plan made sense, it didn't work out.

And it's like, it's all he thought was the long term down the road of like, this will be our retirement. This is how we're going to live. Like, we couldn't pay our electric bill. Like, we were at LLC, like, he'd pay us for the weekends of working and we've gotten separate bank accounts. Because that's another some weird tax thing with that. I remember we had bank accounts that he created for us and paid us for our weekends. And then like, oh, we can't afford to pay the heat for the house we lived in. So we're going to borrow the money from you guys. It was like seven or $800. Yeah.

to pay the bills type thing and it was very much robbie peter to pay paul i think we had four mortgages on the house we were living in because it was it was he was all he was was long-term type stuff so you're overcompensating yeah as we all do with trauma for sure for sure absolutely but i think you just recognized where this block is coming from which is the most important next step you can possibly take

You know, we say all the time, as you know, on Money Rehab, the only financial problem you can't fix is the one you don't admit you have. And getting to the root of what that issue is, is a huge step for you to confront it. And to say, just because it was done a certain way doesn't mean that's how it needs to be for me. And you get to decide now. Yeah, slowly working through it a little bit like personally, like how I view life, I can do

slightly longer long term so I'm just like it we'll figure it out like I'm very much like I used to being scrappy like I had it was like I graduated high school my parents were going bankrupt so it was like our code if we got poor at the right time because it made college a lot less expensive for my siblings and I but like we had to be scrappy for years I'm like I can be scrappy that's all I know how to do now so trying to like relax in the peace of having money and comfort it feels it feels very weird I think you remind myself like oh no life's good we are okay we are safe and it's

It'll be fine. Like, even me being laid off. I'm like, no, we were okay with me being laid off for like six months, just moving to a new state and living well below the poverty line, but could not qualify for any financial help in California, which was very, very weird for the cost of living out here and how little my husband was making. Yeah.

Yeah. I mean, constantly reminding yourself that it's going to be okay is, you know, not necessarily something that ever ends for people with financial trauma. I can tell you that from firsthand experience. So you're on the right track. You're doing great. How do you feel now after we've, I've poked a little bit into your financial trauma and weakness? Yeah.

I think trying to figure out, actually, a burn rate feels better than what it was. Like, I feel like we've been, we're in this recovery period, so I feel pretty good about that. Especially knowing more about, like, different options, really this two-on-buy down. Like, if we wanted to buy a house, it's like, how can I do it? Like, every other person's like, I want to buy the nicest thing for as inexpensive as possible, but...

type stuff but then knowing like the options for like how to calculate the numbers for retirement like what that actually could look like off of our current living situation would be is really helpful to make sure because I think that is something he occasionally worries about but I'm like it's fine we have all this other stuff that will come in but maybe I shouldn't be relying on my family's LLC or his supposed inheritance I think his dad might be inflating but we do know it's a house that's gonna need a ton of work because it's from the 60s and that's gonna be a mess but

I want to safeguard us from that. So I'm going to safeguard from something bad going wrong with an influx. That's really smart. I think when you hear something like supposed, you'll definitely want to safeguard yourself, which is what you're doing. For sure. Awesome. Thanks, Sarah.

Well, thank you. This has been wonderful. I've enjoyed chatting with you. I've been loving your podcast and your books for years. Thank you. A little like meeting your heroes moment in the best way. Well, I'm sorry. You know, they say don't meet your heroes because they usually disappoint you, but hopefully I didn't. No, this has been better than I thought. I was a little nervous and this was just a fun little conversation. I enjoyed it. I'm so glad. I'm so glad. And now you're going to go have this conversation with your husband. Good luck. Tell me if you need me.

I'll just I am you. It's fine. Perfect. For today's tip, you can take straight to the bank. If you're like Sarah and you like mapping out short term goals, check out Bank of America's short term savings calculator. Bank of America is the one stop shop where you can get guidance, tools, solutions and view your Bank of America banking account and manage your Merrill investing accounts online in one place. To learn more, go to B of A dot com slash financial next steps, which I have linked in the show notes.

The views and advice expressed by Money News Network are independent and not endorsed by Bank of America Corp. Investing involves risk. The information presented here is not intended to be either a specific offer to sell or provide or a specific recommendation to buy any particular product or service.

Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Levoy. Our researcher is Emily Holmes.

Do you need some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehab at moneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at moneynews and TikTok at moneynewsnetwork for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.