Can I Hit Financial Independence by 50 with THIS FI Number? (Finance Friday)
01:01:20 Share

Today's Finance Friday guest is hoping to retire by the age of 50, but doesn't have a clear understanding of the investing order of operations and what is best.

Today, we are going to break down the options that Austin has to make his five dreams a reality. Today's guest is young. He's 25 years old. So it's a great episode for you if you are young and on your journey to financial independence, but it's also a great episode for you to introduce the concept of financial independence to someone younger in your life.

Hello, hello, hello, and welcome to the BiggerPocketsMoney podcast. My name is Mindy Jensen, and with me, as always, is my Followed His Own Fi Dream co-host, Scott Trench. Thanks, Mindy. Great to be here with you, and looking forward to helping Austin dominate life, money, and the American dream.

Bigger pockets is a goal of creating 1 million millionaires. You are in the right place. If you want to get your financial house in order, because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting, but it is especially attainable. And let's acknowledge that off the bat here for a individual like Austin, starting at a 25 with a solid six figure net worth and a solid six figure income worlds, this guy's oyster, let's help him get after it as fast as humanly possible and know that he's got advantages that other people don't. Um,

being a single man in his mid-20s with all these options. But let's see how to maximize an advantageous set of circumstances and see how far he can get. Yes. Austin, thank you for joining us today. We're so excited to talk to you. Thank you so much for having me. Austin, let's look at your...

money history coming up to today, where does your journey with money begin? Really where my journey with money began, starting in college, went to the local school in my hometown, got instant tuition discounts, received a large amount of scholarships that the majority of my expenses were covered with

room, board, textbooks, food, everything like that. So I was able to come out of college debt-free, gave me extreme advantage to this day with that Head Start. Studied finance and data analytics in college, but what really got me started was I did multiple internships at local wealth management firms, worked at a local trust, and just got me really just interested in saving, investing, and overall my interest in personal finance started.

So are you working in finance now? No, no. I'm actually, so while I did do that for a few years, I just took kind of a leap there. I'm actually currently in software sales. I work for a publicly traded tech company that I've been with for about two and a half years now located here in Austin, Texas.

Okay. And what is your retirement goal? I would say it's more financial independence. I would love to reach financial independence at 50 years old, have more passive income than my current income, replace my W-2, but really have the option to retire at 50 with that passive income.

Well, you're starting at age 25. So unless I peek in to your numbers in a minute and find like some just massive amounts of debt or like gross overspending, I think your 25-year timeline is probably going to be able to be compressed. Do you like your job? Yeah. Yeah, it's great. Really enjoy the day-to-day. I love to be able to work with really rewarding process overall.

And as you know, I still have a job. I'm financially independent. Well, you might not know, but I have said multiple times on the show, I am financially independent and yet I still continue to work. So once you hit financial independence, you don't have to quit. It just opens up so many more options because all of a sudden you get a new boss and you're like, wow, we get along like oil and water. I'm out. And you don't have to worry about, oh, I've got to find a new job or I have to

you know, slog along with this horrible boss now because you have set yourself up for, for this financial freedom. You can go part-time if you still like it. You can go be a job. You can go do a job that doesn't give you like any living wages. And you're not dependent on that because you've set yourself up. So I'm going to go out on a limb, having not peeked at these numbers yet and say, I believe you can do it in 25 years. Let's go see where you're starting. And do you have a fine number, a specific fine number that you're thinking about?

I would say it's more of an estimation more than anything. Like right now, my expenses are pretty low. So, you know, so many things coming up, you know, with wanting to start a family down the road, things like that. I wanted to travel pretty much about five million, I would say. Shooting high for sure. But that's where I'd say it was like a pretty more than comfortable lifestyle. Okay. So that's your end number. I would like to encourage you over the next few years to think about your –

Like your bare bones number, your I can, I no longer have to work. So if something happens at work, I can casually look for a new job or, you know, because 5 million is a lot, but also that affords you a lot. And you're 25, you have a 25 year timeline. I think you can get to 5 million in 25 years, depending on how you're investing. So that's a question we're going to come up with in a few minutes. But right now I want to look at your numbers. Are you ready? Perfect.

Okay, I see a total net worth of $142,000, which is awesome at age 25. Let me tell you, 25-year-old Mindy did not have the same net worth. Not even close. I do see a large amount in cash. What are you doing with this cash? So it was a few things. I think when I first got out of college, the first thing, you know, I had an emergency fund already set up.

Second thing was I just felt it was important just to set up a timeline for the next few years. I was already thinking of house hacking. I knew I was moving to Austin, Texas. I was just saving for a house hack and then just started saving more and more, really. Yeah.

Didn't was just, you know, go into my retirement accounts versus saving up for the next thing. Until this year, I pretty much stopped saving cash right there just for down the road. But originally it was a house hack and eventually a house down primary down for around 29 to 31, depending on where I'm at. But he did. Mindy, what I love, what he did with this is he stockpiled a bunch of cash and then he left what I presume was a higher guaranteed base salary job in finance to go pursue sales with a much higher ceiling.

That is the best possible use of cash at 25. And just I'm going to give a round of applause. That's exactly right. Like that's exactly what I would do in that situation. And the return on that cash sitting in the bank account, allowing you to feel comfortable with pursuing sales is going to is a really high probability bet.

And you could lose, but in your situation, you can afford to do that because of that. So I love that move. That's what you did with the cash, from my view. Is that about right in your... That was exactly right. I was 22 coming out of college. I had job opportunities to come into finance, go to CFA role, that whole route.

But then a family friend I talked to, just more lifestyle mentor, recommend joining a tech company first year out. But you're exactly right. Going for that riot. And I will say they do offer a pretty competitive base salary as well to cover my basic living expenses. But that was really it. Just like kind of betting on myself. Was it a reduction in base or was it actually an increase in base with commissions on top? It was a deduction in base. Then I would have gotten with a finance job for sure. First year of finance. Yeah.

Not a lot of folks do it. Love it. So you list your current income as $145,000. What is realistic for you? Give us some bands on what this could look like over the next couple of years.

So the 100, it's definitely volatile for sure. It's month to month. But from what I'm seeing, I would say right now it could grow to 175, 200 within two to three years. Depending where I'm at, the companies stay at, but they're plenty relisted to being the 175 to 200 range.

I'm pretty realistic with the next two to three years. Way back on episode 32, we had Mr. and Mrs. Pop on the show, Mr. and Mrs. Planting Our Pennies. And Mr. Pop is in sales. And he said, if you don't know what you want to do, go into sales because there is no ceiling on how much you can make. It's just what you're doing. And anybody can do sales. And I don't know that I would say that anybody could do sales, but if you could do sales, wholeheartedly.

Holy cow, you can make so much money. So yeah, I love that you jumped ship to go to the sales department and your base salary covers everything.

You're not counting on bonuses and commissions and things like that to cover your living expenses. Is that what I heard you say? Exactly. Honestly, more than covers. So my first year when I came out, it was a, I'll just say it out loud, it was a base salary of $50,000. I was able to minimally cover everything, more than cover everything. So I lived off that. If not more, saved more. And then every dollar in commission I made in my first two years was just getting saved, saved, saved in my cash pile.

Okay. So I will allow this cash and let's continue with your numbers. I see $35,000 in a 401k. I think that's awesome. You have 25 of that 35 in a Roth. Yay.

Roth 401k means you have already paid the taxes on that and it's going to grow tax-free. At your age, I love the Roth option for the tax savings because your income right now isn't enormous, although it's $145,000 at age 25. 25-year-old Mindy was not doing that either. So I really love that you are thinking ahead in the Roth option.

And another, you've got Roth IRA of $15,000 and a brokerage account of $10,000. Do you know what I don't see on here, Scott? Crypto. Yay. I don't care if you put like a dollar in crypto, but it really makes me cringe when I see people. They're like, and 50% of my net worth is in crypto. Okay. That's great for you. Used to be 10%, to be fair. Yeah.

Yes. Okay. So going over to the income side, as Scott said, you're making about $145,000 a year. That's not too shabby. Nice job. Thank you. Expenses. Let's look at these expenses. Scott, did you see this? $1,400 in rent. Holy crap. Do you have roommates? I mean, holy cannoli. So a little bit of background there. So I do not have a roommate currently. For my first two years, I did have a roommate, but-

Kind of a caveat there is I bike to work and I get a $200 stipend in kind of like a parking payment to use downtown. I live, I work downtown as well. So like for me being close to downtown, found this great deal where I got one month off last year. It's a good time to be a renter in Austin, Texas. It really is. I would have done almost exactly the same thing Austin's doing and probably would have lived a little larger if the market was as much of a renter's market versus a

landlords market in Austin, like Denver 12 years ago, this was not, I would not have been able to get a deal like that. - Exactly, so like where I'm at, a one bedroom apartment for 1400 is a pretty dang good deal, and I got one month off, so it came out to like 1240, plus I get $200 a month in a stipend to pay for my parking, which I don't use, so I bike to work, so that's my little caveat for living alone for that deal. So it comes out to around like 1000, give or take, so.

Well, I love you. I do love living around. Definitely would have done if I didn't find this deal. This is a sweet deal. I love that you're only paying $1,400 a month in rent, especially at your salary. That's awesome. I was shocked that it was so low. It's very rare, but I will say what I've seen in the market just going on here, it's like people are offering one month off, two months off. It's like they're struggling to fill apartments for sure.

Yeah. Okay. Well, great. If you like your property, if you like the place that you're at, that's a great amount of rent. And I would not be so quick to elevate your lifestyle while you have this very lofty goal. Well, I shouldn't say very lofty. That sounds snotty. This goal of $5 million. Yes.

Your numbers are fantastic. I see $3,800 total in spending every month, $450 on groceries, $160 on restaurants, $250 on travel and vacation, like nothing here is

freaks me out. The only thing I will say is that, and I'm sure these numbers are just rounded up, but everything ends in a zero. So I would caution you to make sure that all of these numbers are actually accurate and you just rounded them for sake of simplicity. But if you're spending $3,800 a month, you're doing great. Awesome. Awesome. Let's move over to the debts. Wow. You have no debts. Okay. So that's good.

When you have a house, you will probably have a mortgage, which is fine. I see no rental properties. I see no pension opportunity, which is fine. You'll make your own. And then I see some questions. So let's talk about these questions that you have for Scott and I. Now we need to take a quick ad break. But listeners, I am so excited to announce that you can buy your ticket for BP Con 2025, which is October 5th through 7th in Las Vegas. And yes, we've got a BiggerPocketsMoney specific track available.

especially helpful for potentially those of you trapped in the middle-class trap. We're going to be exploring different ways to get out of that. You can get early bird pricing for $100 off at biggerpockets.com slash conference while we're away.

They say money doesn't grow on trees, but it does grow in your home's equity. Time to harvest that cash with Figure, the number one non-bank key lock lender. You can unlock up to $400,000 to create, update, or renovate. A home equity line of credit offers low interest rates, flexible borrowing and repayment options, and potential tax advantages.

making it a smart, cost-effective way to fund your projects. Skip the appraisals, paperwork, and waiting. Figure's easy online application gets you approved in minutes, with funding in as few as five days. Fixed rates and flexible terms mean more power to you. Start building the home you've imagined. Visit biggerpockets.com slash figure. That's biggerpockets.com slash figure.

Running out of gas? That's a problem that's avoidable. Owning a rental property without proper landlord insurance? That's a problem that's equally avoidable. Steadily Landlord Insurance can help. Steadily offers fast quotes on property and liability coverages that are tailor-made for the real estate investor community.

And they can even compare pricing from multiple carriers for landlords looking to weigh their different options. You can rest easy knowing your investments are secure with Steadily. They're available online 24-7 and they can start coverage as fast as the next day. Visit biggerpockets.com slash landlord insurance to secure your investments with Steadily Insurance. Steadily Insurance, founded by landlords for landlords.

If you're in the landlord game, then you know the importance of solid tenant screening. That's where RentReady steps in. Now, RentReady has a new feature, proof of income verification. And get this, with Plaid certified reports, you'll see everything from income summaries to total earnings by month. So say goodbye to those gut check moments and say hello to confidence in renting with RentReady. RentReady is actually included in your pro membership at BiggerPockets. If you're not a pro, they're offering a six month plan for $1. You can

You can't beat that. Visit rentready.com. That's R-E-N-T-R-E-D-I.com. And use the code BPINVESTOR, that's BP like bigger pockets, investor to get six months of rent ready for just $1. Welcome back to the show. We are joined by Austin. The first question I have is more towards the retirement accounts focus. With the path of financial independence on my mind, I constantly hear you both talk about the middle class trap of

And basically where I'm at, where my contribution limit, I'm pretty close to that Roth IRA limit. Frankly, based off the volatility of my income, I don't think probably we'll be able to

contribute to the Roth area this year. It's going to be very close. But I plan on, you know, maxing out my Roth 401k this year, my health savings account. I plan on doing that for the next few years. I guess, you know, when should I debate on investing less in there? And right now, I'm very lucky where I can go outside of my retirement accounts. I can really invest everything and max it out. But I see when does it come to a point where maybe I should hold back

and start by really just investing out my brokerage, real estate accounts, stuff like that. Yeah, well, look, my bias is, and look, I know I'm the bigger pockets real estate guy with all this, but I haven't been as go buy real estate the last couple of years in some situations. But I think in your situation here,

it's a really good match for what you're doing in a lot of ways. There's a little bit of market timing in this, which is, I know, going to rile some people up. But I wanted to show you quickly on this front. This would excite me if I were in your situation starting over right now and trying to get going at 25. This is the Austin Real Estate Marketplace.

market in May 2022 when the median home price was $667,000. Today, in January 2025, the median home price is $516,000 median sale price.

That's something right there, right? And that pain, Austin, Texas, I believe is going to see maximum pain in 2025. I don't know if we're at the bottom or that could go much worse throughout the course of the year, but I would be really excited if I was sitting on 80 grand in cash and

at 25 years old in a market that is that desperate for competition and rents in there, and Noah and I could float a couple of good options there. I'd be really curious to see if you'd have your pick of the litter in small multifamily or some interesting single-family rentals.

that come with assumable mortgages and you got all day, you got no rush. You can be super patient, you can take all year to look at that, but if you could get a 3-4% mortgage on a duplex, triplex, quadplex that's assumable or someone bought with one of those assumable mortgages up here and you can defray a good chunk of that or, you know, really any property that's been bought in the last six, seven years

that requires $70,000, $80,000 in cash to take over the debt, you're going to have people willing to work with you. That assumable stuff has been a pain in the rear for a lot of sellers who don't like working with it, but you are in a deep, deep, deep buyer's market in Austin, Texas, which I think is only going to get incrementally better for you as a buyer in the next year.

um for it so i'd be really tempted to start there um with a chunk of that and you may or may not need a lot of cash to pull that off but that would be like the first hunch that i would say is is for one of the first you know big big moves i'd be really thinking about potentially making in your situation what's your reaction to that that's interesting because i was actually one of my questions as well as about you know about the house hack here but the assumable mortgage is something i never thought about um

Honestly, that's something that's interesting. I don't think the classic house hack here right now is... I don't want to say it's possible, but I've heard about the idea with adding an ADU. A lot of people turn it into what they call a sneaky duplex where they add a second entrance, everyone be the rest. And that was actually one of my questions as well. That seems like the...

One of the ways you talk about Denver as a market as well, that's very similar here in Austin, I feel like, with the current price of housing. But the assumable mortgages thing is something I've never thought about and definitely will check out. You only need one deal that works, and there's going to be one, I think, within the next year. And one way to test that out, very simple exercise, use this all the time, but just go look at what's for sale.

and go laugh at the absurdity of the sellers. And obviously you're not gonna buy any of those. And then look at what has actually sold in the last 90 days. And you will find a serious difference between the two. When you do that, I believe in a market like Austin, Texas, you can do that either by just going on Zillow and checking it out, or you can do it by talking to an agent.

in the local market and asking them, show me all the properties here and give me the for sale and then do the sold. But look at those for sale ones and look at the bad first because they're almost all bad if they're on the market right now. And then look at what's sold, big difference. There's a lot of negotiating power. And then you can use products like there's a tool called assumableloanfinder.com and a couple of other tools out there that you can look for that will have the mortgages

that will list some of the properties that have assumable rate mortgages on there. That product, I think, I'm not sure if it still works in Austin. It's kind of hit or miss in some markets. In my experience, we have no affiliation with them, but there's always like something coming up that provides that information. So that would be like the first instinct there. And if that works, that's a home run and you don't need to rush it. You got a great deal on your rent. You're probably loving life, biking to work.

probably, you know, close to 6th and downtown. Like, I would like to chill out for a little bit, but if that deal comes up, that would be fun. Yeah, that's what it's something I've been eyeing to. And the only thing I think is when I actually sent my original email to you was with the house hack too, it's having mine is like, I just got to make sure I'm staying here for at least a couple of years too. That's something that's also been on my mind. That's been, I've seen a couple of opportunities come up maybe last year too, but I just got to make sure that

I'm here for more than a couple of years for the house sack, if that makes sense, if that's the right idea. Well, one of the things I've been in, and this is really macro and market specific, which could be completely wrong and appropriate and inappropriate in some aspects. But when I think about a market like Austin, Texas, I think there's every reason to believe in the long-term demand aspect.

fundamentals in that market and every bit of reason to be super bearish for the last three years. And I've been picking on Mark Austin as my worst market to invest in, in the country for the last two or three years. But that, that all changes at some point, right? At some point that slows down. And if you look, if you, I would also give you some homework of look up when the supply of single family units and multifamily units is

is gonna hit in Austin, Texas. This is a simple Google search that you can do. I believe that Austin, Texas saw about 10% increase in multifamily units hitting the market last year, which is absurd. No metro the size of Austin, Texas will ever grow at 10%. No matter how good you like, you wanna talk about how good business friendly or inbound migration patterns are, nobody grows 10%. That's why you're getting great deals as a renter right now and that should scare you as a landlord. It will take time for that to settle.

But that new construction should be slowing. My guess is it will be slowing in the back half of this year or early 2026 at that point. And so if you can buy a property that has locked in leases for a year, for example, that might be a way to defray some of those risks. You should also do that for single family homes. I don't know the single family homes very well.

Um, in there. Uh, but I think, I think Austin, you'll find Austin's going to have similarly high multifamily supply delivered, especially in the first half of 2025. And that will abate towards the back half of the year and into next year. Um, you should verify all that, but that will give you a little bit more comfort and when, when, and where to like, should I just do some research for the next six months? Or should I begin maybe thinking about that a little sooner, um, on that? So that would, that would be where I, where I'd go. Um,

And I would be curious specifically about small multifamily, duplex, triplex, and quadplexes. I'm seeing the most significant spread

between, you know, in terms of the price to income that I've seen in my career, the best spread in Denver, Colorado, which I think is having a lot of similar dynamics to Austin. I'd imagine they're very similar right now. So I wonder if you revisit that on that what is actually sold basis, if your tune changes about how, oh, this doesn't work. Maybe that's maybe that started to shift reasonably meaningfully in Austin. Definitely. Yeah, definitely check that out. I frankly, the similar loan is something I've never looked into.

But we definitely, honestly, never even heard a little bit about it. Sorry, and that brings me to the last point there of you were talking about how you might not be in Austin a few years. That's great. The house hack gives you the most flexibility of any option for investments from a living situation perspective. You have to break your lease, and then your landlord's got to be able to find a new tenant if you want to move right now.

If you buy a place, then that's not a house hack. Then you're going to have a different problem. If you buy a house hack, and I believe as long as your intent – this is something we should confirm. Please tell us in the YouTube comments. But I believe that if you buy a house hack and then have to get a new job –

for example, that that would void part portions of the one year commitment for the loan. You should never go into it intending to do that. You should intend to live in the property for a year. But I believe that that is one of the circumstances that would allow for early exit. And after that first year, you have the most flexibility in life of anybody because you don't have a lease with yourself. You can leave at any point in time on there if you're a house hacker. So it's way more flexible than even the renting setup, even in a renter's market.

Yes, Scott, you are correct. It is your intent at the time of purchase. You are intending to live in this as your primary residence and you will rent out the other portions. But if your job comes to you and says, hey, we're going to transfer you, as long as you're moving more than 100 miles away, I think it's 100 miles away, but maybe that's an FHA loan. And also there's other outs like your family member gets sick or whatever. It's not like you're just locked into this place. But you should intend to live in there.

for a year, right? Anything else is mortgage fraud, but it is not necessarily like a, a, a prison for, for that, for that period of time. If there is a truly reasonable reason to move out, um, that is permitted specifically. Yeah. Case in point, Scott just bought a house. If he were to then go buy a duplex and, and,

say he was going to live in there, but actually not have any intention of living in there and getting a mortgage on that, he is committing mortgage fraud. So just intend to live there if that's your intent, which it sounds like it is, and then you're not committing mortgage fraud. Your circumstances can change. They can't hold you there forever.

But I love this assumable mortgage idea because you're in a great position. You've got a big bunch of cash, so you can pay a difference if there is one. And in Austin, there might not be one, a difference between what they owe on their mortgage and what you're going to offer to pay them. But you would have to bring that cash to closing. So in a place like Denver, where prices have continued to go up,

Let's say I bought a house three years ago at five hundred thousand and now it's worth six fifty Sure, you can assume my loan. Can you bring a hundred and fifty to closing a lot of people can't so you would be able to bring the chunk of difference to Closing and then assume their loan a couple of things about loan assumptions You can only assume an FHA or a VA loan if you assume an a VA loan and

and you're not a veteran, then if you default, the veteran themselves loses their entitlement, I think forever. The portion that you default on, I think is lost to them forever. So I wouldn't focus on VA loans, but I wouldn't be opposed to them. The FHA loan, you assume it and now it's your loan and you've got that sweet 2.5, 3, 4% interest rate, which is really awesome. But assuming

Assuming a loan is not just, hey, I'll assume your loan. Great. Here you go. It's a process that can take three to six months. The bank does not have any interest in you assuming that loan. They'd like that loan off the books because they can give you a new loan for 7% and you don't want that. So you'll need a company to help you with the loan assumption process. I have heard good things about assumptionsolutions.com. I have not used them. I can't say anything about them. Definitely do your research.

but finding a company to help you with this process, because it is a big can of worms and it's going to take a long time, but you've got a lease that you can continue with. Um,

If you're in the process of negotiating your new property and just waiting for the assumption to take place, ask your landlord if you can go month to month at the end of your lease. Even if they raise your rent a lot, you're not locked into a big long-term lease and then have to cancel that because canceling a lease is, I've heard two months is one of the most common amounts of rent that you are paying as a lease break fee.

So I really like that idea of an assumable loan for you because you're in such a position of power and the market that you're buying into. But like Scott said, having a house hack is absolutely the most powerful position you can be in when it comes time to be transferred someplace else.

No, it's all extremely helpful. Thank you. My dear listeners, I am so excited to announce that we now have a BiggerPockets money newsletter. If you want to subscribe, go to biggerpockets.com slash money newsletter. All right. We'll be right back after this.

Your future home is hiding right inside your current one. Let's bring it out. With Figure, you can transform your home using a powerful home equity line of credit. Unlock up to $400,000 and enjoy low interest rates, flexible borrowing, and repayment options that fit your life. Plus, take advantage of potential tax benefits that stretch your budget further. Apply 100% online. No in-person appraisals needed.

and see funding in as few as five days. As the number one non-bank HELOC lender, Figure has helped homeowners across 47 states access over $13 billion. Competitive fixed rates make this the smarter way to finance. Ready to renovate? Visit biggerpockets.com slash figure today. That's biggerpockets.com slash figure.

Running out of gas? That's a problem that's avoidable. Owning a rental property without proper landlord insurance? That's a problem that's equally avoidable. Steadily Landlord Insurance can help. Steadily offers fast quotes on property and liability coverages that are tailor-made for the real estate investor community.

And they can even compare pricing from multiple carriers for landlords looking to weigh their different options. You can rest easy knowing your investments are secure with Steadily. They're available online 24-7 and they can start coverage as fast as the next day. Visit biggerpockets.com slash landlord insurance to secure your investments with Steadily Insurance. Steadily Insurance, founded by landlords for landlords.

Listeners, I'm telling you now, it's not every day you find a game changer like RentReady. They're not just stopping with just tenant screening. They've rolled out proof of income verification. Let RentReady handle the heavy lifting with automatic checks on financial stability and earnings. Plus, with Plaid certified reports, you'll have all the info you need right at your fingertips. RentReady is actually included in your pro membership at BiggerPockets. But if you're not a pro, they're offering a six month plan for just a dollar. However,

How great is that? So visit rentready.com. That's R-E-N-T-R-E-D-I.com and use the code BPINVESTOR. That's BP like bigger pockets, investor to get six months of rent ready for a dollar. If you're anything like me, you have a full schedule with family, work and everything else. We all know we need to work out, but a busy schedule can make that feel pretty tough. Here's the good news. There is a great way to get a good workout in and have guidance along the way.

That's why we're excited to tell you about Tonal. They are the smart home gym that helps you check workout off your to-do list anytime, day or night. Tonal 2 is seriously next level. It's like having a full gym and a personal trainer right in your home. The system automatically adjusts weights in one-pound increments and goes up to 250 pounds now. Plus, Tonal learns from your movements to give you the perfect challenge every time. What I love most is the new Smart View feature.

There's a high-res camera that watches your form and gives you real-time coaching, just like a personal trainer would. And if you're looking to really push yourself, Tonal's new drop sets are incredible. They actually sense when your muscles are getting tired and adjust the weight automatically to help you maximize every rep. Right now, Tonal is offering listeners $200 off your Tonal purchase with promo code MONEY. That's tonal.com, promo code MONEY for $200 off.

Some things in life are hard, like carrying a couch down a stairway by yourself or telling a good friend their poetry is very bad. No, it's not. Yes, it is, Terry. Anyway, luckily, making sure your family's covered with life insurance is super easy with PolicyGenius. PolicyGenius isn't an insurance company. It's an online marketplace that makes finding and buying life insurance simple. They help you compare quotes from America's top insurers side by side so you can find the coverage that you need at a price you can afford.

As a homeowner, one of my biggest concerns is making sure my family could handle the mortgage payments if something happened to me. Life insurance through PolicyGenius gives me peace of mind knowing my loved ones would be protected, not just for day-to-day expenses, but also for big costs like the house. With PolicyGenius, you can find life insurance policies that start at just $292 per year for $1 million of coverage.

Some options are 100% online and let you avoid unnecessary medical exams. Secure your families tomorrow so you can have peace of mind today. Head to PolicyGenius.com to get your free life insurance quotes and see how much you could save. That's PolicyGenius.com.

Thanks for sticking with us. Back to Austin from Austin. I want to go back to that Roth IRA, traditional Roth 401k thing. So if you are single and make up to $146,000, you can contribute to your Roth IRA. Between 146 and 161, you can contribute partially to your Roth IRA. And then over 161, you're unable to contribute.

But what if you make a hundred and let's say 150 this year? Oh, that's 4,000 over. Why don't you take 4,000 from your Roth 401k instead of contributing to your Roth 401k contribute to a traditional 401k that reduces your taxable income allows you to get into the Roth IRA. That's a good idea. Actually, um,

And I'm glad you said that because I've done something really interesting this year and I didn't know that at the time I had, um, I'm glad you said that cause I'd been using the Roth about the last years. I received a bonus this month that I asked you was going to, we'll see what you guys say about this, but, uh, front load my 401k for the year just to get it right. You just to get out of the way. Um,

If that makes sense. So I actually front load at the start of the year. My company will still extend a match after I front load as well. And that's where I thought you're going to go. I check on that. But if I did that, it's something I haven't thought about where I transferred to the 401k. I'd be able to lower it by however I smell. I have already contributed to. So I was going to actually going to have a fully loaded front loaded 401k by the end of this month. Did you front load that 401k yet? I'm halfway. Okay. But that's a good question there. And when is your next bonus?

Or commission check? Luckily, I... So that was last year's bonus for like an over... Oh, okay. Quota bonus. So I get paid monthly on my commission, which is also nice. So I use that... Basically, I use that bonus as to cover my next couple months of expenses. And then I don't see a paycheck for the next few months. But...

Oh, for the 401k contributions. Okay, I got you. Exactly, exactly. But that's something that's interesting. I'm wondering what the math is there. It's like, I have a good Vanguard fund in my 401k for my Roth. I was like, I wonder that the difference there for the Roth conversion, you know, it's the end of the Roth 401k conversion and the Roth IRA with a total commitment, but...

Would it make sense to bring that debt – so I'm halfway loaded. Bring that down to the 401k so it lowers my taxable income. Then go to the Roth IRA. Then max out the rest of my 401k. Does the math there with the taxes add up is my question actually. I am going to –

Try to understand this question. Okay, so you want to maybe contribute to your traditional IRA. I'm sorry, your traditional 401k so that you could bring yourself down enough. I would actually wait until closer to the end of the year. Maybe you just crush it this year and you're going to make 200 and it's not going to matter. Although then you've got some in your pre-tax and you're reducing your taxable income and then some in your Roth that you are contributing to. I still like that.

the Roth for you because of your age. But that is a tax question. Scott, what do you think about that? That's a touchy one. I think, I've already kind of made my stance here of I'm on team tax

Max out your HSA, take your 401k match, whether that's in the raw, if there's a Roth option, put it in the for Roth 401k. If you can, if your company offers you the match option in either, if not put it in your 401k and take the free money and pile up the cash because you're going to, because you're going to just only increase your option. If it like I would be in your situation, you'd have to take this advice around there. It's obviously going to be your call, but I would be like,

chomping at the bit of like, this is whatever, whatever the bottom is. I ain't buying at the top here in Austin, Texas. And there's a lot of good reasons to believe in this market over a very long period of time. And a lot of good reasons to believe that it's a deep buyer's market. You're going to have really a ton of options here. The more cash you have, the more power you're going to have, especially if, especially if you're going to go this as a loan route. So I would just be like, I'm going to take that. I'm going to

maximize cash, I'm going to make at least one play in real estate. Once that play is made, then towards the back half of the year, I can make that decision to then max out these retirement accounts with any remaining cash. Right.

Right. That's that's coming in or maybe in October, you're like, you know what? OK, I made my real estate play. I have twenty thousand dollars left over. One hundred percent of my paycheck will now go towards maxing out these retirement accounts. You'll have that option later in the year. So I would just I would be just stockpiling cash right now. If you agree with the premise of the house hack, the buyer's market and the assumable loan.

I would encourage you to look at... I just looked up large companies headquartered in Austin, Texas. Dell Technology, Amazon, IBM, Oracle, Tesla, Apple. I don't know if you've ever heard of these companies, but they pay their employees a nice salary. So having something near where you are and near where they are. I don't know anything about the Austin market. I don't know where all these companies are located. But if you could be...

next to Dell Technologies and you've got a tenant roommate situation or multiple tenants that are working at these bigger companies, that's just really nice to have that kind of optionality and have a – you want a tenant who has the ability to pay you rent. You don't want somebody giving you excuses on the first of the month. You want the check on the first of the month. Yeah.

Oh, I had one last thing to say about Roth. Oh, I know what I wanted to say. Do not contribute to your Roth IRA right now. And if you have, don't put any more in there in the account right now. I am concerned that you are going to make too much money. What a horrible

concern. But if you put too much in, let's say you make $175,000 after you've done all this other monkey business, like that's a great position to be in. But if you've contributed to your Roth, you have to go back in and pull it out. And there's all this, well, you're a math guy. There's all this complicated math that you have to do to figure out exactly how much you put in and how much it grew. And then you have to pull all of that out.

So ask me how I know. I did that once. It was kind of tedious to do. So you can still max it out on December 30th. You'll know how much you made for the year and then you can kind of avoid that. Make sure that you can't contribute to the Roth this year. Yeah. That is within your control and power. That has got to be plan A.

In the event that things go very poorly, max it out at the end of the year. But I wouldn't put anything in right now. And you can do that in December if you find out, oh, I'm going to have a big loss or things are going to go very poorly, not according to plan. Okay. We might have answered like nine of your questions, but what other questions might you have for us? So...

Right now, a decent, not a large part of my salary, but like a decent amount is I, every quarter receive vested restricted units. Um, and maybe it might be one of the only mistakes I've made so far in my journey, but I've quite a bit of money still sitting in my company, you know, E-Trade account. Um,

I'm sitting when I receive these units, I've done the SPP before, I didn't sell right after. With this income as well, I'm currently sitting at about a $2,000 loss.

Basically what I'm debating is do I sell for the $2,000 loss with that I believe my company is really undervalued there or do I take this money out, take the unrealized loss and either put that in my brokerage, save the house tax from there. Basically I'm debating like do I sell, do I risk holding this single stock that I debate holding in. Does this all make sense?

Yes. I would reframe this as like, like your goal is to get to $5 million in wealth, right? And you're starting at 150 grand. So that decision is, is really immaterial to the overall thing. So I'm going to frame and then I'll answer your question specifically in a second here. But what are the leverage points to actually get you there?

First flexibility, right? Something needs to go very right to get you to $5 million, right? That is going to be turbocharging your success in your sales career and or a pivot within the next five to seven years to an entrepreneurial venture, like a small business acquisition or something you start and found on your own. I think you know that implicitly coming into the call here. So if you agree with that premise,

Right. Then the sales career, what I think you want to do is you want to generate so much cash and keep your expenses so low that you can go through the entire stack of tax advantage investments next year or at the end of this year, as we discussed earlier, and just max them all out. HSA 401k, Roth 401k if you prefer that. And then if things go very poorly and you still have cash, the Roth IRA.

In a traditional sense, you can also think about backdoors and stuff, but go down the whole stack. And because you spend three grand a month, also accumulate 50 or $60,000 a year after tax and your brokerage. So you can go through both in this situation, but the goal will be to accumulate so much more outside of the 401k and the tax advantaged accounts because you're rocking it so hard on the income front and spending so little that you're still building most of your wealth outside of those.

those. Then you got to figure out how you want to deploy that, right? If the sales career goes super well, keep plowing it into real estate would be my, is my bias or, or stocks or whatever, but that's

that pick one concentrate for five to seven years and really kind of go big in that area. Make sure you get a, you know, you're responsible. There's no leverage that can kill you a situation. Maybe even go a little light, but like plow the cash into something that you can control. That's scalable. Don't buy 10 different properties scattered across the country and random geos on a turnkey perspective so that you have problems in Cleveland, Ohio, distracting you from your $400,000 a year future, future job.

I'm in here, but if you have six properties in Austin, Texas that are reasonably compacted and one of them is a pain in the rear and the others are, have created a several million dollar net worth problem. I get that problem a lot from bigger pockets money listeners, by the way, that's a good problem, right? Oh, they made a million bucks or 2 million bucks and they got a couple of pain in the rear as they just want to sell because they're so tired of dealing with that stuff. Give yourself that type of problem rather than the one that's halfway across the country or in at least in several different geos.

And then if the sales career is killing it and you're earning so much money that's just a coasting to FI, that's great. But if it's not, then you're going to want to pivot to entrepreneurship based on what I know, the few minutes of talking to you that I know about you. So make sure you accumulate enough cash. You keep emphasizing the cash accumulation in order to do that.

And I think that that will provide tremendous optionality within the next three to five years. It'll be a grind, but you'll have to perform really well, sell hard, keep reading, keep communicating, or keep really, really good professional cadence with your clients. But that's the general framework that I'd be thinking about going here. And I could see a series of house hacks plus a couple of rental property investments and/or a business all being in the cards there.

That will have to go better than what you can put into a spreadsheet. And there's a very good chance that a business, for example, could do better than what's going on in a spreadsheet. So give yourself that option. And as a byproduct of this situation, you'll naturally also be building a stock portfolio that will carry you a big chunk of the way towards $5 million at $50 million.

on its own. Like that's the strategy in a nutshell. Sorry, I went on a rant there, but hope to see you nodding. Do you, does that resonate with you and seem right? Yeah, yeah, exactly. That's what I thought too, is we're lucky in a position where go after my rock, go after my retirement accounts early. You saw my coast fire question. There's like, I'm front loading them for a reason. Let those build up everything outside, build up for that middle-class trap, whether it's business real estate portfolio. I know I've asked about turnkey properties as well. Um, but no, this is all

Exactly what I wanted to came on here for. Okay. I have a question about your, your employer. Do you believe in the long-term viability of your company? Oh, sorry. We didn't even, I think I lost the whole point of the question there. Good, good point. Yes. Let's answer, let's answer a specific question here. I'm so sorry, Austin.

Yeah, no, I do. Yeah, I really do. And it's something that where I get paid out of recorder. It's not like an amount of money, but yeah, keep it in. Yeah. If you think if you think if you think they're gonna win, like, could you like, if you think like, if I went back a bunch of years ago, and I was like, Oh, I'm gonna sell all my positions in bigger pockets.

Oh, my gosh. I would regret it. Right? You could still lose it on there, but it doesn't sound like it's a huge chunk of your net worth right now. And if you believe in the company, keep it in. You'll be putting so much more cash over the next couple of years into either real estate or stocks that your portfolio will diversify unless this thing does super well, in which case that's why you're leaving it in. Yeah. And this is currently a $2,000 paper loss. You haven't actually lost the money until you sell it for less than what you bought it for. Right? Yeah.

Okay. Does your company have any unfair advantages? And I'm going to go on a little bit of explanation here. Looking at the large companies headquartered in Austin that I know about, Tesla has the unfair advantage of having a charging network across the country, which makes travel more

really easy and it's very difficult for other companies to come in and compete with them. That's a huge advantage. Amazon has this whole, we've been doing it since 1999 or whenever they started. So they have a huge network. They've got all these local distribution companies. That's another unfair advantage because they have so much money, they can do this and they can squash

squash competition. And I'm not saying this as like I'm supporting either of these companies. I am a shareholder in both of these companies. But does your company have any unfair advantages? If you can't think of anything right now, like that's a homework assignment because if they're just –

you know, doing like we work went out of business because all they did was rent properties and then sublet to other people. Well, there's no moat around that. Anybody could do that. And they went out of business. I think they coincided with COVID, but they didn't have an unfair advantage. Definitely not an unfair advantage. I would say we're not the market dominator, you know, in my industry. We're definitely leading,

not to go into sales here, but leading in AI integration and stuff like that. It's something I believe in and where actually our stock price, it was about 10 times what it used to be. It's 10 times less what it used to be. So it's dropped significantly. The COVID software tech industry hit hard and I came in at a good time with my bestest docs in my head to where we were actually around like maybe 50, 60, $70 a stock and now we're much less. And I invested at a good time in my head. That's where it's like really been like, okay, maybe I should keep this

for the long term. It's a bet. It's really just a bet. I think you make 10 bets like this over the next three years. I'll have one every 90 days is my framework if you think about it. This is one of them.

They're in a house hack or whatever it is in the next 90 days. You just keep layering those on. One of them is going to, some of them are going to flop. One of them is going to take off. And as long as your fundamental core strategy of either real estate or stocks, if you can, you might say, I'm not going to, I'm going to avoid that entire house hacking nonsense entirely in a real estate investing and just go straight into stocks.

on there. But as long as your core strategy is seeing a huge plowing of most of your dollars, taking shots like this could absolutely result in one or two out of 10 paying off over the next three years. And you having a nice couple of wins that, that, you know, jump, jump, jump that formula that I know is probably buried in the spreadsheet somewhere with you, with your finance background, um, that propel it forward to some degree.

So I'm totally aligned with this. And you seem to be interested in it, do it. It's not a core of your strategy, it sounds like. It's just really a side bet. So I think that's great. I would continue to... I wouldn't sell what you've got. And I would probably continue to invest in the company stock because you believe in the long-term viability of the company and...

I think it's a fun bet. And you have other things. You're going to be putting your money in other places. I wouldn't just do that and be like, oh, I'm investing. See and run employees. The way I look at it too is every quarter I get that payment, I would be selling it in the future, but it's just my current stock right now. Taking that income. That's my only... It's worth savings. Awesome. I had a similar situation 10, 12 years ago. In fact, many of the aspects of your situation are similar to where I was at around 25. And...

So before I was at BiggerPockets, the company I was at offered an employee stock purchase plan, and I did not believe in the stock price of that company. And so I just took the 15% discount. They were able to buy shares basically at a 15% discount and arbitraged that.

If I believed in the company, I would have taken the discount and held on to them for a very long period of time. I think that's the only difference. And I think I was generally right in that particular choice. And you should go with your instincts on this particular one. If you were saying, I'm going to have 80% of my net worth in the company over the next five years, maybe I'd have a different, with a base case plan, I might have a different opinion, but that's not going to happen unless things go super well.

It's only maybe 4% to 6% right now, maybe. Quick math. And then one thing I brought up is I've stacked up this money for a down payment. That's $60,000, $70,000 I have in cash for a house hack, whatever it may be. After I've been front-loading for the rest of this year, it's going to happen this month. I'm going to stockpile cash. My plan right now is Austin, it's

Besides the assumable loan is a house hack. It's a high barrier to entry for some of my age I've been looking to a more teen turnkey real estate out of southeast. It's something I've been referred to I see you shaking your head No, I don't like I don't like turnkey rentals in your situation and the reason for that is because your earnings potential is so large and your goal is so big and

Let's play this out. Let's say you buy a turnkey rental in Cleveland, Ohio with $50,000 down and $150,000 mortgage. The best you can reasonably hope for is $250 a month in cash flow.

Right? That would be an excellent situation. And now you own a property in a C-class neighborhood in Cleveland, Ohio. You can pick, you can replace Cleveland with any of the cities that you are likely looking at here. Right? Now let's decide how do we get to $20,000 a month in income, which is your goal, right? So $20,000 a month divided by 250 is 80 units. You're going to do that 80 times. Okay?

That is kind of a truly absurd statement when I frame it that way in order for that to be a part of your portfolio. And guess what? In five to 10 years, if you are successful in your sales career, it is a very reasonable possibility in the upper bound that you're earning $500,000 a year in income.

So now in order to replace $500,000 or $45,000 a month in income, you need 180 of those units. You can build an 180 unit portfolio in Cleveland or insert parallel city external to that. I don't think that's a great move. Now, if you're saying I want to buy 10 paid off rentals in one location because that's all I want.

Okay, we have a different discussion there, but I don't think that's your plan. I think you have an aggressive, I want to drive ROI to get to my $5 million net worth number in parallel with my investment. So I think that's owned and operated real estate or stock market in your situation.

So I would steer you away from that turnkey strategy. Unless, again, you said, hey, I have a tie to Cleveland or Columbus or whatever city I'm trying to invest in. I may even raise a family there in the future because that's home. And I'm going to buy 10 paid-off properties that are in a tight kind of concentrated area where I will have my pick of the litter with property managers who would love to have 10 properties in the same block. Okay, now I have a different approach to that.

But I would be averse to that strategy in your situation. What do you think, Mindy? I agree completely. I have not...

dived, dove deep into the Austin market, but I know that Scott has, and he doesn't love it for other people, but you live there. You have the opportunity to A, assume a mortgage or B, have roommates in your property, or you have the ability to potentially assume a duplex, triplex, quadplex mortgage anywhere.

And I really like the assumable mortgage option for you. I definitely want you to do some research into that because that could be a great way to get a lower priced property with a killer price.

interest rate that's going to make the difference between making money and not making money. And that assumable thing that Scott is going to send you is going to be a pretty sweet thing for you to look into. Yeah. You can imagine, let's say best case scenario is the Austin market goes down for the next three years, a couple percentage points a year. That's a best case scenario for Austin. Yeah.

For you, Austin, not the city, Austin. Very confusing. But that's a best case scenario for you because you buy one property, you'll be like, oh no, it went down. But you buy the second property also with an insoluble mortgage potentially a year later and a third one.

And then like, if you could put like, if that situation were to transpire the next 10 to 20 years, almost certainly would see a reversion to the mean of 3% appreciation. And you'd have a bunch of properties locked in at low interest rates where the people who originally locked in those mortgages actually took all the hit for the last couple of years so that you could get that locked in financing, for example. So I would be, again, I'd be

I am not in Austin right now, but Austin is one of those markets where I may look at the odds indication or whatever deal in the next year or two because I think the situation there is one of the most extreme in the country and there's an opportunity for someone who's smart and really kind of gets to know it well to make some money in there. Austin is not a bad market. It's just the supply dynamic was so absurd that it's caused the current problem.

Anyways, I've harped on that enough here, but Austin, was this helpful? We're coming up on time here. Was this what you were looking for today? Yeah, this was extremely helpful. Just giving you ideas here because it's just balancing ideas off. Really just making my money work, make a couple bets, whether that's a house hack, getting everything into stocks, everything. Just really just keep

Keep throwing everything out there. That's right. As long as you don't put yourself in a leverage position where things are going to get wonky and force you to abandon the high upside approach that you're taking here, the day you need...

to generate an $100,000 base salary to float your portfolio is the day you're losing this flexibility, right? So as long as you're making bets that do not remove that, like the house hack, for example, that has a super high probability of getting most of the rent in there, and that's conservative, or stocks or whatever, and you keep those expenses low, you're going to pile up some really good options, and yeah, you're going to have to just make bets.

The other thing to think about is none of these are all in for you, and this is really hard framework from Vantage Point 25. You spent your entire life accumulating $142,000. Your goal is $5 million. You are less than what, like,

3% of the way there. So you need to make big chunk bets as you described it in order to do that. And you'll have another crack at this every two or three years to rebuild the existing position, the way that compounding will likely work in your career. And I think you should go big and bold and aggressive and you can because your expenses are so low. No, it's really great. It's super helpful. Austin, thank you so much for your time today. And we will talk to you soon. Thank you so much. Both of you, Scott.

All right, Scott, that was Austin and that was awesome. I really love his trajectory and I love that he's 25 and he's thinking about this stuff. I could have learned a lot from him if I was in his same boat. If he was next to me in my same boat at 25, whatever, I didn't do what he did and I still got here. I think he's going to get here too. What did you think of the show, Scott? I, I,

I love Austin from Austin and his situation and all the choices he's made. This guy has every option in the world. He should keep those options open. He should never take, put himself in a position where he's locked into like an all in bet that's outside of his, his work, unless he chooses one entrepreneurial venture.

Um, in the next couple of years, he says go in all in on, but he's going to be, he has a very high probability of success. Yes, he can lose in any of the paths that we discussed there, but I am super optimistic that Austin has a shot at becoming a millionaire. If not in the next 10 years within the next seven, maybe even by the time he hits 30 with a little bit of luck.

So this is the type of position that you can't really model out and you shouldn't lock yourself into a long-term financial model. You should stay flexible, chase that income and go after it. And by the time he's, again, hitting his 30s, he's going to have a lot of options and a lot of really good choices that he can make in his life. Yeah, I love that he's in sales because literally the sky is the limit on your income there. You are limited by your own creativity and your own drive. So he has the drive.

I think he is going to hit it and hit it hard and hit it early. And I'm super excited for him. I want to check back in with him in like six months or a year, see where he's at then. Absolutely. I'm also very curious. I've been really, really dunking on Austin as the worst place to invest in America for the last several years.

And at some point you got to start changing your tune and say, well, if it's gone this bad for this long, is it time to start buying? I think it's about time to start buying. And I would be really interested if I was in that, in that 25 year old position.

house hacking, serial house hacking range there. But I would love to see what you guys think. Tell me about it in the comments and let me know if you think I'm crazy or if I'm spot on and you agree that it's buy time in Austin, especially with that assumable rate mortgage strategy. I'm really surprised that the Austin market is so down because Austin has...

traditionally been a really great market. And with all of those giant companies in the area, they're going to be employing people who may or may not want to own properties. It just seems like

Scott, I hope you're starting to be wrong. Yes. Well, let me be clear. I get it. I told you so on the market went down the last two years, and I think it was the worst place to invest. And now it could be the best place or one of the best places to invest is what I'm saying. So hopefully I'm right for Austin's sake, both the individual and the city. Yeah. So let us know what you think in the comments below. We really appreciate it.

All right, Scott, should we get out of here? Let's do it. That wraps up this episode of the BiggerPocketsMoney podcast. He is Scott Trench. I am Indie Jensen saying see you around the playground.