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- [00:00]
Scott Trench
Mindy and I are so grateful for the following sponsors who make BiggerPockets money possible.
- [00:06]
Mindy Jensen
When you want more Start your business with Northwest Registered Agent and get access to thousands of free guides, tools and legal forms to help you launch and protect your business all in one place. Build your complete business identity with Northwest today. Northwest Registered Agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They are the largest registered agent and LLC service in the US with over 1500 corporate guides who are real people who know your local laws and can help you and your business every step of the way. Northwest makes life easy for business owners. They don't just help you form your business, they give you the free tools you need after you form it, like operating agreements, meeting minutes and thousands of how to guides that explain the complicated ins and outs of running a business. And with Northwest, privacy is automatic. They never sell your data and all services are handled in house because privacy by default is their pledge to all customers. Visit northwestregisteredagent.com money free and start building something amazing. Get more with Northwest registered agent@northwestregisteredagent.
- [01:06]
Scott Trench
When I evaluate debt funds, I look for things like first position loans, personal guarantees, deep experience by the fund operator, low fund leverage, fast liquidity and consistent returns. These are some of the reasons why I'm excited to partner with Pine Financial Group. Their Fund 6 offers investors exposure to real estate credit largely for construction and rehab, with loans originated by an experienced originator with over $1 billion in origination volume. They offer investors an 8% preferred return paid monthly and a 7030 LP GP split of everything over 10% paid annually. The lock period is nine months with liquidity available within 90 days. After that nine month commitment, the fund is open to accredited investors only. The fund's minimum investment is typically $100,000, but Pine Financial is able to reduce that minimum for BiggerPockets Money listeners to a minimum of $25,000. Full disclosure I am personally invested in this fund through my self directed ira. Pine Financial is sponsoring this message and our podcast. Go to biggerpocketsmoney.com Pine P I N E Please note that returns are not guaranteed and may vary based on fund performance. When spring hits, some people suddenly just want to declutter the garage, clean out the closets and get everything all organized. Whether or not that hits you, Monarch will do your financial spring cleaning for you. One dashboard gets your entire financial life organized. No more clutter, no more mess, no more scattered logins, just accounts, investments, property and more all in one place. One of my favorite parts is the Sankey diagram. Every month I open it up and literally watch the flow of money. It shows exactly where every dollar is going. From income to all of my spending categories. It so much easier to spot what's working and what needs tweaking. Get your first year of Monarch for half off just $50 with the promo code Pockets Use the code pockets@monarch.com to get your first year half off at just 50 bucks. That's 50% off your first year@monarch.com with the code Pockets.
- [02:58]
Mindy Jensen
Most financial independence content focuses on getting started. But what about when you've already done everything right and still aren't sure if it's enough? Today's story is all about the mess the middle from growing up with financial instability to steadily investing throughout the dot com crash, the 2008 crisis, and Covid, this couple has built over $1 million in retirement assets, paid off a home twice, and reached a 50 savings rate at one point. But now, with rising expenses, a new mortgage, and questions about health care, they're asking the same things so many people in this same stage are asking. Are we actually on track to be work optional in the next 10 years or do we need to be doing more? Hello, hello, hello and welcome to the BiggerPockets Money Podcast. My name is Mindy Jensen and with me, as always, is my keeping his primary residence, co host Scott Trench.
- [03:54]
Scott Trench
Thanks, Mindy. Great to be here. You're always bringing down the house with these intros. Love it. We are so excited to be joined by Carl today about this Crossroads challenge that he and his wife are in, and we're excited to talk about how we can help. For entertainment purposes only, of course. So without further ado, welcome Carl, and thanks for the wonderful preparation and putting this this personal financial statement together for us.
- [04:14]
Carl
Thanks, Scott. Thanks, Mindy. I'm super excited to be here and have this discussion with you guys.
- [04:19]
Mindy Jensen
I am too. Like I said in the intro, you have some pretty impressive numbers in your portfolio. So I'm going to read through those numbers right now so our audience knows where you're sitting at. I see total assets and a total net worth of just over $2 million. I see a nominal amount of debt, 45,000, combined financial portfolio of 1.4 million. Your other property is about 591,000, so that is including your equity in your home. We've got a primary residence value of just over $500,000 with a home equity of $500,000, leaving a mortgage of just $37,000. We're going to talk about that. Your liquid financial portfolio, cash of $170,000. I'm going to talk to you about that for sure. Traditional IRAs 350,000. Do Roth IRAs 842,000.
- [05:14]
Scott Trench
Yay.
- [05:15]
Mindy Jensen
I love seeing so much in a Roth. I'm sorry, That's Roth accounts, IRAs, 401ks, et cetera, HSA $4,500. Total retirement accounts, 1.193 million. That is a pretty good place. After tax stock portfolio, $83,057,000 in cash flow.
- [05:36]
Scott Trench
So what this is showing here is this is taking his liquid financial portfolio and multiplying it by the 4% rule. And then we're also adding anything from the illiquid financial portfolio, which is very common among biggerpockets money listeners, to get to what is the quote, unquote, cash flow of this portfolio. How much does this portfolio support in spending here? This portfolio is super clean, Carl. Congratulations. It's a wonderful financial result of years, maybe decades of really hard work, consistent savings and financial sophistication that you bring to your personal financial situation. There's nothing unusual about it, right? We got a house almost paid off. Can tell that that's pretty much almost done here. And then we got our pretty traditional portfolio here with a pretty solid cash position. This is a really secure position. We've got nothing complicating the position. No additional assets, no additional cash flows expected here. So we can just work basically with traditional financial planning rules of thumb like the 4% rule. So we have this calculation here in the personal financial statement you filled out, by the way, Anyone listening can go to biggerpocketsmoney.com resources and you can download this spreadsheet in Google Sheets or as a Excel document and fill it out. We're showing it here on the YouTube video, but we're also explaining the numbers for those listening along. This $1.4 million financial portfolio should, at a 4% rule, support something close to $60,000. So it's technically 57,840 is what we got here for spending. And that's going to go a pretty long way, I'm going to guess, once we pay off this mortgage for your lifestyle. So that's what we got on the assets and liabilities. Mind, do you want to walk us through the income and expenses?
- [07:13]
Mindy Jensen
Yes, income and expenses. I see one job of 125,000, another job of 70,000, for a total of 195,000 in income minus deferrals. 45,000 for HSAs, 401Ks et cetera. The married filing jointly taxes of 32,000. Your estimated annual taxable income is 117,000, which is nice. Your estimated annual tax liability is 15,000. Of course this is for informational purposes only. The IRS is going to tell you exactly how much that is. Or wait, they're not, they're going to make you figure that out. But that's, that's a ballpark.
- [07:48]
Scott Trench
I will also say, by the way, I'm having fun with this. I've literally now for one of the other models, put in every single state's progressive tax code and then need to add in the standard deductions that different for states or whatever. So a future iteration of this spreadsheet if you check back will have a more precise tax estimate that actually treats all the different taxes and self employment, all that kind of stuff there. But that's probably going to be a few more weeks, maybe a month or two before I get there. So this is just federal tax and does not include FICA and these other things in there for now. I haven't done with this. You can't tell I've nerded now but, but this is. Yeah. So this, this is just a quick estimate to give us an idea of how much cash is coming into Carl's life on an annual basis.
- [08:28]
Mindy Jensen
Yes. Total take home pay is 179,000, net after tax cash generation 134,000. The spending side, you are spending about $96,000 a year or $8,000 a month. I don't see anything crazy in these expenses. I will say that they all end in zeros and fives. So I just want to make sure that this is actually what you're spending or rounded up. So that's a little bit of a homework assignment for you. But with 96,000 in spending and bringing home 134,000, you probably have these numbers pretty dialed in. So the key numbers we've got here, total gross income 195,000, annual spending 96,000, total tax liability 15,000, net cash accumulation for the year $83,360. And that includes your 401ks, your HSAs, the pre tax stuff, the after tax stuff, etc, we've got a savings rate of about 42%.
- [09:29]
Scott Trench
Does that sound about right Carl, to you? All these numbers?
- [09:31]
Carl
Yeah, yeah, we're pretty close. I mean I will say the expenses I rounded up on everything just to account for some of the unknown unknowns like we're remodeling a bathroom right now. Didn't expect to, but there was water between the tub and the liner, and it was like, oh, well, might as well do the whole thing.
- [09:47]
Mindy Jensen
Yeah, that's how those projects start. Pretty soon, the whole house will be remodeled. Okay, so on your debt schedule, I see a primary mortgage of $37,000, a car loan of 8,500, and those are at 5,000 DOL, 5.85 and 6.63% interest, and medical debt of 9,000 at 0% interest. But if we go back to these assets and liabilities, you have $169,000 in cash. Just for the annoyance factor, I'd knock out both the mortgage and the car loan, because clearly the mortgage is something you do not want to have. And why would you have a car loan if you don't even have a mortgage?
- [10:25]
Scott Trench
Carl, you got to be already doing that. That's already your plan, right?
- [10:27]
Carl
Oh, yeah. Yeah. So I am also annoyed by the mortgage and have been. We moved into a new house just less than two years ago, and I've been aggressively paying it down. That's already down to roughly about $4,000. Mindy. I should have it paid off in the next five weeks.
- [10:40]
Mindy Jensen
Oh, great. Okay, then. So what do you need our help with?
- [10:44]
Carl
There's a. Always a battle within. It's like, am I doing enough? And where do I put money to be not only optimized, but optimized for what my goals are? And that is to be work optional before the standard dates of being able to withdraw funds from a retirement account, because, as you show, most of my funds are tied up in the 401k or the Roth 401k or the IRAs. And so I know this rule of 55. There's the 72t that there's options out there. I would like to have those not in place and use just the brokerage for the time period before 59 and a half to live life. And also, how do I budget the amount of money between when we retire and 65 for medical expenses? Because that's our big unknown. We don't know how big that cost is going to be and. And how to budget for that.
- [11:40]
Mindy Jensen
Okay, and how old are you right now?
- [11:42]
Carl
42 and 43.
- [11:43]
Mindy Jensen
Okay, so you mentioned the 72T. And one thing that I think people don't necessarily realize about a 72t is, yes, you can absolutely access your 401k. That's awesome. But you're 42 years old. You have to take that 72t money for five years or until you're 59 and a half, whichever is longer. Scott, do that math for me. Is that 17 years of 72t?
- [12:10]
Scott Trench
Yeah, I can see why you're, you're not happy with that approach here. I think there's a whole bunch of problems with that in the fire community, but it is one option and it kind of locks you into this path to a large degree. So I think that's why you're reluctant to take it and you want to defer that decision at the very least.
- [12:24]
Carl
Yeah, that's absolutely right. And we're just, we're looking to, you know, be able to pull from essentially just from the taxable brokerage before the traditional retirement ages.
- [12:35]
Scott Trench
Let's start knocking out some of these questions you have here because you came so prepared with all of this super clear, very clean finance stuff. So you said, how do we, how do we plan for medical coverage and early retirement? Right. That's the first one here. Let's start with that and let's knock it out. So basically what you can do here is you can go to this Wonderful website@kff.org interactive subsidy calculator. I will link to that in the show notes here. When you go to kff, right, you need to put in your zip code and you need to be careful because health care premiums vary by county, which is a huge problem if you nerd out about the subject for a long time because some zip codes overlap into multiple counties. And building a model that actually does this is a very complicated process. Even KFFS is not perfect, although it's the best one I found online. We're going to put your income in early retirement at like 65, $70,000, which is just more than you're spending once you pay off the mortgage.
- [13:26]
Carl
Yes and no. And here's part of the nuance. So we. Yes, that once the mortgage is paid off, our spending is going to be somewhere around 65 to 75,000. But in retirement, what we want to do for three months of the year is be snowbirds. We don't want to live here in the winters anymore. It gets cold, it gets snowy. We're done with it. So for three months of the year, we're also budgeting living somewhere else, which accounts for basically tackling back in the mortgage amount and covering some of the medical costs here that we're going to go through.
- [13:58]
Scott Trench
Okay, perfect. So I'll put in $80,000 in income. What's great about the early retirement world is you can manage your income, right? Your Spending can be different from your income in early retirement. So I'm going to put this, I'm going to intentionally set this actually a few thousand dollars lower to make sure that we're below the federal poverty line cliff. That I believe will be the case here. So we're going to have a two person household, we're not going to have employer coverage and we're going to have two adults. We said 42.
- [14:25]
Carl
Yeah. When we retire it'd be about 10 years from now, hopefully. So somewhere around 53 and 54.
- [14:31]
Scott Trench
Okay, great. Okay, so 53, 54 and then we're going to have no children, is that right at this point?
- [14:37]
Carl
At that point, correct.
- [14:38]
Scott Trench
All right, great. So this is what we're looking at. Actually what I'm going to do first is I'm going to increase this number to a high level. So we're not getting the subsidy calculation. This calculator computes the subsidy calculation. If you did not get a subsidy and you chose a bronze plan. Right. This calculator, you have to kind of know what you're doing to look through it so you can find the fire related stuff. A bronze plan is going to cost you about 1381 per month at age 53. Right. And this is what trips people up. Right. This is the whole thing I've been harping on lately is if you guys are 42 and 43 right now, that number is going to be different here and it's gonna be $887. Right. Like are those subsidies going to be around in 10 years? I don't know. But that probably shouldn't be plan A. So the way to do this right now is you'd literally do that every year or, you know, every five years. And you kind of build out a model and say, here's the, here's how much my spending will ramp if I don't get subsidies for healthcare over this time period. And you also assume maybe an out of pocket spend as well going along there and you buffer that into your fire number. It's probably going to be like, you know, a few hundred grand, like maybe 100, 150 to 200 grand on top of the 4% rule number that you're targeting with your core portfolio. So that's a complicated exercise. I've got an article on that that I'll link to here in the show Notes as well that talks about how health care costs rise sharply in early retirement. And I do that for my own family, for example, using the Obamacare.
- [16:04]
Carl
Now with this, you know, should we also budget for a year every five years that it'd be max out of pocket into that as well? Because you can the the payments as far as what you're going to be paying for insurance every month. But then you also need to factor in what if something happens and how do you budget for that as well.
- [16:23]
Scott Trench
My opinion is that look like we want to be realistic, not pessimistic in the fire world. And I think health care, I think that it's too pessimistic to assume you're going to hit your out of pocket max every year, but it's realistic to assume that you're going to have some kind of hefty insurance premium and you're going to have some out of pocket max every year. Here's my article I spent forever nerding out about this why health care costs rise sharply with age and early retirement. For anyone listening here and what I assume here is this is that ramp I'm showing you over the course of your, you know, you're going to retire somewhere here and you're going to see this ramp going through this period. You get a version of that with the two person household and then it's going to, you know, drop substantially once you get on here or Medicare at age 65, right? Then you have a huge drop off in costs. So you got to bridge this amount. And I would ramp both your premiums and your out of pocket average expenses here. The volatility of expenses, you know, do they hit early or late is a risk factor. But in the really advanced mathematics of withdrawal rates, it's not that big of a deal to really delay or be a core part of your planning process to assume like hey, you're going to hit your out of pocket maximum in the first or second year here and go on there. It can impact it, but it's not as nasty a variable as I initially assumed in early retirement math. And by the way, Karsten Jeske at Early Retirement Now Big Earn, if you want to get your PhD in that, this kind of stuff here, you go to that site and you can check that out and get he'll, he'll defend that particular argument really well. World class, world class analysis over there. But yes, I think, I think your base plan should be I'm going to see my premiums increase and I'm going to see my out of pocket expenses increase as I age until I get on Medicare.
- [18:07]
Carl
The other factor of course is Also like yes, 4% is the standard for a 30 year retirement with most likely or hopefully a 4045 year retirement that we're looking at with trying to retire early. Do we use 3.5%? You know I I've heard different arguments as far as lowering that the more years that you have in retirement when
- [18:31]
Mindy Jensen
you want more Start your business with Northwest Registered Agent and get access to thousands of free guides, tools and legal forms to help you launch and protect your business all in one place. Build your complete business identity with Northwest today. Northwest Registered Agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They are the largest registered agent and LLC service in the US with over 1500 corporate guys who are real people who know your local laws and can help you and your business every step of the way. Northwest makes life easy for business owners. They don't just help you form your business, they give you the free tools you need after you form it, like operating agreements, meeting minutes and thousands of how to guides that explain the complicated ins and outs of running a business. And with Northwest, privacy is automatic. They never sell your data and all services are handled in house because privacy by default is their pledge to all customers. Visit northwestregisteredagent.com money free and start building something amazing. Get more with Northwest registered agent@northwestregisteredagent.com money free.
- [19:30]
Scott Trench
When I evaluate debt funds, I look for things like first position loans, personal guarantees, deep experience by the fund operator, low fund leverage, fast liquidity and consistent returns. These are some of the reasons why I'm excited to partner with Pine Financial Group. Their Fund 6 offers investors exposure to real estate credit largely for construction and rehab, with loans originated by an experienced originator with over $1 billion in origination volume. They offer investors to an 8% preferred return paid monthly and a 7030 LP GP split of everything over 10% paid annually. The lockup period is nine months with liquidity available within 90 days. After that nine month commitment, the fund is open to accredited investors only. The fund's minimum Investment is typically $100,000, but Pyne Financial is able to reduce that minimum for BiggerPockets Money listeners to a minimum of $25,000. Full disclosure I am personally invested in this fund through my self directed ira. Pine Financial Institutions is sponsoring this message and our podcast. Go to biggerpocketsmoney.com Pine P I N E Please note that returns are not guaranteed and may vary based on fund performance. When the change in season hits, some people suddenly just want to declutter the garage, clean out the closets and get everything all Organized and that's great if that's you or if it's not you. Either way, let Monarch do the financial spring cleaning this year for you. One dashboard gets your entire financial life organized. No more clutter, no more mess, no more scattered logins. Just accounts, investments, property and more all in one place. Another feature I love about Monarch is the weekly AI recap. It catches spending spikes before they become problems and flags big net worth shifts or upcoming expenses. It's like having a quick personal check in every week so nothing sneaks up on me. Get your first year of Monarch for half off just 50 bucks with the promo code pockets. Use the code pockets@monarch.com to get your first year half off at just $50. That's 50% off your first year at monarch.with the code pockets. P O C K E T S Two of the people I admire most in the community here are Big Earn Karsten Jeski, who I think is the most rigorous analyst on 4% rule withdrawals, maybe in existence, maybe even beaten out Kitsis at this point, who's also fantastic. And then there's Frank Vasquez, right, who has a different argument and different take on the situation is much more aggressive. And I respect and admire both of those folks. But I think if you're looking for what's the risk off answer, you know, I think you start with Big Earn and you look at those that, that study and say here are the risk factors that would, you know, yes, encourage you to have a slightly lower than 4% withdrawal rate through that early retirement. And then you counter that with, well, that also leaves me with a pretty high probability of retiring or passing away with a very large estate in many of these cases. So there's kind of a push and take there. But I'd argue, and I'll even reframe it for you, you already are arguably at fire like within a few months by the end of 2026 this year you could have your mortgage paid off and your car paid off and then your portfolio would suggest that you're at the 4% rule at the end of this year. If 10 years pass before you actually retire, this problem is going to be completely negated at that point unless we get a really, really unlucky stretch of market returns here.
- [22:39]
Carl
It doesn't feel that way.
- [22:40]
Mindy Jensen
No, it doesn't because the numbers are so out of touch and they don't seem real because they're for retirement. Retirement's in the future. I looked up Michael Kitces 4% withdrawal article specifically to get this one image. This is starting at a million dollars, and this is how it grows. One of them grows to $9 million in year 24 after having taken out the 4%. So Michael Kitces is. Research suggests the traditional 4% rule is often too conservative, frequently leaving retirees with excess capital. Again, these are people who are withdrawing from the 4% and continuing on. There's a couple that go below the starting value. And in year 31, there is one that goes down below 0. 1. Out of all of these, I don't remember how many these are. It's a lot. And that is the year that people retire into a position of incredibly high inflation. Late 60s, early 70s, we had high inflation and prolonged high inflation. So we're in a situation right now where inflation is a little squishy. So maybe it would be better to pull out at 3 1/2% until you can see that, yeah, this is going okay. You don't want to hit the sequence of returns risks where the market is, is way down. Right. When you retire and you start pulling out. What amount do you have in bonds?
- [24:14]
Carl
We just, within the past four months, started a bond position within our 401 case. We are typically, I would say 60 to 65% s and P500 in our 401ks. Then we have some small caps, mid caps international. But I think we have like 3% bonds. It's very low because we just. We're not at the point where we feel like we can retire anytime soon. So it's like we're going to start slowly adding into that bond position. But it's. It's nowhere near what a retirement age person would have.
- [24:46]
Mindy Jensen
Oh, so you have 350,000 in traditional accounts and 800, almost 850,000 in Roth accounts. You can withdraw the contributions in your Roth at any time.
- [25:00]
Carl
Does that go for Roth 401k as well, Mindy?
- [25:03]
Mindy Jensen
It does. I just looked it up because I wasn't sure you just. The contributions, not the gains. The gains would be taxable. I don't know how you figure that out, because I'm not at a position where I'm going to start withdrawing from there. But I mean, if you're maxing it out every year, that's pretty easy. You know, 7,500 last year. Okay, well, I can take out 7,500 and it'll be fine. And I can take out the year before. That was 7,000. I can take that out too.
- [25:25]
Carl
We switched over. So we used to be Roth IRAs forever in our 20s. And our 30s and then we started adding in the Roth 401K in our 30s as we built up a larger, you know, income. And recently in the past just three years, our income has gone up more than, you know, what we could have imagined. And so we've gone more traditional. I would say it's 75% we put into the traditional now for maxing out 401ks and only like 25 Roth. So we, we've made that switch to be able to account for tax efficiencies.
- [25:59]
Scott Trench
I think that what's awesome about this is you are basically on the cusp of financial independence right now. And again, I'll go back to, if you, if you stay invested this way, market could go, you know, any which way or whatever. But if we get anything close to average historical returns over the next 10 years, you're going to see this portfolio more than double, adjusted for inflation, plus maybe double again depending on how much you contribute. And add to the pile on this, you're going to have your paid off house and it's going to start to be silly money at that point. And then so that this is awesome. This is, this is a great situation. And I think that what the challenge is, if you came in and said, I want to retire right now, we'd actually have a fun financial planning challenge at that point. It's no fun. Like there's no fun there because you're so far beyond it. You just, you, you have fun. You have to spend more and retrain your brain to spend more at that point in 10 years, if we get anything close to historical average returns. But in the current situation, I think there's a real argument to be made that we have to be a little careful because you can't quite be totally confident in your five plan on there. But what's awesome about your situation is at this like 4% withdrawal rate, which you're right at, basically once you pay off that mortgage and the car loan, even with a little bit of snowburn, if you could bring in like 25 or $30,000 in active income in the first few years or in a down year, for example, that essentially totally negates the small percentage of situations that either run out of money or begin to see your accounts dwindle as you approach traditional retirement age, which is a big challenge mentally for a lot of folks, it would be. For me, that's one option that's very realistic for you guys. You guys, I think literally might be able to be in a position where if you wanted to spend this amount of money, you could potentially sustain it for life if you bring in just a little bit of income and you would significantly de risk your situation.
- [27:43]
Carl
Our goals and our focus is 10 years down the road, mainly because our youngest son should graduate from high school in 9ish 10 years. And so when he graduates, you know, and goes off to college, we're using that time as our, you know, exploring us time frame, you know, where we snowboard, not, you know, a second home. We plan to bounce around at different locations, you know, explore different parts of the country. But we want to enjoy that as well. And that's why, yes, right now, based off of basic needs and stuff like that, you're right, we're probably close to that phi number. But we don't want to live a basic needs life. We want to live to enjoy it. And so that's where some of the nuance and why did the anxiety builds up a little bit as far as our spending?
- [28:27]
Scott Trench
So it sounds like you have a phi number that's larger than this. You're living way within your means now, but your goal is much bigger than that. Do you have any idea what that looks like?
- [28:34]
Carl
Yeah, our goal number is somewhere near a cash flow of between 110 to 125. And you know, that would account for increase in medical costs, as we discussed here. It includes, you know, snowbirding for three to four months of the year and being able to to rent a place wherever we want for that time and be able to withstand our current bills and, and spending habits, which also includes some inflated costs because we do have two kids in sports and all this other stuff that probably goes away in that time, but I don't know. So I can't really plan for it.
- [29:08]
Scott Trench
You're absolutely on track to get to that point. That set, that implies a $3 million financial portfolio essentially that will go a lot farther than what you're spending today. So it'll feel like a lot more. Once this mortgage is paid off, for example, that won't be a part of that and you'll probably be debt free by the end of this year. So what I'm reading here is how do you protect what you've built while also growing towards that number? Is that the main crux of that question?
- [29:31]
Carl
That's the main part of that one. And also. So how do I fund certain aspects, like do I continue to pile in as much as I can to the retirement accounts like the IRA and the 401k or do an I now set a bigger portion of that budget into the taxable brokerage even though it's not as tax efficient. So that I can have that freedom fund, that freedom bucket for those years before those retirement accounts can be withdrawn from.
- [29:58]
Mindy Jensen
Yeah, I like that option. And it isn't like an all or nothing thing. It isn't all 401k or all brokerage. You can still, I don't know if you get any sort of company match. Absolutely do whatever you have to do to get the entire company match. But then if you retired in 10 years, so then you'd be 52 and then you've only got like a seven year 72T so you can start accessing those funds. That's a much different story. I like, like the brokerage idea because that is, you don't have to do anything with that. Those are your funds. You can pull them out anytime you want. You're only paying taxes on the gain. So if you sell a stock that's priced at $100 that you bought for 75, you're only paying taxes on that 25, but you still get the whole hundred dollars. So it's a lot easier to like manipulate that income for tax purposes so you have a better handle on your taxes. I would personally in your position do what I could to max out the Roth IRA for sure. The Roth 401K gives you a lot of options. You can pull the contributions out at any time. But the after tax stock portfolio gives you like all the gains too. You have access to all the gains.
- [31:12]
Carl
What I really want to, you know, focus on that Roth, since 66% of our assets are already in Roth and you know, we want, our spending is going to be a lot lower in retirement than it is currently at our income levels. This is our highest earning income years, the past three years. So I, I want to focus on bringing that taxable amount down.
- [31:34]
Scott Trench
Here's what I'm thinking, right? So I'm going through this and I'm saying the 22% bracket for married filing jointly starts goes from 100,000 to 211,000 here right after your standard deduction and deferrals. Right, right. You're going to be in that 22% bracket with a good chunk of this. I think that's right. Like when we talk about the middle class trap, right. In these other episodes we're not talking about your situation, which I think is Roth heavy and really enviable here. We're talking about people who have it all on the pre tax side of things. And then if they want to Access it early. They have to literally stop working to move into a lower tax bracket to begin accessing that money or doing Roth conversions, whatever. You don't have that problem. You did it right the whole way here. You maxed out the Roth while you were in lower income tax brackets for years, decades, clearly to get this going. That's an awesome position. And now in the higher income tax bracket, I completely agree. Right. We want to balance across these accounts. But in your situation, in your timeline with this Roth balance here, probably a good amount of principal, I would be focusing on this one. I would take your match 401k. I'd be focusing on maxing out the HSA. Would love to get that to 100 grand. Plus by the time you're hitting that retirement goal, that'll be a huge boost to you and it'll drop you in there. And then I'd max out this 401k. And what's great about your situation is you don't have to choose and sacrifice because watch this. When we knock out this mortgage payment, your spending drops to $66,000 per year. You're generating 134,000. Even with a huge pre tax deferral contribution, you're still generating $134,000 in you know, after tax cash generation. You're only going to spend $66,000 of that. You're going to build up your after tax brokerage account anyways even after going through this stack and adding a little bit more to your HSA and your, your 401k. So that's what I would be doing in this situation. I think it's very simple and straightforward from an order of operations like very traditional here. And it's because you did it right and didn't defer for 20 years to have a huge balance here, right. As you hit your peak earnings years and want that optionality. So I think we can do a very uncontroversial or very straightforward approach in your situation. And the wonderful thing is because once your expenses will be so low after you've knocked that out. And plus by the way, you'll have your vehicle payment down, right. So we can knock this down to like 150. So you're going to generate even more cash after that.
- [33:58]
Carl
When the mortgage is paid off. We're going to put all that into the brokerage, that 2500amonth into the brokerage. So that's going to build that up. Should we lower that 45,000 in deferrals to a smaller number to pump even more into that brokerage to be able to float those years before age 60.
- [34:17]
Scott Trench
I think if you want to get really technical about it, I'm having a little trouble getting because it's very complicated here. But we have the HSA is going to be like 8,500. You can have a match and if you max both of these 401ks, you're going to get to something like 49,000 in 2026 or 2027. The inflation just equivalent. So if you really want to get technical, then I think that it would be hard to argue that you shouldn't do that for every dollar over the 22% tax bracket. In the 12% tax bracket, then we have a different argument maybe because this, this tax estimate needs to be precise because it matters and it's not yet to the way it needs to be. But we've got the one big beautiful bill tax credit for child tax credit, which is going to change your taxable income a little bit as well. There's a couple of other like, nuances in your tax situation that I haven't quite nailed in this particular spreadsheet in terms of how things are treated in here. But I wouldn't be surprised if you did a more sophisticated analysis. You were like, I'm going to contribute like somewhere in the $40,000 range to my 401k and that coupled with my HSA is going to move my marginal tax rate on the next dollar into the 12% bracket. And at that point, I think you've got a very strong argument for not contributing that to your 401 and building up your after tax position. And again, I think the target that we want to build is we want these to be roughly a third, a third, a third by the time we hit retirement. But we don't mind if the Roth account is by far the really big third. That's a great situation. So that's how I do it. And you want a little bit in your HSA as well. That one would be really nice to bump up to 10% of your position if you could.
- [35:49]
Carl
I've been using that as kind of like a payment plan for the medical bills and stuff like that. I know it's not the FI thing to do, but that's where I put that money in the bucket and that's the bucket that's paid for medical expenses.
- [36:04]
Scott Trench
I would quibble with you there. It doesn't really matter because you're doing everything else right. But I think it's a great, you got a great situation here as Far
- [36:12]
Carl
as taxes go too, I will let you know that my, my salary is not a salary. It's, it's commission. I earn what I make. So I put in basically what is expected. But the, the variation in the past, let's just say take the five years. Five years ago our household income was like 125. Last year it was more like 3 40. So it varies so much. And I mean it just, it's, it's hard to predict where I'm going to land each year. Year.
- [36:41]
Scott Trench
What I might consider in that case is wait to contribute to these traditional accounts until closer to the end of the year. So this is perfect. You implicitly already do this. You have a large cash position that's going to be almost three years of expenses once you pay off your mortgage. Right. By the way, I don't know why you wouldn't just pay off your mortgage and your car loan with this cash position right now. That will reduce your expenses. Five weeks, Scott.
- [37:03]
Carl
Five weeks.
- [37:04]
Scott Trench
Okay, fair enough. Okay. Now we're sitting there and we're saying this number is really variable. 125. So if that number's huge, then you max out the pre tax and you say I'm going to hit everything over this. You know, you pick 22, 24, 32% bracket. I think in your case I like the 22% bracket. But if you had a huge 401k balance already, I might just pay taxes on that and begin building out something differently. But you did it so right. For the last 20 years or whatever that we can do the classic playbook in this situation. And then I think if it's lower than that. So let's say you have a bad year and it comes in like at 100, then all of a sudden everything's going to be in the 12% bracket. And you can either, you can just max out the. I would still max out the Roth in your situation because this accumulation rate is so huge. Why not put the Roth contribution to the limit and then put everything else in the after tax brokerage. But I think you can choose and you can do that towards the end of the year when you have a better line of sight into what your, what bracket you're going to be in. And I just do it 100%. Like when I did this at work, I would literally have a cash position like yours and I would have 100% of my paycheck going into the whatever retirement account until it was maxed. And then I would make the next decision because if you're going to do it, you might as well put your foot on the gas and do it the whole way.
- [38:14]
Carl
I did that for a couple years when we didn't have in between mortgages. When we paid off one house before we started the next, I would basically have 50. I think it was like 50% of my, you know, income going into the retirement. And I'd max it out by, I don't know, April, May and then, and have the cash flow to do whatever
- [38:31]
Scott Trench
the rest of the year.
- [38:31]
Carl
But that's perfect. That's changed with having the mortgage.
- [38:34]
Mindy Jensen
Do you get a company match?
- [38:35]
Carl
My company has one where it's a safe harbor. So it doesn't matter if we put in or not. They automatically put it in my wife's. It is based off of. Yes, how much she puts in. So I think she has to at least put in 6 or 7%. And it's only if they have a profitable year and they do it all lump sum in January or February.
- [38:56]
Scott Trench
So.
- [38:56]
Mindy Jensen
Okay. I want to just point out to anybody listening who has a company match. Make sure you talk to your HR department. Some companies will only match when you're putting in that paycheck. So you lump sum it in the front and then you miss out on the match towards the end of the year. And you might not realize that until after you've lump sumed it. So definitely make sure you, if your company has a match, you know how they're matching so that you're maximizing your match as much as possible. I've heard stories of that. I'm like, oh, my goodness. And you only learn that after you lump sum it. So you miss out on the match the whole rest of that year. And that's a expensive lesson. I've never worked for a company with a match. So we always just front loaded and just 100% of the salary went into the 401k until it was maxed out.
- [39:44]
Scott Trench
That's right. Biggerpockets did not have a match program because we did a safe harbor.
- [39:47]
Mindy Jensen
Yeah, you did a safe harbor.
- [39:48]
Scott Trench
So that should be good incentive to sell more because every time you sell more, you also get the 3% more. Safe harbor.
- [39:53]
Carl
Yep.
- [39:53]
Scott Trench
What's also remarkable is that this has been going on for a while. The sales job.
- [39:56]
Carl
No. So after we paid off our first house, that is when I was like, all right, I. I have now the relief of like the stress and stuff like that of being able to have to pay for this mortgage that I was like, all right, let's try this position that you know, I feel like I could do. And that's when our income, you know, exploded for the last four years. And it, it's a great earning avenue for us.
- [40:19]
Scott Trench
Okay, so you're asking us all these questions about how you're going to retire with 3 million bucks. I'm an optimist about this, you know, sometimes too much. But I think, I think in five years you're going to be like, well, I'm. This is, this is dumb. Why am I waiting until 52 for this? Because I have all this optionality right now. I can probably sell some things while snowbirding right now and live a very fire version of life in there. But I, so that I think that day is coming sooner than you think based on what I'm seeing here. Maybe you don't retire, but you know, you just generate a little bit of those sales income that totally de risks, you know, traditional.
- [40:48]
Carl
And that is an option that I have thought about, I've discussed and I generally like my job. It, you know, I like working, I like doing stuff, I like servicing, you know, for people. And you know, if that comes with the freedom of being able to live where I want to, then yeah, no, I could see myself working longer than even what the original plan is.
- [41:08]
Scott Trench
You mentioned protect what we built. That was your second question when you came in. What does that word protect mean in this context? We discussed the optimal portfolio mix and the taxable brokerage and various arguments there, but we did not discuss this question.
- [41:24]
Carl
It's a sequence of returns type of question. So we, we're here, you know, early to mid-40s now and we, we have this 10 year time frame. So it feels to us, man, this is crunch time time now we have to get our stuff together. We both started investing in 2001, right as everything was tanking with the dot com bubble then we Both lived through 2008. My wife lost her job for eight months. I mean we were living off of, I think in my pay at that time got deducted by 25. We were living off of $28,000 a year. We, we know what these cycles go through and so we're just like apprehensive like how do we avoid a 50% drop in the next 10 years? Because to rebuild that back up is, is a very daunting task.
- [42:10]
Scott Trench
Okay, so, so we got several options here now, now we're getting into territory. We don't provide specific investing advice here, but let me give you some resources because I love this question, right, because you know, here, here are Other here are risks I've been worried about, right. Like cape, the cyclically adjusted price to earnings ratio. Even when you, if you go to Karsten, I've been, I've been going down the big earn rabbit hole in particular lately on this and even with his adjustments it's at a very high ratio and that is a real threat to 4% withdrawal sequencing. And you know, people argue that, but I think it's, I think he's done really rigorous research on that. You should definitely check out early retirement now and begin diving into that because that'll get you more comfortable with these risk profiles. I think that one potential answer to that, or rather various options to begin exploring to address this concern is one, the Paul Merriman website. So we had Paul Merriman on recently. He is fantastic and has done a lot of research around growth portfolios and he's got a couple of different portfolios. Let me see here. Basically you can factor tilt your portfolio so you could say, you know, us, I'm going to tilt to us and international or I'm going to tilt to. I'm going to have 25% in large cap growth like the S&P 500, you know, I'm going to have 25% in small cap value. I'm going to do the same thing, 25% in the international equivalents there. And you can do all these different variations of it that, that you know, the whole market can go down so you can lose big no matter what you're investing in here. But you might get a little different flavor of those returns, right? Like the dot com crash. Someone who had a 50, 50, you know, large cap and small cap fund had a very different experience for the next 15, 20 years than someone who was all in the S&P 500, for example, right? There's trade offs, there's only trade offs. There might be, you know, there will be complexity with that, there will be rebalancing and there will be sequence. You know, there's still return profiles that'll be different over that time. But that's the rabbit hole to go down if you want to stay invested in growth portfolios for the next 10 years and maybe at least get a different flavor of return profile than just the S&P 500. For example, if you're starting to think about this word protect, the other option on the farther extreme is going to be something like Frank Vasquez risk parity portfolio. So a risk parity portfolio is going to have exposure to a variety of different asset classes and we're going to try to get very ideally, things that are totally uncorrelated or even negatively correlated with the portfolios. The problem with a risk parity portfolio, and I think Frank has done wonderful research on this, is for someone who is as young as us, you're early 40s and I'm in my mid-30s. There's a real drag on the portfolio returns over the next 50, 50 years that we might live in. So that portfolio might be suboptimal, might not have enough growth tilt, depending on how you build it. There's a bunch of different flavors of risk parity that you can build as well, but those would be the two things I would point you towards in terms of optimal portfolio mix. Again noting that once we start saying, here's what to invest in, we begin to find ourselves getting in trouble here on BiggerPockets Money.
- [45:12]
Carl
Speaking of the risk parity portfolio, how's your $10,000 portfolio, Mindy, that you guys did and withdraw, what, $7 a month, or is it 40?
- [45:21]
Mindy Jensen
It's $42 a month, which is over the course of a year, would be a 5% withdrawal. I started with $10,000. I have withdrawn $42 every single month. And my balance right now is $11,015.97. So gold has been my biggest performer. That's what I'm selling every time I'm selling something, trying to rebalance balance because it just keeps going up. And I didn't want to put gold in there, but Frank told me to, so I did. But, yeah, I keep withdrawing and it keeps going up. And this past performance is not indicative of future gains, but it's. It's been a good one.
- [45:57]
Carl
Awesome.
- [45:58]
Mindy Jensen
And it's only been since July, but it's. It's been a good performer since July. And we've had some up and down in the market with the war in Iran and, And the tariffs, and then there's no tariffs, and then. So the market's been up and down and up and down, and it's still chugging along. I have more money in there than I started with, and I've been pulling it out.
- [46:21]
Scott Trench
What's fun about investing is these. These three guys who I really respect. All three of them, Frank Vasquez, Paul Merriman and Carsten Jeske from. From Big Earn all have conflicting opinions on what's best here. And I think they're all right in different scenarios for different goals and portfolio allocations. So I think that's fun, but that's the rabbit hole. I'd point you down, I'd point you towards. If I had to guess, I would imagine you'll find Paul Merriman more your current flavor and you'll find Frank and Carsten's conflicting arguments more appealing once you actually start trying to pull the trigger and live the fire lifestyle. That'd be my guess, but I don't know what you'll end up actually doing there.
- [47:05]
Carl
One of the things that I get caught up in all the time, since I can can, you know, choose my own flavor, there is just all the different options. Whereas the 401k, you only have these options that the company provides for you. In the brokerage, I am all over the place. I, you know, VU qqq, you know, vym those, those are my stall worths. But then I'm, I get into like REITs and you know, small caps, large caps, all this other thing. I, I have like 20, 25 different options when I know I shouldn't be in all of those. It's just. Any advice on how to control that urge to just diversify everything.
- [47:45]
Mindy Jensen
Vtsax diversifies everything, then you own it all. I also kind of struggle with that. We are trying to streamline it a little bit more, but I don't know that we're actually going to do very much of it. Why don't you want to have all of these positions?
- [48:02]
Carl
I just think it's overkill. I that's why I said I have those three core funds, you know, the S P 500, the technology and then a dividend fund, and then the rest are just kind of like supplements.
- [48:17]
Mindy Jensen
Do you enjoy having them or does it cause you stress?
- [48:19]
Carl
No, I enjoy it.
- [48:20]
Mindy Jensen
Then there's no reason why you shouldn't.
- [48:22]
Carl
I think it's not optimal. I have like REITs and stuff like that. It's like in a taxable brokerage. I know it's not efficient, but that's where I get caught up is like, is that the right thing to do?
- [48:32]
Scott Trench
I think that a good exercise. Something else Mindy and I are working on is an investment philosophy template. So we'll provide like a starting point, a draft of like here are the things that we like at biggerpockets money in here. And we love index funds in the passive portfolio and we also love the alternative space in there. And there's a role to be played in each of those. And we believe that a lot of people have unique skills or unique interests that make all these alternative plays very appealing for them. And the income from those reacts with what the optimal portfolio looks like for them in the context of more traditional finance. Right. So like someone with a rental property may need a different type of traditional assets there. I think that if you write down an investment philosophy and commit it to paper and you can write it as a draft and sit on it for a year or two and evolve it, but that might be what the tool you need to feel comfortable with your approach. But I'd also argue that at this point you're talking about a very minimal tax drag on your portfolio. If you make this decision. Right. What we talked about earlier and you have a good thesis for why you are deferring based on your income tax bracket, that's going to matter far more than 10% of this after tax brokerage proposition being tax inefficient because it's in a reit instead of having that, that income hitting your Roth or your traditional account. Right. I mean you have 83 grand in your after tax portfolio. It's like 5% of your liquid financial portfolio.
- [49:58]
Carl
Yes, as of now. And just with my goals, it's going to start getting bigger as we pay off the house because then it's, I'm going to be funneling a lot more in there. I like the idea of making the mistakes while it's small and then getting more optimal as I grow it.
- [50:13]
Scott Trench
The textbook play I think would look something more like having your income if you have it hitting in your traditional, your growth, long term growth hidden primarily in your Roth and the balance of the two hitting in the after tax portfolio, avoiding the active income in your earning years if you can, hitting in that after tax position. And that framework will get you most of the way towards tax efficiency, I think.
- [50:41]
Carl
Makes sense.
- [50:42]
Scott Trench
How we doing? Still, still, still answering your questions here. This is what you're looking for?
- [50:46]
Carl
Yeah, I mean you've, you've touched on everything that's, that's the key points here, the medical, that, that's the, the highest, you know, anxiety point that hits me each day and then the, the rest of it is just like, yes, should I be the 4% or the 3 and a half percent which we touched on and then how to model that in between the tax deferred, taxable and Roth. And we touched on that as well. So yeah, I think we touched on everything.
- [51:12]
Scott Trench
I think if you said I want to retire today and never earn another dollar, I would say your friend is bigger over at early retirement now and his more conservative case. And when you get to your goal, you're going to be fine at the 4%. Rule paradoxically, most likely because you're going to have overshot to a certain degree. And I would also say that you could can spend even more than that if you're willing to earn some active income starting potentially much sooner, which I think is probably where you'll. I would if I had to guess where you'll land in the next four or five, six years or just doing something you like or enjoy. And I bet you that if you keep your expenses this, your core expense is this low, you're going to have that feeling of freedom very well justified within five, six years with my, my hope. We'll see. I would love to you tell me if we're right on that, that five
- [51:58]
Carl
years off the check back in.
- [52:00]
Mindy Jensen
We'll be here. All right, Carl, thank you so much for sharing your numbers with us and for sharing your time with us today. We really appreciate it and we will talk to you soon.
- [52:08]
Carl
All right, thank you, Mindy.
- [52:09]
Scott Trench
Thank you, Scott.
- [52:10]
Mindy Jensen
All right, that was Carl and that was his specific financial situation and his specific goals. And Scott and I were answering those questions. But I think there's a lot of people in our audience who have a very similar situation. Scott, what did you think of Carl's position and my comment that our audience has a lot of these same problems?
- [52:30]
Scott Trench
I think you're absolutely right. I think it's a, I think it's a great challenge. And I think what's awesome about this, this challenge and what we're learning about investing and you know, optimizing for some kind of early retirement is two frameworks, right. One is there's a very simple path to building wealth. Right. We know that. Right. J.L. collins, VTSAX or whatever it is. You know, we know we can't say specific funds or whatever, but, but you know, like The S&P 500 boring old, old fashioned index funds. And that's great. That is an optimal way to passively build long term wealth. Once we start kind of wanting to move a little more towards protection, however, that philosophy breaks down and we need some other version of that. And there are multiple schools of thought that I don't know if I have my fully formed framework around yet for myself, much less other folks. We have very good opinions from Paul Mary, very good opinions from Frank Vasquez, and very good work done by Carson Jeske over at Early Retirement now. But I think that's where it gets a little more nuanced. That's fun. And the second major framework for someone in this position is what should I be doing with my retirement accounts here. And I think that what we do know from, from Cody Garrett and Sean Mullaney, is that the right answer or is some kind of balance having funds in the taxable account, having funds in the Roth and having funds in the pre tax and hsa. That approach, when you have that framework in mind, you can begin to kind of move the, the needle there. And then, and then it's what tax bracket am I in today and what tax bracket I'm going to be in tomorrow? And so it's always a custom, you know, analysis of what's the right answer. But if you apply those two frameworks, you can get pretty close, I think on your own to getting a more right answer. It's always a guess in the end as to what's optimal. But in his case, I thought that his pre tax balance was light. And so there's an opportunity to defer taxes now. And after he pays off the mortgage and the car, his after tax accumulation will still be huge on an annual basis, building up his after tax brokerage position. So that was my flavor on that. But I think plenty of people will disagree. And if you do disagree, please leave a comment here on YouTube. We'd love to hear different opinions on it. I think that this is a place where smart people can disagree.
- [54:38]
Mindy Jensen
Yes, absolutely. I think that you are correct. But also his timeline is about nine or 10 years. He's got such a great base and I mean he's two thirds of the way there. So even if he just lets it grow for 10 years, it's probably going to, he's probably going to get there anyway. And that's actually not something I even thought about until we, I'm looking at these numbers right now and considering his timeline, he's got a kid, kid who's not going to graduate high school for about nine more years. And a friend of mine once said, you are only retired, like truly retired when your last kid leaves school. You're, you're not really early retired. Even if you're not working. If you've got a kid in school, not homeschooled, but in an actual school, you're location dependent anyway. So I think he's going to just continue to put money into these accounts. Honestly, does it matter where they go? Not really. He's going to be in a great position. He's, he will probably get to 10 years from now with 5 million of his $3 million that he wants.
- [55:42]
Scott Trench
I think there's a good chance he outperforms as well. And I, you know, you know me, I'm always very conservative and cautious about the markets and those types of things, which is why I'm so fascinated by these, these different schools of thought with Frank and, and Bigger and, and Kits' and Paul Merriman and all that. So I think there's a really, there's really fun stuff going on there. But I, I also think, think that he's so close to being financially independent. You can basically defray so much of this sequence risk if you earn a little bit of money, right? If he earns 30 grand a year, which should be no challenge for him in his sales role on some kind of part time basis or for some, some certain clients in there, that's half his spending, right? You, you almost never have to sell a portfolio. You know, if his, if his financial portfolio is 1 1.4 million and it generates 2, 2% yield across that, then he's covered his entire expense set with that which is between those two items there. He's not going to sell. He doesn't actually liquidate any part of his equity position and they just live off the cash flow between those two things. And he'll be in a low tax bracket. So that's the last piece. I think that in situations like this I would argue many people are much closer to having the version of freedom that they want than they, than they think as they're approaching this. If they, if they, they start putting that into their, their minds.
- [56:55]
Mindy Jensen
I would argue that as well, Scott. I think a lot of people are a lot closer and they've got this what if syndrome. What if, what if, what if? Well, you know what, there's a lot of what ifs that you can, you can throw out there. What if the market crashes by 50%? I read this great quote by Michael J. Fox. It said something like, don't worry about what about the worst case scenario. It, chances are it's probably not going to be like that anyway. And even if it is, you'll just live through it twice. So don't worry about if the stock market's going to crash or if, you know you're not going to have enough money for retirement if you truly have the 4% rule money. I mean, what did it say? Kitsa says everybody's super conservative and they're way too conservative and start off at 4 but then bump it up to 10%. There's so many different options for people who get themselves to the position of financial independence in the first place. I think they're really difficult just borrowing trouble.
- [57:49]
Scott Trench
What if I, I have almost a million dollars, my roth at age 42 and my kid, by the way, you see that the 80 grand in the beneficiary account, which I'm assuming is the college fund for his kid who's nine years away from graduating high school. Right. So. So I mean college is funded. We're all set. What if I could spend the next 10 years doing something I'm really passionate about, easily cover my living expenses and have plenty of extra spending money from from the portion of my portfolio that is liquid right now. What if I could do that instead of grinding away for 10 more years and my health, my wellness and some passion project develops in an incredible way over those 10 years. That's another what if as part of this and that opportunity is going to pass too. So there's always only trade offs in personal finance.
- [58:32]
Mindy Jensen
Yeah. And why do we what if the bad but not the good? What if the good too?
- [58:36]
Scott Trench
I always what if the good and people complain about me being optimistic. So.
- [58:40]
Mindy Jensen
Okay. Scott referred to an article that he wrote on our website about insurance. I am going to include that in next week's newsletter. So if you're listening to this episode now and you're not subscribed to our newsletter, you can rectify that right now by going to biggerpocketsmoney.com newsletter. And if you want even more financial independence information, you can follow us on Instagram, Facebook and YouTube at bigger pockets Money.
- [59:06]
Scott Trench
I also put a card here. I am now starting to get by myself. I'm loving this. I'm having so much fun building like this, this tax analysis for personal financial statements. I want to model out healthcare costs as they rise so we can all model this problem on BP money and all that kind of stuff. I'm going to do it over the next year or two. But if anybody out there is interested, is very detail oriented and has a skill set in this stuff, I would love to reach out. Happy to attach your name to it. Or potentially we can work out some kind of small payment or whatever. But if Anyone in the BiggerPockets Money audience loves nerding out about this stuff, I could definitely use help making sure painstakingly that these tax brackets are right, updating them every year trying to figure out how to map healthcare costs to the right places there, all that kind of stuff. That's a modeling challenge. It's very solvable, but it's a lot of detail work. And if anyone out there is interested in that and wants to help contribute to these free resources, please let me know scott biggerpocketsmoney.com it will help me speed up the process here, which I tackle in spurts.
- [60:04]
Mindy Jensen
All right, Scott, should we get out of here?
- [60:05]
Scott Trench
Let's do it.
- [60:06]
Mindy Jensen
All right. That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench. I am Mindy Jensen saying chop chop, Lollipop.
- [60:14]
Scott Trench
When I evaluate debt funds, I look for things like first position loans, personal guarantees, deep experience by the fund operator, low fund leverage, fast liquidity and consistent returns. These are some of the reasons why I'm excited to partner with Pine Financial Group. Their Fund 6 offers investors exposure to real estate credit, largely for construction and rehab, with loans originated by an experienced originator with over $1 billion in origination volume. They offer investors an 8% preferred return paid monthly and a 7030 LP GP split of everything over 10% paid annually. The lockup period is nine months with liquidity available within 90 days. After that nine month commitment, the fund is open to accredited investors only. The fund's minimum investment is typically $100,000, but Pine Financial is able to reduce that minimum for BiggerPockets Money listeners to a minimum of $25,000. Full disclosure I am personally invested in this fund through my self directed ira. Pine Financial is sponsoring this message and our podcast. Go to biggerpocketsmoney.com Pine P I N E Please note that returns are not guaranteed and may vary based on fund performance. It's tax season and at LifeLock we know you're tired of numbers, but here's
- [61:18]
Carl
a big one you need to hear.
- [61:19]
Scott Trench
Billions.
- [61:20]
Carl
That's the amount of money and refunds the IRS has has flagged for possible identity fraud. Now here's another big number.
- [61:27]
Scott Trench
100 million.
- [61:28]
Carl
That's how many data points LifeLock monitors every second. If your identity is stolen, we'll fix it. Guaranteed. One last big number. Save up to 40% your first year.
- [61:38]
Scott Trench
Visit lifelock.com podcast for the threats you can't control. Terms apply.