← BiggerPockets Money Podcast
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- [00:00]
Mindy Jensen
What if you could access your retirement funds years before traditional retirement age without paying hefty penalties? Today's guest is going to reveal how at age 55, while her peers were still grinding away at their corporate jobs, Diana had walked away from full time work already. I am so excited to hear her story and see how you can recreate it. Hello, hello, hello and welcome to the BiggerPockets Money Podcast. My name is Mindy Jensen and sadly, neither Scott nor Amberly could join me today on this podcast. But fear not, Amberly will be back next episode. Before we bring on Diana, I have a quick question. How many hours did you spend last month chasing down rent payments, sorting through piles of receipts, or filling in spreadsheets? If the answer is too many, then I need to tell you about Baselane, a trusted BiggerPockets Pro Partner. Baselane is an all in one banking and financial platform built specifically for real estate investors. Baselane automates your rent collection and uses AI powered bookkeeping to auto track transactions for instant cash flow visibility and reporting without doing any manual expense tracking. Plus they have tons of other features like recurring payments, multi user access and free wires to save you time and money. Less financial busywork means more time to scale your portfolio with confidence. Sign up today@baselane.com biggerpockets and claim your exclusive $100 bonus to kickstart your path to becoming a pro. Now let's get into today's show. Diana, thank you so much for joining me today. I'm so excited to talk to you.
- [01:37]
Diana
So good to meet you on the computer because I listen to you on my earbuds every day during my morning walks. I'm always doing my power walk, educating my mind and working up my body. I love it.
- [01:49]
Mindy Jensen
Thank you so much for listening. Let's go back to the beginning of your financial journey. When did you discover the concept of financial independence or the fire movement specifically?
- [02:00]
Diana
I guess when we actually discovered the fire movement itself. It was probably a lot later. But what happened to us is in our mid-30s before that we had started working and were saving and on a regular basis just kind of going through the normal grind in our mid-30s all of a sudden, my parents, who had been working all their careers to be able to retire at 65 or maybe even 62, they both passed away and they weren't able to do the things they wanted to do. They were waiting till they retired to be able to travel, you know, spend more time with the family and all that. And my dad fortunately retired at 62 and then passed away at 63 and my mom passed away a year later. So for us it was a wake up call that said, you know, there's no guarantees of how your life is going to. You know, my parents had thought they were going to live into their 80s or 90s because, you know, their family all did, so they just assumed that, but, but they didn't get that. So from our standpoint, it was a wake up call that said, what do we need to do now to number one, get balance in our lives and do the things that we want to do and also be able to retire earlier so that we have complete freedom to do whatever we want to do and not have to work. So that was, that was our wake up call.
- [03:14]
Mindy Jensen
So what were some of these changes that you made?
- [03:16]
Diana
Well, we had been saving. We had been maxing out our 401ks and so we continue to do that. We also were saving extra money, you know, one to 200amonth. They always say pay yourself first. So we were automatically paying ourselves first, you know, having that money go straight to different funds, to different accounts. And so we were saving for that. And then also our children were young at the, at that time time. And we opened up 529s for each of them and had automatic monthly draws that went there as well. So we had all our little buckets that were being funded. But the most heavily funded one was our IRA 401Ks that we were funding through our employer who gave us I think like a 7% match at the time. You know, so that, that helped obviously, but that was in company stock, so it did help from that standpoint. And we had that match and we took advantage of that and maxed out. I think you could max out to 10% or something like that. So we both, you know, we're big time into saving, but you know, living our lives to going on vacations, enjoying ourselves and spending time. Our kids were both active in sports and stuff, so spending time with them and all that as well.
- [04:17]
Mindy Jensen
What was your career at this time?
- [04:19]
Diana
We were both, you know, very heavy duty into. We were professionals. My husband's an engineer and he was in manufacturing. I'm a business major. I was in supply chain purchasing. So we had very demanding careers. We were working hard, you know, because my, my kids now, my son's big. I was like, you don't understand. Like, yeah, I did understand. You know, we went through that. We had those years where we were just grinding away but trying to still have that balance with our kids so that we could do their sports and do the things with them, you know, trying to save as much as we could, but not being misers. I mean, that's the thing. I listen to a lot of the five people and a lot of them, they are so tight with their money because they're trying to save, you know, 80 or 90% of their money.
- [05:01]
Mindy Jensen
That's me too.
- [05:02]
Diana
And when I have friends that do that, it drives me crazy. Cause I'm like, you know, you've got to think, you know, you can't, especially if you can afford to do it. You know, don't agonize over a few dollars or whatever. Just do it. Just, just enjoy your life, you know, do the things you want to do. So that was our balance that we were trying to do the things we wanted to do, but also being able to make sure that we, you know, had that balance. Do the things, but also save, you know, so try to do that.
- [05:27]
Mindy Jensen
So you said just a moment ago that you were saving in your 401ks, your IRAs, your kids, 529 plans. Did you have any after tax investments?
- [05:38]
Diana
Well, that's what I was saying. We also had some mutual funds. And one of the, I think one of your recent podcasts that I was listening to, you guys referred to Peter Lynch. And at the time, you know, when, when we were young, that was, he was the big, he was the Fidelity Contra fund. And so we had, you know, a lot of our money went into that because that was a kind of, you know, invest in the companies that, you know, it performed really well. So, you know, fortunately we had some, some good, strong performers, which I think helped our overall, you know, building our base, our money base.
- [06:07]
Mindy Jensen
Scott and I have also been talking about the middle class TR recently, where you're doing everything right by the book. You're, you're contributing to your retirement accounts and you're paying down your mortgage, but you're not really doing anything outside of that. So you become a millionaire on paper. But then you look and you're like, well, I can't access any of this money unless I start paying hefty interest rates or unless I start paying fees to, to access the money that's mine because I'm getting it early. And it doesn't seem like this really.
- [06:36]
Diana
Applied to you that it actually does because we are definitely in the middle class trap as far as, you know, we, since we've, since we've actually fired because we're having to work that real balance. You know, we had healthcare because, you know, when we had our small business, we had healthcare through our small business. Once we actually completely retired, you know, we had to get healthcare and we both had preexisting conditions. So we couldn't just buy in on the regular marketplace because they wouldn't cover our preexisting conditions. So we got stuck in that trap. I mean, we've gotten stuck in so many traps. It's just like I feel like we've learned so many things the hard way. But in that, in that case there, you know, when the Affordable Healthcare act came out, that was like our saving grace because they couldn't discriminate against any pre existing conditions and we could get it affordably. But then you had to work that fine line, especially when you're drawing out a lot of your 401k money that's bumping up your income. And so you have to make sure that you keep your income within decent limits so that you're not having to pay, you know, a bunch more. At one point, one year, I think we withdrew like maybe $10 too much and it threw me into the next thing and we had to pay back $20,000. So it's like, oh, you know, is this like you really have to, you know, I mean, I have learned things, you know, the hard way from that standpoint of just knowing how to navigate and work, understand the system and be able to work within it.
- [07:53]
Mindy Jensen
That's really key, being able to work within the system. The system says this, okay, well let me figure out how to work within those, those boundaries. But yeah, you are not kidding. The ACA is a game changer. I also have a pre existing condition and had to stay employed or my husband had to stay employed once we got married. Otherwise there's no insurance.
- [08:14]
Diana
It is doable, but it's, it's not the easiest. Like you said. I, I feel like since being retired or since being, you know, not having a regular job, my job now is how to figure out how to work our lives.
- [08:27]
Mindy Jensen
Exactly.
- [08:28]
Diana
And I'm not getting paid for it, except for if I don't do it, I'm going to be spending more money.
- [08:32]
Mindy Jensen
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- [08:55]
Diana
You.
- [08:55]
Scott
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- [09:30]
Mindy Jensen
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- [10:05]
Scott
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- [10:44]
Mindy Jensen
Welcome back to the show. We are joined by Diana. Well, you have alluded to a small business and you had traditional W2 jobs. So when did you leave your traditional W2 job?
- [10:57]
Diana
At 45. Okay, so at about like right before 45, I guess, you know, I started looking at our savings versus our income and I was like, who? Our savings rate is growing at a faster rate. We're making more money each year than we are on our actual W2 jobs. You know, when you said like when did we discover fire? You know, at the time I didn't know it was fire. But I knew that, hey, you know, our savings that we've been saving all these years is finally starting to add up, and we're making more money with our money than we're making working. But I didn't feel like, okay, we could just do nothing. Yeah, yeah, exactly. Yes, exactly. I didn't feel like we could just do nothing because, you know, we were, we were in our early 40s. Like I said, it's been like 10 years since my parents had passed. And, you know, we, we had gotten to that point and I'm like, oh, we're at that point now. We can do whatever we want to do, you know, so what is it that we want to do? I had always said I, I loved what I did as a career. You know, I was, like, I said I was a business person. I did supply chain. A lot of like what I do now, spend analysis. You know, I would look at companies, like, even when I was doing the consulting, I would look at, you know, the spend that companies were doing, figure out where their biggest spend is and look for opportunities to save money in those areas. That's what I do with my life now, with our, with our personal finances. But, but back then, you know, I love what I was doing, but all of a sud. The corporate world, the company was going through some changes and it just, I wasn't having fun anymore. And I always had said, if I'm not enjoying it, I'm going to do something different. So I wasn't having fun anymore. And, and my husband wasn't either. And so we said, I think it's time for us to figure out what do we want to do with our lives. Somehow we had gotten this idea back when we lived in St. Louis because we had moved several times through our, throughout our careers and we had seen this small business that was kind of a family fun center. You know, it had batting cages, mini golf, go kart track and stuff. And it was just kind of a one place. And we said we would love to do something like that in the town that we were living in. We thought that that would be a neat thing to do. So luckily there was some land for sale right outside of our neighborhood, and we bought that. And hindsight is, if we would have just bought that land and just sat on it and then sold it 10 years later, we would have been much better off. But we didn't, you know, we bought the land and we built a family fund center on it. And my, that's what my husband did. So he left his corporate job to run that business and to work in that business. And I my corporate job and became a supply chain consultant and worked for other companies, you know, helping, you know, some of them were small companies, a lot of them were big companies, you know, helped in their supply chain organization or in their purchasing organization figure out how to save money as a, as a corporation. So that's what we did. Now what happened? So, so 20 years of savings, you know, before that we, we just sat on, we said, okay, we're not going to live off of that. It's just going to continue to grow because it was already, like I said before, it was making, you know, making our salaries. So let's let it keep churning and let's let growing and we're going to just focus on doing these other things. And it got us more quality time with our kids because our kids wound up working in this small business with my husband. And a lot of their friends got their first jobs too. So it was a real neat opportunity. We invested all of our money that was not inside of our 401k, which is really another key there. So our money that wasn't in our 401k, we took that all and we liquidated it and invested it in this, develop this land into a family fund center, Put in a lot of concrete for mini golf, put in the concrete for the batting cages. You know, just, you know, spent a lot of money of our own, money that we had saved as well as we took a home equity loan on our house initially until we could get a business loan because, you know, we wouldn't give you a business loan right off the bat so that we got a business loan. So we learned a lot of things, you know, kind of the school of hard knocks. But it was a good experience and it was, it was a good experience to be able to spend the time with our kids too and have more quality time with them and their friends. And they learned business skills as a result of seeing how a small business operates and such as.
- [14:54]
Mindy Jensen
Well, so you keep speaking about this in past tense. I am assuming that you no longer own the family fund center.
- [14:59]
Diana
So we did that for 10 years. We knew that what was going to help us there is at some point we either needed to sell the business and they say like small businesses, it takes three to five years to finally break even. It was about just exactly that. At three years, we finally broke even. And then the recession of 2008 hit. And we could tell before that anybody knew that there was a recession. People were complaining about not Wanting to spend, you know, businesses really went down because that's, you know, that's extra money people aren't going to spend. If things are tight, they're not going to go out and spend money, you know, playing mini golf or hitting balls with the, you know, or having an ice cream or whatever. So we started to see that already. But at that point, you know, we were in it and we were going to keep chugging through it. And luckily we didn't have to tap our savings because the consulting part was paying the bills for everything. And so we were able to do all right. So we had that business business for 10 years, and then at about 55 is when we finally were able to sell it. And we knew that it was probably going to be a developer because, you know, we had some people at the end that we actually leased it out for a couple of years too. And they thought that they were going to, you know, they had a lease to buy option. But they decided, you know, that it wasn't really. Because it wasn't really a profitable business. It was a fun business. It was, you know, but it wasn't really. It was kind of our community service to the. To the area. So at that time, we didn't, you know, we were able to sell the business to a developer. And that's when we got our money back out of it. And then I stopped consulting as well. So. And at that point, too, our kids had grown up, they had gone off to college. So the business didn't serve that purpose of having that family time because the fam. You know, the kids had moved away for like a year or two after we had sold it. I was still consulting. And I said, I can do that from wherever. Cause I can just as long as there's an airport. So I can, you know, go to my client's place, whatever. I can do that. So we moved further south, which is where our kids were. We were in Florida at the time, so we were up in the panhandle. Then we moved down to. Our kids were in Orlando and in Tampa. So we moved down to the beach area outside of Orlando.
- [16:56]
Mindy Jensen
What percentage of your expenses did your supply chain small business cover?
- [17:02]
Diana
What percent of the overall business? Because in that case, there the money for my consulting, we didn't save any more, you know, so it just pretty much covered all of our costs. We lived off of that. And it also helped support the. The small business, too.
- [17:14]
Mindy Jensen
Oh, so you were coast fi when you left corporate America and started out on your own. And then it just grew for 10.
- [17:23]
Diana
Years, the money that we had saved was just continuing to grow and to save in there, we didn't touch that except for, you know, the money that we did touch was the money that wasn't in our 401k. So that was, that's how we got caught in the middle class trap is that so much of our money at that point was tied up because the money that wasn't tied up in our 401k, we had put that into the business and the money that otherwise was in our 401k was, you know, we couldn't touch it.
- [17:48]
Mindy Jensen
And you weren't saving and investing after you stopped your corporate work. You didn't do any sort of 401k for your, your company or Roth IRAs or anything like that.
- [17:58]
Diana
We could have, we could have. And, and again, when I look back at it now, even doing the 72T we should have at that time because when you have a small business, you can pretty much pay yourself whatever you, you pay. And you know, in the first few years our accountant had said, you know, you're going to have to my husband, you know, you need to start taking the salary because it's, you know, you, you can't just not take a salary because he wasn't taking a salary because, because that business itself couldn't really support another salary. We had employees, you know, some of the, like I said, our kids and some of working for us part time. Yeah, so he finally had to start taking a salary too. But so, so it all came under our overall corporate umbrella. The two businesses were, you know, individual businesses within the, the overall corporate umbrella. We didn't take advantage of, of adding more savings. We didn't convert things over to convert some of our 401k money at that time. We could have converted it to Roth or started the 72T earlier. You know, so we, we had options, but at the time we didn't, we weren't looking at that. We were just trying to figure out how to not touch our savings and how to be able to live off of what we were making at that time.
- [19:03]
Mindy Jensen
Okay, so you just said a fun word, 72t or a fun set of letters and numbers together. When did you discover that you could do a 72t?
- [19:12]
Diana
The first time I heard about it was like when I was in my early 40s, before we had actually left a corporate world. One of my co workers had talked about it as to, like he had just heard that there's this thing, a 72T, a way that you can actually access your 401k money early. So I had that in the back of my mind. But then all the years, you know, that we were doing this business, I didn't think about it anymore until all of a sudden when we thought, okay, we're going to get ready to actually fully retire. How do we, how can we access that money? Because so much of our Money was in 401k and not that much that was, you know, available outside of it. So that's when I asked my accountant, because we had an accountant that did our business work for us. So I asked him, can we do a 72t? And he's like, yeah, let me look into that. And he's like, yeah, you guys would qualify and you could do that. And, and like I said, we could have, you know, now I look back at it, you have to take it five years or until you're 59 and a half, whichever is longer. So we could have, we started it probably when we were like 54. We probably could have started it even earlier and been taking a draw. That or converting it over to Roth, because that's what we should have really done was converted over to Roth. So it can continue to grow with no tax impact once you do the initial, you know, pay the taxes once you first move it over. So hindsight is definitely. So that would be one of my main takeaways for people is, you know, don't get caught in that trap and, and figure out how to, to roll money over or to do a 72T or whatever, you know, earlier. But once you start a 72T, you're pretty much locked in, like I said, till, for five years or until you're 59 and a half. So whichever is longer. So if we would have started it at 45, which we could have, we would have had. Have been doing it all the way till 50, you know, nine and a half. But you can, you know, in this case here, we could have done it and then moved it into ro. Done something like that with it instead. So. Because now we're, we're one of those people that's going to be caught in that trap when we turn 73 and have to take our requirement minimum distributions. I've heard some of my friends that have gotten caught in that where they're saying, all of a sudden now my income is way higher than I've ever had because they've got so much money in their 401ks that it's, you know, it's throwing them into the higher bucket. There. So I've been looking at that now and that's. So one of the things we've been aggressively trying to do is to start rolling money over and to, to Roths now. But we should have, like I said, we should have started that earlier or, or. And we've been doing the, the 72T since we started at 53. We've continued to do it. I mean that, that monthly draw that we were taking is what we're living off of. And we've, you know, since we started at 50, like a 53 I think is when we first start setting it up.
- [21:43]
Mindy Jensen
So you don't have to stop at five years or 59 and a half. You can continue on.
- [21:47]
Diana
Yeah, you could continue, you can do. Yeah, so that's kind of how we're, how we're doing that. Yeah, so we're continuing on that that way.
- [21:53]
Mindy Jensen
Let's talk about the process of the 72t. How does that work mechanically? That's money that's coming from your pre tax 401k.
- [22:02]
Diana
You know, it is really similar to like a requirement minimum distribution. From the standpoint, it's based on your life expectancy, you know, how much money is in the pot. So you could do it from your overall pot or you could do it from, if you've got several different accounts, you could do it from just this account or that account. And it takes into account how much money is in there and life expectancy. And so that tells you what the amount is that you have to take, you know, each month or each year. I, I guess is kind of the overall.
- [22:26]
Mindy Jensen
And how do you take it? Do you take it monthly or do you take it once a year?
- [22:29]
Diana
Just like, so it's like kind of like our salary. We take it monthly, so it's kind of our, you know, monthly income.
- [22:33]
Mindy Jensen
The withdrawals that you're making, does it cover your entire expenses?
- [22:36]
Diana
It's been covering about 80%. So the other 20, when we sold the business, we used the proceeds from that after we paid our huge tax bill from, you know, we use the rest of the proceeds to actually buy a beach condo. So so that's a short term rental. So that gives us some money. So 80% of our income that we live off of is from our 72T and then the remaining is from our rental income as well as other money that we have to, you know, scrape up from outside of our savings that.
- [23:08]
Mindy Jensen
We have the beach condo. That sounds really fun. That's a short term rental that you, that covers the 20% of your expenses or does it cover more than 20%?
- [23:16]
Diana
It probably makes up for the majority of the 20% that's still left there. So. So, yeah.
- [23:21]
Mindy Jensen
And are you actively doing Roth conversions now?
- [23:24]
Diana
Yes.
- [23:25]
Mindy Jensen
And that the Roth conversion is the Roth conversion where you take money from your 401k, you pay the taxes on it, but you don't pay penalties on it because you're putting it into a Roth ira. Right.
- [23:37]
Diana
It's like it's rolling it into. It has to be directly rolled into the, the Roth.
- [23:41]
Mindy Jensen
Yes. You can't take possession of the money. Your 401k doesn't write Mindy Jensen a check and then Mindy Jensen puts it in the account. Your 401k writes the check into the Roth IRA. Yeah. If you take possession of it, you're paying taxes and penalties and you know, every once in a while the, the company that is rolling it over will make a mistake and will write a check out to Mindy Jensen. I wish they, they that actually happened to me once. I was trying to go from one retirement account to a different retirement account. It wasn't a taxable or penalty event, but they did it wrong and they sent me a check. If they sent me a check and I cashed it, then that would be the taxable event and fees and penalties on top of it. So what I did was I sent them the check back to them and I said, this is not correct. You need to make it out to, I don't know, Mindy's 401k or whatever. Whatever I was doing, it's been a while and therefore I skipped the taxable event. So just because they make a mistake, don't compound that by cashing it and making your own mistake. But yeah, the, the rollover IRA or the rollover Roth IRA is a great way to, especially when you have low or no income, to start siphoning off some of those 401k money monies so that you're not subjecting yourself to RMDs at age 73. And I mean, this is a first world problem. This is as far as problems go, that's the kind of problem I want to have. Oh gosh, I have so much money. I have to take so much money out and pay so much taxes. Well, you're paying taxes on this income, so I don't want to pay taxes if I don't have to. But I do appreciate, you know, having a fire department and roads to drive on and, you know, all of that. So I'll continue to pay my Taxes, Taxes, but as low as I can.
- [25:19]
Diana
When you move it from the 401k to the Roth, you know, it's coming out of the 401k and you have to pay taxes on it's a taxable income. So yeah, so we're paying that, but then it goes into the Roth, which then it can continue to grow, you know, tax free. So, and then, and then we've already paid on it.
- [25:35]
Mindy Jensen
It's a great way to start pulling. I mean, if, if I've got a million dollars in my 401k when I turn 73, then I'm going to have to take RMDs against a million. But if I had 3 million and siphoned off enough to skip those taxes, that's even better. So since you quit the supply chain consultant company, wait a second, what did you do with that company? Did you sell it or did you just stop doing it?
- [26:05]
Diana
I just stopped doing it. And you know, and I guess the thing is, is, you know, I've had people say to me, oh, you need to get some employees and you need to, you know, actually be able to sell it as a business itself. Where we sold the business. You know, first we were trying to sell it as a business, but then we just sold it as the land, as the property to a developer who, you know, took up all that concrete and everything and you know, did something, put a shopping center in there. So. Yeah, but, but the consulting part, I just, I just stopped consulting. But, but I still, you know, since then, I have one time in the last 10 years I've, you know, I've had people, you know, always contacting me, trying to get me to, to take on a project. But you know, they want me to, you know, come into a place and work, work Monday to Thursday or whatever. I'm like, I'm not doing like a regular job anymore. So that's been there, done that. But if it's a fun thing. So the one thing I did do a few years ago is somebody asked me to develop some training material and then, and then teach some classes. And so I did do that and I was like, okay, that's fun. But at the end of the day, it really wasn't worth my time and effort either. So I don't have to do it. And it needs to really be something that's, that's worth my time.
- [27:05]
Mindy Jensen
Exactly. I know a lot of people who have retired or retired early and they might do a project that they are interested in, but they're like, I don't need the money for this. So I'm not gonna put, you know, it's not gonna be this like 40 hour a week job or 80 hour a week job. I've got some friends who are like, yeah, I'll, I'd be happy to consult on your little project for another friend, but don't pay me because then I feel obligated to work 40 hours a week and I don't wanna work 40 hours a week. So, you know, let's have a conversation and a couple of hours of chatting maybe, but that's all I want. So I have to ask you this question because I have spoken with several people recently who say, well, I don't want to retire early because I think I'm going to get bored.
- [27:46]
Diana
Which is fair. I was actually. My husband was never worried about that because he, you know, he's always busy working on his little projects and you know, every morning it's kind of like we get up and say, okay, so what's, what do you got planned today? What do you got planned today? And so from his standpoint, you know, he never skipped a beat, never, never had any concerns. I, on the other hand, was more concerned because I really enjoyed what I did and I, you know, and I was afraid that I was really going to miss it. And I was, I'm such a personality person where I was afraid that, you know, if I'm not feeling like I'm contributing or doing something and I'm still every once in a while saying I need to feel like I'm, you know, doing something. Do I do. I volunteer in schools to help educate people, you know, kids on just business planning or financial planning, something like that, because, you know, the financial illiteracy is, is big time, you know, as far as kids understanding or people understanding, you know, kind of all the ins and outs of things. So I've, I've thought about that and I've thought about different things, but, but I really haven't because I've, I've been really busy and so it's you. I was concerned. So now my days are either, you know, like I said, I exercise, I love to travel. So I'm either traveling or I'm planning travel. So, so I do a lot of travel planning, you know, so I, I do really enjoy. We do try to, to get away on at least two to three big trips a year and then, and then a lot of small, smaller trips. So, you know, I spend a lot of time planning. I haven't really missed the work, but I was concerned about it at first, because I wasn't sure, like, what am I going to do with my time? Now I've got all this time, and the day goes by, and it's like, wow, what did I do? And at first, I. First I fe. I needed to have kind of my list of things and felt like I needed to have accomplished some stuff. But I got past that, so it's been great. I haven't regretted it at all.
- [29:23]
Mindy Jensen
Are you at all concerned about the recent stock market fluctuations?
- [29:27]
Diana
That's a good question. I was thinking about that because when it happened to us the first time, and like I said, we had our bucket of money that we had saved, and we weren't. This was, you know, after we were 45, when we were on our, you know, kind of slow fire, whatever, when 2008 hit, I think we lost, like, 40% of our money. And that was. That was pretty sizable. And. But the good thing was, is, you know, I'm not one of those people that gets all, you know, that reacts to that stuff. And so I thought, well, we're not having to touch it, so we're okay because it's there and it needs to grow. And it did. It came back in a couple years, and it, you know, exceeded where we were and, you know, pushed on past it. So. So that was fine. Now it's kind of scared me, too, because now we're actually drawing from it. And now I'm thinking, like, do we need to draw less? You know, do we need to. Because, you know, we are, like I said, 80% of living expenses is coming off of our savings. And I thought, should I diversify and do some real estate? Should we, you know, do some more real estate? You know, get some rental properties or. The. The good thing is with our beach condo is before, when we had it, it was in an area where we lived, and so we never used it. Well, now we live in Orlando, and it's across, you know, on the. On the Gulf Coast. And so now we've actually used it. Every once in a while, we'll go over there and do some stuff on the condo and then spend some time there. So, yes, I thought, well, maybe I should buy another one somewhere else and do the same kind of thing. But we haven't. And you look at the market and I look at our portfolio and say, okay, if I. If it had taken another dip again, 40%, would that, you know, would that really be a major impact on us or. Or now our pot is a lot bigger than it was initially. So you know, hopefully that's not going to be as much of a problem. So. Yeah, yeah, so I do get concerned about it. And, and I guess, worst case. And here's, here's a, Here's a good comment. When we first decided to do this at that point, like I said, our kids were, you know, our kids are adults now. Now they have been adults for a while. They were young. And I said, you know, dad and I are going to leave our jobs. You know, we're going to retire early. We should have enough money to last us until we're into our 90s or 100 or whatever. But if we run out of money, would you take care of us? So that was a funny, you know, funny comment. And they, you know, chuckled and stuff. But then when we started sharing with them a little bit about, you know, where we're at and stuff, they're like, well, then you need to start spending more money, you know, so. Yeah, so, so hopefully, hopefully we should be able. Okay, but, but I've always known, and I've kind of looked at it this way, that if things did really get bad and if we did run out of money or if it was starting to look like we were heading that direction, you know, I said to my husband, worst case is I could be a Walmart greeter and you could work at Home Depot, you know, so, so we could, we could do. We could do something, you know, so.
- [32:06]
Mindy Jensen
But, but of course, if you're really.
- [32:07]
Diana
Old and frail, then that might be bad too. So.
- [32:10]
Mindy Jensen
But also, you are keeping an eye on your finances, right? You're not just fingers crossed, oh, I hope we have money. And I think I was having a conversation with a friend and this subject came up and he said, you know, it's not like we get to a point of financial independence by being frugal and, you know, saving and investing on purpose and then stop looking at our finances. We continue checking it. My husband checks every day because it, like, gives him pleasure or whatever. I don't check because he checks, so I don't have to check. And we talk about it all day, every day.
- [32:43]
Diana
And sometimes, especially when things are as crazy as they are, it's better not. Not to check because I know my husband, you know, he'll say, oh, my gosh, the stock market's down a thousand points or whatever. And I'm like, you know, I don't want to be looking, but. But I do. And, you know, and, and I know, okay, we're down some, but it's not as bad as we were before and we'll be all right, you know, we'll be all right. So yeah, we just have to stay the course and, and not sell when, you know, when things are low and you know, use it as a buying opportunity when you can. And so, yeah, so, so our in our portfolio is invested pretty aggressively because that's how we got to where we were, by being pretty aggressive. My tends to be a little bit more conservative. So we have like our two buckets, you know, our two IRA buckets, you know, his and mine. So his is invested a little more conservative, mine's a little more aggressive and so mine's doing better than his in general. But you know, overall it's, it's doing all right. So that's, yeah. So we just, you know, I do keep an eye but try not to panic, you know, and I also try to look and see are there things that are just not doing well that I need to get rid of that's not going to come back or you know, what's we need to do.
- [33:49]
Mindy Jensen
Okay, we have to take one final ad break. We'll be back with Diana with more after this.
- [33:57]
Scott
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Scott
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- [37:58]
Diana
I think, you know, we got into it because we wanted to have balance and do the things we wanted to do by living the fire life. As far as being financially independent, you know, we can do those things that we want to do. You know, my priority is I want to travel, see as much of the world as I can and spend time with my, my family and my friends. And so if I can do them both together, that's, that's an added bonus if, you know. So a lot of times we will travel with our kids, with our, with our grandkids, and then sometimes we'll travel with friends and that's, you know, that's always fun because then you, when you spend like a week or more with, with some friends, you really get to know them at a whole deeper level than, than just, you know, little visit here, a little visit there. So yeah, so it's, it's been, it's been fun. It's been great. And a lot of our travels too are because we was, we've lived a lot of different places throughout our careers is going back to some of the areas and spending time with friends and, and you know, visit, you know, so visiting new areas, visiting old friends. And so that's all good.
- [38:54]
Mindy Jensen
Last question. What was the biggest mistake you have made on your financial journey and what advice would you give to someone else to avoid that same mistake?
- [39:03]
Diana
Couple big mistakes. One is having too much of our money in 401k, you know, and then having to figure out how to navigate our way out of it again. You know, how to, to, to roll it over or, you know, to move it into other accounts. So, so that was the biggest mistake, you know, so now, you know, I tell my kids is, you know, have some balance. You know, when you can vest in your 401k, you can, you know, max that out, at least get your company match. But then beyond that, you know, if you can't put money in a Roth otherwise and then put it in that or as my daughter, I think she's doing backdoor Roths now, even conversions. You know, she's putting it into her 401k and then coming back and taking it out because she's in higher income bracket so that she can't do it the, you know, buy the Roth individually. So not have too much of your eggs in one basket. You know, in the, like I said in this case here in the 401k is the number one biggest mistake. The second biggest mistake is really understanding the tax implications on your money. So it's, it's not just understanding, okay, I paid this much last year, I paid this much this, this year. But what's the big picture on your overall money and the tax implications of that money? So kind of doing tax planning, and that's not something that most people do. And unfortunately, it wasn't until recently that I've realized that if we would have done a better job of tax planning, like I said before, when we had our small business, that's when we should have been doing the 72T or doing Roth conversions. You know, we should have looked, looked at it when we had the opportunity because our income was, you know, lower or it was, you know, we could manage our income.
- [40:40]
Mindy Jensen
I think that's really key. And I've heard people say, don't let the tax tail wag the dog. And that's, that's great too. It's kind of a fine line. But I love the comment about tax planning. There are just so many things to know, and you don't know what you don't know. So you can't just Google, what am I missing in my tax planning? And then Google be like, hey, here's Mindy. Here's what you're missing. They're not going to, they're going to be like, hey, sorry, sorry, no results found. You know, common tax mistakes might catch a couple, but it's not going to catch it all. You need somebody who can see all of your numbers, all of your scenarios, all of your situations, and say, oh, you could do this. You might be able to do this. And if you do this, then this would apply. I think that's a great tip.
- [41:27]
Diana
No, definitely, definitely. And I, and I think that's one of the things that, that most people probably, they overlook it.
- [41:32]
Mindy Jensen
Don't let your frugal tax tail wag your, your dog. All right, Diana, this was such a fun con conversation. I am so thankful for your time today. I really appreciate it.
- [41:42]
Diana
Yeah, it was great to talk to you and I feel really good about it. I'm, I'm hoping that I can help, you know, somebody else not fall in the same traps that we did. So.
- [41:49]
Mindy Jensen
Yeah, I hope so, too. Yeah. If you're listening, this is the voice of experience. Listen to Diana, because everything she said is 100 true. All right, Diana, is there any place that our audience can find you online?
- [41:59]
Diana
Well, I'm on Facebook, but there I mostly post things. Pictures of my travels and my kit, my grandma, grandkids. And then I'm on LinkedIn. And then I'm also on Bigger Pockets platform as well, too.
- [42:12]
Mindy Jensen
Yeah.
- [42:12]
Diana
So I've got a. An account there, too.
- [42:14]
Mindy Jensen
Connect with her on Bigger Pockets. Are you in the Bigger Pockets money Facebook group?
- [42:18]
Diana
No, I'm not. I probably need to get in there. Yeah.
- [42:20]
Mindy Jensen
Oh, okay. Yes, please go join. It's facebook.com groups bpmoney.
- [42:27]
Diana
Okay, I'll get on there.
- [42:28]
Mindy Jensen
Okay. Diana, this is so awesome. Thank you so much.
- [42:30]
Diana
Yeah, thanks. It was great talking to you. And I'll be hearing you, I'm sure, again tomorrow on during my my morning walk.
- [42:35]
Mindy Jensen
All right, that wraps up this episode of the Bigger Pockets Money podcast. I truly love these conversations with people who have retired before. It was cool before anybody wrote a blog post about it, and I love Diana's story. Thank you so much for joining me. My name is Mindy Jensen. Saying out I zoom bloom.