← ChooseFI | Financial Independence Podcast
ChooseFI | Financial Independence Podcast
Breaking the Mold: How Lexi Redefined Her Financial Goals with ChooseFI | Episode 540
00:43:33
: Episode Summary: Lexi, a first-grade teacher from Las Vegas, shares her journey into personal finance, revealing how finding ChooseFI empowered her financial goals. Initially focused on homeownership, her perspective shifted during the COVID...
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- [00:00]
Brad
Hey, it's Brad. Before we get started with the episode, I wanted to pass along some incredibly exciting news in the Choose a Buy world. As we talked about on a previous episode, Jonathan has spent the last couple of years building something incredible and we actually just rolled it out. This is our brand new Choose a five member site. It's obviously entirely free to sign up for. We're hoping this will take the place of our Facebook groups, both for the main Facebook group and especially for our local groups. So how this is going to work, you just go to our main homepage, choosefi.com and and you will see front and center, register, sign up for an account log in. It's really, really easy. We made it as simple as possible. So right now, Jonathan is building this in public. Every single day he posts an update with the 20 or 30 things that he updated from the last day that people reported that, hey, I want to see this. I'd love to see this new feature. How can we do this? This is the ultimate crowdsourced personal finance website and community. We finally built it. We've dreamed of this since 2017 and we finally have the technology. We are not beholden to Facebook anymore. We can actually send out events and you will get emailed notification of it. So it's not just the 1%. If you get lucky that Facebook shows you the notification. Now for your local groups, when you sign up, you tag hey, I'm a member of this local group. And when your admin sets up an event, you will get email notified so you can't possibly miss it. This, this is so exciting. We already have thousands upon thousands of people that signed up just in the first three days and I expect there to be tens of thousands before very long. So I wanted to jot this off before the episode started. Go to choose ay.com our main homepage and sign up for an account today. Hello and welcome to Choose Ay. Today in the show we've got a really nice episode. We have Lexi, who's a first grade teacher from Las Vegas who is a member of our community for just over a year now. And she reached out to me in response to one of my email newsletters and just told me this incredible story of this path she's been on since finding really finding personal finance and then very quickly finding Choose a fi. And it just has a little bit of everything, including, all right, taking baby steps into I've been a saver. I'm going to start investing in a high yield savings account. Then I'm going to Start investing. Hey, I'm a teacher. I can start maxing out different accounts that I have an option for. Hey, I have questions. Where can I find the answers? Well, I can find them through the Choose a phylocal group. In her case in Las Vegas. There's a lot here and I think really every single person in our community can take something from this. I think you're really going to enjoy this. And with that. Welcome to Choose Fi Lexi. I am so excited to have you here. Thanks for joining me.
- [02:45]
Lexi
Thank you. Thanks for having me.
- [02:46]
Brad
Yeah, this should be fun. So, okay, you just celebrated your 27th birthday, so. I did, yeah.
- [02:53]
Lexi
Thank you. Thank you.
- [02:55]
Brad
And you are crushing it. So you sent me an email. It was a response to one of my newsletters. And I love, I love getting these emails and I just never know what I'm going to get. And sometimes, very infrequently, I reach out to the person and say, hey, would you be interested in coming on the podcast? And yours just jumped off the page to me. So I would love to start from the beginning, which is, okay, you're 27 years old. I think the last you told me you have a net worth around $170,000, which is remarkable. You are a first grade teacher in Las Vegas and your life goal financially was to own a home. But interestingly, that's not the story. And I'd love to hear what's the genesis of your personal finance story.
- [03:41]
Lexi
So I have always been a saver. I've enjoyed saving money and I honestly have always felt the pain of spending. It's never been easy for me, but I never had a kind of framework to think about it with before as like being a value spender or being thrifty. I just kind of thought I was a little cheap. You know, that's what a lot of my friends would have told you or would have told me. But I had just this big idea that I would squirrel away all the money that I could and I would have a home of my own. Like, that was my parents big accomplishment. They're really proud of their house. It's definitely their biggest investment. And my grandparents. And that was kind of my whole money philosophy. I didn't have much else as a goal or as a direction other than to own a home. But that changed a little bit because when I graduated, it was 2020 during COVID and the housing market was absolutely insane. I don't know if you remember that time.
- [04:45]
Brad
I do.
- [04:46]
Lexi
Yeah. Everyone was spending a lot of time in their homes and home Prices, at least where I was, I'm in Las Vegas, were shooting up very, very quickly. We had a big influx of people from other states who liked the idea that Las Vegas had more affordable housing than they did in California or some of the surrounding areas. So my big idea to buy a home didn't work out as well as I thought it would in the beginning. You know, teacher salaries start off pretty low as far as like jobs for degrees go. And I wasn't pre approved for enough to buy any kind of house at that time because my budget was kind of the cheaper homes and those were the ones that people were really jumping on to flip or, or to fix up during that time. Anyway, I decided to really invest in my skills during that time. I went and got my master's degree and I did everything I could to just continue to squirrel away money. I was babysitting, I was tutoring. That's kind of the only, only thing I had in mind. And then once I had built my, my income a little more and I was super excited, I, I went back and tried again to see if I could buy a house this time now that I have more buying power. But at this point, the problem had kind of changed where I technically, on paper, could get a house, but I definitely noticed that it would be a paycheck to paycheck kind of situation pretty quickly. And so I still felt like I couldn't really afford what I thought I could afford at that time. So I kind of mentioned in the email that at this time I happened to find a video online. I think it was the financial feminist. I know you've talked to her.
- [06:31]
Brad
Oh yeah, of course, yeah.
- [06:33]
Lexi
Tori Dunlop. I saw a video on her idea of high yield savings accounts and that started kind of opening my eyes because I gave it a try with all this money I'd been squirreling away for a home for so long, being a saver. And very quickly I saw that my money could earn money for me, which was super eye opening. And immediately I felt so stupid, like, oh my goodness, this whole time my money could have been working for me and instead I'm, you know, getting $10 an hour babysitting jobs on the side or whatnot. So I wanted to know what else I was missing. And at that point I started kind of investigating different podcasts and different books in that area, the financial scheme of things. And your podcast immediately stuck out to me. It really helped change my thinking. Most of all, I think it was very exciting to listen to the other ways that you guys think of money and present money and the idea of time. And suddenly I realized that there are other things that I could be shooting for, there are other goals I could have besides a home. And it could actually be a lot more satisfying, a lot more freeing. And I felt immediately much more empowered because when my only goal was to have a home and it felt out of reach, I totally felt like I was failing with money. And then to hear, oh my goodness, I can be investing, I have all these options. Like, the money that I've been saving up is not just worthless because it's not, you know, buying me a home right now. It can literally be working for me and build this foundation for me to eventually have a kind of wealth of my own and this freedom of my own. And it just totally blew my mind.
- [08:23]
Brad
Wow, Lexi, that is amazing. I mean, that is quite a five story in the first six minutes of the podcast. That's absolutely remarkable. We could probably hit stop right there and call it a day. But I mean, seriously, that has a little bit of everything, right? I think a lot of people get bogged down in that cult of homeownership. Right. Because like you said, this is your parents biggest asset, it's your grandparents biggest asset. They probably talked about it all the time. What a, what an amazing thing. Like, I bought a house in Las Vegas or wherever it was for $15,000 and now it's worth 300 or 500,000. Right? Like, you hear those things, but you don't hear what was the cost? What's the timeline? Are we talking 60, 70 years? Well, all that to say, I think what the biggest thing that you took away from this was a rethink on what life success looks like and what personal finance life success looks like. And I think, like you said, it helped change my thinking. And I think, you know, if you ask me in my heart of hearts, like, what is the one thing that I would want people to take away from choose a buy? It's. It helped change my thinking. So the fact that you said that is remarkable because it really is. It's just, it's a reorientation of everything. And I love that that hits you right away.
- [09:39]
Lexi
Absolutely. And the other half of that is, you know, I'm a teacher and I love teaching. I teach first grade in Las Vegas. It's super fulfilling for me. It's super fun for me. And I always kind of felt guilty in the summers when I had all this time. And I think, oh, what could I be doing? What could I be doing to get some money? And like I said, I'd pick up some of these silly babysitting jobs or you, you know, staying at the daycare. I worked in college for far too long and listening to this and realizing, like, oh, no, this is. This is the real wealth. I have this built in time that so many people would just kill for to, you know, explore my passions and to pursue my health and to go on these vacations. So a lot of rethink. A lot of rethink with the really cool guests on your podcast and the awesome ideas and the reading list that you guys gave me. So thank you, thank you, thank you.
- [10:40]
Brad
Wow. This is. I love it. And right. I think that at the end of the day, for helping, changing thinking is okay. When you have some space financially, when you're not paycheck to paycheck, when you have a net worth like you do, you can actually focus on those other things you just said. Your passions, your health, going on trips and traveling. Right. Like community. I know you joined the choose of my local group in Las Vegas. Like friends and all these things. Like, that's the spice of life. That's what we're doing this for. We're not trying to get to some number. Like, that would be a pretty sorry existence. I think if that was the only goal. I think to me, the goal is, okay, let's pursue financial independence and ultimately get there, of course, but in service of a great life, not in service of a number on a screen. And I love that you're focusing on that great life aspect.
- [11:29]
Lexi
Yeah, no, it's been super helpful. And you mentioned the group. They've been really helpful too, as like, a tool. And the Las Vegas group is starting to kind of have a revival. They're meeting at some coffee shops, and a couple of us went to a free burlesque show. Just an awesome community. And they're super helpful. There were some people in the group that were also teachers, and they helped me with some very specific technical parts of, you know, fixing retirement accounts and stuff. And it's just an awesome group. I'm super excited to be part of it.
- [12:01]
Brad
That's really cool. And I know. So we had way back when, episode 13 with the millionaire educator talked about the unfair advantage that teachers have, which is, again, a funny rethink on. You always hear, oh, teachers aren't paid enough. Teachers, you know, it's a thankless job. And clearly there's some truth to that. I believe teachers should be paid better in a vacuum. Of course, there's always different scenarios and different places in the country. Right. But nevertheless there are advantages. And there's four 3Bs, four 57s. And if you're so inclined, if you're of a 5 mindset, you really can take advantage of that. I'm curious, how have you thought through in terms of like your savings and how you think about like the different buckets.
- [12:48]
Lexi
So with the different buckets. So I started out with my Roth ira. I think I mentioned that in the email too. That one just seemed like the easiest one to start with for me. So I opened that out and I maxed it out for the first time last year when I started listing and I maxed out for this year and then I had a 457 but I was barely contributing to it at all. But listening to, you know, the tax advantages I hadn't realized about, I started upping those contributions every paycheck like immediately. And then it was actually funny because I didn't get to your episode about all the fees that are hidden in some of those 457 yet. And in the Facebook group I posted like, oh, here's what I'm doing with my 457. And now I'm ready to start trying to max out the 403. And here's the account that I used and some of the people were putting crying emojis about oh, you're using the company with the most fees. You have to listen to this episode. You missed it. And I went back and actually switched from Equitable, which is what I was using that when I looked into it actually had very high fees in some. I was in and a teacher in the group helped me get started with Aspire, which was so much better. I can do the self managed way to do it. And so now I'm going to be maxing out the 457 and I'll open up my 403 now. Now that I've got the 457 fixed, but I haven't got both yet. I know. That's the, that's the real secret is when you can do both.
- [14:17]
Brad
Yeah, I mean all in good times certainly, which is it's a nice fortunate place to be that you can essentially double up like most of us think about our 401ks and yeah, you're essentially getting double the space for that in terms of pre tax contributions if you can. Right, right. And I'm not sure what episode that was, but I suspect it was. We had episode 279 about four years ago with Dan Otter from 403B Wise. And I know we talked a lot about teachers and investment options and, you know, complicated and fees and all that stuff. I suspect that was the episode you referenced, but I'm not a hundred percent sure.
- [14:52]
Lexi
It might have been. Yeah, because I had heard the millionaire educator and I was just jumping right in and then thankfully someone said, wait, wait, slow down. You know, you can do it a little better. You got to look, you got to listen a little more. So super helpful.
- [15:05]
Brad
That's awesome. Yeah, it is amazing how fees just really matter when it comes to our investments. We've talked about this so many times in the podcast, but we can't talk about it enough. When you talk about the compounding, we talk about compounding as a good thing, as a benefit. But when you are in essence, your compounding is getting hampered because your overall return is being lowered. And the saddest part, and I know we talked about this with Dan Otter, it's like the people who deserve the best in our community and our society are the people, the public servants. Right. And the saddest part is that it seems like your retirement accounts are the ones that are most fee laden. And that maybe is the single takeaway for a lot of people listening to this is if you are in public service sector, do some research, try to find out what options you have. There might be some that you're just getting killed with egregious fees, but like Lexi, you might have better options. And Lexi, I'm curious, is there anything you could pass along to that person who's listening to this who's saying, like, I don't even know where to start. Like, did you ask colleagues? Did you go to hr? How did you figure out like, hey, I can do these different companies? It sounds like, how did you do that?
- [16:19]
Lexi
So when I actually, when I posted in the local group for the Choose a Phi local group, a teacher jumped right on and he actually let me just private message him and he told me like, hey, check it out, here's the options. But the best one is Aspire. And it's true, I like looked on there, there had been, I think it was Vanguard was on there like way far in the past and they took it off or something. But anyway, and then he let me know the page that I could contact for their website. And when I called up, I said, hey, I just need the paperwork for setting up a self managed account. And I just filled out that paperwork myself. And it was pretty easy. But if I hadn't had the group, it definitely would have been a little harder to find the information. It's a little bit buried. And listening to that episode, I very much felt like I could relate to his story where it was not easy to find the information on starting your account. And so when someone reached out to me, I thought they were from my school district. When they said, hey, don't you want this information on. On retirement? And I was like, yeah, like, I'm not finding this information easily. Like, I would love to know about it. And I literally thought they were from my school district until I listened to the episode and went back and realized, oh, they are just a company. They're an insurance company selling. Yeah, I had no idea this is a product I was getting. And I didn't even realize. So the information you do have to look for, it's not super accessible. It's not like when they hired me, they said, hey, here's how you know the pension works, and here's how the 403s or 457s, they didn't give you any information. You have to do a little bit of digging. But I found the group super helpful because there were other teachers in my same school district that said, here's it, we found it. We put in the work, we found, you know, the company, and the easiest one, and here's the receipts, and it was easy to replicate.
- [18:11]
Brad
Isn't that a cool aspect of having a network or being a part of a community? Right. Is like, you don't have to do the research. And this is not to say abdicate all responsibility. And. And you obviously aren't saying that, but I. No joke. Not an hour before we got on this call, I had a conversation with a friend and I was talking about how this is something that I do in my life is I find I have a trusted network of people that are, you know, great friends of mine. And when I know these people are smarter than me and have done tons of research on whatever the topic. Like, I was literally talking about Paula Pant, who is an amazing podcaster from Afford Anything. She is a, like an expert on I kid you not, sunscreen, okay? Which is so bizarre. And she's gonna laugh if she hears me talk about this, but she's an absolute expert on that. So she gave me, oh, here's the tip on you should be buying zinc oxide, and it should be this and it. And I'm probably going to get the terminology wrong. So, Paula, I'm sorry if I'm messing this up, but. And I was saying, like, this is the joy of having A network is you can rely on people. And I love that you're highlighting the choose of a local groups. So for everybody out there, we have groups on Facebook. So choose a Vatican. ICOM says local, and there are 300 cities across the world. And as of now, as of the day we're recording this, we actually just started creating those groups on our website, which is awesome. So you can just go to choose a dot com. So now we're not beholden to Facebook in any way. We don't have to deal with their algorithm. Just go in the upper right corner and just register, create an account, and then there's a login button. So on our website now, we're going to have all of these groups a ton. We already have thousands of people literally on the first day that signed up, and it's just really exciting. So, I mean, Lexi, I love how you're highlighting, like, hey, just ask the question. Right? Like, instead of like you said before, what else was I missing? Right, right. And it's such a critical question because you don't know what you don't know until you actually do. And how can you know that unless you ask people? Unless, hey, are there any other teachers or whatever, Fill in the blank for whatever job you have. I think that's a brilliant strategy, and I love. I love that you jumped into it so quickly like that. And now it's nice to hear that the Vegas group is coming back too.
- [20:30]
Lexi
Yeah.
- [20:30]
Brad
Yeah.
- [20:31]
Lexi
I think when I first joined, it was a little dormant, but they're really starting to get together. I think there's going to be a book club, which is another aspect of this that I've really loved. All the book recommendations that I've gotten from Choose Fi have been super interesting reads, and I love having a group to discuss it with, too. That's super exciting and fun.
- [20:50]
Brad
That is so cool. Not to put you on the spot, but any. Any books jump out to you that you would recommend to one of your colleagues or friend?
- [20:58]
Lexi
Oh, I think my favorite one recently was the Quit Like a Millionaire. I know it's from a while ago, but I loved her writing style. I loved her voice. I thought the information was amazing. I just really enjoyed it quite a bit. And then the first group from the Las Vegas group that's reading together, they're doing Just Keep Buying. And I read that one, too. Yeah, and that one was really good, too. Putting things in perspective. And I like having a group to chat with about it. There's not too many people in, you know, my normal life Where I'll say, wow, this is a great financial concept. And they'll get excited. So it was exciting to have a group of people that love looking into it too because this is newly exciting to me.
- [21:43]
Brad
That's so great. Yeah, you're, you're making a very good case here for the, for the power of community and our local groups specifically. Thanks for listening to Choose a Vi and for all your support of our mission here. The absolute best way to support Choose a Buy is when you sign up for your next rewards credit card to use our cards page at choose a buy.com cards. I keep this page constantly updated so it should always be the top resource for you. Thanks for being part of our community and for your support. I wanted to go back just real quick to. I couldn't afford what I thought I could afford when it came to the house. And I feel like this is such an interesting thing because a lot of people do go down that rabbit hole of hey, homeownership is the American dream. It's the only way to get wealthy. And you just similar frankly to hey, this person called me up and I thought it was HR basically. And like when you go and get a mortgage and there's nothing wrong with what you did, I mean that's perfectly normal. Right? Like as humans, I think most of us think other people are looking out for us and sadly a lot of times they're trying to sell us something. And I think you have to always look to what are the people's incentives, right? And if the incentives for them are to make money off of you, well, they're usually not going to act in your best interests. And I fear that that happens a lot of times with mortgages as well. Right. Like everyone has an incentive for you to get the most expensive house you can possibly get. But you, because like you said, you crunch the numbers and even though your parents and grandparents had said this is what you should do, you would have been living paycheck to paycheck, even though you could have afforded it technically, quote unquote, we'll say on paper or whatever the mortgage company was telling you. Talk me through that because I think this is it. It's like the small things are the big things in life. Like this to me is the thing as far as I'm concerned, right?
- [23:34]
Lexi
So like one house I was getting very excited about was, was a new build and it they were doing the buy down rates and I was so excited because, oh my goodness, I could have a home. And it's not only going to be mine, but it's new and they're showing me the numbers for year one and I'm oh, okay, yeah. And then, oh, but year two, it goes to this. Oh, and oh, by year four it's astronomically larger. And by the way, did we mention that's not with the HOA or if you're going to pay PMI or, or there is the. What is the sid when you have like a community fee. And when I'm adding it all together, I was like, this house that you're telling me is, you know, 2000 or 2500 ends up being 3000 or 3200 with all of these, you know, once the rate goes to its normal rate after the buy down period with all of these fees. And it just didn't seem very sustainable to me at all. And then looking at, usually when you buy a home, when I was reading about it, it's good to be able to have a couple exit strategies. So like, could you rent it out or something? And I'm looking at these, these little houses that have no yards and they're, they're attached to your neighbor and thinking, could I get 1% of a $3,000? You know, no, I don't think I could, I don't think I could get what I would need to, to rent it out or to make this worthwhile. So even though they would loan me the money and I could sign for the home and technically I could make it happen, it just seemed like, hey, I'm trading a lot of things in my life. Like, I do like to travel and go on vacations and have some flexibility and I do like to save. And I don't want to see my whole paycheck going out the door, even if it is for this beautiful home that no one's even lived in yet. And then the older homes with the rates that are going on right now were honestly not much better. They're very comparable because, yeah, it's just Las Vegas is a great place to live right now. We got sports teams coming, people keep coming and there's a lot of awesome stuff about the growth, but the mortgage prices are certainly growing as well, very quickly. Faster than, faster than I was super comfortable with. So I was very excited to stumble upon a lot of this information, especially at the time when I found it so that I didn't sign for something that was a little bit more than I could chew or more than I'd be super comfortable with later on in my life.
- [26:04]
Brad
Yeah, and I love how you talked about Exit strategies. That's such. Such an interesting way to look at it. And, and what you did was to, I guess, quote Charlie Munger, who's quoting somebody else named Jacoby. I think it was invert. Always invert is what he said. So what you did was you took, as we talk about in, in real estate investing, the 1% rule, right. So if a house costs $300,000, you should be able to get about 1% of that price in rent per month. So that would be $3,000. Now, most places that really, most people want to live, it is very difficult to get 1% rule. It's almost impossible. And that's what makes it, what's so interesting about it. And we just think, like, because again, we've all been led to believe real estate is the best investment there is. Right. Like, you always hear this nonstop. It's this cult of homeownership. But realistically, if you're getting 1% per month, that's a 12% gross return total on top of foreign expenses. And then there's all of your expenses, all the normal property taxes, insurance, all these things. Maintenance, property management. If this is just an investment. So if you get half of that gross return, that's only a 6% return. And then you're banking on appreciation. So, Lexi, that's even if you could get the 1%, which, like you said, there's no way on earth I can get the 1% based on what you were looking at. Right. So it's like when you inverted it and said, hey, does this actually make any sense? Or am I maybe being, like, led to believe something that is not entirely true? So I just, I wanted to slow down on that. Cause I think it's just absolutely brilliant.
- [27:45]
Lexi
Yeah. And then the houses that. That was like the, the new build I was looking at, but some of the ones I was looking at that were older homes too, I would not realize until later on some of the issues. My dad luckily has a background in construction. And so sometimes I'd get so excited, oh, but look, this looks like a great deal for the, the area or something. And he'd come in and say, well, this is why it's a good deal. It's going to need a lot of money to fix up. And so that was another aspect that I don't think I had considered ever until I was getting super into this. Is a lot of these homes end up needing massive repairs and it's going to come out of pocket most of the time. So it was just a lot more of an expense than I had initially conceptualized when I thought, oh, well, I'll just, I'll just buy a house, I'll just squirrel away my money and someday it'll be enough for home, right?
- [28:38]
Brad
As if that were the only goal. And I think that, again, is, is that helped change my thinking. Part of, hey, what does a holistic financial life look like? Right? And I'm sure you've heard me say something to the effect of, if your home is your biggest investment, like everyone else has led us to believe and you're pursuing fi. Something has gone terribly wrong. Like there's, there's no world where your home will ever be your biggest investment. If you are pursuing financial independence. It's just not the way it works. Because the way that we get wealthy. And I'm talking about your single, your primary residence. For anybody out there yelling at me right now, this is. If you're a real estate investor, that's a separate thing. Let's be clear. Right? But we're talking about your single, your, your primary residence. I mean, Lexi, we invest money. And that's what's so fun about it. We invested in the market. I know you talked about High Yield Savings Account as your kind of gateway drug to investing. And, and I think as someone who is unnecessarily hard on himself, you said the words, I felt so stupid. And, and I just want to say, like, you were highly, unnecessarily hard on yourself there and again from one person to another. But it's easy to feel that way when, like, you feel like you missed something. But again with the, you don't know what you don't know until you do. None of us learn this stuff, right? Like, we don't learn personal finance. And I mean, you found it, it sounds like in your. Around 25 or thereabouts. And I mean, there are a lot of people who aren't finding out anything about personal finance until they're in their 50s and beyond. Even so, I mean, I know it feels frustrating that, like, hey, why didn't I learn this when I was 17? But I mean, you're nailing it. So I just wanted to, to give you a little kudos there. But talk to me about, like, hey, I found, like, this money is earning money for me, and how good does that feel as opposed to. And it's not to presuppose that you're not. You can't babysit anymore. But, like, you know, when you're looking at, oh, wow, look at how much money this money's earning Me, as compared to all this random hustle that I'm doing. Maybe I could upskill a little more like you talked about. So, anyway, I'm going on a little long here, but I'd love to hear your thoughts on the couple things that I just talked about.
- [30:44]
Lexi
No, absolutely. I definitely have a complete mind shift about the value of my time. And. And it's from some of the books that, you know, we've been reading, some of the conversations that I've had. But, yeah, I used to take on $10 an hour babysitting jobs. I'd have three kids. I'd get off work from working with kids all day in school, and I would go to someone's house and be helping their kids with homework for, you know, $10 an hour or something. And then as soon as I saw my High Yield savings account would be, you know, making me a similar amount just sitting in that account instead of my old bank account, I was like, oh, my goodness, how have I been missing this? And definitely just the growth. Once I started making switches to investing, my net worth was growing so quickly and faster than it was when I was doing all this extra work, you know, using my time after class. And I did cut some of that extra stuff out. I do tutoring if it's through the school.
- [31:45]
Brad
Okay.
- [31:46]
Lexi
And I do any paid trainings I can. I'm still always hustling for anything that'll get me credit for my next raise because I think that's a better investment for my time. But I did, I did cut out a lot of the other things because I saw, wow, my money is literally working harder than me just sitting in the right accounts. Or once I. I'm putting it in this Roth or I'm putting it in this High Yield, and I don't have to, you know, be helping out, cleaning the daycare center, or, you know, changing diapers after work. This is so much better.
- [32:19]
Brad
That's amazing. And, yeah, that's the cool part is you haven't stopped. The side hustles, you haven't stopped. But you can allocate your time better and wiser, and I love that. So it's just a reorientation of, like, how do I value my time? And I think that's a cool aspect, frankly, of being on this path to being wealthy. Right. And, like, you have this money now working for you. So I'm presuming that, okay, you were this diligent saver, right? You were saving for the down payment. But before the High Yield Savings, I suspect it was Just sitting, earning virtually nothing at that point, right?
- [32:54]
Lexi
Oh, absolutely. And I had no concept. It was just I was putting it in a normal, normal savings account that was making me a couple pennies a year, probably like nothing. But it was what I had been saving, had become a significant egg because I, you know, was working towards this goal and I was a natural saver anyway. And so as soon as I just switched that allocation from making me nothing to. And I think when I joined in, it was pretty high percentage rates too. I don't remember exactly what it was. And the rates are still pretty good right now.
- [33:26]
Brad
Yeah, they're not bad. They're around, you know, 4% and change a little bit.
- [33:29]
Lexi
Yeah, I could see the difference immediately. As soon as I moved it over every month when I would get the little statement of what I was making, it just felt amazing. It felt super exciting. I felt like I obviously am missing some things and. And I'm gonna go search for what they are.
- [33:45]
Brad
Heck yeah. Oh, that's so great. So, right. Naturally you don't stop at a high yield savings, right? Like that's not the, the ultimate goal for investing your money. How did you. So you read books and pod and listened to podcasts like ours and others certainly. And I'm assuming you learned about investing in the market and low cost index funds and things like that. But talk me through that and then how you started shifting if I'm not sure. Did you do it in a lump sum? Are you doing it over time? Like talk us through, like the nuts and bolts of how you're doing that?
- [34:17]
Lexi
I wish I could have just done it in a lump sum because everything I read said, oh, you have this big, you know, egg you're sitting on. Just put it into the market and it's going to do the best work that it can for you. But I just, I've been doing it bits and pieces at a time because it's hard to change all at once. It's easier to change a little bit at a time. But I am getting better at it. And from now on, like I said, my 457 is all set up and so now that's just going to be automatic. I'm not going to have to think about it. It's just going to be out of my paycheck and where it needs to be. And then once I set up the 403, then that'll be even easier as well. But yeah, I've been doing little bits at a time, little bits at a time. But it gets easier because the more I'm seeing my money work for me, the more excited I am to continue to put more in. So, yeah, My, my net worth is. Last time I checked, it's about 1 90, which is like, crazy for me to conceptualize because, yeah, it's been growing so much faster now that it's growing instead of sitting in an account.
- [35:18]
Brad
Oh, that is so cool. I mean, that is, yeah, really, what compounding is all about. I mean, it's. It's both compounding, but it's clearly a significant savings rate too. Right. These, both of these are necessary. And it sounds like you're just nailing it on both sides. And, and the cool part is, you know, again, you think about compounding and then the concept even of, like you said at the beginning, you love teaching.
- [35:42]
Lexi
Yes.
- [35:42]
Brad
Right. Like, it's a passion of yours. So you're not looking to run away from a job. You're just looking to get more financial space. And you think about Coast Phi. Right. And okay, I'm going to keep working because I love it, but my money is going to work in the background. So, I mean, you think about, like, $200,000. We're going to round to $200,000 of net worth at 27 years old. I mean, Lexi, that's remarkable. And then nine years from now, most likely again, with an 8% return, you would expect it to double in nine years. 400,000 another nine years, 800,000, another nine. So 27 years from now, it'll be 1.6 million or thereabouts. Right. So at 54, when most of your colleagues are not even close to retirement, even if you save zero more dollars between now and 54, there's a really high likelihood, assuming, of course, that 8% annual return, which is not like a straight line thing, but over the long term, you're going to have $1.6 million as if you save zero additional dollars. I mean, Right. Like, have you reflected on something like that?
- [36:46]
Lexi
Yeah, that is. That is so exciting, so empowering. And also just having the options, because I am super passionate about teaching and I absolutely love it. And I also don't ever want to be one of those teachers that continues to do it once. I'm not, because I've seen that too, where there's some teachers that have been so, so burned out and, you know, they probably shouldn't be in that profession anymore, but they are stuck. And so it's really freeing, too, to think, like, I am going to be the best teacher I can be and I'm going To be so enthusiastic for my kids. And if there's a day where I'm like, you know what? This is not for me, I'm never going to feel afraid to walk away from it either. So that's all exciting things.
- [37:28]
Brad
That is super exciting. So Lexi, talk me through you. Obviously you talked about a Roth IRA and then the retirement accounts, 4:57, 43B. But clearly it sounds like because you were saving for down payment, you had a lot of money sitting in like a regular, regular account. So not under any of those umbrellas. How do you think now going forward in terms of like a split between the tax advantaged vehicles or the retirement type vehicles versus after tax savings? So the reason why I ask is assuming, let's say you have $190,000 net worth, it sounds like a significant portion of that is in either high yield savings or your regular taxable brokerage now. So like, does that give you more flexibility to really go for the 403B and the 457B or how do you think about that?
- [38:19]
Lexi
I definitely think I'll feel more comfortable having much smaller paychecks because they're going to be all going into those accounts. But it won't feel scary to me because I have these savings to fall back on. And again, before I never realized how much we do pay in taxes, so I didn't realize what an awesome opportunity these accounts were. I definitely am going to prioritize them over the brokerage account because I think one of the books it said that the second biggest expense in many people's lives are their taxes. And I had never even considered that. So it's exciting that as much of that that I can put into my account, growing and working, I would love to do that. And then because I have that savings to fall back on that I'm paying my bills from, I won't need my paychecks to be extra cushy. I can put as much as possible and really max those accounts out.
- [39:13]
Brad
Yeah, that's cool. I think that's one of the tenets of the FI community is control what you can control. Which I think for a lot of us means, hey, if we can control our tax rate by putting into these pre tax vehicles like a traditional IRA, regular 401K, or again these 403Bs, 457s, that gets us a tax deduction today. And then when we go to take the money out many years from now, what happens is that's technically a taxable event. But if we have our expenses under control, if we've paid off a mortgage maybe, or have low rent or whatever, have no car payments and your life doesn't cost that much, well, you can pull that money out and sure it's technically taxable, but we get this massive standard deduction on our tax return. And there might be a scenario where you can pull out most of your life expenses every year and pay a tiny, tiny, tiny little amount of tax on it, which is just like, again, like a, a total rethink on, hey, how do I actually do this? So yeah, I like that you're prioritizing that. And of course for everybody out there, it always depends on what your, what your income is. If you're making a significantly low income, it might make more sense to put into a Roth IRA or Roth accounts because that's after tax now. So you're, you're paying the tax on a lower rate. So we can never give blanket advice. Of course, you always have to look into your situation. But I think for a lot of us, these pre tax vehicles, Lexi, like you're prioritizing make a huge difference. So really like that, I wanted to double back real quick to your living situation. So, you know, for many, many, many years you've been told that homeownership is, is the only path to the American dream. And I'm putting words in, in your family's mouth, obviously, but that's what society tells us. So where are you now? Are you renting? Are you living with family or friends? Or what are you, what are you doing?
- [41:07]
Lexi
So I'm renting. I have a nice little three bedroom house with a big yard and a garage that's much larger than the houses I was looking to buy and I'm paying significantly less for it. And I'm actually rooming with a cousin of mine. So we're sharing expenses and it's super nice. He is new to Las Vegas, so this is a newer, newer thing and it's been really nice. So we're sharing expenses. We have more space than I definitely would have had if I had gone the purchasing route. And I'm super comfortable and I think I, if I had ever stopped to think about it, I would have realized like, hey, actually I really love this house that I've been renting for quite a while and I'm super comfortable here and I love the community. But I just kept looking at these houses to buy that maybe I didn't like the neighborhood as much. I'd probably have a smaller space. A lot of the newer houses or the houses around Me, they don't have yards, which has always been important to me. I love my bonfires. I go for, you know, walks, whatever. I like being outside. And. Yeah. So if I had ever stopped and really thought about where I was living, my home I'm renting is checking a lot more of my boxes than some of the ones I'd be able to purchase. Wood for me.
- [42:29]
Brad
Isn't that amazing? Right? And that's what's so wild, is, you know, you can live in this scenario. You can live where you want in a nicer, bigger house and share expenses with your cousin now and get wealthy in the process, because you're not paycheck to paycheck like you would have been. And this is not to say that homeownership is bad or, you know, we're not trying to paint that picture at all. But it's just like you said at the outset, it's just expanding your thinking, and it's just looking at a problem a little bit differently. And, hey, maybe this thing that everybody tells me, it might be true for them, maybe. But hey, what if this other option really works well for me? Why can't I keep doing that? So, yeah, I really. I love that. I absolutely love that. And sometimes it's hard. You know, like you. You alluded to before. Like, hey, maybe there aren't that many people I can talk about in life by personal finance, but I found my choose of my local group, and it's the same deal. Like, it's hard to talk to family about this stuff because they've been thinking one way forever, and maybe you found something a little bit better for you. And I just think. I think that's really important, and I did want to slow down on it. It's like, that's not easy, Lexi. I mean, you know that, right? Like, that's not easy to do. And I think sometimes we all take it for granted, but we're living a different lifestyle than a lot of people. Even though it doesn't feel like we're doing anything different or extraordinary, but we're getting pretty extraordinary results. And that's. I think that's what's so fun about it.
- [43:53]
Lexi
No, absolutely. Yeah. And I so appreciate just having the framework to think about it, because it really made a huge flip for me in so many ways, and I really appreciate it.
- [44:04]
Brad
Lexi, this has been amazing. I love your story. I love your story from the second you emailed me, and I'm so glad you reached out. I'm so glad you came on. I love your enthusiasm I love how you've just jumped into this with two feet and I mean, you are crushing it. You should be so incredibly proud of yourself and this path you're on. It's remarkable. Like, we just painted the picture before. You're a coast Fi with this amazing, you know, this job you love. And I strongly suspect that you're not gonna. You're not gonna take 27 years to reach FI. I think with your savings and everything you're doing, you are really, you're just so far ahead of the game. And I just wanted to. So thank you for sharing your story with the community.
- [44:44]
Lexi
Thank you so much for having me on and for just building such an awesome community that people can get excited about. And I really appreciate it.
- [44:51]
Brad
Awesome. All right, everyone, the call to action. If you haven't joined a local group, Lexi just painted the best picture why you should do it. So choose a vet.com local or like I said, just go to our website, choose a vet.com and at the top right corner you can create an account and it'll ask you to select your local group. And the cool part now is our website will email you when your local group sets up new events. So it's not, oh, did I log into Facebook? Did Facebook show it to me? With its silly algorithm, you just get notified. I think that is the killer app. And not to mention there's a ton of community going on in our site. So I think it's really going to be a game changer. So with that, thank you for listening and thanks for being part of the choose it by community.
- [45:34]
Jonathan
Thank you for listening to today's show and for being part of the choosefy community. If you haven't already, the best ways to get involved are first, subscribe to the podcast. So you're listening to this on a podcast player, just hit subscribe and then subscribe to my weekly newsletter. I actually sit down every Monday and write this by hand and I send it out Tuesday morning. So just head over to chooseify.com subscribe and it's really, really easy to get on the the newsletter list right there. And I would greatly appreciate it. It's the best way to get in touch with me. You can actually just hit reply to any of those emails and it comes directly to my inbox. So that's the way that I keep a pulse of the community and how we keep this the ultimate crowdsourced personal finance show. And finally, if you're looking to join an in real life community, we have choose a VI local groups in 300 plus cities all around the world. So head to choose a vi.com local and you'll find a list of all of Those cities in 20 plus countries all across the world. And if you're just getting started with FI or you have a family member or a friend who you think would be interested, two easy ways choose a Fi episode 100 is kind of our welcome to the Fi community. And even though it's a couple years old at this point, it still stands up. And it's a really great just starting point to get an understanding of what is financial independence. What are we doing here? Why are we looking to live a more intentional life where we save money and use it as a springboard to live a better life? And then choose a VI created a Financial Independence 101 course that's entirely free? Just head to choose a vi.comfi101 and again, thanks for listening.