Everyone wants to reach financial independence as soon as possible. But if you really want to get on the path to early FI, you’ve got to start making savvy money decisions TODAY. And we’ve got a few tips, tricks, and tools that will help you out!

Welcome back to the BiggerPockets Money podcast! In this episode, Mindy and Amanda Wolfe are fielding questions from the r/PersonalFinance subreddit and delivering their best money tips for scenarios that YOU could easily find yourself in. First, we get into 401(k) accounts and some of the different ways to transfer funds when you leave your employer. We also go over some of the different strategies for budgeting, investing, and saving money that will help you reach financial freedom early.

But that’s not all! If you live in an area with a competitive housing market, we discuss whether you should ever waive a home inspection to help sweeten your offer. We even talk about the idea of buying a house outright versus going the route of a traditional mortgage. Is a large car payment thwarting your path to financial freedom? Stay tuned for a few creative ways to get rid of that bad debt for good!

Mindy:
Hello, hello, hello and welcome my dear listeners to the BiggerPockets Money podcast. My name is Mindy Jensen and joining me today is the fabulous Amanda Wolfe.

Amanda:
Hello Mindy. I’m thrilled to be joining you today. We’re here to make financial independence less scary, less just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone no matter where or when you’re starting.

Mindy:
Today’s episode is a what would Mindy and Amanda do. We’ve lurked around the personal finance subreddit and found fascinating financial situations that we wanted to bring to the show today and discuss what we would do if we were in the redditers situations. Of course, big disclaimer, we are not in these situations and we’re only given a limited amount of information about each circumstance. So this isn’t financial advice. This is a financial discussion, financial pontification, if you will.

Amanda:
Exactly, Mindy. On today’s episode we’ll be tackling 401k transfers, home ownership that requires relocation, waived inspections, car debt, and the best path to early financial independence.

Mindy:
All right. Let’s get started with this first question. “I have $76,000 in a 401k from my last employer that I’m no longer with. I left to start my own business. What should I do with the $76,000? Part of me wants to take a portion out to help with the business as I want another truck, but I don’t absolutely need to. I don’t want to pay any fees or get taxed heavily if that comes with taking some out. I’m not the smartest when it comes to investing, so I need some input. What would you do?” So Amanda, let’s hear from you first.

Amanda:
Yeah. First of all, when it comes to a 401k, an old 401k, you have a few different options. You can leave it there. Of course, you risk forgetting about it in the future. Hopefully you’re not going to forget about 76,000 plus dollars, but you do risk that. So that is choice one. The second is to roll it into an IRA. That is usually preferable for most people because then you have complete control over the account. You don’t have to worry about it changing hands or providers or anything like that. So that is usually people’s best option or favorite option I should say, when it comes to what to do with an old 401k. So those are the two main ones in this situation. A third option for people is to roll it into your new company’s 401k, but since you are starting your own business, I don’t know what the situation is with that. So I would say that it’s probably one of the first two options for you in this one.
Now, as far as what I would do with that money, I would not personally pull that out to pay for a truck. So I think I would do a little soul-searching first, which is like do we actually need the truck right now? You mentioned that you’re not the “smartest” with investing. But the one thing to remember when it comes to investing is that your money does best with time. So if you go and take it out, then you’re not going to be able to get that time back and you’re going to interrupt the greatness of compound interest. So in that case, I would not be pulling it out. You also don’t get to put money back into tax advantaged accounts after the fact. So for many reasons I would not be pulling that money out for that. I think I would probably just, like I said, do some soul searching on the truck. Do I actually need it right now or do I just want one? Starting a business can be really expensive. So those are just some things to keep in mind. But long story short, I would not pull it out. What about you Mindy?

Mindy:
I agree with you. I wouldn’t pull it out, but I would pull it away from the employer. So like you mentioned with the rollover, I am going to assume that this is a tax advantage account, not a Roth account. So I would recommend rolling it over into an IRA. A traditional IRA. This is not a taxable event, so you’re not paying any taxes on it, you’re not getting any fees so long as you don’t take possession of the money, you don’t want them to write a check to Bob Jones. You want to write a check to Bob Jones’s new IRA. So make sure you work with your new IRA provider so that you get this handled in such a way that it is not a taxable event. One thing that I get from his note is that he doesn’t absolutely need to pull the money out of the account, so I’m going to go back with you and say then don’t.
He says he doesn’t want to pay any fees or get taxed heavily if that comes with taking some out. You are going to pay a 10% penalty if you pull money out of your 401k. And then you’re going to pay regular income tax on the money that you’re pulling out. So you could get walloped with taxes and fees. I’ve seen people pulling money out of their 401k and having to pay more in taxes and fees than they end up pocketing. So you definitely want to make a smart decision with this. And the best decision is a slow, well-educated decision. One thing he could do because he is a self-employed person, he could open up a self-directed solo 401k and then roll it into there. Then he could take a loan from the 401k instead of pulling money out. This is not a taxable event. There are rules around how fast you have to pay it back.
I believe you have five years to pay it back. If you close down the company, you might have to pay it back sooner. So you’re definitely going to want to do some research into that. But that could be a different way to access the money without pulling it out of the actual 401k. Of course, when you borrow from the 401k, they sell the stocks that it’s being held in and you don’t get to put them back into the stock market until you pay back that loan. So there’s pros and cons for everything. If you’re going to take a loan from your 401k, you should absolutely have a rock solid plan to pay that back.

Amanda:
I couldn’t agree more. And I will say the thing that makes me a little bit nervous about that is to your point of if you close down the company, you might have to pay it back early or it will be considered a withdrawal. And since you’re starting a new company, we know that usually new companies don’t exactly bring in the dough right in the beginning, so that would just make me a little bit nervous. So I think we’re going to probably both agree to go back to the main point of I would not be pulling this money out. And I will also add, I feel like it sounds like a big scary thing to move your 401k because it could be like a lot of paperwork. What if you do it wrong? You mess it up and lose your money. Most firms, like a Vanguard or a Fidelity or a Charles Schwab, there’s actually a button within their platform that is just transfer and you could just transfer the whole account. You just fill out a couple pieces of information and then they’ll move the 401k over for you. So it doesn’t have to be some big headache where you feel like you have this big chore on your hands now. I did just want to give that input on that piece as well.

Mindy:
All right. Let’s take a quick break. After we’re back, we’ll be discussing all cash house purchases and what to do with an unpaid new car you no longer want.

Amanda:
And we’re back. Next up, we’ll talk about what to do when you’ve already bought a new car and roped yourself into a high monthly payment. But first, a question about putting most of your savings into a house purchase. Okay. Let’s go ahead and hit the next question then, Mindy. So this one says, “We’re buying a house soon. We’re buying it outright and won’t have a mortgage, but we worked our butts off to be able to do this. Two jobs, living like paupers, et cetera. It’s out of state and both my wife and I are taking a large pay cut to move. Although we make a lot more money here, we lose it all to the cost of living in general. We live with my in-laws with our two kids, but it isn’t sustainable and her parents are delicate. My wife and I will have $40,000 left in total once the house is bought. That’s everything we have.
“We won’t have much overhead. We will make a combined $90,000 a year approximately, and my mother-in-law doesn’t want us to leave, but she makes some really good points. She says We will be house poor and we will spend all of our money on home repairs, et cetera, and we’re not prepared for that financial burden. I’d like some advice. Is it a foolish idea to leave ourselves with so little savings? Are we stupid for buying a house with most of our savings and not looking for a rental or for staying with my in-laws? I’m worried I’m putting my family in a bad situation. What would you do?”

Mindy:
So what I would do is not buy a house without a mortgage in this specific situation because they have all the money to pay off the mortgage should something happen. But if they put all of that money into the house, all they can do is then maybe get a HELOC or a home equity line of credit to access that money if they have a big unexpected repair. Or they could just put down a larger down payment and take out a small mortgage. Maybe put down a 50% down payment, then you’ve got that cash available should you have unexpected expenses. And here’s a pro-tip, you will have unexpected expenses with a house. But I would encourage them to look in and answer some questions. Things to think about. Why do you want to move? Is it just because you’re currently living with your in-laws? They said their in-laws are delicate, but delicate can mean a lot of things. Delicate can mean that they’re in poor health. Delicate could mean that they’re very difficult to be around.
So I’m reading between the lines here. I’m thinking that maybe living with the in-laws isn’t the most desirable situation for this person. Do they want to move because they want a lower cost of living area? That is totally understandable. Do they want to move because they want their own home? Again, I don’t live with my in-laws. I don’t know that I could for a long period of time. I want to know why they’re paying all cash instead of getting a mortgage. And I really do like the idea of the hybrid so they’ve got the access to the cash. If they just can’t deal with the concept of debt in any way … And there are some religions that don’t allow them to have any debt, so paying cash would be a good idea. Perhaps they could open up a HELOC, the home equity line of credit, which is an account that you can pull from, but you don’t have to pull from until you need the money.
So of course that doesn’t get you around the no paying interest thing if that’s a religious thing. But that could get you access to cash if you need it. Looking back at their jobs, are there any opportunities to work remote for their current job? Sometimes you ask your boss if you can work remote and they’re like, “Nope. No can do.” And then you’re like, “Okay. Here’s my two-week notice.” And they’re like, “Whoa, whoa, whoa. Let’s talk about this remote thing.” So maybe there’s an option that just hasn’t been given yet because they haven’t given notice yet. And what are your expenses? Is that $90,000 going to cover it? It seems like this is almost a desperate move than a calculated move. They did save for a really long time. It sounds like they’ve been planning to do this. But it doesn’t seem like this is the most well-thought-out plan. Like we have to own a house, so we are going to pay cash for it because we hate debt and we are going to march towards this journey or this destination and we’re not going to think of any other way to get there.
So I would just encourage them to think of different solutions that might help them get to a similar outcome without being house poor. Being house poor is a really terrible position to be in. Is the house new? Is the house newer or is it a fixer upper? Those are things to think about as well. If you bought a house that doesn’t really need a lot of work, then maybe having less of an emergency fund isn’t such a big deal. Amanda, what do you think?

Amanda:
Yeah. I think you totally nailed it in all the aspects. First of all, I want to commend them for living with the in-laws in the first place. I’m assuming they did that to probably save some money and that is huge. I feel like a lot of people would not be brave or bold enough to do that, especially with kids. So good on you for doing that and setting up a plan to actually save the money and get to this point in the first place. But like Mindy, spending all of your money on the house, you really don’t have a lot left for any unexpected things. Your roof blows off or you need a water heater. Those are several, several thousand dollars worth. What if something happens with one of your jobs? How much is daycare in the area? To Mindy’s point, all of these expenses in a new area, I think you just have to explore.
So I also like the idea of just putting some down and then having the money because I know that it could be a religious thing like you said. The other thing is people who have a lot of trauma don’t like the idea of potentially having their home ripped away one day, and those are the types of people who like to pay off their home early or to pay it outright. So I was thinking of it from the trauma route, which made me think like, you’re right. Why don’t they just put a chunk down, keep it. You have the money to pay the house off if something like that does happen, but yet you’re also in a safer, more cuddly place because if anything goes wrong, you have the money versus having to potentially take debt out later or even the HELOC. So yeah. That’s my opinion on it. But I think I would not go squabble my cash at that point.

Mindy:
Yeah. I don’t like them having so little in savings after buying a house for cash that they don’t really need to buy for cash. Get a mortgage and like you said, they’ve got the amount to pay off should they have some event that requires them to pay it off or they feel like they would have to pay it off. But then they still have the access to the funds.

Amanda:
Yeah. And if it is the religious piece of not being able to pay interest or even earn interest, then I think for me, I would rather have them rent for a year save up more or live with their mother-in-Law, live with the in-laws for a little bit longer. You’ve done it this long. You can do it a little bit longer if you need to. So I think I would go one of those two routes if that’s what the issue is.

Mindy:
Yeah. Oh, that’s a really good point too. Another year with the in-laws to save up even more money. All right. Next up we’re going to talk about car loans. Didn’t even know car loans could go this high. So our redditer says, “I bought a car two years ago through a dealership. I was given an auto loan with Santander Consumer USA for an interest rate of 23.84% APR. I pay $771 a month for my car. I don’t really want to lecture about how stupid of a decision this was. I was naive and clueless about the car buying process and I made a mistake that costs me tens of thousands.” So I want to stop right there and say, we’re not here to berate you for your mistake. And also if anybody else has a negative comment about that, you can email me at [email protected]. Because this is somebody who has clearly recognized that they have made a mistake and frankly, I don’t think that they made a stupid decision. I think Santander Consumer USA should be embarrassed that they are charging such high interest rates on a car loan. But I digress.
“Trust me, I know how terribly stupid of a mistake this was.” Well, we’ve already discussed that. “Anyways, it’s crippling my life as I am a college student and work full-time as well, but I have never been late on a payment.” So hooray, you’ve never been late. That’s huge. “However, something amazing has been offered to me and I am extremely thankful. My mom got a new car and has offered to give me her old one. It’s a Nissan, but it’s only a couple of years old and it’s fully paid off. I am incredibly grateful for her offer. The thought of no car payment and cheaper car insurance is a dream for me. So that leaves me with the car I currently have. My payoff estimate is about $25,000.
“Kelly Blue Book and Carvana have estimated my trade-in value at 14,200 and I want to check and see what the dealerships around here would offer me. But let’s say I take the Kelley Blue Book offer that leaves me with 11,600 left on the loan if I were to sell the car. I have a tax return of just under 1,600 coming in. So that leaves me with around $10,000 left on the loan on the car. Am I better off selling the car and getting a personal loan for $10,000? How should I go about this? I really don’t want to make another mistake. I just want to know the best course of action on how to get out of this mess. What would you do?”

Amanda:
Just to repeat what you said, Mindy, definitely not here to judge. And in fact, I am just giving her all the gold stars and claps over here for recognizing and growing from her mistakes and now she knows. So now we’re moving on up. And now hopefully somebody else who’s listening to this will know that that is an unacceptable interest rate for a car loan. But that being said, I think that that is incredible that your mom has offered you this lifeline if you will, and is willing to help you out with this car situation. So I think what I would do is … There’s a few things to think about here. With the $11,000 that you’re still going to owe … You mentioned you’re in college. When do you graduate? Are you going to also have student loans? What is that going to look like? I don’t know if you’re in your freshman year or your senior year of college. How close you’re going to be and if you have a lot of loans. I would just keep in mind whatever this other debt that you might have to potentially pay every month is going to be so that you are not in the same position in six more months or a year. So that’s something to think about in the overall scheme of things.
But otherwise I do think that … I’m assuming you don’t have $11,000 sitting around because you’ve just had all of your money just bleeding dry with this current car loan that you’re paying right now. I think the personal loan route could be a good one if you can get a decent interest rate. I’m trying to figure out why the interest rate was so high on the car in the first place, and that makes me wonder if maybe your credit was really bad at the time. Is it better now? Because I don’t want you to then go and take a 30% interest rate out on $11,000 or something like that. So that’s some stuff I would think about or maybe your mom will be willing to co-sign. It sounds like you’re a really great borrower if you are making all of your payments on time and certainly this amount that you’d be paying every month would be lower than what we were paying previously. But those are some things to think about. I do probably think that the personal loan route would be the best way to go, assuming that it’s not going to put you in a tough position if you’re graduating from school soon or something.

Mindy:
I love the idea of a personal loan to take care of that extra $10,000. And I’m wondering where they could go to get an interest rate that’s even higher than they’re paying. Again, I am mad at the company charging you this much, not for you signing it. Because I’m sure it was presented to you in a very hidden way. I’m sure they didn’t say, “Hey, this is a horrible interest rate and we’re just going to sign you up for this.” No. They made it sound like this is the going rate, this is how everybody is doing it. I’m just so angry on your behalf. I’m wondering because they are in college … And again, this is specific to this situation. I’m wondering if because she’s in college, could she go and take out a student loan at … Is it subsidized when interest doesn’t start right away? But even if she can’t get a subsidized loan, an unsubsidized loan at a reduced rate, like a six or 8% interest rate would be way better than this 23% rate that she’s paying right now.
So even just getting a lower rate. You take out only what you need. You pay off this 23% interest rate loan and then you start knocking out this next payment. She’s been paying $771, that’s going to crank out the $10,000 in about a year. So if she can continue to make the payment that she’s never missed on this $10,000 loan, I would do that. I would try for a personal loan through a bank or a local credit union. Perhaps her mom could lend her $10,000 or an aunt or somebody that she knows very well or maybe she just goes and gets an actual student loan to cover the cost of this so that she can knock this payment out because that’s just … It seems like it’s bordering on usury laws with an interest rate that high,

Amanda:
Very predatory. Not great. Too high of an interest rate for a car loan for sure. The other thing … I will preface this by saying that this is not something that I would recommend to just anybody. But because she seems to have learned from her mistakes, she seems to be making all of these payments on time and she’s been paying $733 every month. If she could potentially get a 0% interest credit card for a year, year and a half, 18 months or something. That could be an option as well if she had the limit available to her. So I wanted to put that out there too. If she can get a 0% interest credit card, that could be potentially a good fit. But again, not for everybody. If you’re somebody out there with debt and you are just transferring it from one card to the next, you’re just robbing Peter to pay Paul at this point. It might not be a great fit for everybody, but I did want to suggest that one too.

Mindy:
Yeah. I think that’s a great idea. But again, for this specific situation. If you find yourself in a debt situation, we might have different suggestions for you. But hey, if you do have debt and you want to share your specific situation with us, we can leave your name out of it and answer on a future episode of what would Mindy and Amanda do so email [email protected].

Amanda:
Love it.

Mindy:
Next up a quick break. But hang on because after we’re back, we’ll be talking about whether or not you should be waiving a house inspection in a competitive market and what to do when you find yourself in a strong financial position early on in your adult life.

Amanda:
Welcome back everyone. We’ve got two really great questions coming about competitive markets and home inspections and about the smartest path to early financial freedom. Should we go on to the next one?

Mindy:
Yes.

Amanda:
Okay. “Would I be dumb to waive an inspection on this house I want to buy in a competitive market? My wife and I have been trying to buy a house in a competitive market, but we keep losing to no inspection offers. There’s a house that came up where the owners are going through a divorce. It was inspected fully in 2022 when they bought it, and the minor issues that came up were fixed. The house is from the 90s and the roof was replaced in 2008. The furnace and AC are both from 2022. The asking price is fair, and both my realtor and parents are saying that this would be a pretty safe one to waive the inspection on as it’s unlikely anything has rapidly changed since 2022. What would you do, Mindy?”

Mindy:
Well, as a licensed real estate agent for 10 years and somebody who has helped people buy and sell houses for 10 years, I have a mantra about home inspections and it goes like this. If you’re asking if you need a home inspection, you need a home inspection. I have another one. It goes like this. Never, ever, ever, ever buy a house without a home inspection. So let’s dive into those a little bit. The roof was replaced in 2008. That’s 16 years ago. And your roof will typically last about 25 years. So you’re getting close to the end of the roof’s life. Yeah. Of course it still has some lifespan left, but you don’t know that if you don’t inspect it. The furnace and AC are both from 2022. That’s awesome. Do you know why they’re from 2022? Most likely because it came up during the inspection and the buyers asked the sellers to replace that during the process of the home inspection objection.
So when you are waiving your ability to have a home inspection, you are also waiving your ability to ask the sellers to make any repairs or to give concessions for things that are damaged on the property. I’m not saying there’s something damaged on the property, but it’s a pretty good bet that there is something that is broken that you are going to want to have fixed. Another thing. It says it was fully inspected in 2022. Okay. I work with … Well, I work with one home inspector now, but I have worked with several in the past. And the reason that I work with only one now is because Rick, my favorite home inspector of all time, is incredibly thorough, and the other home inspectors that I have worked with are not. So the fully inspected … All the other home inspectors that I used to work with did a full inspection, but their reports … I got a report once that was three pages long. I’m like, what is the point of this? Rick’s reports are 75 pages long and they’re incredibly detailed.
So fully inspected doesn’t really mean anything because you don’t know who the inspector was. If you are a home inspector yourself, you’re a contractor, you’re a DIY kind of person, if you have bought and sold a ton of houses before, if you are super experienced, then maybe you can get away with buying a house without a home inspection. But going back to my first point, if you’re asking, then you should probably get a home inspection. And back in the spring of 2022 when the real estate market was super, super hot and people were buying houses with no inspection contingencies, fast-forward a few months later, all of a sudden the news is filled with these articles of people saying, “I’m so angry that I waived my right to a home inspection because now that I have moved in and made this huge over asking offer and I spent all my cash on my property, I don’t have any money to fix these repairs that I didn’t know I was getting into because I didn’t have a home inspection.” So all of that, very long-winded to say, yes, you need a home inspection.

Amanda:
Yeah. Mindy, you’re definitely the expert here. First of all, I think that BiggerPockets should make a song with that never ever, ever, ever buy a house without a home inspection because that feels very on brand. But yeah. I couldn’t agree more. And I think to your point, that people who were waiving their right to a home inspection and then were spending tons of money on fixing things in this new home that they moved into … I would say if you do go the route, if you decide not to take Mindy’s advice on this one and you go the route of waiving the inspection, you better have some extra cash on hand because you better expect more of the unexpected in this situation.

Mindy:
Amanda, before we get to our last question, I am going to give a little bit of a bonus answer for this one. If you are finding yourself in a competitive market where other people are waiving their home inspection, you can sweeten your deal in other ways. I think that you should always have the ability to inspect a house. I think you really need to know what it is you’re getting into. And this is every house. Brand new houses, existing houses, even if it’s a brand new … Like it’s newly rehabbed, you want to know what you’re getting into. So you can sweeten your offer in a different way. You can make the earnest money be non-refundable. You can offer more earnest money than they are asking for. You can shorten your inspection time window. One of the biggest uncertainties in a contract is it going to close? So if I typically have seven days for a home inspection, I can call up my home inspector and say, “Hey Rick, what do you have available in the next three days?” And he’ll say, “I can get you in tomorrow.” Perfect. I’ll write my home inspection timeframe much tighter and let the listing agent know I’ve already scheduled my home inspection for tomorrow morning. If you can accept my offer tonight, we can get this ball rolling.
You want your agent to be making a lot of conversation with the listing agent. You want your lender to have a conversation with the listing agent and let them know what a rock solid borrower that you are so that you are removing as much uncertainty as possible from the transaction itself. So when you have an inspection contingency, that’s an opportunity for the contract to fall apart. When you have a loan contingency, that’s an opportunity for the contract to fall apart. So as many as you can remove or as many assurances as you can give the seller that you are going to get to the closing table that helps your transaction go smoother. That helps your offer look better in the very beginning.
But also make sure that you are writing the offer that makes sense to you on that property. Because there’s going to be another property that works just as well. And another one and another one and another one. So another rule of thumb that I have is don’t fall in love with a property because you’ll find another one that works just as easily. All right.
Our last question comes from a 21-year-old male graduating college in early May. “I already have a job lined up with a salary of $60,000 a year.” Yay for you. “I have zero student debt.” Hooray. “And live in a very low cost of living area in the Midwest.” Just knocking these out one at a time. “I am currently living with my parents, so I have no real bills. My job doesn’t give me a 401k until after six months of employment. Is this standard, by the way? I’m considering opening a Roth IRA to contribute to while I wait to become eligible for my 401k. Is this a good idea? I really have no clue what to do besides save and maybe treat myself. Basically, what would you do to take advantage of this fortunate situation I am in?” Amanda, I would love to hear from you first and then I’ve got some ideas too.

Amanda:
Yeah. What a fortunate position to be in for sure. I know if I could go back in time … The fact that he even knows what a Roth IRA is and a 401k is at this age is just incredible. Having no student debt. Very fortunate. So we all have problems. Some of us have better problems than others, and this is definitely a problem of where do I put my money right now? So first and foremost, the 401k thing, yeah. I would say it depends on the company, but yes, it’s not totally unusual. I think it’s weird. I don’t get why they don’t just let you do it. But yeah, that is a rule at some places. But in the meantime, you can definitely take advantage of the Roth IRA and just max that out early. And once you get to the point where you are eligible for the 401k, just put as much as you possibly can into that because that does cut off at the end of the calendar year, whereas the IRA can go up until tax day of the following year. So just keep that in mind. As soon as the 401k becomes available to you, start funneling your cash into that even if you’re not done maxing out the Roth IRA. So I want to call that out.
The other investment account that you could potentially be eligible for if you are on a high deductible healthcare plan would be an HSA. Now, maybe you are on your parents’ health insurance still, so you are not going to have to worry about that, but I just wanted to call that out too, just in case you are going to be on their health plan. The final thing that I would say is put as much into your Roth IRA as you can. I would also open up a brokerage account in the meantime too and funnel some money into that. You’re in such a fortunate position to be so young and to really have no overhead costs at all. I would keep doing that for as long as I could. Live at home for a year or two because once you move out, you’re probably not going to want to go back. So take advantage of it while it’s not so, so bad. And just funnel as much money as you possibly can into these investment accounts and you’re going to be in a very cushy position in just a few years. So that is my take on it. What about you, Mindy?

Mindy:
I love all of that. I would go a little bit further and say, start thinking about how much money you want to be putting into your 401k and then put that aside every single month so that it’s not a shock. Right now, you’re going to get paid $60,000 a year. Doing quick math that’s $5,000 a month or 2,500 every two weeks. And that’s not with taxes and whatever. But you don’t want to be getting a check for 2,500 and then think to yourself, oh, I’m going to put $500 a month into my 401k or $500 a paycheck and all of a sudden now you’re living on 2000. So start off by living on less and just put that money into a taxable brokerage account or into your Roth IRA. One thing he said is, “I’m considering opening a Roth IRA to contribute to while I wait to become eligible for my 401k.” And I want him to know that you can contribute to both the 401k and the Roth IRA at the same time. So you don’t have to only contribute to the Roth while you’re waiting for the 401k and then stop once you start contributing to the 401k.
So I do think it’s a great idea. I think he’s got a lot of positive things going on. One thing I want to caution him … He says, “I really have no clue what to do besides save and maybe treat myself.” So what is it that you’re going to treat yourself to? You are 21, you’re making $60,000 a year in a very low cost of living area, so that’s awesome. But what are you going to treat yourself to? A new pair of jeans, a nice work wardrobe, great. That’s something that you’re probably going to need. But a brand new car, a great big vacation, things you don’t really need, that could be financially detrimental. So I would say make sure that the treat that you are giving yourself is nominal at this point in your life. The biggest treat you can give yourself is maxing out your Roth IRA and your 401k when you’re young so that you have all this time for it to grow, and then you’re going to be a batrillionaire when you’re 50.

Amanda:
And batrillionaire is a technical number.

Mindy:
Technical number. Yes. Yes.

Amanda:
But I will say that very valid great points on the treat your self piece. Especially coming off the question around the high interest rate on that car loan. It seems like this guy is decently financially savvy. But I would say also to not be afraid to spend a little bit of your money because it doesn’t seem like you’re going that way. It seems like you’re doubling down on the saving. And yes, especially at your age, oh my gosh, it’s going to go so far. But you’ve already been living with your parents, you don’t have any student loans, that’s great. Go on a trip, go to Europe for a couple of weeks or something. You don’t need to be staying in five star resorts or anything. You’re at an age where hostels should cover it. But I would say see the world. You’re at a place where you’re not tied down with a family or kids. This is such a good time to do it. Your living expenses are so low, you’re in such a great position. So make sure to live a little bit too, is what I would say.

Mindy:
Thank you for that reminder, because I am never in that mindset and I do need to be. That is a goal for me.

Amanda:
Live a little Mindy.

Mindy:
Yes. Live a little. But yeah, live a little, not a lot. At 21, you do still need to be thinking about your future. But yes, you can have some nice things. You can go on a small vacation. Don’t go on a $60,000 vacation.

Amanda:
Exactly.

Mindy:
All right. Amanda, do you know that BiggerPockets Money has a YouTube channel?

Amanda:
Tell me more.

Mindy:
We are closing in on 100,000 subscribers, which I think is pretty cool. And do you know that if you subscribe to the channel, you get up-to-date videos with all of our podcasts, but also you get videos that don’t appear on the podcast feed that are just released on the YouTube channel? So I invite everybody listening and you too, Amanda, to go to youtube.com/biggerpocketsmoney and subscribe to our channel so you can get up to date on all of our podcasts and all of our fire videos.
All right, Amanda, thank you so much for your time today. That wraps up this episode of the BiggerPockets Money Podcast. Can you remind people where they can find you online?

Amanda:
Yeah. You can find me at shewolfeofwallstreet.com. That’s Wolfe with an E. Shewolfeofwallstreet.com. Same handle on Instagram.

Mindy:
Awesome. Okay. Like I said, that wraps up this episode of the BiggerPockets Money Podcast. She is the Amanda Wolfe, the She Wolfe of Wall Street, and I am Mindy Jensen saying goodbye and stay fly.

Speaker 3:
If you enjoyed today’s episode, please give us a five star review on Spotify or Apple. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.

Mindy:
BiggerPockets Money was created by Mindy Jensen and Scott Trench, produced by Kailyn Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.

 

 

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.



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