#60 – Live-In Flips & FIRE: How to Build Wealth, Avoid Taxes, and Retire Sooner With Bigger Pockets’ Mindy Jensen

Wes Moss [00:01:00]:
And she’s done this for, I don’t know, 20 some years. Buy a home, renovate it, but live in the home while she’s doing so. These are big projects she undertakes. Well, they’re not all massive projects, but it’s a big life project because she’s living through it. We’re going to sit down and talk with Mindy about her strategy and how she does this and how she approaches real estate. Mindy Jensen, Bigger pockets. What’s up? How you doing?

Mindy Jensen [00:01:25]:
Hey, Wes. I’m good. How are you?

Wes Moss [00:01:27]:
I’m good. I want to talk about real estate. I want to get your perspective on a couple of different areas of real estate. But we’re here at fincon. We’re in. The reason you’re in Atlanta is because of fincon. When did you first go to fincon? Because I remember I still say it’s a financial bloggers conference and there’s no such thing as a blogger anymore because I guess that’s where it started maybe 10 or 15 years ago. That was the medium that was.

Mindy Jensen [00:01:51]:
And I used to describe it as a financial blogger conference as well. My first Fincon was in 2013 in St. Louis and it’s.

Wes Moss [00:02:00]:
And it evolved. Well, that’s. So it’s been over a decade and it’s just evolved from blogging obviously to financial media because now any blogger would have, should or probably has a podcast. They do multimedia, they’re doing YouTube, they’re doing social media. So it’s really evolved into financial media. Is there a particular theme this year at fincon? I don’t know if I remember themes.

Mindy Jensen [00:02:24]:
I think it’s just growth. Growth, how to grow your YouTube channel, how to grow your audience on your podcast, how to grow your social media following, how to just be better at presenting your content.

Wes Moss [00:02:36]:
Yeah, And I think it goes back to so much of it. I guess the simple answer is have great content and make sure it’s, it’s really important. It’s helpful, it’s presented in a clear way. But then there’s, it’s more than just that. I mean there’s probably small podcasts out there that are amazing that just haven’t caught on. And that’s, and that is, I guess, the business side of financial media. You can have an amazing podcast, it’s really good. But it’s still hard to break through because there’s over a million podcasts.

Wes Moss [00:03:06]:
What do you think in the past decade or so has been what has worked that you’ve told your audience about, you’ve talked to your audience about. If somebody had been really listening to, to your kind of your story and trying to do something similar, what’s worked out, do you think the best for your audience if they, if, if they were to have listened to kind of how you’ve done real estate for real estate wise.

Mindy Jensen [00:03:29]:
Okay.

Wes Moss [00:03:29]:
In their lives? Yeah.

Mindy Jensen [00:03:31]:
What has worked out? For me, my primary method of investing in real estate is called the live in flip, where I move into a house that is my primary residence, but it’s a very ugly house out, you know, etc. And I fix it up with my husband over the course of at least two years and then we sell it and we are paying no capital gains taxes because it’s our primary residence in the section 121 exclusion of the tax.

Wes Moss [00:03:59]:
Code says the two year rule.

Mindy Jensen [00:04:01]:
The two years, two out of five years, you must live in it and own it for two of the last five years. And then you can sell it and pay no capital gains taxes up to $250,000 per person on title. So there’s usually two of us on title up to $500,000. We’re actually on this, this current flip, we’re going to hit up against that $500,000 in profit.

Wes Moss [00:04:25]:
So it’s a good problem to have.

Mindy Jensen [00:04:26]:
Yeah, it’s, it’s a great problem to have people who complain about tax bills. Like I have a big tax bill, that means you made a lot of money. It’s not like you made $10,000 and you’re paying $10,000 in taxes. If you’re paying $10,000 in taxes, you made a whole lot more than $10,000.

Wes Moss [00:04:39]:
Right.

Mindy Jensen [00:04:40]:
So. And I mean I enjoy having roads and police and fire services and you know, things like that. That’s, that’s really great schools. So I appreciate that my taxes are getting paid and going to community things. However, I don’t want to pay more than I have to.

Wes Moss [00:04:54]:
Sure.

Mindy Jensen [00:04:55]:
So this is a great exclusion that I take advantage of and that is how I invest in real estate. And what makes it such a great.

Wes Moss [00:05:02]:
By the way, can you add someone else as primary and make bump in another 250? I’ve never thought about that.

Mindy Jensen [00:05:08]:
Yes, you can.

Wes Moss [00:05:09]:
Wow.

Mindy Jensen [00:05:09]:
And there’s some rules around it. Like you could be on my title. So Now I have 750,000 in excluded profits.

Wes Moss [00:05:17]:
But again I would technically have to be living there just like.

Mindy Jensen [00:05:20]:
But it would have to be your primary residence.

Wes Moss [00:05:21]:
Got it.

Mindy Jensen [00:05:22]:
And I’m not going to invite you to move in, but let’s just say that you did. I would also have to split that profit with you. So I take 250, my husband takes 250, you take 250.

Wes Moss [00:05:36]:
If there’s 750 in profit.

Mindy Jensen [00:05:37]:
Yes. If there’s 750 in profit and I’m probably not going to hit the 750. But what I can do is put my daughter on title because she’s about to go to college. She will still technically be living there. That’s her primary residence even though she’s living away at school. So now I’ve got this exclusion and then I just give her.

Wes Moss [00:05:56]:
Does she have to be 18 in order for that or not?

Mindy Jensen [00:05:58]:
I don’t think so.

Wes Moss [00:05:59]:
Okay.

Mindy Jensen [00:06:00]:
She. The, the real estate ownership laws. You can own real estate, but because you’re not 18, you can’t sign a document and be held liable for that. I’m not an attorney. Consultant attorney, yada yada. But she couldn’t sign a purchase and sale agreement to purchase it and then be held liable to purchase it. But she can be on the title.

Wes Moss [00:06:21]:
But really for being practical, if you’re doing a house at a time, it’s hard to have any sort of property go up by 500 grand in just in, in that short period of time. And, and this has been a really good real estate market. So it’s kind of. This might be one of your better ones ever. Is it because of. Well, it’s a combo. Right. It’s a.

Wes Moss [00:06:42]:
How are you doing the renovations? How was the property that you originally bought? And you’ve probably had a real tailwind just in. In general real estate market. It’s hard to find a real estate market that hasn’t had a pretty good couple years.

Mindy Jensen [00:06:53]:
Exactly. And in 2022, spring of 2022, the Fed said, hey, we’re gonna raise rates but they hadn’t raised them yet. And everybody who was thinking about investing was like, well, I’m gonna jump in and grab a property. And that caused prices to go up.

Wes Moss [00:07:07]:
Right.

Mindy Jensen [00:07:07]:
Because you can buy a house for $750,000 at 2% interest and have a much lower interest rate than like a $500,000 house at 7% interest.

Wes Moss [00:07:19]:
Right. Or. Or a payment. Payment.

Mindy Jensen [00:07:21]:
I’m sorry. Yes, payment. Your monthly payment. Your monthly mortgage payment. So people did that math ahead of time and said, well, I’m going to buy a house. So we had a huge tailwind that pushed up the price of the house or pushed up the value of the house. We also bought it really, really low because compared to the rest of the neighborhood because it had a pool. And I live in Colorado.

Mindy Jensen [00:07:42]:
We don’t have a long swimming season.

Wes Moss [00:07:44]:
People actually do not like pools in Colorado.

Mindy Jensen [00:07:47]:
Not in Georgia, in Florida, in Texas, California, Southern California. A pool is a selling point. In Colorado, it’s a detriment. So coupled with the fact that it was a very outdated house, the people who we bought it from smoked in it for 40 years. I don’t think they ever opened a window. It was just this really awful, awful presenting house.

Wes Moss [00:08:09]:
Yeah.

Mindy Jensen [00:08:09]:
So good. Good area, good location, great area, great location. It was kind of like a house.

Wes Moss [00:08:17]:
Out of a horror movie.

Mindy Jensen [00:08:18]:
Yeah. Almost.

Wes Moss [00:08:19]:
Spider webs. I’m thinking, like bats are. Bats are flying around. Stunk.

Mindy Jensen [00:08:24]:
Yeah. I was there for 30. 30 minutes. I had to go home and change my clothes and take a shower because the smoke smell was so strong. But you can get rid of that smoke smell with an ozone machine that costs $80 on Amazon.

Wes Moss [00:08:37]:
Well, and then you’ve got to repaint everything and you’ve got to say, so tell me, so how deep was this particular renovation and how. Or how deep is it?

Mindy Jensen [00:08:44]:
Usually this renovation, there isn’t a wall we haven’t touched, but we didn’t pop the top and add a second story, which I have done in the past and have no interest in doing in the future. But this one was ozoned. The whole house. Rip out the carpet, replace floors, repaint walls. I had wallpaper that I had to remove. That’s a.

Wes Moss [00:09:08]:
That’s really, really difficult.

Mindy Jensen [00:09:10]:
Yeah. The next time I find a house that has wallpaper, I am going to just put new drywall on top. It was such an awful experience to pull this off. But, yeah, there’s. I’m going around. New doors, new windows. It had a new roof. We added solar panels just because my husband really likes solar panels.

Wes Moss [00:09:29]:
Would you not like solar panels?

Mindy Jensen [00:09:30]:
Well, no, I, I do, but I would not have done all of the research.

Wes Moss [00:09:36]:
He likes solar panels.

Mindy Jensen [00:09:37]:
I mean, if you want to know about solar panels, you call him up and he will talk to you for.

Wes Moss [00:09:41]:
150 hours straight because I do not have them. Does it power? Is your electric bill virtually zero?

Mindy Jensen [00:09:48]:
My electric bill is zero and I actually make money off of it. But there’s. There’s some circumstances that surround that, that make it worth it for us to have solar panels. So we live in Colorado. Colorado advertises that they get 330 days of sun a year. We have very strong sun because there’s a mile less of atmosphere between my solar panels and maybe yours down here. Yes. My electric company pays me retail rates for my excess as opposed to wholesale channels back.

Wes Moss [00:10:23]:
So they take the excess.

Mindy Jensen [00:10:24]:
They take the excess and then pay me what I would pay them. So I don’t know what my kilowatt hour is. It’s pretty low to begin with. But let’s say I pay a dollar a kilowatt hour. They pay me a dollar a kil hour for my excess. So there’s a lot of places, a lot of electric companies will only pay you wholesale rates. So you’re paying a dollar when you need it, but they’re only paying you, you know, 25 cents when you’re.

Wes Moss [00:10:47]:
So you’re getting a check every month, or is it. Do they give it to you once a. Once in a while? How, how often do you get money from them?

Mindy Jensen [00:10:53]:
So every calendar year, all of my excess builds up, and then at the beginning of the next calendar year, they credit me towards other city utilities like water and sewer.

Wes Moss [00:11:04]:
Wow. Okay. So you did solar panels. You did the heavy cosmetic. Yes, heavy cosmetic, but not a full blown. You didn’t have to add an addition. You didn’t. What’d you do with the pool? Fill it in with concrete?

Mindy Jensen [00:11:17]:
Not yet. It still works. But when we go to sell it, we will fill it in. We’ll jackhammer the bottom and fill it in with dirt and make like a grass area because we, we also took out all the grass. Colorado is a desert. We don’t get a lot of rain.

Wes Moss [00:11:32]:
So you don’t have green yards where you are. It’s more like a, like an arid backyard with pebbles and stones.

Mindy Jensen [00:11:39]:
And some people do. We took all the grass out and just put in rocks because it is a waste of this water to water my grass that I then have to spend time cutting again.

Wes Moss [00:11:49]:
When you do your renovation, you. The cost of the renovation though, also goes towards the basis of the home. So when you, when you say you’re pushing up on the 500, 000 level, that’s 500 above whatever you had to put into the house.

Mindy Jensen [00:12:02]:
Correct. So I bought it for 365. I probably have a hundred into it. So now we’re at 465, the house around the corner. It’s a kind of a cookie cutter neighborhood. So the exact same model sold for 850.

Wes Moss [00:12:16]:
So yeah, you’re getting close.

Mindy Jensen [00:12:17]:
We’re getting close. And at first I was like, this is going to be awesome. That’s my new goal, to pay taxes. And then I learned from a friend, a tax professional friend, your base, who said you can add somebody else to the, to the title.

Wes Moss [00:12:29]:
Add somebody else.

Mindy Jensen [00:12:30]:
Oh, that’s even better than paying taxes. Is not paying taxes.

Wes Moss [00:12:33]:
Yeah, it’s smart.

Mindy Jensen [00:12:35]:
Legally.

Wes Moss [00:12:35]:
It’s a really smart way to do it.

Mindy Jensen [00:12:36]:
Yeah.

Wes Moss [00:12:37]:
I immediately think you’ve got this house. It was a wreck. Now it’s probably gonna be awesome. Do you kind of wanna stay there though, now that you love it?

Mindy Jensen [00:12:47]:
So this is my 10th live in flip and it is getting a lot more difficult to be like, wow, I can’t wait to move into another crappy house.

Wes Moss [00:12:56]:
Especially after it’s like exactly what you want.

Mindy Jensen [00:12:59]:
Yeah, I have a nice house right now, so why would I wanna move? So we’re, we’re really considering where’s the next place we’re going to move to.

Wes Moss [00:13:06]:
Learning to let go. Learning to leave your love behind by Mindy Jensen so you’ve gotten good at it, but it’s not like it’s easier. It’s, it’s getting harder for you to do this.

Mindy Jensen [00:13:17]:
Yeah, I’m getting older. You know, every year I get older and I’m not so excited about moving into a dumpy, stinky, gross house.

Wes Moss [00:13:25]:
It’s a live in and flip. So you have to be. If you’re a listener of the podcast and you’re thinking, hey, I’d like to do this. It’s got to be an area that you like as well because you’re, you’re literally living in it. Let’s talk about income investing. One of the things we love about real estate is the idea of, of the cash flow that can be created. Now you’re doing it in a, in a pretty unique way where you’re living, renovating, flipping, and then of course there’s rental real estate. Have you ever been in the rent, own rent and would you ever think about that? Or what’s your advice for folks looking to do that?

Mindy Jensen [00:14:01]:
So I have done that in the past and my advice is make sure that the property cash flows when you buy it. Don’t count on appreciation because it may or may not appreciate, but make sure that it’s renting, it’s making money on for you right now because otherwise you’re buying yourself a job that doesn’t sound like any fun at all. And then something’s going to go wrong because that’s how real estate works. Something always breaks, so you’re going to need to be able to cover that. I have done that in the past. I do have one rental right now. It doesn’t make a lot of money. In fact, it’s pretty much break even.

Mindy Jensen [00:14:35]:
And if I really dove into it, I’d probably be losing money. But I want to eventually move into the house. It’s right next door to a friend. It’s on a golf course. It’s in my same neighborhood, but it doesn’t work for my family as it is right now. It’s a smaller house. It’s kind of a weird layout. So once my children graduate from high school and.

Wes Moss [00:14:54]:
But in that cash flows fairly well though it.

Mindy Jensen [00:14:57]:
No, it doesn’t cash flow at all. But the reason that I bought it is because I want to move into it. And if I.

Wes Moss [00:15:02]:
You’re not running it right now.

Mindy Jensen [00:15:03]:
I am renting it, but it’s just breaking even. Like my mortgage is 3500 and I rent it for 3500.

Wes Moss [00:15:09]:
Okay. So it’s barely breaking even.

Mindy Jensen [00:15:11]:
Yeah. So.

Wes Moss [00:15:12]:
But that’s okay because you have your eye on it for the future. Does it need a big renovation?

Mindy Jensen [00:15:16]:
We already did the big renovation. So when we bought it, it was the weirdest house ever. It had a horrible layout and horrible finishes. So we fix the finishes. You can’t really fix the layout unless you redo the whole thing. So we fixed all the finishes and now it’s a nice. We rent it out month to month because the HOA rules don’t allow for short term rentals. We rented out month to month just to cover the mortgage so that we can hold onto it while we’re waiting to move into it.

Wes Moss [00:15:41]:
More money matters straight ahead. If you’ve ever done a Jane Fonda workout or if you remember as a kid, Rocky running the steps, and if Michael keaton is still Mr. Mom to you, then guess what? It’s officially time to do some retirement planning. It’s Wes Moss from Money Matters. Weren’t those the good Old days. Well, with a little bit of retirement planning, there are plenty of good days ahead. Schedule an appointment with our team today@yourwealth.com that’s y o u r your wealth dot com. What’s been a negative surprise as you’re trying to fix something up?

Mindy Jensen [00:16:22]:
Oh, cast iron pipes rot from the inside out.

Wes Moss [00:16:26]:
You looked at the pipes on, on a project and thought, oh, they look pretty good.

Mindy Jensen [00:16:30]:
Well, yes. And then you walk into the crawl space and you’re like, why is there sewage in the crawl space? Because the cast iron pipes rot from the inside out. And right now it’s solid. And then all of a sudden it’s no longer solid. And you know what’s going through there? All of the waste from the house.

Wes Moss [00:16:47]:
So this happened on a home.

Mindy Jensen [00:16:48]:
This happened on my second to last home. Yeah. Luckily we had like an, an 18 gallon tote down there that I don’t even know what’s a tote, like a plastic bin. Okay. We had it down there and we. I don’t remember what happened, but there was, it was on the ground. And then we also were able to like stick this tote under there and catch a lot of it. How do you get this out of the crawl space? I mean, it’s like a four foot crawl space, so you have to kind of hunch over it.

Mindy Jensen [00:17:16]:
Oh, it was. I’m going to vomit just talking about this. It was so disgusting.

Wes Moss [00:17:21]:
Cast iron pipes rotted from the inside, let sewage into the crawl space.

Mindy Jensen [00:17:25]:
The crawl space that was dirt, so it like seeped into the ground and it’s just like there’s the, it’s.

Wes Moss [00:17:32]:
How long and how expensive was that?

Mindy Jensen [00:17:34]:
We dug the dirt out and got rid of it, but also had this giant tub of waste. Waste, let’s just call it waste.

Wes Moss [00:17:44]:
How often do you and your husband have to call somebody in or do you call in the plumbing trade and electricity or do you actually do that too?

Mindy Jensen [00:17:52]:
So my husband’s father was an electrician, so he grew up knowing how to do electric. And plumbing’s not that hard either. He grew up knowing how to do this. But those are the two big ones that people get really scared about.

Wes Moss [00:18:03]:
Sure. I’m scared of the electricity. Yeah.

Mindy Jensen [00:18:05]:
And that’s fine. There’s, you know, call an electrician and have them come. But he knows how to do that, so it wasn’t a big deal for him. We tried to get a plumber to come to our house. This is actually how we learned how to do all this stuff. My husband was like, oh, look, the bathtub is leaking into the crawl space in a different house. I’m going to call a plumber. And the plumber said, yeah, I’ll be there on Tuesday.

Mindy Jensen [00:18:26]:
And he never showed up.

Wes Moss [00:18:28]:
Showed.

Mindy Jensen [00:18:28]:
We’re calling him and he’s not there. And he’s like, I’m just going to figure it out myself. So this is before the Internet. He goes to Home Depot and he buys the like home improvement 1, 2, 3 book and figures out how to do the plumbing and fixes it for. It was like a 25 cent part. He’s like, I’m not going to hire anybody else. I’m just going to.

Wes Moss [00:18:47]:
You guys have gotten better and better at the craft of renovation.

Mindy Jensen [00:18:52]:
Yes. Because really it’s not that hard. And now nowadays you have YouTube University. You go onto YouTube and you say how do I change out my whatever. How do I repair this? How do I do that? And they will, there will be like 5,700 videos for you to choose from to learn how to do it. You watch a couple of them and you see the same thing over and over. You’re like, oh, I could do this now.

Wes Moss [00:19:13]:
Yeah, it is kind of incredible how much education there is. Just like what we’re talking about here. This is real life with Mindy about live in renovate Flip Talk to me on fire. You you guys talk about the fire movement on bigger Pockets. Recently there was an episode where you guys were kind of talking about more of a normal quote normal financial independence retirement timeline. What’s the state of fire and what is the state of you guys in in your audience talking about different ages.

Mindy Jensen [00:19:46]:
What we have discovered is that it takes approximately 10 years from the time you discover financial independence. The concept and are around a zero net worth to the time that you reach financial independence. You can do it in about 10 years.

Wes Moss [00:20:04]:
And give me a quick sketch of that. So I’m asking Mindy GPT tell me how to do zero to financially independent in 10 years.

Mindy Jensen [00:20:15]:
Okay. First you need to know how much you are spending every month or year. Let’s. Let’s go monthly. You need to know how much you’re spending monthly. Let’s call it $3,000 a month. That means that if over course of 12 months you need $36,000. So and then the way that the 4% rule works.

Mindy Jensen [00:20:34]:
Bill Bengan 4% rule says that if you take your annual spending times 25, that’s your, that’s the amount of money that you have to have you then.

Wes Moss [00:20:43]:
Produce what is technically 4%.

Mindy Jensen [00:20:45]:
Yes. That will produce 4%. So with 36,000, I like to round that up to account for some of the lump, lumpier expenses. That, that’s 40,000. You’ll need a million dollars in a, according to the 4% rule, a 60% stocks, 40% bonds portfolio. That should last you approximately 30 years.

Wes Moss [00:21:07]:
Yeah, I, I would contend that, that at least 30 in a lot of cases. It’s kind of in perpetuity. Yes, but hold on. So people are supposed to go from zero to a million in 10 years?

Mindy Jensen [00:21:16]:
Yes, I think it’s absolutely possible. If you are saving and investing, you’re not in, you’re not saving.

Wes Moss [00:21:23]:
Have you found these are pretty high earning people?

Mindy Jensen [00:21:26]:
Not necessarily. These are median income earners. Let’s talk 60, 70, $80,000 a year and up. But you know, when you make $150,000 a year, you’re probably spending a lot more than that. So a median income earner can reach at or close to their financial independence number within 10 years, that is. And that’s over. Like I’ve talked to 500 and something people on my show and everybody has an approximately 10 year timeline. Some people have done it a little bit faster.

Mindy Jensen [00:21:57]:
Some people, you know, earn a higher income and are investing more. Some people are investing in different ways. Maybe riskier or not risky is not the right word. More, more, more opportunity. Aggressive. Yeah, aggressive. That’s the judgment.

Wes Moss [00:22:12]:
But again, it’s worked out for them because it is. I mean, if you think of it, if you’re making 70 grand a year, even if you’re saving half of that, if you’re saving 35, you’re even in 10 years, you’re technically only stashing 35 grand away. It’s only 350. So it’s got to have some pretty serious appreciation. So these are, these people are not just saving, they are investing and they’re investing aggressively.

Mindy Jensen [00:22:36]:
But.

Wes Moss [00:22:37]:
And it’s been a pretty good 10 years.

Mindy Jensen [00:22:39]:
It’s been a pretty good 10 years.

Wes Moss [00:22:40]:
Now if we for real estate, for the equity markets, household net worth is at an all time high. I was just looking at the chart. We are the richest we’ve ever been as a country. Number one is equity and real estate. Number two is 401k. So it makes it, it now, it doesn’t mean that the next 10 years somebody could necessarily do that, but it’s certainly possible.

Mindy Jensen [00:23:02]:
It is certainly possible. And past performance is not indicative of future gains.

Wes Moss [00:23:06]:
Well, and the other thing, Mindy too, you’re also picking pretty low spending numbers. You know, for Somebody that I think is a huge, this is a big variable like that doesn’t work. If somebody needs 10 grand a month.

Mindy Jensen [00:23:17]:
Well it does. But if you need 10 grand a month, you are presumably making more than.

Wes Moss [00:23:23]:
What’s the number? 10 grand a month. So it’s 120 times 25. Yeah. You need 3 million.

Mindy Jensen [00:23:29]:
3 million, yeah.

Wes Moss [00:23:30]:
Which is also a lot to get in 10 years.

Mindy Jensen [00:23:33]:
It is a lot to get in 10 years, but you can do it. I have lots of stories of people who have done that. Presumably if you’re spending 10,000, you’re also making more than 10,000amonth. And, but it’s also a choice. If you make $100,000 a year and you spend 90,000, it’s going to take you 10 years to save up or nine years to save up another one year of spending. If you make a hundred thousand and you spend 50 every year, you’re making two years of spending. So know what you spend, make sure what you’re spending is in alignment with your values and what you want and then aggressively cut out things that don’t align with what you want to spend money on.

Wes Moss [00:24:15]:
So if I’m looking at financial independence for this, again, presumably younger group, they have their spending super in check and they have a huge savings rate. But the other big maybe misnomer around fire is that people are done working. That is not the case. Right. It is financial independence. Retire early doesn’t necessarily mean these people are not working in some capacity. Right?

Mindy Jensen [00:24:41]:
Correct. So I am financially independent. I still work, but I choose to work. I don’t have to work. My husband on the other hand, chose not to continue working because he didn’t love his job. I love my job. I get to talk all day long. I mean, you know.

Wes Moss [00:24:56]:
Yeah, pretty sweet, kind of fun.

Mindy Jensen [00:24:58]:
Yeah. But he didn’t get to. He was working for the VA blood bank and choosing like writing software that helped keep people alive. Well, if it helps keep people alive, there’s the opportunity to make them not alive as well.

Wes Moss [00:25:11]:
So he super high stress.

Mindy Jensen [00:25:13]:
He had a very stressful job. I don’t have a very stressful job, so I choose to continue working. But you’re right, most people who are disciplined enough to get to financial independence don’t just walk away. So what’s the age? You see the age I’m seeing anywhere from like mid 20s to 40s, 50s. It’s, it’s all range.

Wes Moss [00:25:34]:
Mid 20s.

Mindy Jensen [00:25:37]:
Come on, how is that possible? High paying jobs, really great investment strategies.

Wes Moss [00:25:44]:
Low expenses, money from mom and dad.

Mindy Jensen [00:25:48]:
That’S not typically where I’m seeing their money coming from.

Wes Moss [00:25:52]:
Although you’ve seen it some.

Mindy Jensen [00:25:53]:
I mean, I’m only getting the story that they choose to tell.

Wes Moss [00:25:55]:
That doesn’t count. That doesn’t count towards fire. You can’t inherit money. That doesn’t count. Okay. All right. Well, again, I haven’t seen a ton of it. The folks that I worked with and we’ve got over 4,000 families we work with in my investment firm and I guess there are plenty of folks that wouldn’t have to work if they didn’t want to.

Wes Moss [00:26:17]:
But it’s somewhat rare for me to see a 35 year old that has a couple million bucks.

Mindy Jensen [00:26:23]:
Come visit.

Wes Moss [00:26:23]:
Yeah, you’re in Longmont, Colorado.

Mindy Jensen [00:26:26]:
Yeah. Come visit.

Wes Moss [00:26:27]:
We’re not in Silicon Valley. We’re not in. There’s plenty of tech in the Southeast, but it’s, it’s not. I worked for a company, got options and got to a million bucks. You’ve seen some of that too, right?

Mindy Jensen [00:26:39]:
I’ve seen a wide variety. I have seen people who, you know, really hit the job lottery and you know, oh, I worked at Google and then I got all these, you know, stock options. Great. I know people who work at Tesla, they’ve got a ton of stock options. That works out really well. But also that’s not where I’m seeing most people. What I’m seeing, it is very tech heavy. I’m seeing a lot of computer programmers who are coming in, they’re making 100, $200,000 a year.

Mindy Jensen [00:27:05]:
They’re saving time, spending very little.

Wes Moss [00:27:07]:
Right, right.

Mindy Jensen [00:27:08]:
It really is your savings rate.

Wes Moss [00:27:11]:
Well, again, I would say we’re a little bit more. The folks that I’ve worked with for so many years now, a couple decades are a little more millionaire next door and they typically, they may get there by 55. I think the ages have gotten younger of folks that I see ever since I wrote you can retire sooner than you think. Used to be when I was early in my career it was people 60s plus. Nowadays it’s, it’s not uncommon to see mid-50s, early 50s and even some folks that are late 40s. But again, I’m not Longmont, Colorado. I haven’t had a 25 year old come into the office with a couple million bucks just yet. Okay, last question.

Wes Moss [00:27:47]:
Tell me about the middle class trap.

Mindy Jensen [00:27:50]:
I’m so happy you asked this. Okay. The middle class trap is somebody who has a good income and they have done their diligence, they have started investing in their 401k. They’ve got a great house with a lot of equity in the home and that’s where their money is. They didn’t do after tax investments. They don’t have a brokerage account, they don’t have a lot of buckets to pull from. When you pull from your 401k home.

Wes Moss [00:28:16]:
Equity or in a less tax friendly 401k.

Mindy Jensen [00:28:22]:
Yeah. The bulk of your wealth is in a pre tax 401k and your home equity. So on paper you have a lot of money, but you don’t really have a lot of access to that money. Especially now. A couple of years ago you could get a home equity loan for like 3 or 4% and interest and then you have access to that equity. Let’s say you have $700,000 in equity in your house. If you borrow against that, you’re pay 8, 9% interest huge on that. That doesn’t really make that a really enticing way to pull money out.

Mindy Jensen [00:28:51]:
And your 401k, you can’t pull money out of that until you are almost 60. Almost 60 or you are paying penalties, you’re still paying taxes on it no matter what. So your money on paper looks great, but in reality you don’t really have access to it.

Wes Moss [00:29:09]:
And, and when you do it can be a big chunk of it goes away in taxes and, and fees.

Mindy Jensen [00:29:14]:
Penalties for accessing it early.

Wes Moss [00:29:16]:
Early. So how do you solve, how do you solve for that?

Mindy Jensen [00:29:21]:
Well, I have 401k money. I also have an after tax brokerage account. I have Roth IRA money, I have home equity that I’m just not going to touch. And until I sell the house and I have multiple buckets to choose from. So a way to get out of that or a way to, to not get yourself into that is to focus on Roth 401k contributions instead of traditional 401k contributions at an earlier age, presumably you’re going to be making more money. So if you’re in your 20s, you should absolutely be maxing out all of your accounts in the Roth version if you have access to it and then also contributing to an after tax brokerage account so you can pull money.

Wes Moss [00:30:03]:
You’ve been able to do some of the home sales you’ve made, you’ve been able to diversify and put some of that into an after tax account and then use the rest for the next property so you haven’t had to continue to roll all those dollars into the next property.

Mindy Jensen [00:30:17]:
I only put down 20% when I buy a house. So even though I sold this house and I could put, I could buy it for cash or I could put down 50%. I’m only putting 20% down to avoid PMI while still having like the largest loan. Again, I have a 2% mortgage rate, so I’m not actually looking to sell that house right now.

Wes Moss [00:30:39]:
Finish the sentence. Living and flipping a house is not for everyone. If you are blank, if you are.

Mindy Jensen [00:30:47]:
Not handy, not patient because you are living in a construction zone and sometimes it’s really awful. It is not for everybody who doesn’t want to move into an ugly house. It’s not for somebody who, who does. You know, there are people who want everything finished and that’s actually beneficial to me, the Live in Flipper, because I am presenting you this beautiful house and you don’t have to do any of the work. You can just move in.

Wes Moss [00:31:09]:
You’re one in 100, maybe one in a thousand.

Mindy Jensen [00:31:12]:
Let’s go one in a million.

Wes Moss [00:31:13]:
You’re one in a million. All right, we’re going to leave it at that. The Retire Sooner podcast with many gents. Thank you for being here and we’ll, we’ll tell folks how to find you, how to find your podcast. What’s the most latest project for you or anything brand new that you’re wanting people to go see?

Mindy Jensen [00:31:31]:
My husband and I are starting a new YouTube series on the BiggerPockets money channel where we’re talking to people after they have reached financial independence to see what is life like in reality versus what they thought it was going to be when they retired.

Wes Moss [00:31:48]:
That’s cool. Mindy Jensen thank you for being here, Wes.

Mindy Jensen [00:31:52]:
Thank you for having me. It’s always fun to talk to you.

Wes Moss [00:31:54]:
You can find me the whole team, easy to do so@yourwealth.com that’s Y-O-U r wealth.com have a wonderful rest of your day.

Disclaimer [00:32:08]:
This is provided as a resource for informational purposes and is not to be viewed as investment advice or recommendations. This information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. The mention of any company is provided to you for informational purposes and as an example only and is not to be considered investment advice or recommendation or an endorsement of any particular company. Past performance is not indicative of future results. Investing involves risk, including possible loss of principal. There is no guarantee offered that investment, return, yield or performance will be achieved. The information provided is strictly an opinion and for informational purposes only and it is not known whether the strategies will be successful. There are many aspects and criteria that must be examined and considered before investing.

Disclaimer [00:32:56]:
This information is not intended to and should not form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment tax, estate or financial planning considerations or decisions. Investment decisions should not be made solely based on information contained herein.