$100K by 23, Coast FI by 27 Thanks to One Smart Money Challenge

Mindy:
Today’s guest is KFI at age 27 based on her father’s incessant money, conversations, and a challenge to her after she graduated college to save $100,000 by the age of 25. Hello, hello, hello, and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen and joining me today, today is the she Wolf of Wall Street. Amanda Wolf

Amanda:
BiggerPockets has a goal of creating 1 million millionaires. You are in the right place if you want to get your financial house in order because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.

Mindy:
Today’s guest is a future millionaire. All thanks to her Dear old dad, I met her dad at a recent meetup on a road trip, and when he shared her story and her net worth and her age, I knew I had to talk to her, not necessarily for my regular listeners, but for their kids. So if you have a teen or a college-aged child or even a recent graduate in your life, this episode can literally change their financial future. Please recommend it to them and listen to it with them. Today we’re going to cover how you can get started investing in college or even earlier, the rule of 72 and the power of compound interest, and how to start saving for retirement today, even if it’s just $5. This segment is sponsored by BAM Capital, your path to generational Wealth. With premier real estate opportunities, see why over 1000 investors have invested with BAM capital at biggerpockets.com/bam. That’s biggerpockets.com/bm. And now back to the show. Lisa, welcome to the BiggerPockets Money podcast. I am so excited to talk to you today.

Lisa:
I’m excited to be here. Thanks for having me.

Amanda:
Okay, so Lisa, let’s dive right into the beginning. So growing up, what was your life like financially speaking? Did your parents talk about money with you?

Lisa:
Yeah, I would say from a pretty young age they started talking about finances and the importance of saving money, and then as I got older into high school when I got a car I needed to start paying for gas and stuff like that, that’s when they started talking a little bit more about saving up and having the finances to pay for gas and whatnot. And then that just grew as I got more jobs when I was in college and then after I graduated and got my first full-time job.

Amanda:
So they were pretty much, they were openly talking about it as well as kind of handholding you through some of those decision-making processes when it came to your money is what it sounds like. Yeah,

Lisa:
Pretty much. Yeah. My dad, I would say it’s one of his hobbies to invest, and so he reads lots of books and stuff and he just passed on that knowledge to me and really helped guide me through the saving part of my journey.

Mindy:
What was your net worth when you graduated from high school and then from college?

Lisa:
I don’t remember what it was. When I graduated from high school, it was probably only a few thousand dollars, but then once I graduated from college, it was probably around $15,000. And then in high school that’s when I really started investing. That’s when I opened a Roth IRA at 18. I initially just put in a thousand dollars into that and I think my parents matched that $1,000. And then every year after that I contributed $2,000 until I got my first full-time job and that’s when I started maxing it out.

Mindy:
And how did you pay for college?

Lisa:
My parents were great and they decided to invest in me and I was really fortunate that they decided to pay for my tuition.

Mindy:
Okay. That’s the same with me. My parents paid for my college tuition as well, which is a really huge gift, but that’s still starting basically college, graduating college, you had a $15,000 net worth. So yes, there are people who graduate college with negative net worth because of their student loans. So you did have a bit of a headstart there, but not really overwhelmingly you had $15,000. When did your dad give you this challenge? Was it upon graduation or was it after you got your first job?

Lisa:
He gave me the challenge after I got my first job. I think he gave me the challenge in October after graduation.

Amanda:
So what did that pitch from him look like to you? Because I feel like that sounds like such a daunting amount of money, especially to somebody so young. So did he just walk up to you one day and was like, Hey, Lisa, save a hundred thousand dollars girlfriend by 25 and you’re going to be set for life, or what did that conversation look like?

Lisa:
He texted me a podcast. It was actually about negotiating salary with Tori Dunlap, and in that podcast she said something about her own goal of saving 100,000 by 25. And so he texted me and he is like, do you think you can do this? I gave it some thought and I was like, gosh, I have no idea. I haven’t even thought about that. I’m just thinking about saving money, not hitting any particular goal. But the more that I thought about it, I was like, I think I can achieve this before 25. And I actually got there by the age of 23.

Amanda:
Oh my gosh.

Mindy:
Yeah, no, she’s no joke. So at age 23 you had $100,000, and how old are you now and how much do you have now?

Lisa:
I am 27 now and I have about $350,000 net worth.

Mindy:
So at age 27 you have $350,000. I’m going to go with the rule of 72 math here, which is not a guarantee. It is a rule of thumb. It is a guesstimate. Essentially every seven or eight years, your money will double assuming a 10% return. I personally think a 10% return is fairly easy to accomplish. So I believe in the rule of 72, but your mileage may vary and this is not investment advice and past performance is not indicative of future gains, blah, blah, blah. But anyway, here we go. At age 27, you have $350,000. So at age 35 you’ll have $700,000, approximately age 42, 1 0.4 million to the double comma club. Age 50, you’ll have 2.8. Age 58, you’ll have 5.6. And are you ready for age 66? Just a year after retirement, you will have a whopping $11.2 million. But wait, there’s more. What kind of account is this in Lisa?

Lisa:
Most of it’s in a Roth.

Mindy:
A Roth, so that’s 11.2 million tax-free dollars. That’s on the lines. It’s not quite Peter Thiel’s 5 billion in his Roth IRA. But this is a really sweet amount of money to have in a Roth IRA and that is taking into account you never putting another dime in. I am so excited for what your possibilities are. And I’m guessing you’re not going to stop contributing to your retirement accounts, is that correct?

Lisa:
That’s correct. I am currently maxing out everything possible, so I max out my Roth IRA, I max out my Roth 401k, I max out my HSA, and then I’m also contributing to my employer share program that they offered this year. So I’m taking every avenue to continue to save as much as possible. That

Amanda:
Is so insane to me. That is absolutely amazing. I’m losing my words here right now. So cool. And honestly, it’s so inspiring, especially because it’s not like you started out making $500,000 or something. I mean, you were making a very solid salary that a lot of people out there are making and you were just saving a lot of money. But I did have a question. Do you feel like you ever were missing out on fun things that your friends were doing at these ages in your early and mid twenties because you were saving so much money? Did you ever feel like you were missing out?

Lisa:
I definitely felt that way right after college when I started my internship and went into my first full-time job, I was living kind of out in the middle of nowhere, so I knew a couple people there from college, but not a whole lot of people, and it wasn’t a place that had all the fun things like going to concerts and professional sporting events and something like that. So I did feel like I was missing out on part of it. And then also covid hit. So in Washington we were all locked down, stayed inside pretty much, so that really allowed me to save up a lot of my money because my expenses were pretty much just for rent and groceries.

Mindy:
This is so awesome. Are you also contributing to after tax brokerage accounts or are you focusing mainly on your retirement accounts? Right now

Lisa:
I’m focusing mainly on my retirement account accounts, but I do have a brokerage account and I also have a couple of high yield savings accounts for bigger purchases, like a new car and stuff like that.

Amanda:
Lisa’s taken out no debt. She’s even cashflow in her car, it sounds

Lisa:
Like. Yep. Yeah, I bought my car in cash. One of my grandma’s friends was moving and she was looking to sell her car, so she offered it to me for a pretty good deal. I wasn’t really looking for a new car, but I knew that I was going to in the next few years, so I ended up buying that and now I’m just saving up for the next one.

Mindy:
Amanda, do you know what I’m hearing from Lisa? She’s thinking, she’s thinking ahead. She’s contemplating what she’s doing. She’s taking information in from dear old dad, hi dad, and letting it simmer instead of just like, Ugh, dad, not again. I don’t want to hear this.

Amanda:
Well, I think that the other really, really good thing though is from at least what I’m hearing is the way that her dad is approaching her, right? So Lisa, it sounds like it wasn’t like he was shoving this information down your throat. He was meeting you where you were at, and so you finding somebody who was similar to your age and had the a hundred thousand goal, a hundred thousand dollars goal by 25, I think probably made it a lot more relatable and it made it more your decision, which is I think where the intentionality came from. It wasn’t a big chore that had been put on you.

Lisa:
Yeah, he definitely has made it very easy to go to him with questions or get advice. I mean, even just a couple weekends ago, I was asking him for advice on my HSA, I had it in a money market, and he’s like, well, you can make your money work for you more by putting it into V-T-S-A-X, and I couldn’t figure out how to do it, so I went to him and he helped me move it over.

Amanda:
So wait, so I want to kind of bring it back to the salary and all of your different retirement accounts and investment accounts. So what is your current salary now because you’re maxing all of these accounts out at 27, which is absolutely crazy. How much are you making now?

Lisa:
I’m currently making $108,000 salary with a 10% bonus.

Amanda:
So you’re making close to $120,000 all in and you’re contributing 34, and that’s before taxes, almost 120,000, but it’s before taxes, and then you’re contributing almost 34 or a little over $34,000. So I mean, I’m sitting here doing the math after taxes. Do you have any money for rent after all of this? After taxes and investing? How do you have money for stuff? I mean, again, it goes back to intentionality, but yeah, that is a very big chunk of how much you’re making of your overall income.

Lisa:
Yeah, I would say the largest part of my income is going to saving and investing and then going to rent and groceries and stuff like that. And I’ve always been a natural saver and it’s been really hard for me to spend money. So that’s something that I’ve been working on over the past couple of years. I’ve gotten into skiing the past couple of years and getting a pass for that is really expensive. It’s about $2,000 and the first year that I bought it, I was like, oh my gosh, I can’t believe that I’m spending $2,000 at one single time for something. But the way that I justified it was number one, it’s something that I grew to really enjoy. And number two, I do the calculation at the beginning of the season like, okay, if I go on weekends, this is how much a ticket price is. This is how many times I need to go to make this worth it. And then I’m really intentional about going often and utilizing that pass

Amanda:
That is so smart. It makes me think of the number of years I spent basically just making donations to my local gym because I’m like, I like the idea of working out and then you don’t get there. But now I’m signed up for one where I get charged if I don’t go. I’m like, that’s the kick in the booty for me. So I love that you planned it out ahead of time, like this is how much I have to go to make it worth my hard earned money. That is so smart. Has

Mindy:
Your dad issued a new challenge now that you have crushed his original one?

Lisa:
He has not issued a new challenge, but I think my next goal is 500,000 by 30.

Mindy:
You’re totally going to do that. You’re going to have 700,000 by 35 if you don’t do anything and you’re crushing it every year.

Amanda:
Before we get into Lisa’s total annual investments, we’re going to take a quick break from our sponsors. Welcome

Mindy:
Back, Lisa. Whatcha are investing in? You mentioned V-T-S-A-X. Are you a hundred percent in V-T-S-A-X or do you have other investments?

Lisa:
The vast majority of my investments are in VT V-T-S-A-X. I do have one ultra short-term bond that’s about 5% of my portfolio. And then I’m also in an international market fund. That’s a pretty small part of my portfolio as well. And then for fun, I have 2%, maybe 3% of my portfolio in individual stocks in my company and then also in hydrogen.

Mindy:
What’s hydrogen like the molecule or is that a company?

Lisa:
Companies that are involved in hydrogen, so plug power and high on. I

Mindy:
Love that and I love that it’s a small amount. I think that it’s totally valid to want to play around or I really like this company, so I’m going to invest in this company. I just think we need to learn the lesson from Enron and not put every single dollar into one basket, and you have clearly spread them out all over the place. So I give this the stamp of approval too.

Amanda:
Yes, I’m like Lisa’s dad here has very much set her up for success, especially because I love that you are breaking apart the investments a little bit. So it sounds like you have a three fund portfolio where it’s essentially almost like a target date fund with a little more control. So you’re just having 5% worth of your money in bonds, which is you want more bonds the closer you are to retirement age. Being 27 time is on your sites, you have lots of time for the market to recover. So I think traditionally they’re usually like nine or 10% in a target date fund. So just having 5%, having a little bit of a higher risk tolerance because you have so much time. I think your dad has just really nailed the setup there. And then I love that you have a couple percent worth in individual companies and backing what you believe in. I think that’s amazing. I love that.

Mindy:
So Lisa, how does it feel to be Coast PHI by age 27? And do you know what coast PHI means?

Lisa:
I believe I know what coast by means. I think it’s like you can live off of your investments without contributing anymore, but still maintaining a job.

Mindy:
Yes, and you’ll reach traditional retirement age with enough to be very comfortable in retirement. And what did I say? You were going to be at 65 what? 66? You’ll have $11.2 million looking at my crystal ball. I think that’s going to be okay.

Lisa:
Yeah, yeah, I think I definitely have fat phi aspirations, so I’m happy that well, on my way there.

Amanda:
Wait, so what does your fat Phi life look

Lisa:
Like? Probably mostly travel and maybe like a beach house or something.

Mindy:
Nice. Yeah, that sounds awesome. I wanted

Amanda:
To ask you when we just asked how it felt to be Coast Fi at 27, obviously that’s good. Do you share that with your friends? Do your friends know? Do you feel just way ahead, is this something that you guys talk

Lisa:
About? It’s not something that I talk about with my friends typically. I generally just keep it with my family and my boyfriend. Yeah.

Amanda:
Do you ever feel like you want to, if you had a friend who was like, oh, I should start investing, are you like, I know all about this. Let’s open up a Roth I a or you just like, I’m going to keep a lid on this for

Lisa:
Now. No, I definitely share advice at work. The other day I had someone who got into the workforce pretty recently after graduating high school and he was asking questions like, how do I save my money? I don’t get this. And so I was giving him some advice. So I’m definitely open with sharing. I just don’t share my specific dollar amount. I do share my salary because I think that’s really good to know what other people in the same area around the same age and experience are making, but just my total net worth, I keep that pretty private. I

Mindy:
Would do that too. I think that in your age bracket, friends of yours will be like, oh, Lisa’s rich, she can pay for it. Or Lisa, can I borrow some money? And maybe even older coworkers and older friends would be like, oh, she’s bragging, or, oh, how much money did she have? What did her parents give her? There can be a lot of sour grapes. And that’s unfortunate because I mean, Amanda and I are sitting here just falling all over you thinking how great you are, so take our advice, not theirs. You’re doing it right. There’s just a lot of people who will be like, oh, she must have had some leg up in order to get here. She couldn’t have done it. Well, you know what? Her leg up was not spending every dime that came in and putting it into investments on purpose. You have to purposely grow your wealth. It doesn’t just happen overnight.

Lisa:
I was just going to say, yeah, it takes a while to build it up. I remember that first a hundred thousand, even though looking back on it, I achieved that pretty quickly. It felt like it took forever and then it felt like it took forever to reach 200,000 and now it’s finally starting to feel like it’s growing a little bit faster, but it still feels like it takes a long time and it’s something that I think about every day and my expenses like, okay, I’m going to try and find the best deal for whatever it is I’m buying, whether that’s groceries or a new winter coat.

Mindy:
Exactly. You want to be a responsible steward of your money, but also being able to buy something that lasts versus buying something cheap and then having to replace it all the time. And you said it took forever to get to the first a hundred thousand. If you look at this rule of 72 math, which I have typed out already, 350,000 at age 27 by age 35, 7 years later, it’s only doubled once. So it’s 700,000. That’s still a lot of money, but that’s nothing compared to what you are at 66 when it’s 11.2 and it’s growing by itself. You’re not even doing anything with it. That’s the point that I want to make to the people who are listening to this show, she’s doing pretty much nothing to get to $11.2 million. She is literally set it and forget it, put it in V-T-S-A-X and then walk away. V-T-S-A-X isn’t going to go out of business. And if it does, we’ve got way bigger problems. So this is just such a powerful example of compound interest and how starting when you’re young can yield such huge results. I mean, she’s going to have $11 million by age 66 if she doesn’t put any more money in, but she’s already maxing out everything she can right now while she’s got all of this time for it to grow. I’m just so excited for your financial future. I

Amanda:
Mean, that’s just the power of time, right? Time is the thing we don’t get back. So if I always say I would’ve started investing in kindergarten if I had understood how all of this worked. So I would say, however old you are now, you can’t go back in time, but you can start today and starting today can be a game changer to your finances versus waiting a year or two because we can see how fast that can snowball.

Mindy:
And starting today can be $5, it can be $10, it can be a hundred dollars, it can be very small amounts because you are just getting in the habit of putting your money away. So to those of you in high school and college and just recently graduated, please please, please look into how to open up an after-tax brokerage account. If you have a job, talk to your employer about what retirement accounts are available to you, including the Roth options. If you are blessed to work in the public sector, talk to them and see if a 4 57 plan is available. We are going to take one final break, but when we’re back, we’re going to find out what Lisa’s financial future looks like. Thanks so much for sticking with us. Let’s get back into it.

Amanda:
But we love retiring and it sounds like, it sounds like we’ve got a lot of people set up for success here. And so speaking of retiring, Lisa, do you plan to actually retire early? Is that the goal here?

Lisa:
I think right now I would like to retire by 50, if not before that or at least get out of the corporate world and do whatever I want, whatever that looks like. Would

Mindy:
You recommend this challenge that your dad gave to you for other people?

Lisa:
I would absolutely recommend it. I think it’s always good to have goals and setting a date for yourself to achieve that goal. I think it really gives you something to strive for. So even if for yourself you can’t achieve 100,000 by 25, maybe you set your goal for 27 or 30 or something that is realistic for you, or even maybe slightly hard, that might be slightly unrealistic, but still challenges you to save that much.

Amanda:
I love that. So let me ask you then, what is your biggest piece of advice to anybody out there who is listening for somebody who is in college trying to get their finances in order? What would be your biggest piece of advice for them?

Lisa:
I think my biggest piece of advice is just to start small. Like Mindy was saying, even if it’s just $5, putting that into an index fund or into a high yield savings account and letting it sit there and kind of forgetting about it can really help you go far. And then also, just like I said earlier, looking for the deals. When I first graduated from college and I was shopping for all my groceries and stuff, I would go through the two main grocery stores. I would look at my grocery list and I would see, okay, the tomatoes are this price at here and they’re more expensive here, so I’m going to go to this store for tomatoes, but the cucumbers are less expensive at this grocery store, so I’m going to go to that store for cucumbers. And I would have two separate grocery lists that just helped me save probably just dollars. It might’ve been 10, $15. But doing small things like that I think can really add up. And you see the cutting out Starbucks once a week or cutting out your Starbucks every day, how much that can affect your finances. And I think a lot of times on social media, you see people being like, well, that’s only $500 or a thousand dollars in a year. That’s nothing. That’s not going to buy you a house. But if you start doing that when in your early twenties, it can have a major impact.

Mindy:
Absolutely. I love this advice. Just because you don’t make a ton, a ton, a ton of money, doesn’t mean that you can’t start saving for retirement. Doesn’t mean that you can’t start saving for the future. Doesn’t mean that you can’t start saving an emergency fund because oh, it’s going to take me five years to grow my emergency fund. Okay, what year is it going to be in five years? If you don’t save your emergency fund, it’s still going to be five years from now. So get it done. As long as it takes, just get it done. I love that advice to start early. Alright, Lisa, this was so much fun today. Thank you so much for sharing your story with us. Thank you for sharing your numbers with us. I know this is going to be helpful and I know I’m going to get emails from [email protected] saying, oh my goodness, I shared your episode with Lisa and with my kids and it changed their life. So thank you so much for inspiring people who have listened to this episode. I know that you are going to inspire a lot of young people.

Lisa:
Thank you so much for having me.

Mindy:
Alright, we will talk to you soon. Thank you so much. Have a good day. Amanda. That was Lisa and that was my favorite episode ever. I love all of her. I’m so excited for her financial future. I can’t say that enough because I am so excited for her financial future. She’s won the lottery already. She just doesn’t know yet. It’s like a really, really slow play in lottery. But I’m so excited. I just love this story so much. What did you think of her story?

Amanda:
Yeah, I think I want her to be my 27-year-old mom. Is it too late in life for her to adopt me because she has a very much figured it out. I loved just the intentionality behind how she saves and spends her money. I mean, making such huge strides at such a young age is just so admirable. And I loved that the way that her dad approached her with this challenge. It wasn’t a shove it down your throat type of chore. It was very much her decision and that intentionality carried on with her into her late twenties probably for the rest of her life.

Mindy:
I could see where this lesson is going to be with her for the rest of her life. She has so many opportunities now that she has, now that she has figured out her baseline. She’s covered. But

Amanda:
I also loved how she shared the very humanizing quality of I’ve been in such saving, saving mode that now it’s a little hard to spend money. So there’s still that intentionality there. When she talked about the $2,000 ski pass and how she sat down and mapped out like, well, it’s worth $2,000 if I go this many times. I loved that because it wasn’t like she just was arbitrarily throwing out $2,000. Like, I’m in Coast five baby, let’s just move on. No, you know what? That was a tough pill to swallow, but I worked through that mental anxiety and made it work. And now she gets to enjoy her money too. I love that.

Mindy:
Yes. And that’s a real problem for those of us at the farther end of the Phi age spectrum. My husband and I are having a really hard time figuring out how to spend our wealth and we’re working through it. It’s still conversations like all day, every day. That’s all we do is talk about money and real estate and whatever. But if she can figure this out in her early thirties, her late twenties, she’s going to, as Ramit says, she’s going to live such a rich life because she’s got her finances figured out. Now she’s continuing to contribute to her 401k and her retirement account so that she can grow them more and be fat fi. She’s going to be like super ultra fat fi, which is just

Amanda:
F ob or ob

Mindy:
Ob fi. She’s just going to have everything figured out. And she’s still so young. This is just such an impressive story and I’m so thankful that I met her dad and I’m so thankful that she shared it with us.

Amanda:
It’s been awesome. And Mindy, if you and your husband ever have trouble spending that money, I’ll give you my Venmo. You can offload some of it over here, feel free. But no, it’s a very real problem that a lot of people face. And I know that when you have not been in that position, you can think, oh, must be nice. But no, it is very much a mental block. Yeah,

Mindy:
Yeah it is. And you just need to work through it. So the earlier you can figure that out, the better. I mean, what’s the point of cramming yourself through your fi journey to reach financial independence super early and then you don’t feel comfortable spending money? Learn how to spend it on your journey and maybe your journey takes a little bit longer, but it’s an enjoyable little bit longer as opposed to this compressed uncomfortable time in your life. And that’s from experience. Alright, so Amanda, I think we are done for today. That wraps up this episode of the BiggerPockets Money Podcast. Amanda, thank you for joining me today and for filling in for Scott. I dunno what he’s doing, but he’s not here. And you are, it’s always lovely to see you. What do you have going on over at She Wolfe?

Amanda:
Just the usual. We’re talking money. We’re talking budgeting, debt, payoff, investing, retirement, all the good stuff that involves money.

Mindy:
Alright. She is Amanda Wolf, the She Wolfe of Wall Street. And I am Mindy Jensen saying, farewell Snowball BiggerPockets money was created by Mindy Jensen and Scott Trench. This episode was produced by Eric Knutson, copywriting by Calico Content, post-production by Exodus Media and Chris McKen. Thanks for listening.