Fan of the show, but it's misleading to say their net worth is $1.5M. Their Net worth is $793,000 (Assets - liabilities) = ($1,500,000 - $707,000). I know Mindy said she doesn't consider mortgages as debt, but let's be real, it's NET worth, and a mortgage is a liability even if the property cash flows. You have to pay the mortgage or you will lose your property because you owe the lender money. We shouldn't just redefine words that have an established definition. Otherwise, the message is that we all should hyper leverage ourselves (i.e. $10M of debt with $10M of equity is NOT a net worth of $10M). It would make me feel really good to not count my mortgages, but I don't want to fool myself.
Agree. In addition, IMO, regardless if your home is paid for (no mortgage) shouldn't be included. No different than equities until you hit the sell button. Besides, if you sell your home, unless you're single and plan to rent a small apartment, you still need shelter.
@@TheQuiescentSquall i was unclear about this calculation. Thank you for clarifying. Additionally misguiding is to say cashflow from rentals/pension could be reverse calculated via the 4% rule and added on to their networth to give them a better sense of their preparedness for retirement. As fun as it may be to play with the math, I say treat networth and future cashflow as two different beasts. (Recalculating my networth their way I gained about half a million! 😝 It's exciting to dream and play about this way but I agreed that I'm better off being honest with myself😅)
@@michaelhaidee That hurts to read because i know my home's worth a lot but i know deep down you're right. We need to be conservative so ultimately the asset side of net worth is just cash & marketable securities.
@@simonkalibwani5832of course your home and stocks are included in your net worth. Anything object you own that can be sold is included. If you don't include your house, you also shouldn't include magical pieces of paper with old man faces on them either, or numbers on a computer screen. You're looking for cash flow, which is an entirely different calculation.
We used to have 2 rentals (so, 3 mortgages) and although they were both generating a little bit of positive cash flow, it was very stressful to still need to pay 3 mortgages and HOAs at the beginning of every month, not to mention the property taxes, insurance, etc. We eventually decided to sell one of the rentals, and used the proceeds to pay off the other rental and a big chunk of our primary mortgage. What a game changer. Now the one remaining rental is generating real cash flow, you don't worry that much about having a bad tenant or the AC breaking, and what a huge weight lifted off your shoulders!
Sell one rental.. pay off primary home, pay off rental that is left. Take the 2600 ( and other mortgage payments) and invest/ save that amount. In 12 years, you will have more money for retirement and more space in budget. With your ability to live within means, you will do well ! It will be just the two of you.. easy!!
No, don't sell. If you can afford not to, then don't! Keep all and pay the highest interest property off 1st by recasting the loan periodically, increasing your cash flow each time. By doing this periodically, you can stack cash from cashflow and savings to again lower the monthly mortgage until you're comfortable to eventually pay off. I'm on 4 properties, and I'm doing this currently. I have 3 at 3%+- and my primary on a 6% I'll be recasting my primary here soon increasing cashflow with intention to pay off my primary to 100k and allowing the remaining terms of 30 yr play out unless I chose to pay off but at that low of a balance and recasted my cashflow will be 1500+ a month on that property so, I don't think I will pay it off if and when I get there
Excellent video. A few observations: 1. Naive to think adult kids move out 2. no talk of giving to charity 3. ditch the rentals and go all in on index etfs
enjoyed the shout out to the parents. they can have such a big impact on how we view money as adults. a big reminder to parents of young kids - start teaching them good money habits now!
Im a federal employee as well and it sounds like this guy really needs to attend a retirement seminar and learn as much as possible to ease both his and his wives mindsets about their numbers. I am in whats called a special category in the fed. I am eligible to retire at an earlier age than most feds and can take money from my TSP at that time without penalties. I know how much my pension will be. How much I should have and be able to take out of my TSP yearly and exactly when I am eligible to retire. Because of that I will be retiring the second I am eligible knowing I will be financially set for the rest of my life without worry or concern. They need to go to the seminar together and ask all the questions and figure out what his pension will be. Knowing that will change their fears about spending money and their future.
Yes, they need to talk with someone because they should know you can't retire early with full benefits prior to certain age with less than 30 years in. Also, Scott must not understand the Fed retirement will include certain medical benefits.
They really have a problem. If you have 1.5 mill they earn 200k a year and cant spend $500 extra. Its crazy. 1.5 mill at 11% avg SP 500 is 165 k a year avg. thy need to go to a psychologist
She has decided that their house "needs" to be remodelled and judging by her "home depot" comment, she's willing to drop hundreds of thousands to "update" their home to some keep up with the jones standards. She has some enormous home remodel budget in the back of her mind.
Money is a funny mental thing. You can have little and feel rich and free, or lots and feel poor and constrained. We have lots more than they do, no debt, more income, and even a few years ago, I still felt constrained, even though intellectually, I understood that is silly. I think both of them have to overcome their childhood views of conserving money. It takes time.
🚨20:40 - “I have some probably weird money psychology, and it feels almost like a moral failing to go from we where saving this to now spending this” - They have done a great job and need to celebrate it. until she learns to deal with that mindset it won’t matter even if she makes & saves 10 million she will not enjoy her money”
Most people have their wealth locked in their primary residence and retirement accounts. Even with numbers north of 1M, you don't feel well off. Right now my IRA/401k is at 60% while my after tax/cash is 40% of my net worth.
Likewise. We are 40/42 have 1.5M in retirement accounts that’s locked up until 59 1/2. No longer contributing past employer match. Way way overfunded. Such a trap. Now building money for cashflow for 50-59 to retire at 50…
@@zackdreamcast Good plan. I'm 51, single with 1.6M total NW. I also am only contributing to 401k at match level. already a 401k/IRA millionaire. Adding more to my dividend paying stocks.
enjoyed the show. I would be interested to know why selling the rentals as they approach retirement wasn't suggested. With the rates they have and their location, I would expect they have enjoyed some large appreciation. If they do that, they need less cash in the rental maintenance bucket, and expect it would fully fund any gap to get to the pension with a better tax situation.
Oohh the R-word...I felt that one! Well done Mindy for working on yourself but Ramit's forcefulness really continues to trigger me. Pushing people to spend more than they are comfortable with seems ignorant and irresponsible. I know I am frugal but my income requires it and I am focussed on building my net worth, which would not be possible if I lacked control on my spending and appreciation for simpler pleasures. I really enjoyed this show. I can relate to the mindset although not to thier income/savings rate or net worth. I really need to choose between the stawberries or the socks (which I will often just steal from my husband instead of buying my own😅)
I disagree with the no contributing to the Roth TSP. If the current tax bracket is 22 percent then keep contributing to the Roth TSP. Also remember that the if retiring before 62 you will be receiving a supplement additional till 62. The matching is already going to traditional so convert that to the Roth IRA like he stated.
If you put money in dividend stocks for 10 to 15 years and reinvest those dividends. Would it be smart to start collecting the payouts when you retire early? Use that and the rental income to fund your life. Also when you retire early hopefully you have a lot of money in a HSA because you need to think about health insurance.
@6:50 the math does actually check out on that if you use the 10-11% growth rate of the S&P 500. Obviously not inflation adjusted, but that wasn't the promise!
Some people assume a 12% growth rate (not adjusted for inflation). Assuming 1k per year for 10 years only (from age 18-28), and a 12% growth, you get 1.3M at age 65, so in that case the math checks out! I agree that's not realistic, but cool to see
Nobody ever discusses that if you have had a Roth for 5 years then you can withdraw from the Roth without early penalty or tax. If he continued his Roth 401k they would have accessible money to live on!! Nobody wants to retire and sit for 2-5 years to do nothing just to do the backdoor Roth. Scott recommends going back to a pretax but they aren’t hurting doing it Roth now.
I simply cannot listen to this anymore. Not the majority or average person at all. Very typical of your show. I’m starting to think I’d make your jaws drop if I was on your show.
1/3 of the people who view this channel are millionaires. Many have listened to the show for many years… which we hope is one contributing factor to their personal net worth. This couple is, unsurprisingly to me, but surprisingly to you, very “normal” within that millionaire cohort. We will continue to provide content for this type of couple with up to and hopefully beyond 1/3 of our content. Just was we will continue to feature folks who are earlier in their journeys.
@@Scott_TrenchI understand entirely some folks feeling disconnected from these people, and resentful they're not seen. It's a pretty common comment on many of the FI channels. To me, they just have to find the videos that speak to them, and there's a ton of choice out there.
@@Scott_TrenchThx. Today's video was really interesting and I very much appreciated your summary, clarifying that there's a difference between shooting for the biggest net worth vs the kind of portfolio that allows them to feel good that they can enjoy some money now, not worry about strawberries...lol.
Oh Mindy....please stop predicting stock market performance for any set period of time. Also, you are not a personal finance professional, so please stop giving specific advice under the guise that it is anything more than your unprofessional opinion. Scott is the professional, Mindy and even Dave Ramsey are not certified and licensed professionals. (They've stopped giving disclaimers in many of these Friday shows.) Don't do dentistry based on watching RUclips. Remember, you need a plan when your plan doesn't go according to plan. How about reccomending they sent a fee only financial advisor to create a real plan...their finances are complicated... Finally, those 3 rug-rats will cost you a lot more than you think.
Fan of the show, but it's misleading to say their net worth is $1.5M. Their Net worth is $793,000 (Assets - liabilities) = ($1,500,000 - $707,000). I know Mindy said she doesn't consider mortgages as debt, but let's be real, it's NET worth, and a mortgage is a liability even if the property cash flows. You have to pay the mortgage or you will lose your property because you owe the lender money. We shouldn't just redefine words that have an established definition. Otherwise, the message is that we all should hyper leverage ourselves (i.e. $10M of debt with $10M of equity is NOT a net worth of $10M). It would make me feel really good to not count my mortgages, but I don't want to fool myself.
Agree. In addition, IMO, regardless if your home is paid for (no mortgage) shouldn't be included. No different than equities until you hit the sell button. Besides, if you sell your home, unless you're single and plan to rent a small apartment, you still need shelter.
Well said
@@TheQuiescentSquall i was unclear about this calculation. Thank you for clarifying.
Additionally misguiding is to say cashflow from rentals/pension could be reverse calculated via the 4% rule and added on to their networth to give them a better sense of their preparedness for retirement. As fun as it may be to play with the math, I say treat networth and future cashflow as two different beasts. (Recalculating my networth their way I gained about half a million! 😝 It's exciting to dream and play about this way but I agreed that I'm better off being honest with myself😅)
@@michaelhaidee That hurts to read because i know my home's worth a lot but i know deep down you're right. We need to be conservative so ultimately the asset side of net worth is just cash & marketable securities.
@@simonkalibwani5832of course your home and stocks are included in your net worth. Anything object you own that can be sold is included. If you don't include your house, you also shouldn't include magical pieces of paper with old man faces on them either, or numbers on a computer screen.
You're looking for cash flow, which is an entirely different calculation.
We used to have 2 rentals (so, 3 mortgages) and although they were both generating a little bit of positive cash flow, it was very stressful to still need to pay 3 mortgages and HOAs at the beginning of every month, not to mention the property taxes, insurance, etc. We eventually decided to sell one of the rentals, and used the proceeds to pay off the other rental and a big chunk of our primary mortgage. What a game changer. Now the one remaining rental is generating real cash flow, you don't worry that much about having a bad tenant or the AC breaking, and what a huge weight lifted off your shoulders!
Sell one rental.. pay off primary home, pay off rental that is left. Take the 2600 ( and other mortgage payments) and invest/ save that amount. In 12 years, you will have more money for retirement and more space in budget. With your ability to live within means, you will do well ! It will be just the two of you.. easy!!
No, don't sell. If you can afford not to, then don't! Keep all and pay the highest interest property off 1st by recasting the loan periodically, increasing your cash flow each time. By doing this periodically, you can stack cash from cashflow and savings to again lower the monthly mortgage until you're comfortable to eventually pay off. I'm on 4 properties, and I'm doing this currently. I have 3 at 3%+- and my primary on a 6% I'll be recasting my primary here soon increasing cashflow with intention to pay off my primary to 100k and allowing the remaining terms of 30 yr play out unless I chose to pay off but at that low of a balance and recasted my cashflow will be 1500+ a month on that property so, I don't think I will pay it off if and when I get there
Excellent video. A few observations: 1. Naive to think adult kids move out 2. no talk of giving to charity 3. ditch the rentals and go all in on index etfs
enjoyed the shout out to the parents. they can have such a big impact on how we view money as adults. a big reminder to parents of young kids - start teaching them good money habits now!
Im a federal employee as well and it sounds like this guy really needs to attend a retirement seminar and learn as much as possible to ease both his and his wives mindsets about their numbers. I am in whats called a special category in the fed. I am eligible to retire at an earlier age than most feds and can take money from my TSP at that time without penalties. I know how much my pension will be. How much I should have and be able to take out of my TSP yearly and exactly when I am eligible to retire. Because of that I will be retiring the second I am eligible knowing I will be financially set for the rest of my life without worry or concern. They need to go to the seminar together and ask all the questions and figure out what his pension will be. Knowing that will change their fears about spending money and their future.
Federal Employee here, having a Financial Advisor that specializes in Federal Employees retirement would help ease some of their worries.
Yes, they need to talk with someone because they should know you can't retire early with full benefits prior to certain age with less than 30 years in. Also, Scott must not understand the Fed retirement will include certain medical benefits.
They really have a problem. If you have 1.5 mill they earn 200k a year and cant spend $500 extra. Its crazy. 1.5 mill at 11% avg SP 500 is 165 k a year avg. thy need to go to a psychologist
Yeah, but it is locked wealth. Not 1,5 mil in stocks that you can sell/buy at any moment.
She has decided that their house "needs" to be remodelled and judging by her "home depot" comment, she's willing to drop hundreds of thousands to "update" their home to some keep up with the jones standards. She has some enormous home remodel budget in the back of her mind.
Money is a funny mental thing. You can have little and feel rich and free, or lots and feel poor and constrained. We have lots more than they do, no debt, more income, and even a few years ago, I still felt constrained, even though intellectually, I understood that is silly. I think both of them have to overcome their childhood views of conserving money. It takes time.
🚨20:40 - “I have some probably weird money psychology, and it feels almost like a moral failing to go from we where saving this to now spending this” - They have done a great job and need to celebrate it. until she learns to deal with that mindset it won’t matter even if she makes & saves 10 million she will not enjoy her money”
Most people have their wealth locked in their primary residence and retirement accounts. Even with numbers north of 1M, you don't feel well off. Right now my IRA/401k is at 60% while my after tax/cash is 40% of my net worth.
Likewise. We are 40/42 have 1.5M in retirement accounts that’s locked up until 59 1/2. No longer contributing past employer match. Way way overfunded. Such a trap. Now building money for cashflow for 50-59 to retire at 50…
@@zackdreamcast Good plan. I'm 51, single with 1.6M total NW. I also am only contributing to 401k at match level. already a 401k/IRA millionaire. Adding more to my dividend paying stocks.
enjoyed the show. I would be interested to know why selling the rentals as they approach retirement wasn't suggested. With the rates they have and their location, I would expect they have enjoyed some large appreciation. If they do that, they need less cash in the rental maintenance bucket, and expect it would fully fund any gap to get to the pension with a better tax situation.
How do you apply to be on this show?
Oohh the R-word...I felt that one! Well done Mindy for working on yourself but Ramit's forcefulness really continues to trigger me. Pushing people to spend more than they are comfortable with seems ignorant and irresponsible. I know I am frugal but my income requires it and I am focussed on building my net worth, which would not be possible if I lacked control on my spending and appreciation for simpler pleasures.
I really enjoyed this show. I can relate to the mindset although not to thier income/savings rate or net worth. I really need to choose between the stawberries or the socks (which I will often just steal from my husband instead of buying my own😅)
Great episode, learned a lot from hearing your recommendations to this lovely family. 🎉
I disagree with the no contributing to the Roth TSP. If the current tax bracket is 22 percent then keep contributing to the Roth TSP. Also remember that the if retiring before 62 you will be receiving a supplement additional till 62. The matching is already going to traditional so convert that to the Roth IRA like he stated.
This was a great episode. I think everyone on this path struggles with the same things.
Such great insight. Look forward to seeing you guys reach 100k SOON 🎉
You truly believe in using people who use fake names. . It just shows the character in honesty of this channel 😂
If you put money in dividend stocks for 10 to 15 years and reinvest those dividends. Would it be smart to start collecting the payouts when you retire early? Use that and the rental income to fund your life. Also when you retire early hopefully you have a lot of money in a HSA because you need to think about health insurance.
Another great episode.
Happy finance Friday!
@6:50 the math does actually check out on that if you use the 10-11% growth rate of the S&P 500. Obviously not inflation adjusted, but that wasn't the promise!
Some people assume a 12% growth rate (not adjusted for inflation). Assuming 1k per year for 10 years only (from age 18-28), and a 12% growth, you get 1.3M at age 65, so in that case the math checks out! I agree that's not realistic, but cool to see
Nobody ever discusses that if you have had a Roth for 5 years then you can withdraw from the Roth without early penalty or tax. If he continued his Roth 401k they would have accessible money to live on!! Nobody wants to retire and sit for 2-5 years to do nothing just to do the backdoor Roth. Scott recommends going back to a pretax but they aren’t hurting doing it Roth now.
I simply cannot listen to this anymore. Not the majority or average person at all. Very typical of your show. I’m starting to think I’d make your jaws drop if I was on your show.
1/3 of the people who view this channel are millionaires. Many have listened to the show for many years… which we hope is one contributing factor to their personal net worth. This couple is, unsurprisingly to me, but surprisingly to you, very “normal” within that millionaire cohort.
We will continue to provide content for this type of couple with up to and hopefully beyond 1/3 of our content. Just was we will continue to feature folks who are earlier in their journeys.
There's enough youtubers interviewing people who's finances are in a mess.
@@Scott_TrenchI understand entirely some folks feeling disconnected from these people, and resentful they're not seen. It's a pretty common comment on many of the FI channels. To me, they just have to find the videos that speak to them, and there's a ton of choice out there.
@@Scott_Trench And the other 2/3?
Are being motivated to later be that 1/3rd.
A lot of government jobs don't allow switching the retirement choice once it's made.
What do the numbers behind Scott on the display case represent? Actual net worth? Target net worth? Nothing?
They are a real time count of the total people who have signed up for a (free) BiggerPockets account!
@@Scott_TrenchThx. Today's video was really interesting and I very much appreciated your summary, clarifying that there's a difference between shooting for the biggest net worth vs the kind of portfolio that allows them to feel good that they can enjoy some money now, not worry about strawberries...lol.
Those people are doing great. I wish I had their net worth today!
It’s sad that $85k is not what it used to be anymore
I believe that she should have had a reprieve. But then I don’t believe in the death penalty anyway.
Slum lords are the worst
Oh Mindy....please stop predicting stock market performance for any set period of time. Also, you are not a personal finance professional, so please stop giving specific advice under the guise that it is anything more than your unprofessional opinion. Scott is the professional, Mindy and even Dave Ramsey are not certified and licensed professionals.
(They've stopped giving disclaimers in many of these Friday shows.)
Don't do dentistry based on watching RUclips.
Remember, you need a plan when your plan doesn't go according to plan.
How about reccomending they sent a fee only financial advisor to create a real plan...their finances are complicated...
Finally, those 3 rug-rats will cost you a lot more than you think.
I knew Justin was good with money when he showed up with the bluetooth in the ear. Good luck and great job!
These guys got it made and stressed for nothing.
Sorry. But i stopped listening. Im struggling to find guests that are relatable on this show .....
So how the hubby and I feel …401k high net worth but cash flow poor 🥲