Why you Should Purchase at Least One Real Estate Investment Property While you are Still Working your 9-to-5

Admittedly, we do not have a real estate investment property. We prioritized our time with our kids being toddlers to start traveling ahead of purchasing real estate. We intend to return to it once our kids are a little more manageable. If we had known about all these tips we are sharing with you sooner, we definitely would have secured an investment property before we left our 9-to-5s. Ah, hindsight is 20/20.

If you can get yourself even just one property to rent out long, mid or short term, there are great tax advantages especially if your individual brokerage investments are in a high income strategy. We still toy around with getting a DSCR (debt-service coverage ratio) loan for an investment property (borrow based on the rental income of the property) or another non-traditional loan to secure a 2nd property, but so far we haven’t personally pulled the trigger - so we are definitely no experts here.

However, we have met some really brilliant mortgage brokers over our journey of buying and selling our primary homes. AND through our financial education courses, when needed, we’ve been able to question traditional lenders and search for other options. Along the way, we’ve met some brilliant folks with great DSCR options as well as those who can provide non-traditional loans based on your dividend income (even if you don’t show more than 2 years of consistent dividend income on your tax returns!), so please let us know if you need any recommendations!

An important analysis we’d like to share through our research on this topic is a simple rate of return calculation on a property. So, even if you find a property that shows negative (i.e. the mortgage is more expensive than the rent you could receive), you may still find it’s a good overall return. Only if it is an investment property, you can just consider the money you are personally putting into the home (above the renters payment) as a means to diversifying your portfolio; just moving it from one investment pot to another with a different return and liquidity.

As an example - say you want to purchase an investment property for $250,000. The standard down payment for an investment property is 20-25% so you’ll need to put $50,000 in as down payment (be sure you use margin for this!). Also, assume taxes are $2,500 annually, your interest rate is 6%, home insurance is $900 annually and therefore your mortgage is $1,482. In this area, based on the size of the home, you can only expect to collect $1,200/month in rent. That means you are putting $282 into the property monthly. But here is the return analysis:

First, total your Gross Earnings = Appreciation + Rent + Principle = $27,659

Yearly appreciation is $10,000 (4% is the average real estate market return)

The principle paid on your mortgage (using year 2) is $3,259

Yearly rent collected is $14,400

Then, total your Expenses = $1,482 (mortgage) x 12 = $17,784

For simplicity, we are just assuming your total expenses is your mortgage payment only but it is important to consider other expenses that you’d incur based on the property.

So, your Net Earnings = Gross Earnings - Expenses = $9,875

Expected Return = Net Earnings / Money into Property = $9,875/$50,000 = 19.75%

Again, for simplicity, we aren’t including closing costs, furniture expenses, etc. which is important to consider for the amount of money you put into the property.

With all that, 19.75% might be pretty good return worth considering, depending on your overall portfolio...

For more, see our 10 practical tips to implement while working your 9-to-5 to realize the dream of early retirement.

Do you have at least one investment property?!

FINANCIAL DISCLAIMER

Do your own research! We are not providing nor are we intending to provide any sort of financial, tax or legal advice. This article simply includes practical tips that we’ve compiled based on our independent analysis, implementation, and realization of the results - which changed our lives. Everything is of course, subject to market fluctuation. Please always be informed and consult your professionals prior to making changes.

Take Advantage of Credit Cards to Advance your Financial Independence

Credit cards rewards are an exciting topic! We do not claim to know what many other people know about credit card rewards. We don’t fly first class or get free flights to Europe...yet! What we can say is - we put everything we possibly can on our credit cards and pay the entire statement balance every month. The perks of credit cards are great! They provide you additional pots of money/points (essentially for free) that save you from spending your own money. We have been partial to Chase and hold several of their credit cards which we utilize based on the points they earn. We don’t have airline cards because we move around too much so we don’t stick with a specific airline and the same goes for hotels. Our current wallet includes…

• Sapphire Reserve: for our travel & dining expenses earning 3x points

• Sapphire Preferred: for our dining & streaming services earning 3x points

• Prime: for Amazon & Whole Foods earning 5x points and gas earning 2x points

• Freedom Flex: for purchases in the rotating quarterly categories earning 5x points

• Unlimited: for drugstores earning 3x points and everything else earning 1.5x points

Many of these also come with perks like airport lounge access, Doordash memberships, Instacart memberships, etc. The promotions and point earnings change based on the cards at the time of issuance, so always check to see what is being offered. A couple of things to note about using these credit cards:

• Transfer your points to the Reserve: While the Prime credit card isn’t available for point transfer (only cash back), transferring the remainder of the card points to the Reserve allows you to redeem ALL the points in the Chase Ultimate Rewards portal at 1.5x.

• Be aware of the Chase 5/24 rule: There is an unofficial rule that Chase won’t approve you if you’ve opened more than 5 credit cards in 24 months.

• Always keep your oldest credit card active: As long as it’s paid it helps your credit score. This isn’t specific to Chase, but we figured it could be worth mentioning.

We also recently learned about the Robinhood Gold credit card which will give you 3% cash back on ALL purchases and the cash back goes into investments in Robinhood which can be borrowed from secured by your investments to generate even more money. So naturally we are on the waitlist for that!

For more, see our 10 practical tips to implement while working your 9-to-5 to realize the dream of early retirement.

Do you put everything on credit cards?!

FINANCIAL DISCLAIMER

Do your own research! We are not providing nor are we intending to provide any sort of financial, tax or legal advice. This article simply includes practical tips that we’ve compiled based on our independent analysis, implementation, and realization of the results - which changed our lives. Everything is of course, subject to market fluctuation. Please always be informed and consult your professionals prior to making changes.

AFFILIATE DISCLOSURE

This website contains some affiliate links to other websites including the Amazon Associate program. If you use the links provided and make a qualifying purchase, we get a small commission at no extra cost to you. We only recommend products we truly love, have made a difference in our lives, actually use during our adventures, and think you can benefit from too!

Two Important Thoughts to Consider When Purchasing Your Next Home

Use Home Loans with Minimum Money Down

When it comes to buying a home, taking advantage of loans with minimum down payments can be a game changer. Veterans, for example, can use 0% down VA loans, which allow them to buy a home without making a down payment. VA loans are sometimes subject to the VA funding fee - the fee ranges from 0.5% to 3.3% of the loan's total value - however there are several exemptions to this including a service related disability. The cool thing about putting 0% down is that you get huge returns on your investment. If you bought a home for $500,000 and two years later you sold it for $600,000, you earned $100,000 by only paying a monthly interest on your mortgage. To elaborate this scenario, if you put 0% down and had a 6% interest rate, you would have spent almost $72,000 on your home - approximately $59,000 of that in interest and approximately $13,000 in principle. The principle is basically returned to you when you sell. So essentially $59,000 earned you $100,000 over 2 years which is about a 60% return (30% annually).

Even if you’re not a veteran, there are other options out there, like FHA loans that require as little as 3.5% down. We have a really great mortgage broker who is able to go through a pre-underwriting process with you such that when you find the home of your dreams you have a cash backed offer and a short time to closing. Essentially, you can offer cash and close in two weeks which many sellers will happily take even if you offer less than asking! If you are interested in their contact information - email us! Also, always shop around for rates! One time, on an RV purchase, we saved 2% on our interest rate and the amount of money down by $10,000 just by doing our own legwork! A lot of time other lenders will match too if you find a good rate.

The key here is to leverage these loans to keep more cash in YOUR pocket (not the banks’). Then, you can put that money to work in investments that generate higher returns than the mortgage (or other loan) interest rate.

Invest Your Money Instead of Putting It Into Your Mortgage

One of the most valuable lessons we learned was not to pour all our savings into paying down the mortgage. While putting an extra $50,000 into a $500,000 mortgage might slightly lower your monthly payments…

$500,000 mortgage @ 6% (excluding taxes & insurance) = $2,997.75

$450,000 mortgage @ 6% (excluding taxes & insurance) = $2,697.98

Monthly difference = $299.77/month

…the real power comes from investing that $50,000 elsewhere.

In our current strategy, we earn 3% dividends per month, so…

$50,000 x 3%/month dividend income = $1,500/month

This shows that putting $50,000 into a brokerage account earns $1,500/month vs. saving $299.77/month if you put that money into your mortgage. For us, we’ll invest that money and take monthly from it to pay our mortgage if need be. The key takeaway is to put your money where it can grow the most.

Additionally, many people make extra payments to their mortgage to reduce the amount of interest paid over the term of the mortgage. However, if you look at the future value of these additional payments making a modest 8% return in the stock market, you are saving less on your mortgage interest than that money could generate. For example, say you have an extra $500 monthly to pay towards this $500,000 mortgage. If you completely pay off your mortgage, this saves you nearly $200,000 in interest and brings the mortgage term from 30 years to 21 years. But, if you invested $500/month for 21 years instead at that modest 8% return in the stock market, your future value would be over $330,000. These numbers get even better when mortgage interest rates are low…like those lucky ones who are at 2.75% on their mortgage.

For us, we’d prefer to have that money to be more diverse and to have a source of funds we can easily borrow from. Also, these additional payments to your mortgage do nothing to increase the value of your home. The average real estate market grows at about 4% regardless of how much money you put into your mortgage. If you’re home appreciates to $600,000 in 2 years, it doesn’t matter that you paid an extra $12,000 to your mortgage over those 24 months. By putting the least amount of money into your mortgage, you get the greatest return on the amount of money you actually have invested in the home.

For more, see our 10 practical tips to implement while working your 9-to-5 to realize the dream of early retirement.

Will you make these changes on your next home purchase??

FINANCIAL DISCLAIMER

Do your own research! We are not providing nor are we intending to provide any sort of financial, tax or legal advice. This article simply includes practical tips that we’ve compiled based on our independent analysis, implementation, and realization of the results - which changed our lives. Everything is of course, subject to market fluctuation. Please always be informed and consult your professionals prior to making changes.

Don't Spend Your Own Money: The Buy, Borrow, Die Strategy

One of the most powerful strategies we use is the concept of "Buy, Borrow, Die." Here’s how it works: instead of spending your own money, you invest it and borrow secured by it.

For example, assume you earned $200,000 from the recent sale of your home. You invest that in something similar to our current strategy, earning 3% dividends per month. Then, assume you buy a new home and you want to do an improvement project that would cost you $50,000. Instead of taking $50,000 of the $200,000 and spending it, and your money now being $150,000 with the $50,000 essentially never to be seen again, you borrow $50,000 secured by your investments in your brokerage account. This is called a margin loan. Margin loans require no credit check and are available to you by the company you are invested in (e.g. M1 Finance, Interactive Brokers, Robinhood, Schwab). That margin loan will have an interest rate associated with it. M1 Finance margin loan rates are currently 6.75%, Robinhood margin loan rates are currently 6.25%, and Interactive Brokers margin loan rates are currently 5.33%.

So, let’s compare…

$50,000 x 3%/month dividend income = $1,500/month

$50,000 x (6.75%/12 months) margin loan interest = $281.25/month

As you can see, keeping the $50,000 in your account and instead taking a margin loan secured by your $200,000 investment allows that $50,000 to still make you $1,218.75/month! Don’t forget there is compounding interest too.

The idea of “Buy, Borrow, Die” is that you never repay these loans. So you will earn $1,218.75/month on your $50,000 until you die, when your $50,000 will then get paid off by the remaining money in your account. Your heirs will be left with significantly more wealth from the $50,000 that remained and earned compounding interest during your life.

Many financial institutions like Interactive Brokers, M1 Finance, and Robinhood allow you to borrow even more money secured by your investments. There is a required ‘maintenance margin’ for every fund you invest in so the total amount of margin available to you is a factor of that. The amount of margin you take on your account is a factor of the risk you are personally willing to take on. The topic of margin should be very well understood by both you and your financial advisor. We learned about the power of margin through our financial education courses. My husband and I are comfortable being at about 25-30% margin on our account but in times of uncertainty, like election years, we back down on that a bit.

For more, see our 10 practical tips to implement while working your 9-to-5 to realize the dream of early retirement.

Have you heard of the Buy, Borrow, Die concept before?!

FINANCIAL DISCLAIMER

Do your own research! We are not providing nor are we intending to provide any sort of financial, tax or legal advice. This article simply includes practical tips that we’ve compiled based on our independent analysis, implementation, and realization of the results - which changed our lives. Everything is of course, subject to market fluctuation. Please always be informed and consult your professionals prior to making changes.

AFFILIATE DISCLOSURE

This website contains some affiliate links to other websites. If you use the links provided and make a purchase, we get a small commission at no extra cost to you. We only recommend products we truly love, have made a difference in our lives, actually use during our adventures, and think you can benefit from too!

12 Practical Tips to Implement Right Now to Realize the Dream of Early Retirement

Refer to this anytime by downloading our 12 Practical Tips document!

As husband and wife who became financially free in our 30s, we are here to share lessons we’ve learned along the way and practical tips we wished we had known and implemented sooner! While still working our 9-to-5s, there were a lot of little things we did to build our wealth as quickly as possible. These small choices added up to a lot over time and we want to share them with you!

In addition to executing our current investment strategy, here are the tips we implemented along the way to help us realize our dream of early retirement and financial freedom with our young children.

1 - Invest Early and Often

Time is one of the most powerful tools in building wealth. The earlier you start investing, the more time your money has to grow with compounding interest. Consistent contributions—even small ones—add up over the years. For example, investing $200 per month starting at age 25 could grow to over $365,000 by age 65, assuming a modest 8% annual return. If you start at 35, that same investment would only grow to about $160,000. The difference? Time in the market. With our current investment strategy, we’ve achieved consistent returns above 8%, showing that you can potentially grow your wealth even faster.

Getting comfortable with risk is essential to investing early and often too. While market fluctuations can be intimidating, understanding that volatility is part of the process helps you stay focused on long-term growth. By setting up automatic contributions, you can avoid emotional decision-making and stay consistent, even during uncertain times.

We prioritized consistent investing even when our income was tight. By setting up automatic contributions to our brokerage accounts, we remained steadfast and avoided the temptation to spend that money elsewhere. When money flowed a bit better (or we had excess for another reason), we put every cent we could into our investments, accelerating progress toward financial freedom.

Whether you're just starting out or already building wealth, it's never too late to start, but the earlier, the better. Go ahead—open a brokerage account and set up an automatic contribution today!

2 - Know and Stick to a Budget

A budget acts as a financial blueprint - ensuring you live below your means and free up money for investments. Tracking income and expenses helps you:

• Identify areas where you can cut back, redirecting funds toward your financial goals

• Know how much extra you may have, so you can invest it

The key to budgeting success is setting realistic goals and sticking to them. We use a simple excel spreadsheet and set aside an hour on the 1st of the month to review things. A solid budget gives you control over your finances, allowing you to allocate resources effectively and achieve financial freedom faster.

Also without a budget, you wouldn’t know how much you even need to retire at an early age. We are constantly updating our budget and evaluating needs to ensure we’re prioritizing freedom over things.

3 - Rethink Your 401(k) Contributions

While contributing enough to get your employer match is smart, maxing out your 401(k) may not be. My husband and I did this for years, thinking we were getting ahead, but realized it simply locked our money away until we’re 59-1/2. For the last few years prior to departing from the workforce, we adjusted our approach to split our savings between our 401(k) and a brokerage account for better flexibility.

Brokerage accounts let you access your money anytime without penalties, unlike 401(k)s, which have limits and penalties for early withdrawals. You may pay taxes now on brokerage earnings, but the flexibility to have access to your money when you want it is worth it to us. Consider matching what you put into your brokerage with your 401(k) contributions for a balanced strategy.

For all the details, see our article on Why you may want to Rethink your 401(k) Contributions.

4 - Don't Spend Your Own Money: The Buy, Borrow, Die Strategy

Instead of spending your money, invest it and borrow against it with a margin loan. Here’s how it works:

Let’s say you sell a home and earn $200,000. Rather than spending $50,000 on a future home project, borrow that $50,000 using your investments as collateral. Your $200,000 keeps growing while you pay the margin loan interest (around 5-6.75%) with investment firms like M1 Finance, Robinhood and Interactive Brokers.

Example:

• $50,000 at 3% monthly dividends* = $1,500/month

• $50,000 margin loan at 6.75% interest = $281/month

You still earn $1,219/month while keeping your $50,000 invested!

The idea is to never repay these loans—your investments continue to grow, and your heirs will inherit the remaining wealth after you pass.

*3% monthly dividends is currently what we receive on our brokerage investment strategy

For all the details, see our article - Don’t Spend Your Own Money: The Buy, Borrow, Die Strategy.

5 - Put your Emergency Savings in a High Yield Cash Account

For the longest time, our emergency savings was held in a money market account with our bank earning 0.85% interest. 0.85% is actually not so bad for a bank - most savings are maybe earning 0.1%. BUT, there are really great options these days for accounts which earn wayyy more money for emergency savings funds or other cash balances. M1 Finance offers a 4.5% high yield cash account. Interactive Brokers offers 4.33% on the account cash balance. Robinhood Gold offers 4.5% on the account cash balance. There are likely more, but those are the ones we are familiar with. There are also US Treasury Money Funds, like SNSXX, at some brokerages that are easily liquidated and currently earn about 4.6%.

6 - Invest in Financial Education

For years, we read books, watched YouTube, and saved, but our money wasn’t growing fast enough to retire in our 30s. We finally invested in our financial education, and it changed everything!

We took The Perfect Portfolio course, and in just 8 weeks, we made our money back—and much more! Unlike other courses, this one gave us actionable steps that transformed our financial future. In addition to Buy, Borrow, Die, it introduced us to our current investment income strategies earning 3% dividends per month. Now, we’re retired in our 30s, and we get to enjoy time with our toddlers and travel full-time.

Also, invest your time into finding a financial advisor and CPA who is familiar with your strategy. Be a partner with them.

Our thoughts? Invest in learning! It’s the key to making your money work as hard as you do.

For all the details, see our article on Financial Education - Why you Must Invest in it NOW.

7 - Use Home Loans with Minimum Money Down

Using loans with low down payments can be a game changer when buying a home. Veterans, for example, can use 0% down VA loans, which allow them to buy a home with no down payment. The VA funding fee applies to some, but many exemptions exist, such as for service-related disabilities. With 0% down, the returns can be huge. Buying a $500K home and selling it for $600K in two years means earning $100K while only paying mortgage interest (a 30% annual return of more)!

Even non-veterans have options, like FHA loans with as little as 3.5% down. Leverage these loans to keep more cash in your pocket and invest it for higher returns than your mortgage rate!

Also, make sure you shop around for rates and find a clever mortgage broker! We found one recently that can give you a cash-backed offer - essentially you can go in with a cash offer! How’s that for power?!

For all the details, see our article on - Two Important Thoughts to Consider When Purchasing your Next Home.

8 - Invest Your Money Instead of Putting It Into Your Mortgage

One valuable lesson we learned is not to pour extra money into paying down the mortgage (or as additional down payment). While an extra $50K toward a $500K mortgage might lower your payment by $300/month, investing that $50K can generate much more.

For example, we earn 3% in dividends per month on our investments:

• $50,000 x 3% dividends = $1,500/month

That’s $1,500 from investing vs. saving $300 by putting it into your mortgage. If you must take the money from the investments to assist in paying the mortgage, DO THAT - just don’t put all the cash into the mortgage.

Also, investing extra monthly money could give you a better return over time compared to the interest saved by paying off your mortgage early. Let your money grow where it has the most potential!

For all the details, see our article on - Two Important Thoughts to Consider When Purchasing your Next Home.

9 - Get Yourself an IUL

When we had kids, we realized the importance of life insurance for financial security. We chose Indexed Universal Life (IUL) insurance for several reasons:

• Permanent life insurance

• Long-term care benefits (and exemption from new state taxes)

• Triple tax protected (no taxes on growth, distribution, or death)

• Value locked in annually (no market losses)

• Ability to borrow against it

We prefer IULs over whole life policies because premiums are known. Our IUL now forms the backbone of our financial freedom, providing security and emergency funds if needed.

Interested? As a licensed agent, I can help—just email us!

For all the details, see our article on Why Indexed Universal Life Insurance Policies Create an Anchor in Our Financial Freedom Strategy.

10 - Use Credit Card Rewards

We’re all about using credit cards to earn rewards! We put everything we can on our cards and pay the balance in full each month. This way, we earn points instead of spending our own money.

Our favorite Chase cards which we utilize based on the purchase to maximize point earnings are:

• Sapphire Reserve: 3x points on travel & dining

• Sapphire Preferred: 3x points on dining & streaming

• Prime: 5x points on Amazon & Whole Foods, 2x on gas

• Freedom Flex: 5x points in rotating categories

• Unlimited: 3x points at drugstores, 1.5x on everything else

Pro tips:

• Transfer points to Sapphire Reserve for 1.5x value in the Chase Ultimate Rewards portal.

• Follow Chase’s 5/24 rule—don’t open more than 5 cards in 24 months.

• Keep your oldest card active to boost your credit score.

We’re also excited about the Robinhood Gold credit card, which offers 3% cash back invested directly in your Robinhood account!

For all the details, see our article - Take Advantage of Credit Cards to Advance your Financial Independence.

11 - Buy a Real Estate Investment Property

We haven’t bought a rental property yet because we prioritized traveling with our toddlers over investing in real estate. If we’d known what we do now, we likely would have secured one before leaving our 9-to-5 jobs. Rental properties offer great tax benefits, and we’re still considering options like a DSCR (debt service coverage ratio) loan or other non-traditional financing.

Even if a property’s rent doesn’t fully cover the mortgage, it can still be a good investment choice as it diversifies your portfolio and receives a different, but still very positive, rate of return. If you're considering a rental property, we can connect you with excellent mortgage brokers and lenders who specialize in non-traditional loans!

For all the details, see our article on Why you Should Purchase at Least One Real Estate Investment Property While you are Still Working your 9-to-5.

12 - Ethically Utilize Company Relocation Packages & Incentives

We didn’t realize this until much later, but we got a big boost to our financial freedom journey from relocations with our previous employer. Many employers offer incentives like paying for closing costs, realtor fees, or even providing moving allowances if you're willing to relocate. While it can be hard, relocation has a lot of benefits both personally and professionally.

Personally, not needing to pay the fees associated with the buying and selling a home is immensely valuable. That money saved can be invested elsewhere and overall it provides better return on your home investment. Further, if you move again, you can keep that home and rent it, cash flowing even more money. Moving can also be a chance to grow, experience change, and overcome the fear of unknown.

Professionally, relocating for your job is a strategic way to grow in your career while providing immense value to your employer. By relocating, you gain a broader understanding of the company’s operations, which helps you excel in your role and makes you a more valuable asset to the organization.

Many employers offer a variety of incentive programs that can help you save money and boost your financial growth. These can include discount programs for insurance, local events, travel/car rentals, gym memberships, transportation, childcare, etc. Be informed and utilize the savings - it is there for you and the money you save monthly can be invested.

Keep in mind, this should always be done ethically. While you’re at work, it's essential to focus on your job and deliver value to your employer. These incentives are designed to benefit both you and the company though. By taking advantage of these programs, you could save thousands of dollars that you can invest elsewhere and pick up a home that can be used as investment properties moving forward.

Final Thoughts

These strategies have helped us achieve financial freedom, and we believe they can do the same for you. The earlier you start implementing these tips, the faster you’ll be on your way to early retirement. Financial freedom isn't just a dream; it's a goal that you can work towards every day with the right plan and mindset. We are happy to discuss these topics one-on-one. Please email us to discuss ANY of this further.

Please provide any comments or questions below! Do you have any additional tips we can implement?

FINANCIAL DISCLAIMER

Do your own research! We are not providing nor are we intending to provide any sort of financial, tax or legal advice. This article simply includes practical tips that we’ve compiled based on our independent analysis, implementation, and realization of the results - which changed our lives. Everything is of course, subject to market fluctuation. Please always be informed and consult your professionals prior to making changes.

AFFILIATE DISCLOSURE

This website contains some affiliate links to other websites including the Amazon Associate program. If you use the links provided and make a qualifying purchase, we get a small commission at no extra cost to you. We only recommend products we truly love, have made a difference in our lives, actually use during our adventures, and think you can benefit from too!

Why you may want to Rethink your 401(k) Contributions

Most people think maxing out their 401(k) is the best way to save for the future, but that’s not necessarily true. The maximum federal contribution in 2024 is $23,000. For the longest time, my husband and I contributed these yearly maximums, hoping to get ‘ahead’. In hindsight, we believe, this was pretty foolish! Getting ‘ahead’ was only us throwing money at a pot of savings we couldn’t touch until we were retirement age - 59.5!

While we think it is wise to contribute enough to get the full employer match, we started contributing our additional savings into an individual brokerage account instead. While earnings on brokerage accounts are taxed now, at least you have access to them without penalty anytime you want and you can borrow money secured from them! Our rule of thumb was to at least match what we put into our 401(k) into our individual brokerage.

The purpose of a traditional 401(k) is to let money grow tax deferred. It is taken out before taxes on your paycheck and instead you pay the tax when you take distributions in retirement. While it lowered our current adjusted gross income, my husband and I have no illusion that our tax brackets will be less when we retire especially given the current national debt and considering how we want to live at that time (traveling, splurging on kids and grandkids, still likely paying for a home, etc.). If you want to access this money in a 401(k) or IRA before retirement age, you are subject to a 10% early withdrawal penalty in addition to paying taxes on the distributions taken.

Likewise, the purpose of a Roth 401(k) is to pay tax now and let it grow and be distributed tax free. A Roth allows you to have access to this money after your account has been open for 5 years without paying an early withdrawal penalty of 10%. While this is a great option, a limitation to Roth 401(k)s is that you cannot contribute to it if your combined income is greater than $230,000 (o $146,000 for single filers, as of 2024). That makes it a non-option for a lot of people. If we were beneath this threshold, then we would have invested in a Roth over a traditional IRA, but still only matching what our employer would contribute.

Regardless if your money is in a traditional or Roth 401(k), the limitations of a company 401(k) are that the investment options are not always great and you can’t borrow money secured by these investments which is a big reason we don’t personally like them.

For more, see our 10 practical tips to implement while working your 9-to-5 to realize the dream of early retirement and our current strategy for financial freedom!

What do you think? Still want to contribute the federal max to your 401(k)?

FINANCIAL DISCLAIMER

Do your own research! We are not providing nor are we intending to provide any sort of financial, tax or legal advice. This article simply includes practical tips that we’ve compiled based on our independent analysis, implementation, and realization of the results - which changed our lives. Everything is of course, subject to market fluctuation. Please always be informed and consult your professionals prior to making changes.

Financial Education - Why you Must Invest in it NOW

For the longest time, we read books, consulted friends and family, watched YouTube, and so on. We were saving as much as we could, but our money just wasn’t growing as much as we’d hoped. While we were on track to retire early, we weren’t on track to retire in our 30s. At one point, we decided it was time to put our money and time into our financial education. We went to college, paid $60,000+ for engineering degrees, and studied for countless hours…why wouldn’t we spend $2,000 and a few hours on a course that could make us more money on top of what we were earning with that degree?

We found a book called Rich Man, Poor Bank and continued with reading the same author’s book, Top 10 Ways to Avoid Taxes. In that book, the author says to reach out. So we did! And, it changed our lives. He introduced us to his course - The Perfect Portfolio - an 8 week live course (with ongoing access to discussions and updates to this day). In those 8 weeks, we made our money we spent on the course back and way more! We’ve taken some other courses - some that even were around $8,000 - and none of them even had half the information we were able to actually utilize. Don’t go down the same rabbit hole we did with your financial education - just take this one course. 🤪

Once we implemented the actions from this course, we found that the money we had saved would allow us to retire in our 30s, enjoy our toddlers, and travel full time! Had we have known what we do now from this course, we’d be sitting far better than we are now…but you don’t know what you don’t know, right?

We’ve been able to sustain a fun relationship with this team of super smart individuals and cannot recommend it enough. They taught us the foundations behind many of the topics we are sharing with you here and in our current strategy article.

If you are interested in The Perfect Portfolio course we took, we have a couple links for you!

• This link gives you $300 off the price of the live course which is always FULL of the latest information!

• This link gives you pre-recorded sessions for nearly 50% off!

Another aspect of investing in your financial education is investing your time into it. Once you find your financial strategy of choice, invest your time in finding a community that supports it. Find a financial advisor who is prepared to manage your money they way you want it managed - ours is Zega Investments. Find a CPA that is fully immersed on saving you money on taxes - ours is fantastic - email us if you are looking. Be a partner with these people. My husband and I talk to both our financial advisor and our CPA regularly (at least monthly, oftentimes more).

We figure, if we could invest our time into making someone else money (like our employer), then why not invest our time in making money for ourselves. We definitely don’t know everything, but we focused on the foundations and now we have a great team helping us to execute it.

The key takeaway here is to make sure your money is working as hard for you as you are for it! Invest in a strategy that YOU understand well and in return makes YOU good money.

For more, see our 10 practical tips to implement while working your 9-to-5 to realize the dream of early retirement.

Will you spend $2,000 to make yourself thousands or even millions?!

FINANCIAL DISCLAIMER

Do your own research! We are not providing nor are we intending to provide any sort of financial, tax or legal advice. This article simply includes practical tips that we’ve compiled based on our independent analysis, implementation, and realization of the results - which changed our lives. Everything is of course, subject to market fluctuation. Please always be informed and consult your professionals prior to making changes.

AFFILIATE DISCLOSURE

This website contains some affiliate links to other websites including the Amazon Associate program. If you use the links provided and make a qualifying purchase, we get a small commission at no extra cost to you. We only recommend products we truly love, have made a difference in our lives, actually use during our adventures, and think you can benefit from too!

Why Indexed Universal Life Insurance Policies Create an Anchor in Our Financial Freedom Strategy

Have you heard of indexed universal life (IUL) insurance policies? We know, we know…no one wants to talk about life insurance.

For us, our IUL secures our portfolio and allows us to travel full-time with our family without fear! Not only does it provide us life insurance AND long-term care, but the value in the account will never go down. Also, the net surrender value in our IUL provides a pot of money we can borrow against when the stock market drops or another investment opportunity pops up. In general, an IUL provides the diversity we need in our portfolio to feel protected in a down market.

We learned all about the benefits of an IUL when we took financial education courses through The Perfect Portfolio and further after reading Top 25 Ways an IUL can Secure your Financial Future.

IULs are five things. They are permanent life insurance, long term care, tax efficient, a non-correlated asset, and you can borrow from them.

Life Insurance

This goes without saying. IULs are a permanent life insurance policy and will pay a death benefit to your beneficiaries. While there are other permanent life insurance options, we went with an IUL over others, like whole life, because we know exactly what premium and fees we are paying in the policy.

Long-Term Care

Long-term care is important to us as we’ve recently seen our grandmother deteriorate in a long-term care facility. She was there for rehab after a fall, but it was a small town, and therefore it was attached to the long-term care facility. We want to ensure we have money for in-home long-term care and also so there is no burden on our children to take care of us when they are also taking care of their own families.

Also, many states are currently considering a long-term care tax which would be similar to social security and taxed on everyone’s payroll. To date, Washington has implemented this at 0.58%, but California, New York, North Carolina, Michigan, Montana, and Pennsylvania (amongst other states), are not far behind in implementing this. If you have a life insurance policy with a qualified long-term care rider, you will be exempt from this but only if you purchase it in advance of the long term care tax being implemented in your state. Some policies do have long-term care riders but may not be qualified as exempt from this tax, so if you already have a long-term care policy be sure you have a policy in place that your state will accept for the tax exemption. To find out, you’ll need to reach out directly to your insurance company.

Adding a long-term care rider to an IUL is less expensive than a separate long-term care policy. Long-term care riders on an IUL policy are also less expensive annually than this tax will be. Based on my and my husband’s previous salaries and our current IUL long term care riders, we are saving about $750/year (which would increase as our salaries would increase, of course). While maybe that doesn’t seem like a significant amount - over a 30 year career, the future value of that money considering an average compounding interest rate of 8% would be greater than $100,000. Our preference - we’ll keep that for ourselves or our kids colleges instead of sending it to Uncle Sam.

Tax Benefits

IULs are considered triple tax protected. You are not taxed on their growth or distribution and they are free from the death tax. They make great solutions for high net worth individuals seeking to lower their tax bill.

Non-correlated Asset

IULs grow without risk meaning their value never goes down. Every year their value is locked in. If the market takes a 20% dip one year, they remain the same value. If then the next year, the market has a 20% gain, your account grows from its baseline value and doesn’t need to recover from the 20% dip. We use ours as a backup emergency savings for this reason.

IULs also have really great investment options within them. While the insurance industry is only able to say these make about 7% in their illustrations, the expected earnings in these investment strategies are far greater.

Borrowing Ability

We always ensure our portfolio provides us with means of borrowing if possible. Our IUL provides us the ability borrow secured by our investments, similar to our brokerage accounts. This means we have access to money in a non-market correlated asset that doesn’t require a credit check to use. We can use this as our emergency savings. Or, if the stock market tanks, we can borrow from this and buy more shares to earn even more when the market goes up. If the housing market tanks, we can use this money to purchase an investment property to have greater appreciation when the market recovers. Our margin rate on this remains lower than our brokerage (currently at 5%) and you have the ability to borrow from the net surrender value as long as your annual premiums are paid.

Our Choice

We decided to go with Nationwide for our IUL. We like that Nationwide is a mutual company and therefore is not publicly traded so there is no fiduciary responsibility to shareholders. Their long-term care policies are approved in all 50 states and qualified for the tax exemption so we knew we’d be covered as nomads. They also have really great investment options within the IUL and the margin interest rate loans are very competitive.

In addition to permanent life insurance, we purchased term insurance. Ensure you select a term policy that is terminal, chronic, critical AND convertible. A convertible policy is important because it allows you to convert your term policy to whole life even if you are completely uninsurable at that time (e.g. you are diagnosed with a terminal illness) and you want to provide your beneficiaries a larger death benefit sum.

If you are interested in discussing life insurance options in more detail, Mindy is a licensed independent agent - please email us and we can help you find a solution that meets your needs! We always encourage you to shop around for life insurance and long-term care to compare rates and coverages.

Do you have a life insurance policy in place to protect you and your family?

AFFILIATE DISCLOSURE

This website contains some affiliate links to other websites including the Amazon Associate program. If you use the links provided and make a qualifying purchase, we get a small commission at no extra cost to you. We only recommend products we truly love, have made a difference in our lives, actually use during our adventures, and think you can benefit from too!

Our Current Strategy for Financial Freedom

As we’ve discussed in our About Us, we consider ourselves to be financially free, meaning our investments make more money than we did combined in our full-time engineering jobs. Thus we became no longer strapped to those jobs and job locations. Our plan has always been to retire early. We made a lot of deliberate financial decisions to get there. We began our journey as soon as we were married, but more recently, we took significant steps by investing money in courses on financial education instead of haphazardly figuring it out on YouTube and through varying books.

‘Retiring’ in our 30s was sooner than we were planning - we were on track to be totally done in our mid-40s. We are in a situation where we may need to return to work just due to inflation and the changing economy, but we knew we had enough to enjoy this time now with our toddlers before they started school and social lives. We decided we were happy to take the risk and could figure out the rest as future Mindy and Luke problems.

We want to share with you our current financial strategy to generate the income which replaces our salaries and supports this lifestyle. The best well-rounded financial course we took is called The Perfect Portfolio, which educated us beyond conventional financial norms. This course teaches how to have a well rounded financial portfolio of brokerage investments, real estate (or other business), and insurance policies - all of which are non-correlated and have the ability to borrow money secured by your investments (called margin). We learned about good debt and the philosophy of buy, borrow, die which is used by the wealthy.

This course was created by Mark Quann who is the author of Rich Man, Poor Bank, Top 10 Ways to Avoid Taxes, and Top 25 Ways an IUL can Secure Your Financial Future. If you are interested in these books, reach out to us via email and we can coordinate sending you a few!

Here is how our strategy is setup:

Brokerage Investments

The individual brokerage investments are invested in a diverse selection of high income options traded ETFs (offset by some bonds) generating about 3% dividend income per month. We actually have these with a financial advisor through Zega Investments as these ETFs are new and constantly growing/changing - we realized we couldn’t keep up with this and enjoy time traveling with our toddlers at the same time. These are not tax friendly - our dividend income is generally taxed as ordinary income.

This brokerage has the ability to provide us about 50% margin (or cash that can be used for other investments and requires no credit check) and our advisor negotiates our margin rate (which is currently 7%). Margin is pretty complex, is dependent on the individual funds your investments are in, can be ‘called back,’ and is considered ‘risky.’ The Perfect Portfolio taught us about this in detail so we can be knowledgable and comfortable when we make decisions and take risks with our money.

Margin is the money we live off. We send ourselves a monthly allotment based on our budget and actual spending and our financial advisor manages the percent of margin we hold in our account based on our risk profile/comfort level. As needed, the margin is paid down by the dividends that are earned.

Bonus Tip:

One thing we did early on to grow our brokerage account was maximize the amount of money we sent to our brokerage accounts over maxing out 401K/IRA contributions. This is contrary to traditional financial advice. We contributed the maximum amount our company matched to our 401K as we considered it ‘free money,’ but anything above that, we sent to our brokerage. We knew we’d be taxed over the years on the money invested in our brokerage, but we also wanted to have access to it before 59-1/2 and to us, that was worth it.

Also as our retirements were in tax-deferred accounts, we knew we would still pay tax on the money when we took it out in retirement. We don’t plan on being in a lower tax bracket at retirement - we probably won’t have our primary home paid for (we move around too much), we want to pay for family vacations with our kids and grandkids, and we assume tax brackets are going to be higher by the time we retire in general because of the national debt and deficit in social security funds. While Roth’s are different and we’d be able to pay the tax now, you can’t invest in them if your Modified Adjusted Gross Income is above a certain amount (currently $230,000 for married filing jointly).

We later learned in The Perfect Portfolio that if you invest your money in either a 401K or IRA, not only can you not touch it until retirement age (without a penalty), you also can’t borrow money secured by them to use for other parts of your broader portfolio.

Real Estate (or another business)

Real estate (or a business) is another aspect of this perfect portfolio. This is where we offset some of the tax hit from the individual brokerage dividend income.

Real estate has a ton of tax benefits and we are only starting to dabble in it. Bonus - once there is equity in your home, you have the ability to borrow from it too! We are renting our current home so we can now consider it an asset. We didn’t previously call this an asset because we don’t consider things that cost us money (like our mortgage, maintenance, items in the home, etc.) an asset, we consider them liabilities. We are currently renting this home for less than our mortgage. This is because we purchased it when the market and interest rates were high (oops!) - but this was also when we had to because our jobs moved us to a new location and we didn’t care to rent at the time. We expect the area we purchased in to have high market appreciation over time.

Even though this is technically a ‘loss’ - the way we are looking at this is we are just moving some money into a different non-liquid investment which earns a different rate of return (ROR) than our brokerage and makes our overall portfolio more diverse. Through classes and mentors, we’ve learned how to calculate the ROR on real estate and while it may look like a loss every month, we are overall getting a great return on our money over time - we’ll have to do another blog on this analysis.

This is not a perfect situation and we’d prefer to own real estate solely for rental purposes for greater tax benefits which we are working on.

Another great way to offset taxes is by creating a business. The Perfect Portfolio course provides you with lots of business ideas.

Be sure to find a brilliant CPA to help with this part of your portfolio in general. Our CPA was previously in finance and went to be a CPA to legally avoid taxes as much as he can - and he is helping us to do the same. If you need a recommendation, send us an email!

Life Insurance

We always thought it was important to have a life insurance policy but when we took The Perfect Portfolio we learned so much more about the benefits of these policies beyond just providing a death benefit to your heirs. Our focus quickly narrowed in on Indexed Universal Life (IUL) insurance. While these are complex life insurance policies, they serve a purpose in our strategy as a non-correlated asset which overall make our portfolio more diverse.

IULs are five things. They are permanent life insurance, long term care, tax efficient, a non-correlated asset, and you can borrow from them.

Life Insurance

This goes without saying. IULs are a permanent life insurance policy and will pay a death benefit to your beneficiaries. While there are other permanent life insurance options, we went with an IUL over others, like whole life, because you know exactly what premium you are paying in the policy and it is generally less expensive if you want long term care.

Long Term Care

Long term care is important to us as we’ve recently seen our grandmother deteriorate in a state run facility. She was there for rehab, but it was a small town, and therefore it was attached to the long term care facility. We want to ensure we have money for in home long term care and also so there is no burden on our children to take care of us when they are also taking care of their own families.

Also, many states are currently considering a long term care tax which would be similar to social security and taxed on everyone’s payroll. To date, Washington has implemented this at 0.58%, but California, New York and Pennsylvania (amongst other states), are not far behind in implementing this. If you have a life insurance policy with long term care, you will be exempt from this but only if you purchase it in advance of the long term care tax being implemented in your state. Some policies have long term care riders, but will not be qualified as exempt from this tax so be sure you have a policy in place that your state will accept for the tax exemption.

Tax Benefits

IULs are considered triple tax protected. You are not taxed on their growth or distribution and they are free from the death tax.

Non-correlated Asset

IULs grow without risk meaning their value never goes down. Every year their value is locked in. If the market takes a 20% dip one year, they remain the same value. If then the next year, the market has a 20% gain, your account grows from its baseline value and doesn’t need to recover from the 20% dip. We use ours an emergency savings for this reason.

IULs also have really great investment options within them. While the insurance industry is only able to say these make about 7% in their illustrations, the expected earnings in these investment strategies are far greater.

Borrowing Ability

We always ensure our portfolio provides us with means of borrowing if possible. Our IUL provides us the ability borrow secured by our investments, similar to our brokerage. This means we have access to money in a non-market correlated asset that doesn’t require a credit check to use. We can use this as our emergency savings. If the stock market tanks, we can borrow from this and buy more shares to earn even more when it goes up. If the housing market tanks, we can use this money to purchase a home to have greater appreciation when the market recovers. Our margin rate on this remains lower than our brokerage (currently at 5%) and you have the ability to borrow from it after month 13.

Our Choice

We decided to go with Nationwide for our IUL. We like that Nationwide is a mutual company and therefore is not publicly traded so there is no fiduciary responsibility to shareholders. Their long term care policies are approved in all 50 states so we knew we’d be covered as nomads. They also have really great investment options within the IUL and the margin interest rate loans are very competitive.

In addition to permanent life insurance, we purchased term insurance. Ensure you select a term policy that is terminal, chronic, critical AND convertible.

If you are interested in discussing life insurance options in more detail, please email us and we can help you find a solution that meets your needs!

Bonus

One last point we wanted to share is how we are investing our IRAs. While we aren’t using the money in them right now, we obviously want them to grow as much as possible! Ours are currently invested with M1 Finance. We really like M1 because you build what is called a pie - certain percentages of specific funds which each make a piece of your literal pie chart. As those stocks grow or you earn dividends, the pie continually rebalances to the the percentages of the pie you build. The Perfect Portfolio guys keep up on the latest investment funds and can provide great suggestions for how to setup this fund.

M1 also has a 4.5% high yield cash account which is another great option we considered for our emergency savings in lieu of our IUL.

---

This concludes the high level summary of our current financial strategy to support this full time RV lifestyle things with toddlers!

If you are interested in The Perfect Portfolio course we took, we have a couple links for you!

• This link gives you $300 off the price of the live course which is always FULL of the latest information!

• This link gives you pre-recorded sessions for nearly 50% off!

Disclaimer: This is not tax, legal or financial advice. It is simply us sharing how we do it. Always consult your professionals.

Drop us a comment for anything else!

AFFILIATE DISCLOSURE

This website contains some affiliate links to other websites including the Amazon Associate program. If you use the links provided and make a qualifying purchase, we get a small commission at no extra cost to you. We only recommend products we truly love, have made a difference in our lives, actually use during our adventures, and think you can benefit from too!