Intentionally Choosing the Path to Financial Independence with Financial Mechanic

Scott: Welcome to the BiggerPockets Money Podcast show number 97, with Financial Mechanic, from financialmechanic.com.

Financial Mech.: I don’t really think of the money that I save as saving money, I’m actually spending it on freedom. And would I rather spend my money on a shirt, or would I rather spend my money on freedom from work? So have that why, the why of FI, the why of saving, the why of keeping your money where it is.

Scott: It’s time for a new American Dream, one that doesn’t involve working in a cubicle for 40 years, barely scraping by. Whether you’re looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation, you’re in the right place. This show is for anyone who has money or wants more. This is the BiggerPockets Money Podcast.

Scott: How’s it going, everybody? I’m Scott Trench, and I’m here with my cohost, Mindy Jensen. How you doing today, Mindy?

Mindy: I am doing fantastic, Scott. I am super excited for today’s show because the Financial Mechanic is our guest today, and she has a lot of really amazing things to say.

Scott: Yeah, I think this is a great story, and it’s just a lifetime of really good, sound decision making, and being good with money, and it’s just enabled her to become really wealthy at a really young age, and she’s got a FIRE by, what? 30? 32?

Mindy: Yeah.

Scott: Really conservatively.

Mindy: Extremely conservatively. And I want to jump in and head off any of the internet retirement police. Well, you know what? Internet retirement police isn’t the right one. I want to head off anybody who is going to say, “Oh, well she’s young.” Yeah, she’s young. This is an interview with somebody who is just making every right decision.

Scott: That’s right.

Mindy: And people are going to say, “Oh, well she makes so much money.” Yeah. She purposely makes so much money. She designed a career, she designed a college path so that she would have a degree that would allow her to make a lot of money. I don’t think there’s anything wrong with that. Just like last week, Wilson said, “Oh, there’s people who need to get over the fact that wealthy people aren’t evil.” Just because she makes a lot of money doesn’t make her a bad person; it allows her to save significantly faster and reach her financial independence number way sooner.

Scott: Absolutely. And we’re going to have people on, we’ve had people on the show that have families, we’ve had people who start with high expenses, and people who have low incomes, we’ve had a single mother, we’ve had a large diversity of folks. And look, Financial Mechanic, she is a young person who makes a lot of money and is moving toward a five really quickly. There’s a reason she’s doing that, is because of a set of good decisions, and this is a great episode for anybody that can empathize with that situation, or knows somebody who is in college or about to graduate who can likely follow in those footsteps.

Scott: And look, you know, fair, unfair circumstances, or overlapping or not, she is going to have power to direct her life and live the vast majority of her life in a state of financial independence, and she’s going to go on to do things, and live a life that few other people are going to get to live in. And that’s wonderful, and that’s what as many people as possible, in my opinion, should be trying to set themselves up for in the aftermath of graduating college and entering their early to mid 20s.

Mindy: I absolutely agree. And in the beginning of this show, I tell you and Financial Mechanic that I am not going to let my daughters listen to this show, because the little one wants a puppy so desperately. But I am going to have my 12 year old listen to this show, because the tips, the ideas, the thinking, you know, she’s going into eighth grade next year … next year, it’s like the beginning of seventh grade, but she’ll be going into eighth grade, she’ll be going into high school, all these things build up on each other, and she actually really likes programming. She was at a Girl Scout programming thing this last weekend, and she had such a great time. So this is a great example for anybody, for young people who are starting out.

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Mindy: Okay, huge thanks to today’s sponsor. Financial Mechanic, welcome to the BiggerPockets Money Podcast. I’m super excited to have you on the show today. How you doing?

Financial Mech.: I’m great. Thanks for having me.

Mindy: Ah, thanks for coming on. I want to hear about your money journey, the relationship you have with money, and how it has shaped your finances today. So where does that start?

Financial Mech.: It starts, I would say, in childhood. So I had a very frugal family. My mom was the breadwinner, and my dad was a stay-at-home dad. And in terms of my frugal family, we never went out to dinner without a coupon, we’d order one soda for the whole family at dinner, if we even got soda, and when I was young, like five years old, my parents promised that if I saved up enough money I could buy a puppy.

Financial Mech.: So for the next four years, I saved up $100, so when I was nine, I saved up $100 and brought it to my dad, and said, “Okay, I’m ready to have a puppy.” He was like, “Okay, well $100 isn’t really going to cover it,” but since they promised, they got the puppy, and then they let me keep the $100. I didn’t know what to do with it, so I just kept saving, and saving, and saving. So I think that pattern got established really early on, and got me really interested in money.

Mindy: That’s really awesome, and I have to make sure that my daughter does not listen to this show, because she desperately wants a puppy, and she [crosstalk 00:07:32]-

Financial Mech.: Maybe in four years if she saves enough. It could be good. It could be a good tactic.

Mindy: I’d love for her to save the money, but I don’t want a puppy. So your dad allowed you to get a puppy?

Financial Mech.: Yes. So they said, “When your sister is your age, if you have $100,” my sister is four years younger, “then you can have a puppy.” And when the time came, I said, “All right,” I brought it all down, it was in quarters. I spent a half a day, and I remember, sorting out all the quarters, and making sure I had enough. Then they let us get the puppy!

Mindy: That’s a lot of quarters.

Financial Mech.: It was a lot, it was very heavy to carry.

Mindy: So you said you continued to save after he let you keep the $100 and get a puppy. What does your high school experience with money look like, and into college?

Financial Mech.: Yeah, so I started working at 14, I got a job at the local golf course. And I also got, earlier than that, I took a course at Red Cross in order to start babysitting, so I started getting money on the weekends through babysitting, and then throughout the week on summers for coaching golf. I made minimum wage, but over time in high school, I was squirreling away thousands of dollars. I think by the end of high school, I had about eight grand saved up, which was a lot, and I was really lucky that I didn’t have to support my family or anything, and so it all just built up in the savings account that I had with my .01 interest savings account.

Scott: How did that translate when you moved into college?

Financial Mech.: Yeah, when I was in college, I continued to work. I got a job as a research assistant to continue building it up. I think I worked a lot less in college, and just really focused on getting a degree. I would say there, my money journey transitioned a little bit because it wasn’t as much about saving money as trying to build up a foundation for the future earnings, so that’s when I pivoted to really starting to think about my future in terms of, “What degree do I want? What’s going to be the best return because I’m spending thousands of dollars on tuition? So rather than trying to save up pennies now, how can I focus on getting good grades and doing the work in order to get a degree that will pay me back later?”

Mindy: Okay, that’s interesting. I don’t think everybody has … well, I know everybody doesn’t have the mindset that you do to think about, “What is the job I can get that’s going to pay me well?” Do you have any advice for people who are listening, like my 12 year old, who doesn’t know what she wants to do when she’s older? Or my nine year old who does and it’s not going to pay very much?

Financial Mech.: I think a big focus for me was, “What’s going to give me options?” I thought about being an environmental engineer, and then I realized that if I was a mechanical engineer, which is what I ended up majoring in, that I would be able to do environmental work, but if I got the environmental degree, potentially I wouldn’t be able to do mechanical engineering work. So if you’re looking at different degrees, and they don’t have to be high paying, but would it open you up to a range of professions that might pay better? If you really like graphic design, there might be a route with a lot of different options.

Financial Mech.: So that’s what I would say, is to focus on your future opportunities. Don’t peg yourself into one small corner where you can only teach that thing later down the line. You should have job opportunities, hopefully.

Scott: I think that’s great advice. You know, it’s like, “Hey, I can choose between these two different degrees,” and you can still do the same work. Right? You can get a mathematics or business degree, and still do work that involves writing, or art history. We always make fun of that one. But you can still do certain other work if you get a more marketable degree, which I think is great advice.

Financial Mech.: That was huge for me, because I really, really, really wanted to major in English, and I excelled in those classes, and math was harder for me, and at the end of the day, I can write on the side, but I’m not going to engineer on the side of my writing job. But it’s much easier to have an engineering degree that pays me a lot, and opens up my flexibility in order to write on the side, and then start something like a blog to fulfill those passions on the side as well. So if you can find options that way, and a way to still have that passion, but maybe you get paid for something else.

Scott: Love it.

Mindy: Yeah. My daughter was just at a team coding conference for Girl Scouts, it was sponsored by Raytheon, over the weekend, and there was a woman from the FBI talking about … it was like a cybersecurity thing, she talked about the way she does her detecting, and she said, “If this is something that interests you, don’t study criminal justice. If you want to work at the FBI, don’t study this, study something else that we can use. You know, there’s a lot of people who studied criminal justice in the FBI, but they need mathematicians, they need cybersecurity people, they need computer technicians, they need linguists, they need all these different things, and studying this one thing gets you this one job, but studying these other things really opens up all these different opportunities.”

Mindy: I just think that’s really important when you’re deciding what to study, and how much student loan debt to incur. Well, go with something that gives you the most options and the most ability to pay those debts off very quickly.

Scott: So how did you finance college?

Financial Mech.: I was extremely lucky that I had a lot of help from my parents. So while I did work, and I did have that stashed away from high school, ultimately my parents helped me, and I came out of school debt free. And I know that that’s something that not many other people share, especially right now with our student loan crisis. It’s gotten to ridiculous levels. So I’m very, very thankful for that.

Scott: Nope, I share the same position as you, so very lucky with that also. So you graduate college with a pile of cash, ad debt free, I assume. What happens next?

Financial Mech.: First I got an interneship, right out of school, as a systems engineering intern, and that was really fun. As part of the internship, they said, “Here’s a bunch of data, and we need to have dashboards so we know basically who’s calling, what are they calling about, are they angry?” It was basically a dashboard to help customer service to find out what issues they were having. And I started learning Python programming language, consumed all the data, and then made these dashboards. It took me, it was about four month long internship.

Financial Mech.: Then, I really enjoyed it, I loved the challenge of it, I love the satisfaction of when you finally figure something out. So at the end of that, my partner got into med school across the country in Oregon, and I decided I would move to Oregon. When I was searching for jobs, I typed in engineer into Indeed, and all of the jobs that popped up were software engineering. Almost none of them were mechanical.

Financial Mech.: So I spread the net wide, I decided, “Maybe I’ll give it a shot. I don’t really have the right qualifications, necessarily, but I think I could make it work.” And I got a job as a junior software engineer in Portland, Oregon, and then started my career in software engineering.

Scott: Love it. Did you take any training? Or did you just kind of go for it and learn on the job?

Financial Mech.: I learned completely on the job. I was thankful for that first internship where they really let me have free rein over what did the dashboards look like, what language I would be using, and that was my intro. But that was fully paid for, and then on the side I did … you can sign up for problems every day to get emailed for you to practice, so then there’s also a book called Cracking the Coding Interview, and I worked through those problems, and then I started applying.

Financial Mech.: Some of the jobs, you have to whiteboard issues, so you have to write code on a whiteboard, and then you talk it through, and you talk about what you’re thinking about, so I practiced that as well. Then, that was my main preparation, but I didn’t take a bootcamp, they have bootcamps now that you can take, and I managed to mostly do self taught.

Scott: Love it. So what was happening with your money situation throughout this period?

Financial Mech.: I had my internship, saved up for the internship, and then moved across the country with just two suitcases, crashed with my significant other in his apartment with his brother. So we were living in downtown Portland for about $650 a month, which in Portland is amazing, but between the three of us, it made it a lot cheaper. Then my first job paid 65 grand a year, so I was doing okay.

Scott: Yeah!

Financial Mech.: It was before I found out about financial independence. So I started earning quite a lot of money, a lot higher than average, and just out of school, I wasn’t sure exactly what to even expect, especially when I was negotiating the first job offer, they asked, “Well, what do you want?” And I asked to call them back later, and quickly Googled, “Well, what do people make, because this could define the rest of my career what I’m making?” And I had no idea. I could have asked for 40 grand, 30 grand. I had literally no concept of what a software engineer would make.

Financial Mech.: But I did the research, I got the 65 grand, and that put me on a good footing. Then when I eventually … I think about a year later, I found financial independence, and I was glad that I did, because then I had a goal for where to put that money. Until then, I was just saving it with no real reason to save. I just didn’t know what to spend it on yet. And it could have-

Scott: Were you putting it in a checking account?

Financial Mech.: Was I? I think. Yeah, it was mostly all going into savings account. I was planning on buying a car, and I did. I bought a 2009 Mazda Miata. It’s a small convertible, red, a speedy little car. And the rest went into a savings account.

Scott: That great with all that sunshine in Portland.

Financial Mech.: I know! The week after I bought it, we had a huge snowstorm, and it just sat in the garage all week.

Scott: No, so once you discovered FI, how did that change how you thought about where you started placing all this money that you were accumulating?

Financial Mech.: Once I found FI, I … and part of the reason I found FI was because all this money was accumulating, and I felt like I needed to be a better steward of my money, and so I started looking at personal finance on Reddit, and then that led me to the financial independence subreddit, and then from there, I learned more about investing, and investing in indexed funds, and that’s when I started to actually invest. So I found FI through this interest in personal finance, and what do I do with this money?

Scott: Awesome. So what were kind of the next evolutions from there in your money journey?

Financial Mech.: Then, I sold the car because I realized I didn’t need it.

Scott: Oh, I didn’t even know that was coming!

Financial Mech.: So I bought the car, and then I think two weeks later, I found Mr. Money Mustache, and I read through … I’m a blog binger, so I start from the first post, and I binge read it all for maybe the next couple weeks. And I was reading about how you should try to bike everywhere if you can, and the cost and drag of a car, and the depreciation, and everything. So I was really regretting buying that car. I did keep it for two years, and I drove it around, but then for the most part, it was just sitting there. So I actually sold it for a profit two years later.

Mindy: Good for you!

Financial Mech.: Thank you.

Scott: Nice.

Financial Mech.: Definitely, knowing about money and trying to teach myself about negotiation helped with that. Then from there, my money journey evolved into starting a blog, tracking my money, and where was it going. That was all new to me. And finding the community of FI, and having this now dream and goal, and something to build towards. So I would say that was the next step on the money journey.

Scott: Awesome. Did you just start accumulating more and more cash over time as you kind of tracked your spending, and then dumping it in index funds? Is that pretty much the synopsis of that in this period? Or was there more to it besides the tracking and investing?

Financial Mech.: Yeah, so first, I increased my 401K balance contributions, and then I realized, “Oh, there’s a Roth IRA, I should do that,” so I dumped five grand, I think at the time it was five, or 5,500 was the limit, so I dumped it all in, because I had so much in my savings. Then from there, dumped it all in VTSAX, and maybe a bond fund, and an international fund. So I used the three-fund portfolio from Bogleheads. I actually went on the Bogleheads forum … Is it bogle or boggle? Bogleheads?

Scott: I think it might be Bogleheads, but yeah.

Mindy: It’s bogle.

Financial Mech.: I went to the Bogleheads.

Scott: But by the way, for those who don’t know, Jack Bogle was the founder of Vanguard, and so there’s a community called Bogleheads, where you can go on there, and they have an endless amount of discussion about index funds, which I think is hilarious, and awesome.

Mindy: Yeah, they are pro index funds over there. Buy.

Financial Mech.: It was great, too, because they had this whole forum, and I went on, and I posted everything that I owned. I think when I first realized about investing, I made myself a portfolio, and I bought a lot of different index funds, and ETFs, and it was just a huge jumble. And I went on the forum, and said, “Okay, this is everything that I own in which type of account,” and one guy, this user, I think his name is Ducky, and he has thousands of posts, and he just helps out users, he asked me some questions, and he helped me design my own portfolio based off of that, that was way more streamlined, simplified, and just this stranger on the internet helped me.

Financial Mech.: As I learned more, and more, and more, I realized, his wisdom, it kept being reinforced that I had made the right decision to go to internet strangers for all my money advice. But it worked out.

Scott: Yeah, it’s amazing how that can sometimes be much healthier way to learn about money than somebody who is highly incentivized to sell you an expensive, high fee insurance product. So what a world.

Financial Mech.: Yeah, the people on the internet are benefiting from helping you, but not for their own good, not your fees.

Scott: Well, what was happening with your career during this period?

Financial Mech.: My career was going well. I was doing well at work. I took on a few big projects, and I actually got assigned a project to go to live in the U.K. for six months, and they paid for all my expenses for the first two months, so they paid for food, and lodging, and transport, and then the following six months, they didn’t pay for food, but they paid for transport, and the flights, and everything. So that was a really, really fun time to … I was learning new languages abroad, and had a whole new international project.

Financial Mech.: Then after that, I came home, and there had been a bunch of layoffs in our office, and I decided to start looking elsewhere, and I started to apply to a bunch of different jobs, and realized that the industry for software engineering, I could make a lot more than 65,000 a year. So I started applying. I applied to, I think, eight or nine different places, and each time, I negotiated more, and more, and more. So I got a lot of practice with negotiation, and I ended up doubling my salary when I switched jobs.

Scott: Wow.

Mindy: Yeah, so you doubled your salary after how long were you working at the $65,000 job?

Financial Mech.: I worked there for two years, and I did get some promotions. So I was making 65 grand, and after eight months, I was promoted to software engineer 2, it goes 1, 2, 3, 4, 5, then to architect. So I got promoted after eight months, and I got a little bit of a jump with that, and then I did try to negotiate before I left, and I did get a raise, so I think I was making around 77 by the time I left. Then when I moved jobs, that was the increase.

Scott: Awesome. Can you walk us through how you were able to engineer that increase?

Financial Mech.: I see what you did there.

Scott: Yeah, there you go.

Financial Mech.: Yeah, so the increase was, first off, doing lots of research on Glassdoor and PayScale, find out what companies in my area were offering for a level software engineer 2 or a 3 if I wanted to up for a promotion. I did workshops on the weekends to practice whiteboarding questions, and what type of questions are people asking. Then, they would ask, usually you’d have a phone screen and they ask, “Okay, what are you expecting to make?” I found out that you can actually turn the question on them, and most of the time they’ll answer. So I learned to say, “Well, what do you guys offer? Is there a range?” And they might tell me, “Oh, we start our software engineer 2s at 90,000, but there’s a huge range, and it depends on a lot of factors.” But suddenly, they’re saying 90 when I was thinking maybe 85 or something. That worked for me.

Financial Mech.: Then, in actual negotiations, there’s kind of the process of going back and forth, and shooting a bit higher than you might expect to get in the end. Then you can also potentially play offers off of each other, although I didn’t want to do that as much. I think, as long as you have the research, you have the skills, you can say, “This is what I’m worth,” and work with them to try to get there. There’s also negotiating for a lot of different factors, not just salary, but your 401K, your time off, that kind of thing.

Mindy: Ooh, talk about some of that, especially the 401K, that’s very interesting.

Financial Mech.: Oh, that’s true, I guess 401K is not as common. That’s not something I negotiated for, but I did negotiate for, in tech jobs, sometimes you can get signing bonuses, so I found that for most of them, we would talk about our base salary, and expectations there, maybe restricted stock units, and that would be something to talk about and negotiate over what does that mean, especially for a startup versus a bigger company. And I was applying for a huge range, so I had to learn about what does it mean at a startup to get stock versus a lower base salary? Is it going to pay off? What kind of decisions do you have to make there?

Financial Mech.: But you can negotiate for a base salary, and then I asked, at my company that I ended up with, “Well, do you do signing bonuses?” And they said, “Yeah.” And I said, “Can I have one?” And they said, “Yeah.” So I got $10,000 extra just for asking for a signing bonus at the end of the negotiation.

Mindy: Say that again. Say I got $10,000 extra just for asking.

Financial Mech.: I got $10,000 just for asking.

Scott: That’s amazing. With the signing bonuses, are those something that the company will say, “Hey, we’ll give you a signing bonus, but you have to refund it if you’re not here in a year”? Or how does that work? Is it just truly free money?

Financial Mech.: Yeah, it depends on your company. At my first company, I also got a signing bonus when I was moving across the country. It wasn’t actually across, it was from Denver to Portland, so half way across the country. And they gave $10,000 then as well, and I had to stay for the full year, otherwise, yes, I’d have to pay it back. So that got stashed away, just in case. The second one, I don’t actually remember if that had to be a year. I would expect it did. It really depends on the company that you’re at. Sometimes it’s no strings attached. I think for the most part, they ask you to stay for a year just so that you’re not company hopping and taking those signing bonuses with you.

Scott: Yeah, I’d love to get that person on the podcast, who signing-bonused their way to financial freedom. One week at a time. Okay, so that’s awesome. So you’re saying that you were at a job making $77,000 a year, and you effective doubled your annual compensation through this process with one job hop, or multiple?

Financial Mech.: One job hop, and it was, if you go for double, it would be from the starting salary, so the $65,000. Then there’s extra percentages-

Scott: Ah, so it’s only a 75% increase. Ugh, what is this?

Financial Mech.: It depends if you count all the benefits, everything else. Don’t want to mis-advertise. But it’s on the base salary. Then it was just one job hop, although I have seen incredible moves from other people job-hopping. I think it’s a really good way to increase your salary, and to find out what the industry is doing, because if you’re not, and you’re staying, and you’re making the cost of living increase, maybe 2 or 3%, and you move, and you get something like even a 10%, let alone a 75 to 100% increase, it can be a huge difference.

Scott: Love it. So what year was this that you made this job hop?

Financial Mech.: It was a little over a year ago.

Scott: Okay, great. So you’ve been at this job now for a year. Has anything else changed? Has the fact that you’re now earning, generating a lot more income and have different benefits, has that changed your approach to investing? Or are you still just kind of plopping it all into Ducky’s investment portfolio?

Financial Mech.: Good old Ducky, he sent me on the right track. I’ve just been plugging it away, back in Ducky’s portfolio. I’ve been saving like crazy basically for FI, so I’ve recently hit, my net worth has hit $300,000. And in the meantime, I have used the flexibility of being a software engineer to work from home. So right now, I work completely remotely, on my own schedule. I’m on the East Coast, my company is on the West Coast, but they really say, “You just have to get the work done, we don’t care when you work or how you work. Just get the work done.” Which has allowed me a lot of freedom.

Financial Mech.: Then in terms od finances, yup, just dumping it back into the portfolio.

Scott: Awesome. So what’s the end game here? Have you calculated a FI number or thought about what’s next?

Financial Mech.: My goal, and I established a goal mostly for the blog, I wanted to have some type of target, and I think I’ll be basic FI before I hit 30, and the hope is to be actually FI at age of 32 with 1.2 million. So to elaborate a little bit on that, is I currently spend about $20,000 a year, so that would be saving about $500,000, using the 4% rule, and I think I could do that in the next four years. But I am projecting out my spending to double, just to give myself that safety, so I’m projecting out for 40 grand a year, and then adding a little bit of padding to make the withdrawal rate be more like 3%, so basically trying to be very, very conservative, and shooting for 32 to be financially independent.

Mindy: Okay, there are-

Scott: Wow.

Mindy: … some holes in this story that we need to fill in, because you said you lived in Portland, and now you say you live on the East Coast, so when did you move?

Financial Mech.: Oh, yes, I moved just … oh man, when did … it was about four months ago. My significant other finished med school in Portland, and then he got his residency letter; you don’t get to choose where you move if you are a resident. You get an envelope, and you open it up, and it tells you where you’re going to be for the next five years. So actually, four months ago, we moved from Portland to New York, and that’s why I’m completely working remotely now. Yeah, good catch! I was living in Portland just a little while ago, and now I live in New York.

Scott: In New York City?

Financial Mech.: No, in Upstate New York. It’s beautiful, we have the fall colors right now.

Scott: I was going to say, we were going to have some angry listeners talking about how you can’t save $20,000 in New York City.

Mindy: Yeah, you can’t live on that.

Financial Mech.: No, yeah.

Mindy: Okay, so where is your partner in all of this? You mentioned med school. Doctors are never FI. Sorry, Physician on FIRE. So where is he in all of this financial independence story?

Financial Mech.: Yeah, so my partner and I have been together for 10 years. We met in high school, and that’s a fun little love story. But I moved to Portland when he started med school. His dream has always been to be a doctor, he’s studying for radiology. And in terms of FI and finances, we’re not married, and so we have completely separate finances, 100% different. So actually, I am planning to be financially independent at 32, and that’s the same age I will be when he finally finishes his residency and becomes a fully-fledged doctor earning doctor salary. Right now, he’s earning a little bit, but it’s just residency salary, which is a lot less than maybe you would think of as a doctor salary.

Financial Mech.: So it’s kind of two different paths in terms of FI, and we’ve talked about it, he’s not really interested in the retire early part of FI. He wants to work forever, he thinks, and who knows. From my perspective, I think retiring early is just a good option to have, but FI is the most important part. So we’re shooting for FI together, we’re both equally frugal, but in terms of retiring early, we’re definitely on different pages there.

Mindy: Okay, so he enjoys being a radiologist, or thinks he will enjoy being a radiologist.

Financial Mech.: Yeah.

Mindy: But he’s on the FI part of the FIRE path.

Financial Mech.: I think.

Mindy: Is he? Or …

Financial Mech.: He likes the idea. I did have him write a guest post on my site about his thoughts on it, and he kind of, at first just thought it was one of those … I get hobbies, and then I go really deep into them, and so he kind of just thought that FI was just another one of these crazy hobbies that I get myself into, and he wasn’t that interested. But in terms of being financially independent, I think he sees the value in not being dependent on your job in case something goes wrong, and having that job security or income security from FI. But it’s not really a goal for him, so much, because he sees himself being a radiologist for the foreseeable future, maybe retiring at like 55, but who knows because he really loves it.

Scott: No, I think that if you’re looking to retire early, the doctor route is not one that most people take, right? Because it’s not really like, becoming a doctor, you have four years of undergrad, you got four years of med school, you got hundreds of thousands of dollars going into that, and you have years of residency that can vary. Right? So that’s an identity, and you have to be excellent the whole way through, you have to be a top student, then you have to really commit yourself with med school because there’s not residencies, then you have to work the crazy hours that they put these people through during residency.

Scott: So we’ve met several doctors who are interested in FIRE, but there’s almost like an existential problem that they have to face that’s not really related to the money at the tail end of this, where, “Hey, I’ve just put in some of the best years of my life learning this craft in helping people. I’m conservatively FIRE, for sure, but what do I do from there?” So I think it’s really interesting that you’ve got that completely opposite dynamic to your partner, and you can kind of empathize with some of it, what might be going through his head.

Financial Mech.: Yeah, definitely. I think that his interest in FI, he’s realized, and one reason he really likes radiology is it’s actually quite flexible. So his mentor in the hospital ended up moving to Switzerland, and what you can do is called night hawking, where you work for an American hospital, and they send over the x-rays, and then you read them during your daytime in Europe, and then you send them back, but it’s American’s nighttime. So you can go back and forth, and live a more flexible life.

Financial Mech.: That’s one reason that he chose radiology. He also loves radiology, and it’s something he wants to do, but it does allow that career freedom that aligns with what I would like to do, is move somewhere, I’d like to slow travel. And I have traveled, and we’ve done the long distance thing for seven years. So in my retirement plan, I’m thinking of slow traveling, and having a home-base where he is, potentially. And if that’s in Europe, that would be awesome.

Financial Mech.: So we’re kind of trying to slowly design our life. We have lots of time left, but yeah, it’s really interesting being on these completely different paths. We have the same kind of dreams, but different ways to get there, and different timelines.

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Mindy: So you said you spent $20,000 a year. You can’t live on $20,000 a year, nobody can do that, so that’s obviously a lie. What are you cutting out and giving up, and you’re just eating beans and rice, and all of that? The internet trolls really love to hammer this home that you have a miserable life if you’re not spending every dollar that you make. What does your budget look like? What does $20,000 look like?

Financial Mech.: It is the most lavish lifestyle I could ever think of. I don’t know how people can spend double. How do they even do that? Because I travel, I … When I was in England, traveled across Europe, and I go out with friends, and I bike to work. But it’s beautiful because I bike along the river, and I can go out with my coworkers afterwards and I don’t hold back. I think what we end up doing is making a lot of delicious, healthy meals at home, we end up … That’s like the biggest thing, I think, is the meals at home. We keep our rent cost low, and staying in beautiful apartments next to the river, but it might be smaller than what somebody else, or a little bit farther out of town, but I can still bike to work, or I could in Portland, it was a 20 minute bike ride.

Financial Mech.: So I think it’s a beautiful, full life, but it’s always interesting to think about how could I even double my spending if I tried? I don’t even know if I could do it if I wanted to.

Mindy: Get a bigger house because you deserve it, get a nice car, brand new because you don’t want to buy somebody else’s problem, go out to dinner because you deserve it, and you have to celebrate everything. You know, you bought a new pair of shoes, so you got to celebrate that. You have a brand new outfit and you look really cute, you have to celebrate that. You have to get $400 haircuts, color your hair every three weeks.

Scott: Private school.

Mindy: Private school. Do you have kids? We haven’t talked about kids.

Financial Mech.: Oh no. So we don’t have kids, we’re not planning on having kids. I’m 26, so we have some time to really decide on that, but the plan right now is no kids, and that has been pretty good for saving.

Mindy: You know, that is good for saving. And you can always change your mind, but the best time to not have kids is when that’s not what you want.

Scott: Yeah, you know, the story here, you make it sound so easy, and it is so easy, right? Because you started in high school, you picked a major, and you saved your pennies, and didn’t spend it all, right? You picked a major in college that you thought would give you great employment, right? And give you a really good income generation potential, right? You spent less than you earned when you got your first job, you discovered financial independence reasonably soon after college. You made a mistake, and you bought a fancy car, that might have been inappropriate for Portland, and then you sold the car, right?

Mindy: At a profit.

Scott: At a profit, and recouped that, right? You invested some time to learn about investing appropriately, and you negotiated, you worked really hard, I’m sure that was part of this, working really hard, and then negotiated your salary, and understood what your market value was. Right? These are all basic steps that a lot of people can repeat. You know, if you’re in college right now, or listening to this. You just didn’t make any key mistakes or suck yourself into a lifestyle that costs a lot to maintain.

Scott: So that’s why you’re like, “Man, I’m going to FI at 32, and I’m going to double all of my assumptions, and cut the 4% rule down to 3% and be super conservative.” What am I missing? What is there going on? No, it’s just you followed the formula. Sorry, I went on a little rant there, but that’s because I’m impressed, and I think it’s amazing. This is what more people, we need to help more people do exactly what you just did.

Mindy: Well, and I know, I can hear people listening in their cars saying, “Well, but she made a lot of money.” Yeah, she made a lot of money. She made a smart choice, and she didn’t choose fashion design as her college career. That was me. She chose something, purposely chose something that had a lot of options, that paid well. I am so thankful that we have teachers, because I have two children, and they need to be taught, and I am a terrible teacher. But I don’t want to be a teacher, and I think we need to pay our teachers better. But you chose a job that pays a lot more than teachers. I mean, teachers really need to get paid more. That’s a rant I’m not even going to go on right now.

Mindy: But this is an option. You do computer programming that is paying you a lot of money. My husband was a computer programmer. He also made a lot of money. When you have a high salary and a very low cost of living, a very low annual spend, you’re just going to accumulate a ton of money. Where do you put that? You put it in the stock market. The stock market goes on a tear, you put it into real estate. Real estate appreciates. You put it into an investment. What is it? The richest man in Babylon? Spend less than you earn, and invest with somebody who knows what they’re doing. It’s just a winning combination.

Scott: Let’s not forget, we haven’t talked much about it, but you have started a business in this blog, right? And it’s awesome. So you’re doing all four of these components of spending very little, earning lots, earning that flexibly, investing according to a well-researched plan, and you’ve got a little bit of entrepreneurship kind of side thing going as well.

Financial Mech.: My hope, also, is to add real estate eventually to that portfolio. We’re moving next year for the next four years of my significant other’s residency, but I’ve been listening to BiggerPockets because I’m preparing, eventually, to add real estate too. But yeah, you’re right, I think it’s simple, but not easy, and it especially can get very difficult if you don’t know what you’re doing early on, and lots of us don’t. Almost all of us start out not knowing anything, and so it can be easy to dig ourselves into financial holes, and I think that’s why it’s so important to have something like this podcast, where if somebody is listening to it early enough, they can avoid those financial pitfalls early, and start building and hitting all those different steps.

Mindy: That’s perfect. What did Wilson Muscadin say last week, Scott, on episode 96? Learning how to manage your money is a skill, and you need to learn this skill, you’re not born with this skill. I was just talking to a friend the other day, and he’s like, “I’m really good with money, but I feel like I’m not … I don’t know all these things.” I’m like, “Well, let’s say you’re an obstetricians aren’t born knowing how to do brain surgery, they have to learn that. And if you only learn how to deliver babies, that’s still a skill, it’s just not the other skill. So don’t feel bad that you don’t know everything. Teach yourself, learn, go through all of the things that you need to … Listen to the podcast, read the blogs, read the books, just consume this information.”

Mindy: You keep seeing the same things over and over again. Track your spending. How many people have said you have to track your spending, Scott? Like 100% of our guests?

Scott: Do you track your spending?

Mindy: I do, I have a spending tracker.

Scott: No, I was asking that to our mechanic guest.

Mindy: Oh, I’m sorry.

Scott: Yeah.

Financial Mech.: I do too, I also track my spending. I use Personal Capital, and I keep expense reports on the blog every month.

Scott: Yeah, Mindy, I was totally unaware that you track your spending, after 100 episodes.

Mindy: I know, I never say that every episode.

Scott: Yeah, that’s brand new information to me. Well, I just think it’s amazing. I think you’re going to live most of your life in a state of financial independence, right? I have a strong hunch that your model that you’ve built is ultra conservative, with way more than you’ll ever need from a spending perspective, or at least in the near future, and that you probably don’t have the additional increases in salary, and bonuses that you’re likely to work your way into over the next couple of years. So just kudos to you, and as you achieve that, go live somewhere really awesome, and do some really cool stuff.

Financial Mech.: Yeah, that’s the hope, that’s the hope. I think you can have more and work more, or you can have less and work less, but you can still have a fulfilling life.

Mindy: Oh, beautiful.

Scott: All right, well should we transition to our famous four? Yes, that sounds great. All right, let’s do it.

Mindy: Let’s do it!

Scott: All right, these are the same-

Mindy: Sorry, I was taking a note.

Scott: … five questions we ask every guest, four questions and one command, as Mindy likes to say. So I’ll go ahead and get them started today, we’ll reverse the order, Mindy. What is your favorite finance book?

Financial Mech.: I have two favorite finance books, and you’ve actually had both of the authors on this podcast. My first one would be Meet the Frugalwoods by Liz Thames, and she was on episode 10. I really like hers because it’s a story, it’s about her life, with her husband, and their shared goal, and going to live on the homestead. So it’s a finance book, but it’s written with this personal narrative that you can really connect to. That would be one.

Financial Mech.: Then my second one that gets a little more in the technical nitty gritty details is Work Optional by Tanja Hester, she was on episode 13. I really like it because it’s something I want to share with everybody. I gave it to my mom, I read it myself, and it talks a lot about what kind of life are you designing. So those are my top two.

Mindy: That’s awesome.

Scott: Awesome.

Mindy: Those are both really great books.

Scott: Written by really great people.

Mindy: And really great ladies.

Scott: Yeah.

Financial Mech.: Yes.

Mindy: Okay, what was your biggest money mistake?

Financial Mech.: My biggest money mistake, besides the car because that ended up okay, my biggest money mistake was that first job I had as a systems engineering intern was when I left and moved to Portland, my dad called me up and said, “You have to roll over your 401K. We keep getting mail about it.” So I called up and I asked them to roll it over, and the guy on the phone said, “Oh, it’s a lot of paperwork. You should just take it out.” So I said, “Okay, sure, just take it out. Whatever.” My dad ended up letting me know that was really dumb, and there’s a penalty you have to pay. The guy on the phone didn’t say that, he just said it’s a lot of paperwork, and so I decided it would be easier to take it all out.

Financial Mech.: Luckily, it was four months of working there, so I think the hit wasn’t as bad as it could’ve been, but I think that laziness and not wanting to figure out what it meant to roll over, that was a 10% hit on any of my contributions to my 401K that summer.

Mindy: Yeah, that is unfortunately not the first time I’ve heard that. I know that when I was leaving a job … this used to be the case, and I really need to look into this and put this in the show notes if this is actually true or if I’m just telling a lie right now, but let me tell it anyway. If you have $5000 or more in your 401K, you can opt to leave it in there, and this was the case, so it’s probably not even the case anymore, but ask if you have to take it out. Just because you don’t work there anymore doesn’t mean you can’t continue to use their 401K.

Mindy: I know that my company was like, “Well, we would really prefer if you took it out.” I’m like, “I don’t really care what you prefer. I’m leaving you.” It actually wasn’t my choice. I was a terrible employee at that company. I probably didn’t share that on my interview with this company, but yes, I did get fired from that company, I totally deserved it. Sometimes you can change and be a better person now.

Mindy: But yeah, they like, “Well, we would prefer you take this money out.” And I’m like, “I don’t really care what you want. I don’t have to take it out, do I, legally?” And they’re like, “Well, no.” But I mean, it felt very bullying. They’re like, “Well, you have to do this.” So I can see how people would say, “Oh, I guess I have to.” You know, if they don’t tell you that there’s a 10% hit, how are you going to know? And do the research, but in the process of doing all this, it can get kind of overwhelming.

Mindy: So I’m really glad that that was … I’m not glad that that was your biggest mistake, although that’s a good one because it was only four months, it was at the very beginning of your career. How much money did you possibly have in there?

Financial Mech.: Yeah, not that much. But enough to learn the lesson. I think it was a good lesson to learn. And yeah, I agree, it can get overwhelming when you’re switching jobs, and you might not know what it entails, but it’s definitely worth the paperwork. So if you’re leaving a job, you can keep it in there. Actually, I left all my last 401K with my old company because the options are really good there, so I just left it, so I have two 401Ks, so that’s still true, depending on your company. Just check and see, otherwise, roll it over, do not take it out.

Mindy: Yes, and you can roll it over into an IRA, or a self-directed IRA, there’s a lot of ways you can do this. If the check is made out to Financial Mechanic, you are paying taxes, you are paying fees and penalties, and all of that. If it’s made to your 401K or your 401K company, and again, I’ll figure all this out and put a link in the show notes, then you’re not paying the taxes, you’re not paying the penalties, you’re not doing anything wrong. So even if you don’t have the 5000, if that’s still the threshold to keep it in, you can roll it over and still not pay taxes on it.

Scott: And we should bring on an accountant in a few weeks, and have that person walk us through a lot of the details with these 401Ks, we can go to town on all this kind of stuff, because there’s a whole bunch of rabbit holes here. I just love the way that you frame this as your mistake, when the fact that you didn’t self-educate cost you a little bit of money in this case because of that. And I think that a lot of people would kind of play the victim, “Hey, this guy took me for a ride, or forced me.” No, you’re saying, “It was my mistake not to self-educate enough and figure that out.” I think that that’s the mark of someone who’s going to be really successful with managing your finances over time there.

Financial Mech.: Thank you. Flattered.

Scott: I think it’s great. All right, Mindy, you’ve been looking forward to asking this question for a long time.

Mindy: I have. No, no, no, this is your … We skipped one, Scott.

Scott: Oh, I forgot question three. All right, what is your favorite piece of advice for people who are just starting out?

Financial Mech.: Ah, that’s a good one. So like you mentioned, almost everybody talks about tracking your spending, so I’m not going to say that. I’m going to say have a reason for tracking your spending. If you’re just starting out, have a goal. You know, FI is a nice goal, to be financially independent, but really, what’s the goal behind the FI? Do you want to go live on a homestead in the woods of Vermont? Do you want to slow travel the world? Would you like to start up your own business with some financial cushion, take some more risks in your career, or become a fashion designer or something? But do you have a goal for that money?

Financial Mech.: I don’t really think of the money that I save as saving money, I’m actually spending it on freedom. And would I rather spend my money on a shirt? Or would I rather spend my money on freedom from work? So have that why, the why of FI, the why of saving, the why of keeping your money where it is. I think that’s the most important part, is to have a vision or a goal, and it justifies all the work you have to do with maybe tracking … although I don’t think it’s that much work to track your spending, but at first it might feel like a lot of work, but if you have that reason why, it helps the process go smoothly.

Mindy: Amen, sister. Okay, what is your favorite joke to tell at parties?

Financial Mech.: What is the most important part of telling a good joke? Timing.

Scott: Oh, I see what you did there.

Mindy: I love it! I love it! I love it! Oh, I’m so glad I got to ask the question when I liked the joke.

Scott: That was really good. All right, tell us where people can find out more about you.

Financial Mech.: All right, you can find me at www.financialmechanic.com. I’m also on Twitter @fimechanic, or Instagram @mechanicfinancial, which is a little confusing because it’s swapped, but just go to the website first, and then it’s all there!

Scott: Awesome. Financialmechanic.com.

Financial Mech.: That’s it.

Scott: Well, thank you so much for coming on the show today, this has been awesome. Really, obviously, impressed with your story and how efficiently you’re just crushing your progress towards FI, and I think there’s a lot of things that people can take from this and apply.

Financial Mech.: Yeah, I hope people get something out of it. It was really, really great to meet you guys, and chat. It was awesome.

Mindy: It was lovely. Thank you again for coming on the show. We’ll talk soon!

Financial Mech.: Yes, talk soon.

Scott: All right, that was Financial Mechanic, of financialmechanic.com, or fimechanic, or mechanicalfi, whatever it is, her Instagram title. What’d you think, Mindy?

Mindy: I love her story! I love her story so much, and I love that last bit that she said, “I’m not saving my money, I’m spending it on my freedom.” That completely sums up the financial independence movement in general.

Scott: Yeah, I mean, I think I’ve indicated how impressed I am with her journey and story in the intro, and during the show.

Mindy: Oh, were you?

Scott: Yeah.

Mindy: Did you like that story, Scott? Couldn’t tell.

Scott: But it’s just like, that’s how you do it, right? That’s how you do it.

Mindy: That’s how you do it.

Scott: As efficiently as possible, right? Without starting a business and making a million dollars overnight, which never happens, this is the easy … not the easy path. This is the most straightforward path to FI imaginable, right? It’s incredibly predictable, the outcomes that have happened to her over the last couple of years with her career, right?

Mindy: She would have to try to screw this up. She would really have to try to make this not work out.

Scott: And it’s just more people need to kind of hear that story, and design, especially their early 20s and mid-20s along lines that will enable them to get a high powered career going. Right? She did not study computer science. She studied engineering because she knew it had a lot of opportunity for other paths, and then she switched careers to the biggest opportunity that she could find, and then she went really hard after that, right?

Scott: How many people go out and start a new career, even their existing career, then read a bunch of books on how to master the interview, or answer questions, or learn the skills that are in the high market demand, right? Anybody can do that.

Mindy: One, so far.

Scott: How many people do, right? So I think that there’s a lot of things to take away from that, and I think it is never too late to reinvent your career, it’s never too late to just assess your market position, knowhow much you should be paid relative to your skillset and what other companies are paying for a similar skillset, and then go out and make it happen.

Mindy: Yup. This whole episode was just filled with fantastic tips, and I hope every young person going into high school, going into college, just graduating college has an opportunity to listen to this show.

Mindy: Okay, Scott, should we get out of here?

Scott: Let’s do it.

Mindy: From episode 97 of the BiggerPockets Money Podcast, this is Scott Trench, and I am Mindy Jensen, and we are saying peace out, girl scout.