'Set for Life' First Year Results - Any other successes?

Question

Hi all, I'm relatively new to the FI/real estate investing path but am excited to begin seeing some progress in the journey! I graduated from school about 2 years ago and one of the first personal finance books I read a year ago I read Scott Trench's 'Set for Life' and I'm excited to share my first year results.

I purchased a 2B2B townhouse February 2018 and converted the den into a 3rd bedroom. I got 2 of my friends to move in and started to net about $100 per month! This allowed me to significantly cut my living expenses allowing me to achieve a savings rate of about 60% post-tax. I've saved up about $24k in liquid capital which I plan on using to purchase another property this year.

I've also been tracking my net worth quarterly have found that I've been able to increase my net worth by about 17-20% per quarter by saving, investing, and taking advantage of my company's stock purchase plan/401K matching/etc.

It's extremely encouraging to see my savings increase so drastically in a short amount of time. I'll admit that I'm a bit obsessive when it comes to tracking my expenses but I want to know if anyone else has other success stories related to personal finance. I'd love to hear them and to get more inspiration to continue saving and investing!

Lisa Irimata · Answer

@Scott Trench No seriously, thank you for writing the book! Definitely helped to shape my financial perspective as a young professional.

Long-term I am interested in getting involved in multifamily investing and I see that happening in the 5-7 year range, I'm planning on that time transitioning fully to real estate investing. Currently I'm looking at purchasing another property and converting my current residence to a full rental. I'm also simultaneously building up my index funds so that I can have multiple streams of passive income. Not sure if the end goal is necessarily building my own business but I am open to the possibility!

Shiloh Lundahl · Answer

@Lisa Irimata way to go! I think that is awesome that you have already started your investing career right out of college. Way to pull off the house hack.

I have had a lot of great experiences when it come to applying things that I have read in personal finance books. My favorite personal finance book is The Richest Man in Babylon. It is the foundational book for many about money. Right now I’m reading a book called The Millionaire Fastlane by MJ DeMarco and it is really insightful (if I you can look past the occasional crude remarks and the swearing).

One of the best things that newer investors can do when they are starting out is meet with other investors. If you are interested, we have a meetup group in Mesa that we hold every month about investing. Here is the info on the meetup:

https://www.biggerpockets.com/forums/521/topics/682279-investor-meet-up-in-mesa-arizona

Aaron Zimmerman · Answer

@Lisa Irimata yeah it’s pretty hard to keep up with all the podcasts and blogs but I think most of them are either inspirational or education or both!

Right now I’m reading the big leap and it’s basically a book about achieving at your maximum potential. It’s a pretty short read (under 3 hours). Overall haven’t read a ton of books but certainly open to suggestions especially after tax season is done (I’m an accountant)

Aaron Zimmerman · Answer

@Lisa Irimata Also, sorry I didn’t get this in the original message but my best ways of saving have just been being intentional. I typically don’t go out to eat all too often and my food bill has been super low. Finding car insurance that was affordable saved me about $1,600 per year. Tax optimization has been helpful as well. My tax rate last year was about 3-4% for federal by maxing out my 401(k).

Aaron Zimmerman · Answer

@Lisa Irimata that’s awesome that you were able to find something on the MLS and then also get creative with converting the bedroom. I’m glad everything has worked out so far and hopefully everything goes smooth sailing.

My plan is to continue to self-educate for a couple more months and then perhaps get ready to buy a place late this year or early next year. The Chicago market is pretty pricey at the moment and I need to get comfortable with having leverage. Also, my gf and I are considering moving in together and she’s not as into RE as I am. So finding a house hack may not be as easy and also would have to be in a relatively safe area (some parts of Chicago are pretty high crime). But either way, I’m looking forward to enjoying the journey and really hoping to make the house hack a viable option. Otherwise, I’d consider doing a live in flip!

Aaron Zimmerman · Answer

@Lisa Irimata you are very encouraging! I just read the book as well and have yet to take action so far- although I do have a 45% savings rate at the moment. Would you mind walking us through your first deal? That’s awesome that you were able to house hack successfully and take action

Lisa Irimata · Answer

@Aaron Zimmerman Fortunately (or not?) haven't lived with any SO yet so haven't had to have that discussion. But I'm sure in a few years I'm sure I'll be having the same discussions you are. If she's already on board with FI I think you're in good shape!

Those are pretty much all the blogs/podcasts I keep up with too and I supplement this all with the books they suggest on the BP podcasts. If you're looking for a good read I'm currently getting through So Good They Can't Ignore You and it's phenomenal! Same to you, if you have any suggestions of what to read/listen to I'd love to hear them.

Aaron Zimmerman · Answer

@Lisa Irimata that’s great that your significant other is supportive of all of your goals and aspirations. Is he into FI and REI as much as you?

And thanks for the tips! I’ll try to implement some of the stuff I hear on that. I do try and write down relevant action items such as things to convince my gf about REI. To her credit, she is on board with FI!

I’ve basically listened to and read a lot of stuff from the mad fientist and JL Collins and ChooseFI. Are there any other sites that you like? I feel like there’s just so many out there to read/listen to

Lisa Irimata · Answer

@Aaron Zimmerman Hope everything works out for you! Though if you’re already thinking about REI and FI I’m sure everything will. I’ve never had an issue with my SO not being on board but I know that’s a common talking point within the FI community. If you haven’t already you should check out some of the podcasts on BP because I know I’ve heard a few of the interviewees talk about working with their spouse/SO to get on the same page.

Also if you’re interested in maximizing tax savings/index fund investing I’d highly recommend The Mad Fientist!

Lisa Irimata · Answer

@Aaron Zimmerman funny enough I didn’t know anything about house hacking or BP when I bought my first property. I ended up buying my townhouse because I needed a place to live and my previous arrangement fell through, ended up working out though so here are the details.

I knew that I didn’t want to be house poor so I was strictly looking at properties that were ~75% of the total loan I qualified for. I had one roommate lined up so I knew I wanted a minimum of 2B2B but preferably 3B2B. I used a real estate agent and found my property on MLS where it had been sitting for over 2 months. Purchased at $190k with 10% down, conventional financing. Took about 1 month to do some light rehab which I did myself (paint, new fixtures, repaint cabinets, etc). Haven’t refinanced or anything yet but am planning on doing so after I move out and change out the flooring.

After 1 month had my first roommate move in. Within the next 6 months I got the den converted to a third bedroom and had a second roommate move in. With the second roommate my entire monthly mortgage/taxes/insurance/PMI is covered with a surplus of ~$100. I pay for all utilities/water/internet which is about $250 per month. So in total I’m only paying about $150 each month to live!

Reducing my living cost has definitely been the biggest contributing factor to a high savings rate. Are you currently house hacking or finding ways to reduce your cost of living? Excited for you to start your FI journey too!

'Set for Life' First Year Results - Any other successes?

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