Fuel your FIRE

Financial Freedom in 2021! Take Action: Day 30

Wow! We made it to Day 30! I calculated that I’ve written (and you’ve read) over 25,000 words in the last month. That’s enough words to fill 1/3 of a novel, and all of them were about saving money and investing for the purposes of financial freedom.

But why?

In my post titled, What Does Financial Freedom Mean to You?, I summarized what motivated me to jump on board with the FIRE movement:

“Financial freedom allows the ability to let go

of maintaining a specific image; of an addiction to other people’s lives; of the shackles of material goods; of the restrictions placed on me by others; of saying ‘yes’ when I want to say ‘no’; of saying ‘no’ when I want to say ‘yes’; of negative relationships; of working to achieve someone else’s dream.

It provides the option to linger

with a baby in my arms; in bed all morning with my husband; on the floor in my kids’ playroom as they set up a tea party; at church after service or maybe on a Wednesday; on a restaurant patio with a friend; at a beautiful beach all day; in my sister’s living room catching up on a favorite TV show; at my mom’s house sipping coffee; at my children’s favorite museum; on the hiking trail or in the river at a state park.

It affords the privilege of indecisiveness

on whether to build a forever home, buy an investment property… or both; on whether to volunteer in local church ministries, start the business I’ve always dreamed of… or both; on whether to do travel homeschooling, keep my kids in public school… or both; on learning to play golf, participating in an over-40 soccer league… or both; on whether to write a book, start or podcast… or both.

It commands the responsibility to give

financial literacy lessons to my children; personal finance advice to the young and old; donations to charitable organizations; more time to important projects; opportunities to the underprivileged so that they can break the cycle of poverty; gifts to my church; more of me to those I love.”

It’s this final paragraph that makes the FIRE movement especially appealing, not just for myself, but for the entire community too. I recently heard that while others might see an individual’s push toward financial independence and early retirement as a selfish, greedy move, the truth is that most people in the community want to use their freedom for greater good.

Those who’ve reached FIRE write blogs to help others improve their money situations. They host podcasts and share the best tips available. They write books to make investing easier. They teach classes for free to the under-privileged, under-educated, and under-represented. They run fix-it clinics, start buy-nothing sites, and inspire minimalist movements. FIRE people don’t keep this to themselves; they share what they know and encourage others to make the best use of their money as well.

Consider the type of people who truly subscribe to the Financial Independence Retire Early life. These people are often intelligent, motivated, educated, persistent, goal-driven, risk-tolerant, and innovative. When people with these qualities are freed from the daily grind, their talents can then be put toward philanthropy and changing the world we live in.

Take action today on Day 30 by determining what fuels your FIRE and decide what good you could do in the world if earning a regular paycheck was no longer a top priority.

Thank you so much for going on this 30-day journey of action steps toward financial freedom with me! I truly hope it’s been helpful and that you’d be willing to share these tips with others.

I invite you to subscribe to this blog and follow Frugal_with_Four on Instagram. I’m looking forward to sharing so much more on living this frugal yet wonderful life with you.

Thanks for reading!!

Our First Rental Property Deal: The Challenges and Rewards

Just over two months ago, my husband and I bought our first rental property! Adding real estate investing to our portfolio is step #9 in our plan to reach FIRE by 50, so we are stoked that we were able to get started in the infamous year of 2020. I turned 41 this year; my husband turned 40. We still haven’t decided if our age deadline of 50 refers to his milestone birthday or mine, but we figure we have about 10 years to develop a strong real estate portfolio.

At my 40th Bday party…
let the FIRE countdown begin!

It all started with a little podcast called Bigger Pockets Money, which introduced me to several personal finance strategies and books to read, while also making real estate investing sound very appealing. I quickly decided that it had to be a part of our early retirement plan, but the extent of my knowledge only came from buying and selling a few primary residences in my life. So, I had to dive in! Thankfully, the free resources available are endless. About 50 podcast episodes and a dozen books later, I felt like we were ready. I started analyzing deals daily, constantly texted my realtor with questions about available properties, and talked my husband’s ear off about the next best Texas town in which to invest.

After months of research, analysis, and attending random open houses in the cities and towns we heard were the fastest growing, it hit us that we were out of our league. There are a lot of big dogs out there in the investing world, and the competition is fierce. Houses sold sight unseen, and several deals went into bidding wars. Out. Of. Our. League.

So, we finally decided to check out a sleepier town we’ve traveled to a few times on family road trips. I started looking up houses for sale and made a list of about a dozen I was interested in. Problem: Our realtor didn’t have access to the MLS there, and I wasn’t ready to involve a new realtor because we were still in the exploring phase. So, I took matters into my own hands. I spent an entire afternoon while one of my kids napped and the others played legos to call or email the listing agent on every single property. I politely asked if they’d be willing to show us their listing in a couple days. Most obliged despite my unconventional method, and we had 8 showings for that one Saturday.

This particular Saturday was during the dead heat of summer… in Texas … during a pandemic. So, we had no choice but to load all 4 of our kids into the minivan with the temperature gauge already reading 100 degrees by mid-morning. We promised them a fun day trip with just a few stops to look at houses. Thankfully, they bought into it, and we took off for the 2 hour trip. We had packed lunch boxes full of favorite snacks and plenty of treats, and we planned a stop at a super cool playground with a nearby hiking trail along a river.

By the time we made it to the first showing appointment, the car was a disaster, covered in snack wrappers, small toys, and countless coloring pages. Plus, our 3-year-old was fast asleep. My husband and I saw the first few houses in shifts. One of us had to stay in the car with the little guy. And of course, all three of the other children insisted on getting out, donned their masks, paraded through each home, and offered their unsolicited opinions. Our 4-year-old kept pointing out which room would be hers, no matter how many times we explained that we wouldn’t be living in these homes.

After hours of foundation issues, bad neighborhoods, major fixer-uppers, and an historic home with a busted lockbox, we made a quick kid-friendly pit stop for ice cream. At this point, the temp had reached 110 degrees outside, and our A/C was struggling to keep up. Everyone was exhausted. We debated whether it was worth it to see the last two houses. It felt like we had struck out in yet another Texas town.

Maybe it was the sugar high from the root beer floats or the sheer determination within, but we decided to forge ahead and see the last two houses. For our second to last appointment, we arrived to an obviously occupied home but no sign of a realtor anywhere. Soon after pulling up, a woman walked out onto the porch and gestured for us to come on in. The realtor was a man, so we knew this had to be someone living in the home. We double-checked the address, and it was correct. My eldest and I put our masks on and slowly approached the door. The house was beautiful, well-kept, and only a couple years old. It was even better on the inside, and the tour of the home was given to us by the current tenant who had just brought her first baby home from the NICU. We kept our distance, did a quick tour, and chatted outside a bit. My husband took his turn walking through the house, and as soon as he exited, we both gave each other THE look. This was it. We knew it.

Just at that moment, the listing agent arrived and gave us the whole story. We were questioning him about why this wonderful house with kind, paying tenants had been sitting on the market for 30 days, especially since the almost identical house next door sold in less than a week for full asking price.

It turns out that because the tenants in this home had a baby in the NICU for the whole month, no showings were being allowed… until that afternoon when we walked in! We asked the realtor several questions about how much rent the house was getting, why it was being sold, and whether the current tenants planned to stay. The answers couldn’t have been better, and we quickly realized that if another person were to walk through this house, we might lose our chance.

We called our realtor; she recommended a great local realtor in the area, and we put in an offer right away. The realtor she recommended specializes in rental properties, so as an added service, he also agreed to write up a new lease when we closed and to do all the negotiations/signing with the tenants, who did agree to stay.

We couldn’t believe it! After months and months of striking out, we finally hit a home run. We felt like this deal was the best scenario we could’ve imagined for our first rental property.

Here are all the numbers for those interested in deal analysis:

  • Purchase Price: $175,000 (25% down, 3.65% APR)
  • Monthly P&I: $598
  • Taxes and Insurance: ~$420/month
  • Additional expense: $50/month landscaping
  • Rental Rate: $1510 monthly (including pet fees)

So far, everything has been great! We communicate with our tenants a few times per month, sometimes about the house, sometimes about our families. My husband has visited the house for a walk-through once since closing and asked the tenants if there are any concerns or any ideas for future improvements. This relationship has helped with on-time payments and upfront communication. We even get a picture of the check each month before it’s sent in the mail and sometimes a picture of their baby to accompany it.

Now, we’re ready to find the next one! We know not every deal will go this smoothly, and we anticipate that problems will come at some point, which is why we have 6 months of expenses in a separate bank account for this property alone. However, the momentum has started, and we don’t want to slow down. With a goal of 2 properties per year, we are constantly on the hunt.

I’ve recently adopted a mantra I heard in an interview with Robert Kiyosaki: “4 green houses and a hotel.” Hopefully we can play our own game of real-life monopoly within the next decade. Stay tuned to see if we win or go bankrupt trying! My current goal is to just land on my step-dad’s version of “free parking” a few times, where the player gets to collect a mix of Monopoly money and the real cash my step-dad tossed in to make the game more interesting.

We plan to play often with our kids as well. Now that our children have joined us on this journey, literally and figuratively, we’re hopeful that they’ll learn investment strategies and important aspects of personal finance much earlier than we did. We’ve also told them that these homes are a key factor in their future post-graduation. More details on that to come…

I hope you’ve enjoyed reading the story of the ups and downs of our first rental property investment. I can’t wait to share more with you in the future! Please subscribe for more posts on our FIRE by 50 journey and additional tips on living a frugal yet FULL life.