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SHOW NOTES FOR EPISODE 433: SECRETS OF A 27 YEAR OLD RETIREE
Zig Ziglar said, “You don’t have to be great to start, but you have to start to be great.” That’s exactly what personal finance expert, author and real estate investor Rachel Richards believed when she set out to retire in only THREE YEARS. In today’s podcast, Rachel Richard shares her secrets of how she became financially independent at ripe old age of 27.
What You Will Learn
- How to generate enough passive income to retire in 2 to 3 years
- The value of saving 50% of her income
- How to get a college degree without incurring student loan debt
- Why it doesn’t matter what age you are to become financially independent in a short period of time
- How self publishing a book can generate passive income
- What the “Four Savings Buckets” are how they can help you attain financial independence
- Why a college degree is not all it’s cracked up to be
- Setting goals and what to do once you’ve achieved your goals
About Our Guest
Rachel Richards
Only 27 years old, Rachel quit her job and retired, living off over $10,000 per month in passive income. Rachel has made a name for herself in the personal finance realm. She is the bestselling author of Money Honey and Passive Income, Aggressive Retirement. She has been featured on the Penny Hoarder and the New York Times and contracted to speak at colleges. Her valuable lessons have helped thousands of female millennials work their way out of financial despair. She has successfully done what no one has done before: made the topic of money management fun, entertaining, and simple. Rachel has a Bachelor of Science in Financial Economics from Centre College. She has held roles as a financial advisor, a real estate analyst, and a senior finance analyst. Rachel is based in Colorado with her husband and dog.
More About Rachel
- Ever since she was very young, Rachel has been intrigued by money
- When she went to a water park with friends, instead of going on the slides, she was sitting reading the Motley Fools’ Investment Guide for Teens
- She was a “finance nerd” at a young age
- She also loved to write and would write short stories
- She continued reading and learning more about money and writing
- One of the books she read was Rich Dad Poor Dad by Robert Kiyosaki
- This got her interested in real estate investing – one of the best tools to build long term wealth!
- Rachel graduated college in 2013 with a degree in Financial Economics
- She graduated college debt free because she sold knives (Cutco Knives) during her college years, which paid for her education
- She was told by her professors that she would be making $60k upon graduation
- Got a job in finance (advisor and later an analyst) and was making $32,000 per year
- She is very frugal and a big saver – saving 50% of her income!
- She has been able to save and invest wisely
- When she got married, her husband already had purchased a home
- Also, he graduated from college debt free as well because he used the GI bill
First Real Estate Investment & Her First Book
- Real Estate Investing
- In 2017, they purchased their first rental property in Louisville, Kentucky – a duplex
- Kentucky is a great place to invest
- The duplex only cost $100,000
- They had saved enough for the down payment. putting in $10K each for the 20% down
- They self-managed their first rental property
- She read lots of books to learn how to be a landlord, screen tenants and manage the property
- A favorite book for helping her to buy and manage her first rental properties was Hold (one of the authors, Linda McKissack, was one of our podcast guests – 143: From $600,000 in Debt to Real Estate Mogul)
- She had worked for a number of real estate people in her job so she had people she could go to with questions
- Publishing Her First Book
- She also published a book, Money Honey, in that same year
- Her goal was to generate two passive income streams – rental income and royalty income
- She and her husband sought to grow both income streams as much as they could over the next few years
- Three years later, they have nearly 40 rental units and she just launched her second best-selling book Passive Income Aggressive Retirement
- Last year, she quit her full-time job and they are now living on a passive income stream of $10,000 per month – Currently it’s $15,000 monthly
- The income is split as follows:
- $7-10,000 rental income
- Book royalties recently accounted for $7,000 for one month
Writing Money Honey
- She is self-published, which means she maintains much more control and gets substantially higher royalties
- It’s easy to self-publish on Amazon
- But she has to do all the marketing and promotion on her own
- She wrote the book because people always asked her personal finance questions
- She wondered why they didn’t already know these things
- She figured that they didn’t know because personal finance is just boring
- She though, “How can I make the topic fun, sassy and simple?” – That is where the book came from
- She sat down to write the book and it just flowed out of her — like she was meant to write it
- Because she is a female millennial and the people asking her questions were female millennials, she wrote to that audience, even though the principals apply to both genders
- The book is written for young people (college students, recent grads, etc.) just starting out and covers:
- Basics of Money Management
- Budgeting
- Savings
- Debt
- Investing
- College education is also referenced
- Do you really need a Bachelor’s Degree?
- Calculate the ROI before going to school
- It’s difficult to predict your ROI
- She was told by professors that she would make $60K
- In reality, she made only $32K
- It’s difficult to predict your ROI
- Alternatives
- Trade School
- Vocational School
- Community College
- Using Military/VA benefits
- Basics of Money Management
- She has sold over 15,000 copies without any advertising
Advising Young Adults on Money Mangement
- Rachel loves advising and teaching young adults how to manage their money – it’s her passion
- She teaches that budgeting is the key – an “empowering tool” – a GPS to help you get from point A to point B
- You have to have a budget to know where you’re going
- Dave Ramsey said “A budget is simply telling your money where to go instead of wondering where it went.”
- It shows where your money is going
- The biggest question she gets is “Do I put my extra money in savings or debt pay-off?”
- Today, if were heading into recession, she tells them “Cash is king!”
- If you don’t have an emergency cash savings account funded, then you definitely need to start today put money away
- She uses the concept of “Savings Buckets”
- The first step is to fill up bucket number 1 – The Emergency Savings Bucket – with at least $1,000 set aside for any unexpected expenses
- Bucket 2 – Medium-Term Savings – 3 to 6 months of expenses and anything else you’re saving for in the next 12 months (trip home, Christmas gifts, etc.) – higher yield online savings account
- Bucket 3 – Long-Term Savings – Passive things like Index Funds and ETFs
- Bucket 4 – Retirement – Index Funds and ETFs
- Today, if were heading into recession, she tells them “Cash is king!”
Biggest Mistake
- They were looking for a property manager
- You just need to build in the cost before you buy
- They thought they could get an individual instead of a company
- They had a couple that were already helping them with their properties in cleaning, maintenance, repairs, etc.
- They made them employees of their company
- Everything started off fine
- Her husband noticed that a bunch of rent money was missing – about $6,000
- The couple stole the money and left town
- They also found out they had been squatting in vacant units for almost a year
- They learned from the experience that:
- Hiring individuals (from Craig’s List) wasn’t a good idea – even though they did background checks
- That there is certain information they should not have given access to
- There is a warrant out for their arrest
- Don’t be cheap when it comes to property management – if they hired a licensed/bonded professional company they would been liable
Biggest Success
- Trying to take good care of their tenants
- Has one tenant in each building to watch out for things and inform Rachel if there are issues
- When there is a problem between tenants in a building she asks this one question:
- “What do you want us to do about it?”
- Once the tenants thinks that through it, they realize there’s really not a lot they can do
- Sure, they can send out a warning or something else
- But, in reality, there isn’t a lot the landlord can do
- It forces the tenants to resolve the problem between themselves
- Once the tenants thinks that through it, they realize there’s really not a lot they can do
- “What do you want us to do about it?”
Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years
- It is never too late to get started in real estate investing
- She did most of what she needed to do in the span of only 2 to 3 years
- You can still use real estate investing as a means to achieve financial independence and early retirement
- They have:
- One duplex
- 2 single family homes
- 3 buildings with 10 to 12 units each
- They stopped acquiring in 2018
- They didn’t have the time to do more (they were both working full-time)
- She recommends to build your portfolio while working full-time, if possible
- Her husband is still working full-time because he loves his job, not because he has to
- He handles most of the property oversight/management – no more than 10 hours per week
- She says she’s retired because she’s “financially independent”
- She still works too (on her book business) but not because she has to but because she enjoys it
- She also enjoys teaching people about financial literacy
- Launched he first online course that goes along with her first book – Money Honey
- Pre-recorded videos
- 8 weeks total
- Has a community where she can interact with students
- Launched he first online course that goes along with her first book – Money Honey
- She may write another book but the book launches take so much time and effort that it takes a year for her to recover
- If she writes another book, it may be a fiction book, which she has always wanted to do
- They didn’t have the time to do more (they were both working full-time)
- Moving from Kentucky to Colorado has forced them to outsource most of their real estate work, which has freed them up
Current Business Plan
- They worked so hard to get to the place they are at that they didn’t plan beyond where they are
- It was hard work (80-hour weeks, no time off, etc.)
- The plan now is to just relax and enjoy the things they’ve created – hike in Colorado, enjoy the great outdoors
- Take time off to recharge and enjoy their lives
- Real estate has always been the “means to an end”
- They may sell off rentals and go into more passive income in REITs, index funds, ETFs
- ETF – IJR is a favorite
- Invests for the long term
- Doesn’t understand crypto so doesn’t invest in it
Rap-It-Up
- Favorite real estate book: Hold by & 2 more
- Favorite business book: The Millionaire Fast Lane by MJ DeMarco and Tools of Titans by Tim Ferris
- Most valuable web site for success (other than your own): Afford Anything with Paula Pent
- Favorite app: Mint (best free app for managing your money, knowing net worth)
- Favorite quote: “You don’t have to be great to start, but you have to start to be great.” by Zig Ziglar
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? I would wholesale because you can learn and get educated with no money. It only takes 4 or 5 deals to get started in a real estate investing
How to Reach Rachel
To Buy Her Books
To Get Free Stuff
- To get free worksheets and other great personal finance tools: MoneyHoneyRachel.com/free
DISCLAIMER: Many of the above strategies take knowledge and have a higher degree of risk. You need to do your research and/or work with someone who is experienced to reduce your risk.
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Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com
