In her mid-30s, Diana had a huge wake-up call. Her parents, who had just retired, suddenly passed away. This lit a flame that would eventually ignite a full FIRE under Diana to live life on her terms well before the standard retirement age. She and her husband saved diligently, invested heavily, and were able to quit their jobs at 45, starting two businesses, one of which broke even while the other turned a profit.
Mindy:
What if you could access your retirement funds years before traditional retirement age without paying hefty penalties? Today’s guest is going to reveal how at age 55, while her peers were still grinding away at their corporate jobs, Diana had walked away from full-time work already. I am so excited to hear her story and see how you can recreate it. Hello, hello, hello and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen and sadly neither Scott nor Amber Lee could join me today on this podcast, but fear not Amber Lee will be back. Next episode. Before we bring on Diana, I have a quick question. How many hours did you spend last month chasing down rent payments, sorting through piles of receipts or filling in spreadsheets? If the answer is too many, then I need to tell you about Base Lane. A trusted BiggerPockets pro partner base Lane is an all-in-one banking and financial platform built specifically for real estate investors.
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Diana:
You. So good to meet you on the computer because I listened to you on my earbuds every day during my morning walks, I’m always doing my power walk, educating my mind and working at my body.
Mindy:
I love it. Thank you so much for listening. Let’s go back to the beginning of your financial journey. When did you discover the concept of financial independence or the fire movement specifically?
Diana:
I guess when we actually discovered the fire movement itself, it was probably a lot later, but what happened to us is in our mid thirties before that we had started working and we are saving and on a regular basis just kind of going through the normal grind in our mid thirties. All of a sudden my parents who had been working all their careers to be able to retire at 65 or maybe even 62, they both passed away and they weren’t able to do the things they wanted to do. They were waiting until they retired to be able to travel to spend more time with the family and all that. And my dad fortunately, retired at 62 and then passed away at 63 and my mom passed away a year later. So for us, it was a wake up call that said there’s no guarantees of how your life is going to, my parents had thought they were going to live into their eighties or nineties because their family all did. So they just assumed that, but they didn’t get that. So from our standpoint, it was a wake up call that said, what do we need to do to number one, get balance in our lives and do the things that we want to do now and also be able to retire earlier so that we have complete freedom to do whatever we want to do and not have to work. So that was our wake up call.
Mindy:
So what were some of these changes that you made?
Diana:
Well, we had been saving, we had been maxing out our 4 0 1 ks and so we continued to do that. We also were saving extra money one to $200 a month. They always say pay yourself first. So we were automatically paying ourselves first. Having that money go straight to different funds to different accounts, and so we were saving for that. And then also our children were young at that time and we opened up five 20 nines for each of them and had automatic monthly draws that went there as well. So we had all our little buckets that were being funded, but the most heavily funded one was our IRA 4 0 1 Ks that we were funding through our employer who gave us, I think a 7% match at the time. So that helped obviously, but that was in company stock, so it did help from that standpoint and we had that match and we took advantage of that and maxed out.
I think you could max out to 10% or something like that. So we both were big time into saving, but living our lives too, going on vacations and enjoying ourselves and spending time. Our kids were both active in sports and stuff, so spending time with them and all that as well. What was your career at this time? We were both very heavy duty into, we were professionals. My husband’s an engineer and he was in manufacturing. I’m a business major. I was in supply chain purchasing, so we had very demanding careers. We were working hard because my kids now my son’s big dog was like, you don’t understand. Yeah, I did understand. We went through that. We had those years where we were just grinding away, but trying to still have that balance with our kids so that we could do their sports and do the things with them trying to save as much as we could, but not being misers.
I mean, because that’s the thing I listen to a lot of the PHI people and a lot of them, they are so tight with their money because they’re trying to save 80 or 90% of their money. That’s me too. And when I have friends that do that, it drives me crazy like you got to think you can’t, especially if you can afford to do it, don’t agonize over a few dollars or whatever. Just do it. Just enjoy your life, do the things you want to do. So that was our balance that we were trying to do the things we wanted to do, but also being able to make sure that we had that balance, do the things but also save. So try to do that.
Mindy:
So you said just a moment ago that you were saving in your 4 0 1 ks, your IRAs, your kids 5 29 plans. Did you have any after tax investments?
Diana:
Well, that’s what I was saying. You also had some mutual funds and I think one of your recent podcasts I was listening to, you guys referred to Peter Lynch and at the time when we were young, he was the Fidelity Contra fund. And so we had a lot of our money went into that. That was a kind of invest in the that it performed really well. So fortunately we had some good strong performers, which I think helped our overall building, our base, our money base.
Mindy:
Scott and I have also been talking about the middle class trap recently where you’re doing everything right by the book, you’re contributing to your retirement accounts and you’re paying down your mortgage, but you’re not really doing anything outside of that. So you become a millionaire on paper, but then you look and you’re like, well, I can’t access any of this money unless I start paying hefty interest rates or unless I start paying fees to access the money that’s mine because I’m getting it early. And it doesn’t seem like this really applied to you that
Diana:
It actually does because we are definitely in the middle class trap as far as we have been since we’ve actually fired because we’re having to work that real balance. And we had healthcare because when we had our small business, we had healthcare through our small business. Once we actually completely retired, we had to get healthcare and we both had preexisting conditions, so we couldn’t just buy in on the regular marketplace because they wouldn’t cover our preexisting conditions. So we got stuck in that trap. I mean, we’ve gotten stuck in so many traps. It’s just I feel like we’ve learned so many things a hard way, but in that case there, when the Affordable Healthcare Act came out, that was our saving grace because they couldn’t discriminate against any preexisting conditions and we could get it affordably, but then you had to work that fine line, especially when you’re drawing out a lot of your 401k money that’s bumping up your income, and so you have to make sure that you keep your income within decent limits so that you’re not having to pay a bunch more. At 1.1 year, I think we withdrew maybe $10 too much and it threw me into the next thing and we had to pay back $20,000. So it was like, oh, you really have to, I mean, I have learned so many things the hard way from that standpoint of just knowing how to navigate and work, understand the system and being able to work within it.
Mindy:
That’s really key. Being able to work within the system. The system says this, okay, well let me figure out how to work within those boundaries. But yeah, you are not kidding. The A CA is a game changer. I also have a preexisting condition and had to stay employed or my husband had to stay employed once we got married. Otherwise there’s no insurance.
Diana:
It is doable, but it’s not the easiest, like you said, I feel like since being retired or since not having a regular job, my job now is how to figure out how to work our lives. Exactly. And I’m not getting paid for it except for instance, if I don’t do it, I’m going to be spending more money.
Mindy:
Now we need to take a quick ad break, but my listeners, I am so excited to announce you can now buy your ticket for BP Con 2025, which is October five through seven in beautiful, sunny Las Vegas Nevada score, the early bird pricing of $100 off by going to biggerpockets.com/conference while we take this quick break. Welcome back to the show. We are joined by Diana. Well, you have alluded to a small business and you had traditional W2 jobs. So when did you leave your traditional W2 job
Diana:
At 45? Okay, so at about right before 45, I guess I started looking at our savings versus our income, and I was like, our savings rate is growing at a faster rate. We’re making more money each year than we are on our actual W2 jobs. When you said, when did we discover fire? At the time, I didn’t know it was fire, but I knew that hey, our savings that we’ve been saving all these years is finally starting to add up and we’re making more money with our money than we’re making working, but I didn’t feel like, okay, we could just do nothing. Yeah, yeah, exactly. Yes, exactly. I didn’t feel like we could just do nothing. We were in our early forties. Like I said, it’s been like 10 years since my parents had passed and we had gotten to that point and I’m like, oh, we’re at that point now.
We can do whatever we want to do. So what is it that we want to do? I had always said I loved what I did as a career was like I said, I was a business person. I did supply chain. What I do now, spend analysis, I would look at companies like even when I was doing the consulting, I would look at the spend that companies were doing, figure out where their biggest spend is and look for opportunities to save money in those areas. That’s what I do with my life now with our personal finances. But back then I love what I was doing, but all of a sudden the corporate world, the company was going through some changes and I wasn’t having fun anymore. And I always had said, if I’m not enjoying it, I’m going to do something different. So I wasn’t having fun anymore and my husband wasn’t either.
And so we said, I think it’s time for us to figure out what do we want to do with our lives? Somehow we had gotten this idea back when we lived in St. Louis because we had moved several times throughout our careers and we had seen this small business that was kind of a family fun center. It had batting cages, mini golf go-kart track and stuff, and it was just kind of a fun place. And we said we would love to do something like that in the town that we were living in. We thought that that would be a neat thing to do. So luckily there was some land for sale right outside of our neighborhood, and we bought that, and hindsight is if we would’ve just bought that land and just sat on it and then sold it 10 years later, we would’ve been much better off.
But we didn’t bought the land and we built a family fund center on it. That’s what my husband did. So he left his corporate job to run that business and to work in that business, and I left my corporate job and became a supply chain consultant and worked for other companies helping. Some of ’em were small companies, a lot of ’em were big companies, helped in their supply chain organization or in their purchasing organization figure out how to save money as a corporation. So that’s what we did. Now what happened? So 20 years of savings before that, we just sat on, we said, okay, we’re not going to live off of that. It’s just going to continue to grow. It was already, like I said before, it was making our salaries, so let’s let it keep churning and let’s let it keep growing and we’re going to just focus on doing these other things.
And it got us more quality time with our kids because our kids wound up working in this small business with my husband and a lot of their friends got their first jobs too. So it was a real neat opportunity. We invested all of our money that was not inside of our 401k, which is really another key there. So our money that wasn’t in our 401k, we took that all and we liquidated it and invested it in this, developed this land into a family fund center, put in a lot of concrete for mini golf, put in the concrete for the batting cages, just spent a lot of money of our own money that we had saved as well as we took a home equity loan on our house initially until we could get a business loan because it wouldn’t give you a business loan right off the bat. So then we got a business loan. So we learned a lot of things, kind of the school of hard knocks, but it was a good experience and it was a good experience to be able to spend the time with our kids too and have more quality time with them and their friends, and they learned business skills as a result of seeing how a small business operates and such as Well.
Mindy:
So you keep speaking about this in past tense. I am assuming that you no longer own the family fund center.
Diana:
So we did that for 10 years. We knew that what was going to help us there is at some point we either needed to sell the business and they say like small businesses, it takes three to five years to finally break even. It was about just exactly that. At three years we finally broke even, and then the recession of 2008 hit and we could tell before anybody knew that there was a recession, people were complaining about not wanting to spend business just really went down because that’s extra money. People aren’t going to spend, if things are tight, they’re not going to go out and spend money playing mini golf or hitting balls or having an ice cream or whatever. So we started to see that already, but at that point we were in it and we were going to keep chugging through it, and luckily we didn’t have to tap our savings because the consulting part was paying the bills for everything.
And so we were able to do, all right, so we had that business for 10 years and then at about 55 is when we finally were able to sell it, and we knew that it was probably going to be a developer because we had some people at the end that we actually leased it out for a couple of years too, and they thought that they were had a lease to buy option, but they decided that it wasn’t, it wasn’t really a profitable business, it was a fun business, but it was kind of our community service to the area. So at that time, we were able to sell the business to a developer, and that’s when we got our money back out of it. And then I stopped consulting as well. And at that point too, our kids had grown up. They had gone off to college, so the business didn’t serve that purpose of having that family time. The kids had moved away for a year or two after we had sold it. I was still consulting, and I said, I can do that from wherever I can, just as long as there’s an airport so I can go to my client’s place, whatever, I can do that. So we moved further south, which is where our kids were. We were in Florida at the time, so we were up in the panhandle. Then we moved down to our kids were in Orlando and Tampa, so we moved down to the beach area outside of Orlando.
Mindy:
What percentage of your expenses did your supply chain small business cover?
Diana:
What percent of the overall business? Because in that case there, the money from my consulting, we didn’t save anymore. So it just pretty much covered all of our costs. We lived off of that, and it also helped support the small business too.
Mindy:
So you were coast by when you left corporate America and started out on your own, and then it just grew for 10 years.
Diana:
The money that we had saved was just continuing to grow and to save in there. We didn’t touch that except for the money that we did touch was the money that wasn’t in our 401k. So that’s how we got caught in the middle class trap is that so much of our money at that point was tied up because the money that wasn’t tied up in our 401k, we had put that into the business and the money that otherwise was in our 401k was we couldn’t touch it.
Mindy:
And you weren’t saving and investing after you stopped your corporate work. You didn’t do any sort of 401k for your company or Roth IRAs or anything like that?
Diana:
We could have. We could have. And again, when I look back at it now, even doing the 72 t, we should have at that time because when you have a small business, you can pretty much pay yourself whatever you pay. And in the first few years, our accountant had said, you’re going to have to my husband, you need to start taking a salary because you can’t just not take a salary. He wasn’t taking a salary because that business itself couldn’t really support another salary. We had employees, like I said, our kids and some of their friends that were working for us. So he finally had to start taking a salary too. So it all came under our overall corporate umbrella. The two businesses were individual businesses within the overall corporate umbrella. We didn’t take advantage of adding more savings. We didn’t convert things over to convert some of our 401k money at that time. We could have converted to Ross or started the 72 T earlier. So we had options, but at the time we weren’t looking at that. We were just trying to figure out how to not touch our savings and how to be able to live off of what we were making at that time.
Mindy:
Okay. So you just said a fun word, 72 t or a fun set of letters and numbers together. When did you discover that you could do a 72 T?
Diana:
The first time I heard about it was when I was in my early forties before we had actually left a corporate world. One of my coworkers had talked about it as to, he had just heard that there’s this thing a 72 TA way that you can actually access your 401k money early. So I had that in the back of my mind, but then all the years that we were doing this business, I didn’t think about it anymore until all of a sudden when we thought, okay, we’re going to get ready to actually fully retire, how can we access that money? Because so much of our money was in 401k and not that much that was available outside of it. So that’s when I asked my accountant, because we had an accountant that did our business work for us. So I asked him, can we do a 72 teen?
He is like, yeah, lemme look into that. And he’s like, yeah, you guys would qualify and you could do that. And like I said, we could have, now I look back at it, you have to take it five years or until you’re 59 and a half, whichever is longer. So we started it probably when we were like 54. We probably could have started it even earlier and been taking a draw that or converting it over to Roth because that’s what we should have really done was convert it over to Roth so it can continue to grow with no tax impact once you do the initial paying the taxes once you first move it over. So hindsight is definitely, so that would be one of my main takeaways for people is don’t get caught in that trap and figure out how to roll money over or to do a 72 T or whatever earlier.
But once you start a 72 T, you’re pretty much locked in, like I said, for five years or until you’re 59 and a half. So whichever is longer. So if we would’ve started it at 45, which we could have, we would’ve had it been doing it all the way until 59 and a half, but you can, in this case here, we could have done it and then moved it into Roth money or done something like that with it instead. So now we’re one of those people that’s going to be caught in that trap when we turn 73 and have to take our requirement minimum distributions. I’ve heard some of my friends that have gotten caught in that where they’re saying all of a sudden now my income is way higher than I’ve ever had because they’ve got so much money in their 4 0 1 ks that it’s throwing them into the higher bucket there. So I’ve been looking at that now, and so one of the things we’ve been aggressively trying to do is to start rolling money over into a Roths now, but we should have, like I said, we should have started that earlier, and we’ve been doing the 72 T since we started at 53. We’ve continued to do it. I mean that monthly draw that we were taking is what we’re living off of. And since we started it at 50, like a 53 I think is when we first start setting it up.
Mindy:
So you don’t have to stop at five years or 59 and a half. You can continue on.
Diana:
Yeah, you could continue, you can do, yeah. So that’s kind of how we’re doing that. Yeah, so we’re continuing on that way.
Mindy:
Let’s talk about the process of the 72 T. How does that work? Mechanically? That’s money that’s coming from your pre-tax 401k.
Diana:
It is really similar to a requirement minimum distribution. From the standpoint it’s based on your life expectancy, how much money is in the pot. So you could do it from your overall pot or you could do it from, if you’ve got several different accounts, you could do it from just this account or that account, and it takes into account how much money is in there and life expectancy. And so that tells you what the amount is that you have to take each month or each year I guess is kind of the overall.
Mindy:
And how do you take it? Do you take it monthly or do you take it once a year?
Diana:
Just so it’s kind of like our salary. We take it monthly. So it’s kind of our monthly income
Mindy:
That you’re making. Does it cover your entire expenses?
Diana:
It’s been covering about 80%. So the other 20, when we sold the business, we used the proceeds from that. After we paid our huge tax bill, we used the rest of the proceeds to actually buy a beach condo. So that’s a short-term rental, so that gives us some money. So 80% of our income that we live off of is from our 72 T, and then the remaining is from our rental income as well as other money that we have to scrape up from outside of our savings that we
Mindy:
Have the beach condo. That sounds really fun. That’s a short-term rental that covers the 20% of your expenses, or does it cover more than 20%?
Diana:
It probably makes up for the majority of the 20% that’s still left there. Yeah.
Mindy:
And are you actively doing Roth conversions now?
Diana:
Yes.
Mindy:
And that the Roth conversion is the Roth conversion where you take money from your 401k, you pay the taxes on it, but you don’t pay penalties on it because you’re putting it into a Roth IRA.
Diana:
Right. It’s rolling it into, it has to be directly rolled into the Roth.
Mindy:
Yes. You can’t take possession of the money. Your 401k doesn’t write Mindy Jensen a check, and then Mindy Jensen puts it in the account. Your 401k writes the check into the Roth area. If you take possession of it, then you’re paying taxes and penalties, and every once in a while the company that is rolling it over will make a mistake and will write a check out to Mindy Jensen. I wish that actually happened to me once. I was trying to go from one retirement account to a different retirement account. It wasn’t a taxable or penalty event, but they did it wrong and they sent me a check. If they sent me a check and I cashed it, then that would be the taxable event and fees and penalties on top of it. So what I did was I sent the check back to them and I said, this is not correct.
You need to make it out to, I dunno, Mindy’s 401k or whatever I was doing. It’s been a while, and therefore I skipped the taxable event. So just because they make a mistake, don’t compound that by cashing it and making your own mistake. But yeah, the rollover IRA or the rollover Roth IRA is a great way to, especially when you have low or no income, to start siphoning off some of those 401k monies so that you’re not subjecting yourself to RMDs at age 73. And I mean, this is a first world problem. This is as far as problems go, that’s the kind of problem I want to have. Oh gosh, I have so much money, I have to take so much money out and pay so much taxes. Well, you’re paying taxes on this income, so I don’t want to pay taxes if I don’t have to, but I do appreciate having a fire department and roads to drive on and all of that. So I’ll continue to pay my taxes, but as low as I can.
Diana:
When you move it from the 401k to the Roth, it is coming out of the 401k and you have to pay taxes on, it’s a taxable income. So yeah, so we’re paying that, but then it goes into the Roth, which then it can to grow tax free, and then we’ve already paid on it.
Mindy:
It’s a great way to start pulling. I mean, if I’ve got a million dollars in my 401k when I turned 73, then I’m going to have to take RMDs against a million. But if I had 3 million and siphoned off enough to skip those taxes, that’s even better. So since you quit the supply chain consultant company, wait a second, what did you do with that company? Did you sell it or did you just stop doing it?
Diana:
I just stopped doing it. I guess the thing is, I’ve had people say to me, oh, you need to get some employees and you need to actually be able to sell it as a business itself. Where we sold the business first, we were trying to sell it as a business, but then we just sold it as the land, as the property to a developer who took up all that concrete and everything and did something, put a shopping center in there. Yeah. But the consulting part, I just stopped consulting, but I still, since then, I have one time in the last 10 years I’ve had people always contacting me, trying to get me to take on a project, but they want me to come to a place and work Monday to Thursday or whatever. I’m like, I’m not doing a regular job anymore. So that’s a pin there, done that. But if it’s a fun thing, so the one thing I did do a few years ago is somebody asked me to develop some training material and then teach some classes. And so I did do that and I was like, okay, that’s fun. But at the end of the day, it really wasn’t worth my time and effort either, so I don’t have to do it and it needs to really be something that’s worth my time.
Mindy:
Exactly. I know a lot of people who have retired or retired early and they might do a project that they are interested in, but they’re like, I don’t need the money for this, so I’m not going to, it’s be this 40 hour a week job or 80 hour a week job. I’ve got some friends who are like, yeah, I’d be happy to consult on your little project for another friend, but don’t pay me. Then I feel obligated to work 40 hours a week and I don’t want to work 40 hours a week. So let’s have a conversation and a couple of hours of chatting maybe, but that’s all I want. So I have to ask you this question because I have spoken with several people recently who say, well, I don’t want to retire early because I think I’m going to get bored,
Diana:
Which is fair was actually my husband was never worried about that because he is always busy working on his little projects and every morning it’s kind of like we get up and say, okay, so what do you got planned today? What do you got planned today? And so from his standpoint, he never skipped a beat, never had any concerns. I, on the other hand was more concerned. I really enjoyed what I did and I was afraid that I was really going to miss it. And I’m such a personality person where I was afraid that if I’m not feeling like I’m contributing or doing something and I’m still every once in a while saying I need to feel like I’m doing something, do I volunteer in schools to help educate people, kids on just business planning or financial planning, something like that. Because the financial illiteracy is big time as far as kids understanding or people understanding all the ins and outs of things.
So I’ve thought about that and I’ve thought about different things, but I really haven’t. I’ve been really busy, and so I was concerned. So now my days are either, like I said, I exercise, I love to travel, so I’m either traveling or I’m planning travel, so I do a lot of travel planning. So I do really enjoy, we do try to get away on at least two to three big trips a year and then a lot of smaller trips. So I spent a lot of time planning. I haven’t really missed the work, but I was concerned about it. At first, I wasn’t sure what am I going to do with my time now I’ve got all this time and the day goes by and it’s like, wow, what did I do first? I felt like I needed to have my list of things and felt like I needed to have accomplished some stuff, but I got past that. So it’s been great. I haven’t regretted it at all.
Mindy:
Are you at all concerned about the recent stock market fluctuations?
Diana:
That’s a good question. I was thinking about that because when it happened to us the first time, and like I said, we had our bucket of money that we had saved, and this was after we were 45 when we were on our kind of slow fire, whatever, when 2008 hit, I think we lost 40% of our money, and that was pretty sizable. But the good thing was is I’m not one of those people that reacts to that stuff. And so I thought, well, we’re not having to touch it, so we’re okay because it’s there and it needs to grow. And it did. It came back in a couple years and it exceeded where we were and pushed on past it, so that was fine. Now it’s kind of scared me too because now we’re actually drawing from it, and now I’m thinking, do we need to draw less?
Do we need to? Because we are, like I said, 80% of our living expenses is coming off of our saving, and I thought, should I diversify and do some real estate? Should we do some more real estate, get some rental properties? Or the good thing is with our beach condo is before when we had it, it was in an area where we lived, and so we never used it. Well, now we live in Orlando and it’s across on the Gulf Coast, and so now we’ve actually used it. Every once in a while we’d go over there and do some stuff on the condo and then spend some time there. I thought, well, maybe I should buy another one somewhere else and do the same kind of thing. But we haven’t. I do look at the market and I look at our portfolio and say, okay, if it had taken another dip again, 40%, would that really be a major impact on us?
Or now our pot is a lot bigger than it was initially, so hopefully that’s not going to be as much of a problem. So I do get concerned about it. And I guess worst case, and here’s a good comment. When we first decided to do this at that point, like I said, our kids are adults now. Now they have been adults for a while. They were young, and I said, dad and I are going to leave our jobs. We’re going to retire early. We should have enough money to last until we’re into our nineties or a hundred or whatever, but if we run out of money, would you take care of us? So that was a funny comment and they chuckled and stuff, but then when we started sharing with them a little bit about where we’re at and stuff, they’re like, well, then you need to start spending more money. So hopefully we should be okay. But I’ve always known, and I’ve kind of looked at it this way, that if things did really get bad and if we did run out of money or if it was starting to look like we were heading that direction, I said to my husband, worst case is I could be a Walmart greeter and you could work at Home Depot, so we could do something. But of course, if you’re really old and frail, then that might be bad too.
Mindy:
But also you are keeping an eye on your finances. You’re not just fingers crossed, oh, I hope we have money. And I think I was having a conversation with a friend and this subject came up and he said, it’s not like we get to a point of financial independence by being frugal and saving and investing on purpose and then stop looking at our finances. We continue checking it. My husband checks every day. It gives him pleasure or whatever. I don’t check because he checks so I don’t have to check. And we talk about it all day every day.
Diana:
And sometimes, especially when things are as crazy as they are, it’s better not to check. I know my husband, he’ll say, oh my gosh, the stock market’s down a thousand points or whatever. And I’m like, I don’t want to be looking, but I do. And I know, okay, we’re down some, but it’s not as bad as we were before and we’ll be all right. We will be all right. So yeah, we just have to stay the course and not sell when things are low and use it as a buying opportunity when you can. And our portfolio is invested pretty aggressively because that’s how we got to where we were by being pretty aggressive. My husband tends to be a little bit more conservative. So we have our two buckets, our two IRA buckets, his and mine. So his is invested a little more conservative. Mine’s a little more aggressive, and so mine’s doing better than his in general, but overall it’s doing all right. So I do keep an eye, but try not to panic. And I also try to look and see are there things that are just not doing well that I need to get rid of that’s not going to come back or what do we need to do?
Mindy:
Okay, we have to take one final ad break. We’ll be back with Diana with more after this. Thanks for sticking with us. How does fire change your perception of work and life?
Diana:
I think we got into it because we wanted to have balance and do the things we wanted to do by living the fire life as far as being financially independent, we can do those things that we want to do. My priority is I want to travel, see as much of the world as I can and spend time with my family and my friends. And so if I can do them both together, that’s an added bonus. So a lot of times we will travel with our kids, with our grandkids, and then sometimes we’ll travel with friends. And that’s always fun because then when you spend a week or more with some friends, you really get to know them at a whole deeper level than just a little visit here, a little visit there. So yeah, so it’s been fun. It’s been great. And a lot of our travels too are because we’ve lived a lot of different places throughout our careers, is going back to some of the areas and spending time with friends. And so visiting new areas, visiting old friends, and so that’s all good.
Mindy:
Last question, what was the biggest mistake you have made on your financial journey and what advice would you give to someone else to avoid that same mistake?
Diana:
A couple big mistakes. One is having too much of our money in 401k and then having to figure out how to navigate our way out of it. Again, how to roll it over or to move it into other accounts. So that was the biggest mistake. So now what I tell my kids is have some balance. When you can invest in your 401k, you can max that out, at least get your company matched. But then beyond that, if you can’t put money in a Roth otherwise, then put it in that. Or as my daughter, I think she’s doing backdoor Roths now, even conversions. She’s putting it into her 401k and then coming back and taking it out in higher income bracket so that she can’t do it by the Roth individually. So not have too much of your eggs in one basket in, like I said, in this case here in the 401k is the number one biggest mistake.
The second biggest mistake is really understanding the tax implications on your money. So it’s not just understanding, okay, I paid this much last year, I paid this much this year, but what’s the big picture on your overall money and the tax implications of that money? So kind of doing tax planning. And that’s not something that most people do. And unfortunately it wasn’t until recently that I’ve realized that if we would’ve done a better job of tax planning, like I said before, when we had our small business, that’s when we should have been doing the 72 T or doing Roth conversions. We should have looked at it when we had the opportunity because our income was lower or it was we could manage our income.
Mindy:
I think that’s really key. And I’ve heard people say, don’t let the tax tail wag the dog and that, that’s great too. It’s kind of a fine line, but I love the comment about tax planning. There are just so many things to know and you don’t know what you don’t know. So you can’t just Google, what am I missing in my tax planning? And then Google be like, Hey, here’s Mindy, here’s what you’re missing. They’re going to be like, Hey, sorry, no results found. Common tax mistakes might catch a couple, but it’s not going to catch it all. You need somebody who can see all of your numbers, all of your scenarios, all of your situations and say, oh, you could do this. You might be able to do this, and if you do this, then this would apply. I think that’s a great tip.
Diana:
No, definitely, definitely. And I think that’s one of the things that most people probably, they overlook it.
Mindy:
Don’t let your frugal text tail wag your dog. Alright, Diana, this was such a fun conversation. I am so thankful for your time today. I really appreciate it
Diana:
And it was great to talk to you and I feel really good about it. I’m hoping that I can help somebody else not fall in the same traps that we did, so yeah,
Mindy:
I hope so too. Yeah, if you’re listening, this is the voice of experience, listen to Diana because everything she said is 100% true.
Diana:
Alright, Diana,
Mindy:
Is there any place that our audience can find you online?
Diana:
Well, I’m on Facebook, but there I mostly post things, pictures of my travels and my grandkids. And then I’m on LinkedIn and then I’m also on BiggerPockets platform as well too. Yeah, so I’ve got an account there too.
Mindy:
Connect with her on BiggerPockets. Are you in the BiggerPockets money Facebook group?
Diana:
No, I’m not. I probably need to get in there. Yeah.
Mindy:
Oh, okay. Yes, please go join. It’s facebook.com/groups/bp money.
Diana:
Okay, I’ll get on there.
Mindy:
Okay. Diana, this is so awesome. Thank you so much.
Diana:
Yeah, thanks. It was great talking to you and I’ll, I’ll be hearing you I’m sure, again tomorrow during my morning walk.
Mindy:
Alright, that wraps up this episode of the BiggerPockets Money podcast. I truly love these conversations with people who have retired before. It was cool before anybody wrote a blog post about it and I love Diana’s story. Thank you so much for joining me. My name is Mindy Jensen saying out I zoom, bloom.
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