From Zero to FI in Less Than 2 Years | James and Emily from Rethink the Rat Race

June 28, 2022June 18, 2019 by Justin Taylor

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Episode Summary

James and Emily both had frugal backgrounds with James especially being on the really low end of the income spectrum
They met at a local community college and James got his college mostly paid for through financial aid
James ended up changing his major 4 times before eventually acquiring an associates degree
Emily wasn’t eligible for financial aid due to her Dad’s income but her parents did pay for her first two years
She ended up being able to pay off the final two years herself so they both graduated debt free
Emily would take a job starting at $60k and James was at $35k per year in Huntsville, Alabama
Even though they were in an affordable area with $95k of incomes, they weren’t saving a dime
They said they were happy with there life but weren’t spending money intentionally but looking back they can see that they’re so much happier with their life now
James was at work one day and someone said they came across a website that had changed their lives which turned out to be Mr. Money Mustache
James immediately went all in and came home adjusting water heaters and laying down all these things they were going to cut from their lives…probably too aggressively he’ll admit
This was 2016 when they discovered this idea of financial independence
They estimate they cut their expenses down to $35k the next year after discovering the topic and have since cut it to closer to $12k
Emily discusses how changing lifestyles can affect friend groups and social connections
After cutting their expenses down as low as they could they looked to accelerate their path even more through real estate investing
We go over their processes in finding properties and getting them ready to rent
You’ll get a taste of James fantastic knack for negotiating
They bought their first property in Summer of 2017 and have since hit 11 properties
Most of these units were had for under $50k and all of them bring in over 1% of the cost back via rent
- Example: $50k house that brings in $500 is bringing in 1% every month
All of the homes were bought using traditional mortgages
Now they have enough money cash flowing every month to cover over 2x their expenses
This has accelerated their path so fast that they’re now looking to retire in September
- That’s a 2-year path to financial independence!
On top of real estate, they’re also maxing out one 401k and both IRAs
Emily’s family owns a home in Cyprus that they plan on moving into this summer and doing some remodeling.
- Emily already has her EU citizenship and James is applying
They’re not 100% sure what long term future looks like but they’ll probably pick up some side hustles in Cyprus to stay busy and travel all over Europe

Key Takeaways

Everyone has advantages:Some people might not realize living in Huntsville, Alabama is a huge advantage for financial independence but James and Emily realized this advantage and maximized it
Leverage is crazy powerful:James and Emily aren’t these crazy high-income earners but they now own 11 rental units in 2 years. That’s all possible thanks to the leverage you get through mortgages
Not Knowing is Ok:James and Emily don’t have the rest of their lives mapped out. But what 28 year old does? But that’s totally ok because they’re in a great financial position and they can always jump back into the job market if they had to.

Call to Action

Take some time and research your area for potential to become a real estate investor as well as all the other options such as lending for real estate and investing in REITs.

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