Achieving financial freedom requires having the right mindset about money. Having found his own financial freedom at the age of 35, financial coach ‘Tightwad’ Todd Miller knows how to safeguard and grow wealth. Today we speak with Todd to hear his insights on preparing for your financial freedom. After sharing how he went from the corporate world to becoming an investor, Todd unpacks how he helps his clients to become financially independent. From curtailing your expenses and raising your financial awareness to shifting your perspective on what’s important in life, we touch on the key aspects of effective wealth management. We discuss the small actionable steps that you can take to set and stick to budgets while also diving into debates around saving versus investing. Later, we talk about communities that can help you build your wealth, along with questions that you need to be able to answer and that can guide you in creating investing goals. We wrap up our conversation by hearing Todd’s book recommendation, what he’s most proud of, and the top key to his success. As Todd explains, your path to financial freedom starts now. Join us for Todd’s expert advice on taking your first step.
Key Points From This Episode:
- We introduce financial coach Todd Miller.
- Todd shares details about his journey to financial freedom.
- How Todd discovered and then learned about real estate investing.
- What Todd does to help his clients grow their wealth.
- Hear what goes into planning for your financial freedom.
- Exploring the mindset shift that’s needed to attain financial freedom.
- Advice on budgeting and holding yourself accountable.
- We ask Todd how long it takes to secure financial freedom.
- Debates around saving versus investing.
- Why you should act now to ensure a stress-free retirement.
- The questions that every investor needs to ask themself.
- Todd’s top book, what he’s most proud of, and his number one key to success.
Tweetables:
“At the end of the day, most employees are just a number or a cog in the wheel at their company and can be let go at any time. I didn’t want to have that risk going forward in my life.” — Todd Miller [0:03:18]
“Money is a way to get happiness and a way to make yourself happy. You just need to take the time to understand what that is, and what that looks like for yourself.” — Todd Miller [0:10:32]
“When investors start their journey to financial independence, they need to ask themselves, — what is success and what do I want?” — Todd Miller [0:32:34]
“My number one key to success is just taking small consistent actions. And over time, those small consistent actions turn into big goals.” — Todd Miller [0:34:56]
Links Mentioned in Today’s Episode:
Your Money or Your Life on Amazon
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—Full Transcript Below—
“TM: At the end of the day, most employees are just kind of a number or a cog in the wheel at their company and can really be let go at any time. And that was really what I realized and I didn’t want to have that risk going forward in my life. So, I was determined to find a way to have some sort of other forms of income so that I wasn’t 100% reliant on a job, you could just kind of toss me away when they were done with me.”
[INTRO]
[00:00:27] KR: Welcome to Ritter on Real Estate, the show about how to passively invest like a pro. On each episode, I interview real estate experts who give their top investing advice, strategies, and tools that break down the insights into practical steps to avoid the pitfalls and make better investments. I want to help you passively invest like a pro. This is Ritter on Real Estate, and I’m your host, Kent Ritter.
[INTERVIEW]
[00:00:48] KR: Hello fellow investors. Welcome to Ritter on Real Estate, where we teach you how to passively invest like a pro. Today, my guest is Todd Miller, and Todd is the founder of Tightwad Todd, a financial coaching service. Through saving and investing, Todd retired from the corporate world at the age of 35. Todd is now guiding clients for better ways to save, invest and prepare for their financial freedom.
So, Todd, really excited to have you on today. It’s a little bit of a different topic than what we focused on and I’m excited about that, because I think what you’re really passionate about is kind of the other side of the equation, as I see it. We’ve spent a lot of time on the show talking about ways to invest, things you should be investing in, such as multifamily real estate to generate cash flow. But we haven’t spent much time talking about preparing that journey for financial freedom. For example, people want to leave a job. There’s another side of that equation. Many times, you’re going to have to start to budget and understand your expenses and control them right. So, that you’re setting that bogey for that cash flow that you need to create. So, really excited to dig in with your journey on how you did that, how you were able to retire at the young age of 35. So, let’s dig into it.
Why don’t you start with telling our guests your story? So, what was it that was your trigger point for saying, “Man, I want to be financially free?”
[00:02:12] TM: Yeah, definitely can. I appreciate you having me on. Really happy to be here. And tell a little bit about my story, and hopefully, I have a lot of value to your listeners here. So, really, I followed the traditional path that most people do, go to school, get the good grades, get into a good college. Get good grades in college, graduate, get a good job, and work hard at the job, and they’ll kind of take care of you for life.
So, that was kind of the path that I was going down. I graduated with honors from college, got a job at a global Fortune 500 company. I was kind of feeling really good about all the progress I had made in life at a young age. And so, I started my corporate job and was there for about eight months before I got laid off due to the Great Recession. That was really kind of a shocking — and really the turning point for me to really start looking at my options, or really what I wanted to pursue in life and what was important. And it was just kind of shocking at that point to put in, we’re talking 20 years, essentially of time and effort of learning and getting to that point only to really have the carpet pulled out from under you, so to speak. That was a difficult time to really reflect on, “Hey, this is the reality of what’s happened.”
At the end of the day, most employees are just kind of a number or a cog in the wheel at their company and can really be let go at any time. And that was really what I realized, and I didn’t want to have that risk going forward in my life. So, I was determined to find a way to have some sort of other forms of income so that I wasn’t a 100% reliant on a job who could just kind of toss me away when they were done with me.
[00:03:44] KR: Yeah, I mean, it’s just such a fallacy, right? Like you said, carpet was kind of pulled out from under you, like you spend your entire childhood education thinking, “Okay, get good grades, get good grades, get good grades to get a good job.” And there’s just this false idea that that job is security, right? I mean, I have this conversation with people all the time. And coming from my background as spending time as a corporate executive, having to be on the other side of those conversations, when you’re talking about layoffs and things, and just seeing the way that, like, the corporate world treats employees. You’re valuable until they don’t need you anymore. And that’s really the truth of the situation. This idea of — that you have security in your job is a falsehood.
I mean, as soon as there’s a bad quarter, you become expendable, right? And that’s just the reality of the situation. So, I love what you’re saying about, you’ve got to be preparing yourself with budgeting, creating multiple streams of income, really controlling your financial life to make sure that if and when that time comes, you’re not left flat footed. You’ve got a plan B. And I love that.
[00:04:52] TM: Exactly. Yeah. Nobody’s going to care more about you or your money than you do. So, you kind of have to come up with your own plan on what that means and what that looks like. And how you can protect yourself, especially like you said, for a lot of corporate employees, the bad quarters are hidden bad times, like COVID. The company is going to do what’s best for the company, and the shareholders are not going to do what’s best for you and me. Sometimes that’s a harsh reality for people to really look at and realize, but the name of business is to make money for the owners, not to make money for the employees.
So, that experience is what really led me into the wide, vast world of personal finance. And you know, just exploring everything that’s out there, from stocks, to real estate, to debt, to everything that’s involved. And it also made me realize that, “Hey, I don’t know a whole lot on this subject. So, I need to really get outside of my comfort zone, and go talk and meet with other people that are doing some things that I could learn from and see what they’re successful at, or what works for them.” And that may work for them and not necessarily for me, but you know, you kind of get exposed to all these different ideas and techniques on ways that you can build wealth and find this freedom.
So, that’s essentially what I did, is I started out really looking at some things in single-family, in the single-family space, looking at duplexes, quads, mortgages, that sort of thing. Just finding those ways to find passive income. While I was doing that, I was also joining a lot of different investor clubs and ended up finding a mentor, who was able to kind of teach me some of the ways on how you look at buying properties, estimating rehab costs. And all these foreign subjects to me, that he could kind of be there to hold my hand and make sure that I was getting myself into a good deal, and I wasn’t going to be buying something that was just going to drag me down further.
So, that was also really important and pushing me forward and helping me to learn and to grow. As I’m going through that process, it’s just like multifamily. There are really three aspects of budgeting, it’s the income, and your expenses, and your savings — which is just like the rent you receive, your operating expenses, and then your net operating income. So, in personal finance, you have the levers that you can pull. You can look for ways to increase your income, whether that’s starting a side hustle or starting a business or looking at switching jobs or careers to make more money. And then, of course, the other side of the equation is also, what can you do to lower your expenses? Where do you think you’re spending too much? And how can you find different ways to save? And we do all these things, just so that we have more money leftover at the end of the day, which is our savings. And the goal is to put that savings to work in different ways, so that we can build up this passive income, which will allow us to leave those corporate jobs and to live life more on our terms.
That’s essentially what I do right now, is I work with individuals all over the country, and we take a look at their financial position and what they’re doing, what’s working well, what’s not working well, and we make improvements. We find ways to help them save money. My average client right now saves over $500 a month. You’re talking 6,000 a year, that may mean investing in another syndication, you may get one more syndication under your belt, once every four years. So how quickly does that project you and push you towards reaching financial independence? And to me, that’s really what it’s all about, is people being able to live life on their terms, whether that means traveling, whether that means spending time with family, whether that means just pursuing something that they’re passionate about, working in something entirely different than what they’re involved in now.
[00:08:22] KR: I mean, I love that. I love that idea of the plan and the path to get there. Now, with the company you started, Tightwad Todd, I love the name, and you’re helping people through this path. So, what are the things, say, you’re talking to some of our listeners out there that aren’t happy in their W-2 and they’re looking for a path out and they’re not quite sure. They know they need to be investing in real estate. We’re come that far, I hope, and they’re going to be investing in some good multifamily. Get some good cash flow, get that asset appreciation, some of those tax savings, but that’s just part of it. At the beginning, that first investment, especially. it’s not going to be enough to cover their income. So, can you walk our listeners through, when you meet with somebody and they make that decision, they’re saying, “Hey, I want to leave my W-2. I want to be financially free.” What are the things that they need to be thinking about to create that plan and have that vision to get there?
[00:09:18] TM: Yeah, so really, the main starting point is looking at what you’re doing with money right now. And what I mean by that is looking at what money you have coming in, what your expenses are, what you’re spending it on. And then what are you saving at the end of the day. And on top of that, you know, we also start looking at your total net worth, your assets, and your debts to see what’s out there. Because sometimes it doesn’t make sense to start investing from the get go. It makes sense to start paying off high interest rate debt and things like that to lower your overall monthly basis so that you can save more money. So, that’s really the first step is just having that financial awareness as far as what you have, what you’re doing, and that opens up a lot of people’s eyes.
I did this exercise myself as a young 20 something year old guy. I learned that I was spending way too much money going to bars and restaurants. From just looking at that, you’re like, “Wow, I’m spending thousands of dollars a year just going to the bars, this is a little crazy.” And just having that awareness, that makes you start thinking twice about, “Alright, am I getting this much happiness by spending this amount of money by doing this? Or could I put it somewhere else that may bring me more joy and allow me to accomplish the goals and things that I’ve set out in my life?”
Money, to me, is a way to get happiness and a way to make yourself happy. You just need to take the time to really understand what that is, and what that looks like in yourself. We know that society tells us that happiness is when you have a fancy car, and you have a big house, and you have all these luxury goods. But that’s not necessarily the case for everyone and when you stop and really think about, “Hey, these are the things when I reflect back on my life, that I just smile when I think about them.” For me that was doing things like traveling and spending time with good friends and my family. That’s really how I wanted to spend my time, once I became financially independent, is I wanted to be able to go on these crazy bucket list adventures. And spend time with friends and family and not feel like I had to cut things short, because I had to rush to work or I had some other obligation that was outside of my control. That’s what financial independence does for you. It allows you to spend your time however you like and to have these really enjoyable moments.
[00:11:33] KR: Yeah, I think that’s a really important point, because you’re talking about changing your mindset. I was guilty of the same thing. Well, definitely the going out in my 20s and I spent way too much at the bars. But then even as I progressed into my 30s, you started having kids, and I was driving the fancy car. We were living in downtown Chicago at the time. Had a great condo, kind of top four thing, awesome view, all of this. But as you start to realize, like what’s really important, the things you’re talking about, like, the time is really what matters. You can buy all the flashy fancy things in the world, but at the end of the day, that makes you happy for a few minutes or hours or days. You get that adrenaline rush from the purchase. But then, after that, it becomes normal and it’s kind of just you’re not getting ongoing happiness from those purchases. It’s that time with family, the freedom to do what you want. That’s really what brings happiness, right? That’s kind of what this is all about.
So, I appreciate that perspective. So I went through a similar shift of mindset and say, “Okay, now, my focus is on investing as much as possible.” And in doing that, controlling those expenses, and I’m not like a Dave Ramsey guy that’s like, you can’t have debt and you can’t go to Starbucks and all this. I think there is a balance. I think the biggest thing, like what you’re talking about is just understanding where your expenses are, and being able to make those decisions, and say, “Okay, well, can I forego this or is that something that’s really important to me?” And if it is, continue to do it, just understand how it’s going to impact your plan.
[00:13:08] TM: Exactly, yeah. And kind of what you were saying is, you spend money, and whatever you buy usually brings you some degree of happiness, but it’s short lived. And then in order to get that same boost of happiness, you have to go out and spend again, so this is essentially a perpetual cycle that we’re all caught in. But once you really start to understand that there’s a lot of things that we spend money on, just out of habit. It’s not things that bring us any degree of happiness, we’re just used to stopping at Starbucks on the way to work, because that’s just our habit. But at the same time, like you said, it’s also very important for people to — if Starbucks is the thing that brings you happiness every day, then 100%, that’s something that you should do. But there’s probably other holes in your budget and other areas where you’re spending, they’re just leaks, they’re just causing you to bleed money that aren’t really doing a whole lot for you.
A lot of people have these crazy cable packages, let’s say. And yeah, they spend $200 or $300 a month on cable. But most people really only end up watching about 20 or 30 channels, but they have hundreds. Just doing simple things and saying, “Hey, okay, well, let’s just get like an antenna, pull in some local channels, maybe sign up for a sports package or two.” And then you’re set and you’re saving, let’s just say $150 a month or something like that. So, if you can do that in one area, then you can probably do it in four or five and then all of a sudden, you’re looking at saving $400 or $500 a month. And then we jump into investing and compounding and then boom, boom, boom, it just keeps growing from there.
[00:14:40] KR: Yeah, you start that snowball going and as it goes down the hill, just gaining momentum. I mean, I think the cable thing is a big one. We’ve cut the cord. The pro tip is YouTube TV. If you have to have it, you get everything you want. You get the sports package and everything and you can split it with like five other people, really reduce what you’re paying for cable. So, that’s an awesome option. But yeah, I agree, what the cable company charges is just absurd these days.
That’s a great one to hit on, because people need to be watching less TV anyway, let’s be honest. If you want to be financially free, you need to spend less time watching TV and just spend more time reading books and listening to podcasts and educating yourself on how to do that.
[00:15:20] TM: Exactly, yeah.
[00:15:21] KR: Here’s my plug, my call to action. So, Todd, talk to me about when you sit down with folks, what are some of the things, are there common themes that you see that are impending people’s progress, that you can call out and highlight for some of our listeners?
[00:15:36] TM: Yeah, certainly. I think a lot of people view budgeting as just like a big pain in the butt. It’s looked at as, “Oh my gosh, you’re just restricting my freedom. I can’t go to do this or do that.” It’s almost like you’re the fund police to a degree. But again, it’s figuring out what’s important to you, and finding a better use for your money and spending it on those core areas that are going to make you happy. So that you can redirect your funds to other long term goals, which is the saving and investing and the financial freedom piece, and not getting too hung up on, “Hey, this is restrictive.” Well, it’s restrictive, but if you’re setting goals, and these are things that you really say that you want, well, then it’s not restrictive at all. It’s helping you actually achieve the goals and dreams that you’ve set for yourself. And I think that that’s just a common misconception that people have is that they’re cutting back. When in actuality, they’re opening themselves up to more, to greater life experiences and opportunities on down the road.
[00:16:33] KR: Yeah, I think that’s exactly right. So, I’ll have an honest moment here. I’m terrible at budgeting, because I’m good at budgeting at a high level, I have no problem with budgeting. The issue for me comes into like the tracking. A mentor of mine, he’s tracked his income and expenses, like to the cent, since 1997. I mean, the guy knows what he’s spent for the last 25 years, whatever. And for me, it always starts with good intentions, it always falls apart with just the daily tracking, kind of the maintenance of it, and staying up to date. I just have a lot of other competing priorities.
So, are there tips that you can give to me and hopefully help some of the other listeners on like, how can you follow the budget through and do that tracking, but in a manageable way?
[00:17:19] TM: With all the apps and things that are out there, you can do it in as little as five minutes a week, let’s say, where you can use an app like a Personal Capital or a Mint, and connect all your accounts, so that all you do is you have a snapshot of everything that’s going on in your financial world. And you can see the income that you have coming in, you can see the expenses and the way that you’re spending and using money, and even breaks it up into categories for you.
So, like we were talking about earlier, it’s going to show, “Hey, this is what you’re spending on groceries. This is what you spend going out.” So, it makes it really easy for you to view those things, that doesn’t necessarily change behavior as much, because a lot of people just kind of look at it and be like, “Oh, yep, I’m doing good”, or, “Oh, no, I’m doing bad. Let’s turn that off. Let’s not look at that for a while.”
[00:18:09] KR: I’ve used, man. I’ve set up all the accounts and everything kind of flows in there. But it’s like, what’s the rhythm that we should be in? What’s the process that we go through to hold ourselves accountable?
[00:18:19] TM: Yeah, it really, it just comes from repetition, like anything. The more that you’re looking at something, the more that is going to be in front of your face, the more that you’re going to be subconsciously thinking about it. If you’re constantly — or let’s just say once a day for two minutes, you jump on your personal finance app, and you just see what’s going on, and it’s going to tell you, “Hey, you’re saving good this month”, or “Oh, you’re spending a little bit too much this month.” So, that next time, you know, when you’re at the store, and maybe you’ll be like, “Oh, yeah.” It may trigger you to be like, “Oh, maybe I shouldn’t be buying this. Because, that’s really pushing me away from the long-term goals that I’m trying to reach.”
So, I think really, again, it starts with the awareness. However, awareness works best for you, it’s just having that constant look of this is how I’m performing, this is how I want to perform. What’s the difference here? Am I over performing or outperforming my projections? Or am I underperforming? And do I need to readjust and make some adjustments so that I can make sure that I’m on track for those long-term goals?
[00:19:19] KR: Got you. Yeah, I like that idea of making it bite-size, right? By just making it something that’s repeatable, just adding that into your process. Like you said, just a couple minutes, a day, that seems manageable. That’s something that I can take away and try to implement.
[00:19:34] TM: There you go there. Yeah. I would say even for some people that really are having a hard time following a budget. At that point, I usually tell people that maybe you should just try writing down every expense that you make for a couple of weeks. Because that’s another way for you to have, like, extreme awareness and clarity on how you’re using money. Once you start physically writing down everything, then again, you’re getting ready to make a purchase and then it comes into your mind, you’re like, “Oh, crap, I got to write this expense down.” And at the same time, that kind of acts as a trigger, and as like a gut check on is this a solid purchase? Is this really something that’s meaningful to me? Or are we just making another habitual purchase here?
[00:20:17] KR: Yeah, I think that’s a great point around awareness, and just being thoughtful, about what you’re spending and making sure that like you said, it’s not just a habit. As somebody comes to you, and they say, “I want to quit my W-2. I want to be financially free.” What’s the typical timeline that you see people achieve that in?
[00:20:36] TM: Man, that’s a loaded question. There’s a lot of different variables there based on lifestyle, current income, current expenses, and that sort of thing. So, this is where we start getting into like more of the extremes. If you have a goal where you’re looking to become financially independent in the next couple of years, well, then that means you really have to cut back your expenses in most cases in order to achieve that goal. But if you’re thinking, “Hey, my job is okay, I feel pretty safe and secure. I can tough it out for another 15 or 20 years.” Well, then that’s a completely different conversation.
It really starts, in my opinion, and once you kind of establish where you are today, then you can start thinking about your ideal lifestyle. And what that means to you. And so, once you reach this point of financial independence, and you can spend your time doing whatever you want to do, what is it that you want to do? How do you want to spend your time? And from there, you can start backing into lifestyle numbers.
So, let’s just say, for instance, that your dream is to go travel the world. So, then we start looking into, where do you want to go? And when you’re there, what do you want to do? And so, from here, we can start making projections into what we think this lifestyle is going to cost, either on a yearly basis or a monthly basis. And so, then once we really have a number, then we can start solving for passive income in order to meet your lifestyle, or the amount of money that you need to live your lifestyle. If somebody says, “Hey, I need $5,000 a month to live my dream life.” Okay, that’s great. So, let’s figure out — how can we get you the $5,000 a month? What investments are going to help you achieve that goal and achieve that dream so that you can go ahead and start traveling the world.
[00:22:24] KR: Now, that makes a ton of sense. Being clear on that vision, and understanding, I think, in real numbers, what is it going to take to achieve that vision. And then you kind of back into how long it’s going to take you to get there, right? So, the timelines are different for everybody based on where they’re starting and where they want to end. But it’s all about understanding where you’re starting, that’s the budget at the beginning. And then the end is understanding that vision and what that’s going to cost, and then you have to fill the gap, right?
[00:22:50] TM: Right, exactly.
[00:22:51] KR: That makes a ton of sense.
[00:22:53] TM: Yeah. So, you have the starting point, the ending point, and then we got to fill the gap somehow. So, now we start looking at, okay, different investment options. So now, you can start looking at, if you decide that stocks are the right investment for you. Well, then this is how much you’re potentially going to need in order to live this dream lifestyle. So, you can look at it from that way. Okay, so that’s how stocks work. And then you can start looking at maybe single-family homes, and this is how many single-family homes are going to get you to that number. And then you can look at multifamily, and then you’re like, “Okay, so this is what the average cash flow is from multifamily, then this is how many syndications I think I need to be involved in in order to hit this number.”
Most people will have a combination of those because they’re employed. So, you’re dealing with 401(k)s and IRAs. So, usually, it’s a combination of many sources of income, as far as how people actually end up achieving the financial independence.
[00:23:50] KR: Yeah, that makes a lot of sense. What’s your take on saving versus investing? Saving meaning, stocking money away under a mattress or in a bank account, which is pretty much like being under a mattress versus going out and investing that money? I mean, what’s the balance there? What’s your viewpoint?
[00:24:11] TM: Yes, there’s really two different money mentalities or money personalities. You have a saver and you have an investor. And a saver really comes from more of a scarcity kind of mindset and thinking that the world’s going to end some way and that they need to keep their money under their mattress in the event that doomsday comes. Whereas the investor is looking to buy assets in order to experience some sort of a gain, whether that’s through cash flow or appreciation or a combination of both.
Of course, everybody does need savings to some degree, which is what we would call your emergency fund, for the most part. Once you hit this point of whatever you determine your emergency fund is, which is rule of thumb is four to six months. So, really once you hit that number, then having money in a savings account doesn’t do anything for you. It actually hurts you because of inflation. So, then you’re looking to find ways to deploy that capital in order to earn a return.
Now, it doesn’t necessarily mean that you have a couple thousand bucks and you just throw it in the market or something while you’re waiting to save more money so that you can get into a syndication. That’s not necessarily the way to go, because there is risk in a lot of these investments. That’s part of the reason that you have an investment plan as far as, “Hey, this is the strategy that I agree with most. This is the one that’s going to work best for me and allow me to end up living the lifestyle that I want to lead. So, these are the steps that I’m going to take in order to make sure that that happens.”
[00:25:44] KR: I think the emergency fund, that’s a great idea that people should have that, for sure. I think, like, you’re saying that this idea of scarcity mindset, I think that’s exactly right. That’s kind of what I experienced when I talk with those people and understand kind of where it’s coming from. And this idea that investing in general is just ultra risky. There is a balance. There’s risk with an investment, of course, but I like this analogy of like, most people, when they think about, they’re going to pay for their kids’ college, they think about, “Okay, so I’m going to save that money. I’m going to save up until my kid goes to college, and then they can draw from that money, that fixed pile of money, as they’re in college to pay for their school.”
Well, the flip way of thinking about that is if I went out and bought a small multifamily property, or made some investments in a syndication, anything that’s producing cash flow, and put that away and say, “Okay, this is Timmy’s college investment.” While they’re in school, even up to and while they’re in school, that’s kicking off cash flow. That cash flow, then is paying for it. So, then you have the asset and you have this investment that’s actually funding that college that is continuing to get them off cash flow and will continue even after they’re out of school, instead of kind of working this, just hoping that you don’t spend all of this fixed amount before they get out of school.
Retirement is even a better example. That’s the idea of, if you’re stocking it away in your 401(k) and at a certain point, you retire and you’ve got this fixed amount of money, you’re just hoping that you don’t burn through that before you die. That creates that scarcity mindset, because it really is a scarce resource at that point, versus creating investments that have cash flow that you can live off of and continue to feed you, continue to feed your lifestyle, that’s a mindset shift for people. And that can be difficult to kind of grasp at the beginning. But I think it’s so powerful if you can change your mindset to focus on adding assets and creating investments that can fund your lifestyle versus having to work off that fixed pile of cash.
[00:27:46] TM: Yeah, I know, 100%. And really, when you stop and think about it, everyone is working towards financial freedom or financial independence is just traditionally known as retirement. And it’s just really a matter of your strategy to reach this point of retirement or financial independence. The traditional method is, let me stock money away in my 401(k), maybe contribute to an IRA, and then by the time that I’m 60, or the average age of retirement is like 66 right now, so maybe by the time that I’m 66, I can finally retire and finally be able to live life how I want to live life. I can stop taking the orders from my boss. I can decide that it’s time — that for me to travel and to really spend time with my family and friends. That’s truly the traditional option that people take. But like you’re alluding to, the other option is you can start investing in cash flowing assets. And building up this passive income and get to this point where your passive income supports your lifestyle.
This method is just so much better, because of the risk of running out of money as an old person, there’s no way to get more really. Once you’re old, you’re done working, nobody’s going to hire you, an 85-year-old dude, they’re going to be like, “No. Your ship sailed.” If you’re living strictly off of your passive income, supporting your lifestyle, and as you start to age, you also have the underlying asset that you can sell and live off if you need to, as well. So, it’s just a much better strategy. That’s like the thing that keeps me up at night is running out of money in retirement and trying to avoid that.
[00:29:22] KR: That’s a stressful way to live. My advice, what I want listeners to take away is like, don’t put yourself in that position. You don’t have to be in that position. I mean, look at Todd. Todd retired at 35. Between now and 66, wherever you’re at, you can do that and you can kind of do it on your own terms, and not have to be in that position. I mean, that would be terrible to have to be in the position, to have to be 80 years old and still have to be working because you didn’t prepare now. And so, I think it’s act now. I think this is just the tip of the iceberg of being able to kind of understand the program, implement the program, but I hope that it’s inspiring and can show folks. You did it 35, I left my W-2 last year at 35 as well, and it’s possible with a plan, and then by making smart investments and making the right investments, but the plan is critical and that’s what Todd’s all about, about helping you achieve.
So, Todd, how many people have you helped achieve financial freedom at this point?
[00:30:21] TM: So, this business is only about a year old. I have a bunch in the program, still a number of years away for most people. But you know, they’re starting to see the progress and once you start seeing the progress, then the excitement builds, and then you’re like, “Ooh”, you start seeing the light at the end of the tunnel. And you’re naturally excited, and you’re naturally wanting to connect with more people and to further your education and see what else is out there and see, maybe I can do it even faster than I thought I could. So, it’s just like the excitement builds. And as your excitement builds, and you learn, then actually your risk goes down, because you’re learning that, “Hey, I have more control over this than I thought I did. I understand how the real estate market works. So, I can control essentially how well I operate my investment and what sort of returns I end up getting.”
[00:31:08] KR: Yeah, absolutely. So, with anything that’s a little bit alternative, you could call this alternative, although I just think it’s smart. It’s helpful to be able to keep in touch with likeminded people and have a network of a support system. So, are there groups or networks out there or things, blogs, whatever that you could recommend for folks that want to get on this path and want to have that support system?
[00:31:34] TM: Yeah, definitely. There’s one that’s called ChooseFI, which is Choose Financial Independence. And this is a big community of people that are out there, all really working towards the same thing. So, they’re all sharing all sorts of different ideas on — maybe it’s different investment ideas, or different ways that they’re going about saving money or making more money, and everybody has a common goal of achieving financial independence. So, it’s a really strong, supportive community with a lot of good people. I would encourage people to check that one out.
[00:32:05] KR: Awesome. Great, Todd. I appreciate you coming on and bringing so much value and hopefully lighting the fire under people that financial independence is possible. It is within your grasp. You just have to set up a plan and execute. So, as we end the show, I want to go into our keys to success section. I’ve got a couple questions I’d love to ask you. First one is, what’s the one question every investor should ask themselves as they prepare for financial independence?
[00:32:34] TM: Yeah, the one question is maybe the hardest question. And I would say that is, what do you want? And it seems like it may be an easy question to answer, I need to get out of a job, but getting out of this job isn’t necessarily going to make you happy. What is it that you really want? What is it that’s really going to make you happy? What’s going to make a lasting impression on the world when you leave it? How can you make the world a better place? So, really, it is answering the question, what is success or what do you really want?
[00:33:07] KR: Yeah, I think that’s really good. If I could just add, why do you want it? Right? Like, why are you doing this? I think that’s just so important with everything to get to the root of what’s driving you? What’s the motivation? So, yeah, really good. What are you most proud of in your career?
[00:33:23] TM: I’m really proud that I’m helping other people achieve this dream of financial independence. I really think that there’s a lot of people out there that are kind of stuck in dead end jobs that they don’t find any sort of fulfillment. They’re there because they have bills to pay and they’re there because they have to survive. So, they’re just in this perpetual cycle of, “I have to work. I have to pay bills, and I don’t really see a way out.” I’m really, really happy and grateful to be able to be in a position to help these people and to share in their joy and their success as they move forward on their journey towards independence.
[00:34:02] KR: That’s awesome. I mean, I think you’re doing a fantastic service for people. What books should everybody be reading?
[00:34:08] TM: Yeah, so one of my favorites is on the personal finance side is called Your Money or Your Life, and it’s really this idea that we get caught up as American consumers and always having more, and that, as long as you’re buying bigger, or more or newer, then you’re going to be happy. That just wasn’t always my experience. Everybody gets to a point where they have enough and then once you define and determine what enough is for you, then you can really again start backing into what that lifestyle looks like. Again, a lot of it has to do with defining these monthly and annual expenditures so that you have something that you can tangibly work towards.
[00:34:08] KR: Awesome. And then last but not least, what is your number one key to success?
[00:34:56] TM: My number one key to success is just taking small consistent actions. And over time, those small consistent actions turn into big goals. So, as long as you, yourself, are seeing some sort of small progress forward, and you can look back on it and say, “Oh, that’s where I started, and here I am now.” I think that’ll start exciting you and that’ll help you to realize that you’re moving forward, and that you’re progressing towards those big dreams and goals that you have.
[00:35:23] KR: That’s a great piece of advice. It’s something that I’ve tried to learn to live by, just get started, improve through iteration. You don’t have to be perfect the first time around. I think that’s awesome. I think a big piece of that, which we talked about, is being able to track your progress. I think anything you’re trying to achieve, you got to be able to track. Because, like you said, you mentioned, when your students start to see that progress, they get excited, it builds momentum, it starts to accelerate. But unless you’re tracking what you’re doing, you’ve got no reference point to be able to judge that.
So, I think starting to really track, you gave some examples of apps that folks can use. I think those are awesome, Mint or Personal Capital, I think was the other one you said. Track that, monitor your progress, build that momentum.
[00:36:11] TM: Exactly. Yeah, I think momentum builds excitement and curiosity and that pushes people to want to learn more and achieve more, and it really pushes them towards their dreams and their goals and the things that they really want out of life. So, anytime that you can see that you’re making progress, the excitement and curiosity builds and pushes you on further.
[00:36:30] KR: Awesome. Thank you, Todd, for bringing so much value. If folks want to learn more about Tightwad Todd, how can they get a hold of you?
[00:36:36] TM: Yeah, the best place to find me is on my website. And of course, that’s tightwadtodd.com. I have all sorts of free resources there for people. And then of course, you know, if you’re looking to have a little bit more one on one experience with me, I do offer some professional coaching to help push you along your goal towards financial freedom even faster. You can learn from all the mistakes that I made throughout my career, which will save you both time and money and get you there faster.
[00:37:05] KR: Awesome. We’ll make sure we link all that so folks can get to you. Guys, I hope this is inspiring to you as you’re listening. You’ve got two people sitting here that have reached their financial freedom and are pursuing and doing what they love in different ways. Mine is real estate investing. I love multifamily. It’s not that we’re not working. I think that’s important. You talked about financial freedom or retiring and like, it doesn’t just mean sitting around and watching TV all day. It’s like, I think we’re both working incredibly hard, but we’re doing things that we love. And we’re passionate about and that’s what really matters, and I think that came through today, Todd. So, thanks again for being here, man. Awesome content and love to continue to watch the business grow, and you start racking those numbers up, with people you’ve helped get financially free.
[00:37:49] TM: Thanks, Kent. I really appreciate you having me on.
[00:37:52] KR: Awesome. Have a good one.
[00:37:54] TM: You too, bud.
[END OF INTERVIEW]
[00:37:55] KR: Thanks for listening to another great episode of Ritter on Real Estate. Hit the subscribe button and make sure you don’t miss out on the content that will make you a better investor. Also, visit kentritter.com for articles, videos, and tools curated just for passive investors. Until next time, this is Kent Ritter with Ritter on Real Estate. Now, go out and invest like a pro.
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