421: Finance Friday: How to Retire in Your 40s by Building Multiple Income Streams

27:10So I am going to give you a little bit of advice because that's what I do. In a homework assignment, read up on the landlord-tenant laws in the state of New Jersey. Because New Jersey is typically less expensive than New York State, but they have some pretty strict laws, such as, and I'm not investing in New Jersey because I read this once and I was like, no, you can't not renew a lease. So let's say, Joe, you rent a Kyle and he just throws rager parties all the time and you don't want to renew his lease. But he pays his rent on time and he's, in general, not violating the lease. He's just really annoying everybody around him.

28:02You can't tell him, sorry, Kyle, I'm not going to renew your lease. You have to continue renting to him for as long as he wants to rent or until he breaks the lease. Now, again, I'm not living there or investing there. I'm going to invite you to do some homework on this and make sure that the landlord-tenant laws in the state of New Jersey are something that you wish to operate within. Being a cop, you kind of have to follow the laws. They frown on that, I've heard. However, your neighboring state, Pennsylvania, has better laws that are more landlord-friendly. So I would invite you to also do homework on those laws before you buy rental properties and make sure you're investing in a state that actually has your best interest in mind?

28:47When do you think that I should be or I could be ready to get into the real estate game? I know from a financial standpoint, you could kind of... I just don't want to make the wrong decision too early. So being only 25 with my current situation, with my rent right now and what I have, it's great. So do I ride that out for a little bit and just fuel retirement accounts, save at the rate that I'm saving, and then get into real estate at a future date? That's my question. That's a tough question. If I go back to my own journey, I always think, I wish I would have started earlier. And if you'll talk to just about anybody, they'll tell you the same thing.

29:31That doesn't mean that you should jump in this year. but every year that you wait is a year that you can't house hack or buy a house, live in it for a year, buy another one, live in it for a year, buy another one, live in it for a year. But again, in your situation, if you do the research that Mindy's talking about and you decide you don't want to invest in your home state, which can be a viable route. I'm in Oregon and I don't invest in Oregon. And that's just because it's very heavy tenant. It's not as fair. I invest in fair states where what Mindy's talking about. I think the tenants have very...

30:07They definitely have rights and there are bad landlords out there, but it needs to be a fair system for both sides. So if that's where you come out and you decide to start the real estate journey of investing that way, like buying something out of state, then that means you need to have a little bit more of a war chest. You need to have a little bit more in savings for a bigger down payment because it's an investment property. First off, you're not moving into it with a low down payment as a house hack or just living there and then turning it after a year into a rental and continuing that route.

30:39So that might change your strategy a little bit. And that's not a bad strategy at all to build up a solid savings account for down payment and then expenses too. When the first tenant moves out in 3 months and they trash the place, then you got to put$3 ,000 into it to get the next tenant in as soon as possible. Not saying that's ever happened to me ever. But you just have to be ready for those unexpected things. So I think that that would be, you could go either way. The other thing I wanted to jump back to is you were, we were talking about this, this pension, you know, you're, you're working 20 years for the police department and I want to make sure that we're not making any assumptions.

31:17You know, you want to leave your options open as much as possible. Like you want to make sure you don't assume that working 20 years at the police department is the best route for you. It could be. And 20 years isn't that long, but you might get to year 10 and be like, it's long. There's 10 more years. So I don't know what the 50 % pension means. Can you explain that a little bit more? And then I would also caution you to make sure as the time goes on that you're always going to all those pension meetings that they have, that you're paying attention to legislation, anything that they're changing in the pension system is going to affect you heavily.

31:55And for me personally, I don't like having that much out of my control. It can be a really awesome thing. But if you can bring some more things into your control, including the real estate investing and some of your other investment accounts too, but you just got to keep an eye on that. And thankfully, you're in an industry that the pensions are protected more heavily probably than a lot of other public services. Yeah. But not as much still. There's tax dollars that want to be pulled for other places. It's just the way the world works. But yeah. So the 50 % pension, what does that mean? Does that mean because you're taking it early, it's lower because you're not waiting as long or what is that?

32:33Correct. So essentially, just a little... Basically how it works in New York with the PFRS system, which is Police and Fire Retirement system. The way that the pensions work is it goes off... It used to be off your three... I think it's your last final three years together, your final average salary, but now it's your five, your last five years final average salary. And basically what it goes off of is 50 % off that. And we get capped at overtime. So we're only allowed to put in 17 % of overtime lifetime per year toward that final average salary, if that makes sense. So let's say, which in the broad spectrum of things, I'll probably end up being around anywhere from$215 ,000 to$230 ,000 by the time I retire, average salary from year 16 to year 20.

33:29That's just with all of our special pay included, everything. So we do have a very good contract as far as police goes, because a lot of people, you may think like, that's absolutely insane, but we just do have a very good contract, which is one of the reasons why I chose to go with this department. So with that being said, let's say I have a$215 ,000 average salary last five years. I make 50 % of that for life. No state income tax. We do get federally taxed, but everything else, we don't get taxed. But we do also... I think now it's starting to change to where we're going to have to pay into our health benefits still.

34:11The people that are retiring now in the tier two, because I'm tier six, tier two doesn't have to pay. And they also don't get a cap on overtime. So some people... One of my dad's friends just retired with a pension of 190 grand a year. We're not going to get that, which is crazy because the inflation is going to get more expensive, obviously. And then we're getting the crap end of the stick to say the least. But at least we're still able to have somewhat of quote unquote security. I have that mindset, same as you Kyle, where this is why I'm here today. It's great to have a pension. It's great to have that at the 20-year mark.

34:52But if I can get to a point in say 12, 13 years where I'm like, wow, I'm crushing it in real estate. I have my retirement accounts fueled. My future fiance is going to be a physician assistant. So she'll be making good money. And I just want to make sure that I don't just think about that pension at the end goal, if that makes sense. Do you know if it has an inflation adjustment, the pension each year? I don't know for a fact. That'd be something to check on. That's something that they've started to take away from some of the pensions. And that will really eat... I don't know for a fact, but what I can say though is our base salary now, which I believe I sent you guys.

35:34I'm not sure if you have it, but our base salary at a year 11 and a half. So it takes a while to get to that top pay. But right now the base salary is$161 ,693. And that's just base salary. That's not another 50 grand on top of it that we're getting from all of our rotational pay, our vacation pay, our sick pay. However, that contract is up in 2024, so next year. And our PBA is trying to get higher pay because the city just got a good contract. So now they're hedging that for our county. I don't know where the pay is going to be at, but I know that they try to do their absolute best to try and hedge inflation by increasing salary a little bit each contract.

36:17Okay. So your 50 % pension will be approximately$9 ,000 a month. And a few moments ago, you said that you were making$30 ,000 a month with personal training. So I don't know that many real estate investors who make$30 ,000 a month. What was your time commitment just to the personal training to make that$30 ,000 a month? that's the thing. Being only 22, 23, I didn't really have a business mindset of, okay, this is how many hours I'm working a week. I just went after it. And I will be blatantly honest with you guys. Obviously, this isn't a quote unquote relationship podcast, but it hurt my relationship to a certain extent.

37:03I was probably working 90 to 100 hours a week plus, if not more, just constantly on my phone answering people constantly. Um, however, now that I have a little bit more of that mindset and awareness, uh, you know, even if I go all in on, on the personal, you know, on that side hustle, and I do get back to a point of that, um, which I would love to, I definitely will have a little bit more of a balance. Um, just because that's not important to me anymore. Like I, listen, I know I'm young and I'm not afraid to work. I'm not afraid to put in the hours. But there's a point in time where like, I still want to be able to enjoy my life and traveling, like I'm in Hawaii, right?

37:45I didn't even really experience Hawaii because I'm working 120 hours a week and I'm spending all the money to be there and I barely did anything. So that's kind of, like I'm trying to, you know, like there's a trade-off there where the time aspect was a little bit too much. And in the midterm, that's why I kind of went toward the police because I kind of wanted a set schedule. And now in my head, I'm like, did I need to? Probably not. But I will say I enjoy the job. Okay. Well, I'm 50 and I'm just discovering this whole don't work every minute of every day thing. So you're ahead of me. Congratulations.

38:23I think it's really important to enjoy your life. You're only here once. You don't get to 90 and then come back again unless you believe in reincarnation. And good for you. I don't. So I'm just going to go with my original statement. You don't get another chance. So enjoy it while you're here. And I wish I would have learned this lesson 25 years ago. So I think another great homework assignment for you is to, outside of this show, Just think back to what services you were providing, what you were doing when you were on your phone all the time, and what you could pull back, what you could still offer, what you could pull back from that would make it a more normal job, a more normal side hustle.

39:14What could you outsource? Somebody always wants to talk on the phone. Great. Hire an assistant to talk on the phone. Somebody always needs an email responded to. Well, can you respond between 8 and 8.30 in the morning? Like, does it always have to be instant? Does it always have to be you? What services can you provide that people found a lot of value in? And what were you offering that if you pulled back, nobody would miss? Because when I think of online personal training, I think of you're going to say, okay, here's your workout. Like here's your workout for the day or here's three workouts for the day.

39:52Great. That doesn't take you all day long. And that's the kind of thing you can kind of cycle through. You create, I mean, even if you create a brand new one, that's 365. And then you start reusing them, but you're probably not going to do 365 whole different ones. There's definitely different business models in my head that I kind of went through as far as the personal training aspect goes. I do think that if I start going full force with this again, I don't know if I can maintain the high ticket end as far as like$350,$400 a month that I was charging. Because it really does take a lot of time and a lot of attention.

40:31Each person is expecting a lot of attention. With that being said, if I did go down that route and I didn't go down, which I like the high ticket personal training atmosphere, just because I know that I'm getting you the results. The low ticket atmosphere, I truly feel like I'm scamming you. And I've had that kind of feeling before where if I've gave a$100 BS program, and then I never talked to the person again. Now I feel like I'm just taking the$100 and now I'm not actually giving you a service that you deserve. So that's kind of as far as that why I went down the high ticket route. However, it consumed me.

41:05It was like all the time, constantly being on these people. So I do think if I go down this route again, and I get back to the point where I was, like you said, I would have to take a look at, okay, well, how much expenses can I afford? And what people can I hire and the team that I can build around me? Because there's just no way that I could do it myself with a full-time job, if that makes sense. Right. But$30 ,000 a month hires a lot of people. and still leaves room for profit. Like one person can check in every morning. Michelle, your job is to email every one of these people or text them every single morning.

41:45How are you doing? Here's the seven things that I want you to say to them in a rotating basis. Boom. Now you don't have to check in with them in the morning. And if they've got a specific question, they can, you know, she can reach out to you. But now you're responding to three questions instead of 300 questions. Or, you know, you would, of course, know your business more than I would. But look at what worked, what didn't. If you still have contact information for these people, offer them a free month or a free six months or like whatever works to really pick their brain and see what they found value and what they didn't and what they would come back for versus what they wouldn't.

42:22I mean,$30 ,000 a month, that's a huge carrot that I think would be worth exploring. Like there's some potential here that you could do some pretty cool things. And I think you've made some mistakes as far as overworking, but everybody does that and you've done it early. You could read some books and solve that really quick. Like some of the things that Mindy talked about, just delegation. These are not rocket science things. Just they're in a thousand books. You pick one good author. You know, like Michael Hyatt is someone who does a coaching program, but he's written a whole bunch of books. You know, you pick, read five of his books and you'd change how you would run a business.

43:03There's some things here that I think you... Rather than trying to figure out how do we cut expenses or how do I save a little bit more, you've got some big potential where you could make$30 ,000 a year, even on the side of your police job. I actually think you could do that within the next year or two if you delegate well. I think that's something that you could have it both ways. And you were talking earlier about your potential goal of having time for family and things like that. That's a really, if you can build those two options at the same time in a sustainable way with intentionality to where you're not getting burnt out under both of them.

43:40And it's, it would take some work. You have to revisit, do some planning, review the business, make sure you're not getting too stretched out. But you know, in 10 years, you could, you might have a big decision to make to like, definitely jump away and even faster than that to jump away from the police department or even maybe sell the personal training business depending on what you made it to but that opens up some options i just i'm trying to think of 44 year old joe and what 23 24 year old joe was doing and man what he could do in the next 20 years and you know just just think about that i want to make sure you're not thinking too small i i sense in here that you could think pretty big and do some pretty cool stuff.

44:22So yeah, don't get too... The numbers are important, but don't get too stuck in the little numbers when there's these big opportunities and you're young and you've got some good ambition that you could run with. Absolutely. Yeah. I truly appreciate that. And it's funny because after joining the police department, there was like a... And I'm not exactly thinking like this anymore, but there was a certain period of time where I was like, all right, I'm set. I have this job. Now I have a steady income. And then I'm like, What am I doing? I do know that I have room for growth. And like you said, if I could get out before the 20-year mark and it makes sense logically, then I will definitely do that.

45:00And ultimately, that would be a great goal to get myself back on that entrepreneurial mindset as far as taking risks and growing income. And I know you said something about we haven't really talked too much about increasing the savings rate and being more frugal. And it's funny you say that because literally probably about two hours before this podcast, I'm thinking to myself, I'm like, I know I could cut expenses. I know I can, but I also know that I could just grow my income more. I know that that's more of a goal of mine. Instead of just staying in a job and just trying to nickel and dime and save and save, well, I can just grow my income a little bit more and then I won't have to think like that, if that makes sense.

45:48Totally. And that's what... And Scott Trench, he's on here usually. He talks often about one of the best ways to build wealth is a business. It's one of the best ways to build it. And it's not about building wealth so you just have a whole bunch of money. I guess for some people it is maybe. But it's that security. And not many people are as capable or even have the desire to build a business. It's just not a part of who they are. and there's nothing wrong with that. But then there's some people that it kind of comes naturally and it's kind of fun and it's enjoyable. And I feel like that's kind of you.

46:22And I wouldn't throw that away. It doesn't mean you have to go that route. You can go different routes, but I mean, there's some potential there and not everyone has it. And you never know. Life will throw things your way, which you've already found out with your girlfriend. You don't know what five years from now life will look like. You might need to be done with your current job, or you might need to be done with personal training. Maybe there's an injury or something that you have no idea. And that's the cool thing about the FIRE movement is that it's not necessarily about the retire early.

46:53It's making the decisions now to be able to pivot if you need to. And that's huge because life hits you. And if you're ready to pivot, it's awesome because Because that stress of the money piece is not there. You can then go to something else. There's already enough stress because of this life thing that happened to you. But at least money isn't a part of it. So the more things you can do now to build towards that, the better it'll be. I like, this is bigger pockets, but I like the personal training route almost more than the real estate route. Because of where you live, because it's so expensive, because of the landlord tenant laws in the states that are closest to you.

47:35And because the personal training thing is proven and it is so, I don't want to say easy, but I see an easy way to delegate a lot of the time suck aspects of it to others so that you're still making, I mean, oh, you're not making 30 ,000. You're only making 15 ,000 to do basically nothing. Not that you're not doing anything, but you've delegated so much. I mean, I would take$15 ,000 doing nothing all day long versus – I don't know if you know this, but sometimes cops get shot at. Well, yeah. And that's definitely like a time-efficient thing. I definitely do think that's definitely more the route.

48:18There's definitely a little bit of part of me where it's like – and it's like a scarcity thing of like getting back to that point. I think I could do it. I know I can actually. It's just a matter of how much time and effort that's going to take. And I'm not really scared of that. It's just a matter of, okay, how can I manage my time? And I know I've said this already, but it's like, how can I manage my time now that I have a full time job? It was not like that beforehand. And then there's also a part of me that it's like, I know you said that you'd like it better than real estate, but there's still a part of me that I still want some type of portfolio because I do know the power of real estate and I do know what it could do for you.

49:01So I don't want to just have all my marbles in the personal training business because it's very volatile, extremely volatile. What I mean by that is I could wake up the next morning and I can go from 60 clients to 30 because who knows, right? XYZ. And now I have half of my income split in half. So there's something to think about in my head as well for that. And that's another thing I think as to why I was working so damn much back then, because I was like, I can't lose these clients. So there's a lot of volatility there, which is why I do want to have some form of portfolio to support my family long-term.

49:45And it's not an either or. It is, you can do a little bit here and then move it, make some money in personal training. And then, I mean,$30 ,000 a month is the number that I'm stuck on because you threw that out there so casually. Oh, I just make$30 ,000 a month. That's no big deal. And the reason is, is because I was literally, I did a mastermind with that business coach. I was like a small shark in the mastermind. I mean, there was people from a couple of trainers from Canada, a couple of trainers from California that were making, I mean, over 150 grand a month in coaching. So it's doable. So it's like when I say 30, it's not like I take it with a grain of salt.

50:30Like, of course I knew I was doing very well for my age, extremely well, but I knew that I was kind of like a small shark in a big tank there because There was people that were my age, 24, 25, making five times the amount I was. So unsuccessful personal trainer makes$30 ,000 a month. So that tells me that there's room to improve and expand and grow this business. Yeah, I agree 100%. I think a lot of times you'll hear people say, I want to start this business. I have this idea. I want to do this. And it's like, oh, that's cool. Don't quit your job. Stay at your job. You haven't proven anything.

51:05The difference in your situation is you've already done it. And that makes a big difference. Like if you ever watch Shark Tank, one of the things they do is like, oh, this is a cool idea. How much have you sold? You know, like, have you done anything yet? Ideas are great, but until you implement them, it doesn't mean very much. Having a business that generates$100 ,000 a month in a$500 ,000 a house market means that you can buy a new house for cash every five months. Yeah. Your police job, while necessary and important, isn't generating that kind of cash and won't ever. Yeah. Yeah. Well, exactly.

51:42It's crazy because having this conversation, I had the same conversation with my actual business coach two years. Now he's crushing it. I haven't talked to him in a while. But when I was making that type of money, he kept telling me, like, why are you going to go do the police? Like, why? Why is it important to you? And my main answer was I always wanted to be a police officer, which is 100 % true. And there's value to that. And then another thing in my head that I didn't really tell him was the security aspect, right? of having that security, having that pension down the line, having those benefits, not having to pay out of pocket for these big expense benefits like health insurance and stuff like that.

52:32So there's pros and cons to it, but I do know that the big con is the fact that I wish I had the knowledge that I do now as far as changing careers and going to the police. As much as I love it, I do know that it's maybe hindering my aspect or maybe hindering my growth as far as in other areas. And like Kyle said, and like you said, Mindy, I could definitely do them all at once. I just have to figure out how to allocate that. Yeah. I think sitting down and really taking your time, we're not going to be able to do this in one hour, but sitting down and taking time to figure out what you can offer and what amount of your time it takes and what can be delegated out.

53:12I think you'll find some clear avenues to easy wins and some other opportunities that may require partnerships. There are other 22-year-old personal trainers out there who would love the opportunity to partner with Joe and be out there on your team and doing this because they don't have the skills to start their own business or the bravery to start their own business. It's scary to start it. Totally agree. Awesome. Well, Joe, what is the name of this personal training business that you have? It's just my name. So JG Fitness, JG Fitness. But you can find me on Instagram at Joe Granary Fit. If you spell my last name, it's G-R-A-N-I-E-R-I.

54:00Awesome. And we will link to that in our show notes today. Joe, this was a super fun talk because you have a hard choice. Which one of these fabulous options do I choose? Which one of all of these fabulous options? I don't see a bad option for you. I see three really great choices, real estate, police department, and fitness training. Plus like whatever things come out of that after, I mean, you're only 25. Look at, you've got three great options at age 25. I can't wait to see what you do when you're 30. Appreciate it. Thank you guys. Thank you for the opportunity. I really, really appreciate it.

54:37Yeah. Thank you for your time today, Joe. And we'll talk to you soon. All right, Kyle, that was Joe and his fabulous set of problems. What did you think of the show? Oh, man, I'm excited for the guy. I mean, he just has a lot going for him. It was great to talk to him. And I just think he has such good problems. He built this business, kind of overdid it, got in over his head from a busyness standpoint, but learned a lot of good lessons. He's gone through a police academy. He's at a police department. He just has a lot going for him. And I'm excited to see where he's going to be in five or seven years from now, honestly.

55:13Yeah, I am too. I think that having so many different great options, it's great for him. It makes our job a little bit more difficult. Which one would I choose of these fabulous decisions? Sometimes it's really easy. Wow, I wouldn't do that at all. I'd do the other thing. It's so easy to make this decision because you're choosing between an awesome option or an okay option and a terrible option. But he's got three really great ones. So I think I would almost lean towards, not almost, I would absolutely lean towards the personal training part because just the money. I mean, you could do that. You could set yourself up for life by just saving everything that comes in and then go focus on something else.

55:58100%. I lean heavy towards the business thing too, but for the money, for sure. but I prioritize flexibility in my life just about above anything else when it comes to professional stuff. And if you build your own business, that's one of the best ways you can ensure that your flexibility is at a level that you want it to be at. You work as many hours as you want, when you want, as long as you want during a certain season of your life, less during a different season of your life. This affords you that when you're working for somebody else, not so much. So that's the reason I would direct him in that.

56:33He's young. You can build a business to be ready and built and look what you want it to look like when you have kids, when you have a family or other responsibilities. It's just a great option. Flexibility is a wonderful F word. I'm glad you brought it up. And if we're talking about inflexible jobs, I think the police officer is about as inflexible as you get because you are not, nobody schedules a domestic disturbance. Oh, are you guys not available right now? I'll call back. They, you know, accidents happen when they happen. You can't get in a car accident and be like, oh, nevermind. I'll stop bleeding and I'll just have you come back later.

57:18That's literally the least flexible job there is. So not that I am encouraging him to leave the police department. He just graduated from the police academy, but things to think about for sure. Yeah. It's a great launching point. He's got a full-time job where he can launch from and while he's trying to build something else, if that's what he wants to do. Yeah. Definitely stable. There is no shortage of need. He will always have hours and overtime too. All right, Kyle, should we get out of here? Let's do it. That wraps up this episode of the Bigger Pockets Money podcast. He is Kyle Mast filling in for the missing Scott Trench, vacationing Scott Trench.

58:01I don't even know where he is. And I am Mindy Jensen saying chop, chop, lollipop. If you enjoyed today's episode, please give us a five-star review on Spotify or Apple. And if you're looking for even more money content, feel free to visit our YouTube channel at youtube.com slash Bigger Pockets Money. BiggerPockets Money was created by Mindy Jensen and Scott Trench. Produced by Kaylin Bennett. Editing by Exodus Media. Copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.