FI at 44 AFTER Taking a Year Off at 31

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2:37Mindy Jensen:Today's guest gave herself permission to hit pause on her career in her early 30s for an entire year, all while staying on track to reach financial independence by age 44. Today, we're exploring what it takes to take a sabbatical without derailing your fire plan.

2:59Mindy Jensen:Hello, hello, hello, and welcome to the BiggerPocketsMoney podcast. My name is Withme Jensen. My name is Withme Jensen. I don't even know my own name. Oh my goodness. Okay. My name is Mindy Jensen, and with me as always is my sunshiny co-host, Scott Trench. Thanks, Mindy. Great to be here with you, Jensen. We are so excited today to be joined by Alex Morales on today's episode. You can find her online as Girl Chasing Wealth. As of today, she is a few weeks into her year-long sabbatical, which we can't wait to talk about, and we can't wait to talk about the lead-up to her making this decision as well.

3:32Welcome, Alex. I'm Mindy. Hi, Scott. Thank you guys so much for having me on the show. I'm really excited to be here and fangirling a little bit. I'm a huge fan of BiggerPockets, so I'm excited to talk to you guys today.

3:45Mindy Jensen:Well, I'm excited to talk to you. I want to know what your job was that you decided to take a break from. Yeah, absolutely. I have been working in marketing since I graduated undergrad in 2017. So I worked full-time in marketing since then, and I was feeling super burned out and kind of ready to take a break. And pursuing a sabbatical was something I always wanted to do. So I decided everything aligned and it was the right time to take that leap. When you first discovered the concept of FIRE, but what was your position like in life? How far along were you in this journey in your marketing career and where were your finances?

4:27Yeah. So I remember the specific day. It was back in January 2021. And I was just doom scrolling on TikTok. And I came across a video by Katie, aka Millennial Money Honey. And she was talking about how you actually don't have to work until 65 to retire and how retirement is a number. It's not an age. and that was the seed that was sort of planted in my mind. So this was four years ago now and I was 26. So, so pretty early on in my career, but I did all of the research. I kind of did a deep dive on fire. I binged the Mad Scientist podcast, the Mr. Money Mustache blog. I read all the personal finance books and I kind of discovered that, hey, early retirement is actually a possibility for me.

5:20And I had about$50 ,000 saved in cash at that point. So I think I already had a bit of a start there.

5:28Mindy Jensen:Yeah, you had a huge start there. What were you saving that$50 ,000 for? Or was it just for the future? Yeah, it was kind of for the future. Maybe do I want to buy a house, put a down payment down on a home and build wealth that way. Growing up, I was kind of taught like, hey, go to college, get a job, buy a house. And so I think that was kind of the savings goal, but really no full intention or plan there. Once you kind of stumbled into the FIRE universe, it sounds like you went down the rabbit hole pretty deeply, presumably for years, consuming all that content. What are the things that began to change in the immediate aftermath of this with that$50 ,000 saved at year 26?

6:11How do you begin to change the trajectory of what you're doing? Yeah. So from there, I immediately opened my first IRA. I opened a brokerage account. I already had a 401k, but I bumped up the contributions significantly. And then I immediately started tracking my spending so that I could see my savings rate and ultimately project my timeline to FIRE. Awesome. You were clearly saving before this because you had the$50 ,000 saved. But what specifically changed about your spending after discovering FIRE where you're able to presumably contribute more to your 401k and begin accumulating wealth outside of it at an even faster rate?

6:56What were some of the changes there? I cut out unnecessary spending. I lowered my food budget a lot. I was someone who was going out to eat many times a week and I also shopped a lot. So I was buying clothes all the time. So those were two easy things that I could really cut out right away and start saving significantly. I don't think you really realize, you know, how much you're spending on these certain categories until you're really tracking it. And then you start to notice like, oh my gosh, hundreds of dollars a month are going to this. And for what, like why?

7:32Mindy Jensen:Yeah, it's just a dollar. It's just$20. It's just$50. What do I care? It's no big deal, especially when you've got a higher income. But when you start tracking it and you see how fairly easy it is to remove some of these, especially when you go from not tracking to tracking, you're like, I'm spending how much? My Amazon budget is cringeworthy for a while because I think, first of all, I think that Amazon Prime is a brilliant thing for Amazon and not so brilliant for somebody trying to get their spending under control. But let's talk real numbers here. What sort of income were you making and how much were you saving versus what you cut out?

8:17Mindy Jensen:How much did you cut out of your budget? Back in 2021, like I said, early on in my career, I was only bringing in$60 ,000 a year and like a 4 % to 5 % bonus there. So I think I'm a really good example of someone who's not a high earner who's pursuing FIRE. So when I started out, it was, you know, so middle of pandemic. I wasn't traveling much. I wasn't really going out to do things still. And I was able to hit like a really high savings rate around 55 to 65 % each month. As you guys know, on a$60 ,000 salary, that's not really sustainable. I was living in like extreme frugality. And so over the years, I think my spending has transitioned to more of an attentional approach.

9:07And so I don't really align with like the extreme frugality anymore. I really think that you have to prioritize enjoying the time now while also planning for the future. So my spending has changed a lot. I don't want to say I've fallen into lifestyle creep because I do still keep my living costs low and my transportation and food, but I do allow myself more flexibility with travel spending and experiences. So, you know, you're making$60 ,000 a year with a couple percentage point bonus, and you're hitting a 60 % savings rate. So surely you are in like Memphis, Tennessee, or somewhere in the Midwest with a really low cost of living area, right, Alex?

9:52Absolutely not. I unfortunately live in a high cost of living area in California. So it just came down to keeping the housing costs really low by having roommates and then shopping at discount grocers and just keeping food budget super low. I was fortunate that I paid off my car back in 2020. So when I did discover fire and start pursuing early retirement, my car was already paid off. So I didn't really have that big payment every month over my head. So I just want to chime in here that it sounds like there was some changes in your food and shopping budget, but I want to call out that the biggest, it's almost impossible to move towards fire in a situation like yours in a high cost of living market.

10:39If you don't do something special with your housing, in your case, it's as simple and as scoffed at by many as having roommates. Can you tell us about your housing situation and how you were able to presumably keep it very low to be able to spend$30 ,000 a year in total in California? Most people don't want to live with roommates. It's not fun all the time. And of course, you want to have your own space. But if building wealth is what you really want, it's crazy not to do so. Just as an example, to rent a one-bedroom by yourself is going to cost around$2 ,200 a month. In what city is that again?

11:21So I'm in Ventura, California. Okay. Yeah, so that's a one-bedroom. But if you split a two bedroom, you're looking around$2 ,500. If you get like a three bedroom condo, you can bring your housing costs even lower to about$1 ,000 for a room and living with two other roommates. So I think it's very doable. And I think a lot of people just don't want to share their space. And I totally get it. But it's all about the sacrifices that you're willing to make, really. All right. We're going to take the first of two mini retirements from the BiggerPocketsMoney podcast. But while we're away, feel free to go over to YouTube and subscribe to our channel.

12:01That's YouTube.com slash BiggerPocketsMoney.

12:04Mindy Jensen:Welcome back to the show. I love the Dave Ramsey quote, live like no one else now so you can live like no one else later. You are going to have people in your life who are saying, oh, nice, but I could never live with roommates. I could never live with roommates. And then in 10 years when you're retired, they'll be like, oh my God, how did you do it? Well, I lived with roommates. I didn't shop at the brand name stores. I willingly made small sacrifices. You're not eating beans and rice and living in your car. You still have a place to live. You just are sharing it with people. And I think that there's this mentality in America that we have to have everything.

12:46Mindy Jensen:I want to have the nicest of everything. Well, sure, but you're not going to retire early. I mean, you got to pick what you want. And then once you are retired, you do all the things that you want to do. So I think your approach is better. One way of putting it is you have a roommate, I presume still right now, right? Yes. All your peers have a desk. Yeah. Right. So that's the difference. It literally is that simple. In the position that you were in where you were making a reasonable, a pretty good income at$60 ,000 a year, It's not crazy in California, but it's good for someone at 26 at that point.

13:18And you were able to achieve this outcome. I think in large part because of that single choice, that and the paid off car. Oh, my gosh. I mean, there's even additional ways on top of that, like the live-in flip or the house hack that can accelerate things. But it's the roommates. And can you tell us about what your situation is with your roommate? Do you have one or multiple? Yeah, I have one roommate at the moment. You know, it's easy. I enjoy it, to be honest. I, I've actually never lived alone. And I think I would be a little lonely or a little scared. Like it's nice to have someone there to connect with, um, at the end of the day.

13:53Mindy Jensen:Scott, having a roommate is just a fancy way to say house hacking or house hacking is just a fancy way to say having a roommate. You just owned the place in the house hack, but Alex, I also have never lived alone. So I've never, I, I shared a room with my brother growing up. Uh, so having my own room was a huge privilege in there. I didn't have my own room until my senior year of college in there because of the way that the dorms worked at school. And then after that, I had a roommate all the way through until when I met my wife. Then I moved out with a place of the roommate and in with her. And I think that's been an enormous, enormous boon to building wealth.

14:34There's no way I could have gotten to where I got, or I think, I guess you could have got to where you got without that choice. So I want to call that out because it's the most essential ingredient in it. And I think in a situation like yours with your income to being able to move into that next barrier. Do you agree with that? Would you, reflecting on your journey? Oh yeah, yeah, absolutely. I mean, like I said, a high cost of living area, if you're able to keep that housing expense down, that's really going to put you ahead. So I totally agree.

15:02Mindy Jensen:So let's talk investments. What were you doing with this$35 ,000 a year that you were saving from your$60 ,000 salary? Like I said, opened my IRA right away and I maxed it out since I did have that big cash savings. I maxed it out for the year before and then the current year. And then I was contributing a large percentage to my 401k. I believe when I first started out, I bumped it to like 29%. So that was huge. And then more recently, I started a second brokerage account and started to dollar cost average into Bitcoin every month. So I've been doing that for a few years and just throwing like a hundred bucks in each month to diversify a little bit more.

15:51I definitely want to disclose that it's very small percent of my portfolio. And I do not think Bitcoin is a sound investing strategy to reach early retirement, but I didn't want to miss out on what that could possibly be. And the risk has paid off. It's done really well for me in the last few years. So that's definitely bumped up my net worth quite a bit. Do you use the Bitcoin investment to fuel your sabbatical? Are you spending portions of that right now or are you keeping that invested? No, I'm actually not selling any investments to fund the sabbatical. So I decided I wanted to take my sabbatical back in March.

16:35And so since then, I lowered my 401k contributions down to just my employer match. And then I've been saving all my cash in my high yield savings account. I really wanted to avoid selling any positions because I know that those are going to continue to grow while I'm no longer contributing over the next year. And so I think I'm going to be able to do it with just the cash I have. This is the first year I'm actually earning some income from my side business as well. So I'm hoping that any extra income I need, I'll have that as a safety net. But that's definitely not plan A. Plan A is just to use the savings that I've built up.

17:21Mindy Jensen:Did you take an actual sabbatical from your company or did you quit your job completely? I resigned. So my company doesn't offer sabbaticals. I gave my notice and quit my job. You know, it felt like it was really time for me to move on. And before I decided to take my sabbatical, I was looking for a new job. I was applying to new jobs. I really felt like my salary and my professional growth was kind of stagnating where I was at. So So the move was to find a new job. And then while doing that, I was realizing, hey, I'm super burnt out. I'm exhausted trying to keep up with a full-time job with my side business.

18:05I just didn't feel like I could confidently enter a new role and start at a new company at that point. Because when you are moving on to a new company, you want to learn the company. I'm in marketing, so I would have to learn a completely new brand, potentially a new product. And I just didn't think I could give it my all at that point. So yeah, like I said, it really felt like things sort of fell into place where, hey, now feels like the right time to do this because I had been pushing it back year after year. And it just felt like everything really aligned at this point. I'm going to go back a couple of moments here.

18:42You know, we started the journey with$50 ,000 and$60 ,000 in income,$50 ,000 in savings, $60 ,000 in income, presumably a little bit in a 401k on top of that. and a paid off car. What did your income grow to in the next few years leading up to the sabbatical, which I believe began just a few weeks ago here? Yeah, you're correct. I am about 10 days into my sabbatical. So when I just left my employer, I was at 80 ,000 per year. So it did grow quite a bit in the last four years. I received a promotion in that time. So I was striving to constantly grow my income there. And I will say, I feel like I stayed at this company a little bit too long, but sometimes it's a trade-off.

19:28I did really love the people I worked with. I loved the other benefits. They also paid for my MBA. So I earned my MBA while I was with them and that was completely free to me. So I did stay too long, but I think at the end of the day, it was worth it. can you remind me of the second part of your question? What did your wealth grow from? That$50 ,000 to in the last couple of until last month when you decided it was time to take the sabbatical. Yeah, and so since then my net worth just hit $310 ,000 in August so I just reached the$300 ,000 mark which is absolutely insane but I'm not going to get too used to it fully expecting that to go down as I'm spending some of that cash in my savings account.

20:19But like I said, if I'm intentional enough with my business, I'm hoping I can, I guess, limit that hit. So let me ask you this. How much cash did you save up and what do you spend in a year? What do you expect to spend in this next year? So I based my goal on my spending for this year. On average, I was spending about$3 ,300 a month. So I needed about$39 ,000 for the year to take the year off. I actually got close to that. I got to around$30 ,000 and then I paid myself$10 ,000 from my business. Like I said, this is the first year I've been earning income. So I was able to kind of bridge that gap for the rest of my sabbatical.

21:02I am intending to travel a little bit over the year. Nothing super extensive, but take a few trips. So I'm really lucky that I do have that business income in the event that maybe I go overspending, but I'm also going to be at home a lot. So I'm really going to try to regulate my spending while I am home. I'm going to try to eat out less and just limit my spending so that I have that extra buffer when I do want to spend more on a trip here or there over the next year. All right. This is the second of two little mini retirements that we're taking from this episode. We'll be right back with more after this.

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23:15Mindy Jensen:Thanks for sticking with us. What is this side business? You've mentioned this a couple of times. Is it scalable? Do you want to do it full-time or is it really just on the side? That's such a good question. And I think I had that conversation so many times at FinCon last week. It is my Instagram account, Girl Chasing Wealth. So I sell digital products there. I partner with brands and do brand deals. And then I, over the next year, would like to build out a coaching program. It's a really tough question to answer if I would or wouldn't take it full time. I think I ultimately my goal is fire and I don't feel that my net worth is quite high enough to go all in on my business quite yet.

24:05So I think eventually if I could replace my income and all of the benefits that come with the nine to five, I would consider that. But at this point, I do intend to reenter the workforce and then have my business on the side. And that way I can build up a little bit more wealth and maybe make up for taking a year off. But it's not a never type of thing. I will consider it in the future.