From $69K Debt to Financial Independence in NYC

0:00Mindy Jensen:Every business owner hits a point where they need more expertise than they can handle alone, but another full-time hire isn't always the answer. That's where Upwork comes in. It's where growing businesses find highly skilled freelance specialists, not just for one-off tasks, but to build an entire team, fill critical skill gaps, launch projects faster, and scale support up or down at a fraction of the cost and without the commitment of permanent headcount. Visit Upwork.com right now and post your job for free. That's Upwork.com to connect with top talent ready to help your business grow. That's U-P-W-O-R-K.com.

0:35Mindy Jensen:Upwork.com. When you're ready to start your business, Northwest Registered Agent helps you do more than just file paperwork. You get all the tools to build a real business identity from day one. A business address, website, phone number, operating agreement, free guides, and more at no extra cost. Northwest Registered Agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They are the largest registered agent and LLC service in the U.S. with over 1 ,500 corporate guides. These are real people who know your local laws and can help you in your business every step of the way.

1:10Mindy Jensen:With Northwest, your business is set up to stand on its own from day one. That means your home address, personal email and phone number stay private. Don't pay hundreds or thousands of dollars for what you can get from Northwest for free. Visit northwestregisteredagent.com slash moneyfree and start using free resources to build something amazing. Get more with Northwest Registered Agent at northwestregisteredagent.com slash moneyfree. When spring hits, some people suddenly just want to declutter the garage, clean out the closets, and get everything all organized. Whether or not that hits you, Monarch will do your financial spring cleaning for you.

1:48One dashboard gets your entire financial life organized. No more clutter, no more mess, no more scattered logins, just accounts, investments, property, and more all in one place. One of my favorite parts is the Sankey diagram. Every month I open it up and literally watch the flow of money. It shows exactly where every dollar is going from income to all of my spending categories. It makes it so much easier to spot what's working and what needs tweaking. Get your first year of Monarch for half off just$50 with the promo code POCKETS. Use the code POCKETS at Monarch.com to get your first year half off at just 50 bucks.

2:21That's 50 % off your first year at Monarch.com with the code P-O-C-K-E-T-S. Mindy and I are so grateful for the following sponsors who make BiggerPocketsMoney possible.

2:39Mindy Jensen:Hello, hello, hello, and welcome to the BiggerPocketsMoney podcast. Today is our last episode of our New York City series. This has been so much fun to talk to so many people in the FI community who have reached financial independence all while living in a very expensive city and proving Scott wrong that you don't have to live in a low cost of living area in order to reach FI. Kim Hunter-Borst didn't start her financial independence journey in New York City, but it's where everything changed. After moving from the Philippines and building a high earning life with her husband, they found themselves$69 ,000 in debt thanks to lifestyle inflation.

3:17Mindy Jensen:Instead of letting New York City costs derail them, they got intentional. They cut out expenses, leveraged a rent-stabilized apartment, and maxed out retirement accounts. Her story proves you do not need to leave a high cost of living city in order to reach financial independence. You just need a plan. Let's get into it. Kim Hunter-Boist, welcome to the BiggerPocketsMoney podcast. I am so excited to talk to you today. I'm excited to be here, especially for this topic. Yeah, let's jump right into your story. You were earning high incomes. You and her husband were earning high incomes, but you were still$69 ,000 in debt.

3:52Mindy Jensen:What was the moment that made you think, oh, I got to make a change? So we were, as you said, high earners. And as high earners, we often think, oh, I'll always make that kind of money. I can make it again next year. It's not a big deal. And we were a blended family. And as stepmom, I thought it was my job to bring the fund. So I bought a lot of it. And then by the time, I think six or seven years into our marriage, we recognized that we were both working recession-proof industries. I was in health insurance and he was in healthcare. We recognized it was no longer recession-proof. So I was in the process of laying off half of my team when I thought, hey, I might be laid off as well.

4:32And if I were, what type of position would that put us in? And we were living at that time, not even paycheck to paycheck. It was the day before the next paycheck that we were going, oh my gosh, we're in trouble.

4:45Mindy Jensen:What are some of the changes that you made? Because getting to a place of paycheck to paycheck is pretty easy, but pulling back can be really difficult, especially if you're the fun one. It's difficult to pull back when you're the fun, but it's also difficult to pull back when you are a high earner because you tend to move in circles of friends that are also high earners and they're spending freely. So when you make the decision to make a pivot and say, oh, we can't go to brunch every Sunday or no, I'm sorry, we can't go out tonight for a bite to eat. No matter how great that happy hour is, it's still money spent.

5:20It was a matter of making those concessions and decisions to say, what are the things that are important to us? Our oldest was heading off to college that next year. And we were just like, do we want them to end up in a whole bunch of debt? Like we're in debt or do we sit down and have the conversation with them? And that's what we did. we sat down as a family. We talked about where we were with relations to retirement and the income that we had coming in and how we weren't being very smart with it. So we started looking at things critically, like eating out, buying groceries and still eating out, throwing those groceries out and spending money on things like cell phone services and being able to jump to the next phone.

5:57Just crazy things that we were spending money on that didn't make sense. We were paying for cable, home phone, and internet. Who uses a home phone anymore? No one. The only person that was calling us on their home phone was my mother-in-law. So we just went through and started cutting out things that were unnecessary or things that are needs, but they're wrapped in wants. Like we needed cell phones, but did we need the cell phones that we had? We needed a cell phone plan, but did we need the one that we had? So we just started thinking differently. For example, we had AT &T and we were paying an exorbitant amount of money for AT &T.

6:31Nothing against AT &T. We then switched to Cricket Wireless, which was still owned by AT &T, runs on the same network. But we were paying a flat$100 for a family of five versus$300 for a family of three. So those are some of the changes we made.

6:46Mindy Jensen:Was it hard to get buy-in from your kids? I think it was easier for our youngest. Our oldest was going off to college at the time. And so we made a deal with them. And we said to them, while we are digging out of debt, we're going to need you guys to focus on school. And during the summers, we need you guys to work. And your summer earnings are your pocket money. And you'll be responsible for your books when you go to college. And that was the deal. And we said to them, while we're digging out of debt, we don't expect you guys to go into an exorbitant amount of debt. We are challenging you to look at student loans as the last possible option.

7:22We found scholarships through this organization called SCOLI. We also went to both of our employers and found out that his employer would pay a third of our kids tuition. The rest of it, we challenged them. We said, listen, if you can come out of school with a four year program with twenty four thousand dollars worth of student loan debt or less, we'll pay it all off for you. But if you come out of school with twenty four thousand and fifty cents, we won't pay a dime. And because we gave them that challenge, they met the challenge. So knock on wood, we were able to dig our way out of debt in 18 months when the plan was two years.

7:53And after we dug our way out of debt, we started throwing all the money that we were paying towards debt Towards our retirement. We started investing and and mindy. I I mentioned this earlier I'm not sure if I mentioned it, but I think I mentioned it before that as a blended family We got married late in life. I was 42. He was 47 So by the time we got married, I had all my credit cards He had all his credit cards. So we didn't have one american express. We had three We didn't have one capital one. We had two blending a family blending finances you end up with all of this stuff that you find you don't need.

8:26By going through with a fine-tooth comb and eliminating things, we were able to recognize that we were paying, like one American Express bill, we're paying$6 a day in interest.

8:36Mindy Jensen:Ridiculousness. Oh, wow. So where were you living at the time that you decided to get your financial self in order? We were living in Manhattan. So we live in Manhattan now. My husband, preferably, was in a rent-stabilized apartment. He moved here, I think when I met my husband, he was raising two children. And the youngest, our daughter, was, I think, born six months after he moved into this apartment. So it is rent stabilized. It is a pre-war building in New York City. We pay half of what our neighbors pay to live in New York City. But it afforded us the opportunity to be able to cut back and live in a manner that was, I guess a bit more savvy where we weren't spending every dollar.

9:22But I think initially not paying so much to live in New York, we overspent in every other category. So we were like, oh, we don't need three or$4 ,000 for rent. Let's spend that money having fun. And then when we recognized we overdid it on the fund, we had to just dial it back. Walk us through what your housing costs are in this, I think, rent-stabilized apartment. So I have to be honest, we live in a stabilized apartment, but we also co-own a lake house. So do you want the cost of just living here in New York City or the cost of all housing? I would love to get an overview of your whole housing, how you think about your housing costs in a broad sense.

9:58Our apartment in New York City costs, it just went up to$1 ,720 a month, which I guess folks outside of New York, that's a lot of money, but in New York City, that's pennies. And so our rent is$1 ,720 a month. Our utilities, it comes with heat and hot water. So we just pay for electricity. And that runs between$75 to$125 a month. It depends on if it's summer and we are running AC versus not. We pay for internet, which is$60 a month for streaming. And I think that's it for housing costs. And then the lake house, our portion of that, we taxes, mortgage insurance expenses. We don't pay for sanitation or water because there is a well and we pay for propane.

10:47We put$1 ,000 a month towards that. That's for all expenses plus any emergencies that might come up. How far away is the lake house? Two hours. We own a car. We drive up there. We pay for parking. We bought a used car. We put miles on the car, but we have a great time. We go up to the lake maybe one weekend out of the month. Initially, we were going more frequently during the pandemic. But now we go a little less often because we're both retired and we travel a lot.

11:13Mindy Jensen:When you started this, we were talking about being$69 ,000 in debt. How old were you and how long until you retired? It was 2016 when we recognized we were in debt. We got married in 2009 and I was 42. So I was like 48, 49 when we started digging out of debt. And my husband at the time was seven years older than me. So I was 48. He was like 55. And I have to say, being high earners, when you start looking at your finances, you recognize you're not starting from ground zero. So I was fortunate enough to have put money in my 401k. I didn't understand what I was putting money into. As a young 21-year-old, a friend of mine just happened to say, put 3 % in to get the match.

11:58Just put 3 % in every year, increase it. Well, I put the 3 % in and by the time my husband and I looked up, I was still only putting in the bare minimum. I think I got up to like 6 % by the time we got married. But at that time, I had been working in my career for quite some time. So I had about$219 ,000 in my 401k and he had about$17 ,000 in his 403b. But other than that, we were bringing in about$334 ,000 a year between income and bonuses. but we were spending every dime of it and then some. But by the time we found out about FI and got ourselves together, got our act together, we recognized we didn't need all that money to live on and we scaled down.

12:41How many years into your careers were you each at the point where you're making this 335 ,000? I think I was 20 some odd years into my career by the time I started figuring out finances. Way too late, I should say.

12:55Mindy Jensen:Not too late because you were able to retire. Exactly. At any age. So it wasn't too late, but you could have, I mean, we could talk all of the coulda, woulda, shouldas, but that's not going to help anybody. Oh, everybody could have started saving earlier. Everybody could have saved more. Everybody could have done whatever. How does rent stabilization work? Because that seems like a huge boost for your FI journey. I mean, we can't discount the high income, but again, if you're spending every single dollar that comes in, then your income, it doesn't matter how much you're making. This is true. Rent stabilization, I don't know how it works everywhere else in the country, but in New York City, there is this organization that oversees, I think it's NYSHCR, I think are the initials for it.

13:39I can look that up and give it to you. But it's usually a building that was built prior to 1974. It's usually six plus units. And then you can reach out to this organization and find out. Your landlord should tell you if the apartment is rent stabilized, but they don't always do so. But you can go online and confirm whether or not your unit is rent stabilized. And rent stability just means that they are not able to raise the rent as often and not as high as they would like annually. There are regulations in place that says all rent stabilized apartments will see a 2 % increase this year or 3 % increase.

14:14And sometimes it's no increase at all, but that's regulated by the state. Oh, by the state. Okay. Each state has different rules for rent stabilization. This seems very clear cut to me, right? Yes, you had$69 ,000 in debt, but you brought in so much income. $335 ,000 is still probably in the top 25 % for sure of Manhattan area for a household in terms of household income. So that's a wonderful income. And those are opportunities that are real in Manhattan for many people, not everyone, but for many people, especially after a few decades in the workforce and ramping one's skill set. But the real cheat code here is the rent stabilized apartment.

14:50How long have you or your husband been in this apartment? My husband moved here when my daughter was born. So she is now 27. So he moved in right before she was born and he received the rent stabilization. I don't know what he was paying to live here at that time. But by the time we got married in 2009, our rent was$1 ,200. dollars. When we moved in, I was the person saying, I can't live in an apartment. I've always lived in a home. I own my own house. What is this? This is ridiculous. And I kept saying we needed to move. And he kept saying, this is the only house my kids have ever known. So I would prefer that we stay here at least for a little while while they adjust.

15:33They live through a divorce. They're adjusting to a blended family. Let's not outroot them. So I listened. And after a couple of years, especially when we started looking at ways in which to better manage our money, I recognize having this rent-stabilized apartment afforded us an opportunity to live on half of our income. So while we made$334 ,000, by the time we retired, we were only living off of half of that. And we were also being generous with our giving, because I think if you are fortunate enough to earn any type of income, if you have the ability to give back, then you should look at doing so.

16:07So we were carving out, say, 10 % of our income to donate each year. Walk me through, what's market rent for this apartment? How many square feet? What kind of place are we talking about here? So we have a two bedroom, one bath, hardwood floors, 12 foot ceilings. We live in a building that has an elevator, which is huge in New York. We have laundry in the building. It's in the basement. It's not in our unit. But some units, some apartments have been flipped and they now have dishwashers and washing machines and dryers in their units. And those units can run about$3 ,500 a month where we're about half of that.

16:46Mindy Jensen:Anybody who is moving to New York City could find themselves a rent stabilized property, right? Absolutely. I had a friend move in down the street from me. He moved in maybe six years ago and his was a rent stabilized apartment. He had the choice between choosing a rent-stabilized apartment, which was maybe$20 higher than an unstabilized apartment. And he chose the rent-stabilized apartment because he knew that the rent wouldn't go up as much. That's why I asked, how does rent stabilization work? Because I don't live in New York City and I don't live in a rent-stabilized, I didn't know how that worked.

17:19Mindy Jensen:I was wondering if maybe because your husband moved in so long ago, he got a great rate, but then anybody else wouldn't get that great rate. But this applies to everybody. Yes, the way rent stabilization works, if we were to leave this apartment, most people with rent-stabilized apartments never leave them. But if we were to leave this apartment, right now we're paying$1 ,720. Whoever moves in, they can only increase the rent, say, 3%. They can't bring it up to a regular market rate. You know how the change in seasons hits and suddenly you just want to declutter the garage, clean out the closets, and get everything all organized?

17:54That same feeling hits me with my finances every spring. I used to have accounts scattered everywhere, making it hard to stay on track with my money goals. Let Monarch do your financial spring cleaning for you. One dashboard that gets your entire financial life organized. No more clutter, no more mess, no more scattered logins, just accounts, investments, property, and more all in one place. One thing that really surprised me was pulling up the cash flow view and seeing what percentage of my income was quietly going to lifestyle creep. Dining out and subscriptions I barely notice. It motivated me to make some quick adjustments.

18:24Get your first year of Monarch for half off just 50 bucks with the promo code POCKETS. Use the code POCKETS at Monarch.com to get your first year half off at just$50.

18:35Mindy Jensen:That's 50 % off your first year at Monarch.com with the code P-O-C-K-E-T-S. If you've been putting off life insurance, I get it. The old process was miserable. Phone calls with an agent, a nurse coming to your house for a blood draw, then waiting weeks to find out what you'd pay for. That friction is exactly why so many people who should have coverage don't. Here's what I believe. Most BP money listeners need term life, and the right move is to build a ladder. A few term policies of different lengths stack together so your coverage steps down as your mortgage shrinks and your kids get closer to being financially independent or you get closer to hitting your financial independence number.

19:10The thing that makes that practical now is Ethos, a platform that helps you find life insurance all 100 % online. Same day coverage, no medical exam. You just answer a few health questions online, up to$3 million in coverage, some policies as low as$30 a month. So building a two or three layer ladder that used to take a month of appointments is something you can knock out before your coffee gets cold. Get your free quote at ethos.com slash bpmoney. That is E-T-H-O-S dot com slash bpmoney. Application times may vary and rates may vary.

19:42Mindy Jensen:So from a tenant standpoint, New York City just got a whole lot better. You're looking for pre-1974 properties with six or more units. I think in New York City, you can find that pretty easily. Not all of them are rent stabilized, but a lot of them are. Some of them received the rent stabilization simply for tax abatement reasons, and it ran out or expired after a certain period of time. But for the most part, the rent stabilized apartments are either still available or the building has gone co-op, but they can't turn those apartments into co-ops without offering the tenant that's there with the rent stabilized contract, the opportunity to buy it below market value.

20:21Mindy Jensen:This sounds like a really big cheat code that it's probably available in other cities, but we're not talking about other cities, but it's not available to me in Longmont. If I were to go out and rent a two bedroom, one bath apartment in Longmont, I'm paying more than your$1 ,700 a month. There's also, I have neighbors, so they're maybe paying more money than I'm paying, but they're sharing with roommates. Most people that moved to New York City are not moving to New York City thinking, oh, I can afford the rent by myself, or I can afford to buy something. Because in New York City, if you buy an apartment, my mother-in-law, for example, owns an apartment in Manhattan near Lincoln Center, and she pays not only to own the apartment, but she also pays maintenance.

21:05Most buildings in New York City, even if you buy them outright, you still have monthly maintenance, which is the equivalent of rent or mortgage. So most folks, when they move to New York, they know it's high cost of living and they're going to split that cost with someone. So my husband and I contribute. So you can look at it as if we're two roommates sharing an apartment, although we're cozy roommates. We're trying to understand what are the relative advantages and disadvantages of fire in New York City. And it seems like I can summarize what I've learned so far, I want to hear your full take on this, but it seems like it's, in this case, rent stabilization and relatively high income opportunities.

21:45And those two things are a huge boost to your FIRE journey. What else? It sounds like you're going to react and have more. I look at my neighbors in my building. So we have a mixture of folks. We have some folks that are appointed judges and others are attorneys, but then we have some that are working in the creative space. They are on Broadway or they're traveling or they work for the symphony and they're not working in high incomes, but there are things that New York City affords you that most cities don't. So for example, we own a car and we only own a car because we have a lake house and we drive up.