How He’ll Hit $500K by 30 (Coast FI Plan)

17:18Evan Lawler:Yeah, I think that is a great point. I think that people should spend money on whatever they want to spend money on. But you're exactly right, Mindy, that I think if you actually count the cost of a lot of these things, you'd realize that you're paying hundreds of dollars for something that only potentially marginally improves your life day to day. I do get a lot of slack from my friends about my apartment building. Some of them live down in D.C. and have really nice places, again, with the nice amenities. The in-unit washer dryer, I got a lot of hate on. But all in all, I've been this way for a long time, so they know where I'm coming from.

17:55Evan Lawler:And especially with my social media page, they're watching me try and save money as much as I can. So they do give me a hard time, but it's all in good fun. You know that feeling you get when checking your finances means logging into five different apps? That's why I use Monarch. Setup takes about 10 minutes. You can link your accounts, and everything you own and owe lands in one clean dashboard. Banking, cards, investments, even keeping track of recurring charges. After that, you can stay on top of your money in just minutes, not hours per month. Monarch saves you time and actually helps you use it wisely.

18:27Use the code POCKETS at Monarch.com to get your first year of Monarch core half off at just$50. That's 50 % off your first year at monarch.com with the code POCKETS.

19:03overpay for, you stack a few, say a 10-year, a 20-year, and a 30-year layer. So your total coverage steps down as your actual obligations step down. You only pay for what you actually need when you need it. Ethos is a platform that helps you find life insurance 100 % online. You can get a quote in seconds and apply in minutes. There's no medical exam. You just answer a few health questions online. You can get up to 3 million in coverage. Some policies are as low as$30 a month. That makes building a ladder genuinely fast. Get your free quote at ethos.com slash bpmoney. That's E-T-H-O-S dot com slash bpmoney.

19:36Application times may vary and rates may vary.

19:41Mindy Jensen:So what else do you think that you are giving up or pushing down the road by spending less than$40 ,000 a year?

19:50Evan Lawler:Yeah, I definitely live a modest lifestyle. I haven't been on many big vacations. Thankfully, in Philadelphia, we have the wonderful Jersey Shore, which people flock from all over the world to come visit. So I get to go there for my vacations. I don't have always the nicest clothes. This Patagonia was used and a birthday gift. For me, I focus so often on what I have and what I can go out and do that I don't even often think about what I'm giving up. And just like you mentioned, Mindy, I'm always running the cost. So if I want to hang out with my friends and have a bunch of food or even go to a local restaurant, I know that I can afford that.

20:34Evan Lawler:So those things that bring me a lot of joy, I actually do go spend money on. Have you listened to Ramit's podcast? I have listened to Ramit's podcast. Yeah, I've listened to probably every episode. The only show I listen to more is Bigger Pockets Money. All right. Would you characterize your life as a rich life? I would absolutely characterize my life as a rich life. And just like Ramit talks about in his podcast, I don't think other people would want to live my life. And I'm totally okay with that. And I think that I focus on the things that bring me a lot of joy with the understanding that in the future, I'll spend more on the things that I want to do.

21:13Evan Lawler:But I think that I live a very rich life. We have made a conscious choice to keep housing expenses in particular, very low. and that is the fundamental variable in your savings rate. I also want to call out that you said you're making about 100 grand, you're spending about less than 40 and you're accumulating about$40 ,000 per year. A byproduct of that is that you're paying taxes voluntarily to max out your Roth instead of your 401k. So first, I'd like to hear about that decision. Why are you making that decision right now when you could arguably increase your savings rate with a 401k? And what are you projecting?

21:47Where does this lead and by when?

21:49Evan Lawler:Currently, I'm totally maxing my Roth opportunities. So Roth IRA and Roth 401k, 100 % allocation into my Roth. Obviously, I have my company match, which is pre-tax dollars. The reason I like Roth is because from what I understand, Roth is first in last out. And I understand now that these years are my first in years. So I think that it grants me flexibility in the future and I don't have to worry about ever changing tax rates or potentially increasing tax rates. So having the flexibility to take that money out without any tax implication is something that's super appealing to me. My current assumptions show that I'm on track to be 32 years old with about$564 ,000, which would be my Coast Fire number.

22:39Evan Lawler:But I'm trying to bring that number to$500 ,000 by$30 ,000, which would achieve my Coast Fire goal as well. So let's talk through how you project this out. First of all, is that number just the amount you're going to have in your Roth 401k? That number is across all my retirement accounts. So my IRA and my 401k. Okay, great. What are you assuming for your salary growth over this time period? I'm assuming that I'm going to continue contributing the same amount. But if I make more money, my current assumption is that I won't put any more towards my investments. And do you assume that you're going to see salary increases over the next five years that are meaningful?

23:19Evan Lawler:I haven't built it into my projections too much, but I do expect that I will see salary increases over time. I think this is a really important point because I think that, you know, how can you build your model any other way than what you're doing here as a base case? And there's almost no way that someone who is living frugally, working very hard, self-educating, who's 25 at the very beginning of their career is going to go a five or six or seven year period in a situation like yours without finding salary increases, right? It's a very low probability that that could happen. It could happen. And if it does happen, you're better positioned the most because of your savings rate.

23:56And then, you know, it could happen that you get laid off and actually there's a big setback, but the most likely path forward is promotions and opportunities, right? If someone offered you a promotion in a few years or said, hey, here's a two-year path to becoming a manager, would you say yes to that opportunity right now?

24:11Evan Lawler:Yeah, I absolutely would. So I think that there's a very good likelihood that that will happen. And this is missed by a lot of people, right? The career growth does not happen linearly. It's a compound or step ladder over time for situations like this. Have you modeled that out at all? Have you thought about what that career path looks like in a field like yours? I haven't modeled it out. I think that my conservative nature, I always want to make the most conservative assumptions possible. And I think you're exactly right that I am underestimating my ability to grow my income in real dollars. But I think that if I incorporated those changes, it would show that I am at least on track to achieve that goal.

24:53One of the things that I observe, again, I don't know the Philadelphia market very well, despite being a Byrds fan. I don't really know the neighborhoods or those opportunities. But on paper, you know, in a spreadsheet, it looks like a prime place to house hack or potentially look for cash flowing real estate opportunities because of a relatively low medium price and relatively reasonable rents as a ratio to that price. Is that your observation as well? Is that going to be a part of your plan at some point in the next few years?

25:20Evan Lawler:It's such a great question. And it's something that has been spinning around in my mind for years now. I have so much more research and understanding to build on my end, to understand how to effectively go out and house hack and do those things. I think you said in the past regarding house hacking that it's something like a hundred hour obligation in order to reach some level of functional understanding. And I've got about 80 hours to go. So from my preliminary understanding, I think that you could be exactly right. It could be something that I incorporate into my financial picture moving forward, but I would have to make sure that my girlfriend was on board as well.

26:03I just think your approach to how you're handling everything is so wise. You've kept your housing costs low. You are making calculated decisions. You're going down an optimized stack for, you know, an order of operations and investing. You're making a clear trade-off. You understand the cost and you understand what you might get in return. And I think that you're right to be both interested and skeptical of house hacking or real estate right now in the Philadelphia area. I will say that, I don't know if you've considered this as well, but I think that your career, based on what I'm seeing, has excellent prospects, but not like top 1 % prospects for income, right?

26:41Is what I'm gathering from what you're saying here. Like there's a very realistic path to$200 ,000 a year in your 30s, but not$500 ,000 a year in your 30s on the current career trajectory. And all that, it's right where you should be in terms of your mental state, right? If you had a path to make much more than that, I'd say, don't house hack a$200 ,000 quadplex in Philadelphia, right? That doesn't make any sense because then in 10 years, you're going to be making$500 ,000 in your big law or finance career, and that's going to be a complete distraction. But in your case, there's a very real path where if you house hack several times, you can own several pieces of property, get into that$200 ,000 range, and continue to deploy capital in there with a skill set that you've developed.

27:28You can also go the other route and just invest passively. You have both options there. And that's where I think you're correctly treating real estate as an option and not a clear yes, no at this point. And I'll be really interested to see what you end up doing, given your position.

27:43Evan Lawler:Yeah, I totally agree. And I appreciate you saying that it's a wise path. I like to consider myself almost like a young Scott Trench taking on the world in the Philadelphia area again. So really almost a compliment for yourself. I think you're doing a much better job than I did, right? So I was just so hardcore. I was not considering Coast Fire. It was get ahead at that point. So I think you've just taken all this stuff and are making much better decisions than, you know, or thinking about it much more robustly than I was at 25. So I think you're crushing it. Thank you. Yeah. Yeah, and I think you're right about the income growth that a lot of people, like, they almost turn their brain off a little bit when they hear like, oh, boohoo, instead of earning$800 ,000 top line, you could possibly earn$200 ,000.

28:26Evan Lawler:That's still a lot of money. But at the end of the day, those are two, like, categorically different numbers. And I think you're exactly right that for some people who are investment bankers or management consultants who have such a high ceiling, they can go just work their job. But I think for people who are engineers who earn a very strong salary, but maybe that ceiling is not quite so sky high, those other opportunities are really important. Yeah, real estate is such a powerful tool for someone in that category because you can swing the hammer yourself and it makes sense to do that in the extra hours, right?

29:00The 70th hour at your job does not return in those situations. And that's why it makes so much sense. It's why it made so much sense for me as a financial analyst, right? There was no credible path when I started down my real estate journey as a financial analyst to making big bucks without some sort of really hard or total pivot. And so it made perfect sense to spend my extra time after my day job doing something that could create value like real estate. But again, if I had been in one of those other trajectories, it would have changed. And in your case, one question I'll also ask here is, is you are accumulating the vast majority of your wealth in retirement accounts right now, right?

29:38You've discussed that. You know, have you considered the opportunity cost of that or have you considered amassing some after-tax position on top of that intentionally as you kind of approach 30 to make some of these other options like real estate or entrepreneurship or those types of things maybe a little bit more accessible? Or is that off the table for now?

29:56Mindy Jensen:Well, he's got the money in the Roth. Does that kind of cancel out the need for a large after-tax portfolio? Because he can access the funds that he's put in after five years. Great point.

30:11Evan Lawler:And when we say after-tax, are we talking about a brokerage? Yeah, I'm just more asking, you know, you're potentially interested in real estate. There's kind of like a, I want some options as I approach COSFI. Is the intent to use the money that you're committing to these retirement accounts as those funds? Or do you have some other plan to amass cash or other liquidity to create those options at that point via another mechanism? It's definitely something that I've considered before. By tying up that money into these retirement accounts, I get the advantage, the tax advantage. But I totally understand that the trade-off there is that I basically can't access that money without using the Roth that you mentioned, Mindy.

30:51Evan Lawler:But at my current savings rate, I plan that if my income were to grow over time, that I would modestly increase the amount that I'm investing to try and achieve that Coast fire goal of 500 by 30. But any additional income, whether that comes from my job or my part-time content creation, my consideration for that would be to take that money and make it more flexible and available to me, probably through a brokerage account in order to have the opportunity to pursue those goals in the future.

31:23Mindy Jensen:Are there any mechanical engineering side hustles available? I'm not a mechanical engineer, so I've never even looked.

31:30Evan Lawler:The one that comes to mind is that if you are a certified professional engineer, which I'm not, you have to work for at least five years, then you can start a small company which reviews and approves or denies and stamps drawings, which is a way that some people make money. It's not exactly the industry I'm in, so it's not something that I've ever really considered doing, but it doesn't lend itself particularly well to a bunch of side hustles.

31:59Mindy Jensen:Do you have any side hustles that you do or are interested in, or is it kind of not worth your money or your time because of the money that you make in your main job?

32:08Evan Lawler:The only side hustle I have primarily is my content creation. So just kind of sharing my foundational principles of personal finance, I've been able to kind of grow an audience there and from that kind of like initially now like a modest income.

32:24Mindy Jensen:So it's really just that, that main income or any real estate income that you might have. So have you thought about job hopping?

32:36Evan Lawler:Definitely. I know the statistics around job hopping are historically great. I haven't looked at them now, whether or not it's still worth it to be doing that. Currently, I've just been at the same company since school. It's only been about three years or so, But it's definitely something that I've looked at in the future, whether it's to job hopping and get a greater opportunity or to use the offer from another company to negotiate at my current company.

33:05Mindy Jensen:Yeah, that is a skill you could start learning and growing is your negotiation skills. Negotiation for more time off or better pay or better benefits or work from home some days if that's an option. That's a skill that I never had. And I kind of wish that I did.

33:24Evan Lawler:Yeah, negotiation sounds like a super great, simple thing to do. But I totally agree. When I was graduating college and they gave me the number, I said, great, thank you. and even though I knew that I should have negotiated. Yeah, well, and when did you graduate? I graduated college in 2023.

33:42Mindy Jensen:I mean, don't beat yourself up for not negotiating that. Nobody negotiates that their first offer. You're like, I'll take it.

33:47Evan Lawler:Yeah, yeah, exactly right, exactly right.

33:50Mindy Jensen:But do you have a praise folder in your inbox? A praise folder? In your work inbox. Anytime somebody says, Evan, you did such a great job on the XYZ project. Thank you so much for your input. but you put that in your praise folder and go back through all of your email and look for anybody saying, hey, you did a great job or your contributions helped us. And then when it's time to ask for a raise, you don't just go in and say, hey boss, I'd like a raise. You go in and say, hey boss, here's this giant printout of emails. Don't just forward them, print them out and hand them to him. Sorry, Trees for killing you.

34:26Mindy Jensen:But here's all the reasons why I am such an asset to this company. And I think that you should give me a raise of X dollars.

34:33Evan Lawler:That's awesome. Yeah, I have a list of running projects that I'm working on and completed, but I love that idea of collecting that feedback because I think that that really goes a long way. I don't have a praise folder, but yet consider it done. Yeah, exactly.

34:48Mindy Jensen:And I would love to take credit for that. But that was Aaron Lowry from Broke Millennial who first suggested that that I heard first suggest that. So praise to Aaron. Good job, Aaron.

35:28Thank you, Aaron. divisions, depending on how big your company is, will need a full year to put into the budget, your raise and promotion in there. So if you can get way ahead of that with your manager and really kind of crush it, you can, you can start to make those, those odds much more probable. It may be unrealistic to ask for a raise in February when we're recording this. I think you'll, this will get released in March because everything's baked in. But if you have those conversations now, those leaps can be much higher probability if you're getting way ahead of them and thinking in those capacities and saying, what are those clear things I need to deliver or demonstrate?

36:02So that would be my advice on top of Mindy's to keep a praise folder.

36:06Mindy Jensen:And a lot of your coworkers are not going to your boss and saying, what can I do to improve? What can I do to grow? So your boss already thinks you're awesome. And now he thinks you're extra awesome because you want to make his life easier. When you do a good job, he looks good. And then his boss praises him. Or she. Or she. Yes, I'm sorry. So sexist of me. But having that initiative is so valuable. Wouldn't you say, Scott, as the head of the company? Oh, I'd love it. If someone came to me with that, I would say, great. Here are some things that I really need done. If they get done, this makes it so easy for me at a high level.

36:43And of course, I'll do that. If this timeline is perfect, I can put that into the budget for next year instead of asking for more money right now for an off cycle situation. Like that would make it really easy for me.

36:54Evan Lawler:Yeah, I think that's great advice and awesome insight because I think especially as a young professional, a lot of people go in and they feel as though whether it's a bonus or a raise that the conversation is happening right there and that this is the only moment that you could have mentioned getting a raise or getting a bonus when in reality, like you mentioned, that decision might have functionally been made in the summer or the year before when the budget was created. So I think that's great advice and I'll definitely be doing that. What I think is so awesome about your story is it starts with an engineering degree, a high ROI degree, right?

37:30That's not as fun as the at Vanderbilt. We had the HOD degree, which is relatively easy set of classwork compared to the engineers in there. But the engineers a lot of times get very high starting salaries and the career progression is excellent. especially in the first five, 10 years for a lot of engineers that pursue that professionally. That's the number one thing that makes this fairly straightforward from an income perspective. The second is you live frugally. You live way below your means relative to the peers that are earning the same amount of income as you in your city. And then you have a basic grasp, a very strong basic grasp, a very excellent grasp of the foundational principles of personal finance, and you go down the stack investing.

38:14And what's so awesome about your situation here is that for other engineers that are pursuing similar career trajectories, there's nothing that can't be repeated here. It's just very basic stuff that leads obviously to freedom with a very conservative projection profile. So congratulations on what you're doing and thank you for sharing this. The thing that's awesome about what you're doing is that it's so repeatable by others who graduate college with an engineering degree or similar.

38:39Evan Lawler:Absolutely, yeah. I really appreciate that. And I think you're exactly spot on that my approach is to do the basic elements as perfect and as much as I possibly can. And so far, so good. So thank you. Last question before we wrap up, Evan. How do you feel about money these days? I used to feel nervous about money. I like to keep it and I didn't like to spend it. And I would agonize over these small expenses. But I will say a testament to myself, pat myself on the back, that over the last couple of years, diving into personal finance content, including bigger pockets money and running numbers, I've recognized that the smaller expenses that financially ambitious people tend to agonize over really do not move the needle compared to the three to five big decisions that you might make throughout the year.

39:33Evan Lawler:transportation, housing, asking for a raise, the investment vehicles that you choose to buy into. So with that, I found myself sleeping sounder at night and feeling far more confident about money and finding it as a way to enjoy my life more, not something to hoard or agonize over. That's a wonderful evolution there. I also would guess that there's a bit of a, well, it seems like it's pretty much an autopilot these days feeling to it. That's, you know, probably both frustrating and boring, perhaps. Is that at all a reasonable conjecture? That's exactly correct. And that was thanks to Ramit. He talked a lot about like building automations into every single thing that you do.

40:14Evan Lawler:So autopilot is spot on that. I don't have to check my investments or everything comes out automatically. Of course, do I still check the investments every single week? Of course I do, but I don't have to. Yeah, I think that's everybody. Evan, thank you so much for coming on the Bear Pockets Money podcast. Thank you for all the support. Where can people find more about you? Thank you so much for having me. You can find me on Instagram, Facebook, TikTok, and YouTube at the underscore financial foundation. Awesome. And I follow you across most of those, but not all of them yet. I don't think I have TikTok downloaded on my phone, so I'll have to get that one.

40:51But thank you for all the great stuff you put out.

40:52Evan Lawler:Thank you very much. I really appreciate it.

40:54Mindy Jensen:Yeah, thank you so much for your time, Evan. We'll talk to you soon. Talk to you soon. Okay, Scott, that was Evan Lawler. And that was a lot of fun. I'm so excited for his future. And I bet he crushes his goal. What did you think of his story? Yeah, I thought it was great. I bet him a dollar after the show that he will approach his goal by age 28 and a half because he has not factored in raises or promotions that I think are very realistic for his career. He has not factored in growth in his side hustle. He has not factored in any other upside events that could possibly hit his situation. Although there could be offsets too with the stock market.

41:27That's why it's only a dollar bet here. This is my gambling budget for the month. I'm very optimistic about his path forward. We also talked about one more issue. I'm like, oh, these things happen right after the recording sometimes. But I asked him, and he's going to post this to the Financial Foundation, I think, in the next few weeks, what would have to change about his income profile for him to flip from prioritizing the Roth to the tax deferred or 401k equivalent for his position? And I think that was a really good thought exercise. And I'm really interested to see what he what he comes up with, what his answer is for him personally.

41:59I think a lot to do with marginal tax brackets. And but I'm really interested to see what he comes back with on that. I think that's a fun thought exercise for other people to contemplate as well. If you're currently prioritizing the Roth under what conditions would you flip to the 401k or tax deferred equivalent? That's a fun challenge to question to answer for yourself.

42:16Mindy Jensen:I think so, too. I can't wait to see what he says. That'll be really interesting. Scott, are you doing a Roth 401k or a traditional 401k? I am now, when and if extra income hits, I will prioritize the HSA first and then the 401k at this point right now. The tax deferred 401k. Yes. That's what I do too. We would love to hear from you. Anybody prioritizing the Roth 401k over the traditional pre-tax 401k, hit us up and tell us why. Mindy at BiggerPocketsMoney.com. Scott at BiggerPocketsMoney.com. All right, Scott, should we get out of here? Let's do it. That wraps up this episode of the Bigger Pockets Money podcast.

42:53Mindy Jensen:He is Scott Trench. I am Mindy Jensen saying we're out, trout. 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.

43:26The 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.

43:55Evan Lawler:Application times may vary and rates may vary. The further you get along financially, the more you realize how rare it is to find people who are both at your level and asking the right questions. Dan and his son Adam noticed something unique about Long Angle. The people here all seem to be curious and interested in others. That's hard to find in people who are successful. I started for the financial angle, but the non-financial pieces, whether it's relationships, trips, family, wellness, that's brought me a lot of value. Long Angle is a vetted community of 8 ,000 or more entrepreneurs, executives, and investors who came for the financial conversations and stayed for everything else.

44:29Membership is free for those who qualify. Apply at longangle.com slash money. That's longangle.com slash money.