Finance Friday: Middle-Class Trap on Steroids ($3.8M but CAN'T Retire!)

BiggerPockets Money Podcast

BiggerPockets

Investing, Education, Business

4.6 • 2.9K Ratings

🗓️ 29 November 2024

⏱️ 61 minutes

🔗️ Recording | iTunes | RSS

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Summary

There’s a “middle-class trap” that can keep anyone from FIRE—yes, even high-income earners. Today’s guest has a sizable nest egg that should allow her to retire early, but there are a few roadblocks in her way! At forty-seven, Allie has already built a net worth of $3,800,000. She would like to retire, and most people would assume she has enough to retire, but there are two problems. First, she lives in Orange County, California, one of the most expensive areas in the U.S., and has no plans to leave. The other issue? She has no cash! All of her money is tied up in home equity and retirement accounts. To retire, Allie has a BIG bet to make—one that could have a multi-million-dollar impact on her portfolio! Using Scott’s “Keep or Sell Your Home” worksheet, we’ll look at whether it would make more sense for Allie to keep or sell her Laguna Beach property. Will turning this home into a rental property give her the cash flow she needs, or is selling it and investing in the stock market the better long-term play? Tune in as we attempt to thread the needle and provide Allie with the best roadmap for a long, early retirement! In This Episode We Cover What Allie should do to reallocate her $3,800,000 nest egg and achieve financial freedom What to do with money locked up in home equity and retirement accounts Keeping your home as a rental property versus selling it and investing elsewhere Creative ways to improve your cash position so that you can retire early Building wealth with short-term rentals, live-in flips, and other real estate strategies Escaping the “middle-class trap” of earning high income in a high-cost-of-living area And So Much More! Links from the Show Mindy on BiggerPockets Scott on BiggerPockets Listen to All Your Favorite BiggerPockets Podcasts in One Place Join BiggerPockets for FREE Email Mindy: [email protected] Email Scott: [email protected] BiggerPockets Money Facebook Group Support Today’s Show Sponsor, Connect Invest, the Alternative Way to Earn Passive Income Through Real Estate Buy Scott’s Book, “Set for Life” Find an Investor-Friendly Agent in Your Area Finance Friday: How the “Middle-Class Trap” Stops Your Early Retirement (00:00) Intro (01:00) Allie’s Money Journey (03:36) Money Snapshot (13:50) Retiring in Laguna Beach (19:01) Keeping vs. Selling Her Home (26:06) The BIG Bet on Real Estate (34:01) Growing Cash & Renting Her Home (43:41) Real Estate vs. Stocks (52:02) What Should Allie Do? Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-585 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Today's Finance Friday guest is hoping to retire at the age of 47, but she feels like she's
0:05.5	stuck in the middle class trap. Will she be able to retire, given how much of her current
0:10.4	portfolio is tied up in retirement accounts? Stick around for Scott and I to wrap up at the end
0:16.1	because we want to hear from you, our Bigger Pockets Money community, because Allie has a lot of options
0:22.3	to choose from.
0:23.2	Hello, hello, hello, and welcome to the Bigger Pockets Money podcast.
0:25.9	My name is Mindy Jensen.
0:26.9	And with me, as always, is my photogenic co-host, Scott Trench.
0:29.9	Thanks, Mindy.
0:30.4	Great to be here.
0:31.1	And looking forward to creating a complete picture of Alley's financial situation here. Bigger Pockets has a goal of creating one million
0:38.0	millionaires. You're in the right place if you want to get your financial house in order
0:40.8	because we truly believe financial freedom is attainable for everyone, no matter when or
0:44.4	where you're starting. Before we bring in Allie, we want to thank this episode sponsor, Connect
0:49.3	Invest, Real Estate Investing simplified and within your reach. Now, let's get into the show.
0:54.9	Allie, we're so excited to have you on Bigger Pockets Money today. Welcome.
0:58.3	Thank you for having me. Excited to be here.
1:00.2	Allie, can you share where your journey with money began?
1:04.0	My journey with money. So I came from, my parents were very frugal. I was one of four.
1:09.7	An example of my dad's frugality would be we would go to
1:13.9	go out to lunch at Wendy's and he would order one large soda, no ice, and six cups. So that is a
1:23.9	sort of background that I came from. He always said, no debt, pay for everything in cash,
	...

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