Lifestyle creep, budget hesitancy, and cash scarcity are problems you’d likely hear from someone just getting into the realm of financial independence/literacy. But, funnily enough, these wealth woes aren’t coming from newbies—they’re coming from two asset-stacking veterans, Mindy Jensen and David Pere from The Military Millionaire Podcast.

While on the outside David and Mindy may look like squeaky clean financial figures, they’ve realized recently that they have to tighten up their systems to maximize wealth. Mindy has seen a slow and steady lifestyle creep, and although her income can support her, she still wants to have a strong sense of strategy when it comes to budgeting and expense tracking.

David has tried time and time again to budget, but it’s never really gone to plan. He also is feeling a bit stressed at times due to his “cash poor, asset rich” lifestyle that has allowed him to build so much wealth. Our two hosts serve as financial therapists for one another other in this episode as they dive deep into how each other can re-strategize their financial situations. Even the gurus don’t always get it right!

Mindy:
Welcome to the BiggerPockets Money Podcast, show number 275, where David Pere and I chat about our financial imperfections.

David:
If you’re messing everything up, or if you’re messing little things up, if you’re still going towards the goal, if you’re still making that progress, that’s why I will religiously check my net worth more than I do the budget. Because ultimately, if that is continuing to go up and the cash flow is continuing to go up and the passive income is continuing to go up and all of that’s moving in the right direction, if I’m off on my budget a little bit one month, it’s not going to be the end of the world.

Mindy:
Hello. Hello. Hello. My name is Mindy Jensen and joining me today, is David Per from the Military Millionaire Community Cult, where they help service members, veterans, and their families learn how to build wealth through real estate investing, entrepreneurship and personal finance.
Hey, wait a second. That sounds like our mantra. So he’s kind of a money expert. David and I are here to make financial independence less scary, [inaudible 00:00:58] just for somebody else. To introduce you to every money story, because we truly really believe that financial freedom is attainable for everyone, no matter when or where you are starting.

David:
So whether you want to retire and early and travel the world or go on to make big time investments in assets like real estate, start your own business, or just fix your financial imperfections, we will help you reach your goals and get money out of the way so that you can launch yourself towards your dreams.

Mindy:
David and I are going to come clean today. We both have podcasts and websites that talk about money. And while we may seem perfect on the surface, we actually have some of the same money issues that everybody else does. I’m going to let David come clean first. David, what’s your problem? Why aren’t you perfect.

David:
Yeah, no joke. Right? Which problem are we talking about?

Mindy:
List them.

David:
Budgeting is boring and tedious. I think that’s the problem, right? I am not a super detail-oriented person. My personality is very much the visionary, big picture, fly by the seat of your pants, jump out the airplane and try to catch a parachute on the way down on type. And so budgeting is something that while I’m really good about, I do my net worth religiously on the first of every month. And I always tell myself that I’m going to do my budget and I do my net worth. And sometimes I budget. In fact, so I do the envelope system, but I will tell you that I have probably not put cash in these in months. So I have envelopes. I don’t know that I would actually say that I use that system. And this has become real over the last couple of months where I just realize okay, some of there expenses, there’s a little creep there and I need to go back and actually track where the money’s going. In fact today I was going through and doing just that. And I just realized I’ve been getting charged for the last, you’ll love this, probably 10 months for 24 Hour Fitness because they didn’t stop my membership like I thought they did. And I haven’t even lived in that state since May.

Mindy:
Ooh. Okay. So let’s talk about that, David. It’s okay. Not everybody is perfect like me. And I’m not even perfect. I was going through near the end of 2021. I was going through my spending, and I’m like, why am I spending so much money? I don’t feel like I’m doing anything. And it’s the little, it’s only a dollar. It’s just a little bit. It’s the lifestyle creep. Oh, I don’t want to make dinner tonight, let’s go out. I have food in the refrigerator and it takes as much time to start a meal and finish it and present it to my family as it does to get in the car, go to the restaurant, order the meal, have them prepare it, bring it to you. I have a restaurant kitchen in my kitchen and I don’t even use it. So lifestyle creep is very real. That’s going to be my problem that I’m going to talk about in a bit, but let’s talk about your budgeting. You’ve got your envelopes.

David:
I do.

Mindy:
Do you use cash for a lot of things? We’re still kind of in the middle of COVID. I hope we’re at the end, but come on. So using cash, somebody else has touched that, it can be kind of gross. If you’re trying to do this envelope system with cash, but you are always swiping a card, it may not be the best option for you.

David:
Yeah. So I don’t use cash very much. I wouldn’t necessarily say it’s because of the pandemic so much as just that I downgraded my wallet. I had an old billfold for years that was much bigger than it needed to be because I was in the military and I had to carry, not only did I have to carry a driver’s license and a credit card, but I had to carry a military ID, a government travel charge card, a military driving license because I was an operator. I had to carry a whole bunch of random crap, so I had this big fat wallet and it drove me nuts. So I got out of the military and I was like, I’m getting something smaller. And I got one of those little tiny, it’s not a money clip, but it holds four credit cards. You push the button and they shoot out. And if I had it in here, I would show you. But it will carry cash, but not super effectively.
And so what I was doing was I would grab money out of the envelope and I’d stick it in my pocket next to the wallet. And then I would sometimes drop it out on the floor and it just kind of got to be a pain. So I just slowly stopped using cash nearly as much as I used to. I’d carry a 20 round. And so, yeah, that’s probably why I started moving away from being religious with the budget system. And I know there’s a platform. I haven’t tested it out yet, but there’s-

Mindy:
Qube.

David:
Yeah. They sent me a card. I’ve never used it, but I probably need to. What I’m actually about to start doing I think with a lot of stuff is go more towards the, and we’ll talk about this later when we talk more on the business side of finances, but probably move more towards the profit first model for setting up all my bank accounts. I am more of the type of person where for me, the easiest way to budget is to set an amount of money I can spend and just know that once that’s gone, I’m done, and not have to track everything, but just know that, hey, as long as I stay within this parameter, I’m good. And so I just need to set those boundaries a little bit better for myself.

Mindy:
Okay. You mentioned Qube and I’m going to of tell you, I saw them at FinCon and I was blown away by their ease of use. The guy who was talking to me, I think his name was Kyle. I’m sorry. It was a busy time, but he showed me how it works. And basically you set up your little Qubes of money. It’s a digital envelope system. And it’s attached to a debit card. You say in the app, I want to put $200 for groceries. And then as you spend your money, it won’t let you spend more than $200. If you need to spend more than $200 on groceries, you have to move your money around within the Qubes, which is easy to do on the app itself. But what I really liked is the debit card has no money on it. You have to have your app with you and your debit card. And you say, okay, this purchase that I’m about to make is groceries. So you tap the grocery thing. It takes your entire grocery budget, puts it onto your debit card. You swipe the debit card. Hopefully there’s enough money in there. If there isn’t, it declines the purchase until you move that money into the Qube.
And if there is enough money, it subtracts that amount from your grocery budget, and then after you do the app and then puts the rest of it back. So let’s say you have $200 and you spent $112 that, well, I should have done easy math, $125, these now you only have $75 back in your Qube to spend. So if you go to spend groceries and it’s $76, it cancels it out. I like the app for people who are just starting out, for people who need to really focus on what they’re talking on their money. I don’t like it because I’m swiping credit cards for credit card points. And it’s a debit card now.

David:
Same.

Mindy:
So in my position, I need something a little bit different, but for somebody who might not be able to use the credit card, because you don’t want to put money on a credit card that you can’t pay off every month. If you’re not paying off your credit card every month, this can be a great way to use the digital cash envelope system without having to haul around all this cash. I mean, what’s another… I’m sure one of the downsides to the cash envelope system is, oh, I dropped my cash envelopes and now all my money’s gone for the whole month. So I can see why people don’t want to do the cash envelope system. But this Qube thing was really, really fantastic.
And then you’re not keeping track of anything, because you’re doing it at the beginning. You’re setting your budget, but it’s a real time budget. So you can move money around if, oh, I didn’t drive anywhere this month. And I ate more than I thought I was going to. So you can set it. That was kind of an advertisement for Qube, but I don’t mean that to-

David:
Should call them and tell them to sponsor this episode.

Mindy:
I know. Right, I should. But I really like the app because it was so easy to use. And then it takes the mind space out of your budgeting.

David:
So I tried it when they first launched and for me, I don’t think I put the energy into setting it up correctly, but I really like the idea. And I kind of told myself, eh, I’ll go back in a year when it’s got a little bit more streamlined. I might give them a shot. I’m the same way. I like credit card points. But I think for my personal budget, it would probably be a little bit better for me to get a little bit more frugal. The other problem with the envelope budget, like the old school, as much as I love it is you have to remember to grab cash. I mean, the number of times the, that I left the house and was like, oh shoot, I forgot to grab, well, I’ll just cheat this time and repay myself. And it’s-

Mindy:
Oh, I’ll remember to take that money out. No you won’t.

David:
Yeah, yeah.

Mindy:
And again, it’s not just you. I hope everybody listening understands that David and I are great friends and I’m just teasing him, but he’s doing all the same things that I’m doing too. Oh, I’ll just remember. No, you won’t. Your life is busy. You didn’t remember to get the cash out of the envelope. You’re not going to remember to take it out later. It’s just going to be there. So the next time you go and actually do remember to take cash out, you will have forgotten the $27 that you need to take out and put someplace else. You just take that money out now.

David:
And the problem just compounds as you increase your income, right? The more money you’re making, the more you, you set this mental threshold for five years ago, if somebody had said, “Hey, yeah, this is a hundred dollars to do that for your business,” I would’ve been like, “Ooh, a hundred dollars.” Now it’s like, okay. That’s a good problem to have in one way, because I know that I have enough in my budget that I can afford to do that, but it is a bad problem to have because, not to talk raw numbers or anything, but I just literally just touch up a button on Venmo, dumped $4,994 to hire and train to cold callers, which is in the long run will be a very beneficial investment.
But I didn’t even think about it from should I buy that this month or next? And the reality is I probably should have waited until I closed my next deal and pushed it off until next month. It’s not going to break the bank. It’s not the end of the world. But that mentality of being able to just spend the money and know that you have a little bit means that you will then spend enough that you’re like, I cut a little closer this month. I think we said it before we started recording. I said that the whole mentality of being asset rich and cash poor is a great mentality and I’m all about it, but it is so stressful to know that you have money, but not have it liquid because you keep reinvesting it or whatever. I lost sleep last night thinking about my budgeting even though in the long run, I know I’m good. And the money that I spent is going to come back. It’s nerve wracking.

Mindy:
Yeah. So I want to touch on this for a moment because what I hear people in the BiggerPockets forums say all the time is, “I want to pay off my mortgage,” or “I want to not pay off any mortgages. I want to have everything leveraged to the hilt.” And I’m not in either camp. I’m in the middle of both of those camps. I believe that a mortgage is a great tool that you can use to leverage your real estate purchases. But you have to be only leveraged much as it allows you to sleep at night. And right now it sounds like you might be a little bit too leveraged. So let’s look at ways to pull that back in. Is that paying down some of the mortgage? Maybe. Is it buying another property with more money down? I don’t know that buying another property is going to be helping you with your leverage issue. Could it be selling a property? Do you have something in your portfolio that you could just get rid of?

David:
So I guess I should clarify. I don’t think the leverage is what makes me not sleep at night so much as the capital in the bank account. And I would like to preface this. The reason I’m okay being a little bit more aggressive on this is that I do have a substantial amount sitting in a couple different accounts where if, they’re my rip cord. So I have, not that I ever want to touch my 401k, but I’ve got six figures in my 401k. So if the world ends, I could pull that and pay, solve any problem. And then I’ve got probably, I don’t know, 10,000 or 15,000, 20,000, somewhere in there, it does this number in crypto, which is just gambling. It’s just bets that I made on little things.

Mindy:
Thank you for saying that it’s just gambling.

David:
Yeah. I’m not by any means a crypto expert. And I just jumped in. I follow what trends. And so if I see something that people start talking about, I dump some money in. When it jumps, I pull my principal out and leave it. And I’ve probably got close to probably right now it’s probably 15 grand. So if I really cut things close, I can just pull that. So I have a couple different accounts set up to where if I overstep, I can pull it. And then that’s the wake-up call to really cut things down to build all that back up. But I don’t like touching any of that. I haven’t had to yet, but I do cut it a little close sometimes.
So for my specific situation, the answer is that I purchased three properties in the last month. Well, I purchased five in the last month, but three of them are properties that too, I thought I would’ve already sold. And it’s just taken a little longer. One of them is a land deal and the guy next door was going to buy it, but he is just been out of town. So we haven’t been able to get it all locked up. The other, we had some issues with square footage, so it took longer to get listed than it should have, which it’s now listed. And it will be fine. And the third is a property that had a fire, a grease fire in the kitchen, and before I sell it, I’m going to gut the kitchen and get it the environmental cleaning done to really clean the house out and decide from there whether I want to do the renovation in [inaudible 00:15:33] because it’s in a really good location or list it.
So the problem is that I dumped $40,000 or $50,000 in capital on purchasing these, thinking that at least two of them would sell and come back into the account already. And it just has taken longer than B2B. But that puts you in a spot where you’re like, I threw all this money out into the world. I know it’s going to come back. I hope it comes back a lot faster. And then you get to like, oh man, maybe I should have waited to pay for, well, for example, I’m about to join a, well, GoBundance. And I had to sit back and say, well, I’m going to wait I until all of this closes because I don’t need to spend the money for that right now because I don’t have the capital sitting in the account. So it’s kind of a weird spot to be in. But it happens when you don’t foresee, oh this might actually take longer than I thought to come back and I shouldn’t have spent X until Y came back into the bank account.

Mindy:
Okay. So thank you for sharing this story because I think that a lot of people investing in real estate don’t share the, I don’t want to call them heart attack situations, but definitely the ooh, that didn’t go how I planned it situations that come up all the time. Real estate is not complicated, but the transactions could be complicated. And you thought you would sell this property really quickly to the neighbor. And then the neighbor’s like, “See ya, I’m going on a boat,” or wherever he’s at right now. So it doesn’t mean that the deal is dead. The deal just isn’t in that tight little timeframe that you were planning on.

David:
Absolutely.

Mindy:
And that is a great reminder that not everything sells quickly and not every contract is going to get to the completion date and not every contract is going to be a great experience. So it’s not done until you sign, they sign and the money’s in your bank account. And so I think hand in hand with this issue is a business emergency fund. You don’t need to tell me this now, this is a research opportunity for you, for those of us who listen to the Finance Friday episodes, I’m always giving research opportunities to our guests. David, you have a research opportunity. What’s the bare minimum you need to run your business every month? A thousand dollars, $10,000? I really like big emergency funds. I like three to six months of emergency funds. And if you’ve constantly got deals in the pipeline and there’s access to other capital, maybe you don’t need six months, but I would really like to see you have three months of emergency funds in your business emergency fund account. Because you have access to other funds, because you’re constantly buying and selling, I think three months is a good plan for you. So your research opportunity is to see how much money you need and then figure out where you’re going to save that and sell that dumb crypto.

David:
Yeah, you’re probably right at 50 or 60 grand for three months.

Mindy:
Okay. So where can put 50 or 60 grand to just let it simmer?

David:
Ooh, that’s actually a good question. Did you talk to the guys at FinCon about the? I’m trying to think of the name. They created an ETF specifically for saving for a down payment and it’s designed track real estate. Basically what they did was they realized a lot of people have this problem, which is if you’re saving for a down payment or saving for your next investment, where do you store the money? Because you don’t want to put it in a checking account, but you also don’t want to throw it into Tesla and then it has a pullback or whatever. So you don’t want to risk it. So they created an ETF that is supposed to, tries to mirror the real estate market so that it would be its hedge. So it shouldn’t tank, but it has fairly stable upside. So nothing crazy. But the idea being intentionally designed to try to follow, to try to help you build that. It’s a very interesting thought process. And I liked it.
The answer would probably for me, should just be sitting in the savings account in the bank.

Mindy:
Yes.

David:
And just owning the fact that it’s okay if I lose a little bit to inflation and interest because ultimately that cushion is good.

Mindy:
Yeah. We talked to Chris Hogan a long time ago about saving for your down payment. And he said your… Oh no. His was the emergency fund. He said, “Your job is to protect that dollar amount. It isn’t to grow it as big as you can.” Because like you said, you could put it as into Tesla and Tesla has an amazing day like they’re having today, or you could put it into Tesla and all of a sudden electric cars all blow up and their stock tanks and they don’t have a lot of control over their stock price when outside factors come into play. So it could very well recover in the next day, but it could stay down for a long time. And if you need to buy a house, you have 30,000 and now you go to take it out and it’s 12,000. You’re like, oh man, where am I going to get that other 18,000? Well, good luck if you don’t have it sitting around. Or you need to buy a property and you can’t because you don’t have the capital in your business reserves. So I like how you came up with that number pretty quickly.

David:
I would say this as well. Just to reiterate that I’m not as crazy as I might sound with some of this with how close I’m cutting it. My quote unquote emergency fund right now is a $72,000 HELOC.

Mindy:
Ooh.

David:
And so I have access. This is controversial, nobody’s going to like this, you’re not going to like this. Most people aren’t going to like this. The reason I’ve never had a huge emergency fund is because I have a couple credit cards with massive balances that are not balances, but massive limits. Massive is relative. But I have a card with $24,000 limit that I don’t have a balance on. And so I view it as okay, hey, if something really terrible happens, I can use the credit card for the emergency and then pay that back off. And I know that’s the wrong answer because you’re paying a lot higher interest. But I also know that when you’re in that early stage of growth, having $10,000 sitting in an account that you could invest and may never touch seems a little bit more daunting when I was trying to grow.
So now I’m hitting a point where okay, I can probably pull back a little bit and save the money for an actual emergency fund. But as a backup, I was always like, well, if things go really bad, I swipe the credit card, solve the problem, pay that back down. And as long as I don’t use the card, right, it’s not a great strategy, but it works. The HELOC is much better because it’s 3% interest or three and a quarter.

Mindy:
Okay. Lots to unpack there. And I’m really glad you said, oh, you’re not going to like this. You’re right. I don’t like that. But I don’t like that for the person who’s listening who’s just getting started, who doesn’t have a good personal emergency fund, who doesn’t have a 401k to pull from, who doesn’t have a $72,000 HELOC, who might not even have the $24,000 credit card. When you are investing in properties, when you are creating a business, when you have employees or tenants, you have somebody that relies on your product, your company, your service for their home, for their income and you owe it to them to provide what you said you were going to provide. So if you have a company and you have employees and you have no emergency fund and also none of these other personal cushions that David has, you need an emergency fund closer to the six months that I was talking about, because you never know what’s going to happen.
If you are a landlord and you bought your first property, maybe it was a house hack and you’ve moved out to your next property and you’re renting this out to somebody, but you don’t necessarily have a huge emergency fund, how are you going to get a new roof when it needs a new roof? How are you going to replace the furnace in the middle of winter on the very coldest day, which is the only time that the furnace ever breaks? How are you going to repair the AC in one of the hot states like Arizona or Florida, where you’re required to provide air conditioning in the property and it’s 112 degrees outside? You need to be able to provide these things. I mean a roof is $15,000, ish.

David:
Well, if you want real life experiences, how are you going to clean out the unit when one of your tenants dies and doesn’t have family.

Mindy:
Oh, okay.

David:
That was a $4,800 bill.

Mindy:
Yeah, oh.

David:
And you got to rent storage unit for three months in the hopes that maybe someone comes and picks up their stuff. The guy was, died for probably two weeks. So you got to do environmental hazmat cleaning-

Mindy:
Sunshine Cleaners.

David:
Replace flooring, repaint everything. We had to cremate. It was close to, if not at about $5,000, and this is on a $500 a month unit.

Mindy:
Okay. You know what? This is a really great gross discussion. So $500 a month. How much money are you cash flowing on that every month?

David:
$50, $100.

Mindy:
Okay. So I don’t love that property. I hope that it’s going to-

David:
It’s a 10 unit. So overall it does well.

Mindy:
Oh, okay.

David:
That was good.

Mindy:
Okay. So that’s a really great point. There are people who are like, ooh, my property’s cash flowing a hundred dollars a month. You just had a $5,000 bill.

David:
Yep.

Mindy:
At a hundred dollars a month, let’s do the math because I always screw up the tens. At a hundred dollars a month, 5,000 divided by 100 equals 50 months. Okay. And that’s divided by 12. That is four years and two months of cashflow gone from that unit because somebody had the audacity to live out to the end of their life there. That kind of stuff happens all the time in real estate. If you have no way to pay for that, and I’m sure David could have gone in there and done a bunch of stuff himself for less money. And when you don’t have a lot of money, typically you have more time. It’s like, oh, do I have more time or more money? But still, there is cost involved in this scenario and you need to, plus how many months of rent did you lose out on that? Two months of rent. So there’s another $500.

David:
And keep in mind, this is a situation where a gentleman was just older, didn’t have family and passed away. And, and it was only such a long time because he paid rent and then he passed away the next week or two weeks later. And it just wasn’t noticed because he kept to himself, until the next rent was due. And my property manager was like, “Hmm, he always pays on time. Let’s go check on him.” Yeah. I’ve actually had it happen on another property too, where it was literally within the first week of taking over the property. It was just some, it is what it is. Right. And you would never budget for that. When you’re thinking…
Luckily we had budgeted for some updates to the property and that wasn’t necessarily the capital expenditures we were thinking, but we had some capital ready to move on that. I think my first duplex I house hacked, I had nothing. I had a negative net worth. The only reason I was able to afford the down payment is because of an insurance claim on a motorcycle I had totaled. So had something like this happened right away, who knows what I would’ve thought about real estate? I would’ve been like, oh my goodness, I don’t have $5,000.

Mindy:
Yeah. And if you don’t have $5,000, you probably should not-

David:
Scrubbing floors yourself. I don’t know.

Mindy:
Yeah. You should probably not be investing in real estate right now. You need to invest from a position of financial strength, and investing from a position of financial weakness is going to really cause you problems. I had a neighbor who, they lived in a very small house. They moved to a larger house down the street from me and decided they would get into real estate. And they were going to rent out their old house. It was a two bedroom, two bathroom house. They had lived there for, let’s call it six years, and it had just gotten too small for them. They rented it out. Within the first year, they needed a new water heater, which is a thousand dollars and a new furnace in the middle of winter, right when everybody else is super busy and you can’t not have heat in Colorado. And that was $8,000. They didn’t have $9,000 to put into this house.
So they had to put it on credit cards. They took your method of paying 27% interest. And as soon as the first year lease was up, they non-renewed and they sold it instantly because they could not afford it. And I’m like, “Wait, now it’s got a new furnace. Now’s not the time to sell it.” But they had to pay off those credit cards. They had no way to pay off those credit cards. So what they should have done-

David:
I think sometimes you-

Mindy:
What they should have done is sold the house when they bought the new house.

David:
Yeah. I think sometimes people get so, I won’t say emotionally distraught, financially distraught, sometimes people put so much money into a property that they will sell it even if it doesn’t make sense to sell it anymore. Which is like you said like, well you already fixed those problems. So if you can hold it, if it cash flows, I know somebody now who over, it took two years, they had a really rough go and they’re probably $80,000 or $90,000 into a duplex. But now it’s at a point where they’re trying to sell it. Well just rent it. It looks good now, rent it-

Mindy:
All your [crosstalk 00:30:05] is taken care of.

David:
And then refi. They’re like, “Well we have, we sunk all-” I’m like, “Just refinance it.” But I think they’ve gotten to a point where it’s like, well now I’m so just over this project that I don’t even want to touch it anymore.

Mindy:
I’ve been there.

David:
Which is unfortunate because you’re like, the right answer. But the right answer financially is not always the answer that you want to go with emotionally. So separating those is-

Mindy:
Emotional ties to money. Wow. That’s a whole different story that we can get into on another episode. Yeah, that is.

David:
Yeah. Yeah.

Mindy:
Remember back on episode 243, the one that was called [inaudible 00:30:45] Makes Mindy Cry. It’s tough sometimes to change your mindset about money and just like I’ve been saving my whole life, now I’m at the point where I can spend, not recklessly. I mean, you can spend all your money. I have no interest in that, but switching over can be just as hard as going from spending, spending, spending, and now you want to save. So the shift can be really difficult.
We never finished talking about your budgeting. We just went off on other tangents.

David:
Oh, I’m sorry.

Mindy:
I am going to tell you about my own personal experience with money. I have noticed that my creep has become very real. And I wanted to start writing down my spending again and the methods I have tried, multiple methods. I’ve tried the waffles on Wednesday spending tracker, the Google form that you put on your phone and that’s great, but it’s also really easy to not remember to do that. And I go back to writing it down with a pen on a piece of paper. I call this the Mindy Method because I can, and I made a whole video about it with regards to the best way to track your spending, starting out. When you want to make a budget, it’s actually called making a budget. How to make a budget, track your spending. It’s not even about taking your money and putting it into the different categories. It’s about knowing where your money’s going. So if you want to watch my video, it’s at biggerpockets.com/mindymethod. M-I-N-D-Y-M-E-T-H-O-D. I’m going to start singing that Hall and Oates song, M E T H O D O F L O V E.
Every time I spell method, I’m like, ah, don’t sing that song. But then I just did. Anyway, I digress like I always do. But I want you to start tracking your spending, David. I want you to know where your money’s going, and if you’re doing that through that Qube thing that we were talking about, if you’re doing it in real time, that’s going to be the most successful. In my video, I talk about how I started tracking my spending. I put a notebook, just a plain old spiral notebook on the counter because that’s where I entered the house every time I entered the house. So I would, oh my notebooks here, I have to write down my spending. And it got to be a game. Oh, the first week I’m already halfway down the page. Oh, I need to step back. I need to stop spending so much money. And then I wanted to get it to one page. And I also added up at the end of the column. So there’s always a running total. And I was like, oh look, I think I spend $3,000 a month. And here it is the 10th of the month and I’m already at $2,500. Some of that’s mortgage. And some of that is big utilities and things like that where I probably can get to the rest of the month with only spending $500.
But I’m going to have to be really careful about it. So having that in your face where you can’t ignore it, where you come in at the same location in your house every single time is going to be super helpful. However, I will give you the option to go to the waffles on Wednesday spending tracker and make your own Google form. I will include a link to that spending tracker, which is in our show notes at biggerpockets.com/moneyshow275, but I’ll send you a link to that, David. And it’s great. I have it on my phone right now, although I say it’s great and that it’s not even here. Right here, right at the very top is my spending tracker for my personal and my spending tracker for my house, because we’re in the middle of renovations on the house. So if I go to Home Depot, I don’t want that to come out of my monthly spend. I want that to be in my working on my house budget.

David:
I like it. I will check that out.

Mindy:
But yeah, while I have portrayed myself as perfect in every single way, I’ve let my own budget creep up and my lifestyle creep is so real. And every day I talk money all day, every day, budgeting, keeping your spending in track, tracking your spending. And the last couple of years it’s really started to get a little bit higher. And then the last few months of 2021, like I said, it just felt overwhelming. And I have started on January 1st, I started tracking my spending, created a budget. I actually did it the end of last year, but I put it up on the website. It’s bigger pockets.com/Mindysbudget. M-I-N-D-Y-S-B-U-D-G-E-T. And you can see what I’m thinking I’m going to spend and what my actual spending is. And that has been really helpful to be so public with my spending, to show people that hey, sometimes you go over and sometimes you go under and it’s a living, breathing document. It’s not in stone. It’s not written in ink. It’s very fluid with how my spending is, but because I’m keeping track of it, because I’m publicly declaring that this is my spending, I’m able to be more, it’s in my mind a lot more.

David:
That’s a good idea.

Mindy:
Yeah. So I challenge you to track your spending, David. I challenge you to share it. Ooh. Maybe starting in March you could share your budget.

David:
Maybe. Yeah. Maybe,

Mindy:
Maybe not.

David:
Actually, I thought about, was it Pat Flynn who used to dol he had on his website, he’d do the passive income and he would show the numbers his business brought in? And at one point I thought about doing something like that for real estate and cashflow and stuff. And then I realized, I don’t know, it’s just a weird spot to be in because it feels like gloating almost if it’s doing well. Right? So you’re being transparent. People look at it, it’s still kind of taboo. So I was like, eh. But the budgeting thing is decent.
I’m in a weird spot now where, and this is part of what I need to figure out. So I just exited active duty. I’m going into the reserves, but I haven’t received my disability rating from the VA yet. And that will pretty much be my only personal income with exception of the one month a year that I drill or train for the reserves. So I had to change one or two of my LLCs over to S corps and I have to over the next couple of weeks, I need to get with my enrolled agent and discuss how much am I able to pay myself in a salary? Because currently my personal budget is essentially whatever my wife spends on food because of her job. And I’m just rolling everything in the business, which is great, but that’s only great because I still have money in the checking account from my last few paychecks that I was saving.
Now I’m like, ooh, that’s right. I need to figure out how much I’m going to pay myself because otherwise I don’t have a personal budget anymore. So I’m in that weird transition spot, which is exciting. But I guess we’ll see how that goes in a few months when I’m settled in a little bit into that groove.

Mindy:
How long does it take normally to get your disability rating from the military?

David:
If you file on time, which I did, it’s normally the day that you exit. However, I had to have a review on, not to get super crazy, but I have a hearing aid from some stuff and you’ve never seen it, no one ever sees it because I only wear it like I work, but I had to get some a review done on part of that. And so they’re waiting on the results from said review to come back in. And the VA, shocker, is kind of backed up right now.

Mindy:
I would really like the VA to be on top of taking care of the veterans.

David:
Well, so this time’s actually a good reason. Not to sidetrack all of this, but from what I understand, the Vietnam veterans are finally able to claim Agent Orange in their medical record and get compensated for it. And so they’re backlogged because of the influx of handling all of that, which is awesome. I think that should have been something that was taken care of a long time ago. So I’m totally okay waiting. And luckily I’m in a financial position where I can wait a little while to figure all that out. If they don’t pay me for six months, okay. Well, whatever, it’ll wash out in the end.

Mindy:
Okay. Well, I think that’s important that you’re talking about having other sources of income. I really do like the multiple streams of income. I like that you’re putting all your money from the business back into the business right now to build it. I think that some people who start their businesses will take too much out in the beginning. Oh, I want to make $90,000 a year. Well, when the companies bring in $10,000, that’s not going to be an option. And you’re just going to suck all the money out of the business and not be able to put it back in because you already spent it. So not taking any sort of salary at all, not counting on that for a while, is great. But then what’s the point of having a business if you never make any money from it. So it’s a weird space that you find yourself in.

David:
Yeah, it is. It’s very strange. I have six LLCs and a whole hodgepodge of things going on. And if I’m being honest, it’s almost chaotic to look at it all. And I’m like, I need to find me that integrator, not really. I have some teams, so I’m working through all that, but I’m definitely having to stream line my, we mentioned the profit first. I’m streamlining all my business bank accounts right now and trying to make that stuff as simple as possible. Because what you realize is you slowly grow it, is that when you finally step back and look at it, you’re like, wow, I created this monster. It does well, but thank goodness I hired a bookkeeper because if I was to trying to do six LLCs worth of tracking every month, no, it wouldn’t happen. It would be nonexistent. I would get to the end of the year and go, “Oh crap, I have to do taxes.”

Mindy:
Okay. Back on episode 249, Gabe Nelson came in and talked about creating your own business and what do solopreneurs and entrepreneurs need to be thinking of? And some of the advice he gave was what can you get off your plate? What is on your plate right now that you can write out a system for, and then give to somebody else? So there’s another research opportunity for you, David, looking at what you’re doing, what can you pay somebody a big fee, a nominal fee, to do for you so that you don’t have to concentrate on that? You can instead concentrate on other things that help grow your business. Work in your business, not on your business or work on your business, not in your business. I always get that messed up. That’s always confusing to me.

David:
I’m working on it. I’m working on it. I have an assistant now and that’s ironically, she and I talk about it, because she will get to the end of the day and go, is there anything else you need? And I’m like, “I really should say yes, but I don’t have anything on the top of my mind.” So I’m not keeping her busy enough. Now she’s just taking a ton off my plate. It’s just a matter of figuring out those things that are next and then not to take this onto the business side, but the thing that I’m really struggling with right now on that side is, as you talk about scaling time wise is the mentality that takes me five minutes to upload a podcast. It might take me an hour to train her how to upload said podcast. And when I’m in a rush to get a podcast uploaded, I’m like, “Ooh, I’ll put this up,” instead of, “Ooh, I’ll take an hour and train her so that I never have to do it again.”

Mindy:
Okay. I’m going to stop you right there.

David:
I’m working on it.

Mindy:
I’m going to jump right in and say, okay, she needs stuff to do. You need to get this off your plate. So, okay. What’s her name?

David:
Rachel.

Mindy:
Rachel, I need to upload this podcast. Sit next to me, write down all of these steps. It’s not going to take you an hour to show her how to do it, to write it all down. It’s going to take you more than five minutes to show her how to do that because you’re going to go step by step. This is my password. This is all this stuff. But once she takes all these notes for you and asks questions while you are in the process of it, it’s going to take 30 minutes. So that’s six podcast weeks that you now have spent training her to do it and she knows how to do it. It’s already off your plate. All the things. Like Gabe said, go through your email. She can go through your email. Oh, I know this is garbage. I know this is absolutely top notch. I know this. Put it into folders. Read this first, read this second. This is garbage. And then you go through and you’re like, “Oh, you know what? It is all garbage. I don’t need that.” Or “Hey, this one’s not. Put it into this folder.”
And it’s going to take some time. You can’t just go from I’m the only person to I’m going to be perfect. It takes time. But every day that you spend, that you give her another task to do, that’s one less thing that you have to do and you can focus on whatever it is you do best, growing mustaches.

David:
A beard.

Mindy:
A beard. Yeah. A beard, too. Feeding your raccoon.

David:
Hey, this is eight days growth. Give me a moment.

Mindy:
This is a lifetime of growth.

David:
Oh man. Yeah. It’s funny because you’re right. We talk about this all the time and we help people with finances and budgeting and growing, but the problems are always there. There is always somebody who looks like they’re doing it all great. But it’s like fitness. Even when you are that 140 pound shredded dude who looks like you did everything right, you still look at pizza and go, “Hmm. It looks good.” There’s always a challenge. And so being further along in your business or even talking about it online doesn’t mean that it’s not a struggle anymore. It’s not like I just magically every penny goes into the perfect index fund and I don’t spend any of it because that would be dumb. And I live on Ramen noodles. I rented a McLaren the other day because I was like, “I want to drive a car,” but I also used it for a lot of videos and it’s actually going to be a marketing expense, but I was fiending, itching for some kind of a fun adventure, adrenaline, whatever. I spent a thousand dollars on a car for one day.

Mindy:
Wow.

David:
Totally unnecessary expense.

Mindy:
Yes boy, if you would’ve asked me, I would’ve said no.

David:
Yeah.

Mindy:
He’s like, “Yeah. That’s why I didn’t ask you, Mindy.”

David:
Yeah. But the reality is okay, well it’s cool to be in a spot to do that. And ultimately my finances are like, well, you probably shouldn’t have done that. There’s better ways to spend money, but you got to live life a little bit, but it’s finding that balance. At the same time, I could stick to my meal prep better instead of eating out on Saturday with the family or whatever. So there’s always in mediation. All that being said, it’s always uncomfortable to talk about what you’re not doing right in finances. I try to look at things from the big picture though. And I always try to tell people, “Look, if You’re messing everything up or if you’re messing little things up, if you’re still going towards the goal, if you’re still making that progress,” that’s why I will religiously check my net worth more than I do the budget. Because ultimately if that is continuing to go up and the cash flow is continuing to go up and the passive incomes continuing to go up and all that’s moving in the right direction, if I’m off on my budget a little bit, one month, it’s not going to be the end of the world.
So that’s the way that I try to choose to look at it. So I would tell you find your overarching goal and/or metric, and don’t worry so much if you miss a little bit in the middle, as long as you’re still on the right trajectory. So I don’t know. That’s my take.

Mindy:
Wow. Well, I don’t have anything else to add to that. That was great. And I do have something else to add. I love that you used the car as a marketing opportunity for your company, because then it’s a business expense, but you still get to drive it. It’s a legitimate business expense or maybe not super legitimate business expense.

David:
Oh, yeah, totally legit.

Mindy:
A Honda Civic. Does anybody want to, ooh, he drives a Honda Civic. Wow. I don’t really-

David:
You’d be surprised what you can write off. We wrote off a four-wheeler this year, because we have cattle and we have a Schedule F income. So called my guy. And I was like, “Hey, I was about to pay for this with my personal card. But I just realized I have cows and I have a Schedule F. Can I buy the four-wheeler as a business expense?” He was like, “Yep.” Sweet.

Mindy:
Ooh, take this away from that story. He checked with his guy first, your guy is your tax guy.

David:
Yeah. Yeah. My enrolled agent that I work with.

Mindy:
Check with your tax person first before just buying something and like, “Hey, can I buy this McLaren?” No, that’s not a business expense. You use it for one day. Can I rent one for a day for a photo shoot? Probably. Again, talk to your guy, talk to your girl, but check in with these people that you’re paying to help you with your business processes. And there’s a lot of things you can write off. Yeah. I should have just left this with you and your great story. You said you’re off a little bit on your budget, everything is going up and you’re off a little bit on your budget one month, that’s not caused for alarm.
Where you can get into problems, where I have certainly got into problems is where you, oh, I’m off a little bit this month. And then the next month you’re off a little bit more and a little bit more. And it becomes a trend where all your income is going up and your budget is going up, too. And you still think you’re spending $3,000, but you’re spending $4,000 a month or $12,000, or whatever your numbers are. If you’re not accurate with your numbers, that’s when you can really throw your whole self off. And then if you’re not keeping track of it, all of a sudden you’re like, whoa, what happened. Well, your bouncing checks because you don’t have any money because you kept spending too much.

David:
And if I didn’t check my net worth religiously, I would have no idea. So you have to have some metric, whether it’s a daily, weekly, monthly budget or a monthly net worth check or whatever that may be, you still have to check something, i.e., I just prefer the net worth tracker because that’s just way easier at this point over the budget, just because of how many ins and outs there are. So I have the bookkeeper and they give me the report at the end of the month. And I go through and check all that. I am going to manually go back to budgeting for a little while and get myself back on track a little bit with my personal spending. But on the business, net worth is just a lot easier when you get to a lot of real estate. You’re like, oh man, how do I keep tabs on all the equity and all the whatever. If I was trying to budget income and expense reports on 102 doors across also all the other stuff that would just give me a headache, but net worth a little easier to keep tabs on, but it’s still a metric. You still have to track something.

Mindy:
Yeah. I really like that. Have a metric that you’re tracking. For me, it’s my spending. I want to know what I’m spending because that is so easy to change. I can just not spend money. I’ve got food in the pantry. I can just go and eat at home and not buy clothes and calm it down when I’m tracking it. So that’s my metric that I check. David checks his net worth. Now he is going to check his spending because I made him. And we’ll see what happens. Okay, David, this was a lot of fun. I really appreciate your time today. And I appreciate your honestly. I appreciate you letting me boss you around and give you advice. And I love doing that. And I also appreciate you-

David:
I wouldn’t say bossy.

Mindy:
Helping me get back on track as well, because it’s really helpful to have these conversations with people.
If you would like to have a money conversation, please check out our Facebook group at Facebook.groups/bpmoney. No. Facebook.com/group/bpmoney. Ugh. Life is hard sometimes. David, should we get out of here?

David:
Absolutely.

Mindy:
From episode 275 of the BiggerPockets Money Podcast, he is David Pere from the Military Millionaire Group and Cult and I am Mindy Jensen saying semper fidelis.

 

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