Achieving Financial Independence in Your 20s: A Practical and Sustainable Investment Strategy

Mindy:At just 27 years old, my guest has already built a net worth of over $100,000 and is well on her way to financial independence. But what does it take to grow your wealth at such a young age? How do you stay disciplined, save aggressively, and still enjoy life in your twenties? Today we are diving deep into her mindset, strategy, and the steps she’s taking to achieve financial independence, whether you’re starting out or well on your way, this episode is great for what and all. Hello, hello, hello and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen and Scott Trench is play and hooky today. So you just have me. I am here to remind you that BiggerPockets has a goal of creating 1 million millionaires. You are in the right place if you want to get your financial house in order because I truly believe financial freedom is attainable for everyone no matter when or where you are. Starting today, we’re going to discuss ways to invest early with a salary below six figures, how to pay down $80,000 of student loans and answer the question should you have a fine number. Anna, thank you so much for joining me today. I’m so excited to talk to you.

Anna:Yeah, thanks for having me.

Mindy:How long have you been investing?

Anna:So I started investing when I graduated college back in 2021. I just started out with my 401k. That’s how most people start out. I didn’t really know exactly what I was doing. Luckily my older brother helped me out a bunch. He taught me all about investing and personal finance and what I should be doing. So he eventually told me I should open up a Roth IRA. So then I also got into that. So it’s been about three or four years.

Mindy:So he said, you should invest in a Roth. What did he specifically teach you about investing in personal finance?

Anna:So he kept it pretty simple. He said that index funds are the way to go, right? That’s not new news. That’s what all the finance people will tell you to do. So he said, just automate your investments, set it into a retirement account or a taxable brokerage and just let it go.

Mindy:Okay, so you’re right. This isn’t new. This isn’t sexy. This isn’t groundbreaking information, but it is absolutely the simple path to wealth. Oh, see what I did write there. Have you read that book?

Anna:I have. That’s a good one.

Mindy:What made you start investing right when you graduated college?

Anna:I think a lot of it was my older brother. I didn’t really know much about investing at all. I mean, growing up we never talked about money. We didn’t talk about investing. So I really leaned on him to give me advice and help me out. And it was kind of like you hear about 4 0 1 Ks and you don’t really know what they are until all of a sudden you’re graduated and now it’s like, oh shoot. What actually is a 401k? How does it work? So I asked him all of those questions. He taught me the importance of it, getting your employer matched, just starting out that muscle of investing at a young age and get the habit of doing it and carry that through your twenties, thirties, forties.

Mindy:Anna, do you invest anything in real estate?

Anna:I do not currently invest in real estate. I don’t even own a primary residence either. We are currently renting.

Mindy:Okay. And why are you currently renting?

Anna:So we started renting right out of college. My husband and I graduated about a year apart, and we just rented an apartment while I was finishing up my grad school year. And then once I graduated, we moved to a house and just started renting that and we were kind of deciding where do we want to end up? We’re currently on the east side of Michigan near Detroit, but our family’s from the west side of Michigan. So we’re in limbo between jobs and things of like where should we end up? What should we do? We didn’t really have a good answer and didn’t know what we wanted to do. We decided renting was the best option. It was also around 2020 when prices were starting to climb and then they just kept climbing. Real estate was really expensive and we didn’t have any cash to buy a home or to put a down payment down

Anna:So at first it sounded like buying would be really nice, right? In 2019, home prices were pretty low. You could put a small amount down and your mortgage could be reasonable, right? You could pay 1200, 1500 for a mortgage in the Detroit area. Of course, not in all places of the country, but we’re pretty lucky to be in the Midwest. So then as prices got more and more expensive, we were like, okay, we can buy a home now, but if we buy a home, the mortgage is probably going to be closer to 2,500. So we decided to stick with our current situation. We’re renting a three bed, two bath for $1,800 a month in the Detroit area versus buying a home Now that’s equal or more house, and our housing costs would go up $700 a month or more. So right now it doesn’t make a whole lot of sense for us to buy. We still don’t know where we want to be. Long-term for sure. So that’s the biggest thing. I think real estate is great if you’re going to live in it for a long time and you’re not planning to just hop around and sell it or if you’re planning to keep it as an investment property or use it as an income generation. But if you’re just going to talk about primary homes, I don’t think that buying is always the right move for every person

Mindy:And that’s because you’re right, buying is not always the right move for every person. Ramit Satis says it best. He says, when you own a home, your mortgage is the least, you’ll pay monthly. But when you rent, your rent payment is the most you’ll pay monthly. If something breaks, your landlord fixes it. And what you’re saying to me says that you’ve thought this through. I think there’s a lot of people who buy a house because it’s the American dream, and that’s what you do. You graduate from college and then you buy a house you don’t have to buy. And I say that as a lover of real estate. I’m a real estate investor, I’m a real estate agent. I work at BiggerPockets. I mean, estate is my jam, but it’s not for everybody. And also if everybody owned, then there would be no tenants. So it’s perfectly fine for you to be a renter. I just wanted to get that out there. I like the way that you’re thinking about it and the fact that you are thinking about it.

Anna:Yeah. I like what you said about how people just think that they should be buying, and that’s my favorite thing now, is to ask people why they want to buy a home and if they have a good reason. Sure. There’s lots of reasons to buy a home, right? You want to grow roots, you want to start a family. All that stuff makes perfect sense. But when people say, I don’t know, isn’t that just what people do? And it’s like, no, you don’t have to buy a home if you’re not ready yet. You can still figure it out. You can rent your whole life. Ramit safety still rents to this day he doesn’t want to own—that’s amazing. If that’s what you want to do, do it.

Mindy:Yeah, exactly. But again, with Ramit, he’s thinking about it and he has decided based on thought, not just, oh, everybody else is doing this. He’s decided I don’t want to be an owner, so I’m not going to be an owner, and he’s got a reason behind it. Do you ever see yourself buying a house or investing in real estate?

Anna:Yeah, I definitely see myself buying a home. My husband wants to buy a house much more than I do at this point, but I think I’m going to let him have that one. And we will buy a home eventually, and we’re wanting to start a family soon, so we will own a home probably in the next five years. But as far as investing in real estate goes, I haven’t quite figured out what we’re going to do. He doesn’t like the idea of being a landlord, so I’m trying to push him on that a little bit. But I think the plan will be to focus on index funds and investing in the stock market in our twenties and maybe our thirties, and then in our forties or fifties when we’ve maybe got some more free time and more money, maybe jump into real estate investing.

Mindy:And real estate investing isn’t for everyone. There are plenty of people who listen to this show, who have no interest in investing in real estate and are still reaching financial independence. I think real estate is a great way to get there, but it’s definitely not the only way to get there. And there’s all different levels of real estate investing. So when you’re ready, come to bigger pockets.com, review the forums, go in there and see what different kinds of investing people are doing. We have a new podcast in our podcast network called Passive Pockets, which focuses on syndication deals. And if you are investing in a syndication deal, you give them money and then that’s the end of your responsibility. So you don’t have to be a landlord. You’re not getting the phone calls from the tenant saying, Hey, there’s something wrong with the property. It’s a great way to invest in real estate without having to be on the phone with your tenants all the time.

Mindy:It does have some risk, and that’s why we created this new podcast called Passive Pockets so that you can start to learn how to invest in syndications. Not all syndications are made the same. So when you’re ready, give me a call. We’ll chat. We’re going to take a quick break before we hear more from Anna Foley on how she was able to wipe out $80,000 of debt in under four years. Welcome back to the show. So let’s look back to your financial snapshot. When you graduated from college, you had $80,000 in student loan debt, or you had $80,000 in debt.

Anna:$80,000 in student loans between my husband and I. So he graduated in December of 2019 and he had about 60,000 in debt. And then I graduated in May of 21, and I had about 20,000. So total we had about 80 in student loans. And then we also had a car that was about 14,000. So when we graduated, when he graduated in 2019, our net worth was like negative 95,000. And then when I graduated in 21, our net worth was negative 75,000. So we’d made some progress just paying the minimums on his student loans and the car. But yeah, just working through that.

Mindy:And how did you pay down that $80,000? How long did it take and what steps did you take to make it happen?

Anna:So it took us about three and a half years, and the biggest thing we did was at the beginning of every month, we made a plan for how much we wanted to put towards our student loans. And each time we got paid, we would send that money directly to the student loans before we could even use it. If we were going to wait until the end of the month, that money was going to go somewhere, we were going to find something to spend it on. So we made sure that we put that money towards the student loans right away. And over those three years, we did increase our income. So every time we got a raise, yes, we had some fun, but we also made sure that we were using that extra money to pay off our loans quicker. So just really staying disciplined and focusing on making those payments every month.

Mindy:So when my husband was paying off his student loans we’re old, so we were writing checks. You didn’t pay it online because the internet didn’t exist. And I wrote that last check and I was like, this is the best check I’ve ever written. Goodbye student loans. How great did it feel to be out of debt?

Anna:It did feel really good. It was a long time coming. We originally planned, I think, to finish paying off our loans at the end of this year or next year, but because we were able to increase our income, we paid it off quicker than we expected. So it felt even better that we got it done quickly. And then what was really nice about it’s we were allocating all this money towards their student loans, and then as soon as that was paid off, we were like, oh, what do we do with that money? Now let’s just start investing it. Right? So it was really easy to make that transition to investing after we paid off our debt.

Mindy:So paying off $80,000 in three and a half years, how much were you making at the time?

Anna:So when Brett graduated in 2019, he started out making 60,000 a year. I was still in school, so I was probably making 20 to 30 just through my internship. But over that time, once I graduated, I started making low sixties as well. So we were up to one 20 gross income. And then over the last couple years, I’ve gotten a few raises and work overtime to make more, so I’m up to about $80,000, and Brett has jumped around to a couple of different jobs and he’s now up to 105. So last year our gross income was around $190,000. So it went from about a hundred, 120 up to one 90,

Mindy:And that’s awesome. That is how you pay off $80,000 in student loans in three and a half years. As you steadily increase your income, you put the money to the loans first. This sounds a lot like when people say, oh, you pay yourself first. So you take your paycheck and you put X percentage into your savings, 20%, 40%, whatever you’re choosing. You put that into savings, you don’t even see it to spend it. When you put the money to the loans, you’ve already made your payment, and now you have the rest of the money to do with as you choose, as opposed to, like you said, if you leave it till the end of the month, you are absolutely going to find a way to spend that. What are the investing vehicles that you’re currently using to help you towards financial independence? Are you still solely in index funds?

Anna:Yes. We still are a hundred percent in index funds. All of my stuff is with fidelity, so I’m in FX, A IX, just s and p 500 all the way. Brett has his 401k through principal, and they don’t have the best options for investing, so we picked the best one. They have, I think it’s an s and p 500 equivalent, just has a higher expense ratio on it. But yeah, all of our investing is in index funds currently.

Mindy:I love that. Now you mentioned a Roth IRA and a 401k. Are you maxing those out?

Anna:We are both maxing out our Roth IRAs. We’re not maxing out our 4 0 1 Ks. We’re contributing up to the employer match right now. And then Brett also has an HSA that he’s maxing out.

Mindy:Okay. And what are you doing with, I don’t want to say the extra, because there’s no such thing as extra money. What are you doing with the remainder

Anna:Right now? We’re saving actually potentially for a house in the next few years. So we’ve been trying to save two or $3,000 a month. We were saving up for a car. We just bought a car, and then now we’re going to start transitioning to saving for a house.

Mindy:And do you have any sort of after tax brokerage investments?

Anna:Not yet. I’ve been thinking about opening one of those up and just starting to get that ball rolling, but it’s hard to give up the tax advantage of all the retirement accounts. So kind of struggling with that decision on which one I should do.

Mindy:Yes. Well, I totally understand that. We have an episode about the middle class trap where you are a millionaire on paper, you’ve got a million dollars or more in your retirement account, in your 401k in your home equity, but you don’t have any way to really access that without paying penalties and what have you. And that is episode 543. I encourage you to



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