Especially as someone who was just trying to start their business.
Ali, what was your take on the situation from moving in with the house hack?
Ali:So initially definitely expected that my quality of life was just going to how do i get a loan go down the drain at this point. I had very low expectations, but I was very pleasantly surprised.
And I think this was the point, especially when we first saw the property. Because you have to live for free from house hacking. Although I proposed it a bunch of times, we did rent out the garage. So if Scott lived for free, we have to live for free. But anyways, once I got over that and realized, we are still winning, things really started to evolve from there. What happens to your financial position as we move out from this house hack and closer to today? First of all, Scott was living for free because he was living for free in a neighborhood that your wife would not have felt safe in and you would not have lived in this neighborhood. And Scott, do you ask your wife if she wants to have a roommate now? Cutting your living expenses and then doing something productive with that money is a win.
You consciously made a decision that bettered your financial situation and that is a win. Ali:And for us, it was really finding that balance. I think if we were in a different phase of life, maybe we would have been more willing to sacrifice our quality of life. For sure but we were, where we were and then fast forward, because of that situation and house hacking, it made us way more in tune with our finances, way more motivated to make that progress. Scott:Well, let me ask you something about that because in my experience, my journey was not just house hacking. House hacking is one component of the financial journey and other things are happening too. Incomes are going up, other expenses might be getting paid off. Can you give us the other parts of the financial picture? I think you had started, next day cash she had taken a higher paying job- Josh:And so by doing all of this, our confidence to start taking bolder chances on a higher income, because at that point again, we had just been focused on how can we cut our cost of living.
And by doing so, especially as a full time entrepreneur, it gave me so much more confidence to grow my business organically, versus just taking every opportunity that came at me. Ali:So I think both of our salaries went up, our cost of living went down. And getting rid of the two car payments, that was big too.
So Josh gets fired in 2018, a week later, he got in a car accident and totaled his car. And then that same car, I got rear ended on my way to work. It was polarizing in the car ride home because I was , we have a Toyota Corolla and we have a house hack.
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Or- Scott:No, they were under contract and the horrible one that she would have hated. Ali:I think that it is thinking about your why and the bigger picture.
And we talk about this a lot, because for me, did I want to drive a beat up Toyota Corolla or move into a yucky duplex? So it was, I know I have to make hard decisions because instantloans I want more time with the people that I love. And it was, these are the breaks and I have personal loans nj to make them for myself. So the reality of our situation was my driving force. And once we had that perspective, we accelerated our path to our goals. And this is important when we think about consumer purchases, my time versus my money. It is nice to have nice things, but we have to think about how much of our time instantloans quick cash loan service we spend to pay off those things. So I would go back to the drawing board and I would read, I would listen. And Vicki Robin, your money or your life really was transformative for me because Ali, I vividly remember we were sitting in the parking lot in our car and the heated seats at the time.
And we both sat there and we said, okay, what are the things that we value the most? And we literally line by line started writing those things.
And then it was how much time do we have right now based on our lifestyle, based on our circumstances to do those things. And honestly, for us, both the biggest one was time with family, whether it be with our parents, aging grandparents and time together. Well, I want to get back to the how and the nuts and bolts here. And why do you choose now to begin applying the savings towards debt as opposed to making the next investment? So our goal going into it was we want to be debt free. And the reason that we prioritized house hacking in the beginning was we felt that would be the best lever that we could pull. So earn more, spend less and that the difference is our income. So by house hacking that lowered our expenses and that we felt would direct cash lenders accelerate our ability to pay off debt. And so we closed on the duplex December of 2018 and then January one 2019, one, we got that first rent check. We had never gotten a rent check before, and that instantloans was life changing money right there too. So all of that extra income that had now between our income and expenses, we payday payday loans las vegas nevada loan guaranteed acceptance just started making big lumps payments on our student loans.
The property had actually appreciated quite a bit because like so many housing markets, our housing market is no different.
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My income was going up, but my quality of life was going down. And I created this business, not as a means of just making money, but I wanted it to make a comfortable living.
But really I wanted more time with Ali, especially 2019 was our first year as newlyweds. So I actually made a real abrupt pivot in my business. And again, this is what the confidence of having such a high savings rate because of low cost of living gave me is, my income was going up but really my focus became instead of just trying to amplify my income, how can I make a comparable income by working half the time. So, all intentions to continue to pay down that debt, to get another property. So my income in probably March or April, when everything really shut down, really was cut in half. But prior to that, January and February, again, all systems go.
And by the end of 2021, we will be debt free and two house hacks, have four units and almost financially free. Scott:So what was your cash position heading into this? So we typically hover and then I know this is a little bit skinny, but we stay pretty close to that three months cash reserves. It just been the cooler idea, but now a lot of it is virtual, our savings rate also fell. That felt like a really nice buffer in terms of almost an emergency fund that in and of itself. So instead of having a lot of cash, we were going to shift to probably six to nine months closer to the end of the year.
But in the beginning of the year, instantloans we had a high savings rate. We wanted three months of cash in case anything happened, which things happened.
Scott:I just want to point out that you make a great point here.
And the easier it is to accumulate that emergency fund. Josh:So when everything shut down, I think we were, man it would be nice if held onto that cash a little bit. But at the time, we were also really happy to have paid off the student loans. And I got to tell you, that time from say March to May or June, in a weird way, it gave us a dry run of fire, if that makes sense. And that gave us a time to almost hit pause and reflect on, okay, what are we doing? And it was actually a really interesting time in our marriage. Honestly you could not have cherry picked a better first house hack. Again, the couple we bought it from, started house hacking seven or eight years prior to us buying it. They were a young couple taking the world by storm. They specifically wanted to sell to people who they could relate to. And so there was some cool intervention there when our agent introduced us to them, we were, man, you guys are hosts in seven or eight years.
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Scott:I bet they would have increased their emergency fund though, if that was the case and the condition of their house warranted that- Mindy:Well, yes they would have, but maybe somebody listening, was, Oh, Josh and Ali only had three months. So, you guys are having a Sit back and reassess period. What you mentioned, fire life to be, what happens next? So Josh is the go, go, go person in our relationship. And I would describe myself as the Whoa, Whoa, Whoa person. Josh:So at that point too, so I network a ton, right. And so 2019 also gave me a really, really good chance to start attending Facebook group meetups, real estate meetups, get coffee with other investors and learn a ton. And so I started parlaying a lot more of those skills into 2020. And so again, like so many housing markets, our area was crazy competitive.
There was a lot of out of town buyers things for selling for less than 20… In cash less than 24 hours. So we decided that if we were going to stand a chance to buy a property, we were really going to have to find something off market.
And so we had met another real estate investor in our area probably sometime in 2019. And he was actually in the same neighborhood as our first house hack.
And he was pretty adamant, Nope, love the property.
Well, if anything changes, we live up five houses up the street. And then actually in may of 2020, we were renovating our upstairs unit to have a new tenant move in. And then the investor walked up and admired the work that we were doing.
And so I saw him through the window and I was, Oh, shoot, that guy. And then in July of 2020, we went on Facebook and a neighborhood Facebook group. If anybody in the neighborhood might be interested in selling, let us know. And he shot us a message shortly thereafter, his situation had changed and he wanted to talk about selling.
So, instantloans and this was our first duplexes off market, but we did have the benefit of a realtor and that realtor was a very good realtor with a heart of an educator. For this particular property, there was a for sale by owner.
And so this was a really steep learning curve for us in terms of actually handling the transaction almost entirely. We were figuring out how to negotiate a price and so on and so forth. We felt very confident the property would appraise more for that, but the seller was really adamant. Ali:And we were pleasantly surprised when the appraisal actually came in just a little bit South of 169. Josh:And the condition of this property was a lot different than our first property.
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