More Than Retirement, a Chance to Take Risks w/ Diania Merriam

After years and years of working in licensing, Diania Merriam opened up her credit report and saw that she was (collectively) $30,000 in debt. This forced her to ask the question, “what am I working for?” It made sense at the moment: you get your paycheck, you can go out to a fancy dinner, you get another paycheck, you can buy yourself something nice. But Diania wasn’t happy, or at least as happy as she thought she’d be.

She realized that she didn’t want to be stuck in a job she had to go to every day. She wanted autonomy, freedom, and financial independence that would allow her to rule over her schedule and pursue her passions and interests. So, she went to work and started saving whatever she could. She stopped eating out, started cooking all her meals, moved to a more inexpensive city, bought a house and house hacked, heavily invested in retirement, and did everything right.

Now, she’s self-employed, hosting the Optimal Finance Daily podcast and the EconoMe Conference in Cincinnati. She was able to create her dream roles because she came from a position of financial strength, she also had a plan in mind and knew what her “worst-case scenario” looked like.

Mindy:
Welcome to the Advance Guide Money Podcast show number 215 where we interview Diania Merriam from The EconoMe Conference and talk about getting out of debt and quitting full-time employment prior to reaching financial independence.

Diania:
My problem wasn’t really income. My problem was money management and the fact that I wasn’t paying attention and that I was wasting a lot of money. And so, recognizing that, I realized that, “Hey, if I can’t manage a thousand dollars, I’m not going to be able to manage a million dollars.” So, this idea that I’m going to figure it out when I make more money was completely misguided.

Mindy:
Hello, hello, hello. My name is Mindy Jensen. And with me as always is my sweat-glittered co-host, Scott Trench.

Scott:
Hmm. What a sparkling introduction, Mindy.

Mindy:
Scott and I are here to make financial independence less scary, less stress for somebody else. To introduce you to every money story because we truly believe that financial independence is attainable for everyone, no matter when or where you’re starting.

Scott:
That’s right. Whether you want to retire early and travel the world, go onto make big-time investments in assets like real estate or start your own multiple businesses prior reaching FI, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams.

Mindy:
Okay, Scott. I have been a little bit hesitant to showcase a story of somebody who quit their job before reaching financial independence because I don’t want to encourage people to make frivolous decisions. I think that there’s a lot of people who discover the concept of financial independence and then say, “Oh, great. I can quit.” And no, let’s make a plan, but Diania didn’t just quit frivolously. She made a plan. She had an opportunity and she took it and I love her story because she didn’t just slog it out. She overcame some nice debt and … Nice debt isn’t quite the right term for that. She overcame some debt, not an overwhelming, crippling amount but she did pay off some debt before she started her journey and then decided, “I’m going to take some risks. I am in a financial position where I can take risks so I’m going to do that.” And I love the way that she thought about things before just jumping in with both feet.

Scott:
Yeah. I think that this guest, Diania, shows that financial independence is a spectrum or a continuum and not an event that takes place and your financial position, as you go through this journey, continually strengthens and brings opportunity and power in your direction as your fundamentals improve, your savings rate, the amount of cash you have on hand, the amount of passive income that you’re generating. And you do not have to wait until you have a certain number of millions and certain numbers of thousands or tens of thousands and monthly passive cash flow to begin harnessing that power and reaping the rewards. You can do it sooner along that continuum and you don’t always have to have a specific plan, either, but you have to have a strong position, build those flexible options, or have that plan, or as much of that together as possible And, again, there’s no set list of criteria. It’s just the stronger your financial position and the better your plan, the sooner you can act on it and potentially realize your potential, if I can use potential twice in the same sentence there.

Mindy:
I’ll allow it.

Scott:
Potentially realize your potential a little sooner than waiting for a future event and certain numbers on a piece of paper to be achieved.

Mindy:
Yeah. What did you say near the end of the show? I shouldn’t really give this away.

Scott:
Oh, they’ll have to listen to find out, Mindy. Everyone will have to listen. I can’t remember, either.

Mindy:
I wrote it down. I thought it was great. You said, “There is a risk to stability,” and I thought that was really profound. So, yeah, that’s around 47 minutes in, so, of course, listen to the whole show but then rewind that and listen to that again, because I thought that was really, really smart, Scott.
Diania Merriam from The EconoMe Conference, welcome to the Advance Guide Money Podcast. I’m so excited to talk to you today.

Diania:
Well, thanks so much for having me. This is really exciting.

Mindy:
I have heard your money story last weekend at CampFI and now I’m really excited to share it with my listeners because I think there’s a lot of things that your story can help illustrate in a way that we haven’t illustrated before with anybody else that we’ve talked to. So, let’s jump right in. Diania, where does your journey with money begin?

Diania:
Absolutely. So, for me, it really started in my late 20s. I was about 28. I was 30 grand in debt and living in New York City. And what’s interesting about this 30 grand of debt is I didn’t even know I was 30 grand in debt. I ran a credit report on myself. It was the first time I looked at my debt collectively and I went, “Oh! Okay. I probably should do something about this,” because I always knew I had debt. I was making student loan payments. I was making credit card payments, but I have never looked at it all together. So, that level of awareness I think was a big wake-up call for me.
I was also in my late 20s where that 30th birthday was looming and I think 30 is one of those really reflective birthdays, where you think, “What am I doing with my life? What is all this hard work for?” And I realize that I had spent my 20s focused on my career and climbing the corporate ladder and I’m checking all these boxes of things that I thought I wanted in my adult life and realizing that I didn’t have much to show for it because I was pretty irresponsible with my money.
So, I think the first step for me was just the level of awareness to realize that I was in this hole and I wanted to get out of it and I think I needed a change of mindset and attitude because, up until that point, getting out of this debt had always just been something that I’ll do later. I will figure this out when I’m making more money and it wasn’t until that I actually discovered the FIRE Movement through the blog Mr. Money Mustache, which I’m sure a lot of people listening to this are familiar.
I looked at that as a refreshing punch in the face, discovery of this blog, because it helped me realize that my problem wasn’t really income. My problem was money management and the fact that I wasn’t paying attention and that I was wasting a lot of money.
And so, recognizing that, I realize that, hey, if I can’t manage a thousand dollars, I’m not going to be able to manage a million dollars. So, this idea that I’m going to figure it out when I make more money was completely misguided. And so, that was a big wake-up call for me. And I ended up eating that blog with a spoon. I mean, I read every article and I ended up getting out of 30 grand of debt in 11 months and then from there, I started saving about 60% of my income and it just changed everything for me.

Scott:
So, we talk about your situation coming into this. You’re 29 years old. You have $30,000 in debt and your awareness moment isn’t triggered by anything in particular other than that a credit report that you pull. And from there, you begin discovering the concept of FI. Does this all happen in a month-long period or a six months or where does that timeline end?

Diania:
Yeah. So, a little bit more background. I think what prompted this were a couple of things. Number one, I joined this mastermind group that my friend created. It was a group of women and we were all trying to help each other reach certain goals like losing weight, getting raises, getting out of debt. A lot of goals within the group revolved around money just organically. And so, being around a group of people that were also trying to figure this out I think influenced me and made me want to figure out my money situation. So, that was one thing.
I also think, with the 30th birthday looming, one of the things that I really wanted to do was walk the Camino de Santiago, which is a 500-mile trek across Spain. It’s historically a Catholic pilgrimage. And so, I wanted to take two months off of work to go do this crazy thing. And so, realizing that I was only ever going to be able to do that if I figured out my money by getting out of debt and saving enough money to not be able to have an income for two months so that I could go do this.
I also didn’t think that my employer would give me the time off. I had no examples of anyone ever taking a sabbatical or successfully negotiating that. So, in my mind, I thought, “Well, I’m going to have to quit my job if I really am going to go on this trip.” And so, all of those things combined I think really influenced me to put my big girl pants on, you know what I mean?

Mindy:
I love that phrase, put my big girl pants on, because that’s kind of, this whole thing. You are an adult, you have to handle your money as an adult needs to handle their money, but it’s super easy to just keep doing it like the kids that you were and kind of, for lack of a better word, messing it up. I mean, I messed it up, too. I’m not saying, “Wow, Diania! What a mistake. I was perfect.” I was so not perfect, but I love that. So, let’s talk about the Camino. Did you end up going on that? Did you end up canceling? Did you quit your job? Did you …

Diania:
No. So, I ended up going in the fall of 2017 and I think it was part luck and part timing, the way I was able to negotiate this with my employer because, at the beginning of 2017, I decided, I’m going to do this in the fall. I need to take two months off and I’m also going to ask to leave New York City and work remotely from Cincinnati.
So, I had two big asks and, at the time, I’m a sales person. I had doubled my numbers two years in a row. So, I was very valuable to them and they were showing me how much they appreciated me. They had been giving me good raises and I just thought, “Well, what’s more valuable than more money at this point? It would be time and freedom.” That’s what I really saw that as more valuable at that point and time.
And so I said, “Look, guys. Instead of another raise, I want to move away and work remotely and I want two months off unpaid.” And they allowed it. Part of the way that I pitched them the Camino is I said, “Look, if I was going to have a baby right now, I would be taking three months off. I don’t want to birth a child. I want to birth a world adventure, and I’m only taking two months off. This is better for both of us.” And I just had a really good relationship with my boss and she was excited for me. She wanted me to go have this life experience and it worked out really well.

Mindy:
So, this is something that I think a lot of people are scared to ask for. Let’s see. How do I ask this question because you’re already on the other side of having taken the trip, but what was your plan if she said, “No”?

Diania:
So, here’s the thing. It sounds good to say on a podcast, “Well, I would have went anyway.” That sounds so good to say. Honestly, I don’t know. I don’t think there’s any such thing as an alternate reality. And so, it’s hard to say what I would have done. I would hope that my financial situation at the time where I had gotten out of debt, I had been saving a lot of money, that gave me the courage to ask. I would have hoped that it would have also given me the courage to take the leap anyway. But, again, who knows? Who knows what would have happened?

Scott:
I just want to go back a second here and bill up the lead-up, because I believe that the moment of making that ask is both a personal preference across a spectrum. Some people are comfortable doing that only when they’ve retired or have that FI number. Some people are comfortable doing that when they get out of debt. Some people are comfortable with doing it with one year of emergency reserve, whatever. But I want to hear about the financial position you built ahead of that in a little bit more detail.
You’re 29 years old when you first see your credit report and 30’s looming. And what was your financial position, I guess, at that point? What was the lifestyle that you were living prior to that moment and how did that change and what year are we talking about when you see that credit report, because you just told us about 2017. Is that three, four years later? Is that a year later?

Diania:
Yeah. So, I saw my credit report in the fall of 2015. I’m out of debt ll months later so this is summer of 2016. Then, I make the ask in probably January, February of 2017. So, by that point, I’m completely debt-free, very much living below my means. I think I may probably have had around 10, 15 grand in cash that I was going to use for the trip, and then I had also really upped my contributions to my retirement vehicles. That may have been the first year that I actually fully funded 401(k), IRA, and HSA.
So, I was just really getting comfortable with the 60% savings rate when I made the ask, but I think more important than my financial position and bandwidth was the leverage that I recognized I had in my performance. So, because I was so valuable to them as a salesperson and I was bringing in a lot of deals, I felt like I had the leverage to make a big ask. If I was in year one … By that time, I had been with the company for five years as well, so I was pretty established there. They knew me. They were comfortable with me. My performance, they had a lot of confidence in that. And so, I feel like that made me a lot more comfortable in making the ask in addition to being a little bit more financially secure.

Scott:
When we started the episode, you mentioned that you were making $30,000 a year or something like that and were $30,000 in debt. Is that right?

Diania:
No. I was 30 grand in debt. At the time that, I believe I was probably making around 80 grand at the time that I started taking my finances really seriously and then it jumped quite a bit since then.

Scott:
Okay. So, in 2015, you look at your credit report and see you’re $30,000 in debt and you’re making $80,000. How do you pay off the $30,000 in debt? What changes? Does your income skyrocket? Do you begin cutting back on expenses? What is the mechanics of that paydown?

Diania:
It was mainly through cutting back on expenses. So, I started cooking every single meal that I ate. I stopped going out so much. When I looked at where my money was going, I was partying it up in New York City. I was having my 20s, which is great. I mean, it’s a lot of fun, but after a while, it’s like you just have nothing to show for it and I think I got burnt out on that lifestyle.
So, what I really liked about reducing my expenses is for me, it opened up this level of creativity and resourcefulness that I didn’t even know I had and it made the whole experience feel really gratifying aside from the fact that I was saving money. So, discovering my love for cooking instead of eating out all the time. I would host these elaborate dinner parties where I’d have all these people over my apartment. I make my apartment more fun than a bar. They’d all bring the booze. I’d cook the food. I could cook like a great meal for eight people for 30 bucks. That’s how resourceful I got about finding low-cost ingredients. And I would invent all these games that we would play. I also would host clothing exchanges with my friends so we’d all clear out our closets, come to my place and over an afternoon of mimosas and music, we would try on each other’s clothes and I got a bunch of free clothes that way and never bought clothes for the time I was getting out of debt.
Also, my neighbors downstairs, I got these new neighbors. And when they moved in, they said, “Hey, can we borrow your internet password for a couple days until we get our set up?” So, I gave it to them, figuring if they take advantage, I could just change it and it didn’t affect the functionality of my internet at all. So, I just said, “Hey. Why don’t you keep using it and let’s split that bill in half.” So, that cut that bill in half. There were just endless opportunities for this kind of stuff where I felt like it was a very creative time of finding fun ways to get my needs met that before, when I was very mindless about spending, it was just so convenient to swipe a credit card whenever I needed something.
By actually having this pause, I almost had this thought process whenever I was going to buy something. First of all, I would question, “Is this a want or is it a need?” That’s a pivotal question because a lot of times, we just think we need something when it’s actually much more of a want. So, first, I would question that.
Then, I would think, “Well, do I already own something that could satisfy that need?” And if I do need to buy something, can I borrow it from a friend? Do I really need to own something or is this kind of a short-term need that I can borrow something and be done with it? Can I buy used? That was kind of the next thought process. And then, ultimately, if I buy it new, what’s the best price I can get for it doing all the research around that?
So, it’s definitely a lot more time consuming but I had time on my hands because I’m not going out so much. So, yeah. I would say that the decreasing my expenses and just being very mindful of my spending and tracking every expense is really what helped me dig out of that 30 grand of debt. I didn’t get my next income bump until I was at the tail end of getting out of debt. So, most of it was while I was making that 80 grand.

Scott:
So, this is really interesting because usually or often, when we hear about that level of debt paydown, relative to that level of income, it’s because of a couple of major change, like, “I paid off the car, I moved, I got a huge raise at work.” That kind of stuff, but you’re saying that in your case, it really was all what I’ll call variable spending. Just having fun, eating out, all that kind of stuff. And that’s three grand a month in your case that you’re just able to immediately cut back.

Diania:
Yep. It’s kind of embarrassing to admit. Yep.

Scott:
No. I think it’s great. I think that there’s probably a lot of people out there who are in a similar situation where if you’re eating out most of the time and going out, especially in New York and getting 12, $15 cocktails. Maybe they’re more there. I don’t know. That can really stack up to that level, I think, pretty quickly, it sounds like.

Diania:
Definitely, yeah. And up until this point when I discovered Mr. Money Mustache and I believe it was that article like Your Debt is an Emergency that really struck me and created a sense of urgency around this. Most of what I had read about personal finance had this tone of struggle to it, that this is going to be hard, that it’s going to feel like deprivation, and it really kind of turned me off when it came to figuring this out.
When I read Mr. Money Mustache, frankly, I realized how much I was wasting my privilege and that cooking all of your meals was not a hardship. It’s just not. That we are surrounded by abundance and if we’re resourceful about it, we can actually make this whole process really fun. I started working out more. I’m reading more. I’m journaling. I’m learning how to enjoy my own company, which is a skillset, by the way. It was a really exploratory time that I didn’t know was possible just by reading the personal finance content that I had been exposed to up until that point.

Scott:
Love it. I think that that’s really … It’s really powerful to hear that and it’s awesome and it sounds like your journey starts with frugality and then within the next year or two but sometime between 2015 and 2017 changes, your focus changes to … Maybe you optimize on that front to a certain extent and then you focus on income generation and making yourself valuable to your employer.
So, could you walk us through some of the things that you did with respect to your employer? Oh! Mindy has a question before we do that.

Mindy:
I have a question. Well, it’s more of a comment, Scott. I don’t think her journey starts with frugality. I think her journey really starts and I am not a mindset person at all but I think it starts with changing your mindset from one of, “Well, I’ll just do this, because it’s convenient. I’ll just do this because all my friends are doing it.” You decided, “I don’t want to be in debt anymore, so I am going to change the way that I behave.”
And I don’t like the frivolous advice when people say, “Oh, you just need to change your mindset and everything will be fine.” No. You need to change your mindset and then do the work. That your whole journey starts with this big, “Oh! I need to change what I’m doing because I don’t like where it’s going.” So, after that, let’s talk about whatever Scott was saying, the employer or whatever.

Diania:
Yeah. Absolutely. So, basically when I made this move from New York City to Cincinnati, and I had my sites focused on the Camino. I had this 60% savings rate but I am training for the Camino. I’m buying stuff for the Camino. I mean, I wasn’t a very athletic person before this, so I think my biggest insecurity about the Camino was just my physical capacity to do it. And so, I did a lot of training and reading and focus on that. I didn’t buy a car when I first moved to Cincinnati. I picked an apartment that was in kind of a walkable area so I could walk to the grocery store. And being in New York for so long, that wasn’t a big deal to me. I had been used to walking everywhere anyway.
And so what was interesting about this big change is I went from paying $1,800 a month for a cockroach-filled apartment in the bowels of Brooklyn to now living in an apartment for $900 a month, so I really cut that expense in half. And obviously, it’s a big lifestyle change to go from such a big city to a smaller city, but I think around this time, I started kind of shifting from asking myself the questions of, “How do I continue to reduce my expenses and grow my income,” because I had a pretty comfortable savings rate. Sure, I could have focused on getting it to 70, 75% savings rate and there were some months that I did, but I felt like I had this opportunity to start asking bigger questions, like what do I want to do with my time, who do I want to spend it with, what do I want to create? I felt like my financial security and bandwidth at this point almost was inviting me to start asking different questions.
And I think that has really impacted my journey and what I even see in a lot of other people how they describe their FI journey, when you become so laser-focused on hitting your FI number at the cost of everything else. I almost think you lose the opportunity to learn about yourself along the way. And I had watched people talk about this and write about this, the fact that I actually think Mindy, your husband Carl had an article about the death march to FI. And I saw that and felt, “Well, I don’t want to do that. I want to use this journey to FI as almost a journey of self-exploration,” because when I look at my life like, “It seems to change so much year to year and my desires and my ambitions and my interest changed so much year to year,” that to lock myself into reaching FI and not have a lot of clarity on what do I want to do with my time, just felt like I was missing an opportunity.
So, walking the Camino was something that was really intimidating to me, that pushed me outside my comfort zone. It was the hardest thing I’d ever done. And when I got back from that, I just started asking myself, “What are other hard things that I could do? What are other things that are outside my comfort zone that can help me kind of learn about how do I want to craft my life?” As someone that’s single with no kids, it just feels like I have this world of opportunity to explore and I wanted to start using my financial bandwidth to explore that.

Mindy:
Okay. I love what you just said because I lived that death march to FI with Carl and it sucked. It was, like you said, laser-focused on the one goal and we didn’t really enjoy our lives. We just pushed and pushed and pushed and yeah, we enjoyed it a little bit. I mean, we had two small kids. It’s always fun to hear them say funny things, but we didn’t go to the park without thinking in our minds, “Oh, I should be working on the house. I should be doing something else.” We didn’t spend any time just enjoying our life. And the whole point of that article is enjoy the journey, too.
And I think that a lot of people are exactly like Carl. And me, too. I shouldn’t just put all the blame on him, but let’s get to FI as fast as I can. I’m going to cut out everything. I’m going to just push, push, push, push. And if it had taken us an extra year, but we would have been so much happier because we didn’t have this stress all the time of reaching this arbitrary made-up number that we decided on. It would have been a much better life for all of us.
So, I like the questions that you’re asking yourself. What do I want to do with my time? Once you get to retirement, what are you going to do? If you don’t plan for something, you’re going to do all the things that you do now when you get home from work and you’re exhausted and you just plop in front of the TV and watch TV or you go mow the lawn and go to bed or you drink too many beers or whatever it is that you’re doing now is what you’re going to spend your entire time doing.
So, guess what Carl does all the time? Stuff. He’s never sitting around doing nothing. I’m harping on him constantly. Just relax. He’s like, “Oh, I want to work on this or I want to do this, I want to do this.” I’m, “Can you just read a book that doesn’t teach you anything?” Like, “Read a Stephen King book for fun.” And it’s still a process. He’s still learning how to decompress and just relax and enjoy his time and that-

Diania:
It’s a hard lesson to learn and what I’ve kind of discovered in my experimentation is that a lot of times what I think I want, I’m wrong. So, if I don’t test my assumptions around what I think I want …
So, I’ll give you an example. When I got back from the Camino, one thing I thought that I really wanted to do was sing because I was walking the Camino for eight hours a day by myself, I was singing all the time. Maybe we could say it was more like wailing, but I really enjoyed it. And so, I felt like, “Man! I think I want to do this.” And I got in touch with thinking about when I was a kid and I used to kind of daydream about singing on stage somewhere. And I kind of got back in touch with those dreams. And so, I really had my sights set on this. I thought I wanted to sing.
And when I got back, I wrote this list of goals of things that I wanted to do and one of them was to sing. So, I looked into taking private singing lessons and just thought, “Well, I don’t know if there’s much of an outlet for this.” And so, but it was always in the back of my mind. So, fast-forward to, I guess it was probably 2018. I had bought my house and, at the end of my block, a School of Rock opens up and this is a franchise. And a lot of people think of it as a music school for kids, but they actually have an adult program.
And so, I go and I sign up for this adult program and I train for four months with this band of old dudes. It’s like all these old dudes and me. And I had a signing coach. I had to sing every day. I had band practice once a week and then practice with my singing coach once a week and it was an investment. I think it probably costs me, I don’t know, $350 a month or something like that. It wasn’t anything crazy, but when I was super focused on, let’s say, not spending any money because I was so focused on getting out of debt, I would have never spent $350 a month on something like that. I would have never.
And so, I got this experience and the best part about it is that, at the end of the program, we did a performance. I got to sing seven songs in front of a hundred people. And when the show is over and everybody is basking in the glory of what we just accomplished together, I didn’t feel the way I thought I would feel. I didn’t feel the way I imagined I would feel when I was a kid, when I imagined it in my head. But thank god I tried, because I imagine if I didn’t try it, that I would be in my elder years thinking, “I could have been a singer.” But, actually, no. I tried being a singer and I realized that it wasn’t for me and I’m so glad that I tested that assumption and I see the opportunity to test a lot more of those assumptions on this path to FI.

Mindy:
Oh, absolutely. I’m excited to see what else you’re going to do. Do you want to act in a movie? You want to become a back-up dancer for-

Diania:
Time will tell.

Scott:
Well, I think it’s awesome. I think that everybody has something that they like or enjoy and you have to pursue that, to stop to smell the roses along the way with this. What I think is also we have to acknowledge is that, prior to taking shots and spending lots of times on these pursuits, got your fundamentals in place where you got out of debt, you got your savings rate to 60%. Who cares if it goes from 60 to 65 or 70% or whatever it is if life is miserable in those cases. But when you’re still north of 50% in terms of your savings rate, you’re generating wealth at an incredible rate. You’re generating a year of savings every year or a year of spending every year with that, and that’s, I think, 10 times faster than the average American. The math behind that is, if you save 10% of your income, it takes you 10 years to save one year of spending or one year of income roughly. If you spend 50% of your income, you save 50% of your income, it takes you one year to generate that. So, it’s literally 10 times faster to save at a five times higher rate.
Anyways, I’m nerding out there. But you got your fundamentals in place and then, you can do this. And likely, as part of that, there’s less demands on your time perhaps from certain career choices you could make. So, another example of that is the career choice you made to move away. And it sounds like in concert with that, whether that they were discussed or not, there were certain trade-offs you made in terms of advancement potential or hours or-

Diania:
Oh, definitely.

Scott:
… different opportunities with that. Is that right?

Diania:
Yeah. I would say so. I was the only really person on my team working remotely and there are some downsides to that. You’re not in the office. You’re not just in it as much as everybody else, so I do think that there are some trade-offs to that and those were trade-offs that I was willing to make for this idea of more time and freedom.

Scott:
Awesome. So, in 2017, you take your Camino or … What year is that?

Diania:
Yes. Yeah. It was the fall of 2017. Mm-hmm (affirmative).

Scott:
And you’ve got some retirement account contributions. You’ve got no debt and you’ve got maybe 10, 15,000 saved up for that journey. Is that right?

Diania:
Correct. Yep. Mm-hmm (affirmative).

Scott:
When you return, how does your financial journey proceed from there?

Diania:
Yeah. So, when I got back, one thing that I didn’t expect is I bought a house and this is kind of like a happy accident. When I look at my cash position, I typically like to keep a year in cash which a lot of people think is too much. I know we’ll talk about the economy conference later but a big reason why I keep a year in cash is because there’s a lot of risk that comes with entrepreneurship. So, most entrepreneurs should keep a year in cash.
But I also keep a year in cash because I look at is as not only my emergency fund but my opportunity fund. I feel like life is throwing me opportunities every single day and I want to be ready for it. I want to have the cash to be able to seize those opportunities, and that’s kind of what happened with my house. I would say probably it was February after I got back. So, February of 2018, I had a lot of friends that were buying homes in Cincinnati and when they were talking about the financials of that, it became really apparent to me that it costs a lot less to buy than it is to rent in Cincinnati.
And so, I just started looking around and originally what I thought what I wanted was a duplex where the tenants can pay for the whole mortgage and I’d be able to live there for free, essentially. That’s the kind of scenario I was looking for, but when I looked at those options, most investors were overpaying for those kind … Like the financials just didn’t make sense when I was looking at that kind of option.
So, I kind of put it on the back burner and there’s this one house that kept popping up through my Zillow search or emails that I would get and this one house just kept popping up and ultimately I had some plans on a Saturday that fell through and there was an open house for this house and I thought, “Well, I got nothing better to do. Let me just go look.”
And I came and I looked and the house was $150,000. The mortgage is $600 a month and it was a great house, especially for one person. I think it’s like, what, 1,100 square feet in an up-and-coming neighborhood. I knew it would make an amazing rental one day. And so, I just took the plunge and I bought it. For the first two years here, I had a roommate who was basically paying 90% of the mortgage, so it was a good house hacking situation. I’ve been here my myself for about a year now but that was something where it was just kind of, it wasn’t like, for years and years, I had this dream of buying a home and I saved accordingly. And then, it wasn’t one of those long-term planning things. It was an opportunity that presented itself in the moment and I seized it and I’m really glad that I did.
So, that was a big financial move that I made. In addition to that, I also started The EconoMe Conference, which is really a passion project, though it comes with a lot of financial risk because it’s very expensive to produce a large-scale event. And so this was a project, again, of me asking this question, “What do I want to do with my time and what do I want to create?” I thought, “Well, if I was actually financially independent, what would I do with my time if I didn’t have to work for money and what I wanted to create was this party about money, really inspired by other events that I’ve attended.
So, I know you guys are familiar with CampFI and Camp Mustache. I get so much out of going to those kind of events. The real inspiration around EconoMe is called the World Domination Summit, which sounds like it’s produced by Pinky and the Brain or something like that but it’s actually a really interesting event where it’s all about unconventional living and Mr. Money Mustache actually spoke there one year and that’s how I found out about it.
And every time I go … Now, mind you, this isn’t a very frugal choice. The ticket to World Domination Summit is $700 and that doesn’t include any food, travel accommodations, anything. So, to me, kind of my thoughts on frugality is it’s not about being cheap and never spending money, it’s about spending money on the things that are truly valuable. And I get so much out of going to that event. Every time I leave there, I feel like my life is so full of possibility and I thought, “How fun to create that feeling for other people about this topic of money,” because I really do feel like it’s an incredible resource that can open up so many options for us.
And so, I got so excited about this idea for EconoMe that I couldn’t wait until financial independence. I decided to do it now. And I’m so glad that I did because it’s a huge risk and I actually took a 40 grand loss on my first event, which is something that I don’t think I would have been able to do if I waited until FI, because if I didn’t have this kind of safety net of my savings, I don’t think that I would have taken on that risk if I wasn’t also bringing in an income. I think I would have said, “You know what? Ticket sales are not justifying the cost of this. I’ve got to cancel it.”
But I was able to take on that risk and make that decision based on my financial position. And the great thing about it is, that did not stop me from fully funding my retirement vehicles. And essentially, that 40 grand is what I would have put in my after-tax brokerage that year. So, instead, I invested it in my business. Time will tell if I’m able to recoup that investment. That’s what I’m working towards now but I think having, again, this financial safety net enabled me to take on a big risk in creating something that I’m really proud of and, to me, that’s another benefit of pursuing FI is that it enables you to explore those kind of things.

Scott:
When we think about the journey to financial independence, aside from winning the lottery or marrying rich and all that kind of stuff, there are four levers that you can pull. One is spend less. The second is earn more. The third is invest, and the fourth is create. And so, it sounds like your journey over the past five, six years has progressed through all four of those. You’ve used the right lever at the right time. First it was your savings rate. There really wasn’t much to do. You’re in New York. You have a lot of debt. You can’t create a business or invest really when you have that, so you focus on savings rate.
Then, we have a focus on income generation where you scale your income at work. Then, there’s a focus on investing where you’re maxing out your retirement accounts and then house hacking, which I would call an investment with your primary residents purchase there. And now, you are transitioning to an approach to creation, where you’re creating assets and deploying more of your resources towards that.
So, looking back at it, well, from my vantage point, it seems like you’ve correctly or really optimally applied the right lever at the right time in your journey, probably through intuition, you’re just applying common sense, but I completely agree that when you have the time and inclination and the excess cash flow, that trying your hand at creation of a few businesses is absolutely a potential better play than just continuing to max out the retirement accounts.
But you go through and you say, “Here’s my investing approach. I’m going to stop at this point and everything beyond that, I’m going to apply to the next thing, because my formula will still carry me to traditional retirement. My worst-case scenario is middle class American retirement.” That’s not a bad worst-case scenario. The best-case scenario is your business works out.

Diania:
Exactly.

Scott:
So, I think it’s really smart framework that you’re applying there, if I’m directionally correct in my analysis there.

Diania:
No. I really appreciate that summary. I think you’ve captured it in a way I haven’t thought about it before. So, I really appreciate that. I mean, hindsight is 20/20, so when I look back, it seems like I’m making really smart decisions, but in the moment that you’re making these decisions, there’s always risk. You never know how they’re going to play out.
And so, that’s why I feel like getting my head wrapped around my finances and being really intentional about that savings rate, it almost I feel like I have the privilege to be wrong, honestly. Maybe the economy conference isn’t a sustainable business. Most entrepreneurs start businesses that fail. But it’s almost like I have the permission, I’m giving myself a permission slip to be wrong and take on that risk. It’s not like this business is going to bankrupt me. I have the privilege of trying.

Scott:
Love it. So, what you started it, which year was the first year of your event?

Diania:
So, it was 2020. This is crazy. So, the first event-

Mindy:
Oh!

Diania:
… happened on-

Scott:
So, that had no impact on your [crosstalk 00:40:44]. Yeah.

Diania:
… March 7th of 2020. It was one week before everything shut down due to COVID and I had spent 20 months planning this event. So, I just feel like I totally dodged a bullet, that I was even able to have it. And I’ve just learned so much about getting into the space and trying to create something like this.
Most people who produce large-scale events, it’s the last thing they do. So, they start a blog and they write a book and they do a podcast and they build up a big following, and then they create an event because events are typically pretty slim margins, whereas I had nothing. I had no following. Nobody knew who I was. I basically just had a lot of hustle. So, I called 150 people to get my nine speakers. I’m cold calling all of these podcasts to try and get on and spread the word and share my money story and kind of my intention around the event and why I think that it’s something that people should come to. And it worked out. We had 250 attendees at the first event. We had an amazing lineup of speakers and it was a really challenging project. But when I stood on that stage, I had the feeling that I thought that I had when I tried singing on a stage. It just this feeling of I created something that I’m really proud of and, yes, it’s a huge risk, but I just think that those risks are worth our efforts in the long run.

Scott:
Well, I just want to point out that we run an event here and we’ve got a little different bit of a formula because we just kind of talk about our conference, for example, on our podcast or whatever and that’s how we sell most of our tickets but most events that require marketing or those types of things, I think sell some large percentage of their ticket sales in the one week prior to the event occurring. So, that almost certainly had to have impacted your event last year with COVID. You dodged a bullet in the sense that you were allowed to have it but you probably lost a lot of revenue because a lot of your sales would have come in those last one or two weeks prior to the event, I’d imagine.

Diania:
It’s a really good point and given that it was my first event, I didn’t have a lot of history to go off of, what trends and sales should I be monitoring for or tracking against. It was just kind of like let’s see what happens. But yeah, I would say that I sold the bulk of the tickets during the early bird pricing period and then, yeah, leading up to the event, it definitely dwindled a bit.
So, fingers crossed that this year will be a different story. We’re already at about 27% capacity for our next event that’s happening this November at the University of Cincinnati. So, we’ve got four months to go. So, fingers crossed that people are feeling a bit more confident these days to gather in large groups.

Scott:
So, is this business, you’ve called it a passion project, is it intended to be, in addition to a passion project, an additional source of income for you to replace your job at some point or is it …

Diania:
No. It never was set up that way. It really was for me asking myself the question what would I do with my time if I didn’t have to make money? And so, I will say that’s one thing that I learned through this process is I really backed myself into a corner and that the way that it’s set up, it’s only really sustainable with a large audience and sponsorship revenue. And so, I’ve never really considered paying myself from it.
So, I could consider changing the model in the future. I think we’re in such early days that we need to see how the business evolves but where I’m going with it now, I still, I’m not paying myself from it. I’m hoping to recoup my investment. What I’ve done is look at other additional streams of income. So, one of the things that I picked up over the summer is I’m now hosting the podcast Optimal Finance Daily, which is a pretty big show. I think this is an example of creating The EconoMe Conference is going to lead me to other sources of income. That’s really how I’m trying to leverage it.
So, Optimal Finance Daily has been around for five years. They have a really established audience and becoming their new host is basically covering about a third of my expenses. And so, I’m looking for other things like that, like what are the other streams of income that I can piece together to replace my income because I don’t think we’ve covered this but I actually quit my full-time job about six months ago. So, this large six-figure income that was kind of floating a lot of what I’ve accomplished thus far is now gone. And so, I’m having to navigate that decision now.

Scott:
Awesome. So, in the last two years, since the beginning of 2020, you’ve, I imagine, continued to fortify your financial position. You arrived at 2020 with a year of financial runway. You begin building out this business. You lose 40 grand but your savings rate is such that you’re continuing to be able to max out your retirement accounts and those types of things. And over the course of 2020 and leading into early 2021, it sounds like you continue to solidify your financial position and become more and more confident in the opportunities that are available to you to quit your job and begin taking chances at these other things.

Diania:
Exactly.

Scott:
Do you reduce your income as part of this change, at least temporarily, or are you able to kind of maintain around the same income while transitioning out of the job?

Diania:
So, my income is bare bones now. I’m basically not covering my expenses with my income at this moment and I essentially made this decision based on some changes that happened with my employer. I was with my employer for nine years and it just became very clear that I was no longer valued due to some big management changes. I’m trying to say this very politely.
So, I essentially recognized that I had hit a dead end with my employer. And so I thought that, “All right, let me find another job.” I’m very established in my career, in my industry. I went to my top six competitors. I had a couple job offers come out of that and at that moment of time, when I recognized I needed to leave my current employment situation, I had thought that another job was my ticket out.
And then, I started looking at my money and recognizing that what if I’m my own ticket out? What if I don’t have to rely on another source of income in order to make this decision? And what made me feel comfortable in taking that leap was that I had reached coastFI. So, I’m sure you’ve talked about coastFI on this show. It means that I no longer need to contribute any more to my retirement vehicles to retire comfortably at traditional retirement age. So, that I felt was a milestone on my FI journey that I reached coastFI. I also had this year in cash, a year of expenses in cash, and I have a year in after-tax brokerage.
So, I felt like, if worse comes to worst, I could tap into that, into that after-tax brokerage. I also had this podcast job covering a third of my monthly expenses and knowing that they have such a large audience, I felt that that was going to help with the marketing of EconoMe and I had just signed three sponsors for the event, which gave me a lot of confidence that I was going to be able to find more sponsors.
So, I felt like, even though EconoMe was still a shaky business, I had a lot of confidence that I would stabilize and perhaps break even in this year and I had the post FI position, the year in cash, and a year in after-tax brokerage.
So, I’m not FI, but I felt like I had what I like to call peace out money. And so, I would define that as about a year of expenses and it doesn’t mean that you no longer need to work. That’s FI money, but peace out money is that, it’s almost like a permission slip to take a big risk in how you’re going to make money. And I decided that I wanted to explore self-employment. And the podcast gig is kind of the first entry that I had into self-employment. I’m a 1099. And have a lot of flexibility on when I work and how much time I put into it.
And so, I thought, “Well, what if I take this next year to explore more options like that?” Because ultimately why I want to reach FI is full autonomy over my time, financial stability, and the ability to create what I want to see in the world. What if I could achieve all three of those things through self-employment and not have to wait until I reach FI? And so, that’s a question I started asking myself when I found myself in the situation with my employer and it’s something I’m still exploring to this day. I’m six months in, so time will tell.

Mindy:
So, here’s a question about your expenses. You had 12 months of living expenses. You have a job as the host of Optimal Living Daily that pays a third of your living expenses. How much of that initial 12 months do you have left six months in?

Diania:
You know what’s funny about that? This goes to show that you can never anticipate the opportunities to present themselves tomorrow. So, when I ran my numbers, what I didn’t consider is that I had a large tax refund coming my way because of my big loss on EconoMe. And so, actually, the last six months, I’ve been living off of that and I haven’t touched any of the money. I still have more money than when I left my job six months ago. I haven’t touched any of it. So, and that’s not sometime that I planned for. It’s kind of working out that way, but I think we make decisions based on the best information that we have in the moment and when there’s some icing on top from a windfall it’s like, “Great! Even better. Now, I’ve able to stretch my time even more.”

Scott:
When one runs an event business, there can be a working capital situation where in an ideal world, if things go very well, ticket sales come in, so you have the cash in your bank account, then the event happens and the ticket sales are more than enough to pay the fees that you’ve contractually been obligated into by negotiating with the event and the conference sponsorship revenue comes in either in advance or right before the event with that. Are you able to arrange that or are you having to commit cash to the event in advance?

Diania:
Most of my cash or most of my expenses are paid after the event. So, one thing I actually did last year that was great for me is I think I had, what, 10, 20 grand of expenses that I had to pay in one month. And I opened up a couple business credit cards and got these great signing bonuses for that. And then just took the funds that I had and paid off those credit cards immediately so I didn’t pay interest. But, yeah, most of my expenses are coming after the event. There’s some kind of month to month, I got to pay for Adobe Suite and certain kind of administrative things that I need to pay month to month but those costs are really minimal.

Scott:
Awesome. So, what I’m gathering now is a picture of a serial entrepreneur contractor with multiple different gigs going with this and still a high savings rate, ability to live, you’re insuring against all of this risk and the difference in timing with your payments and your income with a year of emergency reserve, which you said at the beginning of the show, you think that all entrepreneurs should have one year of emergency reserve and I think I completely agree with that.
And now, it’s just a matter of kind of thinking up ideas and figuring out what works, quitting what doesn’t and scaling up what does over time and you’ve got your coastFI. So, as long as you don’t have to tap into any of the stuff you set aside in your retirement accounts, you’ll be good to retire in the traditional sense with that, but ideally, you’ll have a couple of wins over the next couple of years that will really take off with a couple of these things while enjoying your time, maybe in a different way than you were when you were working.

Diania:
Yeah. And I think the big shift that I’m still coming to terms with at this time in my journey is the uncertainty around all of it. It was so comfortable to have a salary that I knew what it was, I knew how much money I was going to make. I could go into my spreadsheets and plot my plan to FI and it was such a … No, nothing is ever certain in life. You can lose that job tomorrow and then all your plans go to hell. So, that’s always on the horizon, but we have this kind of false sense of certainty when we have that steady income and I think I’m learning how to transition into this uncertain time where I’m exploring stains of income. I don’t really know where it’s going to come from. I don’t know how EconoMe’s going to go this year. I get stuff coming my way all the time for potential job opportunities that I evaluate and how are those going to work out?
So, I think it’s just a different mindset of kind of trusting that my financial stability is going to help me navigate this uncertainty and what is the worst case scenario. I go find another full-time job. Is that really so horrible? It just is this confidence that I feel like I’m going to be able to figure this out even though all the answers aren’t laid out in front of me right now.

Scott:
In a practical sense, I think that I’ll go a little further with what you just said there and say that the worst-case scenario is to do the job you hate for many more years than is necessary and to not realize your full potential as an individual. So, I think that what you’ve done is you’ve said, “My full potential is more likely to be maximized with this course of action than with the job.” And I think it’s unlikely that you’ll be in dire straits financially, given the way that you’ve described the way that you’ve managed the money with us and it’s much more probable that a lot of good things and wins come your way or experiences that you will remember later on in life, come with this course of action than by staying at the job.
And I think a lot of people do not weigh those risks accurately or appropriately against one another. There’s the risk of failure and there’s the risk of stability and just the slow fading away of the potential that you’ve got over the years at your gig with that. And so there’s a time and place to move and it’s probably before full financial independence if you’re as deep into the Kool-Aid as you are and as I was earlier when I started my journey.

Diania:
You’re so right, Scott, and I think about when I first announced that I made this decision to leverage my peace out money. And I would get notes from people that would say, “Man, how did you come to this decision? How did you take-”

Scott:
Thank you for keeping this show clean with the peace out money phrase, by the way. We appreciate it.

Diania:
Yeah. We’re all winking at each other over here. We know what I’m meaning to say. But I would get notes from people. I remember this one guy in particular. He said, “I’m three years away from FI and I’m so miserable, but I just feel like I need to keep my head down and keep going, because I’m so close.”
Now, I was six years away from FI when I made this decision and what I had to get comfortable with is the idea that maybe I will get to FI faster. Maybe I’ll get there slower but that actually doesn’t matter if I get there faster or slower because this isn’t a race and when we’re in this position where we’re just a few years away, we’re in an incredible financial position to explore. And I think about when I was deciding to walk the Camino and this overwhelming sense of … I felt compelled to do something different because I felt like I had this freedom that most people dream of. I had no man, no kids, and no debt and I felt like I needed to do something with that because if I didn’t, it just seemed like it was such a wasted opportunity and I think a lot more of us are in that same position and we don’t even recognize that that’s where we are.
So, that’s why I like sharing my story, even though it’s a little bit messy and there’s a lot … I’m in the messy middle of it right now, but I still feel strongly that I don’t regret my decision at all. I still feel that I made the right decision and I’m excited at the opportunities that are popping up along the way.

Mindy:
I have several comments here. First, I think it’s all great. Like, “Yay, yay, yay, yay, yay,” but you just said, “I’m in the messy middle,” and I know there’s people that are listening that are saying, “Oh, I hate my job. I want to quit.” You can quit when you have a cushion. You can quit when you’re in the messy middle with a plan. It’s not the most financially advantageous thing to do to quit because you’ve discovered financial independence and you’ve decided you’re going to retire early so I’ll just start now. No. You really should get a cushion and be in a position where you can make the moves out of … What’s the opposite of making moves out of desperation? Making moves out of confidence. “Oh, I quit my job and now, I just realize I don’t have any money. I have to scramble to get a job.”

Diania:
It’s better to stay in the job that really, really sucks but is paying you money while you are making strategic plans. And I think so many people focus on the RE part of FIRE. They don’t really focus on the FI part of FIRE. And back to that death march to FI thing, you don’t really focus on what you’re going to be doing after the fact. So, make a solid plan.
But I love that you just didn’t wait until the end. Carl worked way too long. Once he quit, he’s like, “Wow. I should have done that a long time ago.” I’m like, “Yeah. Wow! Too bad you don’t have a wife telling you to do that a long time ago, either.”

Scott:
Well, if you have a weak financial position, you’re handing over all of that power to your boss. You’re likely already optimized in financial front in terms of income. Many people choose a job that has the best combination of pay and benefits for their life situation that they can and they spend a long time, years and years and years in college and during a course of a career, optimizing for that situation. So, it can be very hard to change your income dramatically in the same type of career trajectory with that. And if you spend everything you have or more than what you have, which Diania, you were doing prior to looking at your credit report, at those five, six years ago, then you have no choice. You are completely stuck and you cannot take all those chances and make those asks.
But as your financial position improves, all of the power begins creeping back in your direction because once you have the ability to say, “No. I don’t need the job at all anymore, because I can take another job for less pay or more flexible hours or start these businesses,” that power is accruing gradually to you over six years and it’s not an event. It’s a continuum and it’s bit by bit by bit. It’s just many people or most, I would say, that we come across, really view it as an event. I’m going to get to this number at this point in time and then this is going to happen and, in your case, I think you see it for the continuum that it is and decided to jump ship earlier as you’re … And it’s who knows what that timeline is? You can’t plot this out in an Excel chart but you can know it and see it and feel it as your position is strengthening over a five, six, seven year period.

Diania:
Yeah. Absolutely. And I’ll say that it still feels like a big risk but it feels like a calculated risk. It’s not like I just quit and I didn’t … I still had some income coming in. I have a plan for economy. I can see how that’s going to lead me to other sources of income. And so, I think if I didn’t have those things brewing on the periphery of my career, not just from a financials perspective but a lot of us on our path, we’ve got strong work ethics. We want to do things with our time. And so, I think it would have been hard for my mental health to not have anything to do, to just quit my job and not have these kind of projects on the side.
So, that was another thing that I think really helped me because I created something and I had something that really contributed to my sense of identity outside of my career, it was a lot easier to leave. I think prior to that, a lot of my identity and ego was, I’ve got all these fancy clients and I have an office in the Empire State Building and I’m making a six-figure salary. I really needed to detach from that, I think, to be able to move towards something else.

Mindy:
That is a very important point that I see a lot of people making after they have left the job. I’m still wrapped up in the job and I haven’t thought about how to detach myself from that. And back to your point earlier, just because you want to be there doesn’t mean that they want you there anymore. They could let you go and then you’re not able to separate yourself from this job that just cast you aside.
So, having something on the side that is your own thing that is so important and … I just can’t stress it enough. You got to have something to do before you leave your job. Even as crappy as your job is, you have to have something that fulfills you and it doesn’t have to generate income if you’re financially independent. It’s nice if it does. I mean, who doesn’t want more money but it’s just, you have to have something to do. So, here’s a … You said that there are job opportunities that are popping up from time to time. Is there a job that could pop up that would make you say, “I want to go back and work for somebody”?

Diania:
Hmm. It’s a good question. I had someone ask me the other day, actually, when I was presenting at CampFI, and they said, “So, my career is in brand extension and licensing,” which, if you think about certain products like Welch’s Fruit Snacks, for instance. That’s a licensed product, so Welch’s doesn’t make it. Another company literally does all of the work and then pays a royalty back to Welch’s. And I worked at an agency for a long time where I sat in the middle and negotiated those deals.
And so, I think if something popped up within that realm, that was a really interesting brand that I knew I could do a really good job on. I think I would entertain some kind of consulting in that sense. And I do have some things cross my desk from time to time in that sense, but what I really realized is, it’s about the people. I think I could make any job fun or worthwhile or satisfying if I’m surrounded by people that inspire me. So, it’s much less about the work that I would be doing. I’m really interested in the people that I could potentially work with.

Mindy:
I like that you brought up consultant because I think there’s kind of this either/or black and white, you either work or you don’t work and you either work full time or you don’t work at all. And consultancy can be a really great way to bridge the gap between, I’m not quite FI yet. I have a comfortable cushion, but I want to, if something interesting popped up. Carl has always said he would go back to work on a very short-term basis if there was an interesting project that came up and just … He has never seen anything interesting. I also don’t think he’s really looking that hard, which is fine. He’s a wife FI. That’s his phrase.
Diania, this has been a super fun talk with you today. I really appreciate you sharing your story with us and with our listeners but we’re not done yet. We still have to get to our famous four questions. Are you ready?

Diania:
Oh, let’s do it.

Mindy:
What is your favorite finance book?

Diania:
It has to be The Simple Path to Wealth. When I was getting into investing, it so intimidated me and I had been reading a lot about it and still was intimidated by it, and that book was really the first thing that I read that I thought, “Man, I can do this. It doesn’t have to be that complicated.” So, yeah. Simple path to wealth is really the book that I recommend to anyone who has questions about investing.

Scott:
All right. We love that one and have had J.L. Collins here on the Money Show twice now to talk about his approach to index fund investing and all that kind of stuff. What was your biggest money mistake?

Diania:
I would say getting into that credit card debt and really just living outside my means and not paying attention. I really think it all starts with awareness. And so the fact that I was not paying attention to where my money was going was probably my biggest mistake. I think if I would have been more aware, I wouldn’t have gone into such a deep hole.

Mindy:
I really like that. It starts with awareness. Yep. Absolutely. What is your best piece of advice for people who are just starting out?

Diania:
Well, kind of circling back to the awareness, I know that when it comes to money and getting a hold on where you stand financially, there’s a lot of shame that’s tied up in that for a lot of people. And I know. I was there, too. And this phrase that I heard, I feel like I heard it or I made it up. I don’t know where I got this from, but let your curiosity be bigger than your fear. It’s like a mantra that I’ve had to say to myself over and over as I’ve done all of these hard things, starting with getting out of debt. I just let myself be curious about what my money situation looked like rather than being so fearful where I didn’t want to look, which is how I spent most of my 20s. So, I think if you can let your curiosity be bigger than your fear, it’s going to help you build the awareness that you need to get started.

Scott:
Love it. Okay. This is the most difficult question of the famous four. What is your favorite joke to tell at parties?

Diania:
This is a funny question to me, because I used to do standup comedy and well, all of my jokes were really raunchy and you guys told me I’m not allowed to curse on this show, so I have to table all of that. But one thing that I actually, a joke that I get to say every day, I have a very strange spelling to my name that you guys commented on at the beginning of the show. This is literally a conversation that I get to have every day.
So, I have a number of jokes about my name and one of the things I like to say is that I find it pretty ironic that there is a silent I in the name of someone who literally never shuts up. Like, how does that make any sense? So, that’s a … I also tell people that it’s my mom’s ultimate revenge for 30 hours of labor that she just threw an extra I in there for no good reason. Yeah. So, my jokes revolve around my name.

Scott:
All right. I like those. That’s awesome. Mindy really appreciated those as well.

Mindy:
I like that. Okay. Diania, where can people find out more about you?

Diania:
Yeah. So, you can go to economeconference.com and EconoMe’s actually spelled, going back to misspellings, EconoMe’s spelled with an M-E, not an M-Y at the end. So, economeconference.com. You can check out our amazing speaker lineup for the event this November. You can check all the videos from the speeches last year on our YouTube channel. Just search for EconoMe conference. Tickets are available now. And we actually have a discount code for listeners of this show, if you use the code BIGGERPOCKETS, all caps, one word, you get a 10% discount on tickets.

Scott:
All right. And we will link to all of that on the show notes here at biggerpockets.com/moneyshow215 and then the link that Diania just mentioned is economeconference.com. That’s EconoMe, but instead of a Y, you have an E, conference.com.

Mindy:
Yeah. And we will link to all of those in our stow notes, like Scott said. Diania, thank you so much for sharing your story today. I think this has lessons for people to learn in a lot of different ways and I think a lot of people are going to get enormous value out of different parts of your story. So, thank you so much for your time today. We really appreciate it.

Diania:
Well, thanks so much for having me.

Mindy:
We’ll talk to you soon. Okay. Scott, that was Diania Merriam. What did you think of her show?

Scott:
I thought it was a fun episode. I think she’s got a very interesting story there and I think, as I kind of observed in the middle of the show there, I think she’s pulling all four of the levers that I wish more people would choose to act on, according to their station and where they are in the FI journey at the appropriate moments. She started by spending less, which was the best lever for her to pull early in her journey. She then focused on increasing income, which was a path available to her given that she’s a sales person or was a sales person. She then formulated an investing approach, which she took for granted but has a very advanced and sophisticated investing approach ala The Simple Path to Wealth with index funds and done through a cascade of retirement accounts that we’ve discussed in previous shows. And then, as her position improved gradually, she began using that position to fund key lifestyle memories that she wanted to achieve and now is using it to give her the option to start businesses and have a truly scalable career in the here and now even before reaching some formulaic definition of FI.
So, I thought it was really good, good use of those four levers at the appropriate times in her journey and I think she did a really strong job with it. And I think she’s happy and excited, you can see it, about what she’s up to right now, which I think is wonderful.

Mindy:
Yes. You know what, Scott? I really like that comment that you made. She pulled them at the appropriate time. It is not an appropriate time to start a business when you are mired in debt and barely covering your bills every month or not even covering your bills every month. It is an appropriate time to take a chance. I don’t even want to call it a risk because she had a cushion available to her that enabled her to take this chance, but spending less opens up so many more options to you than really any of those other levers in my opinion, especially towards the start of your journey.
If you can get your spending under control, if you can reduce your spending, you just have so many more options because you have, like you said, if you have a 50% savings rate, you are earning a year and banking a year every single year. So, basically you’re earning twice what you need, whereas if you have a 10% savings rate, it takes you 10 years to save up one year of expenses. That just, you have a never-ending FI journey because you won’t have enough money … I mean, in 10 years, I’m really stumbling over my words, but you know what I’m saying.

Scott:
She quoted Mr. Money Mustache on the show and said that that was an influence on her and Mr. Money Mustache was an enormous influence on me. Mr. Money Mustache was on Advance Guide Money on episode 001 for us, the very first one, and is only an audio recording. We don’t have a video if you’re someone who likes to watch on YouTube, but it’s a fantastic episode.
I don’t know if we mentioned this in that show but one of his blog posts is called The Shockingly Simple Math Behind Early Retirement and that might be a good thing … I think we can link to that in the show notes at biggerpockets.com/moneyshow215, but Diania is clearly quoting a principle from that post which is, “Hey, if I invest at a certain rate of return and I have a certain savings rate, it will take me this many years to retire given average long-term returns and how the market is performed.” And you can see that, at a 10% savings rate, the time to retirement is something like 55 years. Is that right? Am I calculating that correctly?
And I know that, at a 50% savings rate, your timeline compresses to something like 17 years and at 90% savings, it goes down to three or four years, and so you can boil it down to that simple number. What percentage of your after-tax take-home pay are you able to invest and build out a power curve or a table that tells you exactly how long it will take. And you can see, okay, so 10 years is 51 years to retirement. That means you can start at 20 and you save 10% of your saving, a 10% savings rate invested at 7% after inflation. So, a 10% return minus 3% inflation. It will take you 51 years to reach the 4% rule with traditional retirement. But if you can up that to 50%, it goes to 17 years and if you can get it to 85%, it’s four years. And so, what we’re squabbling over in the early part of the show. Squabbling’s the wrong word but what we were discussing is eking out a few more years or advancing at a few more years can be detrimental if you go beyond a certain extreme point.
But we’re talking about this from a position that is already extreme but we’re saving 50% or more of our salary and we’re debating whether we should go to 55 or 60 or 65. And if you can get that mentality in there, where if I can get really strong, then I can afford to pull back and enjoy life now and still have a ridiculously strong financial position with these opportunities multiplying in front of me. That’s the position to get yourself in and that’s the position that Diania found herself in and I think is truly maximizing here.

Mindy:
Yeah. If you haven’t read that article, it is so eye-opening and the graph is really, really powerful. They’re like, “Oh, if I just save a little bit more. If I spend a little bit less, I have so many fewer years that I have to work in order to be able to finance my retirement.” The numbers don’t lie. Math is always the same. Two plus two is always four, and investing 64% of your income you can retire in 10.9 years always and I’m just taking that from Mr. Money Mustache’s actual article, but it’s really-

Scott:
Always, over every average long period, over the long-term average of a stock market, you can retire in about 10 years. So, of course, the market can tank and then that changes your plans there and we’ve experienced the bull market with this and so many people have gotten there sooner, but that’s the … And we’ve discussed the math behind why that’s an appropriate number, even if the market does tank the day after you retire and we’ve discussed that at length and nerded really out on that topic with Michael Kitces on another episode on the Advance Guide Money Podcast, which I will look up here in one second.

Mindy:
I think he was episode 120, but yeah, super nerded out with him. And Bill Bengen was episode 153. We nerded out with him as well. He is the author, the inventor of the 4% rule. Michael Kitces is episode 120 and in that episode, he casually mentions, “Oh, Bill Bengen. I have never heard him referred to as Bill Bengen until Michael called him Bill.” Everybody else I know calls him William, because that’s how he published his article, but original article. Very interesting guy and the numbers really don’t lie. How many people have we talked to, “Where does your journey with money begin?” “Oh, I was in super debt and then I paid it off and I started investing and I got to FI in 10 years. I got to FI in nine-and-a-half years. I got to FI in 11 years.” 10 is kind of the average when people start putting their minds to it.

Scott:
Yeah. I think that’s right. It probably takes most people around at least 10 years to really complete this journey, unless of course they house hack in which case, they get there much faster.

Mindy:
And if you’d like to learn more, we have a book on biggerpockets.com. Is it biggerpockets.com/househack?

Scott:
Something like that. We’ll link to the house hacking book in the show notes as well.

Mindy:
Yeah, and I’ve got to look it up to see if that works. Oh, that sure is it. Biggerpockets.com/househack is a link to Craig Curelop’s book, The House Hacking Strategy. Okay, Scott. Should we get out of here?

Scott:
Let’s do it.

Mindy:
From episode 215 of the Advance Guide Money Podcast, he is Scott Trench and I am Mindy Jensen saying, “Toodle pip.”

 

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