It has been a minute since I have given an update for all the new followers to the account. Here we go.
My name is Travis, I am 28 years old, and I am the man behind the account @theyoungretireeby33
I started this account a little over a year and a half ago for the original purpose of holding myself accountable and documenting my journey to reach financial independence.
My original content was focused around three things. Money. Mindset. Mission. I started following the financial independence community and it was amazing to see what everyone was doing and the information they were sharing to help others. I wanted to share my story and thought if I could help at least one person then it would be worth my time.
It has been a long journey since the beginning. I have gone from my first ever home purchase (house hack of course) to now owning a profitable short term rental business that is on track to do roughly $250k in gross revenue this year.
What is my mission? To reach financial independence so I can spend my time doing what I want to do, when I want to do it, and with whomever.
How do I plan to hit financial independence? Real estate and stock investment (dollar cost averaging). For real estate, mainly short term rentals and house hacking.
How close am I to financial independence? I could technically quit my W2 today if I wanted to, but it is the main thing fueling the fire to continue purchasing more real estate.
In my free time I am an avid golfer and love to travel. I love looking at problems and figuring out how to solve them with the least amount of effort. Part of my industrial engineering background by trade I guess.
Welcome to my page and I look forward to doing my best to add value for you!
What if I told you life was pretty simple if you want to become financially independent? Would you believe me? What if I told you by eliminating two things you could exponentially accelerate your path to financial independence? Would you be skeptical and not believe what I am saying? I know I would for sure be skeptical to listen to anyone who told me if I did two things I would be able to become financially free at a much younger age.
Well my friends, you are in luck. Time to share the secret sauce.
What’s The Secret Sauce?
Okay, before sharing the secret sauce let me make one thing clear. These things aren’t secret. I did not come up with these by myself. This has been talked about in many financial independence books and podcasts well before I started this blog or TheYoungRetireeBy33 Instagram page.
Now for the secret sauce. Figure out what your two largest expenses are in your monthly budget and ATTACK THEM! That is right. It is that simple.
Do you know what your two largest monthly expenses are? If you don’t know what those expenses are, take 30 minutes right now to figure that out. Let me give you a little help because many studies have been done about this.
For the majority of people (90%+) their two largest expenses are housing and transportation. There is a chance food expenses are higher than transportation for some, but typically largest expenses are housing and transportation.
Cool, I Know My Two Largest Expenses, Now What?
Good, have them figured out? Now determine how to eliminate or significantly reduce both of these!
How to eliminate housing expense? Ah, I thought you would never ask 🙂 house hacking is by far the single greatest thing one could do to fast track your way to financial independence. What is house hacking? I also thought you would never ask. At a high level, house hacking is renting out portions of your home (single family or multi family) while living there. To read a complete breakdown of different ways to house hack, checkout this article I wrote a few months back. Want to get a full breakdown of how to house hack from beginning to end? I have teamed up with @househackingsuccess to help get the word out about the incredible course they have put together to walk a beginner through how to house hack. If you are interested in this course, click the link here.
How To Eliminate Transportation Or Food Costs
The next biggest expense on a monthly basis for individuals are either transportation or food costs.
Why transportation? People love lifestyle creep. The second someone gets a raise at their day job, they have already figured out a way to spend it. A lot of times this comes in purchasing a brand new car and taking on a massive monthly car payment. I have heard and talked to people my age who took on a $600 a month car payment because they felt like they had earned driving that nice new car. I usually don’t give them my two cents because I don’t want them to feel like they didn’t deserve the car. Do you really need that nice new car? You will be taking on a huge car payment and also a higher insurance bill. Don’t forget, there are many more costs to owning a car than simply the price tag.
How do I attack my transportation costs? Don’t purchase that brand new car. Drive used cars that you can pay for in cash. When you get a raise at work, invest the excess cash. Trust me, you don’t need that new car. It can wait till later down the road.
Why food? People are lazy by nature. People want to always get out and about. This typically means going out to eat more often than we should. I mean, who wants to sit at home and cook every day. Interestingly, this pandemic has made things very interesting for many individuals who would previously go out to eat all the time. I feel pretty confident hundreds of thousands of people are going to be shocked at how much money they have saved during the pandemic by not going out to eat all the time. It’s a balancing act though.
How do I attack my food costs? As humans we enjoy paying for convenience. For the purposes of food that means eating out versus cooking at home. The problem becomes the costs to eat out every meal add up quick while eating at home is much cheaper. This isn’t to say never go out and enjoy a happy hour or going out to eat with your friends every once in a while. That is not the intent of attacking food costs. The intent is to think a bit more about how much you want to go out to eat versus eating in. Simple concept but much easier said than done.
Key Takeaways:
Want to become financially independent at a young age? Figure out how to attack your two largest expenses.
Take time now to figure out what your two largest monthly expenses are each month. Was I right that they are more than likely housing and transportation or food?
Don’t buy that new car just because you received a raise at work. Don’t go out to eat for every meal. Keep things simple.
When you’re in your late teens, early twenties, your credit is the last thing you are thinking about. If you are in school, that is priority number one, hanging out with your friends, girlfriend or boyfriend and enjoying life, and rightfully so! But taking baby steps to build your credit will go a long way. Your future self will thank you.
When you are young, it is easier to build
When you’re young and living at home, it is much easier to build your credit. You have fewer expenses and there is no reason to be in debt. Your debts should be immediately paid off (unless you have a car loan).
Why is it important?
Building your credit is important because later on in life when you apply for a car loan, line of credit or more importantly, your mortgage, it will be difficult to get accepted and get the best rates if you have no credit history.
Get a credit card
Hear me out first. If you have a part time job, have a savings account (even if small), you should apply for a credit card with a maximum limit of $500.
I was against credit cards when I was in my late teens. Having worked for a financial institution, I gained knowledge and I realized it was somewhat important to have one to start growing my credit.
Credit cards are not the problem; it’s one’s lack of knowledge on how they work, which is something I strongly feel should be taught in high school, but that is a story for another day.
Having a $500 maximum limit will allow you to make some small purchases. If used correctly and paid on time it will slowly build your credit score. If you are not working or struggle with money, do not apply for a credit card. Everyone’s financial situation is different.
In October 2017, my credit score was 832, which is considered very good. This did not happen overnight. It took time, patience and paying my bills on time.
Side Note
Even if you hate credit cards, they are needed to reserve and give a security deposit at hotels. During flights, if you need to buy food or gifts, the only accepted method of payment is via credit cards. Credit cards are not the issue. The issue is people don’t control themselves and they don’t understand how they work.
Get a cellphone plan
Another way to slowly build your credit is to have a monthly cellphone plan. The monthly amount is not important but what truly is is having regular monthly payments withdrawn from your account. This will slowly grow your credit and show you can make consistent monthly payments.
Apply for a line of credit, even if you do not need one
When you really need money, banks may be reluctant to give you the loan. The key is to apply for a line of credit when you do not need it. When the moment arises that you truly need one, you will already have it. The same can be said for a credit card. Apply for one when you do not need it.
Build good habits
Practice the following spending habits towards building a good credit:
Pay 100% of your credit card debt as soon as possible. My trick is I pay my credit card every two weeks. It allows me to keep track of my expenses and know where I spent my money;
Avoid using more than 30% of your credit limit. Most experts recommend it (on a $500 limit, you should not use more than $150);;
Check your monthly statement. Even if you paid your full amount, check your statement for any errors.
Summary
It is very difficult to apply for a mortgage without a credit history. One of the ways to build your credit is to have a credit card (with a small limit) and pay its balance in full monthly;
If you buy or lease a car, make sure you are able to afford the payments;
With time and a good track record, your credit score will increase. When the time comes and you need a mortgage or a large loan, the baby steps you took to building your credit will pay off.
What do you think? Leave your comments below.
Also, if you haven’t already, go checkout their blog here!
