How She Retired at 27 (with Rachel Richards): Episode 339

At the age of 27, Rachel, a former Financial Advisor, quit her job and retired.  She is now living off over $15,000 per month in passive income.  Rachel has made a name for herself in the personal finance realm. She is the bestselling author of Money Honey and Passive Income, Aggressive Retirement. She has been featured on the Penny Hoarder and the New York Times and contracted to speak at colleges. She is a former financial advisor, and a real estate investor with almost 40 rental units.  Her valuable lessons have helped thousands of female millennials work their way out of financial despair. She has successfully done what no one has done before: made the topic of money management fun, entertaining, and simple.

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Takeaways

  • Rachel said that her first investment for passive income was a duplex for $100k. Her and her husband graduated college debt free, she sold knives and paid her way through school, and her husband used his military benefits to pay for school. Even when she made $36k a year, she was saving half her income and saving half. She really frugal and hustled to budget early on to buy that first duplex as that first passive income opportunity.
  • Decreasing your expenses isn’t the only way to increase your savings. This can result in a scarcity mindset.
  • 2 ways to increase your savings rates.
    • Decrease your expenses
      Increase your income
  • Theres no cap on how much money you can make to save more. But if you increase income by $400, rather than try to cut back by $400, you will be in less of a scarcity mindset.
  • Rachel said that her parents never really taught her about financial education and how to save and invest your money. She learned more of what not to do, and grew up thinking money caused stress and fear. She knew she didn’t want to grow up that way.
  • Rachel realized in high school that she didn’t want to struggle with money like her friends and family had. She realized what she did in those years would either set her up for wealth or poverty. So she did her research and made it her mission to escape the rat-race.
  • Do you have more time or more money? This question is so important, because it is what Rachel said you need to know before you begin the real estate investment strategy.
  • This is a great market to invest in because:
    • If you look at the number of houses built per decade, the number of houses from 2010-2020 was not enough. And now there’s a housing shortage that can’t keep up with demand.
    • Inflation is 7.5 or 8% right now. One of the best places to keep your money in times when inflation is high is real estate.
  • More time or more money? This question is so important, because it is what Rachel said you need to know before you begin the real estate investment strategy.
  • One thing Rachel recommends is to be willing to invest in markets outside the state you live in, where it’s more affordable and less competitive.
  • Rachel said she scaled from 0 to 38 investment properties in 2.5 years. She said they continued to live frugally. It’s a hard process, but they kept going. It was cash flowing $500/mo. It would have been so easy to upgrade cars, lives, etc. But they stayed disciplined to reinvest into their next property.
  • There’s debt that is a huge obstacle to achieving financial freedom: credit card debt should be paid down as quickly as possible. But Rachel said if you have debt on something that is cashflow positive, that is smart debt.
  • Cashflow vs. appreciation: Rachel said she always invests for cashflow. Investing so that the rental income covers the mortgage and all expenses, plus a cashflow every month.
  • Hire professionals. Sometimes we try to cut corners, but in the long run we end up spending more by not hiring pros in the fields we need.
  • Some of Rachel’s best tips for retiring early. There’s two ways to retire early:
    • Save up a huge nest egg and then live off of it.
    • Create passive income streams that generate the monthly income you need.
  • “Once your passive income exceeds your living expenses, you’re retired, you’re financially independent.”
  • If you have more time vs. money, look into creating:
    • Royalty stream: ex writing a book
    • Print on demand store
    • Launching an online course.
  • If you have more money vs. time, look into creating:
    • Portfolio income: Investing in the stock market
    • Putting 20% down on a rental property.
  • Fear can be motivating or paralyzing. Rachel said her mindset was always out of scarcity. She had to outgrow those old ways of thinking. It takes time and growth to overcome your childhood mindsets.
 

Highlights

  • (1:43) A little more about Rachel.
  • (2:38) How Rachel got started building passive income with so little money to start out.
  • (4:49) 2 ways to increase your savings rates.
  • (7:01) How Rachel started with financial education.
  • (8:29) Rachel’s turning point with money mindset.
  • (9:20) Rachel’s tips on how to get started in real estate investments.
  • (13:18) Where to find off market deals for real estate.
  • (14:05) How Rachel scaled from 0 to 38 investment properties: How to build your portfolio.
  • (17:05) Why Rachel’s real estate license helped her get paid to buy homes.
  • (18:55) Having debt… mortgage debt is not dumb.
  • (20:40) Cashflow vs. appreciation.
  • (22:55) How much cashflow Rachel is looking to do each month.
  • (25:20) Why you need to hire professionals. Don’t go with the cheapest solution.
  • (27:38) More of Rachel’s income streams.
  • (28:40) Some of Rachel’s best tips for retiring early.
  • (30:02) Examples of time vs. money income streams.
  • (31:01) How mindset played a role in Rachel’s journey.
  • (33:54) What Rachel’s doing to improve her money mindset.
  • (35:06) Buying things for yourself, and the mindset around that.
  • (36:13) What it means to Rachel to make an impact.
  • (38:59) Rachel’s two books!
  • (39:55) Where to connect with Rachel Richards.

Quotes

“Don’t let the lack of capital keep you from getting started”

“Prioritize function over anything”

“Debt allows your money to go so much further for you, and work so much harder for you.”
“I don’t know a single wealthy person who hasn’t used debt to their advantage”

“Hire professionals.”

“The best tip to retiring early is passive income.”

“Once your passive income exceeds your living expenses, you’re retired, you’re financially independent.”

“Passive income is no get rich quick scheme.”

 

Resources

Connect with Rachel:

Website: http://moneyhoneyrachel.com/passiveincome

Instagram: @moneyhoneyrachel

Rachel’s Books:

Money Honey by Rachel Richards

Passive Income Aggressive Retirement by Rachel Richards

Book Recommendations:

Motley Schools Guide for Teens

Watch Full Episode:

How She Retired at 27 (with Rachel Richards): Episode 339

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Hey! I’m Rachel. I’m a former Big Ten volleyball player turned entrepreneur and professional cheese taster (kidding–but that would be a sweet job).

I’m a Pinterest strategist for female entrepreneurs who are sick of struggling on Facebook & Instagram and want to automate their traffic and get more leads on autopilot. I’ve used Pinterest to increase my blog traffic by 34,000/month…for free!

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