Practical Ways To Become Financially Independent

Hey, it's Mark Konoski, land geek. Your favorite niche real estate website, thelandgeek.com and on this week's podcast, we've got someone. I'll be honest, Scott. I'm not going to be nice, okay? She's young, she's bright, she's figured out really early. It takes most of us a long time to figure it out. She's figured it out. All right, fine, I'll be nice. But I'm really excited to talk to our guest about money, passive income, real estate, all types of interesting topics. But I'd be remiss if I'd been properly introduced by co hosts. You know him, you love him. The brain, the professor, your finance school sherpa. Scott Todd from scotttodd.net landmodo.com learn anything about anything. Investorninjas.com Scott Todd, how are things?

Mark the good. How are you?

I'm good, I'm good. Let's talk to the money honey, Rachel Richards. By the way, it feels weird to say honey at the age, but I'm going to say it anyways because that's your website, moneyhoneyrachel.com at the age of 27, Rachel quit her job and retired, living off of over $15,000 per month in passive income, she's made a name for herself in the personal finance realm. The best selling author of Money Honey and Passive Income Aggressive Retirement, she's been featured on the Penny Hoarder in the New York Times and contracted to speak at colleges. She's 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 successfully done what no one has done before, made the topic of money management fun, entertaining and simple. Rachel Richards, welcome.

Thank you, Mark. I'm excited to be here.

We're so excited you're here. So let's just rewind the tape. And how did you just figure this out so young?

Well, I've always been a finance nerd, so that's most of it right there. But I remember in sixth grade I came across this book and it was the Motley Fool's guide for teens. How to have more money than your parents ever dreamed of. Something like that. And, and I was like, well, that sounds cool. Who doesn't want to have more money than their parents? So I started reading it during summer camp. So, yeah, finance nerd from a young age. And it really taught me a lot about the importance of starting at a young age. So I really took it seriously earlier than a lot of my peers.

Wow.

So at what point did you start building up passive income and which model did you use?

I started my first passive income streams in 2017. So I was 24 years old at the time and my initial approach to passive income was through rental property. I read Rich dad, Poor dad in high school. That was the first thing that turned me onto real estate. And I decided right then and there that's going to be my path to financial independence. I didn't know at the time though that there are so many other types of passive income streams and I have a lot of those now. But in 2017, a couple of things happened. My husband and I invested in our first duplex in Louisville, Kentucky and I self published my first best selling book, Money Honey. So I had these two income streams, rental income and royalty income. And we focused on growing those as much as we possibly could over the next few years. So Fast forward to 2019. That's when I was able to quit my job and really become financially independent, making over 15 grand per month.

Wow.

Wow. Scott's hard.

Man, oh man. If I was there like you Mark, if we were there when we were 27. But no, we weren't there, Mark. We were following the tried and true method of go get a job, go get a good education, go get a job for a company. That model's broken.

Yeah. So you know, I'm going to introduce my daughter who's 16, to Rachel. We're going to call her Aunt Rachel. So Aunt Rachel, what do you tell my 16 year old that rolled her eyes at me has an attitude like how do I convince her? Like there's another way. You know, I do want her to go to college, of course, but it's not a social education. I want it for maturity, learning how to be independent. The social aspect of it, the networking, I mean, should I want her to get a bad job out of college? Maybe so she has some perspective. But then what advice would you give her?

Yeah, I think there's a lot, I think to create the motivation and the urgency. It's really showing her what life could look like in 20 or 30 years. Right. Life could look like this where you have passive income streams and you've worked to invest in real estate or whatever and now you get to travel and you don't have to be constrained financially and you don't have to be working at a 9 to 5 job. Or it could look like this where you are dependent on your full time income at a job and that a Lot of the times means that somebody is dictating when and where and how you do your work. And there's no right or wrong answer. By the way, some people love their careers and they love their jobs, and they love the way that they get paid on salary. And I think that's great. They. So it just comes down to her deciding what is more attractive to her and what kind of lifestyle does she want. Now, one thing I will talk about is that there's this nest egg theory. And so the way that we've traditionally approached retirement, I call the nest egg theory, you work for 40 years at a 9 to 5 job, you save money, you invest it in the stock market, and you hope to accumulate enough by age 65 that you can retire and live off of your nest egg for the rest of your life. That used to work well. But the thing is, times have changed, and the way we've approached retirement really hasn't changed enough to keep up. So, for example, there's a lot of things that make that nearly impossible now. There's really not a lot of pensions anymore, so we can't rely on that. The Social Security Trust Fund is projected to be fully depleted by the year 2035. So that's not even necessarily something my generation and Gen Z can rely on. Also, the costs of college have ballooned, placing an enormous burden on my generation. And there's all these things that just make it really, really difficult to do the nest egg theory anymore. And studies show that millennials will need to accumulate at least $2 million by age 65 in order to retire. Now, I don't know about you guys, but I just don't know many multimillionaires. So the thought of trying to save $2 million feels very overwhelming and daunting. So there's a lot working against people now when they try to approach retirement that way. And that's why I much prefer passive income. Passive income, the way I define it, is that it's money that is earned with little to no ongoing effort. Okay? It's no get rich quick scheme. As you guys know, it does take time or money to create passive income. But the epiphany I had a few years ago is that once your passive income exceeds your living expenses, you're retired, you're financially independent. And to me, I thought it felt a lot easier to try to generate 5 or 6 or $8,000 per month in passive income than it did to try to save $2 million over my lifetime. So that's what I started going for. And that's what I think young people should really take away from this, is that I think passive income is a much more attainable way of achieving early retirement.

Well, you are preaching to the choir.

Yes, for sure.

Scott, what are your thoughts?

I mean, you're dead on. I mean, because like if you have to have $2 million in the bank to retire, well, I think that's a wrong approach to go do it as well. I think that what you have to have is you have to have income that produces the equivalent of having $2 million in the bank account. There's a big difference there. And so you can, you can achieve what you want to many different ways. You can save up the $2 million and say, okay, I'm retired. Or you can have. Generate assets or buy assets that will generate the income that's equivalent to having the $2 million in. I think I'll go for that one over the saving of the $2 million of cash. And then, okay, I'm done now. I don't think that's a fair piece. And look, I think that every generation, okay, maybe not my parents generation, they're probably the last ones. But Mark, I think even us, you know, I've never, I've always been told, don't count on Social Security either. So, you know, I don't count on it. If I get it, great, I'll get it. I don't think I'll get it. I'm paying it to it, so I better get something. But at the same time, I don't know what we're going to get. And the other thing that just I think everybody should be concerned about is are your taxes going to be more in the future than they are today? You better believe they are. At least I think that they will be. So you need to have income because will they take that $2 million lump sum one day and go, oh, we found some money. You're rich now. Rich. So you gotta, you just. I think income's a much better way to do it than just saving some bulk number. And you're right. Then you can put on your retirement hat. Do you have one? Do you have a retirement hat?

I don't have a retirement hat.

Rachel, you have a retirement hat. I'm asking Rachel if she has a retirement hat.

I suppose I do, but a lot of people say I'm not retired because I still work. And that's very true. I love my business and I love teaching people about money. So it's more so I'm financially independent rather than retired.

Yeah, Scott, you're not retiring. We're not retiring.

You're not going to fly retirement hats, man. We have them. We need to get Rachel retirement hat.

But I don't ever want to work. Oh, I want that. Yeah, yeah.

That's what I'm talking about.

Yeah, No, I know. Okay, but let's just pick on Rachel for a second and let's just break down exactly what she did by the age of 27. Okay, so she's generating $15,000 a month in passive income with little to no effort. But it took some effort. But if we took that $15,000 a month, that's $180,000 a year. And Rachel says, okay, how much do I need to save just to put in the bank at 2% interest to throw off the equivalent amount? I don't want to touch the principal. I'm just going to throw off an interest income, the equivalent amount of $180,000 a year at 2% interest. She would have saved $9 million to do that. How long would it take everyone listening to save $9 million to earn what Rachel's earning on a passive income basis? It would take arguably a long time. You'd have to take a lot of risk. And then what we're not really talking about, Rachel, is time. The fact that you smart cutted it so early, you really have the trifecta. Because what we all want in life is we want to solve our money problems, we want to solve our time problems, but we want to do it in a compressed time where we have our health. And now you and your husband can go and live life in any way you want. There's literally nothing stopping it. When I look at my parents, they have money, they have time, but they don't have health now to go do the things that they've always wanted to do. They're constrained. Scott and I, if we were looking at the middle approach, right, we're middle age. Well, we have money, we have health, but typically we wouldn't have time. If Scott was still at his Fortune 50 job, I was working my investment banking job, we would still be hustling because we've got kids that we got to pay for college or this or that, that kind of period in your life. Young people have no money, all the health, and they might have time, they might not, depending on their track. So you have really the trifecta. So now the question is, Rachel, what do people, when they say, okay, I want to be Rachel Richards, how do you advise them? What are some of the more Practical steps, you advise?

Yes, and I'm glad you asked because first of all, with the money thing, a lot of people assume that I had a ton of money going into this, and I didn't. I'm not a trust fund baby. I never made six figures in a job or a career. In fact, my first job out of college, I was making $36,000. And I grew it a little bit, but I never made nearly six figures. So the first thing that I did well and that other people can do well is being very, very disciplined and living a frugal lifestyle. When I was making 36 grand, I was finding a way to save half of my income. So I was living off something like $1,500 a month. It did require a lot of sacrifice. Now back then though, I was missing one key thing. I was so focused on decreasing my expenses and being so restrictive in that way that I forgot there's a whole nother way to save more money. You can also increase your income. And even if I didn't have passive income streams in place, then I could have done things like going promotion or a raise, or getting a part time job or, you know, driving Uber or Lyft on the weekend. There's tons of ways you can increase your income now. So I wasn't thinking about it then. I teach that now. Like, hey, don't forget, there's two ways to save more money. You can decrease your expenses and increase your income. And the beautiful thing about the latter is that there's no cap on how much money you can make in a year. There's nothing stopping you from making more money. And the beautiful thing is you don't have to give up your quality of life or have to forego something in order to increase your income. You can kind of have it all. So now when I think about, oh, do I want to buy $200 of new clothes? I'm not thinking, well, where can I give up $200 elsewhere in my budget? I'm thinking, how can I make $200 extra so that I can afford this? And when you look at it that way, you can really have the best of both worlds. So in shorter terms, it's really going from a scarcity mindset to an abundant mindset and knowing you can have the best of both worlds if you focus more on increasing your income. So that's the first tip that I would give to young people. Another thing is just that I thought you had to have a ton of money to invest in real estate. So I held myself back for years from getting started because I thought, you know, I don't have enough money, I don't have enough experience, I don't have enough knowledge. And those were all limiting beliefs at the time. If I knew then what I know now, I could have gotten started at even a younger age with methods like house hacking and the burst strategy and wholesaling. I could have done any of those to get started sooner. Now don't get me wrong, Getting started at 24 is still pretty good. But those were the types of things I was telling myself and I procrastinated for years because of that. So I would encourage young people to look into those methods too and just to realize that you don't need to have a ton of money to start creating passive income.

I love it. Todd.

The thing is that our brains are pretty powerful Mark. If we convince ourselves that we can't do something because then we can't do it. The old saying, if you think you can, you can. If you think you can't, you're right either way. And that's the thing is when you start to think like oh well I can't do this because well then you've it's over so why not figure out how to do it? And I think that that's a, that's a more powerful message because when you know that you can do it, if somebody else has done it before you, well then you can do it as well. The only difference between you and them is that they, they have drive and motivation and you better figure out how to get that same drive and motivation if you want to do what they did too. Because anybody can do anything.

Yeah, I think there's only three things people really lack when they start off on a new venture. It's going to be belief traits and skill. Where the traits. Are you the kind of person do you have the traits to do this? So for example we could look at Rachel when she started very young, she started learning personal finance very young. She had the traits, she had that curiosity of passive income early on in probably the patience to see it through. She was the kind of person that could just would be a good fit for real estate right away then getting the skills. There's no excuse now not to find how to get the skills either you can get it for yourself even better. It's who not you know how if you're really going to grow big but you can get the skills. But I think what Scott, you brought on and Rachel you brought that first trait which is a little woo woo is the belief you have to believe that you can do it. And there's a great book I read a long time ago called the Talent Code. Scott, you read Talent Code?

Daniel Coyle, I did not know.

Rachel, you heard this book?

No, I haven't. I'll add it to my list, though.

So basically, this guy goes and he looks at like, you know, what are the ingredients of these people that go on and they beat the odds and they become professional, whatever, right? Well, it's typically, it's not that they have any more talent than anyone else. It's that they believe that they can do it. So someone from their neighborhood made it. So they saw it and they believed, oh, I know this guy. He's no different than me. If he can do it, I can do it. They had that belief then they were able to have, by some kind of luck or something else, a great coach in there to give them the skills then to develop those talents. And they had those, the traits they needed. They had persistence. They had really, that was kind of what it came down to is when other kids were struggling with these tougher levels, as they leveled up, they had the persistence. So, you know, it's just a very interesting way to sort of think about how to accomplish your goals. Go ahead, Rachel.

Yeah, I was just going to say, to add to that, there's, you also need to have the belief that there's multiple paths to success. So one thing that held me back and stunted my ability to create passive income is I thought I needed a 20% down payment in order to invest in real estate. So my thought process at the time was I don't have enough money, so I can't do this. Instead, I should have asked, how can I achieve this, given my constraints? How can I invest in real estate given that I don't have a 20% down payment? And if I had looked at it that way, then maybe I would have realized there are other avenues to investing. So that's just another thing to think about, is there are multiple paths to success.

Scott Todd it's funny, Mark, because when you ask different questions, you get different answers, right? If you just assume, well, it's 20%. But if you start asking, well, how does this happen? Just today, it's funny, just today, over the last couple days, I've been trying to get something closed, a transaction closed, and it's been at a standstill because of this little technicality. And I've been pushing, pushing, pushing. Today I took a different approach and I started asking a different question. Well, why not this or why doesn't it work this way? And guess what? All of a sudden, something triggered because you ask a different question a different way, and then the transaction starts to move again. So if you're not getting the answers that you like, ask a different question and you might get a different answer or ask somebody, well, how can this get done? If this, like, if I don't have this, what are my other options? And you'll be amazed because when you ask a different question, then there's always ways that you can get something done. Just got to ask a different question.

Yeah. So, speaking of questions, Rachel, what's the worst advice you see here given to millennials?

Oh, this is a good one. Yeah, there's a lot of advice that's given that I don't agree with. One of them, I'll be curious if you guys agree or disagree with this one is I hear all the time advice given to millennials who want to become entrepreneurs or investors or whatever. And the advice is, take a leap of faith and the net will appear. Meaning, quit your job, just do it and start your business. And I don't, I don't love that advice because the last place you want to be is operating out of a place of panic and desperation when you're building your business or trying to invest in real estate. And, and if you just quit your job and you don't have any other income coming in, you're going to be really pressured and panicked to make something happen quickly. And I don't think that's a healthy way to start a business. Now, some people operate under that and it lights a fire under them and it forces them to take action. And that's great. I just think for most people, the bet the better way to approach it is to start your side hustle or your business or your real estate investing on the side. And that's what I did. I was working full time in 2017, up until 2019. So was my husband. We were both working 40 to 50 hours per week. We were acquiring rental properties on the weekends, managing our tenants on the weekends, and I was writing my books in the evenings. So it's definitely some of the hardest I've ever worked in my life for a period of two years or so. But I'm really, really glad I did it that way because by 2019, I had more than fully replaced my full time income and I could quit knowing that I had the peace of mind of all these other income streams coming in. So the advice I would give somebody is to just Have a goal in terms of a monthly revenue that you want to get to before you quit your job. You don't necessarily have to fully replace your income, but have something coming in, have your proof of concept, and know that you can monetize something before you quit your job. So that's what I would say.

Well, it would be inauthentic to disagree with you because I did the exact same thing, except I was older. It took me 18 months for my land investing income to exceed my investment banking income. And then I quit. Unfortunately, Scott, Ty beat me. Took him 17 months and 3 days to replace his Fortune 50C suite income. But, yeah, I agree with you. I think some people you could pick, like, oh, Mark Zuckerberg dropped out of Harvard and he didn't have a job, and he started Facebook and he became a billionaire. Depending on your idea, and if you've got VC money coming in and you want to do that, do a startup, maybe you could do it. If you're real, real young, you can live on ramen. But otherwise, most people, I'd say 99% of people, should follow your advice. If you're a millennial, it's a way more joyful way to build up your wealth. What do you think, Scott? You want to disagree?

No, Mark, One of the things I would say is that when I had my corporate gig and I wanted out, I sat there for countless hours trying to think of a big business to start, something unique. And I would say, oh, well, the world doesn't have this or the world doesn't have that, or, oh, this is a good idea, but, oh, there's already one of these. And I would, I would go through this idea. Ideation process where I would think this way. And then I realized, like, you know what? It's not about having the next Facebook or the next Instagram. That, that is, that is a lie that you tell yourself. The best thing to do is to. To do what Tony Robbins said. Find someone who's done what you want or lives the lifestyle that you want and kind of following what they did. Right. Because success leaves clues. So find somebody that you want to mirror, find out what they're doing, learn how they're doing it, and then execute and do it too. And then you want to go create the next Facebook, no problem. But the first thing to do is to do something that someone else has done and that you can replicate just to get some traction and then go create the next Facebook, if that's what you want to do.

Yes. I was just going to say on that note, passive income, the passive income streams you create do not have to be something you're passionate about. I've always viewed passive income as a means to an end. So with real estate, for example, I've never wanted to build a huge empire. I've never wanted to have 200 or 500 units. And so the last property I bought was in 2018. Once we reached this $10,000 a month mark in passive income income. And a lot of people ask us, well, why aren't you still acquiring more? You could be have a huge empire by now. And I've always said it was a means to an end for us. I'm not passionate enough about real estate to build this huge portfolio. That's not what I want to do. But it was a means to an end so that when we have that income coming in, we can now do anything else we want. So I think it helps to look at that way too. You don't have to be in love with the passive income stream you're building, but. But it's what's going to give you financial independence so that then you can pursue your dreams and your passions and your hobbies.

I love it. I love it. Well, Rachel, your mentorship has been great, but now we're at that point we're going to put you on the spot and ask you for your tip of the week. A website resource, a book, something else actionable for the art of passive income listeners to improve their businesses, improve their lives. What do you got?

Okay, this is so hard because I can name so many books and websites and I love to read, but one of my all time favorite books is the Millionaire Fast Lane by MJ DeMarco. Have you all read that one?

I've heard it. I've heard of it.

You read it, Scott, So good. It really helped shift my mindset and to be able to see the world not from a consumer perspective, but a producer perspective and how entrepreneurship can help you build massive wealth. So just really an eye opening book. It also has a lot of really great income ideas. So highly recommend that one.

Millionaire Fast Lane. All right, maybe.

Is it the fast Lane millionaire? I always get it mixed up.

Fast lane millionaire.

Fast lane millionaire.

Yeah, yeah.

Fast lane millionaire.

Thank you.

Be wrong.

M.J. deMarco. They'll find it.

I'm gonna start a book called the Middle Lane Millionaire.

There you go.

What about the slow lane?

I don't. I want. No one wants to.

Slow lane. Middle lane. A little safer than the fast lane. More exciting than the slow lane. I Don't know.

The rocket ship millionaire.

Ooh, the rocket ship millionaire.

What's faster? The quantum elite.

There you go. All right, Scott Todd, what's your tip of the week Mark?

You're on TikTok, aren't you?

Of course, when I'm over, when I'm looking over my daughter's shoulder, I'm on it all the time.

All right, check out my tip of the week. It is Playhouse. So sounds kind of weird, right? Like, some of you are like, should I go to click on this Playhouse? So. And guess what it is TikTok for real estate.

Wow. Wow, that looks great. Yeah.

Okay, that's cool. Sign me up. Take my money.

Sign me up.

Yeah, there you go.

There you go.

I love TikTok, so I'm going to check that out.

Wow. Well, as good as a tip, both of you had really good tips. My tip is really actually going to move the needle in your life, which is. Learn more. And check out Rachel's books, her programs, the blog@moneyhoneyrachel.com moneyhoneyrachel.com and learn more. So today's podcast was sponsored by flight school. Go tolandgeek.com training learn how you can become like Rachel Richards and retired in three years. We'll teach you how to make passive income. 10, 15, $20,000 a month. Go up that mountain of land investing with Scott Todd Azure Sherpa. He'll take you up there quickly, safely, efficiently. He's done it thousands of times. And that tuition ain't going to cost you nothing. We guarantee it. You're going to make back your money 180 days or less. Just show us your work again. Go to landgeek.com training if you're getting value from podcasts, do us three little favors. Follow us, rate, review the podcast, send us a screenshot of that review. Supporthelandgeek.com, we're going to send you a signed copy of Dirt Rich, which is worth at least, I don't know, five bucks on eBay right now. At least signed copy, so do it. All right, Rachel Richards, Are we good?

Yes. Thank you. Thank you both so much. I love what you do, so keep it up.

Thank you. Scott Todd, are we good?

We're good, Mark.

All right, thanks, everybody. One, two, three.

Let's let freedom ring.

Yeah.

I thought we were getting out of here without doing it.

I know you're all excited.

Rachel liked it, though. In the call. In the call.

Now, look, I did like it when.

Money, Honey, Rachel likes it. You know, we're onto something onto something.

Then we'll keep. Keep going.

There you go. All right, thanks everybody. Thanks for listening to the Art of Passive Income Podcast. Start your journey at www.thelandgate.com and www.scotttard.net. rate and review the podcast and email supportthelandgeek.com your screenshot for a free Passive Income launch kit.