Early Retirement by 30 with $20K/Month in (Actually) Passive Income

Mindy:
Welcome to the BiggerPockets Money podcast show number 317, where we interview Rachel Richards and talk about real estate and passive income and self-publishing, and just in general, being awesome and living your best life.

Rachel:
Wanted to achieve financial independence, so I could travel the world and I’m finally doing it. And I’m working while I do it and it’s so fun. I’m meeting people and I’m like, “Hey, what are you doing? How long are you here?” And I’m meeting other people who are retired and who are on a two-month trip because they’re retired and they’re in their 60s and 70s. And then when I tell them I’m doing the same thing, they’re like, “What, how on earth are you doing this?” And I’m like, “Oh, I own my own business and I can just work wherever I want. And I have financial freedom and that’s it.” People look at me like I’m absolutely crazy.

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

Scott:
What a bubbly introduction, Mindy. Thank you.

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

Scott:
That’s right. Whether you want to retire early and travel the world to Europe, Italy, and beyond, go on to make big time investments in assets real estate or start your own business, we’ll help you reach your financial goals and get money out of the way, so you can launch yourself towards those dreams.

Mindy:
Well, Scott, today we are talking to Rachel Richard. She is money-honey Rachel, and she is a passive income fanatic. She also makes me feel super lazy because she does just about everything there is to do out there. But she has a really fascinating story of becoming a financial advisor early in life. She was 21 when she started and then deciding that she wanted to do something else. She went through several things and now is out there living her best life with her own company, teaching women how to handle their money.

Scott:
Yeah, I think it’s a fantastic show. I think her story is incredible. We talk about the four levers of finance, spending less, earning more, creating assets and investing. And she went all out on all four of those levers, which is why she’s multimillionaire with hundreds of thousands of dollars in annual passive income by age 30 right now. So, fantastic story. I think you’re going to learn a lot and this is the reward of going all out on your financial journey early in life.

Mindy:
I could not agree more, Scott. She has a great story and I cannot wait to bring her in.

Mindy:
Rachel Richards, welcome to the BiggerPockets Money podcast. I’m so, excited to talk to you today.

Rachel:
Me, too. Thank you for having me.

Mindy:
I want to get into a lot of things, but before we do that, let’s introduce you to people who may not have heard of you, although who hasn’t heard of money-honey Rachel. So, let’s start with your financial journey, maybe around high school.

Rachel:
Okay, in high school, I was already a money nerd, proud of it, still am today. High school is when I first read Rich Dad, Poor Dad, and I had already read a bunch of finance books by then. So, I already knew I wanted to start investing in real estate, but that was the only passive income stream I knew of by then, so to me, it was my path out of the corporate environment. It was my path out of the rat race. I didn’t know that there were all these other passive income streams that I could pursue. So, that is what I started with and that was my goal back then. And after I graduated from high school, I went to college, started studying as a financial economics major and I became a financial advisor after that.

Scott:
Wow. Okay, so we’re done. Story is over.

Mindy:
How do you get somebody to listen to your advice when you are not 50 years old? Because you don’t look like, how do I say this nicely? Because I think you’re wonderful, Rachel, but you don’t look you know anything about money because you have such a youthful glow about you. Was that super, super, super ageist? You know what I mean?

Rachel:
I know what you mean. And it was difficult because here’s the thing, I actually graduated from college when I was 20, so I started working as a financial advisor when I was 21. So, you can just picture me, 21-year-old woman advising people, who were in their 60s and 70s, who had saved up their entire life’s worth of money. And I was telling them how to invest all this money, so it was definitely challenging. But here’s what I would say. Age is one of many qualifying factors when it comes to anything in life, really.

Rachel:
There are a ton of other qualifying factors. There’s credibility experience, background, confidence, relatability, authenticity. There’s a ton of other things. I could keep going on and on maybe. And maybe I was missing one of those things, age, but I made up for it with the rest. So, I found that it really didn’t matter and it didn’t hold me back whatsoever.

Scott:
Now, let me ask you this. Was the choice to finish college at the age of 20, was that something you backed into intentionally with the goal of financial freedom at the forefront?

Rachel:
Okay, so here’s the thing, Scott. I grew up in this really wealthy county and it was a lot of the motivation for me to achieve financial independence because by no means was my family living in poverty, but I grew up in a bubble. I didn’t know what the rest of the world looks like back then. And all my friends were driving BMWs. They were going on these fancy trips with their family. And in the meantime, we were juggling between two cars. We weren’t even going out to restaurants, let alone going on family vacations. Money was always a stressor in my family.

Rachel:
So, growing up, I felt like we were poor. I didn’t have the same things that everyone else had and that was a big motivation for me to achieve more. So, when I went to college, my parents were not able to help me pay for college. I knew that I was going to have to pay for it myself. Because of all the finance books I read, I was really motivated to graduate without debt, so I took a job. You won’t believe this, but I took a job selling knives. Have either of you heard of Cutco Cutlery…

Scott:
Absolutely.

Rachel:
… by any chance? Okay.

Scott:
It’s amazing how many entrepreneurs come from Cutco?

Rachel:
I know, I know. My mom was less than thrilled about the idea of me selling sharp objects to my family and friends, but that’s exactly what I did. So, I paid my way through school selling Cutco. And because I was paying for a $40,000-tuition private school, it was in my best interest to graduate a year early, thereby, saving myself $40,000. So, that’s what I tried to do and that’s why I graduated so young.

Scott:
Awesome. Can I ask you a question? I don’t know how to phrase this correctly. How many men and women, what was the male female split for Cutco sales representatives at that point in time?

Rachel:
Oh, probably 70/30 or 80/20. Definitely more men than women.

Scott:
Yeah, I think that’s really remarkable and unusual of a way to pay for college, I think for a lot of young women, and I think it’s really commendable the way the way that you were so aggressive about that, about this approach to entrepreneurship and sales to pay for college. Was that hard or was there any difficulty there? Did you find any trouble breaking in?

Rachel:
Oh, it was extremely difficult. Talk about rejection. It’s a sales job. It’s a direct sales position, but I learned some very valuable lessons about how to ask for a sale, how to handle rejection, how to market yourself and speak confidently and be a good public speaker and be a leader and be an assistant. So, these lessons, actually, I learned more from that job than I did from my college degree. And what I learned from that has translated to my current business and to writing books and marketing books and building a platform. And it’s helped me more now than I think anything else I learned during college, ironically.

Scott:
So, you graduate college, you’re debt-free at this point, is that right?

Rachel:
Yes, I graduated that.

Scott:
And then you get a job in financial planning. What financial planning are you doing? Is this a sales job as well or is this a fee-only role or how does that work?

Rachel:
So, I was a licensed financial advisor. I was Series 7 and 66 licensed. And at the firm I worked for, I could decide how I wanted to be paid, so you could be commissioned, paid off commissions or fee only. And here’s the thing with financial advisors, you have to ask how they’re paid. If you’re trying to hire a financial advisor, you really need to understand how they’re paid, because if they’re paid off commissions, they’re going to be incentivized to sell you certain products. Products, which might not be good for you. Even if they’re a fiduciary, they’re still going to have that incentive to sell you something. So, I did not like that. I did not want to be incentivized, so I wanted to be paid fee only.

Rachel:
Now, even a fee-only advisor, they’re going to get paid, whether your assets perform well or whether they don’t, so I don’t know. I just found that there was never a really great structure, but fee-only is really the way to go because they’re not going to push certain products on you. However, I found that it was still very much a sales position. And although, I can excel as a salesperson and I clearly did with Cutco, I’m an introvert. And everyone is always surprised by that, but I’m very much an introvert and it was very draining for me. And I did not want to do that, so after nine months I quit.

Rachel:
But the passion for helping people with investing and for helping women learn how to manage their money never went away. I just had to find a different way to do that. So, I quit the financial advising and I moved on to other things.

Scott:
Let me ask you this, while that’s going on, what does your financial position look like? Are you investing in assets at this point in time? Are you building up financial runway like a large cash position? How are you thinking about your personal finances through this transition?

Rachel:
Okay, so I was investing in a stock market. I was contributing to my Roth IRA, and I was trying to maximize my savings. Because when I quit the position, I didn’t have another job lined up. I just quit because I didn’t want them to keep paying me a base pay and knowing that I didn’t have anything else to go to. It was just an integrity thing or I don’t know, so I quit. I didn’t have anything else lined up, but I later regretted that because I was living off my savings for several months and I depleted my savings and it was a really scary thing.

Rachel:
And then what I ended up doing, which I thought was so irresponsible at that time, but I don’t regret it now, but I ended up going to Italy to be an au pair and I did that for three months. But I did it to buy myself time, but I ended up making so much money as an au pair and having an incredible experience. And I came back to the US with 3000 euros. So, I saved a bunch more money in Italy and I wind up in a job working with a real estate investor while I was in Italy. So, I came back having the perfect position where I could learn about what I wanted to learn about. So, it all ended up working out really well.

Scott:
Awesome. So, you’re back in the us after three months in Italy, what’s your situation look like? What year are we in? And what happens next?

Rachel:
We are in 2015, so this was seven years ago. I take a few jobs in the real estate investing world. I start working for this horribly abusive boss. Things aren’t going well. They turn south again. I have a lot of experiences with her where my self-confidence is getting pummeled. I’m not being paid well. I feel like I’m overqualified and underpaid and I just realized I have got to get out of that. So, it kicks my butt into gear where I’m finally like, “Okay, I have to make this happen because I can’t continue to be in this toxic workplace.”

Rachel:
So, I finally started investing in real estate in 2017. I also got myself out of that job and into a corporate finance role. And in 2017, that’s where things started happening. I started building passive income streams and things really took off then.

Scott:
Awesome. So, we have a real estate investor, realtor, and then this third job and by that point, you’re bouncing around from job to job and I imagine saved up some nest egg from which position to begin investing in real estate. Is that right?

Rachel:
Right. In all of those early years, I started making $36,000 and then $32,000 and then $42,000 and then $45,000, so I wasn’t making a ton of money up until about 2017. And then, I got a pay raise to $75,000. So, it wasn’t like I was making six figures where I was saving all this money to invest in real estate. I was scrimping and saving to get by.

Scott:
What’d you do to get that raise?

Rachel:
I started applying for jobs. I just got a really good, strong job offer. And then I got a job offer from another company I wanted to work for even more. And so, I bounced those two job offers off of one another to get them to increase their salaries for me. So, then I got it up to $75,000, which was really nice. I felt like that was more money than I ever was making before, so I felt like I was rolling in it.

Mindy:
Okay, so 2017, you started investing in real estate. What real estate are you investing in and where are you investing?

Rachel:
My first duplex, my husband and I bought together. It was a duplex in Louisville, Kentucky, and we purchased it in 2017. So, we had each saved $10,000 of our own savings by then. And this was a $100,000 duplex. Now, I know people are probably gasping at that price right now. Okay, so it was a different market and this is Louisville, Kentucky. We’re not talking California or Chicago or Washington DC or anything. But here’s the trick is this was an off market property. And I truly believe and know for a fact, because I have clients that I help do this same thing that there are deals to be found in this price range, still to this day.

Rachel:
The mistake people are making that are trying to do this starting out is that they’re looking on the MLS. And I’m sure somebody out there is going to get really lucky and find a great deal on the MLS, but you have to do two things if you want to find a great deals like this. You have to look off market and you have to be willing to look out of state. Because if you live someplace like California or Denver, Colorado, where I live or Austin, Texas, and that’s where you’re looking, you’re not going to find a parking spot for $100,000 right now, let alone in awesome duplex. So, you have to look off market and look out of state if you want to find these really great deals.

Scott:
Awesome. Can you tell us more detail about this first purchase? And then I think if people want more detail, we’ll give the highlights, but you were also on the BiggerPockets Real Estate podcast on Episode 454, I believe.

Rachel:
Yes, that’s correct. This first duplex I found off market because it was an expired/canceled/withdrawn MLS listing. So, I was looking through all of those and emailing the list agents, once a week, once a month, trying to find out what happened. So, I was doing this consistently over a six-month period and just wanted to stay top of mind.

Rachel:
So, one of these list agents finally reached back out to me and she said, “Hey, this duplex is going to come back on the market. Do you want to make an offer first?” Which was really, really nice of her. So I said, “Yes, absolutely, I do.” Made an offer. Got an accepted offer. That’s how we got this first duplex. It is to this day, the best deal we have ever done, our first deal. So, we got lucky, but again, luck happens when you work really hard.

Rachel:
So, it was $100,000. One unit was being rented, but it was under rented and the other unit needed a full-gut rehab. And I didn’t have the money, so we negotiated a seller’s concession, so this seller basically paid us a large cash amount, so we could do that renovation. And I talk in a lot more detail about that on the BiggerPockets Real Estate show. But after all was said and done, we were renting it out for, I think, we were initially making $500 in cash flow per month, so $250 per door, which was amazing on a $100,000 purchase and we put $20,000 down. And now, we’re making $800.

Scott:
It’s a 60% cash on cash. Times 12 is $12,000 and you put $20,000 down, so that’s 60% in cash and cash. Am I doing that right?

Rachel:
So, $6,000 in cash flow per year divided by 20.

Scott:
Per unit, right?

Rachel:
Wait, $250 per unit.

Scott:
Okay. Never mind, it’s 30%.

Rachel:
Yeah, 30%. I’m sorry. Yes, yes. Okay.

Scott:
All right. Next story.

Rachel:
Oh, yeah, that stuck. And now, it’s cash flowing $800 total per month, so it’s increased over time because rents have gone up again. It’s still under rented by the way. We could raise rents way more, but we want to keep our tenants there and everything. So, it’s a really, really great investment for us.

Scott:
Fantastic. And so, what happens in the years following this? How do you go about building your portfolio from there?

Rachel:
We were saving a lot of money. We did three things that helped us scale. So, first of all, we were still living frugally. Even back when I was making $36,000, living alone, single, I was saving half of my income. I was living off a budget of $1,500 a month in Louisville, Kentucky, so being super, super frugal. So, even when we were making more money and we had a combined income of over $100,000, we were living frugally.

Rachel:
And when we started making this cash flow of $500 per month, this is after we had made offers on tons of properties. This is after we had accepted contracts that fell through. This was nine months into the process. It felt very discouraging at times and we wanted to quit at times. So, once we got to this point where we made cash flow, it would’ve been very easy for us to say, “We’ve done it. We made it. We can get a new car. We can upgrade to a new place. We can live it up a little bit.”

Rachel:
Instead of doing that though, we were like, “Okay, no. Let’s keep going. Let’s stay disciplined. Let’s save this $500 a month and reinvest it and put it towards the downpayment on our next property.” So, we tried really hard not to give into lifestyle creep yet and to continue to delay gratification. So, we kept saving 50%, we didn’t give into lifestyle creep. And then the third factor that made it easy for us to scale quickly is that I had my real estate license. So, I didn’t have this for the purposes of helping other clients. It was just for our own purposes for investing.

Rachel:
So, we would deplete our savings every time we purchased a property, but I would get a commission back at closing because I would be the buyer’s agent on the deal. Sometimes, this commission would be thousands of dollars and I would save that big chunk of money for the downpayment on the next property. So, it was easier than I thought to come up with 20% downpayment again and again. And we scaled from zero to six buildings, which was 38 doors in under three years and that’s the high-level version.

Scott:
Awesome. And how much cash did you put into these properties?

Rachel:
Off the top of my head, it’s hard to tell. But we had two single families initially because my husband used his VA loan, so we basically house hacked those first two, so that was a really big benefit. If you’re military, make sure you’re using your VA loan to get started because that’s an amazing benefit that you have. Then we had the $20,000 downpayment. Then, we bought a $430,000 house and then a $325,000 house and then a $125,000 house. And we put 20 or 25% downpayments on all of those as well. So, I can’t do the math, but whatever that adds up to.

Mindy:
Okay. You mentioned that you’re a real estate agent. I’m a real estate agent. I do the same thing when I… well, sometimes, I do and sometimes, I say, “You know what? I don’t want to pay taxes on that income, so I’m going to take that as a reduction in the price instead of taking the money.” But I’m also not trying to scale up I’m in a different place than you are. Would you recommend that others get their license, too, if they want to start investing in real estate? I’ve heard answers yes and no on this side, so I’m curious what you think.

Rachel:
My opinion is yes, especially if you need cash and you’re wanting to scale quickly like I did. So, in my opinion, getting a real estate license makes sense if you’re going to do at least one transaction a year, because it will easily pay for itself. For me, in my experience, it’s cost me $1,000 to $1,500 per year to maintain my real estate license or maybe to get it initially and then about $1,000 to maintain my real estate license. So, if you’re going to do a transaction per year, it will easily pay for itself. And again, some of my commissions were $10,000, $11,000, $12,000, depending on the property I bought. And it can be way more than that if you’re buying more expensive property, so I think it’s well worth it.

Rachel:
And I’ll add to that. It’s not just about the time benefit or excuse me. It’s not just about the money benefit, you can have a time advantage as well. So, for example, one of the duplexes I bought later, it came up on the duplex and because I had the MLS access, I had set myself up on a search subscription. So, it alerted me immediately that this listing came up that was within my criteria and it was within a certain price range and a zip code. It met all of my criteria and because I had MLS access, I saw that first.

Rachel:
And I literally left work immediately when I saw this listing come up because the price was too good to be true. I said, “I need to take my lunch break early. I’m leaving.” I go down to this property. I let myself in because I’m a real estate agent and I can. I let myself in and 20 minutes later, I’m making a verbal offer on the phone. So, I’m making an offer 20 minutes after it’s listed. And that is because I’m a real estate agent and I did that before anyone else could even get down there and access the property. So, I wouldn’t have been able to get that property if I hadn’t been a real estate agent. So, for me, there’s multiple benefits.

Mindy:
Okay. I like that answer. I agree with it. To a certain degree, I think that you do need to be aware of the upkeep that is involved in having a license. But like you said and if you’re in hyper growth mode, if you are in “I want to scale mode” then having your license being able to… how many of us listening to this show have wanted to invest in real estate or even just wanted to look at a property. You call up your agent and they’re showing something, so they don’t answer right away. Then they call you back and then they have to call and make an appointment. And then the appointment time isn’t available and then they call you back. And by that time, it’s six hours later or the next day. By which time, it’s already under contract in a hot, hot market.

Mindy:
So, being able to, “Wow, I got an instant notification.” I called up the showing service, “Hey, I’d like to schedule an appointment.” And they say, “Sure. When do you want to go?” I’m like, “Right now.” They say, “Great. Here’s the code.” You go over there. You look at it.

Mindy:
Once you’re in properties over and over and over again, it gets so much easier to be able to walk a property and just walk through with, “Oh, nope. This is going to be terrible. It’s not for me,” or, “Hey, I know how to fix this. I’ve seen this model before. It could be amazing. This will make a great rental. This won’t make a great rental.”

Mindy:
You’re able… it’s just like running the numbers one. You have to be in the property. I think the world of David Greene. But I also think that you need to be in the property, especially when you’re starting out, because you cannot smell a picture.

Rachel:
I totally agree.

Mindy:
Okay.

Scott:
Yeah. I’ll give a quick counterpoint to that. I have my license and it has not been worthwhile for me. I have used it very infrequently. Unlike Rachel, I haven’t bought a lot of properties in a condensed period of time. I buy one every year or two, and I’ve actually ended up using an agent on most of those transactions because they’ve brought me deals or made life way easier. So, for me, in my situation, it probably hasn’t been worthwhile and for Rachel, it probably easily has been and saved you tens of thousands or hundreds of thousands of dollars between commissions. And then the accessibility or ability to offer instantaneously on deals like the one you just shared.

Mindy:
Ooh, so neutral third party observation. Scott is someone who has a lot of work to do. He’s the CEO of a big company, whereas Rachel had a job, but she didn’t have the same level of responsibility that Scott did and she was looking to grow. So, in this case, Scott, it’s, I don’t want to say worthless for you to have your MLS, I’m sorry, your license. But it certainly doesn’t help you in any way. Why did you get licensed, Scott?

Scott:
Because I thought I was going to do what Rachel did.

Mindy:
Ah, okay.

Scott:
And then I ended up having a lot more work at this startup I joined. That took on a lot more of my time. So, paradoxically, I joined BiggerPockets and did less real estate investing than if I hadn’t joined BiggerPockets.

Rachel:
That’s hilarious. I will say after I stopped acquiring real estate aggressively in 2018, I put my license in escrow. So, it’s been inactive for a few years because I haven’t needed it. And therefore, I haven’t been paying for it, so that’s always an option as well.

Mindy:
Yeah. I think that if you’re considering getting your license or this was one of the top questions that I had seen on the forums when I wrote an article long time ago about it. It’s like, this is the cost of getting your license. It’s a lot of coursework. It’s a lot of time. You have continuing education, you have background checks and MLS dues and on and on and on and on. If you are going to be helping people, if you want to actually work as a real estate agent, that’s great. There is no better way to learn the market than to be in it all day every day.

Mindy:
If you want to scale aggressively and have the opportunity to do it, that’s great too. But if you can be honest with yourself and say, Hey, I am the CEO of a company and I have no time at all, then it is totally worthless for you to get your real estate license because you’re never going to use it, it’s just going to end up costing you money. You can do yourself a better service by finding a really, really great real estate agent. Hey, Scott, where can I find a really great real estate agent to help me with my investing needs?

Scott:
Biggerpockets.com/agents.

Mindy:
So, there you go.

Scott:
Thanks Mindy for the plug.

Mindy:
BiggerPockets.

Scott:
Okay. So, we’re in 2020 after this, the shopping spree for real estate, what happens now? What’s your position look like? What’s your passive income situation? I know you’ve got books and you’ve got this whole other business. When does that start getting going? And how does that play into the whole picture here?

Rachel:
For sure. So, by 2019, I actually was able to quit my job because by then we had built our real estate portfolio to where it was making $10,000 a month in profit. And that was our goal, that’s what we wanted to do. I had more than replaced my full-time income, so I quit my job and that was a real exciting year. And that way, I could focus on building my business because by then I had two books that I self-published that were doing really well.

Rachel:
And I wanted to focus on teaching women about money management. I wanted to help females feel excited about their financial futures and feel confident and capable. And I wanted to teach them how to invest in real estate. So, I started doing that full time and working on that. And I was telling people that I retired. Basically, I retired from my full-time job and I think people have problems with that word, which I totally understand. But I use retired and financially independent interchangeably, so I just meant that I was working because I wanted to, not because I had to.

Rachel:
And what brings me fulfillment and joy are a few things, hiking, traveling, and working on my business. I love my business. I love what I do. I will never stop working. I don’t want to. So, that’s how I spend my time now. And in my business, I have my books, my courses, my programs, and that’s basically what I do.

Scott:
So, your business was developed in parallel to your real estate investing?

Rachel:
Yes. I self-published my first book, Money Honey in 2017, which is also the year that we first invested in real estate.

Scott:
Awesome. And so, can you tell us about that process of publishing that book?

Rachel:
For sure, yeah. I came up with the idea because when I was a financial advisor, all my family and friends came to me for financial advice, which was amazing. It’s what I love to do. And I also remember thinking, why aren’t they reading books or learning on their own or reading up, looking up websites like BiggerPockets. And I thought to myself, “Oh, yeah, it’s because personal finance is boring.” It’s intimidating, it’s complex, it’s overwhelming for most people.

Rachel:
So, I thought, “Well, how can I make it fun and sassy and simple.” And that’s where the idea for Money Honey came from. So, I sat down and I wrote this book and it was really exciting and it was a passion project for me. I didn’t think it was going to go anywhere, but I self-published it in 2017 into my surprise, it took off and it did really well. And it resonated with female millennials. So, I struck a nerve somehow and I recognized that there was a need in the market. There was a hole in the market that I filled somehow, so I just followed that instinct and that hole. And I just kept trying to solve problems, and that’s how I basically built my whole business.

Scott:
Awesome. So, how long did it take you to write the book? What was that like? And then, can you walk us through the mechanics of self-publishing in case anybody’s interested in repeating that?

Mindy:
Absolutely. It took me nine months to write the book. Keep in mind, this was around a full-time job because I was still working my full-time job. And this was around us acquiring rentals, managing tenants, self-managing our properties, so I was doing this in the evenings and on the weekends. And I quit for four months because I was convinced my book was trash and who was I to write a book about personal finances. So, could have done this a lot faster, but it took me nine months from start to finish.

Scott:
Was this in 2016 that you’re writing the book?

Rachel:
2017.

Scott:
It was published in 2018 then?

Rachel:
No, I started in January 2017, published it in September 2017.

Scott:
I’m asking because I was writing Set For Life at the end of 2016 and it released in April 2017. And I had a very parallel experience, I think, in writing the book that probably overlapped heavily with yours.

Rachel:
That’s amazing. It gives me comfort to know we were both probably struggling with imposter syndrome at the same time. I love it, yeah. So, the-

Mindy:
So, you said it took nine months to write this book. Scott and I wrote a book called The First Time Home Buyer. We sat down and we banged out our outline in about an hour. It took us almost no time to bang out the outline. And I think 12 short months later, we were missing our deadlines for our company’s publishing department. That was very, very loosey-goosey for us because he’s the CEO. He’s the boss of the whole company, so he could do whatever he wants. Who’s going to tell him what to do? Even publishing.

Scott:
I got to hit my deadlines with that, but yeah.

Mindy:
You do, but also there are only deadlines for you, Scott. But it’s hard to write a book. So, you said you quit for four months, that means you wrote it in five months, which is still very, very impressive and it’s done well, because you make money from this book.

Rachel:
I make a surprising amount. Yeah, between my two books, I make $8,000 a month in profit or that’s what I made last year in 2021.

Mindy:
$8,000 a month and this is self-published so basically all the money comes to you.

Rachel:
Yeah. So, Amazon is great because when you self-publish a book, you get to keep a large percent of the royalty. Mostly, with traditional publishers, you would make a 10% to 15% royalty when you decide to self-publish you can keep anywhere from, I think, it’s 35 to 70%. So, on an E-book I make, I think it’s about $5. I forget. It’s been a long time since I looked. On a paperback. I think I made $3 to $5 per book. It just depends on the pricing. But it’s way more than I would make on a traditionally published book.

Mindy:
Okay, so in 2017, how old were you?

Rachel:
I just turned 30 on Sunday. It’s my birthday week. So, what does that make me in 2017?

Mindy:
Happy birthday.

Rachel:
Thank you.

Mindy:
Was that five years ago? You were 25.

Rachel:
Five years ago, yeah. I’m losing all sense of time. Yeah, I was 25, you’re right.

Mindy:
Okay. So, 25 years old, you wrote a book that then starts cranking out money. $8,000 a month is nothing to sneeze at. I think even Scott could live off of $8,000 a month. Scott?

Rachel:
Well, it didn’t start making that much. The first month it made $600 and then, it was making a thousand dollars a month pretty consistently. And it was just Money Honey then, because I hadn’t published my second one yet. So, it was making $1,000 a month pretty consistently. And then it might have crept up to $1,500 in the second year. And then once I published Passive Income, Aggressive Retirement, that was a big bump. But it really didn’t explode until 2020 when I went on a podcast tour and I got on all these podcasts and really, put all of my efforts into my business. And that’s when my book sales went up a lot.

Mindy:
Okay, so let’s look at the mechanics around self-publishing. Did you print actual books or do you have Print On-Demand books?

Rachel:
It is Print On-Demand and that’s what is so amazing about this income stream because it is a more passive income stream. Now, when I say passive income, I just want to talk about this for a second because passive income is a phrase that is soused and misunderstood. And I think when people say passive income, they think people are sitting on a beach, not doing anything or making money in their sleep. I hate that phrase.

Rachel:
Okay. There is still work that is spent, an effort that is made. It’s just a lot… it’s very minimal compared to a 9:00 to 5:00 job. So, I define passive income as money that is earned with little to no ongoing effort. Most of the passive income streams I talk about still require a couple of hours a week or a few hours a month to maintain the passive income stream.

Rachel:
Okay, so with Print On-Demand books, what’s great about this passive income stream is that I put together this book. I write this book. I do all the formatting and the cover design or I outsource this. I have other people do that part. So, I have this beautiful finished product. I give it to Amazon, I submit it to Amazon. And Amazon handles all of the pricing and the sales and the printing and the shipping. I don’t have to do anything. So, when someone buys my book, I get paid a royalty and everything else gets handled.

Rachel:
I don’t have inventory risk. I don’t have financial risk. So, I don’t have to buy 20,000 copies of my own books and then hope that they sell or hope that I can sell them and then ship them out and then lose money if they don’t sell. So, it’s made to order. It’s print On-Demand and it’s a really beautiful concept. Anyone can self-publish and then not lose a ton of money if their book doesn’t work out, so that’s what I love about it.

Mindy:
So, what was your cost all in, not including your time, which has value. So, you paid somebody to do the cover design and you paid somebody to do the layout and all of that. How much money did you spend to get Money Honey, ready to go, out of pocket, approximate?

Rachel:
This is a great question, Mindy. With Money Honey, I made a lot of mistakes and the mistake I make in all areas, which you’ll learn about on the BiggerPockets Real Estate show, I was on 454, is that I’m too cheap. And I try to do too much on my own and I don’t outsource enough. So, I spent $561 on Money Honey to get it out the door. It was very little because here was my thought. I was like, “No one’s going to buy this.”

Rachel:
To me, this was a loss. This was already a loss. I was like, “Any money I spend, I’m not going to make back.” So, I just wanted to spend as little as possible just to get this done because it was a passion project. I had no idea this was going to be the start of a business. I really didn’t. This was something I felt compelled to do. So, I created my own cover initially. I’ve since had it redone. It looks a lot better now. The initial cover was horrendous. I also did all the interior formatting initially. I’ve since had it redone.

Rachel:
The one thing I did do is I hired an editor and it was a really good editor that I found on Fivver. And I was very lucky that I found someone who was just starting out, but was very talented and had a really low rate. So, I think I spent the bulk of that $561 on a really great editor. And then maybe a little bit of other money on advertising, but hardly anything. So, that’s how much money I spent. I figured it was gone, but again, to my surprise, I made all of that back in the first month.

Mindy:
I was just going to say, remember, you made $600 the first month. So now, you have broken even and actually made $39, so congratulations on being in the block of $39 your first month. And then it’s just, so book publishing to me is passive, truly passive. How much time are you spending on book publishing when it is all done by Amazon? What do you do in a month? How much time do you spend per month on this?

Rachel:
Initially that first year or two, I literally didn’t do anything because I was still dealing with so much imposter syndrome. So, I want to share this story about that four months that I quit, because I think it’s really important. I quit writing Money Honey and I had no intention of ever picking it back up again. This was about five months into writing it. I did a complete mental 180 and I was telling myself things like, “Who do you think you are Rachel to write a book about finance? You’re a young woman. Who’s going to listen to you? Your writing is terrible. This is going to be an embarrassment if you go through with this.”

Rachel:
That’s what I was telling myself, so clearly, being really nice to myself. And it wasn’t until I sat down and had lunch with a good friend a few months later and I confessed to her my book idea. And she looked at me and she said, “Rachel, you have to finish what you set out to do. You are really onto something here. You need to finish writing this book.” She gave me just enough encouragement that I picked it back up and I finished writing it. And I told myself if I can just help one person, that’s all I want to do, that’s all I care about, so if I can just help one person.

Rachel:
So, I lowered the bar, as far as the bar can be lowered, with my expectations. If I literally could just help one person, I will be happy that I went through with this. So, that’s one way that I overcame imposter syndrome along with surrounding myself with the right people like that friend. And I went through with publishing it. And again, it took off, but I still was so overcome with that self-doubt because in those initial weeks and months, all of your family and friends are encouraging you and supporting you and buying your book and telling you how awesome it is.

Rachel:
But of course, they’re going to tell you that, they’re your family and friends. So, it wasn’t until six months later that I started getting all of these emails from strangers, from people in different states, around the country that I didn’t even know. And messages on Instagram. And they were telling me things like, “Rachel, thank you for writing this book. This book has changed my life. I’ve paid off student loans. I’ve paid off my credit cards. I’m no longer struggling living paycheck to paycheck. I can breathe now. Thank you so much.”

Rachel:
I started realizing maybe I wrote a good book. Maybe this is actually helping people. And then I started having confidence in myself, but that’s why I didn’t do anything at first. And I couldn’t actually get behind my own book and promote it. I just didn’t have the confidence so early on. And so, what I want to tell people in terms of overcoming imposter syndrome is just I’m thinking about those emails that I would start to get. And I used to ask myself before I published Money Honey is, “What if I do this and I fail? What if I do this and I get laughed at? What if, what if, what if?”

Rachel:
So, I challenge you to ask yourself, “What if you don’t?” What if you don’t do this and you don’t share your unique gift with the world? Who out there will continue to suffer because they need you and you were too afraid to publish that book. So, I think you have a responsibility to use your creative gifts for the good. You are needed and your voice is needed, so please don’t give into that fear.

Scott:
I love it. I think that’s really good advice. And I think another way to think about it is that it doesn’t have to sell. It doesn’t have to do, but at least you’re doing something that you’re passionate about. You’re putting it out there and you’re taking a shot and you’ve created an asset. If it doesn’t produce any income, so what? Go do another thing next quarter or next year. Buy another property. Do that next side business, whatever it is, but take your shot and do it.

Scott:
And writing a book is an option that is available to folks if you have something you’re truly passionate about and well-researched in and feel like you’re an expert on. Go do it, go write it. See what happens. You’ll be glad you did later in life, I think.

Rachel:
Exactly. And you do not have to monetize your hobbies to justify them, period.

Scott:
Love it. Okay, so you’ve got two books that you wrote between 2017 and 2020, is that right? And you have this business that’s blossoming, I guess, during that same time period. Can you walk us through the other parts of that business and how that led to your end state in 2020?

Rachel:
Absolutely. Okay, in 2020, I launched my first online course, which is called Get Your Financial bleep Together. I don’t know if I’m allowed to cuss.

Scott:
Feel like I clean writing on iTunes, so go.

Mindy:
Stuff.

Rachel:
Yeah. Get Your Financial Stuff Together. And ironically, I launched this course in April 2020, which is right when COVID first happened. So, it could have been the worst time or the best time to launch this course, but I recognize that my clients and my followers and people who read my book, just they needed me in a bigger, more hands-on way because anyone can read a book. Here’s what I was starting to realize. Anyone can read a book.

Rachel:
Anyone can look up a diet routine. I looked up diets, weight exercises, whatever routines all the time. How often did I actually implement them? Not enough. And I had goals. I wanted to build muscle tone and I wanted to get stronger and I wanted to be able to lift weights. And so, I realized it’s hard to have self-discipline and to do the things that you’re learning about. We can all read a book. How many of us are implementing what we’re learning in that book? So, I thought to myself, “Okay, well, what if I can actually help hold people accountable to what they’re learning in my book, Money Honey.” So, I put together this online course with a group support system and accountability.

Rachel:
And I just figured this is another problem that I think that I can solve because accountability is the hardest part, in my opinion. There’s a quote, “Knowledge is power.” I disagree with that completely. If knowledge was power, we would all have the muscles that we want. We would all not have the debt that we didn’t want to have. We would not be in credit card debt. We would be wealthy. We would all have everything we want because we know the things that we should be doing. We know to pay off our credit cards and to save more money and to invest in the stock market and to eat more protein or whatever.

Rachel:
So, why don’t we do it? It’s because actually executing on that knowledge and implementing and taking action, that is the hard part. So, I put together the course. The course took off because I recognized the problem and I solved the problem. And that was the next piece of the business that I put together. online courses. I also started doing one-on-one coaching. I put together a really high level mastermind. I just put bits and pieces of my business together whenever I saw a new problem arise. And I just solved that problem as quickly as I could.

Scott:
Awesome. So, what does your position look today? And what’s next?

Rachel:
Today, I have active and passive income streams. With my passive income, I’m making $20,000 a month in profit. So, if you already follow me on Instagram, you’ll see that in my bio. What does that mean exactly? Because I want to be really clear and transparent on what that number means. When I say $20,000 a month in passive income, I’m talking only about my passive income streams, not about my active income streams. My active income streams include my mastermind, where I’m actively teaching clients. My active income streams include one-on one coaching. It includes my boot camp because that’s something that I run live.

Rachel:
My passive income streams, when I say 20K a month, that’s profit. That’s not revenue, so that’s with expenses already taken out. So, I’m making 20K a month in passive profit really. Maybe that’s the word I should use. And that includes the $8,000 a month in book profits and then it’s $5,000 a month now in rental property profits, because we’ve sold some of our units last year. It’s about $1000 to $2,000 a month in rental, real estate syndication profits, $5,000 to $6,000 a month in online course profits, the ones that are passive. And then there’s $2,000 or $3,000 a month in other miscellaneous things, print On-Demand, fundraise, interest, other miscellaneous things.

Scott:
Awesome. So, what’s next for you?

Rachel:
I think to keep doing what I’m doing. So, I’m on a two month trip right now in Italy and Croatia, which is so cool. I can’t believe I just said that because this is what I’ve always aspired to do and I feel like I’m finally making my dreams come true. I wanted to achieve financial independence, so I could travel the world and I’m finally doing it and I’m working while I do it and it’s so fun.

Rachel:
I’m meeting people and I’m like, “Hey, what are you doing? How long are you here?” And I’m meeting other people who are retired and who are on a two-month trip because they’re retired and they’re in their 60s and 70s. And then when I tell them I’m doing the same thing, they’re like, “How on earth are you doing this?” And I’m like, “Oh, I own my own business and I can just work wherever I want. And I have financial freedom.” It’s like people look at me like I’m absolutely crazy.

Rachel:
So, it’s just a lot of fun. So, I just want to keep doing what I’m doing. Traveling and hiking and hopefully, impacting more lives and empowering more women to feel confident about their financial futures.

Mindy:
I love it. I think that women, for some reason, feel like they can’t do this. And you’re here, I’m here to say, “You can.” It’s not, I don’t want to say it’s not that hard. It is work. It’s not that hard, but it is work. And sometimes you just need a little bit of encouragement to let people know, to let women know that they can do it. I love it.

Rachel:
Yeah. And I used to be that woman. I used to feel completely hopeless and trapped in a toxic workplace. And it’s easy for me now to sit here and say, “Leave your job. You have to get out of that.” But I also remember the self-confidence that I lost when my employer was treating me that way. And the despair I felt and how depressed I was in that environment and how I was dealing with anxiety. And it’s easier said than done. And I have an overwhelming amount of compassion and empathy for any young woman in her early twenties or whatever age that is feeling that way.

Rachel:
And the truth is we’re in a financial education crisis and at no point in our lives are we taught how to manage our money. And then we’re left as young adults to figure it out all on our own. So, no wonder, I see so many people dealing with these feelings of guilt and shame and embarrassment when it comes to their money. And to me, that’s the real shame because we were not given the resources we need. And if I can just help one more person at a time to get out of those feelings, then to me, that’s all I can do. And I’m very, very happy with that. So, it gets me fired up. I’m passionate about it.

Scott:
Completely agree. That’s why we do what we do at BiggerPockets. Same exact reason. Well, with that, should we move on to the Famous Four here?

Mindy:
Yes, we should. All right, Rachel, it is time for our famous four. These are the same four questions we ask of all of our guests. What is your favorite finance book?

Rachel:
Okay. I love the Famous Four. This isn’t a finance book, but I’m going to say it because it can be related to your finances. And it’s my favorite book of all time. It is Can’t Hurt Me by David Goggins. Have you read this book?

Scott:
I have not. I’ll have to go check it out.

Rachel:
Okay. I’m just going to send you a copy because it’s that good and you have to read it. But it’s just all about how you can overcome your circumstances, even the worst of circumstances and just not be a victim of your circumstances. And it’s all about your mindset and that you can do whatever you set your mind to do. It’s just, it’s an amazing book. I’m a huge fan of David Goggins. He’s a Navy Seal. He’s a Black man and he grew up in a really racist environment and he grew up in poverty.

Rachel:
And he has achieved the most unimaginable things, so he’s like a hero to me. So, I highly recommend the book. I’m going to buy it for both of you. Anyone out there, you have to read it because it can really be applied to your financial circumstances as well and it’s helped me overcome a lot of things. Any time I’m like, “Oh, I can’t do this. I can’t achieve that,” I just think about him and it just really inspires me.

Scott:
Awesome. I can’t wait to read it. What was your biggest money mistake?

Rachel:
This is more of general and it’s still something that’s a mistake, but really just not flipping the switch from the scarcity mindset to the abundance mindset, being too cheap, not delegating and outsourcing more. And not allowing myself to enjoy the fruits of my labor and to enjoy the lifestyle I’ve created for myself. But going back to delegating and outsourcing, you wouldn’t fill your own cavity. You would go to a dentist to have that done.

Rachel:
So, why are you trying to do your own taxes? Why are you trying to do your own legal paperwork and write your own leases? You’re not going to treat your broken arm by yourself. You’re not going to do surgery on your leg, by yourself. So, you have to outsource things to the professionals.

Scott:
I would love to offer a mental motto here and see how you react with it. I think that there’s a time and a place for that scarcity or do it yourself mentality when you’re getting started out and your time is worth $36,000 per year or $18 an hour at that point. That’s a good time to fix your own toilet, do your own lease, manage your property yourself, all that stuff. And then that slowly flips over time, as you earn more as your wealth increases, as you generate more passive income. And parts of that need to begin getting outsourced more often.

Rachel:
Yes.

Mindy:
But you never would do your own cavity. Of course, that’s not something that you DIY. But you might DIY your lease potentially in those early stages because that’s so meaningful to your financial position at that point in time. And then it flips and it’s like recalculating the value of your time. And using that as a tool to go from this scarcity to abundance mindset. I think it’s something that could be powerful for folks.

Rachel:
I agree, I agree. So, what I’m saying is that I did not switch and I have not switched still from a scarcity mindset to an abundance mindset. And I worry about spending amounts of money that are not… I still live like I am making $36,000 or $75,000, when I’m some months I make $36,000 when I used to make that in a year. And so, figuring out how to flip that switch can be very difficult when for the first 25 years of my life, I was living in that. So, when you go from such scarcity to such abundance in such a short span of time, my mindset hasn’t caught up yet. So, that’s what I struggle with. And that’s where most of my money mistakes that I make to this day come from.

Scott:
Love it.

Rachel:
So, I totally agree with what you’re saying.

Mindy:
What is your best piece of advice for people who are just starting out?

Rachel:
My best piece of advice is to understand your motivation, because this is going to help you with the discipline part that we’ve talked a lot about and to dig deep and find your why. So, there’s this book that I love, it’s called the Compound Effect by Darren Hardy. Have you all read this book? This is so good. Okay, there’s this story he shares that I’m going to share here because I think about this all the time now.

Rachel:
So, he talks about the author. I think his name is Darren, Darren Hardy. He talks about if you are on a building, 100-level building, 100-storey building, and somebody offered you $100 dollars to walk a thin plank across the building, to the building across, would you do it? Twenty bucks to walk the plank and risk your life?

Scott:
Nope.

Rachel:
Would you do it? This is not a trick question. You would probably not do it, right?

Scott:
Definitely, not.

Rachel:
Okay, okay. All right, so let me ask you this.

Scott:
Not on your life.

Rachel:
Mindy and Scott., who do you care about more than anyone else in the world?

Scott:
My wife.

Rachel:
What about you, Mindy?

Mindy:
My kids.

Rachel:
Your kids. Okay, so let me ask you this. So, Scott, pretend your wife is on the building next to yours and Mindy, pretend your kids are standing on the building next to yours and that building is burning and it’s going to go down. Would you walk the plank across to save them?

Mindy:
Yeah.

Scott:
Yeah, absolutely.

Mindy:
Absolutely. No question.

Rachel:
Okay. No questions asked. And I’m betting, you’re not going to need a $20 bill to do so.

Mindy:
No.

Rachel:
So, what changed? Your motivation changed your reason for walking the plank changed. And I think this analogy is so powerful because in one scenario, your motivation is not strong enough. And the other scenario, your motivation is so strong enough that nothing is going to stop you from doing what you need to do to get it done. So, I think what you need to ask yourself, if there’s a goal you want to achieve, if you want to achieve financial freedom or to be able to exit that toxic workplace or to be able to go on that dream vacation or travel the world or not live paycheck to paycheck anymore, whatever it is, what is the motivation where nothing is going to stop you?

Rachel:
Do you want it bad enough? Do you want it as bad as you want to breathe? Because that’s the motivation that you need to figure out, o that you can achieve that goal. And if you don’t have that defined where it’s that emotional to you, it’s going to be really difficult to get up early in the morning and stay up late at night and to do the things that are really hard to do to achieve the goal. So, that’s my advice for people starting out is to figure out what is that motivation.

Scott:
Oh, it’s the why? Why are you doing what you want to be doing? And is that strong enough of an emotion to your point to keep you going for years doing that activity or the activities that are conducive to that outcome. And a good tool for that potentially is this artifact of a vision. What is it that you want your life to look like in three to five years from now? But I love it. What is your favorite joke to tell at parties?

Rachel:
Okay. This isn’t really a joke. It’s more of a quote, but I think it’s really funny and it’s attributed to Bill Murray. He said the best way to teach your kids about taxes is by eating 30% of their ice cream.

Scott:
Awesome. There will definitely be a debt tax in the Trench household.

Rachel:
Yeah, yeah, more 50%.

Scott:
It depends on how much ice cream there is. It’s progressive. All right, Rachel, where can people find out more about you?

Rachel:
Thank you. So, my Instagram is Money Honey Rachel. And you can find both of my books on Amazon. They’re in E-book, paperback and audio book, and they’re called Money Honey and Passive Income, Aggressive Retirement. And what I would love to do for the BiggerPockets listeners is if anyone wants download my passive income starter kit, I will give that for free. So, you can go to moneyhoneyrachel.com/passive income to download that.

Scott:
Awesome. And we will link to all of that at the show notes, biggerpodcast.com/moneyshow317.

Mindy:
Rachel, this was super fun. I could talk to you for literal hours. So, we’re going to have to have you come back and talk more about all these other things like maybe a deep dive into yourself publishing, because I think that is super awesome. And I think we just touched the surface there.

Rachel:
Awesome. I would love to thank you both for having me. It was a pleasure to talk to you. I really appreciate it.

Mindy:
Well, enjoy traipsing around the world on your journey, your little two-month sabbatical or not sabbatical. Your two-month still generating income trip and we will-

Rachel:
Thank you. I appreciate it.

Scott:
Thank you.

Rachel:
All right. Thanks.

Mindy:
All right, Scott, that was Rachel Richards from Money Honey Rachel, and she is so much fun. I love her story. She is the embodiment of you can do it if you put your mind to it.

Scott:
Yeah. And she’s crushed it. What an incredible journey. We have a career progression. We have spending extremely little. We have starting out in sales with Cutco. We have buying 30, 40 rental property units and selling them and redeploying the assets into passive syndications, which is a trend that I’m interested in observing with more people and more and more people it seems. We have starting a business, writing a book.

Scott:
All of these different things. All these different levers of personal finances, I mentioned earlier, being applied and the result is, a huge abundance at age 30 that will follow her for the rest of her life. So, really impressive. Awesome to hear. And hopefully, it inspires some people.

Mindy:
I hope so. She really, truly is a genuine giver. She has figured out the secrets to… it’s not really secrets either. She’s figured out the steps to success and now, wants to share them with everybody. I just love her story. Should we get out of here, Scott?

Scott:
Let’s do it.

Mindy:
From Episode 317 of the BiggerPockets Money podcast, he is Scott Trench and I am, Mindy Jensen, saying, go make money, your honey today.