In 2017, the year before they got married, Josh and Ali realized they had a problem. Josh had been denied for a car loan. The potential lender cited his large amount of debt.
"We had done all the things society tells you to do. We had college loans, then a master's loan. Then we got car payments and a fancy luxury apartment that was more than we could afford," Josh says. "When I got denied that car loan, it was the first time I had ever heard 'no' in relation to debt."
It was a rude awakening. For the first time, Josh and Ali, who prefer to go only by their first names, began talking about money and putting together a real budget. In the process they discovered they were $102,000 in debt.
In early 2018, things went from bad to worse. "Within a two-week span, Josh totaled a car and he got fired," Ali says. "Very quickly, we went from two incomes, life is OK, we're getting married ... to realizing how highly leveraged we were and how risky it is to have a single job and no other means of supporting yourself. It was really scary for us."
Ali says the couple realized then they needed to make "a radical change," and they actually went on to make several. Through a mixture of prodigious saving, savvy investing, and clever budgeting, the pair have paid down all but $32,000 worth of debt.
A collection of investment properties means that they no longer pay living expenses. Between a mix of investments and income from their business — an online platform called "The FI Couple," short for financial independence — Josh and Ali are on the way to their goal of leaving the 9-to-5 life behind.
The financial transformation hasn't always been easy. "We try not to sugarcoat our journey. There have been a lot of challenges for us," Ali says. "But every challenge, every sacrifice, every inconvenience has gone toward building our dream life."
Here's how they're doing it.
When the couple realized they were looking down the barrel of serious debt, they began finding small ways to tighten their budget. "We were eliminating small expenses. We cut out coffee; we stopped going to the bar; we avoided takeout; we cooked most of our meals at home," she says. "We were using a spoon versus a shovel to pay off debt."
But, she adds, "the difficulty with that was, we felt very burnt out making all of those tiny little decisions every day."
The couple took a different tack. They'd heard about "house hacking" — a strategy that involves renting out portions of your primary residence to defray housing costs. Where they lived in upstate New York, the couple calculated that they needed about $14,000 for a 5% down payment on a duplex.
Video by Richard Washington
Josh had about $8,000 leftover from an old Roth IRA, and the couple received another $1,000 in the form of wedding gifts. With the insurance money from Josh's totaled car, they purchased a used sedan for $5,000, thereby eliminating their monthly car payment.
With Ali working full time and Josh driving for Uber, among other side hustles, the couple put every extra penny toward saving for a house, and in December 2018 they bought one.
In doing so, Josh and Ali saw a huge boost to their monthly savings. Their $1,384 mortgage payment was roughly equivalent to the rent on their old apartment. But with the upstairs tenant kicking in $725 a month, the couple's housing costs were slashed by more than 50%.
"Less than a year later, our tenant got married, and we were able to put some minimal work into the property and raise the rent to $925," says Ali. "So now we're essentially paying $459 to live there, which was huge for us."
Drastically lowering their living costs gave Ali and Josh the financial flexibility to aggressively pursue their goals. "The rent was down, we had no car payment. Ali changed jobs, which gave us a pay increase, and I launched a consulting business," says Josh. "We're back to two full-time incomes and our expenses are radically lower. So in January of 2019 and through the rest of that year, we were literally throwing everything we could at student loans."
To avoid the sort of burnout that they encountered early in their journey, Ali and Josh developed a system for deploying their excess cash, which then amounted to some 60% of their monthly income.
"We break the year into quarterly sprints, so every quarter, we have a new goal," says Ali. "One quarter may be a student loan payoff goal. Then another quarter, we kind of recoup. And then the next quarter we're saving up money to buy another property. Then the next quarter we're recouping and doing renovation."
Video by Stephen Parkhurst
The couple say that breaking up the pursuit of their goals into smaller chunks keeps them motivated and on the same page about their money as their priorities shift and evolve. "By the end of March, if we hit our debt payoff goal for that quarter, we could kind of pick our heads up and say, 'Do we really feel motivated to buy another piece of real estate right now? Or do we want to invest in something else?'"
In 2019 and for much of 2020, the couple focused on paying off debt and saving for a second property.
In September 2020, they pulled the trigger, buying a second house with a monthly mortgage payment of $1,283 and moving into the bottom of two units. Between the rent for their new upstairs neighbor and rent on their vacated unit, Ali and Josh had achieved one of their short-term goals.
"After accounting for all operating expenses at property 1, the cash flow from that property covers our portion of the mortgage at property No. 2," Josh says. "That allows us to now have $0 per month rent."
These days Josh (age 31) and Ali (30) are prioritizing paying down their last chunk of debt, a goal they hope to accomplish in the next year. "After that, we're really just focusing on investing," Josh says.
What they're investing for is a life outside the traditional 9-to-5 grind, they say. "Our goal has always been to be work-optional and location-independent," Josh says. "Along this journey we built a business that we never really accounted for, and it's helping us with our goals. The 9-to-5 jobs are becoming more optional faster than we anticipated."
In fact, they've already started to go at least partially by the wayside. "I put in my 30-day notice and I'm dropping down to working two days a week," Ali says. "I'll be able to pursue more entrepreneurial stuff through our business and our social media platform and everything else."
Video by Courtney Stith
The pair are currently saving about 90% of everything they make and using a portion of that money to invest in a portfolio built predominantly from low-cost, broad-market index funds and ETFs with a sleeve of dividend-paying blue chip stocks. Through a partnership with other investors, they also plan to buy more real estate.
The couple are eyeing a day when rental income from their current and future properties as well as dividend income and small, steady withdrawals from their brokerage accounts will provide them sufficient monthly income to live on while they continue to expand their business.
In the meantime, Josh and Ali say that the gradual recession from the 9-to-5 life has allowed the couple to live the way they've always wanted: together. "You choose a family and the people you want to be with, but in a typical life, they get the scraps," Ali says.
"I'm grumpy in the morning and in the afternoon and my co-workers get the best version of me, and I think that's kind of twisted," she adds. "That's why we're doing what we're doing. I want to spend most of my life with people that I care about — not the people who are paid to spend time with me."
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