Hello, everyone.

And welcome to an all new episode of The Financial Confessions. It is I, your host, Chelsea Fagan, founder and CEO of The Financial Diet, and a woman who loves talking about money.

And I'd like to say Thanks to Policygenius for supporting this episode of The Financial Confessions. Policygenius is your one stop shop to find and buy the insurance you need. Head to policygenius.com/tfc to get your free life insurance quotes and see how much you could save.

And today, my guest is someone that I have known in the personal finance space for several years now. We've been to conferences together. We've collaborated on work stuff.

We've been in mastermind groups together. She's done events with us. She's a person who if you have an interest in personal finance and have been kind of in this space for a while yourself, especially if you're a lady, you probably have come across her work at some point or another.

She's also someone that I think has an extremely unique and actionable perspective on a topic that is very interesting to a lot of people who want to take a slightly more active role in the kind of investments they're making throughout their lives. We talk a lot on this show about investing in the market and sort of more passive ways of generating wealth. And it's very important that most of us participate in that, especially for things like saving for retirement.

And for most people, investing, especially with things like retirement accounts, are going to be a huge part of your overall wealth building strategy. But another really big way to both secure long-term wealth, to generate passive income, and just generally to make the best financial decisions possible is in our real estate choices. Now, most of us will end up buying a home at some point in our lives, which, for many of us, including even myself, up to the point that I bought my first home last year, remains kind of a mysterious process.

But beyond that, we know that for many average Americans, the homes that we live in, the homes that we own, maybe even the homes that we rent out, are going to be a big part of our overall long-term wealth building strategy. It's also an area that many people find, quite frankly, kind of fun, and an area in which you can have a lot more active role in the kinds of investments you're making and the value that you stand to generate over time. What makes Sarah so interesting in this regard, spoiled her name, preempted myself, but what makes my guest so interesting today is that she is someone who is incredibly active in leveraging real estate as a wealth builder.

But she does it on a budget. And she makes doing so accessible to a lot of different price points and in a lot of different markets. A lot of times, the real estate influencers you might be hearing from are just, frankly, rich as hell and living in a really unrelatable way, and making a lot of unrelatable moves when it comes to real estate.

My guest today, Sarah Wilson of Budget Girl, is someone who does all of those things, but on a budget I think a lot more of us can relate to, and with a lot more insights that are super useful to all of us. Without further ado, my guest founder of Budget Girl, real estate maven, Texan, Sarah Wilson. Hi, Chelsea, it's an absolute honor to be here today.

Thank you for inviting me. We're so excited to have you. So really quickly, can you just start us off by telling us what Budget Girl is, why you got started in it, and how real estate fits into that?

Absolutely. So Budget Girl is now almost eight years old. And I started back when I was-- shortly after college, in a ton of student loan debt, over $30k's worth.

And I was making, post-tax, $19,200 a year. So $33k debt, income, and I was just kind of in giant trouble. I lost my job.

And I swore I would never have-- I had to get rid of the debt to-- in order to live any sort of reasonable life where I wasn't terrified constantly. So I started budgeting. I moved to a new state and essentially made budgeting and talking about my money on the internet my hobby, which eventually made me money.

I paid off the debt in three years through a combination of side hustling and decreasing my expenses. And I now have a net worth of over $200k. Good for you.

And so how does the real estate fit into that? So I was never really particularly interested in buying a personal home, because I don't think renting is a waste. Let me start out by saying that.

I think there are times in our lives when renting is absolutely the best financial choice. And there should be no stigma about that whatsoever. On the flip of the coin, I am now a landlord.

And I saw a lot more benefits to purchasing a home where I could myself live, and I could also rent it out then just having a home that was going to constantly cost me money the same as renting. So I started kind of looking, after I paid off my debt, looking into investing and also real estate investing, I got into the bigger pocket side of the internet, and found it really, really interesting that you could potentially leverage a really small amount of money and gain control of a lot of money's worth of real estate, and use that to make it another income source. So I currently don't pay anything for my house.

I live in a house. And my rental income pays me $140 a month on top of all of my expenses for it. So I've made-- I've essentially eliminated one of the giant portions of your expenses, a place to live, and turned it into something that will make me money.

Also, I live in Texas, so this might not be possible everywhere. It is in Texas. Can you share a little bit of the numbers about what you bought your home for, what you put into it, what you did to it, what you get back out of it?

I would absolutely love to. I love talking numbers. So I bought a three bed, two bath on each side duplex in Texas, College Station.

And I paid $230,000 at the very beginning of the pandemic. And so many people told me I should not be buying a house then, but I did. I did an FHA loan.

So I only had to put 3.5% down, which was about $8,500. So less than $10,000 in at the very beginning. I had saved up that cash.

And I was able to renovate a little bit on my side, essentially rip out the floors, change a few lighting fixtures, paint, paint, and move in. I already had a tenant in there when I bought the place. And so I already had cash flow coming in.

I actually rent out the A side of my duplex to now a really nice lady earlier this year. I had a tenant change. And I put fork into a renovation on her side to make it really gorgeous and nice.

And I also rent to my boyfriend on my side. So between the two of them, I make $1,740 a month. And my mortgage is $1,600.

I have refied it since I first bought the place. Originally, I was paying about $140 a month towards my mortgage. We stan nothing more than the fact that your boyfriend pays you rent.

It's queen behavior. It's icon [BLEEP]. We love it.

So if you want to talk about that, I would love to. We were sharing a place before and splitting the rent 50/50, and the expenses. And we had just an adult discussion about it.

And decided that him paying a flat rate of rent to me, and yes, he does have a lease, made more sense than us trying to split costs down the middle kind of month to month. He's paying off his student loan debt. So fixed prices for that make more sense for him.

He's getting a really excellent rate for the area. He doesn't pay pet rent. He didn't have a deposit, just $500 flat, which is-- and he has a home office.

And we share the common areas and our bedroom. So it works for him. It definitely works for me.

I did also want to say, homeownership has its costs. And it's so important to have an emergency fund for that, because over the past two years, I've paid out $13 grand in costs for the home. And so when something like that comes up, like we had a flood in the kitchen, I paid that out of pocket.

And it wasn't a sudden expense on his part that he suddenly had to do, even though his name isn't on the deed. Well, I mean, that makes sense. And I feel like it's so normalized when the genders are in the other direction that we often don't even think about it.

Now, you mentioned at the beginning of our conversation that renting is, in many cases, the best financial decision for a person. And renting versus buying is not a clear cut answer. Can you talk a little bit about how you made the decision about whether renting or buying and what type of buying was right for you, and kind of the criteria that other people can use in their own lives?

Absolutely. So like I said, if you don't have funds in case of an emergency in a house that you own, you're going to go deeper into debt. That's going to cost you.

Definitely, I would suggest having as little debt as possible. I paid off all of my debt before I bought a home. I realize that for some people, low interest debt doesn't necessarily factor in as much.

I've always been on the lower income side. I didn't want to have a huge amount of bills that I had to cover in case anything ever happened. So I paid off all my debt.

And I saved up my down payment, which was low due to the FHA, which was fantastic. And then I immediately saved up a $10,000 emergency fund for the house, which I had to use a couple of times. I've often heard of renting versus owning compared to an actual house.

If you are renting, the amount that you're paying every month is your absolute ceiling amount that you're going to have to pay. If fridge goes out, if your stove goes out, if something happens to the house, that is all somebody else's problem. And in your rental contract, your landlord is going to have to pay for those things.

If you are purchasing a home, your mortgage is going to be the floor of what you pay on any given month. Anything else that happens above that is going to be your responsibility. And that's not to scare anyone.

These things happen every once in a while. I've had my fridge go out. Like I said, I had the kitchen flood.

And then I had to try to do some landscaping stuff to make sure that didn't happen again. But if you don't have any wiggle room in your budget, renting might be the best choice for you. Yeah, I think that makes sense.

And I mean, it also definitely makes sense in terms of the market that you're buying into . A lot of people around the New York City metro area, especially at the height of COVID, were getting all kinds of bad deals. They were paying systematically six figures over asking, waiving inspection, having no contingencies.

Doing these things to get into houses. I mean, my parents sold their home in Philadelphia at the height of all of that. And it was an amazing deal for them.

They had six offers in the first day. And they were all over asking. They were all crazy.

And so they were like, well, sweet, if someone is willing to do that, we'll take it. But for the people on the other end of that, it's not at all unreasonable to think that they could be upside down on their mortgage pretty soon if the bubble bursts. And so for people who are looking to buy into a market that is either hyperinflated, or very competitive, or might be a bit of a bubble at the time, you could have the money to buy and still not be in a good place to buy.

On the other side of the coin, rental prices are so expensive now in some cities, it's very hard for people to have enough to rent a place, much less buy. And they could potentially buy for a smaller mortgage payment. But the market is so inflated and kind of stacked against them that it makes it very difficult.

Can you talk about the FHA loan? How you got it, how you were eligible for it? Sure, so it's not necessarily just for first time homebuyers, though often, it's thought of as that.

But it's just a way for people to purchase a home at a lower down payment, which is excellent for people who don't just have hoards of cash in their backyard. So I just started talking to lenders and I was immediately presented with that as an option. I could have-- because I did the FHA loan, I do have to pay private mortgage insurance, which is, I think, $77 a month.

And that's just because I don't have 20% in the property. Once I get to that point, where I have enough equity in the property, I can refinance that out. But currently, that $77 makes no difference to me, because it's still a property that I'm cash positive on every single month.

Also at the same time that I bought, my current landlord was planning to increase the rent by $300 a month. So it made more sense, at that time, to go ahead and purchase. Because I had found the right home.

And I had been looking for over a year. Wow, how did you know it was the right home? I looked at homes for a year and figured out exactly what I could get for my money, exactly kind of what I wanted.

And I had looked at basically every multifamily property in the Bryan-College Station area. So when I found this one, I was like, this will work. And I immediately knew.

I know this is an anecdote that some of you may have heard before. But whatever, I'm going to say it again for those who haven't. I only-- when I bought my home last year, the hot stats on it are that it was about $125,000 less than it otherwise would have been given the normal pace of things in New York City because of COVID.

So the people selling it took a loss. But they actually-- they're our neighbors. They moved to another unit in the building.

And they're doing just fine. But they so they took a loss. And we came in, actually, slightly under asking and got it.

We bid on it within under 24 hours in the market. And it was actually ended up being appraised slightly higher than we ended up paying for it. So in terms of the financials of it, it was a good time to buy a New York City, let me tell you.

But fun fact, I only ever looked at one apartment, only ever went and visited one apartment. Because for like six months ahead of time, I had like a very, very, very thorough feed that I had been curating of all of the homes, all the criteria, what made it a good deal, so on and so forth. And so a lot of people, I think, who feel intimidated by the process of doing a ton of home visits, and going to open houses, and things like that, if you're not buying in a crazy, superinflated market, it's very possible to do a very thorough home search without ever leaving your home and becoming very familiar with the market without ever leaving your home.

And for us, I kept that feed going. We were over 100 days in escrow, or between closing and-- or between offer being accepted and getting the keys. And in that time, I had the feed going every day, I never saw another apartment that I would have looked at.

And the criteria never changed. So I do think that for some people it's like an all in-- all intensive, especially my friends who are moving to Connecticut, and New Jersey, and all these really, really super hot markets, they don't have weekends anymore, because every weekend is going to multiple open homes and things like that. But that's not the only way to do it.

I love how scientific you got with it. I was a little bit more open to different setups and situations, because I was looking at it as an investment property, one I was going to have to live in for a while, which made my bar a little bit higher, of course, because I wouldn't want to rent anything I wouldn't also be willing to live in. But my parameters were closer to the realm of what would this be good for as a rental.

How much could this gain as a rental? Is it close to the right things? Is it in a good neighborhood?

How's the traffic? And so I kind of put aside some of my own preferences, like for big windows for plants, and thought of it more as a long-term investment property. I love that.

Now, you mentioned some renovations that you did. You actually-- fun fact for those watching the video the wallpaper behind you is actually wrapping paper and double-sided tape. We love it.

So budget friendly. You are someone who definitely is not afraid to get kind of hands on when it comes to renovations, and home improvements, and things like that. For people who are interested in doing it kind of at any level, whether it is for a rental property, or a home they own, or even a rental unit that they're renting in, how do you decide the projects that you're doing?

And then how do you decide what you do yourself versus what you outsource? That's a really fantastic question. And I really have to take it on kind of a case by case basis.

So anything electrical or plumbing immediately gets outsourced. And then it comes down to a matter of am I going to be able to do this properly, and is the amount of time I would have to dedicate this worth less than the money that I would have to pay to get it done? So I painted both of my rental units.

And I even painted my whole Airbnb outside with-- I own a 1984 vintage camper. And that was a job to paint. But I did that myself because I was confident in my abilities to paint.

And doing little woodworking projects. I've dug a French drain at this point, landscaping projects. But I did outsource the floors, because I did not want to have to buy all the equipment for that and do it.

And it was just really nasty work to tear up all of the old tile floors and put in the nice LBP. And I did outsource one other thing, which was the cabinets in my A unit when I did a reno, simply because it was going to take me too much time. And the people that offered to do the job, it was a very reasonable price.

It was $500 to completely pull, paint all the cabinets, and get them really nice looking. And I didn't think that I could do it in the time that I needed to the degree that I wanted, because I wanted it to be a really nice place. Can you give us the numbers on your camper, out of curiosity?

Yes, all right, so 1984 vintage holiday rambler camper. It's kind of a one bed, one bath, 200 square foot unit, gorgeous, adorable, I'm in love. Spent $4,200 on it.

Got it from Searcy, Arkansas. The people who it had already done the worst work, which is the tearing out of all the walls, patching all the leaks, building everything back out. So essentially, I got it, I had to paint, build out a bedroom, fix a lot of the electrical work, and then get a couch, decorate it, stock it, everything like that.

All in, I'm at about $15k on it. So it costs me a little bit more than I planned. And it also took me about a month longer than I thought.

But yeah, $15,000 for a really adorable camper that is currently an Airbnb. And it's not making me a ton of money, but I'm breaking even. And it's only been up for three months.

So I have-- I very high hopes for it, especially come football season. We'll drop that link. You guys can check it out.

So do you just like keep it parked in a campsite? How does that work? So there's a local RV park, which is really gorgeous and beautiful.

And they charge me $465 a month to keep it parked there. And I'm there through the end of May. And even after electrical, internet, electricity, water, everything like that, I'm under $500 a month in expenses.

And I've been making around $500 a month renting it out. I'm just not making a ton of money yet. Eventually the plan is to find some land, build out a permanent pad, and make it a really cute little destination.

I love that. Wow, so inspiring. So in terms of the camper, adding it on, the reason that you made that your next property, is it just because of the affordability of it?

Yeah, I mean, the camper is already worth about $5 grand than what I paid for it. I've had multiple people offer me in the $20 grand range. And I'm $15 in, so several people have said they would love to live in it.

I've had several long-term stay requests. But right now, I'm keeping it as a short-term camper. And once I put it somewhere, that'll be about another $10 to $15 grand investment.

But essentially, it's a home for $30 grand, which is fantastic. I love accessible ways to do real estate and kind of unique ways to do real estate. So I think it's really cool.

And I love-- personally when I say in places on Airbnb, I love staying in weird cool places. I've stayed in a Schoolie and in an A-frame. And I just love that kind of stuff.

I think it's really unique and an experience. So a lot of people get really kind of in their heads and intimidated by doing renovation projects that they haven't done before. And I've always been fairly scrappy.

And I can figure it out. I've got YouTube. But you can also ask a local handyman or someone for their advice on how to do something.

So I-- and sometimes you screw up. I tried to do some sheetrocking and completely miffed it. But I was able to hire a handyman to come in and fix what I had done wrong.

Every single time I take on a new project like this, I figure out that I will learn as I go. Or I figure I will learn as I go. And I've always kind of been able to do that.

I'm in the room when I hire people to do things. So that I can learn from them. You shouldn't necessarily worry about having all of this construction experience or renovation experience before you jump into something.

Because A, you can hire it out. Or often, you can figure out how to do it yourself if you have just a little bit of self-confidence. A little bit of self-confidence, and I think, also there are steps that you can take to get more and more comfortable with the act of doing some of these things.

I have not done as many kind of higher level stuff, as many higher level things as you have, but the things that I feel comfortable doing in my home now, in terms of improvements, versus five, six years ago is night and day. And I also think there's a lot of real advantages in understanding the market when it comes to home improvements. Similarly to car repairs, I think a lot of people are just like, I don't know what anything costs.

They don't take the time to research. They don't take the time to compare. They don't really take the time to find out-- even when it comes to home improvements, for example, this is very seasonal work, often.

So there are low seasons and high seasons. And often, the prices will be very different. We did get painters, for example, to do most of our home, not all of it, but a lot of it, because it was just a very big, tedious job that would have taken us a week, but would take professional painters a day.

And excellent professional painters, experience was amazing. You buy the supplies through them wholesale. They take everything with them when they go, seamless experience.

But interestingly, their lowest season is during the holidays. People don't want to be doing home improvements during the holidays. So we were able to do an extra room with them for literally 60% off, 60% less.

So now I know, and all my friends know, if you're going to get house painting done, in New York City at least, try doing it during the holiday season if you can, because that's their low season. That's very similar with people doing kitchen, bathroom renovations, all the things that you have to pay for. Just because you are outsourcing it doesn't mean you always have to pay top dollar or that you can comparison shop.

That is a fantastic tip. And if you're in the south, get your AC serviced in the winter. It'll cost you half.

In general, in life, frugality is often about being offseason. So while we're on the topic of smart and savvy financial decisions, I want to take another moment to give a big thank you to the sponsor of this episode, Policygenius. Something we talk about often here at TFD is the importance of insurance.

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And just one more reason why we love Policygenius, because how much we love a good deal here at TFD, they don't add on extra fees. So head to policygenius.com/tfc to get your free life insurance quotes and see how much you could save. So when it comes to building wealth, that's something that you mentioned has been a big part of your life.

It's obviously what you talk about. You've gone from being pretty far in debt to having multi six-figure net worth. When you started your wealth building journey, you were low income, making under $20,000 a year.

I actually don't know if that put you under the poverty line where you were, or just at it? It was close. So but suffice to say, you were low income and not the type of sort of profile that people usually think of when they think of building wealth.

So how did you specifically start taking steps toward wealth building when you were at that place financially? So nobody wants to hear it, but it's a slow journey. I never want to be one of those finance pros it's like, just buy an ATM.

When in reality, it was lowering my expenses month over month, figuring out how to make things cost less. Increasing my income, sometimes with things like secret shopping, and dog sitting, and things that were not glamorous at all, until I could build up some other side incomes to some more money. I've been very privileged in that I was able to kind of build a business through this that brings me money in at a higher rate than I could DoorDash, or something like that.

Not that there's anything wrong with that, but I did have to eventually kind of trade up my side hustles for ones that made me more per hour to make it worth my time, and also not to burn out. So I ended up building Budget Girl up, which is now about a $30,000 a year business. I built an Etsy shop over time that made me $13k last year.

The housing thing, I made $20,880 in rental income last year. And my mortgage expenses were $19,000. So I made a couple thousand off of that, and didn't have to pay rent, which was huge, the biggest thing in my money journey so far.

And so over time, I was able to increase my income, lower my expenses, or keep my expenses fairly low. And I still don't really touch most of that money that I bring in from outside sources. And how did you stay motivated when you were at the very early stages of it?

I made it a game. And it was a game where it's kind of like a don't touch the floor. The floor is lava thing, where if you touch the floor, that's poverty and ruin.

So there was motivation there. I also set milestones for myself. So for every $5,000 that I paid off, I rewarded myself a little bit.

Sometimes it was like a $50 little shopping spree that I could do, or taking myself out to eat. About halfway through paying off the $33,000, I went to visit a friend in California, which costs about $400 total. But I got to see her.

I got to stay at her place. So it was inexpensive. We went to Universal.

And it was incredibly motivating every time I had kind of that next reward milestone in my sights to get there faster. I love that. Now, I obviously-- I've been following you on social media for several years now at least.

And you know your finances in that time have changed quite a bit. But your social media presence and when you share things about what you're eating, what you're doing, you're sort of day-to-day financial choices, they still seem very geared toward frugality. And you seem like the kind of person who definitely lives very well below your means, but still kind of gets a lot of fun out of it, gets a lot of joy out of it.

So can you share a little bit about your philosophy and your practices when it comes to staying so frugal, but still really enjoying things? I built habits while I was paying off debt that still stick with me. So I make a lot of food at home.

And we meal prep a lot of things. We buy chicken in bulk, and then process it, and keep it in the freezer. And just try to do little things like meal planning, and planning out vacations and events kind of far out that you can get a better deal on them.

I'm also very lucky that my boyfriend Jacob and I enjoy doing things like going to garage sales and kind of cooking together. So it's very important to have some people in your life that match you. Before I had a boyfriend, I had friends who would come over.

And we'd have a night in. And everybody would bring stuff to make pizzas or potatoes and play board games. So finding people in your life that kind of appreciate your energy and are interested in the same things, I don't have any friends to go out to drinks with, because that's too expensive.

And I still don't like it. Now, in terms of specific budget cuts versus things that you make room for in your budget, are there things that you didn't do while you were at your most frugal that you do allow yourself now? Absolutely, honestly, when you say it appears like I live very frugally, I'm going to be southern for a second and say, I feel like I live kind of high on the hog.

Because I lived at such a low level, I think I spent like $100 on groceries per month back when I was in debt. And now, we spend like-- I personally spend sometimes $500 a month on groceries and eating out, which might sound insane to some people, and insane in the other way to some people. But I don't feel like I necessarily am telling myself no that often.

I still buy my clothing through Poshmark and secondhand, because I enjoy the hunt for that kind of stuff. And I also still enjoy kind of doing activities that make me money. Both Jacob and I are going to a beef testing research study tonight that's going to pay us $50 each to taste little cuts of beef.

Oh my gosh. And we have done this a lot. Well, I mean, the thing is that I do feel like you do live in abundant life.

But you'll often-- you'll do posts about you're making sushi at home thing. And I think a lot of people, especially as their budget gets more flexible, I think in some ways, they maybe just sort of lose the fun of doing those things. Because yes, it would be a lot more convenient and maybe, in some cases, tastier to order out that sushi, have it delivered or go out to eat it, but then you don't get the entire activity that goes along with doing everything from scratch on a budget.

I'll be honest, the last time I made sushi, it was not very good. I was a little out of practice. And we order-- we order sushi a lot from a local place that does half off certain hours.

So sometimes, we order from there. And I don't know, I guess we just don't really think about it. You see an opportunity, and you go for it to just save a little bit of money.

And then you have more money to do fun things. I love it. So we have a good amount of questions from our audience, things that they want to know from you.

So I'm going to go ahead and get into some of those. Interest rates have been at historic lows lately. But they're inevitably going to go up.

How do I deal with that? How do I plan for it? How do you?

So my interest rate when I bought my home was a full percent higher. And I had the opportunity to refinance actually twice at this point down to 2.5%, which was really good. I would make sure that when you're signing up for like a home loan or something like that, that you can afford the rate as is in your budget.

But eventually, rates will probably go down again. And you can probably refinance, either to get off PMI, or just for a better deal overall as you build more equity. Well, another question that leads into that is did you refinance, which we know you did now, but why did you refinance?

And how did you know it was the right plan? So I did an FHA streamline refinance, which is essentially free. And I love a free thing.

I was able to use a mortgage broker that does those exclusively. And it essentially cuts one of your payments out, and then applies that to the loan. And if you just use the payment from that skipped month, you're back at 0, but with a lower interest rate.

So I was able to do that twice. I asked so many questions. I was a nightmare to make sure that I understood everything that was happening and exactly how my loan would change when I did that.

You also have to make sure if your loan is going to extend or reset to the 30 years, everything like that. So read every single document and be as big of a nightmare as possible until you understand it. How do I know if I'm getting a good deal on a home?

Research and if you can afford it. Yeah, there's basically no other way. What would you say, out of curiosity, because again, especially in the area surrounding New York, it has just been absolute pandemonium with people buying homes.

And from my vantage point, it's hard to understand-- because, I mean, I don't want kids, so I don't need the space, I don't aspire to live in a house with a yard, and a lot of things that I guess on a personal emotional level I can't understand. But even with interest rates being as low as they are, it's very hard for me to sort of put myself in the mindset of people who are paying so much for homes that are already pretty overinflated in price, paying so much more than asking, waiving all these inspections and contingencies. And it feels like, at least on the surface, I'm like how is this not a universally bad financial decision.

But yet millions of people are doing it. What would you say to someone who's looking at a market like that? That's a really, really hard market.

And I would keep looking at homes until you find one that works. I would never waive an inspection. That's terrifying to me.

And if you're paying so much over, you also might not be able to get a mortgage, because the home might not be valued at that yet. Unfortunately, in the case of a market that that's insane, you might have to just keep doggedly looking or wait until things die down just a little bit, which is heartbreaking to hear. I've put in five offers over the past year or so and haven't gotten anything.

But you have to absolutely run the numbers and make sure that when you're paying that off, it's not going to be a hardship on you. You're not signing up for something that's going to just destroy your financial life for years and years and years to come. Yeah, it really worries me when I think about the bubble bursting on this real estate market in particular.

Again, our home was very far under what its value would have been without COVID. But even I feel like we could be upside down at some point, if things go really, really bad in the next year or so. And of course, if you're able to ride that out, great.

But what if you have to move unexpectedly? What if you no longer have your primary source of income? There are so many-- it feels, I think there's something with our generation in particular, I think we're similar age, I'm 33, what are you? 34.

Well, wow, as the standard bearer of youth in this conversation-- sorry, no, but I do feel like our generation is this very strange micro-generation where we were sort of aware of post-2008 stuff, but we were young enough that we don't really take the financial lessons from it that a slightly older adult might have taken. My boyfriend in 2009 had-- he was older than me. And he owned a condo that he rented a room to his brother.

It was kind of a similar situation to what you're in, except it was a single unit. But he was way upside-down on his mortgage, because his parents were really pushing him, you're going to be 30, you need to own your home. This is the time in your life when you should be making these decisions.

He paid at the very top of the market in late 2006 or early 2007, when it was crazy inflated. And then he was upside down for years on it. That's horrible, super stressful.

I also feel like our generation is really starting to seek just any sort of peace whatsoever after graduating in the middle of a recession and everything else that's happening with the world. I've seen a lot, especially on social media, of us just like seeking any sort of stillness. And if you're constantly terrified about money and worried about money, it's really hard to not-- for that not to affect every other element in your life.

Well, and I also think a huge takeaway of 2008, when it comes to living on credit, cheap debt, being qualified for things that you really can't afford, all of that stuff, it's good until it isn't. It's good until anything changes or goes wrong. And I do think although it can be somewhat frustrating to do so in the moment, like setting up your financial choices in a way that you're able to weather a lot of fluctuations.

You mentioned the fact that when you get a mortgage, that now becomes the bottom of what you pay for every month. So having a huge buffer between what you're paying for and what you could realistically afford. I do see even in my own life.

I see people buying the tippy top of their budgets. And it's scary. Coming from where I did with money, with essentially no education, and kind of having to teach myself while I was really in the hole, I'm ridiculously conservative when it comes to things.

So when I was purchasing the house, any time I purchase anything big, I'm always looking at the worst case scenario of if I lose my job, how much cash reserves do I have to fund all of my bills, including my property to get another job, or if there was a giant medical thing. I have a $20,000 emergency fund between my personal and my duplex, which is a huge privilege. But I've also given up the opportunity to invest that, because I want to sit on those reserves just in case something happens.

But that brings me security. And I know that even if I have a fire in my unit, or my tenants don't pay, I'll be fine for a year. And that gives me enough time to figure out how to fix things.

Well, that brings me to another question, which is, do you also invest in the market? And if so, how do you decide what gets invested in the market versus in real estate? That is such an excellent question.

So before I bought my house, I decided to go ahead and start investing just in retirement. So I max out my 401(k)-- I'm sorry, I max out my Roth IRA every year. And I contribute to my company match.

So I have a Teachers Retirement System account, which I put 7.7% in. And my employer matches that, which is fantastic. And then I also put $500 a month into VT sacks.

And that is basically what I do. I have a couple hundred dollars a month I sometimes put into just brokerage accounts to kind of invest in companies that I really believe in and use a lot, like Home Depot, because every time I have a renovation, I spend so much time and money at Home Depot, it seems like I should own some of that. And everything else right now goes to real estate investing.

But what is your reasoning for that? Do you just feel like you can make more of an impact, that you know it better? I feel like longer term, investing in real estate now is going to behoove me more than just investing into the market.

I'm invested into the market. That money is growing. At the rate that I'm going, I'll definitely be a millionaire by retirement on that alone.

But with real estate, which is the thing I'm really interested in, stocks are fine, but they're boring. So I invest kind of what I consider the minimum responsible there. And then everything else, all the extra funds that I have, I get to push towards something that I really enjoy doing.

And when I can match the smaller amount of money with the amount of sweat equity I'm willing to put in and the amount of work, I feel like I can have a much bigger impact on my long-term wealth. We have a lot of people asking some variation of how do you define an ethical landlord? How are you an ethical landlord?

How do you do this in a way that is like-- that is humane and not terrible? I love that conversation. I do think-- there's a reason for some of the landlord bashing out there.

Some of it, I do believe, is just kind of like, why should you have it and I shouldn't? But mainly, I would never rent a place I wouldn't be thrilled to live in. I charge what is a fair market rate.

I actually charge under market for my area, but what I consider to be a fair rate for three bed, two bath. And I make sure to keep on top of every single thing on the property that could possibly go wrong. So I make sure that I get the AC service.

I get the dryer blown out. I do spraying for bugs. And any time that my tenant has an issue, I immediately go try to address it.

She has no problems. I have no problems. She takes care of the place and treats it like she has some ownership over it, because I've created a really nice, safe space for her to live.

And that's the only thing I know that I can do, other than just give away housing, which wouldn't behoove me. I think, well, and I think definitely there's a whole different level to it when you also live in the unit yourself. I'm right next door.

I mean, you were mentioning earlier about when something goes wrong in a rental unit, it's not your problem. And the tough thing is in places like New York with so many-- I mean, you pay in New York, we've paid you know $3,500 a month for places that were effectively run by slumlords, because the market is so crazy here. And there are many people who rent who if something breaks, if they're not getting heat, and there are all kinds of problems.

Yeah, maybe eventually you'll get your landlord or management company to do something about it. But you may have to take them to court. And that in and of itself is a huge can of worms.

So it is troubling to see just how unethical and unscrupulous so many landlords are. Yeah, and the city also doesn't really have you guys' back on that either. I read recently that they've taken away the opportunity to evict, which was supposed to be in support of tenants, but is actually kind of hurting landlords as well, because tenants know that they don't have to pay.

And I'm not saying every tenant or every landlord is like that, but I've seen a lot of articles where that just becomes a nightmare situation for everyone involved. For sure, for sure, we actually were-- the place that we bought, we cannot-- we can't ever rent it out. It's in our charter that we can't rent units.

And that was an interesting thing to think about. And that's something that's less a concern when you're buying a single family home somewhere. But when you are buying an apartment, a condo, a co-op, et cetera, it is important to consider and weigh the options of being able to rent versus what it means when units can rent.

Because for us, there was-- there's obviously some money being left on the table if we can't rent at some point in the future. But the quality of life of the building when everyone is an owner, a stakeholder, someone who has real commitments to the building, that outweighed the downsides of the rental thing. But I do think for most people buying a home, even if you do plan for it to be your permanent residence kind of indefinitely, at least knowing what your options are when it comes to renting is important.

Yeah, because like you said, you might have to suddenly move or something could happen. And then your place is just sitting empty. That's hard.

But I understand why you're building might have made that decision collectively. We live in a college neighborhood. And let me tell you, having lived in many other-- well, several other buildings in our immediate neighborhood that were full of college students all the time, no thank you, never again in my life.

I am not going to live next door to someone who's playing EDM until 4 o'clock in the morning and throwing up on the stoop. That's just-- I'm out of that period of my life. That's so crazy.

We have college students in my neighborhood. And they are the most respectful, kind, clean, neat people ever. I was really, really surprised that it was a mixed family and college student unit, which makes sense, because it's close to the University.

But we have some really, really fantastic kids around here that treat their places well. And I wouldn't hesitate to rent to them. I mean there are some good students, don't get me wrong.

But I mean, let's put it this way, the colleges in our neighborhood are $70 grand a year. And if you're a kid who's going to that college, and your parents are buying you-- renting you out a $3,500 a month apartment for you to just go have fun and be young in the city, I just don't think the concept of responsibility kind of lands in the same way. Yeah, I get it.

But so we've come to the point of our conversation where we hit our rapid fire questions, which I was just pulling up. For those who may not know how it works, these are just quick, off the bat responses, no right or wrong answers. And you can feel free to pass on them.

What is the big financial secret of your industry? And actually, for this one, I'd love to hear the financial secret of like the rental property industry. Rental property.

I think making it a really unique place with-- wait, I'm sorry, are we talking short-term or long-term rental? Let's do short term. So for a short-term rental, I think that making it a really beautiful, cohesive, unique space absolutely puts you ahead of people who are maybe just renting out a place with their old furniture.

I love creating that experience. And same in my long-term rental, creating a place that you would be thrilled to live in is absolutely going to make other people happy, too. What do you invest in versus what are you cheap about?

I like investing in things that will make me money long term and that I can have and look at for a while, like real estate. And I'm super cheap about souvenirs, or other things that are kind of disposable. So if I go somewhere, I'm probably going to take videos and pictures.

And I actually collect little pressed pennies. I'm not a souvenir or a collecting of junk person, because I see too much of that at thrift stores. You collect pressed pennies?

How sweet. Oh, adorable. What has been your best investment and why?

My duplex, so far. Absolutely, it's gained $80k in equity-- in value in the last year because of the market, which is really unfortunate for a lot of people who are shopping for homes. But just for my very personal situation is a positive.

I'm not saying I agree with the way the market is done. But it's benefited me in this situation. There you go.

What has been your biggest money mistake and why? Probably financing Taco Bell sorority gifts and more Taco Bell in college. That was really expensive to take out extra loans to live off of, and then just kind of spend that money like I was a rich person when I was not.

Come back to me when you've done that at a community college, which is what this one did. Crazy, but listen, whatever, I mean I don't regret the experience. OK.

What is your biggest current money insecurity? I am terrified that I'm going to invest in a property that is then going to be a money sink forever. So I'm being very, very careful about places that I look at to invest in.

And unfortunately, it means I've had to pass on a few places which could be really cool. But in my situation, every property purchase has to be a really great decision. So when we talk about foundation issues, or city guidelines that you could possibly have to dance around, or community HOA stuff, I just have to pass and move on.

Love it. What has been the financial habit that has helped you the most? Budgeting.

I am called Budget Girl. I still do it every single month. I love seeing where all my money is coming in, where it's going out.

It makes tax time super easy. And it makes a lot of decisions easy. We love to see it.

And lastly, when did you first feel successful? And what does that word mean to you? I probably first felt actually successful at some point when I was paying off my student loans, where I actually felt like I could do it.

Maybe when I paid off my first student loan and I got some of that income that I was throwing at it back. And I realized that I could actually change the way I felt about money. So when I fully paid it off and I had that money back to be able to do other things with, I just felt really, really proud of myself.

As you should be. Well, Sarah, it has been a delight, as I knew it would be. Thank you so much for joining us.

Obviously, you are of, famously, budgetgirl.com, as well as youtube.com/budgetgirl. Everyone should go and check her out. All of her stuff is amazing.

Follow her on Instagram. It's very inspirational. There's lots of great little DIY ideas and fun, frugal things to do, and make, and eat, and all kinds of great stuff.

Thank you again so much. Thank you so much for having me. This has been a dream.

Thank you, Chelsea. A dream for us as well. And thank you all for tuning in.

And we will see you next week on an all new episode of The Financial Confessions. Bye, guys. [MUSIC PLAYING]