In episode 79, we focus on creating wealth to build a path towards financial freedom. Walli Miller, a self-proclaimed Monday Nerd, joins the podcast. Walli discovered the FIRE movement (Financial Independence, Retire Early), which changed her life. She started the business Financially Thriving, where she offers money coaching. Walli helps high-achieving millennials and Gen-Z professionals who feel overwhelmed with their finances.
No matter your age or the balance of your retirement fund, in this episode, you will learn tips to start and maintain healthy financial growth. Regardless of when you plan to retire, we provide solid advice you can implement to achieve financial wellness.
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Financially Thriving and Financial Wellness Roadmap: Website
FIRE Movement - Description
For more info, see complete show notes: https://www.getthebalanceright.net/blog/episode79
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Get the Balance Right Coaching: Website
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Heather & Get the Balance Right - Link Tree
Zeitzwolfe Accounting: Website - Facebook
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Heather Zeitzwolfe: “Walli Miller. Welcome to Get the Balance Right podcast.”
Walli Miller: “Hi, Heather, I'm excited to be here. Let's get talking.”
Heather Zeitzwolfe: “You are a money nerd, just like me.”
Walli Miller: “And bright. There are not that many of us out there, but yes, I love all things money.”
Heather Zeitzwolfe: “That's awesome. And a lot of women have this fear around money and we've talked about that a lot on this show, but we are trying to demystify.
All of that around money and finance, and welcome to the show to talk about these things. You are part of this fire movement. Can you tell the audience what that means? If they don't know what that means?”
Walli Miller: “Ooh. Yeah. Okay. So when I tell people I'm part of the fire community, or I have joined the fire movement a couple years ago.
People think it's a cult, but essentially fire is an acronym and it stands for financially independent, retiring early. I definitely was one of those people. I am a millennial. And I think Millennials and Gen Z in particular have bucked the trend, this whole working. So the age of 65 is out of the window.
When I heard that there was a path to retiring early and I'm not talking instead of 65, you're retiring at 60. We're talking about being able to retire in your fifties or forties or even younger. If you have a right plan.”
Heather Zeitzwolfe: “Wow. We are going to go into that whole age difference in a little while.
Cause I do want to go deeper into that because my audience skews a little bit older and they're probably thinking “oh my God, is it too late?” We all have our money story and we've talked about that on this podcast quite a bit, but what was that defining moment where you thought I need to start building wealth.”
Walli Miller: “I am a financial coach now and I am a money nerd. And I think that even though I didn't always know the tactical things to do, I was always a little bit of a money nerd, but essentially I spent my twenties living paycheck to paycheck. Even though I was a high income earner, and I think this goes to a really good point that so many people say if I just made a little bit more money.
It doesn't matter if you're making $50,000 a year, if you're able to save 5%, 10% of your income, you're going to be doing so much better than somebody who might be making $100,000, $200,000 a year and spending every single dollar. My sort of defining moment. Was when I received my social security administration earnings statement which tends to happen after you work a certain amount of years or at a certain age.
And I was in my late twenties and I had all of the earnings that I had ever earned in my life, including that job when I was 14 working during the summer. And when I calculated the amount of money that I had made in my lifetime, I was like, what in the world, what is going on? Because it didn't seem like I had made all of that money.
I had nothing to show for it. Why am I going to say nothing? What I had to show for it was a closet full of clothes. I had shoes and shoes galore, but it wasn't really reflecting what I valued most. And that was a, wait a minute moment for me.”
Heather Zeitzwolfe: “After that moment, did you start a 401K or what happened? What was the next thing?”
Walli Miller: “When I realized how much money I had made in my lifetime, and I didn't have the bank account reflect that I really wanted to figure out what was going on. And I realized that I had some like budget leaks happening. One of the first things that I started doing was really understanding how much money I was bringing home.
Like what was my take home pay? And then how much money was I actually spending? And I first started with my fixed expenses, like trying to figure out. How much money did I actually spend on food and accommodations and transportation and things like that. Then I began creating a system to have that, be able to build a savings account and be able to have that financial cushion, which is really important.
But I realized that having a safety net, although important, and was something that I did before. What do I do next? What do you do after you really get focused in, on a good budget, having a really great spending plan that works for your life on having that safety net? What do you do next?
And the component that I was missing was the wealth building component. And even that term wealth, wasn't something that I was really familiar with. I equated wealth with being rich. I equated it with having the mansions and the Lamborghinis. And if you were an athlete and actress and actor, all of these different things, if you were that, then you would be rich.
And I really started with just defining what wealth meant to me and what it. Feel like, what were the feelings that I would feel if I was wealthy and sure. Some of it had to do with money, but a lot of it had to do with the experiences that I wanted to have with the piece that I wanted to have.
When I realized that, okay, saving money is really great, particularly for those short-term goals, particularly for saving for emergencies, saving for some of those things that you want to use money for in the short term, how do you build wealth over time? One of the key components there was investing.
And that was scary because in my mind investing meant gambling. And so I had to really navigate all of the jargon that was out there. All of the intimidating alphabet soup of 401K IRA, ABC 1, 2, 3, sort of navigating. In order to really understand first the type of investor I wanted to be.
And second, what was the asset class that I wanted to invest in? Because when we talk about investing, it's not just real estate, it's not just the stock market. It's not just businesses. So I really wanted to understand the type of investor I wanted to be.”
Heather Zeitzwolfe: “Yeah, it is very complicated. And now with digital currencies, Bitcoin NFTs, all of that.
Now it's even getting more difficult to understand. And I think that's one of the turnoffs for a lot of people is they feel like they don't understand it. They don't want to take the risk. It always seems risky, but there are ways to get around that risk. All right. I want to talk about some actionable things that people can do because you have been able to build wealth. You're heading towards an early retirement, is that correct?”
Walli Miller: “Yeah. I actually like to use the term “work optional”. I think, in particularly your audience, it's not about just sitting on a beach and doing nothing. It's about really having control of your time.
And deciding how you want to spend your time. And sure, maybe some of the things we decide to spend our time with will create revenue, right? We'll generate a profit, we'll bring in an income, but there might be also a situation where you might want to do something that may not generate any income, whether it's volunteering, pursuing a passion project that you might have, I like to use the term “being work optional.” I will be work optional. And about two years my husband and I really got focused on what was most important to us. So we anticipate being able to be work optional by December, 2023. That's like our goal date there.”
Heather Zeitzwolfe: “Congratulations. That is amazing. I love being frugal I've listened to you on other podcasts.
Sounds like you have also been frugal throughout your life, besides all your spending sprees that you were talking about a moment ago, but…”
Walli Miller: “Early on, early.”
Heather Zeitzwolfe: “ I have a lot of experience, with being frugal. I'm a total bargain hunter. I love to clip coupons and all of that.
What are some ways that you educate your clients on how to save money each month? That my listeners can also benefit from.”
Walli Miller: “I love this question. I do have frugal tendencies, but I am not a penny pincher because it takes too much energy. And I also want to be able to enjoy the life that I want to live right now.
So this isn't about building and creating a life of deprivation so that you can have a rich life later. This is about finding that balance about what is it that you're going to want today? What is it that you want today without forfeiting, what you are going to need in the future? There are a couple things to keep in mind, so sure.
Cutting expenses is a great first step. Really taking a look at how much money have you been spending in certain categories, does that. Select what you value most. And what I like to do is have a value aligned approach to spending. So does the way you spend money align with what you value most?
When I take a look at how I was spending my money in my twenties, I was essentially saying that I value clothes and shoes more than anything, but really that wasn't my value. Having experiences traveling spending time with my family. We lived in different states, so being able to spend time with them.
And so when I got intentional about my spending and stopped being like that mindless spender in my mind, I wasn't buying $200 pair of jeans, so I was frugal. I would go and do that bargain hunting. I would go to Marshall's or Ross or Nordstrom rack and see if I could get a good deal, quote, unquote, on a pair of jeans, but I wasn't respecting the money.
I wasn't even expecting the clothes because what essentially started happening was that I was accumulating so much stuff, so many material things, but I wasn't really, truly appreciating it. What did that look like? I had clothes with tags on it. So one of the first things that I would say is really get to know your numbers.
Understand how much money are you bringing in on a monthly basis. Second. I understand your expenses. Where's your money going? Take a look at all of those essential expenses first, and then take a look at the things that bring us joy that add value. Maybe even add some convenient that isn't necessarily a need, but it's a want, right? It brings us some joy.
How you're spending money really reflects what you are valuing most. Yes, reducing expenses is number one. The second step I would say is sometimes when you are frugal, especially if you have come up from a family that is lower income, I didn't have any problem with being frugal and finding ways to, stretch a dollar and clip coupons.
I still do that. Cause I find it fun. The other thing was increasing your income, especially in a digital age that we are right now, it is easier than ever to find ways to maximize and optimize skills that you have. Leverage those skills in order to bring in extra income. Perhaps you love your job.
You have a corporate job, nine to five, leverage the money that you are making right now in order to build wealth. So once you've reduced expenses, you have found ways to increase your income. Now with that extra money that you have, use that money to invest. That is how you can reach financial independence.
It doesn't matter if you're starting at 20 or if you're starting at 60, if you find ways to build that gap, that gap between how much money you actually need to the amount of money that you have leftover. If you can use that gap money to build wealth through investments. And when we talk about financial independence, for example, financial independence at its core is generating enough passive income through investments so that you have that safety net, it's essentially a money management philosophy. Or framework that prioritizes building investments, to such an extent that the passive income generated, provides for your cost of living. So for example, if you need $5,000 a month, that is how much your life costs. That's how much it costs to pay all of your bills.
How can I generate enough passive income? Work. Your energy begins to be replaced by passive activity.”
Heather Zeitzwolfe: “Walli, you just dropped probably about a hundred value bombs right in there. Boom boom. Wow. Oh my God.
I want to unpack some of that stuff. When people think about a budget. They cringe at the term budget. It sounds restrictive. And you were talking about, we don't want to have deprivation. I love that. I equated telling someone to have a budget, to going at a juice diet, where they can only have kale and spinach.
What are some suggestions that you have for folks who want to budget, but to them, it sounds worse than going to the dentist.”
Walli Miller: “I'm a financial coach who doesn't really use the term budgeting with my clients. I actually am a natural spender. And so what I want to do is create a spending plan.
On how I can spend my money, tell me how I can spend my money and I will figure out a way to spend my money. I think just as you mentioned, I equate a lot of physical fitness, health, wellness, to financial wellness, just as you mentioned, diets could be really restricting.
For the short term, but if you really want to have consistent change, you really have to make a lifestyle change. You have to make some choices that are going to affect you for the rest of your life that you can maintain. This is the same thing with financial wellness. Sure. You could say, you know what, I'm not going to buy anything unless it's on my absolutely need to live off of list.
How long will you be able to do that? Now, I will say I love challenges. So if you could do like a no spend challenge for a week. Awesome. Because I think it'd be makes you aware of all of those little things that you ended up spending money on, right? The vending machine, the stop at Starbucks, all of these little chotchkies you might buy.
Creating a spending plan, some people will say you're just using a different word. It's actually a different philosophy too. Because when you're thinking about budgeting, you're trying to match your income with trying to fit it in all these different buckets.
When you think about a spending plan it's yes, absolutely. We're going to focus on the things that are most important to you, but guess what? You get to define what's most important to you. You get to define whether or not you are going to spend money on eating out, or you are going to spend money on maybe downsizing and getting a smaller house with a smaller mortgage or a smaller apartment.
And no one can define that for you. If you want to have a line item where you get to spend money for traveling or even a luxury handbag, those are things that are important to you. So spend lavishly on the things that you care about most, but cut out the things that you don't care about. When we can take a look at how we've been spending money and become more aware of it, we can then at that point really focus on the things that we want to spend money and cut all those things that don't add value to our lives.”
Heather Zeitzwolfe: “I love this. It's a reframe. Even thinking about a different allows you to sort of embrace that philosophy. Looking at what you spend money on. For instance, I was spending so much on internet, but it was also connected to my Comcast cable. Century Link, came to my door and showed me that I could actually have higher speed internet at a lower price.
Why am I spending money on cable that I don't need, I decided to change my spending habits on internet, and I'm so much happier now. And I did the same kind of thing with cell phones too. I switched plans to a different provider, saved all kinds of money and people think, oh, I got to spend a couple hundred dollars a month for a family plan.
You really don't. Find other options that are out there. I love this idea of the reframing it to spending plan. That's awesome. You primarily focus on helping Gen Zs and Millennials plan for the future. Most of the people who listened to this podcast skew a little bit older, so the younger folks, they have more time to build wealth, although you've done it quite quickly, whereas older folks like me that may have had some money troubles over the years.
Their retirement is coming up fast and we're starting to panic. Oh my God, I'm not going to have enough for my retirement age. So what are some tips that you have to jumpstart and maintain momentum towards maximizing short-term wealth building?”
Walli Miller: “I love this question. I don't believe that retirement is an age.
It is. I said this a little earlier, which is really getting to know what your numbers are. Get to know what your income is, really understand what your expenses are. Understand how much money are you spending on a monthly and a yearly basis?
Because when you understand how much your monthly expenses are, multiply that by 12, so you can get your yearly expenses,
Say for example, you spent $40,000 a year. Now you might be saving, but wait a minute, hold on. Who spends $40,000 a year? Now, I'm not talking about income because a lot of times we think, oh, well, I make $75,000 a year yet, but you're not bringing home that much. How much are you really spending? So understand what your monthly expenses are. And again, only you can decide what you want to spend money on. So put not only your food, those essential needs, but the things that you want to spend money on.
If you spend $40,000 a year, you multiply whatever your annual expenses is by the number 25 and this is all because of the 4% withdrawal rates, which I will unpack a little bit. What we'll do is that you will get your annual expenses, multiply that by 25. So 40,000 times 25 equals $1 million.
So essentially what the 4% rule says is that if you build a $1 million nest egg, you will be able to withdraw about 4% on an annual basis and that money will last you for the rest of your life. And so that is how you can begin using it. When people first see that nest egg they might say, okay, $3 million.
That just seems so overwhelming, but then we take a step back , because it's really about how much you save. If you need a $3 million nest egg, does your gap money, does that allow you to be able to build that wealth in that way? And for some people it absolutely does. And for others, they're like, you know what, it's going to take me 25 years to build a $3 million nest egg. I think I can find ways to reduce the amount of money that I'm spending so that I'm not feeling deprived.
I'm living a really full life, but also so that I don't have to work until the day that I die. When people come to me and they want to begin wealth building and they want to start investing, they'll say how can I get started? And my first question back to them is do you have access to a workplace retirement plan, such as a 401K or 403B, or if you worked for the government or military thrift savings plan, or if you're self-employed, do you have an IRA? Do you have a solo 401K? And these are the easiest ways to begin building wealth. And guess what, if you have been contributing to these types of retirement plans, you are also an investor.
These types of plans allow you to begin investing money without being so complicated. I think a lot of people, when they think about investing, they're like really asking what company should I invest in? And it's I don't know. I don't know what company, because a good company today, will it be around 10 years from now?
Let's talk about Kodak back in the sixties and seventies, and today it's like, what's a Kodak. And so really leveraging those type of retirement. It's a good thing. I want to leave your audience with this acronym. I say, if you can learn how to cut the fat and the fat is food, accommodations, transportation, and taxes.
If you can learn, cut those type of expenses. You don't have to worry about all of the little things, focus on those areas first, and you will be well on your way to building wealth.”
Heather Zeitzwolfe: “Yeah. Cut the fat, take that money and invest it.”
Walli Miller: “Today it's so easy to start investing with $25. Cut out a couple of, lunches that you would go out to buy and then just pack your lunch and use that $25, to begin investing. When I started my financial wellness journey, I started with like a hundred dollars.
That was my first investment. I didn't know really how to invest. I wanted to get confident in, I was very scared. I equated it to gambling . It was simply about really understanding how can I use some of the tools that I have and without being really risky.
I like to say I'm a lazy investor. I don't have five screens going up and reading stock charts. I want to live my life. I want to automate. I want to take a passive approach to it. But I also want to mitigate risk. I don't want to be riskier than I need to be sure. Maybe if I would've been riskier, I would have been in a much better place, but I could have also been in a worst place because I took too much risk on.
So there's a way to have good, maybe a semi-aggressive approach without being as risky when it comes to investment. And as I mentioned, investment, isn't an age for me. It's a number. And so it doesn't matter if you're starting at 45 or at 55, there's a way to build wealth through investments, whatever the investment avenue you take.
I talk a lot about the stock market, although I am also a real estate investor because I feel like the stock market again, you can start over. Very simply and in small doses.”
Heather Zeitzwolfe: “You mentioned that retirement funds, you are an investor and people, oftentimes when they sign up for a 401K, they check some boxes.
They, okay, I'll get this one fund and then they never look at it again. Empower yourself as the investor, take a look at these things and evaluate, maybe you need to change it up a little bit. Maybe there's some better funds that are out there for you. Really be empowered that you are an investor.
Oftentimes people are paying off a mortgage. They are building wealth through 401Ks, Roths, et cetera, but then there's the other type of debt. So people are struggling with credit card debt, maybe car payments, student loans.
What are your thoughts if they want to start investing while they're paying that stuff? Should they put investing on hold or if they're able to get a better rate of return than the debt, should they try to invest a little bit and pay down the debt? What are your thoughts?”
Walli Miller: “Sometimes it's not simply a math question, and I actually say it's really the mind over the math, it's the mindset over the mechanics of finances. So can you be in debt and also be an investor? Absolutely.
But here's a couple things to think of. What is the interest rate that you are paying to a financial institution? On a loan or a credit card debt that you might have, so many credit cards have 15, 20, 29% interest rate. Now, if we think about what the stock market returns well, on average, the stock market returns around 10%.
Now the last couple of years, it's been 20% and higher, but let's just, be more conservative and say on average, the stock market returned around 10%. Even if your money is making 10%, if you are paying 29% or 20% on a credit card, it doesn't make a whole lot of sense. So I don't like to use a term good debt and bad debt, but I do like to use a term productive debt and non-productive debt.
Nonproductive debt is debt that you are paying off for a decision you made last year that no longer serves. If you purchase a clothing item, for example, or spend money on buying a round a drinks for a group of friends, that experience is long gone. Are you still paying for it today?
Because you put it on a credit card and it doesn't even add value to your life anymore. But we should begin to think about things like that versus a mortgage where, especially today mortgage rates, interest rates are so low. They're about 3%, 2%, right? So you can get a mortgage rate on two or 3%.
But you're also building that value. You're adding your property's appreciating. If you purchase it for $300,000, it might be worth $315,000 right now, or $350,000 or whatever the market is dictating. Because that interest rate is lower, but it's also adding value to it.
That's a productive day and being able to invest while also having that type of debt is a great thing. Some people might even argue student loans is a productive debt, it could be, so many of us go to school and then don't use the degree that we studied for. But if having that degree also allowed you to have promotions and seek higher paying jobs, it is productive debt, but I have seen student loans where some of the student loan interest rates are 10, 11, 12%.
Really what you want to do is knock down that high interest debt first, whatever it might be. So that you can begin investing. Now, if you have a lower interest at something like a student loan, or a mortgage where it's at 3%, 4%, then there's ways to be able to balance paying down that debt while also investing.”
Heather Zeitzwolfe: “Student loan debt is a horrendous thing, and hopefully there'll be some provisions to help people with that. But oftentimes I think, forget the fact that if they paid it down quicker, they can get rid of a lot of those interest payments just by paying down the principal quicker.
So that is something to think about as well, when they are thinking, where am I going to put my money? Should I pay this off? Or should I invest? Because in the long run you could actually save yourself a whole lot of money just by paying it off quicker. Tools. And there are so many fun calculators online but some people are not techie.
So what are some of your favorite tools whether they're tactile, like the envelope system, I still use my check register maybe using some kind of technology software. There's a lot of stuff that's free out there. Some stuff you pay, what are some of the tools out there that you really like to do?”
Walli Miller: “I'm glad that you said that. I will say trying to recommend a tool that will work for everybody is really hard, right? Because of what you said, some people will prefer something that's accessible on a phone, like an app versus some people still use pen and paper or an Excel spreadsheet or whatever the case might be.
So I like to keep things simple. And there isn't a lack of financial literature out there, right? Personal finance stuff out there. There's some really great podcasts, YouTube channels, blogs, books. There's some really great resources. I like to keep it simple. And I use an Excel spreadsheet. It's the same Excel spreadsheet that I have used for a decade.
And I just list all of my income there and list all of my expenses and I make sure that spending plan aligns again with what I value most. So that is something that I like to use. For some people, if using plastic, if using a debit card or credit card has been difficult for you because it's easy to lose track or it's easy to swipe away, I would say try going to a cash system.
What does a cash system mean? Groceries is one of those things where we don't know how much we actually spend on groceries or how much we actually spend on dining out. And so set whatever your plan is for groceries, for example. So let's say you want to spend $500 a month on groceries.
Take out $250, $200, whatever the case might be, if it's on a weekly basis or if you do one big, large shopping trip once a month, but let's say you get paid every two weeks, take out that $200, and put it in an envelope. And when you go to the grocery store, You're going to be pulling money from that envelope to buy groceries.
And guess what, when you're down to your last dollar, you are not allowed to borrow any money. It's an easy way, a visual way, to be able to keep track of money. Now I'm a Millennial, so I don't like cash, because if I have a $20 bill, as soon as I break that $20 bill, all of a sudden, I will spend it on a candy bar on the vending machine, on this, on that.
And next thing I'm like what happened with that $20, right? It's a little bit easier for me to spend money, cash money than it is to take out my debit card for, something that costs a dollar. Find the system that is going to work for you.”
Heather Zeitzwolfe: “You've given us some awesome tips, Walli, and you have this really great PDF on your website, the roadmap. Can you tell us about what you put together there and how people can get it?”
Walli Miller: “Yeah. So if you visit my website financiallythriving.com, I'm also pretty active on Instagram. You can sign up for my email list and you'll get a free roadmap to financial wellness, and it really focuses on some of those questions. What does it mean to you, also, do you know what your expenses are? Let's break it down between what are your essential needs and what are some of those wants that really you want to include as part of your spending plan. It's a free resource available to anybody all you need to do is enter your name and your email address and I will send that to you.
When you complete the roadmap to financial wellness. You'll also get access to a portal, which it'll take about 10 minutes of your time. But it's a really cool resource to get a financial snapshot. If you've never tracked your net worth, for example, to really know what are your assets, right?
How do you define an asset? What are your liabilities, how you define your liabilities. It really gives you a visual representation of what your net worth is and whether or not how on track are you to reaching a financial milestone. Both of those resources, you could just go to financiallythriving.com to get access to.”
Heather Zeitzwolfe: “Walli, thank you so much for being on the show today. This has been great.”
Walli Miller: “Thank you for having me, Heather. It's been a pleasure.”