00:00.00

wongga

Good afternoon real estate investment community. My name is Garret Wong and I'm your host of the investing to win podcast today I actually have a fellow podcaster on his name is Justin Peters justin how are you.

00:13.47

Justin Peters

I'm doing great Garrett thanks for having me on the show I'm super excited about our conversation today.

00:17.34

wongga

Yeah, likewise. Um so a little bit of background Justin reached out to me and thought it'd be really good collaboration to ah to talk about the topic we have today. Um, and before we get into that. I'd like to sort of find out a little bit more about you I'm sure my audience would want. Don't you give us the ah the intro in the particulars.

00:35.60

Justin Peters

Sure um I'll really kind of talk my my money story I think I think that's probably where a lot of this conversations got to go so I grew up ah middle class and I was blessed to have a dad that um was very transparent about money and taught me a whole lot of things. He didn't grow up up with a whole lot. So it was a goal his to to pass along to his kids and make sure we were financially savvy kids. So I knew a whole lot. Ah by the the right age of 18 about insurance about budgeting even a little bit of investing although that wasn't necessarily his strong suit. He he kind of hammered in. Ah, matching the 401 k I didn't learn a whole lot about the stock market or any other opportunities there but he was great and I think my story gets really interesting. This was Twenty twenty um when I decided to leave my employer and take a sabbatical I was in the same industry for um, going on almost a decade. And just kind of felt flat uninspired. It wasn't exactly sure what I wanted to do next and I got some great advice from somebody to to take some time off take a sabbatical and within inside of that sabbatical 1 thing they told me is to to not spend the first half a year sabbatical thinking about what career path might be next for you but instead invest into a project. That you've always wanted to do but you've never had time to do it because of work and as soon as he told me this I knew it was podcasting I'd fall in love with the medium of podcasting a couple of years before that and realized I could be a creator in this space as well. So I launched the struggle as real and it's been going on now for years.

01:58.73

Justin Peters

Ah, podcasting talking about all things money for 20 somethings.

02:02.91

wongga

Nice, okay, um I've only been at this for a year so my hat's off to you because it's not. It's not easy and as you as our my audience knows this is a passion project of mine as well. Um, so the struggle is real I why don't you tell us a little bit about that I think our listeners would.

02:19.22

Justin Peters

Yeah I think it it really stemmed out of Sunday conversations with my little brother. He's 3 years younger than I was I was in my mid 20 s at the time he was just graduating college and he'd asked me all these life questions. You know how do I get a job or how do I make friends or how these all these things and sometimes I would have.

02:19.58

wongga

Probably tune into that too.

02:38.91

Justin Peters

Answers for him because I maybe had just lived through that experience the last few years other times I'm like I don't know Kyle making friends and staying on top of people is kind of hard. Sometimes let me see if I can go find someone else that might have a better answer for that. So the the genesis of the podcast was really those conversations with with my brother and it morphed in to to. Um, honestly, just advice for Twentyomeths kind of navigating this first early defining decade and since then it's it's morphed into mostly money focused ah shows I feel that is the one of the hardest elements of of your twenty s is is starting to master and get. Ah, get a hand on your money. So I really love to dive into those topics.

03:14.70

wongga

Perfect. Well that is a great segue into this topic which is how to save enough money for the down payment of your first rental property I know it's going to resonate with our listeners quite a bit because when I bought my first rental property that was kind of like okay that's great I have the knowledge I think read a few books. But how do I start? So why don't you share a brief overview of why saving for a down payment is a crucial step besides the obvious.

03:42.43

Justin Peters

Yeah I mean let's call out the obvious I think it's a major crucial step because if you don't have money to put down. You're probably not going to be able to buy the home most even if you're getting a loan or a lender is going to lend you money. They want you to have skin in the game which is really what the purpose of a down payment is they want you to be able to put down some of your money and then they'll lend you money on top of that. So without some kind of Money. You're probably never even got to be able to convince a creditor to to lend you some money to actually go ahead and buy your first home. So I think that's an important first piece to it especially in the real estate investment aspect as Well. It usually takes money to make money and if you're struggling to save enough Money. You're probably got to struggle later on in life whenever the the bills are kind of flowing out of your rental properties and you're you're really. Um, getting hammered with some of this kind of stuff if you're going to always be um, you know, paying via credit card and carrying you know credit card debts or taking out ah outrageous own ah loans because you didn't put enough down the roi for these kind of real estate properties just aren't going to make sense for you.

04:51.72

wongga

So I mean what you're talking about then are are life skills. Okay, um, because I think this could apply to our listeners who might even be renting right now and are thinking of how do I get into my first home never mind a rental property.

04:55.19

Justin Peters

Definitely.

05:06.82

wongga

So I mean why don't you sort of apply I'm sure you've had some guests on of what you would say to even how to how to say for your first home. What are the different strategies that you might entail.

05:06.93

Justin Peters

Ah.

05:18.73

Justin Peters

Yeah I um for saving for a down payment I always love shooting for the number of 20% I don't Garrett is that the same in in Canada too. Do you drop pmi whenever you hit 20%

05:28.84

wongga

It is while there's a bunch of different rules. Ah for a rental property. It's 20 or 25 um for first time depending on the government's insurance. It's called Cmhc you might be able to get away with 5 if it's your first time home.

05:40.58

Justin Peters

And.

05:44.15

wongga

But let's just use 20 as ah, a pretty much of a gold standard.

05:45.22

Justin Peters

Yeah, and I think 20% is is a good gold standard regardless of some of these other factors but here in the United States it's a really great one because you don't pay something called Pmi which is insurance on your mortgage and the last thing you want to do is have to pay an additional cost on top of your mortgage. That you're already paying a whole lot for so that alone is is a really great goal and plus just having that much equity and ownership into your home right? from the get-go I think is a really great idea and it's probably a good indicator for how much home you can actually afford because you don't want to overspend and I think a good rule of thumb for that if you're you know. Renting and or buying is keeping your housing costs 30% of your total total income or less. But if I were to break down this. So I'd start with the 20%. Um, so I think a average home and Winnipeg is probably going around somewhere between like three hundred and forty thousand dollars if I if I got my numbers writer or not which.

06:38.32

wongga

Yep, pretty good.

06:39.98

Justin Peters

Roughly comes out to about 60 grand for a down payment so that would be my goal ahead of time I'd figure out how much money do I already have saved that I want to that I want to allocate towards that that savings rate let's say we already have $10000 and some of our savings accounts are checking accounts that we want to allocate towards that. Okay, all of a sudden now I have 50 grand. A 50 grand savings school that I want to save for and what realistically time horizon do I need in order to get to 50 grand and if you start doing the numbers and you and your partner can both add to that you know, add $1000 to that account $2000 a month. Okay, then it's got to take us twenty five months or a little over 2 years to save for our down payment. You can start doing the math and working the math and if you get to that number and you're like man a little over 2 years. That's not really what I wanted. That's not what I was hoping for I wanted to get my first rental property under my books by the end of next year maybe you're looking at fifteen months or twelve months instead you got to start crunching those numbers and realize okay can I realistically start saving 2000 $7000 a month in order to fund my my down payment.

07:41.94

wongga

Yeah, and I think for those listeners who are living quote unquote paycheck to paycheck right? I mean they're probably think shaking their head going I'm never going to be able to do that. It's going to take me 10 years but I mean I was I mean I'm 52 now. But when I was younger. Went through those cycles of living off credit cards. You know I had a house at the time. So I'd refy and I'd consolidate debt and think I was okay and then all of a sudden. The credit cards are creeping up again and maybe some of it was with rental properties but I mean. Living off 18 19 neteen twenty percent credit card debt is not a recipe for success. Um, and I would also say that you know with the burr strategy that a lot of people you know, buy a renovate um rent out rehab renovate repeat is it's just about trying to get that first property. So if if ah, we as in first -time investors are able to get that 50 60 $70000 to finally buy that first property and then you're able to renovate it now. The power of the real estate is going to start kicking in and now every year every two years you can refine take out money for your next down payment. And the chain is finally starting to go. You know what would you say to that.

08:56.18

Justin Peters

Yeah, and no I I 100% agree on that the that the first one is always got to be the hardest I'm mostly in the investing space when it comes to money and we always talk about how the first hundred thousand dollars is the hardest $100000, you're going to make because it mostly comes down to your own savings rate. Ah, after that compound interest starts to to play a factor. You have this like little part-time employee. That's also working behind the scenes generating some money for you if that's through real real estate income. It's that if that's through stocks and dividends if that's through some kind of other asset allocation class. All of a sudden your money starts making money and that's when you're like whoa this is cool. But yeah, that first hundred thousand or that first down payment that you're saving for is always going to be the toughest and it really is going to come down to you as an individual and your individual savings rate.

09:46.87

wongga

Okay, well let's let's back up a little bit then um, let's like we started off the conversation by talking about good habits. Um spending I mean so what did what would one do as a first step like look at themselves and kind of what chart out I don't know how do you How do you. Recommend they start.

10:05.35

Justin Peters

Sure? Yeah savings rates really comes down to two things. How much money. Do you have coming in and how much money do you have going out and whatever the difference is is your savings rate. Ah so I think we could probably approach both sides of the equation. That's how do I make more money and how do I save more of the money that I'm making. Ah, so garedt I don't know which one you feel like is more impactful to start with, but but happy to take it either direction.

10:29.24

wongga

Let's talk about savings because by nature I'm a spender. Um now I have some you know, disposable income to go out I'm a foodie I love going out but I also enjoyed doing that in my twenty s and I mean you know. I Think let's talk about sacrifices right? when you finally look at what that expense Column is.

10:46.53

Justin Peters

Um, yeah man I hate to throw out the the big bad bead word bew word but I really do think it starts with a budget and a budget in some kind of sense. Whatever is going to get you going I talk about this all of the time because. So many people I run into aren't budgeting at all so you don't have to buy really fancy software or make this overly complex spreadsheet. You just need to figure out what process am I got to continue to follow over and over again to at least wrap my hat my my hands around my money. And I figure out and figure out exactly where is my money going. Um so I would simply start just by documenting every single one of my transactions I think this is a really great thing and easy thing to do for thirty days so in January you're listening to this in December in January. Let's just make the commitment right now that throughout the entire month. We're going to write down every transaction that we make then at the end of the month you could categorize those transactions if you wanted and you could start real getting some real insight into where am I spending my money and I think this is where the the sacrifice conversation comes in but you can rank order some of these things. Um. I am not in favor of cost cuttingtting everything out of your life and being absolutely miserable for 2 years while you're trying to save for your down payment. We have plenty of life ahead of us. We can extend that that period maybe it takes us two and a half years versus 2 years but we get so much more quality of life out of this but I've also found whenever people actually start tracking.

12:14.39

Justin Peters

Some of the expenses that they're having they start to realize wow I spent one hundred and fifty dollars on eating out this month and whenever I'm actually looking at that most of that was just convenience. Food. It was fast food or quick dining type things I don't really get a lot of joy or satisfaction out of that. It's not really bringing any quality of life to me. I can just ruthlessly cut that out save that one hundred and fifty dollars make some some meals at home. Um, and and all of a sudden I just freed up one hundred and fifty or one hundred and fifty dollars into my budget but on the flip side if they're like wow. Looked at the amount that I'm spending on music I love going to concerts I couldn't imagine not attending those 2 concerts in January that really brought a lot of joy to my life well then leave that in your budget and let that be there's just I've found so many other areas that you can cut costs and you don't have to completely overhaul. Ah, your budget and your spending unless you're just at a huge deficit in terms of what's coming in and what's going out more times than not if you pick a couple of battles 2 or 3 in your budget and you start saving an extra 2 or $ 300 a month you're going to make a lot of headway.

13:17.90

wongga

Yeah I think what you're speaking about is having a plan a budget is definitely one of it. A part of that but where are we going? What is like I'm a big advocate of choosing a goal and then reverse engineering how to get there and if your plan is to get that first home. To get married to you're you're in your first home and now you want to have an investment property again. How do we get there or that's where we want to go? How do we get there and what are those steps and yeah, once you do your budget. It really comes down to me to how bad do I want it right. Um, how bad do I want to eat out knowing that it might be 5 years before I can afford my first rental property or I cook at home. Um, you know what would you say about sacrifices and and people saying well I need to live for today and offer tomorrow.

14:12.92

Justin Peters

And I think that's fair and I really struggle with this one, especially somebody. That's routinely kind of expressing ah habits that lean a little on the frugal side I do think you need to to balance your future and your. And your current self and that's a really really hard thing to do and you're the only one from a personal standpoint that really understands what that balance is right now. But once again with a little bit of self-reflection I I truly think that you could be living a joyful life and still setting your your future self up for success. And of course that does come down to sacrifices. But maybe it's just a little more creativity like I love going to business conferences. It's one of my favorite things to do I like to attend a lot of different conferences. Fencon is a very ah 1 near and dear to my heart which is a personal finance content creator conference. I am on this like amazing streak right now I think I have 7 conferences straight that I haven't paid for my ticket and you know conferences can be expensive like 30500 sometimes a thousand dollars for a conference ticket.

15:10.25

wongga

Wow.

15:16.49

Justin Peters

And it's not because I've weaseled my way in I've just gotten very creative and crafty with potentially getting free tickets. So a lot of conferences will have first time attendee scholarships that all you have to do is simply sit down for 20 minutes fill out an application answer a few questions for them. Ah, and they'll give you a free ticket. Others I've gotten free tickets through vendors I've asked my vendor if they want to sponsor me and I've also been a speaker um all the speakers usually get free conference tickets as well. So now. It's just a hunt for me to to try to how do I get this free ticket to this conference that I'm going to and that alone has saved me a couple of thousand dollars over the last two years

15:39.41

wongga

He.

15:52.80

wongga

Yeah, and the brilliant because now you still get to do what you want to do. But you're doing it on a budget. Um I love that. Okay, so let's um, let's say that we put a checkbox there we have looked at our budget.

15:56.82

Justin Peters

Yeah.

16:07.70

wongga

Ah, we've cut out what we can now we've got maybe ah extra thousand two $3000 but it's still not quite enough. What are the other strategies because that's cutting off the expense column. How do we bring in more.

16:18.64

Justin Peters

Yeah I think this is the more fun side to talk about to be honest, you can only reduce your expenses so much. But if you look about if you look at how much money can I make I mean you have an endless possibility there. You can truly make as much money as you as you really want in your life. Um, but you got to pay for food and shelter and all these things you can only bottom out your expenses as far as you can. So I love talking more about how do I how can you make more money versus how can you stop stop spending so much of your money and I think first and foremost it really comes down to your primary source of income It's fun to talk about side hustles and I really hope we get to talk about side hustles because it's been a passion of mine over the last eighteen months but if you want to make a big impact right away I would look at your primary source of income and for so many listeners I've heard that it's aspiring entrepreneurs that are working day jobs right now. So. W 2 earners or or day job earners. You have a consistent paycheck the number 1 thing I would suggest that you do if you want to increase your income is ask for a raise like it seems like a really obvious one that's out there and I know a lot of people are thinking about it but like realistically if you want to make an impact you can go and and start side hustling or. Or start a business or something but that's got to take some time to ramp up and get going if you're making $70000 and you go ahead and negotiate a 15 or 20% raise right? Off the get-go I mean all of a sudden you're up another 7 to $15000 like that's major money right from.

17:50.37

wongga

And you didn't have to get into learning a side hustle doing all that stuff which we will get to that's on my plan of questions to ask you. So I think you just peaked the interest of every listener who's working right now going? Okay, how do I ask for a raise I've been in the same job for 1012 years

17:50.96

Justin Peters

Right? from the start.

18:10.34

wongga

I Don't like I wouldn't even know so enlighten us. Ah.

18:13.50

Justin Peters

Oh yeah, this is a fun one and this is always one of the most listened to episodes whenever I cover this I like to cover this at least once or twice a year because I think it's really important. There are a couple of different strategies but my personal favorite especially if you have a little bit of runway to work with goes as followed. So if I were to ask for a raise I would ah I would go to my my boss my manager and let's just assume you're my manager. So I'd say hey Garrett I really want to talk about performance I want to become a top performer at this company. What would that look like over the next three months if if I were to really be a top performer. And Garrett how would you respond to that.

18:50.36

wongga

I would say well ah you're doing pretty good right now. What do you have in mind.

18:52.23

Justin Peters

Nice you're smarter than most managers most managers will be like okay I like this idea here they might fumble through an idea or 2 like oh I really want you to to work on this or get this going and and like I said they'll usually give you one one concrete thing the thing that you're going to do. Come with 3 really concrete initiatives that you want to work on over the next three months that you feel like are going to make a major impact on you. So I might say hey Garrett. Thanks ah, you know, thanks for allowing me to to talk about this I really think a blind spot that we have or something that our team's currently struggling with. Is that we don't have a standard operating procedure for our billing process I would really like to take charge of that and be ah, be spearheading that idea what do you like? do you think like that's an important initiative in our team and you would have this conversation you would dial out your 3 initiatives and and kind of knock that out and then at the end of the conversation. I'd say hey garret do mind. Ah just as an update and to keep me on track if I just send you an email every other week just giving you a status update on how these 3 initiatives are going I'm guessing you've probably got to respond and say yes, yes so every other friday I follow up up with you and I let you know hey.

19:56.10

wongga

Of course. Yeah, yeah, yeah.

20:04.90

Justin Peters

Garrett just a status update so I've been working on the billing um standard operating procedure I draft I made the first draft and I sent it over the Bill. He's currently reviewing it and adding his two cents in I'll let you know what progress I make in two more weeks and you're going to continue to do that over this three three week or three month period and then as you're closing in on that period. You're starting to check off some of these initiatives you're making a lot of Headway I would set up a conversation with you again and say hey gared I want to talk about how performance is going and I also want to talk about pay would you have availability this Friday to sit down and and have a conversation and we would sit down. We'd have that conversation. We talk about all the great things that I've accomplished over the three months you know we already pre-reed that these 3 initiatives would really highlight me as a top performer and would really return. So some ah roi from our team. So the conversation's going great and then I lay it on you hey gared I really want to make some additional income. Want to do it here. I really love working for you and your company What do you think about me getting a race and you've just float that out there and the biggest piece of advice I can tell you to do at this point in time is shut up shut up too many people keep talking or are kind of spin in circles whenever they lay out this question just.

21:09.94

wongga

Yeah.

21:17.75

Justin Peters

Let your manager come back to you and and kind of give you a sense of what's on their minds and they might say multiple things they might say a man I've loved what you've been doing over the last couple of months I really do think you deserve a raise or maybe it's hey I can't get you a raise right now we're going to have to wait until the annual. Um, the annual cycle and then I can go advocate for a raise or maybe there's some other kind of feedback that they give you and you can you can hash that out and kind of talk a little bit more about that. But hopefully at the end of the conversation you got to a place where you know you're getting a raise or you know when you're going to get a raise.

21:51.53

wongga

Love it. Okay, um, lots of takeaway there because basically I think the majority of people me included would have just walked into the manager's office and said hey I've been here for a while four or 5 six years. It's been a while since I got it a raise. Cost of living whatever you know people say so can I have a raise. They just come out and ask what you're saying is prove or find out what the company needs go ahead and do that and then come back after and say hey I've already proven to you I deserve this is it in the budget.

22:23.40

Justin Peters

Yeah, it's it's hopeful. Hopefully it's a slam dunk conversation and there's nothing wrong with with approaching the conversation. The way you approached it honestly I think the hardest thing to do and the whole asking for a raise cycle is actually asking for it. So if you don't want to go through the whole 3 hree-month proving process.

22:25.29

wongga

A lot easier conversation.

22:41.65

Justin Peters

And really set yourself up for success here and you simply want to go in and and make the ask right away because you do feel like you you deserve it good for you. But what I found through talking with most people getting the confidence and going up and making the ask is usually the hardest aspect of all of this. So I do feel like demonstrating your value and showcasing why you're worth more in the future versus why you're not worth as much right now is an important aspect because I've I've hired people I've managed people I've done it all and the the response I usually get with some of this I mean sometimes it's the cost of living conversation which is ah. Of course really relevant over the last few years with with what inflation has gotten. But also what's in the back of my head is how are you worth more now than what you're worth whenever I hired you whenever I hired you to do all these tasks that you're already currently doing what have you done above and beyond that and a lot of times if you're being really honest and realistic with yourself sometimes. I don't know you might not be a top performer or somebody that's going above and beyond. So I think the the easiest way to get a yes whenever you ask for a raise is to demonstrate that you are a top performer and just be a top performer.

23:50.37

wongga

I love it. Yeah when you think of the context of again we just had a budgeting conversation right to try to get one hundred and fifty two hundred two hundred and fifty dollars onto your budget to start saving and yet you can negotiate a 10 or $ 12000 a year raise. That's a thousand bucks a month and you're basically doing the same job that you had before. So I love that um, are there any other strategies other than the three- monthth um, three-month ask that you would advocate.

24:22.66

Justin Peters

I don't I don't think so I mean I think there are microrates within that I feel like the biggest thing that I want to reiterate throughout this whole process is a demonstrate your value and b be in clear communication with your manager. The reason I like sending biweekly status updates is I have a paper trail. And I'm reminding you. It's not this three months later I'm coming in with this conversation and I'm like hey remember that conversation that we had back last summer whenever we decided what would be a top performer. No I'm consistently reminding you every other week of what we agreed upon and I'm giving you updates small kind of milestones. Throughout the process that really does demonstrate that hey we agreed on what this would what these projects would be and this is actually how I'm fulfilling those promises.

25:09.53

wongga

Love it. Okay, so we budgeted. We have successfully negotiated a raise talk to me about side hustles. Ah.

25:19.38

Justin Peters

Yes, yes I love side hustles. Ah, and I've only recently become in love with with side hustling so I do all the things that I previously stated I am monster monster frugal for for where I feel like I am in my current path right now. Am consistently asking for a raise at work and demonstrating that I'm a top performer but it wasn't until recently that I realized I could make money outside of my 9 to 5 as well and that's where this concept of side hustles came I've also started started ah a business over the last ah year and a half as well. So that's been exciting. But I want to talk about like a true side hustle something that I think you can start today because it truly did start just like that. So um, kind of the long story here. My brother moved to Austin Texas where I'm currently living. He subleased my room from he subleaased a room in my apartment from my roommate she was going out of town. She was going out ah doing some guiding over the summer and and needed to subleaase her room. My brother and I we want we like pizza we wanted to try a bunch of pizza places but he's still getting by he just ah quit his job in order to move to Austin. So he didn't have a lot of disposable income and I said hey Kyle like let's just make a little extra money and put it into a pot. We'll call it our pizza fund and inevitably that came up well how we got to make that money and we're living in apartment complex and in our apartment complex. We had a central like dumpster spot and people would.

26:46.98

Justin Peters

All the time would just bring up their they were moving out quickly moving out and they would bring like their desk and they'd drop their desk and front the dumpster and if anybody needed needed that before trash day came people can grab it and bring it back to their place. Well Kyle and I we got this grand idea why don't we grab those things a lot of times they need to be cleaned up maybe repainted rescrewed. Ah, wipe down things like that we're we're just got to go grab some of these things we're going to take some pictures. We're got to clean them up and we're going to list it on Facebook marketplace so we started doing that and the first few months ah we made about one hundred bucks and it was great. We got to go out to eat once or twice a month.

27:13.21

wongga

Okay.

27:21.64

Justin Peters

Ah, try a new pizza joint and in Austin we are checking off all of these. We get a recommendation from someone we would make enough money we'd fill our our pot it hit one hundred bucks we'd go out. We'd try a new pizza spot and then it just kind of took off. Ah, ah we we moved to a different place so we kind of had a new strategy in mind. So. Ah, Kyle he went out and sourced some tables and chairs think about like a wholesaler of Ikea. He found a wholesaler from Ikea ah source some tables and chairs. He would get the the parts sent to him and he would assemble preassemble tables and chairs and then sell these through Facebook marketplace too. It was a win-win for everybody. Ah. People love to not have to put together furniture especially Ikea type furniture where it take like hours. He um, put a little bit of manual labor in and he would he would get to make some money too and it's taken off we we track it on a spreadsheet of course because we're we're math nerds and ah year to date and we're talking at the beginning of December right now. We've made over $12000 which is craziness. So we're netting over $1000 a month right now. It really just started out us picking up some ah some some some things some some really useful items that people didn't want anymore. They just dumped them out and we cleaned it up and then all of a sudden we found a product at affordable cost and.

28:19.32

wongga

Wow.

28:35.71

Justin Peters

And kind of learned that the avenues of Facebook marketplace stuff.

28:37.67

wongga

Okay, so you said you just recently also started a business but you kind of defined a side hustle as something completely separate. How do you delineate those tune your mind.

28:50.50

Justin Peters

Um, ah, oh that's a good question I feel like with our business I'm investing in our business It's really kind of my future. My baby like I'm building it in the sense of like at some point in time. It's I'm no longer. 1 for 1 in terms of the time that I'm putting in and the output that I'm getting my side hustle more. So is a more 1 to 1 we can make as just about as much as as effort that we want to put into it so we can go ahead. We can go out to the garage we can build a couple more tables. We can get those listed. They'll sell. We'll make fifty bucks on each of those tables or however much it is and and we're kind of trading our time for dollars my my business I'm really thinking about and scaling it and growing it and operationalized operation allowing it in the sense of like we're handing this off to employees now those employees are starting to make us money.

29:39.65

wongga

I see yeah definitely with the business and I know this more than anybody you're not always going to make money for a while right? I think say the average business takes 2 to 3 years before you even start to break even so that's a great point. Would you define a.

29:46.39

Justin Peters

Down.

29:56.30

wongga

Part time job as a side hustle.

29:59.30

Justin Peters

I Think you could um I think a lot of side hustles and I did an episode all about ah side hustles I think something like ah uber or driving for Lyft or something like that could be defined as a side hustle maybe something I don't know how to make the delineation in my mind I'm thinking. Ah, job is kind of aligned with my career path while side hustle is just something that I'm kind of doing off the side of my job with some extra free time just to make some additional money like I promise you I Really don't want to turn into a furniture wholesaler that is not my dream Job. That's not what I want to do it makes some money for us Now. We can eat. Endless amounts of pizza every single month. Um through this side hustle but at some point in time I'm going to want to let this go because the time is going to become more valuable than than the money that it's generating.

30:44.79

wongga

Yeah, no, the great points because if you're able to free up fifteen hundred two thousand dollars out of your budget another thousand dollars in a side hustle maybe 1500 on a part time job that you're in couple days a week. Maybe even driving right? So you can. You know, listen to music or whatever it might be I don't want to imply that driving for lyft or uber is is easy. But I mean what are we at there thirty five hundred four thousand dollars I mean times 12? What are we at that's already 50 grand and that's one year.

31:14.88

Justin Peters

Yeah, yeah, and that's that's what I'm telling like I think it's scary whenever you start doing the numbers on like a down payment, especially where housing rates or housing prices have been going over the last decade or so and you're like whoa like all of a sudden It's not 20 or 30 grand that I need to say for a down payment but it's. FiftySeventyFive $100000 that I need to save for a down payment like I might as well kick that dream to the curb because I'm never going to be able to do that. But whenever you start thinking about it in this context of both sides of the equation. How can I reduce cost. How can I increase my primary source of income. How can I make ah some additional income through side hustles. All of a sudden it kind of starts to become a reality. Maybe I put my head down for two or three years and I save enough to actually get that first down payment and then ah through a lot of the wisdom that you share on this podcast. All of a sudden we can that money can start generating some additional. Real estate opportunities and it can snowball on itself.

32:12.91

wongga

Absolutely again, we're only advocating the sacrifice try to get that first one because that's really the you know trying to get that going and then the rest can all flow downhill. Um, so when somebody is finally starting to get this kind of money and it's. I Mean should it be sitting their bank account where do you advocate to kind of park that while they're saving.

32:36.82

Justin Peters

Um, I think the best and easiest place to park. It is what's called a high yield savings account. These are savings accounts. They function just like everyday savings accounts. But what makes them different is that they're typically generating sometimes five fifty five hundred times the amount of interest that your maybe brick and mortar or national bank savings. Accounts are going to generate for you. So right now. Um, for example I my high yield savings accounts with a company called fidelity and the interest rates that they're they're providing right now are 5% so you're getting a 5 % interest rate.

33:08.42

wongga

Wow.

33:12.34

Justin Peters

On money that's sitting parked there ah which is great I mean that's that's craziness and I was actually looking at my budget and this a funny story as looking at my my budget looking at my income and I have a little bit of money parked in my fidelity account I just set it up and and wanted to get in the flow of having a high yield savings account. And then I have my my other savings account with a longstanding ah large banking institution that provides nothing next to nothing and I was like adding up the numbers. The big financial institution has 5 times the amount of money in that savings account versus my fidelity account year to date my fidelity count generated me. Ah, $30 and interest which is nothing to run home about but I don't have a ton of money in that account and I like wow it generated me 30 you know, realistically my other account should generate me about $150 I looked at it. Do you have any guess on how much was in that account.

34:08.60

wongga

I Can't no oh Wow. Ah.

34:09.66

Justin Peters

Six cents it generated me six cents they they were peeling off 1 to two pennies a quarter in interest I'm like I don't know why my money is sitting here. It. It is essentially losing money because inflation is rising and it's not even keeping up with inflation. Um, so I'm a big advocate of high yieldd savings accounts. There's so many that are out there don't get overwhelmed by this just simply Google high yield savings accounts. You'll see all the options that are available to you. Fidelity is one that I like Alli Bank is a very popular one as well and these are typically online banks so you might still need to have. Another banking institution where you have atm access lines of credit things like that. But this is a great place to go and park your money. Especially if you're going to have twenty five fifty one hundred thousand dollars sitting in an account.

34:52.41

wongga

Well and one thing I want to discuss and something that's been really helpful for me is temptation right? because I mean again I I admit it my wife knows this I'm a spender I love I love researching and buying nice things. And if you're saving for that down payment and you've been living paycheck to paycheck and in your checking account. Let's say that you make the mistake of of having everything mixed together. You've just saved $10000 how tempting is it to so to spend that so 1 thing that I've always done. Is open up another bank account or like you're talking high yield high yield savings account and make it really difficult to access that money right? I even have gone to as far as um I have ah a business savings account where I take all the profit from my business. And when I signed up they're like okay here's your Atm card here's your online banking I'm like no no no I don't want that they're like what do you mean? I said it's going to sound silly give me a bank book and nothing else. Yeah, but sir you're going to have to drive to the branch when you want money I said perfect right. Well, what would you say to that to forbidden fruit and trying to keep it away from your out of your mind.

36:07.91

Justin Peters

I think that's an amazing strategy and an amazing idea. That's one of the the I think ancillary benefits of having a high yield savings account kind of separate from your whole other banking system checking account that you have. Would go as as far as to just set up automatic withdrawals from your checking account into your high yield savings account just go ahead if you know you need to be saving you know $2000 a month into that account. Go ahead set up that automatic transfer your paycheck hits on the first. The automatic transfer goes out on the second that two thousand dollars dollars goes into your high yield savings account. You give your password to your your your parents or your spouse or whoever a trusted individual and you say hey only give this to me if I really really have a good excuse. So why I need this if not, you're just sitting in that sitting there and that money's parking and making you a little bit of money as you're continuing to save up for your down payment.

36:58.34

wongga

Yeah, no for sure. Um I mean something even putting into different vehicles with a financial planner where you need three days before the money hits your account I call that the cooling off period because if you have to wait for three days. Maybe.

37:09.52

Justin Peters

Ah.

37:14.96

wongga

Do you really need it right? So it kind of curbs that impulse spending. Um, yeah, 1 1 other piece of advice that I would give for our listeners is I know they call it like the envelope method or jars or different things like that. But. I mean with a credit union at least here in Canada you don't get charged for multiple bank accounts and so when we were doing our budgeting because there's so many different things we spend we will actually match our budget with separate bank accounts right? so.

37:32.92

Justin Peters

M.

37:45.98

wongga

The idea for me is we have let's say a hundred bucks in our checking account that's connected to my my my debit card my Atm card and then you know I know that we spend one hundred bucks a month on dog food. So I will take that one account call it dog food I'll divide. Hundred dollars by you know, 12 or 26 or whatever. However, you're getting paid and that's how much comes off of my paycheck each month through an auto transfer which goes into my main account and hey all of a sudden I need to buy dog food I just do a transfer while I'm standing in the store put it into my debit card. And then I pay for it and then it's done and we do that with our phones. Our internet utility bills and even to things like travel and dining right? So when that when that bank account is gone. It's gone and then you you really know? Okay I really don't have the money to spend on this. I have to stop.

38:42.35

Justin Peters

I I like that the cash Envelope system If if anybody's looking for for that methodology I think it's a good one to go out and and do some research on and I love some of the online banks that allow you to set up multiple um accounts and name those accounts I don't do it for. My expense categories but I do do it for savings schools like maybe I have a big vacation that I'm trying to save for or maybe it's the down payment for my house I'll go and set up each of those buckets as as savings, goals and I really enjoy kind of watching those accounts grow and creating those automatic transfers anytime that you can take the decision-making process out of your hands. And into an automated system I think it's a really really great Idea. So I Love that system.

39:24.12

wongga

Okay, well perfect. Um, so let's so let's get back to your experience. What are some of the common mistakes people make when they're trying to save for a down payment and how can they avoid them.

39:35.45

Justin Peters

Um, maybe a follow up on the where you park your money conversation. 1 thing that I want you to be weary of is having this large nest egg of a down payment savings and thinking maybe I should invest that in the stock market. And if you're not sure what you want to do with your down payment. Maybe you are thinking about buying a house but maybe you're not maybe we can allocate a little bit of this to the stock market. But if if you really truly have a plan you want to buy a home you want to buy that real estate property in 2 years would highly advise you not to be putting that money into something as volatile as the stock market because the last thing you want to do is save up the 50 grand over the course of the 2 years and then the stock market has two negative years back to back and you look in that account and all of a sudden you save it up to 50 but. There's only $42000 in that account because you made it because the market ah went through a reverse period that is defeating and and not helpful whatsoever and I I know there's some ah opportunity cost and maybe you miss out on ah a gang buster. Um, stock stock market run. But that's why you have money in retirement accounts. You're investing through through your employer' and and sponsored environment ah retirement accounts or your individual retirement accounts. That's not for your savings goals like your downpayment.

40:59.79

wongga

I love that no for sure. 1 thing that so I want to talk about too and maybe this goes to your podcast is the struggle like you know saving for a big financial goal like a down payment like it's draining mentally and emotionally. How do you suggest people stay motivated and focused and not give up.

41:18.17

Justin Peters

You got to celebrate and you got to celebrate a lot I think this with anything financially I love to put little wins throughout my entire goal process. So if I'm saving a down payment for $50000 it's going to take me 2 years I'm going to go ahead in every Five Thousand every ten thousand dollars that I save up I'm going to have a milestone celebration and I would go as as far as like you know every 10000? Maybe there's this like thing that I do so the first ten thousand I'm going to treat myself to this restaurant that I've really been wanting to go to for a long long time. Maybe the second milestone. I'm going to do the weekend vacation that my girlfriend keeps asking me to do but I've had my head down because I've been trying to save the best I can I'd go ahead and give myself the little rewards the drip rewards while hit hit each one of those milestones reward yourself and then once again. Have some fun while you're doing it too like it's so much fun to save this money and to be making progress towards your goals and also you want to celebrate as you are actually going through the journey itself.

42:21.20

wongga

That's wonderful and I mean think of mentally how how confident you feel when you look at your bank account and you have 10 20 $30000 in there and sure absolutely celebrate I love that.

42:34.72

Justin Peters

It's it's cool and it's fun I'm really big into financial independence. Um I'm sure you've heard of of the fire movement I caught wind of that maybe 5 five or six years ago and it was a grind early on I started tracking my net worth. And all of a sudden. It's like 30000 you hit these like little milestones and you get really excited about those and and I told you the power of compound interest once you you know crest over the $100000 mark and all of a sudden you're you know the stock market like last month s and p was up eight and a half percent I was excited to. To look at my accounts at the end of the month and and update my net worth tracker I'm not going to lie there but those are kind of the fun exciting moments throughout this whole journey and and those are the cool things and you want to celebrate and look back on some of that stuff.

43:18.69

wongga

No for sure. Well um, as a final piece of advice because we're I can't believe how fast this time is gone but as a final piece of advice. What would you say is the most important thing to keep in mind for anyone looking to save enough for that first rental property down payment.

43:34.64

Justin Peters

Um, man I don't know if I have any more ah um, outstanding advice. Maybe just reiterating my last point that that celebrate each each of the milestones and if you do have a setback maybe all of a sudden there was a unexpected emergency. You're you're. Your car pittered out and you had to pause your savings goals for two two months while you saved enough in order to get a new car or you had a medical emergency or something like that give yourself the Grace. Um and allow yourself the flexibility to move your plan knowing that you can't you can't predict and plan. All of the things that are got to happen to you throughout your life.

44:07.91

wongga

Love it. Okay, so I am not going to stop right now because I ask every guest this question So I do want to hear what you have to say so here it is this is the investing to win podcast. How do you Define success and what does winning. Look like for you.

44:28.74

Justin Peters

Me personally, it's time freedom. The the reason that I'm really big into the fire movement and financial independence and saving all of this money is to win back my time I really don't want to be grinding in a 9 to 5 or even running a business my entire life I really want to to. Allow money to slide down the scale of importance. It's no longer the number 1 or number 2 factor whenever I'm making decisions but maybe number 8 or number 9 or number 10 and I want my time freedom to be near the top I want to be able to choose exactly. What I'm doing with my time each and every day because it's the most precious resource that we all have.

45:08.42

wongga

Well said. Okay, well we'll leave it there. Um, thanks again for reaching out and thanks again for being a guest on the podcast. Ah yeah, really informative I'm sure this is gonna get a lot of likes and downloads.

45:21.49

Justin Peters

Gared Thanks for having me I so excited to to be on your show and I think we had a great conversation.

45:24.30

wongga

Okay, take care.