What if I told you that retiring at 25.
Is the new 65 or at least it could be
today .I'm joined by Cody Burman who was
financially free at age 25 and while he
may still work he puts emphasis on
passive income not active income giving
him the freedom to enjoy his life as he
sees fit I can't wait for you to hear
how he did it and see how you can
recreate his journey too con thanks so
much for being here I am so excited
about this Mindy it has been way too
long since we chatted especially on
recorded mic and sharing the FI wisdom
with all these people I love it I love
it okay Cody let's go back to the
beginning of your financial Independence.
Journey how old were you when you first
started thinking hey maybe I don't have
to work until I'm 65 so I was really
fortunate to get thrown into this whole
Community into this whole mindset really
early on so when I was 19 I was a
sophomore in college I read the 4-Hour
Work Week my Mom hated me that book she
just had an inkling that I would like it
so I read it and my whole world was
turned upside down before I had read
that book IID always thought of someone
being rich or someone being wealthy as
someone who made a lot of dollars per
hour you hear of doctors you hear of
lawyers like can I make $500 per hour
they make $200 per hour that person's
Rich Tim Ferris the author of The 4-Hour
Work be just flipped that whole
narrative on his head and he taught me
that your money and time don't have to
be linearly related like you don't have
to trade your dollars or trade your
hours for dollars you could actually
build up these passive income Vehicles
whether it's through real estate or the
stock market or digital products or
business all these different things you
trade your time energy or money for
something build some passive income
thing up front and then you kind of reap
the benefit of that thing for years and
decades to come so that was the
beginning for me I love it what did you
do after you got finished with the
4-Hour Work Week what changes did you
make in your life brainstormed a million
different business ideas so I actually
had two failed businesses I don't talk
about too too much I had this idea for a
tutoring business I done some tutoring
in high school made decent money I was
going to have like a tutoring Empire I
was going to hire my buddies and you
know I was going to be taking the margin
in between what I was charging the
clients and what I was paying them
didn't work out for whatever reason
maybe I just wasn't motivated enough I
couldn't find enough people who wanted
to do it for me another idea that I had
still I think it's the best idea ever
was this company called sleeveless and
it was a a Peril company but every
single piece of clothing didn't have
sleeves so collared shirt no sleeves
hoodie no sleeves a regular shirt no
sleeves so I had this like grand plan I
even went and reached out to
manufacturers on Alibaba and they're
like so what do you want for your
minimum order quantity 1,000 or 5,000
and I was like okay I'm not doing this
so
um and then I know we've talked about
this before in other podcasts in person
is the first one that actually did work
was my disc golf company so I created a
dis golf manufacturing company that was
that same year after those two failed
business ideas and that was kind of
where I got my spark and where I learned
honestly a lot of the entrepreneurial
things that I know today so achieving fi
at such a young age is a huge
accomplishment and we need to celebrate
that yay Cody you're the greatest um and
I know that you're the king of the side
hustle which means that your income
month-to Monon is pretty varied what was
your yearly income at the beginning of
your F journey and did it evolve at all
yes so the beginning of my five Journey
so I was 19 when I discovered the 4-Hour
Work week and then that kind of led me
down the rabbit hole Mr Money Mustache
and the mad scientist and you guys Mr
1500 and just this whole world that's
why we met at campfi 2018 back in
January 2018 I was 21 years old I really
started making actual money though so I
was in college at that time when I
graduated college so that first year out
of college 2018 I think I ended the year
making
$444,000 or something like that because
it I started work in July and worked
till the end of the year I was working a
corporate banking job and yeah so that
was that first I made like 44,000 bucks
okay and then as you got farther into
your passive income like you didn't have
just a job and one passive income stream
what was what was the height of your
income before you decided that you were
officially financially independent
probably almost $400,000 the tax return
on that year was like in a year
yeah so I definitely want to put a heavy
emphasis on it is extremely important if
you want to hit fi really really early
the gap between your income and your
expenses has to be astronomical I mean
for me to start earning money at 21 22
and then hit five by 25 yeah I'm not
going to try to sugarcoat it like it's
it might not be 100% rep repeatable for
everyone but the bigger you can get the
gap between your income and your
expenses the faster that you're going to
be able to hit Financial Freedom
absolutely agree with that so what are
you spending Cody with your $400,000 a
year income I was spending around
$25,000
so my savings rate was like 92 or 93% it
was
[Laughter]
Insanity from 22 to 25 I did not upgrade
my lifestyle whatsoever when I was 26 I
did a little bit once I quote unquote
hit fi but it was just absolute grind
years for me it was like working all the
time saving as much as I possibly could
and investing the difference okay and to
anybody who is reading saying oh you
can't live on $25,000 a year yes you
absolutely can now is he living the most
luxurious lifestyle possible probably
not with tracking expenses is all also
you know kind of goes hand inand with
removing things that you are not finding
joy in to quote Marie condo so what did
you give up when you were on your
journey to financial independent so me
and my now wife then girlfriend we
actually got this advice from I don't
even remember what podcast I wish I
should give proper attribution but we
wrote down the 10 things that we value
the most independently on a piece of
paper and then we came together and it
was like time with family time with
friends time with each other working out
travel eating good food and so we look
at our list and we're like okay this is
our North Star let's spend our money on
the on the things that are actually on
this list what wasn't on that list a MC
Mansion what wasn't on that list driving
a super nice car what wasn't on that
list you know going to the club every
weekend so it was like okay the things
that did cost money on that list was
like food TR
we still did those smarter I know you
mentioned travel hacking before and we
were really intentional our groceries
and we have some hacks for saving money
on restaurants but that's where we would
spend our money so if it's helpful
actually have the numbers cuz my
expenses from like 22 to 25 age 22 to 25
pretty much stay exactly the same and uh
I have them right here if that's helpful
for listeners yes absolutely I want
these expenses okay and you'll see it's
it's reflective of what I was just
saying like we're spending more on the
the food and the travel and
entertainment and stuff okay so right
after college I actually moved to Boston
which might some people might think is
that a super high cost living City well
yes if you're living in a one-bedroom
apartment and seport but so I was
splitting a three-bedroom house $2,700 a
month and so each room was 900 and I was
actually splitting a room so my rent was
450 oh so it was like wasn't ideal I
could literally roll over and touch my
buddy in the middle of the night if I
wanted to like he was we were that close
our our room was not big and I I did it
for a couple years um fortunately then I
ended up like house hacking and buying a
house and we can get into that too but
that I just made it work like I didn't
have I didn't have the money for a house
hack I wanted to live in a city I wanted
to experience a big city but I was doing
it for a fraction of the cost by sharing
a room with someone so that was housing
is 450 Transportation I still drove the
same paid off truck that I had been
driving for years at that point so
Transportation was just gas and
insurance which was on average $300 a
month food this is groceries plus
restaurants about $500 a month which may
seem I guess high or low depending on
who you are this is just me as a single
guy then like 250 for health insurance I
just got that off the Massachusetts
exchange and that's actually a big point
of contention with a lot of people a lot
of people think once they quit their
corporate job because we can get into
that as well I quit my corporate job
seven months in I had to go and find my
own health insurance and I'm like oh man
I've heard so many people talk about
like Cobra and it's going to cost $1,000
per month it was $250 for health and
dental 250 wasn't wasn't do at all
travel and entertainment was on average
$300 so this is like concerts this is
going on weekend trips this is sometimes
going on logger trips and then the last
category was about $200 in miscellaneous
which was just like random stuff whether
it was Tech or clothes or just something
that didn't fit in all these other
expense categories so $2,000 a month or
$244,000 a year so that's where that
number comes from what is the Phrase
live like no one else now so you can
live like no one else later I'm sure you
got people saying you know oh why are
you so cheap did you ever hear people
say that all the time cuz I had a pretty
high-powered corporate banking job like
right out of the gate right out of
college I was making 80 grand a year
people are still see me drive the same
truck and I'm sharing a room in Boston
they're like what are you doing why
don't you like lease a car why don't you
get the newest model why don't you
upgrade and live in this nice apartment
I'm like well I'm trying to hit
Financial Freedom like I I had it all
mapped out and like I need to keep my
savings rate at this percentage I'm
trying to invest this much every month
and those are two things I don't
particularly care about like I can
sacrifice now I lived like I lived in a
dump in college like I can keep that up
for a couple more years it's not a big
deal take advantage of your youth if
you're listening to this you're in your
20s you're in your 30s and you're you're
still sluming it and you're cool with
that and you haven't inflated your
lifestyle at all use that to your
advantage don't don't be down on
yourself and be like oh man I wish I had
the nice car the nice apartment you
actually have a leg up on the people who
have the nice car and the nice apartment
because their fixed expenses are so much
higher and it's harder for them to get
that so important that gap between their
income and their expenses to invest yeah
yes and now those same people who five
years ago were saying Cody why don't you
get a nicer car and have a nicer nicer
clothes and live in a nicer place are
now saying gosh Cody how did you do it
it's not that hard it's not that easy it
takes work but it's not that hard you
have income and you spend less than that
that's how you get to Financial Freedom
I just don't want to pretend that I
didn't get lucky because during this
time I don't this is one number I
actually didn't have written down but I
think it was 2019 the stock market
returned like 27% or 30% or something so
I'm plowing all of this extra money into
the stock market that's just going
berserk like I definitely got lucky like
right place right time but like you said
it's the fundamentals I just want people
to a lot of people hear my story and
they're like that's not repeatable he
got lucky it's like of course I got
lucky but I know you like this phrase
I've heard Scott use this phrase in your
podcast before I like to increase my
surface area of luck the bigger that I
could get the gap between my income and
expenses the more things that I could
try with entrepreneurship the more
people I met the more my surface area of
luck expanded so yes of course I got
luckier because I had more surface area
of luck I had more ways to take
advantage of these opportunities as they
came my way yeah but also you took
advantage of the opportunities let's
talk about investing where are you
putting this money Cody for the first
couple of years so 2018 2019 and most of
2020 all of that money was just going
into the stock market and different
buckets so I was maxing out my IR a I
was contributing to my work 401K for a
little bit and then a solo 401K so I was
using all my tax advantage vehicles and
then I was putting basically the rest
into a brokerage account these are all
just in lowc cost index funds so
basically just like total stock market
index fund I think I had a little bit of
like International exposure with an
international stock index fund that was
really it that was really the strategy
for the first couple years and then I
started getting into real estate toward
the like Q3 of 2020 okay and what sort
of real estate are you buying long-term
rentals so this is kind of when the
whole house hacking thing begun so sick
of living in Boston I was like it's too
much traffic there's too many people
around I want to just kind of get back
to the suburbs I'm from central
Massachusetts it was cool living in the
big city for a year but I just wanted to
get back to my roots so I actually
started looking back near my hometown in
Central Mass and the prices just didn't
make any sense like I was looking at the
price to rent ratios I was a huge fan of
Bigger Pockets just consuming content
all the time and it just didn't make
sense like a lot of the properties would
maybe e out the 1% rule but I'm like I
don't know the numbers just don't seem
as flashy as what I'm seeing online from
some of the other people's in these
forums so I had a buddy recommend he's
like hey look over the border to
Connecticut so I look in Connecticut and
the price of rents are just fantastic
like this is amazing so we we meaning me
and my then girlfriend now wife Lauren
we bought a three family down in
Connecticut uh we lived in the basement
unit so we lived in a one bed one bath
and then above us was a split duplex
with three bed and one bath on each side
so at that point my housing went from me
paying 450 a month to us actually
bringing in $700 a month over all the
expenses it was nuts because we were
living in that tiny unit and renting out
the larger part of the house I love that
I think a lot of people think of house
hacking is I have to have a roommate or
I have to live in you know I bought this
duplex that's not equally spaced like
this it's three bedrooms it's it's only
one bedroom that I have to live in the
big one you can live in the small one
you could rent out that whole big one
and and make even more money so Cody did
you have a fi number that you were
pursuing at the start this is a really
good question at the start I was going
after what I call the traditional Nest
Egg method so just a rewind there's two
main methods methods to hit five there's
like the traditional Nest Egg where you
save up 25 times your expenses or it's
called the 4% rule if you're spending
40K a year 25 times that you need a
million dollars invested and you could
take 4% of that every year to live on
which is how you get your 40K 4% rule
25x whatever way you want to swing
the other way this is what a lot of
people in the bigger pocket Community
I'm sure are doing is cash flow
Financial independent so once you get to
a point where you're passive or mostly
passive cash flow can cover your cost of
living then you're financially
independent at that point so my original
goal the reason I'm giving this huge
Preble my original goal was to go the
traditional route I was going to save up
25 times my expenses I was hoping for
like a million or maybe a million five
invested and at that point I could spend
you know 40 to 60 Grand a year whatever
my expenses were looking like but then I
stumbled into real estate and I had
talked to so many people and interviewed
a bunch of people and they were hitting
fine like two years off real estate I'm
like okay I'm missing out I'm doing the
slow method I'm I'm just doing
traditional 4% roll F let me try this
real estate thing so we actually ended
up buying this sounds crazy but again
remember I was
making 10x or more than that 15x what my
expenses were during that last year
before I quote unquote hit fi lot of
disposable income we ended up buying 11
units that year so the year we bought
that first house hack a month later we
bought a duplex like a couple months
after that we bought another three
family couple months after that we
bought another three family so by the
end of that calendar year we had ended
up buying 11 rental units and after all
expenses were said and done it we were
we were getting we were netting like
between $3,000 and $3,500 a month so I
had outlaid a huge chunk of cash
probably close to 350 or 400k in down
payments on all these different
properties from money that I had saved
up and at the time my stock market
Investments were like around 500k so my
net worth is like pretty close to a
million I hit the million Mark right
before my 26th birthday so I can I can
officially say I hit it 25 um but I'm
mathing this out for I'm mathing this
out for you fire nerds out there so at
the point where I like I kind of hit
this Milestone the five the million Mark
I had like 500k in the stock market so
with the 4% rule I'm like okay I can
spend about 20K a year from this little
bundle then we had our rental properties
and we were netting let's just use the
conservative number three grand a month
from them so I'm like okay cool like we
have five grand a month that we can
spend that's 60 Grand a year our
expenses right now are way way less than
that I think we just hit Financial
Freedom and so that's how uh that's how
all that kind of mathed out so yeah
you're generating $3,000 a month in cash
flow while spending
$2,000 for yourself that is the Delta
you're making more than you need and
that's real estate is not truly passive
but when you're buying right and you've
got great properties with tenants that
are paying their rent then that's
Financial Freedom so Cody what do you
think are some of the biggest
misconceptions of financial Independence
I think a lot of people think it's
deprivation whereas hopefully people
don't hear this story and think that I
was depriving myself cuz we can go back
and I was actually going to talk about
this today a little bit I mentioned some
of these expense categories it's not
like I'm just shutting myself in my
apartment not going out not hanging out
with friends not traveling not doing
these things I'm just finding a smarter
way to do it so for traveling I'm using
credit card points to do travel hacking
I'm staying in airbnbs with credit card
points I'm booking hotels with credit
card points for food instead of going
out and me and Lauren getting a couple
drinks each and getting an app and two
Entre like sometimes we used to just go
out and we'd get an entree and an app
and split them and that was it and we
wouldn't go get any drinks but we'd
still have fun with our friends like
we'd still be going out I remember also
going to the bar and people would be
spending $100 a night going out to the
bar it's like I just pregamed and I'd
only buy one or two drinks at the bar so
I was still doing all of the things it
was just I was finding a slightly more
optimal way to do them so yeah I just I
don't want people to think that they
hear this story and they like oh man
like I'm just going to buckle down like
don't sacrifice life for fi that's not
the point you're missing the point if
that's what you try to do you have to
build your dream life as you're going
down the financial Independence path I
think there's a huge misconception
actually a lot of people think once they
hit some magic number that all of their
wildest dreams are going to come true
all their goals they're finally going to
start going after them it's like if you
want to learn Spanish if you want to get
in shape if you want to have a better
relationship and you think any of those
things are just going to start happening
the second you hit fi you are extremely
misinformed like you could be learning
Spanish while you're at your day job
maybe you can only do 30 minutes a week
maybe you can only work out three times
a week maybe you can only allocate a
certain amount of time to hang out with
your partner or spouse while you're in
that day job but once you hit Financial
Independence yes you have some of that
time back but it's not like you're just
going to all of a sudden start forming
these new habits so you really have to
intentionally start thinking about that
dream life during the journey and then
as you get more money as you get more Fu
money and you can start to take some of
your time back and make decisions that
benefit you then you can start to build
more you're like hey you now I have a
now I have a little bit more leeway now
I can allocate some more time to working
out now I can allocate some more time to
learning Spanish now I can allocate some
more time to the relationship it's it's
a it's like a linear Journey it's not
just like a it's not a one and a zero
where all of a sudden you hit five and
all these magical things happen so I see
that a lot people don't know what
they're retiring to they don't have a
plan for when they hit that number
absolutely I could not underlined what
you just said enough I was going to ask
you what advice you have for somebody
who wants to pursue Financial
Independence but that just kind of hit
it I mean I get some more advice if you
want we can we can pry some more advice
out of me I guess Cody this is the all
you show hit me with all the advice okay
so something that I didn't realize early
on like I said at the very beginning I
used to always think that rich people
people were just people who made really
high dollars per hour the doctors the
lawyers the you know $500 per hour
whatever start focusing all of your time
energy and money on things that will
generate returns for you whether or not
you're working on them down the road so
I know I gave some examples earlier but
real estate is a great example of that
investing your money into index funds
another good example digital products
another good example if you can become
like a passive owner in a small business
another great example if you don't put
your money to work for you if you just
have it sitting in a checking account if
you just have it you know sitting on the
sidelines not making money for you
somehow then you're going to be working
forever and it doesn't always have to be
money like there's ways where you can
actually use other resources like I
think I mentioned at the beginning with
the Tim Ferris thing you can invest your
time you can invest your energy and then
the third thing is money so if you don't
have money if you're someone who's young
and listening to this or maybe you're
older and starting your journey and
you're living paycheck to paycheck start
to use some of that time on during the
nights or during your weekends to build
that s Hustle to to launch that thing to
launch that passive income product
whatever that looks like to you there's
a lot of ways to do it but use whatever
resources you have and just throw it all
at building these passive income
machines that pay you whether or not
you're working because once you have
this money coming in that comes in
regardless of whether or not you're
working on it that is the moment you be
become financially free and then you can
build your dream life then you can spend
the time doing the things that light you
up doing the things that get you excited
every morning I love that oh Cody that
is a great place to end except I want
people to be able to find you online so
where can people find you to hear more
of your Amazing Ideas.
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