You saved the lion's share of your salary to get into investing, right?
I actually saved 61 percent of my take-home pay. I lived off of 39 percent of my take-home pay on a $40,000 salary, so it was roughly $15,000 before taxes. But it was fine. All my friends were early 20s college grads living in expensive New York and none of us had money. I had the highest paying job of all of my friends, but no one knew that. I just lived way below my means.
Yet you didn't live in squalor.
No. I still went out basically every night of the week. It didn't keep me from going out. I just did things that were free. I'd go to open-mic nights to watch musicians or comedians. I'd take a bus or walk there; I never took a cab. I just got creative and made everything fun. I didn't sit home and suffer and pout. If you feel depressed when you're trying to save money, you end up buying yourself gifts to feel better, and then what's the point of working overtime?
Walk me through how you bought your first rental house.
OK. Let's say I'm looking at paying $2,000 a month to mortgage payments. I would take that and add $400 of utilities, $200 of insurance and $200 miscellaneous. Basically, that puts me up to $3,000 a month. So I ask, do I have $3,000 a month? Hell, no.
So I go back to the house. The house has four bedrooms. I could live in one and have three roommates. So I look online to find out what a four-bedroom house rents for in this neighborhood. OK, let's say it rents for $3,500. So I could buy it, rent it out, and I don't ever have to move in and I make $500 a month.
But I still need a place to live. So $3,500 divided by four is roughly $875 a month. I gave my friends a discount to live with me, $700 a month, and I rent out three of the bedrooms. That's $2,100 a month. So OK, I'm paying $1,400 a month. I would probably pay more in this neighborhood to live in an apartment by myself, but this way I own the place and build equity. I can afford that on my paycheck instead of $3,000.