BiggerPockets Money Podcast - 15: The Pillars of FI, Pt. 2: Designing the Life You Want with Brad Barrett and Jonathan Mendonsa from Choose FI

Episode Date: April 9, 2018

This is the last half of the epic interview with Brad and Jonathan from Choose FI. Continuing where we left off from last week, we finish up the Pillars of FI conversation, including beginner level topics you can be doing such as frugality and index fund investing but also touch on more advanced topics like tax optimization and travel hacking. If you have not yet listened to part one, you can find that here.  This episode - along with last week’s part one - is a must-listen for anyone on the path to FI, or just getting started. Links from the Show BiggerPockets Forums Richmond Savers Mr. Money Mustache Articles Listen to the episode on BiggerPockets   Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Bigger Pockets Money, show 14, part two. It's that little extra bit of intentionality and setting priorities. Okay, that saves me $80 a month and compounded over decades. That's a boatload of money. It's time for a new American dream, one that doesn't involve working in a cubicle for 40 years, barely scraping by. Whether you're looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation, you're in the right place. This show is for anyone who has money or wants more.

This is the Bigger Pockets Money Podcast. How's it going, everybody? I'm Scott Trench, and I'm here with my co-host, Miss Mindy Jensen. How you doing today, Mindy? Scott, I am doing fantastic. I am out in the Pacific Northwest with my family on vacation. My husband is going to be running a marathon this weekend, and we came out here for the Girl's Spring Break.

And the Pacific Northwest is so much different than the Denver area. It's so green. Everything here is so green. Of course, every time I walk outside, it's raining. that's probably leading to the greenery. But enough about me. Let's get on into today's show. We have the second part, the wrap-up episode of the Bigger Pockets Money interview with ChooseFI. Brad and Jonathan are here to continue with their pillars of financial independence, the 10 foundational points of what it really takes to get to financial independence.

Yep. So again, this is the second part of that episode. You can pick it up right here and get some great information or what we recommend is go back and listen to last week's episode before you get into this one so that you can kind of know what we're talking about in the rest of the today's episode. Yes. So shall we bring them in? Without further ado, here is part two of the Chusify interview with Brad and Jonathan. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye open. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code pockets. What I personally like is that

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when you sign up for a free 30-day trial at audible.com slash BP money. All right. So the next pillar of FI here that we want to talk about is college hacking, which I'm sure is relevant to some listeners, but maybe well-past it for others. So what's your advice on college hacking? You know what? I created this pillar knowing that I didn't have a great answer.

for it and it frustrated me. You know, all of this comes down to opportunity cost. At what point are you starting back at zero? And so many of us are starting at negative 40,000, negative 60,000. Forget the car payment. That's nothing compared to this mortgage that some of us are carrying around her back. I got back to broke at 32 years old. That was when I got back to broke for the first time and now I'm starting from scratch. What does it look like for an individual that's starting from scratch at 18? Finally, they graduate high school, they graduate college and they go right into that job, but they don't do it with the burden of $40,000 a student loan debt. And it needed someone to constantly highlight it and go back to it and add additional tools to the box. And there's a few things that Brad and I have

just kind of uncovered, not because it's our ideas, but rather people in our community have brought it together. Other people have documented it. But this is something that all of us have an obligation to constantly research, constantly find more and more ideas. And honestly, get them out there so that more people can take advantage of them because more than anything that I can think of a signal of like our broken system is how bad the student loan debt situation is for students coming out of school. And for me, as far as college hacking goes, I think it's just, again, it goes back to thinking a little bit differently. Okay. So I know when I was looking to go to college, you know, back in the day, I looked at the most elite schools I could get into. Okay. And I was fortunate,

it to get accepted to two or like the top 10 colleges in America and you know, they're expensive, right? And what I realized looking back is that, okay, if I was, I guess, quote unquote, smart enough or whatever you want to call it to get into those schools, I probably could have gotten a full merit scholarship at 90% of the other schools in the country, but I was too stupid to realize it. And even though I did, I didn't go to one of those two schools. I actually went to a school where I did get a partial scholarship and it was still a great school. So please, you know, no tears for me or anything. But it was something that like my parents still paid a significant amount of money for that.

And sure, I didn't come out with student loans, but if I had gone to a school that I could have gotten a scholarship to, maybe some of that money would have came to me. And at 22, I would have had a net worth of positive, you know, tens of thousands, right? So I think just something as simple as that. And now obviously that's not for everybody, but there are examples. like here in Virginia, there is a program that if you go to a community college, now, this is not going to be, quote, unquote, societally palatable, let's say, right, for most people and like upper middle class, like areas, could you imagine, oh, my kids go into community college? Like, most people

aren't going to want to say that, but that's ridiculous. That's not how people in the five community think. We think smarter. We think of a more optimized manner. So the way that this works is you go to community college for two years in Virginia. You get a three, four, and you, check a couple boxes, dot all the eyes, cross all the teas. You get automatic acceptance to the University of Virginia or William and Mary. Those are two of the best schools in America. You only have to pay for those for two years, right? Many hours, right? Pay for, and nobody knows about this or nobody does it. But you pay for UVA for two years. You get the same degree as everybody else who paid for four, right? Just by being a little bit smarter. You take a ton of AP tests and cleft tests in high school

and see what you can do to get as many credits as you possibly can so you can shave off a year, right? Like there are all these strategies you just need to think about them. Think a little bit differently than the next guy. Like that is, Mindy, you have your list of FI? Like, that's my mental list. My tenant of FI is think a little bit differently than the next guy. And I want to add on to this is to make smart decisions about college. I started college before I graduated high school, which is a smart decision.

But then my college. degree is in fashion design, which is possibly the stupidest thing you could possibly study. You know, there's like nobody gets a job as, you know, the next Carl Lagerfeld, the next Stella McCartney, because they went to fashion design school. And it's, I know how to sew. I can make you anything, but that's literally the dumbest thing I could have studied. If I would have studied business, that would have been a much smarter decision, I would have been able to get better paying jobs right out of the gate. And my parents made extremely smart decisions about how to pay for my college. When I was a kid, my dad would go and

buy a $50 savings bond for me and for my sister every paycheck. And then he would just, I don't know, stick it in the drawer or whatever because savings bonds don't mature forever. But then once they matured, I was in second grade. And I remember sitting there signing my name a thousand times. And I'm like, this is awful. I hate this. And my parents are like, you have to do this because it's in my name. Then they took advantage of the unbelievably ridiculous. interest rates in the 80s, and they locked that into like a 10-year CD at something like 14%. That's just, that's unheard of now. Yeah.

So this, I don't know, $3,000 or $5,000 that he spent on these savings bonds turned into my college fund, my sister's college fund, a large portion of my brother's college fund, just because of, you know, making intentional decisions and taking advantage of, you know, the opportunities that they had available, 14% interest that never happened. ever that's never going to happen again. And then I went and spent it wisely on fashion design. So make smart decisions about college. And if you're not sure, you know, if you have a passion, you want to be a teacher, great, go be a teacher. But if you're not sure what you want to do, study general education courses at your local community college. Go and study business.

You're never going to do a bad thing by studying business. Yeah, I think it's great. And I think that if you go and choose like that, you know, a profession that is not going to be high paying or that doesn't have high odds of success in the marketplace for that starting salary, just do exactly what you guys just said and be smart. Find a way to fund college without having that debt. The worst thing you can do is come out of college with a history degree and 100 grand in debt, right? That's not going to help in your quest in life in general. Even if you don't care about five, that's just going to be such a devastating start to kind of getting, tackling real life, I guess.

Yeah. And, you know, the private colleges cost exponentially more than the state colleges. And you're not getting any, in many cases, I should not talk smack about all private colleges lump them together. But in many cases, you're not getting any better of a degree. You're not getting any better of an experience. You're just getting more debt. And because this is bigger pockets, I'll plug Brandon Turner's college housing or college

hack, which is he put a 25% down on a $400,000 or something like that. a quadplex, and you put a 15-year note on it. It cash flow is about even, maybe a couple hundred bucks a month. And by the time his daughter is college age, he'll have an entirely paid off piece of property, which he can either sell to pay for college. He can use the cash flow to help offset some of the college expense. Or this is my favorite option, he can refinance to another 15-year note, pay for that, pay for college for his daughter, and then use it for the third generation.

So I thought that was a pretty fun one. Love it. So many tools to choose from. All right. Should we move on to the next pillar here? Yeah, number eight is cut the cord. And we kind of tie this now together with the cell phones and the cable package. And just to, you know, it really goes back to tracking your spinning. I think one of the things you're going to find very quickly is after you go through the obvious things like the car and the, your cost of shelter, your food, and then your car bill to all your transportation costs.

Right behind that is now this bloated piece of the pie chart that includes what you're paying to watch TV and this phone that you have on your health. And it is just astonishing that, you know, as a culture, we have decided that $250 a month is okay to pay any single company for something that our parents didn't even know you needed. You know, they were now paying, I'm paying at one point, I was paying Verizon, $250 a month for my cell phone and cable package. And I still didn't have the game on Thursday night because it was a carve out. How much more money do I have to send them before they give me everything? And there is, there's no dollar amount that would get you there. And it's just what you find, if you're willing to just do what we talked about earlier with the coffee, cut it out and then if you're out what you need to add back, you're not going to miss the cable. I promise you. I promise you you will not miss it. We get rid of the cable. And then you find a la carte options to fill in the gaps if you miss something.

Yeah. So I did a little bit of research on this because I was writing an article called 12 reasons you're poor. And I knew TV made you poor. But I wasn't sure how much like all the stats. And the average American watches five hours of TV every. single day. That's unfathomable to me because there's not five hours worth of TV to watch every day. I can't imagine what people are watching. Maybe they're watching the news, but they're probably not. If you're watching five hours of TV a day, it's not because you want to learn. It's because you want to veg out and watch dumb things. But I mean, not even like that. Can you imagine all of the things you can accomplish or learn in five hours if you turned off the TV and read a book, did some research, or just did something? Like, Scott, do you research your real estate purchases or do you just see something and be like,

yeah, I'm totally going to buy that? It spends a little time sometimes to look at the market. And look at how much, look at your net worth at your age compared to similar people your age and their net worth. Like, you have a positive net worth. So many kids your age don't even have that. And I'm sorry, I call them a kid. I'm a couple of years older than Scott.

Well, I'll just say that the game is on on Thursday. at Buffalo Wild Wings and they have a 60 cent wing special. So six bucks, get plenty of wings, game. Nice. That's very cool. Throw a beer in there if you're feeling aggressive. So much cheaper than the 250 bucks a month. And yeah, I mean, this, this one cut the cord, right? So it doesn't sound like something that would rise to the level of a pillar of phi. But I think it's more find your priorities. Right. I think that is probably how I, how I would look at this generally. And I think because,

Because the dollar figures are so significant on cable and cell phones, we do call it cutting the cord or cutting phone, whatever. But it's figuring out, like, you need to prioritize things in life. You cannot spend like everybody else on every single thing with that wild abandon and expect to reach financial independence. You, that doesn't mean you have to live a life of deprivation. And there's a crucial distinction there. You just need to figure out what makes sense for your life. So like for me, on my cell phone, I didn't want to pay $100 a month for unlimited data, right? So, like, there was no value for me because I'm at home with Wi-Fi. I work from home. I'm, you know, I'm here most of the time, the vast majority of the time. I didn't want to pay for data. And I had Wi-Fi. So I went to Republic Wireless and found a plan that had unlimited talk, text, and Wi-Fi. And it was just basically pay-as-you-go on data. So my cell phone bill, instead of being $100 for unlimited data or whatever cost these days. Mine is usually between $12 and $16 a month. So if I have a big month of data, it's $16. That's what we're talking here. Right. And it's just by being intentional. It's not saying,

okay, what do I have to give up for that? What I have to give up is I'm not streaming YouTube or Netflix when I'm not here at home. Right. So if I'm out and I know that's going to cost a lot of data, I'm just not going to do it. Well, oh, poor me, right? Cry me River. I can't watch Netflix. right? And when I'm out in the car or something, right? Or waiting for a doctor's appointment. But, you know, I can listen to a podcast because I've already downloaded that. It's just, it's that little extra bit of intentionality and setting priorities. Okay, that saves me $80 a month. And compounded over decades, that's a boatload of money. And does your life suck because of that? Yes, my life is horrible and irredeemable. Horrible. Do you have formal employment right now,

Brad? Formal employment? No. So I was a CPA, I guess, kind of in my former life. I left that job, I guess, a little more than three years ago. So it's like 37 months as we're recording this. And yeah, I basically left to work full time on my websites, which at the time were just Travel Miles 101 and Richmond Savers.com, which basically talk about the travel reward stuff we talked about earlier. And then, yeah, choose if I came about a year ago. And this has It's really the project of my life. It's the most exciting thing I've ever had going. So I spend really the vast majority of my time on Choose a Buy Now.

Okay. So this sounds like it started off as a side hustle. I know it started off as a side hustle because that's how I met you, was with your side hustle with Richmond Savers. And now you are in like your full-time job is what used to be your side hustle. So let's, you know, conveniently enough, that's number nine side hustles. Let's talk about side hustles. And, you know, that is, like I said earlier, you're never going to get to FI just by working your $50,000 a year job and, you know, saving 10%.

That's not going to get you there. Yeah, I agree. And while I have an interesting side hustle story, I think Jonathan's, frankly, is more interesting just because of the immediacy of it and just how stark it is. So, Jonathan, if you want to go. Yeah, I was thinking about kind of setting that up as like a mental frame. When we go back to this idea of what are the levers that you're going to pull to reach financial independence. There's the income side of the equation. There's the expense side of the equation.

We spent a lot of time talking about how to crush your expenses, right? With your incomes, you can find a very high-paying W-2 employee job that's certainly a way of doing it. Or you can start finding a side hustle. And we just talked about how the average American is spending five hours a day of their life watching TV. What happens when you give that up and you say, wow, that five hours I was being entertained? now I'm going to find a way to be entertained creating a side hustle, right? I mean, that is a powerful place to position yourself mentally. And that's basically where I landed. So at the age of 32 years old, I had finally just paid off my student loans. I had $168,000 in student loan debt, paid them off at

the age of 32, basically back to broke. I had a little bit. I had a positive net worth. But, you know, that was officially when my student loans were crushed. And I was inspired to start this side hustle, choose FI with Brad and I was kind of working it at the same time while I was working as a pharmacist. So 32 years old, no student loan debt. I had been maxing out my 401k. And so I'm kind of on this path. I have a fairly significant savings rate because the same reason that I was able to pay down $168,000 in student loan debt, now that that debt's not there anymore, that obviously goes

straight into savings and investment. And I met Brad and we decided to create choose FI. and it was just a side hustle that I was doing literally when I got home from work for about the first six to eight months and it's slowly taking up more and more of my time and it goes from five hours a day to six or seven to eight hours a day. And at some point in time, they were probably both taking up equal amounts of time. And I found myself very quickly in this unique situation where my entertainment, the thing that I got the most joy from, this side hustle, was now actually just paying enough to cover the bills and it was growing. And because I didn't have to be,

have any debt because my lifestyle was funded, I got in this situation where I needed to take an extended period of time off to go visit my wife's family. And we had a conference. We were going to FinCon, Scott, where I actually met you for the first time. And I went to my boss and I said, hey, look, I got a lot going on, a lot on my plate. And he said, you know, I said, can I take like a three week unpaid leave of absence? I'm in pharmacy. Figured I had a plan in place and someone to cover my shifts. And he said, no, I don't think that would be in the best interest of the company. Well, because of everything else that we've talked about up to this point, in October of 2017, when he said that, I told my wife what his response was, and she got the holy rage because

she knew that I had done a good job, I put my time in, good employee. How dare he not recognize, you know, how awesome I was. And she said, I think you should just put your two weeks in. Now, I had been pleading for this. You know, this is what I wanted. I just needed an excuse. That's how excited I was because I had something that's a business, it's a startup, and it's my passion, and it's also paying the bills. I was like, if I can just put more into this, more time into this, that would be the best thing ever. So in a heartbeat, I went back to my boss and I said,

look, I understand where you're coming from, so I think I'm going to go ahead and have to leave. And so literally, think about the opportunity cost of my last 12 years of my life, from 18 to 32 back to broke. And ultimately, you know, it's not about how much money you make. It's about your time.

That's the most precious resource that you have is your time and what are you doing with it? And if the answer is, I'm catching up on the latest season of Gray's Anatomy, you have made a poor decision. And your 10-year future self is not going to be excited about the place that you land. So I got a question about the side hustle. That's an amazing story. And you crushed it and you were able to make that transition. And it was a bold move and all that.

But getting started with your side hustle and getting into that point where it started to begin generating enough income to cover your expenses. How is your mindset going into that in terms of risk? Was this a risky choice that you made to start this side hustle in the first place? I mean, no, it was risky to leave and pursue it full time, but was it risky to start it? But those are two different decisions. Like, think about that. Just separate that objectively out. There is zero risk to partnering with Brad and in my living room, putting my voice to a podcast

and putting out there and hoping that someone other than my mom will listen to it for an extended period of time. That is no risk. And frankly, at that point, it's no time. You're just taking the time that you were spending in front of the television and saying, huh, why don't I try this? And sure, at some point, it looks like a business. model, but it could just literally be you learning how to build a website. It could literally be you listening to one webinar on how to get involved in real estate. It could be you literally just

listening to a webinar on 100 different side hustles that other people have done to find something that appeals to your unique characteristics and interest. Like those are two different things. Now, if at some point, that's why I like people reject the word side hustle and say it's a very millennial term and it, you know, has all these other connotations to it. That's why I embrace it. It is literally something you're doing on the side in the content. of a nine to five safe, secure job. And if at some point in time, the stars align and everything works out and you can actually start to see how you can monetize it and turn into a business where it's actually feeding

your family and paying your bills, that's the best possible CAPE scenario, but it's not necessary. Everything up to that point is an exploratory mission where you've taken the time that you are wasting in front of the television and actually put into investing in yourself. Yeah, and I think Jonathan is the perfect case and point of there being no downside risk at all. It's just learning a set of skills. So we talk about the talent stack on our podcast. It's from a book called How to Fail at Almost Everything and Still Win Big by Scott Adams. And it's a brilliant book. And I just love this concept, which is when you start accumulating these skills,

you just become a much more valuable person. You don't need to be world class at any single one of them. But when you have these totally disparaged set of skills, you just become much more valuable. So in Jonathan's case, Jonathan is now a essentially world-class podcast editor and knows everything about podcasting to the point where companies have actually come to him and ask him if he wants to consult for them. How freaking cool is that, right? Like that's just one little side thing.

He knows how to create websites. This was a pharmacist 15 months ago. Keep that in mind, right? and now he is an expert at dozens of things. So virtually everything you see on Chusify or here on Chusivai is because of the skills that Jonathan learned in the last 15 months. That is truly remarkable, in my opinion. And it costs virtually nothing, right?

Maybe a couple thousand dollars at most just because Jonathan likes his gadgets and buys the top tier equipment. Sorry, but I had to do it. So think about this. Now you've moved it from being just a hobby or something that you are doing on the side that you're paying for with post-tax dollars. When you're able to find a business that so aligns with something that you enjoy, that's yet another win that I could spend hours talking about. What I think is so great about this is I asked you that question about risk intentionally because it's not risky. It's not risky for me to, like my side hustles, right? It was not risky for me to try to spend a year and write a book, right? That was something.

that I did because I loved it and enjoyed it, and it was a few hundred bucks to do it and a bunch of hours of time, right? When I'm getting my agent's license, like a few hundred, like I think it was 168 hours of training and a few thousand bucks to get it. It's not a risk. That's not a risk like an investment is or whatever. I think it would be, in my position, it would have been foolish to depend on those side hustles to help me build my financial foundation. But it's also risky not to do this on a regular basis and try your hand at some things that you're interested in and learning about. And I think you should try it probably like one a year at minimum if you're serious about financial independence because you never know. You could get lucky and it costs you nothing.

You just learn more and probably have a good time doing it. You're going to look back in five, 10 years and be like, I'm sure glad I started that, you know, choose FI side hustle rather than, you know, watching Gray's Anatomy or whatever it was, just like you said. And it doesn't have, like you guys have all said, it doesn't have to cost a lot of money. And it can lead to a whole new bit of employment. We started our blog as just a thing. We didn't even know you could make money blogging. You know, we're just going to do this so we can keep our, keep track of our journey. And then all of a sudden we figure out, oh, you can actually make money doing this. And that actually led to this job at bigger pockets because I met Brandon and Josh at FinCon 13, I think, and

started talking to them and it just like snowballed from there. But it didn't cost us, I think it was $8 a month at cost to have this side hustle. You don't need when with there's so many people who want to start their own business. I don't want to work for the man. I want to do it myself. You don't have to quit your job to start your side hustle. Figure out what it is you like and start small and scale up as you find that it is beneficial and, you know, valuable. It gives you if it pays you, or use your time to discover, nobody wants this product or service or whatever. You didn't give up everything to go after this one thing that turned out to be a flop. And not every idea is a great one.

Love it. Let's move on to the last pillar of a five, which is savings rate and the 4% rule. Brad, do you want to give us an overview of what this one is? Sure. Yeah, absolutely. So, yeah, I mean, the 4% rule is roughly where people start as far as like, what's your number? So you see like online financial retirement calculators and they're usually predicated on what your income is currently. And that always struck me as like something just odd.

There's something wrong about that because almost by definition, if you're if you're living at a current income and you're saving money, you're paying taxes like we talked about before where potentially you can lower that dramatically, like that has nothing to do with your needs in retirement. What really where it drives off of and what people in the FI community think is it drives off of your expenses. Okay. So basically what the 4% rule states is you can take approximately 4% out of your total buckets. So for most people, it's your retirement income.

Let's just say your net worth generally. You can pull that out. So let's say you have $40,000 of expenses. If you had a million dollars in net worth, you could pull that. 4% of that, which coincidentally is 40,000, and that money should in theory, I guess, last in perpetuity. Then there's certainly some argument about the math of that. We call it the 4% rule of thumb now, just because the math is slightly uncertain, but based on

the famous Trinity study, the argument is that should definitely last you 30 plus years at that 4% rule. So, again, is loose, but at least it gives you a starting. point, which is look at your expenses, not your income. So it's roughly just 25 times your expenses. So hence, the $40,000 times 25 is a million dollars. It's just the same math just backwards, essentially. So to me, savings rate and expenses kind of go hand in hand. If you can increase your savings rate, cut your expenses now also theoretically increase your income, right? That adds to your savings rate as well. If you can pull those levers, then you can increase your savings rate. And I guess

according to Mr. Money Mossash's shockingly simple math, that's a phenomenal pillar article to the five community generally. It's you see basically the time it will take to get you to financial independence. There's no secret to this. It's just math, essentially. So I don't have that pulled up in front of me, but I'm sure Mindy and Scott will put in the show notes and just basically saying, hey, if I have a 5% savings rate, it's going to take me this number of years to reach five, probably 50 plus years. If I had a 99% savings rate, it's going to take me, you know, a couple days, right? So it's just a sliding scale, what your savings rate is. And I mean, that's, it's a really powerful concept. So savings rate, lowering expenses, it all ties together into this 4% rule. So yeah, that's why we kind of

put them all together into one pillar. And what's so interesting about this particular one, going back full circle to what Mindy said at the beginning of the episode is it always starts with tracking your expenses, tracking where your money is actually going. And if you really dive into the math, what you find out is that for every $100 a month that you can cut from your expenses, you can shop $30,000 from what you need from that total number, that 25x. So all of this kind of comes back together with this idea of the aggregation of marginal gains. It's these tiny things. When someone ask you, how did you reach financial independence and you say, oh, well, you know, I packed my lunch every single day and took it with me to work. And they're like,

what? You know, because, but it's not that. Obviously, that is a metaphor for all these little changes that you made in every single aspect of your life that when you put the sum of those together, it's so much more than the individual parts. Yeah, I love it. I think that the 4% rule is an awesome target to give you kind of an idea of how you're going to build towards financial freedom. I guess can maybe kind of, it gets a little bit more tricky when you get into real estate investors and folks that are maybe doing something besides the index fund and traditional approach because there's kind of the cash flow analysis. But once you combine those two things, as you begin progressing towards that, you have the ability to kind of build a plan where you're like, you know,

I'm ready to start making the leap and make a change into a new career or start a new side, or, you know, pursue my side hustle full time or take the leap into financial freedom. So I think that the 4% rule is the starting point. You should build your math. based on that 4% rule and build your plan. And then accept that, hey, if you work at heart of these things, maybe you get lucky and a couple of things work out in ways that you didn't intend.

And you have more than that 4% rule in ways you didn't expect from a business or whatever. And when you have individuals, and when you have individuals in their 20s and 30s that are latching on to all these skills, you're not just going to do one of these things. You're going to be trying a little bit of everything. And so, you know,

I love that what you guys have done so well, you're blending the real estate world, which for whatever reason has been siloed from financial independence for a long time. And I think it's ridiculous. You're kind of bringing those together. And so these models have to allow room for each other in them. And so I think it's coming up with your number using the 4% rule, then looking at your cash flow, subtracting that from your monthly expenses and then adjusting your 4% rule to come down and meet that in the middle is an awesome place to do it. But I think that the conversation is so much better when you add in the complexity of the fact that life is a bunch of choices.

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information in this episode. And I am so thankful that you guys took some time. out of your day to share this with us. We have a segment that we ask the same four questions to our guests every episode at the end. And I would like to ask you guys

today if you still have time. What's doing? Okay. All right. So our famous four questions are the same four questions that we ask to every guest. It's actually five because we don't know how to count.

Since we've got two guests, we're going to ask both of them. Brad, I'm going to ask you first. what is your favorite finance book? Oh, my favorite finance book. That's a hard one. I think probably the simple path to wealth by Jim Collins would be, or J.L. Collins, as he's known on the book cover. That's one for sure.

The little book of Common Sense Investing by Jack Bogle is another one that I like. And similar vein kind of talking about low-cost index fund investing. So I think those two books really set me on a path to thinking about investing. in a, to me, more intelligent manner than I previously was. Yeah, Jim's book is amazing. That is such a great book. I have not read the Bogle book yet. I should put that on my list.

It's a little book. It's a little book. And Jonathan, what is your favorite finance book? I would say it's a toss-up. It would either be rich dad, poor dad, or it would be Dave Ramsey's as a total money makeover. I think what's so interesting about either of those choices is that there's things that I explicitly disagree with with both. But it's a change of mindset. And I think that any book that

gets you to take action is a valuable book. And both of those books are books that change my way of interacting with the world. So it would be one of those two. That's awesome. I want to give a quick shout out to Brad. He recommended a book called Thinking in Betts by Annie Duke, which I think is the one of one of my favorite books I've ever read. I'll read a lot of books. I rarely rave about them. and recommend them to everyone. But that book just so perfectly encapsulated a mindset of decision-making that I found to be incredibly effective. It's about a poker player named Annie Duke who thinks in bets and makes her decisions based on playing

the odds. So thank you for that recommendation, Red. Yeah, you bounce guy. Yeah, I'm still number one in the queue at my library. So I actually haven't read it yet, but just based on some podcasts. Isn't that funny? It's ridiculous. I need to just buy it from Amazon, but based on what I knew about you from your

appearance on our show and what I'd heard about her. Like, I just knew you would love that. So, yeah, when you said it was one of your favorite books, that was very, very cool. Yeah. I forgot that you had rid of it. Whoopsies. All right. What is your biggest money mistake? I guess we'll start with Jonathan. Yeah, you know, I think it's one of these interesting things. And I think it goes back to not beating yourself up about it. But if you think about it, just from an objective place. So right now, I am a full-time podcaster. And I have a side hustle that's now startup business and I'm all in on this hand. But I said I was back to Broke at 3.3. 32 years old and I was back to Brooke because my initial choice that I made was to go all in

on the traditional American play to wealth, which is to find a good job with a good salary, get the advanced doctorate degree and go down that path. And so I got a pharmacist degree and that's four years of undergrad knowing that I was going to become a pharmacist, four years of pharmacy school to become a pharmacist, coming out of school at the age of 28 years old with $168,000 in student loan debt, spending the next four years paying. it off and coming back to 32 years old at broke. Now, let me say this. Now, right now, I have zero regrets about it. None, not a single rest. So I'm telling you this is my biggest financial mistake because it completely transformed the way that I look at money and I would

not be where I am right now without that story, that backstory. But that is clearly by far, nothing even close, my biggest financial mistake. Yeah, my biggest financial mistake was actually, so it's funny on the bigger podcast podcast, but it was real estate. investing, but it was my, sorry guys, it was really real estate speculating. And that's my own stupidity. And I got caught up in the fever in 2005, 2006, and really speculated for lack of, there's no other word than that. I bought like these vacant lots in this like golf club community down in North Carolina. And I thought it was like this can't miss thing. And it was just just my own. Like I said, stupidity.

There's no other word than that. And that has been a very, very expensive lesson. And for me, honestly, it was very hard to get over psychologically. But people like you, Mindy and Scott in bigger pockets, just by learning, right? Going back to what we're talking about, the whole episode is thinking a little differently, just trying to learn and get new skills. Like I now look at real estate investing with a much more intelligent eye. And it's something that I'm finally, literally 13 years later, finally dipping my toe

goes back into conceivably, thanks in big part to Scott and conversations we've had. So, yeah, a huge thanks to you guys, certainly. Well, if you need to know more about real estate investing, you can go to this little website called biggerpockets.com. And we have a forum, we have a podcast, we have a blog that tells you how to do it right. So you don't lose money. So you don't operate outside the law. And yeah, you don't know what you don't know. So I also made some mistakes as a real estate investor, but I just still love it. Well, I will check out that little site called Bigger Packets. So thank you, Minn. Thank you. Okay, Scott. What is your best piece of advice for people who are just starting out?

You know, I was actually going to try and nip this in the bud when Mindy said it because it is always, it always starts with tracking your spending. Every single time someone comes to you and says, how do I get started with financial independence? In almost every case, when I follow up and I ask, well, how much does your life actually cost? Like, that's not something that they can readily produce. It's like, okay, let's go back and figure out where your money is actually going. All plans then can come from there. But that is always my number one piece of advice.

Yeah, it's hard to beat that. I mean, I would probably say take action and don't beat yourself up over past mistakes. So I know that's kind of two pieces of advice there. But really take action. Like every single Friday in our Facebook group, we say, What was the one thing you did this week? What was the one action you took to make your life better? Could be health.

It could be finance. It could be fitness. It could be anything. Right? Like what did you do? What did you actually do this week? So that's even if you just do one thing a week to make your life better, 52, a year, 520 in a decade.

If you do 520 better things in your life over a decade, you're going to have a whole heck of a lot better life. So for me, it's just. take action. And yeah, like I said, don't beat yourself up over past mistakes. It's, you can't worry about things you did wrong in the past. You just have to move forward, learn, and again, take action, right? It all comes together. Such a good piece of advice. All right, this is the toughest question. What is your favorite joke to tell at parties? I'll go first since it's a short answer. I am not a joke teller or a story teller in any way

shape or form. Scott, I feel like I need to get like a whole list of puns that I need to write down for the next time I meet you. But as of now, I've got nothing. So I'll turn it over to Jonathan and no, you can't get away with that. I texted Mindy. I texted Mindy. I was like, I don't know if I when the last time I told a joke was. Like, is this like a life skill that I just missed out or do people do this? Like, where does one learn about these things called jokes? So I googled one before I came on the show. A guy shows up late for work. The boss yells. You should have been at 830. He replies, why? What happened at 830? And then I found $5. See, that is my any joke that doesn't land ever. Always use it. Doesn't matter what I love it.

All right. Well, moving on, did you guys hear about that one guy in the community that invested in lifesavers? No. Pudding. So maybe, are you talking about pudding cups? No, they said, they actually say he made a mint. This is a joke, I think. He made a minute. Oh, dear. But, I'm equally bad on both sides. All right. Okay, so my friend Lindsay was over this weekend, and she told a joke. We live in Colorado. There is legalized marijuana in our area.

There's actually a pot shop down the street from my house. It's kind of a source of contention. I'm not going to go down that road. But we were selling Girl Scout cookies. I was going to take advantage of the fact that I have to live by this shop. I'm going to take advantage of their clientele. And I went in to talk to them, hey, can I set up in your apartment? parking lot. And they said, no, you know, you can't do that because then it's construed as we're

kid friendly and we're not and we don't want to lose our license. But you can be across the street or you can be, you know, you can't be on our property. She said, oh, did they say weed prefer if you didn't do this? So shout out to Lindsay for a joke that Scott is the only person who would love. Lindsay also tells your jokes. I gave you a great joint venture. I was here for your laugh. I'm just going to chime in here and say that I think it sounds like a great joint venture. Oh. Very good, Scott. This is what I have to deal with all day, every day.

Scott's awesome. You know, you're 13 episodes in, and this particular question is still stayed in the famous four. So more power to you. We'll be here for you many more awkward moments to follow. Yes. So if you have a joke when our guests do not, you can tell you. tell it to Scott or Mindy Scott at biggerpockets.com or Mindy at biggerpockets.com. And we will keep a list of jokes for when our guests fall short.

Just for the record, I also don't have any jokes. Okay. So our last question of the day is where can people find out more about you, Brad, go first and then we'll let Jonathan wrap it up. Well, yeah, the most obvious place is choose FI. So, yeah, obviously, if you're listening to this on a podcast player of choice, just subscribe to chooseify. Choose FI. It could be one word, too. You'll find it either way. So that's the easiest place. If you're interested in learning about travel rewards, I guess head over to, well, really, choose if I have a fantastic podcast, as we referenced before. I think that's the perfect starting spot. If it sounds interesting to you, we've got a bunch of resources there, or I have that other website I reference is Travel Miles 101. So there's some more info there. But yeah, that's pretty much where you can find me.

Awesome. And Jonathan. I don't have anything else to add on to that. That's choosefI.com. We'd love for you to come check us out. It's been a lot of fun putting this information together and a lot more awesome conversations to come. Yes, that's for sure. Awesome. Well, thank you guys so much for being on our show today. We ran so long. But really, this is just the kind of show that you can't stop halfway through. Yeah. Yeah, it was a real blast. Thanks for having us, guys. Yeah, this was awesome. All right, that was Brad and Jonathan from Choose FI for the second time. Yeah, wow, that was such a great episode. Having the conversation with them was fabulous. And to hear it all at one time would have just been so overwhelming. We split it up into the two parts.

I'm really glad we did. I'm glad that people listen to both parts. They have so many good points to say. And, you know, they really prove that it isn't that difficult to start down this path. You know, small tweaks in your life make huge change. down the road. And I really, really enjoyed having them on. Yeah, I really love what they're doing over there. They've built an awesome community over at ChooseFI. And I definitely think that folks should go ahead and check it out if they're interested in financial independence. Brad and Jonathan

are just so passionate about this subject. And they just have invested so much time into learning kind of the nuances to help kind of optimize you along that path. And I just always, I always have a great time talking to them and learning from them. And like I said, the travel hacking, but credit card hacking is really a weakness in my financial plan where I ignored Mindy, but then I listened to Brad and Jonathan. So, sorry about that, Mindy. Yeah, so thanks, Scott. No, I remember going into your office and telling you about this amazing thing that you could do with credit cards and you're like, well, you know, I make 1% on my Discover card, so I'm good. I was like, well, okay. Nope, you're right, you were right. I'm sorry, what was that? I was talking. Did you

were right? You were right. I was right. I was right. Right. But hey, now you know, we were just looking through credit card offers today because we had a card and we got rid of it because we didn't need it anymore. We had used up all the points. There's a card offer right now for 75,000 bonus points. If you spend $20,000 in the first three months, which I thought was ridiculous. Who has $20,000 to spend? Who's $20,000 to pay it off? Hey, that could be a great purchase for a flipper or a rehabber. Right? So maybe I go buy a property and I get that card and I get 75,000 bonus points, right? That's funny that you said that because that was my first thought.

We used to flip houses. Well, we still do. We just haven't found one yet. But we would buy the house and then put everything on these credit cards. It helps you keep track of your spending on the house because everything's on one card. And you get these massive bonuses. So that's how we would do it. Then sometimes when you're living in your flip, you need a vacation.

But we are not recommending that the listeners go out. and put $20,000 in a credit card that they don't have, right? This is, you know, the difference. The difference here is, you know, maybe if I were to do a flip, I would have that cash in the bank or in readily accessible liquid stocks or something like that, something that I could access within a week or two in case the flip went south so that I'm not carrying 20% interest credit card debt. It would just be a good way to get a nice, hey, I'm going to track all my spending on this one

credit card. I open up for this purpose. And then I'm going to pay it off before I begin, accruing any type of interest or penalties for that card. And then I'll get 75,000 bonus points as a little icing on the cake. Yes, that is exactly right. There's no point paying 20% interest on purchases just so you can get free travel. You could just pay for the travel instead and pay less money. Yep. Absolutely. All right. This one went really long again. So we should get out of here and say thank you to our listeners. Next week we have Joel Larsgard talking about how bankruptcy affected his life. and his financial future forever, bankruptcy as a kid.

So before we close out, I do want to petition all you listeners for a quick favor. If you like the show, or if you didn't, but hopefully if you did, you will give us a review on iTunes, which really helps us out in the rankings. It helps spread the word to other people. And it just kind of makes us feel good. Additionally, if you have any tips for improvement, please send them to us and we'll try to edit those into the show. We want to make this show full of value for you.

We want to make it fun and engaging and then full of information so that you can increase your odds of rapidly moving toward financial freedom. So send us those tips at Scott at biggerpockets.com or Mindy at biggerpockets.com and then give us some reviews on iTunes and share with your friends. We would really appreciate that. All right, Scott, thank you so much for your time today and we should get out of here. So for Bigger Pockets Money, episode 14, part two. This is Mindy Jensen, over and out.

Thank you.