BiggerPockets Money Podcast - 236: Finance Friday: Enjoy Life Before FI with Simple Investing Strategies

Episode Date: October 1, 2021

Strong frugality is hard to come by. Not many people would write off their solar system as a business expense and use bitcoin mining to provide heat to their house, instead of using a space heater. These are just two things that Yourri, an engineer and diversification whiz, has done to make his balance sheet as optimized as possible. Yourri has spent the better part of the last decade at school and was able to graduate with a phenomenal job doing something he loves. He makes $120,000 a year but has a big retirement goal of $7,000,000! While this may seem like a massive number to most, Yourri should be able to hit it with some regular investing due to his age and aggressiveness to invest. But, he’ll need to opt-out of an over-diversified investing strategy if he wants to reach this goal as fast as possible. Passion projects are also a big part of Yourri’s life, as he’d like to rebuild a vintage motorcycle, get his pilot license, and adopt as many dogs in need as he can. He has a calculated outlook on his financial growth, and there’s no doubt he’ll hit his goals! In This Episode We Cover Pursuing high-cost hobbies and understanding that FI isn’t all about saving every penny Whether or not diversification could be slowing down your net worth growth  The “golden butterfly” investing ratio that helps mitigate risk when investing Writing off solar systems as a business deduction when in a buy-back program  Mining bitcoin for not only extra income but free heat! Whether a 401(k) or a Roth 401(k) is the best option for your retirement And So Much More! Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast show number 236, Finance Friday edition, where we chat with Yuri and talk about setting yourself up for financial independence. I used to have a motorcycle. I sold my motorcycle. I would love to be able to get my motorcycle again. I would love to be able to get my pilot's license and go flying on the weekend. And unfortunately, I tend to find that my hobbies are really expensive. So it's like, okay, I got to try to figure out which one do I actually want to, you know, which one do I want to pursue right now? And then from there, kind of take it further. Hello, hello, hello. My name is Mindy Jensen. And with me, as always, is my champion of the people co-host, Scott Trench. Great to be here with my champion of the intros, Mindy. Thank you.

Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story, because we truly believe financial freedom is attainable for everyone, no matter when or where you're starting. That's right. Whether you want to retire early and travel the world, go on to make big-time investments in assets like real estate, start your own business, or, crush a pretty good career and build a lot of wealth the normal way, I guess. We'll help you reach your financial goals and get money out of the way so you can launch yourself

towards those dreams. I love today's guest, Scott. He is, I'm going to crown him the champion of thinking outside the box. He has a unique way to heat his home, one that I have never heard anybody do before, as well as a great mind for research, which has discovered or uncovered a lot of advantages for him, both in his job and in his investment strategy. You know, I think that's right. And I think that that makes the nature of the way we kind of guided him his thinking over the course of the show so much more ironic because he's so out of the box, yet the in the box or the in the box package for financial planning. I think, you know, a lot of the traditional stuff and going back to the basics and really thinking about it the way that I think a lot of us are taught originally to think about it. I think the key, the playbook of spend less, put it into a tax advantaged accounts and build wealth over the long term in those areas really applies to him in perhaps a kind of a kind of way, given all of his interests and creative ideas and all that kind of stuff.

So I think it was a great episode. And it just kind of shows that there's a different playbook for every goal. And his goal, I think, is best served by the boring old-fashioned way to a large degree. I think you're right. There is a different playbook for every goal. But a lot of goals will have the same boring playbook. And that's okay. The best type of personal finance is steady and solid instead of super sexy, really risky.

Oh, my goodness, I lost everything. Like, it's super awesome to make $100,000 in a minute. it's really, really soul-crushing to lose $100,000 in a minute, especially when you don't have it to lose. So boring is the best. Before we bring in Yuri, let me tell you what my attorney makes me say. The contents of this podcast are informational in nature and are not legal or tax advice, and neither Scott nor I nor Bigger Pockets, is engaged in the provision of legal tax or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal, tax, and financial implications of any financial decision.

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Today we are talking to Yuri. Yuri is an engineer and as such he has his numbers dialed in, but he still has questions and we are going to answer them. I was just chatting with Yuri before I hit record and holy canoly strap in because you are going to learn a ton today. Yuri, welcome to the Bigger Puggets Money podcast. I am so excited to talk to you. Well, thank you so much.

Honestly, pleasure is mine. I've been very excited. I've been more or less thinking that I really should apply to this. And I was surprised on how quickly it turned around. And I got in. And so let's get started. I'm so excited. I'm so excited.

I love your story. I love all of the possibilities. And you just threw another one at us. So I can't wait to jump in. Let's go on to your income statement and balance sheet. So what is coming in and where's it going? Yeah. So currently my yearly income is or my yearly gross income is sitting.

at approximately $120,000 a year, which turns out around 10K a month gross. As far as what I see every month, realistically speaking, I don't exactly know that number right off the bat. And the reason is, at least in my case, budgeting has not always been the best for me. I tend to get super hyper-focused on the numbers. So what I've chosen to do is taking this concept of the anti-budget, which means that I've simply automated all my investments. I've automated any sort of saving that I need to do. And anything that comes and is kicked back out, I utilize that for anything and anything and

everything that particularly fits within my life. So realistically, what's going out, I think that's probably best addressed through what's been automated out. I am doing around 13,500 and a 401k every year right now. I'm planning. I'm pumping that up to the $19500. This year just was, I just needed a little bit extra capital, so I chose to not max it out. I max out my Roth for or my Roth IRA doing $500 a month split up weekly. Every month I basically purchase around $80 of cryptocurrency. I have additionally a few different investment accounts, which we'll obviously dive into deeper.

one is based on speculative growth. Another one is based off of running an options plan, which we can discuss further as well. I know in one of the other episodes, someone had mentioned cash secured puts and covered calls. I do something very similar, and I would be happy to talk about that further. And then lastly, I have a dividend fund. So taking a look more at the value side, more or less acting as a hedge against growth stocks. We have this preconceived idea of what the market's going to be. to do. I tend to be not necessarily risk-averse, but I like to plan accordingly. And I can talk about

my modified golden butterfly whenever you choose that we should do it. Now, as far as my liabilities go, I do have a few loans. An auto loan, which is $142 a month, a solar loan, which is at $192 a month, and then my mortgage, which is sitting at 1372. And then I also have a loan from the bank of dad. When I first started graduate school, I didn't get paid for the first few months just because of accounting issues. So I had to get some money to live off of, you know, zero percent interest, which thank you, Dad.

I greatly appreciate it. But I'm doing my best to pay him back as quickly as possible. So I'm doing $500 a month until that's gone. So that should be gone in about 10 months. So beyond that, that's kind of it. I regularly pay my credit card, so I've never had a late payment on that. So I don't think there's no liability there. I love it.

So I'm getting about $6,500 to $7,000 and free cash flow every month. That's it in your bank account. Is that right? That sounds about right. In fact, I use personal capital, so I can tell you approximately how much that works out in total cash flow every month. between liabilities, I'm seeing, yeah, it's around $6,500. Okay, awesome. And then you have, and then your net worth is somewhere in the ballpark of $50,000 to $100,000.

Is that right? No. So that's been kind of my, we'll talk about that when we get into the investments and everything I do. About a little over a year ago when I left grad school, I was sitting at negative $3,000. And right now, as of this morning, I'm sitting at $131,306. Woo-hoo. Okay.

And that's awesome. Congratulations. That's a huge. year. And where, so, so, okay, so we have the investment accounts of like 80 or so a thousand. And then we also have the home equity. Is that what's comprising that network? Yeah. Honestly, the big one was the home equity. I did end up getting a, I basically got a fixer upper and the area is kind of just exploded. I've fixed up to fix this place up to the best of my ability. Thus far, there's still things to do. But I got it for 250 and right now we're sitting at

And where are you located? I am in the rural mountains of California between Bakersfield and Los Angeles. Nice. Okay. And so what is the goal here? Well, the goal is realistically, I don't intend on retiring early per se. I think my retirement goal is really sitting around 55, at which point I'm too squirly to ever actually truly want to retire. I think the end goal would be to go and adjunct as a professor at a, like a small university and just teach. I thoroughly enjoy it. There's just academia doesn't really necessarily pay, so it didn't make sense for me to try to go down that route. And then pursue my hobbies slash kind of, I guess, giving back goal. And my giving back goal is to more or less run a ranch, like a rescue ranch, kind of as I go later in life. So unfortunately, that's quite expensive, especially since I've got some

interesting, I've got some expensive hobbies, or at least I'd like to pursue some expensive hobbies. So at this point, it's maximize as much as possible so that by 55 I'm sitting at a pretty significant amount of money. Okay. So the goal is as much wealth as possible. You don't really care where. It's just that you have access to or can control a large ranch and be happy with the the professor role. Correct. So I've math,

I mean, I really went through and tried to make predictions on how much it's going to cost, which is something I'm going to mention later. And I came up with a value of, my retirement account's going to have to be, at least in today terms, like $7 million,

which makes no sense to me. But I tend to think I'm pretty decent in math. So I'm kind of at a loss. So I guess if that's going to be the case, I just need to pursue it. and continue to do what I do now, live like a grad student, invest as much as possible. And it's not like I'm uncomfortable by doing it.

I still think I have a really decent, a really decent living situation. But yeah, I guess it comes down to trying to, I guess, further optimize this or further optimize my situation a little bit further and maybe come up with or maybe realize that the way that I'm going about this right now doesn't make all that much sense. maybe there's a better investment vehicles for me to pursue. And once those are kind of figured out, then later I can go back and pivot back and note the way I'm currently working things out on top of whatever, you know, recommendations you make.

So we just want to optimize for long-term value as much as possible and make all the right moves that just lead to the most wealth. You don't really care about cash flow in the short term. You just care about that end state wealth number. Yeah, absolutely not. I'm, you know, I'm, I'm incredibly lucky to have gotten the position I'm, or to be in the position I'm in. You know, $120 a year as a single individual is nothing to scot fat. I totally recognize that.

And as a result, it's given me an awesome standard of living. So I'm not necessarily looking to create any more significant cash flow. I don't think it's necessary. And if I wanted to, if I'm being entirely honest, I could just move into a, different role at a different company. I've definitely had offers to make significantly more. I just, it's not something that interests me, so I choose not to pursue it any further. So specifically in my case, I work in the space industry, but if I wanted to take all of my knowledge and pivot into defense, I could make probably like 160,000 a year. But I'm honestly

not interested in working in that field. Awesome. So yeah, there's a rocket science joke coming at some point later on with this. But that's awesome. So, okay, so here's my first instinctive observation. There's four levers to build wealth. You can spend less, earn more, create, or invest. And you are earning a lot of money at your job. It sounds, you know, and to me, you spend very little, you're generating a lot of cash flow. To me, this one is about an investment approach is my instinct in this. Does that, does that sound right? Or do you think there's another opportunity in the create or income side that we should explore? There could be some income stuff that I personally enjoy doing, which I've thought of some ideas and I would love to bounce it

off of you. But yes, looking at the way that I'm investing is realistically probably the best thing to do. And possibly another idea, because I know that I personally have been called out by it by my friends, and I completely respect them for their opinion on this. They definitely seem me as a bit of a miser. So maybe I am, maybe I'm not necessarily, maybe I'm overinvesting at this point to a detriment, which sounds a little bit, you know, it sounds crazy because obviously like this is an investment, investment focused podcast. Or personal finance podcast, obviously investment is a huge portion of that.

But maybe I am spending too much or not spending, not spending enough on myself and investing too much and it's to the detriment. So I'd love to hear anything and everything. You definitely have room to spend a little bit more and still accumulate a lot of wealth. And your timeline is a very long one with this. So to me, that says as long as you're accumulating $50, $65, $70,000 a year and you plan on your income increasing over time, you're going to have plenty of money to invest bit by bit over this period of time.

You can probably relax a little bit there, but I don't think that's going to be you know, that's a, that's a lifestyle choice that I think you have a very tight budget from what I can tell here based of what we just discussed. On the investment approach, my first observation is you have a lot going on and you are very diversified. Is that fair to? Yeah. If I were to say that any one investor is an inspiration for how I go about things, I'm a big fan of Ray Dalio. So, you know, uncorrelate or statistically uncorrelated athletes. assets are our king in my eyes.

So, yep. So my observation on that would be to think about a completely opposite of that. And here's why, right? I love diversification and doing that if you're managing a large amount of money. And the goal is not to lose a lot of money. But you're guaranteeing yourself a, you know, the point of diversifying is to not have a large loss or not experience a lot of volatility. And you just told us that your timeline is to build the maximum possible wealth 30 years

from now. So if you say, you know, hey, this portfolio is going to generate 8 to 10, 8%, I don't know, or 7%, in a very kind of predictable, low volatility way, you're guaranteeing yourself a 6 or 7 or 8% return instead of the 10% that would just be straight up from index funds. I'm making that up. You might have a different assumption about your portfolio. A real estate portfolio, you know, if you're constantly leveraging or whatever, might be able to earn 15, 16, 17% with some volatility in those type of. of things. And so what I would actually encourage you to do is think through each one of your investment choices or the investment options available and say, what's the best one? And I'm going to concentrate there for the next two or three years on that because that is the mathematical

best bet for this. And since you said, you know, and you can always kind of based on this, you might change your goals. You might be like, oh, you know, I actually do want some money in the meantime. And I don't like the going all in on one area with that. But that would be the first thing I would observe is mathematically, you're going to be better off if you invest in one asset class heavily and begin layering in this diversified approach later on as time moves on and you're moving closer towards that future state in 20 years. So what's your first reaction to that thought? No, I kind of, no, I agree with you on that because there's definitely, there's varying amounts of performance in each one of these portfolios. Some have, like, for example, my highly speculative

fund until this week wasn't doing all that well, but then one of my big bets paid off. So that's not the case anymore. But yeah, realistically, I don't, like my super speculative accounts probably could be untouched for at least for a little bit. Because realistically, if I'm taking a look at what has really skyrocketed my portfolios, it is more or less taking, you know, you're more traditional index. fund style. It's just had a, you know, obviously the S&P's had an incredible last year for obvious reasons.

But that being said, I've still, there's, I've still sprinkled in some little odds and ends that I felt very strongly about and had good conviction. And I actually did, I brought it up, like the S&P last year did 33.5% and I did 52% with, all of my accounts combined, but obviously I had some drag weight. So yeah, no, I completely agree with you. Realistically, I think that if I were to chop out one of these accounts and take whatever funds I'm putting in there and transferring them elsewhere, more specifically, likely real estate, as I had kind of, you know, pre-show brought up, that would probably be the where to go to try to maximize the returns. So, yeah, that's a good, that's a very good point. I just encourage you to say, yes, which one of these areas do I believe is the best? It might be real estate.

It might be stocks. It might be one of these options or creative things here. It might be your speculative fund with that. But like, you're clearly capable of making that assessment for yourself about which asset class or which investment approach you think is best over a long period of time, which is 20 plus years with that. And I think if you stack all your chips into the one that you think is best, especially in the first couple of years, that is a higher, that's the mathematically right approach, right? It may not have the right outcome. You might be wrong with that, but, you know, like, you want to get the seven million bucks in 20 years. You've got to make some mathematical, mathematically correct bets and, and,

and I think dump it in there, or you need to just earn a tremendous amount of money and dump that into something that's very passive and stable with that. So those are both viable options. If you do both, you're probably even better off. that's my first observation about your investment protocol is I think you have really done a lot of research and thought through all of these things. And I think that because of that, you're actually diversifying yourself away from probably the best one of that. And that that's where you need. And that's a scary, you know, thing. But I don't think, I think that diversification is wonderful once you're wealthy. No. Okay. No, that makes sense. I don't think we have

congratulated you enough on turning your personal situation around. from negative 3,000 to positive. What was it positive? 131. So first of all, I'm going to say, good job, Yuri. That's awesome. Yeah, that's awesome. I think that's one of our big downfalls of this finance Friday is that we don't congratulate

the guests enough for getting themselves to this position. So you're doing awesome right now. Thank you so much. But to be fair, being in school for what is for almost a decade, it tends to slow you down a little bit. Well, but you're still, hey, there's a lot of people who, who are 28 years old, who weren't in school for a decade, and they don't have 131 in net worth either.

So you're doing good. Take the compliment. You just say, thank you. You mentioned that you really like your job. You could go in another direction and make more. Are there any opportunities for contract work? Like I just said, you're 28. I know that you're not married and you don't have any kids.

So right now is a really great time to put in some extra work on the weekends. and really crank up the investments? So yes, yes and no. Working within my field would be very difficult. And that's where the real money would be. If I could, you know,

do any sort of weekend consulting, that would be best. But because of conflict of interest and, like, not being able necessarily, it falls in this weird zone of I could put myself into trouble if I really wanted to go for those. maximize returns in from consulting.

The aerospace industry is pretty well controlled. And specifically, if you work in anything ITAR related and engineers out there who know what ITAR is, that it's international trade of arms. So anything rocket related, you don't want to get yourself in trouble. That's a great way to end your career very quickly. Definitely not suggesting that. If you, are there any consulting opportunities outside of the space industry that could generate some income. So that's a good, that's a good, uh, I did. That's a thing that I've tried to

come up with. And I did come up with a, a potential side business, which I was going to try to get some thoughts on. Working within my own industry or tangentially might be very difficult. Um, I think what I could, what I could make realistically is maybe like part time work, trying to help people with like mold design and things of that sort. Um, and mold. the sense of like casting things, not like the stuff that grows in your walls. But it's once again in this weird situation. I don't know how much work there's going to be specifically out here. Where I work, it's everything's aerospace.

So it would just be me going to try to basically help out a competitor or something like that. So I think I would really struggle with that. There are some options in terms of side businesses that could exist. One idea that I have. was Twitch streaming, which I'm assuming Scott's familiar with since you're the video game guy by the sounds of things. So I'm with you on that as well. I'd like to play video games occasionally too. Twitch streaming kind of caught my eye, but not for playing games, actually, for renovating my house. Just live streaming how I renovate and trying to teach people, you know, little odds and ends.

and why would I go about doing this? How do you go about doing this and just teaching people different things? So more or less doing Twitch education is probably not going to make a huge amount of money, but obviously there's people who can make crazy upside if you just happen to hit it big. And if not that, the one that probably makes a lot more sense, but would require significantly more capital to do, would be in van conversion. the converted van market, for whatever reason, is absolutely bananas.

And I am a little bit, I am technically, I'm pretty savvy when it comes to these sort of things. I'm one of those weirdos who love station wagons. And I had a, until recently when I hit a deer, I had a lifted station wagon. And I did the lift myself, funny enough. So I could get in van conversion because I have access to very inexpensive vans being so close to the Mexican border. I could literally just go to Mexico and import in cheap cargo vans so long as they meet regulations. What is your current salary again? 120 a year.

And what would you be able to make if you switched jobs? If I went to the defense industry, I think I could feasibly make like 160 pretty quick here. How much would you be able to make from this one of these side jobs? One of these side jobs, I think, well, so if my math works out, I think I could maybe make around 20K a flip. and I think it would take me about two months to flip a van, start to finish. So I think feasibly, if the numbers work out, and I was a little liberal with the estimations on this,

I think it's probably safe to say I could probably make like another 40, maybe 50 doing conversions and flipping them throughout the year. If I'm really successful, I could do a lot more. How much would you enjoy flipping the vans? Not nearly as much as building rockets. Oh, okay. I was exactly the opposite answer there. Yeah.

Yeah. I have a long sleep shirt on, but I literally have the Saturn 5 rocket and the Apollo landing tattooed on myself. I'm a little bit space obsessed. Nice. Well, so, and with the switch with the careers, would that mean you have to stop building rockets? Is that what I'm hearing? The payload would be different. Instead of people, it would be explosives, which isn't necessarily something I'm super keen on doing.

I mean, I could do it. Don't get me wrong. the principles still apply. Everything that I've done now in the space exploration industry would directly transfer into building missiles. There's really no difference in other than how you recover the object and what you put in it. Within your current industry in space, is there opportunity to move jobs as well? There's definitely room to move up.

I'm still technically a level one engineer. So there's definitely room for me to go up the chain. After this would be, I would become a senior level. After that would become a principal. After that would be a, or no, after that would be a specialist and a principal engineer. And at that point, I could feasibly try to get a position as a director, which would be me running an entire department. And ultimately, that is actually the end goal. I have found that I really like not only the engineering side of things, but also the management and operations.

So I would love to be able to run an apartment at some point or another. I enjoyed it when I was managing interns as a grad student, and I'm finding I still like it now. So I'm still relatively early in my career, and I'm still relatively low on the ladder. There is definitely room for me to grow. It's just that I could grow much faster. in a different industry simply because I'm so highly specialized in a particular thing that would make more elsewhere. Yeah, I don't know how it works, how you're thinking about it, but I know that there's

concerns there about like one work is, you know, what one set of work is furthering space exploration. The other set of work is building things that kill people with that. And so I know that there's a lot of nuance to that decision. And you have a great setup either way. And a great career, it sounds like great career prospects in your, current field or financial prospects in the defense industry with that. But is that kind of like maybe partially addressing the issue and the conflict around the decision? Yeah, that's really, that is the root of the cause. Someone's got to do it and I'm so happy that someone is willing to do it.

I just have, I don't know if I could personally do it. I think I would struggle. If I worked on the exact opposite side, like I was building ballistic vests and more of the protection systems, I would have absolutely no qualms against it. It's just kind of on the offensive side that I don't know. I personally struggle with it. So it's considering how happy I am at my job right now, I don't know if I would trade $40,000 for that, which sounds crazy to some for some people.

No, money is not everything. You have to be able to sleep at night. So I would absolutely say stay with what you're thinking right now. And you can always change your mind down the road. if you, you know, turn 40 and you're like, you know what? I just want to go blow things up. Then you can go do that. I mean, war isn't going out of style anytime soon.

Yeah, exactly. Exactly. So, but yeah, here's my instinct kind of hearing what you said. And this is not, this is not yet kind of where I'm at, but this is where I'm heading towards in my mind. I would love to know if you have you steer me back in the direction, you want, you want this to go with this. But I'm looking, I'm saying you're a year out of, out of school and you're incredibly advanced rocket science.

scientist doing space, you're building rockets that are going to explore space with this. You just started in your career and spend very little and earn a huge income. And your career prospects are phenomenal within the current vertical and you have options elsewhere from the income front. And to me, that just says like, you know, flipping vans on the side while building rockets doesn't seem compatible to me on the surface. It seems like, it seems like, not unfortunately, but kind of unfortunately, like, the game plan is, you've won. The game plan is there.

You spend very little. You build rockets. You're very confident in your career prospects, and it sounds like you should be. And, you know, I think a very boring approach is kind of starting to form of mind where you spend very little. You put it into the highest and best investment case, and you crush this career thing. And you're going to just build a tremendous amount of wealth over. two decades by following the very simple basics of that plan. And I don't know, Mindy, you're starting to look. What do you think about that? I know. I think that you are right. I really thought when you asked

him if he was going to like flipping vans, he was going to say, yes, it's my passion. And if that's the case, then yeah, try to flip a van and see what happens. Maybe you love it. Maybe it goes instead of two months, it's a month and a half. Instead of making 20,000, you make 25. Maybe it turns out to be a really awesome thing. Or maybe it takes you five months instead of two. You make $1,000 instead of 20 and you're like, you know what, I'm done. I don't need to flip any more vans. You have the benefit of youth. So you can try all these fun things and be like, oh, that didn't work out so well. Or, hey, this is great. I'm going to continue to do it more. You need ways to spend time that you enjoy that aren't just nose to the grindstone, make more money, think about investments all the time. So I think you have a lot of options

to explore. And I would not say change jobs to make $40,000 more in an industry that does not make your heart thing. Yeah. And it's just like you have every option available and clearly are just abounding with intelligence and eagerness to learn. And to me, that combination goes right back to perhaps frustratingly, like maybe a simple approach here is really good for a lot of these things with money because the principles are so simple and you're going to become so wealthy with that. If you were saying, hey, I want to come in and I want to retire in three years from my job, okay, now we've got a completely different discussion and we need to begin building these other things. But if you're saying I want $7 million by $55, that to me says tax advantage,

simple accounts or simple philosophy with that, one or two approaches that can be managed with that, and then go become that director as fast as you can by crushing it at work with this. And that's going to, I got to imagine that's a 200, 250 plus income position with probably solid bonus potential and those kinds of things. And game over, you're going to be much more than 7 million, most likely if the market, you know, continues its historical performance over that period of time. And that's probably, you're probably like, no, I've got 50 million ideas on how to do this. They're probably all really good. I just, I just wonder where that allocation of your, your time and capacity might be best spent based on that. What's your reaction to that?

Yeah, no, I think you're, I think you're on the head. Yeah, my brain's a little bit goofy at times. So I tend to, if it's not clear enough, I'm bounding with energy and my mind is even faster. So that can be a bit of a distraction at times. And yeah, that's probably what it comes down to. I probably am overcomplicating things pretty significantly, if I'm being entirely honest. Listen to Scott and I not argue with that. I didn't say that. But you're overcomplicating them in a good way. It's not like you're overcomplicating. and you know, you're like racing to the bottom, you've got a really great position. It's just let's free up your mind from your investment strategy so that you can focus on flipping your vans.

Yeah. And there's, I mean, there's other, like, I think I mentioned in my, in my application. I have, there's certain projects that I have that I want to, like, there's certain things I want to pursue. And at least right now, like, because I'm investing so heavily, I'm still not necessarily having access to those funds in such a way where I can like the big one, for example, is my pilot's license. If it's not clear by now, flight is pretty cool for me.

And I would love to be a pilot. But it's an expensive, it's an expensive thing to do. It's, you know, between ground school and actual flight hours, if you can find a reasonably priced, if you can find, reasonably priced rates, it's still almost, you know, it's almost a $10,000 cost. That's nothing. That's one and a half months of your free cash flow. Yeah, fair and true.

It seems like a lot because you just came from zero last year, right? And you're now at 131. But like now you're in a different place now. You're not a student. You're a full-on employed rocket scientist probably doing pretty good at your job. That's, that to me sounds like a perfectly reasonable. Now, again, if you were saying, I want to. retire in three years and I want to create a bunch of cash flow, then no, that's not,

now is not a good time to get your pilot's license. But if you're saying I want $7 million in wealth in this point in time, like, you, you are crushing it. You're going to accumulate 50 grand in the next year without, you know, really trying on this. You can take a small percentage of that, get your pilot's license, still invest and become a multimillionaire. As long as you're focusing on that career, moving that thing forward, you're going to be, you're going to be great. We just, we just don't usually have folks coming on and say, I want to build a several million, you know, mid to $10 million net worth over a 20 year period with that.

That's one you can model out and go after. And like, you can have a great life the entire time and crush it your career with the things you want to do with that, which is hopefully good news. Yeah. And to be fair, I think a majority of that figure I came up with is because of where I would inevitably like to live is just expensive. and it's only going to probably get more expensive. I don't do too hot in the sun.

I don't particularly care to be in a place where I walk outside and sweat immediately. My ideal environment is like as close to the Canadian border as possible up in Washington. And as it turns out, real estate up there is really expensive, like crazy expensive. And I think I came up with that number simply by taking, you know, an average 3% inflation, which seems to probably be going to be the case. So that always is a little bit concerning. Washington, does it have to be Washington? Could it be Idaho?

Could it be Montana? I like Montana. I just, the big thing is I love the concept of living in like a deciduous rainforest. So like rain and fog, if it could be 60, if it could be 60 degrees, raining every single day of the year, I would be the happiest camper there is. is, which sounds nuts to most people, but I love it. Great. It doesn't have to make sense to anybody else.

It only has to make sense to you. Yeah. So, okay. And is that where you would have your rescue ranch? Yeah. I'd love to have like, you know, have some acreage up there and just be able to like adopt senior dogs. Like that's, that's the big thing. I just want to be able to continuously adopt senior dogs.

I've already got one senior right there and then the puppy over there. So I see your goal of 30 years from now having $7 million as. a unless catastrophic events change the course of history, a no-brainer will absolutely happen. And most likely, I can't say absolutely, will most likely happen. And most likely you will have way more than $7 million. Yeah. As long as you keep your expenses reasonably close to the control level you have right now as you scale that income, I completely agree.

And so backing into like an investment approach that's very simple around that, you might consider saying, I'm going to take the 401K match. I'm going to go back, kind of go back to the basics of like tax advantage now with that, right? Like, do you have an HSA? Can I maximize that? Then do I have a 401k match? Then do I have a Roth option that I can do with that? Then do I have a 401k option with that?

Then after all of that, you're going to, you're going to accumulate at 75 grand this year. Based on what the profile you just said, 6,500 times 12 is what? You probably can do that faster than me. That would be actually, no. Surprisingly, I need a calculator. I'm good at math, but I need the tools. My brain doesn't work that well. So 78K, right?

So if you do some tax optimization on that, you're going to, you get a match. I imagine you have good benefits as in your profession with that. So, you know, you go through that. You probably after maxing out the 401K or Roth option, if you worked with that and a personal Roth, if you do the 401K through work, for example, with that and the HSA, it'll probably be left over with $40,000 to $50,000. You can take 10 of that. get your pilot's license next year. And then you have $30,000 to invest in a real estate deal or

into your after-tax brokerage accounts with that. Now you've got a very simple and boring investment strategy with that that allows you to kind of focus on one of your passions or hobbies. I was also like Mindy expecting you to say, oh, I love building vans. It's like my favorite hobby. You're like, oh, if that's not it, then, you know, maybe we've got another hobby that maybe makes money or maybe doesn't with that. But that would be kind of how I would be, how the situation presents itself to me. And that tax advantage is probably going to be, you know, one of the, the, the, the, a really good option, I think, unless you have, you know, a real, like a desire to get right into real estate, for example, and you would need the bigger down payment in the short run for,

for the first or second property with that. But how does that, what does that, what does that sound like? No, that makes, that makes complete sense. Um, I do have actually, follow a question afterwards. Yeah, because real estate is something I'm interested in, genuinely interested in. I think I would probably take a different approach than most people. I actually intend on taking 0% of the cash flow from them and just dumping them right back into the actual properties. I don't, you know, for me, it's going back to how I mentioned, like, I like the concept

of Ray Dalio's golden butterfly. Normally, those include bonds. I don't particularly, I'm not too key. on bonds right now, but bonds more or less, it's an uncorrelated asset and a hedge against inflation. And I see real estate. Can you explain the golden butterfly concept? Yeah, the golden butterfly is a portfolio where you find five uncorrelated assets and you build a portfolio that is 20% so equally weighted across. And what you find is in downturns of one, the others aren't affected because statistically

they're uncorrelated. So in his case, he would normally do, it was stocks, bonds, gold, and then I can't remember the real estate, or usually the form of REITs, and then something else, and I can't remember that off the top of my head. But I wanted to necessarily, or kind of take that same concept, modify it to something I'm more comfortable with, and then go from there. Statistically, real estate's uncorrelated. in stock market.

So it makes complete sense to use that as your inflation hedge. So that's why I really, really like it. Plus, it's a good tool. And people can, you know, people tend to be very, when they get into real estate, if they are successful at it, they tend to be really successful down the line. I think that's a great approach. I think it makes a lot of sense. Once you cross the $500,000 to a million dollar net worth mark and start wanting to grow your

portfolio modestly and diversified with that to me. But, you know, I just don't think that's an option for folks in the early days if you want to, you know, try to maximize long-term performance with that. Yeah. So I think there's a good, I think that's a good debate you should have with yourself on that one about whether you want to, you want to put, you know, whether you want to follow the golden butterfly approach and that diversified approach in the early days, the next three to five years and then begin working towards it or whether you want to put it in place right away, what you're currently doing, but you know, that might, you know, that guarantees you the modest returns rather than that. That makes complete sense. Yeah, I mean, just, I'm young,

just take on more risk right now. It's, it's probably, it's okay at this point in time. So I have a comment, and this is just an observation. I am not giving you advice on how to run your investments, but I'm slightly older than you, and I have zero percent of my portfolio in bonds and 0% of my portfolio in specifically on purpose in dividends. Through my index investing, I have dividends, but I have purchased no stocks specifically because of dividends. I think that growth stocks is the most option for growth, which is the dumbest statement I think I've ever made on this show.

But that's what I'm in it for. Growth stocks have the most potential for growth. That's where I'm at right now. I also want to introduce you to the concept of the rule of 72, which I'm sure you already know about because you know everything. But you have at age 28, I'm sorry, the rule of 72 means that approximately every seven years your investment will double if you're getting a 10% return. So you and there's other rules involved.

Google it. You'll get a lot of information. But at age 28, you have $131,000. At age 35, you will have $2,000. $262.42, $524,000. $49,1,048. Where's my zero? Yeah, $1,480,000. 56,000. $2,960,000. And by age 64,000, yeah, 96,000. $2,096,000? Yes. Hold on. I'm not, but like, I love where we're going with this. Yeah. Age 64, $4,000. 92,000. Yeah. Oh, yeah. Okay. Well, you get the point. You're going to have four million dollars by the time

you hit age 64 if you don't put any more money in. Are you really going to sit there and not ever invest another dime? No. So look at how much money you're going to have just by putting it in the stock market, assuming that it gets a 10% return and all the rule of 72 stuff, you're actually going to hit on to a point where you're like, I have so much money. I don't know what to do with it. You know, it's the worst part about this. As soon as my friends listen to this podcast, they're going to be screaming. I told you so. It means so much. No, no, no, no. Oh, no. Your friends are wrong. I hope they listen and I hope they hear me say. All of your friends are wrong. He is not investing too much. I think that he's, I mean, you have fun, right? Do you feel deprived,

Yuri? Well, I mean, I live out in the middle of nowhere. There's nothing. I think the closest Walmart's 30 minutes away. So there's not much to do. It's work on the house and play with the dogs. So, and then play video games, of course, with my friends who live throughout the country. But do you feel deprived? Would you rather live someplace else? Would I rather live closer to a city? Not necessarily. I'm not necessarily.

I tend to get claustrophobic in cities. Would I like to have more toys, which is sure. I would love, like, I used to have a motorcycle. I sold my motorcycle. I would love to be able to get my motorcycle again. I would love to be able to get my pilot's license and go flying on the weekend. And unfortunately, I tend to find that my hobbies are really expensive. So it's like, okay, I got to try to figure out which one do I actually want to, you know, which one do I want to pursue right now?

And then from there, kind of take it further. Turns out there's not all that many activities in the desert unless you're into dirt biking and dune bugging, which I'm not really into. Yeah. Okay. In that case, in that case, I generally agree somewhat with your friends to a limited extent on this. And here's why, right? Because Mindy just said, your net worths 131,000 right now. You invest that at the rule of 72.

You're going to have $2 million. So let's say next year you invest $60,000, right? Or half of that, $65,000. Right? Now you're going to have another million or a little less than a million layered on top of that at 55, 56, right, according to this. That's $3 million. Then you do the same thing again the year after that.

You're going to have $900,000, right? So you only need to kind of keep the investment profile alive and keep control of it for another five, six years the way with your current spending. And if you get a raise next year or bonus or any of this, you're going to be able to sustain that level of investing most likely in there. Now, you want to be conservative, but you're way, way farther conservative than you need to be to get to $7 million by age 55 with your current approach with this. It's, you know, it's not, again, you know, we're often talking to folks who want to retire. in three to five years.

And so that's where we need to get really aggressive and keep the foot on the gas with where you're spending and how you're investing and maybe consider some of these alternative investment approaches. But with your goals, you are so good from where I see that you can kind of just like live your life and love it in the meantime. And you will definitely be, you have a very high probability of becoming pretty wealthy by that time point you want and get your pilot's license as well in that. Tax season is one of the only times all year when most people actually look at their full financial

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hourly Amazon employees earn an average of over $24.50 an hour. Employees also have the opportunity to grow their skills and their paycheck by enrolling in free skills training programs for in-demand fields, like software development and information technology. Learn more at aboutamazon.ca. Okay, so I'm going to tack on to what Scott is saying. What I'm hearing you say, because I do agree with Scott, but what I'm hearing you say is that you like your life right now.

I think that you can go out and get your pilot's license at the $10,000 that it's going to cost, and you're not going to derail yourself from your future goals. I think you can go and get a motorcycle. You can get a really great motorcycle for sub 10,000, right? Yeah, but knowing me, what I'm going to do is I'm going to go buy a beaten up one and and then fix it because.

Okay, so do that. Yeah. And then you have your motorcycle. You can fix it up because it's fun. You get your pilot's license. You can go around and fly. But I hear Yuri saying that I make this much money, but I spend this much money because that's just what my life spends.

I don't spend this much money because I feel deprived and I'm horrid. and I'm hoarding away every single dime trying desperately to get to a million dollars so I can retire tomorrow. Yes and no. I would say that if I knew that I had more flexibility, like if I knew that the way, you know, I could invest half as much and still meet my goals, I would invest half as much. What would you do with the other half? I'd just probably take more trips.

Like I haven't, I have not flown out of this country in over a decade, which sounds crazy. because I have family in Canada. I'm sure you're more than capable of this. So I would do this following the call. Take a spreadsheet out and put in a stock market index return number of 8%, something really conservative or 7%, something like that. And say here's what my current net worth is if I just put it into an index fund at 7% or whatever toggle number you want with that, right?

And then say, if I invest this much per year, where am I going to be at age 55? If I invest this much per year, what am I going to be at? how is my salary expected to change over that period of time in my investment? If you're able to invest 65 or 78 this year based in your current profile, if you drop that down to 50, and I give you 28,000 more dollars to spend this year and fund money, whatever, which is going to seem like a lot, I'm sure with that. And then next year, do you get a raise or the year after do you get a raise or a promotion with that? And so can you sustain those types of things?

I think you're going to find that your net worth is going to be so far and away beyond that seven million dollar mark in a lot of those models that you put together, as long as you sustain a 50,000-ish or $30,000 level of investment, that you're going to be like, oh, my gosh, that number is way higher than I really needed to be with that. And that, I think, will be very freeing for you because that's super simple, and you can just think about it like that. And then you can, as much fun as you want, putting together the other parts of your investment profile with other portions of that.

But if you just stick to one formula, for example, like that, I think that will be very freeing for you from a mental standpoint with that. Have you done that exercise? To the nth degree and further, I actually have the spreadsheet up right now. It projects everything from every single year all the way till my age 100, assuming standard returns. Where you add at 55 in that model? If I continue what I'm doing right now, let's see, 55 years.

year of. I love this. This is awesome. I have the same thing. My, my net worth in that case is 6.4. Really? How much are you investing for year? Exactly as I am right now. But the other assumption I made is a 1.5, a wage growth of 1.5% per year. And then I also assumed, that's, that's, that's, that's, that's, it's killing your model is is your 1.5% wage growth. What is what is a more realistic number there? And I know we don't want to be, we're not going to plan aggressively, but like, yeah, I mean, it kind of depends. And that's the real question. Because I don't necessarily know because I've been in the workforce for exactly one year. So I actually don't, I don't have any sort of reference to it. And last year, I, last year, at least with my work, I got a cost of living adjustment, but not necessarily a raise. And the reason being, they couldn't offer it to somebody who had been working there for, you know, six months. So. I haven't necessarily had technically a true raise yet simply because I hadn't been in my job long enough. You know, come January, that'll probably be different because, in my personal opinion, I've knocked it out of the park where I work, where I work, and I've taken on probably more responsibility than I should have, but I still, you know, swung it. And, you know, at that point, I'll be there for a year and a half.

So at that point, I'll be able to take a look at this and, you know, readjust accordingly. But I don't know for sure. I think you can do some research around people who have been in the profession for three to five years and, you know, form an opinion about where you benchmark against some of those folks and put that, put that in. And that, you know, like there's, it just doesn't, it just doesn't seem like to me with your ambition level and the way you're self assessing, you know, unless you're wildly off, which which seems unlikely in this, that you're going to be earning the same level with this. You are in your first year in your career in a high demand field with that. There's no way that the salary figure doesn't start with a two in five to seven to ten years. You know, in my opinion, that seems unlikely in the, in the field, right? My projections for 55, if I, you know, that 1.5 percent, I would end at 182, which might not actually be super necessarily far off.

You know, my dad's, my dad's 55. I know how much he makes. He's 55 in this year. He's not going to be 55 in 30 years from now. I would guess, I would use 3 to 4% just for cost of living. But if you're already knocking it out of the park, and by the way, I recommend that you start a document right now that says all the things that you have done. And as you remember what you've done, add to it. Because sometimes it can be difficult in the spur of the moment to remember exactly what it is you've done over the course of the year and a half that you've been.

there, but that's a side note. You, I think cost of living is three to four percent. So knocking it out of the park, I can see you getting a 7, 8, 9, 10 percent raise. I don't know anything about the space industry. I don't know if that's realistic, but if they... It tends to not work necessarily that way. Once you get to like this area of engineering, it tends to, you start a little high and then you kind of sit there for a pretty reasonable amount of time.

Like, for example, my dad works in defense. So by every definition, factoring-wise, he would be making more than me, which he is, but at 55, he's not making 182. So that's where I'm kind of, unless I really take the step toward trying to do more managerial, if I take the more managerial route, I absolutely will be making more than this. But if I really am dedicated towards saying in engineering, engineering actually plateau, like you start high, but you tend to plateau. toe. And that's kind of the, you know, that's kind of the weird situation. But yeah, if I, if I switched fields, yeah, I would 10% is easy. I'd probably do more than that, if I'm being entirely honest. Well, my instincts without going too far into the model, tell me that you've got a really conservative model to get to $6.4 million. Is that, would you agree that that's potentially fair?

Yeah, it is probably overly, it's probably overly conservative. And there's no doubt about that. But I guess that's just my, you know, change the wage of a sprain to 2.5% for me. Okay, we'll do. I'm changing that to 2.5 right now. And we are pulling that across. Auto-populate.

How many times have you had somebody run their spreadsheet in front of your fun? But I do it internally at work all the time with this stuff. What's your net worth at 55? Yeah. My new network, if I do 2.5%, I'm sitting at 6.7. There's some other things to fiddle with there.

But look, I think the bottom line is, I bet you you got a really conservative model here. I bet you you're going to outperform that. I bet you can relax a little bit on some of the spending there. And I think, you know, I would strongly urge you to consider a, the best investing approach or one, two, or three of those in the early years and then work towards potentially that butterfly methodology longer term. Look, that may have a bad outcome. Right?

Yeah. It may, it may underperform, but mathematically, I think, I think you'll agree that that, that, that makes more sense, you know, over, I, I imagine you might come to, as you noodle on it, to think that, I might as well make the best mathematical bet here, and then optimize into that, that, the protection mode long term with that. No, that makes, that makes complete sense. Yeah, there's a few of my accounts that are probably more trouble than they're worth because they do require me to actively manage them. And I love my job, but I'm not looking for more.

It's really sometimes what it comes down to. You know, I'm looking for investments, not additional work on my plate at times. If things don't work out there, you can always go to Southwest. Since you're going to get your pilot's license next year. Yeah, there you go. Exactly. Yeah. I'm going to tell you, they make a little bit less than you do. You know what? Feasively, though, you could be a pilot and then go into crop dusting because it's an agricultural area. And that you could actually make, you can make some pretty insane income doing that.

Well, I know Mindy had two topics you wanted to get to here in addition to what we've discussed to you. Yeah. So, should we dive into those, Mindy? Yeah,

let's dive into those. So my super funny, fun ways of going about coming up with additional things and additional tax savings. And it brought, this was brought up into my mind because last week's published episode, at least from whenever we're recording this, the other individual and her husband had solar panels. And it's not the only time I've

heard people say that they have solar panels and a solar loan on the money podcast. And time and time again, no one ever mentions it. But technically, if you live in a state where you do a credit exchange with the utility company, you're creating a transaction. And because you're creating a transaction, that solar panel system can technically be written off as a business. expense and you can do Macers on it or rapid depreciation of an asset, which means that not only can you get your 26% credit from when you purchase it, but you can additionally then write off in deductions 80% of the value on top of it. And so if you're in a high income tax state like myself, it actually, even though your loan amount might seem high,

there's a good chance that you actually recover it on the backside, which is what I met, which is what I determined because I can, because of that, those deductions every year, how much I'm making and whatnot, it actually works out that instead of paying around $100 a month for electricity, because electricity is expensive out here,

I'm actually, it's closer to like 65, 70, you know, projected out. And then on top of it, in my area, power outages, are so common that when I had my house reappraised recently to get the PMI removed, they determined that the cost of the panels would be a 100% return on investment to the value of the house. And you're in a sunny location? I have a nearly 90 sun score, which means that I am producing

significantly, I only use about 25% of the power I generate. And you sell it back to the power company. Yeah, so now I'm getting paid around. I'm getting paid around. on $60 a month right now. Oh, oh, oh, oh, I misunderstood. So instead of you spending $100 a month, you are getting paid $60 a month for your electricity. So instead of spending $100 a month from the utility company, I instead got solar panels, which cost me $192 a month. But after if I, once with the credits and deductions, I should feasibly be able to bring that monthly cost down to and then with whatever cashback. The cashback's a little difficult because we're actually doing a credit exchange.

So in the winter, when I'm not producing power, I still have, you know, I still am just exchanging those credits. So it really works out to I'm basically paying around $65 to $70 a month after those deductions come back my way. So it's just, you know, it's deferred. At the end of the year when I get my taxes back, my tax credit back, then I get it there. unless I do much better tax planning, which you'll probably be proud of me. I've always done my taxes on my own because to me it's a game of optimization and I love doing it. But now it's getting way too complicated and I'm just going to hire a CPA because it's so far over my head that I'm just not comfortable taking this on any further.

Okay. I want to say yes, when you are a student and you have one source of income and you don't have any deductions, if you can figure out turbotax and you can because I did it, you should do your taxes by yourself. But when you get all these weird credits and all this like funky stuff and you're making enough money that you can hire somebody and it's not going to be any sort of even line item on your budget, you should absolutely hire a professional who knows what they're doing who can help you optimize your taxes. In many cases, they are saving you way more than it's costing you to pay them to do the taxes. So that's awesome. And then I'm going to super smoothly segue into, hey, do you do anything fun with that extra electricity that you have? Yes. During the

winter, in fact, I heat my house because I live in an area where I'm so off grid that my house is fueled by propane and wood stove. So during the summer, I have to cut wood, which is annoying. And I don't feel like spending $1,000 of propane every winter. So instead, I mine Bitcoin, which sounds crazy. For those of us who don't know what mining Bitcoin has to do with heating your house, can you share? Yeah. So, A GPU, for all intents and purposes, if you let them run in Macs and you don't care how efficient they are, they are essentially a glorified space heater, which works really well when your house doesn't have vents on the second floor.

So I, because I'm working on my computer anyways, I just mine Bitcoin. It produces a significant amount of heat. And then it works out that because assuming, as long as Bitcoin doesn't go back below, I think, like 17,000, which, regardless of your opinion, I personally don't think it is, but to each their own, I'm still up ahead. And if I'm, if it does go below that, then I still have cost savings because it's less expensive than propane at the end of the day, which is crazy, crazy expensive. I really wish I was on that gas, but the SoCal Edison is not willing to run pipes up a mountain along a fault line. Just for you. Yeah, exactly. So how, how, how, how, how, how, how, how,

How many of these graphics cards do you have running? I'm running four at a time, but I've chosen some older units, which I know are significantly less efficient, which sounds once again crazy. But so what? You want the heat. I just want the heat, which that doesn't make it. And people could be like, oh, just run a space heater. That's wild.

But I think that my personal opinion, space heaters don't pop out an asset that could potentially continue going up in value, that's the difference. And if it doesn't go up in value, then fine. I just have a glorified space heater and I got nothing out of it. I love that. That is super creative. So yeah, that's super creative. I'm going to throw a shout out to Alex Wald, who used to work at Bigger Pockets. He said his biggest regret in college when he had free electricity was not mining Bitcoin. So how long does it take to mine a Bitcoin? Because I don't know anything about this. I know that's shocking with the way they've phrased that. So let me, let me phrase that. I'm, okay, I'm mining cryptocurrency. I'm mining Bitcoin is just an easy way so people know people who aren't familiar

with the space just understand. What I use is a pool miner. So basically, I'm renting out those GPU units to people around the world at a rate, and then they pay me in Bitcoin, and they're choosing to mine whatever particular cryptocurrency of the day is being mined. I don't care. I'm agnostic to whatever they want me to do, but they're paying me a rate. So while I'm heating my house, my graphics card are producing assets for me. What's the dollar value of the Bitcoin one might mine on a cold winter's night on a California mountain using five GPUs? Those GPUs were producing me before we were at these prices back like last winter. I was making around $200 a month. All right.

Yeah. So not bad. What's your electricity bill on that? I don't really know. Well, before that, I was paying around, before I had the solar because that was in summer, I was paying around $54 for that. So, you know, arbitraging, I was making about $150 a month just from heating my house. And would one be able to do better with more efficient GPUs?

You could make significantly more money, but you definitely would not have not. nearly as much heat, which is my concern. So how about this? Get another machine that generates the, that is faster to make more money while you are also heating your house with the old units. It would work except for now. It probably, because of the global silicon shortage, which is what's causing the weird fluctuations in cars,

that the silicon shortage is also affecting the GPU market. market, which Scott 100% knows unless you're on console. I'm assuming your computer. Yeah, I haven't my computer. Okay, so he knows 100%. The graphics card prices right now are so astronomically inflated to the point where it doesn't actually make all that much sense. I actually got in before this occurred. So I bought things when you could actually buy a deal. And if you think like the real estate market's a hot, the GPU markets even worse. So, you know, if and when the prices go down, 100%, I'll probably flip out my old cards for more, you know, for newer ones that are also sort of inefficient. Unless I decide to come up with some other ingenuitive thing.

Like, I don't know, maybe I'll start manufacturing methane or something crazy like that. I'm just making my own gas because that's something that I would do in my garage. Wow. Like, I don't know what to say. Yeah. Do you have a methane tank under your house? You could feasibly do it. I mean, I live in a community with a lot of horses.

I don't manufacture methane intentionally. I mean, you could. I live in a community with a lot of livestock. So livestock produce something that creates a lot of methane. So I could technically use that harvest. it and then when that's done, use it for compost. Yeah, I use that for my, like, my garden and whatnot. And just, yeah, I'm eccentric and weird and I love it.

And I, it comes up with, I come up with these weird ideas. So regardless, I could do that, but I'm going to not do that because there's probably safety issues with it. So I'm, so for all intents of purposes, I'm just going to keep GPU mining for heating my house because it's making me money and I'm not burning through propane at a ridiculous rate. I really think you're in the right profession, Yuri. This is awesome.

I hope I am because I've been nine years in school. Well, has this been helpful to you so far? Yeah, no. So full disclosure, I think what I'm going to do after this is take a day to sleep on it. Think about it a little bit further. I've been taking notes the whole time. So I think at first glance, probably what I'm going to do is, simplify the approach a little bit for now.

I think you are right. I'm young enough right now where, you know, being as taking on some of these risk protection measures that I have, even in a massive downturn, let's say, you know, March 2020 happens again. It probably doesn't even matter for me. So I can probably take on some more risk and start addressing some of my more interesting investment thoughts. the big one being that real estate investment deal that I've kind of got in the pipeline

and kind of pursuing that. Because it is something I'm genuinely interested in. I love building systems. I mean, it's kind of, if that doesn't, it's not kind of clear. I love building these sort of things. So building up a team and trying to create that, I think is something that I'm going to, I mean, not only is it going to build my wealth, I think I'm genuinely going to enjoy myself, which is, you know, if your fund makes,

you money, then why not? So I think it probably does make sense. Plus, if I do start taking on some of these larger deals, I'm pretty dead set on doing it without a partner, which means I am

on the hook for the capital, which that is going to be quite a bit, so I'm probably going to have to start realizing that and planning a little bit better ahead. So yeah, Scott and Mindy, I think I did pull something, I did pull from this, which is I'm probably being a little too risk averse,

which I probably don't need because I'm young enough and I'm in demand enough where this stuff, it doesn't really make sense for me to be doing this. I think that's a good, a good takeaway from some of this. I think if you need to catch up, you always can with that. But I think I think your salary is, you know, I'm still skeptical a little bit of your assessment of the salary. situation is I feel like three years in five years into this there's probably a good chance you're going to do pretty well in being I would imagine in demand although that could be could be wrong and I think that the the you're going to be happier with your life over the next 15 years if you get your

pilots license now rather than kind of stockpile that into the next the next investment with that that there may be an investment or something with that as well as I I think you're just crushing it right now I need to take a step back and say I am crushing it right now I'm going to be very wealthy. You know, I'm probably going to stay well past that $7 million mark if anything goes well with a couple of these things. And I think that that would be how I would be thinking about it, I think, personally. Well, I appreciate that.

And yeah, I mean, I think at this point, I think I'm doing a lot of things right. I mean, I think that's, and I think there's probably things I'm doing wrong and I'm not even conscious about it because I'm so hyper-focused on what I'm doing. and I don't know those will pop up over time. But yeah, I think you're right. I should probably focus in on some of the things that are going to be better generators for me at this point. The dividend fund could probably go as much as I love it because it's many. I don't know if I, because I didn't show what was in it.

It's not actually like, it's not dividend stocks. It's not like your classic values, you know, your Colgates or anything like that. It's actually covered call strategy based dividends. Okay. So things like QYLD, XYLD, BST, and BST actually beat the QQQQ over the past decade. So things like that. So they're still growth focused, but they're going about it differently. It's an ETF that does it via options trading, which I'm not.

I'm really good at the sell side and terrible at the buy side. So I'll let someone else do the buy side for me. I'm still apprehensive on getting rid of the dividend fund simply because I think that, and please correct me if I'm wrong. You know, I won't be able to pull any of my, I won't be able to pull any of my retirement funds. Let's say one day I changed my mind. I'm like, you know, I've had a good run. I want to retire early.

I'd like to make sure that some of, I have some extraneous baskets that are bringing income. And if it's not, you know, real estate. will hopefully and should be there. But I guess I'm apprehensive on putting all my chips in said basket. I just encourage you with your language choice. Like you're not doing anything wrong. There's no wrong choice here with that. So there's no, it's not like you're doing something wrong and have something to correct. I would just think about it like this. Like you need after tax investments. And the reason you need them is because you are able to stockpile so much wealth on an annualized basis on a go forward basis from now until the time you stop doing your job or similar,

that you're going to be able to max out your 401k or tax advantaged accounts and have $30,000, $50,000 per year left over with that. So in practice, that's not actually going to be an issue. Like most folks, many folks we talk to are struggling to save $1,000, $2,000 a month. And there is a hard choice there with that. But you can go right, you can march right down a list with a tax-advantaged approach and do all that other type of investing with that. And my bias would be, unless you're trying to be an entrepreneur or start a business or you really want to stop doing what you're doing and go into the van or one of these other side hustle ideas, then like, and you really want to do this until 55, then why not do the tax-advantaged

approach that it's kind of like a boring, basic 101, you know, formulaic long-term tax-advantaged investing approach with that. Yeah. There's a lot to like about that as a component because you can still do the real estate in addition to that. That's how I think about it. I have one more question. And it's actually, it's due. So, once again, doesn't surprise you.

I did efficient frontier analysis on my 401k and like all the different options. And I was like, this is what I want and figured out exactly how to distribute it. But my immediate reaction when I saw my salary, because I wasn't expecting that, I was expecting significantly. less initially my offer was I should probably go the Trad route, a traditional 401k since I'm in a really high income tax state. But I have the Roth 401k option. I don't know if it makes sense for me. But then again, if next year I have as many deductions as I'm expecting,

there's a good chance that I would fall into that category. But I guess I just don't know like, It's kind of in this weird situation of it. At 55. Do you want to live in California at 55, 65, 65? Probably not. Honestly, if I'm, if I'm being entirely honest, depending on, you know, what happens with my health, I technically, I'm a Canadian citizen, so I could just boogie on back to Canada. I mean, if that's a huge concern of mine, because I'm originally from Quebec.

I don't know. Does Canadians pay more or less taxes than Americans? It depends on where you live. Okay. So the question is, do you think you're paying more taxes now or are going to pay more in retirement, right? And my view, because, you know, I'm slightly arrogant and I'm starting young on this, is that I would be paying more taxes at retirement age than I will today because let's use this example. You want to have a $7 million net worth. That means that you're going to, ultimately, you're going to realize even at the 2% of, rule, $350,000 annually on that $7 million net worth, right? So that's going to be realized in some form. So if you believe that, you're going to be earning more income, even inflation adjusted, or perhaps very close to inflation adjusted at retirement than you are today at 55 with that, even more potentially in retirement with that. And so my bias is, I like the Roth 401K for folks

that are younger in most scenarios. And I personally invest in the Roth 401K. myself because of that dynamic. I believe that the odds of the federal government raising taxes over that period of time is more likely than them lowering taxes and that the odds of me having more income, even on an inflation-adjusted basis at that point is higher than they are today for me. So that's why I like the Roth versus the 401K, even though I, like you, am in a little bit of a higher tax bracket today. So actually, funny enough,

while you mentioned that, I pulled up smart asset. So if right now my effective tax rate is 30.34% where I live, technically a little higher, because I also have restricted stock units, which technically kind of sort of fall in income, but I don't consider them because that's an asset I just don't want to even deal with because it's directly tied to my work. So, you know, I just don't consider that. If I move up to Washington, I will have the exact same effective tax rate if I'm making $325,000.

So nearly triple the income, I'd still be paying the same in taxes. Or at least tax rate, effective tax rate. Well, so in that case, you might have a decision there where you're like, you know what, it's for slower risk to put the money in the 401k right now and think about rollovers or whatever it is later on. It could be that there's enough nuance in your scenario where that's true. So that might, that's, that's interesting. darn.

That was something I was hoping you'd have a really good idea on because I was, that doesn't, it breaks my brain. I think it might just be California taxes. And sometimes it's six of one half a dozen other, right? Oh, go ahead. Yeah. Sorry, Mindy. I'm no, no, no, that's fine.

I'm going to invite you to listen to episode 200 with Kyle Mast again. Because in, he's a CFP. In that episode, he said, we asked him, Roth versus traditional. And he said he likes the Roth right now. for as long as you can qualify for it, because he thinks that we have been writing big checks in the last year to help Americans get by during the pandemic. We are going to have to, at some point, pay for that program,

pay for the additional programs. And one of the easiest ways to make cuts is to cut something like the Roth option. They wouldn't, he doesn't think that they would touch any existing Roth accounts, but that going forward it wouldn't be allowed or it would be like off the table or, you know, reduced or something. So contributing while you have the ability to contribute to a Roth could make the decision easier for you. And he's, of course, very smart and explained it way better than I did. But that was the gist of what he said.

Okay. That makes sense. And another way to think about it too in the same vein is you're going to pay for it. You can cut the Roth. But you can also say, we're going to raise taxes or we're going to inflate. Right. And either way, the Roth becomes the winner, if unless the tax brackets move as part of that, right? And so that's another one to think about.

Okay. You know, I think that'll be another change. I mean, it's easy at work. I just, you know, quickly pop into the Oracle system and then just do the quick change. So I'll, yeah. No, that's something I've been wondering about. And just my loose research came to the conclusion that maybe Trad was just a better option for now. And I wasn't 100% uncertain with it.

But then I listened to more personal finance stuff. And I was like, yeah, I should probably just do the Roth. I should probably just do the Roth regardless of how much I'm paying. Okay. Well, perfect. Thank you. Yeah. So listen to episode 200.

And let Kyle give you the rundown. Okay. Yuri, this was fantastic. This was so much fun. I'm excited about the solar panel thing because we're getting ready to put solar panels on our house. And I know I have credit exchange with my utility. So I am going to, this is a research opportunity for me to look into that and see what options are available for me.

So thank you so much. And the whole Bitcoin thing, the heat your house is like the most ridiculously fabulous idea ever. I love that. Yeah, that's awesome. But I really do appreciate your time today. This was so much fun. And I know that people are getting a lot out of it just by, oh, that's an option. I've never thought about that before.

Here's the other ideas that I can think of too. and I really like the spark of the outside the box thinking that you created. So thank you very much. Well, you're rocking. Very welcome. Thank you so much for the assistance. Okay. And we will talk to you soon.

We'll do. Holy cow, Scott. That was Yuri and his amazing brain and his super think outside the box mentality and his I'm going to crush life story. What to think? I thought it was great. I love the energy, the passion, the thoughtfulness. He's clearly dived very deeply into a lot of these areas of,

of finance. He's clearly got a lot of ideas. He's clearly got a great start to his career. He's going to be very wealthy and his goals are super compatible with long-term financial planning and those types of things. And I think he's going to be very successful. And we just need to simplify a little bit. And I think he should feel free in this particular case to maybe pursue a little bit more of those interests on the side like that pilot's license or some of those things as well, given the crazy strength of the basics in his financial position. Yes, I 100% agree. He is a, he's doing really well.

And I think that a lot of people get so focused on the end goal, they forget to live from now until then. So absolutely agree that he should get his pilot's license. He should get a motorcycle. He should go do a lot of fun things and enjoy what he's doing while also keeping in the back of his mind. I need to save money for the future for my rescue ranch at age 55. Now, I do want to acknowledge one thing here where, you know, we're wired. You know, he and I are probably wired a little differently with that.

Like when I was kind of just getting started out in my career, it was consuming to a certain extent. I wanted to become financially free early in life. I did not want to amass millions of dollars by retirement age and realize them at that point. And so I took a completely different approach and was all out and deprived and went after it. Not deprived, but like certainly had a very low. very frugal lifestyle. That was much even tighter than what Yuri describes here in a lot of ways

and that kind of stuff. And that was appropriate for me at that point in times. It's not wrong. It's not right for any of these approaches. And that approach can get you to something that's, beyond that, you know, or passive income exceeds lifestyle expenses sooner in life. But it's not necessary if your goal is not what my goal was with that. And I think that highlights that and where that extreme factor is very powerful if you want to get over the hump as soon as possible to financial freedom. But if that's not your goal, then don't do that because it's not, it's not, you know, that's going to set you back in some ways. You know what, Scott, that's a really good point. We also pursued, once we discovered the concept of financial independence,

we pursued it very vigorously. And what's the difference in one more year of work with a much more enjoyable life along the way. We don't spend a lot of money anyway, so it's not such a big deal for us. Our life wouldn't have changed so much, but we would have stopped the hard, hard, hard, slog. And even now, I'm constantly telling Carl, just slow down, just take a breath, just stop. So I think we're finally starting to figure it out. But yeah, definitely don't forget to enjoy life. Yeah, we just, I think we just hear all these stories and like that, that sense of urgency. see is so powerful in a lot of ways. But it's not cool. Don't do it because it's not necessary in cases like Uri's. Exactly. Okay, Scott, should be out of here? Let's do it. From episode

236 of the Bigger Pockets of Money podcast, he is Scott Trench and I am Indie Jensen saying we'll be back in a pinch, finch.