BiggerPockets Money Podcast - 43: Using the Power of Goal-Setting to Fundamentally Alter Your Financial Path with J Scott

Episode Date: October 22, 2018

You’ve probably heard J Scott’s real estate story (spoiler alert—he’s killing it!). But he’s never really told his money story that led up to this massive real estate success. Today, we talk to J and discover that in his 20s, he knew nothing... Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets Money podcast show number 43, where we interview Jay Scott from 123flip.com or you might know him as Jay Scott, author of the book on flipping houses. I had the second job. I had my job. I was spending less money. Instead of going out to dinner, I was bringing in dinner, which I guess at the time I thought was saving money because I wasn't paying a tip. But I was getting there. I was moving in the right direction. And then one day I decided I was bored. I love the fact that I was saving money, but I needed to see more than just like a thing going up on a spreadsheet. So I said, I want to buy something.

I want to buy an investment. 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? This is Scott Trench.

I'm here with my co-host, Miss Mindy Janssen. How you doing today, Mindy? I am doing fantastic today, Scott. I'm so excited for today's interview. Jay Scott has been interviewed on the Bigger Pockets podcast twice and is extremely well-known on Bigger Pockets for his frank and solid advice about house flipping. As you may know, flipping is kind of my thing.

So you think that working here and being a flipper and Jay is like probably the most well-known flipper on our site. I would have had an opportunity to chat with him. But this is actually the very first time I've ever had a conversation with him. So I'm really excited for today. Yeah, I just think Jay Scott is so smart. And you can tell from this interview, like he has a relentless pursuit of knowledge. He relentlessly tracks his progress.

So it's not like he's just making this up and saying, oh, that work, that we know, whatever. No, this is 20 years. This guy has tracked his net worth meticulous. right 20 years he's tracked all of his investments he's learned to become an expert at valuing investments because he's daily valued investments he was at one point in the show he talks about how he his race we owns a racehorse or own several race horses and if they have a good training session mark the value up because he thinks that they're value and like this kind of relentless pursuit of accuracy and acquisition of knowledge and then just sharing that in the

community and getting feedback from smart people I mean what a privilege what a wealth of information to learn from Jay here. You know what? That's a really good word. Privilege. It was an absolute privilege and delight. I'll go you one further. It was a privilege and delight to talk to Jay today. 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-opening. 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

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229 audiobook completions on Audible alone, and I still regularly re-listened. to the highest impact titles. Lately, I've been listening to Bigger Leener Stronger for Fitness, the Anxious Generation for Parenting Perspective, and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful as its breadth. Beyond audiobooks, you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more,

all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BPMoney. Jay Scott, welcome to the Bigger Pockets Money podcast. How's it going? Great.

How are you guys doing? Fantastic. Today is a beautiful day. It must be nice to be where you are because it turned into winter overnight where I am. Oh. Oh, man. From 98 degrees two days ago to 65 and rain today. That's Maryland. Jay actually lives right where I grew up and your kids will go to high school

right next to the one where I went to. So there's a small world there. Well, let's go ahead and start the story. Where do you kind of consider your financial journey to have begun? Yeah. So actually, this is weird for me because anybody that knows me knows I've been in the real estate world for the past 10 years and I've done hundreds of podcasts and interviews and speaking things where I tell my story and my story always starts with 2008. I quit my corporate job. I get into real estate. But thinking about this, last night up before going to bed, I was thinking about coming on this morning and talking to you guys. And it made me realize that that's my real estate story, but it's not my money story. And my money story starts a good bit earlier than that. And it's a

story that I really haven't thought about in, wow, probably two decades. So I'm going to be going back to my money story probably for the first time in a long time. So I'll be sharing it you and your viewers and your listeners, but this is kind of a new thing for me because I haven't thought about this in such a long time. So my money story starts back in the late 90s. I'm in my mid-40s now. I was in my mid to late 20s back then. And sometime around 27, 28 years old, I was hanging out with my group of friends from college, same friends I'd always hung out with. And the discussion came up of, hey, how are you guys investing your money? And again, I was 27, 28 years old. all had pretty good jobs. We came out of engineering school, so I was making $32,000 or $33,000 a year,

which back then was a lot of money. So my friends are talking about, how are you investing your money? What are you doing? They're talking about, yeah, we're diversifying stocks and bonds and this and that. And I'm just sitting there quietly listening, and I don't say anything. And conversation ends, and I'm driving home. And I had this really horrible feeling because while my friends are talking about investing their money. I'm sitting here thinking, I'm in a lot of debt. And I was embarrassed because I hadn't talked to people about money before. I came up in a household where we didn't really talk about money. My parents lived paycheck to paycheck, sometimes not quite paycheck to paycheck. We were never really good with money. And so for me, debt was just a natural thing.

And looking back, I was in debt probably, I think it was somewhere in the $35,000 to $38,000 range, which was more money than I was making in a year. Now, a lot of that was school debt, but also a lot of that was credit card debt after school. I'd been out of school for five years at that point, so there was really no excuse other than I just wasn't managing my money well. And so I'm 27, 28 years old. I have upper $30,000 worth of debt, which was more money than I was making in a year. And I was starting to freak out a little bit because my friends, for the first time, were talking about how they were saving and investing their money. And it made me realize that I'm behind the curve. And in reality,

we know now, and this was before the internet for the most part, we know now that I probably wasn't behind the curve. There's a lot of people in their mid to late 20s who are in debt, whether it be a little or a lot. But at the time, I felt because my friends were not in debt, I felt that I was way behind the curve. So I went home that night, and I did what I do best. I opened up a spreadsheet. And I decided, I'm going to figure this out. I'm going to see where things are going and see if I can get things under control because it was the first time I had started thinking about money. And when I think about things, I use spreadsheets. So I opened up a spreadsheet and I must have sat there for four, five, six, ten hours. I remember my girlfriend at the time like, what are you doing?

What are you doing? I just need to do this. I just need to do this. And I finish up. And what I finish up with is probably a tiny little spreadsheet. But it's essentially a net worth statement. And on the left hand side are all of my assets, which was one line. It was. It was a small. a bank account. And on the right hand side, it was all of my liabilities, which at the time was a bunch of credit cards. And it was also my school loan. It was my car loan. I probably at the time had my rent on there. And so I see this tiny little number on the left and this big number on the right. And I created a graph at the bottom so I could see just how negative I was, just to make myself feel even worse. And while I was sitting there, I was like, okay, well, now that I've kind of gotten

a handle on the problem, which I had a handle on the problem. I knew I was $38,000 in debt. Now I know I'm $38,000 in debt with a picture. But I decided, okay, what am I going to do about this? And so I started thinking, okay, I created like in the spreadsheet, I said, if I pay off this much every month, how long will it take me to get out of debt? If I pay off this much, how long will take me to get out of debt? And I decided my timeline was one year. I was going to get out of debt. I was going to go from negative $38,000, making $33,000 a year to out of debt in one year. And so I said, okay, in the next month I have to pay off X amount, the month after that X amount, the month after that X amount, and so I knew how much I had to pay off. And it was a ridiculous number. It's something I knew I

couldn't achieve, but I was determined to achieve it. So I said, okay, if I stopped spending on this and this and this and all that, I'll have this much more. And hey, I'm going to go get another job. and I actually did. Two days later, I went out and I got a job. I had gone to bartending school right after college, because I always wanted to be a bartender, but I never did anything with it. So I got a job as a bartender making a few extra bucks there.

And the first month, I actually got pretty close to paying the amount of money that I needed to pay to be on track to be out of debt in a year. Sadly, after that first month, things slowed down. But I realized after that first or second or third month, I'm looking at this spreadsheet. I'm looking at that chart and this negative number is kind of approaching zero. And we're still in probably like the mid 30s or low 30s. I mean, I still owe a lot of money, but I'm actually seeing progress. I'm visually seeing progress. And for me, that was really

exciting. And so I said to myself, hey, if it doesn't take a year, if it takes two years, if it takes two years, it takes three years, it takes four years, that's fine because I'm seeing progress and I was really excited about the progress. So I had the second job. I had my job. I was spending less money. I was like, instead of going out to dinner, I was bringing in dinner, which I guess at the time I thought was saving money because I wasn't paying a tip. But I was getting there. I was moving in the right direction. And then one day I decided I was bored. I like, I love the fact that I was saving money, but I needed to see more than just like a thing going up on a spreadsheet. So I said, I want to buy something. I want to buy an investment because my friends are talking about the stocks and the

bonds they're buying. And so I opened up an account. It was either Fidelity or Schwab, one of those big brokerages at the time, and I bought some stocks. And I don't remember what it was or how much it was. It was a little bit. But then I had something to add to my asset side of my spreadsheet. And for me, that was really motivating. Now I owned assets. I was still in debt, but I had some assets. And so I kept paying down my debt, and I'd buy a few more stocks and pay down my debt. I remember buying some like what I thought were rare coins, like collectible things, because, hey, more assets, diversification, I need to get stuff that was worth stuff. And it took about two years. But in about two years, I found that I was at zero. I had paid off $38,000 worth of debt in two

years. And I was excited about it. I didn't feel like I missed out on anything. I didn't feel like, I mean, I was tired. I was working two jobs. I was getting home for my bartending job at like 2 a.m. and I had to be at my engineering job at like 9 a.m. So I wasn't getting a lot of sleep, but it was okay because I was so excited about money. I had never really thought about money except as something that was holding me back and making my life difficult. But for the first time, money was something that was exciting me. And looking at this spreadsheet was exciting me and seeing the progress I was making was exciting me. And after two years, I get to zero and I've got some assets in the asset column.

I probably had a little bit of debt if I was at zero and I had some assets. but I was at zero for total net worth, and that was kind of the moment in my life that I realized, hey, I'm not stuck in what I grew up with. I'm not stuck in where I had been for the first 27 or 28 years of my life. I can actually get to a point of, and I didn't know these terms at the time, but I can get to the point of financial independence and financial freedom, and I can get to the point where I'm not living every day paycheck to paycheck. And that was kind of the eye-opening, and I know that was a long story, but that's kind of the eye-opener for me. And that was the start of my relationship with money.

And I didn't realize it at the time, but looking back, that was the start of all of this. I'm impressed that your friends were talking about investing at all. You're like, oh, I feel like I'm behind the curb. I think you're hanging out with really great people when you're 27 and 28 who are talking about this because I can tell you my 27, 28-year-old self was not talking about investing with my friends. Well, I'll tell you, these were three friends that I went to college with, and to this day, they're my three best friends. One of them literally lives next door. When I moved back to Maryland, I bought the house next door to him. And when I'm still in California, one of them's now living in Spain with his family, basically retired.

And I've found that of the four of us, I've always kind of been, I don't want to say, least successful. But they've kind of taught me, we all have different strengths. I'm the only entrepreneur of the group, but we all have our strengths. when it comes to money and investing. And part of the reason I think we've all been successful to some degree at financial independence is because we have each other to kind of bounce ideas off of and to keep each other motivated. It took a long time before I was able to admit to them that I was in debt. And the reason I wasn't participating in those conversations wasn't because I didn't know anything.

And that was part of it. But part of it was I didn't have any money. But once I realized that it was safe to talk to them and have these discussions, it was amazing. people around you that you can have these honest and open discussions with about money really makes things easier because a lot of people go through that struggle of being in debt and not knowing how to get started and not knowing how to get educated. And when you can't talk about it with anybody, it's not going to change. You're not going to ever feel like you're in a position where you're comfortable enough to go out and make a change because you're scared to

tell people what's going on. You have to be comfortable. And so I was very lucky to have some friends that allowed me to be comfortable and to learn from them and we learn from each other. Okay, I've got like a thousand comments. First of all, I want to explain my laughter when you said you're the least successful because people who are listening to this show may not know who Jay Scott is. He's a pretty successful flipper. I don't know if you know this Jay, but you wrote what, like the number one book on flipping or something like that? We sell 86 million copies a minute or something like that. The book on flipping houses, you literally wrote the book. And I believe you. you are now a little more successful than you were when you were 27? I am, but it's all relative.

And here's the thing. The most important thing I've learned in this time is that net worth number isn't what makes you successful. You want to have enough money that you can do the things that you consider priorities. But above and beyond that, it's what you do with your life and your time and your family and giving back that makes you successful. So while for me, that number was the most important thing, that spreadsheet was the most important thing for a long time. Luckily, after several years, I realized that the number isn't the important thing. It's what you can do with that number that's really the important thing. So you're going through this phase of about two years where you basically are being really frugal and working two jobs, really tired,

and going there. You get back to that kind of zero. You're in the black now on a net worth basis. Does your lifestyle begin to improve at that point? Do you begin reaping the benefits of building wealth? or what's kind of next for you after that point? So this is interesting. And it's funny. Again, I hadn't thought about this in probably two decades until last night thinking about coming on and talking to you guys. But something really, really interesting happens when I get to zero.

And the reason I know this, by the way, is that spreadsheet that I was talking about, I still have that spreadsheet. That spreadsheet's a lot bigger. It's probably more several times. But I can track my net worth back to like 1998. And if I went, I could see the exact. month that I started tracking my net worth. And so I can see what my net worth has done over the past two decades. And I went from doing it literally daily back then because that was my motivator to now

I look at things quarterly. I actually look at the spreadsheet every day. My wife calls it the spreadsheet and so she'll say, when are you getting off the spreadsheet? Come to bed. But yeah, so I can track and I can see what happened after I got out of debt. And it's something I've noticed before, but I've never really thought about again until last night. But if I look at my spreadsheet, between the time I got out of debt and about two years after that, I flatlined. I basically stated about zero for two years. And I look back and I now know what happened, but at the time it hadn't occurred to me.

But there was kind of several things that all kind of happened at the same time when I got to zero. So the first was I felt like I hit a goal. And after I felt like I hit that goal, I didn't send. any new goals for myself. And most of us know that when you're tracking a goal, when you're trying to achieve a goal, you're going to think differently than if you're just kind of moving through time and space without having a goal. And so for me, that getting to zero goal was the motivator every day to take action and see what was going on and to do the right thing. After that, I didn't have the goal. So it's like, okay, well, if I'm spending more today, if I'm not getting

past zero, I don't have a goal to get past zero. So I'm still achieving the goal that I don't have. And this is something that's taken me two decades to realize, but it's really, really powerful. And I still struggle with this today is we are programmed to believe that we are worth something or not worth something. When we grow up, I truly believe that people are ingrained with an idea of self-worth. I know plenty of people who should be great with money, but are not good with money because they've never been good with money. And they don't think of themselves as good with money. And they don't think of themselves as good with money. And they don't think of themselves. as having the ability to get wealthy or to attain financial freedom or financial independence. And then I know other people who are probably way too cocky and they don't particularly have the financial skills or the business skills, but they think they're the greatest thing when it comes to money. And those people tend to succeed. And so I've noticed this correlation between mindset and your belief in how much you could be worth or should be worth and how much you achieve. And it's really, really consistent. And back then,

I don't think I ever thought that I was somebody who could do anything but live paycheck to paycheck. I think it was always ingrained in me through my family that if you're paying all your bills and you're not in debt, but you don't have extra money, you're doing what you're supposed to be doing. And so I think I always expected that getting to zero was kind of my maximum achievement in life. That's what I'm supposed to be. And it wasn't until I realized, no, I am good enough. I am smart enough. I have the ability and the motivation and the drive and the skills and everything to get to

having $10,000 in the bank, get to having $50,000 in the bank, getting to buy a house, to be able to buy a car outright, to become a millionaire, to become a hundred millionaire, and I'm not a hundred millionaire. But I now know, and again, I still struggle with this. I don't think of myself as a hundred millionaire. I'll probably never become a hundred millionaire because in my mind, I can't think of myself in that space. And when I say I'll never do it, I won't do it until I can get myself in that space where I can imagine myself, I feel like I'm worthy enough to have $50 or $100 million. But the day that I realized that, hey, there's no reason I can't buy a house. There's no reason I can't buy a car for cash. There's no reason I can't live without a mortgage. There's no reason I can't get to be a millionaire. The day I realized those things, I saw myself acting differently. I saw myself doing things differently, and I saw my net worth growing. And so for those two years after I hit zero, I honestly believe that the reason I kind of stated zero was because I didn't feel like I deserved to be above zero. And it was only after I realized

and I gave myself permission to make money and make more money and get to the point of financial independence that I actually started to achieve that. What triggered that for you? What was that trigger that got you going into, hey, I'm ready to go beyond just living paycheck to paycheck and a zero net worth? So there was one particular thing. So this was back in, I think, 2000. It was during the height of the internet boom. As I mentioned, I like collecting assets. So I was buying stocks. I was buying bonds. And I remember buying little bars of gold and silver because I liked having things and saying, I have all these different assets. I bought a tech stock. and it was a startup internet company that was selling books online. Books a million.

Oh, Books a Million. I actually have a brick and mortar books a million down the street from me. Anyway, they were getting ready to go IPO to release on the NASDAQ, I assume. And they released on whatever day they released on. And that morning, I took like $1,000. I said, okay, all these stocks are going IPO and they're shooting up in value. So I took $1,000 and I put it on Books a Million. By the end of the day, it was worth $7,000. The stock literally went up seven times that day. I cashed out. I had $7,000. I made $7,000 in a day. I don't think I had made more than whatever my paycheck was in a day, but I had made $7,000 in a day. And so the first thing I did was I ran home and I put it on the spreadsheet. And I saw that I like, my number was up here at $7,000, $9,000, $10,000 at that point. And like, holy crap, I can have money. And here. Here, the realization that I look back on now as I'm saying this. For years, I understood or I had gotten my head around the idea of saving. I hadn't gotten my head around the idea of investing. And this was

the first time that I had really, and betting on a tech stock that goes up seven times in a day is not really investing. It's gambling. But at the time, it was, wow, I can put my money in stuff that actually grows and makes me money, as opposed to I can just spend less or I can get a second job. And so for me, that idea of putting my money in something, the value of that something growing, and impacting my net worth was kind of revolutionary. And so I started investing in more things that I thought, hey, this can make money for me, as opposed to, hey, this will allow me to save more. And so that for me was a big thing. So I saw my net worth jump in a day to close to $10,000. And I remember I set a goal again. Setting that next goal, and I think the goal was $50,000.

I'm pretty sure it was 50,000. But after two years of not having a new goal, that motivated me to set another goal. And so I set that goal, and I don't remember how long it was, but I achieved that goal. And then I set another goal and another goal. Historically, when I have a goal, when I'm trying to reach something specific, I get there. When I don't have a specific goal in mind, I just kind of float. So that's what precipitated that next phase. It sounds like you also track your progress daily or weekly, like very regularly as you're going

towards these goals, right? I do. And again, my wife gets angry at me because of the spreadsheet I'm on literally every day. If all my accounts aren't reconciled to the penny, if all my asset values, like I do my own appraisals of all the assets I own every day, it's like one of the things I do these days is I own race horses. I love horses. And every day a horse, oh, he had a good training today. So the value of this horse just went up $300. I have to put that in the spreadsheet. Oh, he had a bad run today. Okay, the asset, the value of this horse went down $1,000. So every day I'm kind of tracking my net worth. And it's to the point where the changes are so small compared to the total that it doesn't matter,

but it's what motivates me. That's what I love doing. Okay. Until you said I have race horses, I was thinking to myself, are you my husband? He does this. He wakes up in the morning and checks the bank account. He checks the mint and personal capital spreadsheets or displays or whatever. Just to double check.

You checked it last night before you went to bed. Why are you checking it this morning? But he does every morning. And actually, that was a very good idea for him to do because he discovered some sort of credit card fraud, like the next day. So we were able to nip that in the bud, and that was great. But, yeah, I don't check it every day. And we don't own race horses. I check mine every day.

Mint right now performs a similar function to what your spreadsheet does did for you at that point and does for you. And so I use this online app. But same thing. I check it every single day. there's something to be said and it's not everybody's personality, but there's something to be said about being a little bit neurotic when it comes to money. I think for me, and again, everybody's different for my wife. She's one of those people and she was very successful in the corporate world.

But she's one of those people that she'd be happy like every year or two to go back and say, okay, how much money do I have in the bank? And so again, it's not for everybody, but I think for those of us who are comfortable with being that neurotic and obsessive, I think there's some value there. Well, and I think you make a really good point with having a goal to work towards makes you work towards that goal. When you've reached the goal and you're not doing anything anymore, it's easy to be like, oh, okay, I got there. Now I can take a break. Well, how long is your break?

If your break is two years, you're not doing anything for two whole years. Not that I'm saying you wasted your life for two years. But you could have had more goals that, but you paid attention to it. This is the thing that I think is really, really important to focus on is that hiding or not looking at your finances, you know, ignoring the problem doesn't make it go away. And once you start paying attention to it, it doesn't have to consume your life. You don't have to be focused on it. Oh, I'm $30,000 in debt. Oh, my stomach hurts because I can't eat. And oh, this is so awful. You just, I'm $30,000 in debt. What am I going to do today to get closer to the goal of $0 in debt? And you know what?

Sometimes you don't do smart things or sometimes life just throws, oh, look, I got a $1,000 car repair bill. That's what you have to deal with today. And now you tack that onto the 30 and you continue moving forward. But sticking your head in the sand doesn't change that problem at all. If anything, it nags you behind the scenes. And everything you do, you just feel a little bit uncomfortable and you don't know why. And when you think about it, when you really let yourself be upset about it or frustrated about it. But then you put together a plan, you no longer have that nagging feeling about,

there's this bad thing in my life that I'm putting off and not thinking about. Instead, it becomes there's this bad thing in my life that I have a plan for and it's just, it's part of your life. Everybody has bad stuff that happens to them in their lives. And money is just another thing. And you go around, Scott and I have colds right now. So I walk around coughing and I don't ignore the cough. I make sure that I have a plan for getting better or going to the doctor if it doesn't go away. Having money issues, it's very much like having a cold. It's a temporary thing. And as long as you take care of yourself and you don't ignore it, it'll get better. That's a really great way to put it. So over the court, you know, you had this one day where you made $6,000 or $7,000.

$7,000. Yeah. I remembered vividly. Yeah. So you make a lot of money in one day. And then you set a goal to go to $50,000. And I assume that earning more and saving is a part of that, but also your investment philosophy is a part of that. What was your investment philosophy as you were working towards that goal. So at the time, and this is before I got into entrepreneurship and business and more esoteric type investments, I was really big on portfolio management and portfolio optimization through diversification. So I would sit down and say, okay, I want to have 36.2% of my net worth in bonds, and I want to have 18.6% of my net worth in emerging markets. And I want 13% in gold and silver, whatever it was. And I made up some, I'm sure I probably at that point

I was talking to friends or reading online, something that I thought was some optimal asset allocation. And then again, every day I would go through and I'd say, oh boy, okay, my large cap stocks are supposed to be 21%, but it's only 20%. I'm going to have to move stuff around. So for me, it was really, again, I was probably too obsessive, but it worked for me because I had written down what I wanted to do, what I thought was optimal. And then I was working. towards it. And so for me, at the time, it was stocks and bonds, gold and silver, and then my other category, which was like collectibles, like baseball cards and coins and stuff like that, because, again, I like having stuff around that I can feel and see. And so it was really, it was diversification,

and it was knowing that if one sector of the market went bad, probably another sector of the market was going to do well and understanding the relationships and the correlations between different parts of the market and different assets. And I probably thought it was a lot more scientific what I was doing at the time than it was. But again, it gave me that feeling of control. And so everybody has different asset classes that they're comfortable with. I know people that are comfortable with stocks and bonds and that's where all their money goes. And that's great. I'm not comfortable with stocks and bonds anymore. I like things I can control. And controlling a big company is not something I can do by owning 100 shares or 1,000 shares.

But again, it's all what you're comfortable with. And it's all what you're comfortable with. and it's all what you like. And there's things I can see and touch and feel. It's one of the reasons I like racehorses. I like horses, but it's also this physical asset that I can say, hey, my money is not just in the stock market. I actually own this thing. Come see my racehorse.

Come play with my horse. Come feed my horse. It's really cool to be able to say that, but also know that this thing is an investment that's generating income for me. So everybody needs to figure out what works for them, what is going to motivate them, what type of assets and investments is going to motivate them and keep them going. While you're doing this, so you're trying to have this optimal portfolio blending and all this stuff,

how are you generating an investable liquidity, I guess? Is it your job still? You're earning a high income and saving it? Up until probably 2004 or 5, it was 100% job. But around 2004, 2005, I realized, hey, and I think it was right after reading Rich Dad, Poor Dad, which I'm sure we'll talk about at some point. And I'm sure you've talked about a million times on the show. But I remember reading Rich Dad, Poor Dad in 2002 or three,

and putting it down and forgetting about them picking it back up in 2004 or 5. And I realized, hey, this idea of generating income through my own means as opposed to just being a W-2 employee, maybe there's something to this. And I remember starting a little online, basically affiliate marketing company. I worked for eBay back at the time. And I remember I worked with a group that worked with outside affiliates. These were companies that drove people to eBay and then got a cut of any sales these people made. And I said, hey, I can do that.

And some of these people were making like a million dollars a month as eBay affiliates. And I'm like, I don't need a million dollars a month. If I can make an extra $100 a month or $500 a month or $1,000 a month, that would be awesome. And so I sat down and I hacked out a couple websites that would basically take keywords off off of Google, people get to my website, I'd send them to eBay, and if they bought something, I'd get a commission. And I started making $100, $200, $500 a month, not much, but enough that I realized, hey, I'm now making money. I mean, I remember doing my tax returns, and I did my own tax returns back in 2004 or five, and thinking, this is really cool. I have like income tax stuff that I don't

know how to do. I can't just fill it in. I need to like figure out their rules around self-employed employment tax and all that stuff. And at that point, I'm like, I'm a business guy now. Like, this is big time, me making my $1,000 a year. But I did. I felt like, okay, I'm a business guy now. I can make money from something other than my job. I can be self-sufficient here. And that really opened up a whole new world for me. And so at that point, I got really excited about starting businesses. And I probably started five or 10 businesses over the next five years leading into real estate. And I don't remember if any of them made much money. But every time I made $100 a month, I was really excited because I did it on my own, something I created. And that kind of led into the next chapter, which was really becoming an

entrepreneur and quitting the job and all that. But it was that one little experience of starting my own little business made me realize that I don't have to be tethered to an employer for my financial independence. Do you consider those businesses successes or failures then? Everything I've ever done is a success. I have businesses where I've lost. I've lost six figures and those were a success because in every business I've ever done, I've learned enough or I've taken away enough that it's helped me be successful in the future. So I look at, and there was a business, I started a tech business with a friend of mine back in 2013, I think it was. And over two and a half years, we put in six figures and we ended up closing that business about a year and a half ago.

And a lot of people are like, oh, I'm so sorry. I'm like, no, it was great. I started a physical product business. We invented a product. We had a patent. We had like something that we created, that we were selling, that we figured out sales channels, and Amazon was selling it. We had salespeople.

And it was like, we lost a lot of money doing it. But I learned more in that experience than I think I could have learned anywhere else. And the next time I do a physical product company, or I've invested in physical product companies, I'm easily going to make many, many, many times the amount of money I spent on that company based on what I learned by starting that company. And so I think there are too many people that are terrified of failure. They're scared to tell friends and family, I'm going to do something big because they're scared that they're going to have to come back and say it didn't work.

And for me, there's nothing I like more than talking about my failures. And I've had lots of them. And to me, that's a badge of honor. My failures are kind of, every failure is just a path towards success. And if I'd never had a failure, anybody that's never had a failure has never had a success. You just can't have one without the other. So when I hear somebody tell me 100 failures, I know for fact that they've probably also had 100 successes. And so those failures aren't a bad thing.

Those are a good thing. So what was the product? It was basically a device. The company is called Ready Set STEM. And it was a device to help kids learn about programming and electronics. Oh, I want my kids to learn about programming and electronics. You days don't sell this anymore? Don't sell it anymore.

You can go to the website and there's still a lot of information that will probably help your kids. But no, what we realized was we were really bad at selling into the market that we needed to be in, which was public schools. And selling into the public school market is really, really difficult. And we didn't have that expertise. And so at some point we had to decide, do we keep trying it or do we cut our losses and we decide to cut our losses? But again, what we learned in that experience, I mean, about importing, about creating a product, about getting a patent, about sales channels, about operations, about fulfillment, about documentation, customer support, customer management, all of those things. That's all stuff that we're going to use. I'm going to use for the next 20 businesses I start.

So that failure ultimately was probably, I'll look back and realize that that failure led to a whole bunch of successes in the future. Awesome. Going back a couple of years here in the story, so 2004, 2005, it sounds like you're starting to get your groove on. You're feeling pretty good. You're starting these businesses, starting to generate some passive income. At the point where you leave your job, can you walk us through that? Did you have some cash set aside and maybe some passive income going? What led you to be comfortable? So my wife and I were very fortunate, and I know a lot of people, this is where I'd be telling the story about how I had $2 in my pocket and I quit my job and I was living on the streets. That's not the truth. For us, we were very fortunate. We had tech jobs. We were in Silicon Valley. I worked for a company that got bought by Microsoft. And so my wife and I had some cash to play with. When we decided to get married, we were both working ridiculous hours. She was traveling like three and a half weeks a month. I was traveling a couple weeks a month for my job. And when we decided to get married, we realized that this just wasn't sustainable. If we were going to start a family, this just wasn't the way to start a family. So we said, hey, we didn't have enough money to retire, but we had enough that we could take a chance. And so we said we're going to quit our corporate jobs. We're going to move back east where our families were.

And we were going to figure out how to do this on our own without somebody else being our boss. We were going to be our own boss. We were going to put our family first. And we were going to figure out in the word that we now use, that I don't know if it was popular then, We wanted to start a lifestyle business. We wanted to start a business that would allow us to put our family first, but to also make money around that. So 2008, we quit our job. We moved to Atlanta.

I don't know why Atlanta, but we moved to Atlanta. We were going to get married in August. It was June, I believe, sitting on the couch in the basement watching TV, and one of those flip shows comes on TV. And back in 2008, basically, every show on TV was a flip show. And my wife said, hey, let's flip a house. I'm like, well, we don't really have time to flip a house. We talked about starting a business and we need to figure out a business to start because we don't have enough money to live on without working for the rest of our lives.

And my spreadsheet's going down as we're not working. And we have a wedding coming up. And I said, we need to figure out this business. She said, we'll figure out the business. But we're sitting here watching TV in the middle of the summer. And that means we're way too bored. We need to do something. So let's flip a house.

and she's very much into design. She's very much into architecture. She's a branding and marketing person. And so I knew she just wanted something where she was watching these shows and she just wanted to be able to go in and say, okay, let's put cabinets over here and we can open up this wall. And she just wanted to be one of those people. And we were getting ready to get married. And I was worried that if I said, no, she would not marry me.

So I said, okay, we can flip a house. That wasn't really weird. But I said, okay, we can flip a house. So summer of 2008, I guess it was June of 2008, jump on the internet, and I find bigger pockets. And at the time, bigger pockets had probably 1,000, 2,000, 3,000 members, not very many. And it was like, wow, this is really awesome. Like there's this resource, I want to flip a house. And here's this resource on the internet where there are other people who are going to tell me how to do it.

And it was amazing. And so over that summer, I'm reading bigger pockets. reading some other books. We're looking for houses. And it was probably one of the most exciting summers I've had because I felt for the first time, oh my God, I'm doing something. I'm investing. I'm starting a business. I'm taking a big chance. I don't have an employer. I'm not getting a paycheck. And my wife and I bought our first investment property, our first flip property on August 8, 2008, which was the day we got married. And we realized pretty quickly that, hey, this is going to become our business. This is the business.

that we were talking about. Two weeks after that, we bought our second property. Three weeks after that, we bought two more. We bought 15 flips our first year. And we just kept going from there. And that ultimately became the business that was our lifestyle business. And we've been doing that for 10 years, and we've branched out into rentals and multifamily and notes and lending and all a bunch of other stuff. But ultimately, we realized that real estate was just a great opportunity for us to create that lifestyle business that we really wanted. 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-opening.

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because privacy by default is their pledge to all customers. Visit Northwest Registeredagent.com slash money-free, and start building something amazing. Get more with Northwest Registered Agent at Northwest Registered Agent at Northwest Registered agent.com slash money free. Okay, so you bought a house in 2008. Did you know that you were in the middle of a downturn or in the beginning of a down? I guess nobody knew that it was the beginning of a giant downturn.

Our naivete was our biggest asset back then. So literally our first house was bought in probably the absolute worst time you could buy a house in Atlanta during the downturn. and Atlanta was probably one of the top three absolute worst hit markets in the country during the real estate crash. So we were in the worst place at the worst time, in theory, to buy a house. In reality, what we found and what I like to tell people today when I talk about flipping houses, and I don't want to get too far off topic, but when you're flipping houses, it's never a perfect time to both buy and sell a house. In the flipping houses world,

generally it's either a good time to buy and a bad time to sell, or it's a good time to sell and a bad time to buy. And so people, when they look at flipping houses, they're like, well, it's a really tough market. It's so hard to sell. Well, yeah, but it's really easy to buy back then. And then today you hear, well, it's impossible to find deals, but if you can find the deal, it's really easy to sell. And that's what flipping houses is about. It's about taking advantage of the market and not waiting for the perfect market where it's both easy to buy and easy to sell because that never happens. So in retrospect, back then, everybody was saying this is the worst time to be investing in real estate and buying houses because it's this big crash and there's no buyers out there.

But in reality, if there's one buyer out there and you've got the best house, you're good to go. So what I look back on and you're going to ask me at some point out of feeling my biggest investing mistake, it's going to relate to us starting out in real estate and not taking more advantage of that market because it was absolutely the best time in history to buy real estate back in 2000. Nate, and a lot of people were so scared that they didn't take advantage of that. And I think fear is one of those things that holds people back. And it's just a good example of how if you don't let fear get in the way, you really can do big things. And we push forward without being fearful because we were too stupid to be fearful. And it worked out for us. It did work out for you. I've heard your story. So I have a little bit of insight into what's going on. But I didn't get to ask all these questions when Josh and Brandon interviewed you.

I just sat at the, I was working on my own flip when I was listening to that show. And I'm like, well, let's come about this. So my biggest question is, you know, you bought a house in 2008. It's probably not top dollar that you paid for it. You're flipping it. So it's an unattractive house. What did that first house look like? Was it your, like, was it the crappiest house in the best neighborhood?

Or, you know, what were your plans for selling it? If it didn't sell, were you going to rent it? I also, in the middle of 2008, didn't realize what was going on. But I guess you weren't either. What were your plans for this property if you couldn't flip it? So we made every mistake in the book with this property. We paid too much. We underestimated the rehab.

We overestimated how much we could resell it for. We weren't able to sell it. So we ended up doing a lease option with buyers who trashed the house and left in the middle of the night two years later. We had to do a second rehab, and then ultimately about two and a half years after we purchased it, we got this thing sold. And in the end, we made $3,000 in profit on this deal.

So I look at this as probably one of our least successful and most successful deals ever. Any deal that you can make as many mistakes as we made on this deal and still walk away with a profit is pretty impressive. But we made a lot of mistakes on this deal. You ask you what type of house it was. the ugliest house in a pretty ugly neighborhood. I mean, it was a decent neighborhood, but it just wasn't very pretty. The house was horrible. And we got lucky. The market saved us a little bit when we sold it three years after we bought it, two and a half years after we bought it. The market had

picked up a little bit, so that helped. But luckily, before we realized all the mistakes we've made with this house, we had bought several others that we had done a better job with. If this had been the first house we bought and we hadn't purchased anything else until after this were sold, we probably never would have done another deal, but we kind of got in deep quickly, buying a lot of houses quickly. So by the time we got around to selling this one, we had learned a lot from the other ones we had done. But yeah, every house, there's mistakes, and every business there's mistakes, and every money journey, there's mistakes. And the key is to learn from those mistakes and keep pushing forward. And unless you say, hey, this isn't going to work, unless you can sit down and

say we have to really cut our losses here and move on. A mistake is just an opportunity to figure out what went wrong and do it right the next time. So yeah, that first house, while we made every mistake, it laid the foundation for everything we did for the next 10 years. And we've never made any of those same mistakes again. We make different mistakes. You make different mistakes now. Yes. Nice. Nice. You keep learning. Always learning. So what would you say is your top takeaway from this first house? Be conservative. I know a lot of people that want to get into flipping right. now and it's a really tough market right now because it's hard to find good deals at good prices. And so I see a lot of investors who are like, well, I don't need a big profit. If I can make

$5,000, it's worth it to me just to get my first deal done. And then I'll worry about being more conservative on the next deals. And I tell those people, yeah, if you're focused on making $5,000, all it takes is you overpaying by a little bit or underestimating the rehab cost by a little bit or the market changing and you not being able to sell it for what you thought you could sell it for or property taxes going up a whole bunch next year and you having to pay more in property taxes before you sell it. Little things can really eat up your profits quickly. The reason why we were able to make every mistake in the book on our first house and still make a profit is that we were conservative every step of the way. I said, hey, this is how much we can pay for the property

and I bought it for less than that. It was still too much, but it was less than I thought we needed to buy it for. And when I estimated the rehab costs, I doubled the number. And I said, okay, this is how much is it going to cost. So I was really conservative there. It ended up costing even more than that. So being conservative, I was wrong. But the fact that I doubled the number in the first place, built in some offer. And then when I thought about how much I could sell it for, I came up with a number and I said, okay, I'm going to assume 10,000 less than that, just to be conservative. It ended up being 20,000 less than that, but ultimately I was conservative in every number that I picked out. And I wasn't conservative enough in any of those numbers, so I didn't hit my target profit,

but I was conservative enough that we didn't lose money. So I attribute a lot of the success that we've had in every business that we've done to being conservative and not taking great risks. But by the same token, and my wife is much more of a risk taker than I am, I also look back And I think if we took more risks, we may have been a lot more successful in certain things. So it's a double-edged sword. Risk is good when used intelligently, but also we've gotten to where we are by not taking too much risk in being conservative. Well, and if you're overestimating your rehab costs, oh, I think it's going to cost $10,000.

If it comes in at $18,000, what's the harm? I really like that idea to be conservative. What I'm thinking, though, as you're saying this is, gosh, it's too bad. Somebody didn't write a book about estimating. rehab costs. Yeah, so that was funny because one of my big philosophies when it comes to money, and I know a lot of people say that there are things that you love and there are things that can make money and they aren't generally the same thing. For me, that's not necessarily the case. I've always been a big fan of trying to make money doing things that I enjoy doing. And there are a whole lot of

things I enjoy doing. There's a whole lot of things that can make money. And the intersection is pretty small, but there is an intersection. And so for me, teaching and writing is something that I've always enjoyed. So back in, as you alluded to, back in 2012 and 13, I had this idea that I enjoy writing, I enjoy teaching. Maybe there's an opportunity to make money by writing a book or two. And actually, the main reason I started writing those books wasn't to make money. It was more because I kept getting all these questions over and over and over again. And I figured, okay, I can write this down and that way I don't have to keep talking to people. I'm an introvert. Talking to people is very difficult for me. So I figure I'll write it down and maybe I'll make a little bit of money

along the way. So I wrote those two books and what I realized from those two books was not only could I do something I loved, which is teaching and writing, but I actually made a decent amount of money from those books. And so it was just a good reminder for me that in a lot of cases there is overlap between what you love doing and what you can make money from. And if you can find that overlap, then you're never going to work a day in your life and you're still going to be financially free. Yep, I totally agree a thousand percent. I find it very funny that you say you're an introvert, 52 minutes into a conversation where I have asked one question and Scott has said two things. This is the hardest thing in the world for me. When I found out that this was going to be video and not just

audio, I was like, oh no. Yeah, I walk into a room of if I'm going to do a speaking engagement, I'll walk in and the first place I'll go is I'll go sit in the bathroom like until two minutes before I have to start speaking because talking to people is just so exhausting for me. But this is fun. Yes, this is a lot of fun. And I do thank you for coming out with us today because I've learned so much about you. I was saying to Jay before we started, I don't think I've ever actually met him. I've seen him all over bigger pockets and I've, of course, listened to all of his podcasts and read his books. But I've never actually talked to him in person.

I guess this isn't really in person. This is on Skype. Well, this has been fun for me. You guys have gotten me thinking about stuff that I haven't thought about in two decades, which is great because I have two little kids and I'm always thinking about how best to teach them about money and how to prepare them for their financial journey. And so thinking more about what I dealt with after not having thought about it for a long time is going to help me help them. So thank you. Yeah. So you start this flipping business in 2008 and it starts to go better. and better, I presume, over the next couple of years. And you're also branching out into other businesses at this time as well, kind of a serial entrepreneur style. Is that right? Yep. What does your lifestyle look like over this time? Do you begin seeing the benefits in your life with your family throughout this? Absolutely. And I'm a big fan of figuring out the things that you love to do, figuring out the things

that can make money, and finding that small section where they overlap. And that's kind of where I focus my time, the things that I love that can also make me money. So for our family, it's always been about one family comes first. So I made the promise to my wife when we got married that I would never miss a soccer game. I would never miss a piano recital. I would never miss anything for work. And I've kept that promise. I'm very proud of the fact that I've kept that promise. And we also made the decision that work in general was going to be a family thing. So starting when our kids were literally like weeks old, they were coming to closings with a, They were going to houses with us. Our kids have kind of been integral in everything we do in business. We have money conversations in front of our kids very comfortably because they need to know that stuff, the good and the bad. And so I meet all these kids that are my kids' age, so 7, 8, and a little bit older, 9, 10,

11, and they have no idea what things cost. I was having a discussion with my friend and my friend's son a couple weeks ago, and we were talking about houses. And he literally had no idea if a house cost $1,000 or a million dollars. And it's hard when you grow up and you've never had these frank discussions about money, both, again, both the good and bad, because it puts you in a much worse position when you get into college and after college and you kind of have to learn all of this on your own. So we've always said for our kids, they're going to be integral in our business. They're going to be integral in our money discussions and money decisions. They know when we buy a house, we talk about how much it's going to

cost to buy the house and how much it's going to cost to fix it up and how much we're going to sell it for. Again, we have race horses. So when we go to buy a horse, they know how much we're spending and they know where the money is going to come from and how much it cost to feed them and to train them and all this. My kids did a lemonade stand. They started doing their own little business at the beginning of the summer. And before they started, they needed to get materials. They needed like the lemonade and the cups and the ice and all of that stuff. And basically what I said to them is we're going to treat it like a business. So we made them a loan. We loaned them $25. And we made them sign of promissory note, which was just a little thing we wrote out that said they were borrowing money and

they promised to pay us back. And we went to the store and we figured out how to take this $25 and buy everything they wanted. And they couldn't get like the premium stuff necessarily that they wanted. They couldn't get like the 18 different size cups so they could make charge for 18 different sizes and the 32 flavors of lemonade that they wanted. They had $25 and they figured out how to spend it. And they did their lemonade stand. And when they came back with all their money, we sat down and I said, okay, I'm going to teach you how to do a P&L, a profit and loss statement. And we're going to talk about how you made this much income. And this is how much it costs you in materials to make that. and here's how much you have to pay back mom and dad for lending you the money.

And here's your bottom line. That's how much money you made. So they start thinking about things because before this, my kids literally couldn't get the idea of, well, even if we only charge two cents for lemonade, we're still going to make money. They didn't get the idea of, well, things cost money. They didn't get the idea of you have to buy stuff before you sell it. And so all this kind of crystallized the idea of what it's like to start and run a business and how money works in a business.

And they still don't get a lot of things, obviously. They're seven and eight years old. But we can have a discussion in the framework of what you and I know is a P&L, and they kind of get most of those concepts now. And so hopefully by the time they get into high school or they get into college, they'll kind of be where I am at 45 when they're 18.

Have you bought your kids a house yet or had them buy it and fix it up and then get all the profits? So when they were younger, they had money that they had gotten from like birthdays and stuff. And I told them they could quote unquote invest with us. Basically, you give me that money and I will invest it into the house with our money. And whatever percentage return we get, you'll get back as well.

So they were vested in the investment. So we would talk about, should we replace the cabinets in this one? It's going to cost more money, but we're going to make more money. So they did get the idea of, well, making more money is good because we invested with you. So if you make more money, we get more back. So we have done that. They've not yet bought their own house. So kind of waiting for the right time. It'll probably be a few years before they actually start buying stuff like that. I haven't quite thought through that. But they do invest with us. My kids took their lemonade stand money last week. And I said, would you be interested in doing some private lending? They're like, well, what does that mean? I said, well, sometimes you have money and you don't need it. right now. Other people don't have money, but they do need it right now. So you give them the money. And then when they don't need it anymore, they give it back to you, but they give it back to you with more money so that you get some benefit of loaning them your money. And we talked a little bit

about risk, and we talked about interest, and we talked about like the language of loaning money. and I typed up a couple promissory notes, and it basically said, my son's name, loans dad this much money, and dad promises to pay him this much each month in interest. And at the end of two months, dad promises to pay back the full amount, and we both signed it. And we did this for both of our kids, and so both my kids are private lenders. And this is why I wasn't sure if that was going to be fruitful, but we had the discussion at the time, Are you sure you're not going to want this money to buy anything or to put in the bank or to donate like any time in the next three months? We decided three months was our timeline for the loan.

And both kids are, no, we don't need the money for anything. Well, two days after my youngest son loans me the money, he comes to me and said, I really want to buy my brother a birthday present and I need that money back. And I had to say, no, you made a commitment. You loaned it to me for three months and I'm using that money for other stuff. so I don't have it to give it back to you. And he was really upset. But it was an important lesson because it made him realize that he made a financial commitment. He made a contractual commitment.

And he had to follow through on that. And so we got to have the discussion of, okay, well, what can you do to earn more money in the time being to be able to buy your brother a birthday present? So it kind of merges all different aspects of finance and economics and home economics and life altogether. And so by bringing them into the fold on everything we're doing, they're kind of seeing. a micro version of what my wife and I deal with every day in our businesses and finances. That is so awesome. Yeah, that's just like what a great way to engage young kids and learn these lessons really early and all that. Before we move on to the Final Four, I have one quick question to wrap this up.

Of all the things that you just talked about in your kind of career with money, what are you most proud of? Oh, that's an easy one. I'm just most proud of the fact that my wife can do with something that she's always wanted to do, which is stay home and raise our kids and be there literally every minute of their lives that they're at their home. They're downstairs. My kids are off school today. They're downstairs watching a movie. And that for the most part, I mean, I put in a good number of hours of working, but I do that on my own schedule. I have the ability to say, hey, we're going to Hershey Park

tomorrow. I'm taking the day off. Or I have the ability to say, hey, my kids have a soccer game Thursday night. I'll be there. I'm not going to be working. So basically, again, just being able to build that lifestyle business around the family and put the family first and to always be there for the kids and to allow my wife to do what she wants, which is to be a stay-at-home mom, that to me is everything we've done has been working towards that. And so that to me is the most important and biggest accomplishment. Awesome. Love it. Awesome. Yep. Great perspective. And have you ever heard that term, happy wife, happy life? Absolutely. And then one day I'll get there. I'm just kidding. Yes. Yes, and it's so true. And she supports me and everything I do. I support her and everything she does. And she's been instrumental in every success that we've had. And I think a lot of people don't realize this. I ultimately have ended up being kind of the face of our real estate business. I'm the one that's kind of written the books and goes on the podcast and writes on bigger pockets. But the truth is she's the brains behind everything. And she's done a great job of making us successful so that when I do things like this, I can actually

talk about our successes. Nice. That's nice. And having a spouse on the exact same page financially is the best thing. It is the most important thing because when you're trying to save and she's trying to spend or she's trying to save and you're trying to spend, you're just going to fight all the time. And that makes for a very unhappy life. Yep. Talk about money. That's key. Always talk about it. People are scared to talk about it because it can be a difficult conversation. But when it's difficult, that's when it's most important to be talking about it. Yep. And the longer you put it off, it doesn't get easier. It gets harder. It gets exponentially harder the longer you put it off. Yeah. Compound interest. Compound difficulties when you put it off.

Yep. Okay. Well, this has been fabulous. We're going to move on to our famous four questions. These are the same five questions we ask all of our guests. The first one is, what is your favorite finance book? I have to ask you a question. You call it your famous four. Then it's five questions. Yes. You're seeing some sort of discrepancy. That's okay. You're the one that wants to balance all your numbers on your spreadsheet. Yes, yes, yes.

These are our famous FI or... Okay, I don't have a... I always get asked what's my favorite book, and that's a hard one. I have probably read less than half of more books than anybody on the planet. I don't think I've ever read a book from beginning to end, but I will read, I will start and skim and read the interesting parts of, I can't even tell you, literally hundreds of books a year. So every book I read, I kind of take away as much as I can from it, and I try and get little nuggets from it. So every book I've read has been instrumental to some degree, but the ones that stick out the most, and it's funny because I'm going to name these books.

And to a large degree, I don't like these books, but they've shaped me. So Rich Dad, Poor Dad's a perfect example. There are a lot of things I don't like about rich dad, poor dad, and I don't like to tell people read this book as a blueprint, read this book and go do something. To me, what I've gotten from that book has been the motivation. Rich Dad, Poor Dad was the thing that actually opened up my mind to the idea of I don't need to work for somebody else. I can be an entrepreneur. I can build my own brand. I can build my own company.

I can build my own work life. And so it wasn't a blueprint. It didn't tell me how to do that, but it was certainly the motivation to get me thinking about the fact that that was possible. So that's a big one for me. Four-hour work week is another one where I tell people read it. Don't use it as a blueprint, or I didn't use it as a blueprint, but it opened up my mind to the possibilities.

So four-hour work week talks all about building a business and running a business from anywhere in the world. Essentially, you get a business running and you put it on autopilot. And again, I don't think it's a good blueprint that's going to teach you how to do that, but it will open your mind to the possibilities there. And for me, that really opened my mind to the possibilities of how I could flip 30, 40, 50 houses a year in five hours a week, which was my goal. And we, for the most part, achieved that a lot thanks to that book.

The E-Mith. The E-Mith is another great book that I love. So the E-Mith is basically, if you've ever heard the quote, work on your business, not in your business. E-Meth is kind of what was the founding book behind that idea. Basically, the author talks about if you really want to build a good lifestyle business or any type of business, you don't want to spend a lot of time being an employee in that business and being irreplaceable, but instead bringing in people that can do the work for you

so you can focus on the higher level stuff like the strategy and the business plan and the financial plan and the business model. So that's really shaped a lot of what I've done. There's so many books that have been instrumental. The millionaire next door was a great one. Again, it's not a blueprint, but it opens up your mind to what a millionaire is and what somebody who has financial independence and financial freedom, what that person looks like. It's not what a lot of people think it looks like.

It's not the guy driving a Lamborghini or living in the mansion. A lot of times, the people that live in the little house next door that are driving the Honda Accord are the ones that have a whole lot of money, and they're using the money that they're using the money that they have to either better themselves to advance their family or to make the world a better place. So yeah, those are some of the ones that have been my favorites, but literally every book I've read, I think is I try and take something from. Sorry about that long-winded answer. No, no, that's awesome. I love all these books. Those four books that you just mentioned, Rashad Port at Four Hour Workweek, Emith, and Millionaire Next Door are actually books that I revisit probably once every 18 months just to kind of keep my mind fresh on them and get that motivation back.

So I definitely think these are like four excellent choices just around the subjects of wealth and business. Awesome. What was your biggest money mistake? My biggest money mistake was a success. So my biggest money mistake was 2008, buying a few houses and flipping them and making some money and thinking we've got this all figured out. And now we're going to build our lifestyle business and we're going to flip five or six or seven or eight houses a year. And that was a mistake because looking back in 2008 before we had kids, when we had just gotten married and we were really motivated to work really hard, I wish we would have sat down and said, we're going to buy 50 or 100 or 1,000 houses this year and really go big and be able to build a nest egg so that we were in a whole different category of financial independence. So my biggest money mistake was not going big enough back in 2008 when we had a great opportunity.

and I don't know if, looking back, I don't know if I was lazy or conservative or scared. I don't think I was scared. It was probably just more laziness. It was like we felt like we had found something that worked and we had found a model that was going to generate income for us. And I was too lazy to say, hey, let's build a really big business before we have kids and while we still have time. So that I look back is my biggest mistake.

I wish we would have 10 times did back in 2008. All right. So quick follow up question with this. Why your thing is I was successful, but I didn't go big enough and I could have been way more successful with this. A lot of the folks listening to this show have more modest, hey, I just want to get to a modest level of financial independence and then have like a kind of in me a hedge between my expenses and my income so that I'm very secure.

Why do you think you are looking at it so much bigger? And why should other people? For me it was, I used an analogy. It was like walking down the street and seeing the $100 bill on the ground and thinking, I don't need to pick that up. I'm going to get a paycheck at the end of the week. In 2008, there was this opportunity, and I think I knew it then, but I didn't do anything. There was this opportunity to make a lot of money very quickly and easily because there wasn't a lot of

competition. It was really easy to buy houses. We found a good place to do it. And so there was this perfect opportunity that wouldn't have taken too much time or too much effort. It would have been a year or two out of our lives. And I was too lazy to reach down and pick up that big bill. And so I'm not so much saying that I wish we would have started a big business. back in 2008 and kept it going. I wish we would have spent one year back in 2008 and just worked

really, really hard because there was an opportunity that, again, I don't know if I realized it at the time, but there was this unique opportunity in the history of the real estate market back then, and I didn't capitalize on it. And so it's just one of those regrets that I have that I didn't say, okay, I'm going to spend the next 365 days, work 24 hours a day, and make a whole lot of money very easily, which could kind of change my life in the future. So again, I don't have regrets about that. I don't regret any of my mistakes, but there was the one thing that if I look back, I probably would have done differently. Makes perfect sense. I would have, I would have reached down and grabbed that bill. Well, and I think it's easy to sit here in 2018 and say that. I was not

cognizant of that in 2008 either. And again, I try not to have any regrets about money or anything. And if anything, I've learned from it and hopefully I can relay that experience onto my kids so that if one day, a decade or five decades from now, they're in the same situation. They know what I could have done differently and maybe they can do differently or maybe people listening to the show right now have an opportunity that they can take a lesson from that as well. Awesome. Okay. What is your best piece of advice for people who are just starting out? Figure out what motivates you. Have a dream.

And it doesn't have to be a big dream. For me, the motivator when I first started was getting to zero on my spreadsheet. That was a motivator. And that was a huge motivator. People laugh when I tell them that a spreadsheet was a motivator for me, but still is. Seeing my spreadsheet and seeing my net worth rise in my spreadsheet now, it's still a motivator for me. It's an indication that I'm doing something right and I'm living the life I want to live.

And so that was mine. So everybody needs to figure out what their goal is. And maybe that goal is to save up enough money to buy a house, or maybe that goal is to build a nest egg and save some money and then be able to go out and buy a Ferrari for cash. Or maybe that goal is to generate passive income and get to $1,000 a month and then start tracking that goal. Figure out what the goal is, figure out the steps that it's going to take to get to that goal, and then track it obsessively. And so, yeah, my biggest piece of advice is what motivated me and what motivates me isn't necessarily going to motivate other people, but there is something that motivates everybody. I'm just to figure out what that thing that motivates you is and grasp it and focus on it obsessively. Love it.

What is your favorite joke to tell at parties? I have two little kids. So all of the jokes that I know these days are little kid jokes. So. Okay. Scott will be so happy. Okay. My little kid joke, and I'm guessing all the parents out there, I've heard this one, but this is my favorite in our household.

Knock knock. Who's there? The interrupting cow. Interrupting cow. Sorry. Nice. Sorry. Again, all the parents have already heard that one.

And if you're not yet a parent, be prepared. I actually like that one. We do a lot of knock-knock jokes in my car. They're not always that good. Well, awesome. Perfect. Yes. Okay, Jay, where can people find out more about you?

So, I am on biggerpockets.com. I think your viewers have probably heard of biggerpockets.com. And my name there is Jay Scott, which is my name. And I've been on bigger pockets for about 10 years. So I've written a lot. And so anybody that wants to find out more about what we've done and my thoughts on different things, go look up my profile on bigger pockets. I have a blog that I started in 2008 called 123flip.com.

the numbers one, two, three, flip.com. And there I basically went through and I recorded the first 50 flips I ever did in gory detail. So you can see pictures and videos. You can see the financials down to the penny. You can see all the mistakes we made, all the successes we had, basically every last little detail of the first 50 flips we ever did. And so I don't update that blog as much as I used to, but it's a good historical record of how we got started in the flipping business. So for anybody that might be interested in getting into flipping, that might be a good place to go. And then Facebook, Jay Scott Investor, is my account on Facebook.

And I don't use Twitter. So those are probably the best places to reach out and find me. And if anybody wants to send me an email, it's the letter J at one, two, three, flip.com. Yeah, and definitely go and check out some of these resources. Jay has posted 16.5,000 times over the last 10 years on B. in our pockets, chronicling one of the most prolific careers in real estate investing that I know of on the site in extraordinary detail just so that you can learn it and have better odds of success in your own investing journey. So thank you very much for just like embodying what

bigger pockets is all about for so long. Bigger pockets got me started on my investing journey. So I'm thrilled to be able to give back to other people that are using it to learn as well. Awesome. Well, we certainly appreciate when people who have a lot of experience come on and share with those who don't have so much experience. And the way I like to talk about bigger pockets is in real life, nobody cares about real estate. In my everyday life, none of my friends care. They don't want to hear about it. They don't want to talk about it. They certainly don't have any stories to share or need any advice. But here's this whole community where you can go and talk about real estate all day long and it's really awesome. And that's what I do. Awesome. Thank you so much, Jay. This was fantastic. I really. enjoyed hearing your money story. Scott, Mindy, I really appreciate being on. This was great, and you gave me an opportunity to revisit some stuff I haven't thought about in a long time, which makes it even better. I love that you were thinking about us in bed. I was. I was. Okay, so all of these links to all of your sites and your profile on Facebook and BiggerPockets can be found in our show notes at BiggerPockets.com slash Money Show 42. All right. So Jay, thanks again,

hope you have a great rest of your day. Thank you, you guys as well. Bye. All right, that was Jay Scott, author of the book on Flipping Houses, the book on Estabating Rehab Costs, the book on Negotiating Real Estate, a serial entrepreneur, and just all around great guy. What do you think today? I think he's going to write a book called The Book on Winning Life. Yeah, yeah, something like that. Has he already written that one? I don't know if he's written it yet, but he's certainly living it. I had such a great time talking to Jay. First of all, it's like kind of an honor to talk to him because he's, Jay Scott. He's the flipping guy on bigger pockets. And that's just really cool for me. But I was blown away by all the amazing things he had to say today. Yeah. I mean, again, I mentioned this in the

intro, but it's a relentless pursuit of getting better forever. And not only getting better, but meticulously measuring how much better you're getting, right? He has a very diversified portfolio. He has obviously put in years and years of study and is highly efficient with his time. And And as learns from his failures, he calls him successes. His biggest failure was not going big enough when there was $100 bills on the ground to pick up everywhere. Yeah, his biggest failure was not picking up more $100 bills. That's still leading a pretty good life. Okay, Scott, this show ran really, really long today.

So we should give our listeners rest. Awesome. From episode 42 of the Bigger Pockets Money podcast, where we interviewed Jay Scott, the author of How to Win Life. This is Mindy Jensen and Scott Trench, and we're leaving.