BiggerPockets Money Podcast - 53: 2018 Financial Freedom Lessons With Scott & Mindy

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Starting point is 00:02:16 Lately, I've been listening to Bigger Leaner 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 BP money. Welcome to the Bigger Pockets Money podcast show number 53 with just Scott and Mindy.

Starting point is 00:02:57 Every single guest, right? Every single guest has either spent less, made a change to spend less, figure out a way to earn more money, right, invested in a way to take earn outsized returns if they had a portfolio, or undertaken some sort of entrepreneurial pursuit, right? Every single guest has done that, right? And there's, again, there's nothing tricky about it. There's no surprises. There's no secret sauce. 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.

Starting point is 00:03:35 This show is for anyone who has money or wants more. This is the Bigger Pockets Money Podcast. How's it good, everybody? I'm Scott Trench. I'm here with my co-host, Miss Mindy Janssen. How you doing today, Mindy? Scott, I am doing fantastic. I went to the water park over the weekend with the girls and had a great time splashing about.

Starting point is 00:03:52 It was a lot of fun down in Colorado Springs. I don't know if you ever been to Great Wolf Lodge. You went in December? It's an indoor water park. Ah, okay. So many people are like, you went in December? No, no, it's indoors. Anyway, we had a great time.

Starting point is 00:04:06 They do a lot of things. Great. There's a lot of opportunity to separate you from your money if you want to take advantage of that. But they're not super over hard sales, which has really made me feel good about that. Oh, nice. Because, you know, it's really hard to say no when your kids are like,

Starting point is 00:04:22 hey, I want this, I want this. And you're like, but when they don't even ask, that's better. Ah, there you go. Teaching them well. I'm trying. They still ask for everything, though. So I'm super excited for today's episode, not because it's just you and me,

Starting point is 00:04:37 although I do enjoy talking to you, Scott. You're a smart guy and I feel honored to have you on the show with me. But I'm excited because when we were first talking about releasing a podcast, I wanted to put it out at a time when it wouldn't compete with the bigger pockets of real estate investing podcast. That's, you know, the already existing podcast. So I wanted to come out on Mondays and then I looked at the calendar. Ooh, January 1st is a Monday. Hooray.

Starting point is 00:04:58 And then luck would have it. December 31st, 2018 is also a Monday. So we get this bonus episode. And I wanted to take an hour or so to go back over all of the things that we've learned over the last year. because what I thought was really interesting over the course of recording this episode, this show is that there's similar concepts in everybody's story or similar concepts in like half the stories. There's just, there's so many things that are not different.

Starting point is 00:05:28 It's not, you know, nobody came on the show and said, oh, I won the lottery. That's not repeatable. Everything that we've heard is repeatable. And that makes it like possible for some people. I mean, I've had this money mindset for a while, but there's other people that are just coming into this space and thinking, you know, oh, I could never do that. I'm not a software engineer.

Starting point is 00:05:48 And yeah, the majority of people that are in this space in the, you know, that have already retired early were software engineers are making high dollar figures, but not everybody. This is still achievable even if you're not making $400,000 a year. Yeah, I love it. The goal of the show, right, is to make financial freedom accessible to everyone, right? and why is that important? Well, it's not, it's not like we're not here trying to help people just so they can retire

Starting point is 00:06:14 and sit margaritas on the beach in Mexico, you know, all day long. No, once you achieve a financial independence, you know, a level of wealth capable of sustaining financial freedom indefinitely, you go on to have an impact. First, yeah, you're living a happier, healthier life on your terms, but you can go on to have an impact that few else in society really can have. And so kind of what we're doing here is, hey, how do we get as many stories as possible from as many different people as possible that are all relatable that you can kind of understand and see how they're moving toward financial freedom and see how they're moving toward financial freedom and see how they're moving toward financial freedom and then maybe another episode is someone with a higher income or a lower income than you and achieves it in a different way. And by gathering all of those perspectives, I think that helps make this, like you said, achievable, relatable, and repeatable. And that's the goal here. It's just how do we make this as repeatable as possible so that everybody can efficiently move toward this goal without losing anything from their lifestyle or whatever?

Starting point is 00:07:24 And again, experience the power and freedom that come with having a passive income and a growing personal financial position. Yeah, without losing anything important, you will probably lose something out of your. your lifestyle, but it's not something that's going to matter to you now or in the long run. And I really like how you mentioned that the goal of this isn't just to quit your job and sip margaritas on the beach, which totally sounds like fun, given that it's like 30 degrees outside. I would love to be sipping margaritas on the warm beach in Mexico or Hawaii or wherever. But that would get really boring after a while.

Starting point is 00:07:56 And I think one of the personality traits that makes you able to be so driven and focused and reach this goal is going to prevent you from doing that forever. You're just going to get bored. You're a go-getter. You're a doer. And you're going to want to do something. But this concept of financial independence frees your life so that you're not worried about continuing to bring in money so you can put food on the table.

Starting point is 00:08:20 Now you're worried about what's the thing that's going to make me the most happy? How can I live my best life? Yep. Exactly. Okay. Mindy, what kind of are you picking up? What do you thinking? And I think we both are on the same page with this one.

Starting point is 00:08:33 What do you think is the most important single thing? that our guests have done across the board that has been critical to their success in achieving their financial goals. You know what? I think it is tracking your spending, especially when you're first starting out, but also as you're continuing on the path to financial independence. And way back in episode seven, we interviewed the couple from Waffles on Wednesday. And they talked about making a spending tracker.

Starting point is 00:09:02 They have an article on their website that it's, so easy to follow even I was able to do it. I actually taught my computer programmer has been something was you take a Google form, like a Google survey or whatever. You take a Google form and you ask the questions that you want to answer what you're tracking and your spending. What store you spent at? How much you spent? What day was it? What was the category? Groceries, clothes, whatever. And you keep track of this. They actually went further and said, hey, we put this on our phones. And that's when my computer programming husband came into the rescue and put it on my phone for me because that's not something I have a skill for. But Waffles on Wednesday gives you all the information that you need to make this spending tracker.

Starting point is 00:09:46 You put it on your phone and basically every time you spend money, you write it down. You track your spending. The form puts all the answers into a spreadsheet. So you don't even have to go onto your computer and enter all your numbers in. They're already there once you enter them into your spending tracker, of course. And this is now, we started doing this. We've made it into a game. How little can we spend every month?

Starting point is 00:10:09 And that makes me question every purchase that I'm making. Oh, do I really need this shirt? You know what? I don't. I just need the chips that I came to Target for. I don't need to buy this shirt and those shoes. And, you know, how easy it is to spend hundreds of thousands of dollars to Target. Sorry, Target, but I'm looking out from my bottom line, not yours.

Starting point is 00:10:28 But yeah, tracking your spending is something that has popped up in so many episodes. What is it? Like literally every episode? Yeah, I can't recall very many episodes that didn't start with this in some capacity. Either at the point when the guest became serious or when the guest just was kind of just starting out on the journey, just kind of dipping their toe in the water of getting their finances in order. Almost every single person has called this out as a critical component. I know it's critical to me and I know it's critical to you. I just don't think there's a single better thing you can do. And it's 10 minutes.

Starting point is 00:11:04 You don't have to go back five years with all your spending. Just set up a system and start tracking this month's spending or the last months. Go back and see what you spent last month. It's not hard. And it's just having this information will open your eyes to the problems, to potential opportunities to save more money with your finances. Yeah. And even just knowing where your money is going, another tip that I have heard

Starting point is 00:11:28 from several different people on this show is to write down what you want your life to look like, what your ideal life looks like, what your day looks like, and then look at your spending and see if your spending is reflecting your ideal life. If you want to spend more time with your kids, then going out to concerts and going out to dinner with your friends and all of this isn't necessarily the best choices you can be making in order to live your most happy life. You know, Scott, another thing that comes up every episode is self-education. Nobody who has been on this show, who is on the financial education path, said, you know what, I bet this will just work.

Starting point is 00:12:11 I don't have to do any research. I don't have to do anything. I'll just change my life. And you can't really change your life unless you have some guidelines to help you out. And every episode, a guest has recommended at least one book, many have recommended more than one book. A lot of books come up over and over again, the richest man in Babylon,

Starting point is 00:12:34 the millionaire next door. And your money or your life, oh my goodness, I almost forgot like one of the most important books. I mean, we can make a huge list, you know, total money makeover, right? I will teach you to be rich. Rich Dad, Poor Dad, right?

Starting point is 00:12:48 I mean, these are books that come up all the time. Rich Dad Portad is more so on the Bigger Pockets Real Estate podcast, but we hear on this one as well. Yeah, I mean, the saying is you're the average of the five people that you hang out with, right? And you can't change who you hang out with like right overnight sometimes, right? But they're in your head. You can start listening to these folks on an audible audiobook or podcast. You can read those books and get those concepts. Every single guest, we have not had a single guest who did not

Starting point is 00:13:15 have a book to recommend. And most of the guests, I would say the vast majority, have referred to a piece of content that they read that changed their thinking about money in some dramatic fashion that moved them towards financial independence. So again, this doesn't have to be a book. It doesn't have to be a podcast. It could be a blog. It could be a variety of different sources that you're acquiring information from. But I think that this is a critical component that has driven action for basically everyone we've

Starting point is 00:13:45 had on the show. Yeah. You said a blog. How many people have recommended the Mr. Money Mustache blog? That's such a foundation piece for this whole movement is this guy who decided I don't need to spend every cent that I make. I can live my best life spending. I think he spends $25,000 a year, $30,000 a year. He likes good beer. He likes good coffee. He doesn't care about fashion. He does old fashion workouts. He doesn't have his job. He doesn't care what people think about his car.

Starting point is 00:14:18 So he has some just, I think he's got a Nissan leaf, just like random things. He doesn't care about specific things that everybody else in America cares about. He just wants to be happy. So he's like, this is what I want to do and I'm going to do it. Yeah, I think that it takes a genius, a genius to figure out all this stuff and pave the way, right? And really kind of go out and a pioneer and go out on a limit and do that. But thankfully, other people have done this for us. So we can literally just see what works and follow in their footsteps.

Starting point is 00:14:51 And it's easy, right? We haven't heard a lot of truly terribly difficult stories on this show, but it becomes really easy if you just have the plan laid out for you by reading a couple of these folks who've already done it and know what they're talking about. It's a very easy several step system to get to financial independence. You know, if it takes some time, it definitely takes some time. Maybe easy is the wrong word. It's simple, right?

Starting point is 00:15:16 and it becomes simple if you self-educate and buy in. Yes, it's not complex. And what I think is really important to point out is not only do they share what works, they share what didn't work. And this is true in the real estate investing podcast as well. People learn so much more from your mistakes than they do from your successes. And all of these bloggers, all of these books, all of these podcasts, they will share what didn't work as well.

Starting point is 00:15:43 And I think that's really important. Something else that really works that we've, heard a lot about is money dates. Having your spouse on board is absolutely the most crucial element of this whole financial independence journey because if you're a saver and they're a spender and all you do is butt heads all the time, you're going to have a miserable life. How do you get your spouse on board? Show them the life that you can have by sitting down with them and asking, you know, what is your dream life? What do you want to do all day, every day? Where does your happiness lie. Rosemary Groner from the busy budgeter, episode number four, Liz from

Starting point is 00:16:21 Frugalwoods, episode number 10. Aaron Lorry, episode 24, what's Aaron's broke millennial? Every single one of these ladies has a money date with their spouse. And there's a lot more that talk about money dates too. I just couldn't remember everybody. I think Aaron Chase from episode three also talks about having a money date. You sit down and you go over your budget. This isn't a time to harass your partner or, you know, point fingers or anything, just, hey, this is where we're at right now. This is where we want to be. This is where we're at. Here's our successes for the month or the week or, you know, however frequently you have to have these. Here's our successes. Here's where we could have improved a little bit. Let's come up with a plan to work on during the

Starting point is 00:17:05 next timeframe. Like if you're having these weekly, if you're having these monthly, you know, this is what we need to work on. Being open and honest with your spouse is so. important in this journey. Yeah. And I think I think that one of the things that we've noticed, or at least I've picked up on, is that often, almost every single time, there's one spouse that seems to be more in, or at least initially more in, on the concept of moving toward financial freedom aggressively than the other. And guess what? If that's you, you're probably the one listening to the Bigger Pockets Money podcast here. So the, you know, if that's you, understand you're going to have to make some compromises. And the key thing here is getting on board,

Starting point is 00:17:43 making sure you both have share the same goals, are tracking towards it, and that you're doing enough of the big things right to move towards that in a timely manner. Maybe you can't do what I did and move into the bottom half of a duplex with a roommate in up and coming neighborhood and make every single meal five days in advance for the first year on your journey of financial freedom, right? Of course not. You can't do that if you're well into a marriage and have a family going. But you can begin making some steps.

Starting point is 00:18:11 And we see time and again people who have made tremendous progress in just three to five years by getting their spouse on board and taking the correct steps forward. Yep. Jamila Sufront from episode 39 talked about how her husband really wanted to have a nice car. She said, you know what? I don't want to deprive him of this. But I also want to show him that by spending that money now, we are costing ourselves this life for another three years or five years. or I can't remember exactly, go listen to episode 39.

Starting point is 00:18:44 And you can hear her story about this. And once her husband was finally on board and could see, you know what, that sounds mean. He wasn't finally on board. Once her husband was on board because she was the driving force behind it. Once her husband was on board, he's like, you know what, I really don't want that fancy car. I'd rather have time with my kids. I'd rather have time away from work. I'd rather just do this.

Starting point is 00:19:07 So it's not necessarily an overnight conversion to get your spouse on board. Start small and be supportive of every positive step they're moving towards financial independence or changing their spending habits or whatever. Just start off by asking them, what does your ideal life look like? Is it sitting in traffic for an hour every day? Probably not. Yeah. So if we kind of just take a quick moment and recap what we've talked about, right?

Starting point is 00:19:34 I think these are the three biggest takeaways that we've gotten from the show so far over the course of all the episodes, right? Now, first is that tracking your spending is absolutely critical to success, right? Second is that every guest, every episode has a book to recommend. Everybody practices self-education and you need to as well if you want to begin moving toward financial freedom. And the third is get your spouse on board, right? So the fourth one, which I think is appropriately placed here, is that there is no secret to this, right? Those are three remarkably easy things. And if you just do those three things, you're going to move toward financial freedom in a pretty timely manner. You're going to figure it out and make the change necessary to move towards this, right? I mean, we've interviewed 50 guests and none of them have had a secret that shocked you. You know, that was like, oh, wow, I didn't believe you could do that. You know, I mean, maybe there's been some tips here and there. and some tricks, you know, some ways to defer extra money or take advantage of some tax

Starting point is 00:20:34 situations and all that kind of stuff. But basically everybody has said, no, I started tracking my spending. I read a book or a blog or listened to a podcast that changed my life. And then I got my spouse on board or I settled down and got into a rhythm. And then I hustled and worked through it. Right. There's no secret sauce. Yep. Mr. and Mrs. Planting Our Pennies from episode 32 talked about increasing your savings. rate. They talked about increasing your income. So now you're making a lot more money. Mr. Pop was in sales. He said, anybody can be a salesman. Anybody can be good at sales. And he, I mean, he could sell a ketchup popsicle to a woman wearing white gloves. He is an amazing salesperson. But anybody can be an

Starting point is 00:21:23 amazing salesperson. They decided that they could actually achieve this. I think, Mr. Planting Our Penys discovered it, spoke to her and she's like, no way, she's the numbers girl. She ran all the numbers and she's like, wait a second, this will actually work. We can do this. And now they have reached financial independence. He has quit his job. She has not yet because she still enjoys it. But she has the opportunity to, should something change in her job, should she decide that she doesn't like it anymore?

Starting point is 00:21:56 Should she just decide, okay, we've got something else we want to do. we want to hop on a boat and sail around the world or whatever. You know, she has the opportunity now. She just still likes her job so she chooses to stay. I can relate to that. Yep. I mean, every single guest, right? Every single guest has either spent less, made a change to spend less,

Starting point is 00:22:15 figure out a way to earn more money, right? Invested in a way to take earn outsized returns if they had a portfolio, or undertaking some sort of entrepreneurial pursuit, right? Every single guest has done that, right? And there's, again, there's nothing tricky about it. There's no surprises. There's no secret sauce. There is no secret sauce.

Starting point is 00:22:35 It is repeatable and it is doable. And one of the things when you first stumble upon this concept of retiring early by becoming financially independent, you're like, oh, that's a bunch of crap. Or I'm going to have to give up everything I love and leave this life of complete poverty and misery just so I don't have to work. And then you start running the numbers. You're a numbers guy, Scott. Does math lie?

Starting point is 00:23:00 No. Is two plus two ever anything but four? Nope. No. It's never anything but four. Numbers don't lie. And you run these numbers and you're like, oh, I really could get myself to a spot where I don't have to work anymore for money. I mean, you can't really.

Starting point is 00:23:19 I guess you could just decide you're never going to work again. But that's. And while you don't have to, it is helpful if you can bust out Microsoft Excel. or some sort of spreadsheet and build this for yourself and see the numbers work, right? You don't have to do it. That's not the secret financial freedom. But if you can do that, you're going to really see it for yourself working and you're going to see your path right through to the finish line.

Starting point is 00:23:41 So maybe that's a secret sauce that a lot of our guests have shared is spreadsheet skills and that tracking your spending component. Yeah. And something that I hear from a lot of people, I get a lot of emails that are sent to money at biggerpockets.com. If you have a comment or a question, I'd love to help you out. I see a lot of emails from people who say, I don't know that I can do this. I have this huge past problem.

Starting point is 00:24:06 I have a money issue. I went bankrupt. I lost my house to foreclosure. I spent a lot of money on this. I did that. Every single guest that we have interviewed has had a biggest money mistake at the end of every episode. We ask our famous four questions.

Starting point is 00:24:22 What is your biggest money mistake? I bought a car brand new. I financed. I co-signed. There's a lot of problems, but just because you made problems, you made mistakes in the past, does not mean that your future money life is over. Tiffany Aliche in episode number eight, she's the budgetista. I love her story.

Starting point is 00:24:42 She was on top of the world. As a teacher, she had her own house. And then the bottom of the market fell out, the school she was teaching at closed. She ended up living on her sister's couch. And she hit rock bottom when her sister said, hey, could you move out? She's like, wow, so she moved back to her parents' house. And she's like, how do I overcome this? Oh, I know.

Starting point is 00:25:04 And she picked herself up and she started teaching other people about money. I know about money. I know I can fix these problems. She started hosting for the United Way, these free money seminars. She's like, oh, I wonder how I could do this. I wonder how I could do that? And she just kept questioning, how can I do this for myself? How can I make this better?

Starting point is 00:25:24 she has an amazing program now and has helped hundreds of thousands of women fix their finances, move down the path towards financial independence or at least just financial stability. Financial stability. And she can help you too. She's just an amazing person. Joel from F.I. 180, he was, what were they making six figures and spending six plus figures? Yep.

Starting point is 00:25:52 Like every dime that came in, they had to get it out of their pockets as soon as possible. And he has my favorite quote of all time. When he left his job, he figured out his finances, he left his job and he said, what's the worst that can happen? I have to go back and get a job. My worst case scenario is everybody else's everyday life. Yeah. And one thing I will say that a lot of the folks who have come in and have had, you know,

Starting point is 00:26:17 a lot of the money mistakes we hear are credit card debt or bought a too much car, right? We'll talk about housing in a little bit. But if you've made a lot of those mistakes and have that kind of personal or consumer debt piled up in the $10,000, $30,000 range, we've heard time and again mentioned as a great resource, Dave Ramsey and the total money makeover, right? That's come up with almost every guess that's going to come from that sort of circumstance who's made a lot of progress in a short amount of time. And that might be a good resource to check out, right?

Starting point is 00:26:48 I've never had debt like that, right? But a lot of the people in order to get back that starting point have found that to be a really helpful place to start with that self-education. Yeah. You know, the Dave Ramsey total money makeover or the baby steps. Is baby steps part of the total money makeover? Yep. Okay. So he's got these baby steps.

Starting point is 00:27:06 Look, what is it? Like 4% of Americans could weather a $1,000 emergency expense or something like that? I think it's more of 4%. But, yeah, there's not very many. Yeah. There's a surprisingly large number of people who can't handle $1,000. financial emergencies. Yes. And I mean, a thousand dollars, it could crush somebody. And it's a really low number of people in America who could handle that amount. And that's, I think that's babysat number

Starting point is 00:27:32 one, save a $1,000 emergency fund. And then, you know, start paying off your debt and save up for retirement and all these things. But I think Dave Ramsey is an excellent path for people who are negative net worth. It's a great way to get you to zero debt. and it's a great way to start you on the path towards positivity. I don't agree with his pay cash for everything business. I do enjoy a good mortgage on my own house. But hey, if you don't want to have a mortgage, they don't have a mortgage. But he's excellent for getting you out of debt.

Starting point is 00:28:07 Absolutely. And then for the last kind of thing here about the past money mistakes is that a lot of our guests who have accumulated larger net worths, right? Maybe a million dollars plus seem to indicate that their biggest mistake was an opportunity cost, a failure to invest at an appropriate time, right? And not always like, hey, I didn't invest in Amazon back five years ago when it was really low because I'd be a millionaire now. But it seems, you know, something I'm going to pick up on is a failure to adhere their investing philosophy in a strict manner. So I forget which episode it was, but Harry Mix,

Starting point is 00:28:42 he had his personal written investment philosophy written out and he sticks to it. And even if you have a lot of past money, even if you don't have a lot of past money mistakes, you know, a failure to continue applying your financial philosophy to your investments can be a big mistake that can cost you a lot of money down the road as well. Yes, it can. And Patrice Washington from episode 50 had a million dollars in real estate portfolio, more than a million plus. I think it was multi-millions in real estate portfolio.

Starting point is 00:29:17 And she got pregnant. she had a high-risk pregnancy. She was in the hospital on bed rest while the real estate market was kind of crumbling. And she lost everything. And for years, she tried to fight her way out of it. You know, I don't want to declare bankruptcy. I want to pay off my debts and I want to do this. And finally, she had a financial mentor that said to her, you know what?

Starting point is 00:29:41 You cannot nickel and dime your way out of $2.5 million in debt. The only way to wipe this off is to do. declare bankruptcy. And one of the things that I love so much about her story is that her husband didn't feel like he was too good for any job. He needed to put food on the table. So he went and became a manager at Taco Bell, which is not the glamorous job that being your own real estate agent slash mortgage broker, driving around in a BMW, you know, living in a fancy house. That's not the same thing as working at Taco Bell. But he's not too proud to work at Taco Bell and he wants to provide for his family so he's going to do it. And they pulled themselves

Starting point is 00:30:23 out of their. I don't want to say whole, but it was a pretty big financial whole. And they finally said, we are going to declare bankruptcy. We're going to work towards getting past this. And now they're past it. It was a dark point in their life. And now they're living their best life possible. She's teaching people how to manage their money. And she's doing, she's America's Money Maven. She's doing a really great job of it. Love it. All right. Let's move on. So, so again, we'll take another quick recap here. So the five points that we've brought up now, right, are tracking your spending, relentlessly self-educate, get your spouse on board and consider doing money dates, right? There's no secret sauce.

Starting point is 00:31:02 Nobody has come up with a secret plan that's unrepeatable here for making more money and that you can overcome your past mistakes to move toward financial freedom. Yep. Your past money mistakes do not dictate your future money life. And just like Patrice Washington's husband, worked hard and did what he needed to do, hard work pays off. David Green's episode 12 is fantastic. David Green is the co-host of the Bigger Pockets Real Estate Investing podcast and his story of being a waiter, which is, and please don't think that I'm talking down about waiters, but being a waiter is not

Starting point is 00:31:38 something that every little girl lays in bed or a little boy lays in bed and thinks, ooh, I hope I get to be a waitress when I grow up. Like it's hard work. You're on your feet for 12 hours a day. And David Green's story is, it's specific to being a waiter, but it encompasses the whole world. I worked hard. I identified the problems that my boss was having and I fixed them. I look like a genius. I look like an extra super hard worker simply because I'm making sure that I'm doing my regular job, but I'm also doing extra that's very important to my boss. And he would come in early and take like the last shift table from the previous shift. He would stay late and take all.

Starting point is 00:32:25 And every single thing that he did netted him hundreds of extra dollars every night that he was there. Yep. I mean, David Green exemplifies working hard and working smart, right? And having a rationale behind that, right? David Green, I think, applied all four levers that we described earlier of the personal finance equation, right, to their maximum effect. He lived extremely frugally, right? He went above and beyond and did everything he could, all the little extra things that he could to give himself a chance to earn more money and have a better odds of success at his,

Starting point is 00:33:01 at his career as a waiter, right? He certainly applies that today as a real estate investor and as a real estate agent, right? And then he invested aggressively in real estate, right? And he's turned his attention now to his own business and entrepreneurial pursuits, right? saved, spent little, tried to earn as much as he could from his day job, invested and eventually built his own business. I mean, that's how you do this, right? And that's total dedication and hard work. And I think the really big lever that's moved the needle for David Green has been his work ethic and his ability to apply that work ethic and intelligence to earn more income in a dramatic fashion. Yep. David Green is a really amazing story of just working hard and working

Starting point is 00:33:45 smart. He worked very smart. And he reaped huge benefits. He was the best waiter, the favored waiter. He was able to get, you know, pretty much he made his boss happy. His boss made him happy. Yep. I mean, I think that people who earn high incomes, right, and there's exceptions, right? But David Green has a good example of someone who was in a profession that had the opportunity to scale, right? And when you're in a profession that has an opportunity to scale, that's really, I think, where your effort and concentration need to be, right? If you're an accountant, if you're an accountant and you're looking to achieve financial freedom in a few years, applying that extra effort diligently to your job may result in a

Starting point is 00:34:27 five or 10% raise on the annual basis, right? You might get a slightly better performance evaluation on the end of the year. I'm not saying don't work hard at your profession, right? But if you're going to go that extra mile and really apply it in that 10, 12 plus hour days, like the way kind of David Green did building up his career. right? That's where you've got to apply that to a career that has the potential to scale. And if that opportunity is there for you and you can put the pressure there, that may be the fastest lever in driving you towards financial freedom.

Starting point is 00:34:55 Yes. David Green is a real estate agent and there is no shortage of real estate agents. It's not that difficult to become a real estate agent. You and I are both licensed agents. It's in Colorado, which is one of the strictest states, it's 168 hours of coursework, plus you have to pass a couple of tests. And the tests are the tests, that hard to pass. So it really isn't that difficult to become a real estate agent. Real estate agency has a huge turnover rate because it's not easy. It's not hard. It's work. And the harder and smarter you work, the better you will be at your job. The more success you will have. You need to learn your market. You need to be able to read people. David is an excellent reader of people. How do you say that?

Starting point is 00:35:41 You understand what people wants and he works hard to give it to them. Yes. And he knows how to give it to them based on his experience as a real estate investor and as a real estate agent. Yeah. And there's a number of ways to command a very high income, right? Let's call it over 250K a year. Right. And some of those ways just encompass like coming a doctor, right?

Starting point is 00:36:04 You apply 10 years of extremely dedicated work. You get straight A's the entire time through high school college. and then med school, right, finish your residency, and then that's a path to making over $200, $250,000 a year, right? The other ways to get there that are faster or that are outside that kind of academic track, right, are going to all require the smart application of the skill set that David Green exemplifies, right? Yep.

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Starting point is 00:39:43 His name is Scott Trench. Kind of looks like you. Does a really bad De Niro impression. How about the guest from episode one? Oh, the guest from episode one, Mr. Money Mustache. The guest from episode five looks like me. Mindy. Sounds like me, is me.

Starting point is 00:39:56 Guy on fire from episode number nine. He house hacks in Washington, D.C., a notoriously expensive market. I actually have a friend who just moved to Washington, D.C. and she's like, what is with all these people wanting to share rooms like two people on the couch and one in the closet or whatever? Very expensive market. And he's found a way to make it work. Yep. Joel Larsgard from episode 16, also a house hacker. He and his wife live with a friend. And they rent out kind of the back half of their house to her. And they all share a kitchen. And it works really well for all four of them. Five of them. They have two daughters now. Yep. One of my favorite

Starting point is 00:40:37 stories was Tony Gaden from episode number 21. Aside from losing like 250 pounds and building a $500,000 plus net worth in just a few years, he also got started with a house hack, I believe, and began investing in real estate. And now he invests in long distance in a different market. But yeah, his entire story is just amazing. Do you know anybody named Chad Carson? No, who's that? I think he wrote a book. What's it called? Retire early with real estate?

Starting point is 00:41:11 Oh, yeah. Look, you can retire early with real estate. Chad Carson is an unemployed bum. He's never had a real job since college, since graduated from college. But he just decided, hey, I can be a real estate investor when I graduate from college. So he did. He bought a property. And then he bought another property.

Starting point is 00:41:28 And then he bought another property and another and another. And he's got, what, like 90 units under him now? And he periodically goes through and like gets really. of the dogs and keeps the really good ones. And he doesn't work. He works, what, like an hour a week or something like that, didn't he say? Yeah. And what I love about Chad in particular is he really had a good why behind that, right?

Starting point is 00:41:48 He wanted to build a passive portfolio that would support a lifestyle that he and his family wanted, right? And I think a lot of folks that when you hear him talking about real estate, they always want to go really big, right? They're continuing to build bigger and bigger and bigger and bigger portfolios, right? And Chad knew exactly where he wanted to stop and has really kind of built a portfolio that meets and exceeds his goals. And he's not trying to aggressively expand it to the next level because it gives him what he wants. It gives him that financial independence that he's looking for.

Starting point is 00:42:19 Yep. And when I say 90 units, some people might think that, oh, that's a lot of units. And, you know, that is a lot of units, but he owns a lot of them with partners. But that provides him enough income that he doesn't have to have a job. He and his wife, his wife is a Spanish teacher, I think. They wanted to immerse their daughters in the Spanish language. So they moved to Ecuador for 15 months and their daughters attended school and learned perfect Spanish.

Starting point is 00:42:46 And he jokes that the girls will correct him when he uses a word or a phrase wrong. But you can't just take off for 15 months and go live in Ecuador if you have a job. if you have a job that you, if you need to have a job to provide income and food for your family. Yep, absolutely. Craig Curlop was episode number 35. He's, what is he like, 26 years old? He owns two properties or three? He owns two properties right now.

Starting point is 00:43:20 Okay. So he and in the Denver market, which is very hot. You can't make any money in the Denver market. I don't know if you've heard that, Scott. Everything's too expensive and nothing cash. So Craig bought an up-down duplex and rented out his bedroom of his half of the duplex and slept on the couch and was cash flowing something like $1,700 a month. I can't remember his exact numbers, but he was making money in a city where you can't make

Starting point is 00:43:47 money in a super hot market. He also then lived there for a year, bought another property, a five-bedroom property, rents out all the other bedrooms, lives in one, and cash flows something. something like $1,500 a month there too. All of his living expenses are paid for, because he's a frugal guy, are paid for by these two rental properties. And yeah, he had to sleep on the couch for a year. He was 24 at the time.

Starting point is 00:44:14 He could sleep on the floor if he wanted to. You know, I don't want to sleep on the couch. And I have young children, so I don't want to invite people into my home that I don't know. But this works great if you're a young kid. And what did he say? he's got $80,000 in student loan debt. And this question pops up a lot in the BiggerPockets forums, biggerpockets.com slash forums, where people will ask, I have debt.

Starting point is 00:44:39 Should I invest or should I pay off my debt first? And until I heard Craig's story, my thought was always, well, why would you invest? You should, you know, at least invest to get the company match if you're doing a 401K. But you should focus on paying down your debts. And Craig didn't focus on paying his debts. I think he paid the minimum or even maybe deferred. them? Do you remember if he deferred them? I think he was paying the minimums. Yeah, paid the minimum and then bought a house and then continued to pay the minimum and bought another

Starting point is 00:45:06 house. And now the cash flow from these, because he still has a job, he works here at bigger pockets, but because he still has a job, he doesn't count on that cash flow to sustain his lifestyle. He's throwing all of that at his student load so he could pay those off. So then he can pretty much be financially free. He's got all of his expenses paid for just on two properties. And he's not going to stop. Once he hits the one-year owner occupancy requirements for his mortgage, he's going to start looking for another property. Yeah, I think that's a fantastic episode,

Starting point is 00:45:38 an example of how much progress, how quickly you could, just how much progress you can make really quickly if you are extremely, you know, you go all out on it. I love his story. It's exactly what I would be doing if I were in his position, right? Yes. through it. And I think that it's just a very, I think he's put a lot of thought into his situation and is really understanding the risks. Hey, this deal could work out and, you know, could not

Starting point is 00:46:04 work out. And maybe I'm even more in the hole. But the odds are enough on my, on my side. And I'm willing to live in such a way to make them as high probability as possible that I can go ahead and buy two properties before I start paying down my student loans. Yeah. And if you look at his lifestyle, he has completely cut out his transportation costs. He has completely cut out his housing costs, he lives for free. He hacks his housing and lives for free because somebody, when I say cash flow, all of his mortgage is paid, all his taxes, and then additionally, he makes $1,700 a month or $1,500 a month. And he gives the exact numbers in episode 35. But it's just, it's so doable in a hot market where you can't make money, nothing cash flows, nothing is a good

Starting point is 00:46:50 deal. And he's said, I don't care what you think. I'm going to go and make my own luck. Love it. Well, I think we've covered now the seven major points, the seven kind of key critical points that we've seen kind of come up over a couple number of episodes, right, this year, the 50 episodes this year, 50 guests. Number one, tracking your spending is key. Number two, self-education. Every episode, somebody's got a book or another piece of educational content that they consumed that changed their life and put them on the path to financial freedom. Yep. And what is your favorite finance book, Scott? Well, I won't plug my own. I would say that the millionaire next door is probably my favorite, right?

Starting point is 00:47:34 Have you read the new millionaire next door or the next millionaire next door? I have not. I'll have to go check it out, though. Yeah, I'm going to get that book too. I haven't read that one yet. What is the name of your book, Scott? Set for Life, yeah. Set for Life by Scott Tredge. Number three, get your spouse on board. Have a money date. Ask your spouse, especially if they're not quite on board. Ask them what their ideal life looks like. What would you do if money was no object? Use that question to start the discussion and give them time to think about it. Maybe even set a date

Starting point is 00:48:11 where there's no kids, there's no TV, there's no dishes to do, there's no nothing. You're just sitting the two of you and talking. Grab a glass of wine, grab a soda, you know, a cup of water if you're healthy. and just sit down and talk about your ideal life. If money was no object, what do you want to do? I love flipping houses. If money was no object, I would still buy really ugly houses. I just might not live in them. But I would still buy really ugly houses and flip them.

Starting point is 00:48:38 I love real estate. I love to travel. I love to spend time with my kids. What does your ideal life look like? Love it. Number four, there is no secret sauce. If you want to move toward financial freedom, you're going to have to spend less.

Starting point is 00:48:52 You're going to have to earn more. You're going to have to achieve high investment returns, or you're going to have to build a new income streamer asset, entrepreneurial style. There's no way around it. You have to do one of those capacities or all of the above, right? You have to improve somehow. And if you're looking for the secret, you're never going to get there.

Starting point is 00:49:10 It's just an application of hard work and intelligent risk taking, understanding the odds and increasing them as much as possible in your favor through self-education. Stop looking for that secret sauce and understand the levers and apply. pressure to those key points in your financial position as methodically as you can. But also, there is no secret sauce means that you can do this. This is repeatable. This is doable.

Starting point is 00:49:33 Listen to these stories and pick out the parts that you think apply to you. Oh, I love real estate or I don't like real estate. I like investing in stocks. Great. We've got different people who have different investment strategies. There is no secret sauce and it is repeatable. Number five, past money mistakes do not dictate your future money life. So you bought too much car.

Starting point is 00:49:56 You bought too much house. You spent way too much on credit cards right after college. You have a 400 credit score. Take the steps necessary to fix those past money mistakes so that you can have the best future money life. Yeah. And then one episode we didn't mention that I want to kind of call attention to is episode number 22 with Travis Hornsby.

Starting point is 00:50:17 And he talks about pursuing financial independence with. large student loan debt, like six figure plus student loan debt. So there are ways to do this, even if you have a lot of student loan debt relative to your income. Yes, that was a really excellent episode. I didn't graduate college with student loan debt and I wasn't aware of some of the repayment programs that are available. But it's definitely worth checking out that episode, especially if you have a lot of student loan debt. Also, an episode, listened to if you have kids that are going into college. You know, one of the things that he said that really stuck with me was, you know,

Starting point is 00:50:53 when you're helping your child choose a college, private schools are going to be way more expensive than public schools, but ask them, is this the only thing in your life that will make you happy? Is there something else you could do that would make you almost as happy, but doesn't come with the huge crippling debt, especially like veterans? I didn't realize this, they come out of school with three, four, five, six hundred thousand dollars in student loan debt. And they're making, that's med school debt, but they're not making med school salaries.

Starting point is 00:51:31 Yep, absolutely. I mean, that's just like a very tough, uncomfortable question that we have to ask because the problem is that people are making that decision before they're 18 years old in a lot of cases. Yeah, before they're mature. So my choice. I mean, don't, I'm not trying to dog on veterinarian. My choice was fashion design. That was a really not right for me major.

Starting point is 00:51:53 I wish I would have studied business or finance. What did you study, Scott? I wish I was eating. Economics and finance. Oh, I don't want to study that. I never use it anymore. Yeah, you never use it every day in your life. The sixth kind of big takeaway, though, is that the intelligent application of hard work

Starting point is 00:52:14 in a performance-based career can really be the driver that propels you toward financial freedom. Yep. That is. Exemplified by David Green. Exemplified by David Green in episode 12, work hard and work very smart. In a career that has the opportunity to provide performance-based rewards that are infinitely scalable. And finally, number seven, real estate is an excellent way to financial independence. Awesome.

Starting point is 00:52:43 Well, let's transition here real quick. And so we have a couple minutes left. Let's really quickly go through some tips, some practical tips that we can kind of walk away with. And let's focus these around saving money because I think that this is the component that is the most difficult for most people to kind of transition to if they're looking to move toward financial freedom is how to actually and dramatically cut back on expenses across really four major categories. of spending that have come up in the past episodes. And those areas of spending seem to be housing, transportation, childcare, and health care. Food is a huge component of people spending,

Starting point is 00:53:23 but typically no one really has a difficult time understanding how to optimize their food budget, right? I haven't heard that come up as a challenge for folks. Not really. And if they do, they can go and listen to Aaron Chase's episode number three. She really breaks it down on how to reduce your food spending. And she doesn't talk about couponing. She doesn't talk about, you know, all of these shopping the sales.

Starting point is 00:53:46 Actually, she does talk about shopping the sales. Go into the sales flyer. Look for the meat that your family will eat and make your whole meal plan around that. But plan your meals. I mean, it's so easy to spend a lot of money on food, but it's so easy to not spend a lot of money on food. Yep. Yep. So for housing?

Starting point is 00:54:04 Yeah, let's start off with housing, right? So the first major expense is housing, right? And we've talked a lot about housing over the course of the show, right? There's a whole variety of different ways to do this. You can house hack and try to cut that expense out entirely like I did or like Craig Curlop is. You can buy a house that's well within your means. You can rent a place that's pretty reasonable and close to work. There's a lot of options here that work depending on which market you live in,

Starting point is 00:54:28 what the real estate prices are, what have you. What we don't hear a lot of is we don't hear a lot of people moving towards financial freedom who live in the largest house that they could qualify for and make mortgage payments on that on a regular basis, right? So there's got to be some happy medium between buying all of the house that you can possibly qualify for and living in a content way that can help you move toward financial freedom in a reasonable manner. Yeah.

Starting point is 00:54:54 You know, I think that if you really want to be financially independent and your house is your biggest expense and house hacking isn't an option, at some point you're just going to have to get over the fact that other people may. look down on you. Well, this goes to my other favorite quote, Coco Chanel. I don't care what you think about me. I don't think about you at all. I have a small house. It's 1,800 square feet. And people come over to my house and the outside has this really big porch on it. So it could look like it's bigger on the inside than it actually is. And I have had some people come in and be like, oh, this is kind of small. I don't care if you think I have a small house. You know what I have? I have an $1,100 mortgage payment.

Starting point is 00:55:37 That's what I have. And that makes my. heart saying, I am happy to write my $1,100 every month because it's not $4,000 that I was paying at the last house. And if you don't like me because I have a small house, A, you're not a true friend. And B, I don't care. I'm going to be laughing while I'm sipping margaritas on the beach and you're still at work when you're 65 because you have to have this big house so everybody thinks you're rich. I don't care if people think I'm rich. I actually, when I was looking for this house, I had given my real estate agent my price limit of like 250, I think. And there was another house that had come up that was $500,000.

Starting point is 00:56:17 And I asked her if we could see that. And she said, can you afford that? And I was like, yes, mission accomplished. And then once we finally moved into this dumpy little house, my neighbor across the street was congratulating me on my purchase as though it was my first house. She's like, oh, good for you. I'm so proud of you or something like that. I'm like, thanks.

Starting point is 00:56:37 This is the cheapest house I ever. bought. Yep. Yeah. I think that, like, I live in 700 square feet with my girlfriend. And if it gets too crowded in there, that's too small. Because I got too much stuff. Right. And that's a huge barrier of freedom. Like, there's, you know, the point of accumulating items in today's world, you know, today's age, other than like the things you kind of need to be happy, it seems so irrelevant to me. It just seems like it's just a constraint on your life. It locks you to one place. It forces you to purchase more and more square footage. It's expensive to maintain. And it's difficult to part with. And I think that that's one of the big things is like, take a look at all the stuff you have, right?

Starting point is 00:57:20 I mean, we've had guests in the show who've commented. You know, I didn't even go into a room in my house in the last year. And it was time to make a change. So I think I think that there's, understand what it is that you need from the comes to your housing and understand that that can be the biggest thing that's holding you back. So Anthony Angaro from episode 48 talks about minimalism. And what you just said is so like, it's like you're reading my mind. I have too much stuff. I have way too much stuff.

Starting point is 00:57:51 I need to get rid of it. I am ending the first month of a minimalism challenge where day one you get rid of one thing, day two you get rid of two things, et cetera. So I have gotten rid of 496 items in my house, which sounds like a lot. I bet you couldn't even notice. So in February, I'll be doing it again and probably in April. And I think every other month I'm just going to do it and continue to get rid of all these things in my house that I don't need. I don't use. And I won't miss. Yeah. And think about how liberating it is to have to get rid of all. that stuff and then have a house that's ready to go, for example, for Airbnb. You can take off for a month

Starting point is 00:58:35 and pay for that whole trip for free, right? You can rent out a space commercially like Anthony did, right? You know, there's so many different applications to your residents that are being taken up by your items that are limiting your ability to move toward financial freedom, not just because you can't downsize, but because you can't repurpose any part of your house to be used. You know, if all your assets are in one house, an equity in one house, you're in a really bad, position to enjoy any of the freedoms that you've heard the guests in the show talk about. Let's move on to transportation. Oh, Craig Curlop in episode 35 has such a great story.

Starting point is 00:59:11 He also bought a car that he didn't really need. I think, did he buy it new? I think he bought it new. And he rented it out on a site called Turo where you can rent your car to regular old people and they would use you instead of using a rental car company. And he was making so much money on this car every month. And then when the car got totaled by one of the people who was driving it, renting it, Turo paid him more than he bought the car for when they totaled it out.

Starting point is 00:59:49 Yeah. I mean, I mean, that's like I would say that Craig takes this to its logic, takes the, you know, transportation question, the expense, transportation expense question to its logical extreme, right? You buy a car. Rather than having it cost you nothing or cost a little as possible, you actually turn it into an asset that can produce income by renting it out. And then he would, he would rents his car out and he'd bike to work.

Starting point is 01:00:14 So it's as low a cost or negative cost as you can possibly get in terms of your transportation. Now, that's not repeatable for everyone. But it's an example of the best way possible. The worst way possible, the hardest way, you want to make this a really big challenge for yourself to move toward financial freedom is buy a new F-350 jacked-up red, shiny red 2019 pickup truck, right? And drive that both ways to work in your flat city that most of the time doesn't have any snow or ice on it, right? So between those two extremes, there's a there's a reasonable middle ground, I think, for how you can kind of move,

Starting point is 01:00:53 get yourself to and from work. So my approach and I could have been more efficient is I own a Toyota Corolla. I bought it brand new in 2013. It's 2014. So I brought a December 2013 is when the new models come out. So I bought a 2014 Toyota Corolla. And I actually just paid it off in November of 2018. Right.

Starting point is 01:01:12 And if I got to go back again, if I was buying a new car right now, I'd probably buy something like a Toyota Corolla. That's from 2014, 5 to 7 years old. Because I think to me seems like it has a good tradeoff between economics and longevity for the car. Yes, I have a Honda element that I bought brand new in 2003 and will drive until it's dead. And a Mazda 5 that I bought in 2010 brand new, that I will also drive until it's dead. But those are the only two cars I've ever bought brand new. I will probably never buy another brand new car.

Starting point is 01:01:47 Yep. All right. So let's move on to child care and health care. So let's talk about child care first. So what are some of the big takeaways you've seen from guests who are. tackling the child care problem. Some of the big tapeways I've seen is that there's no easy solution. There is no magic button.

Starting point is 01:02:02 There is no, oh, I want to have a baby and go back to work and pay a dollar an hour for childcare. It doesn't happen. What I have seen is couples splitting shifts. So one of them works the morning. One of them works in the afternoon. And they take care of the kids when they're not working. I've seen relatives, the solution with Jamila Sufront.

Starting point is 01:02:24 her aunt moved in to help her take care of her kids. Alyssa Perros from episode 29. Her mother-in-law takes the baby one day a week. Her mother takes the baby one day a week. And then the other three days a week, the baby goes to, or two days a week, the baby goes to an inexpensive daycare. And then one day a week, she works from home. So, but there is no easy solution.

Starting point is 01:02:48 There's no, oh, go to Bob's daycare and it's only, you know, it's free. It's going to take some work. My husband and I, when we had our children, I wanted to be a stay-at-home mom. That's another viable solution. But you're losing the one salary. Now, are we really losing a salary? I wasn't making very much money. It was going to actually cost more money for me to put my child into daycare than it

Starting point is 01:03:12 would for me to stay home. I would be paying. I would be working and also using some of his salary to pay for child care. And that just doesn't make any sense to me. but I had always wanted to be a stay-at-home mom, and we made those financial choices ahead of time. We didn't take the vacation every year. We didn't buy the new house every year in the brand-new car and all this stuff. We lived very frugally so that we could take time away from my work.

Starting point is 01:03:36 Yeah. I mean, it seems like, I think that's a pretty accurate summary of the problems that people are facing with it. You know, if one spouse earns significantly more than the other and the other spouse, like in your case, it's just not economical. You know, it can be effectively significantly less than minimum wage to, if you look at the tradeoffs to work and then pay for child care versus stay at home. If child care is $20,000 a year, right, which it can be in some of these markets, and you're working for $35, you know, $24,000 a year, $2,000 a month, right? And you're making $40,000, right?

Starting point is 01:04:12 You know, after tax, you know, that's $35. It's $11,000 a year. That comes out to $5.50 an hour. A rational person can say that. That is not a worthwhile tradeoff. One spouse got to stay home, right? The other part of this is it's expensive to move away from family, right? We're noticing a lot of folks, we had someone in one of the early episodes that lives in Pennsylvania.

Starting point is 01:04:35 What was their names? Alyssa Peros, episode number 29. Yeah. So it's like a lesson here is it's expensive to move away from your family. So if you live in a major city that's far away from where. maybe your parents or your spouse's parents live or any other relatives, then there's no ability to leverage that family thing to take care of situations when there's an emergency, right? Every time something comes up, you have to hire a babysitter or figure something out.

Starting point is 01:05:05 You know, you don't have that option of maybe one day a week or even two days a week of your parents or your spouse's parents coming in and watching the kids. And that's a tradeoff you have to understand and kind of come to terms with, hey, the income or the career potential of wherever you are, had better be pretty significantly, you know, significantly in your favor if you're going to walk away from some of the advantages of being around your family.

Starting point is 01:05:28 Right. And my income potential was, that was a dead end job that I was in. There was no significant improvement. There were several years I didn't get a raise because the company was doing poorly. So it was very easy for me to walk away. But also, and I do want to point out

Starting point is 01:05:46 because there are some women who really do want to have a career. I didn't have a career. I had a job. It was very easy to walk away from my job. It wasn't anything that made my heart sing. And I did want to spend time with my kids. I wanted to raise them.

Starting point is 01:06:03 I didn't want to put them in daycare. And we could afford it. So that's what we did. It was not, I mean, we weren't even doing anything with my salary anyway. We were just funding the 401ks. That's how much money I was making. And then the last takeaway, way I have is, you know, from my perspective, selfishly, like, what am I learning from all this?

Starting point is 01:06:21 Well, it's built some passive income and create as a state of a retirement level of wealth as early in life as possible. Because I will not have to deal with these problems. And that's my privilege from having house hacked early in my 20s and build some things up, is if I decide to have kids, then I can potentially make that choice and either decide, hey, I'll use some passive income to pay for child care or stay home or create a child. where my spouse could stay home. Yeah.

Starting point is 01:06:49 And I don't think that privilege is the right word. You made sacrifices in your 20s so that you can have the life that you're living now. You're still in your 20s. So you made sacrifices in your early 20s. And how long did it take you to sacrifice? You had a year of house hacking with your friend. And then you had another year of house hacking with, is he your best friend? I sacrificed everything but the fun.

Starting point is 01:07:14 So, but yeah, but that's the point. The point is that if you can take care of these, if you can really apply the pressure intelligently early in life, then a lot of these problems aren't problems later. And that's what I'm, you know, I'm hoping to share with some of the younger listeners as well, is, hey, if you can do that, you know, it gives you a big advantage when you are making these tough choices,

Starting point is 01:07:36 raising a family. Right. And how much of a sacrifice was it to buy a property slightly outside of the hot area of town and live with your friend. No, I mean, look, I definitely agree with you. I wouldn't be recording a podcast telling people how to handle their money if I didn't believe in what I was talking about and think it worked. But yeah, I mean, I think it absolutely is worth the tradeoff.

Starting point is 01:08:00 It's not that big a deal. And it provides immense opportunity down the road getting into this first few assets, for sure. Let's move on to health care. So health care has actually been the pleasant surprise for me. from this year of podcast recordings, right? It seems like this insurmountable hurdle. But really what we, I think my big takeaway from a healthcare perspective is that healthcare

Starting point is 01:08:22 is extremely expensive if you have a very high income. So if you are, for example, going to retire and live off of passive income less than $30,000, $40,000 a year, there's a lot of options out there through various government programs that are currently allowing you to get pretty good reasonable health care at a low rate. Veterans have a big advantage. If you're looking to achieve financial freedom, you have a military background, you have a huge leg up on the rest of the competition because you have the VA. If you're looking to travel around the world, healthcare is a non-existent issue. Yeah. Yeah. So we do record our episodes in advance. And in two weeks, we're releasing an episode number 55 with Christy and Bryce from

Starting point is 01:09:08 Millennial Revolution. And they go into detail about how they fund their health care. And it's nothing. What is it like $25 a month or something like that? It's so low cost if they're outside of America. When you're inside America, that's when health care kind of shifts and changes. Yeah. So if you do want to travel the world, it's actually quite cost effective to do so. It seems like perhaps one of the best things you can do to move to our financial freedom is build up your asset base, buy a house or house hack, and then put it on Airbnb and travel the world because you could do it for way less than you expect every single time is what

Starting point is 01:09:46 we've kind of heard time and again from the folks who are doing that. And then there's a couple of other programs as well with for healthcare where we heard one from PT Money. He joined a co-op. Is that right? The health share. I'll share. Yes. And PT money was episode number 38. He shares his health costs with a lot of other people. The way that this health share works, his has a religious component to it. I think you need a letter from your pastor, your church pastor that says that you're a Christian, you're a member of a Christian church. But everybody kind of pools there. You pay your premium and it just goes into a pool. And then most of the time you're not. not sick, but when you have a bill, you submit it to them and they pay it for you. And I mean, that's an oversimplification of it. But there's no, they cover preexisting conditions, don't they?

Starting point is 01:10:43 I think the first year they don't. I can't recall all the details on the specifics of it. But I think the bigger point is to know that it's an option. Yes, it's an option and it's a much lower cost option. Yeah. So I think a lot of people struggle with this problem. This is not just early retirees. this is the problem that the self-employed face, you know, entrepreneurs face, right?

Starting point is 01:11:05 This is an issue that comes up time and again, and there are plenty of solutions out there. The most expensive one seems to be to earn a high income and live in the United States. So if you're attempting to do that, then you know you're going to pay a lot for health care, but hopefully you can supplement your, you know, still work toward building wealth and maintaining a strong financial position because you're earning a high income and spending less in other areas. One other episode I want to mention simply because it was just a fabulous episode is the episode with the mad scientist. That was episode number 18 that he talks about the HSA as the ultimate retirement account. And the HSA is the health savings account.

Starting point is 01:11:48 It is only available with a high deductible insurance plan. And a high deductible plan basically doesn't cover any expense until, like $15,000. So you basically have $15,000 deductible and then it kicks in. So it's more of a catastrophic plan. And when I say it doesn't cover any expense, I'm lying. It is, it covers well-child visits. It covers your annual exam for a woman and I believe an annual physical for a man.

Starting point is 01:12:18 But it doesn't cover anything with prescriptions or anything like that. However, if you are a otherwise healthy person, it's a great option. Love it. Yeah. I mean, one of the things you should do if you are interested in this is listen to our podcast and all the other ones on financial independence, retire early, and then teach people how to exercise and eat right and save this country a trillion dollars a year, whatever it is, in how we're spending to treat all of these completely preventable, avoidable diseases centered around overeating, obesity, lack of exercise, right? poor dietary intake, lack of sleep, right? Like, go solve that problem for us and bring all our healthcare problems, challenges down. So to summarize, like, our learnings on health care, you know, again, very expensive to have a high income and purchase your own health insurance in America.

Starting point is 01:13:15 And we don't really see very many ways around that, right? After you retire, if you reduce your taxable income through passive investments or with a low lifestyle expense, there are options that can reduce that cost dramatically. if you are a veteran, there's free health care, take advantage of that HSA plan. And if you want to travel outside the United States, you know, healthcare problems kind of cease to be material. And health care costs kind of cease to be material relative to your financial position if you're supporting an early early retirement. And then lastly, you know, why are these costs going up in the United States so much? Well, there's a variety of answers. But one thing that one action that you could potentially take is, you know, listen to this podcast, retire early, build up a personal financial position, and then go educate. the country here on how to prevent some of these diseases, you know, how to live, how to eat reasonably, how to exercise, how to, you know, get vaccinated and prevent the spread of easily treatable or easily preventable illnesses that are a result of people not vaccinating. That kind of thing might be really big help, might be a really worthwhile exercise to pursue,

Starting point is 01:14:17 even though you're supposed to be technically retired, right? Internet retirement, police will come after you. But yeah, I mean, that's the, yeah, the. Yeah, the answer is there are no easy answers for a lot of these, but there are answers and people are solving them and they're not insurmountable and they are repeatable these solutions that people are bringing to the table. Yeah, there's definitely a solution for every problem that you have. All right. Okay. Before we leave here, I just want to say to everybody who's listening to this episode, as you start the new year, whether you're just discovering this podcast or you've listened to every single episode, start tracking your spending. make it a game that you and your spouse play.

Starting point is 01:14:58 How little can I spend today? How little can I spend this week? And give yourself a reward. Your normal spending is $3,000 a month and you can get it down to $2,800 and you can, you know, go out for ice cream or go for a big walk or go see a movie or, you know, do something that you don't normally do to reward yourself for, you know, making a gain. And every month try to get a little bit better. Yeah, absolutely.

Starting point is 01:15:23 That is the number one tip, right? You're already self-educating if you've made it this far through the podcast. So go track your spending and look at what you're spending, see if you can make a change. And I guarantee you there will be there will be opportunity for improvement that you can go after right away. Absolutely. Okay. Scott, shall we get out of here? All right.

Starting point is 01:15:44 Before we leave, we're going to walk out of here with a couple of Christmas puns. We didn't get to do them last week because we didn't play it ahead. So we're doing them now. Congratulations. All right. My girlfriend, she's an English teacher, so she likes this one. What do you call Santa's Little Helpers? What do you call Santa's little helpers?

Starting point is 01:16:00 Subordinate clauses. All right. Happy holidays. Merry Christmas. Happy Hanukkah. Whatever it is you celebrate, we wish you happy holidays and a happy new year. From episode 53 of the Bigger Pockets Money podcast, this is Scott Trench and Mindy Jensen saying, Happy New Year and we'll

Starting point is 01:16:22 We'll see you next year Ha ha ha

BiggerPockets Money Podcast - 53: 2018 Financial Freedom Lessons With Scott & Mindy

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