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BiggerPockets Money Podcast
The All Out Approach to Achieve FIRE in Your 30s (Median Income Earner)
01:10:14
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- [00:00]
A
Think you need a six figure salary to retire early? Think again. Today, Scott breaks down how a median income earner in their early 20s can achieve financial independence in their 30s with the right all out approach. And as a quick note, if you have a newly graduated person in your life, this episode is for them. Please share this episode with a young person in your life. Hello, hello, hello and welcome to the BiggerPockets Money Podcast. My name is Mindy Jensen and with me, as always, is my Set for Life co host, Scott Trent.
- [00:38]
B
Hey, Mindy, great to be here. Living the dream, right? Dominate life, money and the American Dream. I'm super excited for today's episode. This is going to be a presentation. This is a lot of the lessons from Set for Life packaged here for 2026. And it's hey, how does a median income earner? Let's create a Persona. This person who's 22 years old, just getting started in life, no assets, no debt, has the privileged position starting with a blank sl and that median income. How do we help them have a realistic shot to get set for life financially free by age 30? I think it's a fun challenge and we're going to be going through a detailed financial plan for that person today.
- [01:16]
A
Okay, Scott, we are going to call this particular person Joe.
- [01:21]
B
Yep, Joe is my, as my Persona, he's the average Joe. How do we help average Joe who's not starting from this particularly special position? Yes, it's more advantage than some, it's less advantage than others. How do we help him really crush it?
- [01:34]
A
Okay, Scott, before we jump into that, let's clarify the position that Joe is starting from.
- [01:40]
B
Yep. So Joe is 22 years old. He's a recent college graduate. He's fairly buff, as you can see here. And he makes about $62,000 in his first job out of college. His net worth is zero. He's got no debt, which is great, but he's also got no assets. And he's very ambitious. But I think even more than his ambition, he has this fear in the pit of his stomach, the fear of the cage of corporate life, of being in a cubicle or working a corpor corporate job building somebody else's business for the next 30, 40 years. And so because of that, he wants to achieve financial independence as early as he possibly can so that he has options like early retirement, world travel, starting a family from a position of financial strength, or maybe even going into business for himself at a fairly young age. So that's the motivation and starting position of Joe. Here we Will also in the future do versions of this for folks who do have a lot of debt or are starting in a tougher financial position, maybe making less, but this is the person we're starting with today. Hopefully you can get lessons from it and find it valuable even if you're not exactly in Joe's position or quite as buff as him.
- [02:42]
A
You know, Joe sounds a little bit like somebody else I know.
- [02:45]
B
I wasn't this buff, if that's what you're referring to.
- [02:48]
A
Scott, I've known you for 10 years. You have always been very buff.
- [02:54]
B
Well, thank you, Mindy. Sweat for Life is going to be the next book that'll be coming out with, right? So this journey, by the way, to financial dependence is going to be grounded in this concept of, of the shockingly simple math behind early retirement. Right? This is a famous blog post, Mr. Money Mustache. You should go read it. It's by the same title and he's produced this chart where it says your savings rate as a percentage of your take home pay is going to be the single most variable on the path to early retirement. If you have reasonable assumptions like 7% after inflation returns in a portfolio, for example, you can retire fairly quickly if you can bump your savings rate up. Many people save less than 5 or 10% of their income towards retirement and they will be working for 50 or 65 years in almost an entire lifetime. But if you can bump that up to 30, you shave, you know, almost 30 years off of the, the retirement, the time to retirement for someone who's saving 5%. And if you can bump that up to 50%, you can retire at 17 years. And if you can get to even higher numbers, you can really knock that number down to less than 10 years, which is where we're going to ultimately shoot for to help Joe retire early. Now the obvious problem here is there's a floor to how much you can spend and really enjoy life reasonably in America today. So his income, Joe's income will be the primary limiting factor in achieving early financial independence. But if we can keep our spending low and ramp that income, which we're going to talk about today, we can get there fairly quickly here. So the plan is going to optimize for spending as little as possible, increasing income as much as possible, and assuming average investment returns on accumulated savings. So that's going to be the groundings of this plan.
- [04:32]
A
So Scott, this shockingly simple math behind retirement is like straightforward math, doesn't lie math, maths out, you know, etc. But you gave a similar presentation to our co workers at Biggerpockets multiple years ago. And there was a comment from one of them that really stuck in my mind. And this person said, but I'm young now. I want to live it up. I want to, you know, enjoy my time. I'll think about retirement later. How can we help Joe reframe that thinking so that he is setting himself up for life without really hurting his current lifestyle?
- [05:15]
B
One of the core challenges with American household spending is that housing, transportation and food eat up essentially two thirds of the average American household budget. And this is not the fun stuff, right? This is not actually having fun for a, someone in their early twenties, in my opinion. I think that the, the more fun stuff is going to be the entertainment sector, maybe, maybe in a portion of this transportation sector where you're having fun, some going out and eating, you know, but, but these areas, these smaller slices of the spending pie are really where a lot of life is lived. And if you can just control the costs for where you put your head at night, what you drive, or how you get around on a day to day basis and make most of your food most of the time when it doesn't matter, like packing a lunch to work, making your own breakfast, making your own dinner when you're not going out with friends, for example, you can really get ahead. You can make major progress over the average American. And when I was in my early 20s, that's what I did. I lived with roommates the entire time. I drove a Corolla, paid off Toyota Corolla, and I made most of my food most of the time. And that allowed me to spend more time than the average household on entertainment, fun, alcohol, carrying on downtown and frolicking around Denver. And so I think that that's what life has actually lived for a lot of people is in those discretionary spending categories. And I'd actually encourage you spend a little more in those categories than the average. Just control the big three. So that's going to be the big one there. And I don't think I missed out on much of life at all. I think I had just as much fun as friends who spent twice or even more than what I was spending at that point in time.
- [06:57]
A
Scott I want to call attention to our past episode number six, going in the Wayback Machine, where Sarah Wilson paid off $30,000 in debt in three years. And the way she did it was by not going out and spending money. She was really hyper focused on paying off this debt because she was also only making $30,000 a year. @ that time. And one of the things she did was have friends over, have like potlucks at her house. So she's still getting the social aspect while not see spending the money. So I, I thought that was a really interesting way for a younger person to be thinking about her debt and thinking about her debt payoff. And I just want to encourage people, yes, go out and have fun. But also not everything has to be a spend money on it endeavor.
- [07:44]
B
Like another, another thing I like to ski, right? Well in Colorado an epic pass is like, was like 600 bucks at the time, right? And I got some, I got some new skis, some boots and I went all the time to go skiing. And it was just not, it was not an issue to not have fun during this period. Again, the cost centers are your housing, your transportation, your food. And what's we're going to talk about today. If you can control those big three and some other things, you can ramp your savings rate dramatically. Especially if you make a median income and begin really making compounding progress towards this goal of early financial freedom.
- [08:17]
A
Well, let's talk about this goal, Scott.
- [08:18]
B
All right. So the goal is to satisfy a mathematical equation, right? The equation is going to be your assets. Your asset base times the return it generates must be greater than or equal to the cost of your lifestyle. And you should be able to sustain this for the duration of your life, right? A good answer to this question for a well diversified portfolio is to accumulate 25 times your lifestyle expenses and you're financially free. So if you want to spend, you know, $40,000 a year, you need a million bucks. So what I think is really important about observing this equation is that the lifestyle expenses is the key variable for most people who want to become financially free. The lower your fixed costs for living are, the more wealth you accumulate, the faster you accumulate assets and the less total assets you need to retire early. I also want to call out that the game does not have to end when you hit a financial freedom number. Let's say that you accumulate a million bucks by 30. It's highly likely that you may continue to earn some kind of money on top of that and see that asset base grow. So once you satisfy this equation, you can often many people will find that their lifestyle actually begins to swell. They're able to spend 40, then 50, then 60, then 80, then $120,000 just off of their asset base as the years and decades go on. And you can really live a middle upper middle class or even fat fire lifestyle. Eventually at some point in your life. If you achieve fire early in life, it's not a, you're not bound to frugality forever. It is just the most important thing to get started on the journey in terms of the mathematics. So that's the goal. The core principles to achieve this goal that we're going to focus on are going to be five areas. There's going to be frugality. The wealth creation journey begins with controlling expenses. Then we're going to talk about scaling income. There are two kind of core maneuvers we're going to do to scale income and really ramp that savings rate after we control our base level expenses. Those are your career and then a special type of housing decision called a housing house hack or live in flip. We're going to talk about a aggressive growth style investment portfolio. We're going to talk about the process, the financial model that guarantees or comes as close as to a guarantee as you're going to get in the world of finance to helping you get rich. But we're also going to layer on events, the side bets, the side hustles, the real estate investments, the business opportunities, the career opportunities that you pursue that have a chance to propel your journey forward much faster than the base case financial plan. So those are the five principles that I think are most important for someone in this position if they want to get ahead quickly. All right, want to cut your expenses in half, your biggest ones. Stay tuned. We're going to be breaking down house hacking strategies right after this. Finances can be messy and confusing and it's a lot of work for many of us just to get to the starting point in personal finance, which is understanding what you've got and where your money's going. That's why Virginia, my wife and I use Monarch Money as our personal financial command center for our bank accounts, credit cards, investment portfolio and as our budgeting and spending tracker. Monarch automates everything. It's all linked and every transaction is automatically categorized into each category of spending. In just a few minutes a month. I have a complete picture of where every dollar is being spent and I have a real time net worth statement. I've recommended and personally used Monarch Money for years. I am thrilled and proud to be sponsored by and partnered with Monarch Money here at BiggerPockets Money. Bigger Pockets Money listener get 50% off their first year, which is usually 99 bucks with the code POCKETS@monimalmoney.com that's monarchmoney.com with the code pockets.
- [12:01]
A
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- [12:05]
B
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- [12:08]
A
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- [12:18]
B
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- [12:26]
A
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- [12:33]
B
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- [12:50]
A
Let's jump back in. I think that it's important to remember this is for Joe. Joe's in his early 20s. Joe's superpower is his timeline. He has so much time for his wealth to be growing and his like sub superpower is the fact that he is most likely not married. He is most likely does not have kids. So he's got the freedom to work a little extra, do some side hustles, do this house hack because he doesn't have to worry about like who he's living with. He's you know, just some guy living with some other people and having this ability to be so flexible is, I mean maybe that's like a co superpower. I'm not going to say sub superpower. I'm going to say co superpower.
- [13:41]
B
Absolutely. Those advantages are remarkable, right? Because Joe, we want to optimize for getting to this position as early as possible so we can take risks that are very lopsided, that have low, low downside, just a dilution of time, but have the potential to really ramp things forward. We can be very aggressive because if things don't work out and things go a little slower, Joe will might retire at 35 instead of 30. And that's, that's much lower stakes than for example, we did another one of these for a woman named Barb who was 50 and divorced and lacking a skill set. Now there's really big time pressure because the peak earning years are surely in the next 10 or 15 and there's not a 30 or 40 year horizon. Joe can fail many, many times on this journey and succeed one time and win. And these are huge advantages and we're going to, we're going to maximize those with this particular plan. Here is the simplified plan. We're going to go into detail in each section of this though, we're going to lump this journey into three phases. The accumulation of the first $25,000 which is the hardest part of the journey. Then we're going to get to talk about going from 25,000 to $100,000. Then we're going to talk about building a million bucks in net worth. And from there, the opportunities will magnify and compound geometrically and Joe can really will be able to chart his own course. Surely by the time he reaches a million dollars in net worth, the first $25,000. I don't have a lot of great answers or cheat codes or shortcuts here. We're going to cost cut our way to that first $25,000 and we're going to do it in a year. And I'm going to talk about the aggressive way to do that. As we start accumulating that wealth, we can begin deploying that first $25,000 into a couple of really meaningful lifestyle investments. One is going to be a house hack, going to be into a career pivot that allows us for upside. One of the fundamental problems Joe will run into is that in much of corporate America, a career progression is you start at $62,000, then you get a raise two years later to $70,000. Then you get, you know, a 3% inflation adjustment, cost of living adjustment if you're lucky, and then you get another 7 to 10% raise after two years of getting promoted. And that's just too slow. It's just way too slow for our purposes here. Joe needs to have a plan that could work, that could propel his income further much faster. And that generally means a career pivot to something that is going to pay very well for an in demand skill, to something that pays commissions like a sales type of career, to joining a small business or startup that has the equity potential to grow. At some point, we're gonna have to use that base, that base of cash to take those opportunities. And those opportunities often come at the cost of the highest possible base salary in the marketplace. And then the last part of this, go from 100,000 to a million. We're going to layer in two parts of our plan. We're going to have a crystal clear financial model that maps out the likely income and expenses over the next couple of years, assumes a conservative rate of return for our expenses, and guarantees us that we will build wealth if we are consistent in applying it. And we're also going to layer in a bunch of side bets that had the potential to drastically accelerate that plan. I have some favorites in there, but those are just thought starters. Joe will self educate and read a bajillion books, so he's going to find even better bets over the course of his journey than what we're going to talk about here.
- [16:56]
A
So Scott, I want to point out that in years two through five, they this Joe will simultaneously house hack, invest, job hop and look for scalable income. We have two episodes that talk about job hopping and the exponential income growth that can come from job hopping. I'm going to say right now as we're recording this on September 30, 2025, the job market is not as amazing as it used to be, but this is information for the future. The new job budget is always higher than the job retention budget. So job hopping is a really excellent way to dramatically increase your income. Episode 97 Where We Talked with financial mechan. She detailed exactly how she job hopped her way to, I think two or two and a half times her original income. And a purple Life on episode 110 also talked about how she job hopped her way to significantly increasing her income. Like neither one of them took additional courses or got additional degrees. They just change jobs so that like, don't underestimate the power of job hopping.
- [18:14]
B
Yeah, and this is not saying job hop for job hopping sake. This is understanding that if your goal is to become financially free early in life and you are a entry level marketing professional at, you know, a Fortune 500 company, the game cannot be won. You cannot win on income alone with that career path. And so you must pivot to something that can win, you can win over eventually. But you're not gonna, you're not gonna get there by 30 unless something goes unbelievably well with your side business or real estate or whatever it is. But that's what more what I'm saying is that is Joe is going to pivot to a career that could win at some point. And that may take one, it may take three, it may take no job hops from where he's at currently, but he's going to be open to it because he's built that base of cash. So let's get into the plan, right? Let's go into detail on this first. $25,000, right? Again, this is the hardest, right? Most people never get over this hump and they never build the liquidity early in life. And so they just fall into something and they sit there for, for decades. And that's we're trying to avoid here for Joe to do this. Like I mentioned earlier, we're going to control the big three. Housing, transportation, and food. Right? This is a financial analysis. It's remarkably easy. This is average household spending for one person. Households. This is two years from two years ago. The new data will be released in the end of 2026 for the survey here. So we'll have to be able to update that. You can adjust this up a little bit, but it's about $43,000 per year that the average one person household in America spends per year. Which of course Joe will be in there, right? And the themes here are house, housing. Joe, just live like a college student for a few more years. Get a roommate. You can get a room in Denver, Colorado for 700 to 1,000 bucks, depending on how nice you want it to be in a nice spot, right? No issue there. This is not. Housing does not have to be the killer for your financials if you get a roommate. Too many people ignore that they want to live alone, you want to live alone. You won't be getting financially free anytime soon. That's totally fine. But if you want to become financially free, get a roommate at least for that first few years. Your car. Purchase something that's 8 to 12 years old, an economy vehicle or even better, go without a car entirely and bike or walk to work. Many cities around the country are very bikable. I did this for years here in Denver personally. Food. Prepare most of your meals most of the time with healthy food purchased from reasonable grocery stores, right? It's that simple. Don't forego eating out with friends or having, you know, or spending time and nurturing relationships. But don't be ordering takeout on your own and don't go out to eat alone. Don't go to the, you know, the breakfast spot in the morning before work. Just make those at home and you're going to be so far ahead and you're not going to miss out on life for insurance. This is a nuance for the 22 year old. Joe will only be paying for insurance for transportation and health care. Most likely we do not need this $4,000 a month expenditure on personal insurance and pensions that the average American household does because Joe has no dependents at 22, so he needs at most a very simple life insurance policy to cover funeral costs if he should pass away in an untimely manner. But even I didn't even have that when I was 22 through 20, 26, 27 when I, when I guess when I got married, my 30s.
- [21:24]
A
With regards to insurance, you are saying here, use high deductible plans for insurance policies. I want to give Joe a little bit of a caveat with that. If your high deductible plan on your car is a $5,000 deductible and you don't have $5,000, maybe go with the lower deductible while you're saving that up. That's the kind of thing that could really derail your finances. If all of a sudden, like maybe biking isn't an option for him, he's too his job or it's too cold or whatever and he does need a vehicle. Having a high deductible plan, having an accident and then not being able to replace the car because you don't have the $5,000 or fix the car if it's not total could be an issue. So ease yourself into these high deductible plans, but definitely go into these insurance policies with the idea that you are going to raise it to a high deductible plan just because once you have that, that, that deductible, the equivalent of the deductible sitting there in your emergency fund or sitting there in your high deductible fund, that's going to give you a lot more freedom and your monthly outlay is going to be a lot less.
- [22:37]
B
I'll disagree with you very respectfully here. Right. So if this was presentation for Sam, who wants to, you know, do all the right things and get set up to fund his retirement accounts by 65, I totally agree with you. But Joe is not messing around. Joe is going to get financially free by 30, come hell or high water, and he's going to figure it out, and that's why he's watching this. And Joe is going to save $30,000, 25, $30,000 in this first year or 2,500 bucks to $3,000 a month. And so that 5,000 a dollar deductible, even if he has to pay it in the first week and get super unlucky, he's going to pay it back in two months and get right back on the wagon moving forward. And these deductibles are not that high for someone who saves as much as Joe. So I'd say start out the gate and play the odds on this one. And if you get really unlucky, you get really unlucky. I did this right out the gate and I, I think that if you're serious about getting ahead and you're not going to just, you're not going to, you know, pretend like you're going to get, get ahead and you're going to actually cut your cost and accumulate real cold hard cash, then go with the high deductible plans.
- [23:32]
A
Agree to disagree. And Joe, now we've presented two different sides and Joe can choose which one he wants to do.
- [23:37]
B
There you go. And then for the fun budget, I'm going to double Joe's fun budget. I think that he can spend twice as much as the average American on entertainment. Joe's 22. Joe should enjoy life. Make sure he lives somewhere that he's enjoying where he lives, he's making friends, he's going out, he's enjoying, you know, traveling. If it's to the mountains or to the beach or whatever it is that is local to where he's doing that, he's taken full advantage of that. Because you're only in your 20s once and this is really where life has lived. It's not lived in a one bedroom solo apartment versus a master bedroom shared with two or three roommates for the first year.
- [24:09]
A
I will agree with that because exercising your spending muscle, learning to spend is something that has been very difficult for me. And I am still learning this because I have had a lifelong relationship with frugality and fairly extreme frugality like cheapness and it's unnecessary.
- [24:29]
B
Yeah, this is not blow 10 grand a year on, you know, nightclubs or whatever this is. Have good responsible fun going around and do what you need to do here with this. This is your unlimited natty light budget, not your grey goose budget. Ye the kids today don't even drink anymore, so whatever. So that's going to look like this, right? The average one person household is going to spend about $46,000 a year. I think Joe can do this on $30,000 a year. I did this on about seven or $8,000 less 10 years ago. But so this is very similar to what I was doing adjusted for inflation here in 2025, 2026. So you know, again that, that, that biggest cost difference between him and the average person is going to be housing because he's going to have roommates. Right? A roommate or roommates. The next biggest one is going to be transportation because he's going to drive a paid off Corolla from 10 years ago or a very cheap Corolla that has a very small loan for, you know, seven to $10,000. Then he's going to get, he's going to have a very cheap food budget because he's going to be making most of his food most of the time. And he's actually going to spend more on entertainment than the average American. I have everything else the same except for personal insurance and pensions where I'm going to have Joe spend very little because he has no dependents here at this point. And all of the, the additional savings can go into the bucket.
- [25:40]
A
$16,000 is amazing. And I want to like, calm down all the people who are like, there's no way you could do this. Okay, maybe it's not $116,000 that you're saving. Maybe it's only 14, maybe it's only 10, maybe it's only 8. It's still less than the average. And that money is going somewhere.
- [25:58]
B
Tell me it's impossible. I did this well.
- [26:00]
A
And that's the thing. Live like no one else now, so you can live like no one else later. To quote Uncle Dave. But also, this isn't impossible. This is absolutely possible if you do it on purpose. And it's absolutely possible to spend $46,603 of the average one person household and more if you aren't paying attention to your money. You need to be conscious of where your money's going and you don't have to track every single penny, although it's a great habit to get into. So you know where your money's going and it's going there on purpose, but you need to be conscious of where your money's going. That's the bottom line here.
- [26:40]
B
All right. Joe has the option and I encourage him to do this to supplement that frugality with side hustles or investments in his career. Growth, growth. So there's kind of two buckets. There's two themes that he can explore here, right? One is he can just work hourly, right? That's uber driving, bartending, freelance work, cleaning or landscaping work, tutoring, working events or seasonal projects or something like that. And this is where you're trading time for money to more quickly amass that initial, you know, fund. That's great. I encourage Joe to do that if he has a specific use case for cash that he's going to deploy strategically. But it's not good to spend huge chunks of your life working a job and then working a lower paying side hustle in an indefinite timeline just to get ahead. This is good. If you have a specific goal that you want to advance and you need that extra 2, 3, 4, 5,000 bucks. If Joe is very comfortable with his savings rate and wants to get play, do some more strategic side work that can actually make bigger lump progress towards his goals, then I'd encourage him to think a bit more broadly about, hey, can I take study for those 100 hours or whatever and get my real estate license? Can I get an insurance or lender or financial planning License while I'm working my job, Can I become a notary? Can I learn to design code or use AI to build websites and get a couple of projects there? Can I begin writing regularly producing content on some type of topic that I'm an expert in or that I'm willing to become an expert in so that as time progresses I have the option to do some sort of online creation or freelance work there that could actually pay me like an expert. And so I would encourage Joe to lean towards those more upside concepts but not dismiss the idea of ideas for hourly income. Especially if he wants to aggressively build out a buffer base of cash.
- [28:22]
A
I would encourage him to really consider that real estate license because you need some experience in order to be a real estate agent successfully so he can gain that experience while his friends are figuring out their life and then as they are ready to buy houses. Here's Joe with his real estate license and can start helping them out.
- [28:43]
B
Out. Okay. And at. You know, as Joe is accumulating this first $25,000, what I'm going to recommend he do, he does, is he just sticks that in his savings account. I'm recommending he does not invest that I'm recommending he does not max out his 401k. I'm recommending he doesn't put that in retirement accounts. The reason for that, and I know that's controversial, is I'm again I'm a fan of these retirement accounts. They're really powerful ways to build wealth. But again we're looking at the specific use case of a 22 year old who is hell bent on achieving financial independence early in life. And that when they're 23 with 20 books on business, having read 20 books on business and has 25, $30,000 in cold hard cash is going to be much more dangerous. They're going to be able to have much more opportunity than if that had gone into maxing out their retirement accounts. They're going to have much more optionality at that point in time. In a year or two, I'm going to say max out those retirement accounts and maybe do that for the rest of your life, for the rest of your career. So I'm not against retirement accounts. It's just for this first year for this very aggressive individual who wants to get ahead early, the optionality of that cash to buy real estate, house hacks, live and flip, start a business, buy a business or transition into a sales or commission role that has real, real high upside from an income perspective that's so much more Valuable than getting that head start in this scenario for that 401k. If this person was saying, I want to just begin investing now for a long term time horizon and I want to retire at 65, totally different advice. We're going to max out those accounts. So that's my caveat here. So if you agree with that order of operations in this situation, we're going to build up that thousand dollars buffer. We're going to pay off any bad debt. If we've got that, maybe excluding student loan debt, for example, we are going to take the free money in our 401k match. So if their employer offers a 5% match or three grand, I'm going to put three grand in my 401k and take the $3,000 match for my employer. Of course, if my employer offers some other form of free money, like my old employer used to offer a stock purchase plan where I could buy the Stock at a 15% discount and then sell it the next day as soon as I bought it for a 15% gain. That's a really. That's free money. I'm going to take that and I'm not really investing and I'm just delaying it for a little. Like I think it was one quarter. I would defer my money for one quarter. I'd buy all the stock, I'd sell it the next day and I get a 15% gain. Great. Like I'm going to do that before I build cash. There's not much in life that gets better than that from a return perspective. And then I'm just going to build that cash position to prepare for my first house hack or one of these really high potential opportunities. What do you think, Mindy?
- [31:10]
A
First of all, I think this is a great plan for this specific scenario where he wants to reach early financial freedom as quick as possible and be saving for his house hack. So step two, you say pay off bad debt. What does bad debt mean?
- [31:26]
B
Anything over 8% is an easy answer to that. Some very aggressive people might say it's over nine or ten, but you're somewhere in that range. Once you get over 8%, you got bad debt. All right, so we got our 25, maybe 30,000 bucks. Now we're going to be thinking about how do we move to part two, how do we move to $100,000? We are not going to be able to frugal our way. I love the fire community. I'm a part of the fire community. I think the world of this community. But there's a little bit of rigidity in the fire community about the textbook and the rules here. And a valid criticism that some people have of the fire community in my view is that they try to frugal their way to financial independence and it's just not efficient to focus on frugality for this extended period of time as the main driver. Frugality is important. We're going to keep our expenses low. But now it's time to layer in real bets on income generation and some side bets that can potentially move our, move our position forward much faster. And that's we're going to do here. Frugality is the first lever, but it is not the most important one over the long term. The most important one of the long term is income and the side bets that we make that can drastically propel our position forward.
- [32:32]
A
Yes. So I think that frugality gets, gets confused with being conscious about your money. And I would encourage Joe and everybody who is following the same path with Joe to just be aware of where your money's going. You don't have to be hyper frugal and you know, eat in all the time. Just consciously realize that I am going to eat out once a week or twice a week and then make a plan to only go out to restaurants once or twice a week. Whatever your plan is. I think that the, the frugality, especially in the beginning of the fire community, it got equated to being conscious where your money is going. So don't just spend willy nilly. It's so easy for money to fly out of your pocket when you're not paying attention. So you don't have to be frugal so much as just know where your money's going.
- [33:23]
B
And I'll even go so far as to say this. Frugality is not a virtue. Frugality is a lever on the financial journey. And once you start prescribing it to being a virtue, a part of your identity, I think that's where you've gone too far. And we're going to be frugal because freedom and optionality is so much more important than the stuff we buy. But the goal is not to be frugal forever. The goal is to live the best life that we can. And this is we're pursuing financial independence to live the best life that we can. With that said, the largest expense in Joe's life still, even with roommates, is going to be housing. If we can eliminate the housing expense and get that cost to zero or very close to it, it we can dramatically accelerate our wealth accumulation for the next several years. And the way to do that is with this special type of purchase called the house hack. Right? The house hack is simply buying a house with extra bedrooms or a duplex or a triplex or quadplex, a two to four unit property and renting out the other units or bedrooms. And you're living the exact same lifestyle, right? You're renting, you're living with roommates before, now you're still living with roommates or tenants. They're just paying you the money and that can offset or entirely pay for the mortgage costs plus some. This was very hard to do with a positive spread for the last couple of years and in the latest couple of months in some markets like here in Denver, that's begun to really open up to my observation where you can actually I think live for free again if you make a really smart purchase and look hard. This is a big decision. Joe is not going to just buy a random house and live in it. Joe is going to become an expert as a real estate investor, read a bunch of books, meet with a bunch of agents, look at a bunch of properties and make a very calculated decision for this house hack. A property that he's not going to mind living in, that's going to has a very good shot at providing more rent than the mortgage and other costs to manage the property. He's not going to forget about things like vacancy expense or maintenance or capex. He's not going to forget about taxes, insurance as part of the P and I payment but he's going to, he's going to make those decisions. He's going to buy one of the very best properties in his area and that property is going to make make sense as a long term rental. After he moves out of that property, he's going to have, he's going to take this house, live for free and in a few years have a cash flowing real estate investment and do something. A very high probability. If that's not possible then Joe's going to cheat. So like let's say he's in a very high cost living area on the west coast for example. Well, a lot of those areas have very stringent short term rental laws where only the people who live in properties can rent them out. That's a huge cheat code for someone like Joe who's willing to be creative and find that opportunity to buy in there. He's going to put himself in position to buy a house hack in whatever market that he's living in. He's going to save up Cash to make sure that he has that, that optionality. He's going to fix up the place or be willing to do some of that work and he's going to put himself in a position to live for free. Another option here or spin on this is called the Live in Flip. So let's say that it doesn't really make quite as much sense to buy a rental rental in a certain area. Well, Joe can buy a property that needs a lot of work and over the next one to two years fix that up on his nights and weekends. That's his side hustle now. And then at the end of those two years, he can sell that property for a gain. And for many people, the entirety of that cap gain in Joe's case as a single individual up to $250,000 can be tax free as long as he's lived in it for two of the last five years when he sells it.
- [36:43]
A
Yeah, Scott, I want to make a couple of points. I want to just highlight what you said before. He is going to buy buy the best property in his area that he can. It is difficult to entice people to live in your house when it is a super dump. You're also not going to make as much money in rent as you could if you were in a better location or you were not in such a great location. Like don't buy the house next to the gas station, don't buy the house on the busy street. Buy the house that you can consistently rent out because you don't want vacancy. You want want rent money every month. And with regards to the Live in Flip, know your limitations on the projects that you can do. But you can combine the house hack and the live in Flip where you have a rental that needs a little bit of work or even needs a lot of work but is still habitable. And then you rent it out to people that are handy and you ask them to help you with these projects and you pay them. You don't take it off the rent. You want to receive the rent and then pay for the projects. And the reason you want to do this is your Live in Flip is tax free. If you live in there for two of the last five years, up to $250,000. But your expenses count towards your cost basis. So if you are paying somebody to do the work, then that's an expense that you can take. So maybe you hit a amazing real estate market and you have $350,000 in gains. You would be paying taxes on that $100,000. But in $100,000 to make the house the way it is, then that's reducing, and now you're paying no capital gains.
- [38:27]
B
This is not a move everyone can make, but it's a move that Joe should be asking, how do I make this work? Because unless Joe has some superstar career opportunity, like if you're an investment banker and you have a path to making a million bucks a year, don't house hack. Right? Focus on making a million bucks a year, and you're probably very expensive. Market lift close to the office, which is going to be really expensive in downtown Manhattan or LA or wherever you are, and go after that. But for the median income earner who is trying to figure out ways to get ahead here, this is going to be an incredibly powerful move. And Joe needs to figure out how to put himself in position to take advantage of, to turn his housing, which is his biggest anchor on his journey to financial independence, to his biggest propellant on the journey to financial independence. There's a lot of ways to do this. The simplest is buying a, a multifamily property and offsetting most or all of the mortgage payment if you can. But if that's not feasible, we got to get creative, right? The answer is, how do I do this? And if the, if the answer is I live in San Francisco, Louisiana, New York, or someplace where this is totally out of reach for now, then you better be having paths to make a lot more money in those areas if you want to get financially independent. Because that's the advantage of those places is they have better income opportunities so you don't have to house hack. Pursue those. If you can make 300 grand a year in San Francisco or whatever within the next couple of years, then that's worth the opportunity cost of not being able to house hack. Just rent somewhere cheap with roommates. But, but this is, this is a path for much of the country that's very powerful. Aside from house hacking, Joe is going to dramatically improve his skill set, right? In the end. We've talked about frugality, we've talked about house hacking, but it's. Your journey is going to boil down to your. How much income you can generate. There's no guarantees for how to, how to increase your income. Let's start with that, right? When you control your spending and you don't buy a $15 beer at the ball game, you guarantee that you've saved 15 bucks. It's a guarantee, right? You just know you're going to keep it. There is no guarantee for how to increase income that I'M aware of. These are only probabilistic bets that we're going to make. The best probabilistic bet to increase your income is to become more knowledgeable. Joe should read a book book every single week. Just plop it in audible on an earbud in audible, put it at one and a half, two times speed and consume a book on business. Then one on personal finance, then one on self development and goal setting, then one on economic theory, then one on psychology, then one on how to have a good conversation, then read how to win friends and influence people. Just go after it one after another. You read 25 or 50 books and you work hard at your job, you will get promotions and raises and you will get opportunities and you will see the answers, right? If you read five books on management, you're going to be more knowledgeable than most managers are on how to manage people. And that's going to shine through eventually for you. May take you a little longer than you want, it may go rapidly. But this is a cheat code to getting ahead in the workplace. The next is going to be Networking opportunities are created when you network. There's no opportunity that's going to present itself if you're at home playing video games on Tuesday night, right? Drinking two beers, three beers, whatever it is, right? The opportunity is going to be presented when you go to the happy hour for the Denver start startup or whatever it is, right? Or when you go out there and, and ask some, you know, ask a colleague out for coffee and, and ask them about their career and the history of this particular division of the business. You do that enough times, 70, 80% of them are going to be a complete waste. They're not going to go anywhere. The other 20% are going to provide weird opportunities for you that you wouldn't have foreseen otherwise. But you have to keep putting yourself out there over and over and over and over again asking how you can add value to people and eventually that comes back to you you in unpredictable ways. And the last is going to be intentional skill development, right? It's not enough to just passively absorb information and network. You also got to develop some hard skills that do translate. Like think about this as your toolkit, right? When I was CEO of BiggerPockets, I thought about my CEO toolkit. What is a strategic plan? What does a board deck look like? What does a delegation of authority who makes what decisions look like? What is a good performance management process including a performance review? You look like. But Joe should develop the skills that are relevant to his world, whether that's learning a new, a new programming language, whether that's getting one of those licenses we talked about earlier. There's got to be some process on a reasonable periodic basis of developing these hard skills. You do those three things, your income will increase and it will increase much, much faster than the average person's.
- [42:47]
A
I think this is great. I want to encourage Joe to talk to his boss, have some convers with your manager about what it is they're looking for and how you can get promoted because nobody else is doing this. First of all, your boss is going to give you an idea of what it is you're supposed to be doing. It might not be what you think you're supposed to be doing. Just having that knowledge is going to help him when it comes time for a review. But also, Joe, keep track of all of your accomplishments. It feels a little braggy to like keep a spreadsheet or like a scorecard. Oh, I did this, I did this. Keep track of that. And anytime anybody emails you, hey, Joe, well, job well done. Thank you so much. You were so helpful. Whatever. Put that into a folder in your email inbox. That's called bragging or, you know, praise or whatever it is you want to call it so that you can have those at your fingertips for your review even a little bit early. Give that to your boss in advance so they are aware of how great all the other people in your company think you are. So that when it comes time to give you a raise, give you a review, they're giving you great reviews and they're giving you the top amount of the raise that they can.
- [44:06]
B
Can you imagine Joe, who's like pretty aggressive about his finances, buying a Corolla, right. And not knowing whether the corolla was worth $7,000 or for $18,000 for the 10 year old maker model? Right. It's just, it's a preposterous consideration. He'd never pay $18,000 for that vehicle. He'd pay much closer to the seven or $8,000 number for that vehicle. Right. Joe is going to get that sophisticated and that clear on what his compensation should be for the job he's doing. Right? Like it's that simple. And you just update this very regularly. This is your asset. So if you are a financial analyst and you are doing a certain type of work, you should know when and where you're ready for financial analyst too, or finance manager, or finance director, whatever that is. And you should have that very clearly defined in your head and be clear about what is needed from your boss to get there. And then you need to make a rational assessment. Is my boss going to give me that in a realistic timeline that I think is fair, or should I go looking for an opportunity that will. That's it. You're going to do that at all times. And you're going to get there much faster than most people because you're reading all these books and developing the hard skills at that pace. Now, the other thing that's going to happen here is at some point, for a lot of Joes, you're going to, you're going to sit there and you're going to be like, well, the Fortune 500 company I work at just ain't going to promote me to finance director, even though I clearly have the skill set of finance director because I'm a financial analyst one and I'm one year out of college, just not going to do it. It would be ridiculous. It would kind of disrupt the culture there. It would make a lot of people angry or whatever. So you're going to have to consider, how can I apply that skill set to something that has better opportunity? Right. There are 185 companies. This is from years ago when I was, when I was looking, I was looking at this 185 companies that were unicorns valued at a billion dollars plus. Now there's thousands right in there. But private companies, when you join a startup, there's a chance it will fail, but there's also a chance it will win. And if you're making 80 grand at the Fortune 500 company and the startup's going to pay you 70, but it's got a chance to succeed in a really big way. That's an opportunity that Joe can take that his peer, who's 10 years older and locked into the house and the car and the family cannot. And Joe should take full advantage of that and think about when it's time to jump ship to something that does have that opportunity upside. That's what I did with bigger pockets. I was working at Dish Network Network. Dish Network was fine. It just wasn't going to propel me forward toward financial independence. BiggerPockets was a small business that could potentially have done that, and it did. And yeah, I got lucky, but there's no way I would have gotten lucky if I'd stayed. Right. And that's the, that's the evaluation Joe's going to have to constantly have here and again, as you take that more high risk venture, joining that small company or maybe going into a sales or commission role. You can increase your odds of succeeding because you're self educating, networking, developing hard skills and you have that higher risk tolerance because you have cash in the bank. You don't need that base salary every single month coming in the way everybody else does. You can afford to take a few months to let something ramp an opportunity to materialize. How am I doing, Mindy?
- [47:13]
A
I think you're doing great, Scott. I love every aspect of this and I hope that all the Joes that are listening right now are really taking this to heart. I'd also like to encourage them to, to really think about the benefits going forward of taking this course of action right now. Scott, you had the opportunities available to you because you did all of these things. You were able to take the job with bigger pockets and, you know, gamble for lack of a better word on this Internet startup that could have just easily failed and then you were out a job and you have to, you know, scramble to get a job. Except you don't really have to scramble to get a job because you've got this big savings account that's going to allow you to figure out where you're going to go next as opposed to let's. Shane, who is not doing any of this spending all of his money, still loses his job and now he has to scramble to get anything because he has no savings whatsoever.
- [48:15]
B
All right, we're going to take our quick final ad break after this. Finances can be messy and confusing and it's a lot of work for many of us just to get to the starting point in personal finance which is understanding what you've got and where your money's going. That's why Virginia, my wife and I use Monarch Money as our personal financial command center for our bank accounts, credit cards, investment portfolio and as our budgeting and spending tracker. Monarch automates everything. It's all linked and every transaction is automatically categorized into each category of spending. In just a few minutes a month, I have a complete picture of where every dollar is being spent and I have a real time net worth statement. I've recommended and personally used Monarch Money for years. I am thrilled and proud to be sponsored by and partnered with Monarch money here at BiggerPockets Money. BiggerPockets Money listeners get 50% off their first year, which is usually $99 with the code pockets@monimalmoney.com that's monarchmoney.com with the code pockets.
- [49:16]
A
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- [53:03]
B
So that's the part two. That's how we're going to get to 100 grand. We're going to scale our income, we're going to grind it out, we're going to keep our housing expenses low and we're going to house hack and we're going to get there. Moving on to part three. How are we going to get to a million bucks? Right? And this is where we have both the process and the event. Right? So I put together this financial model for a very cons not conservative. There's a little bit of aggression here, but Joe's a high performer and should be able to achieve something like this as he approaches 30. Right? He starts at this median income of 62. He gets a raise of 3% that he gets a promotion in year three, another 3% raised and another promotion in five years. Then it's raised and one more promotion at year seven and he barely gets to 100 grand by year eight. This is a good career path, but it's not something that Joe shouldn't expect to some degree given his skill set in getting a median income job out of college and getting going on a reasonable start of a career. He's also got a side hustle that he pursues there. If he does all this, I have a complicated model. You can beat it up later. And he invests in the stock market at 10%, he'll generate about $537,000 by year eight when he turns 30, right? That's good. He's getting rich for sure with this model. We want that as part of our plan. It's a base case, it has to be there. But you'll notice that this is not the million dollars that I promised Joe at the beginning of the presentation. It's far short of that. And ain't Nobody retiring in 8 years on $537,000 in total net worth. Maybe you can call it yourself coast fire, Web, whatever. But that's not what we set out to achieve here. We need more than that, right? So, and this is again where, where I have a problem with some of the discussions in the fire community is a lot of people's plan is this. And then you got to drag this column out for another 10, 15 years of grinding it out with low expenses in order to achieve fire, right? You want that in there? If it takes another 10 years, that's fine. You know, it's still better than not retiring early like most people do. And you're going to be 40 at that point. But we want to get there at 30. We also need to layer in the events. And so this is where one of my favorite little quips is. You know, apparently nine out of ten businesses fail, or that's a commonly cited statistic, maybe it's made up, I don't know. But if that's true, then the logical response is to start 10 businesses, right? Let's take a lot of these bets, right? So if we add in to this base plan, you know, a house hack, what happens? Does Joe get 3, 400,000 more dollars, you know, over the course of the next eight years? What if he does three house hacks? So easy to do. Three house hacks over eight years, right? For Joe. What about three live in flips? It's one every two years. Super achievable for someone like Joe on this journey. What if he joins a startup or small business that pays him 10% low, less base salary, but is a 40% chance of paying out several hundred thousand dollars in equity in five years? That's not unreasonable. Millions of people have had that outcome happen. What if Joe buys a business in year four? What if he's worth a couple hundred and fifty grand and says, you know what, none of these other things are working out? The small business I Joined or whatever isn't working out. The house hack is, is good, but you know, I'm living frugally. I'm going to try my own, my own business. I'm going to, I'm going to buy a small, a small business, Cody Sanchez or Alex Hormozi style, and see what that looks like. And that could dramatically improve things. What if Joe tries a new side hustle every 90 days and 9F, well over five years, two are going to work generating hundreds or thousands of dollars in passive income or giving him some potential of an asset to sell for a couple hundred grand potentially or more that would do that over the next eight years. A collection of low risk, high upside bets like those are highly likely to provide some kind of payout. And an intelligent collection of such bets can add a massive boost to Joe's position. Joe could far surpass that $500,000 base scenario over the next eight years. I wouldn't bet on any single one of these, but I will absolutely bet on the aggregation of a collection of bets made over five to eight years by an avid reader who spends a lot less than he earns. That something's going to pay off and accelerate this position pretty dramatically. And there's nothing that really constrains Joe from doing all of the things I suggest invested over an eight year period. Eight years is a lot of time. If Joe does all of those things, surely some combination are going to work. And again, you don't have to depend on any of these. You don't want to put all your cash or all your eggs into one basket. But you're naive if you think that this is not going to work on there. This is how people join the top 5% or the top 1% of wealth, even if they start from a position that doesn't have anything particularly special about it. No family wealth or money that has been passed down, for example. Example. So those who understand this framework become financially independent early in life. And those who don't will drag out a financial model over 30 years in a spreadsheet and sit in an office doing that. Nothing wrong with that. But this is the difference. What do you think, Mindy?
- [57:50]
A
I think this is really, really doable. I can hear somebody saying, well, you can't do three live in flips in eight years. Yes you can. I've done it myself. I know that you absolutely can do it. It's a lot of work work. But Joe is trying to take his, what is that, a 40 year career and cram it down into eight. So yeah, you're going to have a little bit more work to do.
- [58:14]
B
That's it, right? You want to try early, you're going to have to do something different. That's it. That's the difference, right? It's low cost of living and a more aggressive base case than most and a collection of side bets. And I'll tell you what, you can have just as much fun doing these things right? When you have a house hack, guess what? You don't have a landlord. So you don't have a lease. You can move whenever you want after that first year commitment from the mortgage. And you can throw as many parties as you want in your house and no landlord is going to call you complaining about. Right.
- [58:38]
A
Your neighbors might not be happy.
- [58:39]
B
Our friend does flips. There's a huge party before he demolishes the place, right in a couple of those. Like you can have fun doing all these things. It's not like this is all work and no play here on it. You can have just as much fun as anybody else while you're pursuing this and get way further ahead. So I want to revisit something here. If you are going to do more of a process towards financial independence, let's say that Joe develops this hard skill and starts making making $300,000 a year by year five or has a realistic path to doing that year five, six, seven, then go with the process. Then if you're making 300 grand a year, doesn't make sense to do some of these other things quite as much. You can spend more and just coast to financial independence pretty early. If that happens and you do start seeing your income ramp, then follow the process centered order of operations. This is a very traditional style of investing where you're going to have a thousand dollars emergency buffer paying off high interest rate debt. Just same things we talked about. Taking the 401k match, taking an employee stock purchase plan, fully funding your emergency fund and you're going to go down the ladder and max out your retirement accounts. If you've got an hsa, you're going to max that. Then you're going to do your 401k, then your Roth if you do. If Joe does have kids in the next couple of years, he'd max out the 529 or 529 plans for those kids, then finally contribute to the after tax brokerage account and then pay off his low interest rate debt. So that's if we start seeing our income start to grow and are like, I don't have to mess with all these other crazy side bets because my core job is pay me so much that I'm going to get there real easily. Right. That's great. That's what we do. We follow the traditional, the traditional path here.
- [60:13]
A
Both of these say process centered journey. Do you mean events centered journey on the other side?
- [60:19]
B
Yes. So sorry, this, this, this word here for the events center journey. Right. Let's say Joe is not seeing his income boost and he's still making below six figures in years 3, 4, 5, 6. Then I'm going to encourage Joe to go for a more events centered order of operations which is where we're still going to have the thousand dollar emergency buffer. We're still going to pay off high interest rate debt and we're still going to take our 401k match and employee stock purchase plan if available. But then we're just going to accumulate cash. We're going to accumulate cash and we're going to put that towards the next house act or the next live in Flip or the next business bet, something that could work. And we're going to keep trying those very intelligently for at least the next year or three or four while we really exhaust our option of side bets here and really play our hand to the best of our ability. And once something starts to hit and our income starts to really begin to ramp, then we just revert back to going down the traditional retirement stack. That's it. Right. So we're just doing the process. We're doing the events centered order of operations where we accumulate cash until we're able to, to successfully deploy the advantages we have as a young single person with lots of opportunity and time to pursue good ideas once something works. Let's take advantage of all the tax cheat codes. And the reason I'm going into that a lot is people say I'm against retirement accounts, I'm not against retirement accounts. I just think that Joe is going to benefit more from cash in these early years than he will in the retirement accounts until he hits a few winners and has more cash and he can really reasonably deploy on alternatives from an investment standpoint. We're going to be really aggressive, right? There's no everything screams be aggressive Joe. Be, be aggressive. Joe has both a lifetime to accumulate wealth and he wants to maximize the probability of generating a lifetime of wealth early on so that there's only one option. Right? A bias towards the highest returning long term investments that we can get. Right. That's probably going to be a common answer to that, is going to be passively Managed broad based low fee stock market index funds like Vanguard's, vtc, VSAX or BTI for the the ETF version. That's a very popular choice and for good reason. And while many will just choose 100% stock portfolios, especially if Joe is able to get a high income generation early on or get on that track, that's fine. You can also responsibly leverage real estate and you can invest in private ownership and businesses to get to fire. Those are probably going to be his three best options. Although plenty of creative Joes out there find other ways other things to invest invest in. Joe's probably not going to invest in bonds or other forms of debt. They're likely too conservative or low yield for most. And to get higher returns in debt you generally need capital to buy non performing or higher interest rate debt. And Joe doesn't have capital right now. So he's probably not going to use this as a top tool. Maybe he'll use it towards the end of his journey. Crypto and other alternative investments are likely to be red herrings. I think they're distracting, they're tempting, but I think ultimately there'll be lower probability. A lot of Joe's will disagree with me and allocate here. This is by my my comments on that front, on that stance. What do you think about this? Is this the right approach for Joe?
- [63:15]
A
I think that this is a great approach for Joe. Again if he wants to reach early financial freedom for him to hyper focus for eight years and then he's got the rest of his life to do whatever he wants.
- [63:30]
B
Yep, pretty good. Just in case he's wondering right. Joe's probably watching this and he's not 80% of the way to his fire number. But if he is and he's getting there and he coming back and looking at you're going to remain aggressively invested until you're about 80% of the way to your number. So let's say you had a million dollar fire number. When you're hit $800,000 you'd pivot from this very aggressive phase one portfolio to a more conservative retirement ready portfolio. And that retirement ready portfolio might look something like the risk parity portfolio that we did recently with Frank Vasquez where we have stocks, bonds, alternatives, manage futures and some international exposure. But we pivot to this more diversified uncorrelated portfolio that will probably produce lower returns over a long period of time but can support a higher distribution rate, a higher retirement withdrawal rate. So we'll pivot to that at that point so if your goal is a million, you do that around 800,000. If your goal is two and a half million, you do that around 2 million in net worth. You'd begin the transition here. And there may be tax things to consider. You can, you can get the complete the transition by selling some things and repositioning, or you can allocate new dollars or cash flow from your portfolio to the more diversified positions at that point in time. So that's what I got. That's the plan. I do have a couple of additional considerations, but any early reactions so far?
- [64:50]
A
I think this is a great plan for somebody who is in their early 20s, who wants to reach early financial freedom in an aggressive timeline. I don't think this is quite the right approach for somebody who just wants to get coast fi. Maybe they love their job, maybe they're super excited to work for a long time, but Joe isn't. Joe really wants to get there as fast as he possibly can. I think this is a great plan for him.
- [65:16]
B
By the way, I, I would recommend that more people pursue this because again, I do not think it precludes having fun, getting ahead in other areas of life, experiencing life, experiencing where you live. I think you can do both. And I think it's so great and so powerful to be financially free early in life. The options are awesome at that point, when you get to the other side, it's, it's really. I think it was absolutely worth it to do to follow a plan very similar to this in my personal life. Some additional considerations and optional homework. 1. Define your why this is a fluffy thing. I can see some people rolling their eyes. I used to roll my eyes at this. But you got to do it. You got to do the fluffy work of visioning whatever you want to call it, whatever the synonym is here. Because you're about to commit yourself to a pretty long term plan that's going to integrate in every aspect of your life, right? Where you live, what you eat, how you, what you get around in what you do for work and how you spend, spends certain amount of your free time and knowing why, knowing that there is a light at the end of the tunnel, that this will improve your life every single year as your wealth builds, giving you more freedom and flexibility and helping you realize your potential. All that's really important to put down to paper and revisit from time to time because you'll get distracted in the, in the meantime by, by the shiny objects in there. Hey, that guy does drive a nice car. That sounds fun. It is Fun, fun. But it's not nearly as fun as being financially free at the end of that and having those options. And I think you also want to make sure you don't become someone you don't want to become, right? So again, that's a criticism that's valid of the fire community. Is there a bunch of frugal weirdos? We're not all frugal weirdos here. But again, frugality is not a virtue. Frugality is a tool that we use to achieve freedom in there. And freedom is worth more than many material goods. But if you have the means, there's no reason not to also enjoy the material abundance that this world offers these days. Next up, I would suggest you get a system for planning your year, quarter week, month and day. I've used this book called Living your best year ever from Darren Hardy. Love Darren Hardy. Love this book. I have no affiliation with him whatsoever, but I've filled out this book every year for about 10 years now. And I plan out my annual goals, my quarterly goals, and every week I have a little log here that says, you know, here are my top three goals, what I need to do for those top three goals this week, and my habits that I want to pursue. I'm not perfect about achieving all the things in my my log. I'm not even perfect about filling it out every single week. But boy does a pretty high level of consistency at this simple act of planning my week make an enormous difference over time. I never go months not progressing on the most obvious ways to get ahead on my key goals. So whatever you choose shoes, there's cheap ones like this I didn't see. I've never used a life designer. You don't have to use living your best year ever or anything, but pick something that is a system that you can stick with and you do that, it's going to make an enormous difference in your life. Don't have more than one goal. Be financial as well, right? Something's got to be whatever else you prioritize, spiritual relationships, health, business, whatever it is that you're impacting, whatever you're looking to do, make only one of those financial during the stream journey.
- [68:22]
A
I love it.
- [68:22]
B
Next homework assignment is measure and track. You got to create a pfs, a personal financial statement. This is going to list all your assets and liabilities. It's going to compute your net worth and financial portfolio. It's going to list all of your income sources and expenses and it's going to project give you an idea of how much you can accumulate for the next year. Right? That's what we did today. We said, here's how Joe can accumulate $30,000. You need to have some tool that does this. You can do this on pen and paper. You can do this on a spreadsheet. But if you're 22, you're almost certainly going to be using a professional app. And our favorite of those is Monarch Money. They are a sponsor of BiggerPockets money. They're also the tool that I've used for years, long before they became a sponsor of BiggerPockets money. Mindy shows you how to set that up with her personal net worth, several million bucks on there on a recent video, which was pretty cool. And we have a deal with them where if you use the code pockets, you get 50% off off the first year, which is 99 bucks. So 50% off, 99 bucks for that first year. If you use the code pockets. Boom. That's our favorite one. But you can do this a number of ways. If you want to do this, you just. If you want to play the game, you got to keep score.
- [69:27]
A
And, Scott, what I love so much about Monarch Money is that is a snapshot of your entire financial picture. You go to the dashboard, you open it up. There's your budget, there's your spending, there's your net worth, and there's your investments. You can see I'm down today because the market is having, you know, not such a great market. I can see that, that my spending has really ramped up this month. But also, I'm building a house, so, you know, that's to be expected. There's my net worth. Monarch, you have to attach all of your accounts, otherwise it's not going to work so great. But it is so important to just see this really quick snapshot of where you're at, and you don't have to spend a ton of time on it once you've set it up. So it's just. It's such a great tool.
- [70:11]
B
Love it. Yeah, my favorite tool. Used it for years and years now. And then I think the next one is create a written plan. You don't have to use this one, but this is the start, hopefully a starting point for. For a lot of people on this is like, hey, what I'm going to do this next year is I'm going to accumulate 25, 30 grand. I'm going to, you know, do whatever it takes to do that. Then I'm going to find some side bet, some move I can make that could win beyond what is a normal career progression here? Then as I accumulate more wealth, I'm going to layer in a more formal process for taking calculated bets every single quarter or every single year year that can get me ahead while continuing to pursue my base case and allowing that to compound. Right. That's my favorite one. And then last I think it's embrace community and education. I debated about whether to do this, but I'm going to shamelessly self promote. I wrote a book called Set for Life. It's this plan in great detail. Mindy's got the original one there with the light blue. I have an updated edition from two or three years ago and I'll probably update another one in another couple of years with just adjusting for inflation and some updates and those kinds of things. Things. But I. I do think this is a good tool for somebody in Joe's position. It's literally written for exactly that purpose. Someone in their 20s or 30s who wants to get ahead early in life and wants to go all out in their approach to early financial freedom. If you are looking for the best process book for someone who just wants to doesn't want to layer in all these side bets or whatever, just wants a reinforcement of what is the best way to get rich for sure over a long period of time. The Simple Path to Wealth is My favorite by J.L. collins and I recommend the audiobook version of that in particular because he sounds like James Earl Jones who is Mufad from Lion King if you're not familiar.
- [71:45]
A
And Darth Vader from Star Wars.
- [71:47]
B
And Darth Vader from Star Wars. Yeah, you're probably familiar with Darth Vader. If not, if you're not with Mufasa, you're definitely familiar with Mufasa and Darth vader. Yeah. So J.L. collins has an even better voice than those guys and has been a guest here on BiggerPockets money several times. We are going to of course promote our own podcast in our Facebook group. There's a lot of like minded people here in this world and if you're looking for even more depth, there's the R Fire community. There are even subcategories of that for people who are pursuing Lean Fire, which is a low lower net worth version of Fire or Fat or Chubby Fire which are have greater net worths. There's also the Choose Fi Facebook group and they Choose Fi podcast. I can also shout out Afford Anything. Another podcast. There's a ton of really good resources out there for folks looking to do that, but if you do want to join the community here at BiggerPockets Money. Best way to do that is go to BiggerPocketsMoney.com and just sign up for our newsletter. We'll send out every week, sometimes twice a week, updates on what we're doing from the podcast. Any ebooks that we produce, produce resources like this financial plan, which you can download@biggerpocketsmoney.com this presentation will be available at BiggerPockets Money. You can find all this, a bunch of great resources there and we'll be building that out over the next year with more and more good stuff.
- [72:52]
A
Scott, this was a fantastic presentation. Thank you so much for taking the time to set this all up. I think this will be super helpful for our younger listeners. Again, if you have a younger person in your life, late high school, early college, just graduated college, this absolutely is the presentation for them. This can be life changing for them because if they've never heard this before, they don't know that you can retire early. Scott, this was fantastic, but I think it's time to get out of here.
- [73:24]
B
Let's do it.
- [73:25]
A
All right, that wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench. I am Mindy Jensen. Saying got a jet.