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- [00:00]
Scott Trench
This is an iHeart podcast.
- [00:02]
Joel
Guaranteed, human AI is everywhere these days. But Wix Harmony stands out. It's an AI website builder that helps create any type of site while still allowing full freedom to edit everything manually. That means you're not limited to what AI generates.
- [00:17]
Kate
Plus, there is an AI agent named Aria to help along the way. Try it for free@wix.com Harmony that's wix.com
- [00:26]
Joel
Harmony say you've always wanted to take a spontaneous trip to the Caribbean. Here's the thing. If you get smart with your money, you can do things like that. With Empower, you can start making the most of your money so you can go out and live a little. Isn't that why we work so hard to have some fun with our money? Like treating yourself to something special or
- [00:44]
Kate
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- [01:15]
Joel
And listeners of this show will get a $75 sponsored job credit to help get your job the premium status it deserves. And@ Indeed.com podcast, terms and conditions apply. Need to hire. This is a job for Indeed Sponsored jobs. Welcome to how to Money. I'm Joel, and today I'm talking about avoiding the middle class trap with Scott Trench. Okay, so in the song Rock in the Suburbs, Ben folds. He pokes fun at the struggles of middle class life. Angsty, a little whiny, but also tongue in cheek. It's killer piano rock that makes you laugh because deep down it's a little too relatable. And that tension, it's still alive today. A lot of Americans and plenty of how to Money listeners feel like they're doing all the right things. They're saving diligently, they're investing wisely, but at the cost of flexibility and maybe even some joy right now. So how do you balance building wealth for the future without squeezing the life out of the present? That's what we're diving into today with Scott Trench. He literally wrote the book on this set for Life. He's helped thousands of people, and I think the book has sold more than 100,000 copies. Chart their path to financial independence. So, Scott, thank you for taking the time to join me today.
- [02:43]
Scott Trench
My friend Joel. Thank you for the very, very kind intro.
- [02:46]
Joel
You're a legend, Scott. Trent. You've been in this space. You're still pretty young, but you still went in this space for a long time, and you've helped a lot of people. You've done a lot of great work. So I'm thrilled to have you here. First question I ask everybody who comes on, though is, what do you like to splurge on? What's your craft beer equivalent?
- [03:00]
Scott Trench
Okay, so this is a pretty embarrassing one for somebody who runs a podcast and personal financial responsibility, but I recently purchased a golf cart, which I use to get around the neighborhood and take my two little kids to the local park. I will use it to take them to school when they start attending school and to the local pool. So that's my. My. My very big splurge, you know, seven or eight grand somewhere in that range.
- [03:24]
Joel
Oh, wow. Okay. This is a fancy golf cart.
- [03:26]
Scott Trench
A nice little toy. Yeah. That I got to take around the neighborhood here.
- [03:30]
Joel
Okay. Is. So did you buy brand new? Are you buying used on.
- [03:33]
Scott Trench
I should have bought it used. I should have bought it used, but I got it. I got it. I got a new one because the company that was selling them is going out of business. So.
- [03:41]
Joel
Okay.
- [03:41]
Scott Trench
I picked up a new one there.
- [03:43]
Joel
I feel like golf carts are all the rage in the burbs these days. Is that. Is that true where you live?
- [03:47]
Scott Trench
That's it, yes. I just completely jumped on this, like, you know, very basic trend, and I. I've really. I really enjoyed taking my golf cart to the little local coffee shop.
- [03:55]
Joel
Yeah.
- [03:56]
Scott Trench
Or to the pool.
- [03:57]
Joel
See, for me, this was electric bikes, and so I have, like, a rad wagon that I still ride with my youngest, my oldest two. They're on their own bikes now, and they don't want to. They don't want to ride with me anymore. But I have so many fond memories and so many great pictures of, like, sticking them on the back of the bike and going wherever around town that we wanted to go. So that was my version of the golf cart. And I will say, well worth the money. You're going to get a lot of joy out of it. Okay, let's. Let's get on to it, man. What got you interested in the idea of early retirement to begin with? Was it the fact that you were working at one of America's worst companies and you just had to get out?
- [04:33]
Scott Trench
Yeah. So actually what happened was I got. Before I graduated college, I had an internship at Dish Network, which At that year was ranked the worst company to work for in America. And I actually really enjoyed the internship. They put out a great show. It was a wonderful time. I have lifelong friends from that, that summer between my junior and senior year of college. And then when I started in the real world, that's what I began to kind of get disillusioned with the idea of climbing the corporate ladder. When I started the full time job at Dish the next year after I moved to Colorado, and I was like, you know, I'm going to badge in and badge out for 40 years if I do this well. And I'll be one day climbing the ranks, and I'll make good money if I climb the ranks, but I'll have that office over there instead of this one, this cubicle right here, the slightly
- [05:14]
Joel
bigger one with a slightly better view.
- [05:16]
Scott Trench
Yeah, and that was, that was kind of the, that was, that was wearing on me day to day early on in the career. And I was fortunate to have, have immediately stumbled across the foundational stuff in the financial independence world, like Mr. Money Mustache, the mad scientist, early retirement extreme, those kinds of things there. And having a, working in finance and having a background in economics and all those kinds of things at school, that really helped me. I resonated with that. And I could model out, oh, if I just keep my expenses very low, I'll automatically become wealthy. And the best way to keep my expenses very low is, is to attack this huge item in my budget, which is housing. And so I got a roommate, lived with a roommate, then began house hacking. You know, I bought a couple of small multifamily properties, moved into them, rented them out, used owner occupant financing, and did that off and on for 10 years, the better part of 10 years. In a midpoint, like around year six or seven, my now wife and I moved into an apartment, got married in that apartment, and then moved back into one of our rental properties for a year with our little one before eventually getting our forever home here with the golf cart.
- [06:20]
Joel
So, so you were kind of tackling both and. Right. You were, you were saying, listen, we got to dial back on spending, we got to be more frugal, and then we got to thrust that money into income producing assets. So fierce frugality was a part of your journey. And at one point, I think I heard you talk about enduring a really cold winter with, with no heat. Is that like how, how far did you go from a frugality perspective?
- [06:40]
Scott Trench
Well, thanks for looking all this up yet. My, my, what happened was I Bought this place and, and it was like April or something like that. And I was like, I can go until fall before I install heat in my portion of the unit here. You know, I can get by with this stuff. And then my, my, then my now wife moved, you know, started dating me around that time and we, we eventually started, contemplated moving in together. And that, that only lasted a few weeks, that, that low heat. But there was, there was an, it's
- [07:06]
Joel
like, I'm not moving in there unless you get that heater repaired.
- [07:08]
Scott Trench
Yeah. I will also say that frugality was, you know, there's a, in the world of personal finance, I think frugality is sometimes a virtue to a lot of people. And I think that's a mistake, right? Because I never saw frugality as this virtue, right. I saw it as, there is, there is something to it, there is something wonder, you know, like good about it and there's pride to be had in living frugally there. But it was the tool that was right for the job in those early years because I was already maximizing my income. I was already investing according to a reasonably well disciplined approach of serial house hacking and then putting everything else in S&P 500 index funds, right. You know, according to a tax advantaged retirement stack. So there wasn't much more to be done on those funds and those fronts. And so low spending was the main driver of getting ahead financially for me at that point in my life. It later transitioned to income generation or leading bigger pockets. Right. And at that point being frugal was a time and energy suck at that point, right. Like if I'm going to, like I'm going to pay somebody else to mow my lawn, for example, at that point. Because that's going to take me away from this very high paying job where I have a duty to customers, shareholders and all those other folks. And so that's been an interesting evolution. And now after stepping down, there's yet now, yet again a more emphasis on controlling my expenses. I don't have to be frugal the way I was at, you know, 23 or 24, but I have to be back in control of those expenses in a way I didn't while I was CEO. And I think that's an interesting takeaway from this is there's a right tool for the job at various moments along the journey. And the mistake is using one the whole way through and not adapting or evolving as your situation changes. What is the 80, 20 of the situation as you move through your financial journey?
- [08:56]
Joel
I mean, I'm sure you've seen the headlines, the stories about the janitor who dies and has $8 million in his retirement account. And to some people might laud that and say, incredible, right? On a janitor's salary that you could amass that much money. And I think of it as like, incredibly sad, right, that someone would invest and save for that long and never get to enjoy the fruits of their labors. And you're right. I think that's probably the hyper frugality focus gone wrong. And there's just never an ability, at least for that person to adjust and you have to make adjustments over time.
- [09:29]
Scott Trench
Yeah. I view finance as almost like an engineering problem. Right. Here's exactly what I want my day to look like and my life to look like in great detail. I literally have it written down on a page and a half with my wife. We updated every quarter and we did it on our honeymoon. That's how nerdy I am about this. But I literally have that written down and we update it regularly and we engineer for that. And that question is, how do we do that most efficiently? And I think that's how what Scott
- [09:53]
Joel
Trench's ideal day look like.
- [09:55]
Scott Trench
All right, let me pull it up here. You, you want to pull it up?
- [09:58]
Joel
Yeah. I'm so curious to know. And I love this because, because you're right. Like if, if you have it mapped out to that extent. My guess is, my guess is before you start rattling things off, that most of the things that are on there are inexpensive or free.
- [10:12]
Scott Trench
No, no, not, not necessarily. Many, many of the things are. But I specifically, like, I live in Colorado. I want to see the mountains out of my house. I love that. I love like the, the mountain sunset. And that was not free or cheap. Right. And that was, that was a major investment. But I will, I will say that, yes, there's a good, a good chunk of that. So here, I'll pull this up. So here's the latest evolution, right, of this vision. It's not the most recent one and they don't really, it doesn't really move that much anymore. It used to move all the time. My wife and I would be like, oh, we want to live in Hawaii. We want to live here, you know? No, no. Now we've kind of settled in of this is what we want. But our home is bustling with our two kids, Katie and Taylor, and our very handsome kitty, Fred. We have an energetic, healthy, day to day lifestyle with lots of laughter and fun happening throughout the day. We put each other first demonstrated by both of us making an effort every week to make the other person feel loved and appreciated. During the week, our work commitments ebb and flow according to our interests. We can be very flexible and maintain high autonomy over the trajectory of our workdays. So we can work a 10 or 12 hour shift on important deep work or take off for three days in a row doing hike, ski and bike days. We can also take relaxing recovery days anytime. Virginia writes best selling books and I continue my study of early retirement pioneering ideas to accelerate it or make it more enjoyable. Here at Biggerpockets Money, Taylor and Katie are enrolled in high quality full time daycare. We have several wonderful babysitters. We take trips. We have a thriving local community of friends. I'm paraphrasing here, I've got a whole page and a half of this. We maintain high levels of physical fitness. Here's our diet and exercise regimens. Here, here's where Scott's competitive outlet is. You have your marathons. I need to find that. For me that's like one of my projects this year is like what do I want to compete in? Certainly not running for four hours straight or two hours.
- [11:53]
Joel
However fast forward it is pretty psychotic.
- [11:55]
Scott Trench
And then our financial house is in order. We have our paid off primary home, one year cash reserve and a conservative primary investment portfolio that generates 150% of our base living expenses. On top of that we have substantial financial upsides with various projects that we're working on. And so that's, that's it. And one, one particular point in there that I skipped over here is we see the mountains every day from our porch. Like we broke that down years ago before we bought our house and, and get to watch a western facing sunset on most or every evening. And that was really important to us for example. And that, that's not, was not a cheap item. That was something we had to work for and produce income and investment dollars to realize.
- [12:32]
Joel
Well thanks for sharing that. And I know that's, you've actually posted that on your website at Biggerpockets and so we'll, we'll link to that in the show notes. But I think that's like the kind of intentional introspection that most people don't do and they don't get down to the nitty gritty of something as simple as like I want to be able to see the sunset every night right from, from my porch and which then influences, I would imagine going back cascading, you know, different ways of living and ways of saving and ways of investing to help you pull that off. I'm curious too. Like you, you mentioned Biggerpockets and real estate and I want to talk to you about real estate. But index funds are traditionally have been seen as like the gospel of financial independence. Why did you believe that real estate investing would be the best, best path for you to achieve it?
- [13:24]
Scott Trench
So I think this is really funny because I agree with the index fund approach. The reason I got into real estate investing is because when I was following Mr. Money Mustache in 2013, I was like, how do I become more frugal? And I was like, well, something's missing here. What about housing? Like that's, that's a pretty big expense and I want to eliminate that and something on bigger pockets. I think Brandon Turner wrote an article at some point or another, one of the podcast hosts at the time, and he wrote about house hacking and it was like, oh, if you buy a multi unit property and then you get a mortgage and then the other side pays that mortgage, you can live for free or pretty close to it after reasonable approximations for your maintenance, vacancy, capex utilities and all that kind of good stuff. And so that seemed like an obvious way to keep my expenses low. And a byproduct of doing that means, of doing that well means that you have to spend the time to research how to become a good real estate investor. Because you're buying a rental property, fundamentally you're analyzing it for cash flow. And so I put in the several hundred hours needed to think about how to make a quality real estate investment purchase, moved in, fixed it up, and then I had the skill, I knew exactly what to do and I could just repeat it several times. And so over 10 years, you become very good at real estate investing. And I, you know, of course I'm the CEO. I became the CEO of BiggerPockets during this time. So I have lots of repetitions with real estate investors. But I like to think that even if I never went down that path and I had just gone down some completely different career, if I had serial house hacked like that, I would have acquired the skill of being a competent landlord over that time period anyways. And there are, if you're willing to pay that price, real advantages that you can get. Especially in the early days of a real estate investment, when you're using leverage, which amplifies returns and also risk, there are real returns that can amplify that beyond what you can see in the, in a stock market portfolio. And then the other side of that is, as the years go by and your mortgage cost stays. If we step back, real estate at its simplest form is a inflation adjusted store of value. Your property is probably going to pace inflation over 30 years. It's going to be ups and downs across that time. But that's a reasonable bet. If you don't believe that, you shouldn't buy real estate. The other thing it is, is it's an inflation adjusted income stream. The rents minus the expenses is going to compute to some amount of cash flow each year, relatively tax advantaged cash flow. And that should also keep pace with inflation over very long periods of time. In stretches like the last five years. That can compress a little bit as rents don't grow much and expenses do grow, but over long periods of time, you can believe it. And so once the property's paid off or getting close to being paid off, you have more cash flow but diminishing returns because you're not getting the amplification effect of the leverage to the same degree at the beginning of it. And that's very appealing towards the end of your financial journey because it makes the math very simple. You can almost treat it like a pension to some degree. If you're conservative with your assumptions, you know, there would be some volatility, some capex and those types of things and adding that to your fire number. So those are the reasons why I got into real estate. But if I, if I hadn't been for house hacking and bigger pockets and I had some other very demanding career, I may have just gone in with the index fund approach the whole time. So I see real estate as a tool that's very powerful for certain folks that want to use that, they're willing to put in that education and take that extra risk. And they can get different returns, maybe better in the early days, maybe different styles of cash flow that they'll feel more comfortable with at the end of it. But it's not better than stocks. It's just a different approach.
- [16:44]
Joel
And I think house hacking in particular is the real estate investing strategy that kind of trumps everything else because you can lower your housing costs significantly. There's, you're kind of, when you're comparing investing in the S&P 500 to investing in a single family home or a duplex. Yes. You're talking about, you know, the use of leverage to be able to enhance that investment in real estate. And then as the, the better you get as a real estate investor, you might be able to find significant deals. Right. And, and you, and you might be able to, to get Better returns overall because of leverage and because of your, your, your knack for, for solid real estate investing. But there's just nothing that compares to the financial return of house hacking. And so, so few people I think are willing to engage it. It's one of the. Did you feel like you were giving something up to engage in that act? Were you like, man, I'm really slumming it here for, for six months, for two years or whatever? Some people talk about house hacking and it's just, it, it sounds brutal, I guess to the average person listening to this podcast, like I've got to do that in order to secure financial independence. No way. What did it feel like for you?
- [17:50]
Scott Trench
If things work out in my life as I hope that they will, I will go my entire life, never living alone. I will have slept in the same bedroom as my brother growing up. I will have had roommates throughout college. The day I stopped having a roommate was the day my wife moved in with me into my house hack. And I hope to go first in old age. That's it. And most people, I think, have time where they live alone. And that's wonderful. Right? I never had that and I never missed it. I don't know what it would have been like. I never missed it. I don't want it in my life. And that was a cheat code for me because I had roommates the entire way through and I never had the fancy spancy apartment or house that was all to myself in there. And that just is such an extraordinary advantage in accumulation of wealth and then. And keeping costs low, using housing to. As an accelerant on my financial journey. I mean, it's just, it's like a cheat code. It keeps everything low. And other people that were having trouble. One of the things you wanted to talk about, I think was the middle class trap where folks are stuck. You know, middle class family has a house, has a mortgage payment, they've got their childcare or food expenses. They're contributing a little bit to the 401k or maybe even a lot to the 401k. But they have to make a choice at some point. They cannot go through this entire retirement stack, maxing the 401k, maxing the Roth, maxing the HSA and maybe putting away some for college and having additional liquidity at the end of that stack because they don't save enough. But if you house hack when you're, you know, young, you go through that whole stack because you can max out your 401k and have plenty of cash. Left over after that each year to reinvest in other opportunities in there that provide that flexibility. Because your core expense of housing is so low that whatever you were saving, whatever you would have been saving on top, like, you know, 15, 20% without house hacking, is then multiplied by that drastic drop off in, in that core expense. And so that's the cheat code that I think it is. And it just bypasses this problem of access to liquidity for your rest of your life if you do it for a period of three to seven to ten years.
- [20:02]
Joel
Yes, I think you're right. I think it's a kind of a sacrifice you potentially make if you see it as a sacrifice or just willing to live differently than your peers in a way that then just gives you an insane amount of freedom for the rest of your life. And I think it's a worthy trade off. When you think about the difference between investing in real estate and investing in stocks, how big of a factor is control you have? It seems like certainly a lot more control in many ways over your real estate portfolio than you do over what happens in the stock market. And even thinking of sweat equity, the opportunity to improve a property or add an ADU in the back to make it cash flow faster. How big of a factor is control in how you think about real estate?
- [20:53]
Scott Trench
That control, there's this kind of argument about is it active or passive in real estate? Right. The best answer is semi passive or it depends, of course, which frustrates everybody all the time. But I think that in the early days of real estate investing, when you can swing a hammer or do that work, and that's your. Instead of side hustling, driving for Uber, I'm painting cabinets, staining cabinets, or painting walls, or fixing up a rental property. That's a much, much higher leverage return on my time than I would get for many reasons, not just because I'm defraying the contractor cost, but also I'm learning these skills that didn't translate or leave me less helpless in related tasks for the rest of my life. So that's a very powerful, I think, advantage in more ways than one. I will say that the question around control, I don't want to overstate it because I know a lot of people and I'm in this situation with some of my properties that are kind of trapped in their rentals. And this is, this problem is across all these different asset classes, right? You have $400,000 in your 401k at age 35, and you have $50,000 outside of it. In liquidity. That's a problem. That liquidity is not really there in your life if you're still working, because to access it, you'd have to do something preposterous like realize the income on a Roth conversion in your current high income tax bracket. And then you'd have to, you know, and, or pay a penalty if you wanted to withdraw it. So it's really hard to access that. Well, real estate investors are in the same position. Right. You have a property that you bought for 300 grand in Denver 10 years ago. You refinanced it in 2020 and got a really good low interest rate loan on it. You can't sell that thing to somebody else. You can, but you're going to, you're going to take a big haircut on it. And what. It's a deep buyer's market today. And that property is worth more to you? It's worth more to me than it is to the buyer because of that low interest rate debt that I have that's not transferable with the property. So that's a real challenge too, because that equity exists on paper, but it's hard to realize without making a pretty big sacrifice. So I would say that there's only pros and cons or different flavors of challenges. There's no real free lunch in the world of investing. You can't have your liquidity and your control and your, you know, all these different options. There's only different flavors of it that you can access.
- [23:07]
Joel
Yeah. And so I guess when it comes to real estate and wanting to enjoy more of, let's say that property you bought for $300,000 ten years ago is, is worth what, $800,000 in, you know, maybe more. In Denver, it might be worth more than that. Like, how does one think about the, how to approach that situation? Are you like, do I buy. Am I in the buying more units phase of my real estate investing life? Am I in the paying off debt phase of my real estate investing life? Am I even thinking about taking the tax smack and selling some of those properties off so I can enjoy more of the fruits of my labors? Yeah. What is a real estate investor to do in that conundrum?
- [23:51]
Scott Trench
This is a great question and this is an intellectual challenge that I'm trying to figure out for myself right now. And I actually have not gone on the discuss this live yet because I haven't fully finished it. So take my draft here for what you will. But I think there's three ways, like how do you, what do you do with the rental property in the context of your financial freedom number like that, that's in this stuck position. So I think there's three, a three pronged approach to doing this analysis. One is you take a conservative estimate of the after tax, after sales transaction costs, after debt payoff, liquidation value of the property, right? So let's say that's 200 grand, right? You have your $300,000 mortgage, $600,000 property, 550 $560,000 property, and $60,000 in transaction costs plus depreciation, recapture and all that kind of stuff. That leaves you with a $200,000 that you could theoretically within a few months sell and reposition into a traditional stock bond portfolio and withdraw at 4% from.
- [24:47]
Joel
Right?
- [24:47]
Scott Trench
So that's one way surely that should be factored into somebody's position. The second is at the end state, like if you just wiped out that mortgage and said in 20, 20 years have gone by, my income stream remains flat relative to inflation, right? Because that's, that's all real estate investing is, is it's an inflation adjusted store of value and an inflation adjusted income stream that it would be X amount, let's call it 40, $40,000 a year. I can add that as a pension to my 20 year number. And then the hardest part for me is this bridge because there's some cash flow now and there surely should be a slowly increasing stream of cash flow as your mortgage stays flat nominally and the rents grow with inflation. So the other costs, and that's the part that I'm stuck on, of how to map that out. Honestly, in the meantime, I think a lot of investors are stuck that way. And so you can almost think of it as like, hey, I got a pension coming in 20 years or I got a liquidation value today. And this bridge in the middle is something that I'm struggling with on how to map out. Intellectually, I kind of have the curve, if you can follow my thinking here, but I haven't actually fully mapped that out. It's a project for later in the year to put this into some kind of a spreadsheet or Excel to help people with this kind of decision making. But that's where I'm at from a framework perspective for the properties. And I think it's a struggle for people to come to terms with that because they were hoping for maybe more, more access to that rental property liquidity earlier on. And again, there's only trade offs with this, right? In the fire community, we also have a lot of people who have 100% stock portfolios and think they're about to retire. And that's not what withdrawal research says. Withdrawal research says you have to have a diversified portfolio with bonds or uncorrelated assets. And yet in order to turn a pile of money that is in equities into a reliable income stream that can be harvested for, for a long duration. So no free lunch. But that's, that's my intellectual framework for the question you're asking.
- [26:42]
Joel
Yeah. All right. I got more I want to get to with with you, Scott, including I want to talk about why you never asked for a raise for your entire career working at Biggerpockets. We'll, we'll get to that and more right after this.
- [26:58]
Kate
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- [27:25]
Joel
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- [27:41]
Kate
That's right. Join millions of businesses already using Wix and try Wix Harmony for free@wix.com harmony. That's wix.com harmony. All right, so Kate and I, we have been knee deep in researching and making plans for the summer. We're not doing our massive east coast road trip like we did last summer, but we are doing a little bit semi quincentennial US History based travel. Joel, it's gonna be fun. It's gonna be fun. But it does take some time and effort, right? It takes some planning. But luckily there are other summer tasks that are a breeze, like finding life insurance. Thanks to policygenius. Policygenius is an online insurance marketplace that allows you to compare quotes from some of America's top insurers side by side for free. They make it a summer win rather than a chore.
- [28:26]
Joel
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- [28:39]
Kate
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- [28:57]
Joel
take a spontaneous trip to the Caribbean. Here's the thing. If you get smart with your money, you can do things like that. With Empower you can start making the most of your money so you can go out and live a little. Isn't that why we work so hard to have some fun with our money? Like treating yourself to something special or
- [29:12]
Kate
spontaneously doing something extra for a loved one. Use Empower and get good at money so you can be a little bad. Join their 20 million customers today@empower.com not an Empower client. Paid or sponsored.
- [29:30]
Joel
Yeah, I'm talking with Scott Trench. We're talking about avoiding the middle class trap and I'm curious Scott, like when you're heavy into the fire movement or just really thinking long and hard about achieving financial independence. So often we're talking about locking up money for long periods of time. Right. And not being able to without the trade offs you mentioned of a tax hit or a penalty being able to or real estate transaction costs to be able to get into some of that money. Let's say we wanted to take an extended break away from work for a year or something like that. It feels impossible because the trade off of accessing that cash is too difficult, it's too costly. Do you think too many people are investing too heavily in their for their far off future and not enough for current flexibility?
- [30:23]
Scott Trench
Yeah, I think the framework I'd approach responding. I'll respond to your question with another framework which is optionality versus optimality. Right, like so there's an optimal approach to financial independence for a totally passive investor. And it looks something like this. You invest during your working years into pre tax retirement accounts like a traditional 401k and that keeps your tax bill low. You're deferring this income. In high income tax years you'd max out your hsa. You take your match, go as far as you can in that 401k and then 15, 20 years go by and you hit your number and you stop working entirely and your income drops to zero. And now there's a lot of really good options for someone who's spending 40, 80 or even up to $100,000 a year to get that money out of the 401k tax efficiently. You can do a Roth conversion ladder, right? There's a 32,200 standard deduction for married filing jointly couples. So you can just convert that every year at 0% tax bracket, right. Then there's another 10% tax bracket and a 12% tax bracket. Then we get the to the 20, 22% tax bracket. So using that, you can. So many people will argue you should go up to the top of the 12% tax bracket to do these Roth conversions. You'll pay very minimal tax throughout your life. And that's an optimal approach if you know for 15 to 20 years that you're going to work, you're going to grind it out, you're going to stop and you're going to be able to manage a very precise level of spending in your early retirement and move money through this conversion ladder. Or you can also use a tool called a 72T, substantially equal periodic payments to harvest the money from a 401k. It's still income taxed as ordinary income, but it's not subject to the penalty for early withdrawals. And that's an optimal approach. You will likely pay less in lifetime taxes doing that approach than most other alternatives. The problem that I come back to is that life is not a smooth curve. So across thousands of these repetitions with talking with biggerpockets, money listeners, real estate investors, people in the fire community, in forums and all this kind of stuff, you realize what's unique, the unique outlier in the financial independence journey is the person who worked a job, put their money into the 401k and lives off the 4% rule and nothing else. Yeah, yeah, I made a big stink about this a while back and I was like, this person doesn't exist. They're unicorn. And finally I got to meet a few people who reasonably close approximate that situation. But they're outliers. This almost never happens. It's so rare. Less than 1%. Maybe less than 1 in 1 in 500 people you meet in the financial independence community will meet this definition precisely. Almost everybody else has some kind of ace in the hole. They've got their rental property, they've got their small business, their wife works. WiFi is one of my favorites in this. They're military, so they have benefits covered for various things. Or their National Guard, very common. Or they've got some weirdo tail situation which is unique to them but very common across an aggregation of people. You'll talk to, you talk to 100 people, 30 of them are going to have this kind of weirdo tailwind that they do, like a horse farm where they trade horses. Right. Or, you know, this, a book that they've written or a musical property, you know, something weird that they did earlier in their life or that they've come into that is unique to their situation but common across large samples as a variable here or a pension comes into play. And that's been the problem for me across this is if that's the reality for a lot of people. And income jumps over time. Right. It's not a linear curve. It jumps if you follow this plan of maximizing your 401k and putting all your money into deferred accounts, you're locked into that plan because all of your liquidity is going to be in your home Equity or your 401k. Right. $150,000 a year household income family who spends 80 to $90,000 a year very reasonably cannot max out two 401ks and their HSA and their Roth and save for college and build some liquidity. And I don't think the journey to financial independence is very fun or provides a lot of options. If you follow this plan precisely, you may optimally get to the end point a year sooner, six months sooner, maybe less. But you're foregoing the optionality of the after tax liquidity. One spouse can't stay home with the kids for a few years when they're young. One spouse can't start a business and try that out and have a Runway for two or three years. Those can be very powerful investments. You can't buy a rental property and live and flip it in the same way if you don't have a lot of access to liquidity. So that optimal approach actually compresses the option set and I think is less optimal. It ends up backfiring on you across the reality of the messy journey of
- [35:25]
Joel
life because it rubs up against. Yeah. The real life desires, hopes and dreams that people have, which is to take a flyer on a business that they want to get started, get off the ground, which is to stay home with the kids for at least a couple years while they're, while they're young. And hey, maybe it also, you know, saves a bunch of money on childcare costs, which are through the roof right now, I think. And I think you're spot on. If you, yes, if we were, if our lives were spreadsheets, right then we could probably pull that off. But most of our lives don't act accordingly. And I'm glad they don't because boy, that would make life really crummy. And boring. I'm curious. I just mentioned like childcare costs, how expensive they are for the average person. The biggest expenses are housing, transportation and food. If you got young kids, Chocolate cross is probably up there with them. Though each of those has become significantly more expensive since COVID 19 and you know, 2020 does, does this change in your opinion, the trajectory or the timeline for a median earner to be able to achieve financial independence? Do you feel like it's maybe harder in 2026 than it was for people starting in 2015?
- [36:30]
Scott Trench
I don't know the answer to that, honestly. I think, I think that the right answer may be somewhere along the lines of it so more unfair and unfair in the sense that the person who does live with roommates in 2026 and or finds a way to house hack after a few years is going to see a much more, a much more divergent outcome over the next 10 to 20 years than they did 10, 15, 20 years ago. Because if you can lock down that housing expense or find the ways to do it cheaply by living with roommates or house hacking or live in flipping, then you're going to take that out as a variable and all of that can go to all of those savings can go towards the creation of long term wealth in whatever vehicle you choose to apply them to, whether that's more real estate, whether that's stocks, whether that's some sort of business pursuit. So I think it's more important than ever to focus on that leverage point and say, how do I keep my costs low? And the answer to that is sacrifice. You live with roommates, buy a property that's not nearly as nice and make those changes and if you don't, that's fine, but you're going to find it very difficult to float on. You're going to find it incrementally more difficult here in 2026 than in 2014, for example, to float your family's expenses than maybe that family did if you're a median income earner. And I think that's the challenge that people will face and the reward is exponentially greater for solving it and the penalty for not solving it and not making that sacrifice is a really challenging environment of cash flow in your situation and really hard trade offs about whether you, you know, buy the extra groceries today or whether you save for retirement.
- [38:07]
Joel
Yeah, yeah. I think of all the things my mom told me I love you was at the top, which is good. But then life's not always fair was definitely one of the things I heard A ton from my mom. And I think you're right. Like, what you're pointing to is the experience you had buying a property and house hacking and the accelerator that it was for you in terms of your trajectory towards financial independence. It's still a meaningful accelerator, but instead of going like 0 to 60 in 1.5 seconds, you're going 0 to 60 in like 3.5 seconds or something like that. Would you just say, like, it's, it's muted in terms of its impact? It's not quite as significant, maybe as it was in years past, but maybe that makes it even more significant and necessary.
- [38:53]
Scott Trench
Well, no, I think it's all relative to the alternative. Right. So, you know, was it easier to find a property that covered most or all of the mortgage payment in 2014 than now? Of course it was easier in 2014. However, now the option set is renting, buying the place as a, as a, as a primary. Buying a place as a primary residence or house, hacking it. And so what's the relative advantage between those three choices? I argue that the relative advantage of renting over renting is lower, right, because renting is slightly cheaper relative to buying today, but the relative advantage of house hacking over buying a regular house is as great or even greater than ever. And so those are the things that change. And I think that's how you have to make the decision. Making is what's going to give me the greatest relative advantage over my counterfactual.
- [39:43]
Joel
No, that's good. I like that clarification. Let's talk about your work life for a second. Scott, you mentioned early on, hey, you were the CEO of BiggerPockets. You are no longer. And you're still, you're still a young man, Scott. So you, you're not like a CEO retiring at age 70. They're finally kicking him out. You're, you're in your mid-30s. And so I'm curious to, to hear your why behind that decision. Like, what is it, the ideal day exercise that, like, got through to you and you're like, I'm not living my ideal days right now. I'm working too much. What, what was it?
- [40:15]
Scott Trench
Yeah, so there were kind of three reasons behind that decision to step down. One was the Biggerpockets had been an obsession for me for a very long period of time. This was not, this was more than a identity, you know, a CEO of BiggerPockets. It was, it was an all consuming passion project. I love what Biggerpockets does and what we stand for, but also it was really consuming a huge portion of my life. Not just in the much more than 40 hour a week work weeks, but also in the evenings and at night in bed and those kinds of things, thinking about the decisions of the day, what's coming up the next day. So that's one. The second is my skill set is around building community, engaging with people, thinking through these intellectual challenges that hit real estate investors. But the next phase of biggerpocket's growth needed, I think more, more of a technology focus and building out a great website and technology experience. And that was something that I thought somebody else could come in and do a better job of than me. And then the third thing is my, my real passion this whole time, not that I don't love real estate, has been financial independence. Like this is what I love talking about and thinking through. And so BiggerPockets money had been, I've been doing it for almost 10 years, but it always is a side project. So I'd show up two days a week, kind of record, go back to CEO job. And we never really figured out like, hey, where does this fit into the real estate investing world? I just loved it. I love BiggerPockets money and the goal of real estate investing for me was fire. So it's like financial independence, retire early. So why not focus on that and really kind of go explore all the areas that I've been missing around tax optimization and what are those challenges? And so those are the three reasons for the transition. And it's been a big life change the last year. My health has improved immeasurably. I would go through cycles of gaining 20 pounds with one kind of stress and then losing it not in a healthy way because I was getting fit, but because of the various stresses of the job here and now I've finally gotten into a very sustainable routine with my health, like getting outside. I don't bring home, you know, the challenges of high stakes decisions every day to the, you know, the dinner table or beyond.
- [42:27]
Joel
So you said, you said it's been wonderful. You were at bigger pockets for about a decade or as a, you still are in a wet, but you're not in the same capacity. Is it true that you never asked for a raise or that sounds like career self harm. You never asked for a raise. I'm so curious to hear what was your strategy about getting about compensation for the, for your roles there.
- [42:50]
Scott Trench
So yeah, that I started at BiggerPockets earning about $50,000 a year in 2014 and at the time that was actually a decrease from what I would have been making if I had stayed at Dish Network. But I also had the opportunity, at least in theory, to sell advertising for the podcast and for other parts of the platform. And so that was my opportunity to ramp my income. And over the years, I really only looked for more opportunities to sell more. I always, you know, I didn't say no to a promotion, but I just did my very best for Josh and said, I'm not just trying to grow bigger pockets, you know, for that sake, I'm also trying to do right by Josh as the owner and help him make better financial decisions. And that earned, I think, trust with Josh, the founder over time to the point where when he had to step, he promoted me from director to VP at bp. I loved being VP at bp. I just thought that that rhyming title sounded so cool. And then to president in 2018 when he decided to sell the business. And so that was my career trajectory under Josh. And neither of those came with requests for raises. I asked for maybe more commissions. I asked for more equity in the business because I believed in what we were doing and saw the growth potential. But I wanted those more than my base. And the reason for that was simple is I already had enough base to cover my lifestyle expenses. I was saving plenty on that. More base was more taxable income, which is great. I wasn't going to say no to it, but if I could, I made it very clear that in any situation where it was possible, I'd rather have something tied to a percentage, something that could scale, something that was reflective of my very best efforts to compensate me. And so I got raises, significant raises, and got my salary well into the six figures. But I never asked for that as the primary means of compensation increase then
- [44:40]
Joel
your work, how bigger pockets did as a company, well, that was directly tied then to your compensation. If the company continues to grow and succeed and generate profits, your bottom line is better by having more equity in the business instead of just having a bigger paycheck every two weeks.
- [45:01]
Scott Trench
Yes, I think. And I keep getting questions about, from folks about whether they should do the same in their situations. And it's really hard to answer that because the right, like, should I have asked for more of a base or should I have asked for more equity? Well, I didn't know how to value bigger pockets at 24, 25 years old like that. That wasn't, you know, 26, whatever, whatever. You know, those three years, I didn't know how to value the company. I didn't, I wasn't a private equity analyst and couldn't tell you what, what it was worth today or what it'd be worth the next year. I just thought it was special. I thought we had something really good going on there and I wanted to be a part of it in as big a way as possible. And so how do you then give that advice to like a 23 year old kid or 24 year old or even, or someone who's, you got a family and kids and is making that same decision at their company? What the right approach is in that category, I don't know. But for me it was obvious it was instinctive to do this. And I believe that you should apply that approach if your expenses are much lower than your base salary and there's a disproportionate payoff for lowering your base relative to the extra bonus, sales or equity potential. And I believe that was overwhelmingly true in my situation across the years at Biggerpockets.
- [46:14]
Joel
All right, I got more I want to get to with you, Scott, including, let's talk about primary home purchase and why you think that's should never be considered an investment. We'll get to that and a few other questions with you right after this.
- [46:31]
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Joel
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- [49:15]
Scott Trench
Yeah, so remember we talked about our middle class family who cannot go through the entire retirement account stack and amass liquidity after tax, right? They can't go. They can't max out both 401ks, the HSA, the Roth Roth, the IRA or equivalent and some 529 plans and still have enough leftover to actually make some kind of meaningful decision in their 30s. So many people are stuck in this situation, which I call the middle class trap and get made fun of because it's not really a middle class problem. It's really a problem for people who listen to personal finance podcasts for decades and are strong savers and are likely to retire very wealthy. But anyways, I digress. The problem with this is if you want to retire early, let's say 50s, you know, early 50s, maybe even late 40s or even earlier, the optimal allocation, asset location dynamic is really hard to predict and almost certainly going to be a balance. You know, imagine your wealth in thirds, right? You have your a third in your Roth, a third in your 401k, your traditional 401k or pre tax accounts and a third after tax in your brokerage account. And the reason you don't want it all in the pre tax. Right, or the big third, the really big third in your pre tax accounts is because that has to come out as ordinary income one day and that's very tax inefficient. You can do that up to a certain extent at the 0% tax bracket like we talked about in the $32,200 married filing jointly deduction here in 2026. But what's special about after tax growth is that it can be harvested at a 0% long term capital gains tax bracket which is up to like $98,500 for a married filing jointly couple here in 2026. So that should adjust with inflation over time. That's a really powerful way to harvest this after tax wealth. And you're not really taking advantage of that 0% long term capital gains tax bracket if all your wealth is in the 401k.
- [51:12]
Joel
So do you think most people. Yeah, most people don't realize that the 0% capital gains tax bracket exists like that there is a way to harvest gains from your taxable brokerage account and not pay tax. Do most people, Are they just completely unaware?
- [51:25]
Scott Trench
I think there's a lot of unawareness. I think people don't follow this then through to the conclusion. It's like I should be maxing out my 401k and that's great, you're probably going to do that. But if you are a serious student of personal finance and listen to this podcast and read a dozen books and you're saving 30, 40, $50,000 a year towards retirement, which is not uncommon for the demographic that listens to a podcast like this.
- [51:48]
Joel
Yeah, right.
- [51:49]
Scott Trench
Then you're going to overfund retirement. You're going to have so much more at the end of your journey than you really need. That's or that's a real risk. There's a real problem. Like, like Ronald Reed, the janitor who died with 8 million bucks.
- [52:00]
Joel
Right.
- [52:00]
Scott Trench
That's not the goal. We're engineering for a different outcome here. And if you instead don't max out the 401k for a period of time, I think it's like two to five years depending on your situation, you're going to pay, you're going to be a little bit suboptimal, but the opportunity cost is not nearly as large as you likely thought it was because you're only going to pay taxes. Now you're almost certainly you have a very high probability of not paying taxes on those gains at the end state. Now there's a whole bunch of trade offs here, right? Like the 401k plans have higher fee investment products which can be a drag on their returns relative to your after tax brokerage. And the after tax brokerage, if it's invested in index funds, going to have 1.5 or 7% dividend yield, which will have a small tax drag. So you can beat me up on all these assumptions, but the end of the day, if you do a really rigorous analysis, the opportunity cost is not nearly as large as most people think it is if they forego that deferral for a small number of years. My argument is for this, this family is max out your 401k for 35 out of 40 years, but the first five years or the next five years, don't max it and focus on the after tax liquidity position because that will give you options along that entire lifecycle continuum. And you're only sacrificing a few years of that savings in the 401k. And the earlier you do it, the most likely the lower relative income tax bracket you're going to be in and the lower the opportunity cost. So that's the argument I've been working on and trying to defend rigorously in a very complex model. It doesn't always hold true. Everyone's situation is different. But it seems to strike a chord in a lot of people who are stuck in this problem.
- [53:32]
Joel
Well, especially if you're retiring late 50s, you have potentially many years of very little income to be able to do a lot of tax maneuvering to at least pay a low overall tax rate if not be able to completely remove your tax burden. Yeah, I'm, I feel like the average American. Well, when you look at the statistics, the average American has most of their wealth in their primary home.
- [53:58]
Scott Trench
Yep.
- [53:59]
Joel
I don't think of that as a good thing. I think no, it's a forced method of savings. Right. And so for some people who aren't going to invest meaningfully in tax advantaged retirement accounts in their taxable brokerage account, it's at least something. Right. But what is your, how would you help somebody or want someone to think about a primary home purchase and how should they conceive of it if it's not an investment?
- [54:25]
Scott Trench
Well, I think there's a, the concept of the FIRE portfolio and then your net worth. And so when I, when I create a personal financial statement, for example, I Will exclude my primary residence from my fire, my financial portfolio. I'll exclude 529 plans which are beneficiary accounts, donor advised funds, cars, those are, those are personal property which should be tracked, but they're not part of my financial portfolio. And so that, that's how I think about it is, it's just, it's just not part of your. It's an expense. Housing is an expense expense and it's there. You should track the wealth, you should know how it contributes to your net worth. But it is not something that will contribute to your financial independence or flexibility except in the sense that once it is paid off or with a low interest rate mortgage, it pegs your housing expense at a lower rate and you'll need therefore less of a financial portfolio to cover that. You can also include it in your financial portfolio if you intend to sell it. So if you're living in a property and you intend to sell it in the next three or four years and then put that into, put the proceeds into a financial portfolio, then I'd include it as an inflation adjusted store of value, that equity. So that's how I think about it. I think again it comes down to what's the lifestyle I want to engineer and what's the cost of it. And I would encourage everybody to bias towards if you can. The earlier you do it, the better. House hacking or live in flipping, where you move into a property and fix it up is the cheat code. You just do that a few times and you have very high probability of amassing hundreds of thousands of dollars that can make every financial decision for the rest of your life that much easier.
- [55:55]
Joel
I feel like I'm hearing from more people who are buying rental properties while renting. How do you think of that? Is that, is that weird or do you think that's, that's like a wonderful thing for, for at least some people to consider or is it like, no, don't rent house hack homie.
- [56:13]
Scott Trench
I would say, I would say that if you are very wealthy and have specific goals or very high income, then yeah, I've certainly come across people who rent in Manhattan, for example, and buy rentals out of state somewhere else. So I think there's a specific thesis to that and I think it can work out great. It's just going to be work. This is a business that you're building and the idea is that you're going to somehow outperform the alternative, which is your passively managed index funds over some period of time. And I think you can do it if you use leverage and build good systems. But you got to be careful because you know, I talked to this guy who made $600,000 in Manhattan in a bad year and his plan was to buy class C rentals in Cleveland. And that's great, you know, you can do that. But this guy's going to have to buy a lot like 150 Class C rentals in Cleveland while distracted from whatever he does that's so important that it generates $600,000 a year in income. And that probably number is probably only going up if he's actually good at it. That's a real sacrifice there that I think of not enough people actually think through. And I would bias people towards thinking about real estate investments in bigger lumps, right? Maybe I'm buying 150 unit portfolio in that situation, or 15 unit portfolios, 10 of them over time. But transacting on rinky dink properties relative to your income or projected net worth I think is a trap that a lot of real estate investors fall into. And they should, they should think about not just where they're at, but where they're going to be in 5, 10 years with their career trajectories. I think a lot of people then buy rentals that are a pain in the rear and maybe do fine, but are insignificant relative to the position that they're otherwise building.
- [57:48]
Joel
I think that's a really good point and I want to drill down on that real quick. So for, for the average person like who's making solid income and they're like putting money in the 401k, the Roth IRA, the H, I can max all those out and I can build wealth that way, but I'm working 50 hours a week and I've got a family. And so man, the rental real estate, I love that Scott did so well with it. I love hearing those stories. But my goodness, it feels like it would be a distraction in net worth building or maybe I just wouldn't be able to give it the time that it needs. One from a research perspective, when you talk about before you bought your first property, Scott, before I bought my first property, I mean we're talking about dozens and dozens, if not hundred plus hours of research and figuring it out and learning the ropes and it's, it's like learning another language right before going to live in France for a year, you're spending two years on duolingo ahead of time. So. So from that aspect, do you think that rental real estate is like how should somebody know whether or not it makes sense for them given their lifestyle.
- [58:47]
Scott Trench
Well, you got to be able to pay that. You just, you just articulated it perfectly. Right. We at Biggerpockets, we literally map that out as the several hundred hour, six months to two years immersion that real estate investors would put in prior to buying their first property. And that's the price. If you don't put that in up front, you pay it on the back end when you have a bunch of problems you have to deal with. And you could still pay it on the back end even if you put in that research, by the way, on the front end. But you pay that price one way or the other. And I think that I actually got called out by this, by a listener recently because I said doctors shouldn't pay that price. Right. Because that's silly. They're going to be distracted from their doctor profession. But this guy wrote me a very lengthy and very passionate and very correct rebuttal to that saying, no, no, the doctors won that they should pay it during residency when their income is fairly low and they'll be able to reap the rewards on real estate returns across a huge income earning career. That's very consistent. You can borrow against it all that. So I'll eat my words on that particular one. But I would say other high earning professions that are variable, for example, where the full time attention focused on that career, it could be very unattractive to put in that time investment that distracts them from the 61st or 68th hour of work that they could be doing that translates directly to income potential. So that's very challenging. But for a middle class family, a middle to upper middle class family, that's where real estate I think has the sweet spot for a lot of folks because that's where your side hustle now is actually something that translates directly to hourly savings for all the work you put into the property in the immediate future and scales with you as you begin to build that portfolio over time. So I think it's hard as the years go by and your career progression moves forward. I think it gets harder and harder to justify the entry point into real estate investing for a lot of people, but not everyone.
- [60:29]
Joel
Yeah. So the earlier the better if you're
- [60:31]
Scott Trench
going to go into real estate. I think that paying that price early gives you the 40 years to benefit from the expertise that can compound those extra returns. Yes. And I think the more likely you are to house hack, which is the ultimate cheat code for this because you mentioned leverage. With a house hack, you could have put down 5% instead of your friend who just bought a rental property, who put down 25%. That's a big difference. You can buy it with an owner occupant loan.
- [60:53]
Joel
Last question. Do you think at some point the one, the market's too tough and you're just like, I got a lot of other stuff going on. I got enough wealth. I'm not really interested in building up my rental property portfolio much anymore. Like, I'm doing pretty good, and the passive income is solid. How do you. How do you know when to call it quits?
- [61:10]
Scott Trench
So I sort of have gone down that rabbit hole to a point. So last year I moved money out of stocks and bought rentals, but I didn't buy a lot of rentals. I just bought two properties. These are big properties. One was a million bucks, one was 600,000 bucks, and I paid cash for them. And the reason I did that is because now I got my income stream for those properties, and that supports a huge chunk, almost all of the baseline spending for the household. And that's it. Right. And so I have my levered property portfolio, and I still have my financial portfolio and some other various projects that we talked about in that vision document. But that. That really de risks my situation because I've already paid that price over the years of managing rental properties, and it didn't complicate my position. I didn't buy 150 Cleveland Class C properties. I bought two quality assets here in Denver. I can drive to when there's an
- [61:59]
Joel
issue, which is like buying headaches if you went that route. Right.
- [62:02]
Scott Trench
Yeah, so. So I think that's where. That's the advantage of that. And you know, you can quibble. Right. I think it'll be really interesting to see how this works because I sold the cash needed to buy those properties in February 2025. And if you remember, the market crashed right after that. And I was like, oh, boy. I dodged. And then of course, it zoomed back up and into the year, like 15% up. And now it's almost back to where it was in February, as of this recording here of March 30, 2026. So we'll see how this ride goes. But I wonder if I will get a very close return profile to the s and P500 unlevered if we assume these properties will appreciate three, three and a half percent over five, 10 years. And I'll get my. I underwrote them both to about a 6% net operating income each. So let's call it 5 and a half percent cash flow after allowances and those kinds of things and that includes property management, all that stuff. So I think that that's. We'll see. We'll see how it goes. But I think there's a, I think there's a good chance that I'll have a much smoother ride and, or maybe a pretty close result to the S&P 500 over that time period. So we'll see. That's. But that's fundamentally part of the bet
- [63:10]
Joel
we'll have you have back in a decade and we'll check and see how it's gone. Scott, I appreciate you man. Thanks for joining me. And I know that you've been putting a lot of work on BiggerPockets money, so and you've got a lot more resources up on, up on the site. Anything you want to send how to money listeners to?
- [63:23]
Scott Trench
Oh yeah. If you, if you want to see like what I'm trying to do one of the side projects here and I kind of do it in spurts this week will be a heavy spurt because Mindy's on vacation and I have a whole bunch of free hours. But I'm building out these like spreadsheets or financial planning templates and I think that there's a place for free, hopefully high quality resources here and I'm in a unique position to be able to do that, I think. So. Biggerpocketsmoney.com resources has the latest versions of these. I have a personal financial statement for example, that separates out those things. I've got that goal setting workbook that lists my vision as an example of what that could help out. And I keep populating it or updating them. When people spot errors or suggest improvements in some of those resources, that's the big project for the year.
- [64:04]
Joel
Well, we'll link to that in the show notes as well. But Scott, thanks for taking the time. Appreciate it.
- [64:08]
Scott Trench
Thank you, Joel.
- [64:10]
Joel
Oh man. Such a great conversation with Scott Trench, who is one, an awesome dude and two just is clearly so passionate about this content not just for himself, not just for his own life, but to see other people be able to enjoy the same financial freedom he's been able to create for his family. Like, like I was talking to him after for just a quick second and just all of the resources that he's creating over there at BiggerPockets money that are free of charge, right to anybody who wants it because he cares so much about other people having the freedom earning that ability to have those options and avoid the middle class trap that we talked about, which is kind of this, yeah, I'm saving for some far off future, but I don't know how to realize some of that optionality now. I thought Scott gave some good tips and I think one of the biggest ones and it's something that's so underutilized and we should dedicate a whole episode to this at some point, especially if you are a younger listener. The, the house hacking strategy is unparalleled in terms of the options it can give you. Like currently, if you're able to partake in one, if you're able to buy, let's say a duplex and rent out one, one unit, buy a triplex and rent out two units, buy a property. Like the first single family property I bought. It was just, I just had a roommate in there with me and it was ridiculously powerful strategy to be able to cut my living expenses so that I could save up that next down payment to buy the next home two years later. And it's, it's not easy. It takes sacrifice. But there is nothing like house hacking. Then the, the third home, the third property I bought was a duplex and we rented out the back part of that home for four, four and a half years. And it's insane how much it juices your ability to reach financial independence to funnel more money towards whether it's another property or towards your retirement accounts and your taxable brokerage account just, it frees up so much cash because it's reducing your living expenses meaningfully. So house hacking is something Scott did, something I did. I think we're both sold on that as a way for more people to be able to achieve the goal of financial independence earlier than most. And so even if you're thinking, man, real estate investing's not for me. I don't want some gargantuan portfolio. That's okay. I think for a lot of people maybe it just, it doesn't make sense. I think the house hack can be that way where you do dip your toes in, but you're not going whole hog into real estate investing and it can be your way to have at least gain some of that flexibility without being a real estate investor who is constantly doing deals and has a dozen or more units. That's not necessary to achieve financial independence. But I do think the house hack can be a crazy good, powerful first step. So I hope you enjoyed this conversation. You can find the links to some of the stuff we mentioned up on our site at how to money.com thanks as always for listening. Until next time, best friend out.
- [67:46]
Scott Trench
This July 4th, come celebrate at America's Block Party hosted by America 250. America's Block Party is a can't miss 4th of July concert happening at the Los Angeles Memorial Coliseum. Experience music, performances from major artists, patriotic tributes and the kickoff to giving 4th, helping to make July 4th the largest day of giving in American history. It's more than just fireworks. Learn more about this landmark celebration@america250.org
- [68:15]
Joel
this
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Scott Trench
is Bethenny Frankel from Just Be with Bethenny Frankel. Most dog food is marketing, not nutrition.
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Joel
That is why Biggie and Smalls eat
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Scott Trench
just food for dogs. Real 100% human grade food with ingredients I actually recognize. And yes, I do see the difference. Better digestion, healthier skin, more energy. Dogs that feel better.
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Joel
My babies, if you've been on the
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Scott Trench
fence about switching, stop overthinking it.
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Joel
What's more important than your furry babies and their health?
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Scott Trench
Go to justfoodfordogs.com right now and get 50% off your first box. No code needed. Just try it.
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Kate
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Scott Trench
a message for everyone paying Big Wireless way too much. Please, for the love of everything good in this world, stop with Mint.
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Kate
You can get premium wireless for just $15 a month. Of course, if you enjoy overpaying. No judgments.
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Scott Trench
But that's weird.
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Kate
Okay, one judgment anyway, give it a
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Joel
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Scott Trench
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- [69:24]
Joel
Guaranteed human.