I had the good privilege to discover this personal finance movement and have it make sense to me very early on, and then just kind of dive in or read it. Scott Trench: Oh, wow! Thats fantastic. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Chart Your Progress to Financial Independence! Have you made any mistakes, or is there anything you would do differently if youre starting from scratch now? So thats how I managed to lose money investing in stocks I guess. And Ill see you next time. I know its a really hot real estate market these days. Scotts estimated net worth is $1.5 million. Scott is the CEO of BiggerPockets.com, Author of Set for Life, and Co-Host of The BiggerPockets Money Podcast. And hopefully, Ill make it out to Denver one of these days and say hello. And thats the best case scenario, is that you go through all of those rungs of the ladder in 20 years. I wish I had my act together as much as Scott does when I was his age. So hes stepped aside. And I do she does a lot of private lending and other various kind of creative ways to invest and maybe get a diversified or different or higher returns than she can with just stocks. Mad Fientist: Yeah, thats absolutely crazy! So, people always think that thats where they need to focus on their finances in order to achieve a high savings rate and rapidly accelerate toward financial dependence, but thats wrong. When interest rates fall and real estate assets are scarce, asset values soar. It will also teach you how to live a happy, healthy, and fulfilling life . In this show, he talks with successful entrepreneurs, . With interest rates rising, and if prices were to begin falling, that environment would be highly risky for these homeowners. BiggerPockets.com is the worlds largest online network of real estate investors. And its about putting together a plan that makes the most sense to you based on the perspectives of smart people who have been there and that resonate with you. We, AOL, are part of the Yahoo family of brands. A lot of these investors have enjoyed well over a decade of rising prices. Mad Fientist: Nice! Scott Trench: Yeah, and I think a dollar saved is better than a dollar earned because of that tax advantage. So, those are two approaches for investing. And I wanted to do a little bit more than maybe invest in index funds again which is kind of a standard 8% to 10% long-term average return. But its funny because I hear these people, theyre like, Oh, Im very well into FI. Scott Trench: Yeah, I got promoted to president of Bigger Pockets maybe last Tuesday I think. No, heres what I was thinking. I actually enjoyed the audio version of it in the gym. I bought my last property in June 2017. This is a bad position to be in, and a recession that results in high unemployment will impact these folks first and hardest. The amount of savings I had, less my car loan payment, plus the value of my car. Mad Fientist: Hey, I hope you enjoyed that interview with Scott. And then, the rents are about $2600 a month. Or do you think go straight for something like the quadplex if you have the capital to invest? So what would yours be? This is great, I have a friend in Denver doing similar, sadly in UK, increases/changes in Buy-to-let (BTL) taxes, are making this approach nonviable. Yeah, thats a great way to look at it. I think that its increasingly difficult. This doesnt work so well when I have a family. Turns out our guest today, Scott Trench, found a lower paying dream job at a startup. These offers do not represent all available deposit, investment, loan or credit products. Mad Fientist: Wow! And I think focusing on frugality at that stage absolutely is going to be the biggest impact you can have on your finances. So theres a ton of great stuff there. . I know Ive had Chad Carson on the show, and weve talked about it in the 1500s. So, it sounds like you havent made any sort of mistakes or youve been on such a very amazing path seemingly as soon as you got your career? And theyve got a hundred million dollars in cash and no debts. Who cares if its underwater in terms of you owe more than its worth as long as its cash flowing? Scott Trench: Well, thank you, Brandon. Start tracking your own financial progress with these money management apps. So hopefully, it will happen. The author, Scott Trench, has some very wise . It wasnt in the nicest area. Suppose that youre making $50,000 a year, if you save $500 a monthwhich is actually a pretty good savings rate. Funded by the U.S. Department of Agriculture and administered at the state level, SNAP benefits 11 Companies That Will Help You Pay Off Student Loan Debt. Scott Trench: Yes. So one of the problems that a lot of people have I think when it comes to finance is theyre unable to take any risk whatsoever. Scott Trench: Yeah, sure. And that the step after financial analyst two of course is financial analyst 3, then senior financial analyst, then finance manager, senior finance manager, director of finance, senior director and so on, all the way up to CFO of a Fortune 500 company. What Are Qualified Expenses For A 529 Plan (And What Doesnt Count)? Mad Fientist: Wait, let me interject. Trench has focused his career on. Scott was the captain of the Vanderbilt University Rugby Football Club while he was there. But if youre able to start increasing that savings rate, you accumulate this cushion, this what I call financial runway and set for life which allows you to live without the need for wage-paying work on that. This document can be used by anyone in any position no matter how much you have invested or saved up. I was just curious if anyone has calculated there Real Net Worth as he describes it in the book. And yeah, back in my poker-watching days, I remember Annie Duke very well. So you have to have some baseline of stability, and then work as hard as you can to acquire excess so that you can then go on to take these chances in life that you believe, to the best of your ability, are great, and then obviously do whatever work you can to increase the odds as much as you can to your favor. David Greene shares the exact systems he used to scale his Mad Fientist: Yeah, absolutely. Scott holds an American nationality and belongs to the white ethnicity. Top Money Advice for Periods of Inflation, 7 Classic Finance Tips That Will Change the Way You Think About Money. And I knew that my salary at financial analyst 2 would be about $56,000 to $58,000 (again depending on performance). Mad Fientist: Very cool. But then we go into house hacking. Its putting money in your pocket every month. Click Manage settings for more information and to manage your choices. So thats not scalable. Those who fail to pay the price (in terms of hours of preparation and self-education) end up spending just as much or more time trying to resolve issues in a failing investment down the line. But do have any other questions about the. He has some family things that are going on. I was listening to your podcast (which well obviously talk about here soon as well). Its been a whirlwind since then. Scott is of white ethnicity and has American citizenship. I was able to reduce my monthly payments. I definitely still have some work to do to get to there. Scott Trench: Yeah, sure. Start tracking your net worth with Personal Capital using our link. He serves as the CEO of BiggerPockets.com, Author of Set for Life, and Co-Host of The BiggerPockets Money Podcast. And then, they both were co-hosts on my show with me on episode #38. And Im plenty happy doing what Im doing and kind of continuing along with things. So, the goal of this show is to say, Hey, real estate is one part of a strong portfolio. And I believe it makes sense for many people. Well, thank you so much, Scott. And that is my question. I wish that people knew that real estate investing is a double-edged sword. Sarah Peck, Richard Epstein, Logan Sekulow, Jim Harold, Ameera David is an Arabian-American journalist, news reporter, and anchor. So lets dive in! You run out of money and you have to go and find similar paying work as your only option. But in a bad market, its really important because in a bad market, you cant sell. Mad Fientist: And thats why I love these three distinct phases so much. And both Mindy and I are a little bit morehow do I describe it? You could try starting a blog or a podcast. But you get to this $25,000 or this one year of runway, and now you have a lot more options. Thats great. Ive never been to Colorado, and I love mountains. I have a very sizable chunk of my money in index funds for that exact reason. Search by Name, Phone, Address, or Email Its written for a median income earner that is starting with little to no assets but wants financial freedom. We go into just incredible personal stories. Scott Trench: Sure! It was definitely worth talking to youlots of great advice. So, the goal is to go from a year of financial runwaywhich is a very modest goal that you can grind out over maybe a year to eighteen months depending on where youre starting from, what your income is, and where your expenses are, to a goal that has a lot less certainty. And this brings up a really cool thing that I liked in your book, which I havent even mentioned yet. You have to live there until things appreciate or rents go up, or the property goes up and you either have to be able to sell it or live there happily. The next phase is getting that first $100,000. Mad Fientist: Perfect! This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). When I started on the road to financial dependence, thankfully, I was already in stage three. But if youre starting from that point, you dont really have the option of going out and starting a business because youre working full time and starting a business is hard work and unlikely to be successful on a part-time effort in the short run. And Erin Chase is an expert grocery shopper. So I really like how you structured it. I interviewed her and her husband in episode #14. And one of my, and I think Mindys, big petpeeves with the real estate community is that a lot of people will go in and try to buy real estate and hope that buying that real estate will solve their financial problems. Great episode Brandon and Scott!. And yeah, the main focus in that first $25,000 is frugality, which as you talked about in the book, a dollar saved is better than a dollar earned because obviously youve already paid tax on that dollar that youre saving, and its worth more to you than a dollar earned because you would pay a bunch of tax on it and have to do work to get it. House hacking for life!! But youll need about $48,000 to finance your $4000 a month lifestyle. A lot of people will go with something in the 8% to 10% return range for index fund investing over the long term. Thats not fast enough. I couldnt agree more. But really, what were after here is a strong personal financial position with a good savings rate, a strong income, strong investment returns, and then the opportunity, if desired, to go take advantage of entrepreneurial pursuits. Poker players, at least the ones that are really good, have this really good outlook on things where theyre like, Hey, heres the hand Ive been dealt. Building wealth is always possible, even while working full-time, earning a median income, and making up for a negative net worth. Is Scott Trench Married Yes. We've cultivated everything you need to get started, from long-term investing principles to increasing your overall net worth in big ways, with this list of the 20 best finance audiobooks from our catalog. And I have a couple of other expenses there as well. Scott Trench: But yeah, that interest in personal finance is kind of what spurred my ability to save and the accumulation of my first $20,000 to $25,000 for me. 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