Mindy and Scott’s Money Stories and Why They WON’T Retire Early

Mindy:
Welcome to the BiggerPockets Money Podcast’s 400th episode, yay, where Scott and I talk about our money stories. Hello, hello, hello, my name is Mindy Jensen, and with me as always is my ski bum co-host, Scott Trench. Scott, how are the slopes recently?

Scott:
They were great, Mindy, and it’s great to be here with my board co-host, Mindy Jensen.

Mindy:
That’s right, because I’m a snowboarder. Scott and I are here to make financial independence less scary. Less just for somebody else to introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you are starting.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big-time investments in assets like real estate, or start your own business, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.

Mindy:
Scott, I am so excited to share your story today. I am excited for you to help me share mine by asking me leading questions in the show. I always tell our guests when they’re coming on the show, “Hey, don’t worry, I’m going to be asking you questions and leading you through the show.” If we were in court, we would get an objection from the opposing attorney, “Objection, leading the witness.” Because we’re always asking these leading questions. Because I want to help you tell your story. Scott, I want to help you tell your story, but first, we have a money moment. This is our new segment where we share a money tip, trick, or hack to help you on your financial journey. Today’s money moment is, if you want to save money on your everyday online purchases, use a browser extension such as Honey. This app will automatically search the internet for the most applicable coupons. I like that. Who doesn’t like saving money? Do you have a money tip or trick for us? Email Scott, before we get started, let’s take a quick break.

Scott:
Mindy, before we get going in today’s show, I just wanted to take a moment and thank some of our longtime listeners and members of the Facebook group, members of the BiggerPockets Money community, for their engagement and their support of our show. For that, we want to read two of the reviews that have been left on Apple and Spotify recently. First one here is, “Highly recommended. I love this podcast. It’s so informative, and they easily break down what is perceived as complex issues to manageable, easy-to-understand topics. Definitely one of my top three favorite finance-related podcasts.”
Another one, “Thorough and helpful. I have listened to Mindy and Scott for almost two years now, and I have been remiss by not writing a review until now. Mindy is a positive and thoughtful force and has been a great cheerleader for me. Scott is my analytical twin. His uncanny ability to identify goals and design a portfolio to back into those goals have shaped and codified how I approach my financial life. I appreciate all the invaluable work they’ve done.”
Thank you so much to both of you guys. We really appreciate it. I think that was Erica and Courtney who left those reviews. We appreciate that and would just always, always are grateful and appreciative of anybody who listens, especially for those who take the time to leave a review, especially-five star reviews that are nice. Thank you very much, everyone.

Mindy:
Yes, thank you so much for listening. We could not do this without you.

Scott:
Before we jump in, let’s tell everyone the two-minute story of how you and I met and started the podcast. With that, let’s bring in our guests today, who is Mindy Jensen and myself. Mindy, welcome to the BiggerPockets Money Podcast. I’m so excited to talk to you today.

Mindy:
That’s my line. I can’t actually remember exactly how we started the podcast. I have my version, and I’d love to hear how you think it went. There’s three sides to every story, your version, my version, and the truth. How I feel the story starts is, I was in the forums. I was the community manager, and I was in the forums all day every day at biggerpockets.com/forums talking about real estate investing. The most common question that I would get is, “How do I get started investing in real estate with no money and bad credit?” The frugal girl in me just cringed every time I would read that question because I’m like, “You don’t. You don’t invest with no money. What are you going to do if something breaks and you don’t invest with bad credit because how are you even going to get approved for a mortgage?” And I thought, “We don’t really talk about this on the Bigger Pocket’s real estate podcast because I think what they were assuming that you had money and credit.” So I said, “We should start a podcast talking about finances.” That’s what I thought.

Scott:
I’m largely lying. It was the No Money Down Real Estate Investing comments and stuff, and then, I think, philosophic. What’s great about BiggerPockets in a general sense is, there’s no one right way to do anything. They’re just opinions. Your and my opinions are just two voices in a crowd of dozens of BiggerPockets hosts, authors, hundreds of power users in the forums, people who post thousands of times, and millions of members. There’s no one right way to do anything, but I think your philosophy and mine is the correct answer to how do I invest in real estate with no money and bad credit, as you don’t invest in real estate with no money and bad credit. You get your financial foundation set first. Hopefully, if you’re listening to the BiggerPockets Money Podcast, you are aligned with that because that’s what we try to preach twice a week here.

Mindy:
Yes.

Scott:
Mindy, I would love to jump in and hear a refresher on your money story and what’s new since the last time we interviewed you about your money story, four and a half years ago at this point. That was back in 2019.

Mindy:
2018.

Scott:
2018. January 2018 is when we last heard an update about your money story. What was your aha moment? When did you and Carl discover financial independence and begin aggressively pursuing it?

Mindy:
I don’t know that we had an aha moment. We have always been frugal. One week, Carl was having a horrible, horrible time at his job. He was working on software for the VA that matched blood with the blood that was donated with blood that people needed or with patients who needed it. If you didn’t do that right, if you get the wrong blood, you could die. There was a bug in the code that was found, and he had this panic attack for about a week. Like, “Oh my goodness, I was so careful, I checked everything, I double checked, and I wrote something that could kill somebody.” He just could not get out of his head about this. It turns out, the person that was checking the software made a mistake. He didn’t make a mistake. But for a week he had this massive panic attack, and he’s like, “I can’t do this. I can’t do this for another 40 years. How do I quit my job early?” He banged that into the computer, and up pops this website, Mr. Money Mustache. He starts reading. What’s his big article, The Shockingly Simple Math?

Scott:
The Shockingly Simple Math to Early Retirement.

Mindy:
This is crap. This guy is selling something. But he kept reading because it was interesting. He wasn’t selling anything. He starts doing the math, and he’s like, “Oh, that actually works. That’s a real thing.” So he comes running downstairs. He’s like, “Hey, I just found this website, and we can retire early.”
I’m like, “Great, do it.” I was a stay-at-home mom at the time. “I know how stressed you are. Just quit your job. We’ll be fine. Go find another one, whatever.”
He’s like, “I’m going to start a blog about it.”
I’m like, “That’s the dumbest thing I’ve ever heard.”
He’s like, “What do you mean? This would be a lot of fun to talk about.”
I’m like, “Nobody’s going to read this blog. You’re going to be bored after three articles, and it’s never going to…” We just had our 10-year anniversary of this blog, and it’s still going strong. That didn’t pan out quite as I predicted it. But we discovered after doing some research into the 4% rule that we were approximately halfway to our goal just because we knew that we should be saving and investing, so we were, but we were just randomly saving and investing it. There wasn’t really any purpose to it. There was a purpose, but you save for retirement at 65. You don’t save for retirement at 40.

Scott:
It sounds like financial independence runs thicker than blood in the Jensen household. Sorry, I was saving that one up for a while. Hopefully it landed there, Mindy. You started this blog 1500 days. Were you able to achieve that goal in the stated timeline? How’d that work out?

Mindy:
The stated timeline was 1500 days, or about five years, and it turns out that it happened in about three years. We had huge wins of success from the stock market. We started in 2013. We started documenting our journey, and we hit our FI number at the end of 2015.

Scott:
Mindy, how would you say that you and Carl manage… One of the problems, I think, a lot of people may find if they’ve been journeying towards FIRE for many years is the goalposts move. What they thought was enough spending turns out they want more a few years down the road. I’ve certainly found this to be true for myself. I believe you and Carl have done a pretty good job of not having those goalposts move too far on you. Is that a fair assessment, or do you have any thoughts to add there?

Mindy:
I would say you are correct, but that’s because we don’t really want a lot. We have everything we need. I don’t really care about clothes, the latest gadgets, or new fancy cars. We were actually talking about this last night. Somebody reached out to him and said, “I make multiple six figures and I still find myself living paycheck to paycheck. I don’t understand how I’ll ever get financially independent.” We were talking about car payments, and I said, “We have a 2003 Honda Element that we bought brand new, the first new car that either of us had ever bought, and we have a 2010 Mindy van. It’s a Mazda 5 minivan that we also bought brand new.” The element, I don’t think we paid cash for, but we paid it off pretty quickly. The minivan was, we had a car payment for three years because it was financed at 0%. We went into the dealership, and he’s like, “How much do you want to put down? Your interest rate is 0%.”
I’m like, “What’s the lowest amount I can put down? I want to finance as much as possible at 0%. Why would I put down anything?”
He was like, “How about $500?”
I’m like, “Great. That sounds awesome.” So I paid off $20,000 over three years with 0% interest, which was awesome. That’s the best. I’ll do that again all day long, but we haven’t had a car payment since 2013. You hear these stories of people who have car payments that are $600 a month, $800 a month, $1000 a month. I was looking through some Finance Friday applicants with our producer, Kailyn, earlier today, and someone had a $1,038 a month car payment. I’m like, “My mortgage is $1,300.” You’re never going to get to FI if you’re buying these extravagant things. If you can reduce your desires, it’ll be a lot easier, or make a list of the things that you really like and that you really find value in. I don’t really have a lot of value in my cars. I have no value in my cars. They’re worth $0. They just get me from A to B. I don’t care about them. If that’s something you do find value in, great. Find a way to afford it, but don’t spend on all sorts of things that you don’t care about.

Scott:
I think it comes down to, you nailed your priorities, you stuck with them, and you did not let them increase, or you did not let your desires increase for spending over your journey to financial independence. I think that’s the real trick. That’s what separates folks who actually FI from people who maybe struggle with it, especially in the later years and have one more year syndrome. How much of an impact was the stock picking and the excellent performance of Google, Tesla, and some of these other things in pushing you over that hurdle? If you had invested in index funds, how much longer do you think it would’ve taken? What year do you think it would’ve hit FI?

Mindy:
Scott, this is a really interesting question. We preach index funds. The whole personal finance world preaches index funds. It’s set it and forget it. It’s simple. You don’t have to really know what you’re doing. You just put money into index funds. It would’ve taken longer if we had just put our money into index funds. We were in incredibly risky stocks. We were in tech stocks, and there were some stocks like Snapchat and Twitter that we did not buy because we didn’t really feel like that was going to take off. I’m not really sure. That was more Carl. I’m not really sure why he felt like those weren’t going to take off, and they didn’t. We invested in Facebook, which came out, went straight down, and then started going up again. Google’s a verb. The name of the company is an actual verb that’s going to take a long time to take over.

Scott:
Like Xeroxing?

Mindy:
Yeah. My daughter the other day said, “Mom, what’s a Xerox machine?” She said, “What’s a fax machine?” I’m like, “It’s like Xeroxing over the phone line.” She’s like, “What’s a Xerox machine?” I’m like, “You’re grounded. You can’t ask me these questions.” But when your company name is a verb, that’s a pretty good indication of a decent sized chance that that’s going to work out. What did Warren Buffett say? Investing companies with a big moat. Index funds are great if you don’t know what you’re doing. If you’re not sure, if you’re not willing to do just copious amounts of research, you should absolutely do index funds. But we definitely got there faster through risky tech stock investing.

Scott:
If you had to guess, how much faster?

Mindy:
Probably five or 10 years faster.

Scott:
Wow. So this was a huge factor in your ability to attain financial independence?

Mindy:
Yes. I believe that we still would’ve attained financial independence. It just would’ve been much slower if we had not done individual stocks. This is absolutely a do as I say, not as I do thing, because I’m not advocating for that at all. There’s a lot of research. I can’t even tell you how much research Carl does on all these tech stocks, and then we talk about it. I’m like, “If you think it’s a great idea, let’s go.”

Scott:
One of the things I see in the history that you do post on the blog is 25%, 50% annualized returns or annual growth in your net worth, most of which likely was portfolio performance. That is outstanding and really impressive.

Mindy:
There’s more of it because we’ve had a lot of really awesome stock market growth in the last five years. There’s not quite as much as there was because last year was not a really fabulous year. I lost, I think, 20% of my net worth last year, 40% of my net worth. I don’t really like to think about those numbers because they’re so big and so bad.

Scott:
Are there any big changes you’ve made to your position at the strategy level, like how you think about building wealth now versus five years ago?

Mindy:
Yes. Probably five years ago, we were still really heavily into individual stocks. I don’t think we had very many index funds, and that was the beginning of our index fund rollover. We would decide we didn’t want to be in this one individual stock anymore, so we would sell it and invest all of the proceeds into index funds. Instead, we are approximately 50/50 of our net worth in real estate and stocks. Of the stocks, it’s approximately 50/50 individual stocks and index funds.

Scott:
That used to be 100% individual stocks?

Mindy:
It used to be almost 100% individual stocks.

Scott:
Awesome.

Mindy:
I do have a question that I would like to pose to anybody who’s listening, who is smarter than I or has a great answer for this or even just a suggestion, what do you do when you do believe in the viability of a company? Let’s use Google. You know what? No, let’s use Apple, because they haven’t actually laid off anybody recently. I believe in the viability of Apple computers, Apple phones, and Apple the company, and I want to continue to own their stock. But because I bought so long ago at such a low price, my all-in dollars invested is low, but it has grown to be 30%, 50% of my entire portfolio. I still believe in the viability of the company.
But much like Enron employees believed in the viability of their company until it all went to squat, when do you rebalance your portfolio? When do you decide, I don’t want to own that asset? Even though you have enjoyed such a big swing and you believe that there is more swing to gain, you don’t want your whole portfolio in one stock. How do you figure that out? I have asked this question of a lot of people, and I don’t know what the right answer is. I don’t know what answer I want to hear. I want to hear, “You’re doing great. Keep it going.” But I don’t know that that’s the right answer either. That’s a question to the listeners. Scott, you can chime in if you want to.

Scott:
So you’re saying my problem is, I bet on Google 10, 15 years ago, and that worked. Same with Tesla. Same with Facebook. All these other ones that I know you and Carl have invested in small dollars. Now it’s huge. I think that the conundrum is, if you are picking individual investments, you are going to have this problem if you invest for any length of time, unless you’re super unlucky. Your average return across a set of 50 of these bets over the course of a lifetime may be close to the stock market. But when we talk about index fund investing, we’re just saying that stock picking, mathematically, on average, is no better or worse. In fact, it often is worse than just going with an index fund investment. But if you throw darts at the dart board, a couple of them are going to hit and a couple of them aren’t.
Now, I’m not saying you guys threw darts at the dart board. Carl obviously did a tremendous amount of research on that, and you’re extremely knowledgeable about these investments. It may be that you are better than average at picking technology stocks and these types of things and able to get that return. It is possible. We know that some investors can do it if you’re willing to put in hundreds or thousands of hours to find that alpha, which I think you guys have done. That’s one. If you make investments over a long period of time, you are, again, unless you’re very unlucky, going to have some big winners. We had a gentleman from San Francisco who bought a condo 10, 15 years ago, and that was half of his wealth. Same question, what do I do now that I’ve won? But my portfolio doesn’t make any sense. If I had 500,000 and 1 million bucks, I wouldn’t put half of it into Google right now, even though I still think Google is good. So am I framing the conversation? I’m really just framing the groundwork here.

Mindy:
You’ve used a word that I want to highlight. You’ve used the word unlucky. If you do this, you might get unlucky and have negative returns. This was all luck. This was absolutely… We looked into the companies, we did some research, we felt like it was going to be a good bet, and we lucked out. There were other stocks that we don’t talk about, like the Las Vegas Sands casino. That didn’t turn out so well.

Scott:
I know. I’m using the word unlucky intentionally. Because if you make 20 investment decisions and none of them work out to an order of magnitude better returns than the other ones, then you’re unlucky. If you’re betting on tech stocks and nothing happens, then that’s unlucky across a pool of bets. By definition, this strategy is going to wait you. This is venture capitalism 101, they make a hundred bets, and two or three of them carry the entire portfolio across that. Investors will inevitably hit the result of having one, two, or chunks of their portfolio that dramatically outweigh everything else that’s going on. I think that’s the question, what do I do at that point in time? I think what you do is you go back to the drawing board, and it’s the same tool that we’ve talked about in the past.
You say, “If I had converted my entire position to cash after tax, how would I invest it right now?” If you have a long-term philosophy, then that answer will be pretty clear over time, and you can grapple with that. You may need some time to bridge it. It’s never going to be truly clean because there may be tax consequences for making those choices. You may find, “You know what? I like Google still, and my philosophy’s changed.” I’m going to actually update my written investment philosophy to say, “No, I want to be exposed to opportunities that I think are particularly good. The index fund stuff is great, but I’m going to change my philosophy to go with an approach that works better for me.”

Mindy:
I like that answer, Scott, but I would love to hear anybody else chiming in on our Facebook group at facebook.com/group/bpmoney. But Scott, this is enough about me. Let’s turn the tables on you. Scott, welcome to the BiggerPockets Money Podcast. I’m so excited to talk to you today.

Scott:
Thanks, Mindy. It’s great to be here.

Mindy:
Let’s look at your journey to CEO of BiggerPockets. That’s an impressive deal because you’re 14.

Scott:
32, so twice 14 plus four. But my journey to BiggerPockets, I started my career in 2013 at a Fortune 500 company as a financial analyst, and within three months, realized I wanted to become financially independent. I had a massive advantage over a lot of other folks on the journey to FI, and that I discovered the concept when I was 23. I Had no wealth, but also had no debts. Thank you to mom and dad for paying for college. I Discovered the core concepts right away. I was instinctively fairly frugal and protective of my money, but I was very much, again, informed by, here’s the playbook from Mr. Money Mustache from BiggerPockets. Right away, within three to six months of starting my job, I discovered both of those platforms. I was immersing myself in the world of personal finance, Mad Fientist, all these other different types of content out there and formed the plan.
I’m going to frugal my way to financial independence, put that money into index funds and house hack, and invest in real estate to get there. By June of 2014, I had saved up my first 20, 25 grand by working my job, packing lunches, driving for Uber, and otherwise just accumulating cash. At that point in time, I made two decisions. One was to go under contract on a duplex here in Denver. I bought it for $240,000. It’s worth almost two and a half, three times that much now, maybe giving back 10%, 15%. We’ll see this year in valuation. Then the other was to join BiggerPockets as an employee. The way I did that is I met Josh Dorkin, our founder, through a networking little mastermind group that I had joined because of the podcast, the BiggerPockets real estate podcast that encouraged me to go network with local real estate professionals. I did that. I followed that advice, and one of them happened to work in the same space as Josh.

Mindy:
I love that story. Would you please tell how you just barged into Josh’s office to introduce yourself?

Scott:
I was overwhelmed. I was like, “Oh, this guy, Josh, he’s changing my life, and Brandon. I’m following their advice. I’m here right now.” I knock on his door, and I tell him, “Hey, Josh, I’m a huge fan. I would love to buy you lunch sometime.” He claims to remember it differently, but I remember something to the effect of, “Go away, kid. You’re bothering me.” So that happened. I got his email. I followed up three more times, and eventually I met up with him. I can’t remember if I ever got to have lunch with him or not, but I was definitely invited to an interview, which I was not expecting a few days or weeks later after that first meeting.

Mindy:
I think it was a few days later, because when you told this to me, you offered your financial analyst services at the same time that he was like, “I have a big financial analyst problem.” This kid comes in, barrels into his office. If you don’t know Josh, that’s not his favorite thing. When somebody just wanders into his office unannounced, no meeting scheduled, you just wander in.

Scott:
It worked.

Mindy:
For him to say, “Get out of here, kid.” Is pretty on brand.

Scott:
I want to point out, I also offered a job in a brokerage. I might have gotten my agent license at that same time. Another guy from the mastermind that I was in took that route and became an agent. I believe that route went very, very successful. The brokerage is called Thrive Real Estate. They’re doing fantastic. I believe that the income potential in that job would’ve been significantly high. It’s always interesting to go back to these inflection point moments because obviously, joining BiggerPockets has been the ridiculous advantage in my career in building wealth, the connections, the network, the compensation, and the role here of CEO.
But it’s always interesting to think about that inflection point of, “Hey, I would definitely not be hosting this podcast, talking to you right now, or doing these things, but I would probably still have a real estate portfolio and have had a couple of good years as an agent if I had taken that path.” I just find it interesting to think through that key point in going through this incredible luck. But I actually had two good options at that point in time, one of which I’m very glad I chose, but just something I philosophize about sometimes.

Mindy:
Were you actively looking to leave the world’s worst company to work for?

Scott:
I was. Yes. I was telling my colleagues about my goals to become financially independent. One of them was like, “I don’t know what you’re doing in this chair right here.” That just really stuck with me for all these years. At that moment in time, I was six months, nine months into my job, I was like, “I have to make a change into something that is scalable, that has opportunity in front of me.”

Mindy:
Okay. How did you scale to CEO? That’s not something that you do at 32. I don’t know if you know that.

Scott:
First, I joined a three-person company as the third employee. This was a true startup at that point in time. It was bootstrapped by Josh. There wasn’t investment capital in play. What did I do? I served Josh and BiggerPockets as loyally as I could. I said yes to every opportunity. I really wanted to write for the blog. I have an ego about me. That’s just why I’m in front of this mic right now talking to you about money and my personal story. I wanted to talk about these things, put my thoughts out there, and get feedback and reactions. He wouldn’t let me do that, so I wrote for the blog. He wouldn’t let me do that during work hours because that wasn’t the job I was hired for, so I did it after hours. I would stay from 5:00 until 8:00, 9:00 at night, sometimes after biking along the Cherry Creek trail path.
I had a nice set of lights and all that kind of stuff. I would just write blog posts for hours after that and participate in the forums, and then I said yes to every opportunity. Every problem that materialized at the business that I was capable of solving, which is pretty much all the problems at the time except for anything to do with technology, coding, those kinds of things, I would say yes to. I would be like, “Hey, we need to figure out this growth hacking thing. Go figure out how to set up A/B tests and other campaigns using these softwares.” I would figure out how to do that. I would self-educate, read a book, and then go and apply it. I just did that for a couple of years. I’d never asked Josh for a promotion or raise in all the years I was working for him.

Mindy:
What? Did you get promotions and raises, or did you just not ask?

Scott:
Yeah. They just came. I don’t know if that’s a good advice. I don’t know if other people should follow that or not.

Mindy:
No.

Scott:
We always talk about ask for, but I don’t think I ever had a single conversation to that effect. Maybe once or twice, asking about different ways to earn commissions, but I was never like, “Josh, could I get a new title or could I get a raise?” I believe that because I served his interests and BiggerPockets as loyally and to the absolute best of my ability, that was just then rewarded by him and then by future shareholders.

Mindy:
That’s very interesting. I would say, “Here’s Scott’s do as he says, not as he does thing.” We had Erin Lowry on the podcast, and she recommended having these uncomfortable conversations. Here’s how you have these uncomfortable conversations with your boss, you keep a praise folder in your email. Anytime somebody sends you an email that says, “Hey, you did a great job on this thing.” You put it into your praise folder, so when it’s time to ask for a raise or it’s time for your review, you can bring that forward. Because it’s hard to find those in the moment, but when you get them, you’re like, “Ooh, let me just save it over here so I can find it easily.”

Scott:
I think that’s good advice. I agree with it. It’s just not what I did. My circumstances may be completely different. As a third person at a startup, what is my skillset? Where would I go? How would I apply to another job if I were to do that right now? My skillset is serving BiggerPockets to the best of my ability for the last nine years now.

Mindy:
Has it been nine years? Holy cow.
Okay. I think you had a really good point there, though. You said I did whatever Josh asked me to. You were young. How old were you, 24 or something?

Scott:
Yep.

Mindy:
You were young, so you didn’t have any obligations. I make a lot of fun of you for being so young just because I’m so impressed with what you’ve accomplished at such a young age, not because I think that it’s undeserved. I hope everybody gets that it’s ribbing and fun, not like I’m not mad. But you were very young doing all of these things. You had no obligations, no wife, no child, no anything, so you could stay at work until 8:00 at night or 9:00 at night. Let’s talk about the promotions that you got. When I started at BiggerPockets, you were the director of operations, and you directed the operations of the company. A couple of years later, Josh stepped back and made you president. I don’t think you were president before he stepped back. Were you?

Scott:
First, I had the title vice president of operations, so I don’t remember exactly when that happened, but sometime between 2014, and I love that, VP at BP. I could not stop. I put that all over my LinkedIn. I was very proud of that and had a lot of fun with that title, VP at BP. In late 2017, that’s when Josh had the unfortunate situation with his family and his daughter’s health, so he had to step away from the business. For a period, there was no change. It was just, we operated as a leadership team together. A big moment in my career where I was very grateful and humbled was when I was elected by the team as the acting CEO in Josh’s absence. Then he named me president three or four months later, formally.
That’s when we began to bring on the new shareholders, our partners in McCarthy Capital. That took all of 2018. Josh leaves in late 2017. Late 2018, we bring on our new partners. I remember thinking during that period, “Geez, there’s really good things that we’re doing here.” But I imagine that if you’re a private equity investor, somebody like that, that you really know what you’re doing here. I’m 27 and I don’t know what I’m doing, but I don’t want a new boss after this or however that’s going to work or anything. I was like, “I don’t think I can fool smart people who would have the means to make a large investment in BiggerPockets. I’m going to do whatever I can to become the CEO that they would want to invest in.”
That meant more books, being fairly decisive, looking around, and doing an honest appraisal of, “I’ve been here for a while, and I don’t really understand what these five or six people are doing. Fundamentally, how that’s translating to value creation for the business at the highest level?” I remember I had a conversation at one point with the group. It was like, “I don’t know exactly here and here and here, but you’re now on this. You’re now on this. You’re now on this. You are now on this project.” That event, that conversation later became to be known as the BiggerPocalypse because half of those folks left within a few months of that conversation. My fear, though, and again, we have great shareholders that none of these things came to pass or whatever, was that new folks would then make the changes if I didn’t make changes ahead of time. There were definitely some hard moments in there, but a big inflection point for me was, I think, that period from 2017 to late 2018.

Mindy:
I remember the BiggerPocalypse. That’s a great word.

Scott:
That’s Craig Curelop’s word.

Mindy:
You said earlier that you wanted to pursue financial independence while working at the world’s worst company to work for. Why did you go the CEO route instead of the FI route?

Scott:
That’s the big contradiction. I wrote a book called Set for Life that talks about binge-watching Game of Thrones until 2:00 AM in the morning and showing up at the gym on noon on Tuesday. I live a pretty… I don’t know. I know there’s no such thing as normal, but I live in an average place in Denver. I go to bed at 9:00, 10:00, 10:30 at night, I wake up at 7:00. I do the same thing. I’ve done it every day for nine years now. I work more than 50 to 55, maybe a little more, hours a week at a job in a corporation doing all these. Drive my Corolla and live what I assumed to be pretty reasonably consistent with an upper middle-class lifestyle here. There’s some ironies in that story. Is that answering your question, Mindy?

Mindy:
No. Why did you choose not to pursue financial independence? You could have. You’ve got how many rentals, eight doors, four doors, 16 doors? I can’t remember.

Scott:
Why? Yes. That’s the what. Why is, because I’m addicted to this. I feel like we’ve got something really cool here. I feel like we’re helping a lot of people. I feel like we’re succeeding in our mission, people are actually becoming wealthier, investing and making better quality decisions as a result of the work we’re doing here at BiggerPockets. We’ve got a team. We’ve got careers that are blossoming here at BiggerPockets, and it’s fun to grow the business as a business challenge. It’s fun. It feels a little bit like winning in a business context, maybe it is. I’m very competitive, and this gets my juices flowing, so I love what I do every day. I suppose I could easily leave and retire, but I’m here because it’s fun and I like it.

Mindy:
In the FIRE movement. So many people focus on the RE part of FIRE, and we had Jill Schlesinger on just a couple of weeks ago talking about FINE, Financial Independence, Next Endeavor. I think that is a better way to phrase it because so many people are like, “Oh, I can’t wait to quit my job.” Then get a different job that you don’t hate actively. I’ve had jobs that I hated actively, and it’s so much easier to not work there.

Scott:
I think there’s some chicken or egg too, there. As you move towards FI and get better at this, you’re probably going to get very knowledgeable about a lot of investing concepts. It’s going to make you better at your job, and you’re going to have power over the situation with your boss where you can leave that job and begin exploring other options if you’re unhappy. Mentally, that leap is going to be easier and easier as you have more cash in the bank and more passive cash flow. I think that’s part of the story.

Mindy:
But also, what is that phrase? If you enjoy what you do, you’ll never work a day in your life. Sure, you will. You’ll still work a day in your life, but it’s a lot easier to go to a job that doesn’t actively suck.

Scott:
Mindy, I want to go back one second here. Also, because I think that there’s, philosophically, what was the reasoning behind all of this, I think, is what you’re trying to get at over the last nine years from this journey? What motivated that journey? Is that along the lines of what you’re-

Mindy:
I just want to know why, when you worked at the world’s worst company to work for, you were actively pursuing financial independence. Now that you don’t work at the world’s worst company to work for, you aren’t actively pursuing financial independence. Let’s see, you’re not actively pursuing retire early, you’re still keeping an eye on your finances. You’re still investing in real estate, you’re still investing in the stock market, you’re still investing in your 401(k), and you’re doing all of these things to help further solidify your financial position, but you’re not actively looking to quit.

Scott:
That’s because I love what I’m doing. I will say that don’t do as I did, do as I say, or whatever you’re talking about.

Mindy:
Do as I say, not as I do.

Scott:
I would say that there was an intentional philosophy underlying all of these actions the whole way through. It was two parts that I think a lot of people are either/or on, and I was and on. Those two parts are, one, a formula for moving towards financial independence. That formula for me was to spend less than I earn, house hack, and dump the rest into index funds. I still follow that formula today. That’s the underlying piece of this. But I also believe that, on top of that, there are opportunistic items that people should pursue. For you, that was Google, Tesla, Facebook, these other investments that you put large dollars behind. For me, that was a winter gloves for driving business that failed, Trench’s Tees, which had a T-shirt with Buddha on the front asking a hotdog vendor or saying, “Make me one with everything on it.” Which, surprisingly, didn’t sell.
The vendor replied, “Change must come from within.” I still have some of these shirts. They didn’t sell. But I took a shot every 90 days on something. Sometimes it was synergistic with where I work at BiggerPockets, sometimes it was totally unrelated, sometimes it was a real estate investment. But I did that every 90 days for the last 10 years. I’ve done something with my extracurricular time to move my position forward, whether it’s a big investment, like I said, in real estate, a shot at a small business, a major portfolio move, writing a book, writing another book with you. Those types of actions, I think, have been really important and are sometimes dismissed because you can’t quantify it. But you know that nine out of 10 businesses fail, and if you start 10 businesses, one of them is going to be successful. Look, it has been 10 years, that’s 40 quarters, since I started my journey, and I’ve taken 40 some odd shots at advancing my position, and four or five of them have been very effective and built the 20 of my net worth.

Mindy:
Scott, this is episode 400 of the BiggerPockets Money podcast. Way back on episode two, we interviewed you about your money story. What’s changed in 398 episodes?

Scott:
The biggest change, I think, is becoming CEO. That was the inflection point throughout 2018. That was the beginning of 2018, when we started Money.

Mindy:
2018. You had a baby.

Scott:
That was a big, big change for me. Frankly, I would say not much else has changed from a strategy perspective for me. I bought two or three more properties here in Denver. I made a handful of syndication investments. I added to the pile in the index fund investments. We came out with First-Time Home Buyer with little parts of the portfolio, and it’s really just been letting the snowball accumulate, again, from a personal financial situation. There’s been plenty of other updates on the personal front, like getting married to a wonderful, wonderful woman and having our firstborn child, who arrived last October. But from a financial journey, those have been the big milestones. Right now, again, my philosophy has not changed. I’ve stuck to it, and I have continued dumping cash again into boring old index funds, buying, I think, three more properties since 2000 since that episode in 2018, a handful of syndication investments, and continuing to grow BiggerPockets here.

Mindy:
From a financial standpoint, what percentage has your net worth grown?

Scott:
Probably 150% to 200%.

Mindy:
Okay.

Scott:
Two-to-three times bigger than it was at the end of 2018.

Mindy:
Scott, what are you doing now with your portfolio?

Scott:
One of the things that I have been noodling on for a while is why I’m not invested in bonds.

Mindy:
Because you’re not old enough.

Scott:
Here’s where I’m at with that. I feel like bonds are a drag when your portfolio returns over the long term, at least they were for the last 10 years because of such low interest rates. But what’s changed in the last year is rising interest rates. To me, an obvious conclusion that comes from rising interest rates is to lend more, own more bonds. That’s a better investment now than it was two or three years ago, for sure. I think that if you believe the S&P 500 is going to return 10%, give or take, over the next 30 years and you can earn 7% to 10% and you can earn 8% lending, why wouldn’t you lend at least more with a bigger portion of your portfolio?
Again, I think this is just a very simple observation, and I’d love to get beat up in the Facebook group if people have different opinions on this, but to me, it feels like, “What am I doing here? Why am I all in stocks when it’s higher risk or higher volatility, at least, and the same returns as what I can get or very close to what I can get in the bond market?” I’m actually repositioning a good chunk of my portfolio into debt. The way I’m doing that is, I am buying hard money loans or lending directly with private lending. This is Lend to Live. We had Alex Breshears and Beth Johnson on the BiggerPockets Money Podcast to talk about this a while back. But it’s that approach, and I feel like, “Hey, these are great.”
My worst-case scenario, Mindy, I actually met with you for a beer to talk about one of my first of these investments not two or three weeks ago, is, “Hey, I’ll foreclose on this property, and I’ll now own it in cash for 30% off its current market value.” I really like lending right now. I think there’s a lot of safety in it, and that particular one is going to generate 11% return for the next six months. Short term loan, I’ll get my money back very quickly if things go well. If things go very poorly, I’ll own a property near where Mindy lives for a significant chunk off, although, again, after figuring out the foreclosure law here in Colorado. But that’s the gist of it, so I wanted to throw that out there, that’s something that I’m very serious about doing with my own portfolio. I’ve already committed a big chunk there and intend to rebalance a little bit of my stock portfolio into more of this type of debt.

Mindy:
That’s interesting. I would like to catch back up with you in about six months and see how your experience went for the first one and see if you would do it again.

Scott:
You’ll definitely know about that, Mindy.

Mindy:
I know. But we’ll share it with our listeners too. If that house defaults, I almost hope that they do default. If that house defaults, then I want to buy that from you.

Scott:
Mindy, by the way, I’m very lucky to have a contact like Mindy and to co-host with her because, again, it’s right near there. She’s an agent. She was like, “These are the things you should like about this. This place floods, but this is on a hill. It’s going to be away from it.” all these little things I could never have gotten at an out-of-state lender or someone without a friend like Mindy, so I really appreciate that.

Mindy:
Scott, this is our 400th episode. It was very fun chatting with you over the last 400 episodes, and I am so thankful to all of our listeners for sharing these 400 episodes with us.

Scott:
Thank you, Mindy, for being such a great partner over these 400 episodes as well. It’s been a lot of fun, and special thanks to Kailyn, our producer.

Mindy:
For being the rockstar that she is.
All right, from this 400th episode of the BiggerPockets Money podcast, he is Scott Trench and I am Mindy Jensen saying, “In a while, crocodile.”

Scott:
If you enjoyed today’s episode, please give us a five-star review on Spotify or Apple. If you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/BiggerPocketsMoney.

Mindy:
BiggerPockets Money was created by Mindy Jensen and Scott Trench, produced by Kailyn Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.