Mindy: Welcome to the BiggerPockets Money podcast 400th episode! Yay! We’re 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 bored 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 and I am excited for you to share mine or 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 kind of 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. So, 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. Well, I like that. Who doesn’t like saving money, right? Do you have a money tip or trick for us? Email moneymoment@biggerpockets.com. Scott, before we get started, let’s take a quick break.
Mindy: Mindy, before we get going in today’s show, I just wanted to take a moment and thank some of our long-time listeners and members of the Facebook group, members of the Bigger Pockets Money community for their engagement and their support of our show. And for that, we want to read uh two of the reviews that have been left on uh Apple and Spotify recently. First one here is highly recommend. 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 want to my top three favorite finance related podcasts. Another 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 um to both of you guys. We really appreciate it. I think that was Erica and Courtney um who left those reviews. We appreciate that and um would just always always uh um are grateful and appreciative of anybody who listens and especially for those who take the time to leave a review, especially five star reviews that are that are nice. Thank you very much everyone.
Scott: Yes, thank you so much for listening. We could not do this without you.
Scott: Well, before we jump in, let’s tell everyone the two-minute story of how you and I met and started the podcast. So uh with that, let’s bring in our guest today who is Mindy Jensen uh and myself. Mindy, welcome to the Bigger Pockets 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 what how you think it went. You know, there’s there’s three sides to every story, your version, my version, and the truth. So 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 and the most common question that I would get is how do I get started investing in real estate with no money and bad credit? And 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 Pockets real estate podcast because I think that they were kind of assuming that you had money and credit. So I said we should start a podcast talking about finances. That’s what I thought.
Scott: Yeah, I I I’m largely aligned. It was it was the no money down real estate investing comments and stuff and I think philosophic what’s great about bigger pockets in a general sense is there’s no right one right way to do anything. They’re just opinions. and your and my opinion are just two voices in the crowd of dozens of bigger pockets hosts, authors, that hundreds of power users in the forums, people who post thousands of times and millions of members. So there’s no right one right way to do anything, but I think your philosophy and mine is um the correct answer to how do I invest in real estate with no money and bad credit is you don’t invest in real estate with no money and bad credit. You get your financial foundation set first. Um and hopefully if you’re listening to the bigger pockets Money podcast, you are aligned with that because that’s what we try to preach twice a week here.
Mindy: Yes.
Scott: Uh well Mindy, I I would love to jump in and hear, you know, a refresher on your money story and what’s new since the last time we interviewed you uh about your money story four and a half years ago at this point. That was back in uh 2019, 2018. January 2018 is when we last heard an update about your your money story. So, what was your aha moment? When did you and Carl discover financial independence and begin aggressively pursuing it?
Mindy: So, I don’t know that we had an aha moment. We have always been frugal and one day Carl, one week, Carl was having a horrible, horrible time at his job. He was working on uh software for the VA that matched blood with blood that was donated with blood that that people needed and or well with patients who needed it. and if you didn’t do that right, if you get the wrong blood, you could die. And there was a bug in the code that was found and he had this like panic attack for about a week. It’s like, oh my goodness, I was so careful and I checked everything and I double-checked and I wrote something that could kill somebody and just could not get out of his head about this. And 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 like 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? And he banged that into the computer and up pops this website, Mr. Money Mustache, and he starts reading, I don’t know, the the the shockingly simple math. The shockingly simple math to early retirement. This is crap. This guy’s selling something. But he kept reading because it was interesting and he wasn’t selling anything and he starts doing the math and he’s like, oh, that actually works. That’s like a real thing. Um so he comes running downstairs, he’s like, hey, I just found this this website and we can retire early. I’m like, great, do it. Like I know how stressed you are. I was a stay-at home mom at the time. I know how stressed you are. Just quit your job. We’ll be fine. Like go find another one, whatever. And he’s like, and I’m going to start a blog about it. I’m like, that’s the dumbest thing I’ve ever heard. And he’s like, what do you mean? It’s would be a lot of fun to talk about. I’m like, nobody’s gonna read this blog. It’s not going to, you know, you’re going to be bored after like three articles and it’s never going to, you know, we just had our 10-year anniversary of this blog and it’s still going strong. So uh that didn’t that didn’t pan out quite as I predicted it. But um we discovered after doing some research into the, you know, the 4% rule that we were approximately halfway to our goal uh just because we knew that we should be saving and investing, so we were, but we were just, you know, randomly saving and investing. There wasn’t really any purpose to it. I mean, there was a purpose, but you save for retirement at 65. You don’t save for retirement at 40.
Scott: So it sounds like financial independence runs thicker than blood in the Jensen household.
Mindy: Sorry, I was saving that one up for a while. Hopefully, hopefully it landed there Mindy. Well, well, so so you you started this blog 1500 days and then were you able to achieve that that goal in the stated timeline? How did that how did that work out?
Scott: So yeah, the stated timeline was 1500 days or about five years. and it turns out that it happened in about three years. Um, we had huge winds of uh success from the stock market, you know, we started in uh 2013, we started documenting our journey and we hit our fi number at the end of 2015.
Mindy: Mindy, how would you say that you and Carl manage, you know, one of the problems I think a lot of people may find if they’ve been, you know, journeying towards fire for many years is the goal posts move. They they the what they thought was enough spending, um, did they turns out they want more a few years down the road. I’ve certainly found this to be true for myself. Have you were you I believe you and Carl have done a pretty good job of not having those goal posts move too far on you. Is that is that a fair assessment or do you have any thoughts to add there?
Scott: I would say you are correct, but that’s because we don’t really want a lot. We have everything we need. Um I don’t really care about clothes or the latest gadgets or new fancy cars. Um we were actually talking about this last night. Somebody reached out to him and said, I make, you know, multiple six figures and I still find myself living paycheck to paycheck. I don’t understand how I’ll ever get financially independent. and we were talking about like car payments and I said, you know, we have a a 2003 Honda element that we bought brand new. uh the first new car that either of us had ever bought. uh and we have a 2010 uh minivan, it’s a Mazda 5 minivan. Um that we also bought brand new. and the element we paid, I don’t think we paid cash for it, but we paid it off pretty quickly. The minivan was we had a car payment for three years because it was financed at 0%. Uh, 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’s 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. Um but we haven’t had a car payment since 2013. And you hear these stories of people who have car payments that are $600 a month, $800 a month, $1,000 a month. I was looking through some finance Friday applicants with uh our producerlen earlier today and someone had a $1,000 $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, you know, make a list of the things that you really like and that you really find value in. Um, I don’t really have a lot of value in my cars. I have no value in my cars, they’re with $0. Um, but I also don’t, you know, I 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 you know, don’t spend on all sorts of things that you don’t care about.
Mindy: I think it comes down to you got you you nailed your priorities and you stuck with them and you did not let them increase or you did not let your desires increase for spending over the over your journey to financial independence. I think that’s that’s the real trick and that’s what separates folks who actually fi from people who maybe maybe struggle with it, especially in the in the later years and have one more year syndrome. Uh how much of an impact was the stock picking and the the excellent performance of Google, Tesla and some of these other things in pushing you over that that hurdle? And if you had invested in index funds, how long how much longer do you think it would have taken it? What year do you think you would have hit five?
Scott: So 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 have taken longer if we had just put our money into index funds. We were in incredibly risky stocks. We were in tech stocks and um 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 and I’m not really sure that was more Carl. Uh I’m not really sure why he felt like those weren’t going to take off and they didn’t. Um we invested in Facebook which came out, went straight down and then started going up again. Um Google is, I mean Google’s a verb. The name of the company is an actual verb. That’s going to take a long time to take over.
Mindy: like xeroxing, right?
Scott: Yeah. my daughter the other day said, momm, what’s a Xerox? And so 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, I am so you’re grounded. You can’t ask me these questions. But yeah, when your company name is a verb, that’s a pretty good um, that’s a pretty good indication of a uh decent sized chance that that’s going to work out. Um the what did Warren Buffett say? Invest in companies with a big moat? So 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 uh we definitely got their faster through risky tech sock investing.
Mindy: If you if you had to guess how much faster?
Scott: Probably like five or 10 years faster.
Mindy: Wow, so this was a huge factor in your ability to attain financial independence.
Scott: Yes, I believe that we still would have attained financial independence. It just would have been much slower if we had not done individual stocks. And this is this is absolutely a do as I say not as I do kind of thing because I’m not advocating for that at all. There’s a lot of 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.
Mindy: Yeah, you know one of the things I see on your your from your 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. So that is outstanding and and really impressive.
Scott: Yeah, so, well, there’s more of it because we’ve had a lot of uh really awesome stock market uh growth in the last five years. There’s not quite as much as there was because last year was not a a really fabulous year. Um, 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.
Mindy: Are there any kind of uh big changes you’ve made to your position, um at the strategy level, like how you think about building wealth now versus five years ago?
Scott: Yes. So probably five years ago, we were still really heavily into individual stocks. I don’t think we had very many index funds and uh that was kind of the beginning of our index fund roll over. Like 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. Um, we are approximately 50/50 of our net worth in real estate and stocks. and then of the stocks, it’s approximately 50/50 individual stocks and index funds.
Mindy: And that used to be like 100% individual stocks, right?
Scott: It used to be almost 100% individual stocks, yeah.
Mindy: Awesome. 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. Uh, 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 and 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’ve never I don’t know what the right answer is. I don’t know what answer I want to hear. I mean, kind of I want to hear, you’re doing great, keep it going. But I don’t know that that’s the right answer either. So, you know, that’s a question to the listeners. Scott, you can chime in if you want to.
Scott: So you’re so you’re saying my my problem is I bet on Google 10, 15 years ago and that that worked. Uh same with Tesla, same with Facebook, you know, all these other ones that I know you and Carl have invested in small dollars, now now it’s huge. And I think that this is the conundrum is 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, right? Your average returns 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, you know, that stock picking mathematically on average is no better or worse than just in 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 dartboard. Carl obviously did a tremendous amount of research on that and so we’re and you are extremely knowledgeable about these these investments. So it it may be that you are better than average at picking technology stocks and these types of things and able to to get that return, right? 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 that alpha, right? which I think you guys have done. So, that that’s one. Then if you make investments over a long period of time, you are unless 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 like 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 a million bucks and $500,000 or a million bucks, I wouldn’t put half of it into Google right now even though I still think Google is good, right? So I’mm framing the conversation. I I’m I’m really just kind of framing the the groundwork here.
Mindy: Right. And you’ve used 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, you know, have have uh 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 uh 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, right? Because if you make 20 investment decisions and none of them work out to a a couple an order of, you know, an order of magnitude better returns than the other ones, then you’re unlucky, right? If you’re betting on tech stocks and nothing happens, uh then that that’s unlucky, right? across a pool of bets. So, by definition, this strategy is going to wait, this is like venture capitalism 101, right? is they make 100 bets and two or three of them carry the entire portfolio across that. So, investors will inevitably result come hit the result of having one or two or chunks of their portfolio that dramatically outweigh everything else that’s going on. So, I think that that is that’s the question, right? Is is is what do I do at that point in time? And I think what you do is you go back to the drawing board to the same tool that we talked about in the past and you say, if I had if I had converted my entire position to cash after tax, how would I invest it right now. And if you could if you have a long-term philosophy, then that answer will be pretty clear over time and you can kind of you you can grapple with that. You may need some time to bridge it. It’s never going to be truly clear because there may be tax consequences for making those those those choices. And you may find, you know what, I kind of like Google still even and my philosophy’s changed, but I’m going to actually update my written investment philosophy to say, no, I want to be uh exposed to opportunities that I think are particularly good. And, you know, the index fund stuff is great, but I’m I’m gonna I’m gonna change my philosophy to go with approach that works better for me.
Mindy: I like that answer, Scott, but I would love to hear anybody else chiming in in our Facebook group at facebook.com/groups/bpmoney. Um, but Scott, this is enough about me. Let’s turn the tables on you. Scott, welcome to the Bigger Pockets Money podcast. I’m so excited to talk to you today.
Scott: Thanks Miny, it’s great to be here.
Mindy: Uh, let’s let’s look at your journey to CEO of Bigger Pockets. That’s kind of an impressive deal cuz you’re like 14.
Scott: Yeah, uh, well, 32, so you know, twice 14 plus four. Um, but uh, yeah, my my journey to to bigger pockets, uh, I when I I started my career in 2013 at a Fortune 500 company as a financial analyst. And within 3 months, realized I wanted to become financially independent. So I had a massive advantage over a lot of other folks on the journey to FI in that I discovered the concept when I was 23, had no wealth, but also had no debt. Thank you to mom and dad for paying for college. and discovered the the core concepts right away. So I had you know, I was I was instinctively, you know, fairly frugal and protective of my money, but uh, uh, was very much, again, informed by, here’s the playbook from Mr. Money Mustache, from bigger packets. And so right away within three to six months to starting my job, I discovered both of those platforms. I was immersing myself in the world of, you know, personal finance, Madntist, all these other different types of 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. And by June of 20, of 2014, I had saved up my first 20, 25 grand by working my job, packing lunch, driving for Uber and otherwise just accumulating cash. Uh At that point in time, I made two decisions. One was to go under contract on a duplex uh 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 uh this year in valuation. Uh, and then the other was to join bigger pockets as an employee. And the way I did that is I met the I met Josh Dorkin our founder uh through a networking, a little mastermind group that I had joined because of the podcast. The podcast, Bigger Pockets real estate podcast that encouraged me to go network with local real estate professionals. and so I I 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: Well, I was overwhelmed. I was like, oh, this is this this guy, Josh, he’s changing my life and Brandon and uh I’m following their advice. I’m here right now. So I knock on his door and I tell him, hey Josh, I’m a huge fan. Would love to buy your lunch sometime. Uh and, you know, he he claims to remember it differently, but I remember something to the effective, go away kid, you’re bothering me. Um and so uh that happened, you know, I I got his email, I followed up three more times and eventually he uh I met up with him. I can’t remember if I ever got a 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 you had offered, when you told this to me, you offered your uh financial analyst services at the same time that he was like, I have a big financial analyst problem and 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 uh no meeting scheduled, you just wander in. Well, it worked. So for him to say get out of here kid is pretty on brand.
Scott: I want to point out I was also offered a job, you know, in a in a brokerage. I I might have gotten my agent licens at that same time and another guy from the mastermind that I was in took that route and became an agent. And I believe that route went very, very successful. The brokerage is called Thrive real estate. They’re doing fantastic. And um, uh, I I believe that there’s I the income potential in that job would have been in in a, you know, uh significantly high. So it’s always kind of like interesting to go back to these inflection point moments because obviously joining Bigger Pockets is been the ridiculous advantage in my career and building wealth, the connections, the network, the the the compensation and and the role here, CEO. But it’s always interesting to think about that inflection point of like, hey, you know, I I would definitely not be hosting this podcast talking to you right now or doing any these things, but I would I would probably still have a real estate portfolio and another and and uh have had a couple of good years as an agent if I if I had taken that path and it’s just I just find it interesting to kind of like think through that key point in in going through like this incredible luck, but I actually had two good options at that point in time, one of which I I’m very glad I I chose. Um but just something I I philosophize about sometimes.
Mindy: Were you actively looking to leave the world’s worst company to work for?
Scott: I was, yes. I I I was telling my colleagues about my goals to become financially independent and one of them just said was was like, well, I don’t know what you’re doing in this chair right here. Um at that and that just really stuck with me for all these years. And I was like, at that moment in time was six months, nine months into my job. I was like, I I have to make a change to something that is scalable, that has opportunity in front of me.
Mindy: Okay. So how did you scale to CEO? That’s not something that you do at 32. I don’t know if you know that.
Scott: So so first, I joined a three-person company as a third employee, right? So this is this was a true startup at that point in time. It was bootstrapped by Josh. There wasn’t like investment capital in play and so I what what did I do? I served Josh and Bigger Pockets as loyally as I as I could. I said yes to every opportunity. I really wanted to write for the blog. I wanted, you know, I have an ego about me, as just why I’m in front of this mic right now, talking to you about money and my personal story, and I wanted to, I wanted to talk about these things and and and put my thoughts out there and get feedback and reactions. And he wouldn’t let me do that. So I wrote for the blog. He 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. So I would stay from 5:00 until 8:00, 9 o’clock at night sometimes on after biking along the Cherry Creek Trail path. I had a nice set of lights and all that kind of stuff. And I would just write blog posts for hours uh after that and participating in the forums and those kinds of things. Uh and then I said yes to every opportunity. So every problem that materialized at the business that I was capable of solving, which is pretty much all the problems except for like uh at the time except for like 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. Um go figure out how to how to set up AB 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. And so I just did that for a couple of years. I 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, I just it just they just kind of came. So, I don’t know if that’s a good advice like you should like I don’t know if other people should follow that or not. We always talk about like ask. but I I I don’t think I ever had a single conversation to that effect. um maybe once or twice asking about different ways to earn commissions, um but never I was never like, Josh, could I get a new title or could I get a a raise? Um he just he would I I believe that because I served his interests and bigger pockets as loyally and to the absolute best of my ability that that was just then rewarded by him and uh then by future shareholders.
Mindy: That’s very interesting. So I would say, here’s Scott’s do as he says not as he does thing, um, where you know, we had Aaron Lowry on the podcast and she recommended having these uncomfortable conversations and here’s how you have these uncomfortable conversations with your boss and you know, you keep a praise folder in your email and 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, you know, in in the moment, but when you get them, you’re like, oh, let me just save it over here so I can find it easily.
Scott: And I think that’s good advice and I agree with it. It’s just not it’s not not not what I did. And my circumstances may be completely different, right? Third person at a at a startup. What is what is my skill set? Like where would I go, how would I apply to another job if I were to do that like right now. You know, I don’t I don’t have like my skill set is serving bigger pockets as to the best of my ability for the last 10 years, nine years now.
Mindy: Has it been nine years?
Scott: Mhm.
Mindy: Holy cow. Okay, so I think that’s a really good. I 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? Like 24 or something?
Scott: Yep.
Mindy: You were you were young, so you didn’t have any obligations. and I I make a lot of fun of you 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 like fun, ribbing and fun, not like I’m not mad. Um but you were very young doing all of these things. You had no obligations, no wife, no child, no, you know, anything, so you could stay at work until 8:00 at night or 9:00 at night.
Scott: So let’s talk about the promotions that you got. When I started at Bigger Pockets, you were the director of operations and you directed the operations of the company. and then 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?
Mindy: Well, first, first I had the 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. Uh I could not stop uh I put that all over my LinkedIn and all that kind of stuff. I was very proud of that and had a lot of fun with that title. VP at BP. Uh and then uh I uh in 2017, Josh uh late 2017 is when Josh had uh the unfortunate situation with his family and his daughter’s health and so he had to step away from the business. And for a period there, there was no change. It was just kind of we we operate as a leadership team together. Um that was a big moment in my career where I was very grateful um and humbled was when I was elected by the team as the acting CEO in Josh’s absence. And then he named me president three or four months later um formally. And that’s when we began to to bring on new shareholders, our our partners in McCarthy Capital. That took all of 2018. So Josh leaves in late 2017, late 2018, we bring on our new partners. And I remember thinking during that period, you know, jeez, the you know, there’s a there’s 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 and I was 27 and I don’t know what I’m doing. Um but I I don’t want to I don’t want a new boss uh after this or however that’s going to work or or anything. So I was like, I’m going to become, I don’t think I can fool smart people who would have the means to make a large investment in in bigger pockets. I’m going to do whatever I can to become the CEO that they they would want to invest in. And so that meant more books, making, you know, being being fairly decisive, looking around and kind of doing an honest appraisal of like, you know, I’ve been here for a while and I I don’t even understand what these five or six people are doing. Like what what they’re fundamentally how that’s translating to value creation for the business at the highest level. And I remember I had a conversation at one point that was like, with a group is like, I don’t know exactly here, here and here, but you’re now on this, you’re now on this, you’re now on this project. And uh that event, that conversation later became to be known as the big Apocalypse, um, because half of those those folks left within a few months of that conversation. My my fear though was, and again, we have great shareholders, none of these things came to pass or whatever, but was that new folks would then uh make the changes if I didn’t make them make changes ahead of time. So, there were definitely some hard moments in there, but that was that was a big inflection point for me was I think that that period in from 2017 to 2018, late 2018.
Mindy: Yeah, I remember the big apocalypse. That’s a great word.
Scott: That’s Craig Curlop’s word.
Mindy: So, 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: So that’s the that’s the big contradiction, right? I wrote a book called Set for Life that talks about binge watching Game of Thrones until 2:00 a.m. in the morning and showing up the gym on noon on Tuesday. And I live a pretty, you know, I would I don’t know nor there’s no such thing as normal, but I 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 70, I do the same thing and I’ve done it every day for nine years now. I work more than 40 or 50 to 55, maybe a little more hours a week at a a job in a corporation, um doing all these different, you know, drive my Corolla and and, you know, live I what I assume to be pretty reasonably consistent with an upper middle class lifestyle here. And so that’s uh I there’s some ironies uh in that in that story. Is that answering your question, Mindy?
Mindy: Well, 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: Oh why? Yes. So that’s the what. Why is because I love I’m addicted to this. This is this is 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 we’re uh uh succeeding in our mission and people are actually becoming wealthier and investing and making better quality decisions as a result of the work we’re doing here at bigger pockets. We’ve got a team, we’ve got careers that are blossoming here at bigger pockets. Um and it’s fun to grow the business as a business challenge. It’s fun, it’s it feels a little bit like winning in a business context, maybe it is, and I’m very competitive and this this gets my juices flowing. So I love what I do every day and yeah, I I I I suppose I I could easily leave and retire um but you know, I’m here because it because it’s fun and 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. and I think that that is a better way to phrase it because so many people are like, oh, I can’t wait to quit my job. Well, then get a different job that you don’t hate actively. Um, it’s I’ve had jobs that I hated actively and it’s so much easier to not work there.
Scott: And I think I think there’s some chicken or egg too there is as you move towards FI and get better at this, you’re probably going to get very, you’re 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. And mentally that leap is going to be easier and easier as you have more cash in the bank and more passive cash flow. So, I think that’s part of the the story.
Mindy: Yeah, but also like if you, 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: Well Mindy, I want to go back one second here and also because I think that there’s a like a philosophically, what what was the reasoning behind all of this? I think it’s what you’re trying to get at over the last nine, nine years from this journey. like what what motivated that journey? a that is that kind of along the lines of what you’re..
Mindy: Well, I just want to know why when you worked at the world’s worst company to work for, you were actively pursuing financial independence. And now that you don’t work at the world’s worst company to work for, you aren’t actively pursuing financial independence. You’re still uh 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 401K and you’re doing all of these things to help further your further solidify your financial position, but you’re not actively looking to quit.
Scott: Yeah, and that’s because I love I love what I’m doing. I will say that, you know, do as I say, do as I, or don’t do as I did, do as I say or whatever, you’re 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. And it was two parts that I think a lot of people are either or on and I was and on, right? And those two parts are one, a formula for moving towards financial independence. and that formula for me was spend less than I earn, house hack, and dump the rest into index funds. And I still follow that formula today. That 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, uh these other investments that you put large dollars behind and for me, that was a winter gloves for driving business that failed, trenches tease which had a t-shirt with Buddha on the front asking a hot dog vendor or saying, make me one with everything uh on it, which surprisingly didn’t sell. um, and the vendor replied uh changed must come from within. Uh so I I I still have some of these shirts they didn’t, they didn’t sell. But like I took a shot every 90 days on something. Sometimes it was synergistic with my work at bigger pockets, sometimes it was totally unrelated. Sometimes it was a real estate investment. Um but I I did that every 90 days for the last 10 years, I’ve done something with my extracurricular time to move my 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, uh, those types of of actions, I think have been really important and I think are sometimes dismissed because you can’t quantify it. But you know that if you 9 out of 10 businesses fail and you start 10 businesses, one of them’s going to be successful. And so, look, I what has been 10 years, that’s 40 quarters since I started my journey and I’ve taken 40 some odd shots uh at at at advancing my position. And four or five of them have been very effective and built the 80/20 of my net worth.
Mindy: So, Scott, this is episode 400 of the Bigger Pockets Money podcast. and way back on episode two, we interviewed you about your money story. What’s changed in 398 episodes?
Scott: Well, so the big the biggest change, I think is is becoming CEO. So that was that inflection point throughout that that uh the the that 2018. That was beginning starting in 2018 is when we started money, right?
Mindy: 2018. Yeah. You had a baby.
Scott: Yeah, so so that was that was a big big change for for me. Um frankly, I would say not much else has changed from a strategy perspective for for for me. I’ve bought I I bought two or three more properties, three more properties here in Denver. I made a handful of syndication investments. I piled, I added to the pile in the index fund investments. We came out with first-time home buyer between those parts of of uh of the portfolio and it’s really just been letting the snowball accumulate from a, again, from a personal financial situation. So there’s been plenty of other updates on the personal front, like uh getting married to a wonderful, wonderful woman and having our firstborn child who who arrived last October. Um, so, but yeah, that that those from a financial journey, those have been the the big milestones. So right now again, it’s it’s my philosophy my philosophy has not changed. I have stuck to it and I have continued dumping cash again into boring old index funds, buying I think it’s three more properties since that episode in 2018, a handful of syndication investments and um yeah, continuing to grow bigger pockets here.
Mindy: And from a financial standpoint, what percentage has your net growth net worth grown?
Scott: Uh probably 150 to 200%.
Mindy: Okay.
Scott: Yeah, two two to three times bigger than it was at the end of 2018.
Mindy: Scott, what are you doing now with your portfolio?
Scott: Yeah, so one of the things that I have been noodling on for a while is why I’m not invested in bonds.
Mindy: Cuz you’re not old enough.
Scott: Well, well, so here here’s where I’m at with that. I I feel like like bonds are a drag on 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. And so I’ve been it and to me, an obvious conclusion that comes from rising interest rates is to lend more, own more bonds. It’s a better investment now than it was two or three years ago for sure. And I think that if you if you believe the S&P 500 is going to return 10% give or take over the next 30 years and you can earn 8%, 7 to 10%, you know, and you can earn 8% lending, why wouldn’t you lend at least more with a bigger portion of your portfolio? And so for the again, I think this is just a very simple observation. Um and I’d love to get beat up in the Facebook group if people have different opinions on this. But to me it it feels like, what am I doing here? Why am I 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. So I’m actually really repositioning a good chunk of my portfolio into debt. and the way I’m doing that is I’m buying hard money loans or lending directly with private lending. This is lend to live. We had uh Alex Priers and Beth Johnson on the Bigger Pockets Money podcast to talk about this a while back. But it’s it’s that approach. And I feel like, hey this is great is a great my my worst case scenario Mindy I actually met with you for a beer to talk about this very one of these my first of these investments not two or three weeks ago. um is, hey, if I’ll I’ll foreclose on this property and I’ll now own it in cash for 30% off its current market value. So I really like lending right now. I think there’s a lot of safety in it and that 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, things go very poorly. I’ll own a property near where Mindy lives for uh a significant chunk off. Although, again after figuring out the foreclosure law here in Colorado. But but those are that’s the that’s the gist of it. and so I wanted to put that out there that that’s something that I’m 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: Well, that’s interesting. Well, 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: Yeah, you will you will definitely know about that Mindy.
Mindy: I know, but we’ll share it with our listeners too. Um and if that house defaults, I almost hope that they do default. if that house defaults, then I want to uh buy that from you.
Scott: Yeah, and Mindy by the way, uh I’m very very lucky to have a contact like Mindy and a co-host with her because she who again is right near there, she’s an agent. She she was like, this is these are the things you should like about this. This place floods, but this is not a hill, it’s going to be away from that. all these little things I could never have gotten um as a long at a out of state lender or someone without 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: Yeah, and thank you Mindy for being such a great partner over these 400 episodes as well. It’s been a lot of fun. And a special thanks tolen our producer for being the rock star that she is.
Mindy: I know. All right, from this 400th episode of the Bigger Pockets 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. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.
Mindy: Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Kalyn Bennett, editing by Exodus Media, copywriting by Nate Wine Troub. Lastly, a big thank you to the Bigger Pockets team for making the show possible.
