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Mindy: If you’re chasing financial independence, you’ve probably optimized your savings, right? Cut your expenses and invested consistently. But what if the biggest thing standing between you and financial independence isn’t your income? It’s your mindset.
Mindy: Hello, hello, hello and welcome to the BiggerPockets Money podcast. My name is Mindy Jensen and with me as always is my has never made an investing mistake co-host Scott Trench.
Scott: Thanks, Mindy. is selling a bunch of stocks to buy real estate right before the market goes up 10% in a given year, account as a mistake? If so, I think I’ve made plenty of mistakes and some big ones here. We’re going to break down the five biggest mistakes that many people make on their way to financial independence today. The ones that quietly cost you years of freedom, hundreds of thousands of dollars, and a whole lot of stress. Before we get into those mistakes, I’ll let you know that we’re breaking these out into five very obvious ones. These will be no surprise. You’ve heard them before. Then we’re going to talk about eight more subtle mistakes that I think are largely ignored, debatable or really, you know, more more kind of under the surface, more insidious than the ones that are most obvious to the FIRE community. So, without further ado, Mindy, do you want to kick us off with the biggest mistake?
Mindy: Waiting too long to start. Scott, you’ve heard about financial independence and you’re like, oh, yeah, that sounds like a good idea. And then a few months or a few years go by, you hear it again and you think, oh, I’m I’m going to do that down the road. Start. Start today.
Scott: Yeah. I mean, starting early just is such a it’s such a basic building block of personal finance discussions. The compounding journey makes such a difference. You’ve all seen the math or heard the math, I’m sure from anybody who’s been around in the finance space for a long time, talking about the huge advantages that someone who starts investing even small amounts in their early 20s or even before can have over the course of a lifetime. And it’s not really even just there. The compounding journey begins in your career at an early age. It begins in high school with the grades you get, college, whatever it knows first jobs, what you do in your free time. All that stuff makes such an enormous compounding difference. And the game can be very easy relatively speaking for young people who get a big jump out the gate and benefit from that for the rest of their lives, and it can be conversely really hard to catch up later in life. The second biggest mistake is not tracking your spending and net worth. This is a game, right? This is a a competition in a relative sense to your best life. And if you can’t play a game if you don’t have a scoreboard set up, right? This is how much I make, how much I’m spending, and how my asset and portfolio is growing. Am I moving towards that number that represents financial independence for me?
Mindy: Yes, and this is something that continues throughout your journey. You don’t just track your spending at the beginning and say, oh, I’m set. You need to know how much you’re spending because as your life progresses, as we just go further down the calendar years, things get more expensive. You don’t want to make the mistake of thinking that you’re spending $36,000 a year and that’s how you calculate your FI number, and then you get to retirement and you think, uh oh, I’m actually spending 60 or you realize you’re actually spending 60, your retirement number is going to change. Keep an idea of what your spending is, what your net worth is, and this doesn’t have to be an every minute thing, but you want to have this in your mind so that you are progressing down the actual path that you need, not the path that you think you’re on.
Scott: Absolutely. By the way, you can track these numbers in a spreadsheet, you can track them in a free app, or you can go with the Bigger Pockets Money’s partner monarch.com, which is what Mindy and I use to track our spending and net worth. And that is, we have a deal with Monarch where if you are listening to the show and you use the code POCKETS, P O C K E T S, you will get 50% off your first year, which I think is a $99 or $100. So go check that out at monarch.com. That’s the tool that I use with my wife, Virginia, and Mindy, you and Carl use to manage your finances. All right, the third mistake is going to be buying too much house or too much car too early. This is the real liquidity killer, right? We talk everyone talks about, oh, you know, you know, don’t buy a cup of coffee or whatever, you know, that how much that habit can cost you over the course of decades. And that’s real. You know, there is a very real dynamic, you know, a component of in the context of aggregation of marginal gains and not, you know, not overspending on the day-to-day items. But really, the liquidity killer is going to be how much you’re you’re paying for rent, what your mortgage or fixed housing costs are, what your car payment is, or how much you shell out on that car. And if you can keep those expenses controlled, the game gets so much easier to build wealth. I mean, it just it just fixes those those costs at very low levels and allows all of that to go towards either discretionary spending or investing. You might even be able to live a higher quality of life in a relative sense in terms of the little little enjoyments that bring you true pleasure every day and build more wealth if you keep your housing and vehicle costs under control.
Mindy: Scott, let’s play a little game. When I met you, you were working at Bigger Pockets and you owned a duplex and you rented out half of the duplex and lived in the other half. What was your mortgage payment for the entire duplex?
Scott: I believe the mortgage payment was 1550. The other side rented for 1150 and I had a roommate paying 550. So there’s a very, very low housing outlet there. I wasn’t for free because those costs didn’t account for maintenance and you know, utilities and those types of things that came up, but it was pretty close.
Mindy: That particular property was in an up and coming neighborhood, not in a amazing neighborhood. If you were going to go rent an apartment, back then, you could have very easily paid $1500 for the rent on an apartment, a decent apartment, not an amazing apartment. Would you say that’s fair?
Scott: Well before that, I lived in an apartment for 1200 bucks before I bought the duplex, right? And I had a roommate. So that made it fairly cheap.
Mindy: Ah, you did have a roommate. So your choice to purchase a property instead of continuing to live in a property with a roommate changed a lot of your finances because essentially your rent, your housing expenses every month were almost zero or actually zero, not including maintenance and all of that, but you don’t have maintenance every single month.
Scott: The house hack is is an ideal way to do this in many situations. It’s harder now in 2026 than it was in 2014 to find those opportunities, right? That like this was not like a very popularized term, the house hack in 2014. So I was relatively limited in my competition. You could buy a duplex and pretty much make it work or come pretty close with you know, 5% down. And I think it’s a much harder dynamic in 2026, but still the question is how do I keep my housing costs low, right? And I think that if you’re asking that question and making the most reasonable choice in your context, that is going to make a much bigger difference than almost everything else, and the same thing goes for your vehicle.
Mindy: Yes, and it’s not about just house hacking. You can be the tenant in somebody else’s house hack. That’s a way to keep your housing costs lower than if you have your own apartment and you’re paying the entire rent yourself. Just because housing costs have gone up since Scott did this in 2015 doesn’t mean that’s the only way to keep your housing costs flow. Have a roommate. Live with your parents. Live with somebody else’s parents. Is it fun having a roommate? Yeah, sometimes and sometimes not, but keeping your housing costs low and taking that money and investing it, getting started today is going to be your best bet.
Scott: Yeah, I’ll say this. I don’t think that privacy in my 20s would have been worth the incredible reward that that choice and others like it compounded into here in my 30s.
Mindy: And, you know, tagging off of that, Scott, is lifestyle creep before you reach financial independence, and even after you reach financial independence, lifestyle creep is described as as your income grows, your spending grows too. Your lifestyle could have creeped up by graduating from college and saying, I don’t want to have roommates anymore. I have my first real job as an adult. I deserve to have my own place, and I deserve to have a place that has a doorman, and a pool, and a hot tub, and an a gym inside, and happy hours on Friday night, and free breakfast every morning. It’s not free. You’re paying for that in exchange for the amount of rent that you’re paying. So your lifestyle didn’t creep up when you were in your 20s, and frankly, mine didn’t either, but it was because I wasn’t making any money.
Scott: I think that with lifestyle creep, there’s two dynamics to it, right? One is, when I was 23, like, I was a fool to think that my lifestyle was not going to increase if I wanted as I did and I and we eventually got married and and started a family, right? Of course, that’s a different dynamic than when you’re a single man who leaving college, right? and biking around town. But I also think that if you can fix your spending at any point once you kind of got settled into that more permanent lifestyle, that is the big catalyst for FI. even even if it’s fairly high in that initial baseline, because career progressions, because some components of that spending might be fixed like your home mortgage payment, for example. If you can just stop moving the goal posts, you can make FI that much more realistic and achievable. I’ll also say that after you reach FI, there is a switch that needs to be flipped to some degree, which is you probably do need to spend more, right? The lifetime of pursuing wealth to achieve financial independence can wire your brain to be overly frugal and not spend the wealth that you’ve amassed on there. And so I think that Mindy, this is something that you struggled with to switch over to a spender. You haven’t moved the goal post and you probably should move them now that you are FI and your portfolio withdrawals can support a much, much greater spending level spending than you have in your life. I will say that this has not been a problem for me, uh, in the same way as many in the FIRE community. So Trench household is uh free and clear from from this particular concern.
Mindy: It has been difficult to flip the switch on the spending. One of the things is me asking myself, how can I use my wealth to make my life better?
Scott: The last uh obvious mistake, I think, is going to be confusing income growth with progress, right? This is not obvious to a very novice personal student of personal finance, but it’s obvious to anyone in the FIRE community who’s listened to more than a handful of podcasts, right? Wealth accumulation is a function of your savings rate, and if your income is going up, but your savings rate is not, you’re not accelerating your progress towards financial independence in any meaningful way, right? So income growth matters in the context of personal finance because it allows us to increase our savings rate, if we keep our spending relatively constant or at least see it that rise slower than our income growth.
Mindy: Yeah, that’s a really good point, Scott that I don’t think a lot of people really take into consideration. Okay, let’s look at some of the more subtle fi mistakes, those sneaky ones that kind of creep up on you while you’re not paying attention to everything. Number one, building a plan that requires you to be rational forever. And clearly this is something that you wrote down, Scott. Explain rational forever.
Scott: I’ve been going crazy in the last few weeks in building this like super app. It’s not ready for publication yet. that like that talks about how retirement withdrawals and early retirement all map to keeping a low income tax bracket and optimizing for ACA subsidies and those types of things. We’ve talked to Cody Garrett and Sean Melaney, authors of tax planning to and through early retirement. We’ve talked about deaccumulation strategies and portfolios with Frank Vasquez. And so as I I put all this together, I’m realizing there’s an optimal path to withdrawing from a $2.5 million dollar for example, FIRE portfolio to sustain your spending. And it’s ludicrous. It’s there. You can do it. It’s not insane to say that that this can’t this can’t be executed for a year or three. But to have your plan hinge on optimal deaccumulation across decades in a changing tax landscape and healthcare landscape is ludicrous. It’s not a good plan to say I’m going to be this tax-optimized genius for 30 years until I get the traditional retirement. And I think that’s the failure of a lot of FI discussions out there is we’re talking about this idealized state and not the practical messy reality that actually maps to the vast majority of people’s portfolios. So this is not a mistake for the small handful of people who are truly able to execute at an elite level forever and DIY a lot of it, but I think it is too much to ask of me, for example, on here. And I’ve I’ve put the 10,000 hours into studying this subject in already. So that’s what I mean by building a plan to be rational forever. There needs to be more margin of safety. There needs to be more flexibility built into the plan than these assumptions around perfect withdrawals.
Mindy: Oh, perfect withdrawals. Yeah, there is no such thing as perfect.
Mindy: Another sneaky fi mistake is treating healthcare like a generic expense. Oh, health care is going to be X. Healthcare isn’t going to be X. Healthcare is going to change every single year. Scott, did your health care go up this year? Mine did. I think on average, 26% health care costs increased, and that’s just the premiums. That’s not the actual going to the doctor and your copays and your prescriptions and all of the everything else. Healthcare needs to be a real thought in your mind as you are progressing down your FI journey.
Scott: And I hate to be a party pooper on the uh FIRE movement kind of best practices and and core assumptions here. But I think that the the healthcare discussion is a very real threat to a significant portion of the FIRE community’s baseline spending plans. I think that it implicitly relies on receiving low income tax credits for healthcare subsidies for decades, which I think is a bad political bet to rely on. It’s not bad to take those subsidies, it’s bad to rely on that as your foundational assumption that you’re going to be that’s going to carry you through an early retirement. And then I think that a lot of people don’t understand the basic reality that today, forget inflation, forget healthcare inflation, this is not an argument that healthcare inflation is going to outpace CPI. You can have that argument with somebody else. This is just a fact. If I was going to go and get a healthcare plan on the Obamacare Exchange, the Affordable Care Act Exchange right now for my family, I would pay almost double if I just changed my age in the input field to 60. That’s not a inflation thing. That’s a today’s price for that same health care plan. And that I think is not factored in people’s plans. It is not a generic expense. You cannot say that your spending is $40,000 a year or $100,000 a year, and health care is 17,000 of that unsubsidized and will stay there. It will go up. It will go up to 35 or perhaps $40,000 for a household like mine in Colorado by the time I retire without assuming any excess health care inflation. So that’s a real subtle mistake that’s made in the FIRE community and you must I think internalize that or understand how to model those out, if you want a safe or realistic plan for your family.
Mindy: Absolutely.
Scott: All right, next up we have blind faith in the 4% rule without spending certainty. There’s a lot of debate. I think there’s like levels of like understanding of the 4% rule in the finance world, right? The first level is I heard somebody say that’s an answer to like how much you need to retire early. The second is, wait a second, the 4% rule is not 100% secure. It does not survive all the scenarios in history. And in fact, 4% of scenarios that ran out of money, which is the point. The point of the 4% rule is, here’s a scenario that resulted in not running out of money over any 30-year period. The next level is, wait a second, early retirement is longer than 30 years. I should probably think about that in the context of the 4% rule, which was designed for a 30-year portfolio. So the next level beyond that, we’re now we’re now we’re starting to get into more expert territory is, oh right, the 4% rule does have these drawbacks and it also doesn’t account for the flexibility that is in practice common in many fire scenarios, like the ability to earn some kind of part-time income, the ability to reduce spending targets and those types of things. But I think there’s a level beyond that level of understanding that is still eluding the FIRE community at large and needs to be addressed. The risk in the 4% rule is not around investment portfolios, which is a known variable if you’re relying on the 4% rule. The risk is around spending. It assumes that your spending is going to be constant relative to inflation, and it won’t be, at least in the context of health care for an early retiree. That changes once you get past traditional age, spending does begin to drop over time after a traditional retirement age. But the the risk is in many cases, in some aspects of your spending, you will see periodic boosts or declines depending on where you are in life. Are you sending little kids to daycare? Are they going to public school? Are they going to college? What’s your healthcare cost going to look like? That is something you have to lock in. You need to know your spending if you’re going to use the 4% rule. And you need to be confident not only that you are able to project it for your family, but that it’s going to not be very volatile. Volatile spending also kills the 4% rule. Those are the real risks, the real subtle risks that can blow up a FI journey and make a mistake in your plan. And that is what I want to again, I’m a big proponent of financial independence and fire, believe it can be achieved. These are not killers. These are things, mistakes that people make that can have real life consequences over time.
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Mindy: I like the way that this is worded, Scott. Blind faith in the 4% rule. We in the FIRE community call this the 4% rule, and that’s where we stop. But we’ve abbreviated it. It isn’t the 4% rule. It’s the 4% rule of thumb. And rule of thumb means something very different than rule does. And I think that there are a lot of people who have heard it, they’ve read the article, they see that this works and they hear 4% rule. Stop thinking that rule is where that phrase ends. It’s the 4% rule of thumb.
Scott: Yeah, Mindy, I’m geeking out myself. so I want to go into one more level of depth on this because I’m such a nerd on this in this world. Remember that health care example I used, right? That health care cost surging from 17,000 unsubsidized to 30 or 5 or 40,000 unsubsidized by the end of an early retirement from age 35 to 60, for example. That’s a real risk to somebody in the lean fire or traditional fire space in terms of their a percentage of their overall spending. It’s incompatible with a 4% withdrawal sequence. However, that risk in many cases, for example, with a family of $100,000 in household spending, would be completely offset if they have a house right now with 20 years left in the mortgage because the mortgage won’t rise with inflation and then it will roll off entirely right when those health care premium, the risk of of of speaking health care premiums rises the most, right? And so the 4% rule in that particular case, a fairly normal common scenario of a house that’s firing in their 30s or 40s and has a house with 15 or 20 years left in the mortgage, those two things completely offset. I don’t like the 4% rule accidentally being right in my plan. And that is a problem, right? If that family does not have a house as a renter instead, now all of a sudden that risk is there. You have to have actually have those offsets, those flexibility dynamics or those other income streams or the inheritance or the social security coming in at some point to offset those risks in the 4% rules spending categories in order for it to apply. And I think that’s poorly understood by a lot of folks and accidentally correct in many cases. And that’s fine for a lot of those folks, but I really worry about lean fire folks who do not internalize these concepts.
Mindy: That is a really great point. I worry about lean fire folks. Scott, next up is underestimating identity and purpose risk. And just in a nutshell, this is what are you retiring to? You’re not retiring from your awful boss. And if that’s all you’re doing, then that’s not the right choice. You want to be retiring to something because you don’t want to get to early retirement, quit your job and then sit around and be like, okay, now what? Start understanding what it is you want to be doing after you no longer have this 40 hour or more obligation on your time.
Mindy: Number five, unintentionally contributing to the wrong accounts. And Scott, this is the middle-class trap that we talk about or the Lafoff.
Scott: Well, we’re going to a shout out to our friend Brad Barrett. Brad Barrett uh from ChooseFI has given us some strong feedback that he does not like the term middle-class trap. And many people agree with him. This is this is fair. So we like the term middle-class trap, but we have conceded that we will stop using the middle-class trap quite as frequently and instead we have come up with the Lafoff, the liquidity first optionality framework, the Lafoff. Here’s the issue, right? When we’re talking about optimal early retirement approaches, the answer to where should my money be is we’re generally aligning as a community to it. It should be in multiple places. There should be a balance. There should be some in our Roth, there should be some in our pre-tax 401k or, you know, equivalent to referred uh retirement accounts and there should be some in after tax brokerage. And the reasons for this have to do with tax brackets. There’s a 0% long-term capital gains and qualified dividends tax bracket. That’s a really powerful tool that we don’t want to waste by having everything, for example, in a 401k. We want to have some of that in our taxable brokerage. Obviously, if it’s good to have some things in a taxable brokerage, it’s even better to have those that same money in a Roth in many cases from a pure tax optimization strategy. So, first, there’s an argument to be made that balance should be the goal and not concentration in a single one of these buckets or lack of attention to to to all of them. The second that I think is a very powerful argument and is more qualitative, right? This is something that’s a little harder to prove mathematically, is there’s a real power in having after tax liquidity that gives you optionality in your 20s, 30s, 40s and 50s, long before you actually begin withdrawing from your portfolio. A household that spends 100 grand a year and has two working individuals, making maybe 175 to $200,000 in household income, they’re going to feel trapped if they’ve got even 750,000 or a million dollars in net worth, but it’s all in their home equity and 401k. If two or $300,000 of that wealth is actually in an after tax brokerage account that could be harvested today, that’s going to create optionality for one spouse to stay home, to start a business, to invest in a rental property, to house hack, whatever those look like. And those are real investment opportunities that have the power to provide optionality or actually get you what you want from your financial position and or may perform as well or even better than passively managed index funds in a stock market in your 401k. This also doesn’t account for the fact that many 401k plans have expensive funds with high fees that’s offset the advantage of being in that 401k over a long period of time to some degree. So, anyways, I think the argument here is that if you’re unintentionally optimizing for current tax benefits, you could be costing yourself both in real terms. maybe it may be truly tax inefficient to just max out your 401k blindly across several decades, and you’re also going to be missing this subtler and more arguable benefit that we believe there is to having some after tax liquidity.
Mindy: That kind of rolls into the next one, ignoring tax liabilities, both now and in the future. You run the risk of setting yourself up for very real large RMDs down the line if you are contributing to your 401k, constantly contributing to your 401k, and then all of a sudden you find yourself with a larger than intended pile of investments, A because you’re not spending as much, or B, you just had a really great growth segment of the stock market, and all of a sudden, you’re in these tax brackets that you have no control over because RMDs start when they start, and you can’t say, oh, I’m not ready to sell my stocks, the government says tough.
Scott: I think there there’s smart people who will say the RMD worry is overblown, and I think that I totally agree with them for most people, and I disagree with them if you’re listening to this podcast. The Bigger Pockets Money audience is particularly high income earning and particularly wealthy and they are particularly concentrated in their 401k. And so for this particular audience, someone who’s got several hundred thousand or approaching a million in their 30s for example, in a 401k or tax deferred account, you are at real risk of this dynamic if you just continue maxing it for the next several decades in there, and there could be a real real consequence there. And I will also say that this problem gets harder as time passes because let’s you know, the typical career, you earn more and more and more, right? Like that’s that’s a typical career progression as your career progresses, right? Your your earnings go up. That puts you in a higher and higher income tax bracket, which makes the math for contributing to a 401k that much more compelling in the present. And so my argument comes back to these tax liabilities, you know, thinking about that really hard early in your career and saying, hmm, I’m going to max my 401k for most of my career. But at some point, I’m going to have to choose when and where I’m going to do that, and it might make sense to not max my 401k in the very early part of the the career if I agree with this balance dynamic and max it out in the years when I’m in the higher relative earning tax brackets. So those tax liabilities are are fundamentally bets and assumptions that you have to make. And I think that I at least am arrogant and I think many bigger pockets money listeners may share this arrogance where they think they’re going to win. They think their career is going to go obviously and result in them earning more and more income over time. There’s something to be said to actually bet on on what you think is the realistic outcome for your situation.
Mindy: Yes, and I think that there’s a lot of blind faith, to use that phrase from a moment ago, in maxing out your 401k. We’re definitely not saying don’t put any money into your 401k. We’re saying make sure you understand the tax liabilities now, the tax benefits now versus the tax benefits in the future. And it could be just a back and forth. I max out the match and then I put in the after tax accounts this year. And next year, I max out the 401k and put less into the after tax accounts. But regardless, it’s because you’re thinking about your strategies, you’re not just doing something that you heard somebody say one time.
Scott: That’s right. I think that a great exercise to illustrate this point is to say, I’m shooting for this two and a half million net worth number at some point in the future. That’s the midpoint of what bigger pockets money listeners say they need to achieve financial independence. What I don’t want when I get there is for that to be 1.75 million in my 401k and $700,000 in my home equity and $50,000 in my emergency reserve, right? That’s that’s not a good situation that is going to help us maximize our tax benefits. A better situation might look like having that wealth spread across a 401k at after tax brokerage and a Roth. There’s going to be an argument about how big each of those pieces of the pie should be, but it should be more balanced and less concentrated in my view, if we’re going to make the optimal decisions in many common FI journey scenarios.
Mindy: Yeah, I mean your money’s going into investments. It’s just where the investments are held, the different tax obligations of each different kind of account. So this is where a conversation with a CFP could be greatly beneficial to you.
Scott: Absolutely.
Mindy: All right, Scott. Again, tagging off of those is diversification missteps, investing only in one sector or one index or going into bonds too early because you heard that they’re a good hedge, or going into something that you know nothing about like crypto. Make sure that you’re not diversifying just for the sake of diversification.
Scott: I think that uh what we’re learning here is there’s tons of different ways to perform factor investing in the market. There’s an argument that’s emerging and I’m not sure if I’m convinced yet that alternatives to the S&P 500 or total market index fund like a tilt towards value stocks or international growth and value and those types of things could either outperform or perform differently or reduce volatility and drawdown cycles over, you know, the the index funds that are the most popular vehicle in the FIRE community. And I’m not sure I yet buy completely into that even after talking with Paul Merriman. I think there’s an argument for simplicity and a lot of people done very well with those total stock market index funds. and I think there’s more debate to be had there and more thought in the context of retirement though and truly transitioning to fire, that is where there’s a big gap between known best practices and actual behavior of the financial independence community. The financial independence community is so used to and has been rewarded for so long by investing in all equity portfolios that they not moving. They’re not they don’t actually move at least in large numbers, a large percentages that we can measure in our polling to diversified portfolios that include bonds or you know, risk parity style portfolios that include different assets that are not tightly correlated and perform differently at different cycles. and I think that’s a that’s a misstep, right? You know, there’s a good bet, right? What’s what’s a good decision and what’s a good outcome and there’s a bad bet and bad outcomes and then there’s sometimes bad bets with good outcomes in there. and I think the FIRE community and and people listening to this should understand if they’re being rewarded for a bad decision, that you know, good result, bad decision or if they’re making a good decision and and seeing that pay out for them. I think that’s that’s a hard question you should ask yourself if you’re truly at or near your FI number. Did you actually transition to a a portfolio? Or does your strategy evolve some kind of ongoing source of income that obviates the need for that diversification?
Mindy: Yeah, and again, this goes back to thinking about what you’re doing with your money, not just blindly following your same strategy over the course of your entire investing and growth career.
Scott: Okay, last one here is going to be not exercising your spending muscles during the financial independence journey. Mindy, do you know anything about this one?
Mindy: I have uh heard a little bit about this. Something about being frugal with your nose to the grindstone and not enjoying your life at all ever, ever, ever. Yeah, that can actually be a real hindrance to your FI journey because if you’re not having any fun at all, you could decide, you know what? I’m done. I’m not going to do this anymore. Keeping the things that are enjoyable in your life are what make life worth living. So if you cut out everything enjoyable just so you can get to a point where you quit your job, you’re not going to have very much fun, and what’s the point of doing this if it’s not to just enjoy the life that you are moving towards while you’re on the path to that life?
Scott: Another way of framing this mistake is people think that they need to grind for 15 years and it needs to be misery, and then they’re going to be free and life is going to turn as soon as they they leave. And that’s not how it should go. The journey to financial independence should be a continuum that gradually increases your optionality and therefore, on average, your happiness, the ability for you to control your time and day across that continuum. And I think that’s the right answer to the financial independence journey and the wrong answer is, I’m going to grind it out and be miserable for the next seven years and I’m going to finally finish the play. Now, in practice, that could be different, right? You know, you you got your RSUs vesting at your company and they’re going to come due in two years, grind it out, finish the play. But you know, in a in a situation does not have these kind of golden handcuff type situations. I think that there’s a, hey, take a step back, say no to the promotion. Take a job that is a little bit more flexible. Spend a little bit more on that journey if it delays your journey by one year but make your life that much better. Those are all I think reasonable pullbacks from the extreme origins of the FIRE community, you know, a decade or two ago.
Mindy: Yeah, don’t take that promotion. I love that idea, Scott. I was offered a promotion at a job and I didn’t want to do the job that they were offering me. That wasn’t something that I was interested in. That would have cost me more time with my family. Like the money wasn’t worth the elevated time I was going to have to be at work. And for a promotion, I didn’t even want in the first place. Carl had also turned down a promotion. He was offered to be a team lead and he asked, well, what does that entail? Less coding. Well, I want to code. He was a computer programmer. All he wanted to do was code. He didn’t want to manage people, he didn’t want to do these other things. He just wanted to code. So accepting a position that has reduced coding and more management was absolutely not what he wanted to do. It doesn’t matter about the money, it matters about what it is you want to spend your time doing. So, not all promotions are a great idea for you personally. Just know what you’re getting yourself into before you get them into it.
Scott: And I took every promotion that was offered my way until I became the CEO and did the exact opposite of all that. So, um with that, I think we’ve covered all of the mistakes in the financial independence journey here today. Mindy, what what did you think? Is any any of them surprise you or anyone’s you think people are missing?
Mindy: Nope, Scott, we covered every single mistake you could possibly make in this episode. However, if our listeners think that they have found another one, we would love to hear from you. You can email mindy@biggerpocketsmoney.com or scott@biggerpocketsmoney.com. Let us know what other mistakes you think people make on their financial independence journey.
Scott: I’m looking for these mistakes right now. I’m having a I’m having the time of my life, Mindy these last few weeks, just like obsessing over like the next level of like modeling out early retirements and thinking about each type of spending, what’s flexible, what’s not, how portfolios interact with that, which income streams do. I’m shocked at what I’m finding and then I’m then I’m relieved at, oh, well, I’m finding this thing and it’s a real risk and it’s completely offset by this other thing. And so what I think is really the underlying observation across all of this is there’s a real danger for for some folks in portions of the FIRE community from missing some of the mistakes that we’re talking about, especially in the settler world when the stakes begin to really matter about when you’re leaving a job for a very long period of time and there are also many, many offsets to those those mistakes that form in practice. And so this is not a reason to panic, but it’s a real reason to turn your brain on and do that next level of analysis across your financial planning journey, especially as you are seriously getting ready to pull the trigger and move into financial independence and stop wage paying income that is likely your best option for generating income.
Mindy: Yeah, and I think that people are following a path without varying. So we wanted to just introduce these mistakes. If you identify with any of these mistakes, start thinking about how you can change them. For free resources or to sign up for our newsletter, go to biggerpocketsmoney.com. You can also follow us on YouTube, Facebook, and Instagram at BiggerPockets Money. All right, Scott, should we get out of here?
Scott: Let’s do it.
Mindy: That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench. I am Mindy Jensen, saying bye bye, blueberry pie.
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