Mad Fientist Financial Independence and Early Retirement Tue, 02 Jul 2019 09:05:15 +0000 en-US hourly 1 Mortgage Payoff Experiment – Pay Off Mortgage Early or Invest? Tue, 02 Jul 2019 09:02:08 +0000 A real-life experiment that compares paying off a mortgage early versus investing the same amount of money in the markets!

The post Mortgage Payoff Experiment – Pay Off Mortgage Early or Invest? appeared first on Mad Fientist.

Should you pay off your mortgage or invest?

I get this question a lot (twice in the last week, actually).

One year ago, a reader named Clay bought a new house and had to make this exact decision.

Note: You may remember Clay from this 2015 post – Financial Independence After Tragedy

Lucky for us, he decided to do a bit of both and he’s tracked all his numbers to compare the two options!

Clay doesn’t have his own blog so he kindly reached out to me to share his findings.

Obviously your investment returns will differ and you can’t predict what the markets are going to do in any given year but it’s interesting to see how the numbers in this real-life experiment are playing out.

Take it away, Clay…

You’ve read all the articles and heard all the debates.

The “All Debt Is Evil” camp declares…

“Payoff the mortgage as fast as possible! Your damn hair is on FIRE! Debt is the spawn of SATAN! Once the house is paid off you will have enormous cash flow! Pay it off! PAY IT OFF!!!!”

The “Smarter Than Thou” finance ninja will tell you…

“Mortgages are GOOD DEBT! Investments are the way to go. Borrow at 4% and earn 7% in the market! It is simple math you moron. Plus tax law is in your favor. Don’t put your money in the house…put it in investments.”

The decision between mortgage payoff and investing is really about balancing the psychology of living debt free with your own personal risk tolerance (with an extra side dish of finance efficiency).

This past year I found myself in a situation where I could run an actual test, with actual money, on my actual house.

Pay Off Mortgage or Invest

Last year my wife and I bought a house for our newly blended family. When my old house sold, we had enough cash to pay off our new mortgage.

So I had a few choices…

OPTION (1) Pay off that mortgage, burn that bank statement, and invest that extra cash each month. Dave Ramsey would be proud.

OPTION (2) Keep my newly minted 30-yr mortgage and stick the funds from the old place in 100% stocks and watch CNBC for hours each night since I will no longer be able to sleep.

What to do, what to do?

How about a compromise that gives a sense of security and still leaves funds in the market? Wouldn’t that be sweet? Isn’t all personal finance personal?  So why not do a little of both?

Step one, pay off a portion of the mortgage to bring it down to $200k. This is a nice round number and the reduction of principal shrinks the 30-year term to just over 16 years. Now, I’m paying more in principal than interest each month AND I have a bunch of equity in the house. All this makes me feel better. MATH BE DAMNED!

Step two, take that same nice $200k round number and invest it.

Where should it go? VTSAX? Yeah, maybe I would do that if it were the Mad Fientist’s money but this is my own scratch we’re talking about here. This is not just theory, I am actually doing this. So a nice blended fund that generates income would be perfect. I want to have the income from this fund go directly into my checking account instead of being reinvested, because hey, I am sort of semi-retired at this point and care about having some income. Plus there are these things called mortgage payments I still need to make.

I ended up landing on the Vanguard Wellesley Income Fund Admiral Shares (VWIAX), which is an income-based balanced fund.

Yes I could have gone more aggressive and yes I could have re-invested the distributions but hey…this ain’t no disco…this ain’t no foolin’ around. I still need to make sure that my wife and I can sleep at night and the combination of regular income in a balanced fund gives me the confidence that I’m still putting my greenback soldiers to work in a responsible way.

So here we go…

As of June 2018, there are now two competing line items in my spreadsheet:


$200k into VWIAX fund (3,148.119 shares @ $63.53).

This has a historic market gain of 6.8% according to Vanguard and pays quarterly dividends.

The value will change with the market.


$200k at 3.99% with term of 16 years 8 months.

Monthly P+I is $1368.53. The amount owed steadily goes down as it is paid off.


How do we compare?

Unlike watching two racers who would deftly maneuver and muscle for rank, trying to compare paying off a mortgage to a stock fund in real-time isn’t as easy as you’d think.

Compare the Balances

Don’t you just compare the fund balance vs. mortgage balance? Duh. What could be simpler?

Every month, the mortgage shrinks and the fund bounces up and down with the market. I can just compare the balance between the two. If I subtract them I get what I call the “What if I just pay off the mortgage?” graph.

This is what is left in my greedy hands if I cashed out the fund and paid off the mortgage.

For example at the end of June the fund was worth $198,300.01 and my mortgage was $199,296.47. So if I wanted to cash in the fund and pay off the mortgage, I’d need to come up with an extra $996. Wait, what’s that now? I need to pay $996? Oh crap! Terrible decision!

However, by the end of August, I’d have an extra $5,675 in my pocket so therefore I’m a genius. Fantastic decision.

In December the market goes bananas and I’m out eight grand. Again, terrible decision! Wow and this fund is 60% bonds? Can my risk tolerance withstand this volatility?

Not so fast, what about the income generated by the fund?

Investment Income

Let’s not forget that the fund pays out dividends and capital gains, which go right into my bank account.

So far the fund has paid my lazy butt $14,389, which has turned out to be a pretty decent income stream.

June 2018September 2018December 2018March 2019TOTAL

December was a bit of a Christmas surprise with higher than expected capital gains.

It looks like the fund is crushing it even with that downswing in the market. We need to make sure the income gain is considered in the comparison.

Looks like I’m up over $21 large. Anything else to consider?

Aha! You need to subtract the interest paid on the mortgage.

Interest Paid

Every month I’ve got to make a P+I payment to The Man (in this case “The Man” is actually Suntrust Mortgage).

The “P” part of the equation is principal towards equity in the house so I can safely ignore that for this comparison but that pesky “I” stands for interest.

Every month a slightly smaller portion of my mortgage goes towards interest. However, it still adds up.

Over the first year that interest will be $7,823.89 so I need to subtract out those pesky interest payments made for the privilege of using the bank’s money to buy the house.


What about taxes?

I’ve purposely left out the tax considerations here.

Historically, tax policy favored keeping the mortgage. However, with recent changes, deducting mortgage interest isn’t the slam dunk it used to be.

There are also taxes that need to be paid on the dividend and capital gain income from the fund. However, that rate greatly depends on other income so for this comparison, I’ll just keep life simple and leave both rates at zero.


After one year the winner is…the fund by $13k!

I think this has shown what we all already know…the math favors investments over a mortgage payoff.

Even this very conservative, income-driven fund is outperforming the mortgage.

However, for many, the psychological benefit of having a paid off home is worth leaving some money on the table.

Trust me, I get it.

For me, having a reliable fund at my disposal that I could use at any moment, for any reason, has some psychological benefits as well. 

A paid-off house is great but the only way to get the money out of that house is to either sell or take a loan. 

You know what else is great? Having an investment fund at my immediate disposal, especially since it’s also throwing off some income.

Future Plans

What does the future hold?

I’m not sure. Right now I see no reason to change anything and I enjoy tracking the fund performance on a monthly basis so I’ll probably keep this little horse race plugging along for many years to come.

Talk to me after a solid three-year bear market and maybe things will have changed but that is why I chose the type of fund I did.

If my wife and I decided to quit working altogether, we could decide to pay off the mortgage to simplify our finances. However, the fund comes pretty darn close to making the P+I payments for me.

No matter what I choose, I’ll still end up with a paid-off house.

If I stay the course for 16 years and assume a conservative 5% return with 3% income yield, I’ll have a paid off house PLUS a fund that is worth $434k.

Additionally, I will have syphoned off $155k worth of dividends over those years, while paying $74k in interest payments, for a net income of $81k.

All this for NOT paying off my mortgage!

Want to see the raw numbers? My tracking spreadsheet can be viewed here and I update it regularly.

Thanks very much, Clay!

Seeing real-life numbers really helps highlight the differences between the two options.

Although I’d likely go the full investing route myself if I owned a house (especially since interest rates are currently so low), this decision ultimately boils down to a personal choice that you need to make based on your own risk tolerance.

Clay’s hybrid approach seems like a good compromise though, especially since the income from the fund almost covers his entire mortgage payment!

Experiment Updates

Clay plans to update his spreadsheet monthly so keep checking back here to see how the experiment progresses.

Big thanks again to Clay for sharing such an interesting and well-executed experiment and hopefully it helps you decide what to do when you face this same question!

Related Post

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Ramit Sethi – I Will Teach You to be Rich Tue, 14 May 2019 09:00:38 +0000 For the first time, Ramit Sethi from I Will Teach You to be Rich shares his thoughts on FIRE (Financial Independence, Retire Early)!

The post Ramit Sethi – I Will Teach You to be Rich appeared first on Mad Fientist.

Personal-finance icon Ramit Sethi from I Will Teach You to be Rich joins me for an episode of the Financial Independence Podcast!

Ramit first published his New York Times best-selling book, I Will Teach You to be Rich, back in 2009 during the depths of the financial crisis.

He just released the second version of the book today so we discuss how his advice has changed in the last decade.

For a full review of the new version of Ramit’s book, check out this post by my buddy J.D. at Get Rich Slowly

We also talk about FIRE (Financial Independence, Retire Early) – a concept that’s taken the financial world by storm in recent years.

This is the first time Ramit has talked about FIRE so it was great getting his opinions on it, especially since he’s often thought of as being on the opposite end of the financial spectrum (my first podcast guest, Mr. Money Mustache, has even jokingly referred to him as his “arch-rival in personal finance”).

Ramit didn’t hold back (does he ever?) so hope you enjoy this one as much as I did!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • What Ramit likes about FIRE (and what he doesn’t)
  • When you should pay more instead of less
  • How to cure yourself from extreme frugality
  • Why you need to maximize for value instead of cost
  • How to break out of the spreadsheet and start living life

Show Links

Full Transcript

Mad Fientist: Hey, what’s up everybody? Welcome to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest in personal finance to find out how they achieved financial independence.

Today’s guest is an absolute icon in the personal finance space. It is Ramit Sethi from I Will Teach You to be, and I’ve read Ramit’s stuff for years.

He’s been around for over a decade, he released a New York Times bestselling book, I Will Teach You to be Rich and he’s now just released a brand new version of it, which we’re going to talk about today.

I’m also really looking forward to talking to him about the whole idea of financial independence and early retirement because it’s not really something that he’s written about or talked about a lot. But as I said before, he’s one of the most popular personal finance bloggers there is so I’m really interested to get his take on it and if he sees any problems with it, or if there’s any reason he doesn’t recommend it.

I’m also looking forward to trying to bridge the gap between him and Mr. Money Mustache because I don’t know if you are aware of this but Mr. Money mustache, in his early days, used to call Ramit his “arch-rival in personal finance”. Obviously he was saying in jest, because he did recommend this book and things like that, but I’m looking forward to exploring some of the differences between their advice and trying to find common ground with it because I actually think it is more similar than it is different.

So without further delay, Ramit, thank you so much for being here. I really appreciate it.

Ramit: Oh, I am pumped. Thanks for having me.

Mad Fientist: So first, big congrats on the new version of the book, which is out today. I really can’t believe it’s been 10 years since you originally published it.

Ramit: Me either. I mean, 10 years ago, I started actually writing the book in 2007. And it took me two years I would wake up at six in the morning, I would write for two hours, go to work, come back, write for another hour and go to sleep, which took me two years. And I remember getting stuck for about eight months just on the table of contents just to get the structure right. And Funny enough, that book actually came out March 2009.

Do you know what March 2009 was?

Mad Fientist: That was the depths of the worst financial crisis since the Great Depression. somewhere around there.

Ramit: That’s exactly it. And I didn’t, you know, I don’t believe in market timing. And I remember going around to these local news stations for book tour. And these local news directors looked at me like I was a Martian. And they were like, why are you talking about investment? You know, we have 10% unemployment in this country.

And I looked at them like they were crazy. I’m like, yeah, we should talk about saving. But we should also talk about investing. We have 90% employment. And there are a lot of people who are focused on the long term, even despite what’s going on. And history has proven if you bought the book, March 26 2009 and you simply followed the advice in the book, you are financially set for life. And that makes me very proud.

And so I’m excited to come back out at new pages of material, lots of new stuff I’ve learned over the last decade, and hopefully we get to talk about that stuff today.

Mad Fientist: Yeah, absolutely. And yeah, just finished it and it’s fantastic.

Like you said, there’s a lot of new content, but the core message is still there. And the core of the book, I would say, is still there. That must make you feel pretty amazing because things are so different. And yet, the core of your book still applies just as much as it did back in 2009. How did that feel as you were going through this process of making this new version, and realizing, hey, all this stuff is exactly what I would teach people today.

Ramit: Oh, man, thank you for saying that. That makes me so happy because, you know, I love doing things for the long term. There’s a subreddit called buy it for life. And I love buying the best and then keeping it forever. And whether it be something for my kitchen, or a computer, or whatever the case may be, a car, and I feel the same way about books. My favorite books are not the ones written this year. My favorite books have been written 20, 30, 50 years ago.

And when I wrote this book, I wanted it to be timeless. And good investment advice should not change, its long term.

There are some new perspectives that can be offered but low cost long-term investing works, automation works. And I wanted to write it once, spend a ton of time, years and years, writing it and getting it right and then never have to touch it again.

What’s interesting is that my publisher kept on saying, Hey, come on, update it. And I was like, update what, you know, this thing is 98% correct, except for some changing interest rates and bank accounts.

And they had a really good point. And this one surprised me and eluded me for about eight years. They said, people want freshness. And I was like, that’s dumb. Why should they want freshness? This is the book you need. Do this and your life will change. And what happened was every day I would get three or four emails saying, Hey, is your book still applicable today? You know, a lot of things have changed. And I probably went like three or four years just dismissing those emails.

But what I finally learned is, guess what…it doesn’t matter what my view on the world is it matters what other people’s is. And it’s true people want freshness. If you haven’t bought a book on money, you don’t understand that core investment advice doesn’t change. And people are like, what about robo advisors? What about FIRE? And so it occurred to me finally, after the publishers pushed me and pushed me it is time to update it. And I had been tracking all the things I wanted to say, over time. And so I had a chance to go back, keep the majority of this stuff the same, but add quite a bit more psychology, insights on relationships, love and money, and share the stories of people who use the book to create their rich life.

Mad Fientist: Yeah, absolutely. At first, I was gonna ask you, is the real reason you did a new version just so you could troll the crypto people in, in print?

Ramit: Well, listen, it’s it’s not trolling. It’s not trolling. If I’m right. You know, these, these lunatics who came to me…

Let me just tell you about these crypto people…

Oh Ramit, you need to do crypto, it’s up to 3,000%.

And then I’m like, hey, that’s cool. If that’s you know, part of your 5% to 10% of discretionary investment, you want to put it in something fun, you want to put in a bar in Brooklyn or crypto, be my guest.

Oh, 5% to 10% You’re such a luddite. Who’s satisfied with 8% returns in the market? I’m talking 3,000% You’re so stupid Ramit.

Now these people have disappeared. Now, instead of their LinkedIn profile, saying Bitcoin expert, it, of course, inevitably has changed. Now they’re a CBD expert. You know, these people jump from one side to another.

And I don’t mind if you take your discretionary investment money and put it in something crazy. I’ve done angel investments, most of them fail. But I know that I’m not here saying Bitcoin is you know, it’s going to be a totally new way to transfer all this stuff. And it’s going to revolutionize and then then you change your story from that to, Oh, that’s not actually working, it’s actually going to be something totally different. And they’re the models, stones and yardstick of what successes changes. Eventually, it was an investment and then when that tanked now they’re not talking about it anymore. Right now, it’s blockchain. I got nothing against blockchain. And I have nothing against Bitcoin, if you want to put your fund money in it. But please don’t go around telling long term investors that this is the new revolution. Those people are all gone now.

Mad Fientist: Right? Yeah. And you said you mentioned your fun money is like something around five or 10% of your portfolio? Is that right?

Ramit: Yeah. And that’s another thing, I would always ask these these Bitcoin people. Hey, you invested in Bitcoin? Great. I always have one question. What does the rest of your portfolio look like? And they looked at me, like I was speaking alien language, they’re like portfolio. They don’t, they don’t have a portfolio. They just took their money, and put it all in this thing that they heard about on the news, or on Reddit, called Bitcoin. So yes, I do think take 5 or 10%. Or if you really aggressive, you can even go a little bit more, but have a plan so that you know where the boundaries of your fun money are.

Mad Fientist: Yeah, that’s great advice. And yeah, you obviously talk about other things that aren’t crypto…The new things like you mentioned, robo advisors. But you also talk about FIRE, which, obviously, the acronym didn’t really exist back in 2009. But obviously, the whole idea of this is gaining mainstream recently over the last couple years, especially. So I would really love to one know your thoughts about it. But what problems do you see with it because Mr. Money Mustache back in the day would call you his arch rival of personal finance, which he’s obviously just saying that in jest, because he respects you and he recommends a lot of your things, including your book. But it was always like a joke that you were sort of two ends of a spectrum. And I actually think you’re, you’re pretty similar in your messaging. It’s just a slight differences. So I’d be really interested to hear your thoughts on this FIRE thing that’s sort of grown exponentially recently. And if you find any sort of faults with it,

Ramit: Okay, I’m excited, because this is the first time I’ve really talked about FIRE. And I think you’re, you’re the perfect guy to talk about, I’ve listened to a lot of your episodes and your story as well. And I know your listeners are pretty savvy.

So I actually think there’s quite a bit about FIRE that I really like. But I definitely think that there are some issues with it that are not as candidly discussed, as I would like.

First of all, anything that gets Americans to save more money, I’m all for. And what I love about FIRE is they took this typical standard financial advice of saving 10 to 20% and they just laughed at it. And they said 10 to 20%, how about 70%. And I love whenever someone takes you to a whole new level you didn’t even know was possible.

So suddenly, you know, we’ve all read the comments on any one of these major national news pieces, they feature some couple who’s FIRE and the comments are all like in total disbelief. Oh, that’s ridiculous. 70%, they must have been given an inheritance. And then the couple very nicely explained, no, actually, we live very modestly, and we’re very conscious about our spending, and then everyone else is in disbelief. But you know, deep down, there are a few people who are reading that saying like, wait a minute, if they did it, maybe we could do it. And it’s no surprise that this is really swept the nation as a movement. And it’s become bigger than any one person.

So I think we have to credit Mr. Money Mustache, and many other, Early Retirement Extreme, many people for really leading the way and just shattering through the ceiling of what Americans thought was possible and most of them didn’t even do that.

So I have to say, I love that. Anything that gets us to save more, I’m all for. And you know, I’m a very avid reader of financial independence, fat FIRE, different FIRE blogs, and you know, any major national press article that goes out on fire, I’m reading it, and I love the comments. I love the disbelief like oh, that’s it possible? No, it’s not impossible, you just haven’t done it. And so I’m a huge fan of all of that when it comes to fire.

Mad Fientist: But…

Ramit: But there are a few issues.

Yeah, let’s get into this.

Alright. So my mixed feelings about FIRE are…

If you are super clear about your goals, and you decide that, hey, I really don’t need to spend on X, Y, or Z, and I’m going to go for a 40, 50, 60, 70% savings rate, God bless. I’m all for it. In fact, I have a whole concept called conscious spending. And from my own life, I will tell you that I am extremely frugal in certain areas of my life.

So I’m going to give you a couple examples because I think that there’s a misconception that I just like overspend on everything. Oh Ramit, that crazy guy. He just spent thousands on everything. You know, he’s so crazy.

And actually, I was raised by immigrant parents. We hardly ever ate out when we did it was once every four to six weeks when we had a coupon. And our vacations involved us driving to family, and like my mom would pack lunches for us. So I get what that’s about. And it’s funny now, you know, my wife was making fun of me because I run my entire business on a MacBook Air, which apparently sounds like an airplane landing because the fan is just like going crazy, 24/7. And she’s like, why don’t you get a new computer. And I was just like, I don’t know, this computer works, it’s fine. And I had to look at it install something. So I had to find out what version I had. And I moved my mouse up to the Apple on the top left, and I realized my computer is seven years old. Right? Like what so I bought the best computer at the time. And I just keep it until the thing stops working. So I get that.

However, if you go into subreddits like the financial independence subreddit, you could look at the top 20 posts right now and you will see people using words like depressed, guilty, anxious, miserable, prison. These are not the healthy words of someone who’s being strategic and conscious about their spending. There’s something else going on with some people. Now I’m not saying all. But I’m saying that when you start to see those words, over and over, and I’ve been reading this subreddit, and many other FIRE sites for years, then you start to say like, “Hey, what’s really going on here?” And I think, you know, all of us have read that classic post, “I built my savings, but I never built my life”. And there’s a lot of that going around in FIRE.

So what I’m saying here, I just want to be really clear, I think there’s nuance. It’s not like saving 70% is impossible. You could do it if you want or 50%, whatever the number is, if you truly want to. But I would also push and say why?

If your dream is to simply quit your job. What happens then? And you look at the answers in the subreddit, or look at the answers on blogs, most people their answer is, “I just want to sleep.” That’s not a healthy response to what you want for the next 45 years of your life. Let’s get honest.

Oh, I just want to rest and not have to go to work. Okay, well, then you see someone I can already tell you the thread. Someone goes well, out of curiosity, why don’t you try to potentially like get a new job? I mean, you say you hate your boss, you hate wearing a suit, you hate having to commute? Have you ever possibly maybe somehow considered trying to get a new job that you like? “Oh, no, I would never do that. Work sucks.”

How do you know, you never tried.

So if you want if you want to quit your job, fine. But it’s a bit of a it’s a bit disingenuous to say that I want to build my entire life to do this one crescendo this moment of retirement early. And then I have no plans afterwards. That’s where you start getting into danger.

Mad Fientist: Yeah, absolutely. And I think you’re the perfect guy to sort of help figure out how to get a healthier relationship with money. You talk about this in the book, you say living in the spreadsheet, and that’s like being obsessed with the game without realizing while you’re playing it. And I think that is a problem. That was definitely a problem on my journey to find it independence, I was just so obsessed with that end goal. But it also, this is a good time to bring up something that you call money dials, and I’ll link to your article on that in the show notes.

Ramit: So money dials are the things that you intuitively and naturally love to spend money on.

Every one of us has at least one money dial. And the way that you can find out your money dial is by simply looking at your spending for the last 30 days.

Every one of us has something that when you talk about spending on this, your eyes light up, you just love it. In fact, there’s seemingly no amount you will not spend on this. And I’ll give you an example…

There’s about 10, you can just google money dials, but some of them are travel, some of them are relationships. A very common one is health and fitness. You see this with people who have a personal trainer or go to a Soul Cycle class.

Mine is a relatively rare one of convenience. So I have spent a truly gigantic amount engineering my life to be convenient. You know, I wake up, my calendar is fully flowed out. Food is ready. My plants are watered when I travel like everything is dialed in completely. I love that.

Now I know I sound like a lunatic to anyone listening. They’re like this guy’s a psycho. You know, he’s gonna he’s going to skin me alive and wear my skin like a raincoat. I get it. That’s a weird one. But there are some common ones, right? There’s self improvement. A lot of people are like, I will spend anything on taking courses and classes.

Now the reason I call money dials is very important. Most people when they think about the thing they love, they have they spend on it, and they’re happy with it. But imagine if like a stereo dial, you turn that number up. So for example, let’s say that you love convenience, and you decide you want to turn that money dial up, what if you doubled how much you spent or tripled or 10x it. For convenience, you might go from, you know, having somebody come over and clean your apartment once a month to having someone come over once a week, you might have a full time personal assistant, you might have someone scheduling all your travel for you instead of you travel hacking it.

Same with health and fitness, you might hire a personal trainer, see that trainer four times a week, join multiple gyms. The reason that I love this concept is that I want people to dream bigger about the things that they love. And I want them to spend extravagantly on that, as long as they cut costs mercilessly on the things they don’t. So when you get clear, like oh my god, I never thought of actually spending more on the thing I love. Well, in order to do that, I need to cut back on some of the things I don’t. And that is the core of conscious spending.

Mad Fientist: Great. And I’m gonna take the other side just for a little bit. I think there’s also more happiness, sometimes when you limit the amount that you do it. So just to give you an example, I ended up working for two extra years after I hit my FI number. And that second year I I said to myself, you know, I’ve been really good with money my whole life, I’ve always, you know, been super conscious about it and this year, I’m just going to relax a little bit, I’m not going to stress about every little expense, I’m gonna, you know, just do what we want to do. And we ended up traveling for three months, we went all the way around the world, then we moved to Edinburgh, and we wanted to experience all the restaurants so we were going out to eat every you know, every other night or something, which is a lot more than we did in the past.

And at the end of the year one, we realized we didn’t spend hardly anything more than we normally do, which you know, lends some support to your latte argument, which I didn’t understand the first time I read your book because I was like No, well, if I save on lattes, I’ll just be able to, you know, reach FI even quicker. But seeing that year, that didn’t really make a big impact on the bottom line at the end of the year. So that was the one thing but also second, we realized it made us like traveling less, because we didn’t have a bunch of time to plan and look forward to it and you know, start getting excited about because we were just on the road the whole time. So then we’re like, oh, it’s another temple or it’s another church. It’s like, who cares? It was more of a hassle than anything. And then same with eating out. We’re just like, we felt less healthy. And we, you know, didn’t enjoy the experience as much because it wasn’t special. So what would you say to that side of the argument?

Ramit: Well, I think this is a great, I love this.

First off, it’s very counterintuitive, but I’ve always said, you know, buy as many lattes as you want, right?

Saving $3 on a latte is not going to change your financial situation in a material way, it would be better that you focus on the 5 to 10 big wins in life and nail those. And you can buy as many lattes and appetizers as you want if you get the big wins, right.

So those things are things like getting a great job and negotiating your salary. automating your investments, and making sure that they’re low cost, and getting your credit score optimized, if you ever decide to buy a house, etc.

Those things matter way more than the daily requirement of making a decision to stop doing something that deep down you actually want to do. I mean, if you want to buy a coffee, buying coffee, the irony is that I actually make my own coffee. But I’ll buy it once in a while if I’m out for a meeting. And so I think that people treat themselves like they’re robots like they will make these very rational decisions every day of their life. And they do that while sitting in a spreadsheet. And then they go out into the real world. And they desperately try to resist what is out there what they genuinely want to do.

There’s nothing wrong with wanting to buy a cup of coffee, or wanting to buy a really nice jacket. There’s nothing wrong with it. And sometimes I think in the FIRE community, there’s this moral judgment about if you want to buy something nice, you are morally weak.

I disagree with that.

I would say instead, get honest about what you want. And you need to save and invest and automate so that you’re able to do it. But I would actually like to encourage you, once you’ve put all that apparatus in place to actually dream bigger.

You want that coat? How about one that’s even nicer?

You want to take that trip for two weeks, how about four weeks?

So that’s what I want people to do is to live their rich life. Once you are able to do that, you might discover that certain things you thought were really appealing to you actually are not.

In my life, I make my coffee most days.

My wife and I hardly ever eat out, maybe once every month, every four to six weeks, we eat and we live in New York City.

And on the other hand, when we travel, we travel for a long time.

And you know, there are certain things that we spend a lot on and we’re unapologetic about it. So that’s the first thing. The second point you made is also a really good point, I really like it. I do think that there is beauty and there is value in restraint. And I want to give you a couple of examples from my own life.

I moved into an apartment in New York, I rent I rent by choice, you know, I’ve always said real estate is not the best investment that you can make, you need to run the numbers. A lot of people hate me because I say that. And you know, they use the same old things. What about to tax deduction, whatever, we can talk about that.

So, I rented this apartment 10 years ago, I’m in the same apartment. Now my net worth has increased in 10 years. But I stayed in the same place because it continues to provide value for me. I like it. I like the service. I like the views. I like the space. Good. And so I think there’s value in restraint. Could I have upgraded? Of course, I could have upgraded my computer, yes. But those things are valuable to me. So I think a lot of FIRE people are really good at this, they nail this, which is let me decide what’s not important to me. I think they are on top of that, and probably the best in the world. I think the challenge I would make to FIRE adherents is okay, you’ve really nailed what’s not important to you. Now let’s talk about what is important to you. That’s the challenge that I would ask people to think about.

Mad Fientist: Absolutely. And maybe you can help me with that. Because I am still, like I said, I’m a very naturally frugal person. I hate waste. I hate inefficiencies. So I sort of like obsess about making sure it’s like the most efficient way to get somewhere, spend money, or the most efficient use of money and things like that.

Ramit: Yeah, let’s do it. I love this. So you already said some a couple of things that caught my attention. Okay. So first off, we’re working on an addition to the book, which where we’ve got a new course coming out called Wealth Triggers. And this is about the psychology of the wealthy. What do they do? And how do they think differently than everyone else. And you just said something super interesting. You hate waste. Tell me about that.

Mad Fientist: Say my wife and I are going out for the day. And we’re gonna hit up these five spots. In my head, I’ve planned out the exact route we’re going to take because I know the best way to get here the things we can do along the way and stop. And I feel sorry for her because she’ll like throw, she’ll be like, Oh, actually, I want to do this today, too. And she’ll throw that in the mix when we’re already out and about and she can tell my brain is exploding.

But she doesn’t know why. Because why would she know why? Why would she know that? I’ve already planned this whole thing out. And this is the most efficient way to do it. And she has no idea. But now at least we’ve been together for 17 years or something already. So now she can see that my brain is exploding so she now can ask me.

But it’s it’s stupid things like that. So with money, it’s even worse. Like, I searched for flights for way too long for the amount I save on them and all these sorts of things. So that gives you a sort of an idea, but it’s probably way worse.

Ramit: I love this. And by the way, I feel like 90% of people who are in FIRE will resonate.

Mad Fientist: Oh, absolutely. Yeah.

Ramit: So when you think about someone like you, and just like picture them sitting at their computer, they’re like they got 75 tabs open, you know, researching Google Maps, and like some flight options with 10,000 different flight permutations. Like, what do you see that person looking like?

So let me just break it down. First of all, the posture of this person sitting at the computer is like super rigid, just like when your wife says to you, “Hey, why don’t we try like going down this alleyway?” And you’re just like, ah, ok, I can see your body right now. You’re just like, You look like you’ve been struck by lightning. You just frozen? Okay. And and so that’s number one. And number two, how about this? So what if you paid $100 for a flight? And then, and then I told you, Hey, I took that exact same flight, and I only paid 75. How would you feel?

Mad Fientist: Oh, I would know it because I still track the flights after I buy them.


Ramit: You are amazing. Okay. Okay. So I love this. So one thing that’s really cool is you just own it, you’re like, Look, this is this is what I am. And this is I realized this is an issue. Do you think this is genuinely a problem?

Mad Fientist: It is becoming less of a problem now that I’m relaxing more. It’s it is going slowly. But that’s only because you know, I’ve saved more than I expect, to. So I’m finally relaxed in that aspect. But yes, I still think it’s a problem. And it’s one that I’m working on, which is why I was super pumped to talk to you, because I figured if anybody can help me it’s going to be Ramit.

Ramit: Okay. Well, I can definitely help you. And the reason I asked that question is that most people who do this don’t think it’s a problem. They literally go, they don’t understand this whole conversation we’re having right now.

In fact, they probably stop listening to this podcast. Like, what’s the problem? Of course, I’m going to save money, like, what is this guy talking about?

Well, let me give you a quote that might strike you as a little different. There’s a famous marketer named Dan Kennedy. And he says, Why pay less when you can pay more?

Mad Fientist: Why?

Ramit: Everyone on this podcast is like, what is this guy talking about? Let me tell you, there are things in life, where it actually makes a lot of sense to pay more.

And what you have optimized for is the cost, the cost of a flight, the cost of walking from one block to the other, you have maximized for that. And that’s fine. That’s very analytical, you’re living in the spreadsheet, you’re living in Google Maps, that’s fine.

But then you get somebody like your wife, who’s like, hey, let’s go down this little alleyway. And maybe there’s a bistro down there. And she doesn’t understand why you don’t want to do it, you got the whole day free. But in your head, you’re like, you can literally see the Google Maps screen. And it’s not leading you that way. Right? It’s like we’re supposed to go left not right. What happened is you optimize for cost, but you never thought of putting on a different set of glasses, which instead of the lens of cost, instead optimize for value.

And so when Dan Kennedy says, Why pay less when you can pay more, it’s talking about sometimes it actually makes sense to spend more, more time, more money, more resources, and all of this will come together talking about your fear of waste, okay.

As I have become more successful, I have realized that you have to waste money as you get more successful. Now, I’m not saying you should actively go out and just throw dollar bills out the window and light them on fire. That’s not what I’m saying at all.

What I am saying is that I had a co worker who had gotten a contract for us to do some Instagram videos, you know, I think we paid I don’t know, 1000 bucks for 10 videos or something like that. And they sent me one video, and I decided at the last minute not to use it.

Okay, now, this coworker was a little bit like surprised maybe even upset. Hey, you know, it’s okay, if we don’t choose to use that. But that cost us like 20 bucks or 100 bucks. In my mind, that is the cost of doing business, that sometimes we’re going to pay for something and it’s not going to work out. And what I would encourage everyone to do is to remember that cost matters, you need to manage your costs, and you need to have all that tracked. But there’s a whole other lens on life, which is value. And so the value for you and your wife being spontaneous instead, do you think that’s worth more than, you know, saving 10 minutes on your optimized Google Maps route?

Mad Fientist: Absolutely.

And that, yeah, that’s actually really good to try to keep in mind because I would not have even sort of thought that. I would be so in my head, like trying to reroute or whatever, that I wouldn’t even think…You know what, she wants to do this and she’s going to be happy. Who knows what will happen? And I do I do enjoy those types of moments. But I would have never thought of that in that situation. But yeah, if if I can just reframe it as just focusing more on value and not efficiency, and I would be a lot happier.

Ramit: I want to give you one more example. Because it’s easy for us to put someone else first, like this was an easy layup because it’s your wife. So you know, you want to make her happy.

Okay, fine. I think what FIRE people find more challenging is to actually focus that on themselves, and to say, Hey, you know what, I’m just going to pick the first flight that shows up in the search bar. Right? Why would you do that when you could spend an extra 10 minutes and save, you know, 200, or 20 bucks or whatever.

And so what I would challenge people to do is to realize that you can save cost, but what are you losing? While you are optimizing for an extra two or three or $4? And a lot of times, the truth is, most people don’t know what else they would do with their free time. So they say like, hey, it’s either spend 20 minutes optimizing and saving 20 bucks, or I’m just literally going to like, stare at a wall or turn on Netflix.

Yeah, well, that’s sort of a larger issue, which I’ve mentioned about FIRE. If you don’t have anything else going on, then of course you’re going to fall into this rigid spreadsheet driven life, because it provides control and safety for you.

You know, your your spreadsheets are never going to turn their back on you. Your spreadsheets always going to speak logic to you.

But sometimes the most valuable things in life are not simply in the spreadsheet.

I actually think that the most valuable things in life are living outside of the spreadsheet. It’s you saying yes to your wife, maybe even saying to your wife, hey, we’re going to be totally spontaneous today. Who knows what’s going to happen where we’re just going to do it, and I don’t care how much it costs time or money.

Maybe it’s one of the listeners today saying you know what, like, I deep down I really love whatever their hobby is, okay, bowling, and I only go bowling during matinee times. I happen to know bowling because I grew up in suburbia. So I know there are certain times we used to go to save money, Monday nights. You know what, I love it. I’m going to go on a Friday night when it’s full price just cuz I love it. And I’m going to take my own shackles off. Wouldn’t that be amazing?

Here’s one last example. We went on a long honeymoon, when we we got married last year. And one of the hotels we stayed at is a hotel where they they tell us you know, when you’re here, we want you to be treated like family. And I had a chance to sit down with the manager. And I really asked him like, Can you walk me through the guest experience? How do you think about because it is so so well done? And he told me this thing about we treat you like family. And I was like, that’s cool. Like, can you give me an example? He said, think about it. When you are eating with family, would you ever be given a bill to sign? And I said no. He said that’s the same here, you are never signing anything when you are on property. And I said, Well, that’s the first of all, that’s amazing. Like we get up from dinner and we just go back to our room and we don’t have to sign anything they just know. Now, he said, you might think that it might cause conflicts because when they check out they go over the bill. And he said once in a while a guest does bring up something or try to argue the bill. And we almost always credit them for it. So there is a tiny cost to us. But think about the value for the guests who come in and don’t even have to think about signing. That, to me is one of the quintessential differences between cost and value. Yes, they may lose a little bit, but the value they gain is so much more.

Mad Fientist: That’s a great example.

And yeah, I’d like to talk a little bit more about conscious spending before we move on. Because I think I think that’s exactly you know, what the FIRE community tries to do. They try to be conscious about their spending and only spend on things that are important to them.

And to go back to the money dials. Before I hit FI, travel and freedom were the two and I didn’t spend that much on travel because I was good at travel hacking and freedom I spent everything on because I just tried to plow as much as into my savings as I can so that I could hit FI.

Now I seem to be more focused on self improvement and relationships. And I am getting better at spending on those things. Like I just came back from America, I went and saw a family and friends went to concerts with my friends and I booked a festival, it was like a conference that I was really interested in for the self improvement thing. And it was very expensive. And it was a ridiculous trip because we’re going to be back there next month seeing family and I felt absolutely insane to do it.

Ramit: But wait a minute, did you just increase the number of years you’re going to have to work by 28 years? How does that feel to you know?

Mad Fientist: It did nothing. It was not really a big thing. And it’s not even going to really affect anything because, like I said, I worked longer than I thought so I have the money to spend on stuff like that.

But I had to have my wife convince me to do that. Because I was like now this is crazy. I can’t do that. But I did it. So I’m feeling like I’m making progress. And I’m sure you’ve had, you know, lots of readers chime in and, talk about their conscious spending. Are there any like really good examples, to show how people actually consciously spend more on the things that are important to them?

Ramit: Completely. I’m so glad you asked this.

So at the beginning of the book, in fact, the first two pages, I had to really fight the publishers to do this, I’m so glad that I did. I wanted to show people what a rich life can be. And I wanted to show a visual because I think a lot of people think rich looks a certain way, you know, and I wanted to show people that young/old, black/white, men/women, it’s so diverse. And one example right in the front of the book is a guy who wrote me saying he used my book, the material, and I will teach you to be rich, and he and his wife retired at 35 and 36. And they have decided to road trip around the United States in an RV.

Now what I love about this is that’s totally not my rich life at all. That is not my dream, I if I had unlimited funds, I wouldn’t do that. But it’s his. And what I have come to change my view on is a rich life can be different for you and me and all of your listeners, but also how you get there can be different.

So some people might want to push their savings rate to 40%, or 50% or more. And some people might want to just earn a ton more money and start a business like a lot of my readers do or negotiate a $25,000 raise, which is also very possible.

I would say that when it comes to how you get there, I actually think you can save too much. And I think this is something that’s not talked about in FIRE. There’s a steeply diminishing curve of what happens when you save, you know, let’s say from 35%, to 40 to 60. And above 60%. Lifestyle definitely changes. And what happens is ironically, for FIRE people who are so good at controlling costs, they forget to examine the cost of their savings rate. If you’re saving 70%, you are costing yourself opportunities, and you’re just simply not focusing on the cost of that thing.

So you know, would you be better off spending, you know, 50 bucks a month doing something you loved? Or would you know, would you be better off going out saying yes to your co workers inviting you to lunch? If you don’t care about those things, that’s fine. But whenever I hear someone saying, you know, I’m saving 70%, I start to say, wait a second, let’s take a look at the lifestyle here. Because you can save too much, you can invest too much. But of course most Americans save too little and invest too little.

Mad Fientist: Right, that was one of my questions, actually. Because I thought that could be potentially a way for me to relax even more is to say, Okay, this is my normal savings rate, maybe decrease that by 5%, which will obviously make me spend more than I would have otherwise. And then maybe that could sort of just, you know, let me do some of these things and be like, Well, I have to spend it anyway. So I might as well put it to good use and, and do this conference. And maybe then it wouldn’t have been like such a big ordeal to get to that decision in the first place.

Ramit: Well, why not even instrument it further. So I’m a big systems guy. You know, chapter five of my book is all about automating your money, and how to use psychology and systems to automate your money.

Just as an example, I spend less than an hour a month on my money. And if you want to cause yourself to change the way you spend money, why not create a sub savings account called fun money and create a rule for yourself, the rule might be something like this, it might be every month, I’m putting in 100 bucks, and by the 30th of the month, I have to use it, you got to find a way to use it. And if you don’t, you got to throw it outside the window.

Guess what, every single FIRE person is going to find a way to use that money. The thing is, you’re building a muscle that you haven’t built before. So guess what, it’s going to take some time to build that serendipity muscle, maybe a lot of people actually don’t know what they want to do. That’s fine. And that’s just a matter of self discovery. So I would say like go even further, don’t just cut your savings rate, but actually focus in on what you want to do and build a system around that.

Mad Fientist: All right, absolutely. Yeah, I’m glad you brought up systems too, because that’s part of the book that I really enjoy. And once you automate your finances especially, it’s just like, that’s the best thing you could possibly do is just get that all automated and take your brain out of it. Because your brain’s trying to sabotage what you’re actually wanting to do.

Ramit: Totally, most Americans brains are sabotaging them to you know, trade frequently, and to spend a ton of money. I think if you’re hardcore FIRE, your brain is equally trying to sabotage you, but in a different way. It’s trying to draw you back into your Excel model to play you know, some Monte Carlo simulation, and to change your savings rate from this to that plus 1%.

And you got to step outside the spreadsheet, right? Your plan is your plan, you already optimized it move on the rest of your work now is like that book, “What got you here won’t get you there”. You already did the hard work, you built the plan, you have your money being automatically sent over. Now turn the page, you got a new chapter, I’m going to go find some hobbies, I’m going to discover what I love to do. That’s very different than staying in the spreadsheet.

Mad Fientist: Yeah, absolutely.

And, obviously I want to move on to some other things. But there’s one more thing that I wanted to get your opinion on, because it’s something I’ve been thinking about recently that I haven’t written about yet, but I’m sort of just you know, thinking about the idea a lot before I do.

It’s the concept of sort of like staying in your lane.

So I grew up in middle class, not rich in any way. But I’d never felt like we needed anything. And my parents are divorced. So my mom was raising us. So I’m sure she didn’t have a lot of extra money. But you know, she made it seem like we were always fine.

And so I’m a middle class guy. And I think maybe when is it when people get in trouble is that when they’re trying to go up to the next sort of bracket.

Obviously, if you’re don’t have any money in your you grew up poor, then getting to that next bracket is going to be life changing. But getting from middle class to upper middle class or beyond. It seems like that’s when the spending can get out of control. Whereas if people were just content with staying in their lane, they could live the most extravagant middle class life, and be so much happier than sort of getting to that next level.

Do you agree with that? And do you have any thoughts on if that’s something to stay focused on, as you you know, have more wealth than maybe you expected to have?

Ramit: Well, I, I’ve come from a similar situation. You know, like I said, my parents middle class, my dad worked, my mom was home with us. Andhaving been fortunate with my business, and with my investments, and also a lot of luck. I think that’s definitely a part that’s played a role. I’ve had to really re think the way that I approach money in life, I have to say, I think what you say is potentially true.

Like if you wanted to stay in a middle class life and just live very well in that middle class life, you absolutely could.

But I think that there’s, it’s perfectly fine to say you know what, I actually do want to live in a beach house in Malibu, or I actually do want to, you know, travel for a month and a half every year. I think that’s perfectly fine.

What I think is important here is deciding what do you like, what is important? And like, what are the true costs of those things?

I think that most Americans, you know, they simply spend mindlessly to keep up with the Joneses. But if you if you know your savings rate, and if you have like a target date fund, you’re ahead of 95% of people.

So I would say that don’t be afraid to try certain new things. And this, this raises something I’ve been wanting to talk about for a long time. I see in the frugality circles, this idea that if I had a million dollars, I would never do that I would never eat at that restaurant, or I would never fly business class.

And I have to say, How do you know what you would do? Because guess what your values do change over time and with more money, and they should.

So the idea of the hedonic treadmill is most people’s responses, oh my god, we need to not move up on the hedonic treadmill. My answer is you’re naturally going to move up, accept it, and plan for it don’t deny it.

So guess what, if you have a million dollars, it’s not going to make sense to cut coupons anymore. It just doesn’t. It doesn’t make financial sense. Brian Tracy, this famous self self development guy said, the more successful I became, the less I became able to afford certain things. Why? Because he was making so much he would rather spend time with his daughter than mow the lawn. That’s perfectly rational. So when somebody says, oh, if I had that much money, I would never do it. Ultimately, to me, there’s a lot of fear in that statement. fear that, oh, if I try eating at this nice restaurant once, that I’m actually going to like it so much that I know trip and fall over and have to go there every single day of my life.

Guys, trust yourself, you can eat at a really nice restaurant once a year for your anniversary, and not end up becoming addicted to that place. Like trust yourself, have some confidence. And I think that it’s okay to try these things. Because guess what you might discover you love it. And if you do, again, have the confidence to know that you can earn more, you can adjust your system you can cut back on other things. Truly Go for it.

And guess what, most of the time you don’t like it, like I’ve eaten it nice restaurants, fine. It’s fine once in a while, but I hardly ever go there. So but I like knowing that I tried it, I gave it a fair shake. I enjoyed the experience. And that’s cool. Like, I have total confidence in myself that I can go in or go out. And that’s fine.

Mad Fientist: I couldn’t agree more actually, I think trying things out is is an amazing way to do it. And I think maybe where some people get into trouble is they commit themselves to this big decision before trying it out, like buying a huge yacht and think you’re going to sail around the world and selling their house to get the yacht and then they don’t like it. But if you can try in low risk, low cost ways, then why not?

Ramit: Rent it or, you know, if you’re thinking of getting a trainer, that perfect example, because, you know, the common thing is like, why would I pay for a personal trainer, I can get all the workouts on YouTube. That’s true. So why is it that I’ve paid for a personal trainer to go four times a week for the last almost eight to 10 years?

Mad Fientist: Motivation, coaching, encouragement? Yeah, there’s there’s lots of benefits that people probably don’t think about when they just think about the upfront cost.

Ramit: The cost, but the value is tremendous, right?

Mad Fientist: Absolutely.

Ramit: And so I would say like, again, rethinking your perspective of this idea, a lot of people feel comfortable, saying, if I made more money stay exactly the same. That’s not the way it’s supposed to work. When you make more money, you will and you should change you’re spending. Now you can save way more, the more I have made, the more I’ve saved, I have a high savings rate. And when my wife and I sat down to talk about money, that was one of the first things I said, I said, Look, I’m super, super, super flexible on most things with money. One thing that’s important to me, though, is that we have a savings rate of between this and that. And as long as we’re doing that, I’m good. Like I’m good with everything, because that means we’re really nailing it.

So, really thinking about if your earnings went up, like went up significantly, a lot of the courses I teach teach you how to start a business or negotiate a salary, and a lot of people grow their earnings in some cases, $250,000 What would you do? It probably should not look exactly the way it does today.

Mad Fientist: You mentioned personal trainer, which will allow me to quote one of your best lines in the book, in my opinion.

You say you were “six feet and 127 pounds into your mid 20s, looking like a hairy Indian Gumby”.

So you’ve obviously been able to gain a lot of muscle mass over the years because you’re not a skinny, hairy Indian Gumby anymore,

Ramit: Just hairy

Mad Fientist: So I’d like to ask you, if you found any particular sort of diet that has been good for that, because I’m I think I’m a similar age to you. I’m 37. I’ve been working out consistently for the last two and half years, I definitely see a lot of really good improvements, a lot of definition and stuff that I’m happy with. But also, I still feel like I’m on the skinny end of the spectrum. But I am older. So I don’t want to sort of do anything that’s going to get the balances the other way. And then I’ll be in my 40s and not able to deal with it. So any recommendations on that?

Ramit: Totally. Well, you know what, it’s so funny. I love, love, love talking about fitness and health. Because if I had followed my traditional life path, I would never have done this. And so I’m actually more proud of the fitness journey that I’ve taken. Then, like the career journey, like I was, I was raised, my parents are educated, they taught me well, I went to a good school, I felt confident that I would get a good job.

So that was like, Okay, fine. But you know, I should be this skinny Indian dude wearing an oversized extra large shirt. That’s where life should have taken me. And I really had to fight my way out of that. So I think a lot of people listening can hopefully resonate with something that, you know, if you had just followed your traditional life path, you would have been doing it but you had to move heaven and earth to change it.

So for me, just being like skinny and not knowing how to eat was a huge thing. And then I finally got the courage up to ask one of my friends. And they started taking me to the gym and showing me some stuff. And you know, workouts and a little bit of eating stuff. And it turned out that a lot of the stories I had told myself, were not true. I had told myself I have a fast metabolism. No, I don’t, I just didn’t eat a lot. And he’s like, track what you eat.

Turns out that most people are chronically horrible at tracking what they eat, they either overeat dramatically, or they under if you’re skinny dude. And if you track it for seven days, and you actually use like a food scale, you will be absolutely blown away.

I think that the number one surprise in life for people is tracking their food for a week. The number two is tracking their money. Food, though, is by far bigger.

So then I moved to New York, and it took me four months to get the courage to walk across the street into a gym and ask for a trainer for months. And I had the money, it wasn’t the money problem. It was just this, this concept of like, well, if I go there and ask, then that means I’m going to have to do this. And it was easier to just ignore it. And I was nervous. Would he looked at me and laugh?

And I walked in and I met a trainer and the first trader I met, I just signed up with him, you know, just like, didn’t know, I was like whatever and I, I put myself in his hands. He’s like, you’re going to do this and this, and you’re gonna have to do that I was like, I’ll do whatever you want. He goes, it’s going to take at least a year to hit your goals. I was like, I’ll be here as long as I need to. I stayed with that trainer for about seven or eight years, and three times a week eventually for and what happened was about halfway through, I was gaining strength, and I was looking a little better.

But I was on Instagram. And I would look at these guys who were like super ripped. And I was like how come I don’t look like that? You know, I trained hard, how come I don’t look like that. And I think that at its core, there was two things I want. One was vanity, you don’t want to look like that. And two was the craft. I wanted to know how to crack the code of this. So I took a real honest look at what I was eating. And the fact of the matter is I was training. I was training, okay, pretty hard. But my food was horrible. I was ordering seamless delivery every day.

So I then learned how to eat better. And from an eating perspective, I’ve gone through a lot of bodybuilding stuff. And now basically I do what’s called macros. So every week or two, my new trainer will send me macros. And I basically tell them this is the look that I want.

So it’s funny, I like went online with my wife, and we searched like hot guys fitness. Okay, so we’re like sitting there and I’m like, this is the weirdest Google search I’ve ever done. We’d like literally looked through all these pictures, and then we’re like, yeah, okay, that’s a good one. And we both agreed on one. And it was hilarious, because my wife picked this this guy. And she’s like, Yeah, I like it, because it doesn’t look like he works out that much. I looked at this guy. I’m like, this guy definitely works out!

It’s so hilarious that she says that even though she works out herself.

So now every week I get a macro update. It’s basically just three numbers, protein, carbs, fat, and then I plug it into My Fitness Pal. And I can eat whatever, whatever I want that fits the math. I think for FIRE people, it’s actually really good.

Mad Fientist: Nice!

Ramit: Because, it’s just a formula. And then if you want to eat yogurt, or fruit, or pizza, you can eat all that stuff. Of course, you discover over time, it’s better to eat more healthy, you know, lean meats, stuff. So I work with a trainer Chris Colston fitness, he’s awesome. But any good trainer can recommend macros to you. Okay? So you can choose and you can definitely check you out. When you do this. After one month, you will see visibly a change in your body.

Mad Fientist: Wow, that’s cool, ya know, cuz it’s like I said, I’ve been enjoying it so much. It’s been life changing. And just like you like my life would be in such a different place if I had not made some of these changes to do this, but yeah, just I feel like I may have plateaued a little bit and but that’s perfect that I will put some of that stuff in the show notes.

And I will definitely try that one week of tracking my macros because I know it’s going to be low. I know it’s going to be not enough.

I know your time is extremely valuable so I don’t want to keep you on for too much longer.

Where’s where can people find you? the best place for everyone to go? And then obviously I’ll link to the book in the show notes as well.

Ramit: That’s awesome. And then I’m on Twitter @ramit and I’m also on Instagram @ramit.

Mad Fientist: Excellent. Since I started this podcast way back in 2012. I’ve asked every guest, what’s one piece of advice you’d give to somebody on the path to financial independence?

Ramit: I would say spend extravagantly on the things you love and cut costs mercilessly on the things you don’t.

Mad Fientist: Perfect, Ramit, thank you so much for being here. This has been a real pleasure.

Ramit: It’s been a pleasure. Thank you.

Mad Fientist: Alright man, talk to you soon. Bye.

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]]> 29
Online Business Experiment Fri, 12 Apr 2019 08:22:48 +0000 In this new Mad Fientist experiment, I'm starting an online business from scratch and will be documenting the entire process!

The post Online Business Experiment appeared first on Mad Fientist.

I recently wrote an article about why I think you should start a business (and how you can guarantee success).

To put everything in that post to the test, I’m going to run an experiment…

I’m going to start a completely new business from scratch and I’m going to document the entire process!

What’s the point starting a new business after already achieving FI?

As I mentioned in that post, creating a business around one of your interests is a great way to force yourself to dive deeper into something you enjoy.

And as we learned during my recent interview with Cal Newport, going deeper into something results in more happiness and fulfillment.

How this will work

Rather than have multiple posts about this experiment, I’m just going to update this post as the experiment progresses.

I’m stealing this style of posting from my favorite entrepreneur site,

MoneyLab is written by my buddy Matt and is where he runs interesting business experiments, documents all the details, and shares the results.

A lot of his experiments aren’t successful and don’t make any money at all but it’s nice to see that honesty and transparency (especially in the “online business” space).

He also has a really entertaining podcast that’s worth checking out (him and his cohost, Andrew from ListenMoneyMatters, have the best chemistry out of anyone in podcasting so the episodes are always a lot of fun to listen to).

Anyway, he dedicates a page to each of his experiments and updates the page as he goes along and I really like that style so I’m borrowing it for this experiment.

To keep the experiment as fair as possible, I’m not going to publically share the URL of the new project here.

Since the Mad Fientist has been around a long time and has a lot of authority in the eyes of the search engines, I don’t want to give my new site a big head start by linking to it from here.

If you’re interested in checking out what I’m working on though, enter your email below to join the Mad Fientist email list and I’ll send you the URL and will keep you updated on the experiment’s progress.

Note: If you’re already on the Mad Fientist email list, the email you received today about this post contains all the details.

Obviously having some of you visit my new site is going to skew the numbers a bit but I can’t imagine many of you will be recurring visitors (you’ll see what I mean when you read about the site below).

Right Type of Business

The first step of starting a business is to make sure you’re starting the right type of business.

As I mentioned in the other post, you want to choose a business that falls within the diamond in the center of this image:

What to Think About When Choosing a Business to Start

What to Think About When Choosing a Business to Start

The business I plan to start is a YouTube channel about synthesizers (yes, I do realize how dorky that sounds).

Let’s see if it falls within that diamond for me…


Am I interested in synthesizers?

Yes, I spend the majority of my free time playing, reading about, and watching videos about synths.

Am I interested in producing videos?

Yes, I’ve been enjoying YouTube more than any other online content recently and the idea of creating my own videos is really exciting.


Do I want to learn more about synthesizers and get better at using them?

Yes, one of the main reasons I wanted to quit my full-time job was so that I can devote more time to music and getting better at synthesizing sounds is one of the most excting aspects of that.


Do I want to meet other people who are interested in synths?

Yes, I’d like to meet musicians who are interested in similar music so this could be a great way to do that.

It’d also be incredible to join one of my favorite bands so that’d be much more likely to happen if I’m already known online as someone who is really good with synths (I know that’s a long shot but most of my favorite bands are small so it is possible).


Do I have skills that I could utilize to get this business off the ground, that I would enjoy using, and/or would like to improve on?

Yes, I’d say I’m already more knowledgable than most about synths so that’s really all it takes to teach others (you don’t have to know everything…you just have to know more than some people).

I’ve realized through my writing here that I’m good at breaking down complex topics into easily-understandable chunks so that skill will definitely come in handy.

I’ve also developed a lot of knowledge about how online businesses work, thanks to the Mad Fientist, so I could utilize those skills to get my site off the ground quicker.

Does it matter that I’ve not produced videos before? Not really. I can learn as I go and as long as the quality isn’t awful, I can’t imagine it will make too much of a difference at first. It is something I’m looking forward to getting better at so that’s more important than being amazing from the start.

Business Potential

Since the business idea falls within the diamond described above, it’s time to see if the business has potential.

The Reddit Test

Back when I started the Mad Fientist in 2012, I noticed that the Financial Independence subreddit had a healthy number of subscribers (50,000-80,000) and was growing.

This is quite a good test for business viability because it shows that…

  1. There’s a potential audience for what you’re planning to build (e.g. if the number of subscribers is over 10,000)
  2. Interest in the topic is expanding (e.g. if the subscriber numbers are growing at a good rate)
  3. It’s not already so big that you’ve likely missed the boat (e.g. if the number of subscribers is over 300,000)

When I started thinking about this idea, the Synthesizers subreddit had around 80,000 subscribers and was growing nicely. Now, it’s over 100,000 and is growing more quickly so I feel I need to get started soon or will be too late to the party.

Note: I’m not saying you can’t start a business in a space that doesn’t have an existing audience or already has a very large one…it’ll just likely be a bit more difficult.

Gap in the Market

It’s also worth trying to identify a gap in the market that you would be happy and able to fill.

When I started the Mad Fientist back in 2012, there weren’t many sites focusing on the hard numbers of early retirement.

Since I’m good at math and enjoy playing around with numbers, I figured I could be the one to build spreadsheets and run experiments to find new strategies to retire earlier.

The reason I keep coming back to this new synth business idea is because I think there’s a gap there that I’ll be able and willing to fill.

Currently, there isn’t a great video series available for beginners. There are some written tutorials but they are overly complex and there are a few videos but they are either really old or not comprehensive.

Since I’ve realized with the Mad Fientist that I’m good at breaking down complex topics and making them easily understandable, I know I can use that skill in this new space to create a free introduction to sound synthesis course.

Do I know everything about synthesizers? No.

Have I ever produced a video series before? No.

That doesn’t matter though. As I already mentioned, I have above-average skills in a few areas and there’s a gap in the market so that should make up for my lack of experience in other areas (just as my math/analytical/programming skills made up for my lack of writing experience or interviewing experience when I started the Mad Fientist).

Potential Revenue Streams

As I mentioned in my start a business post, making money doesn’t need to be the primary goal (especially if you’re already FI) but it does need to be a goal.

The IRS considers a business that doesn’t earn money as a “hobby” and doesn’t let you take all those great business tax breaks so you need to earn money (or be trying to earn money) to make it a business in the IRS’s eyes.

Therefore, it’s a good idea to think about potential monetization opportunities before starting out.

For this new synth business, here are some of my options:

  • Adsense – I can run Google Adsense ads on my YouTube videos and earn money from views
  • Amazon Affiliate – When recommending synths and other music gear, I can use Amazon affiliate links to earn a commission from those sales
  • Syntorial Affiliate – There’s an app called Syntorial that helps train your ears to get better at synthesizing sounds. It’s an incredible app and they have an affiliate program so I could earn money from recommending something that I’d recommend anyway (just like Personal Capital on this site)
  • Course Sales – I can sell a downloadable version of the beginner’s course I make
  • Custom Patches – I can sell the synth patches that I create
  • Advanced Courses – Once the free beginner course is finished, I can create an advanced course that I’ll sell instead of giving away for free

It’s obvious there’s a lot of revenue potential here, especially compared to this Mad Fientist business (i.e. a site where I’m trying to convince people NOT to spend money so that they can get to FI quicker, haha).

Non-Monetary Benefits

It’s also good to think about non-monetary benefits you can try to get with your business.

For this one, here are some things I’ll be keeping in mind…

  • Free Gear – If I have a popular YouTube channel that reviews synths, maybe I can get free gear to test out and review
  • Free Events – I’m paying to go to a synth festival this year (see below) but maybe I could get a press pass next year, once my channel is more established

Launch Strategy

I wasn’t planning to launch this business right now but something came up that pushed my timeline forward – Moogfest.

Moogfest is an annual technology conference and music festival hosted by one of the oldest and most-respected companies in the synth game – Moog.

At this festival, you can buy an engineering pass and spend two days with Moog engineers building an unreleased Moog synthesizer.

I’ve been wanting to learn how to build my own synths for a while now and this year, they will be building a vocoder so I knew I had to go.

Synth Module Build

Getting some soldering practice in before Moogfest

The engineering pass is really expensive though so I wouldn’t have bought it just because I wanted it.

Since I have been thinking about starting this business, however, I decided to use Moogfest as an excuse to launch my channel (which will therefore let me buy the Engineering Pass as a business expense).

The synth community is really interested in Moogfest so producing videos at the event will be a great way to launch my channel and help me get a name for myself in the YouTube synth space.

I plan to live-vlog the festival, create a cool video of me building the vocoder, and record a bunch of other footage that I can use later.

This brings me to the unfair advantage of FI…

Unfair FI Advantage

I can’t imagine many synth YouTubers have the time or money to get an engineering pass and spend a few days building a synthesizer.

That gives me an advantage and should allow me to create interesting and valuable content that the other channels aren’t able to.

What I’ve Already Done

Since I’m launching this business sooner than I expected, here are the things I’ve been focusing on…


When people search for Moogfest on YouTube and find me, I want them to be really impressed with what they see and I want my channel to look professional (so that people take me seriously and subscribe).

Coming up with a good brand for the Mad Fientist is probably the main reason it’s still around today (check out this article for that whole story).

I think I’ve settled on a name for this new project and have obtained most of the social accounts for that name.

I’ve also designed a logo.  Usually, I’d hire my buddy who created the Mad Fientist logo but he’s really busy this month and won’t be able to get something to me in the next couple of weeks so I just created my own.

I can always change it later, just like I did with the Mad Fientist logo.

Original Mad Fientist Logo

Original Mad Fientist Logo that I created myself


I created a simple webpage with HTML and CSS that simply displays my logo and has links for my YouTube channel, Facebook page, Twitter page, and Instagram page.

I’ll obviously be adding to this at some point but I don’t have time to get fancier now so this will have to do.


As I mentioned, I secured Twitter, Facebook, and Instagram handles for this new business.

I’m not sure which of those I’ll actually use but it’s always good to lock down everything that you can before you start.

Business Cards

Once I finished my logo, I got some business cards printed so that I can hand them out to people at Moogfest and can leave them laying around for people to find.

As always, I used Moo to get them printed because they are high quality, look great, and are affordable (I never understand people who hand out shitty business cards because bad cards actually make me want to AVOID visiting their site).

Next Steps

There are quite a few things I definitely want to get done before my official launch next week.

Video Intro Sequence

I want to make sure I have my videos branded with an intro sequence so I’m going to need to put something simple together myself.

I’m not worried about making the weird synth noises for the intro but I haven’t done any animating before so I’m not sure what I’ll do for that (may just keep it simple with a static image, until I can get my friend to do it for me later, or I may put a simple animation together in Keynote).

Plan my Trip

I’ll be going to Moogfest alone so I should have plenty of time to record a lot of content (my wife has to deal with enough bleeps and bloops at home so it’s not surprising she doesn’t want to travel to hear more of that).

There’s a lot going on at the festival though so I’ll need to plan what I want to see and think about what videos I want to try to make.

Current Business Statistics


Since I haven’t launched yet, I have received $0 of income so far :(


I have racked up quite a few expenses though…

  • Domain Names – $27
  • Website – $0 (I hosted my new site on the same Dreamhost VPS that I host this site on)
  • Email List – $0 (I already have a ConvertKit account for the Mad Fientist so I just set up a tag for the new site)
  • Camera – $599 (Olympus OM-D E-M10 Mark iii)
  • Camera Tripod – $17
  • Lavalier Mic and Accessories – $75 (Rode smartLav+)
  • Moogfest Engineering Pass – $1500
  • Flights – $758
  • Accommodation – ??? (I haven’t booked yet)
  • Synth 3D Pixel Graphic – $58
  • Business Cards – $31

Moog Grandmother 3D Pixel Art

3D pixel art I bought to use for my logo

The great thing about business expenses is you can use them to offset other income/profits at tax time so it’s like getting a big percentage off of things you’d like to buy anyway (since they reduce your taxable income).

Plus, I make sure to put all the expenses on my business credit card so I’m also getting a bunch of points that I can use to travel for free later as well :)

If you don’t have a rewards card for your business, here are two of the best currently available so get one and start racking up points!

Card Bonus Spend Requirement Annual Fee
Ink Business Preferred℠ 80,000 points $5,000 in 3 months $95
Ink Business Cash℠ 50,000 points $3,000 in 3 months $0

Guaranteed Success

As I mentioned in my start a business post, you can guarantee success if you pick the right business.

Even if I don’t earn a single penny with this new venture, it’s already been a big success because…

  • I’ve learned more about synthesizers than I would have had I not started this business
  • I’m going to get to attend a fun music/technology conference that I wouldn’t have otherwise
  • I’ll be taught how to build synthesizers (something I’ve wanted to do for years) by the engineers at the most iconic synthesizer manufacturer in the world
  • I will get to spend time with my family and friends when I’m back in the States on this business trip
  • I’ll also get to see one of my favorite bands play a one-off reunion show that I wouldn’t have otherwise (Brainiac!)
  • I’m going to learn a lot more about photography and video production (which is also something I’ve been wanting to do) now that I have a proper camera to use

What About You?

Have you decided to start your own business? If so, what is it and how’s it been going?

Let me know in the comments below!

Related Post

The post Online Business Experiment appeared first on Mad Fientist.

]]> 76
Cal Newport – Deep Work, Digital Minimalism, and the Key to a Happy Retirement Tue, 05 Mar 2019 08:37:59 +0000 Author Cal Newport joins me on the podcast to discuss Deep Work, Digital Minimilism, and the important things you need to consider before retiring early!

The post Cal Newport – Deep Work, Digital Minimalism, and the Key to a Happy Retirement appeared first on Mad Fientist.

On today’s episode of the Financial Independence Podcast, I’m very excited to introduce author Cal Newport!

I’ve been a huge fan of Cal’s writing for many years so it was a treat to get to talk to him.

We explore many important issues related to early retirement that aren’t often talked about so if you’re thinking about retiring early (or if you already have and are struggling to build the life that you envisioned before leaving work), today’s episode is a must-listen!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • Why pursuing your passion is overrated
  • How to love your job
  • What is “Focused FIRE” and why it’s likely the best option
  • How to get good at something valuable
  • Why you should replace relaxation with difficult, meaningful activity
  • The importance (and increasing rarity) of deep work
  • Why skillful management of attention is the key to a good life
  • How to perform a digital declutter
  • The importance of high-quality leisure activities
  • Why technology could be ruining your personal life and how to stop it

Show Links

Full Transcript

Mad Fientist: Hey, welcome everyone to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest to talk about financial independence and early retirement.

On today’s show, I’m excited to introduce Cal Newport. I’ve been a big fan of Cal’s for many years now. And he’s written some amazing books that have helped me a lot personally in getting things done that I really want to accomplish. And I think that’s a big challenge for people that do walk away from work early in life because after you leave your job, the external motivation is gone. So then it’s up to you to have the discipline to actually do all the things that you’d hope to do. And it’s harder than it seems.

And Cal’s books have been really helpful to me in that regard. So I was excited to get him on the show because even though he doesn’t write about early retirement specifically, everything that he does write about is applicable to early retirees—and it’s actually even more important for them.

So, without further delay, hey Cal, thanks very much for being here. I really appreciate it.

Cal Newport: Brandon, it’s my pleasure.

Mad Fientist: So, I’ve been a big fan of yours for many years now. So this is a real pleasure to talk to you. And you have a new book out, which I’m always excited when you release something. But also part of me, I think dies a little bit too because, you may not know this, but we both graduated in 2004 from college with—I assume you have a degree in Computer Science from your undergrad, is that right?

Cal Newport: Yeah, that’s right.

Mad Fientist: Okay. So, we both we both graduated in 2004 with a degree in computer science. And yet you’ve gone on to—and this is going to be a long list, so bear with me. But you went to grad school at MIT, got a PhD in electrical engineering, computer science and did the two years post doc at MIT, you’ve written six books, and you became a professor at Georgetown and you just got tenure—big congratulations for that. So yeah, any time you release a book, I’m like, “Wow! How does he do it?”

The good news is you don’t hide your secrets. You share them which is what we’re going to be talking about today—which is really exciting. But yeah, it’s always like a bittersweet moment when it’s like, “Ooh, Cal’s got a new book out,” but then, it’s like, “Wow! I just made hummus today. I was proud of that, and now I’m not anymore.”

Cal Newport: Well, if it makes you feel better, I’m probably a lot more tired than you are. So it all kind of balances out.

Mad Fientist: Yeah, I do. I do get a lot of sleep which is good. But no, no. It’s an absolute pleasure to have you on the show. And we’re going to go back to your previous books as well because I think there’s some really interesting stuff. You don’t write specifically for the FIER crowd, but there’s so much that applies. And I’m really excited to dive into your previous two books, as well as your current book—which has just changed my life since I read it a month ago (which we’ll talk about).

So< to launch into it, I want to talk about passion because that is something that you sort of talk about in So Good They Can’t Ignore You which is two books ago. And you say that pursuing your passion is sort of overrated. So could you just give a little rundown of why you say that?

Cal Newport: Right! So, that book, So Good They Can’t Ignore You, that came out in 2012. So if you put that to the timeline of my career, it’s essentially when I was at an important career inflection point.

I was just finishing up grad school plus the post doc years, about to go to the academic job market which, if you do correctly, is going to be your first and last job.

So, I figured if there’s any time, I really should understand the dynamics of how people really end up loving their work. This was a time when I was going to get a lot of leverage out of that knowledge. And so, that’s why I set out to write that book. I really wanted to know.

Using my position as an author and what that gave me access to to try to figure out what is the research and what does original journalism teach us about how people really end up loving what they’re doing.

And right away, it became clear that, at the time (and even until today), the standard answer was we should follow your passion. This was the core career advice that we still give out and certainly back then was the main career advice we gave out—which is career satisfaction is really a matching game.

If you properly match what you do for a living to some sort of intrinsic, pre-existing, pre-inclination, you’ll be happy. And if you don’t get the match right, if you don’t choose the right job, you’re going to end up unhappy. That was the standard wisdom.

But you start looking into this, and it becomes clear really quickly that that’s not really good advice. I mean we don’t really have a lot of evidence that that’s the case.

We get into the weeds of it, but at a high level, there’s two main issues with it. One, we don’t have a lot of evidence that most people have pre-existing passions that they could easily identify and use to select a job. And so, that advice is meaningless for them.

And two, we don’t have a lot of evidence that people’s job satisfaction is strongly determined by the match of that job to a pre-existing interest.

There’s a very rich literature on motivation, satisfaction and meaning in the professional sphere and very little that has to do with matching that job to pre-existing traits.

And so, when you look at the research evidence, it turns out we have no real reason to believe that “follow your passion” is something that’s actually going to lead most people to feeling passion for their work. And yet it’s the main thing that we tell people.

So, I wrote a book saying that’s a bad idea which was a lot of fun. I remember to launch the idea, I got onstage at Chris Guillebeau’s World Domination Summit which has a lot of passion. I stood onstage in this big theater. And I don’t think they knew what I was going to be talking about. And I was like, “Follow your passion, blah-blah-blah, we all hear it… and it’s terrible advice.” You could feel the pin drop or what-have-you—or I guess I should say like the well-formatted moleskin journal drop from people there. It was a lot of fun.

But yeah—yeah, yeah—that’s why I wrote that book. How do we end up getting happy to work? “Follow your passion,” that’s not going to cut it. It’s too simplistic.

Mad Fientist: And instead you found that you actually get that pleasure and happiness from actually getting good at something. So it’s a craftsman mindset versus a passion mindset. So rather than think, “Oh, I need to find this perfect thing, like my soul mate job or whatever,” you instead just start working. And then, as you get better at it, you start to enjoy it more.

And you mentioned three separate things that are like key to having people love their work. And that’s autonomy, competence, and relatedness, being able to do things on your own and get things done, and then being good at what you’re doing, and then all of a sudden working with others and being valued. So, could you maybe talk a little bit about how you stumbled across that and some of the things that went into actually realizing that, actually, not working hard is what’s going to make you the happiest?

Cal Newport: Yeah. Well, the original source of that idea was actually where the title of the book comes from which is this famous Steve Martin quote. He talks about this in Born Standing Up, his memoir. He says, “People always ask me how to get into the entertainment industry—what’s the secret, how do I make the right connections, and what-have-you.” And he says, “The answer that I give them is never the answer they want to hear you. I say, ‘Be so good they can’t ignore you,’ that if you do that, all other good things will come.” That idea basically turns out to be more or less correct.

The traits that make a good job good are very valuable. People want them. And so the marketplace says, “If you want these, you have to have something rare and valuable to offer in exchange.” That’s almost always some sort of skill that the market values.

So, as you get better at something, something that the market actually values, you get more leverage. You get more leverage about what you work on, when you work on, how you work on it, where you work on it. All these things that help build satisfaction come from having the leverage of being good at something that’s very valuable.

And so, when you did start talking to people, people who love what they do, and you say—not giving your advice. You ask people, “just give me your advice,” they’ll just parrot what they’ve heard. They’ll say, “Yeah, follow your passion.”

Mad Fientist: Exactly!

Cal Newport: Just say, “What’s your story?” Almost always, what you’ll find is that they didn’t have a pre-existing passion. They didn’t know in advance what they’re going to be doing with their life. But what they did do is get really good at something valuable. And that unlocked almost everything else.

And so, that’s where the title came from, why I called the book So Good They Can’t Ignore You.

Mad Fientist: That’s very good. Yeah, that’s a great title as well.

So, for the whole early retirement movement thing that’s sort of exploding right now, a lot of people are rushing to this finish line because maybe they feel like they don’t have enough autonomy in the job, and they want to just pursue that passion. But the trade-off is they’re giving up what you call career capital. They’re competent at their job, they’re relating to the other colleagues. And they’re giving that up to have autonomy in this potentially brand new space that is their “passion.” And that doesn’t seem like a recipe for happiness. What are your thoughts on that?

Cal Newport: Well, I think it’s a big issue. I mean I’m a long time follower of the FIER community. And I know you’ve talked about this. And I know Pete’s talked about this as well. I think it’s a really important point. What is it that you’re trying to get to? And so, this notion that you have these passions, if you could just get more time to spend on them, you’re going to be very happy really doesn’t match what the research tells us, which is that’s not a major source of satisfaction. It’s just doing something that you have a pre-existing interest for. You need this sense of impact. You need this sense autonomy, this sense of competence.

And so, it’s almost as if the literature would say what of the FIER variations that we should all consider, a lot of which, you get very good at something, and because of that, you gain a lot of autonomy over how you work on it, when you work on it, and when you work on it. And because of your frugality, your savings rate are able to actually fill in the gaps, support these sort of more bespoke/custom fit situations.

But almost always, if you’re doing something at a very high level, you’re very good at it. That’s a huge source of satisfaction.

And so, I don’t know if we need a new term for this. Should we call it the focused FIER or something like that, right? That’s all we need, right, more and more terms? But this notion that…

Mad Fientist: More words…

Cal Newport: Yeah, you’re working on something you’re very good at a high level. And probably I should actually get paid a very good rate at it, but on a schedule that’s entirely your control.

That type of autonomy plus impact and competence is something shows up a lot when I was researching that book, is that a lot of people who are really happy are very good at something. And because of that, they really control what they do.

So, I talk about a database developer, for example, that does the six plus on/six months off type schedule, which I thought was really interesting. She worked six months on an engagement, and then spent six months doing something else. So she learned scuba diving in one of those six months. She got a pilot’s license. She went back to—her family is from Vietnam. So she spent one of those six month periods back in Vietnam.

And those types of model seemed really sustainable and compelling for trying to build something that’s remarkable. And so, I think that is a really big piece of caution for those of you who are in the FIER community that feel like if you just had time to work on your “passion,” you would find all this satisfaction. The reality might be a little bit more complicated.

Mad Fientist: So, you’ve mentioned that getting good at something is going to lead to fulfillment. So that’s actually where your next book Deep Work comes in. And you say Deep Work is the superpower of the 21st century. So can you maybe just give a little rundown on that whole project because that was the first book I actually read from you and I absolutely loved it.

Cal Newport: Yeah. So, in essence, it was a response to reactions to So Good They Can’t Ignore You which is, “Okay, if we buy your premise, how do we become so good at something we can’t be ignored?” And the answer seems to be at least a knowledge pursuit, so cognitive pursuits.

Deep work is very important. “Deep work” is my term for essentially concentrating without distraction.

And so, I made this economic argument in that book that said deep work is becoming increasingly valuable in the dollar sector of the economy. At the same time, due to technological innovations, it’s becoming increasingly rare. People are getting worse at concentrating. People are dedicating less time to concentration.

And so, I said this is a classic supply and demand situation. Something’s becoming more valuable at the same time it’s becoming more rare. If you are one of the few to systematically cultivate your ability to concentrate intently without distraction, you’re going to get a huge competitive advantage.

Mad Fientist: Absolutely! And from that book, I took away many good habits from it. But the best one has been just shutting down my email for the entire day. So, I will get lost in flow which is also something that you talk about in the book. And I will just be like blasting through stuff for hours. The time will slip by. And then, I will check my email after it and forget that it was closed the whole time. And there’ll be maybe 20 emails that would have just completely destroyed that period of work had it been open and pinging and just checking it. So yeah, it’s been hugely beneficial for me.

There’s a great equation in there where you say “high quality work equals time spent times the intensity of focus.” And that seems to be your secret as far as how you can actually—you rarely work after 5 p.m. And you rarely work on weekends. And yet you did all that amazing stuff that I already said at the beginning of the podcast.

So, what does your deep work look like in reality? And is that still true? Are you still not working in the evenings and weekends?

Cal Newport: Yeah, that’s essentially true. I found with the publicity campaign for my most recent book, I’ve had to add an early morning work session because the terrible thing about publicity tours is that there are things that are scheduled sprinkled throughout the day. And so, it eats up the opportunity to do uninterrupted deep work.

But it’s actually kind of useful for me because taking one month or six weeks to do the publicity tour, it gives me a good comparison of just how much more you could produce when you’re able to manipulate your schedule so that you batch the non-concentrated work and you batch the concentrated work. So you could go long periods of time without distraction, and then do the non-deep work. That’s an incredibly effective formula.

A formula that does not work well is when you sprinkle your day with appointments. So you’ll do a coffee, let me jump on a call, then we try to work for 30 minutes, then let me do this meeting, then let me do another couple of minutes. That turns out to be hugely cognitively inefficient.

A big secret cost that people don’t factor is that context switching is very impactful in your ability to concentrate. And so, people think, for example, glancing at an email inbox shouldn’t really hurt that much because you’re not multitasking. You’re mainly working on something hard, but you’re just glancing temporarily at an email inbox, how can two minutes really hurt? But there’s a cost to that context switch. And so, when you come back from that email inbox, it might be 15, 20 or 30 minutes until your mind has cleared out all of the attention residue from seeing those messages. And it does, you’re working at a cognitive deficit.

And so essentially, what I’ve experienced the last six weeks what I think a lot of knowledge workers experience every day is that we’ve structured our work in such a way that we’re essentially having a self-imposed cognitive handicap. It’s like we’re taking a reverse [neurotrophic] that makes us dumber.

And so, when you get away from that—like you’ve talked about what you’re doing—and spend hours and hours without distraction, it feels like a superpower because your brain is actually able to function in the way that it was made to function without all this extra cost.

Mad Fientist: In the book, you also sort of go into—like these are some of the quotes that I had written down years ago when I wrote it, “Relaxation does not result in happiness… people are happier at work… more flow experiences equal more life satisfaction… and flow happens when your mind stretched when you’re trying to accomplish something worthwhile and difficult.”

So, all of that, again, does not bode well for the whole early retirement thing. So maybe can you talk about early retirement in the context of all the stuff that you learned when you were putting Deep Work together?

Cal Newport: Right! So, when I was doing Deep Work, I pulled from some other sources to make this argument that people actually like doing hard, meaningful things. And this notion that we want nothing to do or that we need to just sit down and veg, we need that type of relaxation, is actually something that’s not really that true.

There’s all these famous thinkers and philosophers going back all the way to Aristotle to Arnold Binet more recently who all say we want to be doing important things. In fact, that could be energizing, not draining. We don’t need to put our feet up and drink a beer while watching the TV.

So, when I was working on my new book, one of the ways I explored that topic is I said, “Let me spend some time talking to members of the FIER community because that’s a great case study in how do we most fulfillingly spend our free time.” If you look at people who have who have recently achieved early retirement, you find people that suddenly have lots of free time. And they also seem to be people that are pretty driven and self aware because it takes a lot of drive and self awareness to actually get to financial independence at an early age. And so they’re more likely to aggressively seek out what’s going to make them happiest.

And the observation I made, I talk about Mr. Money Mustache, and I talked to the Thameses, the Frugalwoods, I said, “Look at these examples. What do these people do after they get, at a young age, freedom to do what they want with their time?” they fill it with activity. That was their instinct, right?

I mean Pete does not like television. Pete does not like sitting around and looking at the Internet. The Thameses, Elizabeth’s out there chopping wood, snow blowing. They’re doing all these crazy manual labor, clearing out their pads or this or that. They have complete choice. They’re not forced to do this. They’re not on a colonial homestead. Pete does not have to pour concrete or weld. But they’re the right examples.

Because they have complete autonomy, what do they end up doing? The hard things. The hard, interesting things.

And so, I think the FIER community really underscores this point, that we don’t really need lots of relaxation. What we need is interesting and meaningful and hard activity.

Mad Fientist: Absolutely! And that was such a nice surprise. And Mr. Money Mustache and Mrs. Frugalwoods, and then your book, I was not expecting that. But it like, yeah, these are absolutely perfect examples of how to do leisure right.

What types of quality leisure do you regularly enjoy? Obviously, you’re trying not to work after five. So you’ve got potentially quite a big chunk of time after work.

Cal Newport: Yeah, you would think so except for I have this other activity called three young boys. I actually have, at the moment, very little leisure time. Though what I do get leisure time—one thing is I read a lot.

And this is kind of the reality of being a non-fiction writer, especially in the idea space, is that your main ammunition is things that you’ve read, so you have to read all the time—five or six books at a time, constant reading. So, I read quite a bit.

And also, I’ve gotten back into guitar playing. I don’t know. I used to play guitar since I was eight or nine years old. But it was actually doing the research for the most recent book which was really underscoring that high quality leisure is key for satisfaction that drove me to take those out of the closet because that’s a quintessential example of a high skill leisure activity that requires concentration. It’s not easy to do, but it’s still something you do for no other reason than just the pleasure of doing it—which is a recipe for a lot of satisfaction.

Mad Fientist: Yeah, absolutely. I wonder—I definitely am really excited to talk about digital minimalism because that’s the new book. But there’s one more thing that I had written down for Deep Work. And that was “skillful management of attention is the key to a good life.” So can you maybe talk about that a little bit because I really liked that phrase.

Cal Newport: Well, your world is what you pay attention to. There’s way more stimuli coming in through your senses than you can actually notice in a conscious sense. So what you actually choose to pay attention to define sort of your experience of the world.

And so, one of the reasons why people who do a lot of deep work—and so, that part of the book, I talk about this metal smith, Ric Furrer who’s out I believe in Wisconsin. He’s a specialist in swords. He actually is a specialist in ancient methods. And I talk about watching this documentary of him building a sword using Viking methodology. And he ended up getting in touch with me after the book came out, so it was cool to talk to him.

But he’s somebody who spends most of his days in deep concentration, looking at metal, pounding on metal, looking at the color of the metal, trying to figure out where the impurities are—like this really concentrated physical labor. And he’s someone who seems really happy and fulfilled.

And part of the argument there is because he’s focusing his attention on small number of things that are hardly meaningful to him.

If on the other hand, you say, “Let me take that attention and stretch it out over lots of social media and emails and constantly web surfing,” like expose yourself to lots of things, much of which might be emotional or boring or upsetting or something that triggers some outrage, your world becomes one in which you’re emotionally drained and upset and outraged.

What you pay attention to really affects how you view the world, and therefore, how you feel.

And so, it’s a hidden benefit of deep work. When you spend more time focusing on a small number of important things, your world just seems more meaningful and interesting than if you instead take that same time and scatter it among lots of different things, especially things that are superficial or low quality.

Mad Fientist: Absolutely. And that leads perfectly into digital minimalism. Deep work is more about how to do really good work and not be distracted by things like email and things like that. But obviously, people’s personal lives are so distracted.

Digital minimalism is about your personal life. And as part of the book, you have this thing called a digital detox. And before I tell my personal story about how that has affected me, maybe just tell the audience about what that actually is.

Cal Newport: Right! Well, I mean just briefly, the way the book came about was, in part, Deep Work readers were saying exactly that. They’re saying, “Okay, maybe I buy these claims about technology in our professional life. But what’s going on in our personal life is even more important.” There’s even worse things happening in our personal life.

And some of it was about it’s affecting their work. But a lot of it was about “My life is just worse. Because I’m spending so much time looking at this screen, so much more time than I want to, and because I’m actually more algorithmically manipulated by what I see, I think the quality of my life outside of work is being diminished by these habits.”

And this is a problem. And it got really bad the last couple of years. And we need some sort of solution.

And so, that’s where digital minimalism came from.

Basically, what I said is let’s take this ancient idea, this ancient idea of minimalism—which has been around forever, like back to the ancients through Thoreau into the modern minimalist movement, into the FIER community, which I really see is something that came out of the neo-minimalism movement that started in the first decade of the 2000s online. So it’s an idea that’s been around a long time. Marie Kondo is an application of minimalism with people’s physical clutter.

And basically, minimalism says you’re almost always better off focusing your attention on a small number of things that you know for sure are really valuable. That’s almost always better than trying to scatter that attention about lots of things that are potentially have lower value.

And so, for some people, this is kind of a new idea. I think for people in the FIER community, this is the whole thing. This is the whole game, right? I mean, this minimalism is the whole game. You’re trying to maximize the time you can spend on the things that are the most important. So, this is actually probably pretty straightforward or old news for your listeners. But I was basically saying, “Let’s bring that to your digital life.”

So, instead of just having this clutter of all these different sort of digital, metaphorical possessions that you downloaded or signed up for randomly that are now all pulling at your time, and the clutter of it all is making you feel overwhelmed and unhappy, why don’t you empty out the metaphorical closet and rebuild your digital life from scratch—except, this time, only add back those that give you really big wins. You have a very specific reason to use it.

And so, the digital declutter is my suggestion for how to do that. And at a very high level, it basically says step away from it all. So all the technology in your personal life that’s optional enough that you could step away from without causing major harm, do so for 30 days.

Now, part of that is a detox, right? I mean it will help reduce the compulsive urge to check a screen. The people who have done this—and I’ve run over 1600 people through this experiment so far—they report that there’s about a 7 to 14-day window. After which, you really lose the compulsion to look at your screen. But that’s just the first step to it.

So, the other thing you’re supposed to do during this 30 days is get back in touch with what you’re really about—what you value, what you actually want to spend your time outside of work doing. This is hard self-reflection. This actually gives you the space from all the online chatter to answer these questions.

And then, when the 30 days are over, you don’t just go back to what you did before. You start from scratch and say, “Okay, before one of these tools or any tool makes it way back into my personal digital life, I have to have a really strong story for how this is the best way to use technology to help something I really value. And if they can’t pass that high threshold, I’m okay miss out on it.”

Just like someone in the FIER community, you say like, “Yeah, it might be nice I guess to have the panini press or whatever. But it’s not at the core of what I value, so I’m okay missing out on that small bit of value.

It’s like you do the same thing, except now, instead of a panini press, it might be Instagram or you’re having to check an online news.

Mad Fientist: Right! No, it’s been the most effective thing for me.

Over the years, I’ve pared down because I’m like, “I didn’t work this hard to now just spend all these hours just refreshing the same webpage and stuff like that.” So, over the years, I’ve cut back. I’ve unfollowed people. I’ve hidden things from Facebook, so that it’s just like the core friends that I want to keep in touch with and things like that. But there’s such a big difference just going cold turkey versus, “Oh, well, you know, it’s okay. I don’t do it until after 5 p.m.” And like I said, I have only a minimal people I’m following and things like that. It’s completely different. It changed just how I interact with it completely.

So, I got your book. And it was right before we were going on a ski trip. And I read through the whole book. And I was like, “Alright! Well, this is perfect. We’re going on a ski trip, so I don’t care about technology at all if I’m going to be in the mountains, having fun. So this is my perfect introduction to it.” And it was great because I didn’t miss it. I didn’t have to go through that sort of withdrawal that I’m sure a lot of people would when they do this.

But then, when I came back, it was just much easier not to even touch it. And then, since I have Mad Fientist Twitter and Facebook and stuff like that as far as Mad Scientist is concerned, I was like, “Alright! Well, on Saturdays, I can just check it. Check everything once and see how it is. And then, that’s it.”

And one, the thing that surprised me most is how little I missed even after one week, two weeks, three weeks. I was able to get caught up so quickly, whereas that would have been maybe a couple hours every night maybe just refreshing the same webpage—which is the thing that really got me about it, just the compulsiveness of it. I don’t have an addictive personality at all. But I felt like I wasn’t in control of that refresh. And that really made me sad.

But yeah, that was the biggest thing. It was like, “Whoa, I can still get all the information that I think I’m missing. And yet it takes me 30 minutes. And my brain feels like a normal brain, not some crazy brain.”

Is that something you found from all of these 1600 people that you ran through this experiment?

Cal Newport: Oh, yeah! I mean this is something that the social media companies hate because it really is true that once you start optimizing—

So, that’s a big part of this digital minimalist experiment. When something comes back into your life, it’s not just a binary question of “What do I use?”, you also ask “How and when do I use it?” So you try to optimize. How do I get most of the value? If something’s really important, how do I get that important value while minimizing the cost?

And so, a lot of digital minimalist, they still need to engage in social media for professional reasons. Do something like you’re talking about. It’s not on their phone. They go on like Sunday night or Saturday morning. It takes them 30 minutes. And they get 99% of the value without the 15 minutes a day of constant refreshing.

And this is something to social media companies hate because the way they like to argue this point is basically—and I know this because I famously have never had a social media account. And for years of sort of being in the public eye, writing up ads, going on the radio, doing debates about social media is not as important as we think, the strategy of the opponents always used to be the same. They would say, “Here’s a reason why it’s important. Like, okay, here’s an artist who publicizes his work on social media. Therefore, argument over, stop thinking about it. Put it on your phone and just start using it all the time.” They want these gateways into their ecosystem.

So like, “Oh, you want to see your grandkid?”—a producer for a TV show was telling me this story earlier this week. Her mom got on Facebook in her 70’s to see pictures of her grandkid. And now, she’s on Facebook constantly—hours a day.

That’s the model. Have some gateway utility, and then hope people don’t think about optimization. And then, you went into the ecosystem. And so, that type of optimizations is important.

And I also want to add, you’re picking up the importance of actually just saying “start from scratch.” And I want to emphasize that’s really unusual for me to do that type of writing. I mean I write advice books, but I sort of worked in this smart self-help type market where I don’t normally do things like a 30-day process or 6-step whatever. I don’t usually write like that.

Mad Fientist: Oh, yeah.

Cal Newport: But it was so important. It was so clear to me, researching this topic and working with people, you had to do it. It had to be the 30 days. You had to step away. It just works so much better than try to get at this nibbling around the edges from the top down.

And finally, the analogy that made me understand this is that it’s the same as in health and fitness. Once we got these highly palatable processed foods in the second half of the 20th century, we had a huge rise in obesity. And the forces were so powerful that just good advice, good intentions, small tips didn’t work. You couldn’t just tell someone “eat less” or “eat healthier.” You couldn’t just put up the food pyramid in the school nurse’s office and assume the problem is going to go away. The forces were too strong.

And so, if you think now who are the healthiest people you know, almost certainly they’re someone who has a very strong philosophy that they believe in. They’re vegan or Paleo or they’re a crossfit fanatic. But they have some sort of philosophy that’s based on their values and they believe in it. And it helps them make consistent decisions.

And so, […] technology forces are strong enough that we need something like that as well. You have to have something really strong, a sort of dramatic break with what you’re doing if you’re going to succeed. Just like it’s hard to give up bad eating by just saying, “Well, maybe I should eat less chips or maybe I should try to eat more vegetables,” that’s not enough, it’s the same thing with the tech.

I mean, we’ve all read the same articles about turning off notifications or not having the phone in your room at night. Everyone writes these blog posts of like, “I’ve cracked it! Here’s my new thing. I take a Sabbath once a week where I don’t look at my phone” or whatever, like all these small tips And yet you see them on Twitter. They’re on there 500 times a day or whatever.

And so, it is unusual for me to have something like 30 days and this and that. But it really seems to work.

Just like with physical possessions—you know, Marie Kondo is successful because she says, “You can’t just kind of get rid of some stuff. You have to empty the whole damn closet. The whole thing has to be empty. And then, you rebuild it from scratch. Just bring back in what’s important.”

There’s a reason why she’s doing that with physical possessions, is because you have to have dramatic break.

And so, I think your experience is quite common actually.

Mad Fientist: No, I couldn’t agree more. Yeah, I think that was incredibly important. And yeah, like I said, that’s the only thing that’s really changed things as I’ve tried to cut this thing out of my life. And yeah, it’s made a huge difference.

So, when you were researching this book, you obviously looked into the downsides of social media and the social media addiction and how it’s playing out in college campuses. And I think we can all feel that something’s not quite right, like it’s not a good thing.

But can you maybe talk about some of the things that you learned?

Cal Newport: Well, I think one of the more interesting things is that this model of phone use that we have today, this constant companion model in which you’re constantly looking at your phone throughout the day, we incorrectly think about that as somehow being fundamental to the technology, right? Like, yeah, this is just what you do with a smart phone. That’s what this invention is for.

But if you look closer, you find out that, actually, that behavior is largely contrived. And it was introduced into our culture primarily from the major social media platforms.

And so, what happens as you look into this—Facebook took the lead in this because they were early—they’re getting to a point where their IPO was coming up, and they really had to get their revenue numbers up, or they weren’t going to get the type of valuation that was going to get their early seed investors the 100x returns that they were expecting.

And so, they had this big issue: “How do we get our revenue numbers way up?” They had a pretty good user base, but they weren’t making enough money.

And this is because social media, until this point had actually been a more static experience. You would post things about yourself. People would post things about themselves. You would occasionally go out and check and say, “Hey, does anyone I know, you know, maybe they’ve updated something about themselves—like they’re on vacation, or their relationship status changed?” It didn’t really engender a lot of engagement—at least not on the level that they needed to make a lot of buddy.

And so, they re-engineered the social media experience to not be about posting and reading other people’s post, but to instead be about this constant stream of social approval indicators.

And so, we think about things like the like button as always being there, but that wasn’t there. The original Facebook didn’t have that. Friendster didn’t have that. MySpace didn’t have that at first. That was actually introduced and widely copied because what that created was social approval indicators that you could see about yourself every time you tap the app.

So now, it’s not just “Hey, one of my friends changed their relationship status.” It’s instead, “Did anyone like the thing I just posted?”

I think they spent a lot of money, for example, on auto-tagging photos, right? I mean why would they spend so much money? That’s a really hard problem. Computer scientists could tell you, image recognition problem, it’s very hard. They spent a lot of money so that they could figure out “Okay, the person in this photo that you just posted is Brandon. So, can we send them a note that say you’ve been tagged?” Why do they spend that money? Because it was another social approval indicator. So now, when you tap the app, you might see Cal tagged you in a photo, someone was thinking about you.

So now, you have a constant stream of social approval indicators coming at you throughout the day. it’s things about you, so that’s incredibly irresistible. And it’s intermittent. Sometimes, when you tap the app, you will get some more likes or tags. And sometimes, you won’t.

And in fact, some people like the NYU Professor, Adam Alter, the whistleblower, Tristan Harris claimed that Facebook and Instagram were both artificially batching likes and hearts and favorites to make the stream more intermittent.

Mad Fientist: Wow!

Cal Newport: They don’t want just the constant, steady stream, they want it to be, sometimes, you get a bunch, and sometimes, you don’t. They learned about that from Las Vegas casino gambling where decades earlier, when slot machines were computerized, so they could actually hard code in reinforcement schedules—they did all this research in Las Vegas to figure out what’s the optimal schedule of rewards and how big should those rewards be to keep people pulling the lever way more than they want to.

And so, they learned from those ideas. They basically re-engineered the whole social media experience into essentially a slot machine.

About you, social approval indicators coming at you intermittently in your phone wherever you are, that’s what created this behavior of “I always look at my phone.”

So there’s nothing fundamental about it. I mean there’s nothing fundamental about an iPhone that says, “You have to look at this all the time.” I write about how that was not the original vision at all. You could talk to the original engineering team from the original iPhone to confirm this had nothing to do with that. It was basically the social media companies reprogrammed us to do this thing. And they tried to trick us into thinking, “Well, this is just what it means to live in a high tech culture. What do you want to do? Get rid of your phones? You want to get rid of the Internet?” They always give me these distasteful push backs hoping that we don’t notice that there’s nothing fundamental about smart phones or the internet or the social internet or any of these great innovations that requires us to look at a screen two to three hours a day.

The only person that serves is essentially the stockholders of these companies, a small number of realtors in the Northern California area. That’s basically who’s being helped by that behavior. It’s not at all fundamental.

And so, it’s so fascinating to learn that. This is why people are so upset. It’s not like, yeah, this is what this tech is. It’s not like, okay, cars are really convenient, but a side effect is there’s going to be car crashes that people are going to die. But you know what, what are we going to do because cars are really convenient.

We don’t actually need the constant companion model. There’s really no value that gives us. There’s nothing that we have to do that for in order to get some sort of deep value. It’s just relatively arbitrary.

I think that’s why people are getting fed up because they’re saying, “I’m doing this for no real good reason. I feel manipulated because of it.”

Mad Fientist: And it’s also harming people as well. It’s not even neutral. It’s not even like, “Oh, I’m doing this, but I could be doing something else.”

I think you mentioned college campuses are seeing a high increase in mental health problems. And that’s because our brains aren’t meant to be slot machined like this and having these weird sort of social interactions, but not like really proper ones.

So, can you talk about what they’re finding on college campuses and how it’s affecting students and young people?

Cal Newport: Well, you know, I first heard about this years ago. Three or four years ago, I was doing an event on a college campus. And I was walking across campus with the head of the mental health services. It’s at Walden University. And she was saying, “You know, everything changed recently. We used to get a relatively small number of students committed with mental health issues. And it was a wide variety,” you know, the standard distribution of mental health issues you see in society at large. And she said, “Yeah, a couple years ago, that all changed. Now we have many, many more students coming in than we’ve ever had before. And it’s all anxiety and anxiety-related disorders.” So, what’s causing that? She didn’t even pause. She’s like, “Smart phones.” That’s the difference.

The students who came in who had smart phones as teenagers, they’re here. And three years ago—at this point, three years ago—the smart phone was still new. And most of them hadn’t had it before college. We didn’t have these issues. Then the research caught up on this.

Jean Twenge has this big, new book out called iGen. She’s an expert. Jean Twenge is a professor who’s an expert in essentially measuring attributes that change over generations. So she measures how certain things change from generation to generation. That’s what she does.

The rise in mental health issues—and in particular, anxiety and anxiety-related disorders—were literally off the chart. She had never seen a jump so high from one generation to the next on any attribute that had ever been measured over any generation that they’ve ever studied. And where that split happened was between the millennials and Gen Z.

And the difference between Gen Z and millennials, the Gen Z had widespread smart phone usage starting in their early adolescence. They looked at a lot of different explanations. And all that have basically began to shake out as not being a good alternative.

The only signal that’s remained strong is smart phones, the social media that it delivers. And it’s not just anxiety and anxiety-related disorders. The corresponding hospitalizations for self-harm and suicide attempts went right up—right up with the anxiety and anxiety-related disorders.

And so, I talk about them in the book as being the digital canary in the coal mine because they’re taking this behavior that we’re all doing, but they push it to an extreme. So, Gen Z is a good way to measure what type of effects you have as you spend more and more time looking at a screen as opposed to engaging in the real world.

When you take the generation that’s basically spending all their discretionary time looking at the screen, we see massive, massive issues with mental health.

And so, you and I, we’re a little bit older. We don’t look at our screens that much. But that’s a good experiment. And the message we get out of this experiment is that our brain is certainly not meant for this behavior. And there is consequences.

And so, I think for people who use it a lot, but not as much as Gen Z, what they have is this persistent background hub of anxiety that they’ve just come to accept as just our normal state of affairs. But it’s actually not. It’s your brain crying out for help saying, “I’m not supposed to be doing this type of high octane, low bit rate digital interaction all day.” This isn’t what the brain is supposed to be doing. It’s sort of the cognitive equivalent of having a pain in your knee because you’re carrying too much weight. This is our brains crying out for help. This is not natural. You should spend less time doing this.

Mad Fientist: And like I said, just the change in myself just over the last month has been incredible. So I definitely recommend people check out the book and go through the whole digital declutter and everything.

And especially for the FIER crowd, you don’t want to work this hard to then get all this freedom, and then just spend it clicking refresh on Facebook or…

Cal Newport: Right! I think a serious issue for the FIER crowd to think about is because when I ran this big experiment with all the people who went through this declutter, what was clear is that it’s actually really hard to fill your time when you don’t have this. That’s not trivial. You don’t want to take that lightly.

A lot of people have really used the distraction of the screen as a crutch. It prevents them from having to face the void or face themselves or face our own thoughts or answer the hard question of like, “What do I want to do? What do I find meaning doing?”

And so, a lot of people, especially younger people who did the clutter had a really, really hard time, especially that first day.

Mad Fientist: Yeah…
Cal Newport: Like, “What am I supposed to do when I don’t have this to click and look on?”

I talked a lot in the book about how you develop the importance of developing high quality analog leisure activities, basically getting really serious about “This is what I really want to do with my time. And this is really important” like Mr. Money Mustache. That’s why I had him blurb the book, is because he’s the guy who thinks a lot about “what do I want to do with my time.” And for him, he really needs to use his hand to build things. And that’s very, very important. But he thought a lot about this.

And the Frugalwoods thought a lot about this too. They wanted to be outside. They wanted to be in nature. They wanted to be manipulating nature and the natural world and engaging. And this was very important to them. They got that straight before they added all these free time to their lives.

And so, I definitely learned this working on this book. It’s harder than you think if you haven’t been working on it, to figure out what to do with your life if you don’t have a screen.

And so, you’re absolutely right. If you get financial independence tomorrow, but you haven’t thought about any of this, you are almost certainly going to spend way too much of that time looking at your screen. It’s just going to make you les happy. It’s going to make you anxious. You’re not going to be happy about it.

So, it’s hard work to figure out “what do I want to do instead” But it’s work that’s really worth doing to the point where I even recommend that young people, in particular, do that hard work before you do the digital declutter because it could be that scary. Otherwise, it could be that scary, that first day. You say, “I have a whole evening, and I have no screens to look at.” It could be really, really scary.
And I know it sounds trivial, but it’s really not. I mean these are hard issues.

And so, it’s really important to figure out what you want to do because these screens have been filling in for an answer to that question much more than people realize until they’re forced to confront it.

One of the big advantages of never having a social media account is we have a drive to be social. And so if, like me, you’re not on social media, this means you actually do the work of like, “Okay, I have to go find people. I got to get a family member on the phone. I got to set up events.”

I set up my porch a lot. I have a porch in this small town where I live. We’re sort of in the center of town. And so, maybe a half dozen neighbors will come by at some point. In the evening, if I’m out there, you could just talk to me. Oh, that’s so important.

And one of the big secret cost of social media is that it tricks the frontal cortex—like the very recent part of your brain—into thinking, “Oh, you’re really social. You’ve been talking to people all day, right? I mean you said happy birthday to three people. You’ve been DM’ing people on Twitter. You’re very, very social.”

But a big point I make in the book is that most of the rest of your brain, the part of your brain that has evolved to be this high power social computer over hundreds of thousands of years doesn’t recognize an emoji or a happy birthday in ASCII characters. It doesn’t recognize that as socializing.

And that’s why we get these paradoxical research studies that show that the more people use social media, the more likely they are to be lonely. It’s because it displaces the real world conversation. And it tricks you enough into thinking you’re social that you’re like, “Okay, I guess I’m good.” But the rest of your brain is like, “No, you’re not. That’s not actually socializing.”

And so, I think part of why I was excited to talk to the FIER crowd is that you guys are willing to consider drastic ideas. It doesn’t mean that you’ll do it. But to you, it’s not a big deal the notion of doing something that’s different and drastic.

And so, if you don’t need social media for your professional life, consider quitting. Consider just walking away. It forces you into so many other activities that are beneficial.

You can still blog. I’m a big blogging fan. I love the fact that so much of the FIER community has remained blog-centric as opposed to just migrating into the larger social media platforms sort of conversations. You’re actually still very blog-centric, which I love (which I think is a great medium).

But if you’re interested in that idea, at the very least, I suggest watching this TED talk I did a few years ago called Quit Social Media. I kind of make my whole pitch about why you should consider quitting it all together.

And so, I’m hoping to plant some of these seeds into the minds of your listeners, that taking drastic steps in your technological life can have drastic benefits just like taking drastic steps to your financial life could have these drastic benefits. I mean they’re connected. The more drastic the steps, the more drastic the improvement that you might actually end up with.

Mad Fientist: Yeah, I can’t agree more. And that’s definitely been my experience. So, I highly recommend you check it out. I’ll link to the TEDTalk in the show notes and also all the books that we’ve talked about. It’s been fantastic.

Cal, I can’t thank you enough for coming on the show. This has been a big treat. I don’t want to take up too much of your time. But I want to obviously ask you the question I ask everyone.

What’s one piece of advice you’d give to somebody on pursuing financial independence?

And this could definitely obviously not be financial related, and it could be maybe more something to think about if you’re thinking that early retirement is what you’re striving for because, obviously, you’ve done a lot of research into that.

So, what would be your one piece of advice for me?

Cal Newport: I mean, going back to So Good, They Can’t Ignore You, my advice would be that skill is your greatest weapon. So, if you relentlessly hone a skill that is very valuable, that is like your strongest weapon in trying to give yourself financial options. You could generate more money. You could generate much more autonomy and leverage over how you generate that money. You get much more flexibility about when and how you work.

It really is like a magic elixir for career satisfaction—be really, really good at something. Even if that requires a sort of in-the-desert apprenticeship type period where you’re really just in the woodshed doing the practicing. I mean, there’s a reason why in So Good They Can’t Ignore You, I spent time with a professional guitar player.

Let me just describe what it’s like watching a professional guitar player practicing. That’s what it should be like when you’re trying to build up a skill in the knowledge world.

But I’m huge booster in skill. I think that sometimes gets lost. I could get lost in the conversations of spreadsheets and savings rate and trying to push things out. The one lever that you also could give you this huge, huge return is the better you are at something that the market values, just the more control you have over almost all those factors.

And so, that’s my one piece of advice, is look at your skill as one of the most important things that you could improve and leverage to gain financial independence.

Mad Fientist: That’s great. And it’ll increase your happiness and your satisfaction with life too which is an excellent added bonus.

Cal Newport: Yeah, you can’t go wrong.

Mad Fientist: Absolutely! So, thanks so much, Cal. This has been great. So obviously, you’re not on social media. So people can find you at And then, obviously, I’ll link to the TEDTalk and all the books.

Cal Newport: Yeah, yeah. I’ve been blogging there for over a decade. I’ve watched the FIER movement sort of emerge over the last 10 years. I had been a pretty big fan of it. So I appreciate this chance to actually come on your podcast and reach this audience because I think we’re kindred spirits.

I mean, if there’s anyone out there that I think this digital minimalism type ideas might immediately makes sense for, it’s probably the people in this community. So, this was exciting for me. Thanks for having me.

Mad Fientist: Oh no, it was my pleasure. And yeah, you’re absolutely right. I think it’s the exact audience that will soak this stuff up. And so, thank you so much again. And yeah, hopefully, I’ll see you at some point and can buy you a beer to thank you for coming on the show.

Cal Newport: Alright, I look forward to it. I’ll hold you to it.

Mad Fientist: Alright! Thanks. Thanks Cal. Bye!

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Millennial Money – From Broke to Millionaire in 5 Years Wed, 06 Feb 2019 09:07:13 +0000 Grant from Millennial Money shares how he achieved financial freedom and increased his bank balance from $2.26 to $1.25 million in just over 5 years!

The post Millennial Money – From Broke to Millionaire in 5 Years appeared first on Mad Fientist.

On today’s episode of the Financial Independence Podcast, my buddy Grant from Millennial Money joins me to talk about how he went from having $2.26 in the bank to $1.25 million in just 5 years, 3 months, and 6 days!

We dive into the strategies and tactics he used but we also go deeper and discuss some of the unexpected challenges of FIRE.

We also explore Grant’s new book, Financial Freedom, which is out today and features parts of my own story (check out the cool video trailer for it here)!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • Why you don’t need to hit FI or save a million dollars to get the benefits of saving
  • How to make the most of your full-time job
  • Why you should strive for peace instead of money or happiness
  • How to find pleasure in mundane moments

Show Links

Full Transcript

Mad Fientist: Hey, welcome everyone to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest in personal finance to find out how they achieve financial independence.

On today’s show, my buddy, Grant, stops by. And I’ve known Grant for a couple of years now. And the first time he reached out to me was actually before I met him in person. He asked if I’d be featured in a book. And the book’s called Financial Freedom. And it is out today! So it’s a long time coming. I’m excited to chat to him about it because I know he’s been working on it for a long time.

But I also wanted to get him on the show just to talk about his journey to financial independence because it’s a really interesting one. He was broke. He had like $2.26 in his bank account. And he took a screenshot of it actually. And in just over five years, he was able to grow his net worth to $1.25 million. And he was able to retire.

So, he has a lot of great information to share about increasing your earnings at your job and starting side hustles and entrepreneurship and lots of things like that. But he also has a really interesting perspective on FI itself. I know he personally has gone through some of the weird existential crises that I’ve found myself going through over the last couple of years. And yet, he seemed to have emerged happier and more content than ever.

So, there’s a lot to dive into here. I’m really excited to have him on the show. So Grant, thanks very much for being here. I appreciate it.

Grant Sabatier: Hey, man. It’s a real honor to be on your podcast.

Mad Fientist: Yeah, no… this is a long time coming. And before we launch in, I obviously want to congratulate you on the new book. That was a long time coming as well. You featured me in it, and I can’t even remember when it was that you gotten in touch quite a long time ago. When was that?

Grant: It was almost two years ago, between a year and a half and two years ago when I first reached out and I wanted to get your story and share your story.

Mad Fientist: Yeah, no… I appreciate it. It turned out great. I’m really happy to be involved in it anyway. Yeah, I just can’t believe it was that long ago. I think that was before we even met in person, right? I don’t think I really knew you like I know you now.

Grant: Yeah, it was right before we had met in person. So I appreciate you responding and sharing all the amazing, amazing insights. You added a ton of value to the narrative.

Mad Fientist: Oh, nice!

Grant: So, for my audience who may not be familiar with the Millenial Money or any other projects that you’ve got going on, can you maybe just give a little quick summary. You have a ridiculous story. You went to FIER super fast. You had like two bucks and then you had like $1.25 million in five years. So maybe giving a little synopsis of how that all happened.

Grant: Yeah! I went to college and was a philosophy major. I graduated not knowing what I wanted to do and did the kind of proverbial bounce-around, a bunch of different jobs. I found myself after being laid off twice in 2010 back at home at my parents’ at the age of 24, sleeping in the same bed that I slept in literally as a 7-year old kid.

I had woke up one morning in August 2010, I had $2.26 left on my bank account. And my parents said that I could only crash for three months and that they weren’t going to give me a dime.

So, that was really kind of my FI story, it starts. Shortly thereafter, I read Your Money or Your Life. It was actually one of the first personal finance books that I’ve ever read. I just googled “best money books” and found it and ordered it on Amazon and read it pretty much almost all in an afternoon. I remember reading it all on a Sunday. And the book just completely changed my entire worldview.

I don’t know what Vicki intended, I actually took from it. But my takeaway was “Okay, if I’m going to trade my life energy for money, I’m going to try to make as much money as I can for my time.”

And it was incredibly traumatic being back home. I’ve always done what I was supposed to do. I went to a good college, got good grades. I’d come down to dinner. My parents didn’t say anything, but just the disappointment in their eyes. You could just feel it. The energy was really palpable. And I felt really down, really depressed that I’d let them down, that I hadn’t made anything yet in my life. I didn’t have any money.

I did the calculation, and I’d spent over 4700 hours working. And not only did I have nothing to show for it, I was deep in credit card debt. So I was really starting from negative.

I read the book and quickly realized “Okay, I got to think about money differently.” And probably because of the trauma and just because I wanted to live differently, I went all in and realized that I needed to build a new skill set.

So, I did another Google search and ended up finding a Google mobile ad. And I figured out that there was demand for running Google ad campaigns and that you could get certified by Google for free.

And so, within a 30-day period, I watched Google Adwards University videos and Google certified. And then, even though I’d sent out over 200 resumes during this 3-month period and hadn’t gotten a single call back, once I’ve put that Google Adwords certification on my resume and on my LinkedIn profile, the first digital marketing agency that I applied to, I got the job.

And that’s when my career started.

Mad Fientist: That’s amazing. Yeah, I definitely want to dive into that a little bit. But I want to go back to that $2.26 because there’s an amazing picture in your book which is a screenshot of your bank account at that time. I think it was like August in 2010 or something.

So, to take a screenshot, you obviously knew or felt that that was like—either like a breaking point or a pivotal moment in your life. What made you take that screenshot?

Grant: That was just the lowest moment of my life. It was just pure sadness and disappointment. I felt incredibly lost.

I took a picture of it because I wanted to remember what it felt like. And I still have it hanging in my closet today, the exact copy that I printed. I took the screenshot and then I printed it out. And yeah, I wanted to remember that feeling. It still takes me back there.

I didn’t have the motivation yet. I hadn’t read Your Money or Your Life. I hadn’t gotten the new job. That was a real low point for me.

Mad Fientist: Yeah, that’s an amazing story. And it’s such a cool thing to look back on now considering where you are today.

The Google thing, that’s incredible. As you mentioned in the book and on your site, you started making $50k after getting that certification, which I think you said maybe it took like 30 or 45 days or something like that. So it was really like a quick 0 to 60, like zero knowing nothing and then 60 in a job that’s paying you good money.

How was that? Was it a super intense month or was it pretty reasonable to get that certification that quickly?

Grant: It was pretty reasonable. But I was kind of so excited about it that I went above and beyond. I probably could’ve passed the exam in half the amount of time.

At the time, if you failed the exam, you’d have to wait five days to take it again. And time was of the essence. And so, I didn’t know how easy or hard the exam would be so I really over-compensated for it. But it was pretty easy.

It still is, to this day, one of the fastest path to six figures. When I’m in a lift or an Uber where I’m talking to something, and they’re like, “How can I make more money?”, it is obviously my own personal experience, but it’s always my go-to answer. There’s so much demand for running Google ad campaigns still. In most cities, the starting salary for a Google campaign manager or a PPC manager is like $65,000 to $75,000 today. And there’s so much demand for it, within a year or two, you can be making six figures in most cities in the United States.

And so, you can still get certified for free. It’s still set up the same way. I don’t know how hard the exam is now. The ads have definitely gotten more complicated. But yeah, it was pretty easy.

Mad Fientist: That’s amazing! So, does Google offer all the resources that you need to get it, all the classes or books or whatever that you need to study to get there?

Grant: Yeah, they’re all YouTube and Google Adwords videos. So they offer everything. There’s like an Adwords study guide. There’s not a book that you need. They walk you through systematically what Google campaigns are, how to set them up, how to run them, how to optimize them, all the different technical parameters.

You know, I got the job and I hadn’t ever ran a campaign myself. I just had the certification.

It’s actually really fascinating. And I ended up falling in love with it because I’m a competitive person, and it’s an incredibly competitive thing to do. I mean it’s a real-time auction/bidding system. You’re trying to bid and be more strategic and outrank other people who are bidding on the same keywords.

And so, it’s competitive. And it’s actually a lot of fun.

And so, once I kind of got into it and saw what it was, that excited me. But obviously, what excited me more was the fact that there were jobs and there was demand. There was a lot of data put out at the time that the demand for digital marketing managers was projected to grow. And it’s actually grown well beyond even those projections at the time.

Mad Fientist: That’s really cool. And not only did it help you get a real job and get out of your parent’s house, you’re able to use those skills in your side hustles and your entrepreneurship and things like that.

So, can you talk about how, pretty quickly, after getting your job, you’re then able to scale up to $300,000 a year?

Grant: Yeah, so I was making $50k going in. I was firmly committed to not making the same mistakes that I’ve made before.

And so I needed a car at the time. So I bought an $800 Nissan Maxima, the cheapest car you could find that ran on Craigslist. I lived in the crappiest apartment I could. And right out of the gate, I was saving about 40% of my income.

So, I felt really positive about that going on. And it was such an amazing experience because, in hindsight, I was about a 30-person company, kind of a small- to mid-sized digital agency where there was only like three or four people who did one role.

And so, what that allowed me to do—I ended up staying there about a year—is, because I was new to this industry—

You know, I knew a little bit of HTML that I poked around with in college. But I hadn’t built any websites. I hadn’t done anything like that. But here I was in a place where, literally, three seats away from me, was the head graphics designer. In another row of seats was like the front-end web programmer. The sales team sat across the room. The CEO’s office was in the corner. And they were all nice. I was energetic and excited. And so I spent as much time as I could with them learning everything because it was all new to me.

So, the SEO guys, the designers, I spent a lot of time with the sales team. And about three months in, one of the sales guys kind of took me under his wing and invited me to a pitch. We ended up winning that project. So I was learning about writing proposals and pitching and all about the business side while also running SEO and we were building WordPress, Drupal and Joomla websites.

And one of the things that was really cool was I learned how to build a WordPress website. One of the guys taught me probably in about a week. And I liked learning Google campaigns, but I was really excited about the possibility of building websites. And so, I started tinkering around.

And I ended up doing a search on Craigslist for someone who needed a website. And I found a small law firm. It was three lawyers. And they were looking for a website for $500. And they put that in their actual ad.

I reached out to them. I was probably the only person that reached out to them. They hired me. I used a template that was for another kind of business. It took me about two weeks to build this law firm website.

They paid me, they were really happy. I showed them how to set up Google ads. I started generating leads for them. And then, this lawyer started recommending me to some of his other lawyer friends. And then I got tapped into an association of lawyers in Chicago.

And three months after that—so this was six months after I got my $50,000 job—I went from selling a $500 website to I sold a $50,000 website to a medium-sized law firm. I used the same WordPress template and I built a website in about three days.

Mad Fientist: No kidding!

Grant: And literally, I remember the day. They mailed me my check. I went down on my mailbox. I remember my hands literally being sweaty as I opened the mailbox and I had a $25,000 check, the deposit for the project. And that completely changed my life. I was like, “I’m going to make, in three days, as much as I’m going to make this entire year. I could do this.” I was off to the races!

And so, then I got a realtor client. I built a couple of other law firm websites. And then, for the realtor, he didn’t know how to run digital campaigns. So I actually set up campaigns where I was using my own money to generate leads for him. And he would pay me for the leads

And so, I got into the lead aggregation game in a little rogue way. And by the end of that year, I made over $300,000 doing this.

And I’ve also gotten a few other clients because my digital agency, they had a minimum threshold of the type of client they would take. And so, a few clients that came in, they didn’t have enough money to pay for our agencies. And so the sales guys ended up giving those projects to me too. And so, within a year, I launched my own agency, and I was off to the races!

Mad Fientist: That’s incredible. And so, your income has increased dramatically. Have you kept your spending at the same level? And if so, was that all due to what you read in Your Money or Your Life? Or did you let your lifestyle get away from you a little bit?

Grant: Oh, I probably spent even less money. Once I got to $300,000, once I even realized that I was going to make over $100,000 that year, that’s when kind of everything completely clicked.

When I had been back at my parents’, I’ve set the goal of trying to make a million dollars as quickly as possible. It wasn’t retire early. Financial independence was obviously wrapped into this. But my very unsophisticated goal was like, “I want to make a million dollars. I want to save a million dollars.”

And so, once I knew that I was going to make $100,000 that year, I was like, “Whoa! Whoa, I’m going to be able to do this. I don’t know how long it’s going to take me. But I’m going to be able to do this.” And so, I got even more committed.

And to be honest, it took me five years, three months and six days from that day in August 2010 until I reached financial independence. And that five years and three months was pretty intense, man. It was like 80- to 90-hour weeks. Thankfully, I didn’t have any kids. I left unfortunately some friendships.

Some of my friends, I helped to make a lot of money. Three of my friends that I profiled in the book, I actually encouraged them to pursue their own passions. And now, one’s a really accomplished music manager and has artists Barnoroo and Coachella. Another one is making $300,000 a year as a recruiters and climbs Mt. Everest—like the craziest…

People around me, I was like getting pumped up about this.

And then, 2 ½ years in, I discovered your blog. And so you were the first financial independence blog that I actually discovered and started reading. So you’re kidn of my entry point.

First, I was like, “Oh, whoa… there are other people doing this.” And then, it was just like—I remember reading everything that you’ve written up to that point. And then, I’ve discovered Pete. And then,that really amplified everything.

I was hacking my way through this. But I was hacking my way through it through just the fact that I was so driven. You know what I mean? I couldn’t make mistakes because all I was doing was working and saving and investing.

And so, I was investing in like Amazon stock in 2011. I remember I was doing a little bit of traveling. And it was the second time that I’ve gone to Europe. And I was outside the Duomo the day that Facebook IPO happened while my girlfriend, now wife, was looking at the art because I want to buy Facebook stock when it went public.

And it went public, and the Internet connection messed up. But then it ended up dropping. And so I was able to buy Facebook for like $26 a share.

I was really driven I think by a lot of trauma, a lot of drive. When you’re 25 or 26 and single and making that amount of money and working all the time, you don’t have a lot of time to spend money.

And I was pumped, man. Once I started seeing those numbers grow, and my investments grow—every morning, I spend at least five minutes with my money. I’d wake up, I’d look at how well I was doing. I check in on Mint. Man, I was all in during this time.

And looking back, I maybe wouldn’t have made as many trade-offs as I made. I was very obsessed at the expense of everything else. I gained almost 50 lbs. during this period. I wasn’t that healthy.

In hindsight, I made a lot of sacrifices that I probably wouldn’t make. But I still feel very grateful for the opportunity and the time that I started, just that it was possible.

Mad Fientist: So if you were to start again today with $2.26 , what would you change? Just maybe take the foot off the gas a little bit and focus a little bit more on the health and friendships and things like that, or would you do it pretty much the same and just make little tweaks?

Grant: Well, it’s interesting because I had a ton of energy when I was 24. And this is one of the things that, your energy—at least mine—it changes as you get older. Your relationship with time changes.

Looking back now, knowing what I know, I probably would’ve worked as intensely. The one thing I wouldn’t have done was put so much pressure on myself. I was stressed out way too much. And whether it’s like the employees that I hired, or not winning certain projects or clients, or losing clients, or things not working, I was very stressed.

Now, looking back, I realized that about a year and a half in, I had 95% of the benefits of FI… I just didn’t realize it. I was chasing freedom. I was chasing that feeling of being free. And in reality, I had plenty of money a year and a half in to stop and take a deep breath. Maybe take a month off.

Maybe I would’ve taken a month off, you know? I did this with no time off, like maybe a Sunday here or there, but it was pretty full bore.

And that’s the thing. You don’t need millions of dollars or to be financially independent to have more freedom in your life. Once I escaped living paycheck to paycheck—like two months in, I should’ve been sleeping better at night. But I wasn’t that aware. It’s like hindsight is always 20/20.

And that’s one of the things, one of the reasons I wrote the book, because people are like, “I want a million dollars. I want to be FI. I want to retire early.” And yes, those are fine goals. But just focus on the next step.

If you’re living paycheck to paycheck, just get to three to six months of expenses. You’re going to sleep better. You’re going to feel more empowered and more controlled. And then, get to two years expenses and take a break. Think about is this what you want to be doing.

I eventually realized that money only matters if it helps you live a life that you love. And I really didn’t love my life during that period. I was driven by the money. And instead of how much money I needed—

The question that was leading me was “How much money did I need? How can I make this money?” when the question should’ve been “What kind of life do I want to live? And then, how much money do I need to live that life?” And so I had it backwards the entire time.

Mad Fientist: Yeah. And I think that’s a very common problem in this whole FI world. So yeah, it’s great to hear that story from you. And yeah, the book definitely goes into that as well. And it also goes into the earning more side of it and how you’re able to do that.

But before we move on to your post-FI life—and we’re going to get deep because when I was on your podcast, we went pretty deep, and it was great. And I’m going to link to that in the shownotes because people think it was a really, really interesting discussion. And I want to turn the table and get your ideas on some of these things.

But before we do that, what would you say to somebody who’s in a similar position? It sounds like you had a lot of courage. And I’m not sure if that courage came from desperation or if you just tried to suppress the nagging voice in your head saying, “You don’t know anything about Google. You don’t know anything about websites” and all the other things that you ended up getting into.

What would you sort of say to somebody who is maybe wanting to try something out new like that but doesn’t really have the confidence?

Grant: So, one of the things that I’ve realized is, in all the people I’ve talked to, in all the people I’ve met and talked about money, you hear their stories. And most people are about two or three steps away from a life that they would really love. And we live in such an all-or-nothing world where it’s like, “I’ve got to jump in. I’ve got to hustle, hustle, hustle. It’s got to be all-passion. It’s got to be like ‘I’m going to put everything on the line’ when, a vast majority of cases, you don’t need to dive into the deep end of the pool. What you can do is just put your foot in for a little while and see how you feel.

And I think a lot of people, they’re stressed in their jobs. They feel like they don’t have enough money. They feel like they’re not going anywhere. And it’s often only a couple of steps that are required to feel less stressed, feel like you have more freedom.

And so, if someone feels stuck in their life, and they’re like, “I can’t imagine doing this” and “That sounds crazy!” and “That sounds impossible,” my recommendation to you would be like… don’t think about the number. Don’t think about “I want to be a millionaire.” Don’t think about “I want to be financially independent.” Those are great goals. Those can be in the back of your head.

Focus on what are the two or three things that are holding you back that you can do right now.

And the first one is look at your current job situation. A lot of people are like, “I want to be an entrepreneur [unclear 24:36].” But if you have a full-time job that has benefits, that’s where you need to start.

There are so many advantages to using your full-time job as a launching pad. Don’t just abandon it. Look at it very closely and say, “Am I making the most of my current situation?” Yes, your boss might suck. Yes, you might not be getting paid as much as you want. Okay, how can you fix that? You know what I mean?

And in the book, I outline very specific process how to analyze your market value and your value to your company.

I mean, most people don’t know that it costs your company between 40% and 60% of your annual salary just to replace you… just to replace you. Just knowing that, most employees actually have so much more leverage than they think they have. And we live in this world where people are afraid to ask for things because they’re worried about getting fired.

But start with your full-time job. Make sure you’re getting paid at least your market rate. Talk to recruiters to get a sense for whether they can find you a better job or what skills that you could build that would help you make more money.

If you’re on a certain career track, there’s so much data available.

We’ve talked about this. I think it’s never been easiser in history to make more money literally because there’s so much information. It’s so open. There’s more and more information every day. You can call up and talk to three recruiters in your industry and get a sense of what you should be paid.

And as a bonus, they might even have a job for you that pays more or they’ll tell you, “Hey, develop these two skill sets, and then you can make $60,000 more a year at this other company.”

That stuff, it’s all available to you. It’s all free. You just have to—

And so, look at your full-time job. That’s where you need to start. Make sure your 30-minute meeting with your HR department, simple question: “Am I making the most of the benefits? Am I taking advantage of it?” Most Americans aren’t. If you want to work remotely, and you want that benefit, it’s never been easier to negotiate it.

So, just look at your current situation. If they’re not willing to budge, if they’re not going to be flexible with you, if they’re not going to give you a raise, you’re not stuck there forever. There’s a path. Life is too short to hate your job.

And that is the thing. So many people, they just feel stuck, and they’re like, “What am I going to do without the job?”

And so, create a safety net. Save like three months of expenses, talk to three recruiters, maybe build some new skills. And in a 3-month plan, you can have an exit strategy, and you’re gone.

Mad Fientist: Yeah, absolutely. It goes back to what we were saying before. You’re so focused on this end goal of financial independence. But really, you could get so many of those benefits of FI when you’re still working. And you can get that because you do have money, and you can survive a few months without a job.

And every single big raise I ever got in my career was when I said I was leaving the job or leaving the company. And I would’ve never got that had I tried to negotiate a salary bump. But as you said, it’s super expensive to replace somebody. And it’s much easier to keep somebody that you know is good than roll the dice and pay a bunch of money to bring on somebody that may not be good.

And you can get that benefit with, what, just maybe two or three months of savings. And that’s way early on your journey to financial independence.

So, I couldn’t agree more. I think that’s amazing advice.

Grant: And a lot of things in life, people are afraid. There’s like this fear. But the thing is life, like investing, is about calculated risks.

And so, how you take a calculated risk just like we talked about in this case is having three months of expenses saved, having skills, diversifying your skills.

And then, a lot of things that a lot of people—it’s easy to see now looking back, you can almost always go back. You can almost always go back. The skills you have, there’s going to be someone who will hire you for them. And so don’t think about the million dollars or being FI. Those are great goals. Those are incredibly admirable. Just focus on those two or three steps—optimizing your full-time job, making sure you’re taking advantage of the benefits…

Try making money outside your full-time job. So much now has been written about side hustling. I have 13 different income streams at one point. And for me, people are like, “How did you do all those things?” I was like, “Well, a vast majority of them, I really enjoyed. I just found a way to get paid for things that I liked doing” like collecting domain names which is like the nerdiest thing on earth, I know. Go out!

The beautiful thing about making money on the side is that you don’t have to go all in. See how it feels. Test what it feels like making money on the side. Just try it. There’s really no risk. All you’re going to lose is a little bit of your time.

Obviously, in the book, I go into great detail about why I think most people think about side hustling all wrong…

Mad Fientist: I completely agree with you on that, especially for people pursuing FI. I just read a post about starting a business just saying how had I not had a business waiting for me after FI, I think I would’ve really struggled. So it’s a way bigger lifestyle change than I think anyone anticipates even though we think about it all the time.

Had I not had something there that was more substantial than a hobby that, actually, other people were relying on me to do things and giving me some sort of external motivation, not having that, I would’ve lost my mind probably within the first couple of months—which we’re going to talk about some of the struggles that people do face after FI because I know you were in a similar situation to me with some of the stuff that you’ve been thinking about, which I’m excited to get into.

I want to get back to your story. And so you did five years, three months, six days, and then you’re FI. So what happened then?

Grant: I took a deep breath. I took a deep breath but was still—it felt good. It is one of the things at least to me that—I’ve cried of joy probably five or six times in my life, and that was one of them. And I felt very grateful. I proved something to myself more than anything else.

But interestingly, I’d always thought I’d get to that number and then sail off into the sunset, write fiction and travel all the time. And when I got there, I had two companies, I had over 20 employees that I was responsible for paying them and their benefits and their family’s benefits. I built an entire infrastructure that depended on me.

That was a hard reality to face. I had enough money. I’ve made it. But here I looked, “Wow! I spent the last five years building two companies that were both successful, that were both growing. What am I going to do now?”

I could’ve never anticipated that. Do you just walk away from something that you spent building?

But what ended up happening was the more successful my companies were, and the more employees I hired, I was spending less and less time doing the work that I actually enjoyed. I was spending time managing people and HR issues and on the road.

I was on the road I think in 2015 like 30 of the weeks of that year. I was traveling all the time to clients. It was exhausting, man.

And a couple of months after I hit FI, I realized just how burnt out I was and really struggled for about a year.

I’ve written a lot about this on my blog during this period. I launched Millennial Money about a month after I became FI. And so that was kind of like, “Okay, I got through this. I’m going to write about it,” but I was incredibly burnt out.

And so, over the next year, I had to face the reality that, from a health perspective, from a mental health perspective, I wasn’t going to be able to continue to grow my companies and sustain this long-term.

I made a lot of mistakes in how I built them. The businesses were too reliant on me. There was a lot of things. I was actually traveling too much. And so I wanted to get out.

But once I made that decision to get out, it still took me over a year beyond that first year—so a couple of years—to unpack the businesses get in the right headspace.

It’s really hard to walk away from a $400,000 gig or more and a multimillion dollar company. And I can honestly say that probably a year in, so late 2016, is when Millennial Money started getting a little bit of traction.

And I remember the first reader email—yeah, I’ve gotten the “Hey, thanks! Cool blog.” But in the Fall of 2016, I got the first reader email that was like, “You’ve changed my life. You’ve helped my marriage. You’ve given me hope. I saved $13,000 this year thanks to your blog. You’ve really inspired…”

And honestly, that email filled me with a level of joy that was so much greater than any dollar than I’ve ever made.

Mad Fientist: That’s awesome.

Grant: And it hit me so intensely that I literally didn’t even know what hit me. It took me a long time to even understand what was going on. I started getting more of those emails.

And then, early 2017, the first time I was on CNBC and NPR and the Washington Post, the website grew, it started making money. So then I was like, “Oh, there’s another way to make money here.”

I hadn’t launched Millennial Money to make money at all ironically. It was just like, “I want to be a writer. I want to share my thoughts.” I want to help other people do this. And then, it started making money where that started taking away some of the anxiety of leaving the companies that I had built. And it was just this confluence of factors where I started getting more emails from readers like I never would’ve—

I would probably have laughed at who I’ve become today like five years ago literally. I was all money all the time. I was conscious and I was a nice person but it was kind of me, myself and I. That was what was driving me. I had the blinders on. It was trauma-driven. It was like, “I’m going to find a way out. I’m going to be successful.” And man, my purpose in life just hit me smack in the face, man.

Mad Fientist: Obviously, you’re much happier chasing that as a way to get fulfillment than just another dollar which is great to see.

Grant: And that’s one of the things, man, I’ve realized. We live in a world that’s like find your why, find your purpose, find what makes you happy. If you had asked me those questions five years ago, I wouldn’t have had an answer. And to be honest, I feel like a lot of those questions put a level of pressure on people that’s not necessarily needed.

If you don’t know what makes you happy or what you’re passionate about or what your purpose in life is, that’s okay. You probably just need the time and space to figure it out.

Mad Fientist: And this brings us perfectly to an article that you wrote that I’ll link to in the shownotes, but how you found that your definition of success has changed. Now, you think success is peace. And I think that’s absolutely brilliant. And I’ve not really thought about that. Contentment is something that I’ve really enjoyed about the last two years of my life that I hadn’t really enjoyed before because I was always striving for something else or striving for more money or more success or whatever. And framing it as peace is something I wouldn’t have thought to do, but I think it’s perfect.

So, can you talk a little bit about that post because I think it’s a really important one.

Grant: So, about a year—gosh, now, over a year. In October 2017, I had a couple of business partners in one of my companies. I separated with them. I sold some of my client relationships to some other people. I unpacked that other company. I’d already started writing the book. But I was in pretty bad shape in October 2017. I was burnt out. I was tired. I felt inspired by the opportunity to write the book. I felt so grateful. The blog was growing.

But what I couldn’t have anticipated was that it ended up taking me about eight months to completely detox from seven years of non-stop grind. I never chilled as hard as I hustled. It was always non-stop.

And last summer, I was sitting in England, just in Cornwall, on the coast there in England—and you might remember when I was there. Early morning, it was really beautiful. I got up. I had to write a post. I was looking at it, the water. I had a feeling. I was like, “What is this feeling?” It was something that I didn’t recognize.

And I realized that it was the first time that I ever felt at peace. And it was a huge moment in my life. I realized that that was what I was seeking all along.

I think I ended the blog post—and this is how I felt, I ended up writing that blog post the next day—“I had nowhere to go but here.”

Mad Fientist: Yeah, it’s a fantastic post. I’m going to definitely link to it. And that’s funny, that you can remember the time that you sort of realized it because I do as well.

I was walking back from the gym one morning. And the green man that tells you you can walk across—they call it the green man here. I forget what it’s called in the States, but just like the walk sign.

Grant: Yeah, it’s like a white man or something.

Mad Fientist: Yeah, the white man to say that you could walk. It turned to a flashing red saying, “You better get across now.” Any other time in my life, I would’ve hurried up and ran into the crosswalk just to get through. I remembered not caring. I just strolled up to the thing, and then I sat there for the whole light because I’d wait until the traffic stopped again. And I was just like, “I can’t believe I did that.” But I was just so content with just strolling through the park and actually just enjoying the act of walking through a park in the day time.

I was like, “That is insane. I would’ve never expected that.” But it was a super happy, joyful moment. And if you looked at me from the cars that were driving by, you would’ve noticed nothing different because I was just waiting. But yeah, it was just a realization that, “Wow, I’m pretty content right now.” I’m not running to get the next thing. It was an amazing feeling.

Grant: Yeah, the one thing I’ve realized is not only do we live in a more and more and more world. But we spend so much of our lives and we’re taught by our parents and the world to chase that next thing—whether it’s a job promotion or a salary increase or a new job or a new thing—when it’s much more valuable but harder to kind of stop and look within.

And you know, the one thing is no matter where you travel in the world or what job you have, the one thing that you’re carrying with you is yourself. And that’s one of the things. Man, I realize that’s like the peace within.

It’s not always there. Some days are crappy. It doesn’t mean you don’t have bad days. But there’s this sense of coming home that I felt where I feel very privileged and grateful to have had that. I wonder if I could’ve found that earlier. I realized that it took a lot of time and space to find that.

It wasn’t even finding it. It’s like it just arrived. We live in such a busy world where you have 10 days of vacation a year or we’re all so busy. You schedule every five minutes. We live in a productivity planner. Everything is scheduled.

Sometimes, it takes just sitting and not knowing and being uncomfortable.

One of my favorite line in the book is: “Life is infinitely richer when you open to it.” And there’s kind of an acceptance and an opening and just kind of a waiting. You don’t always have to chase something because life is going to show up when you least expect it—just like you standing there on the crosswalk or just sitting randomly looking out to the ocean. I couldn’t have sought that out. But you have to give yourself some space and time.

And I wonder I could’ve done that without being FI. I don’t know. I don’t know if I would’ve had that perspective. But that’s one of the things about the book. I hope people are reading it, or someone reads it, and they just realize a) that they can define success for themselves, and then b) that freedom is already within you.

Mad Fientist: Do you have any advice for people to figure out how to find it because I think it is easier said than done because, even now, I still get into the routine of packing my days full and feeling like I need to be productive all the time? I’m still chasing, but they’re just non-monetary things these days mostly.

So, it seems like you’re the same. Obviously, you’re going to be super busy now with the book. And I know there’s times in life where you’re most busy than others. But do you do anything in particular to keep that focus or carve out time for yourself or do anything that’s been helpful as you transition from going a hundred miles per hour to now taking a step back and realizing other things that are important?

Grant: Yeah, one of the things that I’ve realized and I’ve believed in is—there’s a great Alan Watts quote. eHe’s a He’s a British philosopher. He said that “Life is like music, it’s meant to be played.” And I often wake up in the morning. And that’s in my head where I think about it. And for me, it’s not about being busy or not being busy. It’s like, “Am I playing life? Am I having fun? Am I experiencing new things? Am I awake?”

I think we live in a world where we’re kind of encouraged to stay asleep. And some of the simple things that have worked for me, man, just laying under a tree, as simple as that sounds, and just paying attention, these things like 10- or 5-minute meditation, those things are fine to kind of calm you down if you’re stressed out.

But just every once in a while, once a month on a Sunday, schedule the afternoon for yourself and just go lay under a tree or just go take a walk in the park and leave your phone at home. Just give yourself some space.

And the biggest thing that I had to do in that 8-month detox was just give myself permission to do nothing.

Mad Fientist: The tree thing reminded me of something that I’ve really enjoyed over the past year. I got to meet David Cain down in Ecuador. And he talks a lot about things like meditation. I tried one of his programs out and it was really, really helpful for just like 5-minute meditations.

But one of the things that he said was to sort of have a trigger that makes you aware of your surroundings and the present. And I’ve been doing this for the last year. Any time I go out of a door, I instantly notice everything about it which is something I would’ve never done before.

It’s amazing, you step outside, and you get hit in the face with this cold air, and then you smell some trees, and you hear the rustling of leaves and things like this. There’s so much joy you can get out of just simply smelling summer or whatever. That’s been really helpful in just getting out of my head because I’m sure you’re the same. You’re always thinking of how to optimize something or thinking of the next thing you have to do or something.

But yeah, simply just getting out of your head for just a little bit is amazing.

Grant: Yeah, one of the things, I think our minds often hold us back. We try to rationalize everything. The mind drives us to crazy places. And it’s often when you trust your intuition.

To that point, one of my exercises is if I am anywhere in the world—whether at home or in the park or on the train—and I’m feeling frazzled or I’m feeling disconnected, what I’ll do is I’ll just stop. Just be somewhere busy wherever you are and just literally close your eyes for 30 seconds. Just completely close your eyes. You don’t need to meditate. Just close your eyes. Just cut off your sight.

And then just open up and just see. You realize just how rich everything is, how much is going on, how much movement there is.

It’s like awareness is very much like a muscle. It really is.

Mad Fientist: Oh, definitely.

Grant: This might sound crazy to some of you, but it’s something that gets easier over time where you start to see. It’s easier to see. And then, you don’t have to do those exercises as much.

And all of a sudden, you realize that you’re looking at the finch in the tree, and you’ve never noticed a finch in your life before, or you’re seeing something incredibly human like someone sitting and reading a book on the sidewalk out the front of a building.

You start to have a level of awareness where, for me, the more that I’m seeing, the richer life becomes.

Mad Fientist: Yeah, that’s a great way to look at it. I also agree with what you said about it gets easier to sort of see some other things that you probably missed. Just with practice, it is like a muscle.

I was out on a walk with my sister-in-law and her family and my wife and stuff. I guess we were near the ocean and I just got a whiff of the sea breeze. And I was just talking about how nice that was. And my sister-in-law looked at me and she thought I was being sarcastic and I was miserable on my walk or something. And I was like, “No, really…”

And yeah, I think it’s all because of just practicing just being in the present and just enjoying them. And you’re right, the richness of it all is just immense. There’s so much going on. And it’s something I would’ve never expected. If you would’ve played this clip to me five years ago, I would’ve been like, “What are you talking about?”

But yeah, it’s a privilege to enjoy all that stuff and you’re not going and going and going all the time.

Grant: Do you think you could’ve had this awakening without being FI?

Mad Fientist: Oh no, I don’t think so. I was too focused on…

Grant: Yeah, me too…

Mad Fientist: …more money, more money, more money or less spending. I was just too focused on that. So I don’t think it would’ve happened.

Grant: This is the irony of all these. Money does have diminishing returns. You get to a point where you realize how it is a path to freedom and to be thankful and grateful for that.

And if you do feel stuck in your life, money is a way out. I mean it really is. It’s like of anything that I know. But then you get to a point where you realize it’s such a small thing in comparison to everything out there.

But for me, the immensity of it is incredibly freeing because it’s allowed me to let go of a lot of my own competitiveness and expectations. And I always wanted to be the best or be a millionaire or win. And I don’t have that anymore.

Mad Fientist: It’s not all butterflies and rainbows…

Grant: No!

Mad Fientist: So, I want to talk a little bit about that. Do you want to maybe just chat a little bit about some of the things maybe you didn’t expect of post-FI life or anything you struggled with because, like I said, it’s not all just happiness and laying under trees all the time.

Grant: Awareness can be really scary. And at least for me, you don’t wake up every day and you’re just like, “Oh, the world is so rich. I see all the colors.” Some days, you wake up, and when you have kind of unlimited time—

At first, it felt like I had a lot more time in the day. And now time has become a much more fluid thing because I have less markers of it. I’m not waking up getting ready to go into work, coming home, taking the dog out, getting kids.

And the routine, a lot of people feel very safe in the routine—my father is this way—because it kind of bookends their life. And when you lose that, you can either do what—I know you’re doing it, Brandon, build another routine.

I really struggled with that. And for me, I’ve kind of let go of needing one. And that’s had its own challenges because, some days, they’re very creative and very inspired, and other days…

For a while, I felt guilty like, “Oh, I’m not getting anything done.” I’ve let that go at least at this moment. The past couple of months, waking up and doing nothing, I’m totally cool with.

I read everything Ralph Waldo Emerson wrote in like two weeks. And this is at a time when I should’ve been doing a ton of other things and should’ve been blogging and should’ve been blah-blah-blah. And I was like, “No, I’m just going to sit here and read. And that was cool.”

But I think I’m finding ways through some of those challenges. I feel very grateful that I have a mission—which another word could be work. You could say that’s my “work.” I moved from Chicago to New York City so I have a lot of distractions. I have a lot going on. I’m going on a 40-city book tour starting on March. So I’m going to be on the road. I’m actually going to be on the road from March until December of 2019. So I know that’s happening.

And 2020, I’m planning to take off the entire year, and I’m going to work on a second book, Not a Bad Money.

Mad Fientist: Oh, wow! Nice.

Grant: And so, I’ve kind of put that in my head of like, “2020 is the year you’re going to do nothing.”

So, once again, I’m like pushing off. But I’m very happy, man. I’m very happy because I’ve realized that happiness is not my goal anymore just like money wasn’t. It’s that peace. Am I following the rhythms that I’m feeling? Do I feel fulfilled?

I care less and less about happiness. Happiness has kind of exploded into so many other particles now for me where it’s like, “Am I kind of floating? Am I doing what I should be doing? And does it feel good?” It’s more about like “Does this feel good?” I think.

Mad Fientist: Oh, that’s great, man. It’s awesome to see just your transition and how you’re dealing with everything and everything that you’re producing. It’s definitely inspiring. And I’m sure, yeah, you’re inspiring millions and millions more with the book.

So, Financial Freedom, it’s out today. And the book tour will follow next month.

And anything else you want to tell people about it? Obviously, there’s going to be links and stuff on the shownotes. But I’m also going to include an amazing trailer for the book—which I’ve never seen a trailer for a book. But this makes it seem like a movie trailer. And it’s really well done.

So, if you’re interested at all, definitely check it out. It’s like a couple of minutes. And it’s as engaging and action-packed as a movie trailer.

So, is there anything else you want to say about it before we head out of here?

Grant: Yeah, check out That’s the website for the book. There’s nine calculators that are in the book. Those are all already built. They’re for free. You don’t even need the book to use them. Those are in—and a bunch of other resources.

And yeah, pick up a copy if you want to hear what Brandon has to say about happiness and if you want to hear his story. There’s nine other people in the book who reached FI before 35 that are also profiled.

And yeah, I can’t wait to get it in people’s hands. And if you’re into FI, and you have a friend that you’ve really wanted to convince or kind of get them onboard, I think this might be the book for them.

One of the reasons I wrote it is I wanted something that you could literally hand to someone and say, “Hey, this is what I’m about. This is what I follow. This is what’s important to me.”

Mad Fientist: Absolutely! Yeah, I’m super excited for you. And yeah, I definitely recommend people check it out. As I said, it goes deeper into all your story and everything you’ve been able to do and all your recommendations. But then it also brings in these 10 other voices and their input.

So, it’s a very entertaining book. But also, there’s lots of good pieces of knowledge in there that will help anyone on their path to financial independence. So I definitely recommend it.

And people can also find you at Do you want to plug your new site—which I’m really excited about—the

Grant: Oh yeah, man. Yeah, I started writing about more than money. Man, I appreciate that. I wasn’t going to plug that. So you can sign up. I’m sending out weekly emails with some, really, kind of thoughts on life and existence and being alive. And so check that out as well.

Mad Fientist: And you’ve also got the podcast, the Financial Freedom Podcast.

Grant: Yeah, Financial Freedom Podcast. And then, if you want to follow the book around the world, or join me anywhere, check out @FinancialFreedom on Instagram. The book has its own Instagram account, the book and the podcast do.

And yeah, if anyone wants to go to Japan, I’m planning that out right now. I’m going to be doing a bunch of dates there. And yeah, it’s going to be a wild ride.

But hey, man, I just wanted to say, before we end, thank you because this is a true, true bar and a true honor to be on the show, man. You really changed my life when I found your blog. Just keep doing the work you’re doing. And just speaking as, first, a fan, now to be on this show, I think I speak for most people, probably everyone out there, thank you for what you do, man. I really appreciate it.

Mad Fientist: Oh, that’s very kind of you. I appreciate it. And yeah, it’s an honor to have you on. And it’s been a pleasure chatting with you over the years.

And like I said, I’m going to link to your episode with me because you dug dip and got some really good things and made me think about a lot of stuff that I haven’t thought about. And yeah, it’s just been a pleasure just interacting with you.

And I’m super pumped for you about the book.

And I can’t let you go until I obviously ask you the question I ask everyone since the beginning of this podcast: “What’s one piece of advice you’d give to somebody on the path to financial independence?”

Grant: Just take a deep breath.

Mad Fientist: That’s great! That’s the shortest response, but I think it’s one of the best.

So Grant, I appreciate it so much, buddy. Congrats again on the book. And hopefully, I will see you somewhere in the world on your tour. And I will buy you a beer to celebrate.

Grant: We’re just getting started, man. We’re just getting started.

Mad Fientist: Talk to you soon! Bye.

Grant: Thanks, man. Have a good day. Bye.

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Tony – Going Back to Work After Early Retirement Wed, 23 Jan 2019 10:29:55 +0000 It's easy to think early retirement will solve all your problems but what if it actually makes your life worse? A reader named Tony shares his story.

The post Tony – Going Back to Work After Early Retirement appeared first on Mad Fientist.

It’s easy to think that early retirement will be the answer to all your problems.

After all, how could you not be happy when you don’t have to work anymore?

I’ve written about why early retirement is not a magic bullet but what if it actually makes your life worse?

On today’s episode of the Financial Independence Podcast, I interview a reader named Tony who found this to be the case.

He’s since decided to go back to the same career he retired from and is enjoying work (and life) more than ever.

During the interview, we dive into the overlooked benefits of work and the downsides of early retirement.

We also explore serious issues that aren’t talked about enough, like depression and mental health.

Huge thank you to Tony for sharing his deeply personal story with us.

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • The benefits of having a job that are hard to find elsewhere
  • Why early retirement won’t magically fix all your problems
  • The importance of building human contact into your early retirement plan
  • The dark side of having a driving passion and purpose
  • Signs that you need to seek help for your mental health problems
  • What it’s like going back to work after early retirement
  • The Office Space Effect and how FI can make you a better (and happier) employee

Show Links

Full Transcript

Mad Fientist: Hey, what’s up everybody. Welcome to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest in personal finance to find out how they achieved financial independence.

On today’s show, I’m excited to talk to my buddy, Tony, who I met at a Camp Mustache a few years ago. After the camp finished, we became friends on Facebook. And I noticed at some point last year that he was posting about getting a new job. And that surprised me because he achieved financial independence. He retired early. And yet here he was looking to get back in the same career that he left.

So, I reached out to him to see what’s going on. We chatted about it a little bit. And I realized his story was one that definitely needed to be told. And it’s a very personal one. So I really appreciate that he decided to share it with everyone because it’s hard to talk about some of these things. And we dive into things like depression and mental illness and other problems that you think that financial independence could solve. But in a lot of cases, it won’t.

So, as this whole financial independence thing gets more mainstream and there’s more FIER cheerleaders out there saying, “This is the best thing ever. It’s going to fix everything. It’s the answer to all your problems,” just do some soul-searching, listen to this episode, learn from Tony’s experiences, and hopefully, have a much easier, enjoyable, fun journey to financial independence and beyond.

Without further delay, thank you so much, Tony, I really appreciate you being here.

Tony: Brandon, it’s so good to be here. I’m honored and I feel like I don’t deserve to be here. But I’m really glad to be here talking to you.

Mad Fientist: Oh no, you definitely deserve it. You have an incredibly interesting and up-and-down story that I’m excited to get into.

But before we do that, just tell everybody how we know each other. I think we met, what is it, two years ago at Camp Mustache?

Tony: Yeah, Camp Mustache in Washington State. And you and I met there after—well, I have been peeping on your blog for a couple of years at that point and really getting a lot of value out of it.

And so, yeah, you and I decided to have that lunch. And we kind of hit it off. And here we are a few years later, that was the beginning of my FI journey. So it was really an awesome event to be a part of.

Mad Fientist: So, let’s talk about that. What was your life like before you discovered this whole, crazy world?

Tony: So, I kind of became exposed to the idea of early retirement in 2012-ish through a podcast by a fellow named Paul Wheaton who’s in Montana. And he’s a—well, he’s a lot of things. He’s kind of a polymath. He interviewed Jacob Lund Fisker on his podcast which is called the Permaculture Podcast., it’s awesome. He has a few hundred podcast that range all over the place.

But yeah, he interviewed the guy from Early Retirement Extreme. I looked into that and just had like, “This guy’s insane!” He’s an interesting guy himself.

But the idea, that kind of planted a seed in my head of like, “Wow! This guy is living it up.” Well, he’s having a great life. I don’t even know at the time, it was like 10k a year. And I know he shaved it down even more really in the Bay Area for like 7k to 8k a year. It was a way to think creatively about how to structure your life that was introduced to me.

Mad Fientist: At this point, you were a software developer by trade, right? But you were not actually very focused on money. And you actually had some issues with money. You were using payday loans and credit cards and things like that, is that right?

Tony: Yeah. Through my twenties, I was horrible with money, like paycheck to paycheck at best. I was never able to budget, never able to save. And all windfalls that I got unexpectedly—tax returns and stuff like that—immediately just disappeared.

And yeah, I used payday loan services pretty regularly in my early twenties. I’d get to rent being due. And I’ll be like, “Oh, I only have $300. And I need to pay $700 for rent by 8:00 a.m. tomorrow. So I guess we’ll go to the money tree and sign up for a loan.” It’s like 200% effective interest or something crazy.

And yeah, I probably did that like 10 or more times a year. And even into my late twenties, that was kind of my parachute cord. It was “Oh, shit! How did this happen… again, for the hundredth time?”

So, there was zero financial acumen in my life until—I started earning more money in my late twenties. So it became less of a problem. But that was what made it less of a problem, not my becoming more mature or anything about finances.

Mad Fientist: So, at this stage, were you happy in your career? How was life going at this point? Were you looking for a way out or was this just something that was like, “Ooh, this is going to be a good thing to pursue while I’m doing this career that I enjoy?”

Tony: I definitely wasn’t enjoying it. I wasn’t hating it, but I was certainly not looking forward to going to work in the morning.

I did have a lot of co-workers that I really loved working with. I did have a good time with them. But I certainly felt like I was not happy. I wasn’t getting fulfilled. And I wasn’t doing my best work. I didn’t know it at the time. That’s the best way I knew how to do it. I didn’t know there was a better way.

So, this kind of got me serious about lifestyle design as well. And that’s when I started thinking about maybe you don’t have to work five days a week, nine to five, or you can have a goal where you can see an end to that if you want, if that’s not working for you.

So, that certainly got me started on thinking about that and getting curious.

Mad Fientist: So, when I met you, you were also a farmer. So you’re in tech, but then you also ran a farm. So where did the whole farm come into the play?

Tony: In 2011 and ’12, my life kind of fell apart in a way. I went through a divorce with my then wife. It was very painful. It was the right thing to do. And now we’re thankfully best friends, her and I, after a lot of hard work.

And at my job, I kind of ran out of the ability to work harder. I crashed. All my adult life, I had felt the need to prove myself. And I felt the need to be needed, to be indispensible. And my job, at that time, it wasn’t technically software engineer. I was managing the operations IT in the QA department for the software company. So my job, “keep bad things from my happening” was my job in a short sentence. Keep the company running. And the stuff that makes the money, keep it up. And when things go bad, I called at three in the morning, and me and my team would fix it.

So, I just was working harder and harder on that. And eventually, I just crashed. I couldn’t work harder. My body rejected it. I would get sick. I was very sad and irritable. And my CEO at the time who was a wonderful guy, he brought me in a room after a particularly bad event where, because of doing things as fast as possible, I had caused an outage in our service that caused us about $10,000, let’s say, the company.

And he brought me into the room, and I was expecting to get fired, or at least yelled at, and he said, “Tony, I want you to be open to the idea that the solution to this, what happened, and the solution to preventing it from happening again isn’t you working harder. That’s what got us here.”

And I remember that very vividly. And I still think about that because I do have a lot of workaholic and perfectionism tendencies pretty hardwired in me. So, that got me curious about doing something different.

I read a book by a gentleman named Joel Salatin who calls himself the “lunatic farmer.” And he was awesome! I read a book by him entitled Folks, This Ain’t Normal. And when I read that book, it was like a lightning bolt of inspiration to me. I went, over night, from not knowing what I wanted to do with my life to “I’m a farmer now. Where am I going to put the chickens and ducks and pigs… on my balcony?” It was like nothing I’ve ever experienced before.

I had constantly heard people talking about doing stuff, them applying their life to something they would do for free, loving their job, feeling passion for something greater than themselves. I have never felt that before. And this was an immediate, like I said, lightning bolt of inspiration.

That was super exciting.

Then I just went all in on that. The next weekend after reading that book—I went to the farmer’s market every Saturday morning, and I had a bunch of farmers that I bought stuff from. My food budget at that time was actually more than my rent. I was at least $1500 a month. And that was with me eating out maybe three times a month. So I would just buy steaks for $38 a pound. I had enough money where I could do all these stuff. I wasn’t obviously saving any money, but man, I ate well.

And so, I just went to every farmer I had a relationship with. They were there since 2010 when I started shopping at farmer’s market, and I was like, “Let me volunteer on your farm. Let me volunteer on your farm. Let me volunteer on your farm.”

And finally, one of them said, “Well, you can’t volunteer on the farm right now, but you want to come help us tear down our farmer’s market booth today at 2:00?” And I was like, “Okay…”

And so, I did. I had a great time just talking to these people who cared about what I cared about. George was the farmer’s name. And he said, “Hey, do you want to come help us set up tomorrow morning?” So I said yes and I did that.

I kept doing that Saturday and Sunday. And that turned into me, instead of showing up to help set up, and then showing up to help tear down, I just started staying for the whole farmer’s market and helping sell all the goodies that were being produced and raised in the way that I wanted to do myself.

And that’s been maybe the most helpful thing for me in growing, has been to surround myself with people that are successfully doing what I want to emulate because they’ve gone through all of the horrible, stupid mistakes and let me be free to make exciting, new mistakes.

So, fast forward to a few months later, I’ve kind of had—for people that have seen the film Office Space—an Office Space epiphany where because I cared so much about farming, I cared so much less about work. I didn’t just start going in in my pajamas or anything like that. But I just stopped stressing out about little mistakes and even moderately large mistakes that I made because we’re all going to make mistakes all the time.

I started doing better at work. I started enjoying my job more. It ended up with me being promoted and given like a 15% raise a few months after, like six months after that change in mentality and perspective on my job.

Mad Fientist: It’s amazing, isn’t it? I was so surprised by it. But the more and more people I talk to, it’s just the same, exact story. It’s the Office Space Syndrome. I like that. I like the name of that. That’s pretty much perfect.

Tony: And I did that volunteer gig for about four months. And then, that ended. And then I was like, “Well, now what?” Well, I felt like after four months of learning from someone, I was ready to do it myself—which was totally not true. I was looking for a farm land to rent.

And then, as it happens so many times since this epiphany happened, the universe has just given me the right thing at the right time and given me what I needed even though it wasn’t necessarily what I thought I wanted.

And one of the examples of that is I connected with my cousins who owned some old family land, and they weren’t using it. And there was a house on it that had been vacant since their parents died two years prior.

And so, I connected with them. I hadn’t really had a relationship with these cousins because they were about 30 years older than me. But I connected with them. And it was just the perfect fit. They were like, “Well, this house is going to fall apart if no one is living in it and taking care of it and the land isn’t getting used. And so why don’t we work something up?”

And so, I ended up there paying like a pittance in rent. It was like $400 a month in rent for this house and this land. And so, I started a little farm.

I should say I negotiated at my job, I just said like, “I want to work 6 a.m. to 3 p.m. so I can do the farm.” And I moved out there, I got four goats, three pigs, and 25 chickens and started raising, started running a farm.

My schedule is pretty crazy. I’d wake up at 4 a.m. I do chores. I would get ready for work and leave for work about 5:30. I’d work 6:00 a.m. to 3:00 p.m. And then, I’d come home and I would farm more until it was dark. And then, I go free. And that was pretty much all I did from June until February 2014.

Mad Fientist: That sounds nuts! So, in a lot of these cases, you talked to a lot of people with these dreams. And then, the reality is a lot different than the dream. How was it for you? Was it everything you hoped it would be or was it harder?

Tony: It was! It really was everything. It was a lot like what I thought it would be. It wasn’t much harder than I thought. And the ways in which it was difficult, I kind of reveled in. It was so in line with my values that it almost seemed effortless even though I was exhausted at the end of every day.

It was like an exalted exhaustion. I like to think about it like that. When you just put forth all you’ve got towards something you really believe in, there’s a bliss as part of that.

Mad Fientist: So, at this point, did you ever think about turning in the tech job because it sounds like, obviously, the farm was your passion and you had some savings at that time? Or was it just not financially possible to do that? Or did you like the balance of both worlds?

Tony: It was definitely not balanced. I wanted to get out of tech entirely. And in fact, it was kind of hard for me not to just quit a few times in 2013 which would’ve been a really bad idea I think because I would’ve been consumed even more by the farm and probably made myself sick even worse and even more often.

So, at some point in 2013/2014, I kind of was like, “Alright, I got to map out a path to not needing to work in tech.” And that was when I started. I really delved head first into the whole ERE. I read the ERE book. I think that was probably the first book I read. I read Your Money or Your Life? And then, I got into Mr. Money Mustache and Mad Fientist and JL Collins NH and all these wonderful people that have blazed the trail for us and given us the strategy and the tactics, the how and why of how to do this stuff.

So, that’s when I really started to come up with my plan to get to financial independence.

Mad Fientist: So, you decided that you want to get out of the tech world as soon as possible. You had this high income that was growing thanks to the Office Space Syndrome. And your expenses were low because of the farm situation and living situation you worked yourself into. So presumably, it was a pretty quick ramp-up towards this FI number that you had in mind.

Tony: Yeah. So I made a Google Sheet that was just like, “Alright, here’s how much I need to be happy.” And I hardly had any money at this time. I was making a fair amount. But all the money I had have been frittered away or went into the farm.

And so now I was just like, “Well, as everyone says, the numbers are easy.” The math is easy as far as plotting your course to FI. It’s simply, but it’s not—well, it’s simple, not easy. It’s not easy to implement.

So, when I had that path in front of me, I was like, “Okay, I can do this.” And I just kind of set up my life with my commute, my six to three schedule. Once I had a path that I could just keep walking towards, keep walking down the path, and I knew where I was going to be, it became so much easier to just do it.

I don’t know. A lot of people, I think, they get on their FI journey, and they spend a bunch of time and energy on it every day. I really didn’t. I just charted out my path and I just got my lifestyle organized. And I kept walking.

So, I had this stupid, little Google Spreadsheet. And it had forecasted me to hit my number in end of March-ish 2017. And the company I was working for wasn’t doing so hot, and they laid off a bunch of people in August 2016. And I told my boss after that, “Hey, I’m really having a good time here. I feel like I’m doing a good job. And I don’t need this job. So if there needs to be more lay-offs, please sacrifice me instead of someone with a family that needs this job.”

And so, lo, and behold, January 2017, it was the 27th of January, I got to work and had someone come get me and say, “Hey, can you come into this room for a few minutes.” I walk into the room and they have the folder on the table and stuff.

And I had been on the other side of the table so many times laying other people off that I knew exactly what was happening. I just felt this wave of relief wash over my body. I remember it.

And I think the first thing I said to them was like, “Alright, I know this drill. And I know you’re way more nervous about this than I am. So just know that this is totally fine with me. I’m going to be very happy. And you guys, you have a hard day ahead of you.”

And I ended up with a severance package that basically gave me the number I was going to get by the end of March anyway.

Mad Fientist: So, what was that first few months of your life because, obviously, it was sooner than you’d expected. Were you mentally prepared for it?

Tony: No. I had emotionally thought—I was starting to think about “Hey, I should probably think about the transition period before the end of March… at some point before the end of March.” And obviously, I didn’t get that opportunity.

And honestly, I’m not sure it would’ve helped. But yeah, I did not get it. So the ideas I had about what early retirement would look like were that I would play a lot of video games. I have not made time for that. I played a lot of Diablo 3 and Warcraft 3 and had a great time.

And I had tons of ideas. One of the things I wanted to do ER for was so that I could build skills and learn things I wanted to know by doing them—for example, welding or working in a bike shop or an espresso stand or something like that. I want to get part-time jobs doing stuff that I wanted to learn how to do.

And for whatever reason, when I hit FI, I had all these time, I just didn’t go do them. They were ideas that sounded good. But for whatever reason, I just didn’t follow through with them. I had a lot of malaise and fatigue and what I know recognize as depression and anxiety.

And then, July and August, just continued with depression and anxiety. And the way that showed up in my life was that I was pretty irritable to be around. I wasn’t fun to be around. I was often tired, fatigued. I didn’t want to get out of bed.

And the biggest one was I stopped enjoying things that I used to love. Bike rides, hiking, cooking, all these things that I loved to do just became, at best, I was like, “Okay, this isn’t so bad.”

Mad Fientist: So, what were you thinking at this time because, obviously, if you’ve put a lot of hope into “everything is going to be fine and good after I hit FI,” and then, here you are, and it’s not good, it’s not better, it’s worse. All the things you thought you would do, you’re not doing. How was that? And were you thinking about “Did I make the right decision or what was going through your head?”

Tony: I didn’t ever regret the decision to pursue or “achieve” FI. I was in a spiral of thinking yet again that I’m doing this wrong or that I am inherently flawed in some way. I’m so spoiled. I’m so lucky in so many ways. But because of privilege and just lucky timing, and then all the hard work that I did to save so much money, I just felt like, “I have all of these stuff. I have all these free time. I live in this beautiful valley on this farm. And yet, here I am, miserable.” That was some of the lowest times I’ve ever had.

And yeah, it was like I didn’t have anything underneath that. It was like I did everything I knew how to do. I tried my hardest. I used all my skills. I got so much help from so many people. And here I am.

Another way it came out was when I explained my life to other people […], people that I’ve met at parties or whatever, I’d be hearing myself talking about my life, and I’d be like, “This sounds amazing! Why am I miserable?”

Mad Fientist: And it’s one thing when you have a job. You could always blame it on your job. Not only that, but the job is also distracting. So if you are feeling like that, then having to do a bunch of work will usually take your mind off of it.

So, missing out on that job takes away the distraction and takes away the most obvious excuse for why you’re feeling that way.

Tony: Yeah, I couldn’t blame anything. And so that just fueled the fire of self-criticism.

I guess one of the things I learned was that I was using job to manage my anxiety and depression with workaholism and perfectionism. And I actually ended up, at the urging of friends and partners and family, to go talk to a psychiatrist. And I was like, “You guys are nuts! I’m not crazy.”

But I did and I got an opinion that I didn’t like. So I went and sought someone else. And I got the same opinion. And their opinion was that I was struggling with my pretty severe anxiety and moderate depression. And what they would recommend is going on an anti-depressant, an SSRI.

And as one of them described to me I, at that point, was already doing everything they would suggest someone do. I was getting plenty of exercise. I was eating really well. I was meditating. Obviously, I didn’t have stress from work. I had family and friends around me. And yet I was struggling so much with myself.

So, I started on SSRI in August 2017. And these drugs are so weird. They’re like, “Well, take it for three weeks, then we might know if something is going on. We might know if it’s working or not.”

But anyway, I got lucky. I had a good practitioner. And we hit the jackpot the first time around, the first try. And man, September and October, I just started waking up feeling like glad to be alive—and it had been so long. I didn’t realize. When you’re in the middle of this stuff, it’s so hard to realize where you’re at. But it became so clear when I did start doing “glad to be alive” how much I’ve not had it for so long.

I would say that it’s probably been 2014 or 2015 since I have felt that lively. And yes, September and October were just such a welcome. I just felt so relieved and so much less anxious and so much less irritable. And I had more energy. I was just enjoying things that I liked. I was able to give myself some slack, you know?

Mad Fientist: What would you say to people that may be in a similar situation. Like you said, it’s really hard to realize you’re in that situation. The same with me when I was in the hardcore savings mode and we’re isolated in Vermont for two years. I had no idea that what it had got to. It was only when I came out of it that I realized how bad it got.

So, what would you say to people, especially people like you and me who are pinning all their hopes on this end goal of FI and that was just going to solve everything?

Tony: So, here’s the reality checks that helped me. It was kind of like I said. If you can explain your life to somebody, and it sounds to you when you’re speaking it like a totally different life than the one you’re living, that might be a sign that you’re—I mean I like to call my depression and anxiety “brain tubies.” But that might be a sign that you’re struggling with brain tubies. And that’s one big one.

The other one is if you have activities that you used to love, enjoy reliably, that used to give some juice to your life, and now they’re just perfunctory, or they don’t give you joy anymore, they just make your life manageable, endurable, that’s a sign.

And again, if you just find that you’re enduring your life, that’s not how humans are built to experience life.

And that doesn’t mean that you have brain tubies. It might mean that you’re working too much and you’re working too hard, you’re not giving your body what it needs as far as food, rest and exercise… there’s myriads of reasons that this might be happening. It’s not guaranteed that you’re going to have some kind of brain tubies or whatever…

Mad Fientist: But if you get to the state where you’ve eliminated all those other things that could potentially be helpful if you did them, and then you’re still at that position, then that’s probably… yeah…

Tony: If I get on my soap box for three seconds and just the stigmatism about mental illness in our culture is so tragic to me. I just think of all the people that are either not here because they had to escape via suicide, or they’re charging and enduring their way through life without getting help, it really—

I won’t go on about it because I’ll start crying. It is so tragic to me. And the fact that we treat mental illness like some character flaw and expect people to do the mental and emotional equivalence of like running a marathon on a broken leg… you know?

So, that’s my PSA that I’ll just get out there about. Talk! Be honest when you’re not okay. Don’t say everything is fine.

Mad Fientist: That’s why I’m so thankful that you decided to come on because, yeah, that was incredibly helpful. So I really, really appreciate you talking with me so honestly and openly. So, I’m sure the audience does as well.

And so, around this time is when you decided to actually go back to work, is that right?

Tony: Yeah! And that was part of—so when I started feeling better about stuff, thanks to my medication, I was like, “Alright, let’s try to stabilize our life a little bit more and just go back to what was last working for me” like that old saying, “When something goes wrong, stop the boat.” Get back to a place where you can make a decision.

And so, I ended up getting a part-time job in October. I had reached out to some friends that I had worked with, co-workers that I’ve worked with at my last job that I got laid off from. And they were at this little start-up in Seattle. I went in and had a visit with them. And I was like, “Hey, what are you guys up to? I’m looking to maybe start working again. But I only want to work part-time. So let’s see if we can make something that’s a good fit.”

And it ended up that they did seem like a good fit. So I started working in October doing software development as an individual contributor rather than a manager. Now, I work Tuesday, Wednesday, Thursday. And it’s wonderful! It’s even better than the Office Space experience I had before I think because of a few things.

One, I know if it stops being fun, I can just stop. And two, it’s helped me really appreciate the good stuff about working which is mostly about being around other people. I love working on hard problems with people I respect. That’s a drug, and I’m addicted to it.

And it’s also good fun to do something you’re good at. It’s really important to me. And it’s so nice. It feels almost effortless. To get into flow is lovely.

So, that started in October, and I’m really glad I did that.

Mad Fientist: When you were making that decision, was it a hard decision to make or was it obvious like, “Okay, I missed these things about the job, and now I can potentially get those things while still maintaining all the other good stuff about early retirement and fill those voids that I actually am missing not that I’ve stepped away and realized that I’m missing them”?

So, was it a pretty easy decision?

Tony: Oh, yeah. I felt a slight twinge of shame about like, “Oh, I’m a fraud. Oh, I couldn’t do early retirement.” I felt a little ashamed there. But thankfully, largely because of therapy and other stuff, I just felt less of an attachment to that identity, so I could give it up.

So yeah, I had no qualms about it.

Mad Fientist: And that’s what it’s all about. I think people get so hung up on the early retirement part, but the whole point is happiness. So if you step away from work and realize that you’re missing a lot of these things, and the easiest and best way to get those things is to get another job—a full-time job, even a part-time job or whatever—there’s no shame in that.

The whole point is happiness. And a job can give you a lot of things that you can’t do just on your own. So even making a big impact on the world, working for a big corporation, maybe that will give you more leverage than you doing something on your own. And there’s no shame in that.

Tony: No, no. It’s been really great. I don’t know, this whole Office Space Syndrome phenomenon sounds like an illness. But I so appreciate the people I work with as humans now. I’m like making the most of the time I have there rather than like grinding through it. And I enjoy it so much more. And people enjoy being around me so much more. And so the relationships, everything about it, is so much more juicy. It’s really lovely.

Mad Fientist: That’s fantastic. I’m really happy to hear it.

So, it’s great you were able to pick up another job in the same industry. Now, maybe for someone who’s not in a high demand field like tech, that might not be so easy. So, maybe could you talk a little bit more about the things that you were missing and the things that your job has now fulfilled just to give people an idea of they’re maybe in a similar situation, they can maybe appreciate their current situation before they make a big change that they may not be able to unwind?

Tony: Yeah, I can talk about that.

So, the big thing—like the biggest thing—that I was missing was human connection. After I retired, I kind of built my own lifestyle that didn’t include a lot of habitual human contact that was not at work. And so that was a big. I think if I was going to do something different, the biggest part of it would be building human contact into your daily—not daily routine, but definitely your weekly routine.

Mad Fientist: Or some sort of forced human contact because I’m probably really similar to you where if I didn’t have a reason or some other motivation to do it, I just wouldn’t do it, because it’s obviously the easier choice and the more comfortable choice.

Tony: Yeah…

Mad Fientist: So yeah, that’s a good point.

Tony: Right, yes, exactly. Plus, most of the people in our age group, they work 9 to 5, Mondays through Friday. So even days when I wanted to be social with people, it was like, “Uh… well… what am I going to do? All my friends are at work,” that kind of thing. So, yeah, that was a big one.

And then, the other one I kind of alluded to earlier was like it’s really fulfilling to work on something you’re good at doing. So, I think me especially and a lot of people I’m sure, we like to learn new things and do things that are difficult. And a big part of that is failing over and over again. And that can get fatiguing after a while.

So, I think just doing something that you’re competent at is its own reward in a lot of ways. And then, I’d also say that working on hard problems with other people that you respect is totally a drug. It’s just a—I don’t know, there’s something juicy about that. Maybe it’s part of just human brain wiring or maybe it’s just people like me and you that really need that. But those are the big—

And then, obviously, the money doesn’t hurt. I just view it as like a bounty now. It’s like I don’t need to worry about taking care of my needs. I know they’re taken care of. It’s kind of the Office Space thing. When I go to work now, it’s like I don’t need to be there, so I better have a good time. So why not make it the most fun that I can?

And that’s totally infectious. Being around that kind of energy, it’s fun to be around that kind of person that’s trying to make the best of something.

Mad Fientist: Yeah, absolutely. And obviously, everyone else is probably stuck there in the complete opposite. And yeah, you’re right. People can feel that, can tell. And it’s no wonder you get promotions because you’re a whole different species pretty much in the workplace.

Tony: Yes, it’s really totally different than before I found a path to FI when it was just the grind.

I want to just qualify this. Not every day is a good day at work even now. I still have annoying days when I’m irritable or nothing goes right and I’m like, “Argh!” like I’m glad to get home. So it’s not magic. But it’s so much better.

Mad Fientist: So, I want to just ask you a few things about moving on from the farm dream. I know people struggle giving up their career because their identity is tied to that. But I would think that something as powerful and as big of a part of your life for so many years that would be maybe even harder to let go off especially since that’s something that you chose, whereas a career, some people may feel they’re just working because they have to, and yet their identity still gets tied into that, I met you and it was apparent you were a farmer very early on. We chatted about it almost instantly. So has that been difficult?

Tony: The hard part about that was asking the question to myself. It was really tough to even get past the assumption that that might be something I would even ask, that it could be true, that I would not be a farmer anymore. I’d say that was like 95% of the difficult, was just asking the question honestly and being willing to hear whatever answer was true. And once I had that answer, it was like 5% just to carry that difficult truth forwards.

I think I probably waited too long to ask that question. And so, by the time I did, by carrying that out, that was actually like a relief.

I guess I feel a tiny twinge of shame or lack of identity like, “Oh no! People aren’t going to think like Tony, the Farmer” or whatever like one of the feathers on my cap is gone. That’s there a little bit, but not nearly as much as I would’ve guessed.

And I’d also say to people that feel that they need to have some kind of passion and purpose in their life, be careful what you wish for. I went through this journey, and it cuts both ways.

When I was basically working over a hundred hours a week between my job and the farm and driving myself into exhaustion and illness and not able to get out of bed for days at a time, there’s a cost there. And I don’t think there’s anything wrong with making the world a better place and making your place in it the best you can. You didn’t do life wrong if you weren’t possessed of some overriding purpose.

Mad Fientist: That’s great. And yeah, thank you so much for doing this. This is I think going to help a lot of people. And I’m sure a lot of people can relate to this. I know I personally can. That’s why I was really excited to get you on the show.

I usually ask all of my guests if you had one piece of advice for someone on the path of financial independence, what would that be.

Tony: Yeah, if I had to pick one thing that I would have people ask themselves or prepare for, it would be building human connection into their life after they retire. And that might mean volunteering at helping kids or elderly people, just being around people that you can talk to really. And it almost doesn’t matter what venue that’s in. It might be going on and meeting some hiking buddies, it might be volunteering.

Whatever human connection means to you, make that automatic.

And it’s going to be different for everybody. Some people are really gregarious by nature. But I think for people like you and me, that’s a requirement for a fulfilling life in my life, to have meaningful human connection.

So, that would be my one piece of advice. Figure out what that’s going to look like for you.

Mad Fientist: That’s great advice. And I’m thinking of maybe going back to school next year just to force myself to get out and socialize more and just do it in a way that at least I’m learning something. And I’m interested in—so yeah, like I said before, being forced to do it because, otherwise, I’ll just get stuck on my computer, hang out with Jill or whatever.

So yeah, no, I think that’s fantastic advice. And it’s not been shared before on the show. And it’s not even something I have focused on. But after leaving my job, I realized how important it is.

Tony: We’re humans. And humans, we’re a social animal. And it is part of our survival, drive. It’s built into our genes that have been honed through evolution.

Mad Fientist: Absolutely! So Tony, if anyone wants to get in touch, obviously, you don’t have a blog or anything. Maybe they’d either go to the comment section or if there’s any way to get in touch, you’re welcome to share it now.

Tony: Sure! Yeah, so if you want to talk to me, send me an email. And that email would be—I’ll give you one of my Google accounts. It’s

Mad Fientist: I’ll put a link to that in the show notes.

Tony: Okay, yeah.

Mad Fientist: I just appreciate it so much. And I’m sure the audience does as well. So thank you so much for being on the show. This has been great. Hopefully, we can get together at some point again. It’s been a few years since I’ve been at Camp Mustache. But hopefully, maybe one of these upcoming ones, get up into the Pacific Northwest and hopefully catch up some more because this has been graet.

Tony: I look forward to it, Brandon. Thanks so much for having me on.

Mad Fientist: Alright, buddy. I’ll talk to you soon. Bye.

Tony: Bye.

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Monumental Strength – How to Get Fit (and Actually Enjoy It) Tue, 18 Dec 2018 10:00:04 +0000 Don't wait until FI to get fit. Start now to enjoy the numerous benefits and listen to today's interview with my personal trainer to find out how!

The post Monumental Strength – How to Get Fit (and Actually Enjoy It) appeared first on Mad Fientist.

I made two big mistakes when I was pursuing financial independence…

The first was I put off my happiness until I hit FI.

The second was I also put off my health.

In today’s episode of the Financial Independence Podcast, I chat to my personal trainer, Doug from Monumental Strength.

Doug has spent the past two years taking me from a puny computer programmer to a strong, healthy weightlifter!

It’s been a fantastic journey, with numerous unexpected benefits, so don’t wait until FI like I did. Start focusing on your health now and drastically improve your journey to FI (and your life beyond)!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • Why lifting weights is a perfect activity for improving your health
  • How to build a good workout plan
  • Why free weights are better than machines
  • What to eat if you want to build muscle
  • Why weightlifting is better than running for burning fat and losing weight
  • How to progress to doing more difficult lifts
  • The benefits of intermittent fasting

Show Links

Full Transcript

Mad Fientist: Hey, what’s up, everybody? Welcome to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest in personal finance to find out how they achieved financial independence.

I’m excited to introduce my guest today. He’s Doug from And Doug is actually my personal trainer. He’s been working with me since I quit my job back in August of 2016. And he’s whipped me into the best shape of my life. I feel great, I’m sleeping very well. I’m stronger than I’ve ever been. And it’s been a fantastic change.

And I wanted to get him on the program because that was probably the second biggest mistake I made on my path to financial independence—the first being I was putting off my happiness until I reached FI, but I was also putting off my health. I figured I was too busy when I had my job, so I was like, “Well, I’ll worry about health and working out and getting in shape after I hit FI.”

And that was really stupid because I would’ve felt so much better in my job and in my life at that time had I been focusing on my health. The benefits of getting into shape is so much more than just being healthy. Like I said before, I sleep better, I feel better, I’m happier, I’m in better moods, I eat better. And I wish I had taken advantage of it before FI because it would’ve made my work and career so much happier.

So, I wanted to bring him on the show to chat about everything that he’s been putting me through over the last two years. And I wanted to release it now, before Christmas, so that you get a few weeks headstart before everyone hits the gym in January. I’ve been going to the gym for the past two years consistently. And I definitely noticed some uptick in people that are there in January, and then not so much in February. And you don’t want to be one of those people.

So, don’t put it off until January 1st. Don’t make a New Year’s resolution. Hit the gym now. The first two weeks are probably going to be the hardest and the most uncomfortable because you’re not going to know what you’re doing, you’re not going to feel strong. You’re not going to really feel like you’re doing it properly.

But after the first two weeks, that’s when I started really to enjoy it. And then, that built from there.

So, if you hit the gym now—you have a lot of free time over the holidays—you can start figuring everything out while the gym is quiet. And you can take advantage of one of the best perks of working out, in my opinion, the freedom to eat a bunch of food because you’ve obviously strained yourself, strained your muscles, and you need to refuel yourself and rebuild those muscles. So any time I work out, I feel like I can just eat a ton of food and not too feel guilty about it as long as it’s pretty healthy food. There’s no better time than the holidays to take advantage of that.

So, without further delay, Doug, thanks so much for being here. I appreciate it.

Doug Berninger: Yeah, thanks for having me.

Mad Fientist: So, we go way back. We met way down in Ecuador I think in 2014 or so. It was the first Chautauqua I ever went to. And it was no doubt your first Chautauqua as well. And if I remember correctly, you guys were pretty early on your path to FI and sort of new to the whole thing. So it was quite the leap to just go down to Ecuador. Is that right?

Doug: Yeah, that’s right. Luckily, for me, my wife is pretty adventurous. I’m more of the stay-at-home kind of person. So I’m glad I have her to rip me out outside.

Mad Fientist: And your wife is J from and the Fire Drill Podcast, right?

Doug: That’s right!

Mad Fientist: She wasn’t a podcaster blogger back then though. You guys, I think, at that time, you just bought a big house and were maybe second-guessing that decision. You were pretty new to the whole FI game. So yeah, well done to you guys for coming down—especially you because you weren’t particularly into finances and all that stuff, were you?

Doug: No, no. In fact, I wasn’t really second-guessing the house purchase until we went down Ecuador and talked to all of you guys. I was pretty happy with it. And then, I was like, “Wait! Wait a second, they’re kind of right.”

So, I do believe there were some talks about stripping the house of copper wires to get some of the money back or something at one point. I don’t know, I was sleeping in…

Mad Fientist: That’s right. You were sleeping because you were training quite hard at the time, weren’t you, for some event maybe?

Doug: Yeah! Yeah, I was training for a weightlifting competition which is actually the last one that I competed in. Actually, that might’ve been 2015 then. But yeah, it was called the American Open. I was training pretty hard for it. And that was one of my reservations to going down Ecuador. I was just a couple of months away from the competition and I knew, getting down there, I wasn’t going to obviously be able to train with weights or anything especially keeping with the same eating plan and all that stuff.

But it turned out fine anyways. I qualified for the competition and competed and all that.

Mad Fientist: Oh, nice. Yeah, because I remember you, you were always very disciplined with your eating at the meals that we had, and you weren’t drinking, and you were going to bed at a reasonable hour. So yeah, you’re right.

At some point, Jay stayed up way later than you. And we were all in a hot tub. And the bright idea was to strip all the copper wire out, and then just leave the house to rot away, which obviously, we were just joking. I’m glad you didn’t follow that advice because, as you mentioned right before we got on the call, you just hopefully closed on the house finally. So that’s behind you.

Doug: Yeah, for sure.

Mad Fientist: So, we’ve known each other since either 2014 or 2015,whenever that was. And during that time, you have offered to train me. And at that time, I was just a skinny, lazy computer programmer. And I had always thought that I would want to get into shape and get healthier and lift weights. But obviously, there’s always loads of things that always came up that would get in the way of that. But I was like, “Alright! Well, I’m going to be quitting my job soon. So I really need to take this seriously.” I took you up on it. And it’s what? It’s been like two years of you training me remotely through a really cool app.

Doug: Yeah!

Mad Fientist: Maybe before we dive into all the meat of this episode, maybe give people just a little bit of a background and physical fitness I guess.

Doug: Sure! So, I have a master’s degree in Exercise Science from Bowling Green State University. And basically, once I acquired that, I’ve had quite the privilege of working under some great strength and conditioning coaches, anywhere from the private sector, a place called The Athlete’s Performance—which is known called Exos. They work a lot with technical populations, NFL players, college athletes.

And then, I’ve worked at the University of Michigan, the National Strength & Conditioning Association’s headquarters. I spent about four years there as an assistant. And they work a lot in the education side. But I worked in the Performance Center as well. So I had my hands in both the education side where I was able to actually have the opportunity to co-author a couple of chapter in their textbook as well as training athletes out of their work after that as a weightlifting coach, in the sport of weightlifting, what people would see on the Olympics, for example, where you’re doing a clean and jerk […], most known.

And then, now in my current roles, I’m teaching at Seattle University. So I started there, and made it through a full school year. And I’m going into my second school year right now.

I picked a part-time job as a strength coach at a division III school, University of Puget Sound here in Tacoma. So, I’m pretty excited to give that kind of coaching as well.

Mad Fientist: That’s very cool. So, all of that is to say you’re way overqualified for getting my ass into shape because, at the stage I was in back when we met, it wouldn’t have taken all that knowledge and experience to get me into shape. I just needed to get up and moving and actually working out. But it’s been great so far.

So, maybe talk about what your thinking was when I did approach you and we talked about maybe working together—you know, what your focus was to get me from being a lazy guy that stares at a computer screen all day to actually being someone that can make some progress in the gym.

Doug: Well, it definitely starts with the person that I’m working with. So, from my perspective, you came to me and basically said, “Alright, I’m ready.” I think that’s the first hurdle that people need to get over, making the effort to—if they’re working with someone like you’re working with me, to actually come forward and say, “I’m ready to go. Let’s do this” versus most people make the effort, they might go into the gym, but then it’s a scary place. So, getting through that door is really the first step, really getting in the car to go. Once you’re there…

Like even myself, I’ve been lifting and training for probably half my life—so 15 or 16 years—even now, I still have days where I’m like, “Argh, I don’t want to go. I’ve got so much going on” and all these stuff. But once you’re at the gym, then it’s like, “Well, now I’m here. I have to work…” You know what I mean?

So, it seems like a simple step. But once you do that first step, then you’re kind of off and running.

Mad Fientist: Yeah, I actually talked to James Clear. And he was working with somebody who wanted to start getting into shape. And he just started the habit of going to the gym. And he restricted it to only being allowed to be in the gym for five minutes. So it took all that other scary stuff away of like “What do I do when I get there? How do I do all these lifts? Am I going to be looked at? Am I going to be laughed at?” and things like that.

It took all that away and he just built a habit of getting in the car, getting changed at the gym, and then just leaving pretty much—which obviously, after doing that for a while, was pointless because he wasn’t really working out. But he developed the habit of just going to the gym. And it took out all the planning and how to get there and all the preparation. It got that into a habit. And then, once he was there and was used to going, then he was like, “Well, I’m here now, so I might as well just start working out because this is crazy, just coming for five minutes every day.”

But you’re right, it’s a huge initial hurdle.

Doug: Yeah, that’s fantastic. Now, in the way that I look at it, everything I guess as far as the gym goes and training and all that, everything can be put into a continuum or a progression. So, definitely, in his instance, just going to the gym and just changing or whatever, maybe he jumped on a bike for like three to five minutes, and then left, whatever, that’s still better than not going. You’ve got to start somewhere.

So, if that’s his starting point, and then two weeks from there, he actually does some lifting or whatever or goes 10 minutes on a bike, you’re still moving in the right direction. So, if you look at it like that, I think it’s a little less scary.

And in terms of someone who’s never lifted, say they want to learn how to squat, if they’re working with a good professional, that person is not going to put them right into a barbell back squat. There’s a progression to learn that, to build up to that.

And everyone is individual. So, in terms of their learning progress, you might not get to the barbell in a month, but someone else might get there in two weeks or whatever. So, as far as the learning rate and when you’re ready, it’s going to be individualized. And you’re not going to be thrown under the bar which is the most scary thing I think to people because that’s the biggest exercise. You can do the most weight with that. You might start on a body weight squat.

And again, that’s not a bad thing. It’s just where you’re at.

Mad Fientist: Yeah, exactly. Let’s talk about that progression because it was interesting as being the person on the other side of it, seeing what you’re making me do. It was only until later that I realized why I think you’re making me do the things that I was doing.

First, you were easing me into these more complicated things like free weights and bars and dumbbells and things like that. And when I first went in there, I was like, “Oh, these things seem so hard,” and I was wondering why I was doing those versus just the machines which are pretty easy to understand and you don’t feel like you could hurt yourself. I was wondering why I was being eased into these more difficult thing. And it was only later that I realized, “Oh, these exercise with a barbell, say, or working so many different little muscles in your body that a machine is just not going to touch because, in addition to doing the squats, your core has to be there to hold up your body to hold the bar and all these sorts of things.” It was only later that I realized that.

So, maybe talk about that progression and if somebody is a beginner out there, what you would start with and what you would be trying to work towards and why.

Doug: So, when I’m running a program for someone, I would look at first obviously what is their background in terms of exercising. Especially if I’m working with someone remotely like I was with you where I can’t be there with them to see what’s going on, I always err on the side of safety. So, in that instance, whatever kind of workout I’m writing, whether it’s all upper body, all lower body, or a total body workout or whatever, I’m going to start with some body weight exercises first, and then progress that for, say, four weeks. And then, from there, we’ll go into lighter implements like dumbbells, that kind of stuff.

So, I’ve used exercises like that to start someone out just to err on the side of safety because I wouldn’t be there—or even if I was there, I’m first using bodyweight exercises, but then I can assess if I am there what’s their movement like—because movement is going to come first. And when say “movement,” I really mean technique or form, most people say.

So, once they have good technique and their movement is proper, then I would progress them into using external loads—so dumbbells, kettlebells, that kind of stuff. And then, from there, I progress to barbell exercises where you can load more and more weight on.

Mad Fientist: It was a great progression because I had been put on dumbbells or even an empty barbell, I was so weak in so many areas that I could’ve just fallen over or fallen backwards or crumpled or something just because, like all of those supporting muscles that weightlifters have, I just didn’t have any of them because it was hard enough to sit up behind a laptop for eight hours a day. That was the extent of my strength. So, yeah, it was a really intro progression.

Doug: Going back to those progressions, I’m progressing you in terms of safety and learning movements. But now, think of it in terms of you are literally physically educating yourself to build a bigger and bigger repertoire of movements that you can perform, of exercises. So now, even if you get to an advanced point, you can always go back to those simple exercises like push-ups or bodyweights squats or pull-ups. Those are never things that you’re going to totally leave once you progress. You can always go back to them. You just have a bigger repertoire or basket of exercises to choose from now because you’re teaching your body how to move in those ways

Mad Fientist: Right, right. But even a curl machine where you’re just sitting there and your arms are resting on this pad, and you’re literally just doing curls, I feel like I get such a better full body experience by having a barbell that I’m doing curls with or dumbbell curls.

Is there a difference? Is that all in my head? Or is that actually a thing? These machines seem to focus, so hyperfocus on one thing, whereas you could get a full, better experience using dumbbells or barbells?

Doug: Right. No, you’re dead on there. So basically, for the listeners, whenever you’re sitting on a machine, and you’re so focused on a seated machine curl or something, the only muscles that are going to be working are your biceps and maybe some stabilizer muscles on the shoulders or something. Whereas if you’re standing now, you actually have to support your weight as you’re standing. You have to balance. So you have all of your stabilizer muscles in your hips, your lower back is working and everything like that.

So, any time you’re using free weights of any kind and having to support the load throughout your body, you are using more musculature. So that means even if you’re doing a standing barbell curl, you’re still going to strengthen to an extent some of those stabilizer muscles. And when those muscles are working, you’re burning more calories. So if one of your goals is not only to get stronger but to maybe lose some weight, lose some fat, that’s going to be a better option than a seated machine curl. So that’s definitely one of the benefits.

And then, you can do unilateral exercises, so working one side of the body; maybe dumbbell lunges or something like that to where you now really have to balance and now you’re working a lot of your trunk musculature—the core, as most people say these days. You’re going to definitely strengthen that more than if you’re doing a machine exercise.

Mad Fientist: Yeah, absolutely. And that was only something I appreciated later on. But I really appreciate it. I’m so glad that I did take the progression through those things with just body weight exercises to feel the movements and then trying out kettlebells and dumbbells just to ease myself into the weights, and then eventually getting to the barbells because, yeah, it just feels like I’m getting such a good workout.

And this is probably a good time to talk about that actually. People probably think you would lose more weight running a marathon than working out and lifting weights in the gym all the time. But the amount of calories that are burned with some of these exercises is quite high. And lifting itself is an aerobic exercise, to an extent, is that right?

Doug: In a way, yeah. I think what you’re getting at is something called EPOC, exercise post-oxygen consumption. So basically, when you’re lifting—especially when you’re lifting heavier—it’s shown that hours after you’ve completed your session, you are burning more calories still than if you went on a run. And a big part of that is muscle tissue is active. So, the more muscle you have, the more calories you’re going to burn.

So, that’s why they say lifting is better than running or any cardio.

And obviously, I’m not saying cardiovascular exercise is something you should totally avoid because, obviously, with the heart health and things, there are benefits to that. And actually, cardiovascular exercise helps with recovering in between lifting sessions.

Mad Fientist: Yeah, absolutely. But yeah, it’s definitely something—even Jill, my wife, she ran the New York Marathon. And she trained for, I think, nine months to do that. Her weight didn’t fluctuate much at all. And then, it was just like a few months training with me in the gym, her weight had dropped more than it did for that whole nine months of working out. She was toned and feeling great.

So, yeah, it as a very different experience and not something she expected, I don’t think, because you think you’re going to run a marathon, you’re going to get in the best shape of your life. But really, her body composition didn’t change that much—not that she needed to, but she was just happier with the results from three months of lifting.

Doug: And like you said there with body composition, lifting is going to help a lot more with body composition in the end than cardiovascular exercises because, again, muscle is active. And if you’re lifting and working your muscle more, you’re going to, hypertrophy, gain more muscle size, that’s going to then allow you to burn even more calories if you’re adding more muscle to your frame and help even at rest. Even if you’re just sitting there, you’re burning more calories because you have more muscle on your frame.

Mad Fientist: Yeah, okay, that makes sense, yeah. And speaking of sitting there, just real quick, the one benefit that I was really pleased with is better posture. That was something that I was always like—you know, the worst nerd posture. I always wanted to fix it, but I could never focus on it to fix it. I just didn’t realize that core strength was the main problem.

And after addressing the core strength and increasing that, the good posture just came more naturally. Is that how it works?

Doug: Yeah, yeah. If you think about it, even standing or sitting, like you say, if you make those individual muscles stronger, they’re able to essentially hold you up better.

Everyone thinks of strength, or I should say displaying strength, as just doing an exercise. But you can display strength sitting. You have those stronger muscles to now hold you up better.

And even when you see people that don’t really know what they’re doing, they go to the gym, and they’re doing the exercises you see most people do—people call them the mirror muscle exercises, so they’ll exercise the muscles that they can see in a mirror basically facing (so the anterior or the front of your body)—most people don’t work the posterior side or your back. So we’re talking your hamstrings, your gluts or your butt muscles, your lower back, your upper back. So things like rows, back extensions, things like that, those are the postural muscles that are going to help you in being able to sit up straight and being able to walk straight and not be hunched over.

And honestly, just in terms of, we’ll call it “static health,” those exercises and those muscle groups are going to be major in your health for just sitting there. We don’t see it now, but 20 years or 30 years from now, what do you look like if you don’t do those exercises? You’ll be standing up straight for what your normal is, but you’ll be facing the floor.

Mad Fientist: Right! Yeah, no, that’s a good point. And the other thing to discuss maybe about leg day and those other muscles is those are the ones that are going to be burning the most calories. So if weight loss is something that you’re interested in, increasing the muscle size of your biggest muscles, your butt and your hamstrings and things, surely is going to be the thing that burns a lot more calories, is that right?

Doug: Oh, absolutely. Again, bigger muscle, more calories burn—especially on the guys’ side. Most guys don’t do legs, right? Friends don’t let friends skip leg day. So, if half your body is your legs, and you’re not working on them, then you’re missing out on a big opportunity. So definitely important.

And again, you don’t have to start squatting with the bar, you can start with body weight in your room if you don’t want anyone to see you doing body weight squats. But you’ve got to start somewhere.

Mad Fientist: I couldn’t walk after my first session of body weight squats. So it definitely works. If you haven’t worked out your legs ever, then just be prepared to struggle to walk for a few weeks until you get used to it. But it’s a good thing I think.

This is probably a good opportunity to talk about the main training days and the muscle groups that are focused on. I’ve obviously noticed a pattern with your training plans over the years. You maybe want to talk about the big groups and how you pair them up and things on certain days?

Doug: Yeah. I never stick totally to the same stuff. I’m always changing things up and progressing. As we said, we want to move in the right direction. So, it just really depends on what’s the priority goal for that training phase.

So, if someone is looking to gain muscle size, like when I was working with you, I can say, “Okay… well, day one, we’re going to work mostly the chest and triceps. Day two, we’ll switch to lower body, let the upper body rest. And we’ll go more of the anterior muscles like the quads and work squatting type movements. Day there, we’ll do upper body pulls, so like back stuff. And we’ll do a lot of rows and pull-ups and things like that” and so on, switching up the muscle groups. And that’s more of a traditional bodybuilding type program. So, that might be a program you’d see like Arnold and those guys back in the day of bodybuilding.

Now, if you’re talking of “I want to gain strength,” then obviously, I’m not going to get into the nitty-gritty of sets and reps and loads and things like that, but if you were going for strength, then we can look at, “Okay, three or four days a week, now we’re going to pair up, we can start pairing up muscle groups into movements.”

So then we look at it in terms of not necessarily what muscles are we working, but what movements are we working for the sessions. We could do a day one upper body press again, but now we’re pressing overhead because we’re not strict on “Oh, we’re only working the chest this day,” but now, when you press overhead, you’re working the shoulders. And then, the second day, lower body pull. So that will be like deadlifts […] where you’re working the hamstrings and lower back and stuff like that, but then you’re working obviously heavier load, less reps when you’re trying to gain strength.

Mad Fientist: Cool! And this obviously is way more complicated than we actually get into there. But are there any good resources that you’d recommend for somebody who’s looking to get started? I know you have email series that sort of gets people introduced to things like these. Are there any books or courses? What would you recommend for somebody who’s interested in getting started?

Doug: The NSCA who I work for has an Essentials for Strength Training & Conditioning textbook. The fourth edition is the newest one. And that, while it is for professionals, I think is written clear enough that somebody could take a lot from it.

If they’re not looking for such a comprehensive book (because that goes over everything right from physiology to biomechanics and things like that), there’s like one-off books like Periodization by Tudor Bompa. That’s pretty good. Again, that’s textbook size. But that’s mainly on program design. So if they wanted to learn how to properly design a program, that would be a good one.

There’s also Science & Practice of Strength Training. And that’s by Kraemer and Zatsiorsky. So that’s a go-to for me on a regular—and again, it’s not too complex to where someone couldn’t take a lot of information from it. Some of the stuff gets nuanced. But it’s pretty good overall. I think a beginner could read it and comprehend most of it.

Mad Fientist: Cool! And then, if they don’t want to learn about it, they just want to get fit, obviously, the same app that you use for me, you use for other people, right?

Doug: That’s the Trainerize app. Actually, another source that I’ve thought of just now, I’ve been really enjoying a lot of stuff from Charles Poliquin. He’s world renowned as a strength coach and works with a ton of Olympians and pro athletes and all that. Most of his writings, he backs up with research literature. So, like learning from him a lot. And his stuff is on

Mad Fientist: Cool! I will link to all that stuff in the shownotes. And obviously, I’ll link to the Trainerize site for you as well in case people just want to get you to do the programs which I highly recommend because, like I said, it’s been fantastic. And I love using the app as well. It’s just so easy. I just couldn’t get through everything in the gym and keep track of everything which is great.

I want to make a shift to the other important aspect of all of these stuff which is diet. So you can go to the gym all you want. But if your diet is terrible, then you’re not going to see any other results that you want.

So, what do you focus on when you’re thinking about what to eat when you’re training and maybe weight loss versus strength building and muscle mass building?

Doug: Well, it all comes down to—the main focus should always be on calories in versus calories out, how much are you taking in and how much are you burning. And so, really, for someone who’s just starting out, the first step is sit down and write out what you’ve been eating. Keep a three to five day log of your food. And be honest with it—so not only what you ate but what was the quantity or the amount that you ate.

I’m notorious for going through peanut butter like nobody’s business. And actually, my buddy just sent me a five pound tub of peanut butter as kind of a joke but also as payment for helping him with his program. You can get carried away with peanut butter pretty quick. And I’ll admit that I don’t use any measuring with peanut butter. But I usually just say, “Oh, I had this many spoonfuls” or whatever.

But most people don’t keep track or don’t think about it. Especially if you’re sitting down talking with someone and you’re eating as you’re talking to them, right, you lose track.

So, I would say, definitely, the number one thing that I try and focus on (and tell people to focus on) is just be aware of what’s going in your mouth and how much of it. And as simple as that sounds, that’s a big one that is often overlooked and plays a huge role on body composition—and obviously, performance too […]

Mad Fientist: Yeah, just like with money. You need to know where you’re at with your net worth. And you need to know your incoming’s and your outgoing’s before you can actually have a plan towards financial independence. If you don’t know that stuff, then it’s hard to build off of.

So, once you know what you’re currently consuming, are there particular foods that are great for things like adding mass. Obviously, protein, you hear a lot about. What is it that you tend to focus on if you’re wanting to get yourself to the gym and get stronger and get bigger?

Doug: I would say number one is red meat for sure, especially steak. I love steak. I can’t get enough of it. And just the amount of nutrients that you get from red meat are abundant compared to, say, like boneless, skinless chicken breast.

Another source that I like for information is Stan Efferding. He just came out within the last year or two with his diet approach. It’s called the Vertical Diet. So people can look it up. I think it’s just

To be honest, I don’t know a ton about the diet yet. I need to buy his book and read it. But he’s big into sticking with just a handful of sources of food and letting your body get used to digestion with that and taking the nutrients. And one of his biggest things is gut health.

So, there’s a ton in the recent years that’s been learned about gut health. And basically, if you’re not up to par with your gut health, you’re not going to absorb the nutrients as well. And therefore, your body is not going to function at its fullest potential if you’re not absorbing those nutrients.

So, he sticks to say like steak, white rice, carrots and a couple of other things. The reason being is also the micronutrients. So, macronutrients versus micronutrients, macronutrients are your protein, carbohydrates [shots]. Most people think of those as the focus. And his thing is you should be looking more at the micronutrients because you may be missing out on a lot of those micronutrients, say like most people, especially in the northern hemisphere, are deficient in vitamin D because of the lack of sunlight.

So, focusing on what you may be missing out on, and then getting those things, you start to feel a lot better. Just miraculously, all these stuff starts getting put into play. You feel a lot healthier. And a lot of the micronutrients are responsible for things like blood pressure regulation, insulin regulation, things like that. So it’s pretty important.

Mad Fientist: So, this is probably a good time to talk about supplements. I’ve always thought that most supplements are probably a bunch of bullshit, but there’s probably some that are quite good. In particular, I think the ones that we’ve taken in the past—vitamin D, obviously, we’re very deficient of that here in Scotland, maybe some calcium and some fish oil. Are those good? Does it all depend on the manufacturer? Are there some that you would recommend taking and some that you would maybe not recommend taking? What are your thoughts on supplement?

Doug: I’ve taken pretty much everything under the sun at one point or another. But really, the last I’ll say 10 years, I’ve tried to stay away from most supplements and get what I need from food sources.

And really, the only way that you can know if you’re deficient for sure is to actually get a blood panel drawn. So that’s kind of the first step in checking versus just going out and spending your money when you don’t really know if you actually need those things. So, if you want to really know for sure, you go and get a blood panel drawn and look and see what you’re deficient in. And then, you can make an educated decision if you really do need those supplements. Or again, you can always go to whole foods first before getting those supplements to get what you’re missing.

Mad Fientist: Cool! Okay, so I’ll just run through what I’ve been focusing on eating over the last little while. And you can tell me if I’m maybe deficient in something or if I’m on the right track. I’m usually doing quite a lot of eggs. We’re trying to eat some meats. I’ve been just eating a balance of chicken and red meat.

I’ve been doing a lot of Greek yoghurt with nuts, almonds, with chia seeds, throw some fruit in there; peanut butter as well, just peanut butter and bananas.

And then, just a balanced dinner usually of some protein source, and then some brown rice and some, I don’t know, a vegetable or potatoes, things like that. We’re trying to cook as often as we can of our own thing so that we know exactly what’s going into it.

And that’s pretty much it! And then, I’ve been doing a pre-workout protein shake because I’ve been doing intermittent fasting (which we can talk about as well after this diet discussion).

But what do you think? Are those all pretty good choices? Is there anything I should add or anything I should take away?

Doug: I mean, you could probably honestly add—I love avocadoes. So if you don’t eat those every couple of days, I’d say that would be a good addition just for the healthier fats.

Mad Fientist: Okay.

Doug: In terms of calcium, like you said, you have your yoghurt. But also, most people don’t know that almonds are a great source of calcium as well.

And then, your green leafy vegetables, like say spinach, is a great one for calcium. Obviously, if you want to build strong bones—and most of us should be thinking about ourselves in the future. Again, that’s a pet peeve of mine, not thinking about your health in terms of the future. Most people are just “What do I look like now? How am I performing now?” versus “30 or 40 or 50 years from now, what am I going to be like?”

So, with things like osteoporosis which definitely is a happenstance for a lot of people when they’re older because we’re losing our bone mineral density as we age, you want to build that up as much as you can while you’re younger. So you have your maximum amount. You start at the highest amount because we’re all eventually going to lose our bone mass.

So, calcium plays a huge role in that.

Mad Fientist: And lifting helps that immensely as well, right?

Doug: Lifting. In terms of just physical stress to your structure, to your body, lifting is the best way to build bone mass. Hopefully, people can see a recurring theme here of “Oh, this is important!” and “Oh, lifting helps with that.”

Mad Fientist: Yeah, absolutely. And we haven’t even talked about happiness and just mood and sleeping better. There are so many things that have improved in my life because of my gym routine that I’m still kicking myself for not starting this during my career. This was something I put off until FI just like most things. It was like, “Oh, once I hit FI, I can do this.” The benefits that I would’ve reaped from doing this back when I was pursuing financial independence would’ve been even greater because of the stress and all the other things that were going on when I did have a job. I just kick myself that I didn’t start earlier—which is hopefully what people take away from this episode more than anything. Don’t put off health and don’t put off fitness until FI because the benefits are just so many that we haven’t even have time to talk about. Really, it’s not worth waiting for.

Doug: Definitely!

Mad Fientist: So, to chat about intermittent fasting briefly, that’s something that we started over the last, I don’t know, three months or something. But I really, really like it for many reasons. It was already something I was close to doing anyway. So it fits into my eating schedule and my habits. It’s made life a lot easier because there’s less meals that I need to worry about. I also feel like I can just eat as much as I want during the feeding window just because I’m trying to maintain the same level of calories. So I’m able to eat as much as I want.

What are your thoughts on intermittent fasting?

Doug: Well, I definitely like it. I’ve gotten out of it a little bit lately because I was trying to put on a little more mass. And obviously, if you’re going extended times without eating, that’s not going to help necessarily with gaining size.

But people would be surprised in terms of strength. I did it for years consistently and was still able to break some personal records, some PR’s of mine in the gym while doing it. So, it doesn’t really negatively impact strength as much as you would think.

I haven’t read into any of the research in quite a long time. But back when I started it during my master’s degree, again, it fit my lifestyle like you said. I was doing my master’s degree. I was at school or in the gym working either with people lifting or training or I was in the office working on my thesis or whatever. I was like super busy, can’t be bothered by eating. And it’s kind of nice to not be—

I’m sure everyone out there has been like, “Okay, I just ate breakfast. Hey, what’s for lunch?” You’re preoccupied with food that it’s kind of in the back of your mind, and it’s almost like a hindrance to whatever you’re trying to do with the work you’re doing.

So, if you don’t have to be preoccupied with what’s the next meal and you can focus more, then that’s a huge win in my mind.

And then, in terms of just some of the benefits that I wrote about with it, they’ve done—as far as the studies that I have seen—rat studies where the longevity of the rats that were put through fasting, the longevity of their life span was increased quite a bit. So you got to look in terms of calorie restriction. It has been shown to actually increase longevity in mammals.

So, I don’t know, I haven’t seen any human studies, but I’ve heard that it’s at least partially beneficial. So that means someone might want to try it one day a week. You don’t have to do it every day. Just try it out!

And then, going back to daily schedule, things like that, I think it just helps with, again, not being so preoccupied with stuff. Most people get cranky and stuff when they’ve missed a meal or something. I think it helps with getting used to missing meals from time to time and not being so freaked out about it. It’s not the end of the world if you miss a meal.

Mad Fientist: Oh, absolutely. Yeah, Jill has found that because she used to get really shaky when she was hungry and always had to have meals at set times. But once she started doing the intermittent fasting, she feels like she doesn’t get that shakiness even if she’s taking 20 hours in between eating. Yeah, it seems to have changed not only how she deal with not eating, but her body’s reaction to not having food.

Doug: Right!

Mad Fientist: A reader who’s big in Reddit—he started actually a sub-reddit called for Fit for FI or FitFI (I’ll link to that in the shownotes)—he sent me a really good video of some research on intermittent fasting and how it was far superior than calorie restriction, just dieting for weight loss. And then, he went into some of the science behind it which is really interesting. I’ll put a link to that in the shownotes as well.

Is there anything that we didn’t talk about that’s important in this whole sphere of health and well-being and fitness?

Doug: I’d say maybe the last thing—and one thing that I could even do better myself about—we talked about food. Okay, what’s the food you’re eating, what’s the amount of that food that you’re eating. But also, if you take a couple of steps back, what’s the source of that food? Where did that food come from?

Take an apple, for example. We know apples to be healthy and whatever. “Eat an apple a day, keep the doctor away,” that’s the old saying. But where did that apple come from? Was there pesticides being sprayed on that apple? So, you have to keep that in mind. Where’s the food coming from? And what was used on it? Where there chemicals used? Obviously, those chemicals could potentially lead to all kinds of bad stuff, health issues, cancer, all kinds of stuff like that.

Mad Fientist: So, how do you find the good foods? Do you mostly buy organic?

Doug: I do, I mostly try to buy organic.

Mad Fientist: So, this has been awesome. I’m really excited to get some of this information out there because, yeah, like I said, it’s been such a big impact to my life over the last couple of years. So hopefully, it’s inspired other people to take it more seriously?

I usually end all my interviews with what’s one piece of advice you’d give to somebody on the path to financial independence. You could go money this way, you can go health, it could be—I’ll leave it up to you.

Doug: Yeah, let’s stick to health just because my wife, Jay, is the one who handles the financials in the family. I get all the health stuff.

I’d say when someone does reach that point when they retire—but of course, we talked about not waiting. Don’t wait. Just jump right in with two feet and get into healthier habits. But especially when they do become retired, and they have all that extra time, don’t get too overwhelmed by all this stuff because there’s a lot of smoke in the mirrors out there in the health world. And as we mentioned with the progressions, don’t be afraid to just start somewhere, start small.

Certainly, reach out to a professional if you feel uncomfortable starting yourself and don’t know what to do. Definitely, Brandon, you can share my email and people can reach out to me. But start somewhere. Realize that if you don’t have your health, then what do you have? You could have all that money that you just worked on building up, and you just retired early, but if you don’t have that health, you can’t enjoy it the same way.

Mad Fientist: Absolutely, yeah.

Doug: So, that’s always the starting point for me. And I know I’m kind of biased because I’m in that profession. But to me, that’s the most important thing.

Mad Fientist: Yeah, I couldn’t agree more. So that’s great advice.

How can people find you? I’ll add your email address to the shownotes. I’ll obviously link to your website on the Trainerize app. Anywhere else they can get in touch with you?

Doug: My website is You can find me at LilWeightLifter on really all the social media channels.

Mad Fientist: Cool! I will link to all that in the shownotes. And yeah, thank you again so much for chatting to me about all these stuff and for whipping my ass into shape over the last two years. It’s been amazing. So I really appreciate it.

Doug: Absolutely, yeah.

Mad Fientist: Alright, bye. Bye.

Doug: Bye.

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Why You Should Form an S Corporation (and When) Tue, 27 Nov 2018 08:33:27 +0000 If you have a profitable business, forming an S Corporation can potentially save you thousands of dollars every year on your taxes!

The post Why You Should Form an S Corporation (and When) appeared first on Mad Fientist.

When I started the Mad Fientist, I didn’t do anything special to start my “business”.

As I mentioned in my last post, I was sick of being paralyzed by stuff that didn’t really matter so I just started writing and didn’t stress about the business end of things.

I kept track of my business expenses in a spreadsheet and when tax time rolled around, I just filed a Schedule C for my Sole Proprietorship and used those business expenses to reduce my W-2 taxable income.

It wasn’t until 5+ years after starting this site that I actually formed an LLC and started filing my taxes as an S Corporation.

Why did I make the change after so many years? What are the benefits that prompted me to do it?

That’s what this post is about.

My last article described why I think everyone should start a business and this post explains the benefits of forming an S Corp once your business becomes more profitable.

To assist me with this article, I brought back the tax mastermind who helped me switch my own business over to an S Corporation – my personal accountant, Steve Nelson!

Steve knocked it out of the park with his last guest post (Section 199a – The Tax Break of the Century) so I figured he’d be the perfect person to come back to talk about this complicated business tax stuff.

Welcome, Steve!

Okay, a warning. The S corporation tax strategy requires a bit of fiddling. For many small businesses, the strategy won’t make sense.

But for some self-employed folks, the S corporation option easily adds a six-figure chunk to your net worth.

Accordingly, the Mad Fientist thought it made sense to cover this tax-avoidance topic before the year ends.

The paragraphs that follow go over the accounting, discuss the costs, and then point out the steps to take if you want to do this.

Understanding S Corporation Tax Savings

To understand how an S corporation saves tax, you need to look first at the way a sole proprietor’s self-employment earnings get taxed.

Take the case where a sole proprietor earns exactly $100,000.

Assuming this person doesn’t have another job, the self-employment taxes equal 15.3% of 92.35% of the $100,000 of profits.

Self-Employment Taxes - Sole Proprietor

Percentage of Profit Subject to Self-Employment Taxes – Sole Proprietorship

That means this person pays about $14,130 in self-employment taxes.

Note: Self-employment taxes replace the Social Security and Medicare taxes that employees pay and basically work the same way.

However, suppose this person incorporates their sole proprietorship and makes an S election. In this case, the business needs to call out a chunk of the profit as wages. And in this case, that 15.3% tax (now Social Security and Medicare taxes) only applies to the wages.

If the wages number equals $40,000, for example, the employment taxes equal 15.3% of the $40,000.

Employment Taxes - S Corp

Percentage of Profit Subject to Employment Taxes – S Corp

And this means the person pays about $6,120 in employment taxes.

You see the roughly $8,000 of savings: $14,130 vs $6,120…that’s the S corporation strategy in a nutshell.

The Flip Side of the S Corporation Coin

Obviously, the S corporation tax strategy delivers substantial tax savings. Annually.
But the savings come with extra costs and risks.

For one thing, both the federal and state governments levy additional payroll taxes on the $40,000 of wages that they don’t levy on sole proprietorship profits. That’s often about $500 a year.

Further, an S corporation burdens you with additional tax accounting. You might decide to just learn the law and do this yourself. Or you might outsource the work to some accountant.

In either case, that extra accounting costs time or money or probably both (as a guess, maybe another grand for a small S corporation if you outsource the work?).

Nevertheless, an S corporation often saves substantial sums.

You’re talking low to mid six figures for many FIers but for folks who work longer, the future value “S corporation” benefit probably grows into seven figures.

The Reasonable Compensation Riddle

Lots of people use the S corporation gambit (maybe around six million folks but recent IRS data is sketchy).

But you have a big riddle to solve if you want to do this. That riddle…what wages do you pay yourself as the business owner?

To maximize your savings, you want to pay yourself as little as possible. Peanuts, ideally.

But the IRS says (and courts agree) that you need to pay something reasonable. Reasonable means what a similar employer would pay an employee for doing equivalent work.

I will tell you this..the average S corporation generates about $90,000 of profit for an owner and calls about $40,000 of this profit “wages” (this breakdown lines up pretty neatly with the earlier example).

But what you need to do is identify a reasonable compensation amount—and then document your logic.

Dirty Laundry

We’ve got a longer write-up on the setting reasonable S corporation salaries here at my blog: S Corporation Reasonable Compensation.

But we should have the “awkward talk” at this point. Regularly S corporation owners go ape when setting their salaries.

They don’t, for example, set the salary to some reasonable level. They set a salary artificially, often absurdly low.

The Treasury Inspector General in past has reported that tens of thousands of S corporation shareholders pay themselves zero salary. And in that case, they avoid paying any self-employment taxes.

Presumably, hundreds of thousands of S corporation shareholders pay more than zero but still unreasonably low salaries.

But you don’t want to do that. You really don’t.

If you set your salary too low, the IRS can reclassify distributions paid to shareholders as wages and then slap you with penalties.

And here’s the other thing to keep in mind. You don’t have to go crazy or break the rules.

How Optics Matter to Reasonable Compensation

Consider again the earlier example where someone makes $100,000 but pays $40,000, or 40%, in wages.

Okay, maybe that works for some taxpayers. And it meshes with the averages pretty well. But that breakdown may be unreasonable.

Yes, many taxpayers get away with this. The IRS audits about 12,000 S corporations a year, and nearly 6,000,000 S corporations exist.

If you’re paying the average, you are pretty boring to the IRS’s computers.

However, what you really ought to do in a situation like this?

Dress up the optics of the tax return. And people use two tricks here…

Trick One: Nontaxable Fringe Benefits

Trick one? Add nontaxable fringe benefits like health insurance and employer pension contributions.

For example, say you were running a small S corporation that makes $100,000 and that you want to set $40,000 as your S corporation reasonable wage. That leaves $60,000 you pay out as a distribution to your owner—and on which you pay no employment taxes.

That might be risky…

But say the S corporation provides $20,000 of health insurance and a companion health savings account.

In this case, that $20,000 counts as wages (and so bumps the shareholder wages from $40,000 to $60,000) but the extra $20,000 of wages doesn’t increase the employment taxes.

Say you also run either a SEP-IRA or a solo 401(k) plan that provides a 25% employer match. The 25% employer match applies to the $60,000 of wages, which means another $15,000 of nontaxable fringe benefits.

With these fringe benefits, the $40,000 “base” grows to $75,000 of total compensation—though note again only the $40,000 of base wages get subjected to payroll taxes.

If a business makes $100,000 and pays out $75,000 as compensation and benefits, that still leaves another $25,000. And maybe a little risk exists there…

But here’s where a second trick comes into play.

Trick Two: Dial Down the Distributions

That second trick? If you can, you dial down the distributions to the shareholder. Why does this work?

As noted earlier, an IRS agent can only reclassify as wages those distributions the S corporation pays out (remember in our example that’s the last $25,000 a year).

So, if you leave some of that money (say $2,000 or $5,000) inside the S corporation (as your rainy-day fund or as part of your taxable portfolio), bingo…that money can’t be reclassified as wages.

Another example? If you’re someone who gives to charity (say $1,000 or $2,000 or whatever), you can use some of that $25,000 for your charitable giving. And then that money can’t be reclassified as wages.

Note: When you make charitable contributions from an S corporation, the charitable contribution still ends up on the 1040 return.

To put all this together, a sole proprietorship making $100,000 a year might be able to pay a $40,000 wage, save nearly $8,000 a year in payroll costs, and then remove the risk of an audit by legitimately sculpting the tax return to bump compensation and fringe benefits and dial down the distributions.

Further, this sculpting might be especially compatible with working toward FIRE through aggressive saving and investing.

How Would You Even Do Something Like This?

Okay if you operate an unincorporated small business, this all sounds pretty interesting, right?

Sure, some extra work but not that hard to deal with.

So, what’s the next step? Well, if you did want to do something like this, what you would probably do is immediately form a limited liability company.

A limited liability company (LLC) is one of the legal entities that can make an election to use the S corporation tax accounting rules.

The Mad Fientist, on your behalf, arranged for our offices to supply complimentary copies of our DIY S Corporation formation e-book. It provides step-by-step and state-specific instructions for setting up an LLC, getting the LLC an EIN, and then making an S corporation election for the LLC. The DIY kit also includes sample LLC operating agreements. And by the way? Normally, we sell these for about $40. Mad Fientist did you a solid on this! Grab a complimentary kit from this page, Downloadable S Corporation kits… All you need to do to “buy” a kit for some state for free is enter the promo code MADFIENTIST.

Mad Fientist Note: I used one of these kits to set up my Florida LLC and S Corp and it made the whole process super simple. I just followed the guide, line by line, and got everything set up really easily. Thanks to Steve for making these free for Mad Fientist readers and be sure to get your state’s kit before the end of the year because the code will expire on 12/31/2018!

An important point: You need to form the LLC before the new year starts and then file the S corporation election paperwork after setting up your LLC but before March 15th of the year for which you want to use the S corporation gambit.

Example: You might form an LLC today—this very morning or afternoon, for example. But you would file the S election paperwork so it sets 1/1/2019 as the effective date (for 2018, the LLC gets ignored and so your business is treated as a sole proprietorship).

The one other rule to consider: Once you operate your business as an S corporation, you must pay yourself a reasonable salary. And you need to have paid that reasonable salary before the calendar year ends.

Example: If you form an LLC in late 2018 and elect Subchapter S status for 2019, you need to have paid yourself reasonable wages by December 31, 2019. That means paychecks, quarterly federal and state payroll tax returns, tax deposits, etc.

Three Cautions to Wrap this Up

Let me issue three cautions before I wrap this up.

First, carefully think through the reasonable compensation math. The S corporation gambit only works well if you can pay yourself a wage that allows you to really save on your self-employment tax bill. Possibly if you’re a one-person independent contractor, you will need to finesse the optics with fringe benefits to get the S corporation to really work safely.

Tip: Usually S corporations don’t work well for side hustles if you have another W-2 job. And usually they don’t work well for businesses unless you’re making high five-figure profits or more.

Second, you should know that two states—Tennessee and California—make the economics of an S corporation option tricky. California levies a 1.5% franchise tax on the S corporation’s profit (the franchise tax also is always at least $800). And Tennessee doesn’t let you use the S corporation accounting for state tax purposes. For these states, you need to double-check your math. The state tax laws may mean the S corporation isn’t viable.

Third, an S corporation’s reduced wages reduce your future Social Security benefits. Now, that effect is usually modest if you pay yourself a reasonable wage. But to really come out ahead on this, you want to save your payroll tax savings.

It’s the Mad Fientist again. Thanks for the post, Steve!

There’s another benefit of having an S Corp that’s worth mentioning…

If your business makes a lot of money (i.e. more than $157,500 for a single person or $315,000 for a married couple filing jointly), having an S Corp could help you qualify for the tax break of the century when you may not have otherwise.

Imagine you’re a single person and your business earns a $250,000 profit next year.

If your business is structured as a sole proprietorship, you wouldn’t receive any Section 199a deduction because you earn too much to qualify.

If you instead have an S-Corp, you’d be eligible to receive a Section 199a deduction on 50% of the W-2 wages paid by your business.

So if you paid yourself 28.5714% of your business profits (which is the percentage that would maximize the Section 199a deductions in this case), you’d be able to get a 20% deduction on $71,428.50 of your income.

This benefit alone could save you thousands of dollars! Throw in the savings on employment taxes described in the post and you can see why this is a great move for many profitable businesses.

If you already have a business, hopefully this post helps you save a big chunk of money on your 2019 taxes (remember, set up an LLC now if you want to make an S-Corporation election for the entire 2019 tax year).

And if you’re just starting your business, hopefully this article gives you an idea of some of the other tax benefits you can look forward to when your business grows!

Related Post

The post Why You Should Form an S Corporation (and When) appeared first on Mad Fientist.

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Why Everyone Should Have Their Own Business (and How to Guarantee Success) Fri, 16 Nov 2018 10:00:27 +0000 If you focus on the right things and start your business in the correct way, you're guaranteed to improve you life both before and after early retirement!

The post Why Everyone Should Have Their Own Business (and How to Guarantee Success) appeared first on Mad Fientist.

It was my 30th birthday and I was having a meltdown.

Even though I was surrounded by friends at a beautiful ski resort in Vermont, turning 30 hit me hard and I was bringing the whole party down with my self pity.

“I’ve done nothing with my life!”

“I haven’t accomplished anything I thought I’d accomplish and now I’m old!”

My girlfriend (now wife) took those statements personally and got offended, which made the atmosphere even worse.

It was embarrassing and my friends still make fun of me about it today (as they should).

Birthday Ski Trip

Birthday fun before the meltdown

The reason I was so upset was because I had all these good ideas in my 20s but I created absolutely nothing.

The Wrong Way to Do It

It’s not because I didn’t try though. Here’s how it went in my 20s…

I would have an idea that I’d get really excited about.

I’d start doing a lot of research, I’d maybe register a new domain, and I’d start planning how everything would go. And when I say everything, I mean everything.

I’d worry about things that hadn’t even happened yet (and were very unlikely to happen) and before long, I’d be overwhelmed and I’d put that idea on the shelf with all the rest of my good ideas.

Luckily, a new exciting idea would take its place and I’d start the cycle all over again.

That cycle made me feel like I was doing something but I realized on that cold night in Vermont, it all actually amounted to nothing.

Just Start

Thankfully, this story has a happy ending.

The Mad Fientist only exists because of that night.

I turned 30 in January of 2012 and I launched the Mad Fientist in February.

I had no idea what I was doing but I launched anyway. I didn’t know exactly what I was going to write about but I launched anyway.

I had never interviewed anyone before but I started a podcast anyway. I didn’t even have a microphone so I had to borrow a crappy headset (like the ones telemarketers wear) from a colleague.

Podcast Equipment

All the podcasting equipment I had for my first 10+ episodes

I didn’t feel ready but I started anyway and it made all the difference.

Important Lesson #1: Start now and figure out the details later.

Good Ideas Come from Action

When I started the Mad Fientist, I thought I would write about investing. I planned to do a bunch of research, develop innovative investing strategies, and write all about them.

Once I started researching, however, I realized that index investing has the highest likelihood of success (with the lowest costs) so that screwed up my plan to come up with interesting and unique investing methods!

Since I still wanted something interesting to write about and wanted to speed up my journey to FI, I was forced to start looking into other ways to optimize.

And that’s how I ended up writing about tax-avoidance strategies for early retirees, which is what ended up making my site popular.

Had I waited for a eureka moment before starting, it would have never come. It was only the process of researching and writing about other things that lead me to an interesting topic that nobody had written about before.

Important Lesson #2: Your best ideas will come from the work you do (not from magical bathtub inspiration). It’s much easier to improve on existing ideas and make subtle shifts in direction than come up with the perfect idea out of thin air.

Why Everyone Should Have a Business

These are important lessons but why should you care? Maybe you don’t have a business and haven’t thought of starting one?

I’m here to say that starting a business could be the best thing you do on your path to financial independence and it could be the thing that impacts your happiness most after early retirement.

Here’s why…

Fills the Void

People who achieve financial independence and retire early are usually motivated, ambitious, hard-working people.

They’re like a car going 75 miles per hour down the freeway but when they find out about FI, they speed up to 100 mph to get to their FI destination as soon as possible.

What happens when a car going 100 miles per hour immediately drops down to 0 mph though?

You don’t have to be a physicist to know that it’s not good.

And yet that’s what I often see when talking to people about pursuing FI.

They are consumed by their goal, they’re racing there at 100mph, and yet they’re not thinking about what happens when they get there (or what they’re going to do after).

I did exactly the same thing. And as I described in this post, the only thing that kept me from freaking out after leaving my job was the fact that I had an existing business to fill the void.

What About Hobbies

You may be thinking to yourself, “Whatever, Mad Fientist…I have a lot of hobbies and there’s tons of stuff I plan to do after I retire!”

Hobbies are good, of course. But a business is different because it provides additional pressure that makes you do what you say you’re going to do.

For example, I thought I would cook a lot of interesting meals after leaving my job. I have all day to buy fresh ingredients and research new recipes so why wouldn’t I start my new cooking hobby like I’ve always wanted to?

Well, it’s been over two years since I left my job and I still haven’t done it.


Because the only external motivation to do it is my wife saying, “What happened to your plan to cook me delicious meals all the time?!” Yes, that’s motivating but it usually just results in me cooking something easy that I already know how to cook.

The Mad Fientist (my business), however, is different.

I still publish at roughly the same frequency as I always have and that’s because it’s a real business and if I don’t publish for a while, I get a bunch of emails asking when the next one is going to come out.

So a business can be just like a hobby but one that you take more seriously (and therefore hopefully get more fulfillment from).

Which brings us to the most important part of starting a business and the part that if you get it right, can guarantee your success…

How to Pick the Right Business

The first step to picking the right business is to completely remove money from the equation.


If you’re on the path to FI, you already make enough money. And if you’re FI, you already have enough money.

The primary purpose of this business is not earning money (although it likely will)…it’s for increasing your happiness.

Side Note: If you remove money from the business equation, it will put you in a different league from everyone else and can drastically improve your odds of success.

For example, if the Mad Fientist business was about maximizing profit, do you think I would have removed ads from my website? Would I choose to keep my podcast commercial-free? Hell no!

But I do do those things and I believe it’s allowed me to build a closer, more trusting relationship with my readers/listeners and that’s helped me grow to where I am today.

Not focusing on money will give you a unique advantage over other businesses in your space and will help you stand out.

So if you don’t focus on the money, what should you focus on instead?

What to Think About When Choosing a Business to Start

What to Think About When Choosing a Business to Start

  • Interest – What are you most interested in or excited about?
  • Improve – What do you want to learn more about or get better at?
  • Meet – Who do you want to meet and hang out with?
  • Utilize – What skills do you like utilizing and want to improve on?

Let’s use the Mad Fientist as an example again.

Back in 2012, I was aggressively pursuing FI and was ridiculously excited about it so box #1 was ticked.

In order to get to FI quicker, I wanted to learn more about investing and I wanted to figure out new ways to optimize my finances so box #2 was ticked.

I also wanted to be able to talk to people who had already achieved FI so that I could ask them questions. Box #3 was ticked.

As far as my existing skills were concerned, I was better at math and money stuff than most people, I was a professional software developer so I had web development skills, and I also had above-average Excel skills.

Was I a great writer? No. Had I ever interviewed anyone before? No.

That didn’t matter though because in those early days, I just focused on what I was good at and used that to differentiate myself.

For example, I immediately released a FI Spreadsheet that I had built to track my own numbers. I also created a custom calculator to supplement the first post I wrote. I then started using my math and analytical skills to come up with optimization strategies specifically for early retirees.

I used skills I had (e.g. web development, math, etc.) to compensate for skills I didn’t feel I had yet (e.g. writing, interviewing, etc.).

I didn’t need to be the best at everything but I figured there was enough that I was “above average” at that would allow me to potentially make a meaningful contribution. The other stuff I just learned and got better at along the way.

Guaranteed Success

Even if I never received a single reader or made a single dollar, the business would have still been a great success.


First, it forced me to learn more about something I was already very interested in. The things I learned while researching blog posts and podcast episodes drastically reduced my time to FI and allowed me to optimize my own finances more than I would have otherwise (after all, the best way to learn something is to try to teach it to others).

It also allowed me to expand my web development skills, design skills, writing skills, and people skills…all things I wanted to improve on.

Having a podcast gave me the opportunity to call people who did exactly what I wanted to do (i.e. achieve FI) and ask them all the questions I wanted to. I got to meet interesting people that I wouldn’t have otherwise and I learned a lot from them along the way.

So even if the business didn’t make a single penny, it would have been incredibly successful because the business fell into the neon-green diamond at the center of the Venn diagram shown above.

There are even more side benefits to having an actual business that are worth mentioning…

Business Credit Cards

Having a business opens up an entirely new category of travel credit cards you can apply for!

As I’ve mentioned before, travel miles/points have allowed me and my wife to visit 50+ countries for very little money and credit cards are a big reason we’ve been able to accumulate so many points.

Business cards offer some of the best signup bonuses on the market but you need to have a business to take advantage of them.

To see what I mean, here are the two best personal cards currently available today:

Card Bonus Spend Requirement Annual Fee
Chase Sapphire Preferred® 60,000 points $4,000 in 3 months $95
Chase Sapphire Reserve® 50,000 points $4,000 in 3 months $450

Now compare those with three of the best business cards:

Card Bonus Spend Requirement Annual Fee
Ink Business Preferred℠ 80,000 points $5,000 in 3 months $95
Ink Business Cash℠ 50,000 points $3,000 in 3 months $0
Ink Business Unlimited℠ 50,000 points $3,000 in 3 months $0

Business cards often provide higher signup bonuses for lower annual fees and the great thing is, you can get them in addition to personal cards! So when you have a business, you can get the best of both worlds.

Bonus: If you are a resident of the US and want to utilize the strategy I used to earn hundreds of thousands of miles for free, sign up to the Travel Card segment of my email list by entering your email address below:

Tax Benefits of Owning a Business

Owning a business also provides numerous tax benefits so let’s dive into some of those…

Business Losses

My first year running the Mad Fientist, I made no money but I spent money on business things like website hosting so my business made a loss for the year.

I was able to use that business loss to lower the amount of taxes I paid on my normal W-2 salary!

Hopefully you don’t make a loss for many years but at least it helps you lower your taxes in the years that you do.

Business Expenses

Business expenses are a great way to pay for things you’d probably buy anyway while using tax-free money to do it!

This beautiful MacBook Pro I’m typing this article on was a business expenses (you definitely need a laptop to be a blogger).

My recent flight from Scotland to Florida to attend a conference was a business expense (the fact that my family lives 1.5 hours away and I got to see them on the trip was a nice bonus).

My cell phone and internet plans are business expenses (need a way to stay in contact with my audience, right?)

The list goes on but you can see that having legitimate business expenses for things you’d probably spend money on anyway is a great way to lower your taxes.

Retirement Accounts

When you have a business, you can contribute to tax-advantaged accounts like SEP IRAs, SIMPLE IRAs, or Solo 401(k)s.

Depending on how much profit your business earns, you could potentially sock away $55,000 into one of these great accounts and drastically lower your tax bill!

Other Tax Benefits

Having a business will also allow you to take advantage of the Tax Break of the Century!

As you can see, the tax code is very kind to businesses but you need to have a business to take advantage of all the great stuff on offer.

What About the Money

As I mentioned, money shouldn’t be the primary focus for your new business.

Mad Fientist success and all the great things that have come from that over the years wouldn’t have happened if I had focused on the money.

Yes, you have to be “trying” to earn money (otherwise the IRS will classify your business as a hobby and you’ll miss out on all the great tax breaks) but it shouldn’t be the primary thing that’s driving you.

Here is the traffic and income graph of the Mad Fientist since it started in early 2012.

Mad Fientist Income/Traffic 2012-2017

Mad Fientist Income/Traffic 2012-2017

As you can see, it took over four years to receive any sort of meaningful income.

That’s four years of putting in full-time hours and receiving pennies per day.

That’s why so many blogs and podcasts fail. You have to love the topic to keep going and if you’re focused only on the money, you’ll quit long before you see any.

Passive Income

This is a good time to talk about “passive income”.

Passive income is a lie and it should instead be called “front-loaded work”.

Front-loaded work is great because it potentially has unlimited upside and you’re not simply trading hours for dollars. It’s definitely not passive though because it’s often harder than normal work and there’s a lot of risk you won’t earn anything from your effort.

I would say that front-loaded work is the perfect type of work for people who are financially independent and don’t need the money though.

Potential Energy

So if you’re not actively pursuing money in your business, what can you pursue instead that will allow you to still feel productive?

Answer: potential energy

In the early years of the Mad Fientist, I would get jealous that other smaller sites were earning a bunch of money and I wasn’t earning anything.

It was very tempting to do some of the things those other sites were doing (especially since I was still saving for FI at the time) but I wasn’t comfortable doing any of it because none of the money-making opportunities felt right to me. In fact, it wasn’t until many years later that something finally came along that I was excited to promote (i.e. the free portfolio-management software that I use).

I still wanted to capitalize on the traffic I was getting at the time though so I decided to build up my potential energy instead.

What do I mean by that?

Think back to your high-school physics class. When you push a ball up a hill, you’re increasing the ball’s potential energy. The higher you go, the more potential energy. When you finally decide to convert the ball’s potential energy into kinetic energy and you push the ball back down the hill, the higher the ball is on the hill, the faster and further it will go.

I applied that same idea to my business.

Since there were no good money-making opportunities available (kinetic energy), I focused instead on just building up my email list (potential energy).

I figured that if I decided to write a book or something one day, it’d be great to have a lot of people to email about it (side note: I think writing a book would kill me so I’ve since realized that that’s never going to happen).

So I focused on building up my potential energy (email list) in order to generate more kinetic energy (profit) one day when I eventually found something I’d be comfortable selling or promoting.

This allowed me to still feel like I was doing something productive without compromising my integrity or pissing off my audience.

Other Lessons from Mad Fientist Success

There’ve been many other business lessons I’ve learned from this Mad Fientist experiment that are worth sharing…

Be You

When I was thinking of names for my site, I shared the Mad Fientist name with Jill and some of my family members.

They all hated it.

They thought it was dumb and since fientist is a word I made up myself, they thought that nobody would understand what my site was about.

I decided to go with it anyway because I thought it perfectly captured the dorky, analytical, math-focused direction I wanted the site to go in.

Turns out, that decision is one of the main reasons the site is still around today.

Mr. Money Mustache was my very first podcast guest way back in 2012 and since I had no audience at the time, I had no idea why he agreed to be on my show.

It wasn’t until many years later, after we became friends in real life, that I finally asked him why he agreed to come on my podcast.

His answer…”Because you’re the Mad Fientist!”

So he liked my name/logo and that’s why he agreed to come on the show.

Not only did his appearance give me my first traffic, it also made me take my site more seriously. There were many times in the first few years that I thought about quitting but each time I did, I’d say to myself, “No, MMM took a chance on my podcast so I need to keep going and hopefully send some traffic his way one day to pay him back”.

Being me and picking a dorky site name is probably the main reason I’m still typing to you today.

You Don’t Have to Do What Everyone Else is Doing

The other thing I learned is that you don’t have to do what people tell you you need to do or what you see others doing.

When I started, everyone said you had to post weekly or else you’d never succeed. You need to be consistent!

I always knew that if I tried to follow a strict schedule, I’d end up burning out and would quit so I just focused on quality instead of quantity.

I figured that if I provided quality stuff, people would subscribe and as long as I kept producing quality stuff, people wouldn’t unsubscribe so I would grow. I personally would never unsubscribe from an email list because someone only emailed me interesting stuff once a month but I would unsubscribe if they emailed me mediocre stuff weekly.

Yes, it took longer to grow but when growth/profit isn’t your primary focus, it doesn’t really matter (and if you’re FI or going to be soon, it definitely doesn’t matter).

Important Lesson #3: If you get more new readers/customers than you lose, you’re guaranteed to be successful eventually.


Creating a business has provided more benefits than I can count and is one of the main reasons my post-job life has been so enjoyable.

In fact, I’ve been thinking about that Venn diagram a lot and am considering starting a new business in a completely different field (not because I want to make more money but because I want all those other benefits I talked about).

New Business Idea

Let’s revisit the Venn diagram but for this new business idea.

  • Interest – The thing I’m most excited about and interested in these days is synthesizers. I read about them all the time and I love making weird sounds on the ones I already have.
  • Improve – I want to get better at programming synthesizers but I’m not working as hard as I’d like to on that goal so I clearly need some external motivation.
  • Meet – I want to meet other musicians and play music with other people.
  • Utilize – I have above-average knowledge of sound synthesis and I have a lot of experience building a web-based business and an online audience.

So let’s look at my current situation…

I’m interested in synthesizers and I want to do more with them and meet others who play them so I can either:

  1. Continue reading about synthesis online, continue playing around with my keyboards in my apartment, attempt to find a local musicians meetup group or something.
  2. Start a new synthesizer-focused website, create a comprehensive synthesizer video course that I can give away for free on YouTube, create advanced-level premium content that I can later sell to my audience, etc.

If I go with option #1, I imagine I’ll get better (slowly) and may meet some cool people along the way but think about all the possibilities of option #2…

I would be forced to dive into the nitty gritty details of synthesizers while building my comprehensive course. I would find out what is truly important and would drastically improve my own skills while trying to teach others.

After creating the website and course, I would likely have people getting in touch with me who are interested in the same type of music that I am (for an introvert, having people contact you is WAY easier than trying to reach out to others).

If one of my favorites bands is looking for a new keyboard player, I would have instant credibility and there’d be a much higher probability of getting an audition (they’re all small bands so this is actually a possibility).

If my audience got big enough, I’d potentially get free synths and gear sent to me. And any synths that I bought myself, I could write them off as a business expense!

So even if the business itself doesn’t earn much money, I will have still won.

I will have learned more than I would have otherwise, I will get to meet more people than I would have without the business, and I will have at least saved some money on things I would have bought anyway.

Best case scenario though, I have an online course that sells while I sleep, I have a higher likelihood of joining one of my favorite bands, and I have a room full of free synths that I can play for the rest of my life.

See why I think creating a business is something everyone pursuing FI needs to do?

So get out there and create something.

If you start your business the right way, it shouldn’t even cost you much money.

For example, this site gets millions of pageviews every year and yet I’m still only paying $15/month for my web server (a Dreamhost VPS), $5/month to host my podcast (Libsyn), and $23/month to host my custom web applications (Heroku).

My biggest cost is for my email software (ConvertKit) but even that was free when I had less than 2,000 subscribers (on Mailchimp).

It’s easier and cheaper than ever to start your own business so there’s really no excuse not to.

At best, it will provide extra income that will drastically reduce your time to FI and will make your transition to joblessness easier.

At worst, it will allow you to improve your skills, meet interesting people, and increase your happiness and fulfillment both before FI and beyond.

Don’t wait until you have a pathetic meltdown in front of your friends…start something now!

Related Post

The post Why Everyone Should Have Their Own Business (and How to Guarantee Success) appeared first on Mad Fientist.

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James Clear – Atomic Habits and Building a New Identity After Retirement Tue, 16 Oct 2018 16:32:44 +0000 James Clear joins me on the Financial Independence Podcast to talk about productivity, deliberate practice, fasting, and his new book - Atomic Habits!

The post James Clear – Atomic Habits and Building a New Identity After Retirement appeared first on Mad Fientist.

A challenging aspect of early retirement is the loss of identity you may experience when leaving a career you’ve spent a big chunk of your life building.

However, one of the most exciting parts of early retirement is that you have the time, money, and freedom to create a completely new identity!

How do you do it though?

Today, I had the privilege to speak to the writer who has been most helpful to me as I’ve started building my own new identity – James Clear.

In this episode, we discuss habits, deliberate practice, and how to best create a meaningful and purpose-driven life!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • What makes life meaningful and how to live better
  • The importance of social connections
  • How to deal with the “pain of discipline”
  • The physics of productivity and why habits are so powerful
  • The importance of having an easy on-ramp to a task
  • Why a habit must be established before it can be improved
  • How to find a keystone habit that can improve multiple areas of your life
  • Why you should optimize for the starting line rather than the finish line
  • The downsides of habits
  • What is deliberate practice and why it’s important
  • How habits can change your identity
  • Why rewards are good (but only if they don’t conflict with your new identity)
  • What is intermittent fasting and why it’s beneficial

Show Links

Full Transcript

Mad Fientist: Hey! What’s up everyone? Welcome to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest to find out how they achieved financial independence.

Today’s episode’s a real treat for me because I’m getting to interview somebody that I’m a big fan of. And I actually don’t know him personally. But a few weeks ago, I got an email from him, and I just assumed it was a normal newsletter email because I’m subscribed to his email list, but instead it was a personal email to me asking if I wanted a copy of his new book.

And since I’m a huge fan, I of course said yes. And I also asked if he wanted to be interviewed for the show. And luckily, he agreed. So I’m really excited to chat with him for the first time.

My guest is James Clear. And if you’re one of the other 400,000+ subscribers on his email list, you know that he’s one of the best writers when it comes to motivation and habits and personal productivity and health and well-being and lots of different topics that are actually all the topics that I am really needing to read about these days. Now that I’ve left my job, I don’t have any sort of external motivation to do things, but there are lots of goals and long-term projects that I want to make progress on. And his writing has been really instrumental in helping me make progress on those and do it in a way that’s not difficult and is actually enjoyable.

So, I can’t wait to talk to him about a lot of things. And also, I can’t wait to dive into his new book, Atomic Habit.

So, without further delay, James, thank you so much for being here. I really appreciate it.

James Clear: Oh, you bet! Thank you for having me.

Mad Fientist: And before we start out, I have to really thank you because I’ve been doing this for over six years. I’ve had some of the top finance minds on the show. And this is actually the first time my wife has thought I was super cool when I told her about you being on the show. So she doesn’t care about money at all, so she doesn’t know all the big finance names. But when I said you’re coming on, she was so pumped about it. So, thanks for making me look cool in her eyes.

James Clear: Nice! Yeah, that’s great. Well, thank you to her. And I’m excited to be here. Thanks so much.

Mad Fientist: No, no. And actually, a lot of thanks does go to her because over the last two years since I left my job, she has forwarded me about 10 of your emails because they’ve been exactly what I needed to read at the time that I needed to read them. And I’ve eventually obviously subscribed to your email list after the fact. But yeah, lots of great content that we’re going to dive into.

But before we get into the specifics, I noticed on your about page that you say the central question that you’re trying to answer with your work is “How can we live better?” And the fact that you focus on these things like habits and motivation and making progress on things, I’m wondering, does that mean that you think that tackling big projects and doing work that you’re proud of and making progress on important things that you are passionate about, is that what leads to a happy and good life?

James Clear: Yeah, that’s a tough question. I think everyone wants to do work that matters. Everybody wants to feel respected to some degree. And I feel that too. I want my work to feel like it’s making a difference and to hear stories like the one you just told, that makes me feel great, that you’re finding the writing useful and it’s been valuable to you at different points in your life and so on.

I’m not sure. I don’t know what the answer to like what makes life meaningful or what makes life worthwhile or feel purposeful. I can say, for me, at the times when I have felt that the strongest have had some form of social connection—either being part of a team or being a leader on a team where everyone is working toward a common goal, or in the case of my writing, sharing articles each week and then getting the feedback from the audience.

I actually didn’t realize that until I wrote a book. But writing my articles each week, I get feedback immediately. I’ll email everybody and I get all these emails back about what people liked or what they didn’t like. And I really thrive on that feedback, that social interaction. And with the book, it was hard for me because I didn’t get that as much. So that kind of clarified that social connection was an important part of that process for me.

So, I can’t say what it is for everybody. But I can say that having that type of connection, or for me, what makes the work matter is that other people are finding it easily.

Mad Fientist: Yeah, that’s a good insight. Since I left my job—I’m not sure how familiar you are with financial independence or the retirement community, but the main focus seems to be like, okay, people just want to get away from their jobs and save up enough money so that they never have to work again. And it’s usually getting away from something that’s bad, and not so much getting towards something that’s good.

So, for me, when I hit that goal two years ago, I was then just dropped into this place where it’s like, “Okay, now I’m really finding what’s important to me and I’m trying to make progress on that.” And that’s where your work has been super beneficial. But it’s a struggle because I don’t know if you’ve heard this quote before, but I just came across it recently, and it’s: “We must all suffer one of two things—the pain of discipline or the pain of regret.” And I realized that the dissatisfaction with my job wasn’t because I had a bad job. That wasn’t the case. It was the pain of regret that I felt like I wasn’t doing what I was actually meant to do and what I really wanted to do.

But when I had all the freedom in the world after leaving my job, that pain of regret was then substituted with the pain of discipline. And that’s where you come in. And that’s just equally as difficult.

You just wrote this fabulous book about habits. So my question to you is: “Do you think habits is the answer to the pain of discipline?” Is that something that could drastically reduce that pain of discipline?

James Clear: Well, it’s certainly one thing that can help a lot. So to answer your previous point, yeah, I’m very familiar with the FIER and the whole community. I’m kind of obsessed with it really. I love the methodology and the thinking behind it. I’ll read the FIER threads and all that type of stuff. I know Pete, Mr. Money Mustache and we’ve talked a couple of times.

Anyway, I appreciate a lot behind the philosophy and the thinking. With reference to discipline and habits, habits are—

I guess I should step back for a second and just talk about habits from a high level.

So, as you go through life, you face problems. And many of those problems are small; some of them are large. For example, your shoe could be untied. Needing to tie your shoe is a problem. It’s a small problem, but it’s something that you need to figure out.

So, you tie your shoes. And as you do it a hundred or two hundred or three hundred times, pretty soon, you learn how to do it on autopilot. You can have a conversation while you’re tying your shoes or think about something else.

And this is sort of the purpose of habits and why your brain forms habits, is that it allows you to solve problems that you face on a recurring or repeated basis in an automatic fashion so that you can free up your mind to focus on other things. You can direct your attention toward other areas.

In the case of discipline, habits make it easier to get into the work. And I think that is actually the key step to focus on. They don’t necessarily make hard tasks easy or painless. But they can make it less painful to get into the work.

And so, sometimes I like to think about habits like an entrance ramp to a highway. You slide on to this entrance ramp. You don’t have to be moving that fast. It’s not that difficult. You don’t have to think about it. And before you know it, you’re speeding 60 miles an hour down the other direction.

And a well-placed habit can sort of act like that in your life. It allows you to automated the beginning of a routine. And by automating the beginning and making it a ritual, you make it more automatic and easier to get into the work.

And once you’re there, well then you probably have to still focus and exert some effort to get the work done or to finish writing that chapter or whatever it is that you’re working on. But if you can make it as painless as possible to start, then it becomes easier to start each day.

And in many ways, habits are just an exercise in starting each day. If you can get started each time, then it is a habit.

Mad Fientist: Yeah, that’s been key for helping me. One of your articles talks about the physics of productivity. And that was huge for me. And it’s talking about having a nice, easy pre-game to get into that habit. And then that launches into letting you get to the work.

One of the big projects that I’ve only started working on after leaving my software career is just writing music. That’s always been a dream of mine, to write an album. It doesn’t matter if anybody buys it, just to have an album that I’ve written and that I’m proud of. But that’s so daunting especially for a math and science guy like me. How do you just pull a song out of thin air?

So, when I read your physics of productivity, I now have this really easy entrance ramp. And that’s just actively listening to one song that I like every day. And so I sit there with headphones on that are like my monitoring headphones that are really sensitive so I can hear all the different aspects of it. I’d listen to this song three times just picking up production techniques and trying to just really understand how it was put together.

And by the end of it, I already have my headphones in, so I can just plug in and start actually writing music. I’ve already been amped about it because I’m like, “Wow! This song was great. I would like to make a song this good myself.” And I usually pick out some sort of production thing that happened in the song, and I’m like, “Ooh, I should try that on the song I’m working on.”

So, it’s like this perfect, easy thing that I can get started because it’s not intimidating. It’s like you’re here, you have to listen to music, it’s just like, “Ooh, I love doing that,” so it’s not painful and it’s not intimidating, but then it launches me right into this really hard task.

Thanks a lot for that Physics of Productivity post. Is that probably one of the core aspects of starting a new habit, do you think, trying to find that easy on ramp to get that habit a daily practice?

James Clear: Yeah. So that’s a great example. What you just gave is a great example of what I call a motivation ritual in the book. A motivation ritual is just what you had described. It’s something that you do that’s very simple at the beginning that kind of gets you excited to do the work or at least gets you in the right mindset.

I played baseball for many years. And when I was playing in college, I would follow the same ritual at the beginning of each game. And one of the things that’s somewhat challenging about baseball as a sport is that there are so many games compared to other sports. You just are playing constantly.

And so coaches are always saying things like, “Alright, we’ve got to find a way to be motivated today. We’ve got to find a way to be up and be ready to play” and so on. And there are going to be some days where you show up, and you just don’t feel like you’re into it.

And so, for me, that ritual, just the same number of stretches and running and then the same kind of warm-up, the number of throws and so on, by the time that I finish that, I was like, “Alright!” It was like a switch had been flipped. And my brain was like, “Okay, it’s time to be in game mode.”

And so, in many ways, rituals like that can act that way.

You asked, “Is that the right way to start a habit?” and so on. What I usually recommend to people is what I call the 2-minute rule. T he basic idea is many of the habits that we want to follow cannot be completed in two minutes. But pretty much any habit can be started in less than two minutes. So, for example, go for a run becomes “put on my running shoes and step out the door” or do 30 minutes of yoga becomes “take out my yoga mat” or read one book every week becomes “read one page.”

I have a friend, a poet, who his habit each day is to write one sentence. Now, sometimes, he writes a whole poem or multiple pages. But every day, he just tries to write one sentence.

And sometimes people think this sounds a little bit like a trick, like “I know the real goal is to go for a run, like I’m not actually just trying to put my running shoes on and get out the door each day. But what people fail to realize, especially in the beginning is that a habit must be established before it can be improved. So you don’t even have the chance to optimize something if you don’t master the art of showing up every day.

And there are all these little logistical details associated with building a new habit that nobody really thinks about. Whenever we think about a new habit or some kind of goal that we want to accomplish, we always focus on the outcome. We’re always trying to optimize for the finish line. We think about, in your example, the great song that you want to produce, or we think about making six figures next year, or losing 40 lbs. in the next six months. It’s always focused on the end goal, the finish line.

But instead I think we should optimize for the starting line, not the finish line. And by doing that, by scaling it down to the first two minutes and making it as easy as possible, you start to figure out a lot of these logistical details that you don’t think about beforehand.

Say for example I had a reader who ended up losing over a hundred pounds. And one of the ways that he did it was that he went to the gym, but he didn’t allow himself to stay for longer than five minutes. So he would go, he’d show up. He’d do an exercise or something. And then, once it hit five minutes, he would leave. And he did this for like the first six weeks.

And it sounds like he’s not really doing anything. But what you fail to realize is that there are all these questions you have to answer when you’re starting a new habit like “Okay, I’m going to go to the gym. What gym will I go to? How will I get there? What road will I take? What path will I follow? Am I going to meet a friend there? Am I going by myself? What time of day am I going to go? Do I need to get my gym bag ready before I go to work? Or can I get my gym clothes afterward?”

All of those little things that you don’t think about because you’re just thinking about the outcome that you want, they kind of become these points of friction. And if you make it as easy as possible, and you just focus on the first two minutes—or in his case, the first five minutes—then you can get all that stuff figured out.

And then, by the time he turned around six weeks later, and he was like, “Well, I’m coming here all the time. I got to feel like I’m doing something more…”

And that’s like the complete opposite of how most people build a habit. Most people are like, “Alright! Let me do Insanity or P90X or join a crossfit gym or do something really intense because I’m all motivated and I want to get in shape,” and then it starts to feel like a hassle. The workout was a hassle. Ferreting out all those logistics is a hassle. And suddenly, there’s too much friction. They burn out after a week or two.

And so, my recommendation is to scale it down to the first two minutes. Get the habit established and master the art of showing up. And then, you have the chance to optimize and improve from there.

But if you don’t show up each day, then you don’t have the option to get better anyway.

Mad Fientist: Yeah, I know. That’s great advice. And that’s definitely something I found as well when I was trying to do an hour a day at least. There’d be days where I knew I wouldn’t hit that hour, so I would just not do anything, or I just wouldn’t feel up to doing an hour so I wouldn’t do anything. But when I lowered that to 15 minutes, then I would always show up for the 15 minutes. And that would always usually go past an hour which was great. So that’s fantastic advice.

I’m wondering when you’re doing all the research for the book if you came across any core keystone habits that then led to big life changes in other ways. Just from my personal experience, I started going to the gym two years ago and just lifting three or four days a week. And that’s the thing that eventually got me to floss which is something I was always trying to do for the previous 10 or 15 years—which is crazy.

And the reason is like I would go to the gym, and then I would obviously want to eat healthier. So that led to a better eating habit which often entailed lots of seeds and nuts. And then, that would lead to me wanting to floss because I had seeds in my teeth all the time.

And it also led to not drinking as much beer because I did all these hard work at the gym, so I didn’t want to ruin it by just drinking a bunch of alcohol.

So, it was like one core habit that then led to these three other habits of healthy eating, less drinking and flossing that I never even anticipated.

I was wondering if you came across any sort of other habits like that that led to other great changes.

James Clear: Isn’t that interesting how you eat better when you work out? You could be like, “Oh, no! Now I actually did something. I can have a donut.” But instead you don’t want to waste it.

Mad Fientist: Exactly!

James Clear: I had a similar keystone habit. Mine is also working out. I usually train four or five days a week. And if I get those four days in, then a lot of other things happen, similar to what you mentioned. I’ll sleep better at night because I’m tired from working out, which means I wake up in the morning and I have more energy and I’m better focused. I eat better because I don’t want to waste the effort that I put in at the gym. I get this post-workout high for an hour or so where I’m really focused. I have some clearer thoughts and can write well.

And at no point was I trying to build better sleep habits, focus habits or energy habits or whatever. It was all just this natural ripple effect that came from getting into the gym.

And there are some common ones to answer your question. Exercise is a popular one. Especially among creatives, you’ll hear going for daily walk is a big one.

There’s a book called Daily Rituals by Mason Currey. And it talks about the daily rituals and habits of a lot of these famous writers and scientists and musicians and so on. And it’s an interesting read. You end up finishing it and feeling like 80% of them were on amphetamines or alcoholics or some kind of crazy addiction. But the ones who were clean, going for a daily walk is often a huge part of their process. So that’s one.

Budgeting, interestingly, is one. When people pay off their debt or get their finances in order, they will sometimes start working out or they’ll start eating healthier and so on. It kind of ripples into another area.

For performers, visualization is often a big one; comedians for example. They do the same kind of visualization routine each time before they step on the stage. Or basketball players, same kind of thing, they’ll visualize before the game.

And then, the last one I’ve come across that’s fairly common is meditation. You’ll hear CEOs say that if they get their 10 minutes of meditation in each day, then the rest of the day feels like it kind of goes better or they’re more well-equipped to handle what happens throughout the day.

And for people who are listening to this, what I would suggest is you don’t have to do all of those of course. You’re just trying to figure out what is the keystone habit for me. And I think you can simply sit down and think about it for five minutes. “What do I do on days when things go well for me, when my life seems to feel like it falls in line? What usually happens on those days?” or “If I was going to plan out my ideal day, what would be included?”

And you’ll usually come up with maybe two or three of those things that I just mentioned or something similar that feels like “Okay, maybe this could be a keystone habit.”

And then, I would say forget about everything else. Just focus on that for the next month. And really, you can combine the strategy we just talked about. How can you make the first two minutes of meditation as easy as possible? Or how could you make the first two minutes of the workout as easy as possible?

And what you find is there’s kind of an ironic thing about making change and how habits sort of compound and make a difference in our lives. There doesn’t necessarily need to be that much to do. You could just focus on what you think this keystone habit could be and the first two minutes of it, making it as easy as possible to start.

And if you just did that for a month, you might find that there are all sorts of positive benefits that are happening a month or two or five months later. I would encourage people to start there. It’s a nice, easy, but high value way to get started.

And that’s one of the things that I try to focus on the book, what are these tiny changes that can lead to remarkable results in the long run.

Mad Fientist: Yeah, absolutely. You sent me the first three chapters because the book’s not out yet. I haven’t got the full copy yet. I can see why you sent me the first three. It sucked me in so much. I can’t wait for the rest of the book.

Although I could talk to you about habits all day, I think the book is going to cover it beautifully. And it’s called Atomic Habits. And it’s just like as you said. They’re small, tiny habits that just have big, big changes. You can make your life completely different just with a tiny, little habit.

I definitely recommend to anyone to go out and get it. I’ll put a link in the show notes.

But since the book covers it so well, I’m going to move on to another topic that I’m really interested in that you cover so well. And that’s deliberate practice. So I don’t know. If you wouldn’t mind, maybe just give a quick run through of what deliberate practice is, and then how that is different from habits. Habits are sort of the enemy of deliberate practice which is what you’ve said in some of your posts. And maybe explain why.

James Clear: Sure. So you haven’t seen the section yet, but the last chapter of the book is called The Downside of Good Habits. It references this issue, this dichotomy between habits and deliberate practice.

And deliberate practice, just to give us all a working definition here, I think most of us are familiar with putting some kind of practice in, but then it becomes mindless.

You’re a kid, and you’re practicing piano all the time, you’re just kind of like […] putting the work in because your parents told you to be there, or you’re shooting a basketball outside, but you’re just throwing it up, you’re not really thinking about it carefully.

Deliberate practice is the opposite. It’s focused, purposeful practice. So, one example that I give in an article that I wrote on this topic is imagine two players who are shooting free throws on a basketball court. The first is just shooting, takes some breaks, talks to friends or whatever. The other one shoots. And after every 10 shots has recorded how many they made, how many they missed, and the ones that missed, where they missed. Was it too long? Was it too short? To the right, to the left and so on…? And then, they review that after every 10, and then they shoot another set of 10 and do it again.

Okay, if these two players do this for an hour, who do you think ends up shooting better?

And the point here is that purposeful deliberate practice, focused practice where you’re paying attention to the errors and mistakes that you make, it makes you aware of what you need to do and where you need to improve.

And this is where the conversation returns to habits which is that, in the beginning, one of the most important and essential things for building a habit is to put in your reps. And in fact, what you find is that habits are a prerequisite for mastery. They’re required to build this foundation.

If you want to be a great chess player, for example, well, you need to automate and effectively learn how all the pieces move and where everything goes and be able to do that on autopilot before you can think about advancing to the next level of the game, starting to think about deeper strategy and so on.

And this is true at every level. As you progress up, you need to be able to internalize and automate whatever the skills were that you were working on, that you were practicing deliberately, and then use that as the foundation for the next level of deliberate practice.

Now, the challenge is, as something becomes a habit—and this is kind of the point of building habits—is that you pay less attention to it. Once you can do it on autopilot good enough, you stop thinking about how to do it better. You stop paying attention to maybe where your mistakes are.

And in fact, there’s a body of research that shows this, that as people habituate and internalize different tasks, there is often actually a slight decline in performance.

So, for example, they’ll often find that surgeons have actually the best outcomes like pretty early on in their career, maybe a few years out from residency. And then, after they’ve been doing it for years, there’s maybe a slight dip. It doesn’t mean they’re bad at it, but they aren’t at their peak anymore. And a lot of this is because of the fact that we overlook our errors and mistakes as things become habituated.

So, the process of improvement, it’s sort of like a cycle. It has to start with some level of awareness. If you’re not aware of your habits, or if you’re not aware of your behaviors, then it’s hard to design them in any meaningful way.

Then there’s a period of deliberate practice where you’re practicing a new habit for the first time, or you’re working on a new skill, and it requires effort, attention and focus. But with practice, it becomes a habit. And then, eventually, we have to close the loop and return back to awareness because now we’re on autopilot and we have to come back to where we were before.

And so that’s kind of how I see habits and deliberate practice working in concert with each other. We need to habitualize skills so that we can free up the energy and attention to focus on the next thing. Like all the best basketball players in the world can dribble with their left hand without thinking (or their opposite hand without thinking), and that allows them to work on other stuff like complicated shots or different offensive schemes or where do they need to be on the quarter, what time, all that type of stuff. But it’s only once you’ve habitualize the fundamentals that you can move on to the advanced stuff.

But once you get to that point, it’s a never ending cycle. You need to use that as the foundation for the next level of growth and deliberate practice.

Mad Fientist: Right! Okay. Yeah, that’s great. I’m excited that you do talk all that in the book. I think that seems like a very important piece.

I’m wondering… I imagine you’ve worked with some top performers and some impressive people to work through some of these things. And the one thing about deliberate practice for me that is a bit complicated—

It’s like, okay, for something like practicing guitar, it was perfect for that. I have played guitar since I was 10, and I was learning this Back classical guitar piece for maybe 10 years. And once I stopped lessons, I was like halfway through it. And this 10-year period of me just playing it, getting to the part where I didn’t know, and then trying to learn that next part, but not really focusing, it was like useless. It was like me playing for three minutes the part that I knew, playing two seconds the part that I didn’t know, and then screwing it up and then starting again and thinking that I’ll get better somehow doing that. And I honestly did that for like 10 years. And then, once I learned about deliberate practice, I was like, “Okay, this is ridiculous! I need to actually focus on the part that I can’t play, not keep playing the part that sounds great and makes me feel good about myself.”

So, what I did was I slowed down the tempo and just practiced the part that I couldn’t get. And then, once I could get it, I brought the tempo back up. And then, I integrated with the rest of the piece. I just did that for a few months, and then, eventually, just nailed the whole thing when, like I said, 10 years of just playing it randomly just didn’t work and didn’t get me any further.

And that makes sense. Deliberate practice there, my feedback is listening to this bad sound, realizing that I need to practice it, slowing it down, and that all make sense.

But for something like…

Right, exactly. Oh, exactly. It was insane. It was so quick to then just perfect it when practicing the right way. Okay, so that makes sense to me.

But for something like songwriting or something that’s not as like, okay, you’re just putting in the reps, have you ever had to work with anyone in that sort of scenario where it’s more maybe creative and less defined practice routines? And if so, how do you tackle something like that?

James Clear: Yeah, this is one of the criticisms of deliberate practice as a field. It works really well for well-defined fields especially sports or any type of competition where success is easily measured. For example, did you play the correct note or not? Or did you make the ideal chess move or not? Or did you end up with most points at the end of the game? Then it’s very easy to measure whether you’re moving in the right direction.

And I have a chapter in the book where I discuss measurement a little bit. And one of the challenges of measuring—

Well, one of the benefits of measuring is that—well, there are three things really.

The first is that measurement makes a habit more obvious. It makes a behavior more obvious. So by measuring something, you become aware of it.

Secondly, when you’re making progress, there’s an additive effect to measurement. For example, by tracking each time you do a behavior, or each time you perform a habit, like if you put an x in the calendar every day that you practice guitar, then you start to see those build up, and you get motivated to stick with it.

And then, the third thing—and this is kind of essential to the conversation we’re having now—is that a measurement makes a habit satisfying. It adds an immediate bit of gratification to doing the work. So if you’re able to check an x off on the calendar, then you feel like “Oh, this is good. I got my work in for today.”

So, even though you might not be able to play the piece in full yet, which is what the real thing you’re working toward, it doesn’t feel like you totally have to delay gratification because you still get the immediate gratification of measuring it and marking an x off and so on.

Now, the challenge is that—and this is something that’s called Goodhart’s Law—a measure ceases to be a good measure when it becomes the target. In other words, a measure is only useful when it informs you or when it is a bit of data that kind of nudges you toward the ultimate thing. But when it all becomes about the measurement, when the only thing that matters is hitting the quarterly numbers in the business, or hitting a particular number on the scale, then you start to sacrifice—like you don’t even care about health anymore, you just care about hitting the number on the scale. And so you’re over-focused on measurement.

I would say that that can actually be a downside to deliberate practice, is that sometimes if you’re so focused on measurement, it can pull you off course.

So, the question that you asked about some of these fields that don’t necessarily lend themselves to measurement or more creative, a little bit less quantitative or harder to measure, it doesn’t necessarily mean that you can’t perform deliberate practice, or even really that it’s a disadvantage. It might not be as quantifiable.

But what I would say is what you’re looking for, one of the purposes the measurement should provide, is that it provides an emotional signal that you’re moving in the right direction. It provides a signal of progress. And that’s really all that you’re looking for.

So, in a creative field, you can have that, but maybe it just has to come in a different way.

So, an example, let’s take the scale and the weight example I just gave. If you’re obsessed with the number on the scale, then that measure is no longer really that productive or beneficial to practicing good health, whether that’s a diet you’re trying to follow or a workout you’re trying to do. And so it might be more useful to shift to a different form of measurement, so to speak, that gives you feelings of progress or makes you feel satisfied. So, this is where stuff like non-scale victories come into play.

Maybe you stop looking at the scale, or maybe the number on the scale hasn’t moved, but you feel like your energy is better, or you can fit into a pair of jeans you couldn’t fit into before, or your skin looks better in the mirror, or your libido is up. All of these are measurements, in a certain sense, that you’re making progress.

And when you’re dealing with a creative field or something that is not as quantifiable, you have to start looking for things like that. So you may not be able to track it, but how can I find a positive emotional signal that I’m making progress and I’m moving in the right direction. And that of course depends on what kind of field you’re working on and what the particular problem is.

But the core point is that behaviors need to be satisfying for you to have a reason to repeat them. And it’s particularly important that they’re immediately satisfying, that you kind of feel successful right at the ending of the behavior. If you do, then it’s like a signal to your brain, “Oh, hey, this felt good. You should do this again. You should practice again.”

If all you feel is negative emotion or some kind of pain or punishment or sacrifice, then you don’t have much reason to repeat the behavior. And this is why we often find ourselves slipping into behaviors that just feel they’re in the moment even if they don’t serve us in the long run.

Mad Fientist: Right! Yeah, no, that rings true with my experience as well. At first, for the songwriting thing, it was like, “Okay, my goal is to write this song,” and then I would finish it, and it wouldn’t be very good because it was like the first song I wrote. I would be pretty disappointed with it.

So then I’ve since switched over to recording just the number of hours that I put in because that’s something I can’t control. I’m also recording the number of songs I have finished it. And then, I’ve given finished songs to my brother to go through this Google form that I’ve created to actually grade it so that I’m getting some external feedback because I know that’s so important in deliberate practice as well.

And that seems to be working better because when I get to the end of my, say I do two hours, then I feel really good because I can put in my spreadsheet I did two hours. And that’s two hours of hard work that I put in.

And then, obviously, it’s nice to put a one or a two next to the month if I completed one or two songs that month because that’s the actual end goal, was to write songs. And then, obviously, getting that external feedback is always great especially from someone who I don’t care if he know it sounds like crap.

James Clear: I think people who appear to be good at delaying gratification—which is something that a lot of us comes back to or a lot of the research talks about, like you need to be willing to stay focused and stay aware of your mistakes and continue to improve and delay the ultimate gratification of writing a song or being good at whatever the craft is. But what I find or what my theory is that people who appear to be good at delaying gratification or often just good at finding alternative ways to be satisfied in the moment. So, for you, it’s recording that on the spreadsheet. It gives you a reason to feel successful right then.

And that’s particularly important for building a habit or for having some reason to revisit it. There are all sorts of examples of products that have done this. So, for example, chewing gum had been around for decades, hundreds of years, before it became really popular. And that’s because, for a long time, it was just chewy, but it wasn’t tasty. It was like this kind of bland resin.

And then, in the late 1800s, Wrigley created Juicy Fruit and Spearmint. And they added flavors to the gum. So it was like immediately satisfying to chew it. And all of a sudden, chewing gum exploded, and they became the biggest chewing gum company in the world. And it was largely because there was suddenly like this immediate feedback loop, this immediate sense of satisfaction.

Mad Fientist: Right.

James Clear: And that doesn’t work for every habit. You can’t always have some instant bit like that. But what I think the ultimate form of immediate gratification is is a reaffirmation or a reinforcing of your identity.

So, if you want to be the type of person who writes music every day, then each time you sit down to write music, you are being that person. And once you start to adopt that identity, that’s a very powerful place to be.

For me, part of my identity is I’m the type of person who doesn’t miss workouts. So each time I go to the gym, I’m like casting a vote for being that type of person.

And it might take months for me to hit whatever number I want to hit on a particular lift or for my body to change in the mirror. But each day, I get to have that sense of satisfaction of forging that identity and being that type of person.

And that’s one reason why I think identity-based habits are so powerful because if you can root it in a belief like that, every time you do the behavior, you are being that. It’s sort of an instant form of success.

Mad Fientist: Yeah, that’s huge. And that goes back to the whole eating healthy and not drinking as much beer after working out because I felt like, “I’m a gym guy. I’m an athlete. I’m a lifter” and all these other things that I never thought I was before when I was just a geeky, lazy computer programmer.

James Clear: I think that’s an important point, that you don’t want to cast votes for competing identities. If you go to the gym, and then you go eat ice cream afterwards, it’s kind of like, well, it sort of cancels out. Which identity are you?

And so, I think it’s important to find ways to reward yourself that, reinforce that identity that you’re looking to build.

For example, if you’re talking about FIER and people saving for retirement, well, you could say that your reward for hitting some savings goal is like buying a leather jacket. And there’s nothing necessarily wrong with that. But it sort of conflicts with the idea of saving.

It could be something like your reward is you go camping for a week, or you get to go for a walk in the woods, or you have 30 minutes to yourself for a bubble bath or something, those type of rewards more align with this idea of like “My ultimate goal is to have freedom and control of my time.” And so you’re casting a vote for that identity whenever you save because you’re saving towards freedom and optionality and power and in control of your time. And when you reward yourself with that, like “Okay, now I get 30 minutes just to relax,” then you’re kind of like reinforcing that identity again.

Now, I think that it’s important to find ways to reward yourself that still reinforce the desired identity.

Mad Fientist:Yeah, absolutely.

I’m going to switch gears a little bit because this is something that you have directly changed in my life, so I really want to talk to you about it. And that’s intermittent fasting. My wife sent me an article from your email list about intermittent fasting. And it already aligned closely with my eating habits to begin with. So it was a fairly easy change to switch over, but it’s been great.

I just want to maybe get you to quickly describe it, and then maybe talk about your personal intermittent fasting schedule and what you find is the most optimal for you.

James Clear: Sure! So I’ve been doing intermittent fasting for—it’s been a while now, I’ll probably get this wrong. It’s been at least five years, probably more like six or seven. And I’m not militant about it. I probably do it, I would say, 330 days out of the year or so. But if I can’t do it while I’m traveling or if I’m on vacation or we have things over and things change, I’m not really worried about that.

And this is sort of a theme of my approach to intermittent fasting (and really a lot of my philosophy for approaching other problems of behavior change or improvement) which is that we need to stretch the time scales out a little bit. Like you don’t need to worry so much about what you’re eating on a 24-hour basis or even on a smaller scale like are you having a meal every hour or something.

So, to get everybody up to speed, intermittent fasting is not a diet. If you want to change your diet or eat Paleo or Keto or vegan or whatever, that’s a different conversation, the type of food that you’re eating. It’s simply a schedule for when you eat.

The most popular style is an 8/16 split. So you would eat all of your meals during eight hours. Usually, for me, it’s somewhere around noon to 8 p.m. And then, you fast for the next 16 hours. So you’d stop eating around eight, and then you don’t eat until noon the next day. So, in this example, you would be skipping breakfast.

There are other schedules that you can follow. For example, some people eat their normal patter six days a week, and then they just fast for one day. So like on Sunday, they just won’t eat anything. They’ll just have water for example.

And this is some of the most common questions I get. “Can I drink water? Can I drink coffee?” Yes, you can. I drink tons of water. So you continue drinking throughout the day.

Coffee, the general rule of thumb is if you have less than 50 calories while you’re fasted, then you’re not going to break the fasted state. Now you can’t just keep having 50-calorie things because then those eventually adds up and crosses that threshold. But if you want to have a cup of coffee with a splash of milk in the morning, that’s probably fine.

So, the reason intermittent fasting got popular is—it was largely popularized by Martin Berkhan who runs this Whole Lean Gains. And he was this big, ripped bodybuilder. He followed this pattern. And there is some scientific evidence that shows that fasting like this will alter your insulin levels and put you in potentially more a fat-burning state.

I was mostly interested in it from a simplicity standpoint. I like having one less meal to prep each day. I like having one less meal to think about each day. I like having one less meal to clean up for each day.

I work out of a home office. And so I loved the fact that I wake up, get ready, have a glass of water, walk 10 seconds to my office, and I can be writing or into whatever work I need to be doing really quickly. It removes another point of friction at the beginning of my day. So, I like that, that I can get into my day right away. And I like the fact that it simplifies my life a little bit.

The other thing is—and this comes back to the timescale piece I mentioned earlier—I was interested like is this going to affect my training. Will it affect my workouts, my energy levels throughout the day or what-not?

I don’t know if it’s from advertising or if it’s just a societal conversation now, but I think that we’ve become a little too hyper-focused in making sure that we eat all the time. Let’s say you eat 2500 calories in a day. Well, if you have 2500 calories between say noon and 8 p.m. like we’re talking about here, or you have 2500 calories between say 8 a.m. and 8 p.m., and you eat breakfast at eight, well, at the end of each day, does it really make a big difference? I kind of feel like your body is going to figure out what to do with the food. I just don’t know that it’s going to be that meaningful.

And to kind of further the point, most of us have had—you know, you go out for drinks on Friday night, and you sleep in on Saturday or something. And then, you don’t eat brunch until 11:30 or 1:00 even. So you’ve kind of unintentionally intermittent fasted that day, and you didn’t think twice about it. It wasn’t even a big deal at all. You were fine.

So, many people, it happens too randomly every now and then anyway. So to do it in a little bit more consistent fashion, I don’t think as meaningful of a difference as many people worry about.

And this is one of the weird things about intermittent fasting, which is that for many new behaviors and habits, they’re very easy to do mentally. Mentally, like, “Oh, yeah! Of course I should go to the gym and work out for two hours to get fit and do all these stuff,” but then they’re really hard to practice physically. You go there and it’s like, “Oh, man! After doing crossfit for two weeks, I’m out of here!” But intermittent fasting is the opposite.

It’s incredibly easy to do physically. You do nothing. You just don’t eat a meal. The hard part is mentally. People are like, “Wait! Skip breakfast?! I can’t do that. That sounds crazy!” And as soon as you can get over that mental hurdle, it’s incredibly easy to practice. All you do is just grab a glass of water and get to work.

Mad Fientist: And it gets easier and easier, I’ve found. Your body just adapts so quickly to the new schedule. I feel less hungry even in just odd times than I would in the normal schedule.

James Clear: Oh, I don’t even think about it now. Yeah, it’s automatic.

Now, okay, so some people are going to wonder about the fat loss benefits and does it actually burn more fat and all the type of stuff. My personal opinion is that—and there had been researches done on whether intermittent fasting adds up and makes a difference like that. Most of the research is like, if it does, it’s a minimal effect. But the real reason I think people lose weight when intermittent fasting is that they eat fewer meals. And because they’re eating fewer meals, it’s kind of—

If you just eat your normal lunch and eat your normal dinner, by the time you finish that meal, you’ll probably feel about the same as you usually do. And so you just cut a third of the calories out (or if you have a smaller breakfast, maybe it’s a fifth of your calories each day). And even if you have a slightly larger serving at lunch and dinner than you normally would because you didn’t eat in the morning, you probably aren’t having 1 ½ times more. And so, the end result is maybe you cut out 100 or 300 or 500 calories a day. And once you do that, and just stick to that for three months or six months or whatever, then yeah, you end up losing a little bit of weight.

So, I think it’s kind of a brain dead, simple way to reduce the number of calories that you’re going to have. And by doing that, eventually, it adds up and you also reduce the amount of weight that you have.

Mad Fientist: Yeah, especially considering how sweet and sugary most American breakfasts probably are, especially the ones that are grabbed on-the-go. So it does make a lot of sense.

As far as someone like me who is lifting and who’s trying to put on mass a bit rather than lose weight, have you found the lean gain’s attitude of maybe doing a protein shake or something before a workout beneficial?

James Clear: Yeah, I’ve been trying to and have been slowly bulking up for, I don’t know, a couple of years now. But I am now mostly in the maintenance phase in the sense that I don’t need to get that much bigger than I am now (although I would like to continue to get stronger, so we’ll see how that goes. Usually, those things don’t add up well together).

I train in the evening, usually around 5 p.m. or so which means I’m in the middle of my eating window. So I don’t have to train fasted.

Mad Fientist: Sure.

James Clear: Now, if you train in the morning—which I have done, I have trained fasted before—if you’re going to lift for an hour or so, I don’t think it makes that big of a difference. If you want to have a protein shake, that’s probably fine. I would look for something that is on the lower calorie end.

Sometimes, if people are getting really obsessed with it, they want to have BCAAs instead of an actual protein shake because then they don’t have to worry about the calories. But if you’re going to do something longer than an hour or an hour and a half, you’re going to do a 3-hour bike ride or some kind of endurance training for a triathlon or something, I don’t know that my recommendation would be to train fasted if that’s the case.

Mad Fientist: Sure.

James Clear: I think that it’s probably better to have something before a long train session like that.

But as with all of these stuff, your mileage may vary. And I think the best thing to do is just to try it out and test it a few times and see how it goes. That’s what I did. And I ended up settling on, yeah, I get my best lifts in when I’m lifting in the early evening rather than in the morning.

Mad Fientist: Okay. Do you do any sort of longer fasts, like 24-hour or 48-hour fasts or…?

James Clear: Sometimes, I find that to be a very effective strategy. I think the longest I’ve done is 36 hours or something like that, maybe 40. But sometimes, I find it to be an effective strategy when I’m traveling because, a lot of times, airport food is terrible. And so, if you just treat it as “Alright! I’m just going to fast for today,” then you just grab some water, then you go to your destination, and then you wake up the next morning and have breakfast, sometimes I find that to be useful.

Mad Fientist:Cool! Well, we’re getting to the end of the hour. And I want to be respectful of your time. I’m sure you’re a busy man these days. So I usually ask all my guests what’s one piece of advice they’d give to somebody on the path to financial independence. I’m going to ask you, but you’re welcome to take it a non-financial direction or keep it financial. It’s totally up to you.

James Clear: Well, I write not just about habits, but also about decision-making and mental models. And one of my favorite mental models—or just you could think of this as like a lens for looking at the world—is inversion.

The way that inversion works is you take what you want to achieve, and you imagine the opposite. So, for example, the ancient stoics and Greeks philosophers, they used to perform what they would call a premeditation of evils. So they would meditate or think about the opposite of what they wanted. For example, “What if I became homeless? Or what if I lost the ability to walk? Or what if my spouse left me?”

And the point is not to make yourself depressed about these things, but to think through what the scenario would be like to try to fortify your mental outlook so that you could be able to handle when life throws something your way, and then also, and most importantly, to be able to prepare for that. So what can I do to prevent that from happening?

And I find that to be an incredibly effective approach for dealing with daily life and of course with finances as well.

So, the question you can ask yourself is: “Alright! If I want to retire early, what would I do to make sure that I could never retire?” Well, maybe I would buy a house that would be like way beyond my ability to pay, or I would purchase more cars than I need, or I would spend money on frivolous things and not save automatically each month.

And the point is, as you go through this exercise and get more deep with the details, you start to identify essentially what are the stupid things that you should make sure you don’t do. And this is something that Charlie Munger (who is Warren Buffet’s long-time business partner), he says that much of the success that they have had in business has not been because they’ve been incredibly intelligent, but because they’ve avoided making stupid mistakes and dumb decisions.

And this sounds simple, but it’s actually harder than you’d think in practice. And one of the reasons is because of lifestyle creep. People get a promotion, and then they’re like, “Well, maybe we could get a bigger house. We could afford the mortgage payment.” You start talking yourself into all sorts of things that may not be ideal to your particular situation or for your long-term goals.

And so, I think it’s important to practice inversion on a consistent basis just to try to see what is the other side, what would be the dumb decision that we don’t want to make a mistake on, and how can we prepare and prevent that currently.

Mad Fientist: That’s a very cool answer. And yeah, I remember I think reading an article maybe on your site that talks about that. So I will try to find that and I will put a link to that and all the articles that I’ve mentioned in the shownotes, and also a link to the book which is Atomic Habits, which I’m super excited to finish.

So James, I really can’t thank you enough. This has been a treat. I can’t wait for my wife to hear it. She’ll think I’m the man for being able to talk to you and ask all these questions that she’s been forwarding these articles for years. So I really appreciate it. I wish you the best of luck with the book. And anything I could do to help, I’m happy to. So thank you so much for being here.

James Clear: Oh, thank you so much, yeah. I really appreciate it. And as one final thing, if folks are interested in checking the book out, is the best place to go. You can find the book there.

Mad Fientist: Oh, perfect! Excellent! That’s great, James. Thanks so much. And I’ll hopefully speak to you soon.

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Travis Shakespeare – Playing with FIRE Tue, 02 Oct 2018 12:08:14 +0000 The director of the "Playing with FIRE" documentary joins me to talk about the film that has the potential to take financial independence mainstream!

The post Travis Shakespeare – Playing with FIRE appeared first on Mad Fientist.

If you’ve been reading about financial independence for a while, you’ve likely seen that the topic is getting more popular lately.

Although FIRE (Financial Independence / Retire Early) is far bigger than it was when I created this site in 2012, it’s still nowhere near mainstream.

That may change though…

A full-length documentary called Playing with FIRE is currently in the works and the film has the potential to reach millions of people that blogs or podcasts never would.

This is a huge deal.

Check out the trailer below to see why I’m so excited:

I was asked to take part in the film and was lucky to get to know the talented people behind the documentary.

On today’s episode of the Financial Independence Podcast, I’m excited to welcome the director and executive producer, Travis Shakespeare!

Listen to hear how the documentary came about, discover what Travis has learned about FI after spending the last year creating this film, and find out when you’ll be able to see it!

Note: A Kickstarter campaign has just been launched to help fund the final editing phase so if you want to ensure the film becomes a reality, click here to back the project!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here

Show Links

Full Transcript

Mad Fientist: Hey, welcome everyone to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest in personal finance to find out how they achieved financial independence.

Today on the show I’m excited to welcome Travis Shakespeare who is a big time Hollywood executive. He’s a producer of popular TV shows. He’s been nominated for many different awards like Emmy’s and James Beard’s.

He’s generally a very impressive guy, but that’s not really how I know him. I know him as a friend. And we go way back to the Ecuador Chautauqua back in 2015 which is where we met. And we’ve kept in touch ever since. He’s a really smart guy that I’ve had great chats with over the years.

So, I’m excited to get him on just to talk about his story and some of the things that we’ve discussed over the years. But more importantly, I got him on the show to talk about the project that he’s currently working on which is a documentary that I’m extremely excited about. I think it’s really going to be the project that takes this whole FIRE thing to the next level and potentially brings this whole FIRE idea into the mainstream.

So, for the past year, Travis has been working with my other friend, Scott and Taylor. They’ve wrapped up filming. And the premiere of the trailer is going to take place next week at FinCon. So it’s a really exciting time. They’re just launching a Kickstarter to help fund the final push of this thing. And hopefully, it will be released in January or February of next year. So, it’s really exciting.

I’m personally in the film which is insane to me. And so is a lot of people that had been on this podcast actually like Mr. Money Mustache and JL Collins and Mrs. Frugalwoods. And it’s just going to be really exciting to see the concept of financial independence and early retirement on the big screen.

So, there’s a lot I want to get into. I’m excited to have him here. Travis, thank you so much for being here. I appreciate it.

Travis Shakespeare: No worries! I’m very happy to be here.

Mad Fientist: So, we go way back. We go back to—I think it was maybe around this time actually of 2015, my first Ecuador Chautauqua and your first Chautauqua as well, right?

Travis: That’s right, yup! 2015… wow!

Mad Fientist: I know! It’s crazy. So, over three years ago. And we’ve seen each other a lot ever since. We came and met you guys up in LA. And you’ve come to Edinburgh. And we’ve kept in touch all these years. So it’s good to get you on the podcast finally. I’m super excited of what we’re talking about.

But before we dive in to all the stuff I want to talk to you about today, can you just maybe tell people about yourself?

Travis: Oh, yeah. Absolutely!

I’ve worked in entertainment for the majority of my life. I started out actually as an actor, as a young man. And over the past few years, I kind of developed a career in non-fiction television. Some people call it reality TV. Most of the stuff I’ve done has been nature and survival and things like that. My big show on the air right now is called Life Below Zero on National Geographic.

Mad Fientist: I want to dive into how you found this whole financial independence thing and what put you on that path.

Travis: So, that… that happened really when I was about 40 years old, so ten years ago. And what had happened was my father was diagnosed with ALS. And he passed away. I was still $40,000 in student loan debt. I still had credit card debt. I came up as a starting artist. So I always thought that I was going to get a big break and suddenly land million of dollars from some, I don’t know, movie that I got to perform in or direct. I don’t know what I thought. I think I had what I now call lottery mentality which is very common actually in our culture.

I was broke. My dad was a schoolteacher as I said. And his pension went to my mom. So, me and my sister inherited $150,000 to split that he had in a Vanguard Star fund. So, we split that. I paid my sister for half the value of his Honda Civic, his 2005 Honda Civic and paid off my student loans and my credit card debt. And for the first time in my life, I had like $22,000 in the bank in savings.

I panicked because I had no idea what to do with the money because I was completely financially illiterate.

I mean I was very different from so many other people that are in this community. I was a classic financial illiterate basically. I didn’t invest. All I knew is that I needed to do something with my money.

So, I picked up a copy of William Bernstein’s The Intelligent Investor because I thought I was intelligent and intelligent was in the title. And it was so hard for me to understand. It was so complicated. And I was like, “Oh, no! I’m doomed. What am I going to do?”

So, from there, I just started searching on the Internet, and I found actually Get Rich Slowly. I had been using JD and Dave Ramsey’s approach to paying off debt before my dad passed away. And slowly but surely, I made my way around the financial independence community.

First, it was either Jacob’s book, Early Retirement Extreme or Pete’s blog. I can’t remember which. It probably happened between the same week or something.

And I read Early Retirement Extreme. And although that book was really truly extreme and super fascinating for that reason, it resonated with me because, as a struggling young artists, that’s the way I always lived. I didn’t want to live like that. I wanted to be rich. But I was good at living poor.

And then, I read Pete’s blog post, The Shockingly Simple Math which everybody points to. And I was like, “Wait a minute! This is a path that I can actually execute. This makes sense to me. It’s part of what I’ve already done in my life. All I have to do is apply a few of the new tips and tricks, and I’ll be on my way.”

Mad Fientist: That’s fantastic! Did it change your mentality at that point? If you’ve been living the struggling artist or starving artist lifestyle and probably just dreaming of the big pay day one day, to then read a book by someone who’s doing that on purpose and choosing that themselves, did that sort of empower you or make you feel more happy with your current existence?

Travis: I think what I would say is that it made me feel more comfortable with living frugally I guess because the message is that there’s something wrong with being frugal. The messages are, as we’ve all talked about, “buy new cars… buy cruises… buy diamonds…”

Mad Fientist: Especially in LA where you are…

Travis: Oh, yeah. And let me tell you something. I’m a senior executive now. And I drove my dad’s Honda Civic for almost 11 years. I would pull up to CAA, a creative artist agency, where you can only valet, and there’s like Teslas and Jaguars and Maseratis and everything, I would pull up in my little 2005 Honda Civic and the valets would turn their noses up at me like, “Who’s this joker/starving artist coming to get an agent?”

But then, because I kept the car really clean, and when I sold it, it only had 66,000 miles on it, they would pull it around all the time, they’d be like, “Hey, can I buy your car?” And I always felt vindicated then.

But to answer your question, yeah, I felt more comfortable being frugal. I think more than anything, emotionally, it made me feel relieved and like I might have a chance at not ending up eating cat food in my old age.

Mad Fientist: Right! Nice…

So, obviously, it was forced frugality for a while. But are you a naturally frugal person do you think?

Travis: You know, you and I have talked a lot about your frugality. And you typify to me somebody who’s naturally frugal, like there’s something in your nature that you just kind of go crazy if you have to spend more than you think you’re supposed to on something.

I don’t think that I’m like that. I think that I’m more of a value-driven spender. And that’s probably from the entrainment of being a struggling artist where I would have to constantly make choices, “Is this valuable to me or not? Do I want to spend my money on this or not?”

Speaking of my dad, there’s a story in my formative years when I was about seven years old where my dad taught me this really hard lesson about money. And I loved to go swimming in the summers. I grew up in Colorado. And so summers were really a great thing. And it costs a dollar to go to the swimming pool.

And my grandma, my mom’s mom—who of course I adored because she was my grandma—had recently come back from Las Vegas and gave me a silver dollar that she won out of a slot machine. And I cherished this silver dollar for two reasons: one, because it was a token from one of the people that I loved most in my life, and the other was that it had a magical quality to me. It was sparkly. It was this big piece of silver. I had dreams of what Las Vegas might look like and the idea of money pouring out of slot machines and getting extremely wealthy. Again, back to that lottery mentality which probably is an indicator of whether or not I’m truly a frugal person.

On a Saturday, I went to my dad and I said, “Hey, dad, I want to go to the swimming pool.” And he said, “Well, great! How are you going to pay for it?” And I said, “Well, what do you mean?” And he said, “Well, you’ve got a dollar. And it costs a dollar to get into the pool.”

And I said, “Well, I can’t use that. Grandma gave me this silver dollar, right? I can’t gave that up right.”

And he was like, “Well, you’re going to have to make a choice. Do you want to go swimming or do you want to keep the dollar?”

And as a 7-year old, that was an agonizing moment that I’ve never forgotten. But I chose the path of experience.

I remember very deliberately thinking, “I want the money, but I want the experience more.”

And so, I spent the dollar.

Mad Fientist: No way! Wow! I would’ve not called that. That’s pretty impressive. And was it worth it?

Travis: Absolutely! And it really set the stage for the rest of my life because I’ve always valued experience more than getting money in my pocket.

I’ll tell you one other thing that’s really kind of amazing about that story. I held a resentment against my dad for forcing me into that dilemma I think for most of my life. And when my dad was dying, he lost the ability to speak. My dad was a teacher, so he was a big talker. And it was never lost on him on that when he lost the ability to speak, the people around him suddenly could talk more, you know? He thought that was really funny; and so did we.

And I said, “You know, Dad, I’m going to take this opportunity and tell you everything that I can think of before you die that I possibly can so that there’s nothing unresolved in my mind when you’re gone.”

And I told him that story. And he said, “Come here, I want to show you something.” He had this little jewelry box that he kept money in that I used to steal quarters out of and stuff when I was a kid to go buy candy. He opened up the jewelry box, and he handed me that silver dollar that he had kept his entire life.

Mad Fientist: No way!

Travis: So, somehow, without us ever discussing that, he also knew that that was a seminal moment in my life.

Mad Fientist: That’s amazing! What an incredible lesson to learn at such a young age and to keep that with you. That’s amazing. You still have the silver dollar now. You haven’t gone out and spent it?

Travis: I’ve got the silver dollar in the jewelry box. Those are like a couple of things I kept of his belongings.

Mad Fientist: Nice! Oh man, that’s fantastic!

And yeah, frugality is an interesting thing. It’s something I’m still trying to figure out myself, what makes people naturally frugal. And the person that introduced both of us to this world is Jacob Lund Fisker from Early Retirement Extreme, we actually did something I think last week, talking about how INTJ’s personalities crave efficiency so much. And he linked to this really good article about INTJ personality types, and it talked about how they can’t handle any sort of inefficiency in any system. And I think that’s the thing that drives all of my frugality.

But it’s great to see you that you take a look at value. And even if something is maybe less efficient on the spending side or not as optimal from a financial point of view, you would still make that call. And I’m assuming that’s something that’s continued throughout your adult life as well?

Travis: Absolutely! I mean, it really is my personal north star where money is concerned.

I mean I think that my dad dying put a kind of fear in me, that I was going to be broke. It’s very strange. As a 40-year old man, even though I was 40 years old, and I had established myself in my life to a certain degree, the sense of like not having somebody to go run to in the event of a major emergency which is one of the functions that my father had fulfilled in my life was suddenly gone. And that was really scary to me. It was almost like I had to grow up or something totally unanticipated.

Did you have any kind of seminal moments like that in your upbringing where you had a specific lesson around money that changed your approach?

Mad Fientist: My dad bought me like four or five shares of stock when I was a kid. And this was pre-Internet days. So, I would wake up every morning and check in the paper to see how my stocks were doing. I remember that because I was so into the idea of like “Whoa! This money that we had, we could just put it into these stocks, and then it’ll keep growing and make more money.” So that was a big one.

But no, nothing as impactful as that silver dollar story. I’m so happy you shared that because that’s not something we’ve chatted about over the years.

Travis: No, yeah… I mean it’s just one of those that’s kind of buried in my personal story that comes out very rarely when I think about money.

I’d be really interested to see if somebody did a poll about how many INTJ’s there are in the FIRE community.

Mad Fientist: Yeah! Oh, that was my exact thought. I was like, “I need to try to figure out a way to do a poll maybe just on Twitter or something to figure out how many INTJ’s there are because I couldn’t agree more.”

And according to some of the things I read, that’s like one of the rarest personality types. But yeah, I think it’s a big portion of the FIRE community.

Travis: That would be really, really fascinating. I’d love for you to run a poll. I’m an INFP. So for the people out there that don’t know what we’re talking about, this is the Myers-Briggs Personality Test that puts your personality into certain quadrants, whether you’re primarily introverted or extroverted, intuitive or—what’s the other one?

Mad Fientist: Like feeling…?

Travis: Feeling… perceiving… judgmental (which doesn’t mean judgmental, you’re more like conclusive in your life)… and INFP is the second rarest personality type.

Mad Fientist: Yeah, I’ll link to all that in the shownotes. And I’ll link to the article that Jacob tweeted about because, yeah, it’s interesting stuff. And yeah, if I figure out how to do a Twitter poll or something, I’ll go ahead and do that and see if people can answer because I think it would be interesting to see.

Travis: Totally!

Mad Fientist: But I totally want to go back to what you said about value because value is hard for me post-FI when I’m trying to figure out what actually I do value and what purchases do make me happier. And for someone who lets value drive their own financial life, how do you know what’s valuable and what you should spend money on versus what you should hold back on?

Travis: I think the ultimate litmus test is to always think about your own death which is a very stoic practice even though I wouldn’t have necessarily called myself a stoic. I literally do this regularly. I look at something that I may want or may want to do or something like that, and then I’ll ask myself, “Well, if I were going to die tomorrow, where will this land on my value scale?”

Mad Fientist: That’s fantastic! And it’s a perfect time for me because I just didn’t do something. And last night, before going to bed, I thought about it again, and I was like, “I really should’ve done that.” It was a family event. And since I’m coming to America in a few weeks, I didn’t fly back for it because it was just a week ago. Last night, I was thinking about it, and I was like, “I really should’ve done that.” I really regretted it. Had I had that sort of idea in mind—which I would’ve never asked myself that question that you just said, like “If I’m going to die, should I have done this?”, that wasn’t in my vocabulary. But had it been just a few weeks ago, that would’ve drastically change the decision I made. And I wouldn’t have had the regret that was actually keeping me up last night which is rare. It’s not a usual occurrence to be kept up by thoughts. But I was laying there thinking, “I should’ve done that.”

But have you found that you’ve been true to those values? Surely, especially in somewhere like LA, if you’re in the showbiz lifestyle that you are, it must be hard to constantly keep that in mind when there’s probably so many external pressures pressuring you into other things.

Travis: I mean it can be. I’ll give you an example. Last year, I turned 50. I remember also when I was around my late 30’s or early 40’s, I found this website of like a luxury safari in Tanzania. And I was like, “Oh, my God! I’ve got to do this. This looks amazing.” And I said, “Someday, I’m going to do that.”

And as my 50th birthday approach, I thought, “How can I celebrate this milestone?” And I was like, “I’m going to go on a safari.”

And it was really expensive, Brandon. It was not the frugal thing to do. And now that I’m part of a FI community, I was like, “Geez, the opportunity cost. I can be invest it and be safer in my retirement” and all these stuff. But again, I ran the thing like “If I’m dead tomorrow, which do I want?” And I was like, “There’s no way I want to walk off this planet without spending three weeks on the Savannah in Tanzania” because that’s an incredible experience for a human being to be able to encounter.

And by the way, it’s only because of where we are as a society, in terms of having jet planes and all these other stuff that we can even just jump on a plane and do that. It’s a very lucky scenario in that sense.

Mad Fientist: So, was it worth it?

Travis: A hundred percent! Like no question.

But then, I go to your point about Hollywood, I like clothes. I have a little bit of a thing for nice clothes. But I don’t really buy them very often. And I kind of agonize about that because the difference between a $75 pair of shoes and a $400 pair of shoes is real. The quality of the products is actually drastically different. But if I’m pressed to go “Well, you know, I should get a $400 pair of…”

I’m going to the Emmy’s this weekend, right? And part of me is thinking, “I should buy my own tuxedo. I’m a Hollywood executive. Why don’t I own my own tuxedo?” But I’m too cheap to do it because I’m like, “No way! I can use that $2000 to go visit you in Scotland. So I’m going to rent one for $110 off the Internet instead. Nobody is going to notice. I mean they might, but I don’t care.”

Mad Fientist: It must be a danger for some people because that sort of sounds like the yolo lifestyle as far as decision-making goes. So obviously, you have to trust yourself to some extent to not go crazy because you could’ve easily said, “You know what? If I died tomorrow, I would’ve wanted to be in a really nice tuxedo for my last Emmy appearance.” So is that a worry for some people?

Travis: Well, I think that what you’re asking in a way is about holding to one’s own personal north star versus the pressures of your community, your society. And that’s a huge thing.

I mean, I’ve introduced a lot of people to the FI movement. And they just don’t take on to it. They just don’t take to it. I’ll be really interested to see when this film comes out who is exposed to it that would not have normally searched it out and then does take to it.

What I’ve noticed is a lot of the people that don’t take to the principles of the value-based lifestyle, let’s say, or an efficiency lifestyle, are people who just cannot let go of the narrative that they’ve been sold by, frankly, the advertisers.

So yeah, I think it is a slippery slope if you’re a person who’s more interested in the accolades of other people than following your own true north.

And that’s something that I’ve definitely noticed about the FI community. This is not a community of people who give a shit what other people are thinking. I mean they do care about some people and things like that. But they’re not very susceptible to general societal drifts or pressures.

Mad Fientist: I completely agree. And I can’t wait to dive into the documentary because there must be so many other things that you’ve seen over the last year filming this that are going to be super interesting to talk about.

But before I do, I want to get back to your story. So you found this whole idea of financial independence. And it wasn’t too long after that that you decided to come to the Chautauqua, is that right?

Travis: Yes, that’s right. And deciding to go to the Chautauqua was a funny process for me. I’m not a person who’s like quiet about the FI thing. I tell everybody. I’m like, “Yeah, there’s this community. They’re frugal. They invest.” And people, their eyes spin around. They’re like, “What are you talking about?” But for anybody that would listen, I would tell them.

And then, I was talking to my partner, David, and a couple of friends. And I said, “You know, I think I’m going to go to this Chautauqua in Ecuador. But it’s kind of weird because it’s a bunch of people who are getting together in Ecuador to talk about getting rich.”

And I kind of was like, “I don’t know if that’s…I don’t know what I think about that.”

And then, I saw the schedule. And on the schedule was a day dedicated to community service. And when I saw that, I was like, “Oh, wait a minute! These people are up to something bigger. I want to do this.”

And that’s how I ended up there.

Mad Fientist: That was my first one. And it was weird enough for me to go down there, but I’ve luckily met Mr. Money Mustache and Jim Collins before and things like that. So to be an attendee especially in the early days before it sort of got really popular online and things, it must be a pretty difficult decision. I’m assuming you loved it and didn’t regret your decision?

Travis: Oh, no… not at all.

I mean first of all, that was one of the funnest weeks I’ve ever had in my life. It was just great. The people were incredibly—the people were just so smart and so fun and interesting—and happy.

That’s the thing that always blows me away whenever I get around a group of people that are in the FIRE community. I just have never seen such happy people in my life.

Mad Fientist: That’s true. It’s a great bunch to be around. And everybody is so interesting with interesting stories and goals and pursuits. And it’s always such a fun time.

So, yeah, I’m glad you made it down. We had some really great chats. I think we had our one-on-one together. I just remembered sitting out and looking over the jungle and just having this really deep conversation. And we’ve been friends ever since. And we continue to have these great, deep chats which is great. So yeah, no, I’m definitely glad you came down.

And that was sort of the genesis for the documentary, right?

Travis: Absolutely, yeah. In keeping that with that community service kind of thing, one of the things that I find really fascinating generally about the FIRE community is—and I keep asking this question—“What happens if you’ve got a hundred million millionaires, or 10,000 more millionaires, that are liberated from obligatory work? What can happen in the world when that happens?”

And I’ve asked a lot of people in the course of interviewing everybody for the documentary about whether there’s an obligation in some way to give back. I do feel that way. I feel generally, as a philosophy in life, that it’s not an obligation necessary, but it’s a productive thing for us to share our wisdom. I mean that’s kind of how the human species has flourished, is that we’ve shared and paid it forward and things like that.

So Pete, Mr. Money Mustache, you, Jim Collins and Jeremy from Go Curry Cracker were hosts. And when I got back, I thought, “What can I do to help with this? I’m not a blogger. I’m not a financial expert. But I make media.” And I thought, “Well, I could make a documentary about this.”

So, I reached out to all of you guys to see if you would do it. And you were all like, “Yes!” And I was like, “That’s awesome.”

And then, the hard realities of making a documentary started setting in. Also, I still have a day job. And I kind of got waylaid by my day job, to be frank.

Also, I had two problems. One was funding the documentary because documentaries don’t fund themselves. They don’t even really pre-sell usually. You have to make them first. And then, if you’re lucky, they’ll sell.

And the other problem that I had was I didn’t have an organic narrative to follow as a story.

What I had was everybody who’s in the financial community and everybody who’s become financially independent willing to share their story. But that’s not really a movie.

So, I kind of shelved the project while I was putting together a big TV show. And all of a sudden, I hear my partner, my current partner on the documentary, Scott Rickons on the Choose FI Podcast. And I was like, “Oh, shit! That guy’s going to do my documentary.” I was like, “This is terrible! I shouldn’t have put this off,” talking about putting things off for tomorrow.

And a buddy of mine was like, “Why don’t you just call him and just see what he’s up to?”

So, I did. And Scott and I ended up meeting. I was traveling, and he happened to be in Seattle when I was going through. So I stopped off. We had dinner. And we hit it off and decided to partner.

And the great thing about it was that he and his wife had already decided to embark on this journey of understanding the FIRE community and changing their lives over the course of a year which formed the back bone of the documentary to follow and allowed us to disseminate the information that we think is essential to the movement itself and the philosophy and so on.

Mad Fientist: That’s so great, yeah.

So, I was looking through past emails because I just wanted to sort of get a timeline of when all these stuff was happening.

And before I dive into that, I want to tell you one of the emails I came across which is a Chautauqua one. And the quote was: “I didn’t call in sick with traveler’s diarrhea for two weeks, and then immediately retire as adviced by the Chautauqua crowd.”

So, obviously, that was part of the advice some of us geniuses down there shared with one of the attendees. And luckily, she decided not to go that route.

Anyway, so I was looking through all my emails. And you emailed myself, Jim Collins, Jeremy from Go Curry Cracker, and Pete from Mr. Money Mustache on July 28th 2016. And that was sort of your proposition for this documentary. And as you said, you got busy for a year. And it wasn’t until September 1st 2017 that you ended up meeting Scott. So that was a whole year that went by. You must’ve been extremely excited to get that project revived after a year of working really hard at your day job.

Travis: Oh, yeah. I mean I was thrilled.

And also, the fact that Scott and I hit it off is kind of a miracle in and of itself.

Mad Fientist: Absolutely! And the funny thing is that Brad from Choose FI, he’s a long time buddy of mine. And I remember him. He sent me at least two emails saying, “Hey, I met this guy Scott. He’s doing a documentary. He’s great. You’re going to love him. He wants you to be involved.” And I just kept replying and saying, “No, that’s okay. I’m not interested” because I was like, “No, my buddy Travis is doing the documentary. I’m going to be in Travis’ documentary. I don’t know who this guy is.”

And I think it was like the third email, and Brad’s like, “No, seriously. Just have a chat with him. He’s a great guy.” And it was right around that time that I think I heard from you, and you’re like, “Hey, I met this great guy named Scott. And we’re going to team up on this documentary.”

So, I’m so glad you did because I got to meet Scott and Taylor at—I think it was the 2017 Ecuador Chautauqua. And exactly like you, we hit it off immediately. And I was like, “Oh, this is going to be fantastic especially since you guys teamed up.”

So, can you maybe talk about how you actually teamed up on this project? What roles do you guys each play in this project?

Travis: Yeah. So I’m directing the documentary. I’m also an executive producer. Scott and I, it’s a very small operations. Scott’s the executive producer—he and Taylor, and their daughter, Jovy, up here in the film.

Mad Fientist: So, you met on September 1st last year. When did it really swing into full gear in this thing.

Travis: So, they had already started kind of shooting. They had shot a couple of scenes. I can’t speak for Scott, but he told me this. I think he was relieved to have somebody else helping oversee it. It’s very difficult to put yourself in a movie and produce it and direct it. You know what I mean?

So, I think he was really happy. And since they’ve already kind of shooting, we just jumped right in. We’ve now shot across a full year. We basically just finished our principal photography. And we’re editing. We’ve got our first rough cut as of basically today. It’s our first…

Mad Fientist: Oh, wow! Congrats…

Travis: Thanks. We get a little ways to go. But it’s really great progress.

And you know, this is something that myself and my editor, Adam Barton, who’s just a terrific editor, we’re doing this on the side of our day jobs. Adam works full time in television as an editor. So, most of this has been done on weekend and short weeks throughout the year. It’s been a ton of work, but really rewarding. And we’re pretty happy with what’s coming together.

Mad Fientist: Oh, it’s great. I can’t even imagine what the process is like. I saw how much you guys filmed when we were together just for a couple of days in Dallas. And it as just a ton of footage! I just can’t imagine how you got all of that down into a couple of hours. It just seems such a huge task. But if you already have a rough cut, that’s pretty great progress, I would say, right?

Travis: Yeah. I mean it is daunting. We overshot terribly. But the cool thing about that is that we’re going to have all these extra content.

Mad Fientist: Oh, nice.

Travis: All of the interviews that I conducted, we’re going to turn those into long form interviews that people can actually watch outside of the movie.

Mad Fientist: Oh, great. Oh, that would be great.

Travis: …which I think people will really like.

Mad Fientist: I think we’re able to run through some of the cast of characters that you were able to talk to for this film.

Travis: Oh, wow! We’ve got you, Mr. Money Mustache, JL Collins, Jeremy from Go Curry Cracker, Kristy from Millenial Revolution, we’ve got Ryan Holiday who’s an expert on stoicism, the minimalists are in the film.

The sad thing is that we couldn’t get everybody in the movie. We’re trying to keep it definitely under two hours. Hopefully, something like—typically, you do like 90 minutes. So you can imagine how difficult it is to condense a story plus the information on the FIRE movement and whatever into a 90-minute thing.

Mad Fientist: Every time Scott would tell me more people you got involved, I’m like, “You probably couldn’t even introduced all these people in the 90 minutes.” I was wondering how you guys are going to tackle that problem.

Travis: It’s a problem, but we’re working on it.

Mad Fientist: Nice!

Travis: Vicki Robin is just remarkable. She wrote Your Money Or Your Life. She is just an incredible voice;

JD Roth, Doug Nordman—you know, Nords…?

Mad Fientist: Yeah, Nords from the Military Guide, yup.

Travis: Yeah. We also have Jocelyn Pearson from The Scholarship System, somebody who’s really a leader in tackling the student loan problem. So yeah… I mean there’s many more.

Mad Fientist: Sounds fantastic!

Travis: Who all ends up in the final cut remains to be seen just because we interviewed so many people. But I wanted to get as many voices as I possibly could from the community so that we could explore all the different degrees of what this is all about.

Mad Fientist: Is the documentary different than what you thought it would be way back in 2016 when you first had this idea?

Travis: Okay… so here’s what’s really crazy. No… it’s pretty much exactly what I thought it would be.

Mad Fientist: Nice!

Travis: But that’s just insane.

Mad Fientist: Yeah, that’s great. That’s fantastic. So you’ve been able to relaize your vision which must feel so good.

Travis: Oh, I’m besides myself that I was even able to do this.

The only thing that I didn’t really specifically 100% know would be who would fill the shoes of Scott and Taylor? What would that person be? And what would their journey be? And how would that all come together? That was the only thing that I didn’t really know. But Scott and Taylor are just lovely people. And they carried the film really well.

Mad Fientist: Yeah, I bet! You couldn’t pick two better people to be in it. I wouldn’t think so. No, that’s great.

And did you learn anything about the financial independence, early retirement scene that you didn’t know? You were pretty into the scene to begin with. And you’ve met a lot of the big players. And you’ve obviously read and listened to a lot of content over the years. Was there anything you learned through the process? Or was there any trends that seem to stand out that everyone was talking about?

Travis: Yeah, you know, I think that one of my biggest takeaways—and I kind of discovered this in talking to Vicki Robin—was that there’s an analogy between the FIRE community and the ‘60s, the people that dropped out of society to take drugs and reject the standard system and all that. Let’s call them the bohemians, right? The thing that I never quite understood which I was constantly kind of asking myself as I was making the film was: “Who are these people?” You and Pete, what is the common thread here that binds you guys.

And I realized that there’s this countercultural desire for freedom and a rejection of the standard narrative that’s very similar to what happened in the ‘60s.

Mad Fientist: This documentary is going to obviously take this thing to the next level. It’s going to reach people that blogs and podcasts never will reach. And it’s going to open…

Travis: Can I tell you something?

Mad Fientist: Yes, yeah.

Travis: It already is. This past week, we were featured in the New York Times. It’s now been picked up by Le Figaro which is one of the big French newspapers, El Ray which is one of the big Spanish newspaper. The BBC called today. And we don’t even have the trailer out.

Mad Fientist: Oh, wow! That’s amazing.

Travis: So it’s in the Zeitgeist. And you’re very right about that. I can tell you why I think that is, but go ahead… I’m sorry…

Mad Fientist: No, please, please. No, I would love to hear it.

Travis: Well, I think there’s a couple of things. One is there’s a general panic going on especially in younger people about the future. Because of the Internet, and we’re constantly bombarded with all these information all day every day, there’s a sense of insecurity about the future—I think greater than we probably have ever had as a society.

So, the social safety nets of social security, healthcare, everything is in flux—and potentially, in jeopardy. And also, the financial services community—I was about to get conspiratorial—they have forced the individual into a position of responsibility with their own financial future. And we are woefully unprepared to face that because we don’t teach financial literacy to anybody.

We’re taught to be consumers. That’s what this culture teaches us. You make money to spend money. That is the whole point of the game, “Don’t worry about it. Everything will work out.” And that’s a lie.

Mad Fientist: Absolutely. Yeah, absolutely.

Travis: So, there’s a sense that all of these is just crumbling I think. And so the idea of being able to have some control and some knowledge and some agency over one’s own life I think is very attractive.

Now, the question is going to be how much the community, the subculture, is going to be able to impact the standard narrative that we talked about earlier in terms of the slippery slope of like, “Well, gee, but I really do want to yolo. And I need my Instagram picture and all that.” How much is that going to be able to push in?

My goal personally would be 10%. I think that would be radical if we could get 10% of the broad population onboard with what we’re up to here.

Mad Fientist: Yeah, that would be insane. Just obviously, having a website of my own, I’ve received emails over the years. And just to see the amazing things those people have been able to do after realizing what’s possible and after starting to live this life that’s more directed to their values and their purpose and things like that, just to see all the great things that have been created just from that small subset of people, if you reached 10% with the documentary, I can’t even imagine what the snowball effect from that would be. Have you thought about that?

Travis: I mean I wish for it, but I haven’t thought about what it’s going to look like. It goes back to what I said: “What happens if you have 10 million more millionaires who are free? What happens to communities? What all can you do that is in alignment with your values that can have an impact in the world?”

I mean, one of the hard things about making this documentary is that you guys have already covered the ground of how to pursue the path to FIRE. And so how can we make all that attractive to a broader audience and relatable? That was my undertaking. And we’ll see if it works. I don’t know. It could be rejected. You never know.

It’s so exciting because Vicki and I were talking about the healthcare thing. She ardently wishes that the FIRE community as a whole would take up the healthcare problem in the United States because it’s like a thousand of us, put our minds to it and got really dedicated, we could literally change that conversation.

And that specifically interests us because healthcare is one of the big problems in the United States at least with the whole thing.

Mad Fientist: Absolutely, yeah. No, it’s really exciting to think about. I want to talk more about that because that’s something that we’ve chatted about over the years, living a life of purpose and pursuing the things that are important to you. I really want to dive into that in this call.

But I also want to pick up where we left off in your personal story because there’s so much more that I want to dive into there as well.

Shortly after the Chautauqua, you hit your FI number. But then you then decided to buy a house which then sort of threw a wrench in the old FI number. So I want to dive into that because that was definitely a value bet. It was definitely a conscious decision. It wasn’t like you just ended up with a house, and you’re like, “Oh no, I’m not going to be able to retire.” But I want to talk more about that because I think that was a tough decision for you, and I’d like to hear your thought process on that.

Travis: Yeah. And to be honest, I still question the decision. I reached financial independence per the 4% rule 25 times and all that in about eight years. That was extremely accelerated because I came into the community right when my career started lifting as well. So, I started saving money at a really accelerated rate.

I didn’t change my lifestyle. I kept driving the 2005 Honda Civic. And I stayed in a rent-controlled apartment that I had lived in for—well, I lived there with my ex. This is a crazy story. People were always blown away by this. I lived with my ex in a rent-controlled apartment in West Hollywood. And when we broke up, I didn’t move out. We split, and I moved into one room, and he moved into the other room. And I was traveling a lot from my work, so it kind of ended up working out. And now, we’re great friends, and he’s like family for me. So that was the emotional part that worked.

And then, in doing that, I kept my housing costs extremely low. I think I was paying like $700 a month to live in West Hollywood. But that allowed me to save a ton of money.

Mad Fientist: It’s crazy!

Travis: So, when I emailed you and you told you that I was financially independent, that was at my current lifestyle which was living with my ex as a roommate, driving a very old car and just really not—

I think I sort was feeling emotionally like I wasn’t quite flourishing in the way that I wanted to be. So I started looking at renting an apartment of my own. But because the cost of rentals in Los Angeles, when you start writing the math, it’s like, “Gee, do I really want to rent a crappy apartment for like $2300 or $2700 a month,” which is how much I cost here, “or should I consider buying a place?”

I looked for a year and a half before I pulled the trigger and bought a condo.

And it was a great decision personally. I’m really happy I did it. I’m glad that I have my own place. That all feels really great. But I still question whether or not it was the right financial decision.

Honestly, I think the regret is that it’s so expensive to buy anything in Los Angeles that like I’m financially independent, and I have a high paying job, and I have a good career, and I still can’t afford in a conservative fiscal sense the kind of place that I would imagine myself living in at this stage in my life.

I’m still living in an apartment in the middle of Hollywood. It’s not the greatest neighborhood. I don’t know. I think that’s where I struggle with it.

And then, on top of that, it did set me back in terms of me having hit my number. So, I actually just hit my new number again a month ago.

Mad Fientist: Oh, nice… congrats!

Travis: Thank you. So I’m now financially independent again with my current…

Mad Fientist: And this is something I want to dive into as well. You weren’t really sure what to retire to anyway. So it wasn’t like you were rushing to the exits. You have a great job that gives you access to the industry that is your passion. And you didn’t really have anything pulling you away from that at that moment.

I’m wondering if that’s changed since then or if that’s still the situation.

Travis: That’s an ongoing conversation I’m having with myself. I enjoy working. I mean making this documentary is like a dream come true for me. It’s really fun. It’s a lot of hard work, but it’s really fun. And it’s something that I care about.

If I could do that all day every day, that will be unbelievable. I don’t know if that’s a realistic proposition just because of the way life works. You just don’t get everything you want every day even if you’re financially independent.

I definitely feel the tug of wanting to have more greater agency over the way my life plays out.

When I was a struggling actor, I had a ton of agency over my own life. I mean as long as I got enough money to pay my rent and buy some ramen noodles, I was free. And I loved that because it allowed me to pursue what I wanted to be pursuing.

I don’t know. I’m older now. And I kind of got sucked into the system a little bit. I am a little worried about the healthcare question. I haven’t really solved that for myself. If I quit my job—like I have great healthcare where I work. If I quit my job, what would that exactly look like? Do I have enough money put aside? I don’t know! I’m having those struggles which I think are pretty common.

Mad Fientist: How about identity? Do you worry about that? You have a prestigious job in Hollywood. You’re a big shot exec. Could you go to being an independent documentarian? And how would that feel? I’m sure you’ve thought about that. I know we’ve talked about it a little bit as well.

Travis: The identity question is huge for me because I’ve spent my entire life trying to build a career in the entertainment industry. And so it wasn’t like I had a bad job that I was stuck in a cubicle slogging away and just dreaming about the moment I could break the chains. I kind of got to where I wanted to go in many ways. So, I’m very fortunate on that regard.

And just throwing that identity out the window is kind of a weird thing.

I toy around with it. I’m not a famous actor. I’m not Brad Pitt. So I don’t walk out into the airport and people recognize me. I spent a lot of time in Alaska, for instance, working for one of my TV shows, and nobody cares about who I am. I mean nobody really cares about who I am in Hollywood either, to be real. I’m part of the working class of Hollywood. I’m part of the maker class. I’m not a celebrity. So my identity isn’t around that. It’s around what do I do all day. And will I still have the same level of access?

Mad Fientist: So, with your current work—you get to work in these remote Alaskan communities, there has to be some sort of similarities there between these two groups of people who—you know, one chose to go out on their own into the wilderness of financial independence, and then other people decided to go do that up in Alaska or something. So, have you noticed any similarities between these groups after working with them for so long?

Travis: Absolutely! One of the things that is a common denominator in all of my career that I’ve kind of noticed is that the subcultures that I’ve showcased and attracted to are people who seek great freedom. And the Alaskans are the prototypical freedom-seekers. “Last frontier… I don’t want no government… I can do this on my own… Get out of my way.” That’s Alaska.

And there’s a similarity to the FIRE community as we’ve discussed in terms of their desire for freedom and an autonomy.

Mad Fientist: So, what is the plan for the documentary then? I know you’re finishing up some edits. You’re hoping to get a trailer out soon. But what’s the timeframe? And what can people look forward to?

Travis: So, the plan right now is we’re launching our world premiere trailer at FinCon this month.

Mad Fientist: Can’t wait!

Travis: Along with our Kickstarter campaign to raise money to finish the film. I blatantly ask people to please support the film. Making a movie is extremely expensive. We’ve shot over the course of the year. The edit schedule is about four months. There’s all these stuff that we have to do in terms of coloring and mixing and paying a composer and things like that. So, we’re asking the community for their support with their Kickstarter.

And then, the plan from there—and this is a little bit of a trouble with documentaries generally—we’re going to be presenting for sale. We’re submitting it for the Sundance Film Festival. We may do a layer of direct sales to the community first in order to drum up enough interest and excitement from Netflix and people like that to purchase the film. The path for documentaries is you’ve kind of have to hit it from all angles and hope that something sticks.

So, the current plan is definitely to try to release it at least direct to the public by early 2019, probably January—unless we get into Sundance which would happen at the end of January, beginning of February. And that would change a big part of the way that the film gets seen.

Mad Fientist: Oh, that’s so exciting. And yeah, the Kickstarter, I’ll link to that in the shownotes. And I’m chatting with Scott right now to figure out something cool that I can donate to be one of the Kickstarter levels or whatever, however it works.

Travis: Oh, that would be awesome.

Mad Fientist: Cool bundle stuff, we’re working on that now. And hopefully, I’m sure there’s going to be tons of really cool things for any backers of the Kickstarter campaign. And yeah, I’m just super excited about it. I’ve never taken part in anything like that before. But just the production and all the guys you had on the crew, it was such a pleasure.

And I’ve seen some stills from the shots. And it just looks fantastic! So I have no doubt yours are…

Travis: And yours are great. You did a great job! You’re in a movie, Brandon!

Mad Fientist: Oh, man! That’s crazy. Thanks. Yeah! It was a nuts experience. It was great. And yeah, definitely, I’m used to being the radio voice—that’s easy—not being on camera. But no, I know you guys are going to make an incredible film. And I can’t wait to see the trailer in a few weeks.

Travis: The scene with you and Scott and Taylor is so great.

Mad Fientist: Is it?

Travis: Oh, my God! It’s so funny. It’s really wonderful.

Mad Fientist: Oh, nice. I can’t wait to see it. No, it was so fun to do. And yeah, I can’t thank you enough for asking me to be a part of it. And it’s been an amazing thing to see over the years, this thing go from your little idea that was in an email way back in 2016. And now it’s going to be a film. So congratulations!

Travis: Thank you. And I’m really grateful for your support and your participation and everybody else’s that participated in the community. I mean one of the things that I’ve always marveled at with this community is their generosity—of time, of spirit, knowledge. I mean it’s really incredible. It’s very rare.

Mad Fientist: Well, we appreciate you giving us a megaphone. It’s one thing to put something on a website on the Internet, but it’s another thing to make a movie out of it. And I think the reach from your movie is going to be incredible. So yeah, I appreciate the megaphone and the platform to do something hopefully great.

And yeah, like we said, if we get those 10%, that would maybe change the look of the country forever… which should be insane.

So, yeah, very exciting! 2019 is going to be a very cool year.

Before I let you go though, I ask all my guests: “What’s one piece of advice you’d give to somebody on the path to financial independence?” I can’t wait to hear what you have to say.

Travis: Oh, wow!

Mad Fientist: No pressure.

Travis: Okay. Let me think about that. What’s one thing that I would tell people.

Okay, I’m going to tell you the trick, the psychological trick, that was actually a mistake that I did that accelerated my savings rate more than anything else in my path. And that was that whenever I got a raise, I paid myself 10% of the raise based on the rule that I think I read in The Richest Man in Babylon, to pay yourself first 10%. I got it all backwards. I thought that it meant that I was supposed to take 10% of my raise and give it to myself and save the other 90% in the bank.

And this is how bad at math I am and why I shouldn’t really be talking about this stuff. But it worked perfectly. It gave me this boost where I was like, “Ooh, I got extra money. I can spend this on whatever I want,” but I was saving 90% of every piece of future income. And that had a massive effect on my savings rate.

Mad Fientist: And yeah, you get the benefit of the rate, you get the boost. And yet you’re able to reach FI in eight to ten years probably. So yeah, that’s…

Travis: Absolutely!

Mad Fientist: That’s one math problem that you should be happy you got wrong I think.

Travis: I am actually. I’m very happy. I feel stupid about it even still talking about it. But it worked in my favor, so sometimes being dumb is a great thing.

Mad Fientist: Well, this has been great, Travis. It’s always fun to talk to you. And yeah, I’m looking forward to seeing you in Orlando soon. And I can’t wait to see the trailer.

So, if anybody wants to find you anywhere, they can obviously leave comments on the shownotes for this episode. But is there anywhere else you want people to stop by?

Travis: Yes, so the film’s website is I’m also putting out my own website, if people want to contact me directly. But you can also get a hold of me through the Playing with FIRE website.

Mad Fientist: Perfect! I will link to all that and definitely the Kickstarter too. So if you guys are excited about the documentary as I am, definitely go to that. And check out all the backer levels and help make this thing become a reality.

But Travis, thank you so much. This has been great.

Travis: Thanks, Brandon.

Mad Fientist: Alright, buddy. Bye.

Travis: Bye.

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The Incredible Tax Benefits of Real Estate Investing Fri, 14 Sep 2018 10:50:40 +0000 Professional real estate investor Chad Carson breaks down the 10 best tax benefits of real estate and explains how they can help you retire earlier!

The post The Incredible Tax Benefits of Real Estate Investing appeared first on Mad Fientist.

Today, I’m excited to share a guest post with you that was written by Chad Carson from

This is a post I’ve been wanting to write for years but since I’m not a real-estate investor, I didn’t have the knowledge or experience to do it.

Luckily, Chad has both (he’s been a full-time real-estate investor for nearly 15 years) and was kind enough to write the ridiculously informative post you’re about to read.

Side Note: Chad’s new book, Retire Early with Real Estate, was just released yesterday and it’s fantastic so go check it out!

A big thank you to Chad for taking the time to put this together and I hope you enjoy it as much as I did!

Take it away, Coach…

The Mad Fientist is well known for dissecting and explaining amazing strategies to avoid taxes and achieve financial independence earlier. Some of my favorites are:

Like the Mad Fientist, I love benefiting from tax laws to help me reach financial independence earlier. But instead of pretax retirement accounts and stock index funds, my primary focus has been on the tax benefits of real estate investing.

I’d like to share 10 specific benefits with you in the rest of this article (including updates from the Tax Cuts & Jobs Act enacted by the U.S. Congress in December 2017).

But first, a little background on me.

My Real Estate Investing Background

I’ve been a full-time real estate investor since 2003 soon after I graduated from college. But my foray into real estate was not an obvious choice.

When my NFL football dreams fell flat (I was a middle linebacker at Clemson University), I stumbled upon the idea of real estate investing while reading a book. With a Biology degree and German minor, I was basically qualified to tell you the species of trees at a house and translate them to German! But I loved the freedom of entrepreneurship and the challenge of learning something new.

So, a business partner and I dove into real estate investing in 2003 and never looked back.

Real Estate Business vs Investment

As fledgling real estate investors, we had two challenges. First, we had to use real estate to make a living. Second, we had to use real estate to build wealth so that we could achieve financial independence.

To make a living we got into the real estate business. We learned how to find and quickly resell deals for a profit. Sometimes we sold these in as-is condition to other investors (aka wholesaling). Other times we fixed them up and sold them to end-users (aka retailing).

To build wealth and retire early, we also began buying real estate investments. We wanted our investments to grow and fund our early retirement with regular, steady income. Luckily, real estate has many different strategies to do both of those very well.

Along the way, we bought and sold hundreds of properties. And today we still own 90 rental units in and around the small college town of Clemson, South Carolina.

I don’t tell you this because you need to replicate what I have done. The opposite is true. If you have a regular job to pay the bills, you can accomplish amazing financial results with just a few investment properties. And the real estate strategies I have used work very well in conjunction with other investment strategies like stock index fund investing as taught by the great JL Collins.

How to Make Money in Real Estate

Without profits, tax benefits are not relevant. So, let’s first look at how you make money in real estate investing.

Just remember that real estate is an I.D.E.A.L. investment:

  • Income: Regular cash flow from rents or interest payments. I consistently see unleveraged returns of 5-10% from this one method of making money. With reasonable leverage, it’s possible to see these returns jump to the 10-15% range or better.
  • Depreciation: A required accounting method that spreads the cost of an asset over multiple years (27.5 years for residential real estate). This paper expense can “shelter” or protect other income from taxes and reduce your tax bill. I’ll explain depreciation in more detail later.
  • Equity: If you borrow money to buy a rental property, your tenant essentially pays off the property for you. You use the rent to pay the mortgage, and each month the principal paydown (aka equity) gets bigger and bigger like a forced savings account.
  • Appreciation: Over the long-run real estate has gone up in value about the same rate as inflation (3-4%). This passive style of inflation helps, but active appreciation is even more profitable. Active appreciation happens when you force the value higher over a shorter period of time, like with a house remodel.
  • Leverage: Many investors use debt leverage to buy real estate. This means, for example, $100,000 can buy four properties at $25,000 down instead of just one property for $100,000. Leverage magnifies the profits mentioned above (and potentially the losses). Plus, interest on debt is deductible as a business expense.

Not every real estate deal has every one of these profit centers. And sometimes you have to give up one in order to get another.

For example, one time I purchased a mobile home on land. I paid cash (so no leverage and no equity growth). The mobile home itself went down in value like a car (negative appreciation). But the income was excellent. And the depreciation sheltered some of the income from taxes.

Another investment was a more expensive single family house in a great neighborhood. Initially, the net rent after expenses barely paid the mortgage (no income). But my equity built up quickly because the loan amortized quickly. And the property was in a great location likely to appreciate at or above the overall inflation rate.

Now you know the basic ways to make money. Let’s move on to 10 different tax benefits of investing in real estate.

Top 10 Tax Benefits of Real Estate Investing

The Top 10 Tax Benefits of Real Estate Investing

1. Depreciation Shelters Income From Tax

The IRS uses depreciation to acknowledge that an asset wears down over time. Somehow they discovered that residential real estate wears down in exactly 27.5 years (sarcasm intended). Other assets have different timelines.

Unlike other business expenses, depreciation is a paper loss. This means you don’t spend any money, yet you still get the expense. This expense can offset taxable income and save money on your tax bill.

Here is a basic example:

Scenario #1 (without depreciation expense):

$5,000 taxable rental income x 25% federal income tax rate = $1,250 taxes owed

Scenario #2 (with depreciation expense):

$5,000 rental income – $3,000 depreciation expense = $2,000 taxable rental income

$2,000 x 25% federal income tax rate = $500 taxes owed

Tax Savings = $1,250 – $500 = $750

The higher your tax rate, the more taxes you would save in this example.

Depreciation is not unique to real estate, but real estate investing uniquely benefits from depreciation. Why? Because the cost of real estate is so large and often purchased with debt.

A $200,000 building depreciated over 27.5 years provides tax shelter of $7,272 per year. If you had 3 rental properties, you’d shelter $21,816 of income from taxes and possibly* save $5,454 on your tax bill (at a 25% rate)!

There are also other nuances and details related to applying depreciation expenses. If you want to go deep and nerd out, Depreciation For Side-Hustlers by Jeremy at is a great place to start. And the IRS publication about Depreciation of Rental Property makes for excellent weekend reading with a craft beer.

Also keep in mind that what the IRS giveth, the IRS taketh away. When you sell a rental property, it’s very likely that you’ll have to recapture the depreciation and pay taxes on it. The tax rate on this recaptured real estate depreciation is usually 25%. This creates a big incentive to keep real estate or to use other tax savings strategies when selling, like a 1031 exchange. I’ll discuss the 1031 exchange later in the article.

*There are catches to how much you can depreciate. I’ll cover those in the next section.

The Catch to Depreciation

Prior to the Tax Reform Act of 1986 real estate investors took full advantage of depreciation and real estate losses to shelter other sources of income. This was so popular that many high-earning investors bought real estate simply for its tax advantages.

Eventually, president Reagan, congress, and the IRS caught on. So, the rules changed (this is a good lesson to not depend upon beneficial tax rules forever).

To summarize the changes, depreciation expense on a rental property was and is still deductible against other passive income. But let’s say there is an excess loss. For example, your rental income is $3,000, depreciation expense is $5,000, resulting in a $2,000 rental (passive) loss.

Can that $2,000 loss shelter other nonpassive income, like your dividends or job income? After the tax reform, usually no.

But there are exceptions:

  1. $25,000 exemption – You can deduct up to $25,000 of passive rental loss against nonpassive income if your income (MAGI to be exact) is below $100,000 and you actively participate with your rental.
  2. Real estate professional – You can deduct ALL of the passive rental loss against nonpassive income if you or a spouse qualify as a real estate professional (here are the standards).
  3. Year of sale – You can deduct ALL of the passive rental loss (even from past years) against nonpassive income the year you sell the rental property.

So, you’re good up to $25,000 of deductions if your income is below $100,000 and if you’re active with your rental. Many early retirees accomplish this anyway to benefit from other tax angles like Obamacare subsidies and Roth IRA conversion ladders.

You’re also very good if you’re a real estate professional. But among other things, the rules require you to spend 750 hours or more with your real estate activities. Sort of defeats the purpose of retirement, doesn’t it?

The third exception means you get to eventually use your passive losses when you sell. These losses can be used to offset depreciation recapture and capital gains from the sale. This is not as good as immediate deductions, but it’s a decent consolation.

Some of the other tax benefits of real estate are more straight forward.

2. Avoid FICA (Payroll) Tax on Rental Income

Just like dividends and interest income, rental income is not subject to social security and medicare taxes (aka FICA). While this is not an enormous benefit when compared to other investments, it is significant when compared to normal earned income.

If you earn money at a normal salaried job, you pay 7.65% (as of 2018) of your salary in FICA taxes. If you’re self-employed, you pay 15.3% towards FICA tax.

With a $100,000 salary, that’s $7,650 or $15,300 out of pocket from your salary. But if you earn $100,000 in rental income, you avoid the tax completely. This is a big incentive to start earning your money from rental income.

3. No Tax On Appreciation (aka Buy & Hold Like Buffett)

One of the most tax-efficient methods to build wealth is simply not selling. Warren Buffett often says “my favorite holding period is forever.”

When you sell, you pay transaction fees, commissions, and taxes. All of these costs drag down your long-term performance because you forever lose the ability for those dollars to compound and grow.

And real estate appreciation doesn’t get taxed by the IRS. So, if you buy and hold for many years it’s possible to let your net worth grow with minimal tax exposure.

And when you do choose to sell, real estate has other benefits.

4. Capital Gains Tax at Lower Rates

As of 2018, long-term capital gains tax rates are between 0% to 20%, depending upon your tax bracket. Of course, the shifting political climate can always change these rates. But in general capital gains tax rates are lower than ordinary income tax rates.

Low capital gains rates are an advantage if you build your long-term investment strategy around strategically selling real estate for growth or living expenses.

For example, one year my deductions and rental depreciation placed me into the second lowest tax bracket. I happened to sell several properties that year, so my long-term capital gain tax rate was 0%!

But even in the higher brackets of 15% or 20%, capital gains tax would have been better than the equivalent income tax on ordinary income.

5. Live In Your Flip = No Taxes

What if you want to avoid capital gains tax altogether? Then just buy and immediately move into the house as your principle residence. As long as you live in the home 2 out of the next 5 years, in the U.S. you can make a tax-free profit of up to $250,000 as an individual or $500,000 as a couple. Canada and the U.K. have slightly different rules, but the principle is the same.

A real estate strategy called the Live-In Flip takes advantage of this generous tax exemption. Carl from wrote an awesome guest post for me explaining how several live-in flips built enormous wealth and accelerated his path to early retirement.

Keep in mind that this doesn’t have to be a permanent strategy. You could do 2 or 3 flips, reinvest the earnings, and move on to other investment strategies.

6. Exchange Properties For Tax-Free Growth

Another way to avoid capital gains tax (and also depreciation recapture tax) is a section 1031 tax-free exchange. This technique is named after section 1031 of the U.S. tax code.

A 1031 exchange allows you to trade one property for another without paying taxes. You must follow specific rules, and you must be classified as an investor (i.e. not a dealer who flips houses).

Why is this helpful? Because you get to use 100% of the profits from the sale to reinvest in the next property. This maximizes the growth and compounding of your investments.

For example, let’s say you sell a property for $300,000 without a 1031 exchange and pay $35,000 in capital gain and depreciation recapture taxes. By avoiding these taxes using a 1031 exchange, you would keep that $35,000 invested. At 10% for the next 20 years, that $35,000 would grow to over $235,000!

I am currently doing my first 1031 exchange. The technical side of the process has been relatively straightforward because I hired a third party “qualified intermediary” to handle it for me. The most difficult part has been finding a good replacement property in time, but fortunately, I do have one under contract.

Perhaps a future post can spill all of the details!

**UPDATE** The Tax Cut & Jobs Act of 2017 did retain the use of 1031 Tax-Free Exchanges. But there was one negative change for exchangers. Now only real property (the real estate building and land) can be exchanged. Any personal property (appliances, furniture, etc) can not be exchanged. For large apartment complexes with furnished apartments, this could mean significant taxes paid on a transaction.

7. Installment Sales For Income & Deferred Taxes

The IRS gives property investors another tool to reduce taxes on the sale of real estate. This tool is called an installment sale (aka seller financing or seller carry-back mortgage).

Like 1031 exchanges, installment sales are only available to property investors and not to dealers (house flippers). Also like 1031 exchanges, installment sales allow an investor to defer capital gains tax, but unfortunately the entire amount of accumulated depreciation must be recaptured at the initial time of sale.

From a practical standpoint, an installment sale just means the seller of an investment property receives the sales price over time. The seller is essentially extending credit to the buyer instead of the buyer getting a bank loan (here is my visual explanation on YouTube).

For example, a duplex owner could sell me her property for $300,000. $30,000 could be a down payment, and I would still owe $270,000 in the form of a seller financing mortgage. The terms of the financing might be $1,934 per month at 6% for 20 years.

This arrangement would be most beneficial if the duplex owner owned the property for a long time and experienced a huge run-up in prices. For example, my duplex owner might have bought the property for $50,000 over 30 years ago.

An installment sale would allow this owner to only pay taxes on the profits received each year. A $250,000 gain at one time would have pushed the seller into higher tax brackets. But the installment sale allows the seller to slowly receive the gains and possibly stay in lower, more favorable tax brackets.

It’s also worth mentioning that installment sales can be a great way to transition out of active property management and into a period of more passive income. I have done this on many properties myself.

8. Borrow Tax-Free Instead of Sell

To raise cash most investors consider selling investments. As I’ve shown above, this exposes you to taxes or complicated procedures to avoid tax. But with real estate you have another choice. You can simply pull capital out of an investment tax-free by refinancing.

This is exactly what I plan to do to help fund my two daughters’ college educations. I shared all of the gory details with spreadsheets and graphs at How to Pay For College With Real Estate Investing.

In the end when I need money, I am leaning towards refinancing the properties instead of selling. This has a few benefits, including:

  • Get to keep a well-performing property that I know very well
  • Benefit from future loan amortization as my tenants pay it off again
  • Benefit from future appreciation of rents and property price
  • NO tax paid on the cash from the refinance because it’s borrowed

You’d be right to say this technique increases my risk by incurring new debt. But as long as the debt is attractive (fixed interest, low rate, long amortization) and covered conservatively with cash flow and cash reserves, this is a risk I am personally very comfortable with given the benefits.

9. Self-Directed IRA Real Estate Investing

IRAs and 401k style retirement plans are incredible tools to build wealth while minimizing taxes. But most people think of them only as tools to invest in traditional investments like stocks, bonds, mutual funds, and REITs. While this is the norm, it’s not the rule.

The IRS does not describe what your IRA account can invest in. It only describes what you can NOT invest in. The “do not invest list” includes life insurance and collectibles like artwork, rugs, and antiques. Non-traditional investments like real estate, private mortgages, limited partnerships, and tax liens are therefore allowed. But most larger retirement account custodians (i.e. Vanguard, Schwab, etc) do not choose to offer them as a possibility.

So, there is an entire industry of specialized custodians who do allow investments in these non-traditional assets. A google search will give you dozens of possibilities. I personally use a company called American IRA .

While self-directed IRAs are a wonderful tool, there are many pitfalls and strict rules to be careful of. For example, you can’t self-deal by loaning money to yourself or to another disqualified person, like a close family member. If you break one of the rules, you could face large penalties and disqualification of your account from tax-free status.

My favorite way to invest with my IRA is a loan against real estate. It’s lower risk and has fewer moving parts than actually owning the real estate itself. I have also purchased local property tax liens, which often pay high interest rates and even sometimes get you a deed to real estate for pennies on the dollar.

10. Die With Real Estate (Seriously)

This may sound like a joke, but one of the best plans (at least as a tax strategy!) is to die with your real estate. Instead of facing the tax issues of recaptured depreciation or capital gains tax, your heirs instead get a stepped-up basis.

For example, let’s say you bought a rental house for $100,000. Forty years later you die and the house is worth $500,000. When your heirs sell the house, they would not pay capital gains tax on the $400,000 gain. Instead, their basis would be $500,000, which means they could sell it for $500,000 and have no capital gains tax to pay.

Keep in mind that inherited assets are still subject to estate taxes. But as of this writing (2018) $11.18 million of assets are exempt from any estate taxes. So, your heirs would inherit a lot of property before paying any taxes.

Of course, you don’t have to let the tail wag the dog. Tax benefits are only part of the overall equation of finances in your life. You may have plenty of legitimate reasons (like enjoyment of life!) to pay taxes and spend the money before you die. You could also contribute a portion of your assets to charity, still pay no taxes, and help decide how worthwhile causes will benefit from your wealth while you’re alive.

Real Estate Investors Benefit From the New Tax Law

Now let me cover the highlights of how the Tax Cuts & Job Acts of 2017 affected real estate investing.

After the recent U.S. tax law change, real estate investors retained almost all of the existing benefits already explained in this article. But there were some changes to pay attention to. Most will make real estate investing even more beneficial tax-wise. But a couple may negatively affect investors in certain situations.

I’ll describe the highlights of these changes below. But if you have a lot of time and enjoy punishing your brain, knock yourself out with the entire new tax law.

Personal Income Tax Rates Decrease

Most real estate investors own property personally or in an LLC (Limited Liability Corporation). Because in both instances taxes are paid on a personal (not corporate) level, the new tax law was a win with its reduced personal tax rates. Here are the new tax brackets for single and joint tax filers as of 2018:

Single Filers

Tax rate Taxable income bracket Tax owed
10% $0 to $9,525 10% of taxable income
12% $9,526 to $38,700 $952.50 plus 12% of the amount over $9,525
22% $38,701 to $82,500 $4,453.50 plus 22% of the amount over $38,700
24% $82,501 to $157,500 $14,089.50 plus 24% of the amount over $82,500
32% $157,501 to $200,000 $32,089.50 plus 32% of the amount over $157,500
35% $200,001 to $500,000 $45,689.50 plus 35% of the amount over $200,000
37% $500,001 or more $150,689.50 plus 37% of the amount over $500,000

Married Filing Jointly

Tax rate Taxable income bracket Tax owed
10% $0 to $19,050 10% of taxable income
12% $19,051 to $77,400 $1,905 plus 12% of the amount over $19,050
22% $77,401 to $165,000 $8,907 plus 22% of the amount over $77,400
24% $165,001 to $315,000 $28,179 plus 24% of the amount over $165,000
32% $315,001 to $400,000 $64,179 plus 32% of the amount over $315,000
35% $400,001 to $600,000 $91,379 plus 35% of the amount over $400,000
37% $600,001 or more $161,379 plus 37% of the amount over $600,000

Limited Itemized Deductions (Bad For High Cost Areas)

Both property taxes and mortgage interest deductions are now limited for a primary residence. But rental property taxes and mortgage interest ARE still deductible. So, this change only negatively affects owners of a primary residence in high-cost areas, like someone doing a live-in flip in San Francisco.

Mortgage interest is now only deductible on the first $750,000 of acquisition financing on primary and secondary residences. If you previously purchased a residence, a grandfather clause will allow you to continue deducting the interest on up to $1,000,000 of debt.

And state and local taxes are now limited to a total $10,000 deduction. This means, for example, that even if your total state income and property taxes (for your residence) are $20,000, you can only deduct $10,000.

20% Pass-Through Deductions (Section 199A)

Perhaps the biggest new tax-break for small businesses is the 20% pass-through deduction (explained in section 199A of the new tax law). The Mad Fientist literally got the guy who wrote the book on this tax break to write an awesome guest post. I can’t hope to improve on what he already said, so I’ll be brief here.

In summary, the pass-through deduction represents a 20% reduction in taxes on your business income if you qualify! That’s huge!

But will real estate investors qualify? As far as I can tell, the answer is murky. People who flip houses should be fine. But rental property investors will need to qualify as a “trade or business,” meaning you have to engage in your business with “regularity and continuity.”

What does that mean? Even tax professionals argue about it.

But on one extreme, a very passive commercial landlord who simply collects net-lease rent checks from a Walgreens does not seem to pass the test. And on the other extreme, an Airbnb host who actively moves people in and out does seem to qualify.

Landlords in between are in the grey area.

So, I recommend you work closely with a tax professional and keep an eye on updated IRS regulations if you plan to use this deduction as a real estate investor. It could be profitable, but you need to have a good defense for your position.

Increased Depreciation (Personal Property Only)

The new tax law made it easier to quickly depreciate personal property (i.e. save more on current taxes). This means your purchase of rental property equipment like carpet (unless it’s glued down), refrigerators, stoves, washers, dryers, and other non-attached property can often be 100% depreciated in the first year. You can also quickly depreciate computers and other eligible office equipment used for rentals or other business.

Creative investors and their tax professionals may also use cost segregation (ie. splitting up the basis of a rental into separate components) to also write off land improvements. This means things like sidewalks, driveways, and landscaping which could be depreciated more quickly.

But this area of tax law is another tricky one. Tread carefully and get professional tax help.

And if you read tortuous (yet sometimes humorous) tax articles for fun (Mad Fientist, GoCurryCracker, and I are raising our hands, anyone else?), then have fun reading my favorite tax geek in this Forbes article Changes to Depreciation in the Tax Law.

Opportunity Zones

A new concept called an “Opportunity Zone” is perhaps the most innovative and profitable tax law change for real estate investors who can take advantage of it.

To benefit from the change, you must invest in certain areas of the country that are designated as Opportunity Zones. These zones are typically economically-distressed areas (national map of all economic zones).

The vehicle for this investment is called an Opportunity Fund, which is just any partnership or corporation that self-certifies that it is an Opportunity Fund (i.e. you just fill out an IRS form).

How exactly do real estate investors benefit? Here’s an explanation of three primary ways that I learned from the Economic Innovation Group, who has followed the rollout of opportunity zones closely:

1. A temporary deferral of capital gains taxes if funds are invested in an Opportunity Fund. You eventually pay taxes on the deferred gain either when the opportunity zone investment is sold or December 31, 2026, whichever is earlier.

For example, you could sell $200,000 of appreciated stock (i.e. a basis of $100,000), reinvest in an opportunity fund, and pay no taxes on your $100,000 of gain until the fund’s property is sold or December 31st, 2026.

That’s years of tax-free compounding!

2. A step-up in basis for capital gains reinvested in an Opportunity Fund. The basis is increased by 10% if the investment in the Opportunity Fund is held by the taxpayer for at least 5 years and by an additional 5% if held for at least 7 years, thereby excluding up to 15% of the original gain from taxation.

So, in addition to the deferral of tax in #1, you get a reduction of your original taxable gain by holding onto the investment for 5 to 7 years or more.

3. A permanent exclusion of your taxable capital gains from the sale or exchange of an investment in an Opportunity Fund if the investment is held for at least 10 years. This exclusion only applies to gains accrued after an investment in an Opportunity Fund.

For example, if you bought an Opportunity Zone property for $200,000 and sold it more than 10 years later for $500,000, you’d pay zero tax on $300,000 of new capital gain!

As you can see, this is an incredibly generous tax benefit. But it’s such a new provision that the method of implementation and long-term effects are unknown.

I plan to keep a close eye on it, so perhaps the Mad Fientist and I can brew up a future article to keep you updated!


As you have seen, tax benefits are a compelling reason to get involved in real estate. But tax benefits are never the sole reason to invest in real estate or anything else. Basic economics and quality of your investments are primary factors to consider when choosing your strategy.

And you also need to make sure real estate fits your lifestyle. I think real estate is often overlooked as a viable retirement strategy, especially by early retirees. But it’s clearly not for everyone. Do your homework and figure out what’s best for you.

And if you choose to invest in real estate, be sure to build a team of professionals to support you. One of the most important team members will be a tax professional like a CPA or qualified tax attorney. All of the strategies I’ve mentioned here are a start, but a professional can help you apply the details to your situation.

What do you think? Have you benefited from investing in real estate? What tax angles have been most beneficial to you? Did I leave any out?

Hey, it’s the Mad Fientist again.

That was amazing, wasn’t it?

If this post got you excited about real estate and you’re interested in learning how you can use real estate to retire early, Chad just published a book that dives into exactly that topic – Retire Early with Real Estate!

I’ve also interviewed Chad twice for the Financial Independence Podcast so check out this episode to hear more about Chad’s personal story and real-estate investing experience and listen to this episode to discover some of the best real-estate-investing strategies you can use on your journey to financial independence!

Chad has a podcast of his own and he just released an episode about the tax benefits of real-estate investing so check that out here to go even deeper into this topic.

Finally, make sure you head over to his site to say hello and to check out all the great stuff he’s got going on over there!

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Chad Carson – Retire Early with Real Estate Fri, 31 Aug 2018 08:01:35 +0000 Chad Carson joins me again on the Financial Independence Podcast to talk about the best strategies you can use to retire early with real estate!

The post Chad Carson – Retire Early with Real Estate appeared first on Mad Fientist.

Chad Carson from joins me again on the Financial Independence Podcast to talk about the various strategies you can use to Retire Early with Real Estate!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • The best real-estate strategies to use to reach financial independence and retire early
  • How real estate can be a good investment while also enhancing your lifestyle
  • What is the Mad Fientist’s Peak Arbitrage™ strategy and is it a good idea
  • Why you should buy utility but rent luxury
  • Thoughts on internet-based real estate investing companies (e.g. PeerStreet, RealityShares, etc.)
  • What you should look for when buying a long-term “Buy and Hold” rental

Show Links

Full Transcript

Mad Fientist: Hey, welcome everyone to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest in personal finance to find out how they achieved financial independence.

On today’s show, I’m excited to welcome back Chad Carson from Chad was on the show a few years ago to talk about real estate. And he has since released a book that’s compiled all of the various strategies that you can use to retire early with real estate. He shared an advanced copy with me. And I really enjoyed it. It’s actually got me super fired up about real estate again which I was sort of sad about at first, which I talk about in the episode, but now I’m actually really excited about.

I just wanted to get him on to talk about all these various strategies. And he did a lot of interviews in the book about people who actually used these strategies to retire early. So I wanted to dive into some of those stories. And I wanted to get his opinion on a strategy that I’ve been personally thinking about utilizing. It’s something that came up with myself. And I don’t know if it’s actually a thing or if it’s a good idea. So I wanted to get him on to talk about that as well.

Without further delay, Chad, thanks a lot for being here. I really appreciate it.

Chad Carson: Man, it’s awesome to be here. Thanks for having me.

Mad Fientist: So, the last time I spoke to you. You pretty much just landed in Ecuador to start a year in South America with your wife and two kids, right?

Chad Carson: That’s correct, yeah.

Mad Fientist: And now, where are you?

Chad Carson: So, we just go back a couple of months ago. The trip lasted about 17 months. And we had just an amazing time. We made it back to South Carolina (Clemson, South Carolina), a little college town where my home is. We had tenants in our home for two years. So we had to wait a little bit until they moved out.

But looking back over the whole experience, I still pinch myself that it worked out so well and we had such an amazing experience in so many different ways, just to be able to take off and put things on pause and leave. It was awesome.

Mad Fientist: That’s amazing. That’s great. And it was cool that I get to see you down there. We met up at the Chautaqua and had some Ecuadorian fun together which was nice.

Chad Carson: For sure… you didn’t have any guinea pig though, did you?

Mad Fientist: No, I didn’t. Did you?

Chad Carson: I did, yeah.

Mad Fientist: How was it?

Chad Carson: Well, it’s okay. It put the new understanding on baby back ribs when I was eating one of these things. Just picture I can barely fit this little rib in my hand. And you’re gnawing on it, like something from Dumb & Dumber.

But it was good. I mean I wouldn’t have it every day, but getting to try it out—every taxi driver we talked to in Ecuador is like, “Oh, yeah! Que bueno necesito probar.” They’re like, “You got to try this guinea pig. It’s amazing.” So we had to do it.

Mad Fientist: Yeah, I didn’t get to do that. But when we were walking around Otavalo or something, we got some fried bugs, lots of fried bugs. We had some of those. They weren’t too bad. They just tasted like fried anything really.

Chad Carson: Yeah, you put it down with some beer, it always works out.

Mad Fientist: Exactly. So that’s great. I’m so glad it went well. Did you say 17 months? That’s quite the time to be away and especially just somewhere in South America.
Chad Carson: Yeah, we were planning on 12 months. And the best part of early retirement and financial independence, some of the benefits, we were there, things were going well, and we said, “Yeah, let’s extend this trip. We don’t have any reason specifically to come back.”

One of the main reasons we went was we had all sorts of experiences that were positive. But our daughters were in local schools. They were really doing well and had friends. They were speaking Spanish fluently. They were correcting me. I’ve since been speaking Spanish not great, but I’ve been speaking it longer than they have. And my wife is fluent and teaches Spanish. They would come home, and we would speak Spanish around the dinner table. And they say, “Papa, [foreign language 03:44].” They’d wag their finger at me, correct me. They’re like, “Oh, my gosh! My little kids are correcting my Spanish. This is awesome!”

Mad Fientist: That’s amazing! So did you have tenants locked in for two years or was that something where they got to the one year and you’re like, “Hey, do you want to stay another year?”

Chad Carson: Yeah, they were there for two years. And they actually emailed me early before we came back and said, “Hey, we would really like to stay another year.” And we were so tempted just to keep going. We were sort of torn between coming back. We had family and grandparents wanting to know we were still alive and wanted to see their grandkids.

But I think it definitely ignited the itch to do this again. I don’t know when it’s going to be. We’re going to settle down for another year here. And they’re going to a local American elementary school this year. But there’s no doubt that experiencing the flexibility and the ability to travel and see new places and still have income coming in back at home, it made me realize this is possible. We’re already sort of thinking about what’s next. and

Mad Fientist: That’s very cool. And how did it go renting out your house? I know a lot of people are probably in the same situation as you were, and you’re thinking, “Oh, it’s going to be great to just go and take our family away for a year.” But a lot of people would probably worry about their houses getting trashed or something like that. How did renting out your primary residence go?

Chad Carson: Yeah. I mean it went really well. I had the benefit of being in the rental business. So I had a little bit of experience screening tenants. But we found a couple who had a young kid. He’s a professor at Clemson at the local university. And they had a little business they started the year before. So they were super busy, but they were awesome. They were early on their rent payment every month. They did improvements to the house. There was a few, little things. They weren’t as much yard people as we are. So we had a jungle in our backyard when we came home. But other than that, it was great.

I mean, home ownership, for a lot of people, is not their thing. Renting keeps you flexible. But I would encourage people who are homeowners who think that it’s an anchor and it’s going to hold you down. Being able to rent your home and have that flexibility is very doable. And it worked great for us and effective. It funded. We made a profit. We were probably like +$500 a month in our house. In Ecuador, that covered our grocery. Not only it sustained itself, but it enabled the trip even more.

Mad Fientist: That’s amazing. That’s really cool. And I’m definitely going to just talk to you more about using your primary residence and renting it out because I think that’s the only way that I’ll ever buy a house again, is if I buy it first with rental in mind. I want a decent investment. And it doesn’t actually tie us down because it could be rentable. So we’ll dive into that.

But before we do, I want to get into what the state of your real estate business is now. I think the last time we talked to you, you had something like 90 units and things were going great. But now, you just spent 17 months in South America. So how did that play out?

Chad Carson: Yeah, there was a couple of things. I mean we’re about the same level. We’re about to sell one property. And so we’re sort of whittling it down a little bit. But the number of units, we basically pressed pause on the growth. We didn’t try to grow. We didn’t try to do much. We just sort of kept steady while we were there.

But one of the big challenges, the thing that we worked on pretty hard before we left was having a lot of systems in place and having people on the ground who could help me. It worked before I left, but you never know until you just leave the country and say, “Alright!” I have people who are managing my properties. “You’re on your own. You can text me here and there. But I’m in another country.” And it worked really well—I think better than my expectations.

And so, I think it confirmed for me having—we had a couple of different structures, different systems for how people manage our properties. We had a third-party manager. There’s a company, a local company who manage part of them. And then, we had a person who’s worked with us for a long time. It started as a bookkeeper, and then she grew into an administrator and kind of helps us manage properties now. Between her and a handyman who’s really a good handyman, they handled 95% or more of day-to-day activity.

And then, every week, my routine while I was in Ecuador was she would upload the bills that we owed, that the contractor came out, or whatever. She would scan them in Evernote, so I could go look at what the bill was. And then, I would go online to the bill pay for my bank and just send them a check.

So, it could take me sometimes 20 to 30 minutes, sometimes an hour or an hour and a half depending on how much there was and how much bookkeeping I needed to do. But it allowed me to stay involved a little bit. I would do it for an hour, and then go take a Spanish lesson or go drink a beer and do something else.

Mad Fientist: That’s amazing. So, for people out there who already do have a real estate portfolio and were thinking about doing something similar, the key people in your mind to hire would be a general handyman, and then someone to do admin? Or have you used full service management companies in the past? And would you recommend them?

What would be your main focus knowing now what you know after being 17 months down to South America?

Chad Carson: Right! I would say, for most people out there, hiring a third-party management company who has a lot of those functions built in already is the best way to go. I’m a little bit of an exception because I started off building my own management business and we have enough units where it makes sense to have some of our own people working with us a lot.

So, I would say 99% of people, hire a management company yourself. They’re going to have a handyman. They’re going to have a plumber. They’re going to have an electrician. They’re going to take the maintenance calls in the middle of the night. You’ll never have to mess with any of that stuff. And you can just be sort of the person who’s managing the manager, getting financial reports, asking them questions. I think that’s the best way to go for most of us.

But there are other people who are a little bit more hands-on. And so you’d be more like what I have done. And in that case, one of the most important things in addition to having sort of a bookkeeper or somebody who’s going to help you collect rent and do some of those functions is having a list of good repair contractors. That’s the big deal.

If somebody has an issue on a Saturday, their toilet is leaking, and water’s going on the floor, you just want to be able to call and text that handyman, and then be able to go out to the house, take care of it, send you some pictures and have trust that they’re going to actually follow through and do it right.

Mad Fientist: So, you weren’t too busy managing your own 90 rentals, it sounds like. So you had time to write a book, which—big congratulations—you sent me an advanced copy. And I loved it! So it’s great. It’s Retire Early with Real Estate. It’s through Bigger Pockets. It’s fantastic.

So, yeah, how was that process?

Chad Carson: It was laborious. I can’t lie. The actual writing of it became tedious a little bit. But I love the topic. And I’m so passionate about retiring early and the financial independence community. And what I really wanted to do was sort of combine two communities that I’m a big part of.

The real estate investing, Bigger Pockets, how to use a few rental properties to build wealth and create income is something I’ve done for a long time obviously. And then I’m super passionate about a lot of the things you talk about in your podcast and a lot of the community of not knowing when you’ve hit enough money and enjoying your life and focusing on happiness. And doing what matters is sort of the theme of the whole book.

So, it was just fun combining those two ideas. The idea is that be a strategy guide, almost like you’re climbing a mountain and financial independence is at the top. But then, along the way, there’s a bunch of plateaus like what I’ve done with mini-retirements and semi-retirement. And I try to show how the main routes up the mountain using real estate, what they are, and how you do them.

I got to interview 24 other early retirees who use real estate. And I sort of showed their numbers and how much income they need to live off of and how they did it with real estate. So I learned a ton getting outside my own box and learning how other people have done it and try to teach it to other people as well.

Mad Fientist: No, it was fantastic. I loved the case studies. It was always like a treat at the end of the chapter to hear about somebody who had put a particular strategy into practice.

And yeah, your site is called And it really felt like a playbook for using real estate to get to financial independence. Was that a conscious choice? It’s like all these different strategies, you give the pros and cons of each, and it really just felt like a playbook.

Chad Carson: Yeah, that’s funny you mentioned that. I had this old chalkboard in the house that I live in. Of all the features in the house, I didn’t look at the kitchen. I didn’t look at the bathroom. I was like, “There’s a chalkboard in the basement. Awesome!” For me, drawing plays on a chalkboard when I played football or somebody sitting beside me, and they’re drawing it up on the board and say, “Oh, this is how you could do it. You can buy that property. You can make sure all your expenses are covered, and then you have that much income,” that’s what I wanted it to feel like.

I really appreciate you saying that because I wanted it to be, “Okay, I’m a coach. I’m on your side. I’m that guy who cares about you, doing what matters in your life. Let me share some strategies that have worked really well for me and other people and hope they could help you.”

Mad Fientist: Yeah, no. It definitely came across like that. It was really enjoyable. It gave me a lot to think about.

And like I said, when I tweeted congratulations to you on Twitter, it made me want to potentially dive into real estate again. And I did have a negative attitude towards that in between, which you obviously picked up on and laughed at.

But it did! It got me really excited about it. I think I may be ready to dip my toes back in again after forgetting about the houses that I’ve bought in the past.

We’re a completely different scenario. Those were houses to live in. They weren’t investments. I wasn’t as smart back then. So yeah, all of my negativity towards real estate in the past is all of my own doing because they were my mistakes that I made.

So, you gave me a lot to think about. And I also recognize a lot of the people that you did case studies about which is exciting.

And one of the first ones I’d like to talk about actually is Liz from San Diego who we both met on Chautauqua. She’s been really big into something called PeerStreet which is, correct me if I’m wrong, it’s sort of like being a hard money lender on a grand scale. So rather than lending money to you, a real estate guy, who’s going to then do up a house and flip it, and then I would just collect interest from you, I think the way it works is I would just put in some money, and I could potentially be part of many deals.

The good thing about that is it’s sort of like lending club, and you’re lending money to people through the Internet and you’re collecting interest, except that it’s backed by real estate, and you’re the first lien holder.

Everything I said, is that correct?

Chad Carson: Exactly right, yeah. The cool thing about it, somebody with money and capital—

And that’s the disclaimer about some of these crowdfunding sites is what we’re talking about. You typically have to be an accredited investor. So you have to already be able to demonstrate that you have a million dollar net worth or you make $200,000 a year. I think those are the qualifications.

And so, for a lot of us, if you’re new in your real estate journey or new in your financial independence journey, it might be something that won’t be accessible to you right off the bat. That’s just the main point.

But as you grow and as you accumulate some capital, what Liz do just beautifully—she’s just the best example in my mind—she was a commercial lender in a regular job. That’s what she did every day, make loans to people.

And so the way that she explained it to me was “I already have the skill set, I like being the lender, I like being the person who funds the deal, and then let another entrepreneur go make the money, and they pay me interest.”

I should get used to that. It really is. I’ve done some lending now too. And I’m going to be doing more of that.

It’s a beautiful thing when you can just make interest and you have a secure investment. And for me, I like having real estate. So I don’t mind having my money secured by a piece of real estate.

And so, what she did with the crowdfunding platforms, the new innovation with them, is that it used to be “I have to have a hundred thousand bucks saved up,” and Brandon, if you wanted to go buy a property, I could then loan that money to you individually.

And that’s fine. If you can meet that person and I still think that’s a good viable strategy, but one of the issues with that is you have the risk of having one person, one property, you screw that up, you screw it up big time on one property, whereas some of these crowdfunding platforms, I think the best part about them is that I can take that same $100,000, and I could make potentially one hundred $1000 loans and basically pool up with other people.

So, I could have a hundred different properties. And so you get some of that diversification that we all know is important. I could even diversify over different states. I might say, “I want to have 25 loans in California, 25 loans on the East Coast, 25 loans in the south, 25 in the midwest.” You could sort of spread it out geographically which is really hard to do in real estate.

I think there are some challenges to those as well because they’re so new. They’re brand new. But I really am intrigued by the concept. And Liz demonstrates it beautifully that she put a big chunk of capital in PeerStreet, which is one of the better ones. And she had been living off interest at FI. Instead of her having to draw it down on some of her other capital and other accounts in more traditional accounts, she could just live off the interest and not touch any of the principal.

Mad Fientist: Yeah, no. It seems really interesting. And she’s a friend of both of ours now. And she was kind enough to share all her spreadsheets and all the analysis that went into it and how the returns had been coming in. It does look like a great way to go if you’re not wanting to go out there and try to find these individual lenders yourself.

So, obviously, you are a very active real estate investor, and you know you’ve built up your portfolio by working hard and hitting the ground and hitting the neighborhoods and things like that. Is that something you think you’d ever get into?

Chad Carson: Yeah, I’m already doing it. I’m sort of testing it out. I haven’t written about it on my blog yet because people listen to what I’m saying about real estate sometimes, and I just want to make sure I’m really doing it myself. And so I’m going to get ready to start writing some articles and share my experiences.

But so far, so good. I like the concept.

To me, the beautiful thing about lending your money—or not the beautiful thing, but the thing you should always keep in mind is that you want to make sure the collateral that you have is always the first thing you think about. In real estate, you either own the property or you own the loan, securing the property. And you can make money with either one. But the core of real estate always is that collateral, that piece of real estate.

And so, as long as you’re making loans, and you’re keeping that in mind—like one of the things I want to make sure, the discipline I want to make sure I do when I’m making loans is always stay below a certain loan-to-value.

Mad Fientist: And I believe it’s the max for PeerStreet. When I was just poking around, it looked like 75% was the max, was it?

Chad Carson: Correct. Yeah, I think that’s right. So you can make a choice though. It’s really cool. You can filter it out and say, “I don’t want to make any loans over a 65% loan-to-value. I don’t want to make any loans over 70%.” And you can sort. There’s a bunch of different criteria you can choose.

And so, playing around with those criteria, for all the analytical [folks] out there in our community, you could probably go back and look the success rates of past loans. And so I think that will be a key component over the next five to ten years in making sure—

Inevitably, we’re going to have another downturn, right? And so the security you have in a down real estate market is having some equity above and beyond the loan you made. That way, if you have to take a property back—which you will eventually, somebody is going to not pay you—you wouldn’t be panicked about that. You would say, “Alright, I’ve got some equity. I’m going to take it back, sell it,” and you want to take it back, PeerStreet or whoever the lender is, will take it back for you. But there will be some cost. You’ll have some margin to eat up those costs.

Mad Fientist: And being first lien holder, you would be first in line for getting the property. So you won’t be splitting that with anyone. If they stop paying their mortgage, then they default, and they foreclose, and then that property is owned by you, the investor?

Chad Carson: Correct. That’s the important part. First lien means you’re first in line. I would be very cautious about making second liens, second loans. I think there are some out there. But that’s a whole other ballgame.

Mad Fientist: That’s why lending clubs seems such a crazy idea to me, making loans to people that were secured by absolutely nothing. When I first heard of PeerStreet, I was like, “Oh…” I wasn’t too sure about them. And then, I heard that it was actually backed up by the actual property, and you would get it at the end of the day. That made me change my mind a little bit—which is good.

Chad Carson: Yeah. I’ll add one more thing about crowdfunding. I know that we’re kind of going down the rabbit hole. But I think it’s a cool rabbit hole. The innovation and the reason I said that we all have to be cautious about it—I’m not putting all my money in there. You want to still diversify—is because the technology and the legal contracts that attach your money to that property is something new. It hasn’t been tested a lot. And what I mean by that is when you own that $1000, you are basically buying a loan to PeerStreet or to an entity that PeerStreet controls and owns. And then, they are making a loan to the actual borrower.

And so, in their books and in their contracts and everything, it’s supposed to be connected. And more than likely, it is. But it’s just not tested. If one of these new companies went out of business, I’m not 100% convinced that in every case, the bankruptcy court, whatever happened if PeerStreet went out of business or whoever it was wouldn’t take the properties that you own, and they would be able to separate you from your loan.

I know it’s supposed to happen right, but I don’t know. It’s just new to me. And so I’m kind of pointing out the things that I’m cautious about and concerned about seeing. And I think we’ll know the next downturn when one of the technology companies goes out of business, we’ll see how that’s treated. But up until now, nobody really knows.

Mad Fientist: Oh, yeah, that’s great to point out. So thanks for that.

And just before we move on—because we’ve gone down some rabbit hole, but it is an interesting one—is PeerStreet a major player in this space? Or are there others that you’ve heard are bigger, better, more established?

Chad Carson: It’s one of the big ones. And I like the user interface with them. And they seem to be very transparent, which I like. So they’re one of the big ones I’m testing out. Realty shares is another one I’m testing out.

They’re a little bit different. They’re almost a different animal. They do some loans like Peer Street does. Peer street, 100%, I believe is just loans to borrowers and typically hard money loans like people flipping houses.

Realty shares is a little bit different where sometimes they do loans, but they’re more like commercial real estate. So you might be able to buy into a deal where you’re an equity partner in a big apartment complex. So that’s a little bit different. You could be the lender. You could be the owner.

The caution there, if you’re brand new to real estate, I think I’d be a little bit more nervous about that, going and having to analyze a real estate deal and know that you should be an equity partner on this deal. But for people who have a little bit more experience, it’s a really good way to get access to this big syndications and commercial real estate deals all over the country that you might not have access to otherwise.

In the past, it used to be like, “Oh, who do you know in this local town?” It was kind of an old man’s club who are able to control all of the deals. And whoever had money on Wall Street could kind of get into them. Whereas with Realty Shares—and there might be a couple of others that do that as well—they’re taking those deals and putting them out on a technology platform and allowing other people to get access to them at small, like $5000 or $10,000 increments.

Mad Fientist: Yeah, okay. That sounds interesting as well because, yeah, you may not have the capital to purchase a 40-unit apartment building, but a fraction of it may be a good return on investment.

Chad: Yeah.

Mad Fientist: No, it’s interesting. I’ll look forward to reading all your analysis on Coach Carson once you try all these things out because it’s exciting to…

Chad: It is.

Mad Fientist: It’s being democratized in a way. That was the first thing that sort of got me excited. I was like, “Ooh, maybe I could do that a little bit.” And then I got to the long-term buy-and-hold which has always been something that I thought would be really interesting to do. And I would love to have just a very small portfolio of buy-and-hold real estate, particularly in my home town in Pittsburgh because it just seems like such a good rental market. And I could see us maybe going back there one day. So it would be nice to maybe have a property to go back to.

And I don’t know, just for peace of mind. If the stock market just blew up, I would have nothing. But at least if I had a house, I could go live there. So, for a little bit of diversification.

So, in the book, you talked about what you look for. You mentioned like low maintenance construction when you’re looking for a long-term buy-and-hold. You mentioned things like solid surface floors, brick exteriors. And I was just wondering, is there anything else you look for, either in how it’s constructed or the type of house, like three bed, two baths, a certain square footage? Is there a sweet spot in your mind as far as what’s a good rental prospect?

Chad: Yes, it’s a really good question. I think there are two components there. There’s the actual building itself. We call that the sticks and the bricks. The sticks and the bricks are really important. And so you want to look at that. I’ll go into that in a second.

But probably the first thing, and the more important thing, is the location of the real e state. I always start with the location. It’s almost like Google Maps. When you zoom all the way out of Google Maps, you’re looking at the big picture view of the whole country, of the whole world, you see certain trends when you do that big zoomed out view. In real estate investing, the big trends you want to look for—

Pittsburgh, I think, is a good example of some positive trends from what I could tell. In general, you want to invest in an area where population is increasing over time. And you could see that kind of data at the or the equivalent in whatever country you’re in. And so you just want to see, “Alright, what are the trends look like? Is population increasing?”

Like Detroit, [unclear 27:15]. For a long time, it was losing population for decades. It wasn’t a surprise. Two or three decades in a rows, it was going down in population. It actually might be making a comeback. I’m not 100% sure. I haven’t seen much of it.

But the point is you can see the big, huge demographic changes. You want a city where there’s some net population increase. And you also want a city or a metro area where there’s actually a pretty good diverse economy.

And what I mean by that is if you went into a town where 90% of the employment was from a military base, one military base, the thing that makes me nervous about that is what happens if five or ten years from now, they pull the plug on that military base.

So, what you’d rather have is a diverse economy with a lot of different businesses, a lot of different employment sources. And you’d really like to see professional, young professional kind of employment growing, if you can. So that 20-something or 30-something who makes good money.

You want working class jobs, but you also want some of those white collar jobs as well because that’s going to influence the prices a good bit because they’re the ones buying houses, they’re the ones moving into the new, trendy districts.

If you’re zoomed out on Google Maps, that’s what you’re looking for. You’re looking for that population and the economic kind of factors.

And in general, that can take you an hour to do some research on that. And if you’re from a city, [unclear 28:47], there’s reading the newspapers and studying it. You’ll find out whether your city is doing well there. That’s where I would start.

And then, I would zoom in on the city. And I would more on the neighborhood and the street by street level to find neighborhoods that have some qualities that are attractive places to live. And it’s going to be very different from town to town, city to city. But in most urban areas, or small urban areas, you want to look for things like how close is this property or this neighborhood to a big park, a big public space, or some kind of area that the city or the community has that’s really popular.

In a lot of areas right now, bike trails and parks, little commercial districts with a lot of shops and coffee shops and things like that, it’s very intuitive. When you live in a city, you’re going to know the areas where everybody wants to be. And so you just start with that. I make a little Google Map and put a push pin right in the heart of the city, and then start zooming out like, “Alright, here’s the hottest area where everybody wants to live.” And I draw a big, red background around that area.

And then, the coolest places where the most opportunity will be is right on the edge of those hot areas. You can find something that has some of the similar qualities that’s also close to the park, it’s also close to the commercial district, but it’s not yet as expensive as the best area.

That’s kind of the fun puzzle of looking at locations. You’re looking for those little opportunity areas. And you do all of that before you start looking at specific properties because that’s what’s going to drive your future economics particularly with buy-and-hold.

What I love about buy-and-hold is that you don’t have to be like a day trader who figures everything out like today. All you need to look at is the big, macro level, long-term trends. And those trends are super slow-moving, easy to follow.

Real estate is not like a quick “man, this whole market is crashing tomorrow” kind of thing. Things happen pretty slowly. Even in 2007 and 2008, the downturn happened over like a six to nine month period. And you could see the clouds on the horizon if you were really looking for it.

So, that’s the cool thing about real estate and buy-and-hold. You don’t have to be a genius. As you can see, you can just look at the long-term trends, try to buy on locations that have some long-term possibilities. And then, you get to the sticks and bricks, like the actual property. And what you’re trying to do is you’re trying to generate as much rent as you can for the cost of that building.

And so that’s where we got into the type of building you want to have. I like very efficient buildings. I have a friend who have a property in Seattle. And his rental property basically looked like a milk carton. It’s really like small footprint. And it went up like three or four stories. And it had a tiny, little lawn. He basically said you could cut the lawn with scissors or something. It was so small.

On the other end, if you’ve got a big property that had this enormous lawn, and you had to cut it all the time, if you have a lot of square footage, bigger properties are not necessarily better in real estate. What you want is as much rent per square foot as you can get. And the bigger property you get, every time the tenant moves out, you’re going to have to paint it, you’re going to have to replace flooring.

And so, you want to look for efficient buildings and desirable areas. And then, you want to buy them at a price that allows you to make a reasonable cash flow today. But over time, hopefully, that will get better.

Mad Fientist: I was just listening to a podcast where Brandon Turner from Bigger Pockets was on. Obviously, he’s always looking to add value to a property after he buys it. And one of the things that he looked for was like two bedrooms above a thousand square feet because he always thinks that he could somehow get a third bedroom in there. And that’s a really good way to increase that cash flow that you’re getting from rental income.

Are there any sort of things like that that you keep an eye on as well?

Chad: Yeah, that’s a good tip. Two bedrooms, if you get over 1000 sq. ft., his idea is like maybe you have a dining room that you could convert to a bedroom. And it’s very cheap to build a closet. You just basically frame it out with wood, and then put sheet rock, and put some doors on it. That might cost $1000 or less to do that.

And so, basically, by spending $1000, you now increased the value potentially—in some markets—$10,000, $20,000, $30,000. So that’s what he’s looking for for value add. And I do that as well.

I think another trick is to look for unused space in a building. A basement would be one example. If you could convert a walk-out basement that, right now, is just unused space, just used for storage, you can look for the local ordinances and perhaps you could turn that into an extra rental unit that could actually make money. That’s the kind of thing.

It takes a little bit of local knowledge. Some cities will allow that. Some cities will say there are certain requirements that you have to have. That’s where you study what’s going on locally. And there are tons of opportunities like that where you can just look for unused space and convert it to something different, even parking.

In Pittsburgh and some of the more urban areas, I think parking is a big deal. So maybe you can find a building where they’re not charging for parking right now or where there’s some extra space that you could convert into parking, and then charge people for that. That’s the kind of thing that can turn an average deal into an above average deal that makes extra cash flow.

Mad Fientist: That’s the thing that really appeals to me. We were just looking for a place to rent in Edinburgh because we moved out of our place in the spring. And we saw this small, little apartment come up. It was only like 460 sq. ft. But the space was already really utilized very nicely. And there’s some room for improvement there. And it was like, “AirBnB people don’t care. Edinburgh is such a hot city for AirBnB.” And it’s like, “They don’t care if they have 460 sq. ft. versus 1000 sq. ft. So we could buy this place for way cheaper than most of the places in the city are going for, and then still get the same amount of rent and live when we’re not there.”

And just the thought of 1) maximizing space just super appeals to me because efficiency is what I love to focus on more than anything with anything. But then also doing it up to really high standard. And it wasn’t very overwhelming because there’s not that much space. You don’t have to spend a fortune to do something really nice and make it really comfortable because there isn’t that much space to furnish and paint and decorate and all that stuff.

Chad: Yeah, I love that idea.

And to me, there are so many crossovers when you do real estate between practical financial benefits and also personal, philosophical things as well. You just mentioned liking efficiency. And to me, I’m really interested in urban design and how cities are designed. And one of the main messages I get from smart growth and smart development is you want to have very efficient city design where you have more density in some areas, you have public spaces that everybody can use, and then you have that connected by public transportation and biking and walkability.

And so much of what I think makes people happy and makes me happy in a lot of these urban environments can also be more profitable in some cases. So I love it when you can find the intersection of something that you know is the right way to plan a city. And you can encourage that and make money from it—and to do that again.

And so real estate is very hands-on. And it’s very tangible. And you get involved in your local community. Somehow, I got talked into being on a plane in commission for two years before I left for Ecuador. I’m not going to do that again, but it was a super good learning experience on how cities are designed and sometimes how cities are not consciously designed. Stuff happens.

But on a local level, when you get involved, you can make a big impact. Sometimes, at these city council meetings or town council meetings, there’s like 10 people at the meeting. And so if you’re a passionate person who thinks those kinds of topics are important, and walkability and bike trails are important, you can get in there and show up at every meeting for 30 minutes and make a big impact. And I think that’s pretty cool.

Mad Fientist: That is cool. And yeah, you mentioned being more part of your community. And that’s something that I feel that’s one of the only things that’s lacking in my life and my wife’s life currently. We move around so much, so we don’t ever feel like we’re settled. And since I’m like an introvert by nature anyway, if I know I’m going to leave somewhere in two years, I’m not exactly going out and trying to make a bunch of friends.

All of our friends are either back at home where we used to live or where I went to high school and things like that. And I realized that a big piece of happiness is just like running into your friends randomly and not having to plan week-long trips to go see everybody that you like hanging out with.

So it’s like, “Alright, we’re not going to stop moving around the way we are. So maybe buying somewhere would ground us a bit.” And then, that led me to this thought—which I had mentioned Brandon Turner earlier. And he seems to coin all these cool terms in real estate like house hacking and the BRRR strategy that you read about and stuff like that.

So, I came up with my own strategy that I’m calling peak arbitrage. I’m going to run it by you, and you can see what you think.

Chad: Alright, I love it.

Mad Fientist: You heard it here first. This is the coining of this term if it is a thing. If it’s a bad idea, then I’ll give it to Brandon Turner…

Chad: The Mad Fientist has been boiling something up in his cauldron. I love it!

Mad Fientist: Yes, exactly. This is the first time it’s coming out to the world. So you’re hearing it first.

So, this is the thought.

Since my wife and I are from two different countries, no matter where we settle, both of us aren’t going to be completely happy because one of us is going to be super far away from friends and family that they grew up with, and they’re always going to be like, “Oh, I want to go back to America” and Jill will be like, “Oh, I want to go back to Scotland.”

So, we’re flexible obviously. Jill is still working. But she’s working in a part-time, like just picking up shifts capacity. I’m obviously not working.

So, the thought was—this is like two dreams in one. We love Edinburgh. It’s a great place. And it’s got a fantastic short-term rental market because it’s a beautiful city. It’s extremely walkability. Tourists aren’t going to stop coming to the Edinburgh unless the castle gets blown up somehow.

Chad: It’s been there a while though. It’s probably still going to be there.

Mad Fientist: Yeah, exactly. It’s been there a long time.

And then, my long-term dream was to always just live in a mountainous area so that I could play pond hockey on the weekends and go skiing all the time and maybe get a part-time job as a ski patrol guy and throw bombs and create avalanches and stuff with a bunch of guys like super early in the morning.

So, my thought was, since peak travel season for those two scenarios is quite different, if we bought a small flat in Edinburgh, and we stayed there from say January 1st through July 31st, we’re cutting into some of the peak travel season there because summer is quite big. But we could obviously maybe leave in June, and then travel around before heading to the States.

So then we reap crazy amounts of rental income from peak season there. The Edinburgh Festival is like the biggest arts festival in the world. Just crazy prices for staying in Edinburgh during that time. And then, if we had a house in the mountain somewhere, we could stay there from July through to Christmas, say, and we would get to enjoy the last bit of summer there, get to enjoy the fall (which is one of my favorite seasons), and then ski for a few months before then leaving and renting it out for the big part of the ski season which is Christmas, New Year, and then late winter, and then early spring skiing. And we would be back in Scotland where it’s super cheap because nobody wants to come to rainy, dark Scotland in January through whatever.

So, you’ve got the best of both worlds. You’re getting the best of both lifestyles which, obviously, at this point, it would be a lifestyle play—a lifestyle play with investing in mind. I wouldn’t just go out and buy a boat because I want to enjoy a boat because that’s a terrible investment. But this could be a reasonable investment—maybe not the best investment, but reasonable and yet we’re enjoying that lifestyle as well.

It’s something I would’ve never considered. But somebody that you also interviewed for your book, [unclear 41:36]—which is somebody else we’ve met in Ecuador—he was talking to me about it, and he has some mountain properties and he said they’re actually really great investments where he’s invested. So it made me think, “Ooh, maybe it’s not just a thing rich people buy that just is a complete waste of money. It could potentially be a good investment.”

That’s a long way of introducing you to my peak arbitrage strategy, but what are your initial thoughts?

Chad: I think it’s brilliant! The Mad Fientist has struck again.

To me, I’m just kind of reflecting on it as I talked, but the thing I like about it is owning your residence and turning your residence into an investment is one of my core strategies that I talked about in my book. It’s one of the main ways I talked about people getting started in real estate. And in fact, in your case, it might be the only real estate you need to own. And it does a few things.

I love the fact that you’re getting some of the “happiness quotient” that we talked about—like getting into a community and having some roots. It’s something that my wife and I have talked about a lot too. We know here in Clemson, South Carolina where we are, we have family nearby. I’ve got real estate investments. I’ve got friends. We’ve got friends. We’ve got a community. We’re never going to be totally out of this community. But at the same time, we have these other places we love, and we’re going to travel.

So, I feel completely related to what you’re saying. “How do I have roots, but also have flexibility?” And I think having an efficient, high demand property that you live in, and also do short-term rentals in is just an awesome opportunity. You’ve taken advantage of the technology and the way things are changing in the Internet world.

AirBnB and other short-term rental possibilities, that would not have been possible 20 years ago or probably 10 years ago. And so, you’ve taken advantage of the economy, what’s going on, you’re aligning it with what’s important to you.

And then, as an investment, real estate has several core benefits. One of the first ones is income, the fact that a rental property produces income. When you live in it part of the year, and it’s not going to produce as much income, that’s not really the play. By doing a short-term rental, sometimes, you can make as much income in five or six months as somebody else with a long-term rental would make in a year.

There’s a little bit more work to it. But the main thing I would see on that plan is you’re sort of running a hotel when you do these AirBnB’s. I think you can do this, but I think you need to find some people on the ground, like a really good, trusted person, who could be sort of your co-host. You could pay them a fee, and build that into your numbers to make sure that you’re paying somebody a reasonable fee. It keeps them excited to help you out.

When you’re traveling around in the US or in the mountains throwing bombs to get avalanches, you’re not going to want to hear about something going on in Edinburgh. You want somebody there who can take care of things.

Like what I did in my case, I gave my key person back at home a decision matrix. I said, “Look, if it’s below $200, I just want you to make the decision. And if I don’t agree your decision later on, we’ll talk about it. We’ll learn. But I’m not going to penalize you for you making a decision that you thought was the best thing.

So, that’s what I did. They could make a decision. “I trust you. If it’s a $500 decision, okay, text me. I’ll get back to you.”

So, that removes a lot of the day-to-day stuff. I think, in your case, having some management on the ground will be the key piece of the puzzle t make that work, and then also finding the property you were talking about earlier—that efficient property that makes you happy, that’s walkable.

But also just looking at the numbers and seeing what those numbers look like, I’m willing to bet that, over time, if you owned a property in Edinburgh, like an efficient 400 or 500 sq. ft. kind of apartment in a good location, the appreciation play on that over the next 20 years is probably going to be pretty good. You’re giving yourself a good hedge to other investments and other money that you have.

Mad Fientist: Alright. Well, I’m excited. That’s really good.

Talking about having that efficient place—efficient also in the sense of longevity and durability, I guess, is what my question is—do you know of any good books or online resources that dive into like, “Okay, if I’m going to create this with the sense of maybe renting it out to short-term people on AirBnB, what’s the best sort of materials to use for all the different areas of the house so that it lasts and it’s easy to maintain?

Chad: Yeah, I mean Bigger Pockets is a good community to get in for that. I don’t know anybody with any books particularly. You could just YouTube. Every house problem that I don’t know how to solve, I YouTube it, and I almost always find some guy or lady showing me how to do it. So you could do YouTube.

And then, Bigger Pockets, in the forums, there are tons of conversations about materials for rentals. Should I use luxury vinyl tiles or ceramic tile? And what’s the cost difference? That’s one of the cool things about real-time communities is that you can just ask questions. For example, you could post your question on there. “I’ve got a 500 sq. ft. apartment. It’s going to be a long-term rental. It’s going to be AirBnB. What floor surface has gotten all of you the best return on your dollar long run so that it’s durable and I don’t have to keep replacing it.”

So, that’s a place I would go. But in general though, the longer you’re going to hold an investment—some of the mistakes I made personally was being cheap on my materials. “Oh, that’s the cheapest way to do it right now.” And then, you install this product or whatever, and it ends up costing you a lot more in the long run.

I’ll give you an example. We’re selling a house right now. And during the inspection, when the buyer had their inspector in there, they found a leak behind a wall and a bath tub. Somehow, they saw it, like some of the floor was wet from when they look from underneath the house. And this is probably installed before we brought the house. And we learned after taking out the carpet and the floor—we had to rip the entire bath tub out—all of the joists (the joists are like the support beams underneath), they’re all half-rotted.

This entire floor system was like wet and rotted. And when we finally got it all ripped out, they showed me what had caused all of that mess in these thousands of dollars of damage that I’m having to now replace. And it was this one little connection piece where the shower head connects to the pipes behind the wall. It was plastic. It was this little plastic piece. Somebody had just twisted it too much.

And they said, “You know, if that had been a metal piece, whoever had bought that had not bough the ¢50 and they bought the $1.50 piece instead, you would not have to spend like thousands of dollars.”

And I said, “Oh, my God!” What a revelation.

If you can go a little bit more expensive on a long-term property, if it’s going to be more durable and less likely to break over the long run, go for it! It’s probably going to be a good investment.

Mad Fientist: Yeah. So that’s the [unclear 49:03] for me because I’m always looking for the cheapest thing. And that’s why these smaller properties appeal to me so much. “Okay, it’s 460 sq. ft. Even if we pick the nicest tile or whatever for the bathroom, it’s not going to be breaking the bank if it lasts longer. And it looks good for 10 years or 20 years instead of 5, then that’s going to be worth it.”

Chad: Exactly.

Mad Fientist: That’s good to hear because, yeah, I would definitely be in that camp of trying to save the pennies.

So, my peak arbitrage strategy gets the thumb up?

Chad: Yeah, I like it.

Mad Fientist: Good! The flipside of that, I guess, is something else that I read in your book. And you had mentioned something from the Financial Samurai. Sam had said something about buy utility and rent luxury which, in this case, would be the exact opposite because Edinburgh is very expensive. And I’m sure anywhere a mountain property we would buy would be very expensive. And the sort of argument behind rent luxury by utility is that it doesn’t make sense in these markets to pay the premium to own because, a lot of the times, the rent’s a lot cheaper. And Edinburgh is a perfect example. This flat that we’re considering is £800 a month to rent or I think it ended up going for something crazy which is why we didn’t get it because we didn’t even get close. I think it went for like £260,000 to buy. So the 1% rule that you often hear about, that doesn’t come anywhere close.

So, in that case, what Sam from Financial Samurai was suggesting is rather than spend £260,000 to buy a 400 sq. ft. place in Edinburgh to save £800 in rent, you’d be better off taking what is effectively US$300,000 and maybe buying three houses in Pittsburgh that would generate, I don’t know, $2400 in rent. And then, you could use that to pay your rent in Edinburgh and then pocket good profit.

So that’s also very compelling too. Obviously, the lifestyle wouldn’t be the same in that scenario. But what are your thoughts on that strategy?

Chad: Well, that’s basically the strategy I use. People, they’ve talked to me about beach houses and mountain houses. And I’m perfectly happy renting a mountain house or renting a beach house.

But I think it’s a little bit different than your peak—what is it called, peak arbitrage?

Mad Fientist: Peak arbitrage… oh, man. See, the branding must not be good if you already forgot it. That’s terrible! I need Brandon Turner to give me a good key title.

Chad: Yeah, yeah. Let’s brainstorm with Brandon a little bit about that. I think we can make it work. But it’s a little bit different because there’s also the utility that we talked about, those factors.

And I see Edinburgh and living in a downtown area is a little bit different than living at a vacation spot. I’ve been thinking in your case. Maybe you own in Edinburgh or you own in the mountains or one or the other. Maybe you don’t own them both. And then, maybe you take some of that other money. You allocate a certain amount of money to real estate that you’re comfortable with in your overall portfolio. You put some of the money into whichever place makes the most sense financially, whether it’s Edinburgh or the mountain. And then, you take the rest of the money. And basically, what I do is just own solid rental properties that produce good incomes in areas where the rent-to-value ratios are good and where the long-term economics that I’ve talked about earlier are also good.

The thing about big cities like San Francisco and New York, some of those places, they have the best long-term economics. People are always moving there. Urban areas are not going away. But their short-term economics are really, really tough. It just depends on what your goals are, how much income you need.

You’re probably going to make a lot more appreciation in some of those long-term places like Edinburgh. I can just imagine 20 years from now a property in Edinburgh being worth a lot more because it’s really difficult to build. It’s really difficult to find places, any kind of land, I imagine.

Mad Fientist: Oh, yeah, absolutely.

Chad: It’s just going to be almost impossible. And so you’re basically playing on the fact that supply is super limited in the core of the city. You don’t know how that’s going to affect your long-term investment, but that’s supply and demand. You get high demand, really low supply. So maybe—

This is kind of a Warren Buffet play. Warren Buffet learned, in his career, he used to buy the super dirt cheap companies that had awesome metrics. You can buy it dirt cheap. He learned eventually though that he would try to buy the best companies, the really solid long-term companies, and he wouldn’t be able to get those at as much of a discount. But they were growth plays. They were long-term plays.

So, all the companies he owns now like Geico and Coca-Cola—I’m trying to think of all the different ones—he didn’t get a steal on those properties, but he’s made a ton of money in the long run.

And so, I guess going back to your point, I think a combination of those two could be good. I see a principal residence in a core location. If you buy it, and you get a ton of utility, and you get a ton of satisfaction out of being in the same place in a good location, and the short-term rental kind of changes the economics a little bit—you mentioned $800 a month as a rental cost, but I wonder what the short-term rental numbers…

Mad Fientist: That would be over £100 a night. It’s over £100 a night, especially in the summer. I haven’t checked. I’ll see what it is in the fall and the winter. But yeah, it’s over £100 a night for something that’s small in that exact location.

Chad: So, even if you had 50% occupancy for the year—I’m trying to think in rough numbers. Three hundred sixty-five, 150 days a year, that’s £15,000 or something like that for six months.

Mad Fientist: Right, yeah, exactly.

Chad: The point is I guess the economics can—this is what you do in real estate. You got to find a little niche. If you just get to play the average, normal stuff, the numbers might not look great. But if you can get an awesome location, and you can do something like short-term rental or some other kind of niche to get more income from it, you can now turn—maybe that’s not the 1% rule still, but it’s a decent—you kind of get that some of that Warren Buffet kind of quality property territory where you’re making a decent income, you’re getting a lot of utility, a lot of joy, a lot of satisfaction out of being there and being part of a community, you’re getting appreciation.

And then, you could take another chunk of money if you really wanted, like the solid income, go to a growth area in Pittsburgh and buy a property for $150,000 that maybe rents for $1200 or $1500. And the numbers are going to be better. So you’re sort of diversifying between those two strategies.

Mad Fientist: Nice, alright, cool. That’s great to hear. And one of the interesting things about the Edinburgh thing which actually was the only reason I started actually looking into it is because the pound has dropped so much. And since all my money is in the US, even though real estate is still hot in Edinburgh, to me, it’s sort of on sale because that currency exchange rate dropped so much. So it’s maybe a good time for me personally to buy. Whether or not it’s a good time with a hot market in Edinburgh, that’s a different story. But if it’s a long-term play, then obviously, I’m not going to get into currency trading or anything like that if we’re talking about Forexer stuff because that’s mostly speculation.

But it’s like, well, relative to the past, this is actually looking more on sale than it has been in a long time even though the market itself is quite hot.

Chad: Yeah. Yeah, I agree. And you made a really good point earlier that I wanted to go back to about buy utility and rent luxury. In general, that’s still a good strategy for everybody to think of. The point is like you could go to one extreme like Jeremy, our friend at Go Curry Cracker. He and I have debated back and forth about ownership versus non-ownership. If you’re super mobile, and you’re just not wanting to settle down anywhere, owning 100% investments and always renting everything, that works. That’s cool!

I think what I love about this conversation is we’re bringing in the nuance of what makes us happy and also what’s profitable. When you have some knowledge of real estate, and you can sort of diversify yourself into it, you can have ownership of property and flexibility just by knowing how to operate a rental property and by doing that.

And that’s what I found. My trip to Ecuador was an experiment. Can I own properties that have a lot of utility and then have the flexibility for our family to do whatever makes us happy.

And for that 17 months, that’s what made us happy. I don’t know what it is going to be two years from now. But having some well-placed chess pieces within the real estate board and within other investments gives you tons of flexibility if you plan it ahead of time.

Mad Fientist: So, for someone who is enjoying the flexibility and the low stress of just owning index funds pretty much, one of the biggest worries about diving into real estate for me personally—and I’m sure a lot of people in the audience—is maybe liability.

Is that a concern for you? Do you mitigate or weight some of those risks through LLC’s and things like that? How do you think about liability?

Chad: Yeah, it is a concern. I think the first line of defense is not even financial. It’s just running your business in a way that you treat people right. And if you do have problems which, inevitably—even if we try our best and treat our tenants right and do everything we can, sometimes things happen. I’ve had an issue in an apartment where they left for the summer and something malfunctioned. They didn’t leave the air-conditioner on. And in the deep south—you went to school in North Carolina, right? You know how humid it gets in the summer around here. And so we ended up having some moisture in there, having some mold grow. It was just a stressful situation for everyone involved.

I’m not saying that the tenant was completely happy. But we communicated with them. We did our best. We all tried to solve the problem. I didn’t ignore it. And therefore, the liability was reduced.

We solved it in the end. It cost me some money. But also, they walked away and we all kind of agreed to be friends.

And so, I think how you run your business has a lot to do with the amount of liability you’re going to have. I think the horror stories people hear about, lawsuits and craziness, my anecdotal evidence is that they’re coming from people who kind of run their properties like a slum lord. They don’t take care of their property and they don’t treat them right.

So, if you look at your relationship with your relationship with your tenant more as a partnership, like they’re the employee or the partner who’s helping you operate your business, then you’ll treat them differently.

And I think everybody who’s listening here, none of them are running out trying to screw people over. They’re going to try to treat people right. I think that’s the first thing I would say. You’re probably going to be fine there.

But then, beyond that, insurance is a big deal. So even if all that fails, you want to have a liability insurance. And it’s actually super cheap. On a regular house in my area, I get landlord insurance in case the house burns down and have an accident like that. And you also get liability insurance, meaning if something happened, if somebody sued you, you can get up to a million or $2 million super cheap, like $100 extra a year to increase it.

And so, to get a million or two in liability insurance is really going to be helpful for most things you need to worry about.

And so, those are your two first lines of defense. And I’m not ask that protection kind of person. There are attorneys who study this stuff and who are really good at this. And so beyond that, owning a property and an LLC is probably prudent. That’s what most attorneys tell me at least just so you don’t combine your real estate property asset and liability with all of your other index funds and other assets that you own.

So you’re just basically keeping them in separate baskets and running that as a separate business, so that if the worst case happened, you’re at least kind of quarantining your problems there.

Mad Fientist: So, you interviewed a lot of interesting people. And you said you learned a lot. Were there any strategies that you heard about through the interviews that you now may choose to implement?

Chad: Yeah. So there’s one about doing 1031 exchanges. Let me explain what that is in a minute. It’s a strategy I have not used, but I’ve known about for a long time. Basically, what it means is when you sell a rental property, one of the tax benefits, which I’ve written about in your site with the tax benefit article, is you can sell a property in real estate. And as long as you replace it and follow the IRS’ rules with a similar property, then you don’t pay taxes on that transaction. And that’s a super big deal.

And so, for me, because I’ve accumulated properties, I’m now in the stage of sort of moving the chess pieces around the chess board so to speak. I’m selling some properties that are not optimal. And I’m replacing them with other properties. And by doing that, you can really accelerate your wealth plan or your income or the quality of your investments without paying taxes. It’s super tax efficient.

And so I’m actually in the process right now of doing my first 1031 exchange. Studying the books and listening to others sort of showed me what I already knew, but this sort of demonstrated the power of doing that. And it’s something I’m going to play around with as well.

Mad Fientist: Oh, nice. And hopefully, we read about it in

Chad: Absolutely! I’ll show you all the numbers and share the details for sure.

Mad Fientist: Fantastic! Well, this has been amazing, as always, chatting to you. I know I’ve cornered you in coffee shops in Ecuador before to talk about this stuff.

Chad: Any time, any time…

Mad Fientist: So it’s always a joy. And I always end all my interviews just asking what’s one piece of advice you’d give to somebody on the path to financial independence? And I’ve obviously asked you this in our last interview which was a couple of years ago. So it’s fun to ask that again just to see if your thoughts have changed.

So, what’s your one piece of advice this time?

Chad: Yeah, I’m going to go with the theme of my book. And it’s becoming the theme of my life that I’m trying to get out there. It’s just do what matters. And I think this applies whether you’ve reached financial independence or not. I think that’s my lesson from my reading of your articles, and what you’ve realized after financial independence, and my own realization. Life doesn’t start when you get to the peak of the financial mountain. Life is like all along the way.

And so, if you’re climbing that mountain, you can do what matters now. Enjoy your family if that’s what matters. Enjoy your friends. Take time to travel. Take mini-retirements. If you have a cause or something that’s important to you, or you think is important now, don’t wait 15 or 20 years from now when you have enough money. Just do it now.

Get involved. I think that philosophy of doing what matters and kind of building your life around it has been really refreshing for me. I’m a money nerd. I love the spreadsheets. I love real estate. But when it comes down to it, the joy and the happiness you get out of your life I think is aligning that money with the people and the causes and the activities that really excite you and make you passionate.

And so, I’m working on that. I’m not perfect for that. But that’s kind of my aspiration. And I guess I just encourage people to do the same.

Mad Fientist: Yeah, I couldn’t agree more. And yeah, as you mentioned, that’s something I’m realizing more and more, how important that is.

Your answer is different than the first interview, but both were good. This one shows that you’re sort of on the same path as me. You’re thinking and realizing that money is not everything. Your first answer was similar to that vein. If you remember, it was keep it simple. And that was with investments and that was with life in general which was a great advice. The more I’ve simplified, the just happier and more carefree I feel.

Chad: For sure…

Mad Fientist: But yeah, you can see that your thinking has been evolving just as mine has been. So that’s good to see.
Chad, thanks so much. This has been great. I’m so excited about the book. So if anyone wants to get it, should they just head to Amazon? I can maybe link to it in the show notes.

Chad: Yeah, if you look up Retire Early with Real Estate on Amazon, it’ll be there. I actually recorded the book. So if you can put up with my southern accent for eight hours, then you can join me on the audio book. And also, there’s a digital book and a print book.

And if you’d like to order on Bigger Pockets, they actually have some—you can get it on Amazon, but on Bigger Pockets, I did some bonuses where I interview people like Paula Pant and Lisa Phillips and one of my mentors, John Schaub, Building Wealth One House at a Time. It’s really cool for me to interview him because he’s been doing basically what I’m doing for like 40 or 50 years. And so it was really fun for me to get to pick his brain about early retirement.

He actually took a little shot at the FI community. He was kind of joking. He’s like, “I don’t really like to be frugal. I like airplanes.” That was it! I was like, “You’re kind of boxing in the whole FI thing.” But it was fun. He was like, “I like airplanes. So I just buy another house or two to pay for my airplane habit.”

Mad Fientist: You mentioned that book on the first time I interviewed you. So that must’ve been really cool to interview the main book that you recommended I think it was.

Chad: It was really cool. I interviewed him. And that interview is available. If you buy it through Bigger Pockets, you get those as kind of a bonus for buying through them. So that might be a reason to check that out. It’s just fun to get to hear other people’s perspectives other than mine on this whole journey of financial independence.

Mad Fientist: Very cool! Well, I will link to all of that in the show notes, so you can find that there.

Anywhere else people can find you? Should they just head to just to say hello if they want to chat.

Chad: Yeah, yeah. I’m on I’m still publishing weekly. If you’re interested in this whole concept of investing in real estate so that you can retire early and do what matters, that’s my mission. That’s what I’m doing every week. I’d love for you to join me over there are

Mad Fientist: Cool, man! Well, thanks again. I look forward to seeing you in Orlando, right?

Chad: Yeah! See you soon.

Mad Fientist: You’ll be there for FinCon?

Chad: I can’t wait! FinCon 2018.

Mad Fientist: Very cool! I’ll see you in like a month.

Chad: Alright!

Mad Fientist: Excellent! Alright, man. Well, it’s been a pleasure. And yeah, I’ll speak to you then.

Chad: Thanks for having me.

Mad Fientist: Alright! Thanks. Bye!

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Section 199A – The Tax Break of the Century Fri, 17 Aug 2018 10:08:38 +0000 Section 199A of the Tax Cuts and Jobs Act of 2017 is the biggest tax break of the last 50 years so find out how to take full advantage of it!

The post Section 199A – The Tax Break of the Century appeared first on Mad Fientist.

I have a confession…

For the first time in my life, I paid someone else to do my taxes.

I know this may be surprising, since I write a lot about tax avoidance around here.

While I do enjoy figuring out ways to hack the tax code to help you retire even earlier, I have a valid reason for outsourcing this time – I set up an S-Corp for my business and I didn’t want to learn how to do S-Corp tax returns.

Thankfully, I found a brilliant guy named Stephen Nelson to do it for me!

Not only is Steve an amazing accountant, he’s also an accomplished author who wrote QuickBooks for Dummies and Quicken for Dummies (both of which sold over a million copies).

When I found out Steve was also an expert on the most exciting new tax break to be released in decades (i.e. Section 199A of the Tax Cuts and Jobs Act of 2017), I knew I had to get him to write a guest post.

The new Section 199A deduction will save me and my wife over $10,000 in taxes in 2018 so hopefully it will save you a bunch too!

Take it away, Steve…

The Section 199A tax deduction surely counts as the best small business and individual investor tax break of the 21st century.

Using Section 199A, business owners and real estate investors may get to simply “not” pay income taxes on the last 20% of the income they earn!

And the best part? You don’t need to burn any cash or make big financial commitments or suffer through mind-numbing complexity.

To get the big savings, you just need to do your tax return right.

Let’s get into the details…

What is the Section 199A Deduction?

The Section 199A deduction gives owners of pass-thru business entities (e.g. sole proprietors, partners in partnerships, some real estate investors, and S corporation shareholders) an extra deduction equal to 20% of their “qualified business income”.

And just what is “qualified business income?” Qualified business income equals your bottom-line business profit adjusted for any of the other deductions directly connected to the business, including self-employment taxes, self-employed health insurance, and employer retirement plan contributions.

Example 1: Assume your tax return shows a $108,000 bottom-line Schedule C profit, an $8,000 self-employment tax deduction and a $20,000 SEP-IRA deduction. In this case, your qualified business income equals $80,000, calculated as $108,000 minus the $8,000 and minus the $20,000. You potentially get a deduction equal to 20% of the $80,000—or $16,000.

The only rub for the typical taxpayer? The Section 199A deduction can’t exceed 20% of your taxable income.

Example 2: You earn $80,000 in sole proprietorship qualified business income but you also use the $24,000 married-filing-jointly standard deduction. In this case, your taxable income equals $56,000. You don’t get a Section 199A deduction equal to 20% of the $80,000 of qualified business income ($16,000) but instead get a Section 199A deduction equal to 20% of $54,000 ($10,800).

The taxable income limitation doesn’t always matter though, as you’ll see in the following example:

Example 3: You are married and earn $80,000 in qualified business income from a sole proprietorship. Your spouse earns $60,000 in a regular, W-2 job. You two use the $24,000 standard deduction. In this case, your qualified business income equals $80,000 so the deduction equals 20% of the $80,000 ($16,000). Your family’s taxable income, $116,000, doesn’t come into the Section 199A deduction calculation since it’s higher than the qualified business income.

The Finer Details of IRC Sec. 199A

Qualified business income includes sole proprietorship profits, real estate investor rental income (if your real estate investing rises to the level of a trade or business), and the shareholder and partner “profit allocations” reported on the K-1s that S corporations and partnerships send their owners.

Qualified business income does not include capital gains, interest income, or dividend income.

Another important thing to note: Qualified business income doesn’t include income earned outside the United States. The qualified business income deduction only applies to domestic income (not foreign income).

And then a couple of surprises to the unwary: Qualified business income doesn’t include S corporation shareholder-employee wages, guaranteed payments made to partners of a partnership, or other amounts a partnership pays to a partner for services.

Example 4: If an S corporation shareholder’s share of the profits in some venture equals $100,000, but $60,000 of this profit is paid out as shareholder-employee wages and then the other $40,000 gets reported on the S corporation K-1, only that $40,000 of profit counts as qualified business income and plugs into the qualified business income deduction formula.

Example 5: If a partner’s share of the profits in some venture equals $100,000, but $80,000 of this profit is paid out as a guaranteed payment and then the other $20,000 gets paid out as a distribution and reported on the partnership K-1, only that $20,000 of profit counts as qualified business income and plugs into the Section 199A formula.

A High-Income May Limit IRS Sec. 199A Deduction

Most folks don’t need to worry about this, but single taxpayers with taxable incomes more than $157,500 and married taxpayers with taxable incomes more than $315,000 get their qualified business income deduction limited based on the W-2 wages the business pays and based on the depreciable property held in the business. But how this works is complicated…

Below the $157,500 or $315,000 taxable income levels, neither wages nor depreciable property matters.

For single taxpayers with taxable income more than $207,500 or married taxpayers with taxable income more than $415,000, the qualified business income deduction can’t exceed the greater of two amounts:

50% of the W-2 wages paid by the business, or

25% of the W-2 wages paid by the business plus 2.5% of the original cost depreciable assets used in the business.

For single people with taxable incomes between $157,500 and $217,500 and for married folks with taxable incomes between $315,000 and $415,000, the limitation phases out on sliding scale (for the gory details about how this works, you can refer here: Sec. 199A Phase-out Rules).

High-income Professionals Potentially Lose Twice

All the standard professionals (doctors and lawyers and such), investment professionals, athletes, performers, and any one-person celebrity businesses (someone earning appearance fees or product endorsement income) face another equally painful phaseout.

Single professionals with taxable incomes greater than $157,500 see their Section 199A deduction phase-out because they’re professionals (the phase-out is 100% once taxable income equals $207,500).

Married professionals with taxable incomes greater than $315,000 see their Section 199A deduction phase-out too for the same reason (for these people the phase-out hits 100% once taxable income equals $415,000).

These types of folks who are in the phase-out range can potentially get whacked a second time if they don’t have enough W-2 wages or depreciable property to fully support a Section 199A deduction.

Section 199A – Dividends

Just so you know, some investment income also gets sheltered by Sec. 199A and so plugs into the qualified business income deduction formula: qualified REIT dividends, qualified agricultural and horticultural dividends, and the income from qualified publicly traded partnerships.

Note: I’ve got a longer discussion about how the Section 199A impacts investing at my blog, Section 199A Changes Rules for Investors.

Actionable Insights

The new law burdens taxpayers with complexity, as the preceding paragraphs hint. But basically you have four gambits you will want to use in order to maximize the Section 199A deduction and the tax benefits you receive.

Gambit #1: Maximize Qualified Business Income

You want to maximize your qualified business income.

S corporations and partnerships, for example, want to look at dialing down shareholder-employee salaries as well as partner guaranteed payments.

Sole proprietors should reassess whether it makes sense to pay family members wages.

Business owners operating both inside and outside the US may want to look at moving business activity back into the United States.

Finally, real estate investors may want to look at deleveraging their investment portfolios to “dial up” their rental income (using cash to pay down a mortgage not only saves interest expense but may create or increase the size of a Section 199A deduction, if less mortgage interest expense means more net rental income).

But this caution: As the recent regulations indicate, your real estate investing needs to rise to the level of a trade or business. That means you’re engaged in your real estate business with “regularity and continuity.”

Note: The final regulations provide a 250-hours-of-rental-work safe harbor for investors, suggesting the IRS doesn’t think you qualify for the Section 199A deduction with just a single property.

Gambit #2: Dial Down Taxable Income

Taxpayers often have an incentive to dial down their taxable income (obviously).

But the Section 199A deduction creates new incentives for taxpayers who trip over the threshold amounts ($157,500 for single taxpayers and $315,000 for married taxpayers).

If a taxpayer will lose the Section 199A deduction or some of the deduction due to a high income, reducing taxable income delivers big benefits.

A giant pension deduction, which would always be attractive, may become irresistible if in addition to the pension deduction, the taxpayer also gets another $30,000 or $60,000 Section 199A deduction.

And keep an eye on your filing status. We’ve seen clients who in past have filed married separate returns but will probably decide to file married joint returns going forward—just to double the phase-out threshold from $157,500 to $315,000.

Gambit #3: Know Your Limitations

If your Section 199A gets limited due to wages or depreciable property, creatively explore what you can do to bump your wages or depreciable property.

Sometimes, a shareholder-employee in an S corporation may benefit from bumping up his or her wages—in spite of the additional payroll taxes—because those larger wages support a larger Section 199A deduction (you have to do the math for your exact situation in order to be sure).

And then a common trick for any real estate investors: If you are getting a Section 199A deduction because your real estate investments produce taxable income, you may want to avoid things that limit your properties’ depreciable basis.

One example of this would be avoiding a Sec. 1031 like-kind exchange but other depreciation methods and accounting choices can also depress depreciable property.

Gambit #4: Use Tax Savings Wisely, Grasshopper

A final tip—and one that especially relates to folks aggressively saving money toward financial independence…

Use the tax deduction and the savings it produces wisely.

Someone who receives a $50,000 Section 199A tax deduction might just use that deduction to dial down their income taxes by $12,000.

But you could choose to use the deduction and the savings in more creative ways.

One example? If you’ve put a $50,000 “free deduction” on your tax return, maybe you use that deduction to shelter $50,000 of Roth conversion income and maybe you do this for the next several years.

Two Final Comments

Before I wrap this up, two final quick comments.

First, the Section 199A qualified business income deduction goes away after 2025.

In other words, the deduction only appears on tax returns for the years 2018 through 2025. It’s a temporary loophole.

And then a final thing to know: Because the qualified business income deduction includes so many variables (qualified business income, taxable income, potentially W-2 wages and depreciable property), which in turn depend on a bunch of other variables, the deduction’s effect ripples through your tax return. Check your math. Then check it again!

Hey, it’s the Mad Fientist again. Thanks very much, Steve!

Exciting stuff, right?

Steve literally wrote the book on the Section 199A deduction so if you want to know everything there is to know about this new tax break, you can check it out here*.

Note: He wrote the book specifically for tax accountants and attorneys so it’s very detailed and is priced accordingly. Steve sent me a copy and I really enjoyed it though so check it out if you want to go really deep on this subject and figure out how you can save yourself the most money with this deduction.

As you’ve seen, this new tax deduction is huge news for business owners! Yet another reason why I think everyone should have their own business.

What do you think? How much is the Section 199A deduction going to save you in 2018?

Let me know in the comments below and big thanks again to Steve for his fantastic article!

* Full Disclosure: The link to Steve’s book is an affiliate link so I will be compensated if you purchase through the link.

I asked Steve if I could forfeit my cut in order to lower the price for Mad Fientist readers but since the book is targeted to industry professionals (rather than consumers), he wanted to keep the pricing consistent across all sites, which is understandable.

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Valuable Lessons from My Second Year of Freedom Mon, 30 Jul 2018 09:15:09 +0000 It's been two years since I retired from my software career so find out all the valuable lessons I learned during my first two years of freedom!

The post Valuable Lessons from My Second Year of Freedom appeared first on Mad Fientist.

It’s insane to me that it’s already been two years since I left my full-time job as a software developer.

To commemorate this special anniversary, I decided to release two podcast episodes…

First Year of Freedom

A reader named Robin reached out and said he recorded himself reading through my First Year of Freedom post and asked if I wanted to use it for anything.

It sounded great and since it’s packed with a lot of interesting insights from my first year of early retirement, I figured I’d publish it to celebrate my second year of freedom.

You can check that out here:

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here

Second Year of Freedom

When preparing the above episode for release, I realized that I haven’t written about what the second year has been like.

Since I’ve learned even more valuable lessons during the second year, I decided to record another episode talking all about it.

Listen below to find out what a day in my life is like now, hear all the ways early retirement is different than I expected, and learn what all these revelations mean for the future of the Mad Fientist!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here

Show Links

Full Transcript

Mad Fientist: Hey, welcome everyone to the Financial Independence Podcast, the podcast that usually gets inside the brains of the best and brightest in personal finance to find out how they achieve financial independence but today is a bit different…

If you listened to Monday’s episode, you’ll know that it is the 2-year anniversary of when I left my full-time job. To commemorate it, I released a recording of a reading of my First Year of Freedom post, which you can check out, and I decided to record this episode of me reflecting on the last year to give you an idea what my second year freedom has been like.

This episode will likely be shorter than you’re used to but hopefully it’ll still give you a sense of what this whole lifestyle is like after you reach your goal and some of the challenges that you face that you may not expect.

I know personally I have not expected a lot of the stuff that’s happened so hopefully you can learn from my experiences and then be better prepared when you eventually quit your job as well.

I think a great place to begin is to actually reflect on my First Year of Freedom post, which you hopefully have read before. Or if not, you listened to being read on Monday in the last episode.

If not, I would suggest go to that. There’s a link in the show notes to that post.

The great news is the only time I actually freaked out about this whole thing was on that first day of freedom, which I talked about in the last post.

Everything else has been really really great.

There’s been challenges, absolutely, but overall the experiences just been incredible.

As I mentioned in that first year post, I was experiencing new things a lot more which has continued into the second year. I recently biked around the Netherlands with some friends, which is been something I really wanted to do for a while.

Just get on a bike for a week and travel around Europe, because it’s so easy to bike around Europe…the infrastructure is great and there’s so much cool stuff to see you in such a small area so there’s a lot of bang for your buck as far as pedaling is concerned.

Since that Dutch trip was so successful, we actually booked another biking trip with friends and had a great time cycling around the wine regions of eastern France and that was it an incredible as well. It just shows the flexibility of FI and what it can provide you because that was sort of a last minute thing.

Our friends were planning a big trip around Europe and asked if we wanted to join them for any piece of it so we just flew out there for a week, biked around drinking great wine, eating great food, and had a really nice time with some friends.

Had we been working, we probably wouldn’t have been able to do that.

So the new fun experiences have continued from the first year and so too has the focus on health. In fact, I think health has become an even bigger focus in the second year because I realized how great it made me feel in the first year and how it’s sort of was like a cornerstone habit that made me healthier in other ways as well.

For example, going to the gym not only made me healthy from the actual going to the gym part but then it made me eat better, it made me drink less beer, because it’s like I’m not going to go to the gym and work that hard and then ruin it with the bunch of beer or something, so it’s been hugely impactful. And it’s been great for my mental health because I feel great, I’m happier, I feel like I’m sleeping better and it’s just been fantastic so later this year I’m going to get my personal trainers, a buddy who just been sending me programs via mobile app, I’m going to get him on the show and we’re going to talk through everything that he’s been putting me through over the last couple of years and it’s going to be a great episode so stay tuned for that.

The decreased stress from the first year has also carried over into the second year, which I’m very thankful for.

It’s actually amazing how awful stress feels when you are able to design a lifestyle that has very little of it. Recently, we were…I can’t remember what the issue was or why I was stressed, but it was like the first time in a while that I can remember actually feeling stressed and it’s like, “Wow I can’t believe people with stressful jobs and stressful lifestyles go through this all the time and how this is just a normal state for people” because it just feels awful and it can’t be healthy for you. So that’s been an incredible blessing.

Also, I think just my mindset shift with money has changed so much that I am less stressed about a lot of things. Back when money felt like it was scarce or that I needed to save every single penny for the FI goal, I’d worry about lots of things like…What if the car broke or what if something happened and there was an accident and I had to pay for something or what if the hot water heater went out or something.

Now, it’s like, “Okay, there’s enough money there so all of these things could still happen but at the end of the day, you know all you have to do is spend a little money that you didn’t expect to spend and the problem will go away.” So there’s not really any need to stress about it and that’s that’s actually been huge for me. It’s just been such a different outlook and it has allowed me to really not fear as many things or not stress about things that could potentially happen.

Part of this carefree attitude towards money is caused by the fact that money is still coming in so as much as I’d love to write about withdrawal strategies and how that’s been affecting me and how I’ve been selling these investments to maintain my spending and how I’d like to talk about the actual financial aspect of pulling the plug on your job, I really can’t because the credit card tool that I built way before Mad Fientist was even around has been bringing in more money than we actually spend. So it’s a great position to be in but it’s not making me be a very good blogger because I can’t really write about all the things that I planned to write about.

It does show that building these sorts of projects while you are working has the potential to make the transition into post-job life that much smoother and that much easier to deal with from a financial standpoint. Also from a happiness standpoint because if you build something before you’ve left your job, you’re going to have something that you’re passionate about that you can work on after you leave your job so as I’ve mentioned in past articles, the fact that money still coming in, Jill is still working, I worked two years longer than I had planned to…all of these things mean that money is no longer a motivating factor in my life anymore which is really weird to come to grips with.

And that’s what it leads me to the next big thing I learned in the past year, which is learning how to say no to really fun and interesting opportunities that come along. Although I got better in that first year of not saying yes to things just because they could earn me money or they could save me money, I was still agreeing to things because they sounded like they be fun. Having fun is great but it still could keep you from doing things that will give you more lasting happiness and enjoyment.

And that’s something that I’ve realized…I think a lot of my unhappiness during my career wasn’t because I had a bad job, because that wasn’t the case…I had a great job and I enjoyed it. And it wasn’t because I felt like I needed more money to spend money on stuff. It was really because it felt like I couldn’t do the things I really wanted to do and it felt like I didn’t have the time to really pursue the things that I was really passionate about that I thought could give me lasting long-term happiness.

The thing I learned over this last year is that even good stuff can get in the way of that so yes, it was easy to get rid of my job because I was like, “Okay, I don’t really love it so yes, let’s get rid of that and then I can start focusing on these other things.” But then, all these other fun and interesting opportunities arise when you don’t have to worry about money or time but they still get in the way of those things that you really want to be doing!

And that’s something I had to learn the hard way, by overcommitting myself during that first year but now during the second year, I’ve said no to a lot of things, which is really tough to say no to fun interesting opportunities but it has allowed me to get into a better routine and make progress on these things that I’ve always said I wanted to make progress on.

Which leads really nicely into another huge lesson that I’ve learned over the past year, which is the importance of habit.

I mentioned in the past that I didn’t want to travel as much as I thought I would have at this stage in my life. And a lot of the reason is because I get a lot of satisfaction and making progress on some of these things and the only way I can make progress is to have a consistent habit.

To give you an idea of what I mean, I’ll just described a day in my life these days, which may not be too exciting but it is so enjoyable. This is surprising because I never thought I would actually enjoy habits or routine but when you get to design it exactly how you want to, then you actually do.

So normally I wake up naturally around 8 a.m. naturally. I don’t have to wake up to an alarm or anything. I have a nice cup of tea cup of coffee usually try to get some things done on the computer while I’m drinking. That’s actually something I’m trying to change because at first I would check my email first thing in the morning but then that would send me on all these other tasks that I didn’t actually need to complete and it would get in the way of what I really want to do that day. So I’m trying to only check email after 3 p.m. now so that doesn’t happen.

But after drinking a cup of coffee, I would head down to the gym and usually spend an hour to two hours there, just lifting weights, which as I said before, I’ll talk more in depth about when I get my trainer on the program. Then, I usually stop by the grocery store or the butcher on the way home and pick up some stuff for lunch.

I then come back, get a shower, make a huge lunch, since it’s probably the first time I’ve eaten all day (which I’ll also talk about in the health episode), and then I’d spend the afternoon working on the important project that I haven’t actually even shared with you guys yet but I will soon, I promise. There’s a lot of Articles I’m planning on writing about this because it’s been such a struggle but also so rewarding.

So I try to work on that until Jill gets home, if she’s working that day, and then we’ll cook dinner together, have a nice dinner, maybe watch an hour of stuff on Netflix, maybe work a little bit more on some of the projects, maybe do some mad fientist stuff in the evening, and then I try to get to bed by 11 so that I can read until I fall asleep, and that’s usually by midnight.

That’s a pretty typical day but that has taken a long time to get to that stage because you need to figure out what times are good for you to do certain things and when you have the motivation to work hard on certain things and when you don’t.

That’s taken a lot of trial-and-error and I’m going to write about some of this stuff because it’s super important I think to having a life that you’re happy with because like I said before, I think a lot of my own happiness is knowing that I should be doing something else or want to be doing something else but not having the motivation to do it or not having the time to do it or not having the money to do it.

When you reach financial independence, you have the money and you have the time but the motivation is still the thing that could trip you up and it has over the past year or two for me so I plan to get into what worked for me and what hasn’t in future articles but for now I’ll say that habit is the one thing that makes the biggest difference.

If I can get into a routine and I can stick to it, then it makes everything so much easier and then I always go to bed feeling like I did the right thing that day and I feel like I made progress on things that are important to me and it hasn’t been a motivational struggle because it’s routine and it’s normal.

Since my normal day-to-day life is so efficient and focused, that makes me enjoy my vacations more and my trips more so when I go to the States and visit family, I can just relax. And even if I’m not as productive there and if I’m not making as much progress as I would like, at least I know that when I get back I’m going to be making a lot more progress and will be a lot more effective at everything I’m trying to do and that lets me just relax and not feel guilty about it on those occasions when I am somewhere else.

That brings up another point…that’s another reason why I’m trying to limit the amount of trips that we take and limit the amount of fun things that we do because if my whole life is that, then I can’t really feel good about my routine because I’m not doing it anymore.

So it’s been challenging but I feel like I’m making good progress and I’m excited to share some of that with you later in the year in future articles.

I have to say this is a lot different than I expected when I was planning to reach financial independence. I did not think of any of this stuff and it was all the fun things that I was hoping to do like travel and hang out with friends and family all the time and just have the life of leisure and enjoyment. But all that stuff is only really enjoyable when you’re working hard and you feel like you deserve it, like you’ve earned it, so that’s why the focus has really shifted for me this year.

Being a blogger, it’s interesting because you can sort of look back on what you thought you wanted and what you thought you were going to do.

Back in November of 2012, I wrote an article called The Perfect Life and that was an exercise that my wife and I did when we just try to sit down and plan out what are perfect life would look like.

This was a great exercise and it was one of the reasons that Jill, my wife, actually got on board with the whole idea of financial independence.

So I definitely recommend you do it but just know that whatever you think your perfect life is will likely change by the time you actually have the power and the time to live that.

Looking back on that article from 2012, it looks like I did get some of the stuff right but I missed out a lot of things.

My core focus back then was going to be on friends and family, traveling, learning, and creating.

The friends and family thing…absolutely, that’s been great.

The traveling, as I mentioned, I don’t need to do as much of that as I thought I did.

The learning and creating…that is a huge focus and that is something that is been really bringing me a lot of Happiness.

So back then I thought that we were going to live this 3-6-3 plan I called it, which was 3 months living in the States visiting all my friends and family, 3 months traveling somewhere else in the world, and then 6 months living in Scotland and hanging out with Jill’s friends and family.

It’s just amazing how off that would be now!

We tried to travel for 3 months and we realize it was way too long so now I think we’re more one month travel, max.

We also tried to travel and see friends and family in the States for about 2 months and we realized that was way too long too. And it’s not because we didn’t like seeing our friends and family but just not having a home for that long and not having that routine is is just really disruptive. So I think we’re one month max on that side too.

That just means that most of the time we’re going to be in Scotland, which is great!

I did mention in that post that I wanted to spend some time in Thailand, Guatemala and Ecuador and I’m happy to say we hit all those places up since then so that’s cool to see!

The other thing I thought I’d do is create businesses but as I said, when money stops being a motivating factor…you know some of those ideas were just money making opportunities and it’s like, “Well that’s not a really good use of your time, if you know more money is not going to make that big of a difference.”

The other thing that I mentioned in that post was maybe doing a PhD program, which is something I still want to do someday.

I am putting that off to what I’m calling my second retirement, because I feel like there’s so much I want to get accomplished that I still feel like I’m working super hard and I can see a time when it’s like, “Okay I maybe I’ll do a Ph.D program for fun.”

One of my buddies has said that he wants to come over and do a Master’s so maybe I’ll just do it with him for fun.

Then, my proper proper retirement will be being a ski bum on a mountain somewhere and maybe working part time for ski patrol and throwing avalanche bombs and stuff like that.

So what you think you want is maybe not exactly what you are going to want to once you get there so just be flexible, think of other options, experiment, and just have fun with it because that’s really the whole point.

And that brings me to the biggest realization that I’ve had over the last year that I don’t think I had as much in first year…it’s just how good this is and how lucky you are to be able to control all of your time.

There’s been so many times over this past year where I just get this feeling of elation. Really, there’s no reason for it, there’s no external stimulus that caused it…it’s just a moment of pure joy.

Just knowing that you’re in control of your time and knowing that you can do whatever you want and it doesn’t matter if you get kept up late one night because somebody’s noisy in the street or something because you can sleep in the next day, if you need to.

And it’s just these unexpected moments of just pure gratitude that you’re lucky enough to be in this position that you’re in and to be able to live this lifestyle and to have the low levels of stress.

That’s just happened so many times over this past year and a lot more than the first year. I think in the first year I was just really thinking about things and still in the old sorts of mindsets but now it’s just like, this is a new life and I guess every so often I would realize that, “Hey, this isn’t just a vacation or a temporary thing…this is life now and I feel unbelievably lucky to be living it.”

Hopefully this is helpful to you as you’re planning your own departure from work eventually. And hopefully it gives you an idea of where I think the Mad Fientist is heading for the rest of this year and into next year.

I’m going to be focusing a lot on building the lifestyle that you’re hoping to build because I as I said, I’ve had my struggles and I’ve learned a lot about that so I think for the rest of this year there’s going to be a lot of articles focused on that (i.e some of the things that have worked for me and haven’t worked for me) so if you’re interested in learning more about that stuff, then absolutely subscribe to the email list and you’ll get notified as soon as a new article gets published.

There are currently 80,000 people subscribed, which blows my mind, but hopefully that shows that I’m not spamming people and people aren’t unsubscribing.

If you want to subscribe and also get a PDF of all the great advice I’ve received on the podcast over the years just head over to and you can enter email just there and you’ll get a PDF containing tons of great advice I received from all my guests on the podcast over the years.

So that’s what my second year of freedom was like. As they say, time flies when you’re having fun and that definitely was the case. I really can’t believe it’s been two years since I left my job but it’s been a wild ride, it’s been extremely exciting, and I can’t recommend it enough.

For all of you out there who are still on the path to FI and are finding it to be a bit of a grind, trust me…it’s absolutely worth it and all of the things that you’re learning about yourself as you struggle through these times are going to definitely help you build your ideal life once you do walk away from your job.

Thanks a lot for listening and we’ll be back to the normal interview format in the next episode. I have some good ones already recorded that I’m excited to share with you.

See you next time!

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Scott Trench – Set for Life Wed, 20 Jun 2018 09:15:22 +0000 Scott Trench joins me on the Financial Independence Podcast to discuss the three stages of wealth creation on the journey to financial freedom and what you should focus on at each step!

The post Scott Trench – Set for Life appeared first on Mad Fientist.

On today’s episode of the Financial Independence Podcast, I’m joined by the president of and cohost of the BiggerPockets Money Show, Scott Trench!

Scott breaks down the journey to financial independence into three stages and explains what you need to focus on at each step (and why)!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • The three stages of wealth creation on the path to financial freedom
  • Why it doesn’t make sense to worry about investing right away
  • How to create a “financial runway” and use it to your advantage
  • Why you should try to find a “scalable career”
  • How to turn your biggest expense into an income-producing asset
  • The one question to ask before buying your first house hack
  • The multiple benefits of adding side hustles along your journey

Show Links

Financial Independence Podcast Advice

I’ve been recording this podcast since 2012 and at the end of every interview, I always ask, “What’s one piece of advice you’d give to someone pursuing financial independence?”

I’ve received a lot of great answers over the years so I decided to compile all those answers into a PDF, which you can now download for free here!

Full Transcript

Mad Fientist: Hey! Welcome everyone to the Financial Independence Podcast, the podcast where I interview some of the best and brightest in personal finance to find out they achieved financial independence.

On today’s show, I’m excited to introduce Scott Trench from Scott is someone who came on my radar a few years ago because Mindy Jensen, aka Mrs. 1500, from mentioned quite a few times that I needed to get her colleague, Scott, on the podcast. She said he’s a 20-something who’s doing incredible things with real estate and investing and finances in general, so I needed to talk to him. And any time Mindy gives such a glowing recommendation for someone, I definitely check them out. So that’s what I did!

I downloaded an audio book version of his book, Set for Life, and I really enjoyed it. The thing I liked most about the book was that he broke the journey to financial independence down into three distinct stages, each with their own focus. And this is something that I really am looking forward to diving into today in the interview because I think it’s a really powerful way to make the journey to financial independence not as daunting. And I’m also looking forward to exploring some of the strategies that he used personally to get to the stage that he’s at today like house hacking and real estate investing.

So without further delay, Scott, thanks very much for being here. I really appreciate it.

Scott Trench: Well, thank you for having me, Brandon. I’m very excited to be here.

Mad Fientist: Yeah, this is a long time coming. I’m not sure how long you’ve known Mindy Jensen, but I think ever since she got introduced to you, she’s been like, “Brandon, you have to get him on the show. He’s this young guy that’s doing all these crazy things.” So you’re in your mid-twenties, right?

Scott Trench: Yeah, I’m 27. Two or three years ago, I actually [00:01:46] Bigger Pockets.

Mad Fientist: Mindy has been like, “You’ve got to get him on the podcast. He’s doing some amazing stuff,” which I’m really excited to talk to you about. So let’s dive in! What did Mindy see in you do you think? And what caused her to come to me and say, “Hey, you needed to talk to this guy”?

Scott Trench: Well, I think we both share a lot of interest in personal finance. We both have kind of a similar approach to money in general. I think it starts with a basis in frugality, but then there’s an aggressive investing component.

And both Mindy and I are a little bit more—how do I describe it? We try to be a little bit more creative and adventurous with our investment and money management than maybe just passively investing in index funds. I think that’s why we’re attracted to real estate. I have my eye on maybe branching out into some other types of investments. And I do she does a lot of private lending and other various kind of creative ways to invest and maybe get a diversified or different or higher returns than she can with just stocks.

So, I think that’s where our friendship kind of kicked off, a pretty similar mindset on life and finance and real estate in general.

Mad Fientist: Nice! And yeah, you’re 27 and you’ve done a ton of crazy, amazing stuff so far. You’re now president of Bigger Pockets which is huge. Congratulations to you!

Scott Trench: Yeah, I got promoted to president of Bigger Pockets maybe last Tuesday I think. I don’t remember. It’s been a whirlwind since then.

So, it’s kind of the opposite of FI at this point. I’m now working very long hours and trying to figure out how to grow the company and all that kind of stuff. But it’s very exciting, and it’s like the perfect world for me because I just love Bigger Pockets. I love helping spread the message of financial independence to as many places as I can.

Mad Fientist: And you could do it while you’re on the clock.

Scott Trench: And I do it while I’m on the clock.

Mad Fientist: …which is great. And your boss was on the show, Josh Durkin. He was episode #23.

Scott Trench: That’s right.

Mad Fientist: He seems like a good boss anyway. But that’s awesome. That’s great. Congratulations!

Scott Trench: Yeah, Josh has definitely kind of achieved the dream here. So he’s stepped aside. He has some family things that are going on. So we’re wishing him the best with those. But he’s definitely in a position where he’s able to step aside and step out of the day-to-day and have a young upstart like me kind of do some [00:04:01] for him.

Mad Fientist: That’s cool! So how did you get interested in real estate?

Scott Trench: So, I got interested in real estate as a byproduct of being interested in financial independence in the first place. I started out working at a Fortune 500 company. I wasn’t really interested in that line of work. I was interested in that line of work, but I didn’t want to be tied to it for 40 years.

So, as part of my effort actually to become a better financial analyst at my job, I started listening to and reading all these content on finance and kind of discovered the concept of personal finance at some point. And then, I actually stumbled upon your podcast, the very first episode, and Mr. Money Mustache. And once I heard that, everything clicked for me, and I was like, “This is it. This is what I need to be doing and how I need to be moving forward with my life and with my finances. This is why”—I was already fairly frugal—“This is why I’m saving. This is what I want to do with money. This is why I studied finance in general, in college and with the start of my career. This is it!”

So, thank you for that. Thanks to both of you and him.

Mad Fientist: Yeah, that’s absolutely crazy!

Scott Trench: But yeah, that interest in personal finance is kind of what spurred my ability to save and the accumulation of my first $20,000 to $25,000 for me. And I wanted to do a little bit more than maybe invest in index funds again which is kind of a standard 8% to 10% long-term average return. I wanted to try to see if I could do much better than that. And that is where I became interested in real estate and started listening to Bigger Pockets and becoming a fan of the company there.

Mad Fientist: That’s very cool! I published that episode way back in May of 2012. So, do you think you stumbled upon it shortly after it was published or was this something that happened a little bit later.

Scott Trench: No, in May of 2012, I was graduating from college and getting ready to—no, I graduated college in May of 2013. So I was still drinking way too much better and trying to have too much fun when you published that.

So, I spent all my money throughout the rest of my college, all the money I saved up working in summers and all that—all fun in college, and then a three-month backpacking trip when I graduated. So I started with basically zero—$3000 in savings when I started my career.

But within three months of starting my career, my introduction to the real world, I became very interested again in the concept of personal finance. And that’s when I found your show, some time in that timeframe. I want to say it was probably November or December of 2013 is when I actually listened to your show and got this all kicked off.

Mad Fientist: Wow! That’s very cool. So you mentioned your first $25,000. And this brings up a really cool thing that I liked in your book, which I haven’t even mentioned yet. But you wrote a great book called Set for Life. And you’re kind enough to send it to me. I actually enjoyed the audio version of it in the gym. So you were my gym companion for a good week or two.

Scott Trench: Oh, wow! I’m repaying the favor [00:06:47].

Mad Fientist: Yeah, exactly. So yeah, I really enjoyed it.

But one of the things I loved most about it was how you broke it down to three phases. And the first phase was getting that first $25,000. The next phase is getting that first $100,000. And then, finally, the next phase is getting from $100,000 to financial freedom. So I really like how you structured it.

So, would you mind talking a little bit about that first stage?

Scott Trench: Yeah, sure. So one of the problems that a lot of people have I think when it comes to finance is they’re unable to take any risk whatsoever. They’re unable to take advantage of opportunity. And the reason for that is because they have no cushion. They have nothing to fall back on.

Suppose that you’re making $50,000 a year, if you save $500 a month—which is actually a pretty good savings rate. It’s about a little over 10% of your savings—that means you spend around $4000 a month. So you’re not going to be able to even last one month without your job if you’re starting from scratch until eight months have passed and really six weeks timeframe by the end of the year. So you have no financial runway. If you lose your job, you’re screwed! You run out of money and you have to go and find similar paying work as your only option.

But if you’re able to start increasing that savings rate, you accumulate this cushion, this what I call “financial runway” and “set for life” which allows you to live without the need for wage-paying work on that.

And my book is written for a very specific audience. It’s written for a median income earner that is starting with little to no assets but wants financial freedom.

So, some people are starting from a position where they already have a good $25,000 saved up through whatever fortune, whatever they’ve done previous to this point. But if you’re starting from that point, you don’t really have the option of going out and starting a business because you’re working full time and starting a business is hard work and unlikely to be successful on a part-time effort in the short run. There’s plenty of exceptions to that, and I’m not discounting that. I just think it’s lower odds of success than maybe focusing on savings first.

You’re also not likely to get a big raise at your job at work within the next year. People doubling their income in a corporate type situation, it’s not heard of. It’s unlikely. Also, you have nothing to invest, so you can’t get a higher return on your invested dollars if you have nothing to invest.

So, you really have to start somewhere. And I think for that median income earner starting with zero, it’s with that savings position.

Now, once you achieve a high savings rate and accumulate maybe six months to a year or more of this financial runway, options begin to present themselves in your life, things like you can go and take a job that pays you $40,000 instead of $50,000, but offers you a chance at a big bonus at the end of the year, or you can go work for free for an entrepreneur that you really admire and go learn a valuable skill set, or you can just take that $25,000 and invest or house hack the way I did.

And that’s kind of where we start getting into part two there which is $25,000 to $100,000. But do have any other questions about the…

Mad Fientist: Yeah, yeah. That’s awesome. And yeah, the main focus in that first $25,000 is frugality, which as you talked about in the book, a dollar saved is better than a dollar earned because obviously you’ve already paid tax on that dollar that you’re saving, and it’s worth more to you than a dollar earned because you would pay a bunch of tax on it and have to do work to get it. So, I think that’s really important.

And I think focusing on frugality at that stage absolutely is going to be the biggest impact you can have on your finances.

Scott Trench: Yeah, and I think a dollar saved is better than a dollar earned because of that tax advantage. But also, a dollar saved, at least a dollar of lifestyle—you know, if you can reduce your average monthly spending by a thousand dollars, that’s better than increasing your average monthly income by a thousand dollars for a couple reasons.

One, you’re accumulating that all in savings which is 100% gain because it’s after tax savings that you’re accumulating. But two, you’re decreasing the amount of money that you need to produce financial runway.

So, you might need $25,000 in total cash, liquidity, to finance your $2000 a month lifestyle. But you’ll need about $48,000 to finance your $4000 a month lifestyle. So it gets harder to save, and you need way more the more your average monthly spending increases.

Mad Fientist: Wow! Yeah, that’s a great way to look at it.

So, you had mentioned when you hit that $25,000 stability level, you would mention you could get a job that pays less salary but has a bigger bonus potential, or you could go and work at a startup or things like that. And you mentioned in the book something called scalable careers, which that’s a great phrase that I don’t think I’ve really heard before. So can you talk a little bit about that?

Scott Trench: Yeah. So my first job was at a Fortune 500 company as a financial analyst 1. And I knew very clearly that around the 18-month mark, give or take a few months depending on my performance, I was going to get a promotion to financial analyst 2. And my salary when I started was $48,000. And I knew that my salary at financial analyst 2 would be about $56,000 to $58,000 (again depending on performance).

Well, my goal was financial freedom. And I wanted it as soon as possible. Earning an $8000 raise after a year is great. I know a lot of people that would be happy with a raise of that level. But that was not going to get me expediently towards my goal of a several hundred thousand to a million dollar net worth and several thousand dollars a month in passive cashflow. So that’s not scalable.

And that the step after financial analyst two of course is financial analyst 3, then senior financial analyst, then finance manager, senior finance manager, director of finance, senior director and so on, all the way up to CFO of a Fortune 500 company.

And that’s the best case scenario, is that you go through all of those rungs of the ladder in 20 years. That’s not fast enough. It’s in my opinion as a saver who was able to accumulate a year of financial runway within a year, that was a risky career because I knew that I was not going to have any chance to live up to what I deemed my potential to be.

But on the other hand, if I wasn’t saving, if I had no financial runway, it would be too risky to leave. And so what I’m trying to do with Set for Life and with some of the other things I’m doing is try to help people put themselves into a position where they’re saving enough, where leaving a career track like that where they have very limited upside becomes the bigger risk than taking a chance on something that they believe to be a good opportunity.

Mad Fientist: And that’s why I love these three distinct phases so much. When I started on the road to financial dependence, thankfully, I was already in stage three. I was just working towards that financial freedom. But I didn’t realize that passing those first two stages, my first $25,000 and my first $100,000 gave me so many more options and so much more power to make that journey quicker and more enjoyable.

And that’s why I really like how you laid out the book, is because it’s like, “Okay, you may not have that much money to invest and you may feel like it’s a long way out. But you get to this $25,000 or this one year of runway, and now you have a lot more options. You could drastically change your life for the better.

Scott Trench: Yeah, I think that’s exactly right. And once you have that financial runway, moving into step two here, we’re trying to get to about $100,000 in investable liquidity. And once you get to $100,000 in investible liquidity, now how you invest that money begins to become really important.

So, the goal is to go from a year of financial runway—which is a very modest goal that you can grind out over maybe a year to eighteen months depending on where you’re starting from, what your income is, and where your expenses are, to a goal that has a lot less certainty. There’s a lot more factors. More luck is involved in rapidly going from $25,000 to $100,000 than there is from going from zero to $25,000.

And so, it’s all about increasing your odds of success I guess at this point.

And so, I believe that two things are likely to help people increase their odds of success going rapidly from $25,000 net worth to $100,000. One, go find a new job. Go find a career or an opportunity that you believe offers you the potential to scale, but will not allow you to lose money on a monthly basis. And then, two, house hack.

Mad Fientist: Cool! Yeah, can you describe that again? I know I’ve had Chad Carson on the show, and we’ve talked about it in the 1500s. But for those who may not have heard that episode, could you just describe what house hacking is?

Scott Trench: Sure! So, house hacking as I define it is buying a piece of investment real estate that will make sense as a rental property, as a cash flowing rental property for you after you move out; or otherwise, using your housing to build wealth.

So, for example, a house hack the way I look at it through my lens was I bought a duplex for $240,000 here in Denver in about late 2014. I put down $12,000. And I got a $236,000 loan, something like that after the fees and all that.

And so, I put down 5% with an FHA loan. My mortgage payment was $1550. And my rents were $1150 from the other side and $550 for my side. So if you’re following that, I was collecting $1700 in rent on $1550 mortgage.

Mad Fientist: Nice.

Scott Trench: So, after the other expenses that went into maintaining the property and fixing some things up myself, I was probably breaking even or maybe paying a little bit out of pocket to live on a monthly basis. But that’s a huge improvement from paying hundreds or thousands of dollars in rent per month.

And so, that’s the biggest hack that I can think of, like the biggest trick that a median income earner can do on the side to drastically cut their expenses, and then automatically put yourself in a position to have a significant cash flowing asset after a year or two.

Mad Fientist: Yeah, you mentioned in the book, you’re like, “Turn your biggest expense into an income-producing asset,” and I think that’s really powerful to think of it that way. Yeah, this could be your biggest expense—especially if you’re renting or if you go out and buy your dream home right out of college like some people. that is a huge expense. But what you’re talking about is turning that into an income-producing asset instead. So, not only are you not spending money on that big, major expense, but you’re actually earning money from it which obviously is going to get you to that $100,000 a lot quicker than the normal person.

Scott Trench: Yeah, absolutely. I mean when you talk about average American household spending, 33% of that, the biggest chunk of the pie is going to be in housing, 17% is in transportation, 13% is in food. And then, one-third—that was two-thirds I just described there, housing, transportation and food—one third is everything else. Fun, entertainment, healthcare, insurance, all of that falls into that last third.

So, people always think that that’s where they need to focus on their finances in order to achieve a high savings rate and rapidly accelerate toward financial dependence, but that’s wrong. It’s just that the math doesn’t work like that. The math is telling us that the biggest parts of your spending are in housing and transportation. And if you can house hack—like me, I house hacked close to work, so I could bike to work—you’re able to eliminate basically 50%, lop off half of your expenses, in one single investment.

And again, yes, you’re buying in such a way that it will make a smart cashflowing asset for you once you move on and move out of that property.

Mad Fientist: Very cool! So was that your first property then, the duplex in Denver?

Scott Trench: Yeah, that was my first property. I bought it in northeast Denver, and things worked out. I moved out a couple of years later. And it currently rents for $1400. The mortgage is currently $1400 because I refinanced. I was able to reduce my monthly payments. And then, the rents are about $2600 a month.

Mad Fientist: Wow! That’s fantastic. Have you bought any other property since then?

Scott Trench: I live in another duplex doing the same thing. And I also have a quadplex now that I bought as a regular investment property.

So, I’m trying to buy one every 12 to 18 months and just sustain that system.

Mad Fientist: How is that going in Denver? I know it’s a really hot real estate market these days.

Scott Trench: It’s been going pretty well. I think that it’s increasingly difficult. At the time that we’re recording this, I’m finding it very difficult to find properties. I think it’s going to take me a good bit of time here. But as long as I can find a property that cash flows in a sense where I basically have a very, very good odds at having long-term $500 to $800 a month plus in cashflow on a $50,000 to $100,000—it may not be the best cash in cash return, but I do believe that I can see some solid appreciation over a 30-year holding period in Denver.

So, if I kind of maintain my system of dollar cost averaging through real estate, I believe that I’ll have a good result at the end.

Mad Fientist: Very cool. And how does the duplex compare to the quadplex?

Scott Trench: So the quadplex that I purchased, I bought it for $355,000. It wasn’t in the nicest area. The rents there are $800 per month on each of the units. And the mortgage is about $1700.

So, if you’re following, that’s $3200 in rent on a $1700 mortgage. And I have a couple of other expenses there as well. I believe I currently was able to get—I remodeled and got one of the units up to $925. And I believe that by the end of next year—so that’s the end of 2019—that I’ll be able to get approximately $925 to $1000 per unit, plus I can pass on the utility fees to the tenants.

So, it’ll take me a year or two to get to that point because I don’t want to kick any tenants out or anything or raise the rent too quickly on them. But once I’ve got that stabilized after a year or two, I think I’ll have a very, very nice cash flow on top of what is already a satisfactory cashflow.

Mad Fientist: Alright, good. If somebody is interested in getting started in house hacking, what would you recommend as far as getting duplexes? Are they easier to manage initially? Or do you think go straight for something like the quadplex if you have the capital to invest?

Scott Trench: One of the great things about house hacking is it’s a huge spectrum. So the only criteria that I have that I think that you should really kind of strictly enforce is: “Will this property make sense right now?”, the day you buy it as an investment property if you don’t live there. If you don’t have that option, then you are stuck. You have to live there until things appreciate or rents go up, or the property goes up and you either have to be able to sell it or live there happily.

But if your house hacking correctly, you have three options. And this is the real power of it in a non-financial sense. I could continue living in that property happily forever, I could sell it at a gain alongside all the other homeowners in the area, or I could rent it out.

And in a good market, that’s not so important. But in a bad market, it’s really important because in a bad market, you can’t sell. And so, if you can’t sell, then your only option as a homeowner or a house hacker that hasn’t bought a property that would make sense as a rental is to continue living on the property and paying it.

But if it can cashflow as a piece of investment real estate, then you can always decide to continue living there or keep it as a cashflowing rental. Who cares if it’s underwater in terms of you owe more than it’s worth as long as it’s cash flowing? It’s putting money in your pocket every month.

Mad Fientist: Yeah, absolutely. So, Bigger Pockets obviously has tons of amazing resources for people who want to get into stuff like this. Are there any links in particular you’d recommend? Or maybe you can just send them over, and I’ll put them in the show notes in case people want to know more? And

Scott Trench: Sure! I’d recommend people start from the source. So, the first time that I can figure out anybody actually using the term “house hacking” was by a guy that works here named Brandon Turner. And he wrote How to Hack Your Housing and Get Paid to Live For Free. He uses the example of a quadplex I believe in that post. But I’ll be sure to send you that link, so listeners can go ahead and click on that in the show notes.

Mad Fientist: Perfect! So, that was your first $100,000. The first $25,000 was focused on frugality and cutting expenses. The next $75,000, you’re looking at housing and income generation. So do you want to talk about that final step?

Scott Trench: Yeah, sure. So, the final step I think is it goes on forever basically. I think that the two things that come into play there are going to be entrepreneurship, asset creation, and then investing.

So, once you have a hundred thousand dollars in investable liquidity, if you’re spending less than $25,000 or $30,000 a year, by definition, that means you have years of financial runway, years of the ability to go and take advantage of opportunities, or just simply the cash to make a meaningful investment, at least relative to your spending.

So, I think there’s a couple schools of thought. First, there’s the traditional. And there’s nothing wrong with this plan of index fund investing. Throw all your additional cash into index funds, model it out using whatever percentage return you’re comfortable with. A lot of people will go with something in the 8% to 10% return range for index fund investing over the long term. But you model it out, and you just throw all of your excess cash into a big pile. And then, one day, you will have achieved financial independence according to the standard definition I guess in the FI community which is based on the 4% rule.

So, if you spend $40,000 per year, if that’s your target goal, and you have $1 million in index funds or wealth in general in your portfolio, you’re likely to sustain that in perpetuity.

So, that’s one plan. And there’s nothing wrong with that plan. I invest in index funds. I have a very sizable chunk of my money in index funds for that exact reason.

Another approach that I also use is real estate investing. So, alongside kind of dollar cost averaging with index funds, I try to dollar cost average—and by that, I mean consistently invest, so I’m not buying at the top or the bottom of the market—in real estate.

I just mention I have the three properties. I plan to buy a fourth by, if not by the end of this year, by the end of 2018, by at least kind of spring 2019 to just kind of continue my system. I bought my last property in June 2017.

So, those are two approaches for investing.

But there’s also this whole realm of entrepreneurship. And I encourage people to go out and think about adding side hustles one at a time as they’re going down this path. There’s so many different ways to make money that don’t cost anything but your time, and maybe a few hundred to a few thousand dollars to try out.

You could try starting a blog or a podcast. I mean, that obviously worked out for you, Brandon.

Mad Fientist: Right! Yeah, no, absolutely. I couldn’t agree more. This is like the most opportune time for low cost entry into any sort of business world you can imagine which is super exciting. And I couldn’t agree more that also should be a very important focus for you because if you just work so hard to financial independence, and then have nothing to work on after, nothing that gets you out of bed or gets you excited about starting your day once you reach that point, you’re going to probably be pretty miserable and may want to go back to work.

But having that thing that you’re working on as you’re trying to reach financial independence, then hopefully, by the time you reach it, you’ll have something there that you’re really passionate about and that you can spend a lot of time doing.

Scott Trench: Yeah, I think that’s huge. It’s kind of a funny phenomenon to me because when I was starting out on this journey, all I could think about was getting to a point where financial independence seemed like a realistic possibility. And now that I’m there, I guess I technically lean FI, but I have more work to do if I want to get to the point where I can support maybe an upper middle class lifestyle in a good school district and a family one day. I definitely still have some work to do to get to there.

Mad Fientist: Wait, let me interject. I was listening to your podcast (which we’ll obviously talk about here soon as well). And yeah, your last name is Trench, and you want how many trenchlings?

Scott Trench: Seven to ten trenchlings.

Mad Fientist: So yeah, that could take a nice chunk of change. So yeah, you better keep saving a little bit because 7 to 10 trenchlings, I’m sure, aren’t going to be too cheap.

Scott Trench: Yes. So, I definitely have some higher financial goals than kind of like lean FI for me and maybe like one significant other. And I’m plenty happy doing what I’m doing and kind of continuing along with things.

But it’s funny because I hear these people, they’re like, “Oh, I’m very well into FI. I’m easily a 2% or 3% safe withdrawal rate,” which is much more conservative than the 4% safe withdrawal rate, which means they have much more assets than they need to produce the level of income that they desire. And they’re just like, “I don’t know what I’m going to do after I retire.” The money is not the fear anymore. The leap and I guess the freedom is almost kind of the scary thing.

So, I think that you’re absolutely right to have a passion project, whether it’s personal finance-related stuff or a podcast or a blog or a project or a business in something else that you just want to work on with your free time.

Mad Fientist: Yeah, absolutely. So, it sounds like you haven’t made any sort of mistakes or you’ve been on such a very amazing path seemingly as soon as you got your career? Have you made any mistakes, or is there anything you would do differently if you’re starting from scratch now?

Scott Trench: Yeah, you know, I had the good privilege—and this is not like an intelligence thing. I had the good privilege to discover this personal finance movement and have it make sense to me very early on, and then just kind of dive in or read it. So I was able to basically—from a big picture perspective, I think that I’ve been able to at least avoid any major mistakes.

So, my major mistakes are going to be things like I bought a brand new Toyota Corolla in 2014, kind of before I really wrapped my head around the whole personal finance thing. And that’s a Corolla. It’s not like I bought an [00:29:20]. It cost me $1700. And I still have a little bit to go to completely pay it off. It’s like a 1% interest rate. But that wasn’t a huge mistake.

I picked stocks, and I tried to invest in stocks, and I lost money in 2013 and 2014 when everybody else was making money. All the index fund investors were seeing strong returns. I managed to lose money because I knew better than the market about this couple of Chinese stocks that had more cash than market cap… and I don’t know…

Mad Fientist: Oh, nice. So they’re not even recognizable by name, the companies?

Scott Trench: No, I was just finding these weird financial ratios.

No, here’s what I was thinking. I was like, “Oh, I’m a smarter guy than the market.” This company in China is a Chinese fruit juice company. And they’ve got a hundred million dollars in cash and no debts. And their market cap is $50 million. And they’re profitable.

I mean, if you think about that, how on earth is their market cap less than that? Well, the reason is because Chinese companies all the time—I don’t know about this one in particular—lie about their financials. And no one can go in and audit them and figure that out. And everybody knew this except for me. So that’s how I managed to lose money investing in stocks I guess.

Mad Fientist: Nice! It’s good to make those mistakes early. That’s another good thing. You don’t have to be a superstar investor when you don’t have much to risk luckily. And that’s hopefully when you make all your mistakes and learn all those lessons.

Scott Trench: Yeah. So, I think that from a big picture standpoint, I was able to think about it in a pretty rational way and have the odds in my favor for success. Some of it is obviously also luck. And I think that goes right along with what I just said before, it’s about increasing your odds of success, but understanding that some things are out of your control alongside that.

Here I am today after a string of I think good decisions and good fortune accompanying them, but I look back, and I’m like, “I’m not sure which one of those was a bad decision where I got lucky.” I think they were good decisions and I got lucky if that makes any sense.

Mad Fientist: Absolutely!

Scott Trench: And particularly in terms of appreciation and real estate and stock markets.

Mad Fientist: And I really think you make your own luck too to an extent as well. Obviously, some chance plays a part. But when you’re putting yourself into a position to take advantage of opportunities, and you do have options, and you do have that buffer (like that first $25,000 that we talked about), and you’re able to take advantage of things that other people can’t, and then yeah it may look lucky after the fact. But I think a lot goes into putting yourself into position to be lucky.

Scott Trench: Yeah, I rarely do this, but I just read a book that I’m raving about lately called Thinking in Bets by Annie Duke. And she’s a poker player.

Poker players, at least the ones that are really good, have this really good outlook on things where they’re like, “Hey, here’s the hand I’ve been dealt. My odds of success of winning this hand based on what I know are 70%. And I think I can read my opponents as well as I can to feel comfortable with those odds and set myself up. I’m going to bet on that and go with that.” And that’s the correct decision to make in that game. And they’re fine with that.

And if they lose, you’ve got to be able to not tie the result of losing that hand with “Hey! Oh, that was a bad decision to bet there.” No, it was a good decision. You made the right choice. It just didn’t work out. And if you continue along that line of thinking and apply it to your life, I think that’s how you have just really good odds of hitting success.

Now, of course, you can’t make any bets in the first place if you have no wealth and spend all that you earn. You have no ability to even attempt to put yourself to put some money on that or take the shot on that new career or whatever. So you have to have some baseline of stability, and then work as hard as you can to acquire excess so that you can then go on to take these chances in life that you believe, to the best of your ability, are great, and then obviously do whatever work you can to increase the odds as much as you can to your favor.

Mad Fientist: Very cool! I’m going to put that book in the show notes, a link to the book in the show notes. And I’m going to hopefully get it out of the library as soon as I can because that sounds really good. And yeah, back in my poker-watching days, I remember Annie Duke very well. So that would be cool to read that.

So, I mentioned your podcast briefly, but I definitely want you to talk about it because your co-host is one of the people that has been on my show probably more than anyone else. I interviewed her and her husband in episode #14. She and her husband interviewed me in #26. And then, they both were co-hosts on my show with me on episode #38.

Scott Trench: There were some rapping involved in that show.

Mad Fientist: There was! And that is my question. So, yeah, Bigger Pockets Money Podcast. That’s great. I’ve listened to probably half of the episodes so far. And I’m looking forward to checking out the rest. Your first guest was the same first guest that I had way back in 2012, Mr. Money Mustache (which was a great episode).

So, my question was, “Has she rapped yet?” because she is actually a really good rapper.

Scott Trench: You know, she hasn’t wrapped yet. I think I take all of the thunder for the weird or funny, whatever you want to call it, activities there by telling very lame, bad jokes on each episode, or asking the guests at least.

Mad Fientist: Yeah, yeah.

Scott Trench: But we’ll get her to rap on one of the future ones coming up.

Mad Fientist: Absolutely! She’s good. So yeah, the Bigger Pockets Money Podcast, how has it been going? Have you enjoyed it?

Scott Trench: Oh, I’ve love it! So, the Bigger Pockets Money Show started as kind of a spin-off, an alternative to the Bigger Pockets I guess real estate podcast. And one of my, and I think Mindy’s, big petpeeves with the real estate community is that a lot of people will go in and try to buy real estate and hope that buying that real estate will solve their financial problems. So they’re investing from a position of financial weakness and using some form of creative finance which is kind of, for a new investor, often a code word for “extremely risky leverage” and not investing from a position of financial strength.

So, the goal of this show is to say, “Hey, real estate is one part of a strong portfolio.” And I believe it makes sense for many people. But really, what we’re after here is a strong personal financial position with a good savings rate, a strong income, strong investment returns, and then the opportunity, if desired, to go take advantage of entrepreneurial pursuits.

So, we are interviewing people that have expertise in one of these areas or niches in these areas or stories that embody this kind of approach, so that people are not pigeonholed into one type of investing or one type of real estate.

So, for example, on a basic level, Mr. Money Mustache has an incredible intro because I believe—and Mindy agrees—that the basis of personal finance, the foundation, is always in that frugality and having the mindset of the end goal of happiness and using money as a tool to live out that ideal lifestyle I guess.

And then, we kind of move into more niche topics with future guests. For example, we had Erin Chase on there. And Erin Chase is an expert grocery shopper. And groceries are one of the things that a person that’s interested in personal finance can go out and make a change in immediately. You may not be able to change your lease, you may not be able to start biking to work tomorrow. But you can next week go to the grocery store, plan out your meals, and save a few hundred bucks on your eating bill—and eat healthier and bring that advantage into your life.

But then we go into house hacking. We go into just incredible personal stories. One of my favorites which will be coming out soon is with David Greene who’s a real estate investor. But we don’t talk about his real estate investing, we talk about his personal financial journey where he started as a waiter and found ways to make way more money than all the other waiters at the restaurant, how he saved all that money, how he was able to house hack, how he was able to parlay into his career as a police officer, how he was able to save and accumulate tremendous amounts of wealth while most of the people, most of his peers—and this is in San Francisco. This is in an expensive market—were not able to accumulate anything.

So, the goal of the show is to showcase these different perspectives on finance and enable people to think outside the box of “Oh, real estate is the only way to go about this” or even “Index funds is the only way to go about investing” or “frugality is the only path to financial freedom.”

No, all of these things work. And it’s about putting together a plan that makes the most sense to you based on the perspectives of smart people who have been there and that resonate with you.

Mad Fientist: Very cool! Yeah, I’ll put a link to the first episode in the show notes. And I definitely recommend everyone to check it out.

So, I always end all my interviews with one piece of advice you’d give to somebody who’s starting on the path of FI. So what would yours be?

Scott Trench: Get to a 50% savings rate. I think a 50% percent savings rate kind of—get to a median income, and then get to a 50% savings rate. I think that once you have a 50% savings rate on a median income or greater, that’s when all of this kind of really starts falling into place and the opportunities begin multiplying in so many different directions for you.

Mad Fientist: Excellent! Well, thank you so much for coming on the show. This has been awesome. And thanks to Mindy for putting this together. She was right! It was definitely worth talking to you—lots of great advice.

And if people want to find you, where’s best to find you online, just go to Bigger Pockets?

Scott Trench: Yes. I’m on a lot of social media, but I don’t ever check them. I find social media very overwhelming. So the best place to find me is actually on Bigger Pockets. Just search my name in the search bar, Scott Trench. If you message me there, I usually get back to everybody within a day or two.

Mad Fientist: Very cool! Well, thank you so much, Scott. I appreciate it. And hopefully, I’ll make it out to Denver one of these days and say hello. I’ve never been to Colorado, and I love mountains. So hopefully, it will happen.

Scott Trench: Well, thank you, Brandon. If I ever make it out to Scotland, I’ll have to come and check it out.

Mad Fientist: Absolutely! You’re welcome any time. Alright, man, thanks a lot. Congratulations again on the promotion and the book. And yeah, hopefully, I’ll speak to you soon.

Scott Trench: Thank you so much.

Mad Fientist: Alright, buddy, bye.

Scott Trench: Bye.

Mad Fientist: Hey, I hope you enjoyed that interview with Scott. Before I go, I just wanted to remind you that I went back through all of my previous episodes and collected the answers to my final question that I always ask: “What’s one piece of advice you’d give to somebody on the path to financial independence?” And I put all the answers into a free PDF that you can download.

So, if that’s something you’re interested in, head to That’s You can download a free copy there. And it contains all of the answers I’ve received since I started this podcast back in 2012. So there’s a ton of great stuff there.

Anyway, thanks a lot for listening. And I’ll see you next time.

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Marla Taner – Striving for Happiness After Early Retirement Wed, 09 May 2018 01:50:23 +0000 My friend Marla joined me on the Financial Independence Podcast to talk about the effort necessary to find happiness and contentment after early retirement.

The post Marla Taner – Striving for Happiness After Early Retirement appeared first on Mad Fientist.

My good friend Marla Taner joined me on the Financial Independence Podcast to go deep into some early-retirement topics that aren’t often discussed.

Marla and I met in 2014 at Camp Mustache and we’ve had a lot of fun (and sometimes heavy) conversations over the years so I thought it’d be great to record one for the podcast!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • How to deal with a sudden early retirement
  • Rethinking travel after leaving work
  • Finding happiness from within
  • Dealing with losing career identity and external validation
  • How to care less about “success”
  • The effort of happiness
  • Focusing on progress rather than the end goal
  • Doing the work to figure yourself out
  • Justifying the decision to retire early

Show Links

Financial Independence Podcast Advice

I’ve been recording this podcast since 2012 and at the end of every interview, I always ask, “What’s one piece of advice you’d give to someone pursuing financial independence?”

I’ve received a lot of great answers over the years so I decided to compile all those answers into a PDF that you can download here for free!

Full Transcript

Marla Taner: We’re not going to talk about that!

Mad Fientist: Oh, we’re talking about it. It’s coming up.

Marla: Oh, no! I’ll just look like an asshole.

Mad Fientist: Quite right… quite right. I still haven’t recovered from it.


Mad Fientist: Hey, what’s up everyone? Welcome to the Financial Independence Podcast. The podcast where I get inside the brains of some of the best and brightest in personal finance to find out how they achieved financial independence.

I’m excited to introduce my guest today. But before I do, I have something to give you guys. If you listened to episode #40 of the podcast, you’ll know that my brother is over here, visiting. He was taking a little mini-break from work. And since he was here, and didn’t have a job, I was trying to think of something I could give him Mad Fientist-related that I could pay him for. So I thought it would be really cool if we went back through all of my old podcast episodes and extracted all of the best advice from those episodes.

As you probably know, at the end of every interview, I always ask my guests, “What’s one piece of advice you’d give to somebody on the path to financial independence?” So my brother went back through all the episodes since 2012 and he wrote down all those pieces of advice. And I put together a nice PDF. And it’s free!

So, if you are interested in getting that, just head over to, and you can get a copy of that and check out all the great advice I’ve received on the Financial Independence Podcast since 2012.

For today’s show, there’s even more good advice to come. I’ve invited my good friend, Marla, on the show. And Marla doesn’t have a blog, but she’s really involved with the FI community. I’ve met her a few times at various FI events. And I know she goes to Camp Mustaches. She’s been to Chautauqua. She’s been to some Camp FI’s. And so, if you’ve been to any of these events, there’s a good likelihood you’ve met her.

But we’ve had some really interesting chats over the years. And I wanted to try to capture one of those for an episode of the podcast. Luckily, she agreed to come on, and we had a really deep conversation about life after FI and the challenges that you face that you may not expect.

We dive into a lot of really important topics that aren’t often talked about that are related to early retirement and financial independence. So, without further delay, Marla, thanks very much for being here. I appreciate it.

Marla: Thanks for having me. Nice to talk to you!

Mad Fientist: I know this is a big treat. We go back to—when was it? Maybe 2013 or 2014? When was the first time we met?

Marla: I think it would have been 2014 at Camp Mustache.

Mad Fientist: That’s right, yup! Camp Mustache. That was my first one. And we met I think the day before the actual camp because you were good friends with Mr. Money Mustache by that point.

And if I remember right, I travel hacked to you right before we met. Do you recall that story?

Marla: Brandon, I’m very unhappy that you’re bringing that up so early in our conversation. Let’s just say that you cheated.

The last upgrade available at the hotel that we were all staying at, and I had recommended that we stay at…

Mad Fientist: That’s true, yeah. So, Mr. Money Mustache and I were sharing a room, and you’re sharing a room with our friend, Colleen. We got there first. And as we talked my way into this amazing two bedroom, two bathroom suite, so we each had our own rooms and a beautiful living room, you guys got stuck in two double beds or something?

Marla: I don’t want to talk about it.

Mad Fientist: So, we go way back. We’ve been friends ever since then. We had a fantastic time at Camp Mustache. And we’ve been friends ever since. And I’m so excited that you agreed to come on because you’re not a blogger, you haven’t told your story, and it’s an incredibly interesting story.

So, for people that may have not met you at one of these FI events, could you just give a little bit of your background and talk about how you retired four years ago?

Marla: Sure, thank you. I do take that as a little bit of a dig that I don’t have a blog because it’s been on my list, but it may not ever happen. But now I could just tell my story to you. So that’s great.

Mad Fientist: I retired kind of accidentally. I had always been frugal, and I was saving money. I did have a fairly high-paying career, but I’ve been frugal from birth basically. And I had just been saving my money but not knowing what I was saving it for. And when I did forensic accounting to look back and see, “Hey, why did I become FI without really trying?”, I realized that without knowing I was on the path to FI, I had just been doing all of these things.

So, I had always saved about 50% of my pay when I look back at it. I always had roommates. I never bought a brand new car. My parents were kind enough to help me with a house hack, which it would have never been called that at the time. But they bought a house that I managed with renting out to five roommates all through college. And I never inflated my lifestyle.

So, I guess I basically retired at 43. I figure I worked about 15 years, saving at 50%. And you’re the math guy. So I think that’s how it all worked out.

Mad Fientist: So, when did you realize that that was possible.

Marla: Well, I did have a “series of unfortunate events” I guess, to quote the book where I lost a job. I kind of had time for soul searching.

And so I guess during that time I was reading/researching, I stumbled on Mr. Money Mustache. And it changed my life. And then, I went to the first Chautauqua in Ecuador basically to meet him and to meet Jim Collins from JLCollinsNH because his stock series have really helped me. And so I just went there with my numbers and said, “I think I might be done. What do you guys think?” And they said, “Yeah, you’re done.”

So, I came home retired!

Mad Fientist: Wow! So, what was it like when you realized that you could retire? And if you hadn’t been thinking about it for years, building up to it and planning for it (like a lot of people are now who maybe have read Mr. Money Mustache since 2011 when he started and things like that), how was it just being plopped into retirement?

Marla: Yeah, I think ‘plopped’ is a good word. I think I was the happiest—like it was instant happiness and gratitude and sort of waking up with like a smile on my face thinking, “I don’t have to do anything. I have no deadlines, no schedule, no routine.” But at the same time, I also had no plan.

So, I always tell people it just feels like this—I always use the word ‘luxury’ because what could be more luxurious than having time to figure it all out? So, I feel really lucky. I feel like it was challenging, and I haven’t necessarily used the time as well as I wish I had. But it has evolved.

It’s been four years. And so I think a lot of writing has been done. One of the writers I like the best on this topic is LivingFI—it’s kind of an awkward name. He calls himself Doom. He no longer blogs which is a bit of a pattern with people who are already FI. They find other things to do and they stop blogging.

But he wrote some really brilliant things about how to come to the decision and the One-More-Year Syndrome and also the realities of what it’s like when you actually do pull the plug. And so he talks about a detox period and that that’s important for everyone. And I feel like I’ve been on the longest four years of detoxing without knowing what you’re doing. It’s a little bit silly.

But just in the last year and a bit, I would say I feel so much happier. And even happiness isn’t the right word. I’m more content and more comfortable in my own skin and comfortable to just be and not feel like I have to answer.

Everybody always asks the question like, “Well, what do you tell people about what you’re doing?” And that used to be such a fear and maybe you have a comment on this too. It was so scary to try to answer that question. I would make up stories, and I came up with great stories. I would tell people, “Oh, you could use this answer. And you could use that answer.” And what I found now is I just tell the truth. I don’t try to be aspirational about it and let people come to their own conclusion. Hopefully, they can see, if they know me, that I seem a lot more content. And if they don’t know me, they’ll ask interesting questions and the conversation goes in a much more authentic direction.

Mad Fientist: Yeah, that’s really good. I still just rely on the old just programmer. But I just do it for myself now, I just work for myself—which is true. I still do write code for myself. But yeah, I haven’t reached the point where I’m comfortable just telling the full story I guess.

And have you ever had any pushback when you have told people that?

Marla: You get a lot of the typical, “Well, I could never do that.” And because I’m single and I don’t have kids, I think that’s a built-in safety for people to say, “Oh well, I could never do that because my expenses are too high” and that kind of thing.

Of course, I give people that. Everybody’s got to figure out their own—
Not very many people—and I’m sure you’ve found this to be true—actually want you to help them do the same thing you’ve done. And I don’t try to brag about my life or tell people they should live like me. I just tell them what I’m up to. And most people don’t want to drive an old car or live in a one-bedroom apartment. So they kind of maybe feel sorry for me. Well, that’s just fine.

Mad Fientist: Yeah, exactly.

So, you had a high power career, and I’m sure you had a lot of stress. So, do you think it took the three years of straight up early retirement to finally reach that point where you finally got all that career stuff out of your system?

Marla: I don’t know, that’s an interesting question. it definitely took more than a year. And then, there was a lot of false starts or ideas of how I’m going to spend my time without probably self-criticism I guess of like, “What am I going to do? Why aren’t I doing this?” telling people I’m going to start a blog or write a book or something that sounds great, but then still not doing it.

So, rather than the stress of the work, it was working that stuff out. It was trying to figure out what makes me tick, what’s going to make me happy. I can go on amazing trips, and I certainly did that a lot for the first few years, but then sort of what life do I want to live on a day to day and week by week basis.

Mad Fientist: So, let’s talk about that because we chatted in person about travel and things like that. So have you planned to do a lot of travel? And then, was it similar to my situation where it’s like, “Okay, yeah, this is fun and all. But doing this for the rest of my life like I thought I was going to isn’t really for me.”

Marla: Yeah, I still love travel. And I look back on the last four years of how I spent my time, and the first couple of years, I traveled for 119 and 110 days in each of those year.

Mad Fientist: Wow!

Marla: So, obviously, it was a big part of how I thought I would want to spend my time. And then, it’s gone down to—like this last year was more of an experiment in being home more. And it was around two months of vacation days or travel time.

So, I didn’t really have a plan like I wanted to be a full-time global nomad, that kind of idea. But the idea of slow travel and taking big trips and being on the move was very appealing. And to a certain extent, it still is. But I think that feeling where you’re working and you have a vacation, that feeling you get when you’re on vacation is so exciting. And it’s because it’s an escape from a stressful life. But if your life is no longer stressful, you no longer need that escape.

Mad Fientist: Absolutely! Yes. So, how was the last year with less travel? Did you enjoy it more? Did you miss some of the travel? Or like me, did you really enjoy just normal life at home because, as you just said, it’s less need for escape when you actually can build a life that you really love where you live?

Marla: Yeah. I think it’s how I am on the inside that has changed. And no matter what I’m doing now, I think I’m going to just be more content. So the difference is like I didn’t miss going somewhere. I still have a long lists of places I want to go and things I want to do. I think it will vary from year to year how much I’m travelling or whether I move somewhere part time. I think the whole geographic arbitrage is very appealing.

I think I still look at life as an adventure, that I’m probably not going to live in one place as a home base all the time. But I think I’m just more comfortable.

That whole thing of “wherever you go, there you are,” that just resonates for me where I was searching for happiness in external physical locations or external experiences. And now I feel like I’m just happy to just be. There’s nothing aspirational about my life that other people can duplicate other than doing the work that it takes I think to try to figure yourself out.

Mad Fientist: So yeah, can we talk about that because I think you and I have had similar struggles after leaving work. And we’ve talked about it in person and things like that. You definitely seem like you’re in a great spot. So, can you maybe talk about that journey, some of the things that you did struggle with after leaving your job and how you worked through them?

Marla: Sure! I mean I think identity is a huge issue if your career has been important to you and you’ve always enjoyed external validation. I really did. And if you take that away, how do you get validated? And how do you recognize that, external validation, there’s nothing real about it, so you have to feel good about yourself just for being you?

Mad Fientist: Yeah, that’s the same conclusion that I’ve reached. And I forget where I was being interviewed for something, and we’re talking about success and how, if you’re okay with not having success anymore and things, I thought about like the past six months where I’ve actually had a normal life just here in Edinburgh and really trying to build this new life that I’ve always dreamed of having.

And you have a core focus over that time. It’s just like putting in the hours every day doing the thing that I want to get better at, and then just judging if I’m getting better against myself, which is nice to not even look externally because I sort of feel like I won the game. I won the game. I’m outside the game now. And now I’m just doing this thing on my own to just get better so that I have more fun doing it.

And that’s only a recent change. But yeah, not looking externally anymore is really freeing.

Marla: It is! And I’m not saying I’ve cracked the code, and I’ve figured it out. But at least I feel like I’m on the right path. and I think, what you’re describing, you are too.

I think IT would be great to delve into your latest written post, which I think was brilliantly written, about Maslow’s Hierarchy of Needs and the meaning of life. So the idea that if we get to a point in this pyramid of needs where we’re working on self-actualization, can that be something that’s interesting or instructive or helpful for other people who are kind of wondering, “Well, what am I going to do when I’m finished?” or “How can I start thinking about those things while I’m still working, while I’m on the path?”

I think that’s kind of the point. I think you have over to 200-ish comments from that post. And I would say like I didn’t find any that were negative. People were really kind of wowed by it. It made them think like—because you did your own pyramid about kind of the hierarchy of FI also. But more people were talking about that whole, you know, reaching the top of the pyramid. And I’m not saying that as like you and I are somehow self-actualizing, we’re at the top, and we’ve figured out all the rest, or that that’s better. A lot of people commented on how important the self actualizing piece is no matter what level you are in terms of needs and that many people have figured that part out even with very little in terms of money.

So, I look at it as good fortune to have the money so that I have the time, so that I can spend time thinking about this. I think if you’re working hard—and one of the posts that I think has been the most instructive for me, and I think is super helpful for anybody on the path to FI is Doug Nordman’s post called The Fog of Work. Have you read that one?

Mad Fientist: Yeah, I have. It’s great. I’ll link to it in the show notes.

Marla: And what he basically says, because he writes the Military Guide to Retirement, he’s basically using the metaphor of the fog of war, but the fog of work, and saying like, “How do any of us expect that we’re going to be able to figure anything out while we’re working? We’re tired! You barely have time to—you know, you come home and that’s when you want to have downtime or social time or go on a vacation.

And then, he even points out, when you’re on vacation, you’re having like the “work of play.” It’s work because you got to go see the sights and eat all the best food and drink all the best drinks and party. And of course that’s fun. But when is it that you’re supposed to have the time to do planning for your life or think about bigger things.

So, I guess that’s where, if you have this luxury—I’m not saying I sit around and ponder this out. But it’s great when we can make friends in the community who are either a little bit ahead of you in terms of being no longer working or they are pondering the same things you’re pondering.

Mad Fientist: The problem I see is that FI is like the perfect distraction from trying to do that or feeling like you have to. Like at least for me, I was like, “Oh, I’ll just be happy when I reach financial independence.” And I think a lot of people are probably in a similar situation. So it is like the perfect distraction.

So, I think I said in one of my posts, it’s like you said before, we feel like we’re above the consumer culture because we don’t have to go out and buy all these fancy, shiny things. But in reality, FI is just another shiny thing. And rather than treating us to make us feel better by going out and buying a fancy meal or going and buying a new bag or a pair of shoes or something, we instead are just focused solely on optimizing our investments or our asset allocation or something because FI is the thing that we’re using. We’re putting all our hopes and dreams on it. And it’s a perfect distraction to make us not have to think about these things.

So, do you agree with that? And do you see any ways to help people see that?

Marla: I just got goosebumps hearing that because I think we’re so much on the same page with that thinking. Everything can distract you, right? And to actually have to sit and be in your own thoughts, and be in the moment, and not be looking at your phone, and not be thinking about the next thing or the past thing—
And that’s where start to see a commonality with people trying to try out meditation and think about mindfulness and settling and quieting your mind and what the philosophers are trying to teach us. I mean that’s how I’m spending my time—reading things and really trying to just be, and be happy just being.

And that sounds simple. But it really isn’t. We all have insecurities. And we have active, chaotic minds. And we have self-doubt. And there are tools to work on those things, but you have to want to. And it can be painful.

Mad Fientist: So, during your journey, was there any sort of books that you read or any things that you did in particular that helped you get to where you are now?

Marla: Yes! In terms of resources that helped me or books I read, I found a few things. I happened on—I don’t love the Tim Ferris Podcast, but occasionally, I think he has guests that are really interesting. And then, I go seeking out more information from them. He had a guy on called Ricardo Semler. Did you listen to that one by any chance?

Mad Fientist: I haven’t, no. I’ll put it in the show notes, and I’ll take a listen then.

Marla: He is a businessman in Brazil. And he won all these awards because he took a family business. I think his father was dying or ill. He sort of made his son take over this very high value—it’s like one of Brazil’s top companies. And he was very young, in his 20’s. And when he took over the company, the first thing he did was fire 60% of his top managers. And then, he created this very different corporate culture which was very liberal and all kinds of interesting freedoms for the employees.

But in the interview that he has with Tim Ferris, he talks about a few things. One was I guess he had a health scare, or because his father had died young, he had a lot of fear about dying young. And so he created things called terminal days which he says obviously sounds very negative. And was referring to “terminal illness.” And so in his week, he made two days of the week, days that he had nothing on his schedule, and he could do whatever he wanted. His family all knew that they couldn’t schedule him. And he didn’t use them as like, “I’m going to go jump out of planes.” He really used them for just thinking and reflection and being able to say yes to things that came up and use those days accordingly.

So, he had some interesting philosophy that I liked. And also, I guess he’d won all these awards. He’d written books. He had thesis that he’d written. And he burned them all because he didn’t want his children to have to—he felt like there was so much ego around those things. He knew he’d done them. He no longer needed physical representations of those things. And he didn’t want his children to have their knowledge of him be based on these other people’s opinions or books. He wanted his kids to just know him for him.

And I was like, “Wow! This guy is really different.” His book is called Maverick, like the way he started a business. But he’s like a real philosopher at a different level. I found him fascinating.

And he talks about, as his business philosophy, the three Y’s. And you talked about that in one of your articles. And you were talking about Vicki Robin telling you like using the Y’s. And maybe you can talk about what Vicki taught you about it, and then I can tell you what he said about it.

Mad Fientist: Yeah, it was actually in that hierarchy of financial needs post. She said, “You just have to keep asking yourself why,” you know, figure out something that you really enjoy doing or got a lot of satisfaction from. And then just try to figure out why. Just keep saying, “Why? Why was that fun? Why did that give you satisfaction? And why was it worthwhile?” Just keep tryign to ask yourself why until you can’t ask yourself why anymore.

And that boils down to the core essence of what it was about that particular thing that made you so happy.

Marla: Yeah! And he talked about that. And he said you had to do it three times. And if you asked yourself, “Why this?”, then the answer to that question, “Why that?” And I think you did that very well in sort of coming up with your purpose or at least a synthesis of a direction or a statement of where you want to go.

And I guess it comes from Toyota. They actually had this five Why’s. It’s part of their management and production style. I looked it up on Wikipedia. It’s kind of interesting. But I think it worked even better as a personal something to think about. So, he was helpful.

And I read a book. This one was almost like a joke. It was called How to Be Miserable? And the author is Randy Paterson.

And so, I read it thinking, “Well, that’s kind of funny. I’m going to read this, How to Be Miserable?” Maybe I’ll even read you this little quote from it because it’s kind of crazy. I read the book and went, “Oh, I thought I was happy. But now, I don’t know.”

So, he asks this question. “There is one question you must never ask yourself.” And remember, this is a little bit tongue and cheek because it’s an instruction manual on how to be miserable. “If I were already good enough, what would I do then? If, that is, you didn’t have to make up for your inadequacy, what would you do with your life? If you did not have to [unclear 25:17], what would you read? What films would you see? What courses would you take? Where would you go? Having become fully capable, what would you use that capacity for? Where would you make your contribution?”

“If you ask questions like these, all your work on the misery project might come undone. You might begin living your life rather than preparing for it. And you might discover that that alone can sustain you, elevate your mood, and destroy the cynicism and unhappiness you have worked so hard to create.”

Mad Fientist: Wow! That’s really good.

Marla: Yeah. So anyway, that book is kind of fun. But it actually really was helpful. And you’re Non-Traditional Financial Independence, your podcast interview with Chris Hutchins, when he talked about doing one memorable thing per month, I thought that’s super cool too. That really stuck with me.

Mad Fientist: So, you’d mentioned something about Maslow’s Hierarchy of Needs. You want to talk a little bit about that because it definitely relates to what we were just talking about.

Marla: Oh, absolutely! That is a good segue way. I was looking at the pyramid and thinking it’s a nice answer if people are asking me what I’m doing to say, “Well, I’m self-actualizing.”

Mad Fientist: Yeah, it doesn’t sound pretentious at all.

Marla: No, it’s not at all pretentious. But then I looked at the pyramid and I went, “You know what? I don’t know if I figured out all of these. I’ve certainly got a roof over my head and enough food to eat. But these issues of belonging and esteem I think are really critical and important.”

And esteem, in particular, like when we were talking before about comparing ourselves to others or keeping up with the Joneses, being cautious about our ego and caring what other people think, I think that’s probably a lifelong struggle that is hard to get past. So I like to look back at the pyramid and say, “Maybe it’s more of a circle where we have to keep on working on some of these things.”

If we’re retiring early, and we’re leaving this high salaried career, we have to kind of face our own—you know, should we be doing that? Are we wasting an expensive education and an investment of time in our careers? And how can we justify that? And I think we want to justify it to ourselves, but we also want to justify it to others—this is where caring about what other people think really does come into it—and even to our parents.

I think many of us are leaving the workforce before our parents. And that’s really strange. And if we’re doing that, we want to make our lives—like, “Well, what are you doing instead? Why are you not going to be a lawyer anymore? How are you being useful or productive or living meaning?”

And so I think you touched on that in your article talking about “Do we need to leave a legacy, or are we searching for immortality?” I don’t know if you had some thoughts about that part of it. We can talk about that a little bit.

Mad Fientist: Sure, yeah. No, I’m still trying to figure it out. And like I said in the post, as I thought about all those things, I realized that that stuff isn’t actually worthwhile or important or necessary to strive for. And I couldn’t come up with anything better than just being happy and making as many other people happy as you can.

That’s really where I’m still at. I don’t know what are your thoughts on that. Are you similar…?

Marla: I think it’s true. I think that I want to sound good, both to myself and to others. And the “sounding good” is this giving back idea. And really, maybe the giving back certainly that you’re already doing by writing your blog and by sharing your story and by just being an example in the world, I think that’s enough.

And this idea of trying to just be and be content, I think maybe that’s the answer.

And then, what happens by being that way—like interestingly, I have in my room a Buddhist saying. I look at it every day. But I didn’t think about it until I was preparing to talk to you for this conversation. I was like, “Oh, this line kind of says it all.” And it just comes from Buddhist teachings. It says “to bring peace to the earth, strive to make your own life peaceful.”

What’s beautiful about that is it still has the word strive in there. So, there’s an effort required to be happy. And by us being happy, can we make the world happier? Probably. Can we be an example? Can we share our story and change the world little by little? We leave the workforce, that leaves a job for someone else. We show that you can live simply and without spending a lot of money and be content, surely, that’s a positive lesson for the world.

Mad Fientist: I’m so glad you said that. And I’m so glad you said the word strive as well. I have a few articles that I’m currently trying to piece together. And it’s sort of that exact idea. And it’s all about mastery I think rather than having these goals that you try to achieve and reach. It’s really just about getting better every day at being happy, at living life, at helping others, just all of those things, just trying to get better every day and striving for progress I guess.

Marla: Yeah, I think that’s what it comes down to. And I think that’s why having purpose, having meaning, you don’t want to give up on those ideas. It’s just that the direction doesn’t necessarily have to be something big or something that you can brag about or something that sounds good to others. It can boil down to something a lot more simple.

But then, once you’re thinking about the world in that way, I think opportunities to authentically give back or try to make the world a better place, I think those come out, that it’s all about motivation and maybe timing of how to work on those things.

This luxury of time that you buy yourself through the pursuits of financial independence gives you the opportunity to explore things that you never had time to explore before.

Mad Fientist: That’s fantastic. And this has been such an amazing conversation. I knew it was going to get pretty deep based on all the chats we’ve had in person. So I’m super excited that you agreed to come on. So thank you for that.

But I couldn’t let you get to the end of this without admitting to how cruel you can be sometimes. If you could just tell everyone the Benjamin Button story that has been haunting me ever since we met way back in 2014.

Marla: I’d like to point out that, as I’ve said in this interview, in 2014, I was not nearly as evolved in where I’m at. And obviously, I had a big chip on my shoulder. So I think the Benjamin Button story really shouldn’t be told because it’s not flattering to me.

Mad Fientist: Oh, it has to be. It’s got to be. Come on! You’ve evolved personally obviously. I’ve seen it over the years. But the Benjamin Button I think has still stuck around all these years.

Marla: I don’t think it’s fair because the Benjamin Button story, it just makes you look good and me look bad.

Mad Fientist: No, it makes me look terrible! Most of the audience has only seen me in pictures. And the Benjamin Button story is Marla saying that I look like 20 years older in real life than I do in pictures. You’ve made me take pictures while being with you multiple years in a row, and then showed people how much younger I look in the photos.

Marla: Okay, I’ll tell the Benjamin Button story.

So, for those of you who haven’t seen this classic piece of cinema, greatness featuring Brad Pitt, the story of Benjamin Button is a person who starts out old and gets younger versus the rest of us.

So, Benjamin Button starts as a very, very old man, and then turns into a baby at the end of the movie. And when I first was reading The Mad Fientist, I really loved the blog. And in Brandon’s about page—sorry, that was some Canadian pronunciation of “about.”

Mad Fientist: It’s happened more than once this time, and I just let it go.

Marla: We didn’t say I’m from Canada. But now, the secret is out. So sorry, I just said “out” too. Now I’m really in trouble.

Under about on the Mad Fientist’s blog, there’s a photo, a very attractive photo of Brandon. And he’s on a hammock in Thailand. And I was very envious when I saw his picture because I thought, “This guy is so young. How can he be so smart and have life figured out and know all these tax optimization strategies and have figured out all this stuff? He is just way too young to know all of this stuff.”

And so, it was with great relief that when I met him in person, I could say, “Oh, thank goodness. He’s not as young as I thought.”

So, I think that sounds very justifiable. But my mistake was I never should’ve shared that.

Mad Fientist: This was like the first time we met. We weren’t like buddy-buddy by then. This was like right out of the gate.

Marla: Yeah. No, we basically never met. And I had this in my mind as such an important thing that it just burst out of me. You know when you say things, and then you wish you could suck them back in? It was one of those moments.

Mad Fientist: So yeah, this has been great. I knew this was going to be awesome. And you definitely lived up to expectations, so I thank you. And as you’re probably aware, I always end all my interviews with asking: “What’s one piece of advice you’d give to somebody on the path to financial independence?”

Marla: I think it would be it’s not a rush. You don’t need to compare yourself to the latest 30-year old. There’s so much great life experience that you can have through your career. And you know what? Even if you’re hating your job, there’s lessons in that too because nothing’s ever perfect.

And I think I said earlier in our conversation that “wherever you go, there you are.” So, if you think you’re going to be happy because you retired or because you lost weight or because you gained mastery over something, that’s not what brings happiness. You’re going to have to do the work to be happy. And you can do that at whatever point you’re at.

So, there’s no rush. Enjoy the ride.

Mad Fientist: Perfect! Thank you so much, Marla. If anyone wants to get in touch with you, should they just leave comments on the show notes of this show? Or do you want to send them anywhere?

Marla: People can reach out to me on Facebook because I think it’s easy to find me. So, get my name in there, and they can send me a message that way if they would like to.

Mad Fientist: Okay. I will put a link to that in the show notes too so they don’t have to search for you.

Thank you so much. I can’t wait to see you again. Hopefully, you’re going to be making it over here for a trip, which we talked about before. But thank you so much for doing this.

Marla: Thank you very much for having me. It was a really good conversation. It was fun. I don’t think it was quite as silly as it should have been.

Mad Fientist: I know, we got way too serious.

Marla: …way too serious. And I think anybody that meets us in person needs to know that we are super fun and we do not talk about all this deep stuff all the time.

Mad Fientist: No. Well, you did share with me that you have a newfound joy of hard liquor which is a great after-work/early retirement goal of yours, which we didn’t talk about. But now that you do, then yes, when you come over, we’ll have some good whiskey, and we will have a proper conversation that we can record for episode two of this series.

Marla: I agree! More drinking, less philosophizing.

Mad Fientist: Alright! Thanks, Marla.

Marla: Thank you.

Mad Fientist: Bye!

Marla: Bye!

Mad Fientist: Hey, it’s the Mad Fientist here again. I hope you enjoyed my chat with Marla as much as I did. It’s always such a pleasure talking to her as I’m sure you’ve realized from listening to that.

Before I go today, I just wanted to remind you that if you want to get that PDF that I mentioned at the beginning of the show that contains all the great advice I’ve received over the years on the podcast, just head over to, and you can get a free copy of the PDF there.

Anyway, that’s it for today. So thanks for listening. I’ll see you next time.

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Money Talks – Live from the UK Chautauqua with Vicki Robin Wed, 28 Mar 2018 08:11:48 +0000 Listen as we play the first-ever game of "Money Talks", the new game created by the author of Your Money or Your Life, Vicki Robin!

The post Money Talks – Live from the UK Chautauqua with Vicki Robin appeared first on Mad Fientist.

Last August, I was down in England with Vicki Robin (author of Your Money or Your Life) for the FI Chautauqua.

We were chatting about the new version of the book she was working on (which is out now!) and she mentioned that she created a game called “Money Talks” to go along with the new edition.

The card game consists of 52 different cards, each containing a different money question or topic. The idea is, you can use the cards to initiate conversations about money with family, friends, etc. (as you are probably aware, money doesn’t often get discussed in real life so this game attempts to change that).

I thought it was a great idea so I asked Vicki if she’d be up for playing the game with a handful of Chautauqua attendees and I’d record it for an episode of the Financial Independence Podcast.

She agreed and that’s what I’m sharing with you today!

Big thanks to Vicki Robin for teaching us how to play, to Ettington Park for the fantastic venue, and to Eduardo, Laura, Kimi, Matt, Brandon, Jason, Lena, and Meghan for taking part!

Also, thanks to Shane and Ollie for the much-appreciated beer deliveries during the taping of this episode :)

Money Talks Beer #1Money Talks Beer #2

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Full Transcript

Mad Fientist: Hey! Welcome, everyone, to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest in personal finance to find out how they achieved financial independence.

On today’s show, I’m really excited to introduce a lot of guests. Back when I was in Stratford Upon Avon last year for the UK Chautauqua, I had the pleasure of sitting around the table with Vicki Robin, author of Your Money or Your Life and a lot of really interesting people.

And the way this came about is Vicki is releasing a new version of Your Money or Your Life. And to coincide with that release, she’s also created a game called Money Talks. And what it is is it’s a series of 52 cards, just like a deck of cards, but on each card, there’s money topics. And the idea is that this will help promote talking about money with your friends and family and maybe broaching subjects that you wouldn’t otherwise talk about.

So, when she told me about this idea early in the week, I thought that would be an amazing thing to try to do at the Chautauqua. And it would be even better if I could record it and release it as a podcast.

So, that’s exactly what we did. On the last day in Stratford, we all sat around the table, brought out the Money Talks cards, had a few beers, and had an amazing conversation about many different topics.

And that’s what I’m sharing with you today! So without further delay, here’s Money Talks live from Chautauqua UK with Vicki Robin, author of Your Money or Your Life and Chautauqua attendees Eduardo, Laura, Brandon v02, Matt, Lena, Kimi, Jason, Meghan, Ollie, and Shane.

Those last two guys didn’t actually participate in the talk, but they did bring me beer for the talk. So they both definitely deserve a shoutout. So thank you for that.

And a big thank you to everyone who participated. It was a lot of fun. And it was great to listen back to when I was editing it. So I hope you enjoy it.

Mad Fientist: We are in Ettington Park for the UK Chautauqua. And we’ve been here all week. It’s been an incredible week. We’re going to do something special for you today. I am going to pass over to our super special guest, Vicki Robin, author of Your Money or Your Life. And she’s going to tell us what we’re doing today.

Vicki: Hi, everybody. Yeah, one of the innovations I’ve done for the makeover of Your Money or Your Life that comes out March 2018 is to develop a set of questions that people can ask themselves in their journal or ask their mates or a group of people or open up in a workplace or have a conversation in a meet-up, a way for people to talk to other people about our thoughts and feelings and strategies around money.

It’s not about advice. It’s just simply learning together because what we all need to know is not necessarily embedded in the experts—of course, it’s you, Brandon—but it’s embedded in other people. It’s just we have to know how to unlock it.

So, these are questions to unlock the conversations we really want to have about money in our daily lives.

And the rules of the game really are that we’re going to go around the circle once, and very brief opening comment, a minute, maximum 90 seconds. Just we’ll have a topic, Brandon will introduce it. And you all will just say, “Here are some of my thoughts on it.”

And then, we’ll go around one more time with no cross-talk, no feedback. And you can keep in your own comment. You can say, “What I really meant to say…” or “Another thought I had…” or you could’ve heard something that somebody across the table said, and you could, “Oh, that makes me think about…”

So basically, what we’re doing is like finger painting. We’re squeezing a lot of colors out here on a collective art piece. And then, we’re going to open it up and just talk and see where the conversation goes.

And everybody has a question card faced down in front of them which is they’re intervention. If the conversation is driveling into meaninglessness or somebody’s over-talking, at any moment—no shame, no blame, no judgment—you can just flip over your question card and change the subject.

And we’ve never done this before, so we’re going to find out how it works.

Mad Fientist: Yeah, I’m very excited. So thank you guys all for being here. So yeah, this is something different from anything we’ve done before on the podcast. I’m really excited about it. So crack open a cold beer, which I will do right now. Thanks to Shane who brought beer all the way to England from Texas. So I have a Hopadillo IPA from Karbach Brewery.

And I just spilled beer all over my laptop, but that’s alright. We will find a napkin.

So, before we start, I just want to go around the circle so everyone can introduce themselves. And then we’ll just kick right in. So here we go!

Eduardo: Thanks, Brandon! Hopefully, your laptop isn’t too broken. Yeah!

So, my name is Eduardo. I’m originally from Brazil. I live in the UK. I’ve been following this stuff for a few years. I’m very glad that I came to Chautauqua. If any of you are thinking about going to the next one, yeah, it’s an amazing week, amazing group of people, amazing conversations—definitely not just the speakers even though they’re amazing. The conversations you have with the other guests are what makes the week special. So yeah, I’m looking forward to this game.

Laura: Hi, my name is Laura. I’m from London, UK. So I didn’t have to travel as far as everybody else. I’m just now down the right. So yeah, I’ve been following the Mad Fientist for a long time. So I’m really excited to take part in this.

Kimi: Hi, I’m Kimi. I’m from Brazil, but I live in California. I’ve come here to the UK. It’s been an amazing week. Highly recommended! And let’s see what this game is all about.

Matt: My name is Matt. I’m from Leeds, England. Like Laura, I’ve not had to travel too far either. I’ve been a convert from the Mad Fientist Podcast for probably about five years now which has got me really interested in this space. And the amount of laughter we’ve had this week and meeting like-minded people has been the real game-changer for me.

Brandon: Yeah, my name is Brandon. I’m from Minneapolis in the US. And this week has been incredibly inspiring, not just because of the speakers, but all of the people that I’ve gotten to spend time with.

I discovered FI about 2 ½ years ago. And man, I was inspired then… I thought. But now, I’m even more inspired. So I’m really looking forward to this game. And I’m glad to have been here.

Jason: Hi, this is Jason from San Diego. And I’m just going to say ditto. Everybody else pretty much stole my lines. This has been incredible. And I’m just going to keep passing it on here.

Lena: Hello, my name is Lena. And I’m pretty much at the beginning of my FI journey. And so I’m really looking forward to having this talk together with you.

Mad Fientist: Great! And you obviously know Vicki. Yeah, this is great.

So, I’m going to start off with an easy one. Obviously, we’re going to get deeper I’m sure. But this will be at least something that will get us going.

Talk about your biggest money mistake, and what would you do differently?

Eduardo: There have been several. Hopefully, none of them [derailed] me too far. So I’m still on the path thankfully.

I’d say one of them was leasing a car when I didn’t have to. You think it’s a good idea, it’ll make you look good. But just the money leaving your bank account every month, I just did not like that. So, that was a lesson learned. I wouldn’t do that again.

Buying lots and lots of pointless things. Small values, they add over time. They compound. Just getting rid of all of that waste, all of that inefficient spending is probably one of the biggest lessons I’ve learned.

So, lots of little things add up to one big mistake, I’d say that’s probably the biggest thing.

Laura: So, yeah, like Eduardo, probably too many to count, I’d imagine. But I think it all adds up. I think it’s the things where you spend and actually you don’t like what you’ve bought or you think you wanted it and you get it home and you don’t. So I think they’re the biggest mistakes.

They’re not necessarily the things I spent the most money on. They might’ve been of a lot of value, and actually, I’m glad I spent the money. But it’s the things I didn’t really think through.

Kimi: For me, it was definitely taking too long and being too unsure about getting into the stock market. I felt I came from a different country to the US, and it felt a little unsettling for me. So eventually, I summed up courage, and I bought a single stock. And I watched it go up and down. And I’m like, “I’m going to get comfortable with this because I need to get comfortable with this.”

So, I bought a single stock, watched it for about, I would say, four months until I was okay and I was fine to finally put money on the market.

But I had done it before, this conversation would be moved. I would just be here in financial independence way before I am today.

Matt: I think the bigger one for me has been a car. I was a former professional soccer player, so it was always the competition to have the best car in the car park. And it just became a way of life. That was normal.

So, like Eduardo, having a car payment just became normalized. And once you can free yourself from that, it’s so liberating. And then, obviously, it frees you up the money to invest and dive right in.

I was fortunate that I discovered saving and investing in 2008. So I bought a lot of my things on sale. So I’m one of the lucky ones.

Brandon: I would say, for me, it was really just understanding the value of money in my life. I think my big mistake was thinking that I get my paycheck, I pay the bills, and everything that’s left over is what I have to spend. And that was my understanding of money. I didn’t know that it was really a tool that I could use. I wish I could’ve realized that earlier.

Jason: I think my biggest mistake was, I’m going to say “believing the advice I was given.” When I first started saving and investing through 401k’s and stuff through my employer, the average advice was “Oh, if you could save 5%, you’re doing great. And if you can save 10%, that’s amazing!” And in the FIER community, that’s kind of like, “Oh, that’s cute” and they pat you on your head.

So, for me, the biggest mistake was probably everybody says at some point, “Man! I wish I had been able to start bigger sooner.”

Lena: :I have actually two mistakes I did. First, just like Brandon, I got the money at the beginning of every month, and I would just spend everything. I never really ran out of money [unclear 09:46]. It was just I would spend every single cent. And now I just think that was kind of dumb.

And the second thing I did, I did get some money invested in stocks, but I bought mutual funds. And I just realized about a year ago that this was not very smart, so I pulled out the money.

Vicki: Yeah, what occurred to me as we were going around the table—and it’s sort of an odd mistake (or maybe not)—but I actually put a lot of emotion into things I buy. I can’t get rid of stuff in my closet because I can remember every purchase, where I was and who was there. So there’s probably a lot of shopping mistakes in my closet that I just don’t get rid of.

But I was a co-owner of a house where we had a lot of people living together in this house in Seattle. And people started to move away, and other people moved in. There was a point that it was at the top of the housing market in Seattle. But I had an affectionate relationship with a couple that was living there, and I didn’t want to disturb them, so I wouldn’t sell the house.

And so, when they finally wanted to move, that was the bottom of the housing market in Seattle. I mean, it’s pitiful because it did go on Zillow recently, and now it’s worth twice what it was.

But nonetheless, I’m having a happy life.

Mad Fientist: So, mine was my wife—well, then girlfriend at the time—we bought a house in Scotland, and we did it up over 2 ½ years and sold it in 2007 for like over 50% than what we bought it for, just before the whole world collapsed. So we sold it, and then I was so excited because I’ve always wanted a portfolio to manage, I always wanted money, I wanted to invest and all these stuff… but I didn’t know what I was doing.

So, we looked on the Internet for like a financial advisor. We just picked like the top one on Google or something. I called him up, he came over, and he pretty much picked the funds that would pay him the most, but had previously returned the best return (which obviously, the past doesn’t predict the future). So we went into that.

He treated us like big time people. We were in our early twenties I think. And he’s like, “Oh, yeah! We’ll go in the golf course.” And I was like, “Wow! I’m a big shot now. I’m golfing with my financial advisor.”

And then, it was only a few years later, after obviously 2008 happened, so then everything cut in half pretty much instantly after we put it in there, and I couldn’t get it out because they had ridiculously high fees to withdraw it within the first five years. And that’s when I learned to never trust anyone else with your money.

Matt: Yeah! So, mine will probably be resisting index funds for too long. I think my ego is telling me I could actually pick stocks. Once you have a few winners, you really do believe your own story, I guess, your own hype. But then you read the studies and all the math and everything; not to mention the amount of time that you save.

So yeah, index funds all the way.

Thanks, Jim!

Mad Fientist: Jim Collins is smiling, is smiling in the corner. He’s giving the thumbs up.

So, this one is going to get real deep real quick. So at the Chautauqua, each of the speakers give a presentation. And it’s always shocking when they give a presentation because you expect them to talk about something else like Kristy and Bryce from Millennial Revolution—they’re here—and you would expect to travel, geographic arbitrage and those types of things, not buying a house and all that. But then they talk about something deeper.

And that’s actually what I did too. I’m sure everyone here imagined I would talk about tax avoidance or something like that. And actually, I didn’t.

It’s funny that pretty much every talk touched on similar things. And it all boils down to this question: “What is your calling, the work of your heart and soul?”

Vicki: Well, I get this one first I guess because I’m supposed to have thought about it more. This is Vicki again. You know, at some level, it’s just making people happy so that I’m living in a happy world. That’s a really simple way to say it.

But I’m like 72 now. I’ve been around in this body for a long time. And I finally realized that I don’t have to do everything. My issue doesn’t have to be the most important issue.

What I really love doing is using my skills and talents and networks to make a specific difference in the lives of people I love—and I love a lot of people, so sometimes I chose big projects.

Lena: :To be honest, I don’t really know at this point because I’m just trapped in the rat race right now. I do what I have to do. Afterwards, I do what I want of course. But it’s nothing really soul-searching or something where I say, “Oh, that would make me happy beyond everything I’ve ever done.”

So, I think one of the things that we can really buy with money with the FI journey is that we can really have the time to focus on what we’re good at, what we want to do in life, what we want to achieve, and how we want to be happy in the end. So I’m going for it.

Jason: My grandfather basically advocates the campsite rule for the whole world. And that always resonated with me. And so my goal is to leave the world a little better than I found it. And I really think that helping spread the word about FI especially—the RE is kind of optional, but at least the FI part of things…

So, I would like to help spread the word. And even more importantly, help people figure out what they need to do to get there—whether it’s one-on-one, small groups, conferences or whatever. That’s the kind of thing that definitely moves my soul. It makes me get some fire in the blood.

Brandon: This is a super hard question. And I think a lot of us have spent a lot of time trying to answer those questions. I don’t know for me that there is an answer, so I reject your question. And I will insert my own context of how I think this should go.

And I think that there’s purpose to be found in many things for many people. And that’s something that I’ve kind of maybe learned hints of coming up to the Chautauqua. But definitely, it’s been solidified through some talks. And I don’t remember whose talk it was, but it was almost specifically mentioned. I think it was like—you know, I’m a business analyst, but when I was seven, people weren’t like, “What do you want to be when you grew up?” and I was like, “I want to be a business analyst!”

However, I’m not unhappy with my career. I love being a business analyst. And I love the work that I do. I find purpose in what I do. And I think that business analysis is not the only thing I can find purpose in. I think there’s a lot of things I can find purpose in.

And so, that is the answer to my own question.

Matt: I think we all acknowledge that FI is a route to fulfill your dreams, your passions, what you’ve always wanted to do. And I think the difficult thing for me is that the two things I always wanted to do when I was younger was play professional soccer and be a journalist. And I’ve played professional soccer, and now I do journalism. And I’m 37. So, it’s “what else is there?”

I don’t know if it’s necessarily one thing or one passion or one dream. The Millennial Revolution guys were talking this morning that you’ve almost got six or seven lives if you live for another 50 or 60 years. And I think that’s the most exciting thing. Part of the excitement is maybe not knowing.

Kimi: I think your calling, it changes over life. It changes as you mature. And for me, it has definitely changed. For me, I would say that, when I was younger, my calling was a lot closer to my survival skills. So it was being very good at my job. It was being able to provide for myself. It was being able to make money and be free.

So, I’ve always looked for freedom, but through this fulfillment, I think that has changed as I matured. And today, I seek a lot more community. So I look for impact and I look for community in some sense, whether it’s smaller or bigger.

So, definitely removing the survival, not needing money anymore and removing the survival from the list, has allowed me to go for a deeper purpose of having community.

Laura: I don’t know if my calling now will be my calling later. But I’m not FI yet. I’m about to drop down to part-time work. So I get to have a bit more time to explore some things.

And what I’d really like to do is I’d like to help kids read. So I’d like to go to school. I think that if I couldn’t read, I wouldn’t have found blogs, I wouldn’t have found FI, I wouldn’t have found you lovely people. I think it opens up such a world of possibilities to people if they can actually read.

So, I would really like to spend some time, and then see where that goes.

Eduardo: So, I’ve had the most time to think about this, but I probably still don’t really know the answer. But I have been thinking about this topic more recently in my life. I haven’t narrowed it down, but I do know that there’s something to do with being outside, being active, bringing financial education to younger people. It’s something that I’m quite passionate. The fact that we don’t learn that in school, I think it’s criminal almost.

Being healthy… somehow mixing all of those things together I think will bring me a lot of fulfillment in life. And I’m looking forward to narrowing that down a little further and finding out exactly what it is. But I’m sure it’s something along those lines.

Mad Fientist: I have a bit of unfair advantage because my whole talk was sort of talking about how you need something to retire to, and that to that you retire to needs to be big enough to keep you happy and take the place of your job.

So, I thought long and hard about it, and I reflected on some of the most rewarding things I’ve done in my life and the most rewarding things I’ve created. And for me, it sort of boiled down to working hard at something to get better at it in order to create something that helps as many people as possible—myself included.

So, a happy life, creation and mastery, that’s what mine all boil down to.

Thank you, Ollie, for the delivery of Guinness. Thank you. You got yourself on the podcast!

So now, we’re going to open it up and we’re going to chat about maybe something someone else said that you wanted to add to or comment on or if you wanted to dive a little bit deeper into a certain topic.

So, I’m going to open it up. Anyone want to jump in? Yeah, Kimi…

Kimi: I think that something Eduardo said about teaching financial knowledge… I think that a lot of us, there’s so much myth, and there’s so much taboo around money, we don’t talk about it enough. We don’t talk about it openly enough. So we always feel inadequate whenever we’re talking and we are approaching money.

And this is something that I would like to debunk. It’s something that I think we should all—and thank you so much to you, Brandon, and to everybody who talks openly about it and shares information. I think it’s the essential thing so that we look at it, and we’re like, “Okay, it’s not unattainable. It’s not a myth. We can all get there.”

Matt: I think this week has opened everybody’s eyes on the Chautauqua that when we’re at home and we’re following this path, we feel like the odd ones out. And finally, we found our people.

I think that’s been the three words from this week, “we found our people,” that we’re not alone, we’re not worrying about the odd thing. We’re all worrying about the same things. And actually, it’s not the minutia that we’re worrying about. It really makes no difference in the grand scheme of things with the savings rate. Simple investing will allow us to achieve whatever we want to achieve.

And I think in your talk, that was almost the massive, fundamental question. And it probably takes a bit more than a podcast to answer.

Mad Fientist: So, how do you talk with people in your real life because I know I spoke to Ollie who’s the man who just delivered the Guinness—thank you again—and he said something really interesting. He’s like, “I share it with everyone I know because if any of my friends knew about this, and I found myself learning about it 10 years after they actually hit FI, and here I am just like working paycheck to paycheck possibly like I was, I would be really angry with them and sad that they didn’t just share that journey with me early.”

And that’s something that hit home with me. I don’t like talking about it in real life with people I know because I feel like 1) they feel like I’m judging them, 2) I feel like I’m bragging about my financial standing. It’s just very difficult.

So, does anyone here on the table talk to their friends and family? And if so, how do you do it in a way that you don’t have any of those negative consequences?

Laura: I think I’ve been probably talking about it in the wrong way up until now. I’ve been trying to sort of always simplify it down for people to say, “I want to retire early.” And actually, I think a lot of people are very stunned by that. But then it comes back to this whole “What are you going to do afterwards?” or “I really like my job, so why would I want to retire?”

And actually, I think I need to actually change the way that I’m talking about it. I’ve been trying to simplify it down, but in that way, I think I’ve actually been isolating people away from it and probably not explaining it very well.

So, I think I’m going to talk a lot more about how it’s much more about getting freedom and then finding purpose. And some people may think that’s a bit deep and not really be interested in it. But maybe it would just invite a few more interesting conversations rather than just “Well, I like my job, so I’m not going to do it.”

Jason: And to just extend on that just a little bit, I haven’t really been talking about it with people other than my closest friends and family. But I’m thinking about talking about it more and more—hopefully, we’ll see.

But what I’m thinking is a really good hook to get people interested is to sort of point out that no job is guaranteed. One of the talks kind of went into, “Well, you could get a new boss… the company could get purchased by another company.” That has happened to me multiple times at this point, and a really good job turned into way less of a good job. Or you get let go as even Jim has had happen to him once. You never know what’s going to happen.

So, having the protection of a runway of a few years. Basically, the FU money concept, even if you don’t need to say FU, having it there is such a comfort. It lets you take some more risks at work which will actually probably work out in your benefit.

So I’m thinking if I can word it that way, people who initially will be like, “Well, I like my job. I don’t really need to worry about this,” then if you can sell them on some other options, that’s a great way. It’s like I said, it’s sort of the hook to get them interested.

And the numbers, they’re important of course. I’m not trying to say they’re not. But that’s sort of more mechanics and plug-and-chug and figure out your risk and a few other details that can come later when they’re like, “Oh, great! Teach me more. What plugs should I read?” or whatever.

Vicki: Yeah! So, I’ve obviously spent many years talking about this to people with almost a missionary zeal because, really, I wanted to liberate people from feeling like they have no choice. And I also was really passionate—I am passionate—about unhooking people from a consumer society, a throwaway society. And I’ll tell you, if you just talk about your passion for—

Like if you talk about children, if you talk about financial literacy for children, I’m passionate about that. I think our kids are being brought up in a too commercial culture. And so I’m doing this experiment for myself because I really want to unhook and I want to help other people unhook.

That actually goes down like honey because everybody knows we’re hooked.

And the other thing I found is personal story. It’s a basic “I once was lost, but now I’m found” story. It doesn’t have to sound that religious. “A certain point in my life, something happened. And I realized that changed so much for me. And here are some of the ways I’m happier from that process.”

I will also say—I just want to throw in—that as Jason said, we have this term FIRE, financial independence/retire early. Retire early is maybe a little—but then if we talk about financial independence, “I want to be freer. I want to be freer of debt. I want to be free,” everybody wants to be freer. And this is how I’m going about it. Actually, I want to be totally free, blah-blah-blah.

It’s a very human thing. People really want to hear your story. They don’t want to be marketed to. And they don’t want to be convinced. But you tell a story, and it lets them rehearse it in themselves.

Matt: I think it’s a British culture maybe not to share anything. So yeah, I think it’s a taboo subject, probably the most taboo subject, talking about money. So it’s quite a delicate thing to talk to people about.

And if you’ve got a group of friends, or you make the most money out of that group, then you can sound preachy and people can say, “Oh, you can do it because you earn this much and I don’t earn this much.” It’s decoupling the amount of money which will allow you to reach that freedom to find something else.

Even if you’re a teacher, you can still do it. You could just end up going teaching in other countries. But like Laura said, helping people of less advantage to get on in life, I think that’s a really noble thing.

Kimi: And one thing I think is important and is interesting because we talked about it before is also sharing your mistakes. So by exposing yourself, and by saying, “Hey, this is what happens…” or “This is what happened to me when I was down. I failed here, and I was down. This happened, and now I’m better. I’m finally found” is also something that I think connects you to people.

Even though you are exposing yourself, and you need a slightly thicker skin to be able to expose yourself, you are providing this information not from a standpoint that “Hey, I’m financially independent. It’s so great. It’s here where the clouds are beautiful.” It’s not about that. It’s about being on the ground, being in the trenches.

Everybody is in the trenches. We need to go down with them and say, “Hey, I was there. I was below that. And this is what happened to me.” I think then you open a connection and you’re able to talk to.

So, being able to be open and expose yourself is a big thing to get the empathy.

Jason: Yeah, going back to Matt’s point, one of the big eye-openers I had was learning the whole savings rate table because that’s percentages, right? It doesn’t really matter how much you make. It’s a percentage of your take-home pay. So if people can get their heads around that, it’s really powerful as well.

Mad Fientist: Yeah, I love percentages. That’s the best way to go.

Brandon, you had something to add there?

Brandon: I think when Vicki was originally talking, it made me think of, during the Chautauqua, we’ve brought up a bunch of times office space, and we talk about the concept of FU money and being able to just say, “I don’t want to do that anymore. I’m going to walk away.” It’s not just that, but it’s like that confidence that the FU money gives you. It can almost change you as a person into a better person.

And so, the office space references, when Peter gets hypnotized, and then he just has this realization, he’s like, “Yeah, actually, I don’t really care about my job or how well I do or the promotion. I don’t care about the money… like nothing,” and he walks into the meeting with the [bosses], he goes in, he pours himself a glass of water, puts his feet up, he’s like, “What’s going on guys?” They start asking him questions, “Well, what about this? You’ve been missing a lot of work,” and he’s like, “Well, I wouldn’t say I’ve been missing it, Bob” It’s that confidence.

Chris Hardwick has a great quote about confidence. He says, “Confidence is about having options.” And having the FU money is like having all of the options. And that’s where the freedom is. FI brings you that freedom to choose whatever option you want.

Mad Fientist: So yeah, this is all great stuff. I think we’re going to move into the round where we just pick out the wildcard in front of us that was just randomly shuffled through this deck.

Jason: I jumped it. Mine is: Talk about an early memory of money and how it affects you now. I actually have one that comes right up on this. God, mom, I apologize!

So, I was probably about 13, and my dad lost his job. My parents were not massively over-extended, but they had a house and a boat and just the normal things that you accumulate as typical adults these days in a middle class set-up. And he couldn’t get a new job for a couple of years. It was just rough times.

I watched them suffer, be stressed about it, be unhappy about it. They were very good at keeping the fighting away from me and my sister. I don’t know how the heck they pulled that off. But it really made an impression on me because, teenagers, this is kind of like the time that happens. And I still kind of remember vaguely the “Oh, this is what not to do.”

So, luckily for me, that taught me very early on never, ever, ever spend beyond your means. And don’t go into debt for pretty much anything.

Obviously, later I learned houses, cars—oops, the cars.

Here’s one more mistake. But that’s for me, one of my earliest financial memories.

Kimi: Also, mom, sorry. But I think one of my earliest financial memories are that I’ve always been somewhat of a rebel and I wanted to do things my way. And my mother, very strong woman—very, very strong woman—she would look at me and say, “Well, that’s all fine and dandy, but you live in this house, I pay for everything. When you have your money, you can do things your way. You’re not 18. You’re going to be here. And you’re going to abide by my rules because all of this is provided by me.” And I’m like, “Okay, great!”

So, at 13, I found my first job. And I’ve been working ever since because I looked at it and I said, “Okay, if that’s about money, I’ll get my money, and I’ll start being my own boss as soon as I can.”

So, it’s pretty powerful, but then it puts you in some situations, right?

Matt: Yeah, I remember when I was a kid—I mean my mom is the strongest woman I know—apart from my wife obviously. I’ve got to get that one in there.

I remember when she came home one day when I was a kid and she’d lost her job and she was in tears, and there was just me and her, she found a way to get another job.

And she has been so disciplined. She’s always found a way to save even though she never earned a lot of money. And I think that sticks with you. Even if it’s not obvious, it’s in your subconscious. And it’s probably one of the reasons why I’m here.

Brandon: So, during the week, Vicki told me a really interesting story about her earliest relationship with money. And I thought it was pretty fascinating. So I was sharing if she would share that with us.

Vicki: You’re outing me.

Yeah, this was on an early memory about money. I lived in an upper middle class family. And so I just never saw any transactions actually. I just never saw transactions happening. It was all a mystery. And so I didn’t actually know that things cost money.

I was very young. I was totally into my dolls. I had a Jeannie doll which was like a precursor, but more realistic, of a Barbie doll. And I loved dressing my Jeannie doll. I had a whole suitcase full of clothes for my Jeannie doll. And I make clothes for my Jeannie doll.

And then, my brother told me that if we cut through the back hedge, that we could go down […] and we could go over to a part of town I’ve never been in (because I never went anywhere). It was sort of like a rough part of town, but it had a toy store.

So, I’d sneak down. I’d go down. And I’d go in the toy store. And they had all these Jeannie doll clothes. So I’m like really excited because there’s a little coat, and there’s a little party dress. So I stacked up about seven boxes of Jeannie doll clothes.

And I just walked out! I didn’t know about the money part of it. And somebody stopped me on my way out. I was so ashamed and embarrassed and perplexed.

That’s all I remember of it.

Mad Fientist: Yeah, that’s the secret to FI. You just steal everything and then you don’t have to worry about money. That’s great. That’s the best.

So, we actually have a new surprise guest. So Eduardo had to go and call in from work from UK Chautauqua. So now we have Meghan. So please introduce yourself.

Meghan: I’m Meghan. I’m from the Boston area. Me and my husband are here at the Chautauqua. Ollie, the bringer of beer. We’re from the Boston area, and we’re both teachers—poor, poor teachers. How could we ever achieve FI?

We’ve been subscribers to the cult for about five years now. And we’re kind of halfway along our journey to FI.

Mad Fientist: Awesome! Welcome. We’re nearing the end. I just dished out a new wildcard for everyone. So I think we’re just going to go all the way around the circle. You just flip over the card. And whatever the question is, you answer it, and then you pass it on to the next person.

So I’m going to start with Vicki.

Vicki: Okay, here we go. What skills or social networks could you build now to depend less on money to meet your needs? What skills or social networks could you build now?

I’m actually doing that in my home town. We have a network, a volunteer network, that helps people stay in their homes [unclear 35:14]. We have volunteer networks that help the food bank. If I shop at the thrift store, then I’m putting money in the food bank. And later, I get to take money out of the food bank, take food out of the food bank.

So, actually, yeah, that’s the thing. The social network I’m building is my community […] and making that richer.

Lena: :Okay! Take us shopping with you. Describe where you are, how you feel and what you buy.

Actually, I don’t really like shopping; I never have. Somehow, I don’t know how it ended up in my apartment. No, but usually, I go grocery shopping. I do make a list on Saturdays.

So, I have this book where I write in what I want to cook over the week. And if I don’t have time, I just copy another week. But then I do make my shopping list in my cellphone and just go grocery shopping.

Yeah, somehow, sometimes it ends up being a little bit more like potato chips or something. Somehow, mysteriously, they appear on my grocery cart.

But the other part that I usually would go to to buy stuff is outdoor gear. But then, usually, I do have a purpose for going there. And I don’t come out with any other stuff.

Also, I manage to go into an Ikea and come out with nothing.

Jason: What do you want for your children/loved ones that money can buy?

Really, for my daughter—I have a 10 year old daughter—the main thing I want for her to have is a safe, happy, healthy home. That’s the main one. And that’s right now my largest expense by a large, large amount, is to give her a good home and a good place to go to school and all that kind of stuff.

Brandon: Alright! I have two cards. The group doesn’t know. But I’m going to flip them over and pick the best one because FI is about making your own rules.

And so the first one is: “What values and beliefs do you bring to investing?” And the second one is: “If you could take a year off work, how would you spend it?”

I’m going to go with the first one: “What values and beliefs do you bring to your investing?” For me, I found a lot of happiness in just living simply. I’m not a minimalist I would say by the sense of some other people that I’ve seen online practicing minimalism. But there are some aspects of it that’s simple for my life.

And so, I personally have never really had an interest in investing, pun intended. I was never interested in trading stocks and learning about companies and the stock market. And Jim’s book completely changed that for me because it’s the simple path to wealth. It’s like he wrote it right for me.

And so I read his stock series twice. And I read his book twice. And I feel like I have 100%, literally 100%, of the knowledge that I need to achieve FI and continue on this journey.

Matt: Ooh, this is an odd one. What is your life’s work?

Well, if you would’ve asked me 20 years ago, it would’ve been playing football forever which is not possible. That’s a really deep question to answer. Brandon, you give us about three weeks to work this one out. Ninety seconds, I’m not sure.

I think the thing that’s come out of this week when you speak to everyone is everyone wants to use the opportunity that FI gives them to fundamentally help other people, whether that’s really the children in schools. Mine, I came up with it this week without the pressure of work, giving me the space to think, possibly helping educate professional footballers not to spend as much as they already do and also help disadvantaged children, hard-to-reach people.

You can dedicate that time when you have the time to help other people, I think that’s probably the best gift.

Kimi: Okay! So mine is: Who or what would you trust to help you invest your money?

Well, I’m here, so Brandon, the Mad Fientist… and no one else ever. And he knows this. We’ve had a conversation. I actually stumbled upon the whole FI thing through Brandon and through his podcast. And then I heard the podcast, and then [unclear 39:32], and then I read the blog. And then I’m like, “Oh, Brandon, it’s going to be great!”

So, definitely, this is a very good group to help that I do trust to help me invest my money. There’s a paradox here because you come here and nobody tries to sell you anything. So probably that’s why you can trust them to help you invest your money.

But yeah, it’s a good group.

Laura: Okay! So how do you economize and what? How do you feel about it?

I’ve had a budget spreadsheet for about 10 years now. So back before I heard about FI, I was—I don’t know, just probably been nerdy and just wanted to track my money.

So, I guess I don’t economize on everything because I don’t want to strip it back to the bare bones because I think I’ll probably make myself miserable—and I have made myself miserable. I think it’s things like groceries.

Like Lena, I do a meal plan every week. And then I have been known to have several tabs of all the different grocery stores and compare all the prices, and then do some percentage variances from time to time because, yeah, that’s how it goes. And I just try and work out what makes me happy.

Holidays, probably don’t economize on. I try and use air miles, but they’re not as good as the US credit card air miles. So we do what we can. But I like holidays, and they make me happy. So I’m not going to economize specifically on that. But other things, I do try and make sure that I optimize as much as possible.

Meghan: What did you want to be when you grew up? What about now?

I remember, and I remember being told frequently, that when I was in first grade, and I went to school and somebody said, “What do you want to be when you grow up?” I said, “I want to be a teacher so I can be in school forever.” I just was such a little nerd and I just enjoyed so much about school and learning and just having all that at your disposal.

And then, for a while, I kind of wandered away from that. But obviously, that’s where I wound up now as a teacher. So now, I am a teacher, but as I’ve shared with a couple of people throughout the week, I’ve attempted to leave the profession several times over the last 12 years or so. And if you are a teacher, and you have a teacher close to you in your life, you’ve probably seen aspects of that.

And there was a blog post that I came across more than a few years back. She writes under the name Penelope Trunk. But the title, the blog was: Don’t Do What You Love. Keep what you love as something on the side, and then find something that makes you a lot of money. And for a short time, that really spoke to me because I was like, “Is this killing this thing that I love? It’s so hard. And finding the right circumstance is so difficult.” But I feel lucky now to be in a circumstance where I feel like I’m enjoying what I do.

And when we think about moving forward into FI, what that would look like is just doing it more in my own terms, being able to move aside the things about it that I don’t like and keep the parts that I do and having that freedom.

Mad Fientist: And the final card for me. Talk about one thing you own that you love? And what do you love about it?

So, I’m going to do two because they’re at the opposite of the cost spectrum. The first one is my Macbook Pro. Like I said at the beginning, I love creating things, and I can pretty much just create anything, including this podcast, on this machine. I love it so much!

But that’s a very expensive one. And the only other purchase I’ve made recently is one of those little cones that you can make coffee in that makes the best coffee. It’s the Pour Over Coffee. And every morning, I get up and it’s like the best experience ever. I fill my house with smells of coffee, and then I drink wine. It’s the best! And it’s only like $9 or something. And it has brought me so much joy.

We’ve probably owned it for a year or something already. And every time I go in there, and I’d make my little pour over and make the bloom, and then bubbles and stuff, and then you’d pour over like in circles, and it foams, it’s like, “This is the most amazing experience!”

So yeah, there’s two things.

And that brings us to the end of it actually. This has just been so fantastic. So thank you to all the participants. This has been amazing.

Vicki: Good! Go roundabout: What am I taking away from the conversation?

Mad Fientist: Oh, yeah, yeah. Sorry, yeah. Let’s go around and say what you’ve taken away from your conversation. And then I’ll wrap it up. So Vicki?

Vicki: Yeah, I just love this! I loved watching these questions that I developed at home alone with a cat on my lap come alive in your story and see how enlivening it is just to have that permission to talk about these sorts of things. So, thank you all very much.

Lena: :I really enjoyed the cards. We could talk a little bit and that gave us some structure.

I think I never really talked to anybody about my plans. Some people know that I’m a little bit financial nerd, but not that what I’m up to. So, I think what I would take with me is that it’s not that hard to start talking about money in general. I don’t want to out myself, but I’m doing this journey at my job or something. It’s just that I want to talk more about money in general.

Jason: The thing that struck me as we were talking just before we get started was just all the different places everybody was from. This particular podcast is a lot less US-centric than my typical reading and stuff.

So, that was one thing I’m going to take a key from Brandon in here and change the rules slightly and [unclear 45:16]. The other thing I really pulled out of this—and I’ve actually been thinking about this a lot as well—is just the idea of how do we get this sort of teaching to people who aren’t as well off.

All of us here probably have had some good advantages rolled our way. We had some good roles of the dice when we started out one way or another. It’s not to say that we haven’t made good use of them, but to fully acknowledge that and how can we help pay it down if you will. That doesn’t sound right… whatever.

Anyway, to help other folks out, especially people who aren’t going to necessarily run into this on their own.

So yeah, looking to help the disadvantaged—and especially kids.

The thing that really spoke to me was that it’s criminal that we’re not teaching kids about money better. It’s just absolutely nutritious. What we can do to make that better is definitely cool.

Brandon: Jason, I think your last comment about children is—a couple of people around the table here mentioned the piece about children and financial literacy. Like I shared in the beginning, I just thought you get your paychecks, pay the bill and spend the rest because I was never taught any different than that.

And so I think it’s really cool to hear other people thinking about “Yeah!” At that point, it’s not necessarily like we need to teach children FI. It’s like we just need to teach children about money and the value of money and how it’s used and how it’s not used.

So, it’s really cool to see other people really thinking about finances and children.

Matt: I’ve been talking to a lot of people this week. I think a lot of people came to FI probably through Brandon’s podcast. And that’s how they got started—I certainly did.

But I think, to a certain extent, the guests you interview, Brandon, sometimes, the audience is a bit like preaching to the choir. I think what we were talking about earlier is the fact that while we’re on here, we will then send out to all of our friends as bragging rights to say, “Listen to this! Listen to this.” And that could probably be one of the most powerful things, that you’re actually sending it to people who have no idea what this concept is, and just by definition, sharing it beyond its normal audience.

Kimi: I think the game is awesome. I think being able to talk about these things and having the diversity of questions is important. That is very good.

But more than anything, the first thing we talked about was the financial mistake. And as we’re going through the table, you see glimpses of recognition and acknowledgment on everybody’s eyes. So it means that we are all in the same place. We’ve all been in these places.

So, that is the important thing, a feeling that we share that is very mutual. Everybody has it. So bringing it there and bringing it out and being able to talk about it may be very uncomfortable in the beginning, but eventually, will pay for because you’re really talking about something that people do understand.

Laura: I think the big takeaway for me is how things can change for the better when you take a bit of a risk and you have FU money.

So, four months ago, I was on my miserable […] journey to work listening to the Mad Fientist, dreaming of the day I would be FI. And I had FU money. And since then, I’ve quit my job, I’ve gone part-time. And now, I’m actually sat with the Mad Fientist on a podcast with all these amazing people.

So I think when you’ve got that financial security, even if it’s not FI, even if it’s just FU money, there’s so much cool stuff you can do.

Meghan: I think, for me, a big throughline from this week has been values and how much you think about FI being about money and how much, really, for me, fairly quickly, it turned into a question of values.

As soon as you strip away this idea of not needing money, and this very bare question of “Why are you here? What are you doing? What do you want?”, for me, that was the most transformative thing with this journey [unclear 48:58] to you need a job. That was our first intro to all these of holding yourself accountable to living the life that you say you want to live. And that’s been the most transformative thing.

And then, throughout the week, the speakers have been saying, “Well, you know, I’m not really talking too much about money in my presentation.” And that’s really been a throughline of it’s much bigger than that.

Mad Fientist: So, this conversation just highlighted the thing that I love most about the Chautauqua. It’s like people come here for the presenters presumably, but it’s everyone that’s here that has the knowledge and the experiences and the stories that teach everyone else so much.

I can’t wait to listen back to this when I’m not actually trying to orchestrate a podcast and just dive deeper into all of the gems of knowledge that all of you have shared. It’s an incredible thing being here with all of you and meeting you and learning from you. And that’s the thing that I don’t think people expect, everybody is learning so much from everyone else. And that’s the really beautiful thing about this week.

So, I just want to thank all of you for being here, one, for agreeing to do this, talk. And Vicki, thanks for putting this together. We’re recording this in August of 2017. But I’m hoping to release this in March of next year to coincide with the release of the new version of Your Money or Your Life. And I can’t wait to read that new version.

So, presumably, it’s out. And you can look in the show notes for a link to it. But yeah, thanks, Vicki for putting this cool game together. There’s so much gold that came out of these discussions. And thank you all for being here.

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Elizabeth Willard Thames – Meet the Frugalwoods Mon, 05 Mar 2018 07:55:40 +0000 Mrs. Frugalwoods joins me again on the Financial Independence Podcast to talk about retiring to a homestead in Vermont and what it's been like making her early retirement dream a reality!

The post Elizabeth Willard Thames – Meet the Frugalwoods appeared first on Mad Fientist.

Today on the Financial Independence Podcast, I welcome back Liz Thames (a.k.a. Mrs. Frugalwoods)!

Liz was last on the show over two years ago and a lot has changed.

Since then, she’s made her dream of retiring to a homestead in Vermont a reality, she’s had two babies, and she’s just published a book!

Meet the Frugalwoods - Achieving Financial Independence Through Simple Living

It was great to catch up with her to hear about everything that’s happened over the last couple of years and to find out whether her early retirement dream is actually as amazing as she hoped it would be.

And since we’ve become good friends since our last interview, it was fun to challenge her on some of her more “borderline” frugal habits and also share my most embarrissing frugal hack :)

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • What’s changed since our last interview
  • Has the Vermont homestead reality lived up to the dream
  • Why you should just start things
  • How to embracing a $0 budget
  • Why you should eliminate everything and then add back the things you enjoy
  • How the Frugalwoods buy things
  • My super embarrasing frugal confession
  • The best way to deal with the long slog to FI after the initial period of excitement
  • How frugality can help build community

Show Links

And since I promised in the episode, here’s a picture of me and my brother in our onesies…

Embarrassing Frugal Confession

Full Transcript

Mad Fientist: Hey! Welcome, everyone, to the Financial Independence Podcast, the podcast where I get inside the brains of some of the best and brightest in personal finance to find out how they achieved financial independence.

On today’s show, I’m excited to welcome back Mrs. Frugalwoods. Liz was last on the show back in December of 2015. We had a great discussion about frugality and all the crazy plans they had of leaving the big city behind and moving to a homestead in Vermont to retire. And they’ve done all that.

It’s now two years later. They have a baby, another one on the way. They have a homestead in Vermont. And they’re living their early retirement dream.

So, I was excited to get her back on the show so that I could talk to her about everything that’s happened over the last couple of years and see if the reality of homesteading lives up to their dream of it.

And I’m also excited to hear about everything else she’s been up to because she just released a book that’s out today. And she was kind enough to send me an advance copy of it. And I absolutely loved it. It actually read more like a fiction book. And it was incredibly engaging. But it was still packed with all the great information that she has on her blog.

So, I highly recommend it. I’ll put a link in the show notes, so you can check that out.

I also have some rapid fire questions that I’m excited about. So make sure you listen to the end, so that you can hear those. I have a few funny stories that highlight the darker sides of frugality.

So, let’s get right into it. This is my interview with Liz from

Hey, Liz! Welcome back.

Liz: Hi! Thanks so much. I’m delighted to be here.

Mad Fientist: So, I looked into it, and it was exactly two years ago yesterday that you were on the show in episode #16. So, it’s currently December 12th we’re recording this. So yeah, December 11th 2015 is when you guys were first on the show.

Liz: Alright! We’re consistent. We should put something on the calendar for two years from now.

Mad Fientist: Absolutely! And maybe there’ll be another baby on the way because that’s something that’s similar between these two recordings.

Liz: I think let’s just go one baby at a time here.

Mad Fientist: So, when are you actually due this time? Last time, you were about ready to pop if I remember correctly.

Liz: Yes! I feel like we recorded right before our baby [Liz] was born. So the next baby—she needs a better name—is going to be born in mid-February.

Mad Fientist: Mid-February. So there’s some time left.

Liz: A little bit of time.

Mad Fientist: Cool! So, lots has changed. I’m really excited that you’re getting back on the show because it’s just been a crazy couple of years for you guys, which I’m excited to dive into. But the most important thing is that you wrote a book. So huge congratulations on that! Thanks for sending it to me.

Liz: Thank you.

Mad Fientist: And it is fantastic.

Liz: Well, thank you.

Mad Fientist: It exceeded all expectations, so well done. And I’m sure we’re going to talk a lot about it. But how does it feel?

Liz: It feels very good. It’s kind of been a lifelong goal of mine to write a book. And then, once I started writing it, I had no idea how hard it is to write a book. Everybody told me, “Oh, it’s really difficult to write a book.” I was like, “Yeah, yeah, yeah. It can’t be that hard. I write all the time.” And it was a very challenging process for me as a writer. And I’m very grateful for it because I definitely grew and advanced kind of in my skill of writing and in my patience level too with my own abilities. Some of the chapters, I rewrote, oh, 15 or 20 times—you know, just a complete rewrite. And so it’s a very humbling experience to write something, send it to your editor, and have them say, “You know, really, just start over.”

So, it was a good experience. I really enjoy writing. And I still enjoy writing even after this process. And so it was eye-opening to me at the level of dedication that it takes to really do an entire book.

Mad Fientist: It sounds like that would kill me. So well done to you for surviving it. So, was it just like having a writing coach pretty much, I guess having an editor who’s scrutinizing everything? That would probably be pretty good for upping your skill level pretty quickly.

Liz: Yes. And I had a fantastic editor at Harper Collins who really understood the mission of Frugalwoods and the mission of what I was trying to convey in the book and helped me to hone and refine what I was trying to say.

What I realized is that, in blogging, I’m able to expand extensively 2000 to 5000 words on one very discreet topic. And you can’t exactly do that in a book or the book would be thousands and thousands of pages long. So, how do you really distill it down to the best kernels and the key points.

And so, it helped me to become, hopefully, a more concise writer too.

Mad Fientist: Oh, it’s fantastic. It wasn’t what I expected at all. And it exceeded all expectations like I said. It was more like reading a novel. You obviously packed in all of the good information that you do have on your site. So it’s also a finance book. It’s a life book and it’s many things. But at its core, I would say it feels like a novel. I was looking forward to reading it before bed and see what you guys are doing even though I know you guys and I know a lot of your story. I was still gripped by it. So yeah… fantastic!

Liz: Oh, thank you. I appreciate that so much. Thank you. I really want my writing to be interesting. I think we write about money and people are turned off by that. And so I really try to make it a story.

My background is in creative writing. And so I try to think, “Okay, what’s interesting to read? And then how can I kind of sneak the finance message in there?” So that’s always my goal.

Mad Fientist: Well, you definitely hit the goal. So congratulations!

Liz: Oh, thank you so much.

Mad Fientist: I actually learned quite a bit about you too even though we chatted two years ago and we touched on a lot of this stuff. But yeah, there’s a lot more depth to it. I could see the struggle. So I definitely want to talk about that.

But maybe for people who have just recently listened to your last episode—which I definitely recommend people doing because this will be like a continuation from that first episode—tell everybody everything that’s changed.

So, last time when we chatted, you’re still working Cambridge, you were thinking about moving to Vermont. You were both working, and you were childless. So what’s today look like for you?

Liz: So, today we are financially independent which I’m very grateful for and very excited about. I quit my job. My husband still works from home because we were able to move to Vermont. He’s able to work from home in Vermont which is really kind of the best of both worlds. So, we moved from Cambridge, which is a very urban area outside of Boston, Massachusetts, and we now live on 66 acres in rural central Vermont, which the Mad Scientist has been to visit. He can tell you just how rural it is!

Mad Fientist: Oh, it’s beautiful. We had a really good couple of days there. And you guys treated us to some of the best beer that Vermont has to offer, which we’re missing since it’s been 2 ½ years since we’ve been in Vermont. So yeah, it’s a gorgeous plot of land. And I still need to get there in the winter, so I can play some ice hockey on your pond.

Liz: Absolutely! The pond is frozen right now. So you be here. It’s snowing pretty hard today.

We’re kind of not any one thing at any given time, which is what we enjoy. So we’re homesteaders on this 66 acres. We also work what I call “computer jobs.” So we both chose to do work that involves us and a computer because it’s very intellectually fulfilling for us to do that work.

And then, we are also full-time parents. Well, everybody’s a full-time parent who’s a parent. But we’re stay-at-home parents to our daughter who’s two, and then our soon-to-be second daughter coming in February.

So, we sort of craft this life that’s very non-traditional, but that really works for us. And that is kind of the ultimate mission of the book and of my blog, helping people to figure out how would you structure your life—your time and your money. How would you use those two finite resources to their best advantage? What do you most want to be doing?

Before this, my husband and I were both working jobs, really good jobs, because that’s what you do. And we were spending money because that’s what you do. We were just sort of bopping along in this lifestyle inflation path that we’ve been on without any real acknowledgement of what it is that we actually want to be doing with our lives.

And so, having that watershed realization was key for us. And that was really the entire linchpin of us achieving financial independence. It was much less about the money and much more about making that determination of what we want to do. And I think once you establish that, your money will follow. You will find a way to craft a life that fits within the means that you have.

Mad Fientist: Perfectly summed up. And I think that’s the thing that people miss with frugality, especially if you’re just depriving yourself and you’re not buying all these things that you could be buying because you have the money, but in actuality, you’re buying exactly what you want, and you can have as much of it as you want. But you also realize that everything is a trade-off, so you don’t just go out and spend like crazy. And that’s the thing that I struggle to get across to my more spendy friends.

Have you found a good way of framing it or do you just live by example?

Liz: I think for me in my personal life, I live by example. My friends know what I do, and I’m sort of a passive resource. So if people want to come to me with questions, I am more than happy to answer them. And I do a bit of financial counseling with friends who approach me. But I’m much more of a sort of live-by-example type of person in my everyday life.

And I think it’s something that we try to espouse in everything we do. And if people are interested in kind of how we’ve structured our lives such as we have, I’m happy to talk about it.

And then, the blog and the book are really where my true zeal comes across. You can really dig into the specifics of what my husband, Nate, and I have done and the ways in which we’ve saved.

And I think what’s important to note—you know, my name is Frugalwoods, and so I talk a lot about frugality, but there is another side of the equation. Income is a necessary aspect of this equation. And I talk in the book about how it’s really all about income, expenses and time. And those are kind of the three variables that you need to bring into alignment in order to work towards financial independence.

The less you spend, the less you need. And the less you need for your lifetime. Obviously, the more you earn, the more you can save. But if you’re making high six figures and spending all of it, you’re no closer to financial independence than someone who’s making $50,000 and saving half of it every year.

So, I think it’s important to keep those variables in mind and understand how you can retrofit that for your own circumstance in your own situation.

Mad Fientist: Absolutely! So, you mentioned that Nate is still working. And back when he was on the program two years ago, he said he really loved his job—and he must if he’s still working now that you’re financially independent and in the words of Vermont.

So, does he still enjoy it as much as he did two years ago? And is he perfectly content continuing on because he’s able to do everything that he wants to do even while working?

Liz: He does, and he is. I think working from home is such a wonderful balance that I think a lot of people can take advantage of now with the way that the economy is trending and the way that jobs are able to be remote. It gives him so much more time in his day.

Just eliminating a commute is transformational. And just having those moments throughout the day where he can check in with the family and see what’s going on and having flexibility to work at night or early in the morning if that works better for his schedule. So, I think having that flexibility has been paramount in making it tenable.

And then, also, he enjoys the work. And I think that’s a really important thing, knowing what is fulfilling for you. I chose to continue working through writing the book. I certainly worked much harder writing the book than I ever did in my day job, let me tell you. And, for me and for Nate, it really was a choice of what brings us that fulfillment and that contentment.

And I am not happy when I am not writing. I can document this for you. Months where I have not written, I am not a happy person. You know how you get hangry, like if you’re hungry, you get angry? That’s me. I get that. Well, I also get this if I don’t write. It’s the same problem.

So, I think knowing that about myself and knowing that I need that work has been a very important aspect of both financial independence, but also of being a stay-at-home parent. I’ve learned that I’m not a person who can be a full-time stay-at-home parent. I really need that work. And I think Nate feels very much the same way, that we both need the stimulation and the engagement and really the intellectual fulfillment that comes from this type of work.

And then, we also love the physical labor of working on our land, the ability to get out there in the woods and either hike or do chores or work in the garden or clear snow. It’s such a great balance of life for us. And it’s very much what we always wanted, that wonderful symmetry of working with your body and working with your mind and spending a lot of time together as a family.

We’re so fortunate. We get to spend pretty much all day every day together which is just really a remarkable and wonderful thing.

Mad Fientist: That’s fantastic! And yeah, we’re going to get into life as it is now and dive a little bit more into that.

But I want to go back to two years ago. On the podcast, you said that you tend to everything in life at once. And after reading the book, I realized that you took that to the extreme pretty much right after we stopped talking.

So, can you talk about that period of your life?

Liz: I don’t know what’s wrong with me. I am continually layering life events on top of life events. And this happens over and over and over again with Nate and I.

And so, I think it’s just how we are. I think we’re both very driven, goal-oriented people. And we have these visions of what we want to bring to fruition. And we don’t have a lot of patience to kind of wait for it to happen. And so we tend to dive in and do a lot of things at once. But somehow, it does seem to work for us.

So, when we talked two years ago, we were just about to have a baby. And I cannot remember if I actually disclosed this on the podcast or not, but we were closing on our homestead at the exact same time. So we had located our property and viewed it when I was, I think, eight months pregnant. And it was the one.

We’d been looking for three years. We’d done so much research into rural homes. And this was it. We could not let it pass us by.

And so, the day that we came home from the hospital was also the same day of the inspection on our house up here. So Nate had to like hustle the baby and I home from the hospital. And so I’m sitting at home with this infant all day. Fortunately, my friend came over to hold her for a while. And Nate had to drive three hours up to Vermont and be sort of mentally alert in order to do the inspection on the property and walk the boundaries and make sure that everything was as we thought it was.

And it was! We went through and our offer was accepted. And we closed on it in January of 2016. And then we moved here in May 2016 with a 6-month old. And I was writing my book at this time as well. I continued on with writing my book. And then now we are having our second baby and my book is publishing a month after she’s born.

This is very much the trajectory that we often find ourselves on. I talk about it a little bit in the book where Nate and I would kind of make a decision to move or take new jobs or start graduate school. And it would happen immediately. I’ve looked back at our calendar, and it’s something like we make the decision, and then the next Monday, it would start.

I think that there’s good in that and bad. So I’m not necessarily advocating for this approach. But what I will say is that we very much have a philosophy of start now and don’t look back. You can waste so much time questioning if you want to do something or not. You can spend years deliberating about whether or not you want to change careers or pursue another degree or move to a new location. And that’s all sort of lost time. I think that’s very much the way that we view it.

And so, we might be a little extreme. I don’t know that you should necessarily write a book while you have two small children. But I also think that it’s very possible. And I think that sometimes we limit ourselves mentally because we think we can’t handle things. And I can say you can get a lot done in very short periods of time if you really want to be doing it and if it’s what you want to do.

The other day, I think it was in a 20-minute timeframe, I wrote something like 2000 words because that’s the time I had. I had to go back and edit. I mean, there were a lot of typos. But if you want to do something, just do it. And that’s really the philosophy that we live by.

And I would say I need to personally need to work on maybe tempering that a little bit. But I think it’s really useful in a financial journey. If you decide today that you want to work towards financial independence, start right now. Don’t wait until your next paycheck or until next season or until after Christmas.

That doesn’t make any sense!

Mad Fientist: Yeah, January 1st.

Liz: That doesn’t make any sense. That’s just lost time. Those are mental roadblocks you’re putting up where you could be making actionable progress starting this moment.

And I kind of enjoy that life philosophy because it lets me live without regrets. I really kind of do all the things I want to do. And sometimes I drive myself a little bit crazy, but it is an opportunity to recognize how much you can accomplish. And it’s also an opportunity to simplify.

So, I’ve radically simplified our lives in the last few years. There’s a lot we don’t do. There’s a lot we don’t own. We have a very simplified home and a very simplified routine.

And that’s kind of what lets us do these other things. I’d much rather be writing than dusting a bunch of knick knacks. So I just don’t have any knick knacks. You can make those trade-offs in your life. And you can make those very conscious decisions.

Mad Fientist: Even simple things that seem insignificant. In your book, you talk about throw pillows on your bed. You put them in the basement in your place because you’re like, “It just wastes my time. Every day, I have to take them off before bed. And then put it back on after I sleep.” It’s just like they don’t bring you that much joy.

Liz: Oh, a hundred percent. And you’re like, “Throw pillows? That’s five minutes!” Yeah, that’s five minutes, people. And if you kind of identify all those points throughout your day, it’s incredible how much you can get done.

I don’t brush my hair in the morning because it’s good. It’s up in a ponytail. It’s totally fine. I save time by doing that. I mean, it sounds a little bit ridiculous. But honestly, it really works for me because it lets me spend more time with my daughter. And that’s what’s important to me . I’d much rather do that than have coifed hair. Also, no one cares on the homestead. It’s not like the deer walking by have any opinion.

Mad Fientist: Right, yeah. That’s one of the great things about Vermont, just heading up to the shops and looking like an absolute state and not worrying about it because most people are covered in mud or whatever.

Liz: Et cetera… I have to say that living in Vermont very much facilitates like a simplified, frugal lifestyle because everyone here really kind of is focused on their highest and best priorities. There’s very little pretense. There’s very little consumerism. And there’s very little stock put into appearance.

And so, it’s funny. We’ll go somewhere, we’ll get there, and I’m like, “Oh, my gosh! We’re kind of scruffy. I don’t think I bathed my child.” And then we get there and I’m like, “Oh, it’s totally fine! Everybody else is in the same boat.”

Mad Fientist: Yeah, absolutely! I do miss that. It’s a good way to live.

So, you mentioned that you were planning this for years and looking for your perfect Vermont homestead. And then, all of a sudden, you found it. And pretty much, you’re there. It all seemed to happen very quickly. And your dream was realized.

And sometimes, when that happens, the dream wasn’t as you expected. Sometimes, it’s better. How did you find it? I know you’ve been there for over a year, so you have some sense I guess of what it’s like. But do you feel it’s exceeded expectations? Were there things that you would feel or think that you don’t?

Liz: I would say, on the whole, it has exceeded expectations and really been better than we could have imagined. However, I will give a caveat. That didn’t happen until really after we moved here and had lived here for a couple of months.

When we first bought the property—and I talk about this in the book. And I’m not going to tell the sort of terrifying experience that happened to us that made me think that this was a really bad decision with like a 2-month old baby. Suffice it to say, when we first came up here to close on the property, I very much thought we were doing the wrong thing, and I was extremely concerned that we’d made a really big mistake. I was very nervous about moving here. It is a very rural property. You cannot see a neighbor. The neighbors are miles away. We are deep in the woods, which we love, but we were going from an extremely urban environment and I got extremely nervous so much so that, on the way to the lawyer’s office for closing, I almost told Nate, “We can’t do this” because I was so overwhelmed at the prospect of this home.

And so, the reason that I was able to go through with it is that I did not want to live with the regret of having not done it because I knew what it felt like to live in the city and work those jobs that were not fulfilling to us. So I was able to sort of see past the moment of panic that I was in and understand that it was going to be okay.

But I mean, it was quite a gamble. It’s quite a gamble when you change your life so radically. And I think what gave us confidence again is the backing of financial independence. Nate and I like to say at the end of the day, “Okay! So it was a bad decision. What’s the worst that happens? You lose money.” You sold the house for a loss, and you’re out that amount of money out of your net worth.

That to me is the ultimate reason for financial independence, options.

Mad Fientist: Absolutely! The same thing happened with our Vermont house. It wasn’t selling. And then, we were like, “You know what? Just leave it here. We’ll go to Scotland. We need to get to Scotland, so we’ll just leave it there.” And then, it was like winter. It was coming. I was so stressed out about it. Little did our buyers know I probably would’ve given it to them for like $5 or $10 because I was just like, “The stress is not worth it. I’ll just take the hit. It doesn’t matter. It’s just money. I can’t do all this anymore.”

So yeah, that’s absolutely one of the best parts, being able to just realize that, hey, it’s not the end of the world if this doesn’t work out. It’s just a bit of money.

Mad Fientist: Oh, yeah. That to me is the most liberating thing when I can have that realization like, “It’s just money. It doesn’t matter.” Putting yourself in that position is to me transformational.

And so, people ask, “Why would you save 80% of your income?” I’m like, “Let me tell you… so I don’t have to worry about money ever.” It’s the most liberating thing in the world.

So, we got past that. We moved here. And then we were in this race to get things done. When you live on 66 acres, it’s an endless to-do list. I mean it’s nonstop with the work that you need to do outside, let alone anything you want to do inside the home like, for example, unpack dishes or organize your kitchen.

So, that was a challenging first few months of really trying to kind of do everything. And we’ve finally came to this realization that, at a certain point, you have to arrive at your life, and you have to just say, “I’m here, and I’m going to step back and enjoy it.”

And coming to that realization and really embracing that philosophy has been a big part of our first year and a half here. And we absolutely love it! We just could not imagine ever leaving. I can’t imagine that we haven’t always lived here. And we are so thrilled with being here.

But I will say it was very nerve-wracking at the beginning. Really, anything that’s worth doing I think is going to be difficult and scary at the outset because you’re taking a risk. But what’s the point if you don’t take these risks and if you don’t do these things in life? You’re always going to wonder or regret or wish that you’ve done these things.

Mad Fientist: Yeah. If it’s scary and really intimidating and you don’t want to do it, then you should definitely do it because it’s likely going to be worth it.

I’m so glad you guys did and are so happy. And when I read that part in the book, I just was picturing what would have happened to Nate if you said, “We can’t do this” after all those years of researching and stuff. It seems like you both are really detailed and scrutinizing numbers and so many different things to get to that point. I just imagined his head would have exploded if you were like, ”No, I can’t do this actually.”

Liz: Well, you know, actually, I’m married to a very zen person. If he had told me that, I would have lost it. if I had told him that, he would have said, “Okay… let’s talk it through.”

And so I think it’s important to know your strengths. Calmness is not really my strength, but it is Nate’s. So, in that way, we’re really able to balance each other out.

And I think being respectful of what your partner wants is an important tenet of working on this type of journey together. You need to really take into account what each person needs and wants. You can’t to a homestead in the woods if one part of the partnership does not want to be there. It’s not going to work out. You need to be on the same page.

And so, for us, choosing this dream together, choosing this home together, and then ultimately deciding to actually drive to the lawyer’s office and sign the papers was all very much a joint decision.

And also, I think in a partnership, you do have to think about what’s going to make your partner happiest. I’m happiest when he’s happy. And he’s happiest when I am happy. And so I think recognizing that and balancing that has always been important for us.

And it’s also true that then, your kids are happy. It of reflects throughout your whole home if you are able to live kind of a content lifestyle.

Mad Fientist: Yeah, definitely. So, you have your Cambridge house or a house in Cambridge, Massachusetts. So, when I talked to you last, you were planning on renting that out once you get the homestead. And you were planning on managing it yourself. I was just wondering how that’s going, if you’ve decided to hire out the management to someone in Cambridge.

Liz: That is going really well. We have been just thrilled with how that has worked out. And we did decide to hire a property manager which has been an excellent decision. We’re about three hours from Cambridge which is kind of on the edge. You could manage it yourself. But what we came around to realizing is that, ultimately, it’s money. And it wasn’t worth the time to us. I didn’t want Nate to have to be driving six hours in order to fix a leaky toilet which is exactly what would have happened.

And so, for us, it’s very much worth it to pay a property manager. And what we pay is—I think it’s a flat rate of $105 a month which is a really great rate for property management. So what I would say is if you’re looking for a property manager, call around to a lot of different managers. I found just wildly different rates in Cambridge and wildly different levels of service. And I think it’s a question of what do you actually need for your property, how much are you willing to do versus how much they’re going to do. And something like going down to clean in between tenants, we are willing to do that. But again, the leaky toilet in the middle of the night, we are not willing to do that. And so, outsourcing that to the property manager has been a great decision.

They also listed the home and rented it out for a higher price than what we would have asked. We’ve been doing a lot of research on the market to try and figure out where we would fall. And they priced us a couple hundred dollars above that. And they were able to rent it out to the first people they showed it to. So, I was like, “Great! You have earned your commission!”

Mad Fientist: That’s fantastic! And is it pretty much completely hands off for you guys then?

Liz: It is! So far—you know, we’ve only been doing it for a year and a half—it’s been a really passive source of income. And it’s really generating revenue at a great rate.

And I think one of the reasons for that is just the market in Cambridge. I’m very cautious about recommending real estate investing because—and I’m sure you’ve talked about this too—it’s so dependent on the market and the pool of tenants that are available to you. And I think Cambridge is great because there are a number of universities there. And there’s also a burgeoning biotech industry there. Places like Google and other tech companies are also headquartering there because of their proximity to MIT, the Massachusetts Institute of Technology. And so, there’s kind of this upswell in the market.

And it’s also a very constricted housing market because there are a lot of historical regulations in Cambridge. And so there’s just not enough housing. And 60% of units are rented.

So, when you kind of look at all those variables, it’s telling you this is a good place to be a landlord.

And so, I think before you make a decision like that, as you know, it is not always a revenue-generating proposition. And so I never want people listening, “Oh, yeah. I can rent out this place in rural Vermont and make tons of money!” Probably not. I always want to kind of temper my enthusiasm for it. You need to have a deep knowledge of the market that you’re looking at.

And when we bought in Cambridge, this was our assumption, that that home would become a rental. And so we really bought with an eye towards renting it out, not with an eye towards it being our forever home.

Mad Fientist: That’s definitely a mistake I’ve made in the past. We’ve owned two houses. And each of them were bought just as like, “Ooh, this is going to be a great place to live.” And both ended in so much stress for me.

So, I said to Jill, I was like, “If I ever buy again, my first priority is that it’s a good rental investment because then if we do want to leave in two years, we don’t have to worry about any of this stuff. It’s hopefully a sound investment we could cash flow and not have to worry about selling if it’s a bad market or whatever.” And yeah, I think that’s a great piece of advice.

Liz: And I would say that we did very much the opposite with our Vermont home. I mean we consider this property zero dollars in our overall net worth. Even though it’s a great house and a great property, these rural places do not necessarily appreciate. They do not even necessarily stay static. And they certainly don’t sell quickly . It’s very unlikely that it would be a successful rental, probably impossible.

And so, we very much bought this place like, “We just want to live here.” And it’s worth zero dollars.

So, I think having that awareness when you’re buying, like “Am I buying this with an eye towards rental? Is this a great market where I could reseller? Or do I just really want to live here?” And it is not a bad thing to just really want to live somewhere. But then I think you have to understand what kind of investment it is. And for us, it’s an emotional investment in where we want to live, whereas the Cambridge house, I can’t say that we like loved that house.

Did you ever visit us there? I don’t remember.

Mad Fientist: No, I didn’t.

Liz: No. It’s kind of an awkward home, but it works really well as a rental because it’s a single family. And in Cambridge, a lot of units are condos. And there are a lot more restrictions on renting out condos in Cambridge than there are single family properties. So, we could have gotten like a much nicer condo to live in, but it would not have been as good of a rental opportunity.

So, again, having that awareness before you buy I think can be really helpful.

Mad Fientist: Yeah, no, definitely. And yeah that’s where we made the mistake for us. We knew that we would probably be there five years max. So it’s like, “Okay, this is not our forever home. And it wasn’t going to be a good rental.” So then it was like, “Oh, we want to leave right now. But it’s just not a good time to sell” and things like that.

So yeah, just knowing where you are in that space and having it all upfront in your mind and know what you’re going to do in that situation is I think key for not having all the stress that I had.

So, when we chatted last time, I think both of you said that frugality is a lot easier when you have a goal. So when you had the goal of buying your Cambridge house, that was easy to be frugal, and you were able to save a lot of money. But then once you bought the house, then you sort of got off the path. But then you realize that you wanted to retire to a homestead in Vermont, so then you have this other goal, and then you got super frugal again.

Do you have a goal now? Or is it so deep in your being, frugality, that it just comes easily?

Liz: I think it’s more that frugality is so ingrained in our lifestyle that that’s just the way that we live at this point. I would not say that we really have a concrete goal. I would say we have kind of personal goals, where we want to see our net worth go and the things that we want to do with our money.

We started a donor advised fund last year which is a tax advantaged charitable giving vehicle that I highly recommend if people are looking for a way to lower their taxable income. And that was a big priority for us, to be more strategic and mindful about our philanthropy. and that’s something we’d like to do more of in the future.

And so, I think we have monetary goals around that and around some different things we’d like to do around the property and in our community.

But overall, no, I would not say that we have another big goal. I don’t ever want to move again I don’t think for my entire life. No, I’m sure someday. But I think for us, it’s really just maintaining and creating this life that we want to be living. Our family is still growing, and so we’re very much kind of in those transition phases.

And at this point, frugality just brings us so much happiness and is so very much the way that we live that it’s natural for us.

And I would also say that we spend more money now than we did when we were working towards financial independence. And I think that that’s just kind of a course correction that happens over time. So, your first month of frugality, you’re going to probably save more than you will for years from that point. And I think that’s fine.

I think the key to finding tenable frugality is to first eliminate everything, and then to kind of add back the things that you really enjoy. Nate and I go out for dinner once a month now on a date which we did not do back when we were working towards financial independence. We spend more on farm equipment now because we need things for our property and it makes our life easier to have an apple cider press or a wood splitter or pallet forks for our tractor, things like that. We spend the money because it’s going to enable greater frugality and it’s going to allow us to live out here more sustainably and make our own hard apple cider.

So, I think our spending is certainly higher, but it is not at a level where I feel like it’s on frivolous things. So I think if you always have your parameters of goals-based spending guiding you, you’re going to arrive at a really good place with your frugality.

And I think it’s also not a static thing. Inflation, your family size increases, your needs increase, or they decrease. And I think you need to just be aware of that and you can keep an eye on your overall net worth and you can keep an eye on what your income is at that point and where you are in your journey. And you can adjust your spending as it’s appropriate.

Mad Fientist: Yeah, that’s exactly what I found as well. Our spending has definitely increased, but nothing worryingly. And I’m not worried about it because so many years of frugality, I know that I’m spending on things that make me happy and not anything more.

And I think it’s been a huge gift. I think it’s just being able to relax a bit because, before, I was super scrutinizing everything—just like I know you were. And now, it’s like, “Okay, just relax. You got this down. You know what you’re doing. So don’t stress about every single thing because, overall, you’re doing great. And it doesn’t matter if you spend an extra hundred bucks a month than you did a year ago .

Liz: Right, exactly.

I think, again, it’s like if you have that goals-based spending at the forefront, it’s kind of immaterial.

And also, for me, I think I’m moving into sort of being more of a minimalist. I think this is a new phase for me where what I’m recognizing is that I love the simplicity of frugality. And I really like owning less stuff and having less stuff that I need to care for and be concerned about.

So, I’ve been getting rid of a lot of things. I think it’s also because I’m pregnant, and I just do this when I’m pregnant. So talk to me again in a couple of years. I might feel differently. But frugality has made me a less stressed person because I’m just not worried about as many things in my life. Like it’s the Christmas season, and I do not feel stressed because I’m not buying gifts for my husband or daughter. I got her stuff at a garage sale like six months ago. She has no idea. So for me, it’s just a very stress-free time. And I’m like, “This is great! This is how I want to live all the time.”

So, for me, I think the goals have kind of evolved to be a little bit less about money and a little bit more about time and mindset and mentality and how do you find that inner peace and that inner serenity that I think stems from financial independence, but also stems from using your time exactly as you want. And frugality allows me to do that.

And so it’s kind of this whole cycle for me of spending less, needing less, desiring less, and then being happier with less. And I think that’s the ultimate destination for me.

Mad Fientist: Absolutely! We just actually utilized our minimalism just last month. It was time for our lease to be renewed. And the property management company emailed us and said, “Do you want to stay?” and we’re like, “Yeah, we like it. So we’d like to stay.”

And then, they replied and said, “Oh, the landlord has chosen to increase their rent.”

We’ve only been here a year, and were great tenants, so I was like, “This is crazy!” But of course, what they’re thinking is that we have all this stuff, we moved in, we’re settled. And for us, we could just have two small car loads and be out of here and be somewhere new.

So, I replied, I’m like, “No, we’re not going to spend any more. We can leave on February 2nd” or whatever our date was “…or we’ll just keep paying the other rent. It’s up to you guys.”

And she replied so nice. It’s like the nicest email I ever received from her. She’s like, “Oh, yeah. That would be great. You can stay.” And I said, “We’ll stay until May. And then we can reassess then.” She said, yeah, we can stay until May, “And I’ll be in touch soon.”

So, it was just like a 180. She thought she had all the power. And it’s like, “No, we have nothing. We could be out of here in two hours.”

Liz: That’s awesome. That’s awesome. No, I’m envious. I am not that minimal. Let me tell you, I could not be out of this house in like two weeks. So yeah…

Mad Fientist: Yeah, moving across the ocean twice is the best thing ever for not accumulating a bunch of stuff. It’s just like you do that twice, and you’re like, “I never want anything ever again.”

Liz: Like “I’m done. I own nothing.”

And you are the perfect embodiment of having that ability and holding the power. I think, in a lot of dynamics with a landlord or with an employer, they assume that they have the power. And you, time and time again, have shown them, “Actually, no. I don’t need this job. I don’t need this…”

Mad Fientist: Exactly! And that’s the thing. That’s the thing that I didn’t realize on my journey as much as I wish I had, just the power that that gives you and how it makes you so different from any one else and how you can utilize it just like I did with my landlord right there and like I did with my job.

You should utilize that power because you’re very rare if you have more than a few months saved up, let alone a few years or a decade.

Liz: Or a lifetime, yeah.

Mad Fientist: Exactly!

Liz: It’s incredibly liberating. And it really lets you make decisions because you want to.

Mad Fientist: Yes, absolutely. And that’s the best part.

Liz: Yeah. There’s a lot that we don’t do because we’re like, “Well, no, nope. I don’t want to do that.” It’s kind of like having a property manager for us. It’s like, “No, I’d much rather spend that than be driving back and forth.”

Mad Fientist: Yeah, exactly!

So, you were a bit more extreme at the beginning, as you said. So in the book, you talk about the zero dollar budget. I just wanted to chat a little bit about that because I think it’s a really powerful mindset shift.

Is that still similar to the way you think now?

Liz: Absolutely! And part of this stems from laziness. I do not want to sit down and create a budget every month. That would take a lot of time. And it sounds boring. And I think I would be setting myself up for failure. I don’t see any point in creating a budget because it is very much a zero dollar proposition for me.

So, any time we need to buy something, Nate and I have a process that we go through. We discuss it. If it’s a big purchase, we’re going to talk about it for a very long time, like buying a car, for example. We bought two cars in 2016. We have been talking about those cars for, I don’t know, five years maybe. And so by the time we came to purchase them, it was very easy to pull the trigger.

The same thing with buying both of our homes. The decision to actually purchase was made pretty quickly because we’ve been thinking about it, talking about it, and researching for years.

So, with large purchases, we spend a very long time. And then the time is kind of correlated with the size of the purchase price. So depending on how expensive it is, that’s going to be correlated with how long we discuss it and research it.

And our first step is always to wait. I never advocate buying something immediately—except for groceries which you’re going to need to buy pretty quickly. But I never buy something in the moment that I think I need it. I write it down on a list, and then I wait a while—at least two days. Even for seemingly insignificant purchases, I wait and I just see do I actually need this or was this just like a flash in the pan like, “I need this right now,” and I don’t actually need it. And I look back at the list and like, “What even is this? Why is this on here?”

If it is something that I feel like we really need, then I start to try and figure out if we have a substitute. Is there something in the house that can suffice, that we can use instead. Is it something that we’re going to need just once, like a tool, or something very specific that we could borrow from a neighbor? If so, borrow it, be done with it. Great!

If we’ve gone through all these exercises, and we feel like we still need to buy this thing, we start looking for it used. So I check Craigslist, a buy nothing group, which I highly recommend you join or start in any city you live in. I look on Facebook buy and sell groups. If you have kids, those parent buy and sell groups are just a gold mine. I get most of my baby stuff from there because people are looking to offload things. And it’s typically a better price in Craigslist. And it’s a better selection because there’s usually more people posting stuff.

Also find your local parents’ buy and sell group. I just got a changing table and changing pad and a diaper pail for like $15 which normally would be like a $300 expense. So I’m like, “Yes!” Then I almost could not fit it into my car, so there was a moment of stress. But I got it. I turned it around the other way.

But anyway, when you start to buy things used, you will recognize the depreciation curve is astronomical. It’s just on real how cheap you can get things used versus buying them new.

We live in a very snowy climate. We always need snow gear. And our child is constantly growing and eating a different size of snow gear. So anytime I see high quality snow pants, boots or coats at a garage sale, I buy them. I buy them in whatever size they are. And I get [lands] and $60 snow pants for $3. And that’s the kind of stuff where, to me, it’s just, “Why would you buy it new?” It’s so much fun to find it used.

So, utilizing the used market is one of the best tips I have. And then if it’s something you can’t find used—for example, the pallet forks for our tractor—do your research and find the best price, and then buy it. And don’t feel bad about it because you’ve spent all this time researching and thinking it through. You don’t have buyer’s remorse. Then you’re not questioning whether or not it was something you need to buy.

So, in that way, everything we buy is pretty mindful. And it is something that we ultimately do need.

Now, that’s not to say we don’t buy useless stuff. That totally happens to us. But usually, they’re pretty small purchases. I can’t say that we regret any of our large purchases.

Mad Fientist: Nice! So, let’s go back to when you realize that this early retirement was going to be your goal, and you’re doing all this cutting, and you have the zero dollar budget, and you’re probably all amped up, but then you realize that, “Hey, I’m pretty optimize now. And now I’ve still got a few years before this is actually going to happen.”

And there’s a quote in your book. You said, “I wasn’t living. I was just marking off days.” I think that a lot of people find themselves in that same situation. They find the idea of financial independence. They’re all excited. They start making these drastic changes that are increasing their happiness. But then they realize they have a long time to go.

What’s your advice for somebody in that position? How do they keep from just marking off days and not really living life anymore, just waiting for this end goal?

Liz: Yes. That was the hardest point for me. And that was one of the hardest parts of the book to write because I just felt depressed in that period of time. And so in order to write that, I kind of had to go back into that depressed time and remember how I felt—which is not super fun.

It’s difficult. You do, you have this heady euphoria of like, “Yes! Financial independence, I am rocking this,” and then you go a couple months, and you’re like, “Okay! I have done everything. I got my index funds. I’ve got my 401k. I’ve got my savings. Okay!” and there’s kind of nothing left to do with your money, so then you’re just sort of stuck sitting in your apartment wondering what to do next.

So, I think, for me, it was really important to have an outlet. And so my outlets during that time were Frugalwoods, the blog. And I really poured a lot of energy and enthusiasm into that.

Writing is my passion. Writing is what I’d always wanted to do and what I had not been doing because I always thought I didn’t have the time to do it. I had the time to do it. I just was not optimizing my time.

So, I think after you optimize your money, start to optimize other parts of your life and start to figure out how you like to be using your time. Pursue hobbies that you have not been able to do. Take on new projects that you previously thought you didn’t have time or money or energy to do.

And I think by focusing your efforts in other areas, it’s much more tenable to kind of get through that slog. And I think what it also does is it gives you a destination for financial independence.

So, for me, what I realized after I quit my job, “Oh, I’m going to be a writer.” And that was a very clearly articulated goal for me. And so it wasn’t just about reaching a dollar amount, which I think can become a little bit of a grinding goal. For us, those dollar amounts just kind of flew by, and we’ve kind of passed them by, and then it’s like, “Oh, that’s cool!” because we’re so focused on what we want to be doing with our lives.

And I think that that’s a really important thing. I think you’ve actually written about that really articulately, that you need to be retiring to something, not just from something.

So, figure out what those passions are as you’re waiting. So, for me, writing the blog was transformational. And also doing yoga, I got really into doing yoga at that time because I needed a physical outlet. And so I volunteered at the front desk of my yoga studio and got free classes. And that was another excellent way for me to kind of fill my mental energy and fill my space while I was waiting.

Mad Fientist: That’s fantastic! Yeah, that’s great advice. Did you ever feel like you’re in the deprivation zone? I know that happened to me. I was in a similar situation as you. I was like, “Oh, man. I’ve still got years to go. I’m not happy.” And the depression was just like growing, and I wasn’t content with anything. I was like, “Well, I’m not happy now. But I guess I will be happy when I hit FI. So I’m not going to spend money on anything,” which then obviously made me even less happy and it was just like this cycle.

Did you ever feel like you were depriving yourself with your extreme frugality? Or did you feel that you at least had that under control?

Liz: For me, the frugality was kind of the easier side of things. For me, it was much more difficult to keep working the job I was working and living in the city I was living in. That day to day reality, it’s like, “Oh, I’m imagining this life on a homestead, and yet here I sit in my cubicle.” And so, that was the hardest part for me.

Somehow, the frugality part was easier. And I think it’s because it is such a measurable goal that I really loved seeing how much we were saving every month. And so I was so motivated to get to the end of the month. It’s like, “Yeah! We spent so little.” That was kind of a motivation for me in and of itself.

But just going through the days and the weeks was hard for me. And what it ultimately did though is it made me so much more grateful to be in the position I’m in now. And I think one of the things I like to highlight and that I talk pretty extensively about in the book is the privilege of doing this.

I think there’s so much privilege in being able to pursue financial independence. There are so many people for whom working two and three jobs still does not cover their basic needs. And so the thought of putting away this much money is wholly divorced from their reality. And I’m very cognizant of how lucky Nate and I are, and how much privilege we have coursing through our lives—from the parents we had, to the educations we received, to the careers we enjoyed. It’s a really fortunate position.

And so, I didn’t want to lose sight of that, like, “Oh! So you don’t like going to your well-paying white collar job? Too bad! How sad…” And so, being able to step back and understand just how fortunate we were to pursue this lifestyle, and now how fortunate we are to live it out, is what I try to reflect on. And having that gratitude and then having that empathy for people for whom daily life is such a struggle that these types of dreams and questions are not even possible for them and just recognizing how lucky it is to even have the ability to craft a life you want.

Mad Fientist: Yeah, you have an excellent post called Deprivation versus Abundance. And I think that’s a really good one to read for anyone who is feeling like they’re depriving themselves or maybe just cut too much and aren’t happy.

I mean for me personally, travel has been huge with that. You go to these countries and you realize how much privilege you actually have. It’s easy to gloss over it when all your friends look the same as you and all your family are doing the same things. But when you get to some other country, it’s like, “Wow! They’re working so hard every day just to get some rice.”

It puts it all into perspective, focusing on that and focusing what you do have, not that goal, that FI goal that’s maybe five years away, but actually realizing, “Hey, I’m actually working on these things, I am working on these skills that allow me to do these things that I want to do. And I’m able to put food on the table,” focusing on that rather than the thing that you actually want.

And I think in my post you say something like greed versus gratitude, having gratitude for what you do have rather than being greedy for what you don’t yet have. I think that’s an awesome thing to keep in mind during that stage.

Liz: Absolutely! And I think what it also does is it kind of enshrines frugality and simplicity into your life because you recognize that you don’t need a lot, and that you can be happy with less, and that you can, as a result, give away more, and that you can find ways to impact your community and be helpful in that way.

Mad Fientist: And you mentioned community there. That’s something that I came across in the book that, one, I realize that’s lacking in my life. I’m a city dweller right now. We always move every two or three years. So we never really put in the effort to develop a community. But it was really cool to read how your frugality has helped you foster a community in Vermont. And it sounds like Vermont, it would be a bit easier than in Cambridge. But you gave the example I think of you could pay to have your dog watched while you go on vacation, which is just an expense, but then otherwise you could maybe create a community of dog owners in your local town, and you can all make a pact and say, “Whenever one of us is on vacation, we’ll watch the other one’s dog,” and then you’re saving money, but then you’re also helping other people in your community which makes you happier. You’re also fostering this community of people that you may not have had before.

I thought that was really cool. And that’s not a link that I’ve actually put together before, how frugality can foster and help you improve your community.

But can you give maybe some examples of how you’re doing that in Vermont?

Liz: Absolutely! The dog example is great. And we have availed ourselves of that for years. We’ve actually never paid to board our dog.

And I think recognizing that barter and trade is not dead. Our modern economy has created all of these opportunities to pay people to do things. But what we forget is that there’s a lot of people who would rather not be paying to do these things. I would much rather trade with you. And so, bartering and trading with my yoga studio is a great example, with dog watching.

I think in a rural context, it’s a little bit more at the forefront because it’s something that people are more accustomed to. But I would say that it’s entirely possible anywhere in any suburban/urban/rural areas because people are interested in building that community.

I think, especially in the US, we’ve come around to this idea that our unifying activity is to be consumers. That’s kind of the one thing that we all do. And when you step outside of that loop and start to realize that’s not true, you will find other people who are also interested in building deep connections and in working together and in being collaborative.

And so, what we found out here is that people are so much more open and willing to help you and also to ask for help and to be very frank, “Could you come over with your car and help us move?” or “Could you come help us move these pieces of furniture?” or “Could you come help us repair this well? We need to dig a ditch.” These are all things we’ve done, by the way. These are all real life examples.

And similarly, we say to people, “Could you come over and watch our daughter while we go to the doctor?” We’ve been able to sort of create these relationships where you are able to offer your skills to people.

So, one of the things we bring to rural Vermont is our tech skills. And so Nate is kind of like the tech guy. People stop by, call up with tech questions. Yeah, you need your Internet installed, you need your phone set up, we’re here for you.

So, I think finding what you can offer to your community, and then being very honest about what you need help with—people are very excited to help and to be part of your life. And I have been so pleasantly surprised by how much community we’re surrounded with out here.

And again, in a rural context, you really kind of need each other because goods and services and stores are very far away. And there’s a lot of work to be done out here. And so not a lot of money changes hands, but a lot of projects get done together.

Nate helped some friends move a wood stove from one person’s house to another person’s house. I don’t know how you even hire someone to move a wood stove. So they just got some guys together and were like, “Can you just come over and help us move this wood stoe?” “Sure!”

It’s things like that, just being open to it. And I think being available in your community is really important to us. And it’s something that we enjoy and have found a lot of deep fulfillment from.

We’ve created relationships with people of all different ages, which is another element of frugality that I really love, these intergenerational relationships. People know so much! Our friends who are 60 and 70 and 80, they’ve had incredible lives, and they have so much to offer us. Likewise, our friends who are 9 and 10 are just fantastic and hilarious. I looked out one day, and one of them was on the roof of our barn. I was like, “Okay… well, they got up there, they’re going to be able to get down.”

So, I think opening yourself up to that diversity of community is a wonderful thing. And it really does facilitate not only frugality, but also, I would argue, just a more fulfilling life.

Mad Fientist: That’s very cold. And yeah, that’s definitely going to be a focus for us over the next few years once we get citizenship here and we realize where we’re actually going to settle down. I think that’s the one thing that’s lacking. And as we said, it’s super important for overall happiness.

So, for someone who is a big achiever—and I can see that you’re maybe a type A personality and like setting goals and achieving goals—you’ve got your homestead in Vermonth, you’ve written your book, what’s next? And do you have a next? And if not, how do you feel about that?

Liz: Oh, my goodness! So, it’s true. I really try not to be type A. But I found that it’s actually very hard to change your core personality.

And so I quit working, but I just kind of translated my type A over into other things, which I have to be okay with because it’s very hard to fundamentally change who you are.

And so what I’ve tried to do is incorporate more simplicity and peace into the type A that I truly am.

Mad Fientist: So, how do you do that?

Liz: How do you do that?

Mad Fientist: Yeah. I feel like we’re quite similar.

Liz: A very patient spouse who grounds you and reminds you of how you want to be versus perhaps how you are being. And it’s something that Nate and I have a very open line of communication about. And he has his things that he works on as well that I help him out with, don’t worry.

And so, I think recognizing that you need that help from people to understand like, “Okay, this is a type A thing. You need to let this go,” I’ve really been able to do that by understanding how much happier I am when I am not stressed out all day long and recognizing how much happier I am when I make time to hike every day and to do things that I enjoy every single day.

And for me, it’s creating some really strong boundaries around my time, which having a child, like you are a hundred percent set, they will do that for you. And so having our daughter has truly helped me because I have these blocks of time during which I can “work” at my computer, and then I have blocks of time where I’m with her and blocks of time where she and I do household chores together or we play outside. And so my day is very structured in that sense. And so there are a lot of boundaries around what I can and can’t do.

I also have a strict bedtime. So Nate and I go to bed same time every night no matter what. And that’s really important. I used to think, “Oh, I’ll just stay up another hour, another hour. I can get all these stuff done. Okay, so it’s 1:00. Well, it’s kind of bad, but…” So having that strict bedtime puts just a real parameter on my day. We go to bed at the same time, we get up at the same time. And I think that helps me facilitate a little bit of a calmer approach.

And in terms of what’s next for me, having a baby, having the book published. And then, I do have some plans for Frugalwoods for the future of some new places, new directions, that I want to take the blog.

Mad Fientist: Very cool!

Liz: And I’ve gotten into doing a little bit more sort of what I would say maybe financial literacy. I don’t know if I want to say “financial education” because I’m not a formal educator. But I have an Uber Frugal Month Challenge which is a month-long free challenge to help you identify your goals and save more money than you ever thought possible. I guarantee you will save more money.

And having that Challenge, I’ve really enjoyed that because I’ve gotten e-mails and actually handwritten letters from people about how this has saved their marriage or transformed their lives or allowed them to pay back debt or sort of claw out of a depression that they felt around their finances. And that to me is why I do this work. It makes me so happy, and I get so excited when I read these letters.

And so, I want to expand my work in that space and expand my work in offering people some actionable advice on how they can transform their lives.

So, after I have the baby, and the book comes out, hopefully I will be able to focus a little bit on that.

Mad Fientist: Very cool!

So, I’m going to throw a few quicker questions at you. Do you have any frugal hacks that you recently found. I have one that I’ll share after which is super embarrassing, but it’s amazing.

Liz: I feel like I write about frugal hacks a lot, but I don’t know if I have—oh no, I have one. Let me tell you what.

Okay! If you pay for a good or a service to be delivered to your home—for example, propane or heating oil (which are two things that we pay for)—do not go with the same company that you used the year before. Do not assume that they’re going to give you the best price for being a loyal customer. Call around to every single service provider that you can find.

So, this is for Internet, electricity, heating oil—I don’t know, whatever you need at your house that’s essentially a utility. Call, compare prices. And then, ask if there is a pay in full discount because you would be shocked at how many people do not pay in full at the time of delivery for a service.

If you go on a monthly payment plan for something, it’s highly likely you are going to either pay interest or pay a higher price. And a lot of people don’t realize this because many companies do not advertise that fact.

And so, we needed to get propane and heating oil delivered to our home. And so I called every company I could find that would deliver to us. I compared all of their prices, I figured out their pay-in-full discounts. And I actually went with two different companies for the propane and the oil, neither of which we’d ever used before.

And so, it takes a little bit of legwork. But it saved us, I don’t know, a thousand bucks or something. So be really cognizant of things that we assume need to be on autopilot or need to always be the same and figure out if there’s something cheaper in your marketplace. Oftentimes, it’s real money that you’re going to save by doing that.

Mad Fientist: Yeah, that’s impressive. So, I will share mine even though it’s super embarrassing. So, I am currently talking to you while wearing a onesie.

Liz: What?!

Mad Fientist: Yeah. If you could see me now—that’s why we’re not doing us in video. I don’t want you to see me now. But it has changed my winter Scottish life.

My wife, Jill, got a onesie for Christmas last year from her parents. It was just like I guess a joke gift or something. But she wears it constantly. And I would, of course, always make fun of her because she looks ridiculous in it. But I started noticing like I would be freezing all the time.

The way it works in our house is I never turn the heat on. And then, when it gets cold enough, Jill’s cold, she turns it on. And then, I feel like, “Okay… well, I’ll enjoy the heat since Jill wants it.”

So, I thought for months that she was just doing it to spite me like. She’s got to be freezing. She’s just not turning it on because she knows I won’t turn it on myself.

Liz: She would not do that! Jill is the nicest person in the world, I have to tell your listeners.

Mad Fientist: She is! And she wouldn’t do that. It was me thinking that. And I’m like freezing. And every now and then, I would be like, “Are you not cold?” and she’s like, “No, I’m fine. This onesie is really warm.”

Liz: So, my brother came over to stay with us. He’s using his savings to just come and live in Scotland for a few months with us. So he obviously is not used to Scottish winters and Scottish houses with their terrible single pane windows and all that. So my wife was kind enough to buy us both onesies and surprised us one day. And it has changed everything!

I was like, “You know, a onesie is great. But then your hands and feet are still cold and your nose is still cold” and all that sort of stuff. But no, your core is so warm that your blood is able to then go to all your extremities again.

And we’ve probably saved 10x what the onesies cost in heating just since we got them. And that was like a month and a half ago.

So, for anyone out there who doesn’t mind looking ridiculous and doesn’t want to heat a whole house—Mrs. 1500 from 1500 Days, I saw that they were spatting about the thermostat again on Twitter, get yourself a onesie and you’ll never have an argument again.

Liz: Can you expand on this? Like what is the material of the onesies?

Mad Fientist: It is the cheapest fleecy material ever. I’ve already ripped the crotch out of it. So it’s not very robust in construction. But it is, yeah, the softest fleecy blanket you’ve ever you. And every time you use it, you’re like, “Oh, I love this material so much.” It’s that. But it’s your whole body.

And then, it’s got a hood. It’s got pockets. It just traps heat even though, like I said, I already have a crotch ripped out of it. It still maintains all the heat. So it’s fantastic. So, you will look like an idiot, but it’s worth it for the heating savings.

Liz: Does it have the footies in it, the little feet?

Mad Fientist: No, I don’t. No, it doesn’t. But I don’t even think I could handle that. I think that would be way too warm. It’s so super warm.

Liz: Wow!

Mad Fientist: Like I said, my toes are always warm and my fingers are always warm. And it’s because my core so warm that my blood is just doing its thing.

Liz: Okay, you have to send me a link to this. I need to see this…

Mad Fientist: Okay, I will link to it on the show notes.

Liz: Not on you. I don’t want to see it on you. Send me a link to where to buy it.

Mad Fientist: Yeah, I’ll put a link in the show notes, send you a link. And my wife took a picture of my brother and I wearing them. And having someone else there makes it look slightly cooler, so maybe I’ll put that in the show notes as well.

Liz: Oh, I would like to see that, alright.

Mad Fientist: Alright! So, second question. In the first interview, Nate said that one of the things he wants to do when he’s financially independent is to bounce radio waves off the moon. And that sounded like the sweetest thing ever. So has he done it yet? And if not, why not?

Liz: To be honest with you, I don’t know. We allow each other a lot of independent time to do our own stuff. So I got to tell you, he might have done it. I don’t know. He like goes out, goes to the barn. I don’t know what he does out there. So, it’s possible. I don’t think so. But he’s advancing in his kind of things that he wants to be doing around the homestead. And he does have a weather station that he installed, which I think that’s kind of like a space type of thing.

Mad Fientist: Okay. Well, I’ll follow up with him the next time I see him.

Liz: You need to ask him about that directly.

Mad Fientist: Alright! Third question. Frugalwoodstock, why hasn’t it happen yet? And when is it going to happen?

Liz: Because you have not organized it. You and Mr. 1500 need to organize it.

Mad Fientist: Alright, I’ll get on to Carl because I think that was his baby. I will leave that up to him. And he will definitely organize it to a much more fun event that I couldn’t probably even imagine.

Liz: Yeah! You know, it’s a wonderful idea. I love it! I am also kind of having another baby and being a little busier right now. But I would not rule it out for the future. I think it would be a lot of fun.

We’ve actually had a lot of friends come visit us. You and Jill came, the 1500’s have come, JL Collins has come to visit us, some other FI people (who now, can’t remember who all has come). But we’ve been really fortunate to have a bunch of visitors. I love having people come. It would be wonderful to have everyone come at the same time. It’s just the logistics elude me right now.

Mad Fientist: Cool! I’ll get on to Carl about that. He can start organizing.

Liz: Yeah, it’s all Carl’s fault.

Mad Fientist: So, I want to bring back a phrase I used in the first interview, which I’m super embarrassed about listening back to it. At the end of the interview, I said, “I don’t want a baby to start popping out,” so I’ll wrap this up—which we didn’t know each other back then. So it’s even more embarrassing. But now, we’re friends, so I’m going to say it again since we’re in the same situation. I don’t want the baby to start popping out. I’ve just got two more questions for you.

Liz: She’s not due for another two months. So hopefully, we’re okay.

Mad Fientist: Well, like I said before, I don’t know how this all works.

Liz: The last time, I think I was due the next day or something.

Mad Fientist: That’s true.

Liz: We’ve got some time this time.

Mad Fientist: So, I couldn’t let you get through this without you talking about the FinCon incident that keeps reliving itself every year we get a FinCon. So please, please, tell the dark side of frugality. Share that with the audience.

Liz: Alright! This is not the dark side of frugality. This is called strategic efficiency, alright?

So, if you go to, for example, a conference or some other event where there is free food at certain times, and then there is not food for other meals, during the time when there is free food, if you can take an extra sandwich or what-have-you, take it, and then you can eat it later in the day.

And this is the philosophy that we have followed in a lot of our travels. A lot of times, when we travel—we used to travel abroad every year. We use hotel points. And we had status with Starwood for a long time. And so breakfast is included when you have status. You get to go to the club, and you have an included breakfast.

Obviously, your lunch is not included. So when you go to breakfast, get some pieces of toast, make a little sandwich, take it with you, and have it for lunch. I think this is strategic. Brandon thinks that this is tacky.

Mad Fientist: No, no, no. I would share the dark side. This is very dark side. And it’s very personal to me.

So, if you are at a conference, and you tend to stay up later, and Mr. 1500 makes you drink—one too many beers than you actually wanted—and you wake up a bit late, and then you come to breakfast with your lovely wife who’s hungry and she’s travelled from Scotland to be there, you realize there’s no more food left. And then, you’re sad. So then you sit through these sessions very hungry and sad.

And then, you come to lunch, and you see Mrs. Frugalwoods bring out this amazing spread of what could have been my breakfast and eat that in front of you and enjoy it twice, that is definitely the dark side of frugality.

Liz: Okay, I shared it with people. And I would say that the dark side, this is just a lesson on waking up early, folks. I’ve written about this on the blog. You need to wake up early.

Mad Fientist: Yeah, that’s fair enough. Okay, alright.

Liz: I am sorry about that. I did feel bad about that. I’m sorry. I didn’t know they were going to run out of food.

Mad Fientist: Well, they didn’t expect everyone to be taking three meals for the next week of their lives. They didn’t factor that into their calculations.

Liz: I would also point out, this was like two or three years ago, and you’re still not over it.

Mad Fientist: Well, I think I have a picture from the hotel lounge where you’re sitting at this year. And it was a very similar scene. So I will also include that picture in the show notes. Luckily, I was there with you, so I did get to eat.

Liz: I was going to say, you were eating right alongside me.

Mad Fientist: There’s some poor soul that came in 10 minutes later and had nothing.

Liz: Oh no, that’s not true.

Mad Fientist: So, I always end all my interviews asking one piece of advice for someone on the journey to FI, what would it be. And since you’ve answered this before and probably didn’t revisit it, I always like to do it because it’s interesting to see if that one piece of advice has changed.

So, what’s your one piece of advice for someone on the path to financial independence?

Liz: Know what you want your life to look like. Know what you want to do. So the money side, obviously, is going to facilitate that. But the money is not going to tell you what you want out of life.

Money is just an enabler. It’s not going to make you happy. It’s not going to bring you fulfillment. You need to know what your passion is and what your calling is, why are you doing this, why are you working towards financial independence, and what do you want to do once you’re there.

Mad Fientist: Great advice… and consistent. That is exactly what you said two years ago.

Liz: Oh, is it really? I thought it evolved.

Mad Fientist: No, no, that’s timeless advice. And I think that’s the most important thing. And that’s the thing that I got wrong in my journey, just focusing on the money. Had I focused on the actual life itself, one, I would have had a more enjoyable journey. And then, I would’ve had a better idea of what to do once I got to that goal anyway.

Liz: I think you’ve done a pretty good job. I think you can say you’ve successful managed that and achieved that.

Mad Fientist: Well, thank you. I’m learning every day. But yeah, I’m trying my best I guess.

Liz, thank you so much for doing this again. It’s always a pleasure to chat with you. And I’m super excited for your book to be released. Congratulations again on that! It’s Meet the Frugalwoods. And by the time I release this, it will be out and people can buy it. I’ll put a link in the show notes.

Anything else you want to say before we wrap up or anywhere else people should go to see you? Obviously,

Liz: I think you can find me pretty much anywhere on the Internet, @frugalwoods. So I’m on Instagram, Facebook, Twitter. The blog is Frugalwoods. And the book is Frugalwoods. So, we try to be as consistent, make it as easy as possible.

So, feel free to be in touch with me. And thank you so much for having me.

Mad Fientist: Awesome! Alright, I look forward to seeing you again. Good luck with baby #2. And enjoy all the nice snow that I’m sadly missing. And yeah, I look forward to speaking to you soon.

Liz: Sounds good!

Mad Fientist: Alright, bye.

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My Brother – Using the Power of Money to Pursue Your Passion Thu, 08 Feb 2018 10:18:57 +0000 Join me for an interview with my little brother that we recorded live in Venice!  We talk about growing up, extreme frugality, and how you don't need to wait until FI to use the power money gives you to pursue your passions.

The post My Brother – Using the Power of Money to Pursue Your Passion appeared first on Mad Fientist.

On today’s episode of the Financial Independence Podcast, I interview my little brother while drinking wine next to a canal in Venice!

Financial Independence Podcast Live in Venice

Brian, who is three years younger than me, isn’t actively pursuing financial independence but he’s done some really impressive things with his money and has used the power that money provides to fully pursue his passions.

Blue Coupe Performance

Brian Playing Cowbell with Members of Blue Öyster Cult

In fact, he’s currently in the middle of a ~6-month mini-retirement and is using the time off to travel and hopefully take his music career to the next level.

We dive into a lot of interesting financial topics but we also degenerate into some brotherly chat, which produced classic quotes like this one: “I took my solids elsewhere.”

Brian's Apartment

Brian’s “Apartment”

Hope you enjoy it!

And if you want to ask Brian anything (or if you have any connections in the traveling-musical-theater industry), please add a comment below!

Listen Now

  • Listen on iTunes
  • Stream audio file here
  • Download MP3 by right-clicking here


  • How we are different when it comes to money (including his much more extreme level of frugality)
  • Why he chose to live in a place with no heat, hot water, air conditioning, sink, or toilet
  • How to save money as a musician/artist
  • Why focusing on buying more gear misses the point and how you can avoid that common trap
  • How to utilize the power of quitting even if you aren’t financially independent
  • What it’s like tasting the early retirement lifestyle
  • Why learning a language abroad is a great way to travel
  • The pros and cons of having a day job when you’re an artist
  • How to get a dream job in the arts
  • Using mini-retirements and part-time work to pursue your passion

Show Links

Full Transcript

Mad Fientist: Hey! Welcome everyone to the Financial Independence Podcast, the podcast where I dissect the brains of some of the best and brightest in personal finance to find out how they achieved financial independence. I’m your host, the Mad Fientist. And welcome to my laboratory.

Wow! It’s like you’re really here with me. You may notice some additional sound effects today. And that’s all thanks to today’s guest, which is my little brother, Brian. He was the mastermind behind my original podcast interim music which is what you heard at the beginning of this episode. And I asked him to create some music that I could talk over when I’m doing intros just like this one. I was getting sick of just hearing my boring voice all the time. So now you can hear some sweet sounds underneath it, which I think is a lot better.

Anyway, as I mentioned, I have my brother on the show today. And he’s three years younger. And although he’s not actively pursuing financial independence, he’s done some really interesting things with money that I think people on the path of FI could learn a lot from. Not only that, he’s actually a lot more frugal than I am. And he’s really quite extreme with his frugality, which you’ll soon hear about.

So, without further delay, this is an interview with my little brother, Brian, that we recorded next to a canal in Venice, Italy actually.

Hope you enjoy it.

Mad Fientist: Hey, brother!

Brian: Hello!

Mad Fientist: So, before we start, let’s set the scene a little bit. We are sitting here on a canal in Venice. We’ve been here for a couple days, eating a lot. And this is our last day in Venice before we move on to more internal sections of Italy. And I figured what better place than canal-side with a bottle of wine to interview my brother. So, thanks a lot for being here.

Brian: Yeah! Si, si. Grazi.

Mad Fientist: So, my brother has been learning Italian and doing his best.

So, before we start, I also want to thank you for creating the podcast interim music. I don’t think anybody knows who actually made that. But you are the mastermind behind that.

Brian: Yeah! No, I appreciate the opportunity. Actually, it’s been my best known work as of yet. So thank you for letting people hear that.

Mad Fientist: Yeah, it’s been downloaded and listened to over two million times. I haven’t checked for a long time, so it’s probably like 2.5 million. But yeah, it’s been a lot of plays of that music.

Brian: That’s crazy!

Mad Fientist: Yeah! And it’s perfect. I asked you to create/recreate Thomas Dolby’s She Blinded Me With Science, but do it differently enough so I don’t get sued. And then, obviously, replace science with fience. And it’s way dorkier than I ever imagined it would be.

Brian: Thanks! Yeah, it makes no sense musically. I’m glad it worked out.

Mad Fientist: So, I’ve wanted to get you on the show for a long time. You’re not as obsessed with money as I have been my entire life. But you’re good with money. And you do have an interesting story to tell as far as how money has allowed you to be a professional musician. So, how would you say we differ when it comes to money?

Brian: Well, when you asked me to do the podcast a long time ago, I thought it was as an example of what not to do in life. But no, from just watching what you’ve done, it’s taught me how to be better with money.

How would we differ with money? I don’t think about it, to be honest. I typically don’t think about it—or at least, probably five to ten years ago, I didn’t think about it at all. And then, when I got a better job where I was making more money, then I started seeing what’s important and stuff like that through what you’ve been doing with the Mad Fientist.

Mad Fientist: Well, I disagree a little bit. Let’s go back to when you moved into your apartment in Pittsburgh. Obviously, you knew enough about money and prioritization to find a place where you could play drums—which is what you love to do. You’ve been playing drums since, what, you’re 10 years old or something—and you needed a place to be able to do that in the city, and you didn’t want to have to travel out to the suburbs or anything, but you also knew that prices in the city are expensive. So can you just describe what you moved into it when you moved into your last apartment in Pittsburgh?

Brian: Yes. As a drummer, I think it’s impossible to find an apartment where you can practice and afford in a city. Luckily, the rehearsal space I was using with one of my bands was in this beautiful building downtown. And the owner was very relaxed.

I asked him if I could live there. And he said, “Just don’t tell me what you do. You can live here. Just don’t tell me what you’re doing.” So I moved into this empty storage room basically. It was big, but no amenities whatsoever. No utilities really. There was one wall that had outlets all in a matter of two square feet, I would say. Those were all my outlets. There were three outlets. And then, no heat, no water inside of the room. No shower. But I could practice drums, and it was $350 a month including no utilities.

So, it ended up being my dream place. I mean, I think to me being able to practice and play in my house was more important than having an outlet on every wall, so that I could have a nice lamp everywhere, whatever.

Mad Fientist: So, let me just reiterate this. So there was no toilet in the apartment. There was no sink in the apartment? Or did you have the sink at the time?

Brian: No sink. There was a sink right outside my apartment, but no hot water.

Mad Fientist: And there was a toilet three floors down. So this is an abandoned building pretty much in Pittsburgh that has offices in it. So, some people would come in during the day. But pretty much, it was just you in that building.

Brian: Yeah, for nights and weekends, it was basically my building which was amazing. I mean practicing drums, everybody in the building could hear you. But luckily, during the day, I was at work when people were in the building. And then when people would leave the building, I would come home, practice, try and find water.

So, it wasn’t that bad. There was a shower on the second floor where my rehearsal space was for the band. I was up on the seventh floor. But the owner who allowed me to stay there quickly sold the building, probably within a year. A new owner came in and demolished my shower. So that’s when I moved to the buckets.

Mad Fientist: So, yeah, he had an incredible amount of buckets. There is buckets for showering in. There is buckets for going to the bathroom in?

Brian: Well, yeah. I mean, the bathroom bucket came later when I realized it was nicer to just—you know. It was only for code yellow. There were no solids. I took my solids elsewhere. But yeah… I had a bucket for my dishes. I had a bucket for my laundry that I would churn my laundry in, and then a bucket I’d shower in. And I had a camping shower basically. I go harvest the water on the fifth floor where there was a hot water tank, and then bring it up to my apartment and tie it to the ceiling, get in the bucket.

Now, I didn’t have heat either. So in the winters, it was awful. And it was a three-gallon bag that would run out very quickly, so you’d have to stop it while you lather. And that’s when you’d freeze. And then you’d let the water run on you.

Yeah, it was miserable. But I could afford it, I could save money. With that apartment, I could save money. And I could practice, which was the biggest thing. I practiced every day so much because of that place. So I’m really thankful for it.

Mad Fientist: Yeah. And you had drum sets up there. You had a marimba. You had pianos. You had congos. You had Indian drums, tabla. You had loads of instrument sin there. There’s no way that would have fit in some normal Pittsburgh apartment.

So, I also want to say like it sounds really bad, but it was actually a lot nicer than I expected. When you said that you were moving to somewhere like that, I was actually really worried about you. It sounded awful. But when I came, it was actually pretty cool. You’d have to get into a freight elevator to get up there, which was a cool Brooklyn loft space thing. It was actually really cool. And the space was really nice and bright.

And then, it kept getting better over the years, right?

Brian: Yeah, yeah. So, when I first moved in there, I brought an ex-girlfriend with me. And she started crying when she saw it. And she just kept saying, “What is your mom going to think?” because there was nothing but filing cabinets in the space, in the area. They took the filing cabinets out of course.

And then, he new owner—I thought I was going to be evicted pretty soon because it wasn’t necessarily legal to live there because it wasn’t residential. But the owner just kept it quiet. And he gave me more outlets. He eventually put electricity in. And then, about two years ago, I got heat and air conditioning. It just blew my mind.

And then, the best part was about a year ago, he put in a toilet, a functioning toilet, and a hot water tank in my room. I cried, and I asked the plumber while he was installing if anybody ever said you’re a miracle worker. He said no. He said no. But it was the best experience ever.

Mad Fientist: So, explain how you took a shower.

Brian: Eventually, when I got the running water, I had a hose that ran from the spigot—that’s what we called it in Pittsburgh, the faucet—to a shower head that I made out of a PVC pipe that my dad made for me.

Mad Fientist: Yeah, my dad made a big shower enclosure out of PVC pipe. That was actually pretty impressive.

Brian: Yeah! It was amazing. It was the best shower. And then, a bucket inside of that. I would stand in the bucket, shower curtains all around me, flip the nozzle on the faucet, that would redirect the water to the shower nozzle, the shower head. I would stand in the bucket.

And then, I had a foot pump in the bucket with me that I would step on while I’m showering. And that had a hose that would lead to a bucket outside of my bucket. That would put the water in there. So, I had two buckets waiting for the water. So I’d have to switch the hose mid-shower because the one bucket would fill up. And then I would use that water to flush my toilet.

The same with the laundry. Laundry, I had a bucket. It was basically a salad spinner. I would put my wash in there which was basically three boxers—three pairs of boxers max is what I could do or one pair of pants. And then, I would churn that. I would get exhausted. But it was like living a pretend life. And that was what was so much fun about it. It didn’t feel real every time I do it. It just made me happy because it was like it was a way to do something that’s so easy for most people, but then you really appreciate it when you think about what you’re actually doing, like taking a shower and seeing where the water goes and having to do something with it. It was really fun. And I’m going to miss that a lot.

Mad Fientist: So, how long were you actually in that apartment for?

Brian: I was there for seven years—seven years, yeah.

Mad Fientist: Seven years. And you’re 32 now. Someone in their mid-20’s, I don’t know how many people would make that decision. So why did you not think, “Why don’t I just go into a bunch of debt and have this really nice, fancy place in the city and have and bunch of space?” Why did that never cross your mind?

Brian: I don’t know. I don’t know if it’s the way we grew up. We weren’t really given like a credit card at a young age or anything like that. I don’t know why I didn’t think debt was an option for some reason. I thought live within my means and hope it gets better. And yeah, it pretty much did.

I mean, if I had gone into a lot of debt then, I don’t think I would be sitting in Italy right now.

Mad Fientist: Yeah. And that’s a really interesting story too. And we’re definitely going to come to that because what you’re doing now is amazing and not many people could do that at your age which is a testament to how you’ve been able to save and your choices with money.

So, you’re living in a place where you can practice all the time to any hours of the night that you wanted to, put in a lot of work to get better at all the percussion things that you’re doing. And you’re working at the time. So can you just describe a bit what you’re doing?

Brian: So back then I was working at a flower shop when I first moved in there. So, I wasn’t making much at all. And there was no really working up in that company. Then I wasn’t really saving any money, but I was living way more comfortably in a place that I loved and was able to practice. So I knew I could get better and go towards something I wanted.

But then I got a new job that paid more money. And now, because I maintain the same quality of life from when I was working at the flower shop, I was able to start putting money away for whatever. I didn’t know what I needed. As a musician, you just want more gear. So I was probably saving for a new drum or a new drum set or something like that. But really, I didn’t know what. So I was just saving which was nice.

Mad Fientist: So, saving for new gear. That’s maybe something we should touch on because I think a lot of people in the creative fields are always looking for that next thing. I know me personally, it was like, “Well, what’s the next synthesizer I could buy. That would be really sweet. It’ll make me even better at what I’m doing. I’m sure it’s the same with a lot of different arts.”

So, how did you overcome that urge?

Brian: Well, luckily, I think it was that the job that allowed me to make a little more money to save was also a job in the instrument selling arena. So I was mainly dealing with customer service aspects of selling drum parts for custom drum builders and stuff like that and just people, general instruments for musicians and stuff.

And so seeing the amount of people that were obsessed with the wrong thing, seeing people call and complain that the drum sticks were an ounce off or something crazy and complaining about that, it made me realize these people are not focused on the right thing. They’re focused on these elements that have nothing to do with music or getting better. And that made me not want to spend money on gear and kind of save my money for more experiences, or if I needed to take off work for a musical job, I would have that safety where I could leave my work and maybe not that well-paid gig.

Mad Fientist: Yeah, I definitely want to talk about that because you’ve utilized the power that money in your savings gives you, and you’ve utilized it quite a few times in your career which has been really good to see.

And I know we talked about it before you made that first demand at your work. So can you talk a little bit about what you did when you were thinking about going down to Hilton Head to play some Broadway-type shows.

Brian: Yeah. So, I got an offer. I worked back in the end of high school/early college with a producer who did Broadway tours and stuff like that. So I did a run with him. And he was living Hilton head. And he said, “We’re doing a production. We need a drummer. Can you come down for two weeks?”

Now, I didn’t have two weeks worth of vacation time. And I was really torn because it’s a dream of mine to play musicals and travel. So that was my in there. And I called you I think and said, “What should I do?” And you said, “When you’re a good employee, you have all the power because it’s hard to find good employees. Just tell your bosses you need two weeks off. And don’t worry about it!”

I had the savings already. So if they said no, and I still wanted to do it, I would be fine. So I went in to work and said, “Yeah, I have an opportunity, I’d really appreciate some time-off for it.” And they let me.

And then, I went down, came back. And while I was down there, I got another opportunity to come back two months later to play for a month-long show.

Now, my bosses did not like that. So when I got back, I said, “Okay, I’m doing it again.” And they said no. And I said, “Okay, I’m still going.” And then, they said, “Okay, you can come back and you can work remotely.” So, it worked out great.

Mad Fientist: I know! That was great. I actually visited you. And you were put up in this amazing beach house with a bunch of other really cool and interesting people. And you’re living on a beach for a month for free and playing, what, a couple of shows a night or something?

Brian: Yeah, yeah. We’re doing at least a show a day; two shows on one of the days.

Mad Fientist: And you’re working remotely, so you’re still getting paid.

Brian: …“working” in quotes. You can’t see the…

Mad Fientist: Yeah, I taught him that that was the key thing when you’re working remotely. Every time you say “working,” you have to do air quotes.

And yes, so had you not had any savings, that would have never been possible because they said no right off the bat?

Brian: Yeah. As soon as they had said no, I would’ve had to say, “Okay, I won’t do that. I will stay here. I’m yours” because I wouldn’t have had an option.

Mad Fientist: And since your expenses were low (since you obviously worked your way into a very low cost of living situation), you had five figures saved up. And that could have lasted you for a long time.

Brian: Yeah, yeah. I’m trying to think. I didn’t have a car payment. When I needed a car, I bought it with cash that I had saved up. So, that was the most important thing about buying a car for me, was not going into debt for that.

I don’t see any reason to want to go into debt. There’s nothing that I want bad enough to be in debt for. So yeah, not having debt and having a low cost of living made all that possible, all that traveling possible.

Mad Fientist: And now here we are in Venice on a small little waterway in Venice. It’s beautiful. I’ll put some pictures in the shownotes. And you haven’t had a job for how long now? Four months.

Brian: Four months it’s been since I’ve had a job. So yeah, I’m tasting the retirement life. I’m not there. I haven’t reached FI. But I’m tasting it, and it tastes delicious.

Mad Fientist: So yes, let’s discuss that decision and how all of this came about.

Brian: So, again, that’s from having the savings, the low cost of living and no debt. It came from me not necessarily being happy at where I was working. Unfortunately, because of the legal reasons with my living situation, the owner of my building started getting worried that there would be people asking questions and stuff about me living there. So, he asked if I could move out, at which I was fine with. We’re still good friends and stuff. There was no hard feelings. But it was the saddest thing for me because I lived there, struggled there for seven years. I loved it so much.

So, moving to just a regular house or trying to find another apartment was just not what I wanted to do. And then, you and Jill offered to have me come out and stay in Scotland for a little bit. And here I am, I still haven’t left. I don’t know how you guys are feeling about it. But I’ve saved up money to try and buy a house.

And then, I realized there’s no reason for me to buy a house right now. There’s nothing holding me there. And I want to travel. And I had the savings. So, I was able to leave my job and live off my savings for a good amount of time I think.

Mad Fientist: Oh, yeah, yeah. You’ve been living on it for a while, and you hardly made a dent, which must feel pretty good.

Brian: Yeah, it feels great. I mean, it’s a lot to you and Jill for letting me stay with you guys.

Mad Fientist: No, it’s fun for us. We’re super excited to have you. And yeah, it’s nice having some company in early retirement when everybody else is at work, when Jill’s working and all our friends are working.

Brian: So, we get together at the gym, […] Yeah, that’s another thing, when we were talking about appreciating things that you brought up, was how much you appreciate relaxing after you do something like going to the gym and like how nice this is, how much like sitting out and having a glass of wine after doing some work and stuff. So…

Mad Fientist: Speaking of Jill, she’s sitting here taking pictures. And she’s shaking her head now. But how has it been living with your brother-in-law for the last four months.

Jill: It has been wonderful! It’s made me appreciate him a lot more. And he can stay as long as he wants.

Brian: Thanks, Jill.

Mad Fientist: No, it’s been great.

So, we’ve actually done a lot of cool stuff. We’ve gone to Portugal. We’ve gone to London. And now we’re in Italy.

Yeah, let’s talk about Italy. So you’ve been learning Italian over the last few years. And you just spent, what, 2 ½ weeks at an intensive language program.

Brian: Si, si. Yes, that means yes. I have been. I’ve always wanted to learn Italian. Since probably 10 years ago, I wanted to learn Italian. So I figured I have this time. I’m already in Scotland. It’s £20 to fly to Italy. And then, doing the two-week course is just something I would want to invest my money. That was worth investing my money in.

Mad Fientist: Yeah! And then, I got to come over and meet all your language-learning friends. It was really cool. It is amazing how integrated into that society you seem to get in just two weeks.

And I know you’ve said to me personally that that’s a great way to travel. Can you just talk a little bit more about that?

Brian: Yeah! I can’t really say I learned a lot of Italian. I’m pretty awful still. It’s a lot harder than I thought. Duolingo was telling me I was 43% fluent, and there’s no way I’m 43% fluent.

Mad Fientist: This is a good story actually. When Brian was living with us over in Scotland, I would be doing something on my computer in the morning, and he’d be doing his Italian. And then, he’d say over to me, “Oh, 43% fluent!” And I’d laugh and make a joke and say something like, “Yeah, right.” And I thought he was laughing with me, but he actually wasn’t. He thought he was 43% fluent. So, in his mind, he’s just going to come over here in two weeks. And two weeks…

Brian: Just tough it off.

Mad Fientist: Tough it off in two weeks and be 100% fluent. But that isn’t how it exactly works out.

Brian: No, I’m off. I’m even worse than when I came here for some reason because it’s killed my confidence completely. I just panic every time I walk into a restaurant.

Actually, the first night I was here in Italy by myself, I walked out of a restaurant because the lady looked too Italian for me to handle. She wouldn’t have any patience for my awful Italian.

But yeah, traveling, the experience of traveling like this has been amazing. It normally takes a long time to kind of make friends. I have been in Pittsburgh for so many years. And the only way I’ve made friends is through joining bands and stuff. And that’s years of playing with different people. Going to Italy, within the first two nights of being here, I was living with a person, my host family, which was just a guy in his 30’s, a musician as well. We became friends really quickly. And then he took me out with his friends. And it was just a group of us that got along.

So, even more important than learning the Italian, I think, was making the connections and having interactions and just having a great experience like that.

Mad Fientist: I know you met some people. And you may be like one guy needs a drummer in Paris, and you may go and explore that; and there’s another guy in London. Yeah, it seems like you’ve met a lot of good contacts.

Brian: Yeah, it’s great. It’s great having an open life almost. I’m open-ended. I can go anywhere right now.

Mad Fientist: So, you’ve had about four months of this early retirement lifestyle. Is there anything you’ve noticed or taken away from it being an observer of the lifestyle I’m living or just feeling that level of freedom? Are there any thoughts there?

Brian: For me, recently, it’s hard to leave the vacation mindset of it because I immediately left my home and went to another country. So automatically, right there, it feels like a vacation. It doesn’t feel like I’ve just quit my job. I’m still maintaining my life. Everything changed as soon as I quit my job.

So, it’s hard to get out of the vacation mindset and actually get serious about that I need to find my next step in life. So that’s been hard. Your life is so open after you leave work, it seems like it’s overwhelming to organize. I think you really have to work on organization, personal organization. I’m not very good at that. I always told you I would just have meltdowns when we had scheduled shows for the bands I’m in because I’d never write anything down because I didn’t want to believe that I had to go do it for some reason. I don’t know why. It always stressed me out.

So, getting organized is a hard thing for me. So I am going to have to work on that.

Mad Fientist: So, how do you think you differ from your musician friends as far as how you’ve handled your finances? I’m sure you probably don’t talk about that stuff with them, but have you got a feel for how other musicians handle life and maybe not earning a steady paycheck?

Brian: I think out of my musician friends, most of them are trained in classical or jazz background, and then mostly play rock around town and stuff like that. Those guys struggle. I mean I think a lot of them are kind of in the gear mindset as well. Even though they’re great musicians, they still want the next thing. They tend to spend money on that.

It’s unfair for me to say I was just a musician at the time because I did have that job where I was—

Mad Fientist: Do a lot of your musician friends not have a day job?

Brian: A lot of them don’t. A lot of them teach. So they would teach. I would go to my nine to five job and work on customer service. And I know they’re more paycheck to paycheck. There’s not much of a savings. And they also tend to be more oriented towards getting new gear as well which doesn’t seem to make sense.

That’s the funny thing. When I have less money, I would search more for new gear and want that more when I didn’t have money. And then, when I had a little bit of a savings account, I didn’t want to spend it on gear and stuff like that.

So, I think that’s maybe their mindset. I can’t really speak for them. But I know they teach, and it’s more paycheck to paycheck for them.

Mad Fientist: So, what are your thoughts on a day job? Obviously, it’s allowed you to do this. And who knows where this will lead, potentially lots of opportunities and maybe something completely life0changing that you decide to do after this just based on the contacts and the things that you’re doing now. So, do you think the day job, you’re happy? You want the day or you’re out?

Brian: I’m happy I saved while I had a day job. I think that’s why I left it, because I kind of do miss the struggle in a way because it makes you more creative on how to live. When I was struggling, I found this apartment with no shower. And that led to such great things.

But now, I could go into debt or spend all my savings on a really nice apartment and struggle to find a job to maintain that lifestyle, I would prefer to not go back to a day job and maybe have to be more creative with how I spend my money and how I make money. But yeah, I would prefer not to go back to a day job.

Mad Fientist: Yeah… we can transition to what you’re thinking about in the future, but we haven’t really even talked about what you’ve done in the past. So you’re a classically trained percussionist who played operas in Italy. You’ve done musical theater down in Hilton Head. You’ve toured America with rock bands like Love Drug. You’ve played congas with Rusted Root.

Brian: Yeah, I think the ultimate experience was the cowbell. I did get to play cowbell with two of the original members of Blue Oyster Cult on Don’t Fear the Reaper.

Mad Fientist: So, for the people who have seen the Will Ferrell sketch of him playing cowbell in the studio with Christopher Walken on Saturday Night Live, that was my brother.

Brian: Yeah, I was slightly inebriated during that. I was hired to play keyboards on another song with the band, Blue Coop. It’s a bass player from Alice Cooper and then two of the members from Blue Oyster Cult. And so, I was playing keys with them on one song. I went up to the drummer and I asked, “Could I play cowbell on Don’t Fear the Reaper?” and he’s like, “We would love to have you, but we don’t have an extra cowbell.” And I was like, “Don’t worry! I got mine in the car. I ran out and got it.” And I don’t know if they wanted it, but I played the entire song over top—even when I wasn’t supposed to.

Mad Fientist: Yeah. Sadly, we still haven’t tracked down the video of that. But I have a picture of you—it was a very bad picture, but I can see you very sweaty and really intensely smacking the shit out of a cowbell.

Brian: Yeah, yeah. It was one of the best experiences of my life, I’d say.

Mad Fientist: So, you’ve done all these various things with music. Where do you go from here? What’s your ideal future looking like in the next six months or year?

Brian: I think it’s exactly what I’ve experienced so far, mixing the two, using music to live the retired life of travel. That’s what I experienced with doing the musical theater stuff in Hilton Head. At night, every day, it was like vacation. But then you’d go for two hours and play a show, which I loved playing. So that was the work. That was what paid me. And then, you were just living a life of retirement basically.

So, I think combining those two things would be my ultimate dream—travel, playing music. I feel most confident and most alive if I’m in a new place, and I’m there with the purpose of playing music. So if there’s any way I can do that—which I know there is, I know people that do that. I don’t know how to get into that right now. That’s what I’m trying to figure out while I have this free time.

Mad Fientist: What you came up with was a really good idea. Well, one, we have some friends in London who are in the Weston Theatre in a musical capacity who we’re going to chat to about it. But you also had a really good idea of taking lessons with people in the job that you want.

Brian: Yeah, exactly. So, at this point in life, after school, after studying, it’s all about who you know pretty much. So moving to a city where there’s things that you want to do, you have to get involved in that community in that city.

So, for example, moving or going to London and taking some lessons with somebody who’s in the theater industry, that’s the perfect way to get into that industry.

Mad Fientist: …because you said, they get a lot of requests to play. And obviously, they can’t do everything. So when they can’t do everything, they think, “Oh, who could do this? Oh, yeah, Brian, my student, because he’s amazing. And I know he’s amazing because I’ve taught him.”

Brian: Yeah! I mean a lot of the times back when I was in middle school and high school when I was taking lessons from the big guy in Charlotte, he would say that. He would say—not based off of my playing. He would say I’m easy to work with. That’s very important I think, being easy to work with. I would get a job because of that, because I show up on time, and I’m easy to work with.

Now, I would like to get a job because I’m good at playing too. But…

Mad Fientist: That’s something I’ve learned as well just in my career as a software developer. A lot of people can do the job, but a lot of people are just really terrible to work with. Like I told you before, you’re in the top 1% of drummers anyway. The fact that you’re not an egomaniac, and you are easy to work with, is going to make it an easy choice for a lot of people.

So, yes, we have talked about all the amazing musical things you’ve done, but we forgot that you were the drummer of Junk Star way back in the 90s, right?

Brian: Yeah. Yeah, that’s where it all started actually—North Carolina, Junk Star, circa 1998.

Mad Fientist: I don’t even know. No, no, because I was in middle school, and you were in elementary school. So it was my eighth grade talent show.

Brian: Yeah, I was in elementary school. Holy crap, yeah!

Mad Fientist: So, Brian was in elementary school. And he was our drummer. He came up to middle school for the big talent show. And we played a Nirvana song, I think?

Brian: Yeah, Territorial Pissings. We had to change the name because they wouldn’t let us play.

Mad Fientist: That’s right. We weren’t allowed to say the name, but we played it. And yeah, everybody’s like, “Who’s this elementary school kid that came up here and destroyed it on the drum?” So yeah, I forgot to highlight that incredible achievement.

Brian: I had a drum solo. I just remember I had a drum solo. And then you came around while I was playing my drum solo and started petting the back of my head. It made me screw up while I was in it. I said, “What is happening?”

Mad Fientist: It’s all about the performance.

Brian: It is a performance element. People just ate it up, yeah.

Mad Fientist: We sadly didn’t win. I think we were quite loud.

Brian: We got the loudest. I think we won loudest.

Mad Fientist: We were loud. And I was singing which was a big mistake.

Brian: Puberty, you were going through puberty at the time.

Mad Fientist: Yeah, it was squeaky. It was high anyway. Had I been pre-puberty , I think it would’ve been alright. But it was either borderline or after. And there’s no way I could scream like Kurt Cobain. So…

Brian: No. No, you couldn’t.

Mad Fientist: So, you’re thinking touring as a musician. Now, is that musical theater? Is that more in the rock band sort of area? Do you have a preference?

Brian: I think I like the professionalism of the musical theater industry. I mean with musical theatre, if you get an international tour or national tour or something like that, you get benefits. You get a retirement fund. I never had that. That would be super exciting.

And I love the idea of playing the same show every night and trying to get better at that, and then being in a new city with a group of people that you’re traveling with. I like that.

Touring with a rock band, that would be great, but I think that would be more of a struggle and less organized, less professional—not that it’s not professional, but less professionally oriented where I wouldn’t have retirement, I wouldn’t have health insurance from the rock band tour.

So, I’m happy to do either of those as long as I can maintain my life.

Mad Fientist: So, you’re tapping into your savings. You really haven’t made too much of a dent, maybe 15% or something so far. And it’s been a good 4 ½ months of living off of it. And I know you said to me that you’re thinking about maybe going part time when you go back to the States. So maybe talk about what your immediate plans are.

Brian: Yeah, I do need to get back, start practicing again, and start figuring out the actual plan for how I’m going to make what I’ve discovered here—you know, being here and enjoying how you live, how you guys live, you and Jill. After discovering that, I want to figure out a plan to make that work. And I think that will involve part-time work, so that I don’t have to deplete that savings. I don’t want that gone. I like the safety net of having that.

Again, like you’ve taught me, you have power when you have that safety. So, I don’t want to get rid of that.

Mad Fientist: Yeah, power and choices, definitely. So, I know you’re not really pursuing financial independence or early retirement or anything like that. But you obviously are good at money to be able to do something like this when a lot of your peers probably, as you said, are paycheck to paycheck.

So, do you have any advice for someone on the path to financial independence or early retirement?

Brian: I mean for me personally, I think the hardest thing about living in America is you get taught that your happiness involves acquiring things. It’s hard to look past that. But not spending money on silly things like gear and stuff, and spending money on life experiences and then saving the rest to get to financial independence I think is super important.

Yeah, that’s what I learned from listening to the podcast and reading your blog and stuff like that. It’s helped me. I don’t think I would have saved without you doing Mad Fientist stuff.

Mad Fientist: Really?

Brian: Yeah, I don’t think. No, no. I would’ve gone into debt.

Mad Fientist: Oh, really?

Brian: Probably. I think I probably would’ve just not cared at all about money and just, yeah, fared that way…

I never grew up with it, but it’s just something you see everywhere. So I think it would’ve been hard for me—

I see friends like buying the brand new Mac. And they can’t afford it. It blows my mind. And it blows my mind I think because I’ve seen how you work with money and you deal with stuff.

Mad Fientist: So, yeah, that just reminded me, you have been pretty cold in our apartment sometimes.

Brian: Yeah. Well, Jill, thank God, bought us onesies that keep us warm because we don’t use the heat that much.

Mad Fientist: So, my life obviously to me feels really normal. I guess when Jill question things, that makes me question them a little bit. But still, it’s not like I have that much feedback. So, is there anything else in my life that’s really quite extreme or weird or bad?

Brian: No. Yeah, the heating is weird, but I think that’s a Scotland thing. It seems like everywhere in Scotland, the heating is not great. But people tend to keep it on more I think.

That’s a funny thing. Going to Scotland, I never heard so many people be like, “Should we turn the heat on? Should we turn the heat on?” everywhere we’re going. In America, it’s just like, “Oh, the heat’s running constantly. It’s got to maintain the 72° temperature in the house, Fahrenheit.” But no, it stays pretty cold. That would be the strangest thing I’m thinking.

Mad Fientist: But the onesies have changed everything.

Brian: It changed everything in my life, yeah, yeah…

Mad Fientist: …which I’ve talked about this with Mrs. Frugalwoods. And that episode is going to come out after this one. So stay tuned for that. But probably the best investment that Jill has ever made, she bought it—Brian and I didn’t believe it. And we’re always freezing, and she was always warm because her parents bought her a onesie. So, she bought us onesies as a surprise. And they’ve obviously paid for themselves with the amount of heat we’ve saved. But the amount of enjoyment is just priceless.

Brian: Yeah. I mean, they look great. I took the last band picture I did for Love Drug, I used the onesie as my costume. I wish I had that back when I had no heat in my apartment. I used space heaters for five years in my apartment. So, if I had that onesie, I could have freed up one of my three outlets for something else.

Mad Fientist: Well, it’s been great. I really appreciate it. We’ve gone through three glasses of wine since we’ve sat here. I have been stopping the recording every now and then to refill. And it is getting cold. It is January in Venice which has actually been a really nice day. It’s nice and sunny as you’ll see in the pictures in the shownotes. But it is a bit chilly. So we are going to sign off.

So, yeah, I appreciate you taking the time to sit here and chat with me. And I look forward to your new interim music. I’ve commissioned my brother to add a little bit of jazz to my intro because I’m tired of just talking and not having any background music. So in addition to the brilliant 3-second intro, we’re going to have a little synthesizer background music hopefully to accompany my intro for the guests. Hopefully, we’ll get that done for this episode—which yeah, maybe we will.

Brian: Yeah, I appreciate you letting me live with you and feeding me. I appreciate everything honestly. It’s been great.

Mad Fientist: No, it’s been great. We’ve loved having you. So yeah, thanks for doing this. And so long!

Brian: Ciao!

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