011 - Welcome to the Hotseat

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Time Speaker Text Tags
0 - 2 Jonathan Mendonsa Alright Brad Welcome back to the studio.
2 - 4 Brad Barrett Hey Jonathan.
4 - 18 Jonathan Mendonsa So today what we're going to do this is the hot seat. This is something that we've been thinking about for a while. We're going to be having some guests coming up very soon. I think we have a mad fientist millionaire educator and Chad Carson and Mr. 1500.
18 - 21 Brad Barrett Yeah that sounds like a pretty darn good line up of financial guys.
21 - 25 Jonathan Mendonsa That is a decent lineup and I am excited about every single one of those.
25 - 59 Brad Barrett Yeah we. We want to make our guests experience here a little different than other sites. I mean other podcast certainly. Basically most people come on a podcast and they kind of just give their background story right. And you know you've heard many of the guests we've had you will have heard at other podcasts and we don't want them to just regurgitate essentially what they've said on all these other podcasts so you know we're going to take a couple of different aspects and one is really diving deep into specific articles they've written that we think are especially interesting.
backstory, podcaster
59 - 59 Jonathan Mendonsa Yes.
59 - 89 Brad Barrett So I think I think that's going to be a really cool angle which is you know find their best articles their most cutting edge thinking and really dive deep into that. So I think that's going to provide a ton of value to you out there. And another thing we're going to do is is this hot seat. So you know we're going to try to come up with a list. We have five questions now. You know that could change plus or minus but right now we have these five questions. And I guess what Jonathan are you going to do here is actually go through the hot seat for each of us.
89 - 134 Jonathan Mendonsa Yeah absolutely. And I think what Brad is saying is exactly what I was visualizing as well. You know these people have all been on different podcasts and they've all told their story and while obviously we will need to introduce him to you. We're not going to spend as much time on that will direct you to their Web site will direct you to the other podcasts that they've been on so you can go back and hear their stories. But they have. They have such good ideas. And if we can just dig down and have them coach us through their thought process maybe we can get one or two ideas that we can incorporate in our own life. And so that's exactly what I'm excited about as well. And so they'll probably come on multiple times because these are people that have spent thousands of hours researching and coming up with these different articles and we're not going to cover it all in 20 minutes but because it's not just a simple interview. We can have them back and have them talk about something else.
134 - 183 Brad Barrett Yeah and I think another thing that we have planned is kind of like a we're calling it a FI round table so if financial independence roundtable and we'll you know we're personal friends with many of these people. So you know we can one day get you know the mad fientist and Carl from 1500 days and you know have them Skype in from their locations around the world and have Jonathan and I sitting here chatting and you know the four of us can just shoot the breeze and talk about you know what's going on in our lives any kind of particular financial financial personal you know whatever is interesting to you guys. And what's interesting to us you know and what we want to talk about I think that'll be a really different perspective as well just to hear people kind of just talk this through and you know we're not going to prepare for it. We're just going to say you know this is the topic of the day and let's go to town.
183 - 235 Jonathan Mendonsa Yeah absolutely. And you know if you want to be a part of that and you want to have some input in what sort of stuff you would be interested in hearing about. Brad I have an ethical bribe currently outstanding on our Web site. And basically what we put out to our community is we want to get to 50 written reviews on iTunes and once we get to 50 written reviews on iTunes we're going to add this voicemail feature on our Web site where if you have an idea that you would like to have discussed by thought leaders in the space you're interested in. You can go and leave us a voicemail and then we will actually find the experts bring them on and we'll talk about that specific topic so if that's something you're interested in and you would like to see that happen just go to iTunes search for choose FI. Go to ratings and reviews and then leave us an honest review hopefully five stars. And you know so many of you have already done that. We really appreciate it and we're excited that we're going to be able to offer this feature for you.
235 - 251 Jonathan Mendonsa OK choose FI fans. Brad and I are unpacking a brand new segment today called Welcome to the hot seat. Brad let's go ahead and cue up the epic music score.
251 - 280 Speaker In a world drowning in debt and rampant consumption. Trapped by the chains of lifestyle inflation. These questions highlight the secrets of those who have broken free. Welcome to the choose FI hot seat.
280 - 397 Jonathan Mendonsa OK I got to say that was freakin cool. And I want to give a shout out to the guy that we have that does all of our voice overs. I've had a couple of you ask me who does that. And I use fiver for the voiceovers. I'll include a link to his profile. He goes by Spike real. He has this incredibly awesome Don LaFountain gravelly type voice does amazing work gives you a very quick turnaround time and is always open to revisions. So you know if you need somebody to help you do a voice over for your project he's on fiver very very reasonable rates and so you guys definitely should go check him out again. That is Spike real on fiverr and this might be a great place for me just to segue and say that a choose FI we really aren't not necessarily just focusing on focusing on one aspect of financial independence. We believe that you should be plain like Dr. Thomas Stanley from Millionaire Next Door says we think he should be playing offense and defense. And so yeah we're going to teach you all these different life hacks to decrease the cost of your life. But then we're also going to encourage you to start playing offense as well and increase your income. And Brad and I are both big believers in starting a side hustle or a business on the side and we have obviously put a lot of time into our own businesses and we've learned a lot of stuff on the way and we want to share that with you to speed up your process to financial independence but also in the short term to help you get your business up and rolling. If Especially if you want to create something in the fields that we're familiar with like creating passive businesses online so we're going to include all sorts of really neat resources to help you do that and give you little tips along the way. And the one that I was telling you about today is just you know if you decide to do a podcast. Definitely definitely look into getting someone else to do your voice over for you. And and Spike Real does a great job.
hustle, lifeoptimization, passiveincome, podcaster
397 - 406 Brad Barrett All right so let's get to the hotseat And I think I'll start here which is. Jonathan what's the favorite. What's your favorite blog that you're current currently reading.
406 - 451 Jonathan Mendonsa Yes so what I do a lot of is I constantly need to come up with new ideas and I'm always trying to learn something. And I've been digging through actually Mad Fientist stuff recently partially because you know we're going to have them on this podcast in the next you know month or so. And I realized he has so much good stuff that I just didn't even realize was there and one that I'm really enjoying right now. I've been a big fan of his HSA articles HSA hack for a while. I told A lot of people about that. It is very very cool once you realize the possibilities. But this one called the triple value of income is just fantastic so yeah mad fientist he has a podcast but he also has a lot of great content and if you haven't gone on to his website to explore his content you really should because there's a lot of great information there.
hsa, podcaster
451 - 470 Brad Barrett You can really dive deep into the articles. I know he's in the middle of redoing his site and making it easier to find some of his or older articles which are still pertinent today. But you know in the time in the meantime you can just kind of go through cycles through his old pages and really dive into that stuff it's brilliant content.
471 - 474 Jonathan Mendonsa So Brad what is your favorite blog that you're currently reading.
474 - 520 Brad Barrett All right. So my reflexive answer is always going to be Mr. Money Mustache. I think that's that's kind of my favorite blog of all time. But I guess what I'm currently reading now is frugal woods. OK. So you know I've met Liz from frugal woods at fincon a couple of times. We've know become become friends and she is just a brilliant writer and you know so I just love literally reading what she writes. I think it's so well-done and beautifully crafted and I think also the fact that they have recently moved to their homestead in Vermont is especially interesting to me. It was it was interesting while they were you know quote unquote frugal weirdos and living in Cambridge Massachusetts. But you know now that they've actually.
520 - 522 Jonathan Mendonsa They've literally gone off the reservation.
522 - 532 Brad Barrett Yeah I mean they have done it. You know and they pull the trigger even years before they thought they would. So it's a cool perspective and I just love seeing what they're coming out with.
532 - 535 Jonathan Mendonsa So Brad what is your favorite article of all time.
535 - 622 Brad Barrett OK. So I'm going to cheat and give you two answers. The most influential thing that I've ever read was The stock series by Jim Collins. Yes. JL Collins NH dot.com and you know we'll link to this in the show notes certainly which you can always reach at choose F-I dotcom and stock series. Just changed my entire investing life so that without a doubt you know it made me realize the value of index funds how consequential it is to cut down on your fees your expense ratios on the mutual funds that you're buying. And just you know what an impact it can make over 30 to 50 years over an investing lifetime. So you know that clearly without question is is the most important thing. The other I have a few for Mr. Money Mustache the biggest one is how to go from middle class to Kick-Ass. OK. So in this article Pete has a really neat little chart where he has every category that they spend in life essentially it's you know just from scrolling through this really quickly it's got to be easily what 30 30 plus categories and he has a column for middle class which is what you know every bozo out there appears right you know he has cars as he calls it on the auto fleet. You know he has some really snarky things in here.
622 - 634 Jonathan Mendonsa I love that bombastic way. And I think that's what's made America fall in love with him so much even though he's telling them that they're idiots. I think it's that bombastic way of writing that's just so unusual and just engaging.
634 - 727 Brad Barrett Yeah. No doubt about that. That is that's his thing. Yeah and you know just seeing. Ivy League child activities some of these categories are absolutely hilarious. Another one that Laura and I have always joked about is the voluntary ownership of multiple large animals. I think that we we've probably repeated that 50 times in our house. It's just you know we're not animal people in fairness But anyway so yeah. Right. And Jonathan's dogs lovely. So you know he is middle class. And then he has Kick-Ass and it just you know you scroll down and then he has some some notes or comments and you scroll down and you see you know what the lifestyle is for the middle class family. And it's you know on this article it's almost $120000 a year whereas the kickass version is 36000. And that's just you know as he says it's I'm goint to quote here it's just by switching from the typical high income families spending to the slightly less ridiculous yet still luxurious level spending that comes as part of adopting a more mustachian lifestyle. This typical family was able to reduce its annual spending by over 82 thousand dollars a year. That's crazy right. And you know there are and you know you go through each of these and you say wow that really would not be that hard to do. So you know sometimes I sit back and say how are we saving this much money and everybody else isn't. And you can see it perfectly in this chart. It's the most important thing you'll read in this year.
highincome, midincome
727 - 770 Jonathan Mendonsa Absolutely. And if you want the links to the two that he just mentioned you can go to choose F-I dot com slash 0 1 1 and that will continue our show notes and down on the bottom we will post links to all the blogs that we mentioned and the specific articles that we mentioned including the mad fientist article and the JL Collins stock series and money mustache articles also for the JL Collin's he just recently published a book which is now available on Amazon and I have my copy of it courtesy of the mustache camp that we just recently went to. And I highly recommend that for you and if not for you if you have a child son or daughter or someone that's generally interested in finance but is not really a Web site person that you buy them a copy of it and if you're interested in that link that's also on the show notes as well.
770 - 788 Brad Barrett Yeah. The book is called the simple path to wealth and I'm actually reading it right now. Even though Jim gave me an advance copy before he published it. You know just seeing it in you know tangibly in your hands it's just a fantastic book so highly recommended. So Jonathan what is your favorite article of all time.
788 - 875 Jonathan Mendonsa Yeah. Also a mustache article. Thus the shockingly simple math of early retirement. That is just a mindblowing article. And basically he just did what no other person seemed to be able to do before him and just realized that the stuff that you have is actually owning you the stuff you own is actually owning you and it's adding time onto your retirement. And basically just by looking at your savings rate he is able to predict exactly when you can retire and then every single recurring expense that you have is extending that. And so by putting those two concepts together you start to realize that every single time you have a recurring expense you're going to have to work longer before you can retire and if you add then you can make a value choice on whether or not you really need that object in your life or not and if you decide that you can live without it then now suddenly you can retire sooner or at least you can be financially independent sooner. That's the first time I'd read anything like that all the other people that you know you've read on the internet or that we're talking about we're talking about how to invest so that when you are 60 you could then have the option to retire. Nobody was talking about this idea that you could use the exact same math and get your freedom free life in your 30s in your early 30s early 40s. And so it just completely blew my mind and it's definitely my favorite article. I know it's one that's loved by many many other personal finance bloggers that are out there.
blogger, hotseat-post, savings
875 - 878 Brad Barrett Yeah. Jonathan and I actually fought over this as are our favorite article.
878 - 880 Jonathan Mendonsa We both wanted it.
880 - 955 Brad Barrett So I think in conjunction with the from middle class to kick ass article the shockingly simple math is is absolutely essential if you read those two you get a really read introductory concept of mustachianism and what you know Pete is up to over at Mr. Money Mustache. And really it makes you just see the world differently. Right. And there are not many things in life that that you can read in 10 minutes and really really come away with it completely different perspective on life. This truly is one of them. And you know it makes you realize you know for many people they just assume that they have to work until 65 and even then you hear in the media all the time how insecure people are with their finances at 65 and how they can never retire cetera. It doesn't have to be that way if you actually save money and you can do that by using the middle class article. It doesn't have to be that difficult. You can save 50 percent of your money with just a few life hacks. Right. And if you're willing to change and then you can you can take back control of your life in your 30s. Or you know 10 years from wherever you are if you're if you're listening to this when you're 50 you know eight years from now 10 years from now you can be financially independent and not have to work into your 70s or 80s like you know unfortunately many people do.
955 - 963 Jonathan Mendonsa Yeah. No absolutely. All right. Let's see next Brad. Favorite life hack.
963 - 999 Brad Barrett All right. This was very difficult for me. I have a ton but I think the thing that jumps out to me first is actually using the password manager called last pass. It does multiple things at once. Essentially it makes my all the Web sites that I have much more secure as opposed to like you know most of you out there you know we all hear about password security and you know and that's fine. That's all well and good. You don't think you're going to get hacked. Right. But and you have the same password that you use on dozens and dozens of sites.
999 - 1001 Jonathan Mendonsa Password one two three four.
1001 - 1003 Brad Barrett Right right.
1003 - 1006 Jonathan Mendonsa Or some combination of your dog's name and your parents date of birth something like that.
1006 - 1060 Brad Barrett Yeah exactly and you know most of our financial lives. And you know I mean my businesses my web sites you know these are all online so I mean password security is essential and this allows you to really up that level. I mean you can have 30 50 character passwords and you don't need to remember them they're stored in last pass very securely much more securely again than having this dopey password that can be hacked very very easily. And Jonathan is actually a huge fan of last pass so he's going to jump in on this in a minute. But you know I can say that you know it enables me to put in dual factor authentication on on my last pass so I literally have this grid that I print out that I bring everywhere. So even if someone stole my last past master password I physically have this grid that I I kid you not a cart with me everywhere in life and you know nobody's getting into into that without this grid.
1060 - 1062 Jonathan Mendonsa I didn't know about the Grid. I need to look into the grid.
1062 - 1072 Brad Barrett Yeah it's awesome. I'll show you afterwards. There are a bunch of dual factor authentication methods for last past that you know are probably a little more sophisticated than the grid but I like it.
1072 - 1102 Jonathan Mendonsa I couldn't go anywhere without this I mean I'm I have easily upwards of 400 individual unique passwords now and you know at some point back in the day I remember writing them in a little book I think I still have the book somewhere with just a few of those passwords written down. But it's exceeded my ability and when you have a unique one for everything it makes it you know very safe. But unmanageable from a. From a keeping track of it on a document and then if you put it on an excel file you know you're also being a little bit risky as well.
1102 - 1136 Brad Barrett Yeah I agree. And you know I read this book that we'll link to in the show notes. It's called future crimes by Marc Goodman I believe it is. He was a FBI cyber terrorism and you know dealing with with all these hackers essentially and it is the most frightening book you will ever read in your entire life essentially like how easy it is for hackers to get into everything and you know one of his low hanging fruit type ideas to make yourself more secure is to get a password manager like last pass or one password. I think the other one that he recommends.
1136 - 1137 Jonathan Mendonsa I've heard of that one too.
1137 - 1139 Brad Barrett So yeah Jonathan favorite life hack.
1139 - 1163 Jonathan Mendonsa Mine. You know if it's not going to be last pass and I use that one multiple times day it's a really really good one. Mine is probably just ditching the cable and never buying DVDs. If you take me into your living room and show me your really awesome DVD collection I'm going to congratulate you and say oh that's really cool but what I'm really probably thinking is that there's a lot of money tied up in something that you're not going to be able to use five years from now.
1163 - 1178 Brad Barrett And I'm thinking oh my god what a moron. Why are you spending thousands of dollars on a DVD. It's the same thing like when someone shows me their brand new car. It's oh you congratulate them and then you think wow that was really incredibly stupid. But anyway I don't want to jump on stage.
1178 - 1235 Jonathan Mendonsa Yeah I know. I finally you know I think at some point when I graduated and got my job and was making you know an income I was like oh great now I can get cable because that's what you do. Right. And then somewhere along the way I realize I'm paying $150 a month for something that I was never watching. You know I didn't have time to watch it or when I was watching it it was on TiVo or DVR or whatever else but it was like one or two shows and I said this just doesn't make sense this is stupid why am I doing this well it's because everybody has cable you need have good cable or else you're not cool. And then once I separated myself from that I said this is ridiculous and ditched it. I haven't looked back. And you know I have you know Amazon Prime and Netflix and things like that. And America is moving to this model of actually more and more just paying for what they want to watch not just paying for everything but that for me was a huge life hack and you know what you will actually survive without cable you don't really need it you don't need to pay someone $150 a month for the courtesy of pumping commercials into your home for eight hours a day.
1235 - 1244 Brad Barrett Sounds about good and I totally totally agree and yeah that's something we've we've gone towards as well as you know cutting the cord and just kind of dealing with Netflix and Amazon Prime.
1244 - 1247 Jonathan Mendonsa So that's probably the bullet point my favorite. Life Hack cutting the cord.
cordcutting, hotseat-lifehack
1247 - 1253 Brad Barrett Yeah. All right. Jonathan your biggest financial mistake.
1253 - 1302 Jonathan Mendonsa OK let's see. I have done multiple things I've taken out loans more than I needed to. Not realizing that you do actually have to pay them off. Probably the one that stands out to me the most is actually paid for a car cash on Craigslist and I paid $9000 for it and it was a turbo engine. And then within a couple of months it started to have some problems that it will cost me three grand effects. So now I'm 12 grand invested in it. And then I drove for a couple more years and then I then started had the exact same problem so I sold it for like $1800 or sign of losing like 10 grand on this one vehicle within like a two year period it was a particularly painful for me. And I've learned from that but that was
college-loans, debt
1302 - 1311 Brad Barrett Yeah that's what I was going to ask. You know obviously that sucks to lose that money but you know was this just bad luck. Or was there something that you could take away that you could give to the audience as an actionable tip.
1311 - 1314 Jonathan Mendonsa You know there is a strategy there I think.
1314 - 1315 Brad Barrett If it's beyond the scope of this.
1315 - 1334 Jonathan Mendonsa Beyond the scope we're going to have an article on the true cost of car ownership. And if you're interested in that I want to know how I think I could have done it better. That's our long conversation that I'll walk you through using some of my mistakes and then what I would do differently. But that was that was a 10 grand mistake right there. Brad what was your biggest financial mistake.
1334 - 1437 Brad Barrett All right. This is not even close. For me the biggest mistake that I made. And honestly I'm actually still still dealing with this which is pathetic. But we at the very very height of the market we bought what we thought was an investment property and it wound up it was undeveloped land in this like kind of a country club ish development down in North Carolina. And you know we got we got greedy. We had you know in the year before we had kind of flipped one of these. And made you know I forget 10 20 30000 bucks something like that. But you know it was in hindsight it was completely obvious that there was this bubble. And you know we should have run you know as far and as fast as we could. But we doubled down and we bought a second one of these properties. And you know we literally still have these things and they are worth a tiny tiny tiny fraction of what we bought them for. We still have loans on them so you know Jonathan talks about a $10000 mistake. I mean this is it's almost incalculable how much money we've wasted. I mean literally if we never went to North Carolina to look at these properties I would have been financially independent. 100 percent you know years ago. So this was you know luckily we live such a frugal life and you know we have such a high savings rate even with this mistake. And you know this is not something I've talked about publicly I don't think ever before. But even with this mistake we've been able to do pretty darn well for ourselves. But man if we never went there it would be. I mean you know unfortunately probably when compounded and all this other stuff it's public it's going to be hundreds of thousands.
debt, savings
1437 - 1438 Jonathan Mendonsa Yes. So lightyears worse than mine.
1438 - 1439 Brad Barrett Yeah yeah. That's worse than.
1439 - 1440 Jonathan Mendonsa It makes me feel better.
1440 - 1445 Brad Barrett Essentially anybody. So hopefully 2017 is the year we kind of figured this out once.
1445 - 1447 Jonathan Mendonsa People try to learn from other people's mistakes.
1447 - 1453 Brad Barrett Yeah. Yeah. If it's too good to be true you know if it seems too good to be true it probably is.
1453 - 1458 Jonathan Mendonsa Maybe it's a tie in knowing what you know now what would you tell your 18 year old self.
1458 - 1463 Brad Barrett Yeah well don't ever go to North Carolina. Don't ever set foot in the state.
1463 - 1466 Jonathan Mendonsa And there was our last visitor from North Carolina.
1466 - 1535 Brad Barrett Yeah. So you know I mean I think it actually ties into a lot of the stuff we talked about already which is retiring early and financial independence is real and it's really not that hard when you look at the mouth. I think it's you know I have a lot of answers to this. You know I think a little bit differently. Think outside the box. Right. I think you know I was kind of always on that path of you know ultra elite college you know great job. You know the best accounting firm in the world. You know I thought I would stay there for years and become a partner. You know all this other nonsense that you know I quickly realized once I got into the real world that that was not a path that I was interested in. So you know for me it would be just know that you can you can outsmart the system essentially. You know if you will that sounds a little nefarious but you can if just by being a little bit smarter than the next guy. By following the advice in the you know from middle class to kickass article and by saving as much money as you can you can control your life by your by your 30s. And that's that is just such a powerful concept so I mean that clearly is what I wish my 18 year old self knew.
Brad_Catchphrases, college
1535 - 1653 Jonathan Mendonsa That's fantastic. And I think I really do have some actionable ones here. I think one of the things that I wish I had had as an 18 year old was direction. I wish I had had a model to follow like I you know like a step process that if you do this then this. That's what I feel like I didn't have the courage to figure out on my own at the age of 18 I didn't know how to ask the question and get the answer. And so I think if I were going to talk to my self I would kind of lay out for them a 10 year plan of what they can do and if they did it what the upside would be now they could choose to do it or not do it. But you could say this is what it looks like. And so you know maybe I wish that I had maxed out my Roth the first time I had a job or that I'd save 50 percent and put it in a Roth and I worked out some deal with my parents why I want to talk to them I said look I'm going to do this and this is I think this is a really good smart financial move. And if I do this we all match what I'm putting in there. You know something like that and then that money that I saved me maybe then I would have had that to then put in for a down payment on my first house and instead of just getting a house for myself maybe I would have gotten a duplex and rented out the other half and started some sort of real estate thing on the side just at an early age. Those are the things that I just didn't even know were options. But other people were doing I think I could have done college a little bit smarter and I would have started designing the life that I wanted a little bit earlier I would have had different questions that I have now. I'm pretty satisfied with where I am now and where it where things are going but only recently did I started learning stuff and applying it to create a business with it. And you don't need to be 31 years old to learn the answers to the question that I'm learning right now you could learn these. You could ask these questions and find these answers at the age of 12 13 14 15 16 17. You know the Internet has this unbelievable resource and I think the questions that I had at the age of you know 15 to 20 were kind of dumb. And you have the right to be dumb when you're in your teens. You know we all do that but maybe if I had known what the upshot would have been to learning some of the answers to those questions I would have started a lot earlier.
college, househacking, landlording, roth
1653 - 1726 Brad Barrett And I think Jonathan's statement of designing the life you want to live is especially interesting. That definitely resonated with me even when he was mentioning it. A buddy of mine Dominic Quartuccio he has a new online business where he's actually helping people design that life and you know not to plug him but it's just something that's been in the back of my mind recently because he's you know that and kind of live events which you know we went to camp mustaches Jonathan I mentioned and my buddy Dom is having a live event as well about designing that life that you want to live and what you need to do to get from here to there. And I think that is really important. You know it's easy to focus on the financial independence aspect of this but you know as J.D. Roth mentioned you know and had us run through this program during camp mustache really figure out what do you want to do with life. I think that you can't lose sight of that. You know that's that's really the end of the rainbow here is. What did you do when you have time. What do you do when you can have that life that you want to live. So you know that's kind of my parting thought is you know you've got to always keep that in mind here. So I think that's that's crucial.

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