Four things I’ve learned from reading Set for Life by Scott Trench
I’ve thoroughly enjoyed reading Set for Life by Scott Trench, the book summarizes key points based upon the Financial Independence Retire Early (FIRE) movement and was easy to follow along with. The book contains a wealth of information of which I was able to learn from and apply to my financial situation. Among all the chapters I’ve read, below are just a few key points which I would like to highlight that have shaped my view on achieving financial independence and my families personal experience with struggling with it.
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Time as a resource/Expensive habits
Time is the most expensive resource you have. It is finite and if used wisely and early on, can help you multiply your resources and opportunities. If used unwisely, it will be lost forever and limit the potential of your investment returns. This comes down to how you value your time and staying focused on spending that time for things that matter the most to you. Reading this section was very helpful for me to assess where my priorities are and using my limited time accordingly every day in a responsible manner.
My priorities are:
1. Serve my wife as her husband, to think of her first in all things
2. Be a father to my child, to raise her in a loving and stable parenting environment
3. To serve the community around us
I believe reaching FIRE will free up that time for us in the future so I can do these things at will instead of being obligated to work long hours until typical retirement age (67+).
With that in mind, I’ve realized my expensive habits that are not based on spending money really but spending time. A few of my shameless time expensive habits include watching Youtube/Netflix for entertainment (not educational), and playing video games. These are huge time sucks and ultimately do not contribute at all towards my priorities, instead are purely there to satisfy my desires to be distracted at the moment.
Reading Set for Life has led me to rid myself of these distractions and focus any spare time (the limited amount of time not already spent on my priorities) on learning more about financial literacy and then taking action on those ideas.
Since then I’ve learned to use my time wisely, that it either contributes to my priorities or to helping me learn something productive to help us reach FIRE. I’ve been reading 4-hour work week by Tim Ferris and Miracle Morning by Hal Elrod, both of which have changed my perspective of how I should be spending my time and building productive habits to aloow me to focus on obtaining my goals.
Bad debt and financial runway
Everyone should prioritize getting out of unhealthy high interest debt (student/car/personal loans) as soon as possible and then save enough of your capital in liquid assets for 1 year and then 5+ years. We should not be living in a mindset to be in debt constantly. Debt (specifically bad debt) hinders you, obligating you to pay it back and not spend that time and money on opportunities when they appear. Eventually if left unchecked, living in debt will constantly stress you and incur you to get into further debt. The idea of being in debt will normalize and the scope of your lifestyle will continue to scale as you make more and more money.
I’ve struggled with bad debt in the past and it has been a humbling experience for me. To not have enough money to purchase a plane ticket home (spent it all on a new laptop and clothes) before going on deployment and asking for my parents to pay for that ticket instead. I was embarrassed and ashamed to be considered a grown adult ready to go off to war but not have the foresight to save enough to go home and instead spending it on lavish luxuries. That moment was a learning experience for me on my financial literacy journey, to be responsible for myself financially and know the results of my actions.
After removing bad debt, the next step is to build a financial runway to sustain yourself for 1 year and then for 5+ years. This means to have an emergency fund to cover all your necessities (rent/mortgage, utilities, food) initially for 4-6 months but then for 1 year and more. The majority of the population is living in debt and from paycheck to paycheck. Do not be the majority, instead build a financial runway of 1+ years so you don’t have to be stressed if your job situation changes. Having a financial runway removes that level of stress in your life and gives you flexibility to take time off or take opportunities when they appear.
Invest for cash flow now, not later
If you want to achieve FIRE, you have to find ways to invest your capital in liquid assets now instead of putting it into your retirement accounts. The key here is with the FIRE mindset you are actively using your capital to grow your assets to obtain many streams of cash flow earlier in life in order for them to mature naturally over time so you may start using that cash flow to retire earlier in life. This runs counter to the majority mindset of putting as much money away into your retirement accounts and preserving that capital so you can use it later. For me, growth is more important than preservation. Of course this will depend on age and how close you are to actual retirement.
Scott Trench’s thoughts on this have changed my perspective of retirement. No longer will I simply set aside funds to my retirement accounts (besides meeting company match, always take advantage of that free money) and hope to live off of it when I retire. Instead I will learn to use my investment resources wisely now to build multiple streams of cash flowing income that will benefit me now and into retirement. I will do this via purchasing rental properties, dividend stocks, online affiliate marketing businesses, and anything else I can learn about that will provide me with passive income (income that continually provides cash flow without me taking direct action each time). The key is to use time to your advantage to do this earlier in life and let it’s results compound over decades.
As an analogy to help portray this, would you rather use the time you have now to grow your income by having as many golden geese as possible or are you trying to preserve your retirement by having one big golden egg. Which do you think is riskier?
Scott Trench states to stop thinking you need the “best”, more often than not quite good is sufficient. Stop wasting your time and resources to get the best, do a good enough job and reclaim that time for more important matters.
This mindset has led me to get the best value out of my time, to produce good enough work and then moving on to another area of my life that I can work on. Most times producing the “best” work will require substantially more time and the level of effort to get there will drain you and is no absolute guarantee it will be considered the best level quality to others. The return on investment of time spent for good work should be weighed against the time spend for best level work. I believe it is more important to scale your time to produce many good enough level work instead of a few best quality work. Don’t waste your time on trivial decisions, just make it and move on.
I’ve applied this to my strategic mindset in investing. When investing in stocks, although I can do due diligence and study up on each company, read their quarterly 10-Q, research their P/E, and speculate on future performance, I have to realize the big picture of how much time am I spending on this.
The big picture is to get good enough returns on your investments, and then shift your time and attention towards other opportunities. I will still do some level of research on stock picking but have not shifted towards relying upon other people’s time and research to make my decision. Let other people use their time to deep dive into stock research and then make a decision from it. This is for picking individual stocks. If you want to spend even less time, simply choose a S&P 500 index fund or other any other fund (I’ve been following Joseph Carlson on YouTube who has well crafted Dividend Growth “pies”) that provide 8-10% returns yearly. There is no need for you to spend the majority of your time researching every stock when in the end you simply want to get a good enough return.
Where do I spend the rest of my time (limited investment time that is, besides taking care of wife/baby/community)?
Studying up and acting on other investment opportunities which are rental property/BRRR method, online affiliate marketing, and print on demand merchandise.
I’m excited to take the time to learn and act on all of the above to see where else I can scale to get more passive income now while I’m younger. I’ve learned time is the most critical resource, don’t waste it away. Stay focused and use it wisely towards your family and community. The FIRE model will be the mindset to ultimately get you more time back, away from trading your time for money.
The little things don’t matter too much
Tackling expensive items in your budget is more important than the little things. Get your rent/mortgage/car payments/loans to an absolute minimum. Place all your priority to limit how much you are spending on expensive things that do not generate any cash flow back to you. This will net you much more money back instead of cutting back on getting that coffee and croissant every morning. Be frugal starting at the top of your expense list first and then work your way down.
I’ve learned to apply this towards the cars we own as a family. Coming into marriage, I’ve owned a nice new luxury AWD European sub-compact sedan with all the pleasantries for a young bachelor at the time. As my wife would attest, I loved that car and it was great for us when we were dating. I didn’t mind the high cost of maintenance for a luxury vehicle and enjoyed being able to be seen driving the vehicle.
But with a baby on the way and learning about FIRE, my priorities have changed and I recently sold the vehicle for a more suitable larger and non-luxury brand. It didn’t make sense to me anymore to pay for something that will cost me so much in maintenance and upkeep. Luxury cars are nice but in the end are a complete waste of money, I know that now. Cars represent the epitome of a liability, the majority constantly depreciate in value and do not give any cash flow and instead costs you more and more money to maintain.
Another recent experience I’ve had involved my wife and I arguing over getting a monthly Spotify account. My wife wanted to have that account in order to access playlists posted by our community, and enjoying those playlists during the delivery process. Me, being the logical and more frugal personality in the relationship balked at the idea of getting another paid monthly subscription when we already have one other similar music subscription. I failed at letting my emotions of extreme frugality and idolization of FIRE overcome me and interfered with hindering my priority to serve my wife. I did not think of how much pain and distress my wife will go through in delivery and how simple pleasures may in any way help alleviate some of that stress. So we’re getting Spotify, I realized there is a 1 month free trial anyway…
Learn from my mistakes, make sure you and your partner are on the same page on big financial items and don’t let the little things hinder or jeopardize your relationship. Fights over money are a common theme in marriage, be on the same page towards FIRE together and don’t let it ruin your marriage.
Set for Life has been an amazing read, improving my mindset on many areas of my life that can me and my family achieve FIRE. I hope I was able to capture your attention and give you helpful insight towards just a few topics from the book that may help you in your FIRE journey.
Have you read the book, what are your thoughts? Are there any experiences you want to share? What other books do you recommend for us to achieve FIRE together?
Leave a reply in the comments below.