BiggerPockets Money Podcast

BiggerPockets Money Podcast 148: How to Become an Everyday Millionaire with Chris Hogan

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Chris Hogan joins Scott and Mindy today to chat about becoming an everyday millionaire.

Chris and his team interviewed more than 10,000 millionaires to hear how they did it. Hard work, determination, spending less than you make, investing wisely, and eliminating debt.

Chris shares how to discuss your finances with your spouse – and how to bring them on board when you have differing views about money. He talks about the emotional journey that debt paydown can take you on – and how to handle that so you come out on top!

Chris also reveals his feelings about FIRE – and how there is too much focus on the RE and not enough on the FI. He wants you to become Financially Independent but also wants you to enjoy your journey.

Chris firmly believes that anyone can become debt free and start to build wealth to become an Everyday Millionaire.

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Mindy:
Welcome to the BiggerPockets Money podcast show number 148, where we interview Chris Hogan from The Chris Hogan Show, yes, that Chris Hogan, and hear how you can become an everyday millionaire too.

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Chris:
Getting out of debt is intense, and it’s a short period of time and you can see the enemy. With building wealth it’s not necessarily an enemy, you’re chasing a dream and so you got to be able to see it, you got to be able to tap into it, you got to believe that you’re worthy of that.

Mindy:
Hello. Hello. Hello. My name is Mindy Jensen and with me, as always, is my jubilant co host Scott Trench.

Scott:
Always a joy to hear your intros Mindy.

Mindy:
Scott and I are here to make financial independence, less scary, less just for somebody else and show you that by following the proven path, you can put yourself on the road to early financial freedom and get money out of the way so you can lead your best life.

Scott:
That's right, whether you want to retire early and travel the world, go on to make big time investments in assets like real estate or start your own business, we'll help you build a position capable of launching yourself towards those dreams.

Mindy:
Scott, I am super excited for today’s guest, it is Chris Hogan, the Chris Hogan from The Chris Hogan show from The Dave Ramsey show from the book Everyday Millionaires and I am so excited to talk to him.

Scott:
Very excited to interview Chris Hogan today. Chris has a very tight knit and well thought out robust philosophy around building wealth. You’re going to be familiar with some parts of it if you’re familiar with Dave Ramsey at all and look, I know that there’s a little bit of controversy within the FIRE community about whether some of the debt free approaches that are espoused by the Dave Ramsey community and Chris Hogan but I think frankly, that if you’re not willing to listen and learn from these guys very thorough, well designed, well thought out philosophy around wealth building and finance that you’re missing out and I think it’s an absolute privilege to have Chris here today and learn from him and I admire the results of their program that they’ve achieved for so many millions of people.

Mindy:
You really can't argue with their results and like I say every episode, personal finance is personal. This is an example of living your financial life without any debt, here's how to get out of debt, here's how to start building wealth and like I said before, a personal finance is personal and this is his personal take. He does not like debt. There are a lot of people listening who also don't like debt, frankly, I don't like debt. I don't love that I have a mortgage, but I choose to have a mortgage, so that I can use that money in a different way because like he says a little bit later in the show, "Money is a tool." I use the tool in a different way that he does, it doesn't mean my approach is less valid than his, it doesn't mean that his approach is less valid than mine, they're just different approaches. Chris Hogan from the Chris Hogan show, welcome to the BiggerPockets Money podcast. I'm so excited to have you today.

Chris:
Well, thank you. Thank you. It’s a pleasure to be with you all.

Mindy:
We have actually met before I’m sure you remember, we were at FinCon together with 2000 other people so.

Chris:
Well, it’s good to see you again.

Mindy:
I’m sure you remember. So Chris, you have a book called, Everyday millionaires where you conducted a study of over 10,000 millionaires to figure out how they became a millionaire and what I really identified within this book is, that it isn’t winning the lottery or getting generational wealth, inheriting your money, it’s making it yourself doing it yourself, investing in yourself and growing it yourself. How does somebody start when they have come from a place where they don’t know anything about money?

Chris:
That’s a great question. And I think the first thing you have to do, the start point, is to believe that it’s possible for you and I say that, because when if you don’t believe you can, you won’t and so the mindset around it and understanding the reason… We did the largest study of millionaires ever done before was to really break down a lot of myths, to be able to help people see it and understand it so they can then choose to believe that they can, then the next step is grow your knowledge about money, how does this stuff work? What are the things you need to do? And then the third aspect of it is, taking action and so really to sum it all up in one word, how does someone start? Intentionally. Very intentionally?

Mindy:
Yes, I love that. I love that. One of the big questions that we get a lot from people who listen to the show is that they listen but their spouse doesn’t. They’re on board, but their spouse is not. How do you get somebody on board who feels… I mean, the whole thing about, we have to fix our finances, we have to get out of debt, when I am not ready to hear that, that tells me, I have to cut out everything that’s enjoyable in my life, I have to stop doing anything fun, and just buckle down and have a horrible, horrible life.

Chris:
And it’s just not true. I think the first place to start, as I’d advise people, is start from the heart and what I mean is, is don’t jump off into a litany of things that we’re going to do, don’t jump off into a whole lot of things that need to be stopped being done but start with the heart and what I mean is, ask people about their dreams and goals for themselves and if you have kids, start talking about your dreams and goals for your kids. See, I think the best place to start are on things that unify you, not things that divide you and so ask questions of your spouse about their dream and we’re not judging it in this conversation, I just want you to hear it and I want you to hear it not through your ears, but through your heart.
What does it sound like? Does that sound like encouragement? Does it sound like excitement? And then ask questions to get them to open up. You see, we naturally ask questions that are closed in, those questions where you say yes or no, I want people to start to learn how to ask questions that are open ended, that get people to say more and talk more about what they’re feeling. So I think starting with the dream is the best place to start.

Scott:
What do you think are some of the emotions that millionaires feel around money besides other than believing it’s possible? What do you think that why is? Or that dream is? Is there a unifying vision that these folks have?

Chris:
Well, so many of them are so intentional, not just with their money, because they’re intentional about their goals in their life. They’re very intentional about what they want to leave to their kids or their grandkids one day, they’re extremely intentional about what they’re doing day in and day out so life doesn’t just happen to them, they happen to life.

Scott:
We’ve interviewed a lot of successful people over the years and I’m wondering if you have a framework like this, where it seems like a lot of millionaires or a lot of successful people, they either have written goals, they might wake up early in the morning, they may have rigid daily routines, they might read a lot, they might diet and exercise appropriately, whatever those is, are you finding all of those things to be true? Are you finding that everyone can have exceptions, you don’t have to be perfect across all of those to be successful? Or how do you think about those characteristics that are defining these people?

Chris:
No, the things you just rattled off are some of the things that are always on that list because as you look at it, it goes back to that word being intentional, where you do wake up, and I firmly believe I’m a huge goal setting person, I think having goals written down, allow us to be able to look and identify what’s important to us, but also to help to identify something else. Typically, when you talk about setting goals, and this time of year is where people start to evaluate and obviously, this COVID pandemic has turned 2020 on its ear and so people are so ready to turn the calendar and I’m like, hold on a minute, we still got a couple of months left, don’t you dare cash in, don’t stop now, but here’s what happens, we’re good at identifying what we want, we’re not so good at identifying what we’re willing to give up to get it and so I think it’s imperative to write down those sacrifices, what am I willing to give up to make this thing happen? And so being able to do those two things together, will help you stay focused.

Scott:
If you’re trying to repeat the success of some of these millionaires that you’ve interviewed, what are some of the things that you’re finding that they’re giving up in order to get to their wealth goals or that life vision?

Chris:
I’m amazed at how many of them gave up being comfortable and being comfortable, I firmly believe this, I do a lot of leadership teaching as I travel the country, typically travel the country, now I travel all through zoom, right? But I found that you make a decision, do you want to be popular or do you want to be effective? If you want to be popular, you’re doing what everyone else is doing, right? You don’t ever upset the applecart, you kind of stay that path but if you want to be effective, it means you matter and so I think a lot of these millionaires chose to be effective, to be effective in how they handled money to be effective in how they’re relating with other people and connecting, but also on how they dream and push themselves. I think they’re constantly looking for a challenge and they’re driven people.

Scott:
Do you have any examples of that, that stick out of maybe some folks who have made that choice.

Chris:
Well, I can tell you the driven. I love the research that we did inside of everyday millionaires, it got so big, we needed to use an outside research firm I mean, it was just a massive project and I love the information that I provide and there’re two people based on the study and the things I learned but I’m going to tell you something, the thing that is the most powerful thing inside of that book are the stories, the stories of people that through time have walked it and done it.
There's a story of a gentleman in there and I don't want to be mix up his name, but grew up in a tough childhood I mean, he was in seven to nine different foster homes, his parents had, mom had mental illness, his dad was an alcoholic, spent time in seven to nine foster homes, he had the built in excuse, right, to not do much just to give up and to quit but this guy, not only push forward, join the military, got out became a teacher, because he cared about the hearts of other kids and this guy ends up with a net worth of three and a half million dollars and so he didn't let his circumstances prevent him from dreaming and striving and so there's so many stories in there, people that were homeless at some point in time, but they made a decision and so I think those things are what people can relate with and they go, Wow, if they can do it, then I can.

Mindy:
In the very beginning, you said, “You have to believe that it’s attainable.” And then you just said that this study was so big, you had to use an outside group, that means that there’s a lot of millionaires out there who have done it. Scott and I interview somebody every week on this show and frankly, the boring stories are the ones that are the most successful. Hey, I spent less than I earned. I invested the difference. It comes back I mean, from, what’s my favorite book Scott? It’s yellow, George S. Clason. I’m totally drawing a blank on this.

Scott:
Oh, Richest Man in Babylon.

Mindy:
The Richest Man in Babylon, every single one of those things. That book was written in 1920 and I’m reading through the book and I’m like, this is not new at all. We all think that we’re on this great journey, Oh, look, I’m going to share this new idea with people, it’s not new, George Clason wrote about it 100 years ago, and all the same principles are the same, spend less than you earn.

Chris:
That’s right. And here’s the reality, even before he did that, you can look back and look in the Bible, right, you have close to 1000 scriptures on money inside the Bible and so even before he wrote that, you begin to have a template to be able to see how we need to interact and that money is in fact, a tool for us to use to build and to serve others.

Mindy:
I love that, money is a tool. Yes, it’s a tool. It’s a great tool, as long as you know how to use that tool.

Chris:
That’s right. That’s right.

Mindy:
There’s so many tools that I don’t know how to use, I flip houses.

Chris:
Oh, me either. Listen to me, if you’re building something, I’m not the man to call, okay? If it’s beyond a flat head or a Phillips screwdriver, it’s beyond my league, but money I can work with you all.

Mindy:
Perfect. Well, let’s talk about some more of the emotional aspects of money because it is very emotional. I feel attacked when somebody says, “We need to fix our finances.” Not me personally, but somebody listening would feel attacked and it’s so easy to read about what you have to do and it’s so difficult to actually take the steps to do it. It’s like losing weight, I know what I have to do to lose the extra baby weight that I have, I have to eat more vegetables, I have to eat less sugar, I have to not drink so much beer and exercise but you know what’s way easier? Eating sugar, drinking beer, sitting on the couch, doing nothing, it’s so much easier than that. And I think that people feel attacked when it’s brought up.
Let’s see, what do I want to say here? The emotional and mental gearing on staying committed once you’ve decided to do it can be really challenging as well. I’m on the path to financial independence, I’m on the path of paying off debt, whatever my path is. Dave Ramsey, maybe you’ve heard of him, has these things called, The Baby Steps and the Debt Snowball is huge. Is that the first baby step I can’t remember anyway, [crosstalk 00:13:54].

Chris:
Yeah, Baby Step one is, getting $1,000 in place just so you can break the habit of using debt and then Baby Step two is, listing your debts out smallest to biggest, the Debt Snowball, and we’re going to attack the debt that way. So I’m going to make minimum payments on everything except for the smallest and I’m going to throw all extra money at that little one and then once you do that, and you get your money back. Imagine that, getting a raise without having to go talk to your employer, you give yourself a raise because you got more money staying with you now instead of going to debt. Once you do that, then I advise people to do your fully funded emergency fund, that’s where you want to save about three to six months of expenses and have that sitting in the bank ready to protect you.

Mindy:
So with a fully funded emergency fund, Dave has always said and you’ve always said, “Three to six months.” With the pandemic in our, I would love to say rear view mirror but it’s not, it’s in our front view mirror as well, would you err more towards six months or have you extended that even a little bit more?

Chris:
No, we’ve actually stayed in the three to six, in that range, but here’s the deal, if you’re self employed and your income is kind of dependent on a lot of things, you’re going to err on the side of a six month emergency fund but if you’re both employed or you’re employed, your job is stable than a three month emergency fund’s fine. What I told people throughout the COVID pandemic was, if your hours were reduced or you lost income or anything was scaled back, you wanted to go into what I was calling, conserve mode. Conserve mode meant, I am going to sit on being intentional with every dollar coming in, and being super intentional with every dollar going out however, if things are normal for you, meaning your job hasn’t changed, your income hasn’t changed then, I’m advising people to keep the emergency fund the same and keep working through the steps.

Mindy:
Okay, in conserve mode, let’s say my job has been cut, my hours are cut, I am no longer investing, or am I still investing?

Chris:
No, no, you’re going to shut that down. You’re gonna stop that because your income is now gone so you’re going to pause the investing, you’re pausing everything, really but your job one is to find another job like-

Mindy:
Thank you.

Chris:
I’m talking to so many people that say, “Hey, I was laid off from my house or my hours were cut back and I’m waiting to find out what the company is going to do with the severance or with this or that.” And I’m like, No, no, no, dust off the resume, start to reach out to your friends, coworkers, the people you know, let them know you’re looking for a job, it’s so much easier to find a job when you have one and so that’s that first step and I’ve been telling them a lot about my friend, Ken Coleman, who’s America’s career coach helping people kind of get on that path and that journey.

Mindy:
Thank you, you have to get a job. That is your number one priority. I was FIREd once, I was a terrible employee, I totally deserve to be FIREd at that particular job. I’m wonderful now. I got FIREd on a Friday, I went home, I had my little pity party over the weekend and then Monday, I cranked out my resume, I submitted it to every single thing that I wanted to work at, every single job that I felt was even remotely interesting and this is something, I don’t have the statistics, of course on hand but women will not apply to a job unless they feel like they meet every criteria or 90% of the criteria or something like that whereas men will apply to a job if they are meeting like 60% of the criteria or something and I’m totally pulling those numbers out of my nose but it’s very different and my thought was, look, they’re not going to call me up and ask me if I’m looking for a job, they only know that I’m looking when I apply. So if it looks remotely interesting, I applied because what does it cost me to email a resume? This was back when I had to mail it in.

Chris:
Right. [crosstalk 00:17:49]. I tell people not only do I want you to apply and submit, I want you to follow up, pick up the phone and call them. Find out the status of your application. Do they have it? Do they have any more questions? Do they need any more information? You being proactive, listen, no one’s going to advocate for you like you, right? You know, you. You know your things. you know what you need to make happen for your sake and your family so be an advocate, pick up that phone, make them tell you no, so you can move on to the next thing but the main thing is, there are a lot of food delivery things out there that are doing well and there are multiple companies, Home Depot, Target, Amazon, there are so many companies that are hiring, so you can get a job while you’re continuing to look for the next one.

Mindy:
We had Patrice Washington on the show, she was on episode 50 so it’s been a while, this is episode 148 but she in 2008, she and her husband had a real estate company that was flying high and all of a sudden everything came crashing down in the 2008 real estate crash and they found themselves out of a job and her husband went from real estate broker to working at Taco Bell. He was working as a manager at Taco Bell and what I love about that story is, he didn’t say, “That’s beneath me.” He had a brand new daughter, he had a wife who couldn’t work because she had complications with her pregnancy or something like that, he had to put food on the table and he did not say, “I am too good to be a manager at a fast food restaurant. I’m going to do what I need to do to put money on the table or put food on the table and bring in money so that I can support my family.”
And delivering for Grub Hub or, I don’t know all of the ones that they have but that doesn’t mean that that is your career, am I digging a hole here Scott by see this? That does not mean that has to be your whole career but right now, when you don’t have any money coming in, if you don’t have food on the table, go do something that will bring food to the table.

Chris:
That’s exactly right and again, thinking out of the box but here’s the thing also, Mindy and Scott, here’s another thing you can do, if you’ve got debt and you want to get serious about getting it out of your life, take on a second job, take on a third one if you have to, and devote that money directly toward the debt. I can’t tell you, in the 15 years that I’ve been a part of Ramsey’s Solutions, the number of stories that I’ve heard of engineers taking pizza, delivery jobs, or attorneys working at Home Depot on the weekends or doing whatever. Don’t let your ego get in the way of your progress and so really start to think outside of the box and really start to think, what are options? And you really want to work together as a team with your spouse, you guys sit down together and both brainstorm ways to bring in extra money to attack this debt and get it out of your life and each of you have three to four ideas, don’t judge the idea. Brainstorming is getting it down on paper, you can go back and look at the validity of that idea later.

Mindy:
That’s a great tip.

Scott:
One of the things we’ve noticed, I think in a lot of the stories we’ve had in our show, is that when we hear of folks who have paid off a large amount of debt in a short period of time, relative to their incomes, or have built that first $200,000 in net worth, were they’re beginning to get on the other side of that snowball that is capitalism here, right? That there’s this period of a grind, where they’re doing kind of what you just described, working that second job even or working crazy hours, spending very little of those types of things. Have you come across that kind of all out intensity of effort in the stories that you’ve worked with, with these millionaires? And if so, how long do you have to sustain that in order to get ahead or to begin achieving your goals?

Chris:
Well, I think first and foremost, it goes back to believing that it’s possible for you, regardless of your background, regardless of where you come from and then I talked about growing your knowledge, right? And then taking the right actions, so I think it becomes more of a mindset and a lifestyle as opposed to just an event. An event is something that just occurs once, right? But when you have a mindset shift, or lifestyle shift, what you’re talking about is now your thinking and doing differently, consistently, it becomes a way of living for you and so I tell people, getting out of debt is a sprint. And in college I ran track, ran the 100 and the 200 and so, an all out sprint is where you get all this effort in the short distance but I had crazy friends of mine that would run the two mile, right? Or run marathons. I don’t do those, I have a car, right? I’m driving.
When you’re running a marathon, what are you doing? You’re at a consistent speed over time and so, I think building wealth is more like that marathon, getting out of debt is that sprint but either way, both of them require moving forward both of them require that I’m not going to stay the same. I’m going to improve and I’m going to push myself.

Scott:
I love it. I think that’s a fantastic answer that. Yeah, we’ve seen some folks really sprint over [inaudible 00:23:08]to get ahead and I think there is a component to that and it’s great, but.

Chris:
I agree. And listen, people can run faster than they think they can. A friend of mine, I’ll never forget, we were little, we were like 10 or 11 years old and we were walking through this field, I grew up in Kentucky so there are fields everywhere, we were walking through this field and this dog comes after us like it comes running, sprinting at us and we had about 50 yards to get to a fence to get over and this friend who would claim that he was not fast, outran me to this fence because, I mean, I knew all I had to do is be faster than him, right? And then the dog would get him and I’m going to survive, it’s okay.
Fear, focus, and just pure drive can make us do things we don’t think we’re capable of doing and so to your listeners out there that you say, “You know what, this can never change for me. This is the way it’s been. This is the way it’s always going to be.” I’m want to tell you, that’s a lie. All you have to do is decide right there where you are, right now, decide that you’re going to do better because betters available and you’re going to try right in that moment and if you had this debt for 10 years, please don’t think you’re going to get out of debt in 10 minutes, right? You’ve had this for 10 years.
Be reasonable with yourself in your timeframe. Be reasonable with yourself with your expectations but please, please be reasonable with your plan and so you follow our process of the Baby Steps, I promise you, it works.

Scott:
Do you think that fear is a big motivator for folks in that sprint phase? Is there like a positive motivator maybe, for the marathon?

Chris:
I think fear is very real and yes, I think for certain people fear can be a motivator. For example, my son once, he told me his team Last basketball game, he was like 11 and they lost by like 20 points and he’s up in his room and I always give him 30 minutes to pout, be frustrated, irritated, then we got to talk about it, right? Because I want him to be a healthy competitor but my son told me once he goes, “I hate losing more than I love winning.” And it struck me and I went, “Wait a minute, say that again.” And he said it, he goes, “I hate losing more than I love winning.”
And I went and wrote it down, I had to like think on this, I’m like, this kid’s like little Socrates or something, where’s that coming from? But that desire to not fail can push us, the desire to be better than what we’ve come from and there are several stories in my book, Everyday Millionaire, of people that made decisions at 9, 10 and 11 years old, that they were going to be different, that there wasn’t going to be this fear of not having food, there wasn’t going to be this fear of not being able to have some nice things and so there’s something to be said about making that decision and I think it’s a mind switch, I think it’s a way of looking at things totally different and it’s also about the internal drive. So fear can motivate us in a positive way but you don’t want to let fear take control, you don’t want to become obsessive compulsive about it, you want to have a healthy view.

Scott:
That’s exactly how my husband was motivated to be better with finances, his father was an electrician in Chicago and a union electrician, when you’re union electrician, you have a lot of work in the summer, and then you get laid off in the winter because it’s cold outside, and there’s nobody doing any building in the winter. So every year was the same thing and he’s like, “Why is this such a cycle? Why are we always worried about this? It’s feast or famine all the time, every single year, you should be able to predict this.” It’s back to mindset, like you said.

Chris:
It’s also a matter of looking at the situation. Like I talked to a lot of people who are self employed, and they’ll fall in that cycle. So one of the things I do, I consult with 10 or 12 companies a year, and work with them and help them improve their people and their processes but one of the things that I asked them is, What is your cycle? What’s the downtime in the company, where revenue goes down, or profits aren’t as high? And what I’m identifying is A, they can always tell me, right? They can always say, well, the summertime or the wintertime or that’s when I go Okay, so it’s not a surprise, like Christmas being in December is not a surprise. It’s there every year. So if we know this cycle, what can we do about it? What are some things to start to do to put into place?
And this is to be honest with you, where the emergency fund, I think this year, this COVID situation, gave more validation to us talking about the emergency fund more than ever. It’s where people started to really wake up and look at it and go, Yes, I do need a cushion between life and me. Yes, I do need to make sure I’ve got money that’s sitting there, not invested but emergency fund that’s ready to protect me and down times.

Mindy:
Oh, you said, "Sitting there." Where is it sitting there? Is it just like a regular old bank account? I know everybody wants to get the highest amount of interest possible and-

Chris:
Well, here’s the deal, the emergency fund is insurance, it’s not an investment. It’s going to ensure that you have money that’s there to protect you and your family if you were to lose your job or get ill. So I’ve advise people just to park it in a money market account, because it needs to remain liquid, which means I need to be able to get to it if I have an emergency. So park it in a money market account, it’s going to give you a better rate of return than a regular savings account but the goal is not to grow this money, that’s not an investment. The goal is for that money to sit there ready, willing and able to help you if and when the time comes.

Mindy:
That is something I have never heard somebody say. I’ve never heard anybody actually articulate before. That’s perfect. Yeah, everybody wants to get the best return on your emergency fund, it’s not an investment, you’re not looking for the best return. I love that.

Chris:
Right. It’s not an investment, it’s insurance. I appreciate the compliment, but a lot of people have told me that’s helped them to see it differently but here’s the thing, as we’re talking about this, I have to say this, once you have that emergency fund in place, if and when you ever have to use it, job number one is to replace it, okay? Don’t keep going on with life as normal. So if someone lost their job, and they were out of work for 30 days, which there’s no reason to be out of work for 30 days, I mean, there’s something you can do to bring an income right? Because we want to protect the emergency fund. So if I get money coming in, it means I don’t have to use my emergency fund but if you had to use that for 30 days, once you get your income stabilized job one is to replace that amount in your emergency fund, so you always want to be at three or six months at all times.

Scott:
So I’ve got a question here, I struggled with this when I was starting out on my financial journey and the reason I struggled was because I was so aggressive, I was sprinting when I started out, because I don’t know what was necessarily motivating me, maybe a fear, maybe just a deep desire to become independent, in general but I began saving greater than 50% of my income and so when you’re saving greater than 50% of your income, you’re accumulating one month of emergency reserve every month.

Chris:
Right.

Scott:
Right. So to me, I didn't value at that time, I do now. I have actually a larger than three to six month emergency reserve, but I didn't value the emergency reserve, in a liquid sense, the same way that I do now because of my intense savings rate and getting started out there. Does your advice differ for somebody that is really going completely aggressive and trying to build wealth with no bad debts or those types of things?

Chris:
Well, balance. We got to have some balance, which means yes, it’s awesome to be able to have… That’s the kind of the thing I disagree with the FIRE movement, right? Like the aFIRE movement, they want you to just put all the money, invest it all, don’t do anything, like eat a cracker a day or something and just just put it all in there, and then rely on credit card miles and points and all this other stuff. Listen here, right? We got to live, we got stuff we want to do and it’s okay to do some stuff and it’s okay to be super aggressive but I want you to kind of check in your spirit, how you’re feeling. If you’re feeling limited, that you can’t enjoy stuff, or you’re committed to this and you feel trapped by it, that’s dangerous because what’s going to happen is, you’re going to fall off the wagon, and you’re going to go do some stupid, big, car payment, or you guys remember the Atkins diet?

Mindy:
Yeah.

Chris:
Mind, you were talking about the diet so I’m dying to bring this up. From the Atkins diet, I did the Atkins diet for about hold on, I think it was two hours, right? Lost my mind. I needed a potato chip people, I did. I was losing my mind but I think that’s what happens a lot of times when people are hyper focused, they get so focused and they’re running, they don’t realize that man, my gears are running down and that’s like a car, even a Lamborghini, that’s registered at 325 miles an hour or something, you can’t redline that engine for so long, right? It’ll burn up, the oil, the engine will lockup.
I think the same is said for us and how we chase goals, there’s a time to sprint, there’s a time to really sprint but then there’s also a time to kind of pull back a little bit and go, I need a break, right? My knee’s bothering me, I need a break and the crazy thing is, is with any kind of exercise, if you don’t stop or give your body a break, your body will make you and I think oftentimes, that’s what happens with our goals financially.

Scott:
Awesome. When you think about the journey of the of these millionaires, we’re using a sprint versus marathon analogy, I imagine that the vast majority achieved it mostly through a long marathon over a period of years, and consistencies and I imagine that chunks of that were automated or very regular and sustainable with that [crosstalk 00:33:11]

Chris:
The number one tool these millionaires said that they use, was company retirement plans, 401K’s, 403B’s, IRAs and Roth IRAs and so it wasn’t some magic formula, it was consistently investing month after month. Close to 70% of them said that they used an investment professional. So they weren’t doing it on their own. They were consistently investing, you’re absolutely right and there wasn’t a magic formula and here’s the crazy thing, a third of the millionaires, remember, we talked to over 10,000 of them, a third of them never made a six figure household income.
I want you all to hear something, I said household income, that meant if two people were working, they combined together didn't make $100,000 but yet they still over time invested and became everyday millionaires. So it's not like Mindy said in the beginning, it's not about this super high income and I think it was really important for me to chop down these myths, they didn't go to fancy schools, they didn't take ridiculous leverage schemes or use cryptocurrency, I needed to break these myths down because I needed people to go, Oh, I can do it. Oh, I don't have to belong into this special club. I can make a decision and walk a path just like these other everyday people.

Mindy:
I am going to have you say that again, one third of all the people that you talked to, didn’t make a six figure household income.

Chris:
Correct.

Mindy:
So I have been a part of the personal finance space and the FIRE movement community in general, for about seven years I mean, my whole life, I’ve been very frugal my whole life, but I have watched it kind of evolved from this, You have to do everything super extreme to, Hey, I can allow things to come back into my life and it’s okay, while still focusing on it, but I think that one of the underrepresented groups in that space is the people who make less than $100,000 a year. Personally, or as a household or whatever, you can still do it, you can still get there. Scott, we had Sarah, the go budget girl, she was on The Dave Ramsey Show, she did her debt free scream.

Chris:
Yeah, I saw that.

Mindy:
She paid off $30,000 in debt in three years, while making $30,000, which to me is an incredibly inspiring story because she was making basically a living wage, and still paying off a ton of debt. You can do this, even if you don’t make $100,000 a year.

Chris:
You really can. And it’s just again, understanding and that’s why the stories are inside the book, I want people to be able to read, relate, and then go, right? And it’s a matter of hearing it and until we believe, I don’t think anything changes. Nothing changes until we start to believe that A, it’s possible or it’s worthwhile. I think with both of those, when you believe it’s possible and you believe it’s worthwhile, that gives us the fuel to continue to push and strive even when we get tired.

Mindy:
So let’s look at somebody who has gotten to the point where they’ve paid off all their debt. How do you continue to be inspired to grow your financial wealth or your, financial wealth oh, my goodness. How do you continue to be inspired to grow your wealth and not slip back into old habits of, Oh, I paid off all my debt, now I can go charge something or? Because it’s super inspiring and motivating to see Oh, I just paid off a whole credit card, I now never have to pay visa again and now I can attack my MasterCard and that one’s gone too and Amex is gone, and I’m getting these wins but when you’re saving money for retirement, it can be less exciting to, Oh, wow. 10%, now my dollar’s worth a $1.10.

Chris:
Right. I think the big thing is with as far as getting out of debt, and making sure you don’t go back, as I tell people is, once you pay off that credit card, I want you to shut it down, close it. Don’t allow the door to be cracked or that kind of crazy to come back into your life because that’s just the thief, it steals from your peace of mind, it steals from your income, it’s also steals from your future because if you’re paying for debt, you’re not investing but I think the thing that motivates me are my dreams, the stuff that I want to do in retirement, I’ve got a free tool at my wife’s website called, The Retire Inspired Quotient, the RIQ and it’s a free tool that helps people understand how much you’re going to need to live your dream retirement but it takes it a step further within that.
On the initial it helps people start to tap into their dream but you’ve got to know what it is you’re chasing. I had rockstar grandparents growing up so I know for me, without a shadow of a doubt, one of my life goals is to be a rockstar grandparent. My boys are younger right now, they’re 16, 15 and 14 so I got a long ways to go but I want to be able to have the time to spend with those grand babies when they get here, I want life experiences, I want to travel, there’re places I want to go see and so what I’m helping people do is, to tap into the dream because you’re right, getting out of debt is intense and it’s a short period of time and you can see the enemy. With building wealth, it’s not necessarily an enemy, you’re chasing a dream and so you got to be able to see it, you got to be able to tap into it, you got to believe that you’re worthy of that and I think when people do that, they can shift from that sprint mentality to more of a marathon lifestyle mentality as they sustain it because if you do what we talked about and invest the way that we guide you, you still have money left over to live and I think that’s what helps people to sustain the journey.

Scott:
I've got a question here, moving in a slightly different direction with this. We have a tactic that we really like along the wealth building journey here and let me set this up for a moment here, when we look at the average Americans household spending, two thirds of that spending is going to be in three categories, housing, transportation, and then food consumption, the remaining third is going to have a lot of the things like insurance, entertainment, those types of variable expenses. One of the tricks we like here at BiggerPockets is this concept called, house hacking and what I mean by that is, you buy a house, you use a mortgage… For example, my first home was a duplex, I bought a duplex, I moved into one of the units, I rented out the other unit and used the rent from The other unit to cover my mortgage expense and live for free. Have you come across this tactic? What are kind of your reactions or thoughts to a strategy like that in terms of helping jumpstart the wealth building process?

Chris:
Well, I think there are many ways out there to get to our goal, I think, one of the things that I advise people to do, obviously, with homes is, at minimum always a 10% down, I'd love you to do a 20% down so you avoid PMI, which is private mortgage insurance, that protects the lender, not you and can add 150 to $500 a month your payment so the down payment is crucial but I tell people a 15 year fixed rate mortgage, that's really the only debt I'm okay with people having but the process by which to pay that off… Here's the deal, I'm all about building wealth, I am not about debt so I want to hurry up and eliminate debt quickly out of my life so now my income is working for me.
So I think there are many ways to get people to jumpstart and think, I just don’t want them taking on leveraged debt schemes, right? And those schemes are things where you’re taking on more debt and risk for the appearance of growing wealth later. I’m just an anti debt guy, I’ve seen what it does, and I don’t like it and so I want people to be really intentional, even about, getting out of credit card debt but I want you to also attack and pay off that house. I want you to bring your dreams, your goals, your family with you in retirement, I don’t want you to bring a mortgage if you can avoid it.

Scott:
Mm-hmm (affirmative).

Mindy:
So this is a really big debate and the pay it off versus keep your mortgage and I think that’s a personal choice because like you said, you’re an anti debt guy, you want no debt and that’s great, that’s probably from your childhood. Did you have any-

Chris:
Oh, no, it’s grown from my knowledge, I know how to count. I know, one plus one equals two. And I know three minus two equals one. So it’s just learning how to add and again, I don’t want obligations, right? I want to be able to be smart and so whether that’s selling the home, and downsizing or whatever it is, you pay that bad boy off, now that mortgage payment can go work for you instead of going to the lender and so it’s just a mindset, it’s looking at it and understanding but most importantly, my mission is to educate, encourage and empower as many people as I can while I’m on this planet and that means, I want to help people understand that building wealth is possible but that can also chase their dreams down and I don’t want people working until they’re 75 or 80 and not enjoying life. I think there’s so many ways we can give back with our time, our talent and our money if we free ourselves up and so a few years of sacrifice can equal you many years of peace.

Mindy:
Oh, that's good. I am on the same page, as you were on the same team. You said, that you want a 15 year fixed and I would be curious as to why 15 instead of 30, I know that you pay off the loan sooner, so you're paying less interest but the 15 year mortgage payment is going to be higher than a 30 year mortgage payment, so [crosstalk 00:43:17].

Chris:
Go ahead.

Mindy:
With a 15 year mortgage payment, you have to pay off your mortgage in 15 years, that’s the longest amount of time you have whereas in 30, you have a little bit more flexibility, you could pay it off in 15, or five or 10 or whatever, you don’t have to, you could let it lengthen and again, this comes from the place of this is a common debate on our website and so I’m just curious as you’re feeling for 15 versus 30?

Chris:
Well, I select a 15 year fixed for that very reason, just so it does give you an opportunity to get it out of your life. It does cut out hundreds of thousands dollars of interest, go into the bank, but I’m going to be honest with you. I initially before I knew Dave, I took out a 30 year and I said, I’m going to pay it off in 20 and for three to four months out of the year, I paid extra but for those other months out of the year, I didn’t. So it was a thing that I intended to do, but I didn’t stick to, so having it structured as a fixed payment for you, number one, you know at the end of the day, the maximum it’s going to take me as 15. Now we found out through the survey, most millionaires are paying there’s often 11.2 years because again, they’re looking at it and they’re counting. They’re not trying to hold on to a house. The debate is and again, we’re in the presidential debate season so I’m I’m riled up and feisty, I’m read but the debate people say, “Yes, Chris, I’m going to keep the mortgage because I’m going to deduct the payment.”
Well, number one, that’s only if you itemize A, that you do that and B I say this, pay off the house and instead of itemizing and writing off the interest from the mortgage, how about you do this? Pay off the house and then go give to a single parent charity, go give to a wounded veterans function and that donation is something you can deduct as well and so the main thing is about risk. Debt equals risk, it needs a payment every month, it doesn’t care if you get sick, it doesn’t care if you lose your job, it doesn’t even care if your child is ill, it wants a payment, all it does is take. So I advise people, let’s get on a shorter term, let’s pay this thing off.
The people I’m talking to on The Chris Hogan Show, I’ve heard some a few people say we they paid this off in 12 years or 13. Listen, I want you to chase him down your dreams so do the math, figure out your plan and as I tell people, if you’re married, I want you and your spouse to be in agreement, it doesn’t matter what I say, I want you guys to be in agreement and have a plan. I’m just telling people what I’ve done, what I’ve seen and what works.

Scott:
What does financial freedom look like for a millionaire who kind of meets a lot of these criterias that have a paid off house, well funded retirement accounts so three to six months emergency reserve, where does that maybe passive income come from someone who wants to retire at 50, 55 with this debt free scenario?

Chris:
Yeah, well, passive income, you have options with that, right? Like, obviously people will think through and they’ll think about businesses that they’re looking to start or options there, which I think is a great opportunity. I think you know, one of the other things that I kind of disagree with the FIRE movement on is that, A, they talked about using credit cards from the things that I’ve read, but it’s all a matter of leaving the job, you’re trying to leave.
I want people to no, no, no, I want you to retire towards your dreams, retire toward things you enjoy, go volunteer, go mentor, go spend time at a retirement home, and walk around and hang out with some of the people in there, you'll hear some awesome stories and so passive income is an option but again, me, I'm the anti debt guy so as I do that, even though it might be passive income, it's going to come from saved money that's how I started the business and so I think it's really smart to think, but again, you guys we got to be aware.
There are so many shady people out there and so many shady schemes that we have to always be on guard, I mean, don’t even get me started on the cryptocurrency thing, I talked about it in the book, right? Like you’re going to give $1 amount to this thing I can’t touch it’s code, I’m like, Really? I touch Benjamin’s, right, I fold them, I put them in my pocket. I can’t put code in my pocket but anyway, I digress but I think it’s one of those understanding what you want, understanding your risk tolerance but then being aware of Hey, is this a hobby or is this a business right?
My friend Christie [inaudible 00:47:48], she teaches women how to start businesses and business boutique and she goes, “If it’s a hobby, it’s just something you enjoy. If it’s a business, this thing starts to bring in some money.” So I think even though we’re striving for passive income, we’ve got to understand what it is, can it make money? How much can it make? And when will it start making it?

Scott:
Hmm. Do you have any creative examples from some of the millionaires you’ve studied that are in ways that they’re able to do that without any debt whatsoever?

Chris:
Well, a lot of them saved up like, there was one guy out of Kansas, he and his wife over the years over a 15 year period, bought close to 3000 acres of land, right, in Kansas. They were hyper intentional, they paid cash every year and acquire land and so one of the things that they’re doing with this land that they own outright, is they’re leasing it out to farmers to be able to grow hay or to for cattle and so it’s one of those things where, hey, they’re paying the property taxes on the insurance on this, but this thing is bringing in so much revenue for them that he is a farmer, and she’s a schoolteacher, and so they can retire whenever they want. They got themselves out of debt, and they have this money coming in and land isn’t going anywhere, it’s one of those things you always going to have developers potentially calling you, right, or other farmers or rotating crops so, farming is one way, another way, obviously, there’s so many business opportunities out there.
You know, throughout this COVID situation, one of the things that I went back and I looked at, in 2007 to 2009, The Great Recession, we had more businesses thought up and created during that time and so it's crazy what can happen when we look at a situation but also start to make decisions about hey, what can I impact? What can I control? And so I think it's good to incubate and think about options, but you need to understand what's the risk, what's my risk tolerance? And when is it going to make money for me and how much do I need it to make? I think those are all crucial.

Scott:
Yeah, I know two investors locally, who both kind of started the same way in real estate investing, both did use some leverage to get started, but one decided to aggressively pay down his portfolio of 12, 15 homes and is completely debt free right now.

Chris:
That’s fantastic.

Scott:
Yeah. The other is get the others working on becoming a billionaire. The problem is, because that one guy is working this business, he’s in a whole bunch of trouble right now with the pandemic, he’s got all these different issues that are going on, and the other guy became ill, but his portfolio is completely paid off, and is able to work on that so two different visions and a departure point after that first 10 or 12 properties with very similar approaches, different goals there, different life flexibility [crosstalk 00:50:41].

Chris:
That’s rights.

Scott:
In spite of the big goal of being a millionaire.

Chris:
Yeah, but they also now have different kind of stress levels, right?

Scott:
Yep.

Chris:
And so there’re multiple paths to be able to get there. I think it’s really a matter of figuring out what we want, like for me I plan to work, I’m having a blast, I love what I’m doing but at some point, I’m going to go work in a college and teach communications or speech or business a couple days a week, and then I’m going to go travel, I’m going to go do stuff and so it’s important to know what it is you’re chasing, but why it matters to you and your timeframe, that’s really big, that’ll impact the decisions you make.

Scott:
One of the books that we like to talk about sometimes on the show is, The Four Hour Workweek and there’s a concept there that applies to this about lifestyle design, you’re building your end states with that end lifestyle in mind and backing into that and then I think that there’s a lot of merit to the idea of, how do I do that with the least amount of risk possible in my overall financial position, such as through a debt free approach, when that time comes?

Chris:
That’s right.

Scott:
We have respect for all the ways people are building wealth, but at the end state, wouldn’t it be good to not have any debt to an ability to fund exactly the lifestyle that you want with a giant surplus?

Chris:
I’ve talked to people that are self employed, and obviously they leverage when they started out, but their mindset is, is they’re attacking and paying some of the debt, but they’re also growing their company and so for them, their exit strategy is to essentially one day, sell the company and take the money and then be able to move on but I’ve got friends, they have their kids working with them and what I tell them as individuals is, listen to me, if you want to hand the business to your kids, that’s great have that initial plan but that means you personally need to build wealth so selling company doesn’t become part of your parachute and so it’s just a matter of having the end in mind, right? Let’s see this thing clearly and work the path.
I want to leave you kind of your listeners with this, I advise people kind of make two year decisions and what I mean by that, you want to make a decision today that you’re going to look back on in two years, and you’re glad that you made it. Now that requires you to pull out and look ahead, it requires us to be uncomfortable and maybe go through a period of tough time or sacrifice but what it does, is it sets you up on a trajectory to be more in control, more aware, and also moving forward towards your dream so that two year decision can help people really start to think differently.

Mindy:
That’s a really good point because two years, I could do a lot of things for two years. It’s only two years it’s not the rest of my life. That’s a great way to frame that and think about that. Okay, Chris, I really appreciate your time today. Do you have time for our famous four questions?

Chris:
Sure. Let’s make it happen.

Mindy:
Okay, what is your favorite finance book?

Chris:
Oh, the favorite finance book without a shadow of a doubt is Total Money Makeover. Yeah, that’s the book that changed the game for me. That’s my Dave Ramsey and people can pick up a copy, just get over to daveramsey.com.

Mindy:
You are not the first person to recommend that book.

Scott:
I’ll also co-recommend that book, it’s just fantastic book everyone should read it, there’s certainly some debate in the financial independence community but that’s a fantastic book, I’ve read it multiple times and find a lot of value every time so.

Chris:
Very good.

Scott:
What is your biggest money mistake?

Chris:
Oh my gosh, my biggest money mistake was going to look at an SUV, okay? I went looking and guess what came home with me?

Mindy:
An SUV.

Chris:
An SUV and a payment, it was stupid and if I could go back and stop me I wouldn’t have gone to look.

Mindy:
You know what, the car is one of the most frequently frequent answers to that question.

Chris:
Yes, yes. Yes.

Mindy:
What is your best piece of advice for people who are just starting out?

Chris:
Hmm, best piece of advice for people just starting out, start right where you are. Don’t try to go back and think you can fix the past and don’t try to hurry up to the future, just start right where you are and believe that you can.

Mindy:
1,000% agree.

Chris:
what is Your favorite joke to tell at parties?

Mindy:
Well, when you’re the father of three teenage boys, I’m not going to sit here and tell you they’re the joke but I have a lot of stories, I got a lot of stuff I can talk about and I work with a lot of cool people here at Ramsey Solutions and so I’ve got a lot of good friends, so constantly have a lot of stories. I love to laugh. I love to have a good time so between working here and those three boys, I got a lot of content.

Scott:
Do you have any that you’ll be able to share with us today?

Chris:
Well, these boys are hilarious, their newest thing is they want me to go skydiving which is a scary thought. I obey the law, gravity is a law, when you’re my size as a former football player, you’re supposed to stay on the ground and so there’re jokes about dad being scared or dad’s a chicken, I go, “I’m not a chicken. I’m smart. I’m going to stay on the ground.” And so if they want to go do it, I will take them and I’ll go up in the airplane and cheer them on but that’s been the latest thing, the skydiving thing is hilarious.

Scott:
I went skydiving, it was a once in a lifetime experience for me.

Chris:
Will you ever do it again Scott?

Scott:
Decided once in a lifetime. No.

Chris:
Okay, he said one, there you go, absolutely.

Mindy:
I live near a skydiving place and it’s fun to watch them but I stay on the ground.

Chris:
Yes ma’am. We were we got we share things in common. Scott’s the crazy person.

Mindy:
He is the crazy one. Okay, Chris, I know people already know the answer to this question but where can people find out more about you?

Chris:
Yeah, to find out more about me and my show and both books, Retire Inspired and Everyday Millionaires, just go to ChrisHogan360.com. ChrisHogan360.com and you can find it all there.

Scott:
All right, and we will link to all of that in the show notes here at BiggerPockets.com/moneyshow148 as well.

Mindy:
This is fabulous. Chris, thank you so much.

Chris:
Thank you all. Have a great rest of your week.

Scott:
Thank you very much.

Mindy:
Okay, you too.

Chris:
Appreciate you.

Mindy:
We appreciate you. Bye bye. Okay, Scott, that was Chris Hogan what did you think?

Scott:
I thought it was a great episode. I really learned a lot from him. Man, his voice is so incredible.

Mindy:
That voice.

Scott:
I always remember it with a jolt about how, yeah, wish I could sound like that. No, I learned a lot from him because I’m not interacting with Dave Ramsey content or Chris Hogan content on an everyday basis sometimes I forget about the why behind a lot of their rationale, around no debt around the Baby Steps and those types of things and when you hear it from them, it’s just such a powerful concept and powerful and simple and again, you said in the intro, the results that this program has produced, speak for themselves in a lot of ways. So I always admire the Dave Ramsey network, including Chris Hogan, and all the other wonderful hosts they have over there and I’ve learned a lot from their books and their podcasts and was grateful to have a chance to learn from Chris today.

Mindy:
I was super excited to talk to him. He keeps saying things I’m like Yep, I agree with that. I agree with that. I agree with that. I really don’t have much to add to his show because it was so good. He chooses not to have debt and if you don’t want debt either this show is absolutely reaffirming to you that you don’t have to have debt in your life and you can still become financially independent, you can still retire early if you choose, you could still do all those things without having any debt even you’re mortgage.

Scott:
Well, he didn’t specifically say this, I am encouraged that maybe the idea of house hacking could work under the Dave Ramsey and Chris Hogan model, maybe it’s just a matter of putting 10, 20% down and a 15 year mortgage, in order to house hack your way or dramatically accelerate your journey to financial independence because you’re allowing now your tenants to help you even more aggressively pay off that mortgage. So that was a fun one to hear Chris’s opinions on that.

Mindy:
Yeah, I think house hacking is a perfect complement to their entire strategy. Yes, you probably need to have a mortgage in order to house hack, but when you’re not paying any of your own income towards your mortgage, that’s just better. I don’t know, [crosstalk 00:59:26].

Scott:
And then I’d imagine, I’m extrapolating here, I should have asked this more but I imagined that the idea would be to pay off your first house hack while living in there with the mortgage there and then repeat the exercise if you’re going to get any more debt or save up cash for the next investment as well. So something along those lines probably, but we’ll have to bring him back and find out next time.

Mindy:
Oh, that would be great. Okay, the show notes for today’s episode can be found at BiggerPockets.com/moneyshow148. We would love to know what you thought about this episode please share your thoughts at our Facebook group which is located @facebook.com/groups/BPmoney. Scott, should we get out of here?

Scott:
Let’s do it.

Mindy:
From Episode 148, he is Scott Trench and I am Mindy Jensen and we will see you later alligator because I didn’t look anything up.

Scott:
After a while crocodile.

Mindy:
Okay, bye

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The BiggerPockets Money Podcast is for anyone who has money… or want to have more! Join BiggerPockets Community Manager and Podcast Director Mindy Jensen and CEO Scott Trench weekly for the BiggerP...
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    Scott Pearson from Hunlock Creek, PA
    Replied about 1 month ago
    This was a great podcast! Mindy at times was almost giddy. Lots of good advice and fun to listen to.
    Mindy Jensen BiggerPockets Community Manager from Longmont, CO
    Replied about 1 month ago
    Yeah, I have no chill.