BiggerPockets Money Podcast 52: Creating a Life Worth Living Before Retirement With Roger Whitney

by | BiggerPockets.com

Roger Whitney learned early on that your life doesn’t always cooperate with your plans. The passing of his mother – who had always worked hard and saved for ‘later’ made him realize that ‘later’ doesn’t always happen. So he set out to create a life he loves – and NEVER wants to retire from.

But first, he made a bunch of money mistakes. His free-wheeling 20’s gave way to his more responsible 30’s, where he cleaned up his debt and got serious about his finances.

Now he’s living his best life, and shares tips for having the conversation with your partner to allow you to live your best life, too.

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Listen to the Podcast Here

Read the Transcript Here

Welcome to the BiggerPockets Money Podcast, show number 52 where we interview Roger Whitney from rogerwhitney.com.

Like with net worth statements I see that as the representation of all the decisions you’ve made over time on one piece of paper. Right all your values are going to be there all your choices will end up expressing themselves on the net worth statement.

So one thing that I use with clients is the growth of their net worth and making smart little decisions on the net worth statement and tracking that. Because that’s much more important than real estate prices or stock market prices or anything else.

It’s time for a new American dream, one that doesn’t involve working in a cubicle for 40 years barely scraping by. Whether you’re looking to get your financial house in order, invest the money you already have or discover new paths for wealth creation, you’re in the right place.

This show is for anyone who has money or wants more, this is the BiggerPockets Money Podcast.

Scott: How’s it going everybody, I’m Scott Trench, and I’m here with my co-host, Ms. Mindy Jensen. How are you doing today Mindy?

Mindy: Scott I’m doing fantastic I’m having a great day. My daughter climber her first fourteener this weekend. That is a 14,000ft mountain for those who don’t live in Colorado.

Scott: And she also runs marathons or10Ks, right?

Mindy: She runs 10Ks, she’s run two 10Ks and she’s in cross country, she’s really discovered a love of running which she absolutely does not get from me. She gets that from her dad.

Scott: That’s very inappropriate given that she’s a Coloradan.

Mindy: Yes, we’re an outdoor loving people.

Scott: Well things are going good here, so rugby is going good. We won our first game.

Mindy: Yay. And I’ve noticed no black eyes yet.

Scott: No black eyes. So the face is still pretty for now. Alright so let’s talk about Roger. So Roger is a CFP and has a great personal story with money and then has a kind of interesting different spin on determined planning and goal setting I guess.

Mindy: Yeah. And I like this story, I like interviewing these financial professional these financial experts because they all seem to have one thing in common, they didn’t always know everything about money. So they did make mistakes, they did have problems.

And they worked through them and were able to overcome them. But I like the story that it tells people that just because you made a mistake doesn’t make you a bad person. Nobody has this all figured out and nobody’s perfect and just learn from your mistakes and move on.

Scott: Yeah absolutely. And Roger did just that and has built a successful business and I think accurately has a different take on some of the mathematical kinds of concepts behind finance.

Mindy: Yeah I do like this kind of approach to it. There’s no one size fits all and Roger’s show kind of illustrates that.

Scott: Well let’s go ahead and bring him in.

Mindy: Roger Whitney from the Retirement Answer Man, welcome to the BiggerPockets Money Podcast, how’s it feel today?

Roger: I feel bigger already. And how do you do that when you’re in Texas because everything is bigger in Texas.

Mindy: Don’t mess with Texas. So yeah I just saw this you’re in Texas I don’t know where I thought you were located but I didn’t realize you were in Texas. I don’t know why that’s a thing.

Roger: Well it’s weird, this age you don’t really know where anyone is at when you’re talking to them in this medium.

Mindy: Right, you’re right in my office today in Denver looking very tanned having just returned back from a quick trip to Cuba.

Roger: Yes, wow that was amazing. We talked about the idea that entrepreneurs can live anywhere. We taught a lot of that in Cuba which was pretty interesting.

Mindy: You saw people in Cuba from-

Roger: That were entrepreneurs. The Cuban people like a doctor make 40CuP a year which is nothing and they drive cars. They’re figuring out ways to improve their lives even in the communist system. It was very cool to see.

Mindy: That’s interesting, that’s very cool. Okay as much as I would like this to be the Cuba podcast or the hey all the great places I went on vacation last week podcast, today we’re going to talk about money as it pertains to retirement. And I was doing a little bit of research about you before I had you on the show and I saw that your mum passed away at the age of 48. And I am guessing that that kind of shaped your entire view on money. How old were you when she passed away?

Roger: I was 22, it was right before I moved down to Texas from Michigan which is where I grew up. And one thing that stuck with me is because she was an attorney later in life. She went to law school while I was in middle school. And she always worked extremely hard with this idea that she would relax and do all the things and think about the things that she wants to do later in life in ‘retirement’.

And in college she would come up and we would go out to dinner and we’d have drinks and we’d have active discussions of that whole battle of the youth versus yield live for today was the young guy that was me, right. And she was sacrifice and have meaning in life and you can enjoy tomorrow. We always had those battles.

And I’m sure I romanticize a little bit that she always deferred her life for tomorrow for ‘retirement’. And then when I moved down to Texas to do an internship to finish my degree she was battling cancer. I had to go back to Michigan and spent the last four weeks of her life with her while was going through that process of passing away.

And that sticks with you especially later on in life when you think when you’re helping people plan for the future, “Oh yeah don’t forget about today,” right because it may not be there. And it’s that constant tension between having an awesome life but you want to be a good steward and have a great retirement. There’s a constant tension between those two always.

Mindy: Okay so before we get too far down this step which I do want to talk about very much, I want to talk about when your mum did pass. What was your financial position and how did it change after her death?

Roger: Well I mean I was just out of college. So in my twenties I lived for today. I made more money that I realized I could early. And I was a really horrible steward about that all through my 20s. And then my thirties, I view my thirties as cleaning up the big financial mess I made in my twenties.

And I think that’s when really that seed of what my mum was telling me of being a good steward, planning for tomorrow really started to take hold. And then my forties I think it really started to inform the financial advice. So twenties I was an idiot, thirties I was a reformed idiot really working at cleaning up my mess.

And 40s, was the renaissance of finally getting back to zero and feeling like my life was moving forward. And then Mindy that is when it really started to inform the financial advice and working with clients. We get these messages but if you’re not ready for the message, sometimes the germination happens that it could be a decade later.

Scott: What did that look like in your twenties when you were being the idiot as you said? Like what sort of idiocy are we talking about? Did you accumulate a lot of debt? Was there bad credit?

Roger: Yeah it’s a good question, no bad credit. When you’re in your twenties and you start to make money, you assume your income can never go down Scott, right. So you do these calculations on spreadsheets and my income will increase by this amount. So what I did I used debt poorly, whether it’s credit cards or too much mortgage.

We went from our first home that my wife and I bought and I had this dream custom home that I moved our family into because my income would go up like it had been going up and it would always go up like that. And I was using the spreadsheets to look at the numbers and started to I guess you call it live forward into what I projected my income would be.

I wasn’t thinking about assets because I never really learned about assets and investing and building wealth from my parents. I learned about income and growth and so that’s what that was Scott is that I was living into the future of my projected growth and income which doesn’t always happen.

Mindy: Oh is this foreshadowing for a job change?

Roger: Yeah well in ’98 because I started in ’90 as an advisor so that was the tech stock boom and I learned just how to trade tech stock. So I was basically a stock trader all through the nineties.

Mindy: Okay.

Roger: Which was fantastically fun when you have this beautiful flow of up. And then in late nineties prior to the burst I realized this is not who I was supposed to be. I was supposed to be a planner, I had a much different spirit and approach. And then I started my CFP program. I switched from a smaller broker dealer to a major investment firm at the time PaineWebber. And became a grown up advisor learning the grown up system.

And as part of that process I was very noble and this is a good lesson in change management. I do not want to be that man that traded stocks anymore so I blew up that entire business and started fresh nobly in this planning practice. Which is extremely noble. I could hold my head high as my income went down by 80% and my expenses did not with small kids and a big mortgage and everything else.

Scott: Was right about when you were hitting your thirties at this point?

Roger: Yeah this is my early 30s.

Mindy: How do you fix that? I mean when your income went down by 80%. Was your wife working at the time?

Roger: She was not.

Mindy: Okay.

Roger: Just brilliant. Well if you don’t have the assets to cover the shortfall and you can really increase your income, what’s an easy thing to do? You borrow the money. You accumulate credit card debt, you stop saving, you patch hole wherever you can. And that is exactly what I did. Very smart for a financial advisor.

Mindy: Excellent advice, so go into debt so that you can continue the lifestyle that you like when your income goes down by 80%. Why do we have this guy on this call?

Roger: Well and then you have that personal aspect, for a period of time my wife was not aware of a lot of these things because I didn’t want to blow up that lifestyle. And I didn’t want to reveal myself as inadequate or a failure but we ultimately moved from the big fancy house to a house that cost less than half the amount.

We did all the right things in our 30s as I matured and took hold of the situation. And to this day I still have a lot of regret that you still work through getting over of what I did during that time.

Scott: So when I’ve come across this scenario before, I grew up in a wealthy area, I had some wealthy relatives that kind of stuff. When this kind of thing happens, when there’s a drastic decline in income and inability to sustain a high end lifestyle, in my experience that usually ends in divorce.

So how did you guys kind of end up working through that with your relationship? Was there a lot of tension in the relationship when you finally had to begin cutting back and changing up that lifestyle when it wasn’t sustainable?

Roger: That’s a great question and you’re exactly. And what’s interesting is there was no recriminations on her end about what had happened. She was totally cool with living anywhere with whatever adjustments we needed to make. Where our marriage really ran into trouble is with my pride and I wanted to shield her from all the stress of all of this.

So I took it on myself and didn’t have little conversations to keep her in tune, but it almost consumed me and caused me to be a horrible husband and horrible father, which caused her to wonder who the hell I was. And that’s what almost caused the big break not the money part of it. She was cool with whatever journey we were on. She wasn’t cool with me being a jerk consistently.

Mindy: Wow, she’s so mean.

Roger: How could she not know that I’m jerk?

Mindy: How could she not want that? So you are still married to this woman.

Roger: I am still married to this woman, 28 years next month.

Mindy: Okay I wanted to just make sure that we didn’t ask this question, so this usually ends in divorce. Yeah it ended in divorce here too. So this goes back to something that I hear from so many people so frequently, is once I started talking to my spouse about our financial situation our relationship improved, our financial situation improved.

Like everything improves once you open the lines of communication. Is that spoiling your story? Is that what happened with you guys too once you started talking to her about it, she was like, “Okay now I get it.”

Roger: It wasn’t that actually. What it was, we had more triage to do before that.

Mindy: Okay.

Roger: And let’s use the practical operating on the patient, the triage was repairing our relationship and letting her realize that I am the man that she married. And that I was worthy of being the man that she stayed married to and help me in repairing pain that I had caused her. That’s the initial triage especially when one was keeping it all to themselves and then just acting out passive aggressively I guess we would call it.

I had to repair the emotional connectedness of that. Only after you do that can you actually get to the operation part of it. Because once you’re all in on we are in this boat together, we are a partnership, then all that tactical stuff of fixing everything actually becomes much easier. So that was where we had to start. And then yeah once that was started then you have two people in alignment growing together in a loving way supporting each other, that’s pretty powerful.

Scott: That’s fantastic. Let’s dive into that tactical approach though. So with your 20s you’re earning a good income, it’s going up and up. And then you have a drastic decline in income you accumulate a bunch of debt. Now something’s got to change and I assume that’s got to happen from the lifestyle expense front. Is that right?

Roger: Yeah that’s a good start, that’s a good triage is get the expenses down best as you can.

Scott: So what did that look like for you guys? What were some of the things that you did to get those expenses down to start coming back out?

Roger: Yeah so we moved from the fancy house that we custom built that was my ego house I guess. We sold the fancy BMW that was my self-image that I needed to drive, my wife doesn’t like BMWs to this day. And we moved to a house that was less than half the cost that’s a mile from her parents’, a mile from her twin sister. Got really close to the family unit.

And she went back to work to help plug the holes and we right sized our lives from a spending plan. The other part of that6 Scott, because we all know you too probably know Paula Pant from Afford Anything. Paula was on my show once and she gave me a quote that I keep giving her credit but supposedly you’re allowed to just steal it at some point.

And there’s only so much frugaling you can do, is what she said right on that spending side. Especially you got two young kids and life, where the real power is, is in income, right. And how do invest your human capital to create more income? And that’s really where we focused once we did those basic things.

Scott: The income makes perfect sense in the investing. But quick question on the expense side, moving closer to the family, did that help at all with childcare? Were they able to watch the kids, that kind of stuff?

Roger: Exactly.

Scott: Okay.

Roger: Yeah. We lived in a neighborhood that had a community pool and my wife took over the management of the pool. And she watched cousins during the day to earn extra money. I mean we both were just doing little things to plug the holes.

Scott: So there’s only so much frugaling you can do but you did all of it. You moved the house, fixed your car situation, moved closer to the family so you could get a lot of the financial and relationship benefits of that. And your wife went back to work. That makes perfect sense.

Roger: I didn’t give her any cable. I just I had a lot of this…

Mindy: Well you’re not savage. Okay so before we jump into the income side of it, I don’t want to argue with Paula especially since she’s not here. But she says there’s only so much frugaling you could do and that is totally true. But I want to point out that there is a lot of frugaling that you can do. I just recently was talking to a friend whose husband was diagnosed with cancer.

And they’re going through all of that and I’m thinking to myself, “Well how can I help them even though they haven’t asked me for advice?” so I have to keep it to myself. And I’m looking through their things and like they have a big truck that they really don’t need. They could sell that and take that money and put that towards other debt. There’s a lot more frugaling that could be going on that isn’t going on.

So yes there is only so much frugaling you could do. But if you really look at it, there is a lot of frugaling you could do if income isn’t necessarily where you can focus your attention right now. But once you’ve all the frugaling yeah I know what Paula’s saying, it gets to the point when there’s no more frugaling that could be done. But income is there’s no limit, you could make a billion dollars a minute if you were really good.

Scott: Mindy thank you for pointing that out because so as a planner in helping people figure out the difference between needs, wants and wishes, we can flip those things all the time. To go back to Cuba for a second, needs can be pretty basic.

Mindy: Yeah food and water shelter.

Roger: Shelter.

Mindy: Is that it?

Roger: The truck I don’t think has to be in that need category.

Mindy: Well you can walk, you can ride your bike.

Roger: Yeah.

Scott: And it sounds like there’s a lot of frugaling you can do and then income is also very helpful and investing is also important. And aside of this of entrepreneurship can be helpful at the same time. So it sounds like you did several of these things all at once or attempted to. And that’s what we’re going to hear about next is on the income side.

Roger: Sure. I do think especially when you’re under 40 but even into your forties, one of the best investments anyone can make is investing in themselves either through their skills, their network or iterating on entrepreneurial types of things. I think that all three of those are just are valid as real estate investing or stock investing or any other kind of investing.

And the return on investment could easily dwarf those things if you do them intentionally. So for me, part of that was while at this major investment firm I became friendly and started to walk life with two essential people. And the three of us in 2003 went off, left the investment firm together and as partners started our own independent firm.

Which gave us total- because I was still in a semi-corporate environment too. It was commission based but semi-corporate environment and started our own venture and then truly became entrepreneurs and started to build what we have today.

Mindy: So you have three co-workers, you go off, two co-workers.

Roger: Two yeah two partners.

Mindy: Three total okay. You went off and you started your own investment firm.

Roger: Correct.

Mindy: Okay. And that’s when your income took this slight dip.

Roger: Well yeah that definitely hit the dip right because you’re reinvesting in the firm. You’re investing but I stopped saving, not recommending this. But my choice was and it’s still I think a valid choice is I stopped saving for my children’s education when they in the seven, eight range, stopped saving for retirement. And all of my excess capital, every little dollar, a lot of my human capital went into investing in the business.

Mindy: What did that look like? What are you investing in the business?

Roger: Well you’re investing in the marketing and setting up the shop and hiring the staff before you feel very comfortable hiring the staff as you’re starting to get traction. Because any kind of entrepreneurial venture that I’ve seen that has long term success is like a hockey stick.

There’s all this churning where you’re spending all this money and revenue is growing. But you’re still spending a lot of money to support the business with the growth. And then all of a sudden you’re hitting an inflection point where expenses level out but revenue continues to grow.

And that’s really when the power of a business grabs hold because all of a sudden your margins expand, because you already have the infrastructure to support the growth. And then that’s when you really make money but that can take a year, it can take 10 years depending on the business.

Scott: How long did that take for you?

Roger: Three years. I was paying myself a living wage as compensation but I wasn’t getting the huge power of the business. So I had fixed the cash flow stuff because I was paying myself a living wage but we weren’t taking money out, we were choosing to reinvest in staff and in marketing and all the things that you would invest in a business for.

Scott: Awesome. No I think that that’s the question that people have to ask and usually a lot of folks will go into this kind of- like we’ve interviewed a couple of entrepreneurs over the course of the show. A lot of the entrepreneurs are the folks that I consider more on the spectrum of entrepreneurship are folks like you who didn’t have this nice cushy financial position going into entrepreneurship.

And instead kind of staked it all on the line and really transformed their lives to make this work. Whereas a lot of the other type of entrepreneurship is what we call side hustles which is where everything is pretty cushy and stable and so I’m going to work on this as a hobby and maybe it’ll make something of itself. But I think that’s like very impressive and yeah it’s a very calculated decision that ended up paying off for you with high risk for a couple of years, where you weren’t able to accumulate wealth through the traditional means.

Roger: Necessity is a good motivator. It focuses your attention.

Scott: It definitely does. Well while we have you here why don’t we talk about some of the things that you come across in your practice? Some of the questions that a lot of folks who’re attempting to move toward financial freedom retire early but still as you expressed earlier live the good life today. How does someone do that? How does someone live life like they’re already retired and why should you I guess?

Roger: I don’t know if I would say live life like you’re already retired. But I think so my primary market from the people that I speak with and talk to are baby boomers. They’ve hitched their life to this retirement bandwagon from a very early age. Many of us look at retirement or think of it conceptually like what our parents or grandparents did.

You leave your work, you move to Florida, you got the blue lights special, you take the cruise every month. And you just have this life of leisure until you die. Right, the tradition view of retirement is that you’re sitting on the park bench of life and you’re just resting. That does not work anymore for almost everybody or some reasons.

One is we’re all living much longer than any generation in the history of man or woman. A 60 year old has 50/50 chance of living past 90 so you’re talking a long time. Baby boomers especially look at retirement not as your chance to rest but finally I get to live on my own terms, I get to get out of the corporate environment and actually live.

So people are living, they’re a lot more active and they’re spending a lot more money. So what ends up happening with traditional financial advice, retirement planning is everybody talks about retirement is your number, right, what’s your number? That’s a horrible way to think about it. It’s one dimensional because it makes it a math problem.

And because you’re living longer and you’re spending more money the math doesn’t work. So the answer is always going to be work longer, save more, settle for less later on. No, all those suck so no wonder nobody possibly can get you general retirement planning. So to your point Scott, when I’m having conversations, I think what I’m hearing from people is they don’t want to not work per se.

When I survey my audience and talk to hundreds of thousands of people is they want time freedom number one to control their own schedule. That’s not the absence of work and they want to do something with purpose and travel. So it’s not the absence of work, it’s just having more control over your time so you’re not having to go through that corporate grinder that is traditional corporate America or any kind of industry.

So if that’s really what the issue is, it’s not about this march up this Everest to your number where you can retire, it’s really a more gradual journey of figuring out how do you design a life where you gain more time freedom sooner. And that’s where pretirement is the word that I use which is we think of retirement as a light switch on and off for more perspective.

It’s really more like a dimmer switch. How do you slowly dim down work and increase the time freedom. And you can do that if you’re just intentional about it. But first you have to accept that retirement as we traditionally think about it is really not what we’re trying to do.

Scott: Can you give us an example? Can you walk us through a scenario of someone who’s attempting to do this? If someone comes into your office and I say I want all these things. Here I am, I’m making immediate income with a little bit of assets but mostly my 401K and maybe some home equity very little savings. How do I go about choosing this dream that you’re painting or this vision you’re pitching?

Roger: Oh yeah, I use the one that I use in my book is there is this lady who worked in corporate America and she liked to sell. And she had a cousin or nephew that managed commercial real estate properties. And he came to her once and brought her a flag that needed repair. We’re in Texas and it’s windy in Texas.

So repaired the flag because she enjoyed it and then he would bring her flags from time to time to repair and she would repair them and he would pay her a little bit of money while she had her day job. And this is that side hustle stuff. The whole idea of side hustle it could either be for extra money or it could be the launching pad of that pretirement work that is that in between stage Scott.

And that’s what it was for her. Over time she went from making six figures to making about $80,000 a year just repairing flags. But it happened over time so she kept the security of her day job. For her it was side hustle but she didn’t think of it like that it was just something that she enjoyed. But over time she was able to build up her reputation and see that it was a path to more time freedom and still having income.

And what it gave her yes she earned more money but it was more in her sweet spot of what she felt she should be doing. She used logs to sell plus she was able to couple it with a way to make money. So I think it’s a lot of times we get these successful careers that we end up being really good at. But they’re not what we ever had a desire to do.

And it’s a little bit of a renaissance of again I’ve seen people do it in real estate as well of now that I have some financial security, the kids are out of the house, I know who I am. How do I make the transition to maybe I earn a lot less than I’m earning in the corporate grind but I gain a lot of life freedom and I’m actually doing something that I enjoy.

But that’s one example I have others, people that have started sprinkler companies. But unlike me Scott, what we try to do is gradually get them there rather than be all noble and prideful and just blow up what is before you’re ready because that can be disastrous.

Scott: One of the things that I like about this and I’ll put it out in this also, a lot of people in the FI community that’s been going on for a while, they do boil it down to a number, they hit the number, they quit and then they have to figure out what to do.

And this another way to kind of I guess avoid having to do that or avoid having that problem. You’re kind of hey this is what I’m going to after I do, this is my pre-retirement, this is what’s going to be that in between phase. And it’s not a complete abrupt shift from working all the time to what do I do now, I guess.

Roger: Yeah.

Mindy: Yeah you definitely need to have a plan when you are- I don’t like the word retire because it makes it sound like you’re not going to do anything else ever. And especially for the early retirees out there, I’ve said this before, the same traits that get you to this early retirement are the same traits that are going to keep you going afterwards. You’re not going to just all of a sudden stop being super productive and just watch TV 24/7.

Roger: Yeah and I agree with you. I think the FI community is awesome in their intentionality about money and consumerism which is really hard to do in this world, right. I worry that they may sacrifice too much too early from a life perspective potentially to get to that number that you referred to Scott.

But I think people they are in their best when they have a purpose. I think absence of purpose or work and expressing ourselves in whatever gifts that we have is a really sad place to be. Tim Ferris does not work four hours a week. Right he probably works more than almost all of us. His podcast aren’t even just four hour at times.

Mindy: Okay that’s hilarious.

Scott: I got a question here. So one of the great things about a number, about the mathematical side of things is a lot of the FI community a lot of the folks there are very mathematical engineering mindset type folks. I’m not an engineer but I sometimes think that I think like an engineer in a lot of ways.

But how do you tell you’re making progress? What are some guidelines you’d give to folks that are trying to live life intentionally now and move towards this goal of a successful financial future? How do you tell you’re making progress? How do you measure your steps along the journey?

Roger: And I’m not dismissing the math for sure. I’m a math kind of guy I love net worth statements. Net worth statements and income sources. So you definitely have some benchmarks of like with net worth statements I see that as the representation of all the decisions you’ve made over time on one piece of paper.

Right all your values are going to be there all your choices will end up expressing themselves on the net worth statement. So one thing that I use with clients is the growth of their net worth and making smart little decisions on the net worth statement and tracking that.

Because that’s much more important than real estate prices or stock market prices or anything else. That’s a good personal benchmark. And plus producing income sources that yeah we think of risks. Let’s take the example of a corporate income versus real estate income through managing houses. Corporate income a salary feels really secure, right.

It’s like that IBM promise of generations past where you get a job it’s a job for life you can never lose your income. It feels really secure. Well that promise is gone, that is no more secure than any other thing. So that’s a risk, right because you could be laid off tomorrow. If life hits corporations will make hard decisions.

So another way of measuring that Scott is what other sources of income that you have and how secure are they. Take rental property income. You guys are masters of that. There are risks there you can have vacancies you can have extraordinary expenses. But there’s a lot more stability in rental income assuming you do all the right things to buy the rental properties.

There’s a lot more stability there in some instances than a corporate job, right because unless the house catches fire but you’re insured for that. So it’s measuring the stability of your income sources and how those are growing. And I like the net worth statement because that’s a great dashboard to make decisions on.

But what I worry about the math is that life much more uncertain than ever before. So if you take a 20 year old I don’t know what the number is for 30 year olds. But a 20 year old has a 50/50 chance of living over 100. You can’t project math that far out and have any degree of accuracy whatsoever. So the math is great but I worry there’s not enough soul and not enough balance to the elegance of math in the messy life that we all live.

Scott: Can you explain that a little bit further? The way I’ve always looked at it is to me it’s very easy to forecast where a business my financial position all that kind of stuff is going to be in six months. Right something is going to have to go really wrong for me to start running out of money in six months, right. Over the next three to five years things could change really dramatically there could be laid of different things happening.

But over a very long period of time I feel more and more increasingly confident that I’m going to be able to calculate the long term average returns of things like stocks, real estate those sorts of things. So when you say that it’s very difficult to project the math over long periods of time what do you kind of mean by that?

Roger: Well couple of things. One is you would intuitively think that the longer terms of the averages work their way out. But statistically speaking even the average just take the SMP500. Let’s say the average is 10% well that’s since 1926. That’s a lifespan beyond any of us living. So I’m 51 years old. The only period of time I’m concerned about let’s say between now and 91 is that 40 year time period right.

So 41 years seems like a really long time. God willing it is. But that average, that’s not enough data set for that average actually to work itself out. If you start to look at historical data and look at different seasons of 41 year time periods all of a sudden the dispersion of what the possible outcomes can be is a lot more than the average.

That’s the hard part with statistics is it takes a long time to ever get the averages. But also on the flipside is there’s so little that we know about anything. We don’t have control over markets in periods of time, we don’t have near as much control over our life as we think we do. Whether that’s our health, our marriage, our physical abilities, our mental abilities.

I’ve seen so many curveballs walk in life with clients. We don’t live an average life we live a very unique life and those unique lives can include car accidents, disability, major impacts to income, having to support family members. It’s much messier. So when we’re doing math problems we assume the devil is in all of these assumptions but we don’t live a normal life.

And none of that gets calculated in there. But to your point you’re right six months you have a lot of visibility. The way I look at is we need to stop trying to figure it all out. And let me know if you want me to go here. We need to stop trying to figure it all out because it’s not a worthwhile exercise.

So Cindy and I can remember this I’m guessing you can’t Scott is back in the day when we purchased software for a computer what you got is 20 discs. And then you had to sit there and load them into your computer and then all night long for it to have Microsoft office. And those programs were created using project management called Water Fall.

And Water Fall methodology was this let’s figure it all out all at once because we can’t change it once it’s done. And you ended up with big bloated pieces of software through all of these calculations in math. And that’s how I think of traditional retirement planning. They spend so much time trying to figure things out that really aren’t going to change anyway and it’s a waste of time.

Nowadays and this is the world that you live in Scott, is you don’t even have to buy anything. You just subscribe to it and it’s right there. And you have a phone and I have my phone and I just got back from Costa Rica I got like 39 updates for apps on my phone. Nowadays they use what’s called agile project management where they don’t try to predict the future.

They know where they want to go long term but they do what you talked about. They focus back down to what is the most important thing we can do next. And they iterate really quickly and they constantly look for recent opportunities and prioritize the things that they want to take care of. And they iterate themselves to an amazing program knowing they’ll never get it all right.

And I think that’s a much healthier way. Yeah we want to look out into the future but get back down to where I want to be a year or two from now. And if I can keep those in alignment with what I value and where I see my life going, you’ll be agile enough to switch directions if your priorities change which they will, and you’ll keep moving forward but you’ll also be able to adjust as your life unfolds.

Scott: Right so I’m listening to this episode right and I’m thinking okay great, iterative process I’m going to build this out I’m not going to boil it down to a number. What are some things I do in the next year in your opinion to advance my financial position and move towards that goal?

Roger: Okay so I want to bring it back to the marriage. Same thing you do as a secret to a good relationship whether it’s you two cohosting or a marriage. Have lots of little conversations with your partner and they can be uncomfortable conversations so you’re both walking hand in hand together right. Do that first, you don’t blow that up.

You want to have one, where do we want to be as a family in the next year? Where do we see our lives being at least in the next year? What do we want to work towards? My wife and I are achieving one next year, next year we rented a house in Colorado for a month. We’ve been working towards that to be able to build the business so I can be remote and other things.

So we’re going to live in Colorado for a month that’s going to be one thing that we’ve been working towards. We’re doing that next year. Where do we want to be in the next year or two specifically as a family? Number two, cash flow. The frugality part of it and where is the big opportunity to improve position ourselves to increase our income?

What’s the one thing that we can do to increase our income over the next year? One could be networking internally if you’re corporate. One could be networking in real estate if you want to get in real estate. It could be taking courses or learning to improve your skill set to position yourself. There are a lot of things you could do in the next year to position yourself for more income. You can have all these conversations over wine which is beautiful.

Mindy: And how frequently do you advice people to have these conversations? Is this like a once a month thing? Is this once a year?

Roger: So I think it’s once every quarter you have a check in and then two times a year you like this is what I do. Two times a year we set a six month sprint on specific things. And usually it’s no more than two sprints. And then when I work with clients then we have quarterly check-ins on where we’re at on whoever’s responsibility.

But you got to be really clear and I can give you smart sprint check sheets. It’s similar to the smart goal setting you got to be very specific and then you can build rewards in there as well.

Mindy: What kind of rewards do you have?

Roger: I’m usually really bad at that part of it. I have ordered an electric bike that was my yeah.

Mindy: That’s cool, that’s gaining popularity. Do you live in a hilly area?

Roger I do not, this is more of like a really cool hipster electric bike. It’s called a Super73 it looks really cool. I don’t even need it but it looks cool.

Scott: So I built the electric bike that Mindy’s husband put together, designed or at least showed off how he did it. And it goes very fast except for I did something wrong because I keep having it break down. So I only get to use it like a couple of weeks in a row and then I’ll break the chain or something like that. But yeah this thing goes like 40 miles an hour.

Roger: Oh yeah that’s good. Holy cow.

Scott: Yeah I don’t ever take it that fast but it could.

Roger: It’s like a … drive. Like you know you got it you if you need it. That was my reward for buying my third property.

Scott: Awesome.

Mindy: Okay Roger is there anything else that you would like to cover before we move on to our famous four?

Roger: I just think I just want to encourage people that a little bit of intentionality and having these conversations, it takes away a lot of stress. It’s that old saying you keep focus back on what you can control. And what you can control most are things that you have control over in a short period of time, over the next six months.

Keep focusing on those things rather than trying to figure out the future because if you look too far out it’s intimidating because you know you can’t figure it out. And that creates stress and that zaps life. So I think focus on what you can control.

Mindy: Absolutely that’s great advice. Alright it is time four our famous four questions. These are the same five questions that we ask all our guests. Question number one, what is your favorite finance book?

Roger: Besides the one I wrote, right?

Mindy: Yes, besides the one that you wrote.

Roger: That’s a really hard one. There are so many I think well this won’t be a finance book which is going to upset the money nerds. But The ONE Thing is a really good financial book.

Mindy: That book is the one book that we require all of our new employees to read. It is an excellent book yeah when you start at BiggerPockets, you get a BiggerPockets t-shirt, you get a copy of The ONE Thing and I think one of your first assignments is to read the book.

Roger: Wow I didn’t know that. This is very underrated, focus is good.

Scott: What was your biggest money mistake?

Roger: Wow the biggest money mistake is I think the way I handled the transition. I got too noble. I didn’t handle the transition from one kind of work to another and almost the financial future of my family with it. Transitions are hard.

Mindy: They are hard. And I would say that not talking to your wife would be-

Roger: Good plus.

Mindy: It’s just you know what, she’s not going to know until you tell her. So not telling her isn’t going to change the situation. And I’m not like dogging you I’m trying to share it.

Roger: No, dog it that’s good I own it.

Mindy: You were a horrible person but like you need be on the same page and money the thing that couples fight about the most frequently. And it’s really so draining to be in a fight with your spouse I mean like a really big fight. So talk to your spouse get your spouse on the same financial page that you’re on even if it’s not a great financial page.

Roger: Yes. Trust them more than you do. They’re your partner.

Mindy: Yes and you should have chosen wisely. Okay so well what is your best piece of advice for people who’re just starting out?

Roger: Be careful with lifestyle inflation. That’s the number one zapper of creating wealth. If you can control lifestyle inflation, it will give you the margin to actually create wealth in your life especially if you’re younger.

Mindy: That is such a good piece of advice. Because you can always buy it bigger, better, later.

Scott: And that occurs at every stage in life. So the easiest place to control lifestyle inflation and where I think I got just a huge head start over a lot of people is I just basically continued living the college lifestyle for the first two or three years out of college. And now I don’t have a roommate anymore that kind of stuff.

But just those first couple years being able to save all that money now I’m still there and I’m still not renting that expensive place downtown, that’ll come maybe at some point in the future in the next couple years, after passive income and my wealth can support it rather than just income from pay check.

Roger: Well done and Mindy when I look at people like Scott it’s like, “Man I was such an idiot when I was Scott’s age.” And Scott, very impressive and I’m always impressed when I talk to people that have figured it out long before I did.

Mindy: Try working with him all the time. And he’s not just on for the podcast he’s like this all the time. I’m the president of the Scott Trench Fan Club.

Scott: Awesome.

Mindy: If you’d like to join we meet on Tuesdays.

Scott: Well thanks for the love but yes I think that’s great advice. Just be careful of lifestyle inflation and think about it from my perspective in my 20s lifestyle inflation happens in your 20s not just when you’re having a family and kids are going off to high school and college and all that kind of stuff. Alright what is your favorite joke to tell at parties?

Roger: Did you hear about the truck that got stolen and got robbed the other day? This actually just happened in Dallas. Three masked robbers stole the truck and had a five hour energy, it was a five hour energy truck. But I just don’t know how these guys can sleep at night.

Mindy: It was terrible.

Roger: I know.

Scott: That was pretty good that was an original one.

Roger: Can I give you an extra, I’ll give you an extra one. This is actually a true story. I talking to my son and I dress a little bit like a hipster when I we’re going out. He says I’m a hipster and I was like, “No man, I’m a dad. I’m a dipster.

Scott: You’re the coolest dad around.

Mindy: Now dads are cool.

Scott: Yeah.

Mindy: Okay. Where can people find out more about you Roger?

Roger: That’s easy. Go to rogerwhitney.com or check out The Retirement Answer Man Podcast where noodle on how not just to survive retirement but how to really rock it. And we have a blast.

Scott: Awesome.

Mindy: Thank you so much for your time today this was really fun.

Roger: This was awesome. I felt like I was in therapy a little bit, and it was great. I feel better about myself.

Mindy: Oh good I’m glad you feel better about yourself.

Scott: Alright that was Roger Whitney from rogerwhitney.com. What did you think Mindy>

Mindy: I really like a different outlook on all the topics that we discuss on this show. And Roger just had a different way to look at retirement planning and I think that’s great. One of the things I really wanted to do when we started this show is to give people information and give people options. And there really is no one size fits all approach to retirement. There’s no one size fits all approach to life. So I like having a different perspective. How about you Scott?

Scott: Yeah I thought it was good. I really liked what he said about those three steps you can do for the next year. Figure out where you want to go, what you want your life to look like, figure out how you can produce the cash flow to get towards that goal. And then make sure you’re managing that cash flow appropriately and pursue that goal.

I mean it’s very simple. This is what I do every year. I do it every quarter, every day. I have a little sheet that I pull out and I say here’s my goal that I’m working towards, here’s what I’m doing to earn more money, here’s how I’m going to invest that money. And then here are my other non-financial goals. And every day I just do a little thing that moves me towards it.

And it’s like my little conversation with myself to get towards these things. And I don’t know it’s very simple and like he said it’s very iterative. I don’t have like necessarily one big number that I’m shooting for over the next 10 years. I have a number I’m shooting for at the end of this year. And then I’ll reset, I’ll relock, reload, figure out what’s realistic in the next year, and then go and pursue that aggressively.

Mindy: Yeah one of the most surprising tips I’ve picked up over the year of this show is the money conference or the money plan or the money discussion that our guests repeatedly recommend and repeatedly say that they do in their money journey.

And getting your spouse on board your significant other on board, and having this conversation to make sure that you’re both on the same track is so important. And those three tips that he said to do he suggested once quarter with your significant other, I think that should be everybody’s New Year’s resolution for next year.

Scott: Yeah and I think what it does is it seems like it really makes things easy all of a sudden. Right like it seems like an unapproachable challenging problem like how are we going to do this. Well no, you sit down with your spouse and say, “Hey here’s the deal we’re going to run out of money and go bankrupt if we don’t make some changes.

And the spectrum here is we keep doing what we’re doing with no changes and we definitely go bankrupt. Or we cut just the minimum amount necessary to where we can probably keep our head above water or we make a couple of additional changes and we begin to build wealth and things will get easier and easier over time.

And this is the conversation in some form or other that Roger and many of the other guests that have been on the show have had with their spouses. And it seems once that conversation is had, numbers on the table that the decisions become much more clear and much more easy to make even if they are at first seem like big moves.

It’s not very difficult hey we’re out of money got to sell the house, got to downsize. After I’m sure you have that conversation there’s not really that much else to be done, right.

Mindy: No there’s not. It is here’s the black and white situation, here’s the two options. Keep it or sell it or cut expenses. Or whatever it is you’re talking about in your specific situation there’s usually only two choices and it’s kind of stay with the status quo which is not working or make a big change. And the thing is not talking about it doesn’t make the change for you.

It doesn’t fix it. It just continues down the path that isn’t working. So yeah that is really my favorite tip that I’ve picked up over this year. And Scott happy anniversary, happy podcastiversary. This is show 52 it is with the way that the calendar worked this year we actually get 53 shows. Monday January 1st and Monday December 31st. So we actually get 53 shows this year but there’s only 52 weeks in the year so I’m going to call this our one year anniversary.

Scott: So this isn’t actually our anniversary our anniversary is next episode. You forgot out anniversary.

Mindy: You forgot our anniversary.

Mindy: I forgot our anniversary. I miscalculated our anniversary oh my goodness I can barely remember my own anniversary like my real wedding anniversary. I mean not that-

Scott: No that’s awesome. We will wish everybody all of you listeners a happy anniversary next episode. And you can forget we ever had this conversation.

Mindy: That sounds great. Okay from episode 52 of the BiggerPockets Money Show this is Mindy Jensen and Scott Trench and we are leaving.

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In This Episode We Cover:

  • Roger’s money journey after his mom’s death
  • Living into the future of his projected income growth
  • Switched from being a stock trader to financial planner
  • The importance of having a conversation with your partner about your financial situation and lifestyle change
  • What he did to get their expenses down
  • Moving closer to the family to get financial and relationship benefits
  • Focusing on income and how to invest their human capital to create more income
  • Starting his own independent firm
  • How some people live life like a retiree
  • Having a plan and purpose before retiring
  • Guidelines for those who want to live life intentionally
  • Making smart decisions on the net worth statement
  • Measuring the stability of income sources and how they are growing
  • Difficulty projecting the math
  • Things to do to advance your financial position next year
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “Necessity is a good motivator.” (Tweet This!)
  • “A lot of times we get this successful careers that we end up being really good at but they are not what we ever have the desire to do.” (Tweet This!)
  • “One of the best investments anyone can make is investing in themselves either through their skills, their network, or iterating on entrepreneurial types of thing.” (Tweet This!)
  • “Net worth statement is the representation of all the decisions you made over time.” (Tweet This!)

Connect with Roger

About Author

The BiggerPockets Money Podcast is for anyone who has money… or want to have more! Join BiggerPockets Community Manager Mindy Jensen and Director of Operations Scott Trench weekly for the BiggerPockets Money Podcast! Each week, financial experts Mindy and Scott interview unique and powerful thought leaders about how to earn more, keep more, spend smarter, and grow your wealth. You'll get tips for getting your financial house in order and actionable advice from guests who have been in your shoes - and found their way out.

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