Book Report: Set For Life by Scott Trench

Set for Life

Just about a month ago, I had the opportunity to meet Scott Trench and Mindy Jensen at Camp FI Southeast. This was great for one because they’re awesome, friendly people, but also because it was a nice opportunity to pick their (expert) brains a little bit about the real estate world.

I’ve never owned real estate (always the renter, never the bride), but these two work for a company that is dedicated to real estate investment: Bigger Pockets.

This was also the first time I had heard of Scott’s book: Set for Life. He gave a presentation about how he believes “House Hacking” is the best strategy for people in the early stages of wealth building and made the generous offer to send a copy of his book to anyone that was interested. Well, being both frugal and a personal finance nerd, there’s no way I was passing that offer up.

So, over the course of the last month I’ve covered the whole book, mostly with the audio version, and thought I’d share my thoughts with you fine readers.

Book Report

Let’s start by stealing a quote from Chapter 7:

This book is about early financial freedom. It’s about building a life changing state of wealth as rapidly as possible. It’s about putting yourself in position to take advantage of real opportunities and make big changes.

Clearly, this is a topic that I am very passionate about and so I was vibing with this book pretty much from the get go. I think there are a ton of lessons packed into this book and that, while the target audience is mainly people just starting out in the world (think- just out of college), there is practical advice for anyone looking to generate wealth.

The book is broken out into 3 parts that function as a sequence of strategies that you can take. Let’s go through each one real quick:

Part I

I immediately loved Part I. This section is dedicated to helping someone get from zero net worth to saving up their first $25,000. It focuses mainly on the type of frugal living tactics that are almost universally available for people to implement. Additionally, this isn’t just frugality for the sake of frugality. That works for people like me and The Frugalwoods, but many people bristle at the idea. Instead, there’s an end goal in mind. Scott’s designed a strategy that will get you to $25k so you can then start investing in income generating assets (in Part II) and rapidly grow your net worth.

Part II

This section is appropriately titled “From $25,000 to $100,000 through Housing and Income Generation” because that’s what it’s about. There are some well thought out strategies here that I’d say most people definitely don’t even consider.

In chapter 6 he talks about switching from salaried work to work where pay is based on performance (such as commissioned sales). I knew this was coming and was ready to write it off because I have no interest in that sort of high pressure work.

Nevertheless, I found it actually really hitting home as he described the ways that salary work teaches high performers to be more average and put in time just being in their seats. Escaping from this sort of environment is one of the reasons I’d like to become FI in the first place.

I don’t think you have to do it Scott’s way, as I’m well on my way to FI (and many others have done it before) by working a regular salaried job for a steady paycheck. Nevertheless, I feel like there’s no arguing with Scott’s point that the performance-based pay approach could absolutely accelerate wealth building if you’re willing to put in the work. It’s also critical that you establish the baseline frugality and savings from Part I to allow you to pursue these types of opportunities.

Overall, when it comes to choosing a career, he gives some tough love and makes some really great points that run counter to what the common wisdom would tell you.

Part III

In keeping with the chronological layout, this section of the book lays out strategies and tactics for moving from your first $100k in net worth to ultimately achieving your financial independence.

I’ll cover a couple of the specifics from this part of the book in the next two sections, but again it was the case that I was impressed with how comprehensive Scott’s approach is and found myself agreeing with almost all of it.

 

General Concerns I Had

Having heard a bit from Scott about his own background and the strategy he’s implementing in his own life, I had a slight concern that he’s recommending the path that worked for him. Sometimes you see this sort of thing from successful people and the approach ends up not being all that replicable.

In this case, I think it’s the reverse though. He seems to have really analyzed the various options and pursued this path in his own life because he feels it’s the best and that’s why he’s recommending it. At least, that’s the impression I get. The book certainly seems full of ideas anyone can implement if they’re willing to put in the time and effort.

There is a somewhat high emphasis placed on buying real estate. This definitely shouldn’t be surprising, since the book is published by Bigger Pockets and Scott is a real estate investor. Some people may be turned off by this, or unable to implement the strategies in their local market, but it doesn’t hurt the overall message.

While I was still in the middle of the book I wrote my longest complaint about Scott’s characterization of retirement accounts as “false” assets. He did so because he feels they’re counter to acquiring early financial freedom, which is fair, but I took issue because there are various ways for a dedicated planner to access that money early without the penalties (such as Roth Conversion Ladders) and ultimately save tens of thousands of dollars in taxes. However, when I got to the Appendix, I discovered he’d devoted a full 9 pages to a detailed analysis of these sorts of strategies, basically just destroying my entire complaint.

Other than that, I’d maybe instead of “real” vs “false” assets, call them “current” and “long term” assets, the way that accounting statements do. This is a bit of nit-pick though. I do agree with the overall point that if your long-term assets come with liabilities (debt) and you don’t have the current (real) assets to handle those debts, you’re in a worse position than if you didn’t have those assets and liabilities in the first place.

 

Things I Loved

Honestly, I loved the majority of the book. I could go through page-by-page and most of the time you’d see me just nodding my head and shouting “Preach!”. That’s not really how book reports work though, just ask my fifth grade teacher…

So, here’s a list of some of my favorite parts that stood out as I was going through the book:

  • Love his points about the downsides of financing a master’s degree. I’ve got a post coming out soon for Choose FI that will go into my thoughts on pursuing master’s degrees.
  • I enjoyed how in part 3 he re-frames common decisions to the viewpoint of someone pursuing “early financial freedom” instead of a 40 year career.
  • Love his discussion of why you should invest in index funds instead of wasting time trying to pick winning stocks.
  • Loved his points about speculation (bitcoin fans take note) and the Warren Buffet quote on gold:

“I will say this about gold. If you took all the gold in the world, it would roughly make a cube 67 feet on a side…Now for that same cube of gold, it would be worth at today’s market prices about $7 trillion – that’s probably about a third of the value of all the stocks in the United States…For $7 trillion…you could have all the farmland in the United States, you could have about seven Exxon Mobils and you could have a trillion dollars of walking-around money…And if you offered me the choice of looking at some 67 foot cube of gold and looking at it all day, and you know, me touching it and fondling it occasionally…Call me crazy, but I’ll take the farmland and the Exxon Mobils.”

  • Love that he frames “risk” as the odds of not producing as much wealth over time, as opposed to the common definition of a risky asset (like stocks) being volatile in the short term. This is because he assumes the principal investment will never be spent, only the returns.
  • Love listing “Time” (and how you spend it) as a financial metric to track. This is something I’m continually trying to get better at.
  • Love chapter 13 where he’s brutally honest about habits that most of us have that are sabotaging our progress (watching TV continues to be a weakness for me).

Give It a Read

I’m definitely not getting paid to write reviews of things, so please believe that I am only writing this because I really think you’ll benefit from reading the book. You could pick it up from Amazon with my affiliate link, but I’d be just as happy if you told your library to get you a copy, so long as you read it and implement these ideas in your life.

The biggest indication of how much I agree with Scott’s writing is that I’ll be trying to convince my friends and loved ones to read this book. I’m sure they’ll laugh at me and continue to think I’m a big weirdo for caring so much about personal finance, but at least I’ll try…

 

Finally, here’re some additional (audio) resources:

  • Check out Scott and Mindy’s Podcast: Bigger Pockets Money.
  • Here’s a recent interview Scott did with the ladies at the Fire Drill Podcast. (Also give their other great episodes a listen)

 

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8 Comments, RSS

  1. Gwen @ Fire Drill Podcast February 12, 2018 @ 9:14 am

    I agree! Scott knows what he’s talking about. I’m about halfway through their new money podcast and am loving it so far. Thanks for the shoutout!

    • aardvarkadvisor February 12, 2018 @ 9:16 am

      Thanks, Gwen! So glad we’ve got all these great FIRE related podcasts these days, including yours and theirs. Keep ’em coming!

  2. Scott Trench February 13, 2018 @ 5:49 pm

    Thank you so much for this awesome review. I’m so glad that you specifically commented on the Warren Buffet quote which I think is just such an incredible and to the point explanation of the absurdity of “investing” in gold with a significant portion of a portfolio!

    Also, I love your Fire Drill Podcast Gwen!

    • aardvarkadvisor February 14, 2018 @ 8:11 am

      Buffet quotes are always worth their weight in gold 😉

  3. Arrgo February 15, 2018 @ 8:14 am

    Enjoyed the review. Even though real estate isn’t my thing, you can always pick up some new ideas and motivation from someone else’s FI strategy.

    • aardvarkadvisor February 15, 2018 @ 8:17 am

      Definitely agree, and I think there’s plenty of good advice in there, even for someone that has no interest in owning real estate.

  4. Javier February 15, 2018 @ 8:15 am

    I am on the path to FI and will be gifting myself a copy. Once I’m done I might have my sons read it.

    • aardvarkadvisor February 15, 2018 @ 8:18 am

      Awesome to hear, Javier. It’s crazy to think how far ahead the next generation may end up by learning about these sorts of ideas early in life and being able to implement them at a young age.

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