finance
For those who have money… or want more of it! Join Mindy Jensen and Scott Trench (from BiggerPocketsMoney.com) 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 reach financial independence.
Guest Mel shared that at age 33, she has built an invested net worth of $1.72 million and achieved Coast FI, meaning she no longer needs to save or invest more to hit her early retirement goal by age 41. She currently works as a nurse anesthetist while pursuing financial independence alongside her husband.
Mel revealed that her husband, an automotive technician of 20 years, was fired after his employer was taken over by a massive corporation and denied their request for unpaid time off for a trip to Japan. Mel noted that the corporate rigidity ultimately did them a favor by pushing him to leave.
Mel shared a travel hack detailing how she received 600 euros per person in compensation under European Union Regulation 261 after her return flight from Greece was cancelled, despite having booked the flight using airline points.
Jay Scott discusses recent reporting from the Wall Street Journal, noting that oil coming out of the Persian Gulf and through the Strait of Hormuz has reached or exceeded pre-war levels, reaching about 80% through the Strait of Hormuz and over 100% through the Persian Gulf.
Jay Scott explains the timeline of how energy supply shocks transmit through the economy, starting with crude oil futures moving in minutes, gas and diesel prices responding within weeks, food and goods taking three to six months, and wage growth and Fed rate decisions taking up to two years.
Jay Scott notes that inflation pressures from tariffs introduced in 2025 have begun to subside, partly aided by a Supreme Court ruling that overturned certain broad presidential tariffs.
Jay Scott shares that foreign investment into the U.S. reached $452 billion during the first 18 months of the current presidential term, closely tracking the historical average of approximately $300 billion annually.
Scott Trench and Jay Scott analyze the Federal Reserve's difficult policy position, highlighting that CPI inflation sits at 3.7% while recent monthly job growth slowed to 29,000 jobs, forcing the Fed to weigh fighting inflation against supporting economic growth.
Scott Trench and Evan Lawler discuss data comparing rent-to-income ratios for renters aged 25 to 29. Scott reveals that rent-to-income is remarkably flat or only modestly worse, sitting around 32.8% in 2024 compared to 32.6% in 2014, with rents cooling in recent years.
Scott Trench breaks down income growth data across age brackets, highlighting that while starting pay at under 25 can be around $34,000, median income for a single-person household doubles to $68,000 in the 25 to 34 age bracket.
Scott Trench and Evan Lawler examine data showing that the median Gen Z college graduate leaves school with less debt than millennials did a decade prior. The percentage of graduates carrying debt dropped from 61% in 2014 down to 47% for recent cohorts.
Evan Lawler and Scott Trench agree that despite steady rent metrics and lower student loan burdens, the cost of homeownership and the disappearance of easy house-hacking opportunities present a significant headwind for Gen Z financial independence.
Tad Fallows joins the BiggerPockets Money Podcast to discuss a new survey from Long Angle detailing financial product usage among high-net-worth households with an average net worth of $10 to $15 million. The findings highlight that popular cards like the Chase Sapphire Reserve and Amex Platinum have lower recommendation rates than simpler cash back options, while whole life insurance receives overwhelmingly negative reviews.
Tad Fallows explains that the Bank of America Premium Rewards Elite card boasts a 100% recommendation rate among surveyed high-net-worth members. The card becomes especially lucrative for those with a high-balance relationship with Bank of America or Merrill Lynch, allowing users to earn high cash back returns on everyday purchases and taxes without dealing with point transfer complexities.
Discussing brokerage choices among high net worth respondents, Tad Fallows notes that Fidelity and Schwab lead significantly in both usage and recommendation rates at around 45% usage and 86% recommendations. Fallows attributes their popularity over legacy brokerages like Vanguard to superior user interfaces and digital experiences.
Tad Fallows and the hosts discuss the poor reception of whole life insurance products among wealthy respondents, noting that Northwestern Mutual suffered an 80% regret or non-recommendation rate. Fallows points out that whole life is heavily pushed by commissions rather than being an ideal product for most consumers.
Tad Fallows and the podcast hosts strongly recommend umbrella insurance policies as a low-cost, high-value tool to protect high-net-worth individuals from extreme liability and tail risks. Fallows notes that policies offering up to $10 million in coverage can often be obtained for under $3,000 a year.
Jay Scott explains that the Federal Reserve has raised interest rates to combat inflation, which has been exacerbated by factors including the war in Ukraine and energy price shocks. While the Fed's primary mandates are price stability and maximum employment, current inflationary pressures, particularly from energy costs, threaten these goals, prompting the rate hikes.
Jay Scott outlines two primary drivers of inflation: demand-pull and cost-push. He notes that post-COVID stimulus and pent-up demand fueled significant inflation in 2021-2023. Currently, however, supply-side issues, including the war in Ukraine, energy constraints, and tariffs, are major contributors.
Jay Scott clarifies the Federal Reserve's core mission, stating it was established with two primary objectives: maintaining price stability and ensuring maximum employment. He emphasizes that these two goals are crucial for sustained economic growth in the nation and should therefore be a priority for individual investors and business owners.
Jay Scott posits that the Federal Reserve acts more as a reactive entity, akin to the rear steering of a fire engine, rather than a primary driver of the economy. He explains that the Fed's role is to steer the economy and prevent it from going off track, meaning its actions are largely a response to existing economic conditions rather than direct control.
Jay Scott acknowledges that the Fed made a significant error in 2021 regarding inflation but argues that their subsequent actions in handling the situation were reasonable. He contends that inflation has not been out of control since they began raising rates, suggesting that data would refute claims of poor management post-2021 miss.
Jay Scott discusses the surprise nomination of Kevin Warsh by Trump, noting Warsh's historically hawkish stance on monetary policy. Scott expresses that Warsh's approach to reacting to the economy aligns with the Fed's charter, which contrasts with expectations of a more dovish nominee.
Jay Scott explains that immigration policy has a dual effect on inflation. On the supply side, reduced immigration can lead to higher labor costs and thus increased prices. Conversely, on the demand side, fewer immigrants mean less demand for goods and services, which can put downward pressure on prices.
Jay Scott discusses shelter inflation, noting that it reflects existing leases rather than new ones. He explains that real wage growth, while positive, may not be sufficient to drive rental housing income as high as historical averages, impacting the housing market and its relation to inflation.
Jay Scott provides context on the Fed's 2% inflation target, noting that historically, inflation has averaged around 3.1% to 3.2% over the last 120 years. He explains the 2% target was set after the 2008 recession to combat deflationary fears, and suggests a current target might be more accurately set at 2.5% to 3%.
Jay Scott emphasizes that energy price increases have a pervasive impact across the entire economy, unlike more specific commodity price hikes. He explains that rising costs for fuel, electricity, and transportation directly affect consumers and businesses, influencing the price of nearly all goods and services.
Jay Scott highlights that market interest rates, such as the 10-year Treasury yield, have reached highs not seen since 2007, surpassing the Fed's direct control. He attributes this to structural economic issues, including excessive money printing, inflation concerns, and geopolitical risks, leading investors to demand higher returns.
Jay Scott clarifies the narrative around money supply, noting that while there was a significant dip in M2 from 2022 to 2024, it has since re-accelerated. He argues that despite this dip, the overall growth in available capital and credit, alongside substantial deficits, contributes to long-term inflation concerns.
Evan, co-host of the BiggerPockets Money podcast, argues that engineers are in the best position to achieve financial independence (FI). He cites three main reasons: high starting salaries, manageable educational debt after a four-year degree, and a natural inclination towards the technical aspects of FI like math and withdrawal rates.
Mindy Jensen suggests that sales is a top profession for achieving financial independence, highlighting its lucrative nature and unlimited earning potential. She references a past guest, Mr. Planting Our Pennies, who found success in sales despite a humanities degree, implying it's accessible to a wide range of individuals.
The discussion touches on the challenge of variable income in sales careers when pursuing financial independence. While sales offers unlimited earning potential, the commission-based structure can be problematic for long-term FI planning.
Mindy Jensen advocates for careers in the trades, such as plumbing, electrical work, and HVAC, as excellent options for those who do not wish to pursue college. She notes that these physical, in-person jobs are AI-proof and offer significant income potential and opportunities for entrepreneurship.
Accountants are highlighted as a stable career option for financial independence, offering medium to high income, consistent growth, and the ability to maintain lifestyle. The profession's inherent understanding of financial math and current demand allows for client selectivity and even geographical arbitrage.
Naseema Macroy shares her journey from bankruptcy and single motherhood to building a $1.3 million net worth by age 45. Despite facing financial setbacks including divorce-related debt, she learned to manage her finances effectively.
Naseema Macroy, a labor and delivery nurse in the Bay Area, described her financial situation in 2015 as earning $200,000 annually but having no savings. She lived in a $630,000 house and had significant debt, including $200,000 in student loans.
Naseema Macroy realized she was feeling broke despite a high income because she didn't understand where her money was going. Her expenses, including a large mortgage and student loan payments, consumed her earnings, leaving no room for savings.
Kate, a sales professional earning $120,000 annually, found herself in $18,000 of credit card debt with minimal savings. A $6,000 HOA special assessment in 2020 served as a wake-up call, prompting her to seek help from a money coach named Berkeley.
Kate attributes her $18,000 debt primarily to impulse shopping and a lack of financial planning, driven by FOMO and a tendency to say 'yes' without considering consequences. She identifies 'sneaky, leaky' spending – small, unmonitored Amazon purchases – as particularly damaging.
To combat impulse spending, Kate implemented strategies to create friction, such as removing shopping apps from her phone and deleting saved credit card information from online platforms. She also found that leaving items in a shopping cart for a period allowed her to reconsider purchases.
Kate prefers the term 'money ecosystem' over 'budget' to describe her financial system, emphasizing flexibility and adaptability. She explains that unlike a rigid spreadsheet budget that can feel like a failure if one category is exceeded, an ecosystem allows for natural fluctuations and seasons of change without collapsing.
Kate's money coach, Berkeley, advised her to identify and budget for infrequent but predictable annual expenses like oil changes, haircuts, and memberships. These amounts are then divided by 12 and saved monthly in separate high-yield savings accounts, which Kate uses with Ally Bank's 'bucketing' system.
Kate suggests re-evaluating what constitutes an 'emergency' expense, particularly for pet care. She argues that predictable events like a cat's annual vet visit or a recurring urinary tract infection should be budgeted for as regular expenditures rather than emergencies, as they are foreseeable.
Scott Trench discusses the concept of 'lifestyle inflation' and how he is incorporating it into his 'Coast FI' plan. He explains that 'Coast FI' aims to reach a point where future investments will grow sufficiently on their own to fund retirement, and that allowing for lifestyle inflation is a deliberate part of his strategy.
Scott Trench emphasizes the importance of providing AI with a framework rather than letting it create one to avoid potential pitfalls. He suggests that AI is most beneficial when used to summarize, simplify, or make complex personal financial situations actionable.
Mindy Jensen advises users to provide AI with a wealth of information, especially when starting out, and to treat it like a conversation with a person. Scott Trench adds that framing the AI with specific financial preferences, such as a willingness to pay higher deductibles for lower insurance premiums, can lead to more tailored advice.
Scott Trench explains that a robust financial strategy involves a clear diagnosis of one's situation, guiding principles, and specific, actionable steps. He emphasizes that AI can be a "superpower" in this area if prompted to adhere to a defined strategy, preventing generic advice that may not fit individual circumstances.
Scott Trench highlights AI's strength in generating initial drafts quickly, suggesting users leverage this to create rough drafts that can be refined over time. This iterative process allows for the development of a strong starting point for concrete financial decisions and seeking professional advice.
Scott Trench suggests that AI can be a valuable tool for refining investment philosophies and developing investment theses, particularly for individuals with diverse assets beyond typical stock and bond portfolios. He advises using AI to bridge the gap between general investment principles and personal financial realities.
Scott Trench proposes creating an AI chatbot that acts as a virtual financial assistant, tasked with tracking spending and ensuring budget adherence. Users can instruct the AI to provide weekly spending summaries, identify budget overruns, and suggest monthly areas for cost reduction.
The podcast episode "Is Coast FI Riskier Than Traditional FI?" discusses the concept of Coast FI, a retirement strategy where individuals save enough for their investments to grow to a desired amount by traditional retirement age without further contributions. Host Mindy Jensen and co-host Evan Lawler explore the potential risks and benefits of this approach.
Evan Lawler, the new co-host for the BiggerPockets Money Podcast's Wednesday episodes, is personally pursuing the Coast FI strategy. He aims to invest $500,000 by age 30, projecting it to grow to over $5 million by age 65, which would provide a $200,000 annual inflation-adjusted income.
Traditional FI (Financial Independence) involves building a portfolio large enough to stop working entirely, typically requiring 25 times annual spending. Coast FI, however, focuses on accumulating enough to reach a traditional retirement age with projected growth, allowing individuals to 'coast' to retirement.
Mindy Jensen shared a personal anecdote about her own FI journey, where her initial calculation of $1 million was insufficient because she underestimated future spending needs. Her husband's computer programming salary of $130,000 a decade ago and their subsequent need to accumulate $2 million highlights the risk of setting FI goals based on current, rather than projected, spending.
Professor Aswath Damodaran of NYU discusses the valuation of the AI complex, emphasizing the need to differentiate between companies building the AI architecture and those aiming to profit from AI products and services. He estimates the infrastructure build-out alone is over two trillion dollars.
Professor Aswath Damodaran highlights the unprecedented scale of investment in AI infrastructure, estimating it to be over two to two and a half trillion dollars since November 2022. He compares this build-up to historical events like railroad spending and the dot-com bubble, noting its significantly larger magnitude.
Aswath Damodaran expresses caution regarding the profitability of AI products and services, noting that current optimistic revenue estimates of $250 billion over four months might not justify the over $2 trillion invested in AI infrastructure. He suggests that revenues would need to reach $8-10 trillion to validate the upfront capital expenditure.
Professor Aswath Damodaran advises separating companies that build AI infrastructure (architecture companies) from those that aim to monetize AI products and services. He argues that lumping them together, especially by summing market caps, can distort valuations, and highlights that companies like Alphabet and Meta profit from advertising, not directly from AI architecture.
Professor Aswath Damodaran characterizes the current AI investment landscape as the largest "leap into the unknown" in history, with a massive build-out of infrastructure lacking a clear understanding of future product and service revenues. He uses a 'three P test' (Possible, Plausible, Probable) to evaluate the feasibility of AI generating the necessary revenue, currently deeming it only 'possible' with low probability.
Alex Preziosi, previously featured on the BiggerPockets Money podcast, has successfully transitioned from her W2 job to working full-time as a real estate agent. This move has led to a doubling of her income, and she is now on track to earn $200,000 in commissions this year.
Alex Preziosi, who previously aimed to reach financial independence (FI) by age 45, has seen her perspective on FI evolve. She now focuses less on a specific dollar amount and more on the flexibility and freedom that financial independence provides.
Alex Preziosi has entered into a contract to purchase a three-family house hack in her town. The property was acquired off-market and is described as a project, indicating potential for further investment and value addition.
The hosts of the BiggerPockets Money podcast cautioned listeners against quitting their jobs to become real estate agents without careful consideration. They highlighted that while real estate can be lucrative, the market has slowed, and success requires significant effort and existing client networks.
Alex Preziosi reported that her real estate agent commissions are on track to reach at least $200,000 for the current year. This projection is based on her earnings so far in September and expected closings in the coming months.
Alex Smirzlock of Franyzie explains that franchise costs can range dramatically, from low-cost options like commercial cleaning services starting at $10,000 to large swim schools or indoor play parks costing up to $5 million. He suggests that $50,000 to $150,000 is typically sufficient to enter many income-replacing or empire-building franchise concepts.
Alex Smirzlock highlights franchising as a 'de-risked' path for aspiring entrepreneurs who have saved capital but lack a specific business idea. He notes that franchising provides a proven playbook, a network of peers, and a higher success rate compared to starting an independent business from scratch.
Alex Smirzlock identifies three primary types of franchise buyers: 'side hustlers' seeking supplemental income, 'corporate warriors' looking for a career change and more control, and 'serial entrepreneurs' diversifying their investments. The 'corporate warrior' segment, often dual-income households, is a significant demographic.
Alex Smirzlock contrasts the success rates of franchised businesses with independent startups, stating that franchised businesses have a five-year success rate of 85%, significantly higher than the 50% rate for independent businesses. He attributes this difference to the proven playbooks and support systems provided by franchisors.
Scott Trench poses that many individuals desire to be business owners but hesitate due to not knowing where to begin. Alex Smirzlock agrees, noting that franchising offers a structured approach for those with transferable skills from corporate careers who want to own a business without the extreme risk of a startup.
Alex Smirzlock clarifies that purchasing a franchise is not a passive investment and generally requires a full-time commitment, particularly in the first few years. He likens it to starting an independent business in that it demands significant time for hiring, sales, and operations, unless one has substantial capital to hire an operating partner.
Alex Sarnack of Franzi explains that the cost to enter a franchise business varies widely, from low-cost options like commercial cleaning ($10K-$20K) to large ventures like swim schools ($4M-$6M). However, he notes that $50,000 to $150,000 is often sufficient to access franchises capable of replacing a corporate income or enabling empire building.
Alex Sarnack highlights a significant gap between Americans' desire for business ownership and actual action, citing a Gallop survey where 68% expressed interest but only 12% pursued it. He suggests that franchising offers a de-risked path for these individuals by providing a proven playbook and support system, allowing them to bypass the initial steps of entrepreneurship.
Alex Sarnack categorizes potential franchise buyers into three main groups. The 'side hustler' seeks a low-commitment franchise for supplemental income, the 'corporate warrior' is an unhappy professional looking for a full income replacement, and the 'serial entrepreneur' views franchising as another investment for diversification.
Alex Sarnack argues that franchising is a de-risked entrepreneurial path, citing an 85% success rate over five years for franchises compared to 50% for independent businesses. He explains that this is because franchisors have a vested interest in franchisee success, providing a proven system and support structure.
For a $500,000 franchise investment, the typical cash requirement is 10-20%, translating to $50,000-$100,000. The remaining 80-90% can be financed using sources like SBA loans, ROBS (Roll Over for Business Startups), home equity, or seller financing. A $400,000 SBA loan over 10 years at 8% interest would result in a monthly payment of approximately $5,000.
Alex Sarnack outlines the franchise buying process, starting with self-assessment of interests, skills, and finances. This is followed by researching concepts, contacting franchisors, reviewing the Franchise Disclosure Document (FDD), conducting validation calls with existing franchisees, signing the agreement, and finally, undergoing training and onboarding.
When evaluating a franchise, Alex Sarnack advises looking for red flags in the Franchise Disclosure Document (FDD), particularly Item 20 which lists current and former franchisees, noting a high number of former franchisees could signal dissatisfaction. During validation calls, listen for consistent concerns, hesitancy in answering questions about profitability, and the franchisor's responsiveness.
Alex Sarnack emphasizes the importance of territory size in achieving income replacement goals through franchising. For location-based franchises, a single territory may suffice, but service-oriented businesses might require multiple territories, significantly increasing the initial investment. Understanding revenue potential per territory is key to financial planning.
Alex Sarnack identifies key mistakes made by aspiring franchise buyers, including insufficient due diligence, such as skipping FDD review or validation calls, and underestimating the required time and effort. He stresses that franchising is not passive income and requires dedication, with buyers sometimes focusing too much on glamour over operational realities.
Rising interest rates make franchise financing more expensive, potentially requiring larger down payments or increasing loan payments. Conversely, increased costs for goods and services have boosted demand for certain franchises, like home services. Franchisors face higher operating costs, but the demand for franchising as a de-risked entrepreneurship path remains strong.
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