JL Collins: You Don’t Need to Be Rich to Reach Financial Independence

Mindy:
Happy New Year, my dear listeners, and welcome to the BiggerPockets Money podcast. Today we are talking to the godfather of financial independence and international bestselling author, JL Collins.

Scott:
That’s right. We’re going to be talking about his new book, Pathfinders, which is a sequel or really a companion book to The Simple Path to Wealth. You’re going to be hearing about the framework, JL recommends to reach FI after he’s collected hundreds of stories to compile in this book. And why are we doing this right now? Well, with the start of the new year, we wanted to bring one of our favorite all-time guests and serial author now to discuss the path to FI and his new book, share all of these different journeys and hope that that inspires you with your New Year’s goals and resolutions around reaching FI.

Mindy:
Hello, hello. My name is Mindy Jensen and with me as always is my finding his own path, co-host Scott Trench.

Scott:
Always a pleasure to navigate the journey to financial independence. With you, Mindy.

Mindy:
Scott, without further ado, let’s bring in JL Collins. JL, welcome to the BiggerPockets Money podcast. I am so excited to talk to you today.

JL Collins:
Well, thank you Mindy. I’m excited to be here. I appreciate the invitation.

Mindy:
JL, we first spoke to you way, way, way back on episode 20 and then again on episode 116 and 285. But for our new listeners, or just a reminder for our audience, how did you initially get involved in financial independence?

JL Collins:
Oh, great question. I started writing my blog jlcollinsnh.com in 2011, and I really had no intention of starting a blog. It was just a way to archive some letters that I’d been writing for my daughter. I’d managed to turn her off to all things financial by pushing it too soon and too hard, and I want to make sure the information was available to her if and when the time came, she was ready to hear it, and even if I wasn’t around. And a friend suggested that I put this stuff on a blog and I thought that’s a great way to archive it. I barely knew what a blog was. I never dreamed it would develop an audience, but that was the beginning. And of course, none of my friends and relatives cared about it, but I started developing a readership outside that circle.

Mindy:
I think all bloggers can relate to that. Your friends in real life are like, “Yeah, we don’t care.” “Oh, sure. I totally read your blog every day.” They’ve never even typed it in.

JL Collins:
Exactly.

Scott:
You compiled. I think a lot of that work inspired a classic in the financial independence world in The Simple Path to Wealth, which has been read millions of times now. Is that right? Millions?

JL Collins:
Well, it’s sold almost 700,000 copies at this point, so it’s probably fair to say it’s been read at least a million times because people pass it around and they get it out of the library and that sort of thing.

Scott:
Awesome. So phenomenal. It’s a classic. We recommend it all the time. In fact, we recommended it just the other day to another podcast guest because it’s just such timeless classic, awesome advice here. But today we want to talk about a new book that you wrote where I think that’s informed by the success of The Simple Path to Wealth, maybe the relationships you form with your audience over time. Can you tell us a little bit about Pathfinders?

JL Collins:
Yeah, so Pathfinders is a book that has been in the back of my mind to do within a year of The Simple Path to Wealth coming out because I wrote The Simple Path to Wealth for my daughter, as I alluded to earlier in starting the blog. And so it’s very specific. She’s an American, she was in college at the time, at the beginning of her journey, and within months of The Simple Path to Wealth coming out, I started to hear from people who read it from all over the world and from all different stages of their life and they were taking this kind of specific book and adapting the principles and lessons to their own unique situations. And I just thought that was incredible is that it’s a collection of just about 100 stories, again from all over the world, all different kinds of people, different stages of their own journey, talking about how they’ve applied the lessons from The Simple Path to Wealth and where they are on that path everywhere from kind of near the beginning to already fully financially independent. And-

Mindy:
I think a large number of people who discovered the concept of financial independence but aren’t really on the path or are on the path, but just at the beginning, find that it can be a little daunting with these large numbers that need to be invested in order to get to financial independence. How does Pathfinders help answer this question and potentially allay some of the anxiety about being able to reach these goals?

JL Collins:
Yeah, that’s a great, great point, Mindy, because if you’re at the very beginning, it can look very intimidating and the first thing I tell people is that, “It’s a journey.” It’s not an on off switch. And the moment you start down the path, the moment you start getting rid of your debt if you have it and saving and investing, if you don’t or once that debt’s blown out, you get a little bit stronger than you were the day before. And so it’s not like you have to wait to the end to enjoy the benefits that come from being just on the path. And the stories in Pathfinders really illustrate that because as I mentioned, there’s some stories from people that have come to the end of their journey, but the vast majority of stories are people that are at some stage of their journey, and they talk about what it’s meant to them, and how they got there, and how it’s enriched their life.
So I think for somebody who’s contemplating maybe starting down the path to being financially independent, I think it’s a pretty inspirational book filled with pretty inspirational stories. In fact, one of the questions I got early on was, “Should people read The Simple Path to Wealth first before Pathfinders?” And I thought about that and I said, “No, I think you can really read either one of them first.” But then the more I thought about that question, the more it occurred to me that actually Pathfinders is probably the better introduction to this because I could not have written Pathfinders obviously, without The Simple Path to Wealth, I wouldn’t have the stories, but Pathfinders really talks about how accessible this is no matter where you’re starting from, no matter what your initial starting point is. One of my pet peeves is the pushback against the financial independence community that says, “Oh, that sounds wonderful, that sounds good, but that’s only for people who have very high salaries and have certain kinds of tech jobs or engineering jobs.” And that was never my experience as I met people in this community.
And when you read through Pathfinders, yeah, there’s a couple stories from people like that, but the vast majority of stories are from people who are not at all like that and who come from very humble beginnings. There’s a story in there, for instance, from a guy who was a child migrant laborer picking asparagus in the field. There’s a story from somebody who says, “When I was a kid, the rich people were the ones that had flush toilets.” So it doesn’t matter how humble your beginnings or your starting point, this is a path that has worked for other people and can work for you.

Scott:
Well one of the things that I noticed here is not all the stories are people who have completed the journey to financial independence as well. So you have people who start from a variety of different positions and you also have people who are at various points along the journey. And to your point earlier, you’ve highlighted how the benefits, you don’t have to wait until the very end of the journey to get some of those benefits. What were some of the stories that stuck out to you in terms of the life-changing outcomes that even just a few years down the path really had on some of those folks?

JL Collins:
Oh, I mean it’s kind of all of them. Most of them are people that are at some point along the journey, but the stories, some of them that stick out to me, obviously the first two I mentioned about the child migrant laborer and the flush toilets, but there’s a story in there from a guy in Ukraine who is not only following The Simple Path to Wealth, but he has a podcast, which by the way, he was kind enough to invite me to be on, for other Ukrainians who are following this path and their country’s at war, they’ve been invaded. So I love a story like that because it just illustrates anybody can do it. It almost doesn’t matter what your circumstances are.
There’s a story in there from a guy in the middle of Russia. His country is an international pariah. There are huge economic sanctions against Russia because they invaded Ukraine, makes it extraordinarily difficult to try to build wealth, but he’s figuring out ways to do it in spite of those obstacles.
And again, this speaks to my heart because one of my pet peeves again, is the people say, “Oh, this can’t be done unless you start from some privileged position.” Or “That sounds wonderful, but I’d have to give up my leased luxury cars and my McMansion, and that’s just too hard.” And when you read these stories, you realize no, you can choose not to do. In fact, I’ve said, “If you read…” There’s a risk in reading pathfinders, especially if you’re a naysayer, because if you read pathfinders, you’ll never again be able to look in the mirror and say, “This can’t be done.” Because they’re just too many great stories that people who are in fact doing it. You’ll still be able to say, “I choose not to do it.” But you won’t be able to say, “I can’t do it.”

Scott:
Well, one of the things that I’ve noticed whenever we’re talking to somebody here in the BiggerPockets Money podcast about their journey with money, there’s always a catalyst moment that I’m looking for. What was that moment where, sometimes it’s an evolution, a process, many of the stories I think in Pathfinders cite The Simple Path to Wealth as that aha moment for them. But excluding that, what are some of the aha moments that you’ve seen in those stories? What are the drivers that prompt the change of behavior and the beginning of the journey down the path to financial independence?

JL Collins:
Wow, that’s a tough one, because you are testing my memory, I think there are situations where people find themselves in a difficult situation. Maybe they’ve come across hard times, but most of them, because they’re talking about where they are on the journey are talking about the results of the benefits of having done this. I mean, there’s a story in there of someone, and again, this is someone who’s not fully financially independent, but was hit with some major medical issues and talking about how challenging dealing with those were; and what a tremendous relief it was to not have to worry about money in that context, because if you haven’t begun to build a financial suit of armor, so to speak, and you get hit with something like that, well now you’re not only dealing with the health issue that is afflicting you or a family member or whatever, but you have to deal with all the financial ramifications around that.
And so being on a path to building wealth and resources is just incredibly powerful. People talking about how there’s a guy who’s a ski bum, basically, he talks about how he works in a restaurant. I think he’s a server and how in three months he can not only make enough to live on for the rest of the year, but he’s also putting money aside to build his wealth to ultimate financial independence. And of course, the secret is he just lives very cheaply. You can appreciate he house hacks is one of the things, and he just hasn’t got caught up in buying a lot of stuff. So he’s got this incredible lifestyle that this approach, walking The Simple Path to Wealth has provided. So yeah, just about everybody who’s in Pathfinders almost by definition started by reading The Simple Path to Wealth and applying the lessons that are in that book.

Mindy:
One of the things I like so much about Pathfinders is that it isn’t just, and this is the stereotypical FI follower is the tech bro who makes a ton of money and then just spends less and invests the rest. And feel kind of hypocritical saying this because we’ve reached financial independence because my husband is a tech bro who made a lot of money and we didn’t spend very much. But I like that there’s so many different stories with different circumstances because in the beginning of my financial independence media participation, that’s all I heard was people who were making like $180,000 and they were saving 50% of their income. “Oh, wow. How did you do it?” That’s not really such an impressive… It’s still an impressive story because in America, you spend everything. So the fact that you’re not spending everything and instead are thinking about the future is great, but when you’re only spending $60,000 and then of your $180,000 paycheck, wait, that doesn’t… That’s not right.
Well, whatever. If you’re on $90,000 of your $180,000 paycheck and then you’re investing $90,000, you’re like, “Well, I only make $45,000, so I guess this isn’t for me.” And then you go away and this book is showing that, hey, you can do it. And it’s not just rich people that can do it. You can be making a whole lot less and still pursue financial independence, and honestly, you’re not going to get there as fast as the guy who’s saving $90,000 a year, but you could still get there. And I think it’s really encouraging to show people and me telling you, “Hey, you can do it.” Is not nearly as powerful as reading a real life story of somebody who did it and seeing that. Yeah, somebody in my circumstance can do this too. I really love this book, JL.

JL Collins:
Well, thank you. I’m glad it resonates. And now that’s been out for a while. I am hearing that kind of feedback and I absolutely agree with you. As I think I said a little bit earlier, one my pet peeves has always been this concept that, oh, this is only for wealthy engineers and this FI path, and that was actually not my experience when I first started writing in this FI community and starting to get to know people. I certainly met people like that and including you and Carl, but I met a lot of people who are not like that. And I think what the naysayers lose sight of or people who become intimidated by this is that achieving financial independence is not just a function of accumulating a certain amount of money. There’s not a magic amount of money. It’s a balance between how much you have, how much you accumulate, and how much you need, and the less you need, the less you need to accumulate.
So for somebody who’s making $45,000 a year as an example, to replace that income, they’re not going to need as much as the person making $180,000. So they will probably get to what they need at about the same time that the higher income person will get to what they need. It’s not like everybody needs $2.5 million dollars, which grows off $100,000. So it’s very much a balance between what you have and what you need, and the less you need, the stronger you are financially, obviously the more money you have, the stronger you are financially. But the other side of that equation is the less you need, the stronger you are financially. Going back to that ski bum waiter, he’s constructed a life where his financial needs are very minimal, so he only has to work three months out of the year, and not only can he ski the rest of the time, but he’s also building wealth.

Mindy:
You just said the less you need, the easier this is to accomplish and the faster you can accomplish this. So for somebody who is listening, who spends every dime they make, how do you need less?

JL Collins:
That’s a huge challenge. In fact, I’m very grateful that personally, I never fell into the trap of lifestyle inflation, and I’m very grateful that my daughter so far has avoided it because it has to be extraordinarily difficult to have constructed a certain kind of expensive lifestyle and then to unwind it. One of the stories that I like to tell around this idea that only high income people could achieve financial independence because my experience, I’ve known a lot of people make a lot of money, and they’re not all financially independent. And I know a lot of people have made very modest amounts of money who are.
And one of my favorite stories along those lines is back in the early 1990s, I was in Chicago having lunch with a friend of mine who was in the financial business. He had just gotten his bonus check for $800,000. A bonus in that business is a big part of your income. It’s not all of it. So I don’t know, maybe his income was $1.2 million or something. You know what we talked about at lunch, we talked about how an $800,000 bonus was not enough to make ends meet. Now I can see, Mindy, your jaws on the floor. My jaw, frankly was on the floor. I imagine for a lot of our listeners, they’re having the same reaction. A lot of people are probably saying, “Man, pay me $800,000 for one year and I’m done.” But when I sat at lunch with my friend and he walked through the lifestyle he’d created, the leased luxury cars, the multiple houses, the private schools, the exotic vacations, and you start totaling that up and you realize that he was right. He is actually not making enough money to support the lifestyle he’s put together, let alone begin to build financial independence.
So you say, “How the hell can somebody make say $1.2 million not already be there?” Well, that’s how, it’s the lifestyle you create and he will never be there unless he makes significantly more money and resists spending that extra money or he reconstructs his life to bring it back to more reasonable levels of spending. By the same token, I’ve known people who’ve never made more than $40,000 a year who are financially independent, again, based on that formula of what their needs are.

Scott:
The lesson there is that boating is a rental sport word. No, it is just amazing though. It’s about what… And it comes down to spending, you’re spending, I think Pathfinders validated this for me is it’s not always… There’s always a factor, right? It’s income spending and how you invest, but spending overwhelmingly seems to be the most important variable among the people who actually get to financial independence and have a stable portfolio that they can sleep well at night around. Has that been your experience as well, JL?

JL Collins:
Yeah. I would say that’s true. It’s certainly been my personal experience. So when I came out of college in 1972, and it took me two years to get my first professional job because the 70s were a very difficult economic time with stagflation and all that kind of stuff, but I just arbitrarily said, “I’m going to save and invest 50% of my income.” There was no internet in those days. There were no computers for that matter, at least no computers, personal computers. So I didn’t have any guidelines for this. I was wandering in the wilderness, making it up as I went along, but I knew that this was an incredibly important thing to me to have financial freedom.
And so I arbitrarily decided I was going to save 50%. That savings rate not only got me to FI, but it saved me from some financial mistakes I made along the way because again, I didn’t have any guidelines for how to do this. I had to learn it all the hard way. And then my first salary was $10,000 a year. Well, I knew people who were living on $5,000 in those days and $5,000 a year was a whole lot more than I’d been living on in college. I put myself through college. So this was not deprivation for me at all. This was a big step-up. And then when I was making $20,000 a year, I was saving and investing $10,000 and I was doubling the amount of money I was living on my lifestyle money. And when I was making $50,000, $25,000 and $25,000 and $150,000 on up the scale as my career progressed, in fact, I’ve come to start saying, “I have spent every dime that has ever come into my possession, and I’ve spent it almost the moment I got it. The difference is that I spent half of those dimes on the thing that was most important to me, which was my freedom.” And I think everybody does that in their own life. They spend their money on the things that they think are most important to them.
In our culture, a lot of times that’s fancy cars and big houses and those kinds of things. And I say now that if anybody listening to us or who reads The Simple Path to Wealth or Pathfinders, I don’t necessarily hope that they follow the simple path, that’s up to them. But I hope that now they know that’s an option. That freedom is something you can also spend your money on and that maybe for some people that will become the more important thing because if it isn’t the more important thing, then you’re never going to be financially independent.

Scott:
I love it. I think that’s the most important thing to me. That’s what I’m spending my dimes on, and I wish more people would do it. It’s just the power that comes with it is so incredible to direct the rest of your life. And yeah, to your point, my entire journey has been the same way, where I’ve spent 50% of my income or less, the entire time, and it feels like I’m spending a ton now, but it’s still less. It is just because it’s been ramping up the entire time and I started on such a low base.
So yeah, I love that framework and I think it’s super powerful and that’s another benefit of the compounding. It’s just the spending piece, the buying freedom, whatever it is such a multiplier effect. I think Mr. Money Mustache put it this way, but it’s like the less you spend, the faster you accumulate and the less your portfolio has to kick off in order to sustain your lifestyle.
So it’s like a double factor in the equation. It’s all after tax. Every dollar you don’t spend is after tax accumulation for you. So it’s powerful in that regard. And it just totally de-risks your situation. If you spend 50% of what you bring in, even if you get fired and have to take a 20% pay cut at another job, you’re still saving 30%. So you could be way more aggressive.

JL Collins:
You’re golden.

Scott:
Yeah, you probably are able to, if you spend 50% of what you earn, and here’s another one, you accumulate a year of savings in a year. If you save 10% of what you earn, it takes you nine years. The math works to accumulate one year of saving. So that multiplier is so huge on this, and that also extends to how you invest.
A lot of very wealthy people I think, who earn very high incomes but have very low savings rate, perhaps like your friend with the $800,000 investment, cannot afford to set something aside in an all stock portfolio and wait 30 years for it to go up, Allah, simple path to wealth. But if he had spent 50% of his income and had a huge pile of… Was so confident in the annual cash flows that he had, then he doesn’t have to worry about not being able to access the money until financial independence is reached or a very long time horizon. So it allows him to be more risk, take on more risk associated with the volatility of that investment. So my rants over in complete agreement with you.

JL Collins:
I absolutely agree with you. Points well taken.

Mindy:
I have a new rant, JL, let’s talk about the 4% rule. It’s actually a question, not a rant, although, I can go off on the 4% rule forever because I’m a huge fan, spoiler alert. But Michael Kitces in his article, How Has The 4% Rule Held up Since The Tech Bubble And The 2008 Financial Crisis? Has this fascinating chart that shows your portfolio has a very real chance of increasing after 30 years of the 4% withdrawals to two to nine times the starting balance of 30 years ago, how do you balance the saving with the not saving too much?

JL Collins:
So the 4% rule is also something I can go off on a rant on as well. So let me start by saying I hate calling it a rule because I think that makes people a little bit crazy and you wind up… I read debates now is well, it’s 4% the right amount or should it be 3.782? It’s a terrible rule. It’s a wonderful guideline.
So if you go back to the Trinity study, which came out in the 90s and look, and they looked at 30 years and different withdrawal rates and different portfolios from 100% stocks to 100% bonds, different allocations of those two things. That’s where I think the idea of 4% came from because if you withdraw 4% and you adjust it for inflation every year, there is a 96% chance that that money will last at least 30 years. That sounds like pretty good odds, and so I think that’s where the 4% rule came from. But if you really look at those charts, excuse me, if you really look at those charts, what you see is that in the vast majority of times, not only does the money last 30 years, but it grows and in a certain percentage of those times, to your point, it grows incredibly large.
And so what I say to people is, nobody… And I don’t think anybody really would do this, but if you chose a 4% withdrawal rate adjusted for inflation every year and just set it on automatic pilot and never paid any more attention to it, that would be a mistake. It would be a mistake for two reasons. The reason most people focus on is the fact that it does fail 4% of the time. It’s not perfect. And so you could wake up one day and find yourself broke. Nobody wants that. So you need to pay attention and if the winds go against you, you’re going to need to adjust so you don’t wind up broke.
But the bigger reason to pay attention to it is the fact that the far more likely scenario is if you just let it run at 4% for 30 years, you’re going to wake up and have this huge pile of money that you could have been enjoying over those 30 years. So 4% is a wonderful guideline. Use it as a guideline. It’s a great way to determine whether or not you’re financially independent if you apply the 4% rule to whatever you have against whatever you need. It’s a great formula to make that call, but you’re going to have to pay attention. You don’t want to run out of money, which is the 4% chance, but you also want to be aware of the 96% chance that you probably could have taken more along the way and enjoyed your life a little more than you might otherwise.

Mindy:
I think it’s really important to note that you have to pay attention, and I’m wondering how many people get themselves to a point of financial independence and early retirement as opposed to traditional retirement, and then stop paying attention. Because I don’t know about you, but my husband is obsessed and goes and checks… His morning routine, is sit down at the computer and check every single balance. That’s not my morning routine. I don’t have to pay attention because he pays attention and we talk about it all the time. But this is something that I have found, most people that I know in the FI space continue to pay attention even after they stop working. It’s just like maybe they’re not as obsessed as Carl is, but they’re still keeping an eye on it. And I was actually talking to Pete a couple of years ago and he’s like, “You’re not going to run out of money because if you get yourself to this position, you’re going to keep paying attention.” And then when you’re paying attention, you’ll notice that your balance is starting to go down well before you get to 30 years out. And all of a sudden you’re like, “Hey, why do all my checks bounce?” You’re still going to pay attention to it, I think.

JL Collins:
Mindy, I think that’s a great point and that anybody who gets into this FI community, and especially if you follow The Simple Path to Wealth, almost by definition, you are going to pay attention to this. And this is another reason that I find the obsession about whether 4% is the correct withdrawal rate to be kind of absurd because there’s an underlying assumption that people won’t be paying attention. Anybody who has the wherewithal and the interest and the knowledge to achieve financial independence or even again, working towards it, is by definition going to be paying plenty of attention, probably too much attention, like maybe your husband does, and it doesn’t take that much attention. You just have to look at it maybe once a year and say, “Pete, where do I stand?” I mean, if you had a really bad year, like 2022 where the market was down 22%, well, okay, you might want to think about taking a little less money the next year.
If you have a great year like we’ve had so far in 2023, then you look at it differently. But you’re right, the kinds of people who would suffer by not paying attention are not the kinds of people who are going to be doing this anyway. So the kinds of people for whom following the 4% rule could actually result in what would still be a very modest risk. They’re not the kind of people doing this. So yeah, I think it’s a great guideline and it’s nothing to obsess about.

Scott:
The reason it’s so obsessed about is because the FI community and by definition is kind of obsessed with enough, what is enough? And enough is a function of how much you spend or how much you project you want to spend and how many assets you need in order to get to that point. So the first question is a personal choice. The second question is, as closely as we can do it reasonably benchmarked around this 4% concept. And that’s where that comes down to what I’ve detected in Pathfinders is the understanding and definition of enough among all the people really that the story projects that are on the path, they have the definition in place, and generally speaking, it’s fairly modest. It’s not this $1.2 million is not covering my needs situation. It’s something much less than that and a clear definition of what drives happiness. And I think that’s what it’s all about. And then it’s an engineering mindset, which I think is why it attracts so many engineers to back into how many assets do I need to preserve that?
I’ll also say this about the 4% rule. I have never met a person. I’ve met a lot of financially independent people. I’ve never met a person who has the 4% rule and nothing else and calls themselves… And is actually living the FI lifestyle. Maybe they’re out there, you let me know when they’re there, but I’ve never met someone who has that and nothing else, no big cash position, no pension from the military, no blog, no book, no other source of passive income. All of them go well past it. So guideline or rule, wonderful, whatever. It’s in practice not used by people once they actually get to that point.

JL Collins:
I would agree. I don’t think I’ve ever met anybody like that either. I think the other thing in Pathfinders, as I’m listening to you reflect your observations about it, when we were selecting the stories to go in it, we didn’t eliminate a bunch of stories. We didn’t look at stories from high income earners and say, “Okay, we’re not going to include those. We’re only going to include stories from people more modest means.” I mean, that was not a metric we used it is just that was the kind of stories that were in Pathfinders were pretty much the kind of stories that came to us. And they were chosen based on how cool the story was otherwise.
So there’s at least one story in there that I can think of offhand that is sort of that stereotypical model. It was a couple from Ohio that were software engineers. They went to Silicon Valley, they managed to keep their expenses low, they made the big salaries you could make out there, and then when they accumulated their money, they moved back to Ohio where the living’s a lot cheaper, a little bit of geo arbitrage.
And so there are those kinds of stories in there. But yeah, mostly it’s people who have their feet pretty solidly on the ground and they know that spending money is inherently is not going to make you happy. Owning a lot of stuff is not going to make you happy, but having enough, we all need to have enough. And then maybe a little bit extra beyond that. And once you’re there, what more do you need?

Scott:
JL, what do some of the folks that you interact with, just giving some listeners a glimpse into the folks who completed the journey, what do their day-to-day lives look like by and large, once they’ve accumulated this enough and left work? What are some of the examples of things that you find most inspiring or neat about those folks like the Ohio couple?

JL Collins:
One of my very favorite stories in there is, and I alluded to this one earlier, is from my friend Tom, and he was also a case study on the blog, and Tom was a client of mine, which is how I know him, back in the 90s when we were both in, I was in the publishing business, he worked for NAD agency. But in Tom’s life, everything went financially wrong. Tom had a couple of expensive divorces. I think he’s got five kids from the two different marriages. He was a very talented, successful guy, but in the ad agency business is a business that caters to young people for the most part. So as he got older, he became less and less employable. He ultimately lost his house to foreclosure. He went bankrupt. He lost his job and was unable to replace it. And at the age of 6… so he’s going bankrupt and losing his house to foreclosure at the age of 62, right? 60, 62. So he is kind of an old guy at that point. And so he takes his social security at 62, which is not optimal because you don’t get your full benefit doing that, but he needed the money to live on.
He had a very tiny pension from one of the companies he’d worked for along the way. But then Tom went out and he got a job on the Firestone. I think Firestone does… The Henry Ford Museum has an 18th century working farm where people who visit the museum can see how farming was done back in those days. And they have people who actually do the farming chores. It’s a real operating farm, but who dress up in period costume and they farm the way it was done in the 1800s. Well, Tom is one of those. And so now in his old age, he’s got this great job where he is working outside, he’s physically active. He’s a very personable, sociable guy. So he gets to interact with people who come to the museum. He doesn’t make a lot of money doing that, but he’s got a little bit of money coming from that. He’s got a social security, he’s got this tiny little pension.
Tom’s doing fine, not great, not wealthy, but Tom has enough and everything went wrong. And the other thing I will say is that Tom is probably the single happiest human being I know in my life and everything has financially gone wrong in Tom’s life. So when I hear people in our community who are riddled with worry about, is my $2.5 million dollars really going to last? I just want to say, “Yes it is. And even if it doesn’t, you’ll probably be okay, if you have the right attitude, things work out.”

Mindy:
JL, do you have any tips for people who are just getting started on their journey to financial independence today?

JL Collins:
Well, the first thing I’d say is if you’re just getting started in your life and you’re going to start on a path to financial independence, you’ve discovered it, you have a tremendous advantage. You don’t have any inflated lifestyle that you need to unwind. So I think the first thing I would say is don’t let that happen to you. And probably as Scott was saying, with his savings rate, and I was talking about mine, determine how much of your money you want to spend buying your freedom. And of course, the more you divert to buying your freedom, the sooner you’ll have your full freedom be fully financially independent, and that’s an independent judgment, but just start there. And then you never have to worry about unwinding things and understand, that almost no matter what you make, if you look at half of that, there are people out there who are probably living successfully on half of whatever that number is. That was certainly my experience.
And then if you’re in debt, I mean, that’s job one. As our friend, Mr. Money Mustache likes to say, “If you’re in debt, your hair’s on fire.” So you need to, and I say, “Being in debt’s like being covered with blood sucking leeches.” And it’s appalling to me that in the United States, we think this is normal. The idea of carrying consumer debt is considered normal. Well, of course I do. That’s how I afford all this stuff I want to own. It’s insane. It’s like saying, “I don’t want to spend X number of dollars for this thing. I want to spend much more than that in the interest payments.” And again, it’s like being covered with blood sucking leeches. It’s not normal. You got to take your sharpest knife and start scraping the little blood suckers off.

Scott:
I completely agree. Consumer debt and these types of things, you have to dig yourself out of the hole and then begin the wealth building journey, which you have to do in America if you want to live a comfortable retirement at any point in your life earlier or traditional. So it’s an emergency, and that’s not the time to be go out, going out and eating out or whatever, got consumer debt that you can pay off. You got to just attack this stuff.

JL Collins:
Here’s a silver lining, because that’s not easy. It’s easy for us to say that, it’s not easy. But if people organize their life in such a fashion to free up money from their income to divert to paying off that debt, they have created a wonderful discipline because once they successfully blow that debt out, all they need to do is start taking that money that was going to the debt and now channel it to buying their freedom, which of course you do by buying assets. So you’ve already got the discipline in place, you’ve already created the lifestyle that you need to become wealthy, and you can turn it around. I mean, we, all three of us know people who have done that successfully.

Scott:
Well, JL, where can people find Pathfinders? Where can people find out more about you?

JL Collins:
Well, so I guess I’ll start with more about me question because that leads to both, my blog is jlcollinsnh.com. And if you go to the blog, you’ll be easy to find Pathfinders, you’ll find a little ad for Simple Path to Wealth. You click on that, that’ll take you to Amazon. You can buy Pathfinders at Amazon. One of the… Pathfinders is my third book. It’s the only one I’ve done with a traditional publisher. And one of the advantages of that is that they have distribution channels. So my understanding is you should be able to find it in bookstores, maybe even in airports. But if it’s not in your bookstore, you can certainly ask them to order it for you, but finding it shouldn’t be a problem.

Scott:
Well, thank you so much for coming on today. It’s always a pleasure to talk with you and learn from you. Really appreciate it and highly encourage everybody to go and check out Pathfinders in addition to The Simple Path to Wealth. So thanks for all you do JL, and great to have you back for the fourth time here on the BiggerPockets Money Podcast.

JL Collins:
Thank you for having me back. I always enjoy hanging out with you guys and our conversation, and I’m happy to come back anytime whether I’ve got a new book or not. So anytime you’ll have me, I’m up for it. It’s always my pleasure.

Mindy:
Awesome. Well, thank you JL. This was so much fun. It’s always fun talking to you, and we will talk to you soon.
All right, Scott, that was JL Collins and that was fantastic. I’m so excited about this book. I’m so excited to just have somebody sharing these stories with other people because it is so easy to start down the path and think, “Well, I’m the only person doing this. I’ll just stop. I’m the big weirdo. Why would I put myself in this position?” But to have the reinforcements of not only can you do it, you can do it at almost any income level. You can do it regardless of how much you’re able to save. Here are stories that show you, you can do this. You can become financially independent. I’m just so thankful that JL Collins was able to join us and spend some time with us today. What did you think of the show?

Scott:
I thought it was a great episode and really enjoyed everything that JL had to say. Look, that’s what we’re about here at BiggerPockets Money. Financial Freedom, we believe is attainable for anybody no matter when or where you’re starting. And that’s what Pathfinders is at its core. With that, should we get out of here Mindy?

Mindy:
We should, Scott, that wraps up this episode of the BiggerPockets Money Podcast. Happy New Year to our listeners. He is Scott Trench. I am Mindy Jensen saying ciao, ciao willabow.

Scott:
If you enjoyed today’s episode, please give us a five star review on Spotify or Apple. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.

Mindy:
BiggerPockets Money was created by Mindy Jensen and Scott Trench, produced by Kaylin Bennett, editing by Exodus Media. Copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.