5 Kids, Modest Income, and $1M Net Worth in 7 Years

24:11So if you've got two phone calls with a fake phone number, that's$3 ,000 in statutory damages. I record all the calls with my old iPhone 5, and I file them under Texas state law, And I typically do it in small claims. So let's say, for example, if I get multiple calls about my car's extended warranty, I'll typically just answer the phone and I'll let them go through their spiel. And I'm just polite on the phone. And I take notes about what company they say they're calling from. And they usually have a similar call script. And then let's say it's the third or fourth call about a car warranty. Then what I do is I might even have my spreadsheet there and I'll check my spreadsheet.

24:52and it's like, oh yeah, this is the fourth call I've gotten from these guys. And then I just buy the warranty, you know, and I put it on my credit card. And then once I receive the warranty in the mail, it has all of their legitimate legal information. And then I call back after I get that and I cancel it and I get a refund back on my credit card. And then the guy's book has a form letter that was put together by an attorney. I send my demand letter and, you know, depending on how willing they are to settle, They might call or they might ignore me. And if they ignore me, which is what happens most of the time, I file with the small claims here in Plano, Texas.

25:28That sounds very believable to me. There's a bunch of calls. I go through this activity set and then they do nothing. They completely ignore me. How do you actually even collect? That's an excellent question. So typically, I find their legal information, get them served. And I've been learning more and more the last couple of years how to enforce judgments. And small claims here in Texas goes up to 20 ,000. And usually, depending on the company there, and if I've got them for$5 ,000, it's normally not worth their time to hire an attorney. So most often, you know, they call me about a week or two before we go to trial and, you know, want to talk numbers and come up with a settlement.

26:05And, you know, once again, if it's 6 ,000 in statutory damages and I can get them to write a check for 4 ,000, it's worth it for me, you know, because I don't have to worry about collecting. Other ways that you can collect is through if they own property, I can file liens against it. There's a lot of different ways, but as I've learned over the years, I'm learning the legal system. How much have you collected or generated in this activity set? I sat down and looked at it, and over the last seven years, I believe I've collected about$80 ,000. $80 ,000? Yeah. Because somebody called you. Yeah. I love it.

26:38Because he keeps a spreadsheet and entertains all these calls and has gone through and listened to what they have to say. This is not like no work to do this. There's a real process that you've installed here with real failure rate and 80 grand is a nice bonus. But that comes back to the story that we've been talking about here, which is your wealth building journey seems to have been built on a variety of these side hustles and various gigs or work that you have. It sounds like the last eight years have involved lifeguarding, music gigs, this. It sounds like there's teaching involved. There's lessons that you gave for guitar.

27:11Your wife is in real estate and property management. So it seems like there's like a large collection of side hustles or side bets going on at any given time. And this is one of those. Yeah, correct. How much time do you think you've spent to generate that$80 ,000? I'm not sure. It's gotten to be over the years. There's definitely that learning curve, that S curve. You know, in the beginning, the first year I did it, I didn't collect anything, honestly. It was a learning curve. You know, I would send demand letters and I would collect data. And even the first two trials that I went to, I lost because I just didn't have good evidence and I didn't know the law well enough.

27:48I was in the right, but I just didn't know how to present the evidence and present the law. And that was OK. That was, you know, that's how you learn is from making mistakes. And, you know, small claims is a good place to do that. Yeah. Small stakes, too. So$80 ,000 is a great salary for a year. Would you estimate you've spent 2 ,000 hours doing this or less or more? I'm not sure. Okay. You know, the first couple years, you know, I just, I learned how to kind of the detective work, like how to gather evidence, how to keep records, how to make the spreadsheet, how to take the screenshots and record the calls.

28:27Like I said, the first two trials I went to, I didn't have the calls recorded. And in Texas, that's permissible. You know, I don't have to tell them when they call that I'm recording it. And it's a one party state. So I can present that, you know, unless they request it, you know, I don't have to give them that evidence. And there's a legal way for them to do that. So I can present that in court and it's completely legal and it helps, you know, show that they're the ones making the calls. And I never signed up for any of that stuff. Just over the years, as I've learned the skills, just like any other skill, initially I didn't get much return for it as I was learning the skills.

29:02And then I started to get a big, big return. and then as I've gotten better at it, it's taken less effort. So typically now I like, if I can find someone that has several violations, I've got a trial this week. I actually have them for more than 20 ,000, but I just put it at 20 ,000 because that's the cap for small claims here in Texas. And with small claims, you don't have to hire an attorney, you can represent yourself. Correct. I mean, I guess you can represent yourself anytime, but have you ever hired an attorney to help you with this? I have a couple of cases that attorneys have handled and attorneys that handle these cases typically take 50 % minus legal fees.

29:40And so it's a tough spot. So, you know, I've got a couple of cases that they've, that they've handled, but it's really inspired me to say, you know what, I can do this myself. In fact, the last one that I had an attorney, I had to teach him all the laws and present all the evidence. And, um, you know, it's, I've gotten to where it's like, you know what, it's easier for me to do it myself, You know, kind of coming back to that DIY mentality. What if many people in the financial independence community achieve financial independence? And then whenever their early retirement is interrupted by a spam phone call, they go, great, I'm going to make my 500 to 1500 bucks.

30:13That would end this spam world pretty quick, or at least greatly reduce it. But let's go back to the meaningful factors in your story here. So 2019, early 2020, we have an epiphany to begin building wealth. 2020 is a whirlwind of activity where you're starting this pursuit. It's actually a zero in 2020 for you. Your wife goes into property management. You have furloughed$600 a week unemployment from the COVID situation that's going on. You have gig work and online work happening. You are investing in your Roth and you pay off your house. Give us the overview of what transpired over the next few years and what were the big levers?

30:49Was income coming in from some form of active work? What was the meat of your financial journey over the last seven years since then? Well, Scott, I'll quote you and say, get to a 50 % savings rate as fast as possible. And the big three, like housing, transportation, and food, we wanted to get to that 50 % savings rate as often as possible. Once we built an emergency fund, we didn't have to keep building an emergency fund. So all that money we could save, invest, and give. And once we got to where we were comfortably at a 50 % savings rate, like we'd learned how to live the way that we liked. And with my wife's support, you know, I was able to work on making more, you know, so and then that financial confidence that comes with a strong financial situation.

31:35You know, eight years ago, if I got a call about a gig, I might feel an urgency to take the gig. It's like, this is the amount that I'd like to get paid, but I need the money so I could ask for less. But, you know, having a strong financial position, it's like, well, maybe I'd like to stay at home with my wife and kids. So I'm going to ask for more money. You know, a position of financial strength has put us to where we could get more. It sounds like the power dynamic flipped in your situation for your gig work, at least. What happened with the lifeguarding or the day work that you were doing?

32:06Yeah, the other side of that, too, is it's been so awesome to just study tax advantaged accounts. Right. So my city job, we have a state pension. you know, I can put 7 % into that and the city does a two to one match. So every dollar I put in the city puts in$2. And then we also have a 457B. And so all of that money goes in, you know, pre-tax. And as I learned from listening to your show, you know, there's no retirement age. So whenever I want to early retire from that job, I have full access to that money. You know, high deductible insurance. And because I'm a gig worker, for the most part, my city job is not full time.

32:49So I don't get benefits. So we have marketplace insurance, and we can take high deductible insurance because our emergency fund will easily cover that high deductible. And so our health insurance is very low. We have a high deductibles and, you know, stuff on our homeowners insurance, high deductibles on our auto insurance, and then just all the tax advantage stuff. And even, you know, we'll use the saver's credit. You know, so I try to put as much as I can into tax advantaged accounts to bring our taxable income as close to zero as possible, and then put the rest in like Roth or taxable accounts and, you know, get the saver's credit and take full advantage of that.

33:30What is the saver's credit? So depending on your income, they will give you up to a 50 % credit on your tax return up to$2 ,000 for a married couple. And so, you know, let's say, depending on where you sit there, if you put 6 ,000, and Roth contributions count. So let's say if I put a bunch into my 457 and it lowers our taxable income to where, you know, let's say we have a$10 ,000 taxable income at 10%, you know, so that's going to be, we owe$1 ,000 for income tax, but our contributions put us in a position that we We get a 50 % credit up to$2 ,000. So we get a$2 ,000 credit and that would just cover our entire tax bill.

34:16I actually wasn't aware of this. And that's kind of embarrassing because I think a lot of the BiggerPocketsMoney listeners are just fairly high income. So they don't qualify for this credit here. And that's what makes your journey so remarkable is the low expenses that you maintain this entire way through so that you could, you generated a substantial wealth. I want to hit that headline number in a second here. over the last eight years from this$150 ,000 starting position through this body of activity. And then it sounds like just general applied financial knowledge. And I imagine that knowledge didn't come in one big chunk.

34:46It was hours and hours of consuming content and going and researching and finding every possible advantage and stacking them up bit by bit. And that really compounded nicely for you. Am I again guessing reasonably close here for this? Yeah, that's absolutely right. I know you talk about the four levers. Yep. Spend less, earn more, invest or create. Yeah. He does it all. Yeah. You've done, you've done all of them. So, so what was the headline here? We are never earning up more than a hundred thousand dollars a year from$150 ,000 in net worth in 2019, early 2020. What are we, where are we at today?

35:19Yeah. We hit a million in net worth back in April. Yes. Hooray. That's awesome. The double comma club. Yeah. That was a huge milestone. for us, you know, and that was just unreal. How old are you right now? 49. 49. Okay. So you started your forties, not doing bad necessarily with any of this, but not feeling like you were on the right track. And by the time you'll turn 50, you're well past$1 million in net worth, assuming that there's no market crash or anything like that, but you just, you just absolutely crushed it here. Do you think your journey is repeatable? Do you think that there was, your situation was particularly unusually suited to building this wealth?

35:57Or do you think that this is something a lot of people who are maybe starting their 40s or even 50s can repeat? I think there's components of our journey that have just been a blessing and luck. You know, just being at the right place at the right time, you know, putting myself in a position to become lucky. Once again, I can't say it enough. You know, my wife being on the same page with me has been critical, you know, for us to just be accountable and encourage one another. And her skills as a homemaker have just been, you know, absolutely fantastic. but it's repeatable, you know, just taking the tax advantaged and, you know, the side hustles and doing those things and just cutting expenses.

36:33But really, you know, for us to digging into that minimalism and not feeling deprived, you know, looking at those things as, you know, when I make salsa at home, like it's better than when I buy it at the store. When we make laundry detergent at home, it's better than what we buy at the store. We build our own furniture. My wife and I build it together. It's, you know, cost pennies on the dollar of something that we would buy. And it's become like a fun activity for us to do together. And I think it's repeatable. I think, you know, a lot of people just don't challenge those limiting beliefs. And, you know, it's been, it's been so satisfying.

37:09The story that I'm hearing is absolutely repeatable to somebody who's willing to do the work. This was not just, I am going to sit back and let all this money come to me. This was, I am going to go out and find ways to earn income. I got annoyed by these spam calls. I get annoyed by spam calls too. Do I do anything about it? No. So guess how much money I've collected over the last eight years? A whopping zero. But you saw a story online. There's a lot of people who saw that same news story and did nothing. You took action and you are$80 ,000 richer because of it. I would actually say you're more than$80 ,000 richer because you took that money and probably invested at least some of it, which has grown.

37:52So you're more than$80 ,000 richer because you took action when most people don't. They sit on the couch, they watch the video and they're like, huh, that'd be cool. And then they never do anything. So yes, your story is 100 % repeatable if somebody is going to do the work. This next question I have is what is retirement going to look like for you? And when are you expecting to retire? Do you want to retire? That probably should be included in the question set. Yes. I mean, look at his life, Scott. What does he want to get rid of? That's really hard to say. So, you know, I love the four hour work week when Tim Ferriss talks about, you know, no one wants to have a million dollars.

38:30They want the lifestyle that a million dollars pays for. And I feel like we've found ways to live a very fulfilling life. My wife is actually in the other room watching my granddaughter right now. And it's just amazing to have the freedom to say, I can go spend time with my granddaughter. I got this seat for my bicycle that I can put her on and take her for bike rides. That is so fulfilling to me. I can go around with my band and, you know, play my favorite songs and it helps pay the bills. I can go to the pool and hang out with my coworkers and talk about, you know, finances and, you know, read my Bible and do all the stuff I would be doing at home for free.

39:07And, you know, most of the people go to my pool and pay to be there. I get paid to be there. You know, so retirement, I just think it's, you know, kind of more doing what we want to do. We're happy with our house. We're happy with our lifestyle. And it's just taking more time to spend maybe more travel and giving more and, you know, spending time with our kids and our grandkids and just trying to share this kind of information with our friends and family. I love this. I love your mentality. I love your happiness because there's a lot of people who look at this financial independence weirdo thing and think, oh, I would be miserable.

39:46I have to give up everything. And you have a really great life. It sounds like you really enjoy the life that you're living now. Yes, you could choose to retire, but you also really enjoy doing all of the things you're doing. Why would you retire? You're kind of doing, professionally, the same things you were doing eight or nine years ago, but the power dynamic has totally flipped in your life where you're in complete control of the situation. So it really hasn't resulted in like, you're still doing a similar job, you're still doing the band, you're still suing scammy phone callers. It's just now the options set has exploded and you decided, you know what, I really like what I'm doing here and I can now kind of open up and see what's next.

40:30That's what financial independence, I think, is all about, is it doesn't necessarily need to lead to a huge external view of life changing. It's just a power dynamic and a happiness security relationship. It sounds like it's all improved as you've pursued this journey and crossed the million dollar mark here. Yeah, I agree with that. I mean, and we definitely spend luxuriously on the things that we get value out of. Like, I always only drink really good coffee. You know, I always, you can laugh at this, but the socks that I wear are$15 a pair, but they're really nice. They're really nice socks.

41:02My son, you know, got me on really nice soap. You know, things are like$7 a bar for soap, but I get value out of that. And I don't get value out of having a car payment or an expensive car or a bigger house. You know, my wife does like if we go on a trip for our anniversary, if I rent a sports car for the week, you know, and she likes that. But it's easy to rent a sports car for the week if I ride my bicycle to work. And I like riding my bike to work. It helps wake me up and it gets me some fresh air and a little exercise. And it's amazing. Fantastic. Well, congratulations on a wonderful outcome here and a fantastic story.

41:40You know, thanks for sharing your journey with us. It's just so impressive to hear what you've achieved here, never having earned over$100 ,000 in active income in a year, right? Is that the right statement? I think the last couple of years, it's probably been a little over 100 ,000, you know, maybe in that 100 to 110, 115, maybe the last year or two. And that's the aggregation of these multiple things you guys are doing has stacked up to that. Yeah. And it's just still remarkably impressive. And congratulations on what you've built and the wonderful, fulfilling life that you seem to have here.

42:14And thank you so much for listening and sharing your story here with BiggerPocketsMoney. We really appreciate it. And it's just, it just makes our day to hear about this kind of outcome. Thank you guys so much for sharing the information and just, you know, challenging my limiting beliefs and putting out the resources and just, you know, making it seem approachable and just aggregating just, you know, all that information for people like me to access it and be inspired. And I'm just so happy that you took action. Thank you for hearing it and then putting it into practice. I love that. Dave, where can people find more about you?

42:48And specifically, where can people find out where you're going to be playing your next shows? You can go to my website, davesguitarmusic.com. And you can also find me on Facebook, you know, with my bands, Guns and the number four, Roses and Walk This Way and Texas Kiss Destroyer, something like that. I don't know. But you can find me on Facebook, you know, under just under my name. Well, thank you very much. We'll check those out. You ever come through Denver? We actually took a trip up through there a couple months ago. And I thought about you guys. We took a family trip and went and did some hiking.

43:24It was a lot of fun. Did the Manitou Incline. Oh, how did you like that? That was a lot of fun. That was a lot of fun. I gave up because there was no parking the day I went there. So I still have been over here forever. I tried to go there once and it was no parking. So I went and did some other hike. I have to go back and try it sometime. I've heard great things. Yeah. Scott, when you go, take Carl with you because I don't want to do it. I love reading the reviews on the Manitou Incline because people are like, wow, this was a lot of stairs. What did you think it was? It's like 2 ,700 steps or something.

43:56It's like at altitude, straight up. So yeah, not my idea of a good time, but I'm glad you enjoyed it. You know, and it was one of those things that it didn't cost anything to do. Yeah. They give out passes. You have to have a permit to do it, especially on the weekends. but you can get a permit, I think, either one or three months in advance. And it's free. They don't want 9 ,000 people on these stairs. So they only give out a certain amount every day. It is a very interesting, fun, in air quotes, thing to do if you are in the Colorado Springs area. All right, Dave, this was so much fun. I'm so thankful that we had you on the show today.

44:34I loved hearing your story, and I really, really appreciate your time with us. Thank you so much, and we will talk to you soon. I love it. Thank you guys so much, Scott, Mindy. Appreciate you guys and all you do. All right, Scott, that was a fantastic story from Dave. What did you think of his side hustling and his just willingness to take action? Well, I think it comes down to what he said in the show where his big three, his housing, transportation and food expenses were kept under really tight control for the majority of his wealth building journey. And I think that it's literally that simple and that hard for a huge percentage of people in a similar position.

45:11And I think that one of the things we didn't get to today, it's tough to speculate on this one a little bit, but one of the things we didn't get to is the decision to pay off the mortgage versus invest, you know, to finish paying off that last $38 ,000. I imagine that was at a low interest rate or could have been refinanced to a low interest rate at that point in time. But what paying off the mortgage did, I think in his situation is it made everything optional upside, that extra gig negotiation, this component of flexibility over here in my day job. I just think that that provided that optionality there.

45:42And that may, in his case, have overcome the opportunity cost of not investing that$38 ,000 at what ended up being a very high return. We'll never know. It's not as simple as you could invest and get more wealth than paying off your mortgage, I think, in a lot of real world scenarios. And this may be one of those examples. I hear you saying that you are a team no mortgage, Scott. I'm team it's not as simple as it seems, right? I probably would not have paid off a three-year, you know, two and a half, three, four percent mortgage. In many cases, I have made the equivalent decision to basically pay off a six and a half percent mortgage.

46:15I think it just depends on that situation. And I think it's interesting that once those costs are very low, optionality explodes, especially if that comes with this embrace of the minimalism or I'm going to be able to do it myself mentality, which I think is the key to being able to have an outcome like Dave's on an income like Dave's household. It's really just a remarkable story. It reminds me of another Dave. Dave Ramsey says, live like no one else now so you can live like no one else later. And I really love that quote because Dave was living like no one else. Nobody else is going to be doing musical gigs and also being a lifeguard and also doing all these other side hustles, the TCPA payoff that he's getting with these spam phone calls.

47:00There's a lot of people who have no interest in doing that, but then they'll come up to Dave. They're like, wow, how'd you make a million dollars? How did you grow your wealth to a million dollars? Well, this is how you do all of these little things and they add up. I love his story. I have a question for you. I think that Dave's clear sophistication and self-education and the action he's taken in a variety of like his, the tax advantage accounts and how he's doing that, the savers credit, the opportunities that came with COVID, you know, to make the best of the situation with COVID and his furlough.

47:32You know, I think all of those stack really nicely with the complicated and varied income sources that Dave has as a musician and lifeguard and a spam call sewer or whatever, however we describe that activity set. Those things, I think they really stack nicely with advanced personal finance knowledge accumulated over many thousands of hours of self-education, perhaps in a way that they don't stack quite as nicely with somebody who is earning$80 ,000 a year at a W-2 job, right? There's just not as much mechanically to do in one of those situations other than control the budget and move through the tax-advantaged accounts as there may have been in this situation.

48:10Do you think that's fair? I think that's really fair because let's take this person who's making$80 ,000 a year. They're probably working at least 40 hours a week. They don't have time to answer that spam phone call and talk to the person who's on the line and take the notes. And they could eventually amass$80 ,000 in lawsuit money, but they would also have to go to court, which means they would have to take time off work. And Dave has more of a gig lifestyle where he can just not take a job on that day that he knows he has court. So he can go in and do that. He can go do the door dashing and the Uber Eats, and he can go do lifeguarding.

48:53They need lifeguards during the day. They need lifeguards on the weekends. If you've worked your 40-plus hour job, A, you can't lifeguard during the day. You have to lifeguard at night, and the pool may or may not be open for very much longer after you get off work. You're not going to want to do anything on the weekends. You're trying to recharge. I think it very much coincides with Dave's more gig lifestyle. Everyone has their picture of what they think personal finance ought to look like, right? And it's nominated by the, I'm a W-2 employee earning a middle class income, and here's the right set of actions.

49:29And I think what's been so interesting in the last few years here at BiggerPocketsMoney is hearing the different stories where that breaks. because there's not really much controversial to disagree with for the traditional approach for an employee. I mean, it's basically pick your Roth versus your 401k. There's an argument about which marginal tax bracket you make the switch to Roth versus 401k, depending on where you're at. It's straightforward. There's no there's no arguing what best practice largely looks like in that situation. And then it really opens up once you get into entrepreneurial side hustle land where you have six jobs stacked at once.

50:00And it's very interesting, very fun. I'm sure many people also would have no part in it and it's not really for them. And that's great. That's what makes personal finance personal. Yep. Scott, how many TCPA lawsuits have you filed? I have filed none. I've thought about a hundred. Yeah. I've thought every time they call, I'm like, no, I don't want it. I also have to answer my phone every time it rings because I'm a real estate agent and it might be somebody asking a question about a listing that I have or some transaction that I'm in the middle of. I don't have the luxury of just not answering some random call I don't recognize.

50:33Well, should we get out of here, Mindy? I think that sounds great, Scott. That wraps up this episode of the BiggerPocketsMoney podcast, but we are not done sharing information with you. We have a whole website filled with information, articles that Scott has written, articles that I have written, templates and forms and calculators, free resources for you. Everything on our website is free, BiggerPocketsMoney.com. We also have a Facebook group, facebook.com slash groups slash BP money. And we would love to have the conversation continue with you over there. Reach out anytime. All right. He is Scott Trench.

51:07I am Mindy Jensen saying good wishes, little fishes.