Set for Life

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8.5 / 10
8.5/10

 

This was a eloquently structured manual for how to approach wealth, stage-by-stage, with extremely actionable ideas. Scott Trench is a living example of what he writes about which gives him both credibility and a certain confident authority on the subject matter in this book– this is more than evident in the writing. 

I plan to revisit this book annually and highly recommend to anyone just starting their wealth-building journey, early in life or not! Note: this is also a good one to read right after reading Rich Dad, Poor Dad by Kiyosaki.

Introduction

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Those who achieve early financial freedom build wealth and acquire assets such that they produce passive income in excess of what they need to live .

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You need to earn more , spend less , and invest the difference aggressively throughout your journey , as they apply to the specifics of your situation .

Chapter 1: Building The First $25,000 through Frugality

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The hard truth is that the first step in the process to escape the rat race is ( and always has been ) to begin preserving capital . Frugality . Savings . Penny pinching . Living on less .

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** If you can easily get by on significantly less income than you currently earn , you open yourself up to an entire world of possibilities or opportunities . Some people call this luck — and only the financially prepared are in position to get lucky .

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Instead , ask yourself the following question : Is that event / trip / item so important that I’m willing to delay my financial freedom in order to purchase it ?

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you consistently prioritize your early financial freedom the way it deserves to be prioritized , then many spending decisions are easy .

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Do not look for expensive professional advice without doing at least a few hours of in – depth research on the subject to find someone who fits the bill .

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** Now the folks who play in the big leagues with money will argue the opposite . They will argue it’s not worth your time to learn about these things , and that it’s better to hire a specialist . And , their advice is correct — but only for them . Those earning hundreds of thousands of dollars per year absolutely should hire out as much as they can , focusing their time and energy on activities that produce such large income !

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No , you do not need to buy the best — you can get by just as happily with acceptable goods and services . Do not fall victim to marketing messages of those telling you that you deserve the best .

Chapter 2: How to Live an Efficient Lifestyle

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** there’s no need to eradicate the small pleasures in life that you truly enjoy on a day – to – day basis if you are willing to do the big things right instead . Don’t sacrifice the little things . Change the big things .

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Living in a cheap apartment convenient to the workplace is the single most important thing you can do to start saving money .

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** Too many Average Joes talk about how a commute is just a part of life in their part of the country . They are wrong . A commute is not “ just a part of life ” in any part of the country . It can always be changed . Always . Every single person who has a long commute has made the combinatorial choice to live where they live and work where they work .

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Always have the ready option for a delicious and healthy meal

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Never go out to eat because he doesn’t have anything prepared

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But , it’s absurd to eat unhealthy food in the name of saving money . Joe should eat wholesome food every day . He just needs to make his default option a healthy choice from a grocery store .

Chapter 3: What to Do with Money as You Save It

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A credit score is a reflection of one’s financial dignity .

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Build $ 1000 to $ 2000 in emergency funds immediately . Start paying off bad debts and get back to zero . Build up about $ 25,000 in working capital .

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Cut back on everything that doesn’t bring you happiness . Don’t forget to enjoy life , but understand that wasteful spending can eliminate hours or weeks of hard work .

Chapter 4: Turning Your Largest Expense into an Income Producing Asset

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Yes , not losing wealth can be counted as building wealth in the case of housing , which for most people is one of those “ fixed ” expenses we discussed in chapter 2 .

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But it’s far easier to pull off for the guy with excellent credit , excess cash to pay for unexpected problems , and a strong savings rate to get through the occasional month without tenant or roommate assistance . Don’t skip straight to this part . Build your financial foundation one step at a time .

Chapter 5: The Financial Impact of Housing Decisions

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** Don’t buy the most expensive piece of real estate in the most expensive area with your first home purchase if you aspire to early financial freedom . Don’t lock yourself into a mortgage and physical location that limits your freedom for the foreseeable future . You never know what might happen in a few years , and retaining the option to move without dire financial consequences can put you at a huge advantage . Instead , buy a home that affords you the luxury of future choice .

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A home is not an asset , unless it generates income or is expected to produce reliable appreciation .

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Furthermore , when live – in flippers go to sell their properties , they can often exclude most of the capital gains on their primary residence from taxation , a nifty loophole as part of the Taxpayer Relief Act of 1997 that makes this strategy extremely advantageous .

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House hacking is the optimal financial decision for most first – time buyers . As Joe showed us in the last chapter , house hacking entails buying a piece of investment real estate with the intention of living in it , while renting portion ( s ) of the property to cover the mortgage payments .

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As long as you aren’t discriminating illegally , you can choose the kindest , quietest neighbors who apply and kick out ( either by evicting or refusing to renew a lease ) the ones you don’t like .

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As a live – in house hacker — because of a special tax law that benefits owner – occupiers — appreciation can produce a more powerful financial impact for you than it can for a traditional investor . Assuming you live in the property for more than two years , when you sell the property , much of the capital gains are tax – free .

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Turn your first home into an income – producing asset , and make an incredible leap forward .

Chapter 6: How to Make More Money

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the point of earning more money is so that it can be used to acquire income – producing assets . The point of everything in this book is to rapidly bring about early financial freedom .

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You’ll need to change your job and likely your career if you want to earn significantly more money significantly faster than you will on your current career track . Thus , salaried , specialized work is the worst kind of work in America today for the ambitious seeker of early financial freedom looking to scale her income .

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What happens to the team member who can handle twice as much work as the next guy ? Well , he’s given twice as much work ! Is he paid twice as much ? Heavens , no . Pay , of course , isn’t based on productivity , but instead is based on experience . It reflects tenure in the form of years of service to the company or in the industry . They call it “ paying your dues . ”

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**** Coupled with a personal finance outlook seeking to spend every penny they earn , a startling pattern emerges . A surprisingly large number of Americans become unmotivated , specialized , unhealthy , and dependent on their current jobs to make it through the short – term future . They learn to passively accept the workday , and are too tired and unmotivated from their week to do anything other than watch a little bit of TV and go on the occasional weekend trip to visit the in – laws . What a terrible way to approach a career . But , does it sound familiar ? This slow drain of enthusiasm and ambition confines your hunger for achievement to little wins one can earn from the cubicle . March Madness bracket becomes exceedingly important . Fantasy football becomes a central part of the workday banter . People jockey for the corporate tickets to the ball game . Wearing the stupidest tie in the office on Wednesdays is something of a weekly contest . Folks plan out ways to sneakily be the first one out of the parking lot at 4 : 00 p.m . on the dot on Friday . They apply their best creative efforts to these things — and it’s because creativity is slowly suffocated in a salaried job ! Living out a professional life over decades in this manner is a terrible fate that those who achieve early financial freedom can avoid easily . Yet it seems to be the fate of the majority of intelligent white – collar workers ! What do the best educated , most accomplished individuals do with their careers ? Exactly this . That’s right , most of the best competition out there is earning a high wage , with little opportunity to flex their talents in a wide variety of business pursuits . Their abilities , ambition , and drive are slowly being suffocated and destroyed . They have no control over what they do , beyond the narrow confines of completing certain types of assignments

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Americans expect things like healthcare , insurance , 401 ( k ) s , vesting stock options , PDO , and the rest of it . While these benefits obviously provide value , don’t lose the forest for the trees .

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Do not fall into the trap of believing that all is lost by giving up these benefits . Pursue opportunity , not stability . Stability is ensured by your continually lengthening financial runway , not by an employer’s cushy benefits package .

Chapter 7: Scaling a Scalable Career

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Don’t let the fear of others taking advantage of you get in the way of the many , many more folks out there who are happy , willing , and able to help you achieve your goals .

Chapter 8: An Exploration of Financial Freedom

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Slightly better items and luxuries don’t change the day – to – day freedoms and passions that individuals pursue .

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Every month , millions of Americans pay a small amount toward a large mortgage . This happens like clockwork . Do not manage wealth this way . Instead , intentionally build wealth in a readily accessible form , and accumulate assets that are likely to produce excellent results that provide benefits immediately .

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The safe withdrawal rate is a number you choose . It is a rate of return that the individual investor accepts , such that she might have excellent odds of never depleting her asset base .

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There are a wide variety of ways that the seeker of early financial freedom can solve the financial freedom equation , but they must keep in mind the fact that only assets that generate income or appreciate in value faster than inflation count toward their early financial freedom .

Chapter 9: An Introduction to Investing for Early Financial Freedom

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An investor doesn’t accept someone else’s money and invest it in an enterprise , just as an employee isn’t an investor when he or she accepts stock options at a company .

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the earner only keeps $ . 70 for each additional in income . This earner would be far better off saving a dollar than earning an additional one , as he’d get to keep the whole thing ! It’s far more advantageous to save money than to earn it for most wage earners , dollar for dollar .

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an investor isn’t confident or interested in acquiring the knowledge or putting in the effort to achieve significantly higher returns than 10 percent , they might as well just invest in stock index funds , and focus on earning more and saving more instead of on managing their investments .

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Suppose Becky wants to retire in ten years . For the next five years , the market climbs . In years six and seven , there is a big crash , and the market climbs again . Assuming Becky invested throughout this period in regular increments as she receives a paycheck , she will have navigated the crash successfully , because she bought before the crash , during the crash , and after the crash ! She was consistent . Sure , her investments right before the crash dropped in value , but her investments during the crash have recovered nicely and made up for much of the loss . This is how to navigate a crash !

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**As long as you consistently purchase an asset class that’s capable of sustaining long – term returns and are comfortable with your choice , you are likely to build wealth regardless of market highs and lows .

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History tells us that the owner of stocks is likely to become far wealthier over time than the owner of bonds . Invest in an asset class that you believe will help you to produce above – average investment returns .

Chapter 12: Tracking Your Progress

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not focus on increasing net worth as commonly calculated if you desire early financial freedom . Instead , track your real net worth , as comprised of real assets and cash and cash equivalents less debts and obligations .

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** Do not purchase false assets with debt if you seek early financial freedom ! This is why buying luxuries on credit is such a drag on middle – class America’s finances . Financed cars , boats , trucks , TVs , computers , and the like are a double – whammy as they aren’t assets that serve the goal of financial freedom , and the debts must be counted against their financial position .

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List out your top priorities ( no more than two or three ! ) for each day / week / quarter / year in any manner you choose . Then , figure out the tasks , habits , or relationships that you believe will be most impactful in advancing those interests .

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*** If it saves $ 5 to shop at a supermarket that’s thirty minutes away , and you have a grocery store next door , save yourself the hour and buy groceries next door . The difference between the two decisions is immaterial and you needlessly inconvenience yourself for a trivial amount of money .

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It is completely acceptable to gather all of the data , acknowledge the story being told by the data , then totally dismiss it , and make a decision that’s not supported by the data . Don’t make a decision without having the data . Know your numbers , but don’t be afraid to do something that you feel is right , just because the data seems to indicate something else .

Chapter 13: Habits and Their Impact on Financial Freedom

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*** However , do not spend a large amount of time comparing options between things that are extraordinarily similar . This is a disturbing habit that combines a seeming lack of purpose with a needless waste of money . Know what you need , get in , get out , and then do something that works toward your goals or that you truly enjoy !

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The snooze button is the ambitious person’s greatest ally . It keeps the competition in bed , where they can’t compete ! Better yet , it makes them groggy , unproductive , and way worse off than if they had just gotten out of bed in the first place .

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Waking up is a mindset . When that alarm goes off , get up quickly and be grateful for whatever sleep you got . Snoozing for more won’t help .

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You can’t commit to any projects or visions that will help you make an impact on the world or that lead to success if you are too preoccupied with experiencing everything the world has to offer .

Chapter 14: Conclusion

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*** Put yourself in positions where you can pursue synergistic side hustles and outside income streams . Free yourself to pursue scale and hasten financial freedom , and do not allow your lifestyle costs to creep up when you do experience great success . Instead , work diligently and consistently until your assets are generating passive income in excess of your lifestyle costs . Work hard . Spend as little as possible . Invest the difference aggressively .