"Set for Life" - Was it harder going from $0-25k or $25k-100k?

Question

A couple years back, I bought Scott Trench's book, "Set for Life" because I heard through the BP podcast that it was a great book for young people looking to attain early financial freedom. I've read and reread it a few times now but I just realized yesterday that I actualized Part 1 of the book earlier this year without much fanfare. For those who haven't read it, Part 1 is about building up your first $25,000+ in cash or equivalents through a frugal and economic lifestyle, or as David Greene would describe it, through good defense.

Scott Trench · Answer

So awesome! Thank you for sharing @Kohei Hayashi

I think that I agree with @Andrew Syrios

Getting out of debt, interest is working against you.

Going from $0 - $25K interest is neutral

Going from $25K - $100K you have a few exceptionally high leverage and powerful options (house-hack, job switch, side hustle, etc.)

Going from $100K - $1M, you have compounding and CAGR on your side.

Of course, all of this is on average, and in down markets things can wreck even the best laid plans. But, in the market conditions during my period of getting to $25K and then to $100K, I found this to be true.

Joe Splitrock · Answer

@Kohei Hayashi with anything in life, getting started is the hard part. Once you gain experience or develop good habits, everything that follows is easier.

I just looked at my bank account and noticed we added $30,000 to savings in the last two months without being frugal or any focused effort. I am not saying that to brag. I am just pointing out that once you get momentum, it gets much easier.

Congratulations on your accomplishment! I see good things in your future.

@Scott Trench I am sure will enjoy your success story.

JD Martin · Answer

My experience is that going beyond the basic chunk of cash was harder because it required a different set of skills than the ones I already had. It wasn't terribly difficult for me to live frugally - I grew up so poor my stories make most people cringe - so just living below my salary and socking away the difference was pretty easy. Once I started growing this real estate thing, however, and I realized the opportunities that were out there if I only had the capital, I had to develop new skills in terms of BRRRRR (buy, rehab, rent, reserve, refinance, repeat), generating outside capital, deal analyzing, etc. a lot of which I had not ever done before, or had never applied to real estate.

If I was going to just save my way from $25k to $100k, the only thing that would have been harder about it would have been the amount of time it would have took. Learning how to make your money make more money is a real skill, and not an easy one to master as it requires constantly assessing your environment, making decisions, pivoting, etc, whereas just saving up money only requires you spend less than you make.

Andrew Syrios · Answer

I think the first part is always the hardest. Getting out of debt is harder than getting to $25k which is harder than getting to $100k etc. At least that's how it generally seems to be.

Lynnette E. · Answer

Going from $25k to $100k can happen in the blink of an eye.  It depends on what you invest in and where.  Some properties can go up that much in a year or two just with the crazy market now.

Neither step was hard for me  But when I was going through them I  was single, had not adopted kids yet, and working 12 hour shifts 6 days a week and 8 hours on Sunday.  Money poured in, but I had no life for a few years....mandatory OT set me up well in life financially, but it was hard!

Tim Johnson · Answer

Thanks for your good thoughts Kohei. The question you ask will vary for each investor. Some folks had great mentors around them from an early age and fall into REI naturally. Others have a high-risk tolerance and are anxious to get started but have absolutely no ability to live frugally, save carefully, or practice any form of delayed gratification. Still others, experiencing analysis paralysis,  need to overcome fear, anxiety, and hesitancy to even jump into that first deal. Fortunately, there's room for all of us if we're willing to learn from others, network with others, and stick to a plan.

Congratulations for reaching that first goal "without much fanfare"! Who knows, that second goal may not need much fanfare either. Who says one of the stages needs to be hard? Best wishes...

Lynnette E. · Answer

I did not want that level of commitment when I accepted the job.  But when the workload shifted I did it.   I did believe in the mission and as they dumped on the OT others quit, so those of us left got more and more OT.  In the end out of my lab that should have had 12 scientists there were 2 left, and both ladies...all the ones who left were men!  The upstairs lab had one man and one lady left.  But the reputation I earned set me up for my career and the money set me up for anything I wanted.  No regrets!

Nick Rutkowski · Answer

@Kohei Hayashi

I think starting off is the hardest part of the journey. Too many unknowns and what if’s. My first property made me 25k profit so I dropped it in my next property. And so on.

Now that I’ve been doing this for a while, I’m not afraid to try something new because I can rely on my skills to navigate through.

Andrew Syrios · Answer

It's unfortunate that the hardest part of building wealth is at the beginning when you're trying to get the ball rolling and have the least experience.

Kohei Hayashi · Answer

Sorry about the format with the original post - not quite sure what happened there.

I really appreciate you all taking the time to share some of your thoughts.

@Tim Johnson I'm definitely in that third group that you mentioned, the hesitant type. Overcoming fear is going to be a hurdle for sure but your words are encouraging. Also, I was recently reminded of Tim Ferriss' exercise of Fear Setting which has been helpful for defining what exactly it is I'm fearful of and how I can potentially respond.

@JD Martin "So poor my stories make most people cringe"  Dang! I haven't had a chance to listen to your podcast episode yet but I'll hop on that tonight to hopefully hear some of those stories. I see what you mean about developing new skills for sure.

I'll be taking all of your guys' thoughts and advice: Getting started no matter what, staying adaptable, building skills and momentum, and @Lynnette E. maybe I won't reach that level of sheer hard work, but I'll definitely be putting in the time and effort!

"Set for Life" - Was it harder going from $0-25k or $25k-100k?

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