Jun 10, 2019
If you feel that you are going out of your mind, with spiralling debts, credit card interest and stress then this is the show for you. Today’s guest is Jonathan Mendonsa a man who reluctantly walked into the world of frugal living, but now will never I assume go back. Yes he was a spender, and i guess at his core is still someone that likes to splash out on the finer things in life. But he knew he had to change as at the age of 28 he graduated college as a pharmacist with $168,000 in student loans. Now 4 years later he has clawed his way out and is pursuing Financial Independence. As he says “I feel I am qualified to talk about the normal path because I have lived it for the last 30 years. My hobby and passion over the last 5 years has become learning new skills and looking for ways to develop passive income streams. I also love to talk about what I have learned. I ran out of people in my immediate social circle to share all this awesome information with so enter ChooseFI… He has developed passive income streams, based around community building, affiliate marketing, information analytics, videography, career hacking, tax planning and entrepreneurship that he can discuss and share with the ChooseFI community. The podcast he and his co-host Brad Barrett created to highlight the tactics and stories of people who have chosen this alternate path has become one of the fastest-growing podcasts online. With almost 1 million monthly downloads and a hyper-engaged community with over 200+ local ChooseFI chapters throughout the world and in the words of Jean Chatzky, The Today Show’s Financial Editor, “it (the FI movement) has grown to be a movement in large part because of a podcast called ChooseFI.” So with so many things on the go at once, does he want to run away to the nearest shopping mall for some major retail therapy? And how did he get the FI community up and running, and engaged? Well lets find out as we bring onto the show to start joining up dots with the one and only Jonathan Mendonsa. Show Highlights During the show we discussed such weighty subjects with Jonathan Mendonsa How Jonathan first went out and got the idea that being financial freedom was not just possible it was highly doable – so he did it. Why minimalism is a great starting point, but why not focus more for the value than going after the scarcity. Is failing a bad thing or should we simply look at failing forward as quickly as possible. And lastly………… Jonathan shares how his podcast has grown to massive proportions and the things he did to make it happen. How To Connect With The ChooseFI Team Website Facebook Linkedin Twitter Audio Transcription Of ChooseFI Founder Jonathan Mendonsa Intro [0:00] When we’re young, we have an amazing positive outlook about how great life is going to be. But somewhere along the line we forget to dream and end up settling join up dots features amazing people who refuse to give up and chose to go after their dreams. This is your blueprint for greatness. So here’s your host live from the back of his garden in the UK David Ralph David Ralph [0:21] Yes. Hello there. Well, good morning to welcome to another edition of the I like to say sexy podcast, which is a join up dots Yes. When two men get together, and we bring you also conversations, stimulating thoughts. And yeah, it’s a podcast episode. That’s what it’s about. We do it from this and you listen from there. Well, today is one of those shows that if you feel that you’re sort of going out of your mind we’ve spiralling debts credit card interest in stress by NBC to show for you because our guest is a man who reluctantly walked into the world of frugal living, but now will never I should go back. Yes, he was a spender. And I guess at his core, he is still someone that likes to splash out on the finer things in life. But he knew he had to change as at the age of 28. He graduated college as a pharmacist with listen to this 168,000 in student loans, how many meals at Hooters Can you have to wrap up? I don’t know. Now, four years later, he’s clawed his way out and he’s pursuing financial independence. As he says I thought I’m qualified to talk about the normal path because I believed it for the last 30 years. My hobby and passion over the last five years has become learning new skills and looking for ways to develop passive income streams. I also love to talk about what I’ve learned, I ran out of people in my immediate social circle to share all this awesome information with so enter choose f5. Now he’s developed passive income streams based around community building affiliate marketing information and analytics, video graphic video graphic. I should have saved videography, career hacking, tax planning and entrepreneurship, but he can discuss and share with his choose FBI community and the podcast he and his co host Brad Bauer created to highlight the tactics and stories of people who have chosen this alternative path has become one of the fastest growing podcast online. Yes, the swine. We’ve almost 1 million monthly downloads and a hyper engaged community with over 200 Plus Local choose Fei chapters throughout the world. And in the words of Jean Chatzky, but today’s show is financial editor. It’s the movement has grown to be a movement in large because of a podcast called choose, as I said, With so many things on the Go at once, does he want to run away to the nearest shopping mall for some major retail therapy and splurge splurge splurge? And how did he get the FBI community up and running and so engaged? Well, let’s find out as we bring on to the show, to start join up dots with the one and only Jonathan Mendonsa. Morning, Jonathan, how are you sir? ChooseFI [3:02] David, I am doing great. And I don’t think I’ve ever said this to another man before. But I really want to see the back of your garden, David Ralph [3:08] you come to the back of the garden. And we’re sitting here and we will record live. Because actually, as we speak at the moment, I do recall that in the back of my garden, I’ve got a studio bear. And I thought to myself, I go home for lunch today. And I’ve been locked out, I can’t get back into the house. So until my kids get back from school, I’m here I’m trapped. But I can’t think of somebody nicer to be trapped with because Jonathan, you are a man who’s been on a journey. And it’s a journey that so many people are struggling with and you’ve come out the other side. Do you feel smug about it? ChooseFI [3:41] No, it’s more than I just feel like almost this calling, or I have to tell as many people as possible. This idea that I think all of us have kind of been given this normal narrative that we’re expected to follow to follow society’s rules. And at a certain age that may or may not be considered our golden years, we have permission that is do what we want basically kind of our desires, whatever you wanted to do as a child has to go on a bookshelf. And then you have to go through the slog to get the house you get the car, get the second car, you have to get you have a second kid, you get the promotion, you get the next promotion, you work the corporate ladder, you somewhere along the way pay off the student loans, student loans, they may be so big that they may outlive you, there’s literally means dedicated to the perpetuity of student loans, maybe at 65, there’s some government security in place for you. And then you are allowed to do maybe go work on your golf game, something along those lines. I was on a cruise ship relatively recently, and I went on there with my family. And I should say that we’re just kind of in our 30s. But I realized on the cruise ship that the vast majority of people that are on these cruises were like 60 years and older. And when they are asking people if they want to get off the ship, many of them just simply couldn’t at that point. So finally they had the freedom to go see the world do whatever it is that they wanted to do. And they quite literally just had to stay on the ship at this point. That just doesn’t seem right. Like why do we just get permission to our golden years? What does it look like to get our best years and I think just kind of thinking about that as a framework for you know, my personal story. And what we’re talking about on the show is a really powerful way to look at it. David Ralph [5:10] Isn’t that good vote to keep all the old people on the ship. So that can get me on the street easier. And you know, that’s what Yeah, isn’t it? ChooseFI [5:20] Yeah, that’s the conspiracy from the top down. That’s really what it’s all about. You got it? I think David Ralph [5:24] so. So with yourself in you are based in Richmond, Virginia, which is a lovely place in the world. And here. Yes, I have been here many, many times. And yes, it’s, it’s one of those places I always hit in the summer, dirty, sweaty. I don’t know how you guys charged? Yeah, I jumped out and I put the air con all the time. But for somebody like myself, what what interests me is I am I’m fine. I’m fine. financially independent. I, ChooseFI [5:52] I can cool to be able to say that, like when you say that I’m financially independent. I work because I want to not because I have to you’re doing this podcast out of love out of a passion out of a calling, not out of any sort of scarcity. I need to figure out how to keep the lights on like, think about that, how powerful that is? David Ralph [6:09] Well, is is but what I also have to say is no matter how financially free I become a debt always appears, I’ve never got to the point where I’m totally debt free, no mortgage, yes. And then I take out a car loan, and then I pay off the car loan, and then some there’s always something going on. Are you totally free from that? Are you totally free from you know, having the debt hanging around? Even if it’s only a small debt every now and again? ChooseFI [6:37] Yeah, that’s a great question. I think it just kind of depends on how you define it. So basically, the way that I consider financial independence is you have reached a number At which point, if you were to never bring in another dollar again, you could maintain your current lifestyle, right. So in my community, people do that. Either way, many people keep the money in an account and have the money grow the basically like if you decide to make the choice to pay off your mortgage, you’re essentially locking in a three or 4% rate of return depending on what the interest rates are in your particular area of the country, I’m the United States going rate is just around 4%. UK may be different. As opposed to that other people say, Well, you know what the market, I believe that over time, the market will outperform that. So I am going to take the money that I would be paying towards my house, and I’m going to grow it and an investment account. And you know, I have the choice of any point I wanted to pay off my house, I could, but you know that that’s my particular choice. But certainly other than the home mortgage, yes. 100%, debt free, no car debt, no. Student loans, and I’m not financing a couch or a blinds, there’s nothing running, you know, parallel to that, Mike, my budget looks relatively simple. And then I personally would rather just hold on to the mortgage, but that’s just more out of a cash interest rate arbitrage rather than something else. I think, you know, really the larger point set, the framework for your audience is really just talking about that, that kind of framework, because it ties so perfectly to the overarching theme of your show, which is joining the dots. And what I look at when I when I think of this is bandwidth, you know, how do you create bandwidth in your life, you so many of us when we’re paycheck to paycheck, we are one financial crisis, even a tiny financial crisis, we’re right next to the cliff, right? The financial cliff, we if our if the tire goes flat, it’s a it’s an existential crisis. If we lose our job, because of layoffs, or downsizing or whatever else, it’s an existential crisis. If if there’s something that we can do along the way to create that amount of space, it means that finally you might have the time in your life to actually start looking at what lights you up, to start thinking about how to make that next connection and really open yourself up to the possibilities of future that you can get excited about, you know, not 65 beyond but now let’s start moving yourself slowly in that direction. And I think that’s kind of like the my entire story, because I was sure that business of businesses, small business owners, I was sure that, you know, all businesses fail, the vast majority failed, quote, unquote. And I think along the way, one thing that I failed to realize is that while many businesses fail, those are that’s the first failure. And most business owners, most entrepreneurs iterate on that first idea, and come up with something that works. But you can’t do that, or it’s very difficult and dangerous to do that. If one you have to take out a ton of debt to do it. And to you don’t have any financial space, any financial margin in your life. So in my case, I googled in 1999, I googled, you know, top 10 professions, because I don’t want to do this crazy entrepreneur thing that people are doing top 10 professions that you know, will guarantee that you quote unquote, make it and somewhere on that list was pharmacy right? and and you know, there’s some other obvious ones on there, maybe now it’s computer software engineer, or doctors or lawyers, you know, you can get up, it’s probably a very stereotypical list of 10. Even still, but quite literally, for someone that wanted to guarantee an outcome. That’s like, all right, well, I’m going to do one of these. Now you’re saying, Well, that sounds kind of dumb, but I guarantee you that there’s tons of I’m not the only one tons of people do this, because we want to take the safe path, right? Love this guaranteed outcome. David Ralph [10:07] Did you get fed up with talking about this, Jonathan, because I can hear the passion coming from you. But I bet I bet there’s people around you that goes okay, john, okay. I know it. I know it, just just give you know, we’ve even got a critic in the Back Bay bad enough. ChooseFI [10:23] Ya know, I never get tired of it. And they may get tired of it a little bit here. Fortunately, we’re only here on Mondays and Fridays. So you get three days of break in between? Yeah, so I mean, like, that’s kind of the path I followed. And so to become a pharmacist, you know, it’s four years of undergrad, and then it’s four years of pharmacy school, so eight years of education. And so I graduate with $168,000 in student loan debt, and then four years pay that off, because I just, you know, you can kind of sense that he’s kind of anti debt for the most part. So I was like, I gotta pay all this off. It’s 12 years. And by the end of that little cycle, I kind of burnout, right? I mean, just, my quality of life in this job has just gone down. It wasn’t what I thought it was going to be. I mean, in retrospect, you’d look back and say, there was a lack of passion that led you there initially. So that was probably one mistake early on. But the larger point was, this guaranteed path didn’t allow me to feed that creative instinct, that creative juice, right, that that I think all of us at some level probably would enjoy would lean into would make for a happier work environment. And what’s interesting about that, though, even though, you know, my quality of life was was kind of going down the hill, as I was staying in this gig. I had no debt now, right? That’s the one thing that I did right, is that I crushed my student loan debt burden, if I had $168,000 in student loan debt, and immediately when I graduated, I had grabbed that high lifestyle, you know, that we’ve kind of just described earlier with maybe the multiple car payments and the large house and the extravagant entertainment budget and private school for kids and all that are jazz, like, I probably would have just felt trapped, right, I have to always make sure that I can continue to fund that lifestyle need to do whatever it takes to happen. That’s what you see people, when they first get that first job, they get their first taste of safe money, they immediately inflate their lifestyle to be able to sustain that, even though what they’re really just sustained is payments. And what so i what i did personally, is, when I graduated from school, I just kept my lifestyle very, very lean, we bought a very modest home, we bought a very modest car, we paid off all of the you know, we paid off the car note. So there was virtually in the United States, our cost of living was probably somewhere between 30 to $40,000 a year depending on depending on the you know, depending on the year, and that allow me to effectively achieve a 70 plus percent savings rate, and just crush that student loan debt. And that math is really helpful, you know, in terms of met charting your own particular path to financial independence, in that it’s pretty obvious if your paycheck to paycheck, you can never retire. If you can say 25 percent of your income, then that means that you work three years, you can take a year off, if you can say 50% of your income, then that’s pretty obvious, too, right? You could work a year and take a year off, you can do that forever. But it’s little more nuanced than that, that if you can save 50% of your income for even a relatively short period of time, like 10 to 15 years. And you invest that into pretty common sense investments. I’m not talking about cannabis and Bitcoin here, just regular index fund investing, low cost index fund investing, you can get to the point where working is optional, basically within that interim, interim period of time, and it’s not get rich quick, which usually leaves you a little bit broken better and your money in someone else’s pocket. But it’s get rich, quick ish, which can work every time because it’s based on simple math. David Ralph [13:44] Now, I love this. And there’s a lot of movements out there at the moment. And there’s one of the things that I got in about was minimalism. And I thought this is brilliant. If you reduce the amount that you’ve got, then you don’t have to service Batman by going out to work. So for a while I was into that. And then it started to get a bit sort of icky, where I was seeing people who were, you know, you go into the house and it was like a cave with one garden chair, and one spoon and one another on come on, you need a little bit more to it. Now, what we’re saying here, we’re just saying sort of, it doesn’t have to be too far into the sort of the been landing in a cave scenario. It’s just ChooseFI [14:31] did you just establish David Ralph [14:32] he was my number one minimum. So I can just imagine him sitting there on a garden chair with a spoon waiting for the Americans to find him. So it is is that a problem? When people look at this? And they go, Yeah, I’d love to be financially free. But it’s all a bit crap. I like to go out for a meal. I like to do this, I like to do that. Is it just about sort of reducing what they like to do by half to make a small difference? ChooseFI [14:58] Wow, it I genuinely love this question like this is the heart of it, isn’t it? I think that when you go through life, just purchasing everything, you have no cost, it’s almost impossible to know what you value, because you’re just going to get it right. And if you can’t afford it, you’ll just finance it’ll all work out, I can afford the payments. And the reality is you simply can’t afford it. You know, you simply can’t afford the risk that comes with financing everything in your life. But to your larger point, like finding that balance there, I’m kind of the same way no one. I mean, no one will look at me and say, well, that guy’s a minimalist. So you just and I think that’s kind of like it’s both cool. And it opens up the door. For us. minimalism is incredibly powerful as a concept, my slight pivot on it that me and my co host Brad have kind of leaned on is this idea of focusing on value. And so minimalism, the heart of minimalism is intentionality, right? Do you, you know, cut ruthlessly on the things that you don’t value and spend lavishly on the things that you do? I think some people certainly would say it’s the white wall, it’s Apple, it’s the you know, it’s the certain it’s just a very minimal setup. And but I think you can probably the common sense individual can take the heart of minimalism and apply it to their own life and tie it to this and find their own balance point for them. So for example, what would that actually look like? You the average individual that’s burned through 10, or 20 years of just consumption, has no idea literally no idea what their life costs? What would it take to unwind that? Well, the most obvious place would be just to track your spending over a 1234 month period of time, I don’t know why I have three four in there, I just felt like maybe instead of three will say four months. And once you do that, then you finally have a sense of where your outflow is where your outflow is going. And you can make this as high tech there. Certainly software solutions for this or a low tech get a very minimalistic pen and paper, I don’t care. I’m not going to judge you for it. But once you’ve done that, now we know what we’re spending on. And so once you go through that, now you can start what I would say, Yeah, I actually would say, cut to the point of deprivation, I mean, just barely to the point of deprivation, right? And then once you’ve reached that point, you’re like, Man, this is not so much fun anymore. Start adding back the items that you really miss. I mean, now, you know, I actually value this, do you really value the subscription magazines that want a free trial you got three years ago, the only reason you haven’t cut it out? Is because you didn’t want to make a phone call? Do you really value the 300 channels that you have on TV? And you go to that and there’s nothing on? And you say that out loud? Does Do you really value that? David Ralph [17:29] value that but it’s their wives that do value Unknown Speaker [17:32] that? David Ralph [17:34] Because you know, I could cut back on everything, I’d be quite happy. But my wife, she likes it. How do you overcome that when one person is going, we’re going to come back and the kids are going Please don’t. I want the Disney Channel because I’ve had that anytime. a five year old crying for a whole weekend because I was getting rid of the cable. ChooseFI [17:52] That’s hilarious. I can’t help you with all the kids that’s on you, brother. Let’s talk about your spouse for a second. This is a really important conversation. So one of you listens to my podcast or this podcast, and you’re just like, I’m going to go crazy, we’re going to get rid of everything. We’re cutting it all out and go home and you tell your spouse about this crazy plan that you concocted say we’re doing this. And she looks at you like you developed a third head, right? This is about tactics, right. And it’s about aligning your life, your as in plural, you know, you and your spouse are on this journey together. And if you’re going in opposite directions, two ships are going to crash, right, you need to get alignment there. In order to do that it’s going to require more than you drop in the master plan. It’s going to be a conversation, I think one of my best example that the most crystallized example I have of this, there’s a documentary that’s going to be it’s actually available now there’s actually a screening in London, but it’s going to be all around the world. And you’ll increasingly hear about it called playing with fire, talking a little bit more about this movement in financial independence. And in this documentary, Scott comes home to his wife Taylor with this master plan. And she kind of gives them that two heads, you know, look that we’re just described. But ultimately, what he does in this exact situation is he says Taylor, what I’d like for you to do is make a list of like the 10 things that you value your most your ideal day, like what makes your day and he just had her take some time, not on the fly, think about it, come back to them with her 10 things. And she read through those. And then once they had that once he had that he just made observations that you know, as you just pointed out, Hulu or TV TV wasn’t on there. And to just other items, like a lot of the items that were on there didn’t include didn’t include like what you would expect it include the Louis the time the expensive handbags, expensive car, like you just wasn’t there and involved, a husband is being present, right? It’s putting the phone down time with their baby quality time, just like the list went on and on it. And if you think about it, you’re like, Oh, yeah, of course, that would be amazing. But think so many of us have bought into this idea of convenience, and the pleasure that comes with convenience. And we trade that for happiness all the time. So the object of this is not to be miserable. I’m miserable and rich, you winning. Instead, focus on what actually makes you happy, right? And you won’t do that. If you always do what’s convenient. There’s a great quote by jersey record, I love this quote, but I have so much trouble saying his name. But basically the quote says, easy choices, hard life, hard choices, easy life, you’re going to have to slow down in your life and actually consider what is it that makes me happy. Now what brings me the most pleasure all of us like checking our Facebook, all of us like checking to see if we got any likes or any retweets or anything else. But what actually makes me happy. And if you look at that over a duration over span of several weeks or several months, the cadence of your life, it’s probably not going to involve Netflix vendors, right, especially when they screw up the finale. Yeah, David Ralph [20:49] my wife is saying, I know she’s going to seven, seven series of Games of Thrones, we’ve been about four days. And she can’t get the last one she can’t get and she’s she’s going mental. But let’s play some words now. And then we’re going to come back because I’m going to tell you gentlemen, what I did to my wife, this is this is sexy time. Here we go Jim Carrey Jim Carrey [21:09] my father could have been a great comedian, but he didn’t believe that that was possible for him. And so he made a conservative choice. Instead, he got a safe job as an accountant. And when I was 12 years old, he was let go from that safe job. And our family had to do whatever we could to survive. I learned many great lessons from my father, not the least of which was that you can fail at what you don’t want. So you might as well take a chance on doing what you love. David Ralph [21:35] Right. So this is how I did it with my wife to get on board. And she’s not totally on board, because you know, give her three grand, she’s going to spend three grand, but um, basically, she was doing all these little jobs and she would work in a pub, and she do a bit base and she do a bit of a, and I wanted her to reduce her hours that she was working elsewhere. And it wasn’t gonna be dramatic. But I said, if we drop this package that we’re paying, that you say that you want on the TV, sailor Amazon, but you don’t really because you got Netflix, and Amazon is not that important. That means that you can drop down three hours a week, but you don’t have to work. We’re saved. And I’ll give that to you. You know, I’m happier. But you’re having it and you’re not working van, it’s just going off to this big corporation. So that’s how I planned it. And I went through everything saying, right, I’m going to drop this down a couple of stages, we were paying this, let’s go down to the budget version. And then you can have the money she bought into that she bought into that quite quickly. And once you get into that sort of mindset, you can’t go back because you realize, as you say that the finances are slightly out of control some somehow and more often than not, it’s just effort to regain that control. ChooseFI [22:52] Yeah, and what you did is you tied money to her life, energy, your life energy. I mean, that’s Vicki Robin, and your money or your life was a book that was released in the 1990s essentially made that same case, are we making a living are we making a dime, when you look at your clothing rack, you know, and it’s full with all the latest name brand stuff, the latest tech toys or whatever else, realize that ultimately what that represents is your life energy, right. And while obviously like all of us are going to have stuff and enjoy stuff, to varying degrees, make sure it’s something that you don’t look back at with regret. And to your lot to that quote which man Wow, I’ve heard it now multiple times to Jim Carrey as I was listening to episodes of your podcast. And what’s so amazing to me is how true it is, and how you can even iterate it slightly to give yourself a couple different outcomes. So like in the case of his father that decided to take the safe path in this account, and then was just laid off, right. So the one path should be never take a safe, safe route. But some of us feel like we’re already pot committed. In my mind, if we’re already there, we’ve already chosen that that path. Let’s make sure that we have an escape route for ourselves, right? Let’s like don’t don’t, here’s my biggest fear advice. Don’t leave your only stream of income without plan. There you go that that feels like that’s probably bankable. Now behind that though, how do we give ourselves th