Retire Before Mom And Dad | Rob Berger
Episode 156
Episode Guide
Episode Timestamps
ChooseFI Podcast Episode Show Notes
Episode Title: Rob Berger's Journey to Financial Independence
Guest: Rob Berger, Founder of Dough Roller
Hosts: Jonathan Mendonsa and Brad Barrett
Air Date: [Insert Air Date]
Episode Summary:
Rob Berger shares his transformative journey from a successful law career to pursuing financial freedom. After struggling with lifestyle inflation, he made the conscious decision to ditch his expensive habits and focus on personal finance. Through practical steps such as paying off debts, reallocating expenses, and investing wisely, Rob outlines how he achieved his financial goals. He highlights the importance of having a clear end goal — financial freedom — rather than just eliminating debt, proving that financial independence is attainable beyond traditional advice. Rob's insights also touch on investing strategies, behavioral finance, and the real meaning of retirement, encouraging listeners to reconsider their financial systems and beliefs for a more fulfilling life.
Key Takeaways:
Introduction of Rob Berger
- Rob is the founder of Dough Roller and a well-known figure in the personal finance community.
Rob's Background and Career Shift
- Discusses his transition from practicing law to focusing on financial independence.
Approach to Debt and Financial Commitment
- First Step to Financial Freedom: Commit to no more debt.
- The importance of eliminating unnecessary expenses.
Investment Strategies and Personal Finance Tips
- Continues to invest while paying off debt, emphasizing smart financial decisions.
- Views on dividend stocks and index funds for long-term growth.
Defining Retirement and Financial Independence
- Challenges the traditional definition of retirement.
- Highlights the fact that financial freedom doesn’t require being debt-free.
Actionable Takeaways:
- Commit to eliminating new debt as a first step to financial freedom.
- Focus on investing in index funds for long-term growth.
- Consider your ultimate financial goals and adjust your spending accordingly.
Important Quotes:
- "Financial freedom doesn’t require you to be debt-free."
- "Always focus on your ultimate goal: financial freedom."
- "Expect unpredictability; life’s financial journey is rarely smooth."
Resources Mentioned:
- Rob's Book: Retire Before Mom and Dad - Released insights on achieving financial independence.
Chapter Markers:
- Introduction of Rob Berger
- Rob's background and career shift
- Approach to debt and financial commitment
- Investment strategies and personal finance tips
- Defining retirement and financial independence
FAQs:
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What is the first step to achieving financial freedom?
Commit to no more debt and focus on reallocating funds towards debt repayment and investments. -
What is the significance of having a financial goal?
A clear financial goal, such as financial freedom, guides your decisions for saving and investing. -
How should one approach debt repayment?
Use a structured strategy, prioritizing higher interest debts, and consider the types of debt.
Discussion Questions:
- What steps would you take to begin reducing debt?
- How do you define personal financial freedom in your life?
- What investing strategies resonate with you?
Episode Contact:
For more wisdom on financial independence and personal finance, tune in to ChooseFI Podcast with Jonathan Mendonsa and Brad Barrett!
Podcast Intro
Podcast Extro
Achieving Financial Independence: Insights from Rob Berger's Journey
Financial independence is a goal many aspire to, yet it often feels elusive. Rob Berger's transformative journey from a successful law career to pursuing financial freedom offers valuable lessons that can guide anyone on their own path to financial independence. Here’s how you can apply his insights to your financial life.
Commit to Financial Freedom
The first step towards achieving financial independence is making a firm commitment to your financial goals. Simply wanting to be "better with money" isn't enough. As Berger emphasized, "Commit to no more debt as your starting point" . This commitment should extend to all aspects of your finances.
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Set Clear Goals: Define what financial freedom means to you personally and set measurable objectives. Whether it’s retiring early, traveling, or simply living without financial stress, clarity is essential.
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Eliminate New Debt: Choose to live within your means. This doesn't mean living a life of deprivation; rather, it means being conscious about your spending and avoiding lifestyle inflation.
Understand the Importance of Financial Goals
Having a clear financial goal is crucial. Berger notes that, "Always focus on your ultimate goal: financial freedom" . This focus ensures that your actions align with your overarching financial vision.
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Track Your Progress: Create a financial roadmap and monitor your progress regularly. This could involve budgeting tools or financial apps that help you visualize your journey towards financial freedom.
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Flexibility in Goals: Don't limit yourself to pursuing only one goal at a time. You can work towards multiple financial objectives, such as debt reduction, saving for a home, and investing for retirement simultaneously.
Develop a Solid Debt Management Strategy
Rob Berger's approach to debt management involved a mix of prioritization and strategic payments. He employed the Debt Avalanche method, where he tackled the highest interest debts first, while also being cautious about which debts he paid down aggressively.
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Prioritize High-Interest Debt: Focus on paying off high-interest debts first, which will save you the most money in the long run. If you have some low-interest debt, consider maintaining it while rapidly paying off higher-interest balances.
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Utilize 0% Balance Transfers: Take advantage of 0% promotional rates on credit cards to manage your debt more effectively. Just be sure to pay them off before the promotional period ends to avoid unnecessary interest.
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Reevaluate Your Loans: Look into refinancing high-interest loans or consolidating debts where possible to reduce your overall interest payments.
Invest Wisely for Long-Term Growth
Investing is a crucial aspect of financial independence. Berger advocates for a simple yet powerful investment strategy: focus on index funds.
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Keep It Simple: Align your investment strategy with your financial goals. A diversified portfolio of index funds can often outperform actively managed funds due to lower fees and the power of compounding.
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Consider Your Risk Tolerance: As you progress in your financial journey, reassess your risk tolerance. When starting, it might be appropriate to have a larger percentage of stocks in your portfolio. As you approach retirement, gradually shift to more conservative investments like bonds.
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Stay the Course: Don’t let market fluctuations deter your investment strategy. Maintaining a long-term perspective is essential. As Berger mentioned, "Expect unpredictability; life’s financial journey is rarely smooth" .
Rethink Volatility and Emergency Preparedness
Rob Berger’s journey highlights the importance of being prepared for financial uncertainties without overestimating the need for a large emergency fund.
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Assess Your Risk: Determining the amount of savings required for emergencies depends on your personal situation. If your job is stable, you may not need as large of a cash cushion.
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Balance Savings and Investment: It's important to find the right balance between saving for emergencies and investing for growth. While having some liquid savings is essential, ensure that most of your money works toward your financial goals.
Redefine What Retirement Means to You
Retirement is often viewed as a time of rest, but for many, it becomes an opportunity to pursue passions, start new ventures, or even volunteer. Berger's view on retirement is that it should be aligned with your personal desires, not just financial metrics.
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Embrace the Freedom: Look at retirement as a chance to reshape your life. What do you want to accomplish? This could mean starting a business, traveling the world, or dedicating time to family and personal interests.
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Challenge Traditional Concepts: The notion of retirement doesn’t have to mean stopping work entirely. Consider part-time opportunities that align with your passions and can provide supplemental income.
Conclusion: Take Action Towards Your Goals
Rob Berger's approach to financial independence is proactive, strategic, and reflective. By committing to no more debt, setting clear goals, developing a solid debt management strategy, investing wisely, and redefining what retirement means, you too can rewrite your financial story and strive towards financial freedom.
Remember: "Financial freedom doesn’t require you to be debt-free" . So, set your intentions, take targeted actions, and embrace the journey ahead.
Rob Berger, founder of Dough Roller and Retire Before Mom and Dad, talks about the simple math of early retirement and more essential FI lessons that are important to talk about.
[elementor-template id="143609"]Rob's Personal Finance Story
Before a total transformation, Rob thought about money in a similar way to his law partners. Rob had spent eight years at a law firm and recently made partner. With that promotion, he started doing what many lawyers in his firm did. He bought a fancier car, joined an expensive golf club, and a designer watch.
However, he realized that it wasn't enough for him. It felt like he was trying to emulate his father but didn't actually want the life he was pursuing. As he looked to the partners further along in their careers, he realized they were not all happy. In fact, many older partners still struggled to find their place and continue to thrive.
I thought, you know, we’ve got one life to live and I just don’t think I want to go down that route and make my entire life about big law. And, yeah, it's funny, looking back on it, it doesn't seem that risky to me. But I know it sounds crazy to actually make that decision.
After two years of being a partner at a wonderful law firm, he realized that he didn't want this lifestyle anymore. So he quit and took a six-figure pay cut in the process.
Changes
This career shift necessitated some dramatic personal finance changes. Rob realized that stuff wasn't making him happy, so it was time for a change. He ditched the country club, sold the fancy watch, and took a closer look at his financial picture.
At the time, Rob and his wife were carrying debt in the high six figures. An assortment of student loans, car loans, mortgage, and a HELOC was the cause of their debt burden. When Rob quit in 2005, he wrote a note to himself that promised he would be debt-free in seven years. Although that timing did not quite work out, this decision led him down the path towards FI.
Paying Down Debt
After making the commitment to become debt-free, he started by paying off a car loan. He also made sure to avoid taking on any new debt, even if it was a 0% APR offer.
Rob and his wife took advantage of any 0% balance transfer options they could find. Importantly, they continued to invest throughout the entire process. For Rob, not investing throughout the debt pay off process is terrible advice.
Rob made this decision after deciding what his ultimate goal for the personal finance transformation was.
I always keep my eye on what my ultimate goal is. My ultimate goal isn't to pay off all my debt; that may be part of it but the ultimate goal is financial freedom.
For Rob, the goal was financial freedom not simply debt-free. If your goal is to become Financially Independent, then skipping a 401(k) match during your debt pay-down process is not ideal.
With their goals in mind, Rob and his wife made sure to get the lowest interest rate possible on all of their debt. Although most of their interest rates were relatively low, they did tackle the higher interest rates first.
He also felt more comfortable paying down different debts at different paces. For example, he was more comfortable paying off the HELOC in big chunks when possible because he could always reborrow the money. Unlike an installment loan that would be unaccessible once he repaid the debt.
Emergency Funds
Throughout their debt payoff process, Rob did not keep a large emergency fund on hand. In fact, they only kept a few hundred dollars worth of savings on hand for many years.
If an expense such as a car repair came up, they could easily cover the expense through borrowing. He felt that his income was relatively secure based on his education and the area they lived in. However, today he has enough money in his emergency fund to live on for many years.
This approach to an emergency fund worked for Rob, but it might not be ideal for everyone.
The key here is to understand that there’s no one right answer that is going to apply for everyone.
For Rob's situation, he did not feel there was a big risk to keep a lean emergency fund. However, others around the world may feel differently based on their situation.
Investing For FI
When Rob started investing, he didn't know anything about it.
So, he bought a front-loaded expensive fund from a bank. Next, he invested in an actively managed fund at the suggestion of a coworker. Although that fund beat the market for five years, he realized that at some point it would underperform the market. Since he couldn't stick with his investment for the next 50 years, he decided that he had no business staying invested in that fund.
After reading All About Asset Allocation by Rick Ferri, he took a different approach. At first, he attempted to be invested in every single asset class. However, he now has a standard portfolio of six funds. With a mix of index funds and other investments, it makes it more manageable to stay the course.
In a six fund portfolio, Rob has these funds:
- Small-cap values
- Large U.S. companies
- International fund
- Emerging market fund
- REITs
- Bond fund
Additionally, Rob has 15% of his portfolio in individual stocks. With the exception of Berkshire Hathaway, these individual companies are all blue-chip dividend-paying stocks. Over the years, he has been able to buy them when the market prices go haywire.
If someone young is just starting to invest, then they might not need to have bonds in their portfolio. However, it will come down to their risk tolerance.
As you grow, it is likely that your allocations will shift based on your risk tolerance. After all, your age can lead to more money at stake and less tolerance for losing money. You can look to target-date retirement funds as a place to start your allocations.
Dough Roller
Rob started Dough Roller as a way to document his personal finance story. At first, the site was only a hobby that he was very motivated about.
For the first two years of the site, he would get up at 5:00 AM to work on the site before work. Plus, he would work on the metro and at night. It was a fun way to focus on his finances. Over time, it became a side hustle that turned into a full-time business. He retired from practicing law as Financially Independent in 2016.
After 11 years of enjoying the site, he sold it. The sale gave him the freedom to do other things such as the Dough Roller podcast and Deputy Editor at Forbes.
Related: Why A Side Hustle Is FI's Secret Weapon
Retirement
Although he still earns money from several sources, Rob considers himself retired at 53. The Forbes position pays enough to live on, so they haven't had to touch their nest egg yet. Congrats Rob!
How To Connect
You can connect with Rob's content on his website, Retire Before Mom and Dad. His book, Retire Before Mom and Dad is now available.
Also, he still writes for Forbes.
The Hot Seat
Favorite Blog, Podcast, or Book: All About Asset Allocation by Rick Ferri
An Inflection Point: The death of his father in a car accident when he was 12.
Favorite Life Hack: Deciding on the three most important things that he needs to do the next day in order to move his life forward. He writes these three things on an index card the night before and tackles them the next day.
Biggest Financial Mistake: Joining the country club which cost around $70,000 in 2001.
The advice you would give your younger self: Don't move somewhere where the commute will be an hour and 15 minutes both ways.
Bonus! What purchase have you made over the last 12 months that has brought the most value to your life? He got rid of his car and mostly bikes now. If you want to challenge something you take for granted, then start by running experiments and thinking outside the box.
Listen to the Friday Roundup of this episode here.
Related Articles
- The Unfair Advantages of the Individual Investor--Brian Feroldi
- Bridging The Gap Between Dave Ramsey And The FIRE Community
- Beyond 4%: The Argument For Flexible Spending Rules In Retirement
New to FI? Be sure to check out Episode 100: Welcome To The FI Community!
