2020-08-14_Friday

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00:00:30.000 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

00:00:41.000 | Today is Friday, and that means live Q&A, but would you believe it? I've lost my music on my computer.

00:00:46.000 | And so I am unprepared here starting a live Q&A show without music.

00:00:52.000 | But I've got one, two, three, four, five, six, seven colors on the line, so it promises to be a busy podcast no matter what.

00:01:00.000 | Oh, hey, someone just jumped on.

00:01:03.000 | So it's going to be a good fun day of Q&A.

00:01:05.000 | I want to begin today's show, though, before going to the questions.

00:01:08.000 | I want to begin today's show with a short apology.

00:01:10.000 | The most recent show that I released on the podcast prior to this show, I did an interview with a man who is quite an interesting guy.

00:01:19.000 | Extraordinarily provocative, controversial, et cetera, but very interesting, and who was able to build wealth very, very quickly.

00:01:27.000 | But he has built his wealth primarily in a version of the pornography business and the webcam business.

00:01:33.000 | And when I released the episode, I try very hard to keep the show interesting.

00:01:40.000 | I try to keep it a little bit radical, a little bit edgy.

00:01:43.000 | I don't do edgy for the sake of being edgy, but I'm not scared to talk about difficult things.

00:01:47.000 | And I'm fascinated by money, and I'm fascinated by how it works in different circumstances and situations.

00:01:53.000 | And when I recorded the show and I thought about bringing him on, when I released the show, I thought, "Okay, well, this will be a little bit edgy, but what I'll try to do is I'll try to, by the content of the interview, I'll try to focus in on the lessons.

00:02:09.000 | I'll try to focus on the positive stuff, but steer away from the immorality."

00:02:13.000 | And so I did that, and I tried to do that.

00:02:17.000 | And it was an interesting conversation.

00:02:20.000 | However, after the fact, as I was thinking about it, I thought, "Okay, I did a pretty decent job on the interview of keeping things somewhat light."

00:02:27.000 | After the fact, I got an email from a listener, and she wrote me this email, and it's fairly short, it's three paragraphs.

00:02:34.000 | I just want to read it to you because it really struck me.

00:02:37.000 | It really cut me to the heart and humbled me.

00:02:40.000 | And I decided, "Well, let me read the email, and then I'll make a couple more comments."

00:02:44.000 | And so, a listener writes in and says, "Joshua, I want to respond to your latest podcast.

00:02:48.000 | I'm not angry, nor am I going to pull my Patreon support, but I am the mother of a woman whose life has been destroyed by people like the man that you interviewed.

00:02:56.000 | Yes, they pull in a lot of money, and if you take a libertarian point of view, there may be space to throw up our hands and say everyone is responsible for their decisions.

00:03:03.000 | I would contend that my young adult daughter, who had left home for the first time, was at a tremendous disadvantage when caught in the crosshairs of someone like this.

00:03:12.000 | While the catchy phrase, 'Prostitution is the world's oldest profession,' sounds good, I would contend that this shouldn't be the case.

00:03:19.000 | The exploitation of women to profit off of the lusts of men is an international epidemic.

00:03:25.000 | Many can speak to the damage it's done to their marriages, but I would like to appeal to you as a parent and how supporting this 'business model' puts your own family as well as the families of your listeners at risk.

00:03:35.000 | My experience is that your guest whitewashed what he did.

00:03:39.000 | My young adult daughter found herself being offered a job as a server at a strip club.

00:03:43.000 | She needed the money, and the tips were good.

00:03:45.000 | This was the gateway to where we are in 2020.

00:03:48.000 | She was offered the chance to dance, lured into stripping, has become a heroin addict to deal with the pain, lost custody of her now 16-year-old son, then a 2-year-old who was abused by her clients.

00:03:59.000 | She has seen her friends murdered, and now works the truck stops around Las Vegas.

00:04:04.000 | Last year she was picked up and sentenced to a year in prison.

00:04:07.000 | Upon being picked up, she found out she was pregnant.

00:04:10.000 | Her sentence would be longer than her pregnancy, so our youngest grandchild was born while her mom was in prison.

00:04:16.000 | On December 18th, I flew to Las Vegas to serve as guardian of our granddaughter and spent the next several days with her in the NICU.

00:04:24.000 | On the 29th, I flew back to Minnesota with our 8-day-old granddaughter.

00:04:28.000 | At 61 years old, I have recently retired much earlier than expected, and we are now adopting Lily.

00:04:34.000 | This choice, while in the best interest of our family, will cost my husband and I a considerable sum.

00:04:40.000 | With the lost income, we could buy your guest another fast car or two.

00:04:44.000 | Ours is one of the more hopeful stories, and that unfortunately plays out in more Christian homes than meets the eye.

00:04:50.000 | My point being, our daughter was a leader in our church youth group.

00:04:53.000 | She wanted to go into youth ministry as a career.

00:04:55.000 | She was an honor student, and men like your guest stepped in and flashed money, fast cars, lots of cash, and cocaine.

00:05:02.000 | They seem to walk away unscathed by their actions and litter their life with the hollowed-out lives with the women they fire if they aren't profitable, or beat to death for not turning more tricks per day.

00:05:18.000 | As a podcaster, is this the business model you want to sell to others?

00:05:21.000 | As a very devout Christian man, does this align with your faith?

00:05:25.000 | Do you feel right holding up your guest as a role model to your young male and female listeners?

00:05:30.000 | Being cool and minimizing immoral actions is all part of the game.

00:05:34.000 | I give your guest credit for one thing.

00:05:36.000 | He acknowledged that he lived in a country that tolerated corruption.

00:05:39.000 | Are you yet another wide-eyed Christian who has fallen for his deception?

00:05:43.000 | Do you really know what's going on in his casinos?

00:05:45.000 | I guess he's bringing people in with more than free Starbucks coffee.

00:05:48.000 | I hope you reconsider this particular podcast and remove it from your feed.

00:05:52.000 | I thought that email was just particularly striking because obviously it was written from a place of deep personal pain for that mother.

00:06:01.000 | And as I thought about it, I just realized how serious it is to point people in a direction that can have dire influences and has oftentimes generational influences.

00:06:20.000 | I pride myself personally on my ability to talk with just about anybody.

00:06:25.000 | I try very hard not to be a prude.

00:06:28.000 | I try in the show not to be a prude.

00:06:30.000 | I try to talk about things broadly and be willing to listen to people, be willing to talk to people I disagree with.

00:06:36.000 | And in my personal life, I pride myself on that, my ability to talk with almost anyone.

00:06:40.000 | I pride myself on my ability not to get offended at small things.

00:06:45.000 | But it really struck me, there's something about the rebuke of a grandmother that cuts you to the heart.

00:06:50.000 | And I just realized that even though I tried to, in that interview I did my best to say, "Okay, well let's talk about the interesting things," and there were lots of interesting things,

00:07:01.000 | I just realized that the consequences for pointing people down a path of immorality are very, very serious.

00:07:08.000 | I was reflecting on it and I was thinking about what Christ taught.

00:07:12.000 | In the book of Luke, Jesus was preaching and it's in Luke chapter 17 and he says this.

00:07:18.000 | He says, "And Jesus said to his disciples, 'Temptations to sin are sure to come, but woe to the one through whom they come.'"

00:07:30.000 | I repeat, "Temptations to sin are sure to come, but woe to the one through whom they come.

00:07:38.000 | It would be better for him if a millstone were hung around his neck and he were cast into the sea than that he should cause one of these little ones to sin."

00:07:50.000 | It's hard to get more serious than to have Jesus Christ himself, the man that most of us acknowledge was the epitome of love.

00:07:57.000 | It's hard to get more serious than when Jesus Christ himself says, "It would be better for a man to have a stone put around his neck and to be drowned in the sea than to cause someone to sin."

00:08:09.000 | And the one thing I like about this passage in Luke, which is different than the parallel passages in Matthew and Mark, just is that first comment, "Temptations to sin are sure to come, but woe to the one through whom they come."

00:08:20.000 | And so I don't want to be a part of that. I don't want to at all. And I pushed the line too hard, and I'm sorry, and I hope you'll forgive me.

00:08:29.000 | And I removed the episode from the podcast feed, and I'll try to in the future exercise more judgment.

00:08:36.000 | It's tough, right, when you do this stuff alone, you don't have enough people to talk to, and so judgment is a tricky thing, and I'll try to do a better job in the future.

00:08:43.000 | So my apologies, I don't ever want to be one who influences somebody in the direction of sin.

00:08:50.000 | That's a very, very serious thing. And so I apologize. I hope you'll forgive me, and we'll try to keep the show interesting.

00:08:59.000 | I'll try to not be a prude, but I don't want to highlight things that would cause anybody to go in the direction of sin.

00:09:09.000 | I think of some of the prostitutes that I've seen on the street. You see just people are just in total abject poverty, and it's just heartbreaking.

00:09:18.000 | And of course, I think of my daughter, and I think of, "Is this the kind of stuff that I want to glorify?" And it's not, so I apologize.

00:09:25.000 | And on that note, we go to Rita in North Carolina. Rita, welcome to the show. How can I serve you today?

00:09:31.000 | Hi, Joshua. I'm actually in Florida. That's where my phone number comes from. But that's heavy. I have to acknowledge that.

00:09:43.000 | Whoa, following up, I'm actually glad that I was chosen first, and I just want to tell you that I have so much respect for you, and that's why. So that was awesome.

00:09:57.000 | So what I was calling for was not a financial question today. In Florida, you know, the schools are opening up, and I chose, of course, to homeschool.

00:10:11.000 | And as a single parent that works from home, I just wanted to know if you can give me any tips, pointers, and encouragement.

00:10:20.000 | And how do you, being that you came up through homeschooling, but you had brothers and sisters, my child is the only child, what do you recommend at this time for socialization?

00:10:33.000 | How old is your child?

00:10:35.000 | Five.

00:10:36.000 | Five.

00:10:38.000 | Everything with socialization is hard because of COVID. And so, you know, as my wife and I, we've talked through what's going well and what's not going well with our children and our family and whatnot.

00:10:50.000 | I always make sure I identify, is this a problem due to COVID, or is this a problem due to something else?

00:10:56.000 | And what we find is that most of our problems right now are due to COVID, and it's, of course, impacting all of our lives in some pretty heavy ways.

00:11:05.000 | For socialization during COVID, you're extraordinarily limited.

00:11:09.000 | So, let me zoom back for just a moment.

00:11:12.000 | From the perspective of socialization, I think it's important to, which is a major concern that all of us have as parents, right?

00:11:21.000 | We all acknowledge that we want our children to be socially competent.

00:11:25.000 | We want our children to have strong social skills.

00:11:28.000 | We want our children to be able to win friends and influence people.

00:11:32.000 | We want them to be liked, to be loved, to be cared about, and to be kind.

00:11:37.000 | And so, we acknowledge that those skills need to be earned.

00:11:40.000 | And all of us are rightly concerned, well, how are those skills going to be learned by a child, especially if we take that child out of an environment where there is more opportunity for social interaction?

00:11:53.000 | And so, that's the number one concern that I often hear with parents about homeschooling.

00:11:57.000 | Well, if I homeschool my child, how am I going to provide for that socialization?

00:12:01.000 | So, here are my comments, kind of big picture.

00:12:04.000 | Number one, I am personally convinced that children learn social skills from their parents primarily.

00:12:11.000 | When I meet awkward children, not always, but it seems to me like at least more often than not, if not the majority of times, the awkwardness that the child has in social circumstances can often be traced to the parent.

00:12:25.000 | And I think that children learn most of their social skills from their parent.

00:12:30.000 | And so, usually, awkward children are probably due to awkward parents, whereas socially well-adjusted children are probably due to socially well-adjusted parents.

00:12:41.000 | And so, the first thing that I focus on is trying to have my children with me, is that I think that I can do okay in most social situations.

00:12:51.000 | I'm probably not the world's, you know, slickest of men, but I am comfortable in social situations.

00:12:56.000 | I know how to treat people with kindness and respect.

00:12:58.000 | And so, if my children are with me, they'll see me, and they'll naturally model my behavior.

00:13:05.000 | And so, I would say the first thing is to try to keep your child with you and to intentionally expose your child to the social situations that you're involved in.

00:13:14.000 | That's not easy if you have to go to an office and work.

00:13:17.000 | So, of course, there's a whole world of social situations there that he or she won't be able to be involved in.

00:13:22.000 | But with your friends, with your family, et cetera, because they're going to be watching and learning social skills there.

00:13:29.000 | That's the first thing, and I think the most important thing.

00:13:32.000 | What I like about that is if children learn how to interact effectively with parents, they'll understand how to work effectively in an adult world, which is ultimately what we're training them for.

00:13:43.000 | One of my frustrations with people using school as a primary tool of socialization is children learn how to interact with other children, but those experiences are often very artificial.

00:13:57.000 | And if you ever tried to treat an adult the way that children treat children, you would quickly find out that those aren't positive quality social skills for them to learn.

00:14:06.000 | And so if children can interact with adults effectively, they've made a significant progress towards learning how to function in the real world.

00:14:18.000 | That's also a success tip for them, because if a child can interact effectively with adults and interact respectfully, competently, intelligently, that child will have far more opportunities than they will at a later day in life.

00:14:34.000 | I remember one story from my own life is that I got a job one time in ninth grade, I think it was, and I got it simply because I went to a friend of mine, a female ninth grade friend, to her birthday party.

00:14:47.000 | And I just spent some time sitting in the living room talking with her parents.

00:14:51.000 | There were a couple of older couples there of parents and one of their friends there, and I sat and chatted with them for a little while, and the guy offered me a job basically right after the fact.

00:15:01.000 | And I observed that I was the only one that sat down and talked with the parents, and yet it resulted in good things for me.

00:15:08.000 | So that's the first thing.

00:15:09.000 | Number two is to identify the stage of life where a child is.

00:15:13.000 | So there's a massive difference in the socialization needs of a five-year-old girl versus a 15-year-old girl.

00:15:21.000 | And so at five, I think you're still at the point where it's not particularly important.

00:15:27.000 | And so if COVID results in you and your child being locked away, fairly isolated, you are your child's world.

00:15:35.000 | And it's far less important because your child is still inward focused, is still focused on you and on your household for their center of being and not outward focused.

00:15:48.000 | That starts to change.

00:15:49.000 | If you have a child that reaches 15 or 20, now their focus is very external, and so it becomes more important.

00:15:56.000 | That's the second thing.

00:15:57.000 | I think don't worry about it with younger children.

00:15:59.000 | For my children, most of their social interaction is at home, and that's a very healthy thing.

00:16:05.000 | Now, we're fortunate to have multiple children.

00:16:07.000 | That's a challenge that you have to figure out how do we have – how do I expose my child to other children so they have the challenges of interacting there.

00:16:14.000 | But it's okay for young children to have their home as the primary center of their community.

00:16:19.000 | Third, I think that ideally you want to be very thoughtful about the social influences that you expose a child to in the same way that even what I led the show with, even just exposure to certain influences can be destructive on people's lives.

00:16:34.000 | You want to be very thoughtful and want to be careful.

00:16:36.000 | And so what I would look for is who has the kind of children that I want my children to model and then intentionally pursue relationships with those people.

00:16:47.000 | So if you know a family that has children that are lovely, beautifully behaved, kind children, then seek out a relationship with that family.

00:16:57.000 | And often children don't need that many friends.

00:17:01.000 | It's nice that they have a few friends and can interact with them, but you want to be very thoughtful about the friends that you expose them to because our friends and the things that we're exposed to are going to influence all of us.

00:17:11.000 | And so I say do it intentionally there to the degree that you can.

00:17:15.000 | Now here's where there's a difference between COVID and non-COVID.

00:17:18.000 | The natural circumstance is to find a church group, a homeschooling co-op group, a play group, a neighborhood group, some kind of group of peers or people with whom you have an affiliation, be it geographic or ideological, and then to develop relationships with those people in such a way that you can facilitate friendships there.

00:17:42.000 | And that's, I think, the ideal way to do it.

00:17:45.000 | And what I like about the opportunities that you have is that as a homeschooler, your child is not forced into relationships with people that you don't know their background to.

00:17:56.000 | I do think it's very healthy and valuable for children to have plenty of interaction with other children.

00:18:01.000 | Most homeschool students get that.

00:18:03.000 | Frequently it's through a church group, a youth group, or a homeschool co-op, something like that, or just local play groups.

00:18:11.000 | And so in my experience, outside of COVID, the vast majority of community groups have something that can be explored for you to have opportunities to build those relationships, and so that's what I would focus on.

00:18:24.000 | During COVID, I don't know if there's a way to do it.

00:18:27.000 | You know, some parents will put their child onto, say, hear a video chat with your friends.

00:18:32.000 | Sure, if your child has those.

00:18:35.000 | But I don't know of a specific way to do it.

00:18:37.000 | I would just say, five years old, not particularly important right now.

00:18:42.000 | Do the best you can with what you have and wait for there to be more mobilization in society.

00:18:48.000 | Okay.

00:18:50.000 | And are there any tips or resources or something that I should rely on in terms of actual education?

00:18:58.000 | Right now, thankfully, academically, she's above average, but I don't really have another good curriculum other than just regular books.

00:19:09.000 | Are you using, like, the Florida Virtual School System, or are you doing it yourself, or what are you doing right now?

00:19:15.000 | Well, right now for this school year, yeah, I did enroll with Florida Virtual.

00:19:22.000 | Okay, great.

00:19:23.000 | So with Florida Virtual, and this is an opportunity that in so many ways is so much easier to homeschool now.

00:19:29.000 | Well, practically everyone's homeschooling now in some way or another.

00:19:32.000 | But so many of the government school systems provide, like Florida Virtual School has a government-run homeschool option where you have curriculum, you have teachers, et cetera.

00:19:42.000 | And that provides a huge opportunity for people with regard to the resources that they can use.

00:19:49.000 | So I think that just start with that.

00:19:52.000 | As far as I'm concerned, the basics are the most important, and I'll do this very quickly just due to the number of callers that I have today.

00:20:02.000 | But the old saw about reading, writing, and arithmetic really holds true.

00:20:07.000 | The core skills of education are the ability to read, the ability to do mathematics, and the ability to write because those are the core tools.

00:20:16.000 | That's what you and I use to learn to teach ourselves anything that we need to do.

00:20:20.000 | We learn to read so that we can consume and absorb information.

00:20:24.000 | We learn to write so that we can organize our thoughts and so that we can communicate effectively with others.

00:20:30.000 | And we learn mathematics because it's a language in and of itself that's interwoven in all of our life.

00:20:35.000 | And so for somebody at five, the first goal is learn to read.

00:20:39.000 | And then what I say is instill a love of reading.

00:20:42.000 | And I think that one of the ways that I've changed my opinions on a lot over the last few years is having children now that are growing older and watching the process of learning develop more naturally, I've become much less worried about early child education than I was in the past.

00:20:59.000 | In the past, I felt the pressure of, "Okay, we're going to help our children to be academically excellent."

00:21:04.000 | Now, as the father of four, my eldest is almost seven.

00:21:09.000 | I've just seen how it happens naturally and easily when the child is ready.

00:21:13.000 | And there are many knowledgeable, experienced education advocates that advocate that seven is when formal education should start.

00:21:22.000 | And so even if you didn't want to bother with a five-year-old being enrolled in anything, but you just had a five-year-old that had books and had a chance to read and had a chance to engage in unstructured play and unstructured reading, et cetera, totally fine.

00:21:34.000 | No need to stress out at an early age.

00:21:36.000 | And so my answer is focus on reading and instilling a love of reading.

00:21:41.000 | Focus on mathematics at the appropriate time when it's appropriate in the child's life.

00:21:45.000 | And then help for when an age-appropriate way, help for an opportunity for writing.

00:21:50.000 | Now, we're appreciative of the Charlotte Mason tradition.

00:21:54.000 | What you do in the Charlotte Mason tradition is you encourage narration.

00:21:58.000 | And that narration in the beginning is verbal.

00:22:00.000 | And the narration in a later age is written.

00:22:03.000 | And so I would encourage your daughter -- sorry, do you have a daughter or son?

00:22:09.000 | I keep saying daughter, but --

00:22:10.000 | A daughter.

00:22:11.000 | Okay, good.

00:22:12.000 | A daughter.

00:22:13.000 | So when you have a daughter, just encourage her to tell you what she's reading about and tell you what she's learning about.

00:22:18.000 | And that encourages the skill of expressing verbal expression, which later will be translated into written expression.

00:22:24.000 | And so my overall answer, though, is don't worry about it too much.

00:22:28.000 | If you can develop a child who's a reader and then at an appropriate age start doing mathematics and writing, then everything else is simple.

00:22:37.000 | And so the old saying is just read as much as you can to her and then encourage her to read the things that she's interested in.

00:22:44.000 | I'm super grateful.

00:22:47.000 | Thank you.

00:22:48.000 | Thank you.

00:22:49.000 | Yeah, she's a reader.

00:22:50.000 | She is a reader.

00:22:51.000 | Perfect.

00:22:52.000 | Thank you.

00:22:53.000 | That's what you need.

00:22:54.000 | Super encouraging.

00:22:55.000 | Thank you so much.

00:22:56.000 | Thank you for being here, Rita.

00:22:57.000 | Thanks, Chris.

00:22:58.000 | Is that Chris in Thailand again?

00:22:59.000 | Chris, welcome to the show.

00:23:00.000 | That's me.

00:23:01.000 | Hi, Joshua.

00:23:02.000 | I have a few technical financial questions I want to get through, but then also I wanted to do a financial independence checkup and then figure out how to allocate some future investments and some basic flag theory.

00:23:15.000 | Okay.

00:23:16.000 | First question, do you know off the top of your head, can you convert a traditional inherited IRA account into a Roth inherited IRA account?

00:23:27.000 | Interesting question.

00:23:28.000 | I've never been asked that.

00:23:29.000 | I don't think you can.

00:23:31.000 | I believe that would be impermissible, and I don't see how you would do it.

00:23:39.000 | So if you have an inherited IRA, are you stretching out the payments?

00:23:43.000 | Are you receiving payments from the –

00:23:45.000 | It would be a stretch IRA.

00:23:47.000 | Right.

00:23:48.000 | So if you have an inherited IRA and you're doing a stretch IRA, you're already having a stream of payments come in, and those payments are deferred from a tax perspective.

00:23:58.000 | So let's think through the math.

00:23:59.000 | If you were to try – let's pretend that you could convert it to a Roth IRA, and let's just pretend you did a lump sum conversion, you would then incur all of the tax now, and then you would have a stream of payments that where the gain would be tax free.

00:24:18.000 | So thinking it through, my instinct is no, you can't from a technical perspective, although I've never researched it, but from a technical perspective, my instinct is no.

00:24:31.000 | Once you're receiving – well, hold on.

00:24:35.000 | Got a listener.

00:24:36.000 | Let's just do this.

00:24:37.000 | Matt?

00:24:39.000 | Matt, tell me the answer.

00:24:41.000 | You just sent me a note in the chat and said from a spouse, yes, from anyone else.

00:24:44.000 | So Matt, answer the question for Chris, please.

00:24:46.000 | Oh, my goodness.

00:24:47.000 | Okay.

00:24:48.000 | Well, so the answer is from a spouse, yes.

00:24:51.000 | You can put it in your own name and then convert it.

00:24:54.000 | If it is from anyone else, you can't do that, but as I was turning my planner brain on with this, what you could try to do would be do what you suggested, which is withdraw the money and pay the tax, and then you could try to think of some way to shove it back into another account that could be converted.

00:25:15.000 | So like a solo 401k or you could use it to make your 403b contributions for the year or some kind of deferred comp, right?

00:25:24.000 | So enlist the money to fund your own budget in order to fully maximize some other kind of tax deferred account that you could then potentially convert.

00:25:31.000 | So I think that's the short answer.

00:25:34.000 | Does it make sense to you, Matt, to do it?

00:25:36.000 | Does there seem to be any significant enough tax savings to make it even worth it, even if you were doing a lump sum like that?

00:25:42.000 | Yeah, I mean, I think that the question would be, are you making some kind of a bet on a tax arbitrage where you think that your rate is lower now versus higher in the future?

00:25:52.000 | That's kind of like speculation.

00:25:54.000 | The other way that I think about this is that I think it's wonderful to sort of end out with a mix of pre-tax and Roth assets at retirement such that you can choose to sort of surf the tax brackets, realizing income at certain times and not realizing income at other times in order to maybe minimize tax in retirement.

00:26:17.000 | So that's more like knowing the tax rate or exerting control rather than making a bet about which way your tax rates are going.

00:26:25.000 | Yeah.

00:26:26.000 | Chris, what do you think about the answer?

00:26:28.000 | Yeah.

00:26:30.000 | The research that I came across, pretty much it said I wasn't able to and just it's not a spouse inherited IRA.

00:26:42.000 | So, it just seemed to make it a little bit more complicated and I couldn't find a good answer.

00:26:48.000 | So, I figured I'd ask you, Joshua.

00:26:50.000 | Well, if it's not a spouse, you got Matt.

00:26:52.000 | Matt's a financial planner and you got me that both agree and your other research says, "No, it's not possible."

00:26:58.000 | So, I would just say enjoy the stretch IRA because that's changing and so enjoy that for as long as you can and then focus on other steps.

00:27:06.000 | So, go with your next question, Chris.

00:27:08.000 | Okay.

00:27:09.000 | So, if you renounce United States citizenship, are you able to keep your existing IRA and brokerage investments accounts?

00:27:18.000 | If so, do you still owe capital gains and dividend taxes to the IRS after renouncing?

00:27:26.000 | If not, do you have to cash them out and pay the capital gains tax as part of the renunciation process?

00:27:35.000 | I'm just not familiar with how the exit process works in relation to do you owe IRS taxes for those accounts after you renounce US citizenship.

00:27:47.000 | Yeah.

00:27:48.000 | So, let's go through it.

00:27:49.000 | So, the first thing is you're a US citizen and considering renouncing US citizenship.

00:27:53.000 | In that situation, the first thing to acknowledge is that you can keep all of your – you can basic – it's my understanding.

00:28:03.000 | I have not renounced citizenship but I have researched this with the same interests that you have.

00:28:10.000 | You can keep your things in the United States.

00:28:14.000 | You can keep your bank accounts.

00:28:15.000 | You can keep your credit cards.

00:28:16.000 | You can keep your assets.

00:28:17.000 | And that's one of the things that's interesting about US citizenship renunciation.

00:28:23.000 | In the same way that there's like weird advantages to being a US citizen, there's also some weird advantages here that you can keep everything in the United States.

00:28:31.000 | You'll keep your social security number.

00:28:33.000 | You'll even keep your social security payments.

00:28:36.000 | You'll lose access to the United States for Medicare coverage if you did renounce because you wouldn't be – if you renounce, you can't be assured of being able to gain access to the United States to receive care under Medicare.

00:28:50.000 | But you do keep your social security payments if you are covered under the social security system.

00:28:55.000 | So, you can keep all of those things.

00:28:58.000 | That's the first thing.

00:28:59.000 | The second thing is there is – there's a difference between the exit tax.

00:29:04.000 | The exit tax is if your net worth is $2 million or more or you've had an average federal tax liability of about $160,000 per year for the last five years before renouncing or if you can't certify your tax compliance with the US government.

00:29:21.000 | In that situation, then you have to pay an exit tax.

00:29:24.000 | And so, it's my understanding that the exit tax basically brings you of a mark to market scenario where you say, "Here's what I owe on my – if I bring everything current, what are the capital gains that are subject to me from my overall portfolio?"

00:29:47.000 | And then you pay it as if everything were sold on the day of your renunciation.

00:29:51.000 | That's my understanding.

00:29:52.000 | Now, on IRAs, you're stumping me again, Chris, because I can't remember the answer of how that works.

00:30:02.000 | Let me write it down and let me look into it again because with IRAs, I can't remember right now and I can't do it on the fly.

00:30:10.000 | And I'll try to – I'll write it down as a subject.

00:30:13.000 | And if I haven't answered it within a couple of weeks, call back in and ask me and I will research that so that I can answer it clearly.

00:30:21.000 | Okay, thanks.

00:30:22.000 | Yeah, because this is sort of – I'm considering renouncing if I can save enough on taxes based on all my IRA accounts because especially for that inherited account, I'm estimating about $5.6 million that I'll be receiving and require minimum distributions over the course of my lifetime in that stretch IRA.

00:30:46.000 | So, if I don't have to pay taxes on the capital gains by renouncing, that would be a definite pro in doing that.

00:30:58.000 | Right. So, if you've got – what's your total net worth right now? Is it 5.5 or is it less currently?

00:31:03.000 | No, current net worth is 1.2 million.

00:31:06.000 | Okay. So, you should be able to get out underneath it.

00:31:11.000 | Yeah, our goal is to in six years to grow it to about 1.9 million in total net worth and then draw 4% a year, about 75,000 and live off that income.

00:31:25.000 | We currently live in Southeast Asia.

00:31:29.000 | Probably going to live here for a while and just slow travel throughout the world once COVID's handle calms down.

00:31:39.000 | I'm sorry for talking over you. Go ahead and finish your narrative. That leaves you with?

00:31:47.000 | So, that sort of leads me to my next point. We're trying to figure out – we have about $340,000 in cash that we're trying to figure out what to prioritize our next future investments.

00:31:59.000 | And if that were to lead towards a second citizenship or residency, we would definitely be open to that.

00:32:08.000 | And if we could work on that process over the next five to seven years, that might be a smart way to allocate our cash right now.

00:32:17.000 | But we're also looking at other alternative options and trying to diversify from the United States if possible.

00:32:24.000 | I don't know if you have any experiences trying to open up term deposit accounts in like Georgia or Armenia because I know they have APRs of like 8% to 10% in local currencies.

00:32:34.000 | But there's obvious institutional and currency risks that you have to take into account.

00:32:42.000 | But we're also looking into other local real estate opportunities that we know the local region and local language that we could also take advantage of.

00:32:52.000 | So, we're just a little lost and we're not sure what the next steps would make sense for us to allocate that capital, especially in these very up and down times.

00:33:05.000 | Right. Of course. So, I think I found the answer to your previous question. So, let's just cover it real quick.

00:33:12.000 | I'll read you an article on this from Premier Offshore, which I've read. I forget the guy's name that runs that website.

00:33:19.000 | But I've read most of his site and I read his book and I appreciate it. He has a whole book on, I forget the name of it, but offshore tax planning as well.

00:33:28.000 | And so, I respect him as a source. So, let me just – here's his answer, which will make it simple.

00:33:33.000 | And his answer makes sense with my general understanding of how I would expect this to work.

00:33:39.000 | So, we covered that. So, we covered the high net worth person. So, the question more properly framed is, what happens to your IRA when you give up your US citizenship or expatriate and you are a covered person?

00:33:54.000 | High net worth covered persons pay tax as if their IRA were fully distributed to them on the day they expatriate.

00:34:01.000 | And the early distribution penalty does not apply. So, if you qualify as a high net worth person using that three-pronged test that we talked about, average annual tax bill of $160,000-ish, $2 million or more net worth on the date that you renounce and/or failure to certify tax compliance, then you're considered to be a covered person.

00:34:23.000 | And so, you would pay taxes if the IRA were fully distributed to you on the day that you expatriate, but not the 10% tax.

00:34:35.000 | And so, the only published information from the IRS is Notice 2009-85, the discussion of specified tax deferred accounts in Section 6 of this notice, quoting from the IRS publication, "The mark-to-market regime does not apply to specific tax deferred accounts.

00:34:51.000 | Instead, Section 877(a)(e)(1)(a) provides that if a covered expatriate holds any interest in a specified tax deferred account, defined below, on the day before the expatriation date, such covered expatriate is treated as having received a distribution of his or her entire interest in such account on the day before the expatriation date.

00:35:11.000 | Within 60 days of receipt of a properly completed Form W-8(c)(e), the custodian of a specified tax deferred account must advise the covered expatriate of the amount of the covered expatriate's entire interest in his or her account on the day before his or her expatriation date."

00:35:27.000 | Note that the covered person is treated as having received a distribution. This is not the same as having your IRA account cancelled or closed. In fact, you have the option of continuing your IRA after giving up your U.S. citizenship.

00:35:41.000 | If you were to close your account and take a distribution, you'd be liable for the early distribution penalty. If you close your IRA as part of giving up U.S. citizenship before reaching $859.50, you will pay a 10% early withdrawal penalty in addition to income tax on the amount withdrawn.

00:35:57.000 | If you decide to keep the IRA open after expatriating, you'll pay U.S. tax when you take distributions from the account, presumably at age 70 and a half. This tax will be calculated only on appreciation in the account from the date of expatriation.

00:36:12.000 | That is to say, a covered person will pay U.S. tax on all the gains in her account on the day she gives up her U.S. citizenship. Then she will pay U.S. tax on the gains earned in that account after expatriating when she takes the required distributions.

00:36:25.000 | The IRA remains intact. All you did is "prepay" your U.S. taxes on the account. For example, you have $100,000 in your IRA on January 1, 2017 when you give up your U.S. citizenship. You pay tax on this $100,000 on January 1, 2017.

00:36:41.000 | You decide to keep the account open after expatriation and begin taking distributions 5 years later, in 2022. As of January 2022, your account is valued at $130,000. You will pay tax on the gain of $30,000 as you take these distributions.

00:36:57.000 | Considering you will remain linked to the U.S. tax system after expatriating through your IRA, you would have to be facing a very large early distribution penalty for it to make sense to keep an IRA open. If you're a 45-year-old doctor who rolled a $2 million defined benefit or profit-sharing plan into an IRA, then you might keep the account going. If you have $150,000 in your IRA, pay the 10% penalty and be done with it.

00:37:21.000 | So I hope you found this article on what happens to your IRA when you give up the U.S. citizenship to be helpful. The bottom line is that 95% of us should close our accounts and be done with the IRA. Only those facing large early distribution penalties should consider keeping their account open.

00:37:35.000 | So you're going to be in that second class if you have a $2 million IRA angling for a bigger one. You would be in that second class where you would need to do some more thoughtful, careful calculations there.

00:37:48.000 | What I would consider is I would think about doing a Roth conversion strategy and think about doing a series of Roth conversions because my instinct is if you move the assets into a Roth or substantial portions of the assets into a Roth, then this problem with the deferred tax liability goes away.

00:38:06.000 | You would incur the tax now, but then if and when you renounce, you would have the assets in the Roth and you would be able to receive the tax-free distribution from the Roth.

00:38:19.000 | Okay, that makes sense.

00:38:21.000 | Okay. To your other question, let's call back in the next show. I've missed the last couple weeks of Q&A shows, but I'll be doing one next week. Call back in and let's talk more about the options when we can explore some more of your situation because I think it's super interesting and we'll talk more about the investment options then. Fair enough?

00:38:41.000 | Okay. Okay. Thank you, Joshua.

00:38:42.000 | Cool. Thanks, Chris. All right. We move now to Jeremy in Ohio. Jeremy, welcome to the show. How can I serve you today, sir?

00:38:49.000 | Hi, Joshua. Thanks for taking my call. So my wife and I are US citizens and we're considering moving abroad. She's self-employed and if we move, we would like to create a foreign corporation that owns her LLC to avoid paying Social Security, Medicare, self-employment taxes.

00:39:07.000 | And I just have a few questions on the logistics. So in all likelihood, we will not move until next summer. So I'm wondering, can we create a corporation in the Caymans or the Bahamas to own the LLC right now while still living in the US for the next 10 months?

00:39:24.000 | Where are you planning to go?

00:39:50.000 | I don't know yet. It depends on my job search. It will end up most likely being in Southeast Asia, Vietnam, Thailand.

00:39:56.000 | Okay. So the answers are simple and I'll make them quickly. So what you should do. The answer is no, you should not establish the foreign corporation while you continue to be in the United States, although you could, but you should not.

00:40:10.000 | You will not be able to save any unemployment taxes by establishing a foreign corporation unless you do not live in the United States. And so it'd be great if you could, right? Practically a lot of us would say, well, fine, I'll just start my corporation in the Cayman Islands.

00:40:29.000 | I'll live in Florida and now I can avoid this 15.3% self-employment tax, but that is not permissible. The only way that it is permissible for you to work for a foreign corporation and thus not have to pay US employment taxes is if you are not located in the United States.

00:40:49.000 | So basically you need to qualify for the foreign earned income exemption on your income in order for that way of saving on your self-employment taxes and your Medicare, Social Security, et cetera, in order for that little wrinkle to work. You need to be physically located outside of the United States and then your business needs to be physically located outside of the United States.

00:41:10.000 | The other reason why you should not establish the foreign corporation until you are gone is that it will make your tax filing life a nightmare. It is brutal. It is the major downside of being outside of the United States is you still have to file tax returns and now they get brutal.

00:41:31.000 | I did my taxes last year and it was the hardest I have ever done. It was just insane to do the form. The IRS, the form, I forget the number off the top of my head, but the form, the IRS predicts that it's a 35-hour form just to fill in the form. And it's one of the costs that has to be reckoned with.

00:41:49.000 | Unless you are willing to take it on yourself, which having done it, I advise against it, you're going to be incurring extra tax preparation fees and you have to – whenever I consult with people, I always say how much money you're going to be making because this needs to be worth your incurring an extra $400 to $1,000 at the simplest of tax preparation fees for this to be worth it.

00:42:12.000 | So if you're only saving $2,000, I say just pay the employment taxes, get your $2,000 and credit in the system and skip filing the foreign corporation documents because to this day, I expect the IRS to show up with guns blazing because I'm sure I made a mistake on the thing even though I did my very best and I should know how to do it.

00:42:33.000 | So don't create anything before you do.

00:42:36.000 | Now the next thing logistically, all you do, have her set up her single member LLC in the United States, choose the state that you're going to run it from, which may or may not be your current state of residence.

00:42:49.000 | There's no reason why it can't be your current state of residence as long as you don't live in a state like California that imposes an $800 annual fee, something like that.

00:42:56.000 | But it can be whatever state you live in.

00:42:58.000 | And then establish all your bank accounts, establish all your infrastructure, establish all of that stuff while you're in the United States.

00:43:05.000 | Then when you leave the United States, you won't have to change anything except one little change where you establish the foreign corporation and then you file a corporate action with your papers with your LLC and you convey that LLC to your foreign corporation.

00:43:23.000 | And that's what's the beauty about that structure is that you don't have to run anything through the foreign corporation.

00:43:31.000 | Everything is through the US LLC.

00:43:33.000 | It's just simply from the IRS perspective because that single member LLC is a disregarded entity from the IRS perspective, then everything rolls up to the foreign corporation.

00:43:42.000 | Does that make sense?

00:43:44.000 | It does, yes.

00:43:46.000 | And yeah, the tax saving on self-employment taxes would be in the five figures, which is why I'm looking into all of this.

00:43:52.000 | Very worth doing.

00:43:54.000 | And especially I think that in the future it will be if right now the self-employment taxes are one of those things where traditionally they have been capped at the Social Security wage base for at least for Social Security taxes, which is I think $116,000-ish, about $120,000 or so.

00:44:12.000 | So of course you have Medicare taxes on top of that that don't have the wage base.

00:44:17.000 | But one of the things that I expect to see change in the coming years, and this is one of the things that Joe Biden has said in terms of his tax plan, what he'd like to do, we'll see if he gets elected or not, but is to remove that cap on the Social Security wage base or to impose it at a higher level.

00:44:38.000 | And so traditionally, employment taxes have been some of the easier taxes to plan for because they're capped at $120,000 wage base, plus you can manage them through the S Corporation as well.

00:44:52.000 | But I expect that area of tax planning to become harder in the years to come because the U.S. legislature is going to try to save the Social Security system, and the natural way to do that is to remove and adjust that wage base as has been done previously.

00:45:05.000 | So I think that this form of offshore planning is really strong.

00:45:09.000 | And just as a quick follow-up, just to make sure I understand, the foreign corporation that we set up, does that need to be based in our country of residence?

00:45:19.000 | Not necessarily.

00:45:20.000 | It just depends what the country.

00:45:22.000 | Right. Well, yeah. So that's one of the tricky things with tax planning is that you've got to plan for the United States, and then you've got to plan for the country that you're going to.

00:45:33.000 | So there may be good reasons for you to establish your corporation in the country that you're going to.

00:45:40.000 | Maybe you go to Thailand and you say, "I'm going to establish my company in Thailand, and maybe Thailand gives me some benefits with my immigration process or otherwise, or my taxes, etc., because of the fact that I'm establishing it in Thailand."

00:45:55.000 | But on the other hand, some countries, for example, Malaysia, I think Thailand also, although Thailand's a little bit murky to me, but for example, Malaysia has a territorial tax system.

00:46:06.000 | And so if you were going to move to Malaysia and live in Kuala Lumpur, you definitely would not want to establish your firm as a Malaysian company, because you would want to keep your company outside of Malaysia so that you could minimize your tax obligation to the nation of Malaysia.

00:46:25.000 | And so the major reason to establish your company in the country that you're going to would be if it gets you some benefit with that company.

00:46:38.000 | From the United States perspective, it won't matter. It doesn't matter whether it's Cayman or Malaysia or Hong Kong. It just doesn't matter.

00:46:45.000 | So the key thing would be, does it matter to the country that you're going to? Do you get some kind of benefit from doing it there?

00:46:51.000 | And then is there some kind of disadvantage of doing it outside that country?

00:46:55.000 | So if you're a resident of a country that's going to impose taxes on you from offshore corporations, now you might very well want to incorporate in that country because it simplifies your tax preparation there.

00:47:10.000 | Now, from a flag perspective, that can be a little bit difficult.

00:47:14.000 | You have to weigh the value of independence and autonomy, and I think that's a good reason to do it outside of the country that you live in.

00:47:21.000 | In an ideal world, if you're following flag theory, your business should never be established in the jurisdiction where you're spending time, because that gives a jurisdiction in which you're spending time too much potential control over you and your assets and your business.

00:47:34.000 | And so you would always use another jurisdiction from that perspective.

00:47:40.000 | So in most cases, if we were to move to Vietnam or Thailand, it would be legal to set up the business in another country, Caymans, Bahamas, wherever.

00:47:51.000 | But we just need to look into the logistics of how that is taxed and pros and cons versus, okay.

00:47:57.000 | And your situation from that perspective, depending on which country you are in, and the country matters a great deal, but your situation would be much simpler in some of those countries if you didn't even have the business there.

00:48:12.000 | Because remember, any time you establish a business in a country, that country may tax you on that business.

00:48:19.000 | And so that's the other level of taxation that you need to avoid.

00:48:22.000 | In the same way that I wouldn't be a Florida resident and then go and establish a business in New York or California because they're going to tax my business in that place unless I'm doing business there and I legally have to.

00:48:35.000 | In the same way, I'm not going to go and move to Vietnam and establish my business in Vietnam where it's going to be taxed there if I can run my business through Hong Kong and have it run through Hong Kong completely tax-free.

00:48:50.000 | So just be very thoughtful.

00:48:53.000 | From the U.S. perspective, which is of course where I can answer and not from the others, from the U.S. perspective, it doesn't matter the jurisdiction that your business is organized under.

00:49:02.000 | And if you're using – if your wife is running a simple business where it's all run through her US LLC, the exact jurisdiction where her business is located is going to be invisible to her clients.

00:49:16.000 | So it doesn't matter. There's no need to pay thousands of dollars per year for audits and for filing fees in a prestige company – sorry, in a prestige country.

00:49:27.000 | You can just need any country that offers an international business corporation that you can use and you're good to go.

00:49:34.000 | So now if you were running a big company that you were going to build a massive global import/export business, well, of course now you would want to go to that jurisdiction possibly for the prestige, possibly for the – where you're going to run your cards through, how you're going to get merchant processing, banking, etc.

00:49:50.000 | That's a different scenario than what you've described to me here.

00:49:53.000 | Yes, and it's very different than our situation.

00:49:59.000 | Good enough for now, Jeremy?

00:50:02.000 | Yeah, as always, very clear and helpful. Thank you very much.

00:50:06.000 | My pleasure. Thank you for calling in.

00:50:08.000 | All right, we go to Peter in New York. Peter, welcome to the show. How can I serve you today, sir?

00:50:12.000 | Peter in New York. Going once, going twice. Peter, we'll come back to you at the end.

00:50:24.000 | Jason in Texas. Jason, welcome to the show. How can I serve you today, sir?

00:50:27.000 | Hey, Josh. I just want to comment and really appreciate your opener to this podcast. While listening to that, it just really made me think of what Matthew said. What profit is it a man to get in the whole world but lose his soul? And so I really appreciate your views on ethics and morals and religion and finance as a whole.

00:50:51.000 | My pleasure.

00:50:54.000 | Quick question. I wanted to see what you would recommend to find a good trustee financial advisor. And are there generally any financial – I'm kind of ignorant in this area – are there any financial advisors that double as accountants as well?

00:51:15.000 | Yes, although you're more likely to find them through the accounting angle than you are the financial advisor angle. And so to begin with, I think you need to start by saying what advice, what kind of financial advice am I looking for? So what kind of financial advice do you think would profit you?

00:51:35.000 | What I'm mostly looking into is someone to manage my Roth IRA and basically talk through strategies for myself and my family as far as financial goals and advice moving forward.

00:51:56.000 | I don't have a huge net worth but someone to bounce ideas off of and someone who hopefully isn't working on commission and telling me what I want to hear.

00:52:06.000 | Right, right. So speaking broadly, the first thing is to identify what kind of financial advice that you want. So for example, maybe if you don't have a lot of money, the kind of financial advice that you're most likely to need is how do I make more money.

00:52:21.000 | That's going to be the core thing. And to my knowledge, almost no financial advisors are going to be able to tell you much about that because it's not something that most financial advisors really know much about.

00:52:39.000 | And so if you identify your financial needs that I need to make more money, then I would go looking for a financial advisor on how to make more money. That might be somebody that you know in your town that makes a lot of money.

00:52:52.000 | That might be your uncle who makes a lot of money. That might be somebody that you ask around in your fraternity club or your alumni club and say, "Who do I know that makes a lot of money?"

00:53:06.000 | You can go to the Internet and start studying how do I make a lot of money on the Internet.

00:53:10.000 | And so if that's the goal, then the first focus I would be more inclined to buy books and courses on Gumroad from the various people in Money Twitter who are popularizing courses on that than I would be to go and consult a local certified financial planner.

00:53:29.000 | So that's the first thing is identify what you need.

00:53:36.000 | Now let's say that you needed help managing your money. You look down and you notice, "You know what? I'm making plenty of money, but I'm just spending it all over the place and I don't know where it's going."

00:53:52.000 | Well, now that's a different problem. And once again, I don't know all those certified financial planners ostensibly are supposed to be able to help you with that kind of thing and give you some budgeting tips.

00:54:02.000 | But my experience is many, if not most, financial advisors, people whose business card says financial advisors, are not really tuned in to the day-to-day of that.

00:54:12.000 | They make a lot of money. They usually spend a lot of money. And because they make enough, it becomes fairly easy for them to gain wealth.

00:54:18.000 | And so there I would go to personal finance section in the bookstore. I would go to personal finance blogs to get that advice.

00:54:27.000 | People can say, "Is there a budget coach?" or something like that. "Am I getting out of debt?" That's a different kind of financial advisor.

00:54:32.000 | Now where I think the more mainstream question comes in really well is if you're making money, you're saving money, you're running things well, and then you want to sit down and you want to talk about the nuts and bolts of financial advice.

00:54:47.000 | The nuts and bolts of insurance. Do I need insurance coverages? Do I have good insurance coverages? Do I need to save money? How am I saving money? Do I need a college account? Do I need a college plan?

00:55:01.000 | And there I think you'll find most financial advisors do really well if you pick the subject.

00:55:07.000 | For example, although those of us who are certified financial planners, the gold standard in the financial industry, we have to pass on our CFP exam a bunch of sections on property and casualty insurance.

00:55:20.000 | In theory, I should be able to sit down and review your property and casualty insurance policies with you.

00:55:25.000 | In practice, if I had an office and you came in and said, "Can I review these with you?" I would say, "There's a property and casualty insurance guy right across the street. Go do it with him."

00:55:34.000 | Because that's a financial advisor for property and casualty insurance.

00:55:38.000 | I'm an expert on life insurance, so I would review life insurance policies, disability policies.

00:55:42.000 | I would review investments, but I'm not the guy if you brought in your real estate portfolio and said, "Hey, I want to review this real estate portfolio."

00:55:51.000 | Now you've got to go and find another professional or a seasoned real estate investor to talk with.

00:55:58.000 | I know I'm not giving you a simple answer, but this is what I believe truly is the answer.

00:56:02.000 | The answer is to identify what kind of advice do I need and then to solicit that advice more broadly.

00:56:10.000 | If you're looking for a good review of my IRAs and can someone help me calculate how much money I need to be saving for retirement?

00:56:18.000 | If you're looking for a review of my portfolio allocation and you're looking for a review of your insurance policies, that's where a more mainstream financial advisor, the way the term is usually used, is going to work really well for you.

00:56:31.000 | Now, how do you find such an advisor?

00:56:33.000 | This is frankly an ongoing problem because there are many excellent advisors, but usually you have to find some way of weeding them out in advance, and that becomes difficult.

00:56:45.000 | So my kind of go-to two things.

00:56:48.000 | Number one, if you've done the hard work of identifying where your needs are, then you can pick an advisor that's going to be helpful to you.

00:56:58.000 | And how do you do that?

00:56:59.000 | Well, in the past I used to do ads for a referral service, and I got pretty good, I would say, on the dominant hold, pretty good feedback, but not all the way.

00:57:09.000 | So I just haven't really continued that anymore.

00:57:12.000 | What I would do is I would start with the accounting angle.

00:57:16.000 | If you need some help with accounting, I would start by polling my group of peers, if your group of peers is people that you respect.

00:57:23.000 | So I would talk to the men that I know who are successful businessmen.

00:57:27.000 | I would talk to anybody that I know who is a professional, and I would say, "Do you have a financial advisor that you would recommend?

00:57:34.000 | I'm looking for a financial advisor."

00:57:35.000 | And I would collect some referrals and try to get some info from them about what they like about their financial advisor.

00:57:39.000 | But people love to give good referrals to their good financial advisors.

00:57:43.000 | And so I would start with that.

00:57:45.000 | I would look around and see, is there an organization?

00:57:48.000 | Is there companies in my area?

00:57:49.000 | There are many good financial planning firms in your area.

00:57:53.000 | There's a lot of good work done these days by online financial advisors.

00:57:58.000 | I'm sitting here looking at Matt Miner's name on my screen, knowing that he's coming up in the queue.

00:58:03.000 | Matt's been on the show a couple of times.

00:58:05.000 | And so you can go and listen to him in, let's see, episode 597 and 377.

00:58:12.000 | Matt's been a financial advisor for a number of years now, but he was an MBA guy, and he's been on the show twice.

00:58:18.000 | His website is plcwealth.com.

00:58:20.000 | So there you go, Matt.

00:58:21.000 | I didn't forget about you.

00:58:22.000 | I'll be to you in a minute.

00:58:23.000 | And so you can talk to a guy like Matt.

00:58:25.000 | Most financial advisor work can be done virtually now.

00:58:29.000 | And so this has been a major change in the last few years where now you can work with somebody like Matt.

00:58:34.000 | He's in North Carolina.

00:58:35.000 | You're in Texas.

00:58:36.000 | But he listens to Radical Personal Finance.

00:58:38.000 | He's the kind of guy who understands probably what you would be talking about, and so he would be a good guy to talk to.

00:58:47.000 | He is plcwealth.com.

00:58:49.000 | The answer is at that point, beyond that, it's just a matter of trying to find somebody and then using your education to lay out the problem to that person so they can help you solve your issues.

00:59:01.000 | And I don't have a better solution than that right now.

00:59:04.000 | There are many good firms.

00:59:05.000 | There are many good advisors.

00:59:07.000 | And the key to getting a good fit with a good firm and a good advisor is by being clear on what you know, what you want, what you need, and then asking the person, "Is this something that you can effectively help me with?"

00:59:18.000 | And if it is, you'll probably get good service.

00:59:23.000 | Okay.

00:59:24.000 | Yeah, I think that's a lot of good information to work with.

00:59:30.000 | I think that's it.

00:59:31.000 | Thank you, Josh.

00:59:32.000 | All right.

00:59:33.000 | Very good, sir.

00:59:34.000 | All right, moving on.

00:59:35.000 | Daniel in Florida.

00:59:36.000 | Daniel, welcome to the show, sir.

00:59:37.000 | How are you?

00:59:38.000 | Hey, Josh.

00:59:39.000 | I'm doing well.

00:59:40.000 | Thank you for taking my call.

00:59:41.000 | My pleasure.

00:59:42.000 | I've got a quick question, and it's less a technical question and more a theoretical question.

00:59:48.000 | You are the privacy guy, and so I wanted to run this by you.

00:59:53.000 | I have got an LLC business that is an LLC, and it is named -- it's in my name.

01:00:00.000 | I'm starting a new business that has no tie to me whatsoever name-wise, and I'd like to keep it that way.

01:00:07.000 | One of the things that's most concerning to me recently with the cancel culture craziness that's going on is, you know, people looking through past, you know, problematic tweets.

01:00:19.000 | And it seems to me that a future danger is that opinions that are reasonable today are not going to be reasonable five years from now.

01:00:28.000 | You know, you look at, to use low-hanging fruit, Barack Obama's 2012 beliefs on marriage in his campaign would make you a literal Nazi now.

01:00:41.000 | Right.

01:00:42.000 | And I'm looking for a way to distance myself from my business in a sane manner.

01:00:50.000 | I don't need to go overboard.

01:00:51.000 | I'm not worried about anyone looking into me for anything nefarious, but just to keep things like that at a minimum and how to structure that.

01:00:59.000 | My initial inclination was to set up my new business as a DBA of my current LLC, and I'm wondering if I can just go the easy route or if I need to get a little bit more involved.

01:01:11.000 | And, you know, again, it's just to kind of keep myself separated from the business against, you know, the most casual observer or lurker on Facebook.

01:01:19.000 | I don't need anything extreme, I don't think.

01:01:21.000 | But I'd love to hear your thoughts on that.

01:01:23.000 | What, are you willing to share the general nature of the business that you're considering?

01:01:29.000 | Yeah, absolutely.

01:01:30.000 | So it's an artistic business.

01:01:32.000 | I'm a photographer, and this is a corporate photography business as opposed to my previous photography business.

01:01:39.000 | I'll still be running both, but I do anticipate that the new business is going to be easily 75 to 80 percent of my revenue going forward.

01:01:48.000 | Okay.

01:01:49.000 | So the current business is going to sort of take a back seat.

01:01:52.000 | Right.

01:01:53.000 | So when you are interested in privacy, there are going to be several levels at which that has to be tackled.

01:02:07.000 | And I've studied this topic pretty deeply.

01:02:10.000 | I've tried to find solutions for you, and I think we need to begin by acknowledging it is tough.

01:02:15.000 | It is super, super tough.

01:02:18.000 | I don't think that I deserve in any way the label of the privacy guy because although I have an interest in privacy and I've studied it, I've come to the conclusion that in order to effectively maintain privacy, you have to be so deeply committed.

01:02:36.000 | And it substantially interferes with what most of us have come to believe is normal life, and that if you're going to be committed to privacy, it's going to come with some significant tradeoffs.

01:02:52.000 | For example, there was a time where I was pursuing privacy, and I tried to take my picture and all my family's pictures off of the Internet.

01:03:03.000 | And I saw the danger, and I said, "You know what?

01:03:07.000 | I used to share everything, but I'm going to do my best to take my picture and my image and all my family's images off the Internet."

01:03:14.000 | But then the question comes down, "How do I run a modern business that's kind of a personal brand influencer business like I run right now without sharing that stuff?

01:03:26.000 | How do I do it?

01:03:28.000 | And is it possible?"

01:03:30.000 | It's possible if that's somebody's part of somebody's shtick.

01:03:34.000 | Michael Bezel does a great job.

01:03:36.000 | His picture is nowhere, and his whole shtick is privacy.

01:03:39.000 | And so anybody who comes to him and looks to him for privacy, they expect that.

01:03:44.000 | But it's a lot harder for me.

01:03:46.000 | Am I not going to go on to somebody's podcast because I'm trying to do that?

01:03:51.000 | And I did this thing where I did an interview for a guy one time, and this was in kind of where I was trying to be super private.

01:03:56.000 | So I decided I wasn't going to do video at the time of my face and everything.

01:04:03.000 | And I went on an interview with a guy, and I did the interview, and it was audio only, but he was talking to me.

01:04:09.000 | And so I just turned on my camera for a moment, let him say hello so we could talk for a minute with face-to-face like normal humans.

01:04:16.000 | And then I turned my camera off for the Internet.

01:04:18.000 | Well, then he publishes the episode to the Internet, and all of a sudden there is my screenshot picture of my face put as a still thing on the video.

01:04:28.000 | And I came to the point, I was like, "What do I do?

01:04:30.000 | Do I write to this guy and be like some weirdo who says, 'Hey, man, would you please undo all this work and put some wacky avatar of me instead?'

01:04:39.000 | Or do I just say like this is normal?"

01:04:41.000 | And I eventually came to the point where I said, "This is unsustainable.

01:04:44.000 | I can't build a business in this normal way if I'm like this hardcore privacy."

01:04:50.000 | So I still find it frustrating.

01:04:52.000 | Like my wife and I have decided we don't put her picture online, we don't put our children's pictures online, but it's frustrating because I have the cutest kids in the world.

01:05:00.000 | And I could get so much great marketing clout by putting pictures of my cute children out there and all the things that I do.

01:05:09.000 | And it hurts me.

01:05:10.000 | It hurts my ability to market because of the privacy focus.

01:05:13.000 | And so I think that you'll face the same thing.

01:05:15.000 | And especially if there's something that's related to photography or some kind of personal brand, you'll face the same thing.

01:05:21.000 | And it's not an insignificant problem.

01:05:24.000 | It's a really significant problem.

01:05:26.000 | And so you've got to think through that first.

01:05:28.000 | Is this going to be worth it?

01:05:30.000 | Now, and then there are some businesses that lend themselves well to privacy and some that don't.

01:05:36.000 | And so if you really are interested in privacy, that's going to actually affect the kind of business that you run and affect how you run it.

01:05:44.000 | So give some serious thought to that.

01:05:46.000 | Now, the second thing component is going to be how are you going to get paid?

01:05:50.000 | And this is the hardest thing to maintain privacy for because in the United States there is such a heavy, heavy focus and emphasis on financial transparency that it feels almost impossible to do any business transaction privately, you know, outside of cash and possibly cryptocurrency,

01:06:16.000 | especially if you're using some kind of privacy-focused coin.

01:06:21.000 | But it's just really, really difficult to do.

01:06:24.000 | And so that's one of the reasons why tax evasion is—I advise against it.

01:06:30.000 | Like, the people who have the most need for privacy are those who either can't work legally or who are choosing to engage in non-taxed work in the black or gray markets.

01:06:41.000 | Those people have a really difficult time doing it because of the stranglehold that the government has on the financial system.

01:06:49.000 | When you interact in any way with the financial system, you have to understand that everybody with whom you interact is a paid spy for the U.S. government.

01:06:58.000 | And so that means that it's very difficult to do anything privately because your local bank has far more to lose than you do if they get caught facilitating somebody who's money laundering or tax evasion, etc.

01:07:12.000 | Because the government can shut them down, they can revoke their license, they can take their assets.

01:07:16.000 | It's just not worth it whatsoever.

01:07:18.000 | And so any person involved with finance that you work with is an unpaid spy for the government.

01:07:23.000 | And that's why you're required to have multiple forms of ID.

01:07:26.000 | Now it's getting to the point where you have to have real ID and you have to update it regularly and everything has to fit the profile perfectly.

01:07:32.000 | And so the only way to run a business truly privately is if you can figure out a payment system that is anonymous, because that's going to be your biggest, tough, hard part, is the payment system, and your images and things like that.

01:07:49.000 | So private businesses lend themselves to cash-oriented businesses where you get cash or checks.

01:07:56.000 | Now even the check system in days past, and it's still possible to some degree, although now to cash a check you need substantial identification.

01:08:05.000 | But in the days past, let's say that we were going back 10 years ago and you said, "All right, I'm an illegal immigrant to the United States.

01:08:12.000 | I can't work legally, but I need to make money."

01:08:14.000 | And so you start a pressure cleaning business.

01:08:17.000 | Well, privacy was fairly simple, that you would just simply offer a cash discount and somebody pays you with physical currency.

01:08:23.000 | That solves your privacy problems.

01:08:25.000 | Or if they pay you with a check, you ask of them that they pay you with a check and then you take that check to a local bank.

01:08:35.000 | You require that it's a local bank.

01:08:36.000 | You take that check to the local bank.

01:08:38.000 | You cash the check at the local bank.

01:08:40.000 | You don't need an account there.

01:08:41.000 | And you're able to get your money that way.

01:08:43.000 | And you can still do that, although the banks, especially the big ones, have become pretty hardcore.

01:08:48.000 | Like for example, Wells Fargo, if you go and cash a check that somebody pays you at Wells Fargo, on a Wells Fargo account, they literally require your thumbprint on the check.

01:08:57.000 | It's a horrific system, but you have no other recourse.

01:09:01.000 | No one else is going to do it for you.

01:09:03.000 | You try to do business in the postal money order system.

01:09:06.000 | You can still get money orders in the United States.

01:09:08.000 | I think you can get up to about $4,000 from them, but they start asking for ID.

01:09:15.000 | I can't remember the numbers, $2,000, $3,000, but you can go in and get -- someone can get a $500 money order without ID.

01:09:20.000 | But the problem that you face is when you go to cash it.

01:09:24.000 | And if you could try to go and cash a postal money order at a post office, they almost never have the cash.

01:09:31.000 | Now, $20, you can do it.

01:09:33.000 | $80, maybe.

01:09:34.000 | But $200?

01:09:35.000 | All of a sudden, they look at you and they're like, "I'm sorry.

01:09:38.000 | I don't have the money in my till," right?

01:09:40.000 | And they refresh the drawers every day.

01:09:42.000 | And so you can come at the very end of the day, and you might be able to cash your $400 money order, but the postal workers are going to be annoyed at you the whole time.

01:09:49.000 | It's a very, very frustrating system.

01:09:51.000 | And so you can do it in a world of cash and maintain privacy there, but it's hard beyond that.

01:09:59.000 | Now, this is why it's so important that we encourage other forms of payment that will work, distributed payment systems.

01:10:08.000 | This is why cryptocurrency is so important that we encourage and figure out how to make it work, because we've got to get this stranglehold off of us from the perspective of the total invasion of privacy all around the world.

01:10:23.000 | But we're a good ways off from that.

01:10:25.000 | So the most private businesses are going to be a business that you can do in person and that you can take physical payment, given the constraints that I just described.

01:10:36.000 | But you're going to lose elements of privacy anywhere you go beyond that.

01:10:41.000 | And so here you have to identify, "What is my concern?"

01:10:45.000 | And there are three basic entities involved.

01:10:49.000 | You've got the public, you've got financial institutions and service providers, and then you've got the IRS.

01:10:57.000 | So let's start with the easiest.

01:10:59.000 | You can run a business totally in cash, and you could just simply declare that to the IRS on a Schedule C, which is the most private way to do it.

01:11:09.000 | You just run it as a sole proprietorship.

01:11:12.000 | You report your income on a Schedule C.

01:11:15.000 | You don't even have to tell the IRS the name of it.

01:11:17.000 | You just have to report all the income that you earn.

01:11:19.000 | That keeps you totally legal, where you avoid any problems with the IRS, and then you can collect your payment elsewhere, and that's simple.

01:11:27.000 | You're not interacting with any institutions.

01:11:29.000 | You're not interacting with the local business registration.

01:11:32.000 | You're not filing a DBA form.

01:11:33.000 | You're not establishing an LLC.

01:11:35.000 | You're not establishing a bank account.

01:11:38.000 | Everything is just done in cash.

01:11:40.000 | You can totally do that, and that's going to be your most private business that you can have.

01:11:45.000 | And you can do that with a website.

01:11:48.000 | You can do that with a phone, easy to get a phone and a website anonymously, and that solves your problem.

01:11:54.000 | What you give up with that is you give up liability protection, and you give up probably the ability to grow, because that kind of business is going to have a pretty strong connection as to how big you can grow.

01:12:08.000 | Now, the second thing is -- so we've taken care of the IRS there, right, and the IRS is from now on going to be involved, because there you can't keep anything private from the IRS safely.

01:12:23.000 | So the second thing comes down to what about service providers and banks, et cetera, and this is where most of your danger comes in.

01:12:32.000 | The cancel culture is not only a concern with regard to the general public.

01:12:39.000 | It's also a concern with regard to service providers.

01:12:42.000 | Now, it doesn't sound to me like your kind of business is likely to be the kind of thing that would be shut down by a service provider, but let's say that you made a job instead of photography.

01:12:53.000 | You made a business assembling custom AR-15s, right?

01:12:58.000 | This is an entirely legal, 100% legal business, but now you've got major problems from a privacy perspective.

01:13:05.000 | The banks will shut you down.

01:13:06.000 | They'll say, "No, we don't want to do business with gun owners."

01:13:09.000 | The stripe will shut you down if you are doing this, and I've seen this a lot.

01:13:14.000 | It was one of my big concerns is that you see a lot of organizations.

01:13:18.000 | Most commonly you see there's been a lot of Christian organizations that have been put on the SPLC hate list, and then all of a sudden their stripe account gets canceled, their PayPal account gets canceled, and nobody can give them money except sending them a physical mailed check through the mail.

01:13:35.000 | And so the financial institutions are a real risk, but for a business like you're describing, that shouldn't come into play.

01:13:43.000 | Your personal opinions, we're not at the point yet where your personal opinions that you spout off on on Twitter are necessarily going to impact Stripe's willingness to keep your merchant account open with them, but you're not going to be able to establish that account and keep your name private.

01:14:00.000 | So even if you go and establish a company in a more private jurisdiction, there are a number of them.

01:14:06.000 | Wyoming is one of the favorites because they allow privacy on the filers.

01:14:10.000 | You can designate a nominee.

01:14:13.000 | There are a number of the states that allow it as well.

01:14:15.000 | So you can have an agent in Wyoming that files your corporation paperwork for you.

01:14:19.000 | You have a company that doesn't require the identity there.

01:14:24.000 | Your agent knows your identity, but when you go to a bank, the bank is going to require your personal identity.

01:14:30.000 | And so you can run that kind of company fairly anonymously.

01:14:35.000 | You can establish a Wyoming LLC that you hold.

01:14:39.000 | In order to establish bank accounts or merchant accounts, it will be connected to your personal identity.

01:14:45.000 | Unless you're big enough that you can hire an attorney and that attorney can be given power of attorney from the company, et cetera, and do that, it's possible, but it's bigger.

01:14:55.000 | And that is unlikely with a startup like yours.

01:14:59.000 | And then when you go and do your public-facing things, you can do all of that underneath a pseudonym.

01:15:05.000 | You can register yourself as an employee.

01:15:07.000 | You can work under a pseudonym.

01:15:08.000 | You can run your Internet website and everything anonymously.

01:15:15.000 | And so you can protect yourself there, but there's still going to be some significant exposure to you.

01:15:21.000 | And if anyone sues you, don't expect to maintain your privacy there.

01:15:23.000 | So in summary, what I would say is privacy is brutally difficult in our modern world.

01:15:29.000 | And it's not totally impossible, but it's about 90% impossible at this point in time.

01:15:38.000 | And so there is no such thing as perfect privacy any longer.

01:15:42.000 | There's only scales and levels.

01:15:45.000 | And so you've got to decide what scale and level am I concerned about.

01:15:50.000 | What I would submit to you is that the simplest way to solve the problem that you're describing is simply to stop saying things that are going to get you canceled.

01:16:00.000 | And that stinks because you feel like, well, this isn't crazy, but it's really the more practical solution versus pursuing privacy, at least on a hardcore level.

01:16:10.000 | But that's my analysis on the subject.

01:16:15.000 | Awesome. Thank you. That's really helpful. And it gives me kind of a good paradigm to think about all of this.

01:16:20.000 | I don't quite think I'm there yet. And a lot of that seems very extreme, given my position and giving what I think the threat assessment is ridiculous, as it sounds, to use a phrase like that, is and what I'm hoping to protect.

01:16:33.000 | But it really gives me a good paradigm to think about that from the top down. So thank you for that.

01:16:37.000 | Yeah. And what I would add, two things. Number one, the things that are easier to protect with regard to privacy are things like your physical location, your phone number, et cetera.

01:16:51.000 | What I came to when I did this analysis, I came to the conclusion that it was basically impossible for me, for all the reasons that I described, to create total privacy around a business venture.

01:17:04.000 | But what I could do is I could create massive privacy around things like my physical location, where I sleep at night, et cetera.

01:17:13.000 | And by imposing discipline and being thoughtful with phone numbers and electronic devices, et cetera, then I can gain a substantial amount of personal privacy.

01:17:24.000 | And so in many cases, that's significant enough.

01:17:28.000 | The second thing is, as I've analyzed the problem, what I've come to the conclusion of, that to survive cancel culture, there are two strong solutions and two strong ways to survive cancel culture.

01:17:42.000 | The number one is don't say anything. And I think that this should be followed by far more people than it is.

01:17:49.000 | That there's that not everybody, right? If somebody really wants to talk, fine, but that more of us should just simply not say anything.

01:17:57.000 | And I just point out that most of us aren't doing anything productive by saying anything anyway.

01:18:02.000 | We're not actually changing anybody's mind. We're not actually having an influence. We're just making noise and creating heat.

01:18:10.000 | And so the solution is just don't say anything. And if you just don't say anything, or at least not in a public format where you can go viral, then things are simpler.

01:18:21.000 | That's not a perfect solution, but if somebody avoids using social media, they can avoid a lot, not all.

01:18:26.000 | So I would give an example of people who can't avoid everything.

01:18:30.000 | Think about the guy at Costco a few weeks ago that got fired from his insurance company because he didn't want to wear a mask at Costco.

01:18:43.000 | And he yelled at the person and said, "I feel threatened." And then somebody took a video of it and said – and a few days later he lost his business, he lost his job and everything, even though he wasn't spouting off on social media.

01:19:03.000 | So he could have avoided that by not saying anything and by just submitting to the crowd dynamics and going along the way.

01:19:11.000 | Another example of a guy who got burned even though he wasn't personally publishing stuff on social media was the biker who was wrongly identified as – in Maryland, the guy who was wrongly identified as accosting the little girl and the woman who were putting up papers in support of a Black Lives Matter protest.

01:19:36.000 | And so here was this guy who – I think he was a businessman or an attorney. I've got the news story in my archives.

01:19:43.000 | But here was this guy. His name – I have it here. Just a moment.

01:19:48.000 | Peter Weinberg, a 49-year-old finance marketing executive in Bethesda, Maryland.

01:19:54.000 | And I'll just read two paragraphs from the news story from The New Yorker.

01:19:58.000 | "By the standards of the pandemic, Thursday had been a normal day for Peter Weinberg, a 49-year-old finance marketing executive.

01:20:10.000 | He worked from his home in Bethesda, Maryland right outside of the District of Columbia, staying busy with Zoom meetings and the new rituals of a socially isolated world.

01:20:18.000 | Then around 10 p.m. he received an irate message on LinkedIn from someone he didn't know."

01:20:22.000 | And so he gets all these messages after message after message, and all these pictures come in.

01:20:30.000 | And what happens is everyone pieces together that he used an application that followed his bike rides, and he used an application.

01:20:38.000 | And that application released his – I think it was Strava, maybe – releases his daily bike rides publicly.

01:20:44.000 | And somebody went looking for him because the police had released the wrong date of the assault.

01:20:51.000 | The police had said the wrong date, and so he had been riding in the park on that date.

01:20:55.000 | And somebody thought that his red helmet and his face looked like the face and the helmet of the guy in the story.

01:21:02.000 | And so he got doxed, even though he didn't have a social media account.

01:21:06.000 | So there are still dangers for all of us on these regards, even if you don't share something publicly.

01:21:14.000 | So it's not a perfect solution, but the majority of that can just go away by just being quiet and not saying anything.

01:21:19.000 | The second solution is just simply to lean into your brand.

01:21:22.000 | The people who are impossible to cancel are the people who are just open and loudmouthed with what they think.

01:21:28.000 | And it's not a – where their social media use and their in-person use is totally congruent.

01:21:35.000 | There are lots of people with loud, offensive opinions who are totally uncancellable because they've never hidden that.

01:21:42.000 | Yeah, Twitter might dump them, but that's not what you're talking about.

01:21:46.000 | The crowds aren't going to reach them because they're just clear and loud and outspoken with what they think and what they believe.

01:21:51.000 | And I think those are the two strategies that work.

01:21:54.000 | Either make everything that you do congruent with what you think and what you believe or don't say anything on the Internet.

01:22:00.000 | The major risk is just simply saying things on the Internet.

01:22:02.000 | It's not so much of a risk to speak to people in person in normal situations and tell them what you think.

01:22:07.000 | The major risk is saying things on the Internet because we have an unprecedented situation in which millions and millions of people can interact with your comments.

01:22:16.000 | And that's brand new in the history of the world.

01:22:19.000 | So in addition to privacy of business, which to the degree I laid out is possible, I would say the lower hanging fruit is privacy of your location where you live.

01:22:30.000 | So at least you can go to sleep at night knowing that someone's not going to knock on the door and bust your door down.

01:22:36.000 | And then also you can choose the level of circumspection that you choose to exercise on what you actually do say publicly.

01:22:46.000 | Perfect. Thank you very much.

01:22:48.000 | And I was afraid that you were going to say that as an avid user of social media who has no fear spouting his opinions all over the place.

01:22:57.000 | That's what I knew you were going to say, but I hope you wouldn't.

01:23:00.000 | My pleasure.

01:23:02.000 | All right, Daniel, have a great day.

01:23:03.000 | All right.

01:23:04.000 | $10 left. Let's go to Matt in North Carolina.

01:23:08.000 | Matt, welcome back.

01:23:09.000 | Were you just sitting there burning saying, "Joshua, tell them I'm a financial advisor. Joshua, tell them I'm a financial advisor."

01:23:15.000 | And I'm sitting here at PLCwealth.com.

01:23:19.000 | Did I get you right?

01:23:22.000 | Of course. I'm sitting here in my basement just like everybody else.

01:23:25.000 | Thank you for your generous comments.

01:23:28.000 | It's always a pleasure to chat with you.

01:23:30.000 | You got any gas left in the tank?

01:23:32.000 | I mean, you've been at it 90 minutes now.

01:23:33.000 | I do. I'm ready to go.

01:23:34.000 | I'm a machine, man.

01:23:35.000 | Let's go.

01:23:36.000 | Okay.

01:23:37.000 | Well, first, I just wanted to thank you for your encouragement and help over the last five years.

01:23:41.000 | I'll take a moment and plug your consulting services as some of the best value anywhere.

01:23:45.000 | I really appreciated our call in January, and I feel like that plays really well to your strengths.

01:23:50.000 | Thank you.

01:23:51.000 | So thanks for that.

01:23:52.000 | During the pandemic and post-pandemic, communicating on the Internet is more important than ever, and it's also more crowded with content than it ever has been before.

01:24:02.000 | I guess I wanted to ask your feelings on how these developments sort of change content marketing.

01:24:09.000 | I would call you a podcast incumbent.

01:24:12.000 | I'm a new guy, and I just wonder how you think about sort of how this plays out in the Internet as we find it in 2020.

01:24:23.000 | I guess I'm the opposite of the last caller.

01:24:24.000 | I'm not seeking privacy.

01:24:25.000 | Right.

01:24:26.000 | Right.

01:24:27.000 | You're sort of seeking publicity.

01:24:28.000 | Sure.

01:24:29.000 | I think it is really interesting, and I've been fascinated at how many people I have seen, just people who previously didn't engage in public-facing content, who just grabbed their cell phone and turned the camera on and start going live on Facebook and giving a motivational speech or talking about anything.

01:24:54.000 | It's truly remarkable.

01:24:56.000 | It feels like – I'm sure there's another stage beyond this, but it feels to me like we're at the last stage of this revolution that has been happening.

01:25:07.000 | I'm not sure if it's 20 years.

01:25:09.000 | Maybe it's more.

01:25:11.000 | Maybe it's 25 or 30 years.

01:25:12.000 | But if we think about – I'll just sketch it out how I see it as far as what's happened.

01:25:21.000 | With the development of the Internet, we went through some initial phases where more and more people started to be connected, and then bandwidth started to open up, so people started to be able to build websites, and everything was text-based due to slow connection speeds.

01:25:38.000 | Then connection speeds increased, and there started to be much more visual opportunity, creating things visually.

01:25:45.000 | But then there was a video revolution when broadband speeds became common, and then video started to become really key.

01:25:52.000 | And then the mobile device, which is what, at this point, 10 years old, 13 years old, something like that, 11, 12 years old, I guess.

01:25:59.000 | It would be about 2008, I think, 2007, 2008, that the iPhone came out.

01:26:03.000 | The iPhone totally transformed everything.

01:26:07.000 | It took a few years for the fullness of the connections to be in place.

01:26:13.000 | So podcasts changed dramatically once the iPhone allowed for podcasts to be downloaded over the air.

01:26:20.000 | The iPhone dramatically changed video creation, video consumption.

01:26:25.000 | The social networks changed it even more.

01:26:28.000 | But now all the forms of communication are ubiquitous.

01:26:31.000 | Anybody on the planet can reach a global audience with any words written that they want to tap out on their screen, with any pictures that they want to share, and with any video that they want to share.

01:26:42.000 | It's become universal, not totally obviously, but almost universal.

01:26:49.000 | So where do we go to stand out, and what do we do?

01:26:54.000 | I don't know what the next phase is going to be.

01:26:58.000 | If you think about the difference between video, audio, and written text in terms of content creation, it doesn't seem like there's much more that can be done.

01:27:10.000 | Some people might argue for virtual reality, maybe, but I can't imagine that making that much of a difference on my life.

01:27:17.000 | Maybe I'm naive to think that, but it's hard to imagine much more what can be done.

01:27:22.000 | So the trends that I see is, number one, a trend towards quality, and number two is a trend towards niching down.

01:27:31.000 | And that's the only solution that I currently see of how to stand out in a busy world.

01:27:36.000 | Let's talk about quality.

01:27:37.000 | The amazing thing about quality is how inexorable that press is towards quality.

01:27:43.000 | When I started my podcast, you could still get away with having mediocre sound.

01:27:49.000 | Many people did.

01:27:51.000 | Today, you cannot get away with having mediocre sound because there's no reason to have mediocre sound.

01:27:57.000 | The microphone that's in your phone is perfectly capable of creating a world-class sounding podcast.

01:28:06.000 | And so things like high-quality sound are not optional anymore.

01:28:11.000 | In many ways with video, high-quality video is not optional.

01:28:16.000 | What's happened is you've seen this tremendous upsurge in skill and capability in storytelling.

01:28:25.000 | If you look at the average blogger, and I don't think I'm wrong to say that word "average."

01:28:29.000 | If you look at the production quality of the average blogger, it rivals or bests the production quality of professional television programs from 20 years ago.

01:28:42.000 | It certainly sinks those programs in terms of resolution and in terms of image quality, audio quality, etc.

01:28:50.000 | But just the things of, you know, I like to watch sometimes sailing channels.

01:28:54.000 | And I was watching this morning a video of a guy, and here's this guy cruising his sailboat down, driving his sailboat,

01:29:01.000 | and simultaneously driving this incredible drone, capturing these amazing shots that 10 years ago would have been six figures to hire a helicopter for the day and get these shots.

01:29:11.000 | And yet here he is doing it with a $500 to $1,500 piece of gear while driving a sailboat.

01:29:18.000 | It's amazing.

01:29:19.000 | But that quality stands out.

01:29:21.000 | And so you see in certain formats, you see video, for example, the quality of the storytelling is what's really important.

01:29:27.000 | And so quality, I think, will always rise to the top because as things become noisier, I think people want higher quality.

01:29:36.000 | So my strategy there, or what do I think is the right strategy, poorly implemented by me many of the times, but what do I think is the right strategy?

01:29:44.000 | I think the right strategy is to figure out your strength and then lean into your strengths.

01:29:49.000 | For example, I have not yet proven to myself whether or not I have any skills with video, but I know I have skills in other places.

01:29:59.000 | And so what I want to do is I want to lean into my strengths.

01:30:03.000 | And you can define your strengths in multiple layers.

01:30:06.000 | Some people would define their strengths in production quality.

01:30:09.000 | For example, you'll find in podcasting, let's talk about podcasting, right, you find these awesome NPR style podcasts that are just stunning.

01:30:20.000 | They're so fascinating and they're so well produced and everything is just right.

01:30:26.000 | Those have a significant audience because their strength is their production quality.

01:30:31.000 | Well, I don't listen to any of them because I'm not interested in the content.

01:30:35.000 | So what I try to lean into is my strength is content, try to come up with interesting ideas and diversity of thought.

01:30:41.000 | And that's always what I've tried to lean into, and my audience appreciates that.

01:30:45.000 | And so if you're like me where you say I'm going to come up with interesting ideas and interesting content, then that's a strength.

01:30:52.000 | Other people's strengths, many areas, but I think you lean into your strengths.

01:30:56.000 | And then you lean into your strengths in areas of production.

01:30:59.000 | There are a lot of people who can pull out a cell phone today and create six-minute videos or 16-minute videos,

01:31:05.000 | but there aren't so many people who can create awesome 15-second TikTok videos.

01:31:09.000 | And so the people who have that skill of creating a 15-second TikTok video, that's the right platform for them, whereas another platform is ideal for other people.

01:31:20.000 | I think there's an art to these different component, to these different things.

01:31:23.000 | And some people work really well with 15 seconds, some people work really well with three minutes, some people work well with three hours.

01:31:28.000 | And so I think you lean into your strengths.

01:31:30.000 | If you find skill in writing, there's always a place for higher quality writing that takes good ideas and higher quality writing.

01:31:38.000 | Sometimes it's more encompassing, sometimes it's smaller.

01:31:41.000 | For example, I'm amazed I follow a number of financial advisors who do Twitter really, really well.

01:31:47.000 | They're very, very good on Twitter, and their secret is they take these things that you being a financial advisor or me, we've studied,

01:31:55.000 | but they're able to break it down to a very attractive eight or 12 or 20 tweet thread, and they thrive in Twitter.

01:32:03.000 | And they have massive followings, even though they never write on their blog.

01:32:07.000 | And so I think that's going to be the trend of the future is people leaning into their strengths, but the strengths are being defined by the platform.

01:32:15.000 | I have a hard time believing that anybody today can do well on all platforms.

01:32:20.000 | I think that you try to figure out where does your platform work the best or where does your type of content work the best,

01:32:27.000 | and then lean into the platform that's appropriate for that as a starting point.

01:32:31.000 | The second area I think is niching down.

01:32:33.000 | Nitching down into specific demographics is never bad, and it solves a lot of the tensions.

01:32:44.000 | And so the people who niche themselves down into these tiny subgroups are often the people who will be able to find the audience that resonates with them the most easily.

01:32:57.000 | For example, I started the show by giving an apology for my content.

01:33:02.000 | Well, that's only necessary because I don't niche down into this really hardcore area.

01:33:07.000 | If I were creating Christian personal finance exclusively for Christians and I took that tone with everything that I did and I incessantly banged on my Bible and I incessantly spoke with Christianese,

01:33:21.000 | well, I would never do the interview that I did and mix over because this is Christianese central.

01:33:29.000 | On the other hand, I don't speak with a lot of Christianese, and although I bang on my Bible occasionally, it's not a daily feature.

01:33:35.000 | And so I go to places that some other people wouldn't go.

01:33:38.000 | But a guy who just never does what I do and doesn't come from the worldview that I have would have no problem at all with the interview that I had.

01:33:47.000 | And so the tension that comes that even came in the apology that I started the show with comes from trying to be too broad.

01:33:55.000 | And I do that because it keeps my interest and I feel like somebody should do it, but I don't think it's necessarily the most successful strategy.

01:34:03.000 | I think the next successful strategy is to niche down.

01:34:06.000 | And so I think that those are the two trends, is that there's going to be – in the future, there's going to be a financial advisor for single dads who are executives,

01:34:20.000 | who travel between Toronto and New York City on a weekly basis, and who – just like that level of granularity is the future because then you can talk about things that are specifically appropriate to that.

01:34:35.000 | And I think that's where the power is.

01:34:37.000 | And that's where I think where the power has always been.

01:34:39.000 | I was fascinated years ago by a life insurance agent who was incredibly successful.

01:34:44.000 | But the only clients that life insurance agent worked with was NASCAR drivers.

01:34:51.000 | That was it.

01:34:52.000 | The only families he worked with were NASCAR drivers.

01:34:55.000 | And he understood NASCAR drivers like nothing else, but that was his specialty.

01:34:59.000 | I read another profile of a financial advisor that exclusively worked with professional bass fishermen, and that was his market.

01:35:06.000 | And I believe that that's always been the key.

01:35:09.000 | It's just I never knew how to transition over, but in the age of the internet, I think it's easier to do than ever before.

01:35:15.000 | And so even little things like that, the guy that I remember who was the financial advisor for bass fishermen and fisherwomen, he would go to every tournament.

01:35:25.000 | Everybody knew him.

01:35:26.000 | He was involved with everybody, and that was his thing, and it worked for him and was very profitable.

01:35:32.000 | And so I think those are the two trends at least of the next couple of years.

01:35:37.000 | A flight to quality, but quality is defined by maximizing the medium of communication that you're choosing to maximize along the specific definition of quality that you have.

01:35:49.000 | And then number two is niching down into smaller and smaller niches.

01:35:54.000 | That's my answer.

01:35:55.000 | >> Super helpful and super encouraging.

01:35:59.000 | I think now that the show's launched, it's probably time to schedule another call with you.

01:36:03.000 | I think this is the direction that I'm headed, and the advisor you're talking about is Jared Reynolds, who was recently on Michael Kitsis.

01:36:12.000 | So great.

01:36:13.000 | Great.

01:36:14.000 | That's a good one.

01:36:15.000 | All right.

01:36:16.000 | Thanks so much for taking my call.

01:36:17.000 | I hope you have a wonderful afternoon, Joshua.

01:36:18.000 | >> My pleasure, Matt.

01:36:19.000 | All right.

01:36:20.000 | Two callers left.

01:36:21.000 | We'll go to Lucas in New Jersey.

01:36:22.000 | Lucas, welcome to the show.

01:36:23.000 | How can I serve you today, sir?

01:36:24.000 | >> Hey, Joshua.

01:36:25.000 | How's it going?

01:36:26.000 | >> Well, sir.

01:36:27.000 | >> Very good.

01:36:28.000 | I don't want to take up too much time.

01:36:30.000 | So in good news, my parents sold their house, which is a real blessing because it's basically where they held all of their assets, and it functionally has to start up their retirement plan.

01:36:43.000 | They've sold the house now and are looking for kind of where to start with what to do with the money.

01:36:49.000 | My recommendation is that they -- well, at least my initial recommendation was that they plunk it down into a money market account.

01:36:57.000 | While they're figuring out what they want to do, they're going to pay off some debt.

01:37:01.000 | They'll pay off the rest of the mortgage.

01:37:03.000 | I'm sure they want to put some money down on a new property and use the remainder as a nest egg for, you know, an eventual retirement saving.

01:37:11.000 | And I just want to say, given the current market conditions, what you think about that plan, if there's anything to know about what they should be doing, given that they're both in their mid to late 60s, and this is pretty much everything they've got.

01:37:26.000 | >> How much money?

01:37:28.000 | >> After paying off the mortgage and some debts that they have, they'll probably come out with about $130K.

01:37:40.000 | >> But they live in a house that they're paying off, and this was a rental property they sold, or they've sold their primary residence and now they don't own a house?

01:37:47.000 | >> Sold primary residence, do not own a house.

01:37:51.000 | The proceeds from this sale would probably -- part of it would have to go toward buying a new home in a smaller home, less costly, in a lower cost of living area.

01:38:04.000 | >> Are they receiving Social Security income?

01:38:07.000 | >> One of them is, the other will be in the next year or two.

01:38:10.000 | >> And about how much when they get the two Social Security incomes, do you have any ideas on how much that will be?

01:38:16.000 | >> Combined, I wouldn't guess it would be more than $25,000 to $30,000 pre-tax.

01:38:23.000 | >> Okay. Do they have an idea on where they'd like to live? Do they want to stay in New Jersey? Do they want to move to Florida? What are they thinking?

01:38:29.000 | >> Definitely going southeast, you know, for family reasons as well as lower cost of living, nicer climate.

01:38:38.000 | >> Well, it's -- do they have designs or ambitions to continue working and earning an income?

01:38:48.000 | >> Yes. Yes. In fact, I'm likely going to be starting up a small business with my mom and my dad will continue in his self-employment.

01:38:59.000 | He's an artist, so he has a lot of flexibility to continue that as long as -- in as much as he's able with his health.

01:39:07.000 | >> Right. So I like that. That makes a big difference if the person is -- if people of their age are willing and open to working.

01:39:18.000 | Where I would begin, if I were talking with them, is I would begin by trying to get them to sketch out a lifestyle and an employment plan and/or business plan that they're really excited about.

01:39:31.000 | I'm not opposed. If somebody wants to retire, fine. Obviously, I work with that. I just don't see the point, generally speaking.

01:39:39.000 | And I think that retirement is going to lead, for most people, to an early death.

01:39:44.000 | There are some people who really love retirement if they have a really active thing planned, right?

01:39:53.000 | Some people say, "I've been planning to retire because we're going to go and travel around Europe for four years," or, "We're going to travel full-time."

01:40:00.000 | There are people who do that. And then the constraints of that are fairly simple, right?

01:40:05.000 | If they came to me and they said, "We're going to retire and we're going to travel around the world full-time for the next 10 years," then we would -- I would say, probably put the $130,000 in the bank, maybe invest it, but probably just keep it as a cushion at some point.

01:40:22.000 | And then they just simply live on their $25,000 to $30,000 income while traveling, and they adjust their travel budget to match their income. Problem solved.

01:40:32.000 | Where I think other people are very keen about, "I want to retire so that I can do this other thing," well, in that situation, then usually it's clear enough that it presents itself.

01:40:45.000 | The people who I think go wrong in retirement are those who retire because they reach a certain age, and then they just kind of say, "Well, I don't know what else to do, so I'll just sit and retire."

01:40:55.000 | And there's not a lot of satisfaction in that, I think, for most people.

01:40:59.000 | So from a financial perspective, there's a night and day difference in this financial plan if they say, "We've got $130,000 in the bank and $25,000 of income," versus, "We've got $130,000 in the bank and $25,000 of guaranteed income, and we're excited about some of the possibilities of the things that we can create over the next 20 years."

01:41:18.000 | That's just a world of difference between those.

01:41:21.000 | And so I can very easily, depending on somebody's excitement level, I can very easily see many different kinds of financial plans that can work really effectively.

01:41:31.000 | So the couple who says, "All right, we're going to hang it up. We're 67 years old or 65 years old. Time to hang it up. Move to Florida."

01:41:38.000 | Well, they go to the villages, they pay cash for a little $50,000 house in the villages, buy a golf cart, and then they've just got to figure out how to live on $25,000 a year.

01:41:47.000 | And there's lots of people that are doing that. It can be done.

01:41:50.000 | And there's not going to be any major plan to it.

01:41:54.000 | They're just going to buy something really inexpensive where they can afford the lot rent out of their income, and they're going to live frugally and have fun playing with their friends.

01:42:03.000 | On the other hand, if somebody says, "I'm 65 years old, and I'm an artist, and I'm doing this thing. I'm starting this small business," maybe the $130,000 is just a down payment on a beautiful lake house that they're going to support with their income.

01:42:16.000 | There are many options, but it's all going to be driven by what do they see themselves doing with their day-to-day activities.

01:42:23.000 | I believe that work is one of the most important ways that we contribute to the world.

01:42:29.000 | And so if they can find and start with a lifestyle of work, of something that they would be excited about, something that fits their skill sets, something where they can see themselves growing and build a plan where their work life provides them with adequate flexibility, where they can have fun when they want to, they can do work that's meaningful to them, I believe that's the best solution to start with.

01:42:52.000 | And so to begin with, I would want the money to go in the bank, I would want no major decisions, and I would try to say, "What is the lifestyle that you would be really excited about living?"

01:43:06.000 | Where I think that maybe you can do this, you might need to bring in someone else, happy to talk to them if you want a private conversation another time or something for me, but what somebody needs to do is dig into their dreams and find out what their list looks like and what they want to do.

01:43:26.000 | And then once that's all out on the table, you can design the financial plan to fit that, and that I think is really, that is my ultimate solution.

01:43:38.000 | And depending on what those dreams are, that will naturally drive the use of the money.

01:43:46.000 | There are tons of couples in their 60s who live full-time in an RV, they do work camping five months of the year to cut their expenses a little bit, and they travel full-time.

01:43:57.000 | Well, in that situation, $130,000, you'd spend $60,000 to $80,000 on an RV for them to live in full-time, they'd be debt-free, they'd have $25,000 to $30,000 of income coming in.

01:44:08.000 | The answer is obvious once you know what someone is to do.

01:44:12.000 | That's different, maybe they want to move to Florida, they rent a little place, they buy a rental house with $130,000.

01:44:18.000 | So that's where my brain goes, I want to get them clear on their work plans, on their lifestyle plans, how much money they think they could earn, and then once that's all really clear, then I think the financial situation will be more obvious.

01:44:33.000 | Okay, thanks. Yeah, there's a lot going on in transition, and yeah, the idea of just parking it in the bank, not making any big decisions right now is probably the one that I needed to hear the most at the moment, but I appreciate the perspective for sure.

01:44:50.000 | It's one of the biggest changes that I have made in my thinking is I used to feel this pressure to do stuff with money, and the older I get, the more I listen to people and the more experience I have personally, the more convinced I am that just sitting and waiting is often a really brilliant thing to do.

01:45:09.000 | And it's very rare that you'll just miss out on an opportunity that was a once in a lifetime opportunity. Are they out there? They are. But that's really rare compared to the peace that comes from just taking time.

01:45:22.000 | And from your parents with their social security income, I would guess that they probably haven't had $130,000 in the bank, maybe ever, if not in a long time.

01:45:32.000 | And so putting the money in the bank and just letting it sit there and just giving it some time to season can help to buy somebody some freedom and some new thinking.

01:45:41.000 | And a lot of this stuff takes time. It takes time for somebody to transition from one thing to another.

01:45:47.000 | When somebody moves out of a house that they lived in for 30 years and they raised their children in this house and now they're thinking about something else, sometimes it takes a little bit of moving to figure out where they're content.

01:45:57.000 | And so I say, "Hey, rent a little apartment. Try that out. Maybe the apartment didn't work out. Rent a little house. Let's just see, is Florida the right fit?"

01:46:04.000 | And having money at your back allows all those solutions to happen and for you to try those different things in a non-hurried way.

01:46:12.000 | And there's almost never a need to rush into anything. There's always good investments. There's always things available to you. And there's almost never a need to rush.

01:46:22.000 | So yeah, I would move slow and I would encourage them, "Put the money in the bank. Let's give it a little time. Try some different things. Try the artist work. Try working with you and your business. Is there another job that they would want to do?"

01:46:37.000 | Because out of that, the needs may become more obvious. There are artists who travel the country in an RV with a little trailer selling their art at shows.

01:46:47.000 | Well, you need money to buy that infrastructure if that's what they wanted to do. There are artists who live in a little house in the middle of the country.

01:46:54.000 | Well, then if that's what they want to do, then it'll emerge in time. So yeah, slow down. Have them put the money in the bank. Spend a lot of time talking and dreaming.

01:47:02.000 | My closing encouragement though is don't get them to not buy into the idea that their life is over, but rather have them build a plan for the second half of their life that involves growth, that involves fun, that involves work, that involves contribution, that involves service.

01:47:20.000 | And then if they can dream that kind of lifestyle that they would really love to live, the specific financial needs will become fairly obvious.

01:47:31.000 | Awesome, man. I really appreciate it. Thank you.

01:47:34.000 | My pleasure. Thank you for calling in. All right, we go back to Peter. Let's see, Peter, are you with us this time?

01:47:39.000 | Hey, Joshua. Yeah, sorry about that.

01:47:41.000 | No problem. I'm glad you're here this time.

01:47:44.000 | Thank you. You're a marathoner. I appreciate it.

01:47:47.000 | As long as my voice holds out, we'll do it. How can I serve you today?

01:47:51.000 | Yep. Well, and I appreciate your mea culpa at the beginning of the show. I just want you to know I was not offended by the content and I thought it was a pretty interesting episode. So I'm glad I heard it before.

01:48:03.000 | Before it disappeared into the lost interwebs.

01:48:06.000 | Yep. I saw it when it happened.

01:48:09.000 | I have wondered if I should just, you know, I have thought, you know, especially when you do something like this, it like makes it bigger than a deal.

01:48:18.000 | I wondered if I should just keep it out there, but add a little, you know, add a little intro or something to it, but keep it available. So I don't know. It's so hard to figure out.

01:48:26.000 | Go ahead.

01:48:28.000 | Yeah. Disclaimer, you know, disclaimer for sensitive audiences or something.

01:48:32.000 | Yeah.

01:48:33.000 | But, you know.

01:48:34.000 | Who knows.

01:48:35.000 | What are you going to do?

01:48:36.000 | All right. Go ahead, sir.

01:48:37.000 | Yeah. Two quick ones. These dovetail on something you talked about earlier. We're getting a house. I've never done this before. And two real quick ones. After we closed, does it make sense to put it in a trust? And number two, any tips or pointers on home security systems?

01:48:55.000 | What, why would you want to put it in a trust?

01:49:02.000 | The main reason would be that my, I've got relatives who have done this because they thought it would make everyone's life easier if they died unexpectedly.

01:49:15.000 | And do you think that would fit your situation?

01:49:21.000 | I don't like to bother people with things I could have handled on my own in general. So I think that's the primary driver. However, if it's not a colossal imposition to anybody, if it weren't in a trust, then, you know, I'm happy to let things ride.

01:49:39.000 | I just, it was one of those things I just heard some people talk about and I was more curious how beneficial it really is or how much of a pain it is if you die and it's not in a trust.

01:49:51.000 | Right, right. Well, so I'll try to make it simple. It is, there are a lot of factors as with anything with finances. The first thing to do is just imagine that, you know, you bought the house and then next week you're dead.

01:50:05.000 | What would happen? I'll just ask you. So you buy the house and next week you're dead. What happens to the house in that situation?

01:50:12.000 | My wife gets it.

01:50:13.000 | Okay. And then do you and your wife have children if you and your wife die together next week?

01:50:19.000 | We have no children.

01:50:21.000 | Okay. And who would you want to inherit the house in your estate plan?

01:50:27.000 | We would probably have a chat between, they're both our nephews and nieces, but her nephew and my two nephews and niece would be the people that they would potentially be divided between.

01:50:42.000 | Okay. So by way of background, when you use the term trust, what you are probably referring to is a simple living trust, which is I'm going to create the Peter trust, right, the Peter New York trust, and that Peter New York trust is going to hold my assets.

01:50:58.000 | And then the idea behind this is when Peter dies, then Peter's trust continues on and a new trustee is appointed.

01:51:06.000 | So the basic reason why that's usually done is so that the person who owns the assets can make sure that those assets, everything flows according to their wishes and so that they can maintain privacy around their affairs.

01:51:20.000 | The biggest benefit of that kind of trust when you die is privacy. So if you die today, do you and your wife have wills?

01:51:27.000 | Yes, we do.

01:51:28.000 | Okay. So if you die today and your house is in your will, naturally you would leave your house to your wife. Your wife, if she dies, would leave her interest in the house to you. You probably own the house. Does New York allow tenancy by the entireties?

01:51:41.000 | No, they don't allow it.

01:51:43.000 | Okay. So then you would own a joint tenancy with rights of survivorship. And so you die and she inherits your 50%. She dies, you inherit her 50%. That's really simple, right? There's no problem there.

01:51:55.000 | Then the second thing comes down to, well, what if you both die? Well, you could put it into a trust and then it would pass on and that would keep privacy for you.

01:52:04.000 | So many people, what they don't like is that if you don't have it in a trust and you just have it according to your will, so you leave the house to your wife, of course, by its joint ownership, if it's jointly owned.

01:52:14.000 | If not, you know, and you both, you and your wife die, then you leave the house by will to your nephews and nieces. Well, in that situation, your house and its value would be submitted to the New York probate court and it would become a matter of public record what you own and how much it's worth.

01:52:31.000 | For many people, no big deal, right? Everyone knows I live in this house. It's worth $400,000. Not a big deal that the court is there.

01:52:38.000 | And then you can just simply direct in your will, your guardian, to sell the house and then to distribute the proceeds to your, whoever you want, your nephews and nieces.

01:52:47.000 | There's no reason why that can't happen with a will. And in your situation with not having children, I don't see any reason why you shouldn't just do it that way.

01:52:55.000 | I don't think you need to run out and get a living trust just because you can.

01:52:58.000 | Now, the situations where trust becomes more important is, for example, if you did need that privacy around your affairs if you died.

01:53:09.000 | Another example would be if you did need – let's say you have three children and one of your children is a deadbeat and can't look after himself, but your other two children are super successful.

01:53:22.000 | And you want to establish and say, "I want to provide for this for the super successful ones, but I want to cut out the deadbeat."

01:53:29.000 | Or, "I want to provide the house for the deadbeat, and I want the super successful children to take care of the house," et cetera.

01:53:35.000 | Well, then you definitely need a trust.

01:53:37.000 | But from what you're describing, just for the house, I don't see any reason why you shouldn't just own it and then leave it in your will and direct your guardian to sell the house and distribute the proceeds to your beneficiaries.

01:53:48.000 | The wrinkle would come – what you don't want to do is you don't want to leave the house to the beneficiaries split eight ways and say, "Okay, well, each of you can come to the house for a month and a half."

01:54:00.000 | That's not a good plan, and that's where the trust comes into play for people who have multiple beneficiaries like that that they need to protect.

01:54:08.000 | Got it.

01:54:12.000 | Go ahead. You had a second question, and I forgot what it was that you asked.

01:54:15.000 | Home security systems, of the ones that are out there, do you have any particular expertise, knowledge, or thoughts about any of them?

01:54:22.000 | With regard to the specific security system, I think that's less important than many of the other factors that don't involve security system.

01:54:34.000 | So a security system is just one piece of an overall security plan.

01:54:39.000 | So when you think about home security, what you want to think about is a layered approach, and basically your goal is to first, of course, make sure there's no specific threats to you.

01:54:51.000 | They don't make murder movies about people, just general random acts of violence or random acts of theft.

01:55:00.000 | They make murder movies about somebody who flipped somebody off in traffic, and now the guy follows him home.

01:55:05.000 | So you avoid those kinds of risks, and then you think in terms of layers, and your basic goal with security system of your house is to make your house look tougher than your neighbor's houses and less attractive than your neighbor's houses.

01:55:21.000 | And so everything goes in layers.

01:55:24.000 | That's the overall way to build a security system, and so I talk about it.

01:55:30.000 | You want to live in a safe town, in a safe state, in a safe town, in a gated community, in a house with a fence around it, then with good external protection, and the security system just goes all the way through.

01:55:50.000 | So that's the overall view of it.

01:55:52.000 | And so if you study just the basic security techniques, you'll have a lot more success with hardening your home, making sure that doors and windows are locked, making sure that appropriate protection is there, that your garage door is reinforced.

01:56:12.000 | You want to make sure, for example, all your doors, some simple things that you can do, you want to make sure that all your doors are hardened.

01:56:18.000 | You can install harder doors, you can go hardcore on it, or you can just install things like door armor, put in three-inch screws to hold the door together rather than inch and a quarter screws.

01:56:34.000 | So you go around your house, and you make sure that all of it looks hard to get into.

01:56:39.000 | That may involve some armoring.

01:56:41.000 | You can do security films or security windows.

01:56:43.000 | I like security films because you can add them without swapping everything out.

01:56:47.000 | So if you're happy with your windows, just add security films to your windows, and then somebody can't just take a wrench or a hammer and break the window.

01:56:56.000 | Doors are also, just to repeat, doors are also really important for you to adjust.

01:57:02.000 | What you want to do is you want to make sure that your house looks nice enough to be well-protected but not so fancy.

01:57:08.000 | And so you want to have reasonable fences for the neighborhood but not super ornate.

01:57:13.000 | You don't want to be the one house that stands out on the block that has an ornate wrought iron fence and a $15,000 door when your neighbors have chain-link fences and not so much stuff.

01:57:27.000 | Then you want to, lights are a big deal, making sure that the house is visible.

01:57:33.000 | You want to make sure, and this is always a challenge with privacy, but the goal is to make sure that there's no place that somebody can position themselves to try to get in without being seen.

01:57:42.000 | And so all of the classic things that your local police department would tell you of trimming your bushes, trimming your trees, making sure that those things are done.

01:57:51.000 | I don't have any input on the specific security system but I do think a wireless system is better.

01:57:57.000 | If you have a lot of stuff, it's worth investing, I think, in a professional system.

01:58:01.000 | The big massive winner these days are the SimpliSafe systems.

01:58:06.000 | I don't think there's anything wrong with it but I do think that there is still value of a professionally installed system if you have a lot of nice stuff and you want to protect it.

01:58:16.000 | And so a wireless security system is going to be important.

01:58:21.000 | And then I think one of the most important things is just simply set up a system where your house always looks occupied.

01:58:27.000 | And so there are a couple of things, obviously the classic of leaving lights on when you're not home, putting some lights on timers and programming them.

01:58:35.000 | There are some simple devices that I like, for example, that can use a TV.

01:58:40.000 | There's a fake TV device that you can buy on Amazon and you just aim it at the window upstairs and you've set up timers.

01:58:45.000 | Let's say you have an empty bedroom, then just set that up where it's this little LED box that looks like a TV is on and set that on a timer so that when you're not home, those are the things that are there.

01:58:57.000 | I mean it just goes on and on and on.

01:59:00.000 | I've got pages and pages and pages of ideas on it.

01:59:03.000 | So that was a long-winded way to say those things are more important in my opinion than a security system.

01:59:09.000 | So if I can have all that stuff, have strong doors, have strong windows, have motion sensor lights on the whole property protecting all of the entrances, having the property visible by my neighbors, assuming that that makes sense in the neighborhood so that nobody can hide, having keeping bushes trimmed, etc.

01:59:26.000 | Then I would be happy with that and a dog bowl for killer by the back door versus having the fanciest alarm system.

01:59:36.000 | If you add an alarm system onto that, then you do really have a really high quality system.

01:59:43.000 | The final thing I would point out is that the alarm system only buys you time.

01:59:47.000 | That's the whole point of an alarm system.

01:59:49.000 | An alarm system doesn't catch anybody.

01:59:51.000 | It may deter some people and so you try to make some parts of it obvious but it buys you time.

01:59:56.000 | So if you're not at home, it buys you time for the police to get there.

02:00:01.000 | It buys you time to invest in a high quality safe for your valuable items and if you are at home, then it buys you time and you're dealing with some kind of home invasion, it buys you time to retreat into your fortified safe room or whatever you have set up inside.

02:00:17.000 | The comprehensive security system is all things that you can do regardless of what brand.

02:00:24.000 | The brand probably doesn't matter all that much but there's no reason not to have a good brand as appropriate to your overall situation.

02:00:31.000 | But just don't think that the security system is anything magical.

02:00:34.000 | It's not.

02:00:36.000 | Got it.

02:00:37.000 | Sounds great.

02:00:38.000 | All right.

02:00:39.000 | Thank you for calling in, sir.

02:00:40.000 | I appreciate it.

02:00:41.000 | Anything else?

02:00:42.000 | No, that'll do it.

02:00:43.000 | Have a great weekend.

02:00:44.000 | You earned it.

02:00:45.000 | And you as well.

02:00:46.000 | All right.

02:00:47.000 | Thank you all for listening.

02:00:48.000 | I appreciate each and every one of your being here.

02:00:50.000 | Thank you for the busy Q&A show.

02:00:52.000 | I hope you've enjoyed it and I'll be back with you in the coming days.

02:00:56.000 | I'm aware that the shows have been light over the last couple of weeks.

02:00:59.000 | I've actually recorded a number of shows, just didn't release them, didn't think I got them quite right.

02:01:04.000 | And so it's my ambition to change that starting this coming week.

02:01:08.000 | We'll do a much better job.

02:01:09.000 | So happy Friday, everybody.

02:01:10.000 | Have a great weekend and I'll be back with you very soon.

02:01:13.000 | [music]

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2020-08-14_Friday_QA