2020-09-18_Friday

00:00:00.000 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:03.880 | skills, insight and encouragement you need to live a rich and meaningful life now while

00:00:08.040 | building a plan for financial freedom in 10 years or less.

00:00:10.560 | My name is Joshua.

00:00:11.560 | I'm your host.

00:00:12.560 | Today is Friday.

00:00:13.560 | That means we have a live Friday Q&A show.

00:00:15.000 | The way these shows work, just like call and talk radio, you can call in and talk to Dave

00:00:18.520 | Ramsey or you can call in and talk to me.

00:00:20.880 | Call in and talk to Dave Ramsey, you get about a minute and a half and you get through tens

00:00:24.120 | of thousands of callers or you can talk to me, in which case sometimes I've been known

00:00:27.520 | to give people 45 minutes worth of show.

00:00:31.200 | So I hope you'll join me next week.

00:00:32.680 | If you'd like to join me for next week's Q&A call, sign up to support the show on Patreon.

00:00:35.880 | Go to patreon.com/radicalpersonalfinance, patreon.com/radicalpersonalfinance and you

00:00:41.040 | will find me there.

00:00:42.840 | We begin with Hap in California.

00:00:44.240 | Hap, welcome to the show.

00:00:45.240 | How can I serve you today, sir?

00:00:46.240 | Hap Ramsey, CFO Alphabet and Google: Hey, good to talk to you, Joshua.

00:00:50.880 | Personally, I'm glad to be talking to you and not to Dave Ramsey.

00:00:54.680 | I will try to not take 45 minutes of your time.

00:00:57.480 | I'll just try to keep it short.

00:01:00.280 | Well, two quick things.

00:01:01.440 | The first thing is just to share I'm a little bit elated right now because I wasn't even

00:01:05.920 | planning this, but I just had a conversation with my boss this morning where I asked him

00:01:11.280 | for a raise and got it and I'm just really happy about that.

00:01:15.080 | And I wanted to share because I feel like the path to developing myself and increasing

00:01:20.760 | my confidence and all that to be able to be in this place is a lot of it, not all of it,

00:01:25.080 | but a lot of it I kind of credit to listening to you on this show, honestly.

00:01:29.160 | So I just wanted to say I really appreciate you for that.

00:01:32.240 | Thank you.

00:01:33.240 | Thank you.

00:01:34.240 | Tell us how you did it.

00:01:35.240 | What were some of the steps that you've been taking at work, some of the things that you've

00:01:36.920 | been doing in your personal life, and when did you come to the point of being willing

00:01:40.880 | to ask for a raise?

00:01:42.880 | Well, a big piece of it is I have a really, really good relationship with my boss, which

00:01:50.080 | I mean, he's a really good guy and I know I'm outside of work too and have him.

00:01:55.160 | So the decision to leave my old job to work for him actually came at the beginning with

00:02:02.480 | a decrease in pay, sort of more of a startup situation.

00:02:06.280 | But just being young and having the confidence and I guess the vision to see the longer term

00:02:13.680 | potential upside was kind of a risk to take at the beginning, but now it's sort of paying

00:02:19.880 | off.

00:02:20.880 | And he's just really encouraged me to do a really intentional job of evaluating myself

00:02:31.240 | consistently actually in terms of the dollar amount that I bring to the company.

00:02:38.000 | And he's always had a pretty good rule of just giving me as a rule of thumb of if you

00:02:44.840 | can provide 3x of whatever you [inaudible] that number is divided by three and that's

00:02:53.320 | always something that you can be confident and feeling deserving of in terms of being

00:02:58.800 | an employee.

00:03:01.360 | So that's just been my mindset for the past, ever since I've had this job really.

00:03:06.320 | And so he's been open about giving me the space to pursue these types of conversations

00:03:14.240 | and book time with him to chat through those things and he's been open with me.

00:03:17.800 | But it's still scary to ask the question and I'm still growing through that.

00:03:26.560 | But yeah, does that sort of give you a bit of a margin?

00:03:31.520 | Yeah, it does.

00:03:32.520 | And what I'll just affirm to you and to every other listener is simply this.

00:03:37.600 | The most difficult thing that a business owner, a boss, an employer generally has to do is

00:03:46.000 | to find high quality employees.

00:03:48.640 | It's very difficult.

00:03:51.520 | Employees spend, employers spend a lot of money and a lot of time and a lot of effort

00:03:57.400 | to find high quality employees.

00:03:59.400 | It's very difficult.

00:04:00.920 | Even something simple, right?

00:04:02.360 | And I'd encourage you if you've never hired somebody, try to figure out how to hire somebody.

00:04:05.880 | If you need to hire a housekeeper, hire somebody simple in your life and you start to see things

00:04:10.400 | from the other side.

00:04:11.720 | It's very difficult for an employer to find really high quality employees.

00:04:17.000 | And it's also very risky for an employer to find very high quality employees because there's

00:04:22.000 | a process, kind of the courting process so to speak, when you're trying to attract an

00:04:26.840 | employee to your firm.

00:04:28.200 | Yes, you're going to need to know them but you have to sort through, you have to advertise

00:04:31.800 | for the job or get the word out in some way, start to collect resumes and applications.

00:04:37.320 | You have to interview lots of people and there's a good chance that people in that interview

00:04:41.480 | process are, some are probably telling you flat out lies.

00:04:46.100 | Everybody is selling themselves to the best, the very best way possible.

00:04:50.040 | They're trying to make themselves seem like the best fit.

00:04:53.040 | And so there's a good chance that you might get it wrong and it's very hard for companies

00:04:56.440 | to get it wrong.

00:04:57.440 | There's a lot of time and expense associated.

00:05:00.720 | And I mean just look at the amount of money that a company will pay to a recruiter.

00:05:03.960 | I can't remember the exact percentages off the top of my head but I would guess it's

00:05:09.280 | at least 50% of the first year salary, depending on the industry, depending on the job.

00:05:13.300 | But if someone's going to hire somebody, they'll pay a recruiter a significant sum of money.

00:05:17.240 | Let me not put percentages out that I don't actually know.

00:05:19.320 | A significant sum of money and I wouldn't be surprised to hear a recruiter say, "Yeah,

00:05:23.480 | I get 50%," some more of the first year salary is a finder's fee.

00:05:27.160 | So just imagine that if your boss is going to pay you X number of thousands of dollars,

00:05:31.880 | they're also going to pay someone else X numbers of thousands, tens of thousands of dollars

00:05:35.800 | to get somebody.

00:05:37.400 | And so it's difficult to find good employees.

00:05:40.080 | It's difficult.

00:05:41.080 | It's risky and it's difficult.

00:05:43.460 | Now when a company has an employee, they're dealing with a known quantity, a known entity.

00:05:50.540 | They can understand who this person is.

00:05:52.760 | They know how you work.

00:05:54.000 | They know what you're capable of and what you're not capable of.

00:05:56.620 | They understand who you are.

00:05:58.280 | They know if you get along.

00:05:59.280 | They know if you have personal problems.

00:06:00.680 | They know if you don't have personal problems.

00:06:02.140 | They know who you are.

00:06:04.080 | So in that situation, if you are an asset to the company, if you are a good fit for

00:06:11.480 | the company, if all of those things are true, that you're productive, that you're a hard

00:06:16.280 | worker, etc., it is very much within the company's best interest to keep you.

00:06:22.680 | And a slight marginal change in your salary going from $20 an hour to $23 an hour or going

00:06:30.280 | from $92,000 per year to $107,000 per year.

00:06:35.200 | In the grand scheme of things, that's a very small cost for the company compared to the

00:06:40.760 | cost of replacing you.

00:06:42.700 | And this is why employees who are high-performing employees, who are valuable assets to the

00:06:48.120 | company, in many cases have the upper hand.

00:06:51.640 | Now there is a reality that you have to identify the market.

00:06:55.240 | You have to understand, am I easily replaced?

00:06:58.680 | And this is why it's so important to have valuable, unique skills.

00:07:05.880 | If your job is simply saying, "Hi, welcome to Walmart," standing at the door, there's

00:07:10.600 | a certain value to somebody who knows the Walmart culture that gets along to the manager

00:07:14.980 | of that store.

00:07:16.260 | But they can fairly easily find other people who are capable and competent of saying, "Hi,

00:07:21.040 | welcome to Walmart."

00:07:22.240 | On the other hand, if you have unique skills, you have unique insight, you have unique industry

00:07:27.440 | experience, you have unique relationships with the clients, a company does not want

00:07:31.120 | to lose you.

00:07:32.280 | And they're going to be often willing to increase your salary in a commensurate way to your

00:07:39.160 | contributions.

00:07:40.760 | So step one is make sure that you are developing yourself, that you're a good worker, that

00:07:46.360 | you work hard, that you're diligent, first in, last out, all of those things that we

00:07:50.000 | all know from the simple things of keeping a desk clear and being kind and dressing well.

00:07:55.040 | None of those things are out of fashion, but they need to be buttressed by being at the

00:07:58.560 | top of your heap with the technical skills and you're current on the latest trends that

00:08:02.420 | affect your industry and you're filled with creative ideas and you're good at communicating

00:08:06.300 | those ideas and selling yourself.

00:08:08.480 | So do all that stuff.

00:08:09.860 | And then as you're doing that, make it a regular habit to continually ask for more compensation.

00:08:17.600 | And if somebody is productive, that question, that request, the worst that can happen is

00:08:25.480 | no.

00:08:26.480 | I mean, I can't imagine a situation in which a valuable, useful employee gets in any worse

00:08:33.360 | situation because they ask for more money.

00:08:36.280 | There's just no downside to asking for more money.

00:08:39.480 | Now maybe if someone's just a total loser and a jerk, then I don't know, maybe there's

00:08:43.600 | some terrible boss out there, the guy comes and says, "Hey, give me more money."

00:08:47.280 | And he says, "No, I ain't giving you more money."

00:08:48.880 | And what's more, you're fired.

00:08:50.840 | But if you're a good employee, there's no downside.

00:08:54.000 | The only thing that the person can say is no.

00:08:56.840 | And the nice thing is this, even if they say no or even if they say no for now, by asking

00:09:02.440 | for more money, you are affecting your reputation in the eyes of your boss.

00:09:07.520 | You're telling your boss, "This guy is not someone to be complacent.

00:09:12.560 | This guy is looking for more money."

00:09:14.160 | And your boss will think, "Maybe I should pay him more money."

00:09:16.840 | And sometimes they'll come a week later and say, "You know what?

00:09:18.920 | I'll pay you more money.

00:09:19.920 | You asked a week ago.

00:09:21.040 | I didn't realize that I was underpaying you, but I realize now that I am underpaying you

00:09:24.520 | and I'm going to pay you more money."

00:09:26.280 | Sometimes you'll ask again six months later and they say, "Yes, I'll pay you more money,"

00:09:30.080 | because they were primed for it because you asked them six months before.

00:09:34.280 | Sometimes it'll just make them realize, "You know what?

00:09:37.200 | This guy is going someplace."

00:09:39.160 | Because if you're doing all those things at your job, if you're genuinely productive,

00:09:42.920 | if you're genuinely leading your industry, if you're genuinely developing yourself and

00:09:47.360 | contributing and looking to increase your contribution, you are a valuable commodity

00:09:53.120 | in the marketplace.

00:09:54.840 | And your boss is going to know, "Hey, this guy is aggressive enough to continually and

00:09:59.920 | regularly ask me for a higher income."

00:10:02.720 | That probably also means that he's aggressive enough to be looking around the industry.

00:10:06.800 | He's aggressive enough to be looking for other opportunities.

00:10:09.580 | So I'd better make sure that I'm paying him what he's worth or that I'm somehow helping

00:10:14.840 | him with a total compensation package where the total benefits are going to be his best

00:10:20.240 | offer because your employer is competing against every other employer around you and they know

00:10:26.600 | that.

00:10:27.600 | And so it's very much within their interest, if they can, to make marginal increases in

00:10:32.100 | your pay to make sure, "Yeah, I'll give you a little bit."

00:10:35.000 | And even if it's a small raise, those little raises add up significantly.

00:10:39.000 | And so very, very important that you continue to do this, especially—well, I was going

00:10:45.560 | to say especially in your early career.

00:10:47.800 | It's true because the compounding power of those little jumps and then big jumps in the

00:10:52.720 | early part of your career make a big, big difference over the long term.

00:10:56.080 | So I wanted just to take a minute to talk about it from your employer's position that

00:10:59.440 | you have to understand that if you're a good and valuable employee, then it's within their

00:11:04.560 | interest almost every time to increase your pay as much as they can.

00:11:10.120 | There may be situations where they just can't justify it.

00:11:12.320 | They can't justify it to their board of directors.

00:11:13.920 | They can't justify it to their bank account, in which case then you can ask for something

00:11:18.520 | else.

00:11:19.520 | You can say, "Hey, could you give me this other thing?

00:11:22.160 | You can't increase my salary, but could you allow me this other thing that I'm looking

00:11:25.320 | for?"

00:11:26.320 | And a lot of times they can do that as well.

00:11:27.920 | So there's no downside.

00:11:29.800 | If you're a good employee, there's no downside to doing what you've done and there's a lot

00:11:33.240 | of upside given that you just got a pay raise.

00:11:35.760 | So congratulations.

00:11:36.760 | Go ahead with your question, Hap.

00:11:37.760 | Hap Lebowitz Yeah, absolutely.

00:11:38.760 | Thank you so much for saying that.

00:11:39.760 | I wonder if it's, how do you rewind when it's live?

00:11:40.760 | I want to listen to that again.

00:11:41.760 | Paul Abrams It'll be, the show will be published about

00:11:42.760 | an hour after we record, so just check your podcast feed and you'll be able to hear it.

00:11:43.760 | Hap Lebowitz Cool.

00:11:44.760 | Okay.

00:11:45.760 | I'm going to be famous.

00:11:46.760 | This is great.

00:11:47.760 | My real question, so I'm not super familiar with this and I'm sure you're probably familiar

00:12:00.760 | with California, but just whatever you can riff on from what you know, an investment

00:12:09.000 | property versus a secondary residence or vacation home.

00:12:14.440 | My wife and I are highly considering/probably either way moving forward with taking a small,

00:12:22.200 | small cabin off the hands of people we're connected to.

00:12:25.680 | They used it as a vacation home, family stuff, but it kind of bled over into letting friends

00:12:31.320 | use it and that ended up for them setting up a website, having a reservation kind of

00:12:39.200 | system and they were connected in the church, were connected to the same church.

00:12:44.480 | We're interested in having other people use it and using it as a ministry opportunity

00:12:51.080 | and just something that everyone can enjoy alongside us.

00:12:55.040 | But, and we're also interested in having that make sense for everyone considering we'll

00:13:02.320 | have to do a bit more management and go clean it and stuff like that.

00:13:06.120 | But I've been warned about the trouble you can get into if somebody mistakenly thinks

00:13:13.960 | that your vacation home is actually functioning as an investment property or a short term

00:13:18.960 | rental type thing.

00:13:20.120 | So I'm just curious on your, if you have any experience with that or if you can maybe

00:13:25.120 | elaborate on some of the guidelines to make sure that we're just using it in the correct

00:13:29.600 | way and following all the rules.

00:13:32.240 | Will your, will, so let's assume that you used it as you imagined using it.

00:13:38.920 | Will the financial income be significant?

00:13:42.720 | What would you guess?

00:13:43.720 | How much would you guess it would actually be?

00:13:47.080 | So we actually talked to the owners about this and they weren't really trying, right,

00:13:54.080 | from a business perspective or from a management, they didn't market it, they didn't whatever,

00:13:58.040 | but they just kind of took word of mouth referrals and they didn't put it on Airbnb or anything.

00:14:04.680 | Nothing like that.

00:14:05.680 | They only rented it to people they knew really well or had recommendations from people they

00:14:10.360 | knew really well.

00:14:12.360 | And they, it ended up, they said on average about 80 nights a year.

00:14:17.480 | So it's really not a lot.

00:14:19.280 | And I think on average that would end up covering like their mortgage.

00:14:25.560 | They encouraged us that we could be much more aggressive, double the price, you know, hype

00:14:30.400 | it up a little bit more and we could probably get so much more out of it.

00:14:34.600 | But that's the point at which I'm like, well, I don't want to, if that's not what we're

00:14:38.360 | supposed to be doing with it.

00:14:39.720 | But I imagine there's not even a really a goal to get more than, you know, half or a

00:14:47.920 | little more of the mortgage paid for each month at most.

00:14:51.680 | Well, from a financial perspective, it is, there's no question that from a financial

00:14:56.640 | perspective it's in your interest to use it as an investment property.

00:15:02.820 | If it's desirable property, if you could make money on it and if that would fit your lifestyle,

00:15:08.240 | then there's no question that it's better just to use it from an investment property.

00:15:12.960 | I can't think of any argument as to why you wouldn't except for the hassle of managing

00:15:18.400 | it, the hassle of having someone clean it, the hassle of negotiating, going back and

00:15:22.640 | forth with people on Airbnb or whatever platform you wind up using.

00:15:26.760 | And so if you're willing to deal with those hassles, then I think the investment property

00:15:31.040 | is certainly the way to go.

00:15:34.600 | Let's talk about the difference.

00:15:35.880 | The difference I think just simply comes down to what's deductible and what's not and also

00:15:44.720 | possibly when you go to sell a property.

00:15:46.920 | So if you have a second home, that you use a second home, number one, there are some

00:15:53.200 | rules on it that you need to live in the house for part of the year and that you can't rent

00:15:59.760 | it out.

00:16:00.760 | I think it's more than 180 days a year.

00:16:02.240 | You can't rent it out more than 180 days a year.

00:16:06.200 | And so if that's the case though, then you will be able to, you'll qualify.

00:16:12.480 | You can deduct your mortgage, you can deduct your property taxes, but you're not going

00:16:16.240 | to be able to deduct a lot of your expenses if it's just simply a second home.

00:16:20.800 | Now one nice thing is that there is a de minimis limit that is available on any property that

00:16:29.400 | you own where if you rent the property out for 14 days or fewer in the year, then you

00:16:36.600 | can take that income.

00:16:37.880 | It's not taxable income.

00:16:39.120 | It's totally tax-free income.

00:16:40.520 | You're not going to take any deductions associated with the income, but it's totally tax-free.

00:16:44.360 | And so this is always a nice wrinkle.

00:16:45.680 | If somebody lives in a very desirable place, maybe you live in a place where the masters

00:16:50.880 | come through and for two weeks you can rent out your house and you can rent it out for

00:16:56.360 | $8,000 a week and rent out your nice big fancy house for $16,000 when the masters is in town

00:17:03.440 | or some local event, maybe the Kentucky Derby or that kind of thing.

00:17:07.880 | So if you have, if there's some kind of seasonal scenario, any homeowner can rent their house

00:17:11.800 | out privately for 14 days or fewer and that's tax-free income.

00:17:17.560 | And so that can be worth paying attention to.

00:17:20.520 | However, if you're renting it out for more than 14 days, then you can't take it tax-free.

00:17:30.800 | You will pay taxes on it, but you can apply some of the expenses to the income, I think,

00:17:37.080 | ask an accountant, but I think based upon your occupancy versus the occupancy of a renter.

00:17:45.720 | Now when you go to sell a second home that you haven't lived in as your primary residence,

00:17:51.000 | you don't get the $500,000 Section 121 exclusion, the tax-free sale on your profit.

00:17:58.160 | And so that's one downside.

00:18:00.540 | For an investment property, you basically, the benefit of an investment property, of

00:18:05.480 | identifying it as an investment property, is that all of your expenses that are associated

00:18:10.160 | with that are now applicable to your, are deductible against it.

00:18:16.340 | So all of your expenses would be deductible comprehensively with the exception of excluding

00:18:24.040 | whatever your personal expenses were in the property, whatever was not actually part of

00:18:28.960 | the real estate expenses.

00:18:29.960 | But I think that there'd be a lot more benefit for you of saying, "This is an investment

00:18:35.240 | property, marketing it actively, using it as an investment property.

00:18:40.480 | Yes, you can still stay in it on occasion, and you'll need to not deduct the expenses

00:18:46.120 | that you have associated with staying with it, but even expenses to go and work on the

00:18:50.780 | property and check on it, things like that."

00:18:53.000 | Now your mileage becomes deductible of driving out to the lake to check on the cabin and

00:18:57.040 | make sure that everything is okay.

00:18:59.120 | So it's just, I think, from a tax perspective, I don't see any question why having it as

00:19:04.840 | an investment property wouldn't be a superior solution for you.

00:19:08.360 | Remember that you could always, if it ever worked out in your lifestyle, you could move

00:19:12.140 | into the property at some point in time, and in moving into it, you could live in it for

00:19:17.800 | a couple of years and then always have the tax-free gain after you've lived in it for

00:19:20.600 | two years.

00:19:22.160 | But I don't know of any argument as to why you wouldn't just say it as an investment

00:19:25.280 | property if you're willing to do the work.

00:19:27.280 | And I would say that one other thing, one other benefit of doing that, sometimes when

00:19:33.120 | you have a second home and you use that second home charitably and you say, "Hey, stay at

00:19:38.720 | my second home," that's a tremendous blessing, right?

00:19:41.720 | And I think that's a nice thing to be able to do.

00:19:43.600 | Many people have blessed me in that way and said, "Hey, go and stay at my lake house or

00:19:47.280 | go and stay at our mountain cabin."

00:19:49.120 | It's just such a blessing because it opens up experiences for people that they wouldn't

00:19:53.280 | be able to afford.

00:19:55.880 | But sometimes those things are not as appreciated as if people know the actual benefit of it.

00:20:02.840 | So from that perspective, I don't see any downside to the fact that you rent this thing

00:20:07.160 | out on Airbnb for 200 bucks a night and you tell your best friend, "Listen, why don't

00:20:11.400 | you guys go take a week at the cabin?"

00:20:13.120 | They know that's a genuinely valuable gift and it's more clear than if you didn't do

00:20:19.200 | that.

00:20:20.200 | So I don't know, maybe there's downside to that, but I don't see any reason why you wouldn't

00:20:24.080 | just say this is an investment property and use it as such.

00:20:28.280 | Yeah, I mean, I guess I don't either.

00:20:35.600 | I'm curious, if I can ask for your patience, what happens if we change our mindset?

00:20:44.880 | Say we particularly like with our mortgage or the implications with that if we get a

00:20:51.320 | certain rate on it or whatever, but then we change our mind about its use.

00:20:55.360 | Do you know, how does that work?

00:20:58.320 | Yeah, there's not really any implications there other than what's specified in the mortgage

00:21:01.760 | contract.

00:21:03.040 | So if I buy a house today and my plan today is to occupy that house as an owner-occupant,

00:21:09.560 | this is going to be where I'm going to live.

00:21:10.960 | I buy the house today and then tomorrow I get a job offer in the next state over and

00:21:15.320 | I move for that job offer because it just fell out of the blue and I move for that job

00:21:19.560 | offer.

00:21:20.560 | So there's no real reason why I can't just say, "Okay, I'm going to put this property

00:21:25.360 | in to my, I'm going to keep this property as an investment rental."

00:21:29.680 | The one thing you need to be careful of is if there are any requirements in the mortgage

00:21:33.640 | contract.

00:21:34.920 | And so, for example, it's not uncommon that a personal mortgage contract might require

00:21:40.560 | residency by the borrower for one year, personal residency by the borrower for one year's time.

00:21:47.040 | And so those clauses, they matter, but there's also probably some leeway in terms of what

00:21:54.720 | does that actually mean?

00:21:56.020 | What does residency mean?

00:21:57.720 | And so if you are just going to apply for a residential mortgage for the property, what

00:22:02.360 | does it mean that I live in the property?

00:22:05.320 | In some cases there is a clear definition.

00:22:07.700 | If the contract states you must physically reside in this property for 181 days a year,

00:22:15.120 | okay, well that would be clear.

00:22:16.300 | But in my knowledge, in my understanding, that would be uncommon.

00:22:19.840 | And so I wouldn't have any problem saying I have a second home up by the lake and we

00:22:23.840 | go out there on weekends and on vacations and I spend a total of six weeks there.

00:22:27.880 | I live there, right?

00:22:28.880 | That's my second home.

00:22:29.880 | I'm not trying to make them think it's my only home.

00:22:33.600 | It's just that's my second home.

00:22:35.240 | And so some of these terms are a little bit imprecise.

00:22:37.200 | And the basic idea is that the mortgage company doesn't want their mortgages being used by

00:22:41.680 | a professional real estate investor.

00:22:43.160 | They want somebody who's going to occupy it.

00:22:45.240 | So an Airbnb situation I don't think would break that contract, but you'll just need

00:22:51.160 | to read the actual numbers and find out.

00:22:54.220 | So there's no reason why you can't go back and forth in these.

00:22:57.380 | And this would be a simple example or another example as to even how, since we're talking

00:23:02.680 | about tax planning, in the long run this is a useful scenario as to how you can actually

00:23:10.000 | gain with your properties over time.

00:23:11.660 | So you might have a personal residence that you live in today.

00:23:15.360 | And so let's just make a hypothetical scenario.

00:23:17.060 | Let's pretend that you're very location agnostic, that your wife is cool with moving every few

00:23:22.100 | years and you want to build a real estate portfolio.

00:23:25.560 | You can buy a single family house today.

00:23:28.140 | You can qualify for it with a personal mortgage.

00:23:32.260 | And it's just the mortgage is underwritten based upon your income and based upon the

00:23:36.180 | details of the house.

00:23:37.180 | It's very, very, very simple.

00:23:39.500 | Assuming that that mortgage requires residency for one year, you live in that house for one

00:23:44.100 | year.

00:23:45.620 | And then one year later you go ahead and you rent out that house, you find some renters

00:23:49.980 | and you find another house and you buy.

00:23:52.500 | And then a year later you do it again.

00:23:53.980 | Then a year later you do it again.

00:23:55.060 | Then you do it again.

00:23:56.140 | This is called the nomad real estate investing strategy.

00:24:00.140 | The idea that you just qualify for these houses based upon personal mortgages.

00:24:04.260 | And so now fast forward.

00:24:05.780 | Let's say you do this over the course of 10 years and you now own 10 rental houses.

00:24:12.220 | So the house was a personal residence, then it's a rental.

00:24:16.380 | Well now you can go back and let's say you want to sell and maybe your first house that

00:24:20.260 | you bought has doubled in price.

00:24:22.140 | So now you move from the 10th house back into the first house and you live in it for two

00:24:27.340 | years.

00:24:28.460 | Then at that point in time you go ahead and you sell that first house for a very large

00:24:32.260 | gain but now you qualified for the $500,000 exclusion for a married couple selling a house

00:24:38.020 | that's a personal residence.

00:24:39.020 | So you can take $500,000 of gain.

00:24:41.680 | Then you can move into the next one, live there for two years, maybe it's sold and you

00:24:44.820 | can take $500,000 of gain.

00:24:46.100 | And so you can continually increase your basis and you can do that every two years and take

00:24:51.020 | that tax-free gain.

00:24:52.540 | In the meantime you can still do 1031 exchanges on your other properties.

00:24:56.900 | So if you've got gain but you want to swap one property out, you can sell that property.

00:25:02.220 | Do a 1031 exchange of the gain into another property.

00:25:05.380 | And so for somebody who actually was that flexible in their lifestyle, which I've never

00:25:10.620 | met somebody that was that flexible.

00:25:12.620 | My wife is pretty flexible but I don't think she would be willing to do that.

00:25:16.460 | But for somebody who's actually that flexible in their lifestyle, willing to move so frequently,

00:25:21.180 | you can do this by going back and forth between investment property and personal residence.

00:25:25.940 | You can do this in a very, very tax-efficient way and it's all legal.

00:25:29.480 | So keep that in the back of your mind.

00:25:32.220 | Cool.

00:25:33.220 | Last question for you really fast.

00:25:37.020 | I guess it was the guy I'm talking to on the mortgage side who had encouraged me to treat

00:25:46.940 | it as a secondary residence.

00:25:49.100 | For some reason he had kind of encouraged me against treating it like an investment

00:25:55.260 | property.

00:25:56.260 | It's like, "Oh, you don't want it to be this way."

00:25:57.740 | I'm sure maybe it's just him trying to get me a better rate on the mortgage or whatever.

00:26:02.460 | But it kind of sounds like my next step is to just push back against that and ask him

00:26:07.100 | exactly why he thinks that.

00:26:08.500 | Is there a way for me to get exact clarity?

00:26:12.000 | And then of course read the fine print of whatever contract I signed to know exactly

00:26:18.140 | the specific difference or why do you think that might be?

00:26:22.580 | I don't know.

00:26:23.580 | I guess I'm confused at this point.

00:26:24.580 | Yeah, I'm confused at these words.

00:26:25.580 | Yeah, yeah, yeah.

00:26:26.580 | So here's the thing, okay?

00:26:27.580 | Let's keep it simple.

00:26:28.580 | Because I think what you're getting drowned in is you're looking for a precise definition

00:26:33.420 | to terms that don't have a precise definition.

00:26:36.560 | What is the difference between a second home that you go and spend a month at during your

00:26:43.060 | summer vacation and an investment property that you go and spend a month at during your

00:26:48.600 | summer vacation?

00:26:49.600 | What's the difference?

00:26:50.600 | I don't know.

00:26:51.600 | Yeah, I don't know.

00:26:52.600 | I don't know.

00:26:53.600 | Yeah, it's just, the point is there's not really any difference in the way that I specified.

00:26:59.300 | It's just a matter of nomenclature.

00:27:00.300 | Right.

00:27:01.300 | Right?

00:27:02.300 | It's just a word.

00:27:03.300 | And so the term second home versus the term investment property is going to have a meaning

00:27:08.700 | to the mortgage broker.

00:27:10.380 | They're going to say, "Oh, if you are trying to get this as an investment property, then

00:27:14.060 | it's going to go with this kind of mortgage.

00:27:15.500 | If you're trying to get it as a second home, then it's going to go with this kind of mortgage."

00:27:19.380 | Those terms have meaning to a mortgage broker, but that's not related specifically, unless

00:27:23.660 | their contract actually says it is, it's not related specifically to what the IRS says.

00:27:32.260 | Now, the term second home versus investment property, those terms do have meaning to the

00:27:37.580 | IRS, but I went over those words.

00:27:39.220 | It has to do with how much is it used, et cetera, and how you're approaching it.

00:27:44.260 | They do have meaning to the IRS, but the IRS and your mortgage broker are not connected.

00:27:48.180 | And so that's where all of these terms are a little bit fuzzy.

00:27:51.580 | And there's in some cases an intentional ambiguity, and in some cases there just is ambiguity.

00:28:00.740 | Where do I live?

00:28:02.340 | That's a hard question to answer sometimes.

00:28:04.580 | Does that come down to where I own a home?

00:28:06.140 | Well, what if I don't own a home?

00:28:07.740 | Where do I live if I travel a lot?

00:28:11.500 | I use this stuff with my own lifestyle, which is simply, where do I live?

00:28:15.380 | Well, I live in multiple places, but depending on the context, I say this is where I live

00:28:21.100 | for certain things.

00:28:22.540 | And so when someone says, "Where do you live?"

00:28:24.020 | I say this answer or that answer, because the idea of where do you live, we think we

00:28:30.140 | understand that.

00:28:31.140 | And in an older context where you have one house and you work on your farm around your

00:28:35.620 | house, it's a very clear concept.

00:28:37.460 | But it's not such a clear concept for those of us who have different lifestyles.

00:28:41.260 | And so I would say that you just ask the mortgage broker and say, "What is the difference between

00:28:47.980 | the second home and the investment property?"

00:28:50.380 | And whatever is advantageous to you, ask them, "Okay, if I have the mortgage, what is the

00:28:54.820 | contract going to say?"

00:28:56.580 | Read what the contract is going to say and say, "Can I live with this?"

00:29:00.220 | If you can live with the restrictions of whatever the contract says for the mortgage company,

00:29:06.060 | then get the mortgage that's most favorable to you.

00:29:08.780 | The IRS and how you classify a home with the IRS is almost certainly completely different

00:29:15.980 | from the mortgage company.

00:29:18.340 | It would be—now, the only place it would enter in—we're going so deep here—but

00:29:22.860 | the only place it would enter in is let's say that you committed fraud and the mortgage

00:29:27.780 | company said, "We'll give you a mortgage as a second home and we'll give you this rate

00:29:33.060 | and we'll give you a mortgage as an investment property, we'll give you this rate, and you

00:29:37.020 | choose the second home because it gives you a better rate."

00:29:39.740 | And you commit fraud.

00:29:41.060 | You misrepresent something to the mortgage company.

00:29:43.740 | You say, "Yes, I'm going to do this."

00:29:46.260 | And so now, through some series of circumstances, which are extremely unlikely because as long

00:29:50.180 | as you pay the mortgage, most mortgage companies just want to get paid, but you default on

00:29:53.820 | your mortgage and now the mortgage company sues you.

00:29:56.820 | Well, in theory, they could say, "We're going to subpoena your tax returns and look, you

00:30:00.820 | represented to the IRS that this was an investment property and look, you were recorded on a

00:30:05.060 | podcast to Joshua Sheets saying that this might be an investment property and then after

00:30:09.100 | the podcast, you sent your best friend an email that we're able to find that said that

00:30:12.620 | I'm getting an investment property, so you committed fraud, so therefore, you know, we

00:30:16.660 | got this."

00:30:17.660 | That's how this stuff comes in is that in theory, eventually, maybe down the road, somebody

00:30:25.100 | could figure out how you classified it, but in practice, have you ever had a mortgage

00:30:29.740 | company request your tax returns to see what your personal house was and where your physical

00:30:36.180 | presence was?

00:30:37.340 | Has your personal mortgage company ever asked you how many nights of the last 365 did you

00:30:41.700 | sleep in this particular house that we have a mortgage on?

00:30:45.500 | That's not – these are imprecise words and you just need to read what the contract says.

00:30:51.020 | That's what matters.

00:30:52.020 | As long as you can abide by what the contract says, then go with whichever one gives you

00:30:56.300 | the better deal.

00:30:57.300 | Okay, yeah, that gives me a super clear path forward.

00:31:01.700 | Thank you so much, Joshua.

00:31:02.700 | I really appreciate it.

00:31:03.700 | Cool.

00:31:04.700 | My pleasure.

00:31:05.700 | All right, we go on to looks like Dan in Missouri.

00:31:09.020 | Dan, welcome to Radical Personal Finance.

00:31:10.180 | How can I serve you today, sir?

00:31:11.180 | Yes.

00:31:12.180 | Thank you, Joshua.

00:31:13.180 | I have a – it's kind of a philosophical question on saving versus giving and the way

00:31:19.780 | I think through that in my personal finances.

00:31:23.220 | So my main problem with the general idea of financial independence for retirees early

00:31:31.400 | is that we call for the spending function versus saving and that not a lot of products

00:31:38.020 | are given.

00:31:39.020 | And as a Christian, as a – living in a Western country with a lot of money, you know, I'm

00:31:47.900 | rich and I'm first Timothy 6 says, "I'm too good, too rich, and good work, generous,

00:31:53.420 | and ready to share," it's a big part of my lifestyle.

00:31:56.500 | And so how I solve for both putting a high importance on saving and a high importance

00:32:02.500 | on giving, which are opposed to each other, the more I give now, the less I save for later.

00:32:08.300 | How do you think through that personally and any advice you have for the way I can do that?

00:32:17.380 | Can you ask me an easy question, please?

00:32:19.300 | I wasn't – I don't know if I can – this one's a tough one.

00:32:26.660 | It's certainly a very real tension.

00:32:29.540 | Certainly a very real tension because who was it?

00:32:32.860 | There was a well-known preacher who if we went and looked for, he was well-known for

00:32:39.580 | saying make all you can, give all you can, save all you can, something like that.

00:32:44.580 | And when we give in, when you touch the philosophy of some of these things, it's really difficult

00:32:49.500 | because there's a wide range of subjective experience to this.

00:32:57.820 | And you get into a point – we get into some pretty thorny areas of theology, get into

00:33:03.780 | some pretty thorny areas of hermeneutics, you know, philosophy of interpretation, of

00:33:09.940 | epistemology.

00:33:14.180 | The question is very, very, very thorny.

00:33:18.660 | And I'll tell you – I don't want to bury the lead with my answer.

00:33:21.940 | My answer is it's a distinctly personal decision that each person will have to make

00:33:29.700 | in faith before God.

00:33:31.580 | And I'll tell you how I get there in my own opinion as we talk about it.

00:33:37.260 | So the first thing with regard to saving.

00:33:39.580 | Let's start with saving.

00:33:46.700 | Saving is a thorny and difficult topic to work through biblically depending on your

00:33:53.980 | particular tradition, your particular interpretive lens that you put on scripture.

00:34:01.540 | For example, I have a friend of mine who years ago gave me a book, and the book was basically

00:34:08.220 | a very literalist, fundamentalist interpretation of Christ's command of "Don't lay up

00:34:16.220 | for yourselves treasures on earth."

00:34:18.460 | And it's "Don't lay up for yourselves treasures on earth, where moth and rust destroy,

00:34:21.860 | and where thieves break in and steal, but lay up for yourselves treasures in heaven,

00:34:24.380 | where moth and rust do not destroy, and where thieves cannot break in and steal, for where

00:34:26.900 | your treasure is, there your heart will be also."

00:34:29.700 | And his conviction was that command is a proscription, a forbidding of laying up for

00:34:42.060 | yourselves treasures on earth.

00:34:44.300 | And so he would very actively seek to not lay up treasures on earth.

00:34:49.660 | So for him, he felt that saving was something that he couldn't do in faith at all.

00:34:55.700 | No significant form of saving.

00:34:57.900 | And there are other very important commands of Christ that would lead one to believe the

00:35:04.400 | same thing.

00:35:05.400 | Jesus said, "Take no thought for tomorrow."

00:35:08.940 | Take no thought for tomorrow, what you will eat, what you will drink, or what you will

00:35:13.020 | wear for tomorrow, and it will take care of itself.

00:35:15.780 | And so when you look at things through that lens, it makes all the sense in the world

00:35:21.060 | that he would choose not to save.

00:35:25.020 | On the other hand, there are different passages in the Bible that would seem to very strongly

00:35:31.100 | encourage saving and forethought.

00:35:33.300 | We could go to the Psalms or the Proverbs, "A prudent man foresees the danger and

00:35:36.740 | hides himself."

00:35:38.740 | You could see all kinds of biblical Proverbs.

00:35:41.460 | And so you have to look at it and say, "What lens do I look at these things through?"

00:35:45.780 | And so do I look at things through a red letter as primary?

00:35:50.540 | Did Jesus come in to institute a radically new form of living?

00:35:57.180 | And so when Jesus said, "Take no thought for tomorrow," he was giving a command that

00:36:01.980 | annulled all of the instructions from the book of Proverbs?

00:36:07.380 | That's I think a legitimate argument associated with that.

00:36:12.220 | But it's less common, but that's a legitimate argument.

00:36:16.740 | And so some people would take that perspective with regard to saving.

00:36:22.540 | So there are those who say, "I'm not going to save anything."

00:36:25.420 | Now my personal trouble has often been with those who take that position has often been,

00:36:33.060 | "Well, what do you do with the money instead?"

00:36:36.360 | So I have known people who are so abundant in their giving, they're very, very cautious

00:36:44.860 | with their expenses, and they're very abundant in their giving.

00:36:48.060 | And I would never point a finger...

00:36:49.380 | First, I don't like to point fingers at anybody, but I would never point a finger at that man

00:36:52.540 | and say, "Oh, you're wrong.

00:36:55.180 | You're earning $100,000 a year.

00:36:57.180 | You're living on $25,000 a year, and you're giving $75,000 a year away, and so you're

00:37:02.460 | wrong."

00:37:03.460 | I wouldn't say that.

00:37:04.880 | On the other hand, where I've often been troubled is I have known people who, in my opinion,

00:37:11.900 | made plenty of money that they could save, but they didn't...

00:37:16.540 | And they gave money, right?

00:37:18.260 | No man answers to me.

00:37:19.260 | I'm not to judge anybody of how much they give, but I had the impression or the sense

00:37:23.800 | or the clear knowledge that they gave a little bit of money away to others, but mostly what

00:37:29.780 | they did was they just spent their money and wasted it, and they lived not frugally.

00:37:35.320 | They didn't accumulate anything.

00:37:37.300 | And then they justified it after the fact with this basic idea of, "Well, I'm spiritual

00:37:42.100 | because the Bible says, 'Don't lay out for yourself treasures on earth.'"

00:37:45.300 | And I look at that and I think, "Is that the mark of a spiritual man?"

00:37:48.980 | And for me, that's always been something very distasteful.

00:37:51.460 | I've never wanted...

00:37:52.460 | I've never aspired to be like that person.

00:37:56.220 | And when we look on a global basis, this is what's so difficult, because every single

00:38:00.380 | one of us is rich.

00:38:02.380 | Every single one of us is rich.

00:38:04.700 | And when you say to somebody, for example, if you're preaching and you preach from...

00:38:09.940 | I think it was the verse I quoted about Jesus, Matthew 23, I think it is, where he said,

00:38:14.540 | "Take no thought for tomorrow."

00:38:15.900 | Sorry.

00:38:16.900 | "Don't lay out for yourselves treasures on earth."

00:38:19.260 | That verse preaches very differently in a suburban, middle-class, suburban, white-steepled

00:38:30.460 | Baptist church than it does in a little hut in rural Nicaragua.

00:38:37.500 | It just preaches radically differently depending on who you're talking to.

00:38:43.100 | And it's a verse of tremendous comfort to the poor, to the slave.

00:38:47.220 | It's a verse of tremendous healing to there, and it can be a verse of tremendous judgment

00:38:52.620 | to the rich, suburban, white-steepled Baptist church.

00:38:58.820 | And so I think that there's a real...

00:39:01.860 | We've got to face these things head on and not run from it and realize that the verse

00:39:07.620 | is there, but then understand what's the meaning of it.

00:39:10.580 | Now, that's a little bit on saving.

00:39:12.900 | So some people believe that I shouldn't save.

00:39:15.760 | Some people believe that I should save everything.

00:39:18.820 | And I think that here, once again, it's very easy to get into some extreme positions where

00:39:31.140 | you start to say, "That doesn't give me the flavor of Christ."

00:39:36.380 | I'm generally unimpressed by people who can't balance their finances enough to take care

00:39:43.740 | of the things of life.

00:39:45.180 | You've probably known people who, they don't save anything, and everything is a matter

00:39:50.740 | of an emergency.

00:39:53.180 | They have a flat tire on the car and it's an emergency.

00:39:54.740 | And they just go from emergency to emergency to emergency.

00:39:58.180 | And then on the other hand, though, you know people who are genuine misers, who they're

00:40:03.300 | so fixated on the money, they're so fixated on selling everything, that in my opinion,

00:40:08.780 | they go too far.

00:40:10.340 | And the money has a...

00:40:12.460 | Again, I prefer not to be any man's judge on things like this that are intensely personal

00:40:21.740 | or I don't have the data.

00:40:23.260 | But you observe people and you say, "Money has got that guy's heart."

00:40:27.900 | He's captured by the prospect of having money.

00:40:31.940 | And if Jesus said to him, "Go and sell all that you have and give to the poor and come

00:40:35.260 | and follow me," he would go away sorrowful.

00:40:37.860 | You can just see it.

00:40:38.860 | It's obvious that the money has them.

00:40:41.620 | And I don't find that to be a flavor of Christ.

00:40:45.660 | I don't find that to be something that I encourage either.

00:40:48.860 | So that's on saving.

00:40:49.900 | What about giving?

00:40:51.620 | On giving, there are different perspectives.

00:40:55.700 | I think that I've never known somebody who would say that I shouldn't give.

00:41:00.260 | And so that would be, I guess, maybe someone's out there, "I just, I'm not going to give."

00:41:04.260 | But I've never met a Christian or anybody who would profess the name of Christ in any

00:41:07.780 | way who wouldn't say that giving is a virtue, that generosity is a virtue.

00:41:12.740 | But now we go to, to whom do I give and how do I give?

00:41:16.900 | And so the first thing would be, well, do I give to my local church?

00:41:20.260 | And then we immediately start to discuss the tithe.

00:41:23.820 | The tithe is, I think, a more complex issue than is often given credit.

00:41:32.460 | On the one hand, in the Mosaic law, the tithe was clearly required of the children of Israel.

00:41:42.420 | And so if we go back and we look at the tithe, we can see that it was required that the children

00:41:46.900 | of Israel set aside and give to God 10% of their increase.

00:41:56.580 | Now most of that was not wages.

00:41:59.120 | Most of that was not money.

00:42:00.380 | Most of it was agricultural goods.

00:42:02.380 | Most of it was wheat or oil or flocks, right?

00:42:06.620 | You know, a sheep or a goat, et cetera.

00:42:09.180 | And the function of it was crystal clear in scripture.

00:42:12.300 | The function of it was very, very clear.

00:42:16.540 | And it was to support the children of Levi, the tribe of Levi, who was the priestly tribe.

00:42:22.740 | And so you had 11 tribes of Israel that were divided.

00:42:26.320 | Those 11 tribes of Israel were granted land that they could live on, that they could use

00:42:30.500 | productively, but the tribe of Levi was set apart to the service of God.

00:42:34.420 | And so those priests had to be supported by the people.

00:42:37.700 | They were doing God's work.

00:42:39.340 | They were working in the temple.

00:42:41.060 | They were making sacrifices and offerings to God.

00:42:43.340 | They were attending to the temple and all of its associated labors.

00:42:47.920 | And so they needed to be supported by the people so that they would have something to

00:42:51.100 | eat.

00:42:52.160 | And so you can very clearly see the function and the system of the tithe.

00:42:56.660 | Now go over to the New Testament.

00:42:58.140 | And the question is, does that translate over to the New Testament?

00:43:02.320 | I would say that in much of the modern world, including Protestantism, Catholicism, and

00:43:08.900 | Orthodoxy, I would say that the majority teaching is that yes, it does.

00:43:16.100 | But here we run into a split, a split of a doctrinal split, and it has to do with a view

00:43:22.820 | of the law, a law versus grace, which is a tremendous schism across Christianity with

00:43:29.380 | the schism of, are we under law?

00:43:31.860 | And if so, what law is that versus are we under grace?

00:43:34.660 | And if so, what is that grace?

00:43:35.740 | Now the common, what I would say the most common thing is, at least across Protestantism,

00:43:40.940 | would be that we are under grace, right?

00:43:44.780 | We're saved by grace, only grace, grace alone.

00:43:52.140 | The common way to say it would be grace alone that saves, but it comes with other works,

00:43:57.900 | right?

00:43:58.900 | There are things that you do out of that place of grace.

00:44:02.080 | And so most Protestant churches would not preach that you have to tithe in order to

00:44:06.900 | be accepted by God.

00:44:09.180 | They would teach that you're accepted by God, and so because of that, you should want to

00:44:12.140 | tithe.

00:44:13.440 | But here we once again get into this difficult thing.

00:44:17.140 | So there are significant schisms across Protestant Christianity related to what law are you under,

00:44:23.020 | right?

00:44:24.020 | Are you under, there's the classic thing from the 1970s, no law but Christ, right?

00:44:28.500 | And many, many Christians and many Christian denominations have a distinctly antinomian

00:44:33.820 | flavor, this distinct sense that if you place any burden on me, that you are going beyond

00:44:40.100 | what Christ has called you to do.

00:44:41.920 | And so many pastors wished that their churches would tithe, they wish that their congregants

00:44:46.740 | would tithe, but they shy away from preaching very vigorously about the tithe due to this

00:44:53.540 | antinomian flavor that runs through their theology.

00:44:59.980 | There are many people, there are, so that's not across the board.

00:45:03.980 | So then of course there are many denominations who believe very clearly that tithing, 10%

00:45:09.420 | of your increase, 10% of your wages or your profits towards your local church is an exact

00:45:14.660 | and obvious and perfect thing to do and that you should do it and that the church is the

00:45:22.500 | new Israel, right?

00:45:23.500 | There's a theological, and this is where the break is so difficult.

00:45:27.980 | There are some Christian denominations that believe that the church is the new Israel,

00:45:32.100 | that when Christ died on the cross and when the veil in the temple was rent from top to

00:45:36.660 | bottom, that that was the clear sign of a break of God's working with Israel as his

00:45:44.500 | special people.

00:45:45.980 | And so in that act, God clearly said, "Israel has broken my covenant.

00:45:54.380 | Israel has broken my covenant and as such, I'm done with her.

00:45:58.220 | And theologically, I'm divorcing Israel and I'm marrying the church."

00:46:03.000 | And that God's final judgment on Israel came in the year 8070 when the Jewish temple was

00:46:08.960 | destroyed, when the Romans destroyed Israel and the people were scattered, that that was

00:46:12.800 | God's final judgment on Israel.

00:46:15.200 | And so these theological traditions believe that God is not working with Israel.

00:46:20.940 | For example, the modern nation state of Israel has no theological significance whatsoever

00:46:25.600 | to God, that it's just simply a nation state just like any other nation state, that the

00:46:31.680 | people of Israel are no more theologically significant to God than the people of Bahrain

00:46:37.200 | or Jordan or Oman or the United States or Russia, that it's just simply a nation like

00:46:41.920 | any other.

00:46:43.200 | Now that's very common in many parts of the world and in many theological traditions.

00:46:50.280 | That's less publicly common in the United States.

00:46:53.480 | In the United States, there's much more of a theological belief that the nation of Israel

00:47:00.440 | has a continuing significance to God, that the nation of Israel, that when the nation

00:47:07.240 | of Israel was formed after World War II, it was in 1948 I think, when the nation of Israel

00:47:11.960 | was formed, that that was a sign of God's fulfilling his covenant mandate with Abraham,

00:47:19.320 | Isaac, and Jacob, that he would give them this land to their ancestors.

00:47:23.320 | And as the Jews were gathered together from all the scattered lands, that that was a very

00:47:27.280 | significant event to God.

00:47:30.880 | And so these traditions believe that the modern nation of Israel is a nation to whom God still

00:47:36.680 | has – that there's a modern nation that continues as God's chosen people.

00:47:40.520 | Now this is a little bit tricky to work through because there's some significant meanings

00:47:44.080 | to either saying the modern nation of Israel doesn't have significance to God or it does.

00:47:49.640 | And so if it does, it opens up kind of this two-system thing, which is very difficult

00:47:53.440 | for Christians to answer.

00:47:54.440 | Well, if Jews are God's special people, then do they need to respond to Christ?

00:47:57.800 | Do they continue in Judaism?

00:47:59.040 | How are they saved, etc.?

00:48:00.440 | It gets really, really, really, really difficult as you parse your way through the issues.

00:48:06.920 | Now thankfully, most people never get into this, but theologians are trying to build

00:48:11.920 | a structured, coherent system.

00:48:14.520 | You kind of take your position on these issues, and then that position largely guides what

00:48:20.920 | you're doing.

00:48:22.200 | And so back to the church is the new Israel.

00:48:26.160 | So if the church is the new Israel, then those traditions, those theological traditions that

00:48:31.800 | say the church is the new Israel, they have no problem saying the church is the new Israel,

00:48:37.320 | and so therefore the church is the priest – those are the priests that are functioning.

00:48:41.280 | And so those priests need to be supported by 10% of the congregants' increases.

00:48:49.440 | And so they have no problem with that being agricultural goods and agricultural societies,

00:48:54.240 | but in the modern society where most of us live in a financial society, then that's

00:48:58.320 | a financial contribution.

00:49:01.000 | So – and they're very strong about that.

00:49:04.200 | And I think there's very good arguments, right?

00:49:07.040 | Anyway, there's very good arguments.

00:49:09.080 | On the other hand, there are many people who believe that, for example, what is it, 1 Peter?

00:49:14.840 | We are a nation – ye are a royal priesthood, you are a royal priesthood, that we're a nation

00:49:20.840 | of priests.

00:49:21.960 | And so there are many people who would say that there is no priest and layperson.

00:49:29.140 | There is no longer this priestly class or priestly caste in the church, but that we're

00:49:34.440 | all involved, that we're all priests.

00:49:37.120 | And so as such, then why should one special class of people be supported by the others

00:49:44.280 | at the risk of – why should one special class of people be supported financially just

00:49:50.320 | so that they can preach, just preach, preach, preach, preach?

00:49:53.160 | And I think that some of these arguments are very compelling.

00:49:56.680 | For example, I think it can be easy for people when you see, "Oh, there's these pastors

00:50:02.520 | and they get paid and all they got to do is preach a sermon one or two hours a week and

00:50:07.960 | maybe pray a little bit, go to the hospital, visit with some people in their study and

00:50:11.720 | study Greek and Hebrew all day.

00:50:13.160 | Isn't that easy?

00:50:14.160 | Isn't that a nice life?"

00:50:15.160 | Now, of course, pastors know that things are more difficult than that, but that in that

00:50:22.080 | situation that people make a good argument.

00:50:24.200 | Why should I support this guy to be the holy guy up on there?

00:50:28.200 | We're not offering sacrifices on the altar anymore.

00:50:30.960 | We're not – you're not burning incense anymore.

00:50:34.920 | Apologies to my Catholic and Orthodox friends who do that.

00:50:39.000 | But we're not a two-class system any longer.

00:50:46.400 | And so this is where it's so confusing in Protestantism.

00:50:49.440 | Again, go back to a place where there's either – it can be a Protestant tradition where

00:50:54.560 | there's a very clear priesthood or Catholicism, Orthodoxy, where there are priests.

00:51:03.640 | And so, okay, I got to support the priest.

00:51:05.480 | But in the looser realms of Protestantism, then this becomes more difficult.

00:51:11.480 | So I've given all these perspectives, and I haven't answered the question specifically

00:51:18.560 | because the question is going to have an obvious answer to people based upon their tradition.

00:51:26.640 | And it's some of those who aren't part of the more traditional hierarchical expressions

00:51:33.260 | of Christianity where it does become more difficult, which is where I would guess that

00:51:37.760 | you're coming from.

00:51:38.760 | If you were coming to me and you were in the Orthodox Church, you wouldn't have that

00:51:41.320 | question so significantly.

00:51:44.120 | And so when I look at it, I'll give you my answer for it.

00:51:46.880 | When I look at it, I'll tell you where my sympathies lie.

00:51:48.680 | First of all, I am a Protestant, and so my sympathies are in that realm rather than in

00:51:56.560 | the realm of Orthodoxy or Catholicism.

00:51:59.680 | And in addition, my sympathies are very much on the simple church model, the context that

00:52:07.440 | I have a very hard time with the idea that Christianity is something for the professional

00:52:12.480 | classes.

00:52:13.760 | And as I see it, the institutional churches and the very hierarchical institutional churches

00:52:22.680 | do a whole lot less for the strength of their congregants than do simpler forms of church

00:52:30.040 | gathering.

00:52:31.560 | And I'm intentionally foregoing lots of moderating statements just to say something clearly,

00:52:38.120 | but I'm not judging any man's heart.

00:52:40.440 | I have to give a couple, but I'm not judging any man's heart, just saying that when I look

00:52:44.200 | at the functioning that I see in the scripture, to me, what I read in the book of Acts is

00:52:51.820 | a simpler system.

00:52:53.880 | And when you go to a simpler system, it changes some of the financial scenarios.

00:52:57.880 | So for example, I have never been, with the exception of a brief time last year, I've

00:53:02.560 | never been a part of a large institutional church that had to maintain a building.

00:53:07.640 | And in that situation, if you have a church that has to maintain a building and they have

00:53:12.240 | to pay for the air conditioning bill and they have to pay for the 401k plans, etc., then

00:53:16.480 | you understand, okay, I need to support the local church.

00:53:19.480 | And when I was briefly last year, part of a more structured, organized church prior

00:53:27.720 | to that getting shut down by COVID, then I supported financially because I understand

00:53:32.120 | that I have an obligation to help care and share the expenses of this organization.

00:53:37.600 | However, for the last six months of COVID, I've had a church gathering in my home, which

00:53:46.320 | is kind of the way that I've always experienced church in a very simple way.

00:53:51.120 | There's 20 to 30 people that get together every Sunday and we gather in my home.

00:53:55.280 | And we have breakfast together and then we gather and we talk about scriptures and we

00:53:57.960 | pray and we invite people and we are functioning very much like a new fledgling church.

00:54:05.160 | And it's just because everything was shut down.

00:54:07.400 | And so in that situation, who do I give my tithe to, right?

00:54:11.240 | Who do I give my 10% to?

00:54:13.540 | It just becomes very strange if you are from a simpler tradition.

00:54:17.280 | It becomes very strange to think about, if I'm preaching this Sunday, why should everyone

00:54:23.300 | give me thousands of dollars just because I preached a sermon?

00:54:25.840 | That's different.

00:54:27.040 | But even in those simpler expressions, which is where my sympathies lie and my experience

00:54:33.720 | lies, even in those simpler expressions, even in the simple church, right?

00:54:37.800 | That would be the missiology word that would be used in a modern seminary, the simple church.

00:54:42.100 | Even in that context, though, you cannot get away and escape from the very clear Christian

00:54:48.000 | teaching to support those, right?

00:54:51.040 | The Bible says very clearly in the New Testament, not an Old Testament thing, the Bible says

00:54:54.280 | very, very clearly that you are to support those.

00:54:57.560 | A worker is worthy of his wages.

00:55:00.120 | Those who labor in teaching and preaching are worthy of double honor.

00:55:03.580 | And so that's very clearly financial.

00:55:06.640 | So you have very clear commandments in scripture to give, to give to support ministry, to give

00:55:13.420 | to support missionary work, to give to support financial relief, et cetera.

00:55:18.240 | And so in that context, just because you're in the New Testament, you're not absolved

00:55:21.620 | from giving.

00:55:22.880 | So let me give you what I have come to at this point in time as my current understanding.

00:55:31.060 | I am nervous, although I see the benefits of preaching about a tithe, I am nervous about

00:55:39.940 | preaching that extremely strongly at this point in time.

00:55:43.720 | It is very clearly a system that was clearly important and mandated by God prior to Christ,

00:55:56.060 | but it is not so clearly a system that was mandated by God after Christ.

00:56:01.140 | I have a very hard time preaching from the New Testament on the requirement of a tithe.

00:56:08.220 | And so I'm nervous about that.

00:56:10.820 | So I haven't done a lot on it.

00:56:14.060 | I haven't done shows on tithing, but I'm nervous about it theologically.

00:56:20.300 | Now on a couple of these big theological issues, I've been wrestling with a lot of these for

00:56:23.780 | about the last five to 10 years, trying to understand my own thinking on it.

00:56:28.820 | And I'm not at a place of rest in my own understanding on some of these issues, where I'm still working

00:56:33.900 | it through and trying to discern, okay, what's the right solution?

00:56:36.500 | But what I do look at it is I say that if BC, then it was mandated by God that all of

00:56:50.860 | the children of Israel would tithe 10% to support the work of God.

00:56:54.700 | If that was true BC, then why should my requirement personally in AD be any less?

00:57:03.060 | Why should I not personally be giving more in AD?

00:57:08.900 | Because when you look at the preaching of Christ, what you see is that on so many issues,

00:57:15.460 | Christ took the standard that was given to Moses and he raised it.

00:57:20.000 | So you see this most pointedly when Jesus said, "You have heard that it was said, 'An

00:57:23.420 | eye for an eye and a tooth for a tooth.'

00:57:24.860 | But I say to you, love your neighbor, do good to those who despise you, do good to those

00:57:29.460 | who persecute you."

00:57:32.660 | You have heard it said that – we're talking about divorce, right?

00:57:37.500 | The Pharisees were asking Jesus, "Can a man divorce his wife for any reason?"

00:57:41.700 | Jesus said, "You've heard it said that such and such, Moses commanded you to give a certificate

00:57:47.020 | of divorce.

00:57:48.020 | I say to you, don't divorce."

00:57:50.480 | But I say to you, don't divorce.

00:57:51.760 | And so on almost every issue where Jesus was preaching, you have heard it said, "Don't

00:57:56.480 | commit adultery."

00:57:57.480 | But I say to you that if you look at a woman with lust in your eyes, you've already committed

00:58:00.140 | adultery with her in your heart, that things were raised.

00:58:02.400 | And so the basic structure that you see AD, Anno Domini, after Christ, you see that almost

00:58:10.680 | all of the requirements of the old were raised.

00:58:13.480 | I can't think of any requirement from the old that was not raised in the new.

00:58:18.980 | And so given that, then I say I have no fear whatsoever about saying that any Christian

00:58:26.980 | should clearly be giving away at least 10% of his income.

00:58:32.540 | Where I do question a little bit though is if that is held as a legal thing.

00:58:39.380 | I have a hard time, and especially I have a big question if that all goes to support

00:58:43.940 | the local church.

00:58:44.940 | So I have a very hard time in some of the circles that I travel in going to some big

00:58:50.180 | monster mega church in the favelas of Brazil.

00:58:54.700 | And or I have a hard time going to some big monster mega church in Nigeria where the pastor

00:59:00.380 | rolls up in a Rolls Royce and he's got a private jet and he preaches to the people who are

00:59:06.340 | utterly destitute, "Come and give.

00:59:10.660 | And if you give to God, after all, Malachi says, 'Give, test me in this, give, and will

00:59:14.740 | you not find the windows of heaven opened up and poured out upon your life?'"

00:59:18.380 | I find that utterly repulsive and I want nothing to be involved with that.

00:59:25.740 | And so when you look at situations where you see somebody who is in great need, I have

00:59:30.940 | no problem saying to somebody who has very little, "You should be giving."

00:59:36.320 | But I want to honor the giving of time, I want to honor the giving of resources, and

00:59:40.100 | I want to honor the giving.

00:59:41.620 | And I want that giving not to be to some big monster mega church organization, I want that

00:59:46.660 | giving to be local.

00:59:47.940 | I want – I have a spirit of giving.

00:59:49.740 | So for I've come to it, is I've come to it to say that God honors my giving and that

00:59:54.620 | I need to be a giver.

00:59:56.420 | And a minimum goal, not something that's a stretch goal, but a minimum goal or a minimum

01:00:01.620 | standard should be 10% of my income.

01:00:03.660 | I should at least start by setting aside 10% of my income and designate that to giving.

01:00:10.260 | Now if I'm involved with a local church where there are responsibilities and functions of

01:00:14.940 | that local church, so for example, maybe I'm gathering with a group of people and we have

01:00:18.740 | a building, we've chosen to build a building.

01:00:21.020 | Frankly, I'd just as soon tear down half the buildings and put churches back in neighborhoods

01:00:27.420 | where they're not so subject to – where they're more useful in many situations.

01:00:34.500 | But I'm not utterly opposed to buildings, just that it just doesn't strike me as particularly

01:00:39.140 | useful.

01:00:40.140 | You wind up putting yourself in a difficult place when you build these big buildings.

01:00:42.780 | One of my biggest issues with buildings is just that it stunts evangelism.

01:00:46.700 | If your church has a building and you can seat 500 people, if everybody in your church

01:00:52.020 | went and invited somebody to church to the church meeting this Sunday, if you're using

01:00:55.740 | a Sunday meeting as a primary form of evangelism, and if half of those people came, all of a

01:01:01.940 | sudden you've got a problem.

01:01:03.780 | And so buildings naturally are very, very difficult.

01:01:07.020 | So in many contexts, especially in Western contexts, I'd much rather see churches function

01:01:12.340 | flexibly.

01:01:13.340 | I'd rather see people meeting in a gym where you can go from 200 to 600 and back to 300

01:01:19.300 | with minimal expenses than these big, big buildings that cost so much.

01:01:23.820 | I'd rather see people meeting in homes where I can gather from 20 people to 50 people and

01:01:28.380 | it's not a big deal.

01:01:29.740 | Now in other circumstances though, where homes are much smaller and it doesn't work, then

01:01:33.580 | I'm not opposed to buildings.

01:01:34.940 | I just think that buildings stunt growth and buildings have this event – again, these

01:01:39.940 | are my opinions – I think that buildings have this unanticipated end result of having

01:01:45.860 | everybody looking towards the front, which creates this priestly class that does the

01:01:51.040 | spiritual work.

01:01:52.600 | And so instead of what I see in the scriptures where Paul says that ministers are given – teachers,

01:02:00.260 | evangelists, apostles, prophets, and pastors – that these ministers are given to the

01:02:07.380 | local church for the equipping of the saints for their work of ministry, then it feels

01:02:13.560 | to me like a lot of my travels, what we do is we get that wrong and we think that the

01:02:17.700 | preachers are given and the teachers are given for the building up of the saints, just for

01:02:22.380 | their own benefit, when in reality it's the saints who have to do the spiritual work.

01:02:26.500 | And so, forgive me, but I see benefits to having the simpler model.

01:02:33.940 | And so when you give, then the – so if you're part of a church where there is a – you

01:02:39.620 | have a pastor who's serving, you have a responsibility to support that pastor.

01:02:44.460 | If you're part of a church that has a building, you have a responsibility to support that

01:02:47.100 | building.

01:02:48.420 | If you're renting a place to meet in, you have a responsibility to meet that.

01:02:51.520 | And so you need to allocate money towards that.

01:02:53.860 | And to the extent that the church is a – that the church in whatever function it has is

01:02:58.860 | able to manage that money effectively and you're able to see an increase from it, then

01:03:03.180 | I have no problem with it.

01:03:05.620 | But what you have to do, and this is where it gets theologically difficult for some people,

01:03:10.300 | what you have to do is if you see the church wasting its resources, then you need to withdraw

01:03:14.660 | those resources.

01:03:16.580 | And that's difficult because a lot of people don't want to do that.

01:03:19.420 | And so my question is, are you getting a good return on your money?

01:03:22.500 | And what I would wish to see is that many people started with the mindset that I'm

01:03:26.700 | going to give 10% of my money, but I would wish to see that more of us took more ownership

01:03:32.940 | of that 10% and how we did it.

01:03:35.700 | It's not to say that you can always – that there's not benefits of working together.

01:03:40.540 | I think there are benefits of working together.

01:03:43.400 | If you can support a certain program or a certain thing, a certain outreach, a certain

01:03:47.660 | missionary, a certain thing that's done administratively, that can be helpful.

01:03:52.860 | And so for those who see that and can work together, I think they should.

01:03:56.060 | But what I'd like to see more people do is do more personal giving, because in personal

01:04:00.400 | giving you have the opportunity and the ability to expect requirements, to expect a gain.

01:04:08.000 | And I believe that if we ask God for those opportunities and those circumstances, that

01:04:11.820 | he'll give them to us.

01:04:12.820 | He'll bring the people along that need help.

01:04:15.660 | I'll just share one example.

01:04:19.620 | For a while now, I've been supporting a lady who is in very dire financial circumstances

01:04:26.700 | right now.

01:04:27.900 | And as such, because she's in dire financial circumstances, she was previously employed,

01:04:33.920 | but a couple of years ago she started to have some health problems and she wasn't able to

01:04:39.220 | work and she's just been in complete poverty.

01:04:42.460 | And she has older children, but her children are not caring for her.

01:04:48.940 | And I don't see in the place that she's in, I don't see in the place that she's in how

01:04:53.500 | she's going to make it, especially given the scenarios that we're in with regard to the

01:05:00.580 | pandemic.

01:05:01.900 | And so I've been supporting her for a time, and yet in my supporting her, I have the opportunity

01:05:08.500 | as an individual to be relatively free in the sense that I can be free in helping her

01:05:21.140 | in the way that I think is best.

01:05:22.820 | And so in the beginning, what I started with is I chose to give her food, right?

01:05:28.300 | And basically she didn't have any money for food.

01:05:30.180 | I said, "Well, I need to give her food."

01:05:31.780 | And I started to give her money, but very quickly, instead of just giving money, giving

01:05:35.180 | money, I got involved and I said, "Let's find a solution.

01:05:39.860 | We have to find a solution."

01:05:42.020 | And in giving to her, I'm able to look and talk to her.

01:05:45.580 | And it's not going through some board, through someone else, it's coming through me.

01:05:50.100 | And I'm able to talk to her and I'm able to say what's going on and to counsel her and

01:05:53.600 | try to find a solution.

01:05:55.340 | Now in this situation, due to the pandemic, I don't think she's going to be able to be

01:05:58.300 | employed here in a local area.

01:06:01.160 | So I've helped her with some of the finances locally.

01:06:03.260 | I paid off some of her debts.

01:06:04.460 | I've supported her.

01:06:05.900 | But more importantly is I'm trying to find a solution where she can get back on her feet.

01:06:09.860 | And so that solution in her case, she has dual citizenship with another country where

01:06:16.220 | there's a better economy.

01:06:18.380 | And so my solution for her is I'm supporting her.

01:06:20.780 | I've encouraged her to move to the other place.

01:06:23.220 | I'm paying for all of her expenses to get there, paying for her to buy her clothes and

01:06:27.960 | things that she has.

01:06:29.480 | And I'm paying for expenses for her to go and get there and then supporting her for

01:06:32.940 | a short time while she gets her feet under her until she can get employed.

01:06:37.220 | And so I say that simply to say that I have, as an individual, I have a tremendous degree

01:06:42.900 | of leeway that no government aid organization, no church aid board would ever have.

01:06:49.180 | And I can move fast and easy and I can, in a sense that I can solve problems because

01:06:54.100 | I don't have the burden of oversight.

01:06:57.300 | If I were part of a church board that was part of a charitable aid board, we would have

01:07:01.740 | to develop some kind of process where we knew that we were treating people properly, equally.

01:07:07.740 | So we would have to have some kind of application process where somebody brought a paper and

01:07:12.540 | said here, here's my need and will you help me and here's my expenses, et cetera.

01:07:16.220 | And those things can be good.

01:07:17.220 | I'm all for appropriate care and managing them.

01:07:20.780 | And on a small level they can work.

01:07:22.820 | But on an individual level, I have utmost flexibility with my giving.

01:07:26.820 | I have the easy ability to say here's a need and I can solve this need.

01:07:32.780 | And I can solve the need for as long as I see that solving the need is a good thing

01:07:37.620 | and I can stop solving the need when I see that it's not a good thing.

01:07:40.880 | And so that's the benefit that we have as individuals.

01:07:43.100 | So I think that where we should start with our giving is primarily individual.

01:07:47.260 | We should support others, but we should start with individuals.

01:07:51.500 | Sorry, we should support the local church, especially to the extent that the local church

01:07:57.540 | has expenses.

01:07:58.980 | My local church at present doesn't have expenses.

01:08:02.120 | And so in that situation I don't have something that I can tithe to, right?

01:08:07.620 | What would I be doing in that situation?

01:08:10.000 | So we should support our local church because we've given a responsibility.

01:08:14.740 | We should be involved in and we should make sure that that church is accountable for how

01:08:18.220 | it's done.

01:08:19.220 | And we should support things in that local church, especially to the extent that they're

01:08:23.340 | fruitful.

01:08:24.340 | So if there are certain ministries or if there are certain forms of outreach that are fruitful,

01:08:28.220 | then we should do it.

01:08:29.340 | And so right now maybe running a food bank would be an incredibly fruitful thing to do

01:08:33.060 | and be very useful.

01:08:34.180 | We should do that.

01:08:35.300 | And I think that if the local church can be organized in such a way that the deacons and

01:08:40.140 | the responsible leaders can help the administration so we see that people are getting help that

01:08:45.720 | they need and not just handouts, then, you know, handouts with no responsibility attached,

01:08:52.620 | then we should continue to do that.

01:08:54.100 | And that can be a fruitful form of outreach.

01:08:57.220 | I think we should look in our personal life and say, "Where are there opportunities for

01:09:00.780 | us to give?" and give there.

01:09:02.900 | And as we're wrestling with the question of how much we should give versus how much we

01:09:06.780 | should save, I see no answer and no solution other than to ask God to give us a witness

01:09:12.620 | by the Holy Spirit as to what his answer is for you or for me.

01:09:17.360 | And I am entirely comfortable to leave that up to God.

01:09:21.340 | I'm entirely comfortable for you to come to me and say, "I believe that God is telling

01:09:25.780 | me that I should give 10% of my income away.

01:09:29.100 | I should save 40% of my income for my future and I should spend 40... whatever.

01:09:35.180 | 20, 40, 40.

01:09:38.060 | I can't do math.

01:09:39.980 | You know, I should give 10%, I should save 50%, and I should live on 40%."

01:09:44.940 | Okay.

01:09:45.940 | I'm also entirely comfortable if you come to me and say, "I've prayed about it and I

01:09:53.140 | believe that God has shown me that what I should do is I should give 50% of my income

01:09:58.020 | away and I should live on 50%."

01:10:00.620 | And I think this has to be left at a place of personal freedom before the Lord because

01:10:04.540 | each person has different circumstances.

01:10:06.820 | I can't go into a Christian in New York City or in London, England and say, "You're spending

01:10:12.600 | $10,000 a month?

01:10:14.900 | Are you kidding me?

01:10:16.380 | What's wrong with you?

01:10:17.380 | Don't you know that people around the world live on $2 a day?"

01:10:19.620 | I can't go into that because in New York City or in London, England, $10,000 a month may

01:10:24.980 | just provide a basic level of comfort for a family to be able to be held together.

01:10:32.340 | On the other hand, it's not my place to go into anybody's life, but that would be very

01:10:37.740 | different if I were living in Biloxi, Mississippi.

01:10:40.500 | And so each of us has to look and say, "What can we do?"

01:10:43.540 | And I'll give you more examples.

01:10:45.380 | One of the things that I have realized is that I don't think it's a credit to God when

01:10:50.100 | people live excessively frugally because they don't know how to make money.

01:10:55.180 | I don't see any way that it's honoring to God if I live like in a hovel, right?

01:11:00.020 | I live in a shack and I say, "Well, I'm just this pious person where I live in this dump."

01:11:06.900 | And somebody comes along and like, "Aren't you a Christian?

01:11:10.180 | Don't you serve the God who claims to have a cattle on a thousand hills and here you

01:11:13.260 | are living in a dump?"

01:11:14.460 | I think that that can poison relationships.

01:11:16.660 | I think it can poison marriages.

01:11:17.980 | I think it can poison relationships with children.

01:11:20.300 | I think that it's very easy to go too far.

01:11:23.100 | And so I would be very nervous about living like a miser and making my children suffer,

01:11:29.740 | my wife suffer, et cetera, just because I'm doing all this pious giving.

01:11:33.380 | I'd be very nervous about that.

01:11:35.420 | On the other hand, there is excess.

01:11:37.220 | And I think that that excess has to be looked at as well.

01:11:42.300 | And so I don't see a solution.

01:11:45.140 | I don't see a clear biblical mandate.

01:11:47.340 | I've talked about the tithe.

01:11:48.860 | I think that's a good minimum, but I think that it's something that should be understood

01:11:53.580 | as a minimum.

01:11:55.460 | But I don't think it's something—some people have this belief that says, "As long as I

01:12:01.940 | give my 10% to the local church, I can do whatever I want with the other 90%."

01:12:05.340 | I had a friend of mine who was a Jewish rabbi, and he expressed it most clearly.

01:12:08.740 | We were talking about the subject from a Jewish versus Christian perspective, and he said,

01:12:12.260 | "Listen, Joshua, you're crazy.

01:12:13.260 | As long as I give my 10% to God, I'm done.

01:12:16.660 | I can do whatever I want with the other 90%.

01:12:19.540 | I have a hard time with that from a Christian perspective because I believe the basic Christian

01:12:24.100 | ethic is that God owns it all.

01:12:26.540 | He owns all of me.

01:12:27.540 | He owns all my money, all my life, all my time, and I have to go to Him and ask Him

01:12:32.100 | in faith, 'What do you want me to do right now?'"

01:12:35.220 | And so—yeah, go ahead, please.

01:12:37.220 | So that's the end of the tension that I struggle with.

01:12:41.020 | Much like we can talk about spending and saving as not being true to your distinction, you

01:12:46.980 | know, am I saving up for a house?

01:12:49.700 | You know, at some level, that's consumption just a few years down the road, versus capitalizing.

01:12:56.340 | Am I saving up to produce more in the future?

01:13:01.620 | And I think if I set the percentage of my income or resources that I want to give away

01:13:08.900 | every year, and I'm continually trying to increase that, just like I am with my savings

01:13:13.860 | and my savings, maybe this is a different question, but is it possible to have a portion

01:13:22.100 | of my savings being essentially capitalized for giving?

01:13:29.620 | And that's where these lines between saving and giving blur, like the blur between saving

01:13:35.860 | and spending.

01:13:37.860 | Yeah.

01:13:39.940 | Where I have come to, and I want to hear where you've come to, and that was quite the monologue,

01:13:44.340 | but where I've come to on the subject is that yes.

01:13:48.580 | So at the moment, right, what am I doing?

01:13:50.580 | I'll just tell you what am I doing personally at the moment.

01:13:52.700 | At the moment, when I earn money, I set a certain percentage aside into a separate giving

01:13:57.340 | account because I don't want to be caught without some money to give.

01:14:03.420 | And I find that by setting money aside into a separate giving account, I'm looking for

01:14:07.660 | opportunities to give.

01:14:09.540 | I think that there's a great danger of having everything earmarked for spending or saving

01:14:13.780 | because you stop looking for money to give.

01:14:16.180 | And I found years ago when I first started setting aside money into a separate account,

01:14:19.300 | you start to see it grow, and you're like, "I need to give this away."

01:14:22.660 | But I feel no compulsion that I have to give it away today.

01:14:27.060 | I can let it grow for a while, and I'm looking for opportunities.

01:14:29.860 | I'm looking for things that I can give money to, and I want those things to be productive.

01:14:34.460 | Now, I'm also actively saving and accumulating, and along the way, what my attitude is, I

01:14:43.100 | believe that God has given me a lot, and I believe that I can use it to create more.

01:14:48.220 | In the same way that we can't get away from what Jesus preached about, you know, "Don't

01:14:52.580 | lay out for yourselves treasures on earth," in the same way we can't get away from what

01:14:56.180 | Jesus preached about, "Don't take no thought for tomorrow," we also can't get away from

01:15:04.980 | the parables of the good steward.

01:15:06.700 | All right?

01:15:07.700 | Jesus very clearly, in the parables of the good steward, he very clearly taught that

01:15:12.060 | when the master goes away, he expects to come back and find an increase.

01:15:16.460 | The thing that is very important to me to emphasize is that when Jesus was preaching

01:15:21.320 | that parable, the reason he used the word "talent" was because a talent was a sum of

01:15:26.740 | money.

01:15:27.740 | Now, in my understanding of the etymology of the word "talent," in the modern world,

01:15:31.660 | we use the word "talent" to refer to some kind of innate ability, innate skill that

01:15:37.700 | we have, some ability, some way that we're better at something than someone else.

01:15:43.460 | We use that in the modern age that comes from this parable, largely because we've taken

01:15:48.680 | this parable to enhance and say that God wants an increase.

01:15:52.860 | But in the original context, it was a form of money.

01:15:55.400 | It was a sum of money.

01:15:56.460 | It was bucks.

01:15:57.460 | It was dollars.

01:15:58.460 | It was yen.

01:15:59.460 | It was money.

01:16:00.460 | And so I believe that God wants an increase on our money.

01:16:04.720 | And so this is where I've come to.

01:16:07.860 | What helped me a lot was as I walked away from most of the mainstream forms of increase

01:16:14.060 | of money, especially just mass market mutual funds, and when I did that, I saw much more

01:16:19.580 | value to my investment dollars than I ever did previously.

01:16:24.060 | I went through a significant personal tension for a while where I had all this money in

01:16:29.320 | mutual funds, and I thought, "How on earth is this at all helpful?

01:16:33.740 | The only benefit I'm going to get from these mutual funds is that I'm going to get richer.

01:16:38.540 | Okay, well, I like to get richer.

01:16:40.780 | That's fun.

01:16:41.780 | But it seems to me a really, really shallow return on investment if I just get richer."

01:16:45.860 | And I looked at some of these companies, and I thought, "These companies, some of them

01:16:50.180 | are flat out immoral.

01:16:52.560 | Many of them, how do I look Jesus in the eye and say, 'Yes, I invested your money into

01:16:57.140 | this company' when they're clearly engaged in things that are absolutely abhorrent to

01:17:04.540 | the gospel of Christ?

01:17:06.060 | How do I do that?"

01:17:07.320 | And so when I walked away from that, it helped.

01:17:09.220 | It gained me a lot of peace, and I started to see, "Okay, I see how.

01:17:13.660 | If I can invest my money into something where there's more benefits from it, then now I

01:17:18.060 | see how it can be helpful."

01:17:20.140 | And so I like to use as a simple example a rental house.

01:17:22.500 | A rental house is a tremendous asset for an investor.

01:17:25.580 | Why?

01:17:26.580 | Well, a rental house needs work.

01:17:28.220 | And so now, let's say I've got the guy who says, "I don't have any work."

01:17:31.220 | I can say, "Listen, buddy, why don't you come over and I'll pay you to paint the house?"

01:17:35.180 | And something as simple as taking money that's in an index fund and using it to buy a rental

01:17:39.100 | house allows me to create work for people.

01:17:42.820 | And that work for people is something that can be useful.

01:17:45.660 | So now, instead of talking to the homeless guy on the street and saying, "Here's some

01:17:50.940 | money," or, "Here's some food," or, "Here's a tract," and don't you know there's a homeless

01:17:54.500 | shelter, I can say, "Listen, I've got some work.

01:17:56.500 | Would you like to come and work with me?"

01:17:58.420 | And many businesses go beyond that.

01:18:00.020 | So small or privately held businesses provide a tremendous platform that which you can use

01:18:06.540 | them.

01:18:07.540 | I've said this publicly before, but I have a client of mine who I'm deeply jealous of.

01:18:11.780 | But this client of mine has a business in the automobile business.

01:18:16.580 | And he has the ability to hire guys who don't have a high school degree.

01:18:21.940 | He primarily hires men because it's heavy, hard, difficult work that most women don't

01:18:26.020 | want to do.

01:18:27.540 | And so he has the ability to bring in guys that are high school dropouts and give them

01:18:32.060 | a job.

01:18:33.060 | And he's got a hundred, a lot of these young men working for him.

01:18:38.380 | And as I look at it, my heart bleeds for these guys who have no opportunities.

01:18:42.900 | And I look at it and I say, "My client's not a Christian."

01:18:46.420 | And I'm forever telling him, I'm like, "Dude, you've got the best opportunity for evangelism

01:18:50.900 | in the world."

01:18:52.060 | And he takes it seriously.

01:18:53.340 | He takes his mentoring role seriously.

01:18:55.620 | And he does a good job with it.

01:18:58.180 | But it's opened my eyes to an expression of investment that for me is very, very important.

01:19:04.340 | Now, the nice side benefit of his business is that it mints money.

01:19:08.500 | It's the most obscenely profitable thing I've ever come across in my life.

01:19:12.120 | And yet he's got this incredible opportunity where he's got dozens and dozens and dozens

01:19:16.900 | of young, difficult, broken men who he can help.

01:19:24.460 | And I've wanted so much to make this side project.

01:19:26.980 | I haven't done it.

01:19:27.980 | But I wish that so many more Christians, well-heeled Christians, would stop putting their money

01:19:35.420 | into Wall Street and would start investing it locally.

01:19:39.340 | Because I see that as ways that now you can really fulfill that dual-fold mandate.

01:19:45.820 | You can make a lot of money and you can do a lot of good.

01:19:50.580 | And it's one of the things that I've been working hard in my private life to try to

01:19:54.540 | figure out the answers to.

01:19:56.140 | But I think that it solves that in a lot of ways.

01:19:59.500 | Because as I see it, there's no reason why you have to choose between them.

01:20:03.460 | There's no reason why you have to choose between doing it.

01:20:06.820 | Even with regard to giving.

01:20:07.820 | And I've got to stop.

01:20:08.820 | But I'll just say this with regard to giving.

01:20:10.700 | And I want to hear your thoughts on this.

01:20:12.220 | But when I give money, I don't like to give money where it's not going to grow.

01:20:18.040 | So I'm happy to give money.

01:20:19.500 | I rejoice in giving money.

01:20:21.420 | And I believe that there are circumstances in which giving money where it's just gone

01:20:26.380 | is right.

01:20:28.060 | You say, "Here, I'm giving to you."

01:20:30.100 | But to use the example I shared from my personal life, I told this lady that I'm supporting.

01:20:33.940 | I told her, I said, "Listen, I'm not going to keep giving you money for a long time.

01:20:38.740 | And so why am I doing all this stuff for you?

01:20:40.420 | Why am I moving you to another country?

01:20:42.140 | Why am I buying you a new wardrobe?

01:20:44.120 | Why am I helping you with settlement expenses and whatnot?

01:20:46.740 | I'm doing it so that I can stop giving you money.

01:20:49.820 | Because you're not going to be a charity case.

01:20:52.620 | You're not disabled.

01:20:54.460 | You're perfectly fine.

01:20:56.260 | I'm not going to keep giving you money for years and years and years.

01:20:59.100 | And this is going to be Joshua's pet project.

01:21:01.100 | I don't believe in welfare.

01:21:02.900 | And so I'm going to give money where there's going to be a return.

01:21:06.060 | And in her case, I'm going to require her to return the money.

01:21:10.100 | Now I might have her pay it back to me.

01:21:12.420 | I might have her pay it back to someone else.

01:21:14.140 | But I'm going to require a return on my money.

01:21:16.300 | And I think that even with giving, this is the proper attitude.

01:21:20.060 | That when I give to something, I want to give in an area where I know it's going to grow.

01:21:25.820 | I was involved a number of years ago with a project in Africa.

01:21:29.380 | And we gave and we bought a farm for a guy.

01:21:32.740 | And this is a guy who was in a situation where he had four or five children, I think.

01:21:40.220 | And then he adopted 12 orphans.

01:21:43.900 | And he had no ability whatsoever to pay.

01:21:47.220 | He had nothing to do.

01:21:48.220 | And so we bought a farm and we gave it to him for a farm.

01:21:51.700 | Gave him a farm.

01:21:52.700 | It was a big financial gift.

01:21:54.800 | But in that situation, that farm has become a tremendous center of outreach and ministry.

01:22:00.300 | That farm has supported these at least 16, I think 20 children now, something like that,

01:22:06.340 | helped them to establish themselves.

01:22:08.240 | That farm has provided.

01:22:09.700 | We've invested into the farm.

01:22:11.500 | That farm, for example, we dug a well.

01:22:13.700 | We gave the money to dig a well on the farm.

01:22:15.300 | Well, that well has kept the whole village supplied with water.

01:22:20.420 | And the nice thing about the way that it was done is that the return on that gift has been

01:22:25.980 | huge.

01:22:27.540 | Not in terms of money back, but in terms of a return on investment, it's been well worth

01:22:32.340 | it.

01:22:33.340 | The man who was the farmer is involved with a dozen or two churches.

01:22:37.660 | I shouldn't give too many details away, but a dozen or two churches that are basically

01:22:42.100 | all flowed from the original gift of the farm.

01:22:45.820 | And so I think that even in giving, we should be looking for a return, but that part of

01:22:50.260 | that return is financial, but part of it and a significant part of it is in souls.

01:22:56.300 | How do you lay up treasures in heaven?

01:22:58.080 | You invest in souls.

01:22:59.400 | You invest in people.

01:23:00.400 | And as you invest in people, people are what's in heaven.

01:23:03.820 | So when you're investing in people, then you're investing in heaven.

01:23:08.020 | So that's how I see it.

01:23:09.740 | I'm going to quit because that was an absurd 45 minute monologue.

01:23:13.740 | Tell me your thoughts, Dan, and how you've worked through these issues.

01:23:18.700 | Yeah, I see it as people and organizations doing good things to give money to, whether

01:23:27.100 | that's working with people just getting out of prison or women in crisis pregnancy or

01:23:35.620 | people working to translate the Bible into languages.

01:23:38.780 | And there's all sorts of opportunities to support causes that you think are worthy of

01:23:46.300 | it.

01:23:48.860 | And so I try to do that, support people and groups and organizations that I believe are

01:23:56.660 | genuinely needing help.

01:24:03.660 | And I'm always cognizant of saving for myself in the future.

01:24:09.380 | Someday I am going to have health problems and it is what we're called to take care of

01:24:15.540 | our family first.

01:24:16.540 | You know, I need to take care of my parents.

01:24:19.580 | So there are things I need to save for in the future.

01:24:26.420 | I think it's good that it be a never ending question because if it's the difference between

01:24:42.580 | Christianity or at least the flavor of Christianity that I identify with, one of the big differences

01:24:49.580 | between Christianity and many other major religions is the accountability, the sense

01:24:55.700 | of accountability.

01:24:56.700 | You know, I spent a lot of time thinking about and studying Islam.

01:25:01.980 | Islam is a profoundly simple religion compared to Christianity.

01:25:06.340 | The requirements for a Muslim are so simple, they're so much easier to explain, it's so

01:25:11.700 | much easier to discuss than it is the requirements of Christianity.

01:25:18.660 | And yet this concept of a personal God, which I believe is the cornerstone of Christianity,

01:25:25.700 | is a concept that is absent in Islam.

01:25:29.820 | And so to me this is one of the great things, the great tensions that should never go away,

01:25:34.540 | right?

01:25:35.540 | I'm responsible to God for how I use my time.

01:25:38.020 | And so I need to be able to be in faith, you know, to be able to be doing what I'm doing

01:25:43.020 | in faith.

01:25:44.020 | And sometimes that means sitting at a, you know, a couple weeks ago, sitting at a five

01:25:46.860 | star resort with my children, teaching my children to swim.

01:25:49.340 | And I was there in total faith.

01:25:51.340 | I wasn't thinking, "I should have taken this money and given it to the poor.

01:25:54.180 | After all, you know, I would just be so much better if I'd taken this money to give it

01:25:57.060 | to the poor."

01:25:58.060 | I was sitting at a five star resort, a beautiful pool, teaching my little children how to swim.

01:26:01.700 | And we did nothing but enjoy ourselves in what we were doing.

01:26:06.860 | We ate nice food, we swam in the pool, we had a great time.

01:26:10.300 | And I was in faith because I believe that what I'm doing in that situation is I'm fulfilling

01:26:16.500 | number one, God's taking care of me, right?

01:26:18.300 | I need a vacation.

01:26:19.300 | A master doesn't make a steward work like a dog all the time.

01:26:23.500 | But more importantly, I'm sowing into my children's lives.

01:26:26.540 | Now in that situation, I was very fortunate that I was able to invite a friend of ours,

01:26:31.460 | a family who is a missionary family, who lives on overseas support, some local support and

01:26:38.060 | overseas support.

01:26:39.900 | And I was able to invite them along.

01:26:41.800 | And it was a nice thing where I was able to combine two things.

01:26:44.860 | I was able to take them to a place where they would never be able to afford.

01:26:48.540 | I was able to take them along, pay for all of the expenses, have a really fun time with

01:26:53.660 | a missionary family that has children that are similar age as my children.

01:26:56.580 | We had a great time.

01:26:57.580 | It wasn't, we didn't sit around and open our Bibles up and have four hour Bible studies.

01:27:01.500 | We just hung out by the pool and we had a great time.

01:27:04.460 | But I was spending money and doing it in faith.

01:27:08.140 | On the other hand, there are little expenditures where often I sense the Lord check me.

01:27:12.300 | I was like, "No, you don't need to waste money on that.

01:27:14.340 | Don't spend money on that."

01:27:15.680 | And I feel like that's how it should be.

01:27:17.420 | I'm not trying to raise myself up as an example, just trying to share from personal experience.

01:27:20.700 | I'm responsible with my time and I'm responsible with the money.

01:27:23.540 | But I'm responsible to ask the Lord, how does he want the time and the money to be spent?

01:27:28.000 | And that in that process, we're cultivating the relationship with God that is genuinely

01:27:33.380 | powerful or it's not a matter of a divine mandate that thou shalt give 10% of thy funds

01:27:38.120 | to thy local temple.

01:27:39.820 | No, it's a matter of, "Lord, what do you want me to do today in it?"

01:27:44.700 | And what I would say to buttress my position is I would say, what did Jesus say?

01:27:50.860 | Jesus said that when he was preaching at the end of his life, he says that the advocate,

01:27:57.340 | the helper, the comforter, the Holy Spirit, whom the Father will send in my name, he will

01:28:03.300 | teach you all things and will remind you of everything I have said to you.

01:28:08.100 | He will teach you all things and will remind you of everything I have said to you.

01:28:14.100 | And so my final answer after that somewhat confused monologue is simply that God, the

01:28:19.420 | Holy Spirit has promised to teach you, Christ has promised that the Holy Spirit will teach

01:28:25.140 | you all things.

01:28:26.140 | And so if you want to learn how to manage money and how you should manage your money,

01:28:30.140 | ask God.

01:28:31.140 | Ask him, how do you want me to manage my money?

01:28:33.540 | And I'm content personally with there being a wide range of answers to that question.

01:28:38.860 | And I rejoice in hearing people's testimonies.

01:28:42.460 | It's fun to share your own testimonies of God providing for you.

01:28:45.460 | And I can believe wholeheartedly that it's absolutely within God's will for one person

01:28:51.980 | to be a missionary, living on faith, living on support and contributions from another

01:28:57.380 | person, never knowing where their money is going to come from tomorrow.

01:29:00.300 | And I have no – I don't believe that person is unspiritual if they have no retirement

01:29:04.660 | savings, if they have no savings for a car.

01:29:08.740 | I could sit here and talk for another hour about firsthand stories that I have heard

01:29:14.020 | of God's miraculous provision for people that I know.

01:29:18.180 | Right when they needed it, God provided for them.

01:29:21.180 | I also have no issue whatsoever of recognizing that just because one person is a missionary

01:29:29.000 | in a little mud hut in Africa doesn't mean that another person isn't a missionary in

01:29:33.220 | a skyscraper in New York or in an expensive swanky college town or in anything.

01:29:41.460 | I often feel like one of the things that I do wish is I wish that more people would approach

01:29:46.820 | their life and their jobs as missionaries.

01:29:49.180 | And I'll just close with this just personal thing.

01:29:51.980 | Feel free to ignore this.

01:29:52.980 | I believe that we as people – notice I didn't say Christians – but I believe that we as

01:30:00.360 | people have an obligation to help our neighbors.

01:30:03.960 | God's commandments are not exclusively for Christians, which is why I generally don't

01:30:06.440 | talk to Christians.

01:30:07.440 | I generally talk to people because God's commands are for all of us and all of us are

01:30:10.840 | required to love our neighbor, whether you're a Christian or not.

01:30:13.440 | We all are commanded by God to love our neighbor and to provide for our neighbor.

01:30:17.280 | I appreciate and I see good work coming from all kinds of relief companies.

01:30:22.400 | I'm happy about that Charity Water, who to my knowledge has nothing to do with any

01:30:26.560 | kind of religious thing, is digging wells for people all around the world.

01:30:29.480 | I think that's great.

01:30:30.560 | I'm happy that Samaritan's Purse is doing relief work all around the world in the name

01:30:36.160 | of Jesus.

01:30:37.160 | I think that's fine.

01:30:38.680 | But I'll tell you what I do wish we had more of, is I wish we had more people who didn't

01:30:44.040 | do relief work but just preached.

01:30:46.120 | I've spent a significant amount of time in some expat missionary communities and I've

01:30:49.960 | observed that it seems to me, feels like about 80% of modern missions is related to relief

01:30:57.480 | projects, right?

01:30:59.200 | Feeding the hungry and helping the poor and whatnot.

01:31:02.080 | And it feels, it's very unusual for me to come across a missionary who's focused on

01:31:05.800 | preaching and that's what they're doing is they're preaching.

01:31:08.120 | They're not setting up a food camp or something, they're preaching.

01:31:10.720 | I understand why that is.

01:31:11.960 | It's easier, it seems easier to most people to get donations and support when they can

01:31:16.760 | say, "Well, look at this project that I'm doing and support this project."

01:31:20.480 | But just a personal plea to my missionary friends that listen and to those of us who

01:31:25.120 | support missionaries financially so that they can be full-time engaged in preaching, is

01:31:29.920 | that I would love to see more of our work and our effort focus on preaching and teaching

01:31:36.800 | and a little bit less on relief.

01:31:41.680 | I am wholeheartedly a supporter of relief work.

01:31:44.800 | I've publicly supported projects here.

01:31:47.480 | I've used donations, which I need to give an updated report on some of the work that

01:31:51.120 | we've done, and I've not used any donations from the audience to support preaching and

01:31:54.680 | teaching.

01:31:55.680 | But I think that we could do a lot more in the world of preaching and teaching and that

01:31:59.800 | I believe that if we ask God and say, "God, where do you want your money going?"

01:32:03.600 | I've never experienced him not to answer that.

01:32:05.680 | So that's my answer, Dan.

01:32:06.680 | Thank you for taking the time to speak with us today.

01:32:07.680 | I'm sure that you've heard these topics, which I appreciate, to be examples from the

01:32:08.680 | Christmas march.

01:32:09.680 | Yeah, my pleasure.

01:32:10.680 | I'm glad to be here.

01:32:11.680 | I'm glad you asked the question because I've had on my list of shows, I've had shows to

01:32:18.840 | talk about, or I've had topics to say, "Oh, let me talk about tithing," or "Let me talk

01:32:24.760 | about giving," and whatnot.

01:32:26.240 | In fact, I actually do want to do a lot on giving.

01:32:28.400 | I have a lot of this.

01:32:31.520 | I do have a lot of it that I can do, some from a Christian context, but a lot of it

01:32:35.960 | just from a "here's how you think about it" context.

01:32:38.700 | But what's difficult is, as you see with my 45-minute monologue, there's so much involved.

01:32:44.500 | And what you find is you think, "Oh, talking about tithing should be simple."

01:32:47.900 | Well, some people can do it simply, but it's actually a really, really difficult theological

01:32:52.920 | issue to talk through.

01:32:54.020 | Most people, thankfully, don't understand it, but there's some big issues associated

01:32:58.580 | with it.

01:32:59.580 | And so, you know, with my predilection towards thinking about things comprehensively, it

01:33:05.740 | makes it difficult for me to do.

01:33:06.740 | So I'm glad you asked the question, and I hope that our comments and my comments were

01:33:11.620 | useful to the audience as we wrap up today's show.

01:33:16.220 | Thank you all so much for listening to today's Q&A show.

01:33:18.900 | Never a dull moment here on a Friday Q&A show.

01:33:20.580 | Hope you enjoyed it.

01:33:21.580 | Thank you for listening, and I'll be back with you very soon.

01:33:23.660 | Remember, if you would like to join me for next week's show, go to patreon.com/radicalpersonalfinance

01:33:30.740 | and you'll be able to sign up to support the show there and trigger me with any question

01:33:36.300 | you want.

01:33:37.300 | Until soon.

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2020-09-18_Friday_QA