2021-02-26_Friday

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00:00:14.320 | Today on Radical Personal Finance live Q&A.

00:00:17.840 | (upbeat music)

00:00:21.420 | (upbeat music)

00:00:24.000 | Welcome to Radical Personal Finance,

00:00:35.180 | a show dedicated to providing you with the knowledge,

00:00:36.700 | skills, insight, and encouragement you need

00:00:38.740 | to live a rich and meaningful life now

00:00:40.740 | while building a plan for financial freedom

00:00:42.040 | in 10 years or less.

00:00:43.140 | My name is Joshua Sheets.

00:00:44.060 | Welcome to Radical Personal Finance, a live Q&A show.

00:00:46.940 | These are the shows that work

00:00:47.820 | like live call-in talk radio, you call in, we chat.

00:00:51.420 | And of course I release it to the podcast feed

00:00:53.980 | in usually about 30 minutes or so.

00:00:56.100 | So it's not quite live for you, but mostly.

00:00:59.180 | (upbeat music)

00:01:01.760 | These are my personal favorite shows of the week

00:01:07.700 | because I don't have to choose the topics.

00:01:09.380 | I don't have to think in advance.

00:01:10.540 | I just show up to a phone line and you get to call in

00:01:12.660 | and talk about anything you wanna talk about.

00:01:14.740 | Ask any question you want to,

00:01:16.080 | bring up any topic you wanna talk to,

00:01:17.620 | and we can chat about anything that's on your mind.

00:01:20.580 | I do my best.

00:01:21.420 | If I can't help you, I try to point you

00:01:22.420 | in the right direction,

00:01:23.240 | and you can judge for yourself the results.

00:01:25.620 | If you would like to join access to these Friday Q&A shows,

00:01:27.980 | you can do so by joining us on Patreon.

00:01:30.540 | Go to Patreon and search for Radical Personal Finance.

00:01:32.660 | Sign up to support the show there on Patreon,

00:01:34.980 | and I will be happy to talk to you on next week's Q&A.

00:01:39.220 | Just helps me to meter the access a little bit.

00:01:41.540 | If I open it up to the public

00:01:44.120 | without screening it with Patreon,

00:01:45.900 | then I would have probably 30, 40, 50 callers every show.

00:01:49.700 | That's usually how it's been

00:01:50.940 | whenever I've done something public.

00:01:53.040 | So by metering it behind Patreon,

00:01:54.820 | it allows me to have a manageable number of callers.

00:01:56.500 | At the moment, we've got five sitting in line.

00:01:57.820 | We'll see who else joins here in the next few minutes.

00:02:00.580 | To begin with today, let's see.

00:02:02.680 | We will go to Andrew in Texas.

00:02:07.020 | Andrew, welcome to the show.

00:02:07.860 | How can I serve you today, sir?

00:02:09.300 | Andrew in Texas.

00:02:13.620 | - Thank you.

00:02:14.620 | Thank you for taking my call.

00:02:18.380 | A question about home equity line of credit.

00:02:22.660 | And I got some of the answer

00:02:24.140 | in your recent podcast on ratios,

00:02:27.540 | and really found that valuable.

00:02:29.860 | But yeah, I'm finding that with real estate values

00:02:34.300 | that have kind of climbed over the last year or two a lot,

00:02:37.740 | I've got suddenly a lot of home equity,

00:02:40.860 | and I've been getting bolder through your podcast

00:02:45.540 | and different things about the idea of taking risk

00:02:48.180 | with that money, putting that capital

00:02:49.780 | or putting that equity to use in a better way.

00:02:52.300 | And so I got an email from my credit union,

00:02:55.260 | says, "Hey, look how big it is

00:02:57.380 | "to take out a home equity line of credit."

00:03:00.260 | And so I've been approved for $240,000 in that.

00:03:05.260 | And so I'm looking to take a start, not with all of it,

00:03:10.860 | but maybe 100,000 and put that to work,

00:03:14.260 | probably with the guys who are managing

00:03:18.540 | my retirement accounts, basically in the stock market,

00:03:22.900 | they've been having very productive results.

00:03:26.940 | And so just looking for any kind of reassurance

00:03:30.340 | or further advice on any mistakes

00:03:33.300 | that might come up on that.

00:03:34.860 | The reason I like that kind of thing is,

00:03:38.980 | I don't really have in my income budget,

00:03:43.980 | the money to make new payments from that loan.

00:03:49.860 | But if I take out 110,000 and put 10,000 in savings

00:03:54.860 | and just make payments from that for a while,

00:03:58.020 | I give some time for the 100,000 to get up and going.

00:04:03.020 | And I believe the income and the growth from that

00:04:07.420 | will eventually pay for those payments.

00:04:10.700 | - How much do you earn per year from your job?

00:04:12.540 | - You might have 120.

00:04:16.220 | - And currently, without having taken out

00:04:19.300 | any home equity loan, what is the current

00:04:21.580 | mortgage balance on the house?

00:04:23.260 | - 295.

00:04:27.500 | - 295, and if you sold the house,

00:04:29.420 | about how much would it sell for?

00:04:31.060 | - 650,000.

00:04:35.460 | - And other than this, do you have any other debt?

00:04:38.420 | - No.

00:04:42.660 | - Okay, and how old are you?

00:04:44.660 | - 55.

00:04:47.580 | - 55, so right now, you're thinking,

00:04:51.100 | if I go ahead and take out a home equity line of credit

00:04:53.180 | on the house, and let's say I take $100,000 out

00:04:56.860 | of the equity in my house, and I put that money

00:05:00.060 | invested in the stock market with my

00:05:02.540 | investment management guys, then I could probably

00:05:06.020 | make a higher return in the stock market

00:05:08.220 | than I can on my home equity line of credit.

00:05:10.780 | Is that what you're thinking?

00:05:12.220 | - Absolutely, yeah.

00:05:14.180 | - Okay.

00:05:15.020 | Well, I'm not--

00:05:17.260 | - And I'm also open to other, I'm also open to

00:05:21.340 | a business, or I like having that capital available

00:05:27.060 | for any other kind of investment opportunity

00:05:28.860 | that comes along.

00:05:29.700 | - Yeah, how much money do you have currently in savings?

00:05:32.420 | Is this not in retirement accounts?

00:05:34.180 | - No, 15,000.

00:05:39.220 | - And how much money do you have in retirement accounts?

00:05:42.020 | - 180.

00:05:44.580 | - Okay, so why do you own such an expensive house,

00:05:49.580 | unless you have other investment assets

00:05:53.460 | that you haven't told me about,

00:05:54.300 | but only have about $180,000 in retirement accounts?

00:05:59.380 | - Well, it's grown in value.

00:06:02.100 | I was able to get into it fairly cheaply.

00:06:05.400 | - How much did you pay for it?

00:06:07.860 | - 12 years ago, 392.

00:06:11.180 | - Great, nice.

00:06:13.100 | And do you have, are you married?

00:06:17.100 | Do you have children?

00:06:18.140 | - Yes, yeah, I have college-age children, and I'm married.

00:06:24.100 | - Could you, have you and your wife talked about

00:06:28.060 | changing houses at this point in time?

00:06:29.820 | If you have college-age children,

00:06:30.860 | have you talked about changing, selling this house

00:06:32.500 | and going somewhere else?

00:06:33.740 | - A little bit, a little bit,

00:06:36.380 | but we're pretty connected to family and community.

00:06:40.800 | So, we could move to a smaller house

00:06:45.620 | in the neighborhood still, but we love our house.

00:06:50.620 | And like I say, it's grown in value considerably

00:06:55.380 | over the last five years.

00:06:58.180 | - Okay, well, obviously, I don't think

00:07:00.500 | that what you're talking about here,

00:07:02.100 | you're thinking about some conservative moves,

00:07:05.420 | you're not trying to get every dollar out of it,

00:07:08.180 | you're trying to figure out what to do here.

00:07:10.500 | But let's talk through some of the options.

00:07:12.660 | The first thing is, to me, it seems like you've got

00:07:15.540 | an expensive house compared to your income.

00:07:18.840 | And just to clarify, your income is 120,

00:07:22.540 | is your household income higher than that?

00:07:25.360 | - A little bit.

00:07:29.000 | My wife works some, she has her own business,

00:07:32.600 | but that income's very uneven,

00:07:34.880 | and not a lot when it is on.

00:07:39.240 | - So, it just feels like kind of an expensive house

00:07:42.160 | for you to have with $120,000 income

00:07:45.320 | and with a little under $200,000 in retirement assets.

00:07:49.640 | I think that ratio is a little bit out of whack.

00:07:52.560 | It might be, and it might have been, the best solution.

00:07:56.120 | There are some times, especially with children,

00:07:57.680 | with young children, where we make a decision

00:08:00.000 | that's a lifestyle decision,

00:08:01.360 | even if it's not the optimal financial decision.

00:08:04.720 | I think it makes a lot of sense for parents

00:08:07.200 | to spend and have a nicer house, a bigger house,

00:08:09.620 | when their children are younger,

00:08:11.120 | because they'll use the house.

00:08:12.920 | And so, in a situation like mine, I work from home,

00:08:16.160 | my wife works from home, where children are at home,

00:08:18.480 | we homeschool, and so I would be happy to give advice

00:08:21.280 | to someone like me and say, you should have a nicer house

00:08:24.000 | than maybe somebody who doesn't spend much time

00:08:26.400 | in their house.

00:08:27.560 | But, at the end of the day, the house is still

00:08:31.040 | not primarily a moneymaker.

00:08:34.760 | It's primarily a consumption item.

00:08:37.080 | And so, you want your ratios to be better

00:08:40.120 | to where the amount of money that you spend on house

00:08:43.000 | is not so much compared to the amount of money

00:08:46.780 | that's in investments.

00:08:47.760 | Now, that's what you're trying to do

00:08:49.680 | by considering taking out a home equity line of credit.

00:08:52.120 | And I'm not 100% opposed to it,

00:08:54.200 | but I wanna point out that you could do it

00:08:55.760 | in a couple ways.

00:08:57.040 | So, you should first consider the actual lifestyle

00:09:01.000 | of what you need where you live there in Texas right now.

00:09:04.480 | In most parts of Texas, a $650,000 house

00:09:07.800 | is a very nice house.

00:09:09.280 | And that may have been a perfect situation

00:09:11.160 | when you had teenagers in the home,

00:09:12.900 | when you could really use the house as a social center.

00:09:15.880 | For me, this is important.

00:09:17.120 | I want my house to be a house

00:09:18.840 | that with my children's friends is used.

00:09:21.280 | I want our house to be a social hub.

00:09:22.780 | I want it to have the game room and the pool

00:09:25.200 | and the things that make it an attractive place

00:09:27.160 | for my children's friends to hang out

00:09:29.680 | so that I can be involved in that part of their life.

00:09:32.300 | I don't want them going away to the fancy house

00:09:35.000 | three miles over all the time instead of us,

00:09:38.560 | because they're ashamed that we live in some shack

00:09:41.440 | where they don't have room to entertain their friends.

00:09:43.880 | But if your children are college age,

00:09:45.560 | that might be changing.

00:09:46.840 | Not saying do anything drastic, but reconsider it.

00:09:50.000 | Because a couple things line up here

00:09:52.000 | to make my instinct go

00:09:53.640 | that the first idea might be to sell the house.

00:09:55.340 | Number one, you got a lot of gain.

00:09:56.940 | Let's say you bought it for 400 and it's worth 650.

00:10:00.560 | If you could sell it for 650,

00:10:02.320 | I'm ignoring here sales expenses,

00:10:04.260 | you could clear $250,000 tax-free,

00:10:07.200 | assuming that you qualify for the exclusion of capital gain

00:10:10.940 | for a personal residence.

00:10:12.160 | That would be great.

00:10:13.560 | Because if you could sell it and get some tax-free gain,

00:10:17.320 | now you could go ahead and invest that money

00:10:19.560 | into the market or any other investment

00:10:25.160 | that you wanted to invest it into,

00:10:27.160 | and you're not paying any kind of interest payment on it.

00:10:29.600 | You would clear it tax-free,

00:10:30.800 | you can go and invest the money,

00:10:32.320 | go ahead and put that $250,000

00:10:34.320 | into other investment assets.

00:10:35.880 | Could be fine if it's in stocks,

00:10:37.440 | could be fine if it's in your own business,

00:10:38.880 | could be fine if it's in a rental house,

00:10:40.960 | something like that.

00:10:42.200 | You could also possibly just go ahead

00:10:44.320 | and streamline your house.

00:10:46.660 | You probably a little bit young

00:10:48.560 | to really be looking for that,

00:10:50.640 | but I know that when watching my parents,

00:10:52.880 | when my parents sold their big house

00:10:54.640 | at a big five bedroom house,

00:10:56.160 | I think six bedrooms, something like that,

00:10:57.280 | big old house that they built for us to live in.

00:11:00.920 | But then once their parents died

00:11:02.880 | and once my siblings and I generally all moved out,

00:11:05.760 | then moving into a condo for them was a wonderful solution.

00:11:10.200 | It really brought a better lifestyle to them.

00:11:12.600 | And so talk about those lifestyle considerations

00:11:15.040 | with your wife and see,

00:11:15.980 | because it can work out financially

00:11:17.880 | in your best interest as well.

00:11:19.600 | You could do this same thing

00:11:21.120 | and do it more efficiently if you did that.

00:11:23.280 | So if you sold the house,

00:11:24.740 | and let's say you bought something for 300,000,

00:11:28.120 | put down a minimal down payment, 10 or 20% down payment,

00:11:31.560 | just fine instead of the traditional mortgage,

00:11:34.440 | then you could go ahead and invest the money

00:11:39.220 | and have a safer position all the way through.

00:11:41.840 | So my instinct is that if you and your wife

00:11:44.280 | were willing to move,

00:11:45.120 | that that would probably be a better financial move.

00:11:47.560 | I'm not--

00:11:50.200 | - I think-- - Go ahead.

00:11:51.040 | - I think our expenses related to the house

00:11:54.920 | are really more like a $400,000 house.

00:11:59.260 | And so mortgage and that kind of stuff,

00:12:04.880 | except for account of property taxes,

00:12:07.200 | but that's a fairly minor piece of it.

00:12:11.260 | So I get it,

00:12:16.260 | doing it without debt,

00:12:18.460 | and I'm not crazy about the debt,

00:12:20.660 | but you've opened up a new world for me

00:12:23.540 | to consider that type of thing

00:12:25.420 | as far as kind of a equity stripping kind of thing

00:12:28.020 | to have investment capital.

00:12:30.900 | And so I'd like to hear kind of more on the investment side.

00:12:34.200 | - Okay.

00:12:35.040 | So let me pivot there,

00:12:36.780 | but before I do,

00:12:37.620 | I wanna talk about equity stripping for a moment.

00:12:39.260 | The key thing here that stands out to me

00:12:40.980 | is that you live in the state of Texas.

00:12:43.100 | So I'm a lot less enthusiastic about equity stripping

00:12:46.420 | for somebody who lives in Texas or who lives in Florida,

00:12:49.620 | where you have good homestead exemption laws

00:12:52.520 | as compared to equity stripping

00:12:54.120 | for somebody who lives in Georgia.

00:12:56.340 | I don't think, and again,

00:12:58.460 | there's always value in having a paid off house,

00:13:01.340 | especially at a younger phase of life,

00:13:03.340 | but I don't get real excited about a guy in Georgia

00:13:05.780 | having a $650,000 paid off house.

00:13:08.620 | But in Texas, you have to bring into that,

00:13:11.080 | the fact that, hey, this equity that's in my house

00:13:13.380 | is protected by favorable creditor laws.

00:13:16.580 | And so for a Texas resident or a Florida resident

00:13:19.480 | or another state that has favorable homestead exemption laws,

00:13:23.340 | I'm more excited now about having the home equity,

00:13:26.180 | which doesn't make it an immediate slam dunk for me to say,

00:13:28.900 | strip all the equity out and do something else with it.

00:13:32.060 | But if you did wanna do it,

00:13:33.440 | I would say what you need is you need a very compelling story

00:13:37.340 | of how you're going to invest the money more effectively.

00:13:40.540 | I'm not, depending on the interest rate of,

00:13:44.140 | depending on the interest rate of the house

00:13:47.340 | and depending on what you're invested in,

00:13:50.500 | I think in theory, it can work for people

00:13:54.140 | to invest in stocks versus paying,

00:13:56.660 | putting down a mortgage.

00:13:57.500 | So the argument goes like this.

00:14:00.400 | If a financial advisor is giving advice to somebody

00:14:03.080 | who says, I have an extra $2,000 per month,

00:14:06.000 | should I put the money into the stock market

00:14:07.800 | or should I pay extra on a mortgage?

00:14:09.980 | The numerically correct answer,

00:14:12.420 | given our past experience over the last 80 years or whatever

00:14:16.420 | is going to be that you'll come out ahead

00:14:18.880 | by putting the money into the stock market

00:14:20.820 | versus paying off the mortgage early.

00:14:22.940 | So that's generally the best answer.

00:14:24.980 | Mathematically, whatever returns a higher investment

00:14:28.220 | is mathematically superior.

00:14:30.100 | So if you're borrowing money on a mortgage at 3%,

00:14:32.420 | and you're investing it at say,

00:14:34.500 | 7% net of taxes and fees and expenses on an investment,

00:14:38.040 | you're going to come out ahead by investing the money.

00:14:40.940 | And that applies whether you have extra money

00:14:43.620 | and you are trying to,

00:14:47.060 | should I pay extra on the mortgage

00:14:50.420 | or should I put money in the stock market?

00:14:51.860 | It applies there.

00:14:53.040 | And mathematically, it's no different

00:14:56.280 | if you're trying to say about,

00:14:58.220 | should I borrow the money out of my house

00:15:01.720 | and go ahead and put the money into the stock market?

00:15:05.020 | Mathematically, it's the same.

00:15:06.700 | Now psychologically, it can be a little bit different.

00:15:09.980 | You always hear, Dave Ramsey, for example,

00:15:12.100 | if somebody calls into his show and says,

00:15:14.020 | Dave, should I borrow money?

00:15:15.940 | Should I put my extra money in the stock market

00:15:17.700 | and put money in the mortgage?

00:15:18.620 | He'll always flip it,

00:15:19.660 | which I think is a valuable question.

00:15:20.940 | He'll say, if you had a paid off house,

00:15:22.940 | would you borrow money on it to put it in the market?

00:15:25.420 | And often, the answer to his question is often no,

00:15:29.420 | because we sense some kind of psychological certainty

00:15:32.440 | of having a paid off house.

00:15:33.980 | And I think that's valid and we should consider that.

00:15:39.080 | I personally would be slow to do what you're proposing.

00:15:42.840 | I would be slow to put this into a mainstream investment,

00:15:45.840 | stock investment, especially one,

00:15:52.200 | I would be slow to do that.

00:15:54.440 | I would be quick to do it into real estate

00:15:57.020 | where I had a higher potential rate of return

00:15:58.840 | for my involvement,

00:15:59.880 | and I would be quick to do it into a business,

00:16:01.700 | but I would be slow to do it into stocks.

00:16:03.700 | But I think that--

00:16:06.080 | - I can tell you about the stocks.

00:16:07.940 | A normal kind of index fund or something,

00:16:13.360 | I would absolutely agree with you.

00:16:16.400 | But I've had my money with some guys

00:16:20.400 | for the last nine months or so,

00:16:22.580 | and I've tracked their results and stuff

00:16:24.760 | for a lot longer than that,

00:16:26.160 | who are much more actively managing things than that,

00:16:31.160 | and have been getting 30, 40% annual returns

00:16:36.440 | for the last couple of years.

00:16:45.000 | - Last couple of years or last nine months?

00:16:47.160 | - Well, they've certainly had it in the last nine months,

00:16:51.760 | and they beat the market before that,

00:16:56.760 | and avoided most of the big down bear markets.

00:17:02.040 | So I feel like that opportunity

00:17:07.480 | is largely what's motivating this,

00:17:11.640 | because otherwise I wouldn't know exactly

00:17:14.680 | where to put the money right now.

00:17:16.200 | - Are they with a local financial advisory firm

00:17:18.600 | there in your area?

00:17:19.560 | - Yes.

00:17:21.640 | - What are their minimums for you to bring money to them?

00:17:24.340 | - 50,000.

00:17:27.000 | - Okay.

00:17:28.440 | I'm very skeptical.

00:17:30.280 | And what I'll tell you is that I can't answer,

00:17:32.440 | this is a question I think where you need to

00:17:35.000 | sit down with someone, either privately

00:17:37.360 | and go through more details,

00:17:39.040 | and kind of really look hard at this.

00:17:41.460 | And I think that this would be good

00:17:43.000 | probably to engage somebody in your area locally,

00:17:46.240 | who can help you with your scrutiny

00:17:48.900 | and with your due diligence.

00:17:50.160 | So let me just kind of see what I say,

00:17:52.360 | and I'll point out some of the red flags,

00:17:54.040 | and then you can consider what's best to do.

00:17:56.440 | So to reiterate, I'm not opposed to taking money

00:18:00.680 | from a home equity and investing it into something

00:18:03.400 | that has a higher chance of return.

00:18:08.400 | I don't love the idea of adding more debt on like this,

00:18:12.120 | and I think that you own too much house.

00:18:14.080 | If you want to build wealth,

00:18:16.360 | I don't think that you should start

00:18:18.900 | by putting on more debt onto the house.

00:18:21.280 | I think you should start by saying,

00:18:23.320 | could we buy another house in the neighborhood,

00:18:26.240 | you know, one that's $400,000 instead of 650,

00:18:29.920 | and go ahead and take our tax-free gain.

00:18:32.480 | Now, that's obviously a personal decision

00:18:34.920 | that you and your wife would need to think about,

00:18:36.580 | whether that fits your lifestyle.

00:18:37.840 | And I'm not saying you have to, right?

00:18:39.120 | You're not broke, you don't have to do it.

00:18:41.000 | But I think that that would be my preferred solution

00:18:43.600 | to go ahead, harvest some of that tax-free gain,

00:18:45.780 | downsize the house, buy a smaller house,

00:18:48.440 | perhaps one that you can force some more appreciation into,

00:18:51.360 | and live, kind of go ahead and downsize to a simpler one,

00:18:54.880 | and free up the cash.

00:18:56.520 | I think you have too much house

00:18:58.080 | if you really want to build wealth

00:18:59.280 | compared to your income and your assets

00:19:00.840 | at this stage of life.

00:19:02.320 | Now, if you proceed forward with this plan,

00:19:05.520 | I don't think it's completely wrong.

00:19:08.000 | I'm skeptical of these guys.

00:19:10.600 | Nine months is not impressive to me.

00:19:13.000 | Almost every year,

00:19:14.240 | lots of people beat the market every single year.

00:19:17.400 | A local firm is not particularly impressive to me.

00:19:20.840 | I believe personally,

00:19:22.120 | I am not a strong, efficient market hypothesis aficionado.

00:19:25.680 | I believe that there are people

00:19:27.000 | who beat the market consistently over time.

00:19:29.700 | The problem is that most,

00:19:31.280 | I've never found someone who's gonna be open to somebody

00:19:34.020 | with a $50,000 investment to do that.

00:19:37.400 | Is it possible that they're out there?

00:19:38.920 | Is it a new firm where they have

00:19:40.700 | a really smart financial advisor

00:19:42.480 | and they are able to do it?

00:19:45.560 | It's possible, right?

00:19:46.560 | I don't like it when people make blanket statements.

00:19:49.400 | It's possible that these are some smart guys

00:19:51.880 | who've got a good strategy

00:19:53.000 | and they're just getting started, et cetera,

00:19:54.840 | and you may be able to get in today with $50,000,

00:19:57.600 | whereas their minimums,

00:19:59.160 | three years from now are gonna be a million bucks.

00:20:01.440 | I'm deeply skeptical though,

00:20:03.180 | because almost anybody can beat a market over nine months.

00:20:05.960 | The stock market has been up for the last nine months.

00:20:08.740 | How much they beat it by, I don't know, right?

00:20:10.920 | Every strategy works cyclically.

00:20:12.920 | So I've spent too much of my career

00:20:14.480 | sitting down and showing people charts

00:20:16.640 | about why a diversified portfolio is the solution

00:20:19.400 | because it, a diversified portfolio is a solution

00:20:23.960 | because look, this wins this year,

00:20:25.400 | this market, this segment wins this year, et cetera.

00:20:28.280 | And so I'm not impressed with nine months,

00:20:30.860 | no matter what the returns are,

00:20:32.440 | and I'm not impressed with guys

00:20:35.560 | that have a $50,000 minimum,

00:20:37.040 | and yet you're convinced

00:20:38.000 | that they're gonna beat the market.

00:20:39.480 | So what I'd say is go slow,

00:20:41.720 | and I think you need to engage somebody local

00:20:43.640 | who can go through all the numbers

00:20:45.080 | and take some more time to think about

00:20:47.080 | kind of the full situation

00:20:48.560 | before you make this particular decision.

00:20:50.300 | Fair enough?

00:20:51.140 | - Yep. - All right, cool.

00:20:53.800 | Keep me in the loop though as things develop.

00:20:55.520 | I'd love to hear more from you.

00:20:58.200 | All right, we'll move on to,

00:20:59.480 | looks like it's gonna be Chris in California.

00:21:01.400 | Chris, welcome to the show.

00:21:02.240 | How can I serve you today, sir?

00:21:03.600 | - Hi, Joshua, thank you so much for taking my call.

00:21:07.200 | So kind of in the spirit of your show,

00:21:10.480 | I have two questions about, I guess,

00:21:12.320 | sort of getting my data right.

00:21:14.400 | The first one is, so based on a personal experience,

00:21:19.280 | I'm starting a dental facilitator service

00:21:21.880 | for a holistic dental group in Costa Rica,

00:21:24.840 | and I was just curious if you had any thoughts,

00:21:28.360 | maybe sort of starting that,

00:21:30.280 | if there's any, I don't know, tax sort of snags

00:21:32.640 | that I'm not, maybe should be aware of going into it,

00:21:35.880 | or just wanted to get your general thought on the idea.

00:21:39.720 | - You're living in the United States?

00:21:42.400 | - I am.

00:21:43.240 | - And you are seeking to establish, basically,

00:21:47.120 | a marketing operation to encourage dental tourism

00:21:51.040 | to Costa Rica, is that right?

00:21:52.640 | - Yes.

00:21:54.920 | - So you've worked out, you found some local dentists

00:21:57.000 | in Costa Rica that you think you can refer business to,

00:22:00.120 | you'll market it to US Americans primarily,

00:22:03.240 | and you'll say, look, if you'll get on an airplane

00:22:04.880 | and fly to Costa Rica, you'll be able to get

00:22:07.000 | your dental services, very high quality

00:22:09.760 | at a third of the price, plus a vacation

00:22:11.800 | to Costa Rica to boot, is that right?

00:22:13.900 | - You got it, yeah, and it's with this one particular

00:22:17.760 | dental group that I actually went

00:22:19.360 | and experienced personally, I had a, yeah.

00:22:22.560 | - Great, great, okay, so from a tax perspective,

00:22:26.240 | if you are living in the United States,

00:22:28.320 | there is no way for you to reduce your taxes

00:22:31.040 | on this type of operation.

00:22:32.600 | For the extent that you are living

00:22:35.440 | in the United States yourself, you won't be able

00:22:38.320 | to do this in a tax-efficient way.

00:22:40.400 | You're going to be taxed just like any other business,

00:22:42.960 | and the fact that you have a referral relationship

00:22:45.960 | to send people to Costa Rica isn't going to help.

00:22:48.600 | Now, if you are willing to move from the United States,

00:22:52.520 | and possibly even move to Costa Rica,

00:22:55.280 | then yes, you can do this business

00:22:57.380 | in a more tax-favorable way, but that's gonna be

00:23:00.880 | a lifestyle decision as to whether

00:23:02.560 | you're willing to move or not.

00:23:04.600 | - Okay, got it.

00:23:08.040 | Okay, I do think it's a good idea.

00:23:10.280 | Costa Rica is, it's a disaster of a country economically,

00:23:16.120 | with the exception of it's a great place

00:23:20.680 | for tourists to go, they got a great tourist infrastructure,

00:23:23.560 | and it is a good place for medical tourism,

00:23:26.560 | and so I think that in the coming years,

00:23:29.900 | you'll see more and more medical tourism.

00:23:32.480 | Costa Rica basically destroyed the medical tourist

00:23:35.200 | marketplace for six months, they totally closed

00:23:37.480 | their borders for, I don't know, months,

00:23:39.920 | almost six months in the pandemic.

00:23:43.040 | But I think that their borders are open now,

00:23:46.000 | they don't require COVID tests for people to come in,

00:23:48.180 | I've been thinking about setting up an event

00:23:49.520 | there in Costa Rica in the coming weeks myself,

00:23:51.600 | because of that, although now the United States

00:23:53.320 | requires people to come back in.

00:23:55.560 | Prices are good, and I think it can work out really well.

00:23:58.440 | There are lots of dentists, lots of very trained dentists,

00:24:01.320 | and I think it's a good solution for that.

00:24:03.440 | I also think you should, and since you have

00:24:05.720 | personal relationships there, I think that's good.

00:24:07.680 | I think you should also look at Mexico as well.

00:24:11.720 | I think that Costa Rica can work well

00:24:13.660 | for certain types of medical tourism,

00:24:16.840 | for example, dental tourism, I think there's also

00:24:19.400 | a good argument to be made in favor of things

00:24:21.980 | like laser vision correction surgery to Costa Rica,

00:24:24.760 | there are a number of hospitals there that do that.

00:24:26.800 | I think that can be a feature.

00:24:28.400 | But on the whole, I don't think it has quite the depth

00:24:31.840 | that a market like Mexico has.

00:24:34.000 | And so, one of the business ideas that I've personally

00:24:37.000 | toyed with is setting up a medical tourism company

00:24:39.160 | into Mexico, because I think that Mexico is easier

00:24:42.000 | for people to get to in the United States.

00:24:44.560 | I think they have a much deeper bench

00:24:47.320 | of physicians and whatnot, and so I think it's also

00:24:50.880 | a good option for you to consider.

00:24:52.120 | I have known people who have done medical tourism companies,

00:24:55.000 | and I think it can be very profitable,

00:24:56.040 | so I think it's a great thing for you to pursue.

00:24:58.360 | And a referral relationship, where you act as a go-between

00:25:02.360 | and you charge a commission, can be a very low cost

00:25:05.120 | and high profit business, so I'm totally in favor of it.

00:25:07.600 | Just tell you that you're not gonna save any money on tax,

00:25:09.720 | doing it from the United States.

00:25:12.640 | And I wouldn't necessarily move to Costa Rica,

00:25:14.800 | because you won't save anything in tax

00:25:16.440 | if you move to Costa Rica.

00:25:17.800 | So you could run it tax efficiently

00:25:19.800 | if you were willing to move, but not to Costa Rica

00:25:22.240 | in this particular context.

00:25:24.420 | - Okay, cool, that makes a lot of sense.

00:25:27.520 | Thank you so much.

00:25:28.680 | One more quick question.

00:25:29.760 | So listening to your show the other day,

00:25:33.440 | it was like I had a moment of going,

00:25:36.080 | oh no, am I making the right choice?

00:25:37.520 | I'm about halfway through, I'm about 70%

00:25:39.800 | through my coursework for the CFP,

00:25:42.840 | and I was hoping that this is not a dying industry.

00:25:45.520 | I guess my question is, do you still feel

00:25:51.760 | that the CFP is a worthy pursuit?

00:25:54.060 | - You know, I've struggled with that question

00:25:57.040 | so much over the years.

00:25:58.920 | I have a CFP designation, I maintain it,

00:26:02.200 | I let it lapse for about a year and a half,

00:26:04.520 | 'cause I didn't keep up my CE,

00:26:05.720 | but last year I went back and caught up my CE credits,

00:26:09.960 | my continuing education credits, and reinstated my CFP.

00:26:12.720 | I don't know, I honestly don't know.

00:26:16.120 | The financial, so the financial,

00:26:17.760 | let's talk, I'll walk it through with you.

00:26:19.700 | So first of all, the financial advisory business

00:26:23.080 | is a business that has been under significant pressure.

00:26:26.120 | As I think about the history,

00:26:28.200 | going back over time, we have had,

00:26:32.320 | so if you go back to, let's say, the '80s, right?

00:26:35.600 | When you said financial advisor,

00:26:36.800 | people thought stockbroker.

00:26:38.800 | Well, what happened to stockbrokers?

00:26:40.200 | Basically, stockbrokers largely disappeared.

00:26:44.840 | You had people come in, and instead of being a stockbroker,

00:26:48.360 | you had the low-commission trades

00:26:50.560 | and no-commission trades come in.

00:26:53.120 | Then you had the move towards mutual funds.

00:26:55.000 | You had a massive growth in the mutual fund industry.

00:26:57.440 | So financial advisors made a lot of money

00:26:59.280 | selling mutual funds.

00:27:00.520 | When I started in 2004, I didn't sell a lot,

00:27:04.040 | but I still sold some commissionable mutual funds,

00:27:09.040 | Class A mutual fund shares.

00:27:11.000 | And there are people out there who do sell that,

00:27:14.040 | and I'm not current on all the industry figures,

00:27:16.480 | but I would say for the most part,

00:27:18.200 | selling commissioned mutual funds has basically disappeared

00:27:21.120 | in favor of no-load funds.

00:27:23.000 | You had the incredible transformation of the industry

00:27:26.920 | with Jack Bogle and Vanguard,

00:27:29.800 | where everything moved from,

00:27:31.520 | if you look at the asset flows

00:27:34.600 | that used to flow into active management

00:27:37.000 | that now goes into passive management,

00:27:38.960 | it's absolutely turned upside down.

00:27:41.160 | Vanguard has completely won the day

00:27:43.720 | to the point where now it's basically considered,

00:27:46.840 | it's almost a form of dogma, financial planning dogma,

00:27:50.760 | that if you suggest anything

00:27:52.120 | other than passive index fund investing,

00:27:54.800 | you just don't do it.

00:27:56.400 | You look at some of the vocal commentators,

00:28:01.400 | you look at Dave Ramsey and his influence

00:28:03.840 | on term insurance versus whole life insurance,

00:28:07.240 | very, very effective.

00:28:09.160 | Al Williams and his story and everyone else.

00:28:11.800 | So there's been a massive move towards term life insurance

00:28:14.800 | and passive index fund investing.

00:28:18.440 | So what have financial advisors done in response to this?

00:28:21.960 | Well, I would say they've adjusted in a few different ways.

00:28:24.520 | So most of the wire houses and whatnot,

00:28:26.600 | they move towards saying,

00:28:29.160 | okay, we're gonna charge management fees,

00:28:30.720 | that way we can still get our money

00:28:35.160 | and we can go ahead and yet still engage

00:28:40.160 | in whatever our investment strategy is.

00:28:42.040 | You've seen some bifurcation

00:28:44.880 | with the investment marketplaces.

00:28:46.240 | There are still people who market themselves

00:28:50.040 | as investment experts,

00:28:52.320 | but it seems like a lot of those people

00:28:54.000 | have moved into the hedge fund space

00:28:55.720 | and to work with accredited investors

00:28:59.240 | instead of with retail investors.

00:29:01.200 | So for example, the previous caller,

00:29:02.760 | that kind of situation is pretty rare.

00:29:04.080 | I very rarely hear of someone who says,

00:29:05.920 | look, we can beat the market

00:29:07.320 | and look, here's our results and test us

00:29:09.400 | and we'll take a $50,000 account.

00:29:10.960 | I mean, I very rarely hear about that kind of thing.

00:29:14.360 | Meanwhile, in the financial advisory space,

00:29:16.720 | there are still people who have,

00:29:19.640 | there's still people who work with insurance companies.

00:29:22.120 | There are the New York Life, the Northwestern Mutuals,

00:29:24.640 | the Guardian, the Mass Mutual, et cetera,

00:29:26.160 | and have an insurance practice

00:29:27.520 | and some cases an investment practice.

00:29:29.800 | You still have plenty of people

00:29:30.960 | that work with the large firms,

00:29:32.600 | doing charging fees on investment management.

00:29:37.000 | But then you have this bifurcation

00:29:38.840 | into the financial planning world for a fee.

00:29:42.760 | So you've got kind of the Garrett Planning Network guys,

00:29:47.760 | who charge us an hourly fee for financial planning.

00:29:51.880 | You've got the XYPN Network, right?

00:29:54.800 | More only targeting younger advisors and younger clients

00:29:57.920 | who they try to go with monthly retainer fees,

00:30:00.280 | primarily or flat fees.

00:30:03.320 | But I think the fee pressure is down,

00:30:05.560 | down all over the board in financial planning.

00:30:08.440 | So I'll tell you from my perspective,

00:30:10.680 | I like what I do because it gives me a one to many business.

00:30:14.720 | I would not choose myself to go into financial planning

00:30:19.360 | for an hourly fee.

00:30:20.560 | I think it's a very low paid profession.

00:30:22.480 | And even if your hourly fees are,

00:30:24.640 | my hourly fee right now for consulting is 400 bucks an hour,

00:30:28.160 | I'm gonna raise it to 500 before the end of the year.

00:30:31.160 | But even still, it's so much even there,

00:30:35.280 | and I don't even provide a lot of deliverables with that,

00:30:37.880 | it's just straight phone consulting.

00:30:39.600 | But the amount of, and to some people it sounds high, right?

00:30:43.960 | But the amount of work you have to go through

00:30:45.760 | to get enough clients to fill your schedule,

00:30:48.120 | doing hourly fees, it's just,

00:30:49.840 | it's not a business that excites me.

00:30:52.400 | So I wouldn't pursue that option

00:30:54.020 | in the financial planning business right now.

00:30:56.120 | I would personally go back

00:30:58.000 | into the insurance side of the business.

00:30:59.920 | I really like insurance.

00:31:01.440 | And I think that when done properly,

00:31:03.440 | insurance solves so many problems

00:31:05.320 | that it makes it really, really a good solution.

00:31:10.320 | But there continues to be a very significant

00:31:14.960 | kind of undercurrent of people who don't do insurance.

00:31:19.960 | Very rarely would I talk to a group of CFP students

00:31:23.760 | at the University of Texas or whatever,

00:31:25.680 | where they're getting a degree in financial planning,

00:31:28.640 | and many of them are just not that excited

00:31:30.580 | about going into the insurance business.

00:31:32.120 | And I understand that, right?

00:31:33.020 | When I went into the insurance business at 23,

00:31:35.480 | all I could think about was how quickly

00:31:36.880 | I could get out of it.

00:31:37.920 | Well today at 35, I would go into insurance,

00:31:40.080 | and I could happily just work in insurance

00:31:41.520 | the rest of my life and feel happy about it

00:31:43.040 | because the business model works.

00:31:45.080 | If you go and work as a fee-only planner,

00:31:47.840 | you walk away from insurance commissions,

00:31:49.700 | which I think is a business mistake,

00:31:51.360 | a major business mistake.

00:31:53.480 | So I guess for me, if I were to go back into it,

00:31:57.100 | there are three options that I personally would pursue.

00:32:01.000 | Number one is I could go back and have a hybrid model

00:32:05.520 | of insurance and investment management.

00:32:08.760 | I personally think that's the sweet spot

00:32:10.360 | as long as you can get a good enough solution

00:32:13.680 | where you can provide good solutions

00:32:15.360 | in both of those areas.

00:32:16.740 | But I think that insurance and investment

00:32:19.440 | fit together so perfectly that it's just a mistake

00:32:23.320 | to do only one of the two.

00:32:25.760 | The second place is I would go and work

00:32:29.080 | in a single-family office or a multifamily office,

00:32:32.620 | and just go straight to the high end of the market.

00:32:35.360 | That's where I would personally enjoy working

00:32:37.440 | because if you have the credentials and the skills,

00:32:41.300 | then you can walk away from the pressure

00:32:43.040 | of the things that annoy you of working with low-end clients.

00:32:48.040 | That's kind of the second thing.

00:32:50.800 | And then the third thing is I do think there are options

00:32:53.080 | in the financial education space,

00:32:55.480 | but I would focus less on the CFP stuff

00:32:58.520 | and more on the making money space.

00:33:01.040 | The CFP curriculum has become

00:33:03.160 | basically a technical consultancy.

00:33:06.280 | And it's becoming more of kind of the accountant

00:33:11.280 | advice industry versus the make money industry.

00:33:16.520 | And I appreciate good accounting advice, right?

00:33:20.200 | That's fine.

00:33:21.280 | But as an accountant, you're never going to make a fortune

00:33:25.080 | as an accountant unless you build a large firm.

00:33:28.360 | There's nothing wrong with working as an accountant.

00:33:30.240 | It can be a perfectly reasonable career.

00:33:32.840 | You can make a fair income and you can make a fair income.

00:33:36.800 | You can serve your clients

00:33:37.800 | and it's a very agreeable type of work,

00:33:40.000 | better than many other kinds of work.

00:33:41.620 | I could do accounting, but I wouldn't go after it

00:33:44.420 | with a sense of this is an aggressive growth model

00:33:47.760 | because the numbers aren't there.

00:33:48.880 | And I think that kind of the financial planner world

00:33:51.560 | has largely gone in that direction.

00:33:53.640 | The CFP world is largely that.

00:33:55.260 | It's a technical specialty.

00:33:56.800 | You need to understand a generalized knowledge

00:33:59.520 | of insurance, estate, tax, investments, et cetera,

00:34:04.440 | but it's extremely generalized and commoditized.

00:34:07.640 | And so in that world of generalized commoditized work,

00:34:11.360 | it's hard to stand out.

00:34:13.440 | So I would say that being a certified financial planner

00:34:17.380 | as a step one would be analogous

00:34:18.920 | to being a family medicine doctor.

00:34:21.960 | Is it a good career?

00:34:23.160 | Of course it's a good career.

00:34:25.000 | Can you make money?

00:34:25.840 | Yeah, you can be highly paid.

00:34:27.600 | But being a family medicine doctor,

00:34:31.160 | your income is going to be very, very different

00:34:33.820 | than if you're a pediatric anesthesiologist.

00:34:36.320 | There's a 4X return of being a pediatric anesthesiologist.

00:34:41.120 | And so for me, that would be what I would say

00:34:43.800 | is that just getting a CFP designation

00:34:46.640 | and working as a generalized financial planner

00:34:48.800 | can be a very agreeable, perfectly adequate

00:34:52.120 | professional compensation where you can make a good living

00:34:55.000 | in a very agreeable way.

00:34:56.600 | But it's not a specialty that's going to make you

00:34:58.880 | really rich in a really short period of time.

00:35:01.120 | - Great, that's great.

00:35:04.640 | And thank you so much.

00:35:06.280 | And sort of last thought is,

00:35:08.680 | I'm working, I would be a career changer.

00:35:10.800 | I work as a creative director right now.

00:35:12.520 | So this is really helpful.

00:35:13.720 | I really appreciate all your wisdom on that.

00:35:15.680 | Thank you. - My pleasure.

00:35:16.560 | I think you just gotta find a spot

00:35:17.960 | that you're comfortable with and that you feel fits you.

00:35:20.160 | And if you can find that spot that it fits you,

00:35:24.160 | then I think it's a great career.

00:35:25.940 | I like it and it's a really good way, again,

00:35:30.200 | to serve people and to help people.

00:35:31.720 | My only frustration, I'll share my biggest frustration

00:35:34.440 | with you for you to consider, is just simply this.

00:35:38.200 | I thought when I got into financial planning,

00:35:41.400 | I thought that I was gonna help people get rich.

00:35:43.800 | And what I discovered is that I couldn't

00:35:47.280 | really do it very well.

00:35:49.780 | And I realized that as a financial planner,

00:35:53.200 | what I was doing was giving some

00:35:54.880 | technically proficient answers that would

00:35:56.880 | help people optimize a few things.

00:35:59.640 | And so for me, my desire has always been

00:36:02.280 | to help people get rich.

00:36:03.480 | And so today, if I were making that same choice again,

00:36:07.000 | and I'm actually moving in this direction

00:36:08.720 | just to my own attention, I care much more

00:36:11.260 | about teaching people how to 10x their income

00:36:13.800 | than I care about teaching them how to remove

00:36:15.600 | 10 basis points from their portfolio expenses.

00:36:18.440 | I find the portfolio expense and the tiny tax optimization,

00:36:23.800 | I find that stuff extraordinarily boring and non-meaningful.

00:36:28.800 | Whereas I find the 10x stuff, right?

00:36:31.960 | Here's how you 10x your income with entrepreneurship.

00:36:34.600 | Here's how you 10x your lifestyle with a remote business.

00:36:37.880 | Here's how you cut your taxes to zero by going offshore.

00:36:41.460 | To me, those big wins make me so excited

00:36:44.640 | about seeing people how they can get progress fast,

00:36:49.480 | that that's where I wanna spend my time.

00:36:51.520 | So I would rather, if I were making a career change

00:36:54.280 | right now, again, if I needed money fast

00:36:57.960 | and I wanted to make $150,000, $200,000, $250,000 a year,

00:37:01.400 | and I needed to do that for five years

00:37:02.880 | to stabilize my family, I would go be a financial planner.

00:37:05.200 | Now, I have the experience, so I know I could do it quickly.

00:37:08.480 | You might take you some more time to retrain for that.

00:37:11.000 | But if I wanted to make an impact,

00:37:12.940 | I would much rather go work for Russell Brunson

00:37:16.200 | than I would go and be a financial planner

00:37:19.320 | because I believe that a guy like him,

00:37:21.320 | at the end of his life, he's gonna be,

00:37:24.400 | I mean, the amount of money that he's gonna help people make

00:37:26.880 | is gonna be absolutely staggering.

00:37:28.820 | Tai Lopez is gonna have a much bigger credential

00:37:34.820 | at the end of his life with the amount of money,

00:37:36.920 | the amount of people that he's helped to build wealth,

00:37:38.960 | become wealthy than any financial planner I've ever met.

00:37:42.780 | So is it a good career?

00:37:44.740 | Yeah, I've known a lot of guys who made a fortune

00:37:47.140 | as an estate planner, et cetera.

00:37:49.440 | But for me, the excitement is always on the big wins,

00:37:52.480 | not on the minor optimization.

00:37:54.160 | And I just see that as the,

00:37:55.800 | that's one of the big downfalls

00:37:57.720 | of many of the modern financial planners,

00:37:59.640 | including the CFP curriculum.

00:38:01.120 | It's just, it's mostly focused on minor things.

00:38:04.120 | I've never heard a CFP, here's my final comment.

00:38:07.500 | I've never heard an accountant or a CFP

00:38:11.840 | talk to their client about leaving a high-tax jurisdiction

00:38:16.080 | and moving to a low-tax jurisdiction.

00:38:18.180 | And yet that in and of itself

00:38:20.040 | could be the single most valuable idea

00:38:22.200 | that you ever give somebody.

00:38:23.760 | I'm doing a show, I meant to do it yesterday,

00:38:25.920 | I'll do it, it'll probably be out on Monday.

00:38:27.520 | But the next show I'm gonna do

00:38:28.360 | is talk about the magic of the doubling penny, right?

00:38:30.880 | You can start with a doubling penny,

00:38:33.040 | and you can say, and you can,

00:38:35.680 | if you start with one cent

00:38:37.720 | and you double it every day for 31 days,

00:38:39.840 | you wind up with $10.3 million, I think,

00:38:42.600 | at the end of 31 days.

00:38:44.140 | If you cut that doubling with a 30% tax rate,

00:38:48.280 | then you all of a sudden put yourself in a situation

00:38:52.480 | where that, I can't remember the number,

00:38:53.960 | I did it with like 35% tax rate, 30%,

00:38:56.300 | it comes down to a few thousands of dollars,

00:38:58.480 | and in some cases, literally $25

00:39:01.160 | with tax rates that we pay.

00:39:02.660 | Now, that's just pointing out the power of tax.

00:39:06.560 | And so for me, wanting to help people get those big wins,

00:39:09.340 | before I would go back and be a financial planner,

00:39:11.400 | I would go set up an offshore firm

00:39:12.920 | and teach people how to leave high tax jurisdictions

00:39:14.800 | like California or like the United States

00:39:16.620 | or like Germany, because in today's world,

00:39:19.520 | that's where the exciting stuff is.

00:39:21.240 | Or I would go to where they can 10X their returns

00:39:23.880 | and help people make money with better marketing, et cetera,

00:39:26.920 | because to me, that's the stuff that's exciting enough

00:39:29.220 | to keep me going.

00:39:30.060 | So best of luck to you.

00:39:31.800 | John in Florida, welcome to the show.

00:39:32.800 | How can I serve you today, sir?

00:39:34.360 | John in Florida, you're up.

00:39:41.720 | I gotcha, yep.

00:39:43.480 | I wanted to talk cryptocurrency.

00:39:46.800 | I need a sanity check.

00:39:50.300 | I've been in the space for a long time,

00:39:56.720 | and I've got a fairly well-rounded portfolio

00:40:01.720 | of many different currencies.

00:40:06.400 | The total currently of that portfolio

00:40:10.680 | is about 600,000 in US dollars.

00:40:15.680 | I've ridden multiple run-ups.

00:40:26.920 | So I was actually in on that very first run-up

00:40:30.120 | to $1,000 back, and then I rode it all the way down to 200.

00:40:35.120 | And then I rode it up again to 20.

00:40:37.600 | And I was shocked and amazed that I had,

00:40:41.280 | my portfolio had grown to $200,000

00:40:46.640 | at the top of that 20,000 run, but I didn't do anything.

00:40:51.640 | And then I watched it run all the way down to about 50.

00:40:56.120 | And now I'm at the position where it feels like

00:41:04.260 | a similar type of feeling as that.

00:41:09.260 | Like, whoa, at the high, my portfolio was pushing 800K

00:41:14.260 | just earlier this month.

00:41:19.340 | And it's come back down to 600, right?

00:41:23.020 | So I don't wanna sell, 'cause I don't,

00:41:28.020 | I mean, I don't need the money.

00:41:32.860 | And I don't have a plan for it per se.

00:41:37.860 | Like, if I turn this into cash,

00:41:42.100 | it's just gonna sit in the bank and decrease in value

00:41:45.860 | with the flood of new printing.

00:41:49.100 | So I don't know, I just wanted to hear your perspective

00:41:54.900 | on, I know it's not a crystal ball or whatever,

00:42:00.580 | going to a million a coin or 10 million a coin, whatever.

00:42:04.700 | But is there something that you can say about

00:42:09.700 | taking money out along the way?

00:42:17.940 | Like, I would estimate my total investment

00:42:24.700 | in US dollars that I'd put in probably over the whole time

00:42:29.060 | is somewhere around 100,000.

00:42:31.340 | Just in purchases.

00:42:35.300 | - I understand the question.

00:42:36.380 | Let's talk it through.

00:42:37.300 | So we're gonna talk it through on two levels.

00:42:39.620 | I'm gonna begin with what's most impactful,

00:42:41.660 | and then we'll talk about crypto.

00:42:43.460 | The most impactful is always personal financial planning.

00:42:46.820 | In my opinion, what I fall back on

00:42:49.900 | is always personal financial planning.

00:42:52.260 | And I'll elaborate what I mean by that

00:42:54.100 | so that you understand.

00:42:55.820 | Because to me, this is the one thing that I can control.

00:43:00.820 | I have no idea what the price of Bitcoin is 12 months

00:43:04.460 | or 12 years from now, and neither do you.

00:43:07.820 | We have our hunches, we have our ideas,

00:43:09.780 | you have your beliefs, you have your perspectives.

00:43:12.020 | But at the end of the day, we have no idea.

00:43:14.620 | 12 years ago, Bitcoin didn't exist.

00:43:16.820 | 12 years from now, will Bitcoin exist?

00:43:19.260 | Well, to the extent that something digital

00:43:22.020 | and intangible exists, yes.

00:43:25.340 | But what will be the impact on society?

00:43:27.700 | We don't know.

00:43:28.520 | So we have some ideas, we'll talk about those in a moment.

00:43:31.320 | But what can you know?

00:43:32.640 | You can go back to your life, and you can always say,

00:43:34.940 | well, what should I do right now in my life?

00:43:37.760 | And with regard to the risk factor,

00:43:41.980 | you can put in place the things that make you feel good.

00:43:45.980 | And so what I do is I go back to financial planning.

00:43:48.800 | I say, where am I right now?

00:43:50.660 | So first, how old are you?

00:43:53.420 | Are you married?

00:43:54.260 | Do you have children?

00:43:55.260 | - Yeah, I'll be turning 40 this year,

00:43:59.900 | married with four children under 11.

00:44:04.420 | - Okay.

00:44:05.340 | If your $600,000 disappeared today,

00:44:08.740 | all of your cryptocurrency disappeared today,

00:44:10.660 | pretend that the United Nations came out

00:44:12.900 | and all 193 member nations of the United States,

00:44:16.460 | sorry, out of the United Nations says,

00:44:18.300 | not only are we banning Bitcoin,

00:44:20.380 | but we're banning any cryptocurrency,

00:44:22.420 | and you can never convert your cryptocurrency

00:44:24.740 | into a local fiat currency period whatsoever.

00:44:27.920 | That would of course impact massively

00:44:30.460 | the value of all crypto assets

00:44:33.000 | that are intending to be used as some form of currency.

00:44:37.100 | So your $600,000 could disappear overnight.

00:44:40.420 | Let's say that happened, unlikely,

00:44:42.800 | but let's say that happened.

00:44:44.540 | In that situation, would your family be destitute?

00:44:47.320 | Would your children be on the street?

00:44:48.940 | Would your wife and children go hungry?

00:44:50.980 | Would your wife divorce you?

00:44:52.180 | How bad would that be for your situation?

00:44:54.340 | - It wouldn't affect my situation at all.

00:44:58.820 | - Okay.

00:44:59.660 | So to me, this is my answer,

00:45:01.420 | is if it wouldn't affect my situation at all,

00:45:04.240 | that means I've done good financial planning.

00:45:06.940 | I've put myself in the best solution possible.

00:45:09.860 | I've protected myself on the downside.

00:45:12.420 | And so what I can do, what I can control is,

00:45:15.820 | are my children gonna be put out on the street?

00:45:18.020 | Are we gonna run out of food?

00:45:19.620 | Do we have some other assets?

00:45:21.540 | So if I were a young, if I were a single guy, for example,

00:45:25.060 | and it were just me, and let's say that I had an income

00:45:27.600 | where I could work and earn $100,000 a year at a job,

00:45:31.060 | I would be willing to take a risk

00:45:33.180 | on having 100% of my assets in cryptocurrency.

00:45:36.100 | Why?

00:45:36.920 | Well, because if my cryptocurrency disappears,

00:45:39.100 | I still have income and I'm gonna be okay.

00:45:42.380 | If I were a married guy with children

00:45:44.940 | and I had a good, robust home life,

00:45:47.260 | and I had a good source of income,

00:45:48.780 | and I had some other assets,

00:45:50.220 | then I would be willing to take a big risk on a hunch,

00:45:53.300 | right, on cryptocurrency.

00:45:54.860 | What I would not do myself

00:45:56.620 | is I would never put myself in a situation

00:45:58.580 | where if my cryptocurrency disappears in value,

00:46:01.020 | my children go hungry.

00:46:02.500 | Or if my cryptocurrency disappears in value,

00:46:04.500 | my wife divorces me.

00:46:05.940 | Or if my cryptocurrency disappears in value,

00:46:08.060 | I'm left destitute living under a bridge.

00:46:10.080 | Like, to me, that's unacceptable.

00:46:12.000 | So as long as you're thinking about your downside,

00:46:14.500 | then we're in a good shape.

00:46:16.620 | And you can make your hunch on what you think

00:46:18.860 | is the best for you.

00:46:21.820 | Now, I do think it makes sense to diversify.

00:46:24.460 | And so when you have a winning hand,

00:46:26.780 | I believe it makes sense to take some of those winnings

00:46:30.100 | and put them into something else

00:46:31.460 | because it protects you on the downside.

00:46:33.500 | The example that I usually use is with entrepreneurs.

00:46:36.260 | And I've been saying this for years.

00:46:37.500 | I must repeat it.

00:46:38.420 | I mean, I've been on the show dozens of times.

00:46:40.720 | I don't know.

00:46:41.660 | But I always give this talk to entrepreneurs, okay?

00:46:44.340 | And these days, I work with a lot of entrepreneurs.

00:46:47.900 | When I was a financial advisor,

00:46:48.900 | I always worked with entrepreneurs

00:46:49.980 | because that's where the money is, right?

00:46:51.420 | Entrepreneurs know how to make money.

00:46:53.060 | They know how to literally make money.

00:46:55.040 | They take something that doesn't exist.

00:46:57.140 | They call it into existence with their vision,

00:46:59.760 | their words, and their actions.

00:47:01.420 | And then they literally create a money printing machine.

00:47:03.580 | It's the most incredible thing in the world.

00:47:04.920 | And it's all legal.

00:47:05.760 | That's entrepreneurship, okay?

00:47:07.340 | So you'll be with an entrepreneur.

00:47:08.580 | And let's say that you have an entrepreneur

00:47:10.180 | that has a wonderful, smooth business model.

00:47:12.580 | And they're looking at their business model.

00:47:14.380 | And they're saying, you know what I can do?

00:47:16.460 | Is I can take this business,

00:47:20.060 | and for every dollar that I put into this business,

00:47:22.340 | it will print me $10 out.

00:47:24.500 | And so you might be sitting there with them,

00:47:26.460 | talking to them about buying stocks

00:47:28.220 | in someone else's business, or buying gold coins,

00:47:30.660 | or buying cryptocurrency,

00:47:32.020 | or buying a life insurance policy.

00:47:34.100 | And they always look at it,

00:47:34.980 | and in the back of their mind, they're saying,

00:47:36.660 | but if I put a dollar into my business, I get 10 out.

00:47:39.420 | I put a dollar into my business, I get 10 out.

00:47:41.580 | I put a dollar in my business, I get 10 out.

00:47:43.400 | Why would I ever do anything different?

00:47:45.100 | And so the example I use is gambling, right?

00:47:47.460 | So let's say, John, you and I, we get on a cruise ship,

00:47:49.700 | you know, we're with our families, we take a cruise,

00:47:51.900 | and we decide tonight, you know what?

00:47:53.580 | We're gonna go down to the casino.

00:47:55.220 | And, you know, we get babysitters for the children.

00:47:57.700 | We dress up in our fancy suits,

00:47:59.700 | and our wives put on their slinky dresses.

00:48:01.540 | And we say, all right,

00:48:02.600 | how much are we gonna gamble tonight?

00:48:03.780 | Let's say it's, I don't know if you're a big gambler,

00:48:05.260 | but a thousand bucks, right?

00:48:06.560 | So you take a thousand bucks out in cash,

00:48:08.220 | you leave all your cards,

00:48:09.140 | and you say, here's a thousand bucks in cash.

00:48:10.780 | We're gonna go, and we're gonna gamble tonight

00:48:12.020 | with a thousand bucks.

00:48:12.860 | Lose a thousand bucks, big deal.

00:48:14.140 | It's the price I paid for an evening's entertainment.

00:48:16.380 | And so we go down, and we're playing, and we're playing,

00:48:18.580 | and we're doing well,

00:48:19.500 | and our thousand grows to a thousand, to 1,200,

00:48:21.740 | to 1,500, to 1,800.

00:48:23.180 | All of a sudden, we're up to two grand, okay?

00:48:25.380 | Now, what does a smart man do when he's out gambling,

00:48:27.920 | and he's doubled his money from a thousand to 2,000 bucks?

00:48:30.820 | - He will take cash out and walk away.

00:48:34.260 | - Cash out and walk away, right?

00:48:35.940 | But wait a second.

00:48:37.140 | Maybe it's only 9.15 at night, we're having a great time,

00:48:39.940 | we already paid the babysitter for six hours,

00:48:42.100 | and you know how hard it is

00:48:43.100 | to get a babysitter for four children.

00:48:44.780 | So you're like, okay, what do we do?

00:48:46.420 | Well, at least at that point in time,

00:48:48.220 | maybe you say, okay, I wanna keep playing,

00:48:50.900 | we're having a good time, we're enjoying ourselves,

00:48:53.140 | but you might at least take the original thousand

00:48:55.500 | and slide it in the back pocket.

00:48:56.980 | That way you're playing with your winnings,

00:48:58.420 | and if you lose it all, at least you walk away whole,

00:49:00.500 | or you might double it up.

00:49:02.140 | So the problem is that that's what you and I would do

00:49:04.660 | as non-addictive gamblers.

00:49:06.140 | We may or may not walk away,

00:49:08.740 | but we would at least take some off the table

00:49:10.980 | and tuck it aside,

00:49:12.060 | knowing that we're playing a dangerous game.

00:49:14.500 | So what happens is oftentimes business owners

00:49:17.460 | and other types of investors sometimes don't do that.

00:49:20.820 | They play the thousand, and it's up to 1500,

00:49:23.340 | and up to 1800, up to two grand.

00:49:25.300 | Then they look at it and say, man, we're doing awesome.

00:49:27.120 | So they play the two grand and they double it to four.

00:49:29.340 | Then they play the four and they double it to eight.

00:49:31.420 | Then they play the eight and they double it to 16.

00:49:33.620 | It's 10.45 at night, we're parents, we go to bed early,

00:49:37.180 | and we're looking at it saying,

00:49:38.020 | okay, just one more good roll.

00:49:39.740 | And all of a sudden they play the 16,

00:49:41.900 | but instead of this time doubling to 32,

00:49:45.340 | it declines to something significantly less

00:49:48.940 | due to perhaps unforeseen activities.

00:49:51.380 | So my answer is head your bets, right?

00:49:55.080 | Okay, you got the thousand, play it,

00:49:56.980 | take 500 off the table when you're up to 2000.

00:50:00.140 | Take 500 off the table, put it in something else.

00:50:03.140 | Grow it up, you know, take another thousand off the table.

00:50:06.100 | Just take some off the table and diversify it.

00:50:08.540 | And diversify it into something

00:50:10.020 | that you think is a good investment,

00:50:11.260 | but that's not subject to the same forces.

00:50:13.660 | So what would I do if I had built

00:50:15.140 | a $100,000 portfolio into $600,000?

00:50:19.620 | And by the way, before I tell you what I'd do,

00:50:21.540 | for me this is very personal because I've known

00:50:25.580 | so many people who've made money in good markets.

00:50:28.380 | In 2000, I knew somebody, young guy, who made a fortune.

00:50:32.820 | He went from nothing to a couple million dollars

00:50:35.100 | overnight with a dot-com business.

00:50:37.100 | Bought a Porsche, had millions of dollars

00:50:39.940 | and was doing awesome.

00:50:42.320 | And then everything fell out and he lost it all.

00:50:45.660 | Lost his Porsche, lost everything.

00:50:47.280 | And I thought to myself, that was stupid.

00:50:49.540 | Then in 2000, you know, in the mid-2000s,

00:50:51.780 | I had friends who were making fortunes in real estate.

00:50:54.780 | And then they lost it all, went through bankruptcy,

00:50:57.460 | bankrupted out of $2 million worth of property.

00:50:59.500 | And I thought to myself, that was stupid.

00:51:01.940 | Why can these people not see that when you've gone

00:51:04.600 | from nothing to multi-millions in a short span,

00:51:08.280 | it might be worth it to take something aside.

00:51:10.480 | And it's because you get that gambler's greed

00:51:12.360 | where you say, this is working, this is working,

00:51:14.240 | this is working.

00:51:15.360 | So if I built 100 into 600,000, I would look down

00:51:19.060 | and I would say, well, this portfolio very well

00:51:21.540 | could keep going.

00:51:22.800 | But I need to make sure that if this thing wipes out,

00:51:25.040 | that I'm not ruined.

00:51:26.520 | And so I need to make sure that I do something.

00:51:28.920 | Maybe I take $100,000 and I buy gold in a vault in Austria.

00:51:32.800 | Maybe I take $200,000 and I go buy a rental property.

00:51:36.040 | Maybe I take some money and I put it in the stock market

00:51:38.280 | where somebody else is managing it.

00:51:40.040 | Doesn't really matter.

00:51:41.040 | The point is that it's not all on one thing.

00:51:43.920 | So that if this disappears, then something,

00:51:47.880 | that I still have something covered.

00:51:49.520 | Because I've never seen a market in anything

00:51:52.780 | where it couldn't all be misdisrupted overnight, right?

00:51:55.720 | Hello, US government or your state government comes in

00:51:58.240 | and says, hey, you've got a rental property,

00:51:59.680 | but you can't evict your tenants.

00:52:01.040 | What did that do for the value of your real estate?

00:52:03.080 | What did that do for your rental flows?

00:52:04.920 | Or they come in, I mean, there's just any market can crash.

00:52:08.920 | So if $600,000, the loss of it,

00:52:12.040 | wouldn't affect the rest of your life that badly,

00:52:15.480 | then I would say, keep playing, right?

00:52:16.860 | Keep investing in what you think is gonna happen.

00:52:19.840 | But if it would, you wanna make sure

00:52:22.120 | that you're levering up over time.

00:52:23.480 | And so you need to look at the rest of your portfolio

00:52:25.320 | and consider how does the 600 relate

00:52:27.120 | to the overall portfolio.

00:52:29.440 | So that's my first answer is look at it

00:52:31.400 | in a financial planning perspective.

00:52:33.240 | What would it be like if I lost it all?

00:52:35.480 | What would the harm be?

00:52:36.860 | How big of an asset does this represent and go on?

00:52:39.580 | And I just, I would say, look at it like this, right?

00:52:42.960 | Do you remember the Snapchat story from the last five years?

00:52:46.980 | - I know of several stories,

00:52:54.360 | but I'm not sure which one you're talking about.

00:52:55.840 | - Here, I'm just thinking about the owner of Snapchat.

00:52:57.600 | Now, I don't have all the data current in my mind, okay?

00:53:00.400 | But there was a time a number of years ago

00:53:02.480 | when Snapchat was the next hot thing.

00:53:05.640 | It was very, very valuable.

00:53:08.200 | Mark Zuckerberg came to the owner of Snapchat

00:53:10.720 | and offered him something like two or $3 billion

00:53:14.120 | for the purchase of Snapchat.

00:53:16.380 | He said, no.

00:53:17.360 | He said, no, I'm gonna keep Snapchat to myself

00:53:20.960 | and I'm gonna keep on building it.

00:53:22.720 | Mark Zuckerberg then, a month or two or whatever later,

00:53:27.540 | rolls out all of the identical features of Snapchat

00:53:31.520 | across the board to Facebook and Instagram,

00:53:36.440 | his services that he owned.

00:53:38.840 | And at that point in time, it was rather obvious to me

00:53:43.200 | that Snapchat basically imploded.

00:53:45.140 | There was a time where basically everyone I followed

00:53:47.680 | had their yellow profile picture, follow me on Snapchat.

00:53:51.760 | I haven't seen one of those in a long time.

00:53:53.480 | I personally could never figure out how to use the app.

00:53:55.860 | Maybe I was stupid, but I could just,

00:53:57.440 | it never made sense to me.

00:53:59.120 | And here was this guy who had offered--

00:54:00.520 | - You and me both.

00:54:01.360 | - Yeah, two or $3 billion to sell to Facebook

00:54:04.640 | and he chose to say no.

00:54:06.200 | Now, was it the right decision or not?

00:54:08.200 | We would only know that if we could talk to him and say,

00:54:11.720 | well, what do you value more?

00:54:13.320 | As I understood it, he valued his independence.

00:54:16.120 | And Snapchat is still in some sense a going concern.

00:54:18.920 | I don't hear about it much anymore,

00:54:20.360 | but every now and then someone says,

00:54:21.340 | oh, Snapchat's gonna come back.

00:54:22.820 | I'm sure he still has as much money as he needs

00:54:25.240 | and he's gonna be fine.

00:54:26.680 | But I think about that and I say,

00:54:29.080 | put yourself in those situations and ask yourself,

00:54:32.440 | would you wanna have cashed out?

00:54:33.840 | Me personally, if someone offered me

00:54:35.640 | two or $3 billion for a company, I would cash out.

00:54:38.960 | I would cash out because I don't need to be the guy

00:54:41.280 | who's got $50 billion.

00:54:43.080 | Two or $3 billion is pretty substantial.

00:54:45.280 | That's pretty good.

00:54:47.000 | And you don't get, a lot of times you only get

00:54:48.840 | one of those opportunities in life.

00:54:50.200 | So you've gotta consider it in the context

00:54:52.640 | of your personal financial planning

00:54:55.020 | and then think about the maximum upside,

00:54:57.600 | the maximum downside and see how that affects you.

00:55:00.440 | That said, I remain very bullish on crypto,

00:55:03.240 | my personal opinion.

00:55:04.200 | I remain very bullish on the importance of cryptocurrencies,

00:55:08.040 | on the use case for them.

00:55:10.040 | And while I believe that the fundamental value

00:55:13.880 | of a Bitcoin is a magical number made up

00:55:17.440 | exclusively from supply and demand,

00:55:20.020 | that's the world we live in with everything else in life.

00:55:22.880 | The value of a US dollar is a number

00:55:24.860 | that's exclusively made up

00:55:26.540 | based upon the value of supply and demand.

00:55:28.980 | And so it's made up, it's fantasy,

00:55:31.060 | just like everything else in our life.

00:55:33.060 | But I think that the arguments are going forward

00:55:36.680 | that cryptocurrencies can be a very, very useful part

00:55:40.940 | of what we're doing.

00:55:42.000 | Now, will the long-term winner be Bitcoin?

00:55:44.620 | Will the long-term winner be Ethereum?

00:55:47.260 | Will the long-term winner be some other minor,

00:55:50.020 | useful coin that's been developed?

00:55:51.340 | I don't know.

00:55:52.660 | So those things are opaque to me,

00:55:55.220 | but I think that my personal opinion

00:55:58.820 | is that we are still in the very early stages

00:56:02.700 | of a transformation in the world,

00:56:04.340 | and that more and more people

00:56:06.380 | are going to start to use these tools.

00:56:10.380 | I need cryptocurrency personally to succeed

00:56:14.580 | in order to minimize the hassle

00:56:16.940 | of dealing with the banking system.

00:56:18.580 | And I don't see why it can't succeed.

00:56:20.580 | And to me, every marker is on the way.

00:56:24.020 | The biggest marker right now is gonna be regulation, right?

00:56:26.380 | You had new regulation in India recently.

00:56:28.740 | The United States government is passing

00:56:30.420 | all kinds of new regulation on cryptocurrency.

00:56:33.580 | Could the whole premise still fail?

00:56:35.540 | Well, I think any one currency could fail,

00:56:38.220 | but in terms of the premise, to me,

00:56:40.020 | this seems to be in line

00:56:41.140 | with the direction the world is going.

00:56:42.900 | And so as long as I'm not gonna be wiped out,

00:56:45.820 | I would personally continue

00:56:47.660 | to be involved in the marketplace.

00:56:50.080 | - Okay, yeah, that's kind of my same general feeling.

00:56:55.080 | When I was looking at the number

00:57:00.640 | and I was like, wow, that's a good amount of money.

00:57:03.880 | And then I was like, how many years would that last

00:57:07.840 | if I were to cash it out?

00:57:09.440 | And would that be like 10 years of income after taxes?

00:57:18.760 | And that right now,

00:57:21.640 | and that kind of got my head thinking like,

00:57:25.680 | well, maybe I should do something rather than nothing.

00:57:30.240 | And then I went to start adding up numbers

00:57:32.120 | of how much I'd put into it,

00:57:34.360 | 'cause I'd never actually done that

00:57:35.760 | until I got to thinking.

00:57:37.800 | And I was like, I was pretty flabbergasted

00:57:40.520 | that I had put that much in without even knowing about,

00:57:43.360 | knowing the total over five years

00:57:48.400 | that I didn't keep that information in.

00:57:53.400 | It just got the ball rolling.

00:57:59.520 | Like maybe I should do something about this differently

00:58:02.280 | than any time before.

00:58:04.000 | But that being said, I'm also bullish.

00:58:07.640 | I think they've got,

00:58:09.400 | there's places to go further than where we are.

00:58:12.760 | So yeah, I appreciate your thoughts.

00:58:19.200 | I think I'm just gonna let it ride

00:58:20.800 | because it could be that Snapchat story.

00:58:25.520 | - To try to put it succinctly, my answer is very simple.

00:58:30.480 | When you have something better to do with the money

00:58:33.200 | than what it's invested in right now,

00:58:36.160 | do that thing that's better.

00:58:38.320 | So when you have a better use of the money

00:58:41.320 | than your cryptocurrency portfolio,

00:58:43.440 | do that thing that's better.

00:58:45.480 | What could be some examples?

00:58:47.440 | Maybe you look down and you say,

00:58:48.920 | if we paid off our house,

00:58:50.200 | our life would be better because of this reason.

00:58:52.840 | Well, then if you're convinced of that

00:58:55.120 | and you make that decision,

00:58:56.480 | you'll do it and you'll feel happy with it

00:58:59.920 | even if Bitcoin went to the moon

00:59:01.200 | because that was the decision

00:59:02.240 | that was right for you at the time.

00:59:03.920 | I wouldn't, just to be clear,

00:59:04.760 | I wouldn't hasten to do that, but it's an option.

00:59:07.600 | If you thought, you know what,

00:59:09.360 | my daughter is dying of cancer.

00:59:12.280 | And if I take this $600,000

00:59:14.200 | and invest it into her medical treatment,

00:59:15.840 | I may be able to save her life.

00:59:17.320 | You would do that because it's a better option.

00:59:19.680 | If you come across another investment opportunity,

00:59:22.120 | a business, a house, a stock, a different coin,

00:59:25.600 | whenever you find something better,

00:59:27.920 | then do what's better.

00:59:29.420 | But don't just retreat from what you think

00:59:31.340 | is the best thing because you're somehow scared of it.

00:59:34.440 | Think it through and always question your assumptions,

00:59:37.200 | but only change when you have something better to do.

00:59:40.360 | All right, we go to John in Pennsylvania.

00:59:41.840 | John, welcome to the show.

00:59:42.680 | How can I serve you today, sir?

00:59:45.880 | - Hey, Joshua, thanks for taking the call.

00:59:48.360 | That's a good voice for that last caller.

00:59:50.400 | I'm gonna be sending this show to a friend of mine

00:59:54.280 | who has basically the same situation,

00:59:56.280 | but you just add a zero to the totals.

00:59:59.080 | He's been fluctuating between the millions

01:00:01.560 | and really struggling with the psychology of it.

01:00:04.280 | Actually, he seems pretty stable.

01:00:05.480 | I'm struggling with being his friend.

01:00:07.240 | - Right. (laughs)

01:00:08.160 | - Not knowing what to do with those scales of money.

01:00:10.240 | I don't know how to--

01:00:11.680 | - I'll tell you what's worse than that

01:00:13.740 | is the people who are struggling

01:00:15.120 | with the fact of how many Bitcoin they bought

01:00:17.200 | and then they lost in a wallet

01:00:18.880 | that became inaccessible to them.

01:00:20.680 | I had a client of mine one time

01:00:22.200 | that a year or so ago, he had $2 million.

01:00:25.880 | What was at that point in time worth $2 million

01:00:28.720 | sitting in a hard drive that he couldn't get into

01:00:31.280 | because he couldn't, in a password he couldn't remember.

01:00:34.460 | And then just watching the prices increase

01:00:37.520 | where now, I don't know, but I'm guessing

01:00:39.280 | that what was $2 million is now $5 or $6 million

01:00:43.160 | is just a major gut check.

01:00:44.760 | And so I've been thinking about that a lot

01:00:46.280 | because it's a matter of how well

01:00:48.200 | do I have my systems worked out?

01:00:49.960 | How well do I have my backup plans?

01:00:52.440 | Just even for simple things like my computer

01:00:54.200 | and my phone and whatnot.

01:00:55.440 | Sometimes we play a risky game

01:00:56.960 | and don't cover ourselves properly.

01:00:58.480 | And those are the people that I think about

01:01:01.040 | and pray for that they'll still be alive a year from now

01:01:03.960 | rather than having punched themselves in the face

01:01:06.540 | so many times that they just can't do it anymore.

01:01:08.720 | So go ahead, John.

01:01:09.560 | - Yeah, no, that's absolutely brutal.

01:01:12.640 | And I know my own problems with memory

01:01:15.360 | and devices and everything.

01:01:17.800 | Yeah, that would probably be me, to be honest.

01:01:19.480 | I only have like 100 something in Bitcoin or cryptos

01:01:22.680 | and I'm more interested in it as a currency

01:01:24.840 | that's usable rather than a speculation thing.

01:01:28.560 | But at the same time, I can't deny what my friends

01:01:31.240 | I've been able to build with it.

01:01:33.440 | Although I couldn't have taken the swings.

01:01:35.120 | He's gotten from whatever it's 40,000,

01:01:37.640 | he's turned it into five

01:01:38.840 | and then he watched it go back to 500

01:01:40.360 | and then up to recently to nine

01:01:42.800 | and then back to seven in the millions.

01:01:45.320 | And I just, I don't think I would ever be able

01:01:47.520 | to take the swings.

01:01:48.520 | Just, I couldn't do what he did

01:01:51.520 | even though I watched him doing it.

01:01:52.760 | You know, I know that I wouldn't be in the same situation

01:01:55.880 | 'cause I couldn't have done it in those ways.

01:01:58.440 | But yeah, I'll be sending this to him.

01:02:00.640 | Anyways, my question is,

01:02:03.560 | I caught it a couple of weeks ago.

01:02:06.800 | I've been laid off and trying to,

01:02:10.480 | well, I am enjoying some time off, a sabbatical.

01:02:13.160 | I'm still interviewing a bit half-heartedly

01:02:16.680 | kind of questioning whether I'm burning bridges

01:02:19.760 | by taking interviews but not preparing 100% for them.

01:02:24.760 | But in my time off here,

01:02:27.400 | I'm trying to focus a little bit more on walking

01:02:29.800 | and health and different things.

01:02:31.640 | And one thing I've found in my walks

01:02:34.120 | and listening to certain things

01:02:35.760 | and exposing myself to different ideas

01:02:37.760 | and trying to get fresh ideas in my head

01:02:40.040 | is I'm pretty good at delving deep into things,

01:02:42.880 | getting into one or two topics

01:02:44.440 | and just spending all my time

01:02:46.400 | going deeper and deeper into them.

01:02:47.600 | And of course, the mechanisms we have with Instagram

01:02:50.920 | and YouTube makes that deep dive real easy.

01:02:54.960 | And other algorithms kind of favor that type of a feed.

01:02:59.000 | And it's been fun.

01:03:01.240 | But I remember, I'm sure you did a long time ago

01:03:04.200 | about exposing yourself to lots of different ideas

01:03:06.960 | and books being a primary way to do that.

01:03:09.120 | So I'm trying to read more.

01:03:10.560 | I used to read nonfiction.

01:03:11.560 | I'm trying to read a little bit more fiction.

01:03:14.320 | I'm just wondering if you have any ideas

01:03:15.880 | on trying to expose myself to a broader range of ideas

01:03:20.880 | both for future occupations, maybe business ideas,

01:03:27.600 | and not necessarily just money-making things,

01:03:29.520 | just hobbies even.

01:03:30.400 | And yeah, just sort of looking for some thoughts around that.

01:03:34.520 | I mean, I find myself going to the library

01:03:37.640 | and just picking out literally random books

01:03:40.840 | off the bookshelf to see if it starts a curiosity

01:03:44.800 | down one avenue or another.

01:03:46.680 | Should I be more direct or more intentional about it

01:03:49.680 | when kind of all the world's a possibility?

01:03:53.920 | - I don't know how to be more intentional about it

01:03:56.440 | in what we're talking about.

01:03:58.000 | I think that the secret is always,

01:04:01.280 | as I've said in previous shows that you've heard,

01:04:03.840 | you read or you learn in the direction of your goals.

01:04:08.360 | So when you have a goal, something that you've said,

01:04:11.200 | this is something that I would do, I would want to do,

01:04:14.040 | you identify the goal, and then you start learning

01:04:17.160 | or reading or exposing yourself to things

01:04:19.600 | in the direction of that goal.

01:04:21.440 | And that to me is what has made things,

01:04:23.520 | that's where things are so easy now.

01:04:25.120 | If we can get people to write down a goal,

01:04:27.800 | and the writing it down is important,

01:04:29.920 | but the most important thing is just to notice a goal.

01:04:32.360 | And it can be simple, like I want to be healthier,

01:04:34.720 | but just to notice that and not say,

01:04:36.560 | oh, okay, I'm just gonna pass it by,

01:04:38.240 | but say I want to be healthier and write it down

01:04:40.480 | so then they can recognize this is something that I want,

01:04:43.040 | now I can start doing something towards it.

01:04:44.800 | So my coaching in that situation would be,

01:04:46.440 | I want to be healthier.

01:04:47.920 | And then I would ask the person to say,

01:04:49.840 | what are some things that I could do

01:04:51.300 | that might move me in the direction of being healthier?

01:04:54.000 | I could schedule an appointment with a doctor,

01:04:55.920 | I could go and read a book on health,

01:04:57.480 | I could figure out what aspect of my health

01:04:59.400 | I want to improve, et cetera.

01:05:01.600 | So the key is just to notice it.

01:05:03.440 | So when you can notice something that you'd like to do,

01:05:05.960 | then it guides your web walking.

01:05:09.720 | If you notice and you say,

01:05:10.640 | I'd like to live a more adventurous life

01:05:12.440 | and travel around the country with my children in an RV,

01:05:16.940 | well, now you have something that guides

01:05:18.960 | your Instagram channels you follow,

01:05:20.920 | your YouTube channels you search out,

01:05:22.760 | the blogs that you read,

01:05:23.820 | the books that you find in the library or on Amazon, et cetera

01:05:27.020 | or the people that you talk to.

01:05:28.320 | Oh, hey, look, there's a meetup of travelers in my area,

01:05:30.280 | I'm gonna go get together with them.

01:05:32.280 | When you don't have that though,

01:05:34.160 | then I don't know of any way to direct that

01:05:37.200 | other than through what you've said.

01:05:38.960 | So what I would do, what I encourage people to do

01:05:43.440 | is if you are unemployed,

01:05:45.240 | you find yourself with significant amounts of time,

01:05:47.840 | expose yourself to things

01:05:49.520 | where ideas will come into your mind.

01:05:51.560 | So I like the library because I can go to the library

01:05:54.600 | and I can just bumble around.

01:05:56.800 | I can go through sections

01:05:58.140 | and see if anything attracts me to a certain section.

01:06:00.700 | And then if something attracts me to it,

01:06:02.540 | I just grab a book off the shelf and sit and read all day

01:06:05.000 | or take home 20 or 30 books

01:06:06.940 | and browse through them for a day or two

01:06:08.260 | and then take them back, it doesn't matter.

01:06:10.260 | Browse through the magazine racks.

01:06:11.900 | So this is where a Barnes and Noble

01:06:15.200 | or something with a big magazine rack

01:06:16.740 | or the library magazine rack is so interesting

01:06:19.100 | because these are things that other people are interested in

01:06:21.660 | and if other people are interested in,

01:06:22.700 | I might be interested in it too.

01:06:24.380 | And then along the way,

01:06:25.220 | just ask yourself the questions of

01:06:27.060 | why are you interested in this certain thing?

01:06:28.820 | What is it that you're looking for?

01:06:30.900 | Is there some theme to it?

01:06:32.720 | Beyond that, I don't know.

01:06:34.460 | I think that thinking about it is probably enough

01:06:36.580 | to develop the skills of introspection

01:06:38.620 | to understand what's important to you and why you like it.

01:06:41.880 | But as far as how to expose yourself,

01:06:44.500 | it is I think somewhat random

01:06:46.780 | and there are too many options in the world.

01:06:48.280 | There's too many careers, there's too many choices,

01:06:50.520 | there's too many hobbies.

01:06:51.980 | There's just far too many to think

01:06:54.060 | that you could ever do some kind of comprehensive analysis.

01:06:57.140 | Rather, I think it's just a matter of training yourself

01:06:59.900 | to be observant to what you're interested in and why.

01:07:02.600 | - I appreciate that.

01:07:06.100 | I think the very start of your advice there

01:07:10.620 | gave me what I needed, which is,

01:07:12.300 | I actually have one or two things

01:07:14.020 | that I'm getting pretty deep into it

01:07:16.020 | and I guess I had a little bit of uneasiness or guilt about,

01:07:20.660 | I already had, not necessarily specific goals,

01:07:24.020 | I can put goals around those,

01:07:25.420 | but I was delving deep into these things

01:07:27.580 | without thinking, maybe I haven't gone wide enough first,

01:07:31.020 | but I already had an innate interest

01:07:32.540 | from multiple angles on these hobbies.

01:07:35.420 | And so I think just what you said,

01:07:37.940 | maybe building a goal around that

01:07:39.220 | so I have more intentionality about what I've already

01:07:41.980 | in my head chosen these handful of things I'm working on

01:07:45.500 | is really what will solidify that feeling

01:07:48.180 | or take away that feeling

01:07:49.540 | that maybe I didn't explore widely enough

01:07:52.180 | before I delved into these things.

01:07:54.260 | If it's in my head and I'm interested in it,

01:07:55.660 | I should probably just be okay with

01:07:57.940 | dedicating my time to pursuing it.

01:08:01.060 | - Dedicate your time to it

01:08:02.020 | and then just be okay with it sliding away.

01:08:04.500 | If it's not of interest anymore, just let it go.

01:08:08.180 | I mean, it sounds very woo-woo,

01:08:09.500 | but I think that to me, it's fine to say,

01:08:13.940 | hey, I was into that, but now I'm not into that so much.

01:08:16.860 | And I don't know of any magic formula to this

01:08:19.980 | other than just to be easy on yourself.

01:08:22.620 | I think that at the end of the day,

01:08:24.820 | being present in today is important

01:08:26.660 | and then just being observing what you like to do,

01:08:29.260 | what you don't like to do,

01:08:30.180 | what enhances your experience of today,

01:08:32.340 | what enhances your experience in the future.

01:08:34.540 | And those are uniquely individual things.

01:08:38.820 | So I don't see this as the area

01:08:42.460 | of where there's any objective reality.

01:08:44.940 | There's no right or wrong.

01:08:46.700 | This is just a matter of, hey,

01:08:48.700 | here's what I'm into right now,

01:08:50.300 | and here's why I'm into it.

01:08:51.900 | And those reasons can be completely your own reasons.

01:08:55.180 | And if what you're doing is morally right,

01:08:58.180 | you're not harming other people,

01:08:59.500 | then these are areas where it's just a free personal choice

01:09:03.700 | that can change along the way.

01:09:05.200 | - Yeah, that's great.

01:09:08.060 | And I think that's another good thing I need to do

01:09:09.900 | is I've already done in my head,

01:09:11.140 | but maybe just writing down all those.

01:09:12.620 | There's multiple benefits of this hobby

01:09:14.460 | and things I can do with my kids with it.

01:09:17.460 | So just solidifying on that and just being okay

01:09:20.300 | with it, I think is what I need to do.

01:09:22.700 | So I appreciate that, thank you.

01:09:23.940 | - My pleasure, thanks for calling in, John.

01:09:25.540 | All right, we've got four callers left.

01:09:26.900 | We're gonna move faster here.

01:09:27.960 | Houston, Texas, go.

01:09:29.120 | That was gonna be this big--

01:09:33.620 | - I'm not sure-- - There we go, there we go.

01:09:35.300 | I had it all lined up for you.

01:09:36.140 | It was gonna be a dramatic, perfect, like boom, boom, boom.

01:09:39.340 | Go ahead. (laughs)

01:09:41.780 | - All right, yeah, I listened to your two episodes

01:09:43.940 | with Jonathan Harris and we love it

01:09:46.020 | that children, they're developing process

01:09:47.980 | and our role as parents is a topic

01:09:50.460 | that you cover in your podcast.

01:09:54.380 | And as new parents, I just have a couple of questions

01:09:57.540 | that I'll just ask first,

01:09:59.020 | and if we don't have time, it's fine.

01:10:01.180 | - Go ahead.

01:10:02.220 | - It is important for us to stay close

01:10:04.380 | to our extended family and for them to be a big part

01:10:07.460 | of our children's life.

01:10:08.900 | And we currently envision keeping our children

01:10:12.100 | in a traditional school system,

01:10:14.020 | but also try not to fall into the traps

01:10:19.020 | of a mindless, busy family life.

01:10:22.460 | And what would be your advice on how we should create

01:10:26.300 | a framework for this from a young age,

01:10:30.620 | just based on your own experience with your children

01:10:33.940 | and other knowledge that you have?

01:10:37.260 | Basically, if you can stick to it,

01:10:39.380 | that's all I had for today.

01:10:41.460 | - How old is your child or how old are your children?

01:10:44.380 | - Oh, she, we just have our first kid

01:10:47.340 | and she's like five and a half months old.

01:10:49.860 | - Great.

01:10:51.780 | - Yeah.

01:10:52.620 | - I think the most important advice that I would give

01:10:56.620 | and that I think that anyone else would give

01:10:58.620 | in this situation is focus on your child,

01:11:03.620 | not on someone else's child, but on your child,

01:11:07.300 | and then seek to do what you believe

01:11:10.380 | is in the best interest of your child,

01:11:12.740 | based upon your vision as a parent

01:11:14.940 | and based upon their unique personality.

01:11:17.560 | For example, I personally am pretty strong,

01:11:23.460 | I'm strongly opposed to enrolling my child

01:11:27.020 | in a government school.

01:11:28.900 | And I have clear reasons for that.

01:11:31.260 | But that's not an absolute statement.

01:11:34.060 | I'm opposed to it in my mentality,

01:11:37.020 | and I've got what I think are good arguments against it

01:11:39.620 | as to why for me, for my children, for my family,

01:11:42.780 | it's probably not a good idea,

01:11:44.940 | but that's not an absolute statement.

01:11:47.080 | I need to look carefully at my child

01:11:50.500 | and I need to think about what's in my child's best interest

01:11:54.800 | and there may be times

01:11:56.500 | where you completely change everything.

01:11:58.660 | So even if Jonathan Harris were sitting here talking to you,

01:12:02.060 | I think that would be the first thing he would say

01:12:03.940 | is look at your children

01:12:05.660 | and think about who they are as individuals

01:12:07.940 | and what your vision is.

01:12:09.700 | And what I'll tell you is that right now,

01:12:12.180 | there's no need to worry at five and a half months,

01:12:14.780 | there's no need to worry about any of these decisions

01:12:18.580 | because you won't know who your child is

01:12:21.740 | until more time comes.

01:12:24.500 | And so you need to be aware of your particular child.

01:12:28.780 | And so let me give you just a couple of practical examples.

01:12:33.380 | Your daughter might be incredibly smart

01:12:37.580 | and you might find that she's so smart,

01:12:40.620 | you have a hard time keeping her challenged.

01:12:43.860 | And so what you need to do is you go

01:12:46.700 | and you find the best, most challenging school.

01:12:50.900 | And yes, you're a fan of the traditional school environment,

01:12:53.620 | but you go and you try the local government school

01:12:55.980 | and they just don't give her enough challenge.

01:12:57.980 | Then you go and you find the best,

01:12:59.620 | most elite private school in your area

01:13:02.140 | and they don't give her enough challenge.

01:13:04.220 | And so basically you and your wife,

01:13:06.660 | you throw up your hands and you say,

01:13:07.740 | "We have to homeschool, right?

01:13:09.100 | "Because we can't keep her challenged in this situation

01:13:11.260 | "because she's just too smart."

01:13:13.140 | And so now all of a sudden, she's so smart

01:13:15.380 | that you are doing something

01:13:18.460 | that you never dreamed you would do.

01:13:20.420 | Now let's do the opposite example.

01:13:22.220 | You might then find out you're working with your daughter

01:13:27.220 | and you're trying to challenge her,

01:13:29.740 | but she's lonely all the time.

01:13:31.620 | And she doesn't have enough friends

01:13:33.220 | and she was thriving on the social interaction.

01:13:35.980 | But you can't find a solution.

01:13:37.180 | So what do you do?

01:13:38.020 | You go start a school, right?

01:13:38.860 | I've known people who've started a school for their children

01:13:40.780 | because they couldn't find what they wanted

01:13:42.380 | and the school became a fabulous, thriving business.

01:13:44.820 | But you can't predict anything like that.

01:13:46.660 | It's unknown.

01:13:47.780 | Or the exact opposite could be, right?

01:13:49.740 | Maybe your daughter, instead of being smart, is not smart

01:13:53.620 | and has tons and tons, she's slow,

01:13:56.100 | she's behind all her peers.

01:13:58.060 | Well, in that situation, you're gonna look at her

01:13:59.940 | and you're gonna say,

01:14:00.780 | "What's the best thing for me to do with her?"

01:14:02.620 | And if I had a child that was slow

01:14:04.620 | and behind his or her peers,

01:14:05.940 | I would not want them to face bullying,

01:14:10.140 | to be made fun of, or to be made to feel inferior.

01:14:13.140 | And so I would homeschool them in that situation.

01:14:15.620 | But when you homeschool,

01:14:17.300 | like for example, one of my children,

01:14:19.260 | I question whether my child is responding properly

01:14:24.260 | to other authority figures.

01:14:26.660 | And so one of the problems is

01:14:28.700 | that my child has been responsive to my wife and me

01:14:31.260 | as authority figures,

01:14:32.660 | but continues to be somewhat non,

01:14:37.540 | to have trouble with other authority figures.

01:14:39.500 | And so I keep watching every day,

01:14:41.420 | thinking about what do I do?

01:14:42.780 | How do I adjust this?

01:14:44.300 | And so for now, I've intentionally hired other teachers

01:14:46.980 | that come into our home,

01:14:48.260 | but there have been times where I have thought,

01:14:50.220 | "Maybe I need to go ahead and enroll my child into school."

01:14:54.220 | Right?

01:14:55.060 | Because maybe that school environment

01:14:56.500 | and facing the discipline of the school environment,

01:14:58.740 | it would be good for humility and whatnot.

01:15:02.060 | And so you're going to watch your child

01:15:05.700 | and you're going to constantly think,

01:15:07.860 | "What's best for my child right now?"

01:15:10.500 | And so in terms of a theory or a grand framework, et cetera,

01:15:15.500 | that's it.

01:15:16.620 | It's a matter of looking at my child along the way.

01:15:18.980 | Now there's more to it.

01:15:20.060 | You'll listen to other people's stories.

01:15:21.660 | You'll think about it, but that's what parenting goes.

01:15:24.580 | You'll try something.

01:15:25.660 | You'll see, are we getting results with this?

01:15:27.900 | What should I do?

01:15:29.060 | And you have to, I think, remain open

01:15:31.860 | to really any decision along the way

01:15:36.700 | if you believe that that's what's best

01:15:38.100 | for your particular daughter.

01:15:39.940 | That's my overwhelming advice.

01:15:41.540 | Along the way, listen to other people,

01:15:43.140 | find out what they like, what they do,

01:15:45.100 | be open to them, and then think about their stories,

01:15:48.580 | but don't think that there is one particular thing

01:15:51.140 | that's a magical solution.

01:15:52.660 | Every child is different,

01:15:53.820 | and it's your responsibility as a parent

01:15:56.140 | to coach your child and to help your child

01:15:58.100 | to do what's best for her.

01:16:00.100 | - Perfect, thank you so much.

01:16:02.140 | - My pleasure, congratulations.

01:16:03.620 | And I would just say, I guess the other thing I would say

01:16:06.380 | to the father of a five and a half month old,

01:16:08.940 | breathe, relax, and enjoy it.

01:16:13.780 | There is no pressure.

01:16:14.900 | I'm convinced there are some societies

01:16:18.620 | in which we put a lot of pressure on our children,

01:16:21.540 | and this happens a lot in the United States.

01:16:24.620 | It's not the worst in the United States,

01:16:26.420 | but it's bad in the United States,

01:16:27.860 | and it's very bad in some areas.

01:16:30.100 | And I do think that it's important

01:16:33.820 | to give children time to be children,

01:16:36.500 | and to have free play, to have unstructured play,

01:16:40.100 | to have unstructured time.

01:16:41.540 | So don't get too involved in the academics too early.

01:16:44.340 | I got pretty involved in the academics early,

01:16:46.780 | and even though we were doing it at home,

01:16:48.500 | we weren't putting a lot of pressure, et cetera,

01:16:50.700 | but we just learned, with four children now

01:16:54.340 | and going through the years,

01:16:55.420 | I've learned that each child is different.

01:16:58.100 | It's important to do what the child is ready for

01:17:00.460 | at the right time, but not to try to fit

01:17:02.460 | into some standard mode or model

01:17:05.260 | that has everything done at a certain time.

01:17:08.460 | So that's my recommendation to you.

01:17:10.100 | And with that, we go to what will be

01:17:12.420 | our final caller here in California.

01:17:15.180 | The other two callers dropped off,

01:17:16.420 | and so you're gonna round us out today.

01:17:17.900 | Welcome to the show.

01:17:18.740 | How can I serve you today?

01:17:19.940 | - Oh, beautiful.

01:17:22.220 | Thank you, Joshua.

01:17:23.060 | How you doing?

01:17:23.900 | - Very well.

01:17:24.740 | How are you?

01:17:25.580 | - I'm doing very well.

01:17:26.420 | All right, let me get into this.

01:17:28.020 | So I've been at a company for about five years now,

01:17:31.700 | and two years of that, two or three years, I was full-time.

01:17:35.060 | Since then, I've been part-time.

01:17:37.020 | The owner of the business wants me to come back full-time.

01:17:40.740 | He wants me to do the grunt work,

01:17:42.500 | help him build the business up.

01:17:44.460 | And then in Promise, he said he wants me

01:17:46.780 | to eventually move into an operations role

01:17:49.700 | within the company, the corporate company.

01:17:52.100 | And he wants to give me equity within the company.

01:17:54.780 | And so my question to you is,

01:17:57.180 | I trust him from the five years I've been with him,

01:18:00.420 | but from my standpoint,

01:18:04.420 | what should I ask for in terms of writing?

01:18:07.220 | 'Cause this is just a future Promise.

01:18:08.780 | This is probably two more years of work.

01:18:10.900 | In terms of writing to get the equity,

01:18:13.460 | and in terms of writing to get the role

01:18:15.460 | that will eventually be an operational standpoint role.

01:18:18.580 | Is there anything that you can tell me

01:18:20.180 | that will make this an operational standpoint role?

01:18:22.780 | Is there anything that I can do

01:18:24.900 | to make this a legit Promise?

01:18:28.060 | - What kind of company is this?

01:18:29.460 | And tell me a little bit about the numbers

01:18:31.060 | of what you're making right now,

01:18:32.540 | what he wants you to make

01:18:33.380 | if you come back full-time, et cetera.

01:18:35.220 | - So in the veterinarian field,

01:18:38.940 | and I would be a technician.

01:18:41.540 | And numbers-wise, we get paid by,

01:18:44.660 | we clean teeth, we get paid by the animal.

01:18:47.100 | And I'd probably make around 100K

01:18:49.060 | a worker for the first year that I'm back.

01:18:52.220 | Once I get on full-time

01:18:54.260 | and become a salaried employee with him,

01:18:56.860 | I'd be making upwards of 100, 200, something like that,

01:19:00.540 | depending on how far the business can go.

01:19:03.700 | - And you are excited about this opportunity?

01:19:05.700 | You think this would be a good fit for you,

01:19:07.260 | and you trust your boss from working with him

01:19:09.060 | for five years?

01:19:09.940 | - Yes, sir.

01:19:12.300 | - Okay.

01:19:13.140 | Well,

01:19:15.380 | (sighs)

01:19:17.380 | you could, so first,

01:19:22.740 | you can put in place some paperwork.

01:19:26.780 | The question generally with paperwork

01:19:30.900 | is whether it helps you or hurts you.

01:19:33.940 | In the US American culture, at this point in time,

01:19:38.260 | we are very paperwork-intensive.

01:19:40.300 | The challenge is that just because you have paperwork,

01:19:45.100 | doesn't necessarily mean that

01:19:47.580 | the paperwork is performed on.

01:19:51.220 | Perhaps,

01:19:52.060 | I lent somebody money recently.

01:19:55.780 | I try to never lend people money.

01:19:57.660 | I try to give 'em money or say no,

01:19:59.180 | but I've lent people money.

01:20:01.300 | And when I did it,

01:20:03.500 | I made sure to write it down,

01:20:06.540 | exactly what was needed.

01:20:08.620 | But I wouldn't actually try to

01:20:12.620 | enforce what was written down in a contract

01:20:15.820 | in a court of law,

01:20:17.220 | because how am I gonna,

01:20:20.140 | am I gonna do that to this person?

01:20:21.740 | Am I gonna actually go there?

01:20:24.020 | And so, there are times when people do go there,

01:20:26.820 | when they go ahead and bring litigation

01:20:29.260 | to try to force a performance of a contract.

01:20:32.580 | And that's what contracts are for,

01:20:34.020 | and I think that's what courts are for.

01:20:35.180 | I think that is one of the most important

01:20:37.100 | functions of government,

01:20:38.380 | is the judicial branch to bring a court system

01:20:42.180 | where you can have a judge,

01:20:43.140 | and in some cases a jury, hear a case,

01:20:45.380 | and then force the performance on a contract of some kind.

01:20:48.620 | That's important.

01:20:49.940 | So the contract is important.

01:20:52.420 | However, a lot of times, if you go into a contract,

01:20:55.900 | I kind of say, well, there's the contract,

01:20:58.180 | and then there's what's reality.

01:21:00.220 | And so, a lawyer would probably say,

01:21:03.620 | get this contract perfectly right.

01:21:05.940 | But sometimes I personally, from my perspective,

01:21:08.460 | I think, why am I writing out this contract?

01:21:11.140 | So, why would you first put something down on paper?

01:21:13.940 | I think regardless, you need to have

01:21:15.260 | something written down on paper.

01:21:17.220 | The first thing you need to do

01:21:18.060 | is you need to have expectations.

01:21:19.860 | People, even smart people, often forget what they said.

01:21:24.860 | I do.

01:21:26.500 | We all do.

01:21:27.420 | And so, writing something down

01:21:28.980 | forces us to communicate clearly.

01:21:31.340 | So, I will, my advice to somebody who's starting a business

01:21:35.460 | is you talk about what, you know, your Ds,

01:21:37.540 | what happens in the case of the death

01:21:40.060 | of one of the business partners,

01:21:41.260 | or the disability of one of the business partners,

01:21:43.500 | or the divorce of one of the business partners,

01:21:45.500 | and the dissolution of the business,

01:21:47.140 | or, you know, what do you do

01:21:49.380 | if the business fails and goes bankrupt?

01:21:51.860 | And so, you wanna write down a contract,

01:21:53.940 | and you wanna write it through

01:21:54.780 | to make sure there's clear communication.

01:21:56.740 | And you always do that communication in writing,

01:21:58.460 | so you have a piece of paper to say,

01:21:59.460 | this is what we're agreeing on now,

01:22:00.860 | and then if you need to, you point back and say,

01:22:02.860 | this is what we agreed to.

01:22:04.380 | So, that's the first goal.

01:22:05.700 | So, you could, at the very least,

01:22:07.420 | you should talk to him, and you should say,

01:22:10.260 | I wanna make sure that I understand what we're agreeing to,

01:22:13.340 | I wanna make sure that this is the expectation,

01:22:16.340 | and you write those things down.

01:22:18.780 | And you, and then sometimes you sign them

01:22:22.580 | as an actual contract, you know,

01:22:23.980 | you indicate somehow that we're both present.

01:22:26.400 | Sometimes you just file a memo.

01:22:28.020 | So, if somebody, you know, says to you

01:22:29.900 | certain, certain things, what you'll often do

01:22:31.820 | is you'll sit down and you'll file a memo with them.

01:22:33.580 | You'll send them an email.

01:22:34.760 | As we discussed yesterday, here's what you agreed to do,

01:22:37.220 | ba, ba, ba, ba, ba, here's what I agreed to do,

01:22:38.980 | ba, ba, ba, ba, ba, here's what's gonna be done

01:22:40.940 | if we don't do what we agreed on,

01:22:42.140 | ba, ba, ba, ba, ba, et cetera.

01:22:43.500 | Just wanted to make sure that my notes

01:22:45.460 | from yesterday's meeting were clean and agreed, et cetera.

01:22:49.200 | So, that's kind of the standard point.

01:22:51.140 | So, I'd say the most important thing,

01:22:52.660 | why you need to write things down with him

01:22:54.660 | is to clarify exactly what he expects of you,

01:22:58.060 | exactly what performance looks like for you,

01:23:00.420 | and then to get an idea of what he's talking about,

01:23:02.900 | what numbers he's looking for.

01:23:05.940 | You could go to something more formal, right?

01:23:09.460 | So, he could write out a contract for you

01:23:12.260 | and say, if you'll do this amount of work,

01:23:16.540 | these two years of work,

01:23:17.980 | and if we hit these certain benchmarks,

01:23:20.240 | then here is what we'll have.

01:23:22.880 | The only reason I'm not saying start with that

01:23:24.940 | is sometimes that's hard to do, right?

01:23:26.660 | I work with business owners

01:23:28.140 | and they have highly valued employees

01:23:31.660 | that they try to compensate,

01:23:33.140 | but it's, first of all, can be very expensive

01:23:36.060 | to go ahead and draw up a formal document,

01:23:38.860 | a formal contract, and so often they're slow to do it

01:23:41.140 | 'cause the legal fees, et cetera,

01:23:42.700 | and then things can change very, very quickly.

01:23:45.060 | And so, if you trust him,

01:23:46.620 | and if this is a good fit for you,

01:23:47.780 | and if he's paying you enough money to make things work,

01:23:50.680 | then I think it would make sense to do that.

01:23:52.980 | You're gonna have to lean on him, though,

01:23:58.340 | in terms of what he's willing to do

01:24:00.300 | to make things attractive for you.

01:24:03.940 | So, you can write things down,

01:24:05.340 | you can send him a memo after your meeting,

01:24:07.580 | you can say, "I just wanna make sure we're clear.

01:24:09.580 | "Is this what you're agreeing to?"

01:24:11.100 | But in terms of him actually getting a lawyer

01:24:14.900 | and writing up a formal employment contract

01:24:16.760 | and formally saying, "If you perform these certain duties

01:24:19.500 | "and here's how we know you performed them,

01:24:20.780 | "then I'm going to gift you 15% of the company,"

01:24:23.940 | et cetera, on this date,

01:24:25.400 | then you're gonna have to depend on his willingness

01:24:27.980 | to actually do that.

01:24:29.220 | - Gotcha.

01:24:30.060 | Gotcha, okay.

01:24:33.380 | Thank you, sir.

01:24:35.660 | Yeah, that makes total sense, okay.

01:24:37.700 | And I think it would be more of an agreement anyways.

01:24:41.660 | - A formal agreement or an informal agreement?

01:24:44.060 | - Informal.

01:24:45.980 | Just because of the fact that this is all based

01:24:48.540 | on the business growing.

01:24:50.460 | And so, how can you really say,

01:24:52.740 | "Okay, if a business grows past this,

01:24:54.300 | "then you get this position."

01:24:55.820 | It's kind of like, "Well, I'm gonna have to

01:24:57.820 | "and it's kind of like what hearsay."

01:25:00.020 | But yeah, I understand what you're saying.

01:25:03.580 | - Right.

01:25:04.420 | So that's why I tried to just say

01:25:05.260 | is that one of the simplest things you should do

01:25:08.020 | is as you're having these conversations,

01:25:10.180 | you should document them.

01:25:12.060 | And you need to feel out the relationship

01:25:15.220 | to figure out what's the right way to document them.

01:25:17.820 | I wouldn't try to force him to sign a contract necessarily.

01:25:23.660 | And I think that that's where if you trust him,

01:25:26.180 | you're gonna have to trust him.

01:25:27.420 | At the end of the day, we all trust one another

01:25:29.140 | and I'm not opposed to trusting people.

01:25:31.300 | But I would try to document things

01:25:33.700 | to make sure that our understanding is clear.

01:25:36.620 | I believe that that helps.

01:25:38.180 | That helps in any relationship

01:25:39.700 | to make sure that we have a clear understanding.

01:25:41.620 | Here's what you're willing to commit to,

01:25:43.780 | here's what I'm willing to commit to.

01:25:45.540 | So at the very least, you might do that

01:25:47.500 | in a form of a memo, an email,

01:25:49.720 | and just have things written down

01:25:53.340 | so that your communication is clear.

01:25:55.540 | And I think that that's often a good test

01:25:57.260 | for whether or not this will be

01:25:58.420 | a good working relationship in the future.

01:26:00.520 | If I think about the times

01:26:04.420 | when I've gotten involved in dumb businesses,

01:26:08.220 | when I've been scammed and cheated out of money,

01:26:10.740 | when I've been employed by people who were untrustworthy

01:26:14.580 | and yet I swallowed everything,

01:26:16.360 | some of the time, I mean,

01:26:18.380 | none of the time did I have written documentation.

01:26:20.300 | A couple of those guys I think would have agreed to anything

01:26:22.900 | because they were just swindlers

01:26:24.200 | and I got hoodwinked by them.

01:26:26.180 | But I think it doesn't hurt you to write things down

01:26:28.180 | and at least helps you to know I'm not being crazy

01:26:30.660 | if they're not performing.

01:26:31.980 | So definitely write it down, get agreement,

01:26:36.300 | and at the very least, in the form of an email,

01:26:39.300 | the memo to him stating, do you agree,

01:26:42.060 | is this what you've said to me,

01:26:43.820 | is this what you're communicating to me

01:26:45.140 | as far as your offer, so that you have that record.

01:26:47.840 | - Perfect, yeah, and in the meantime,

01:26:51.580 | I mean, it's not like I've been screwed out of a deal,

01:26:54.060 | I'm still making money.

01:26:55.660 | - Right, and that's important.

01:26:58.300 | And one thing you should expect

01:26:59.500 | is you should generally expect

01:27:01.100 | you're never going to have control of this company.

01:27:03.860 | And so that's one thing you should think about

01:27:06.460 | is yes, you're making money, but you need to make money now,

01:27:09.580 | but you're never gonna control this company.

01:27:11.180 | So let's say he makes you a very generous offer

01:27:13.340 | and he says, hey, if we do these certain things,

01:27:16.180 | I'll give you 40% of the company.

01:27:18.460 | That would probably be more than I would expect

01:27:20.180 | based upon what you're describing this,

01:27:21.460 | but okay, 40% of the company.

01:27:23.900 | You're never going to be in control of the company.

01:27:26.660 | You might be a trusted leader,

01:27:28.380 | you might be a manager, et cetera,

01:27:30.440 | but at the end of the day, you can always be fired

01:27:33.140 | and you're never gonna control the company, which is fine.

01:27:36.620 | We all take jobs that pay us a good amount of money

01:27:39.140 | and we don't control the company, we just do our job.

01:27:41.420 | But don't think that just because

01:27:42.940 | you have a little bit of equity in the company

01:27:44.540 | that you're going to be in control of the company.

01:27:47.260 | I think one of the things that disappoints some people

01:27:49.900 | is they're building their way up in their career,

01:27:52.740 | they find somebody who says, who recognizes their value

01:27:57.180 | and that person comes to them and says,

01:27:59.220 | listen, I think you should come and work with me

01:28:01.620 | and not only will I pay you a salary,

01:28:03.180 | but I'll give you equity in the company.

01:28:05.140 | That's great.

01:28:06.220 | It can give you extra compensation,

01:28:08.100 | it can allow you to have a performance incentive

01:28:09.880 | for being involved in it, et cetera.

01:28:11.860 | But if you recognize yourself as the kind of person

01:28:14.380 | who just needs to be in charge, who wants to be in charge,

01:28:17.420 | who wants to have the control over your destiny,

01:28:20.900 | and if you think that that's important to you,

01:28:23.180 | don't think that just because you have equity in the company

01:28:26.020 | that that's going to do it for you.

01:28:28.260 | I warn you about that simply

01:28:29.340 | because that's been something for me.

01:28:30.820 | Like years ago when I was younger, I would have thought,

01:28:33.060 | man, if somebody just give me equity, then it'd be fine.

01:28:35.380 | But what I've since learned about myself

01:28:37.200 | is that I like to be in charge, I like to be in control.

01:28:40.280 | Not because I'm a control freak

01:28:41.860 | or an authoritarian or something,

01:28:43.540 | but I like to have the opportunity that comes with control

01:28:46.820 | and I like to be free in my decisions.

01:28:49.260 | And so I've often thought, there was a guy,

01:28:51.380 | when I started Radical Personal Finance,

01:28:52.860 | there was a guy who already had a very established brand

01:28:56.100 | in the personal finance space.

01:28:57.680 | He made me an offer, he saw my potential,

01:29:03.020 | he saw what I brought to the table.

01:29:05.260 | I would probably have made more money,

01:29:08.020 | a lot more money working with him

01:29:10.180 | than doing what I have done.

01:29:12.760 | But I would never have been happy doing what I did,

01:29:15.820 | sorry, going and working with him,

01:29:17.700 | even though I would have made more money,

01:29:19.420 | because I would have felt like

01:29:21.340 | I wasn't doing what I wanted to do

01:29:23.340 | and it would have put me behind in my career.

01:29:25.700 | Because I would have worked with him

01:29:27.020 | and the longer I worked with him,

01:29:28.780 | those golden handcuffs would have gotten heavier

01:29:31.060 | and heavier and heavier

01:29:32.000 | and yet I still would have been stuck,

01:29:33.660 | feeling like I have to hide behind his brand,

01:29:36.460 | I have to do what I believe he wants me to do

01:29:38.540 | because he owns the company.

01:29:40.540 | And he never would have given me,

01:29:42.420 | he never would have sold the company to me,

01:29:43.780 | never would have given me control of the company,

01:29:46.400 | because he started it.

01:29:47.820 | And we would have always been two, in that sense,

01:29:50.180 | two alphas, fighting with each other.

01:29:52.420 | And so taking that offer would have been a mistake,

01:29:55.420 | even if it made me more money.

01:29:57.300 | So it doesn't sound like that's the case for you.

01:29:59.220 | It sounds like this is gonna be a great fit for you.

01:30:01.360 | But if you think that that might be the case,

01:30:03.260 | if you think that, you know what, I need to do this,

01:30:05.740 | then just be careful because you get in deep sometimes

01:30:09.220 | and those golden handcuffs become very heavy

01:30:11.780 | and you get accustomed to the money,

01:30:13.100 | you get accustomed to the life

01:30:14.180 | and then it's harder to break free.

01:30:15.980 | And so if you think that five years from now

01:30:17.820 | you're gonna break free,

01:30:19.020 | then you might take this deal

01:30:23.080 | and you might do it for a few years

01:30:24.360 | or you might just say no to it and do something yourself

01:30:27.400 | because if that's the kind of personality you have,

01:30:29.780 | you need to pay attention to that.

01:30:31.480 | Otherwise, this can be a great way to make a lot of money

01:30:35.280 | and be involved in a business with very little risk

01:30:37.240 | and can be an awesome solution for you.

01:30:39.200 | - Perfect, thank you, sir.

01:30:41.960 | I appreciate your input.

01:30:43.080 | - My pleasure and I wish you a very wonderful day.

01:30:48.080 | Our other callers hung up,

01:30:49.320 | so that means that our call, our show is shorter for today.

01:30:53.240 | So as a wrap up here, what do I want to say to you?

01:30:55.780 | I don't think I have anything to say.

01:31:02.600 | We've had an interesting show,

01:31:04.100 | some technical financial options,

01:31:07.680 | some interesting business ideas,

01:31:09.360 | and some interesting discussions.

01:31:11.000 | So I hope that you'll take these ideas.

01:31:13.280 | I guess the only thoughtful thing

01:31:14.800 | that I would add in conclusion

01:31:16.040 | would just be simply learn from other people's stories

01:31:19.200 | and you'll be able to make better decisions for yourself.

01:31:22.200 | And if you'll do that consistently over time,

01:31:24.140 | things will be better.

01:31:25.400 | I would love to talk to you next week.

01:31:26.920 | If you would like to do that,

01:31:27.760 | go to patreon.com/radicalpersonalfinance,

01:31:29.600 | just search for Radical Personal Finance on Patreon

01:31:31.620 | and find the show, join me there,

01:31:33.080 | and then I'll be able to speak with you next week.

01:31:34.880 | Until then, have a great weekend.

01:31:36.280 | (upbeat music)

01:31:39.880 | - Struggling with your electric bill?

01:31:42.160 | Get an energy assist from SDG&E and save.

01:31:45.420 | You may qualify for an 18% discount.

01:31:48.880 | Visit sdge.com/fera to find out more.

2021-02-26_Friday_QA