2021-08-27_Friday

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00:00:31.160 | It's Friday and today, of course, thankfully, that means live Q&A.

00:00:52.600 | On the Radical Personal Finance, a show dedicated to providing you with the knowledge, skills,

00:00:55.880 | insight, and encouragement you need to live a rich and meaningful life now while building

00:00:59.880 | a plan for financial freedom in 10 years or less. My name is Joshua Sheets. I am your

00:01:04.400 | host. Today is Friday. And as with every other Friday, at least in which I can arrange the

00:01:09.720 | appropriate technology, we do live Q&A. You call in, we talk about whatever you want.

00:01:24.400 | Love doing these Friday Q&A shows and plan to be doing quite a few of them over the next

00:01:28.440 | few weeks. I'm sitting in rural France right now, in rural southern France for the next

00:01:33.560 | month. So really enjoying our time here. I always get questions about, "Joshua, what

00:01:37.520 | are those birds in the background?" So today's birds are the French ones. I assume that you'll

00:01:44.000 | hear by their accent that they are appropriately French. These Friday Q&A shows work just like

00:01:48.840 | any other call-in talk radio show works. Basically, it's a live show where you can call in, talk

00:01:53.280 | about anything you want to do, want to. Any questions, any comments, anything that you

00:01:57.840 | want to chat about with me for the benefit of the audience. To gain access to these shows,

00:02:03.960 | you need to become a patron of Radical Personal Finance. Go to patreon.com/radicalpersonalfinance.

00:02:09.520 | Find me there on Patreon and sign up to support the show there. And that will give you access

00:02:13.600 | to one of these Friday Q&A calls. I would love to have you there supporting the show

00:02:18.280 | on Patreon. That just helps me keep the call volume down to, you know, go for four, five,

00:02:22.800 | six, seven callers, something like that. Otherwise, it winds up being 30, 40, 50 callers and I

00:02:27.400 | can't do that in a reasonable amount of time. We begin today, however, with Trey in Texas.

00:02:32.160 | Trey, welcome to the show. How can I serve you today, sir?

00:02:34.800 | Hey, thanks, Joshua. We just had our first child and I wanted to ask your opinion on

00:02:42.720 | how to save for his future education. I mean, I still think college is a pretty good deal

00:02:51.920 | right now. I think it's making some kind of ominous sounds though and I'd like to maybe

00:02:56.720 | not have it tied up to where it has to be used on a traditional university, although

00:03:03.000 | that's probably where he'll end up going, I would guess. But, you know, 18 years is

00:03:09.160 | a long time. So, I just wanted to ask how you would recommend we save for him to either

00:03:13.640 | attend a university or do some kind of other further education after high school.

00:03:19.640 | So common question, we'll give it the rapid treatment here, although I certainly expect

00:03:25.480 | this to be a 15-20 minute conversation because there's a lot of things to do. But let's

00:03:29.320 | begin with the basic concept of I don't see much point in saving for a child's education

00:03:37.440 | if that means that you're going to sacrifice some other goal that is more important. So,

00:03:42.880 | a couple of baseline points. Most of us who are parents want to make sure that our children

00:03:49.280 | have the best life that we can offer them. However, financially speaking, college should

00:03:55.320 | be one of the lower financial priorities. The classic comparison that I have stated

00:04:00.080 | many probably thousands of times, at least hundreds, maybe not a thousand, is simply

00:04:05.600 | this. You can borrow for kids college, you can't borrow for retirement. So, if saving

00:04:12.080 | for your child's education in the future is costing you some other goal that is more important,

00:04:19.240 | you shouldn't do it. I don't think it makes any sense for you to shortchange your retirement

00:04:24.080 | savings in order to save for your child's education. But more importantly, that's common

00:04:28.920 | advice, more importantly, I would say, I don't think it makes any sense for you to shortchange

00:04:34.880 | your personal freedom goals in order to save for your child's education. I don't think

00:04:40.680 | it makes sense for you to shortchange your business building goals in order for you to

00:04:44.120 | save for your child's education. I think it's one goal among many and so you should order

00:04:50.320 | your goals and pursue whatever you think is going to be the most important aspect to it.

00:04:56.880 | Now that said, many people like to have clear goals related to finance and I think that's

00:05:03.360 | a really good idea, right? I have them, you have them, we all have them. We have this

00:05:06.480 | idea of segmenting our money and it helps us to make thoughtful decisions. So, I don't

00:05:11.000 | see anything wrong with saving for your child's education. The second argument that I like

00:05:16.340 | to make is I believe that saving for college, if saving for college is causing you to shortchange

00:05:23.720 | something today, I believe that saving for college is the wrong move. I believe that

00:05:29.460 | every dollar invested into early childhood education is going to pay off far more than

00:05:38.760 | a dollar down the road, right? The time to invest in a child's education is in the early

00:05:45.040 | years because college is such a simple thing for somebody who is either talented with some

00:05:52.760 | marketable skills such as athletics or somebody who is cognitively, has a high IQ, high cognitive

00:05:58.920 | capability. College is very simple to pay for whereas other things are more difficult.

00:06:04.480 | And so, if I had to choose between enrolling my child into a better quality school, a private

00:06:12.560 | school versus a lower quality school, I would pay for the private school. If I had to choose

00:06:18.280 | between hiring a personal tutor to come into my home and homeschool my children to the

00:06:23.560 | cost of whatever that costs, knowing that I'm not going to be able to save for college,

00:06:28.080 | I'm going to do that. If I had to choose between taking my children world schooling and traveling

00:06:33.600 | around the world with them, I'm going to do that instead of saving for college education.

00:06:38.480 | If I had to choose between enrolling my children into career-oriented, interest-oriented, passion-oriented

00:06:45.520 | summer camps, I'm going to do that before I'm going to save for my child's college education

00:06:50.120 | because I believe those are a better bang for the buck. They make more sense. And again,

00:06:55.920 | college is easy to solve financially. And so, what I don't like is the fact that many

00:07:01.860 | parents prioritize this ephemeral idea of college savings if it's hurting something

00:07:08.360 | today. And in my experience, most parents are not in tune with the things that they

00:07:13.040 | can do today that are far more likely to impact the course of their child's life than the

00:07:18.560 | things that you can do down the road in college. And so, if I have to choose between those

00:07:22.740 | things, I am going to choose those early childhood opportunities. I'm going to choose that expensive

00:07:28.040 | summer camp if that's the one that really fits my child's needs. I'm going to do homeschooling

00:07:34.960 | and I'm going to give up a family income so that we can homeschool instead if we're into

00:07:41.080 | that. I'm going to go and enroll in the private school. I'm going to do those things early.

00:07:45.920 | And so, thus, most of this conversation really goes out the window if you buy those arguments.

00:07:51.720 | Now, I don't say them lightly, but consider those first two things so that you can understand

00:07:57.080 | what might be the best before you get to what type of account or what type of investment

00:08:02.200 | asset should I use. Because I believe that those points are really valuable and really

00:08:09.440 | important. Now, the third thing that we don't know is we don't know what the cost of college

00:08:15.040 | is going to be. And so, for people who are just saying, "Well, I'm concerned that college

00:08:20.220 | education is getting expensive and I just want to have a little bit of money," I usually

00:08:24.160 | say, "It's probably not that big a deal." Right now, today, in 2021, in the United States

00:08:30.280 | of America, you can get a fully accredited college degree with no scholarships, just

00:08:36.240 | straight out the door tuition for $10,000 total. Get a bachelor's degree. So, anybody

00:08:41.360 | can simply pay for that. And so, there are lots of options. And I think that in the future,

00:08:48.000 | those options are going to be far more numerous. So, when someone says, "Well, I'm saving for

00:08:53.040 | tuition at a local, just run-of-the-mill college," I often say, "Well, don't bother so much."

00:08:58.400 | The people who I really think should prioritize college savings accounts are those who have

00:09:02.680 | a family culture and a personal culture where they're deeply committed to formal education

00:09:07.720 | and they're saving for big-dollar colleges. You're saving for a big-dollar Ivy League

00:09:12.880 | college. You know there's going to be a $200,000 tuition bill or whatever number. Then that

00:09:17.000 | makes a lot of sense to save for. But if you're just saving a few thousand dollars, it doesn't

00:09:21.400 | make a lot of sense other than to make you feel good about, "Hey, I'm investing in my

00:09:25.240 | child's future." The next point that I like to make is a lot of times you need to understand

00:09:31.720 | that the so-called college savings accounts are only modestly effective at actually funding

00:09:38.680 | college. Why? Well, the first point I point out is the savings. And here I'm talking about

00:09:43.560 | things like 529 programs, educational savings accounts. Those are the two most popular.

00:09:49.200 | Although you can still do educational savings bonds, but nobody does that. Those types of

00:09:54.880 | accounts are limited in impact with regard to actual tax savings. So a lot of times someone

00:10:01.400 | might come along and say, "I've got a 10-year-old child and I want to set aside money for my

00:10:07.240 | 10-year-old child's education. And so I'm going to put aside $100 a month." Well, if

00:10:10.960 | you run the math on what you might expect with $100 a month going into a stable account

00:10:16.440 | of some kind, you're not really saving anything. And what most of those college accounts do

00:10:22.160 | is they don't actually save. They only allow you to avoid paying income taxes on the increase

00:10:32.760 | in the account value to the extent that there is an increase if used for education, which

00:10:38.040 | all told, in most of the time, that's not a very big tax bill. And so most college accounts

00:10:44.520 | have limited effectiveness. They make you feel good and the numbers don't make that

00:10:48.960 | big of a difference. So you might pass some of those barriers. And so some of the things

00:10:54.680 | that I look for when someone says, "I want to save for my child's college." First thing,

00:10:59.040 | I look for a young child. You have a baby, so this is perfect. The second thing that

00:11:03.280 | I really like to see is can that account be front-loaded? So instead of $100 a month,

00:11:09.000 | can you just put in 10 grand? Because now you might start to get enough gain. If you

00:11:14.200 | put in 10 grand or 50 grand or whatever you're trying to put aside for a child's education

00:11:20.000 | and you do it up front, as front-loaded as possible, then you now have much more opportunity

00:11:26.960 | for the accounts to grow so that college accounts can actually be really powerful and really

00:11:33.720 | useful from a tax savings perspective. I also look for someone who wants to save substantial

00:11:39.760 | money. And if those things are there, then yeah, I think college accounts are a good

00:11:44.160 | fit for that. Now, you didn't ask just about college accounts, so let me give a number

00:11:48.340 | of alternative ideas that I think make a lot of sense to consider. The first idea that

00:11:53.520 | I think makes a lot of sense to consider is simply acknowledge the fact that we don't

00:11:58.880 | know where you're going to be at that point in time and we don't know what college is

00:12:03.600 | going to be like. And so if you buy the idea that it makes sense for me to square away

00:12:08.760 | my financial life first, then set up your financial life in such a way that it gives

00:12:13.960 | you personal flexibility in order for you to be able to have cash flow college. What

00:12:21.720 | most wealthy parents do when the time comes for college is they simply pay for it. They

00:12:26.800 | simply pay for it, right, out of cash flow. And so think about if you're taking out a

00:12:32.360 | mortgage, right, maybe you have a 30-year mortgage but you got a brand new baby. So

00:12:36.320 | to make out an amortization schedule and say, "We think we're going to be here. I'm going

00:12:39.840 | to pay this mortgage on an 18-year schedule so that I have no mortgage payment when my

00:12:44.000 | child is in college." If you are thinking about buying a new car and taking out a car

00:12:49.360 | payment and you want to pay for your child's education because, "Hey, my son is going to

00:12:53.920 | college at 18 years old," well, then just make sure that your car payment is not going

00:12:58.880 | to exist during that time so that you can simply cash flow the college payment. These

00:13:04.960 | are useful ideas. Now, what can you invest in? Well, if you want to invest in a college

00:13:09.920 | account such as a 529 account or an educational savings account, you're going to be limited

00:13:15.760 | to mainstream mutual funds or to a private college's growth and investment in prepaid

00:13:23.000 | tuition type of program. Ignoring prepaid tuition, because I think that's kind of a

00:13:27.600 | silly program for most people to be involved in, ignoring prepaid tuition, basically those

00:13:34.160 | accounts work really well if you want to participate in mainstream investments. Now, you don't

00:13:38.160 | technically have to do this. For example, if you're proficient with investing, you've

00:13:43.600 | got some really high return investment, you can do a self-directed educational savings

00:13:48.640 | account. You can put an LLC into that educational savings account and you can use that LLC to

00:13:54.880 | invest in higher returning investments. You could buy tax lien certificates and put them

00:14:01.120 | in your ESA. You can actually set up a checkbook LLC through which you self-direct your 401k,

00:14:07.120 | your IRA, and your ESA. And so if that's of interest to you, then you can do that. Most

00:14:12.960 | people aren't going to do that because most people aren't interested in that kind of investment.

00:14:16.680 | So the people who I would try to steer towards 529s, ESAs, things like that, those people

00:14:23.720 | are generally people that I would say are just going to be mainstream investors, are

00:14:28.920 | looking for passive investments. They don't have to be involved. They're not going to

00:14:32.200 | be out on the weekends painting shutters and mowing grass, etc. And they're just looking

00:14:36.800 | for simple, smooth, and done for you. And in that case, if you have relatively small

00:14:43.680 | dollar amounts, an ESA is a good solution. If you're looking to put more money aside,

00:14:47.760 | a 529 is a good solution. And these are fine with the caveats that I have said. What I

00:14:53.320 | would say you look for is choose your state carefully. You can invest into any state's

00:14:58.280 | 529 account. I think that Clark Howard does a really good job of listing various 529 accounts

00:15:04.280 | and their fees. So I've always sent people to him. He and his staff update that regularly.

00:15:09.320 | So go and find Clark Howard's 529 account guide and follow his advice if you're looking

00:15:14.040 | for that kind of ordinary mutual fund type of approach. The things that have often been

00:15:20.460 | more exciting to me, though, are more unusual ideas, things that look differently. So I'll

00:15:30.000 | just give you maybe a few, I'll just pick a few of them. One approach is to make sure

00:15:36.280 | that your child doesn't need college and that your child is able to support himself by the

00:15:41.520 | time he actually gets to college. I think that this is a good plan. I think that it

00:15:46.200 | can be done with academics. I have had so many friends who have been academically capable

00:15:52.120 | and their scores were good, their grades were great, and they got paid to go to school.

00:15:56.720 | And so, again, back to my philosophy of early childhood rather than saving, I think that

00:16:01.280 | makes a lot of sense, is focus on that versus the finances. I would love to see someone

00:16:06.560 | invest into a business that helps their children. I think one of the best things you can do

00:16:11.400 | is teach your children how to support themselves at an early age. How you do this, I think

00:16:16.800 | it's up to you. Maybe you go to ifixit.com and you buy a set of electronic device tools

00:16:27.640 | and you teach your child how to set up a phone screen replacement, a battery replacement,

00:16:33.360 | basically an electronic fix-it business. And he can make money fixing things. Maybe your

00:16:40.920 | daughter is very gifted with a certain art and so you teach her how to use that in a

00:16:47.640 | commercial capacity. And so I love to see some kind of business created that's kind

00:16:52.280 | of sidelined, but I really believe you can invest into it. I think this, if you took

00:16:58.120 | the average family, and I know you're not average and I'm kind of intentionally avoiding

00:17:04.920 | asking you a lot of questions because I'm just trying to give you ideas. You have a

00:17:07.120 | newborn, right? You can go in any direction. But let's say you took the average person

00:17:10.620 | that's spending $150 a month on a 529 account. What I would do is I would say, "Why don't

00:17:18.560 | we spend $150 a month instead on your personal education budget for book purchases and online

00:17:28.680 | course purchases?" Here's a credit card. What I would do is set up a privacy.com debit

00:17:33.880 | card with $150 limit per month. And I would say, "Here, any course you want to buy on

00:17:39.760 | Gumroad, you can do it." I would rather my child spend $150 a month on courses on Gumroad

00:17:49.320 | rather than set it aside in a mutual fund so that he can learn how to trade crypto,

00:17:56.140 | he can learn how to play in NFT space, he can learn how to make money from an automated

00:18:01.980 | Twitter account, he can learn how to make money with his pickup truck. There's so many

00:18:07.280 | things you can do. And to me, that seems like a better return on investment than anything

00:18:12.820 | in this strictly financial space could be. And so I really believe that education is

00:18:18.880 | more powerful. And if you do the education well, then you minimize a lot of the need

00:18:25.460 | for the expensive college tuition. And then your child can choose, with your guidance

00:18:31.960 | and coaching, whether or not college is a good fit at that future time. I just believe

00:18:38.040 | that the world is going to be fundamentally different 18 years from now. A second way

00:18:42.080 | I think that you can approach this, and by the way, I don't think that the monopoly

00:18:49.480 | on education is going to be held as strongly as it is today. Today, going by the data,

00:18:59.160 | I have to continue to argue that college education seems like a really good investment. It helps

00:19:06.120 | your child to have more options, opens doors all around the world, etc. But I don't think

00:19:11.400 | that we're going in that direction. That's the old model. And most of the old things

00:19:16.560 | that college provided, a sorting and filtering mechanism for society, helping your children

00:19:22.480 | to have an appropriate dating pool for an appropriate mate, giving basic technical qualifications,

00:19:30.120 | many of these things are being replaced with different mechanisms. The sorting capability

00:19:40.040 | of a well-run Twitter account is far more powerful than the sorting capability of being

00:19:46.720 | in the right class at the Harvard School of Business. And what you see is that colleges

00:19:52.240 | are generally not keeping up with the rapid pace of change necessary for reacting to a

00:20:00.080 | changing marketplace. And so a lot of the markers of things that people really wanted

00:20:04.520 | historically are different. So I'm not throwing it out. I'm not an extremist totally opposed

00:20:10.740 | to it, but I think it's different and thus requires more flexible thinking. Other things

00:20:15.280 | you can do. I think that if you're interested or have the capability, I think it makes a

00:20:18.920 | lot of sense to say, "I'm going to invest into a specific asset that's going to be for

00:20:24.000 | the benefit of my child." And so one of my desires, which has been stymied by my global

00:20:31.520 | wanderings, if I weren't so involved in constant perambulations, then I would have more opportunity

00:20:38.960 | to do it. But one of my ideas has been, I want to invest into a house and I want each

00:20:45.000 | of my children to have his or her own house to start them off in life properly so that

00:20:51.280 | they have an asset that it can be a hands-on business lesson for them. And so maybe you

00:20:58.400 | look at it and say, "You know what we'll do is we'll go ahead and I did have $10,000 or

00:21:03.600 | $20,000 set aside that I was going to use and put into a 529 account. But what I want

00:21:08.600 | to do instead is I want to go ahead and use that $20,000 as a down payment on a rental

00:21:12.880 | house. I want to rent a house out and the goal is, can I get the tenants to pay this

00:21:17.360 | thing down over the course of the next 18 years so that my new baby is going to have

00:21:23.160 | a house?" And so maybe he lives in it, maybe he rents it out and the tenant income pays

00:21:28.600 | for his school. But now we have something that is number one, a business so he can get

00:21:33.780 | involved with actual business and start building those business skills. He has an opportunity

00:21:38.340 | for work so we can spend time together working on the house, fixing it, etc. He has a house

00:21:42.840 | and we have an opportunity for a genuine family business with all kinds of side tax benefits

00:21:50.760 | and planning benefits, etc. To me that's the kind of goal that for me is just more exciting

00:21:55.760 | than a 529 account and is vastly better from a tax planning perspective, potentially better

00:22:01.880 | from a return perspective if the property is well chosen. But even if you just said

00:22:08.480 | the house we're going to get no benefit from appreciation, we're going to get no benefit

00:22:13.880 | from tax sheltering, we're just going to focus on mortgage pay down, it's a pretty good move

00:22:18.980 | if you could do that compared to the flip side of the 529 account. I like the idea of

00:22:27.440 | my children having collections of things. So maybe your goal is I'm going to buy a silver

00:22:34.360 | American Eagle or maybe a monster box of, that's too much, a tube of silver American

00:22:40.160 | Eagles for every year of my child's life. This is something I like to do, right, where

00:22:44.360 | you make sure that, hey, you know what, you were born in 2021 and here's a cool coin collection

00:22:50.120 | of silver or gold, you could do it with gold too, here's a gold coin for every year. Now

00:22:54.120 | I'm not arguing that those, I'm not arguing that a, let's say you buy a gold American

00:23:04.040 | Eagle, an ounce of gold every year instead of putting the money into a 529 account. I'm

00:23:08.200 | not arguing that the gold will outstrip the return of say a mutual fund. Is it possible?

00:23:15.800 | Yeah, but it's unlikely. But there are other benefits to it, right? Now we have real physical

00:23:22.920 | assets that are interesting, the child can touch, can hold, assets that aren't recorded

00:23:28.320 | in the same way in terms of financial assets held at financial reporting institutions.

00:23:32.960 | And so there is a little bit of fuzziness there when it comes to reporting who owns

00:23:37.360 | what. You have a choice of when you actually gift the asset. And so I'm not arguing you

00:23:42.880 | should break the law, just one of the benefits of things like gold coins. So there are lots

00:23:48.400 | of things you can do and I would love to see, I guess to lay my cards out clearly on the

00:23:53.840 | table, I believe that if you will focus on your child as an individual and consciously

00:24:00.360 | choose to spend money actively on the interests, just the interests that your child has, then

00:24:10.600 | I think that you can do better with those investments than you can with just putting

00:24:19.840 | the money aside in a 529 account. So I guess one final point would be this, right? The

00:24:26.040 | other thing that I think you should seriously consider is I expect by the time 18 years

00:24:30.760 | comes by, I expect college to be free in the same way that today education is free of cost

00:24:37.280 | for anybody who wants it, just like it's always been, right? With a library card, now we just

00:24:41.960 | have way better resources with what's available for free online. I expect schooling itself

00:24:48.720 | to be free. And so the way I look at it is this, I think that government schooling at

00:24:56.240 | the college level will be "free" by the time my children are at college age. I expect it

00:25:04.440 | to be as worthless as anything that is free actually is. And so I still expect there to

00:25:10.160 | be very high dollar educational institutions available, but I'm not willing to save, especially

00:25:19.120 | in college accounts, for those high dollar institutions. If at some point in time my

00:25:24.600 | child decides, "You know what? I want to go to an elite Ivy League university," then either

00:25:30.920 | I'm going to be wealthy enough that I can simply pay for it and I'm going to choose

00:25:35.560 | that yes, this actually is appropriate because we're going to move you into an upper class

00:25:39.800 | or we're going to provide the things that come with that, or let them pay him to come,

00:25:46.000 | or let her figure it out. But I'm not going to set aside these accounts for something

00:25:50.880 | that is completely unknowable, especially when the benefits of the college accounts,

00:25:56.560 | for example, are not there. So what I do, what have I done? I don't have college accounts

00:26:05.080 | for my kids. It doesn't make any sense for me to do that. I'm not opposed to it, as I've

00:26:10.160 | tried to state very clearly, I don't think you're wrong to do it, I'm just not going

00:26:13.400 | to do it. What do I do? Well, I invest in my children, I try to buy them all kinds of

00:26:18.320 | things that are going to stimulate their creativity, I try to buy them cool stuff that's going

00:26:22.100 | to help them, I'll spend money on fancy gear. Like right now with the travels, I've bought

00:26:28.600 | my children kind of mediocre cameras, but right now I'm thinking, okay, I should go

00:26:32.640 | ahead and what I need to do is go ahead and buy my almost eight-year-old a brand new GoPro

00:26:40.800 | with a Media Mod kit so that he can be doing high quality video and high quality camera

00:26:47.520 | shots and start learning a skill of videography. And to me I view that as an investment. That's

00:26:53.880 | a bet and a probably a better investment than money in an account. And so whether it's,

00:26:59.640 | I want to be committed to my children's education and I'm finding lots and lots of ways to spend

00:27:06.120 | money on that now, and as far as I can see, we're only getting started. And so I'm going

00:27:11.500 | to spend a lot of money on my children's education and I'm going to do it in the very best way

00:27:17.500 | that I can. And if the time comes when college comes, I've got a couple backup options, right?

00:27:23.500 | I'm going to teach my children and they can always go to a country where college is already

00:27:27.500 | free. Any US American or anyone from anywhere can right now today apply and go to a German

00:27:34.500 | university without being German, without speaking German and go completely tuition free. Has

00:27:40.500 | to cover his own room and board. Any person can go to college working part time. I put

00:27:45.500 | myself through a private school, pretty expensive, did it part time. Anybody can apply and work

00:27:52.500 | my way through, graduated debt free. Any person can go and simply go to a less expensive school

00:28:03.700 | and go through slowly, etc. So I think I've said my point. If you want details way back

00:28:09.620 | in the beginning of the show, I did a whole series of shows, I think I did like six hours

00:28:13.540 | or something on every college account and how to use it and educational savings bonds.

00:28:18.860 | I'm focusing on these ideas because that stuff is easy and obvious. If you decide that what's

00:28:25.180 | best for us is to go ahead and set aside a college savings account and we want to do

00:28:30.740 | it and we don't want to be messing around with buying houses or gold coins or anything

00:28:35.900 | like that, go and open a 529, go to Clark Howard's guide, use one of those 529s, you'll

00:28:40.460 | be done in 15 minutes and move on your way. It'll work fine. But I think that by doing

00:28:46.460 | that you're missing out on the really high return activities which are all these other

00:28:50.180 | things that I've mentioned.

00:28:51.820 | >> Steven All right, yeah. I think you kind of convinced

00:28:58.380 | me. I was kind of leaning that way anyway. So yeah, I don't think I'm going to do a 529.

00:29:06.260 | just set aside money and if it does help you feel better

00:29:10.220 | to have an account for your new child,

00:29:12.280 | what I would say is choose your budget

00:29:14.000 | and set up an account for your new child.

00:29:16.120 | Set up a bank account

00:29:17.080 | and if you were gonna put $200 a month in a 529 account,

00:29:20.560 | just put $200 a month into the bank account

00:29:23.120 | and then start to see what adds up.

00:29:25.000 | And then in the coming years, it's hard to spend,

00:29:27.760 | the only way I've come up with to spend money effectively

00:29:31.200 | on the education of my zero-year-old, one-year-old,

00:29:34.800 | two-year-old, three-year-old, four-year-old, et cetera,

00:29:37.000 | is to have my wife as a full-time mother.

00:29:39.120 | That's it.

00:29:39.960 | And that's a major cost.

00:29:41.120 | It's a financial cost to our family, it's a cost to her,

00:29:44.560 | and someday our children will appreciate it.

00:29:46.800 | That's the only way I know to invest in a two-year-old.

00:29:49.920 | But when your child starts to get to six, seven, eight,

00:29:53.600 | all of a sudden, it opens up the world

00:29:55.720 | that I'm talking about in a really powerful way.

00:29:58.600 | And so set the money aside in an account

00:30:00.880 | and then think about it,

00:30:01.740 | that way it's allocated and separated

00:30:03.320 | and you feel like you're being a responsible father.

00:30:05.920 | And then, hey, if two years from now you decide,

00:30:09.840 | you know what, I really think a 529 account is a good deal,

00:30:12.280 | then go ahead and just make a lump sum contribution,

00:30:14.300 | put your five or 10,000 bucks in it and move on from there.

00:30:18.160 | I said 15 minutes, it turned into be 26 minutes.

00:30:20.760 | Let's go to Thomas.

00:30:21.600 | Thomas, welcome to the show.

00:30:22.420 | How can I serve you today, sir?

00:30:23.760 | Thomas, you're up.

00:30:28.440 | - Hey, Joshua, can you hear me?

00:30:29.320 | - I can hear you now, go ahead, sir.

00:30:31.680 | - Hello?

00:30:32.520 | - Go ahead, please.

00:30:33.360 | Got you loud and clear, Thomas, go ahead.

00:30:37.680 | - Hey, Joshua, thanks for the call and all that you do.

00:30:41.320 | Yeah, I just wanna say I do appreciate the last question.

00:30:46.040 | I have a newborn as well and I look forward to any updates

00:30:49.720 | that you have on your process over time

00:30:51.800 | and if you're willing to share on how you end up

00:30:55.920 | introducing activities or especially business aspects

00:30:58.980 | to your children in the future.

00:31:00.500 | I did wanna just say for Trey,

00:31:02.520 | one plan that I had actually was,

00:31:06.440 | I actually set up a 529 account

00:31:08.320 | and just let family and friends know that,

00:31:10.040 | hey, instead of clothes or toys,

00:31:12.600 | that they can contribute to that on my child's behalf

00:31:16.520 | and that can get some funding that way.

00:31:19.320 | - I think that's a great idea, absolutely.

00:31:20.920 | And people like it.

00:31:22.820 | There's no question that people like those accounts.

00:31:25.480 | - Yeah.

00:31:26.320 | I personally had a question about crypto interest

00:31:36.340 | and lending platform accounts like BlockFi,

00:31:39.460 | Celsius, Nexo, Cake, et cetera.

00:31:42.140 | I'm specifically using some of them to park funds

00:31:46.660 | for passive income and/or while waiting

00:31:48.940 | for other opportunities.

00:31:50.560 | Just kind of wondering what your thoughts were

00:31:52.660 | about any of those accounts, if you had any,

00:31:55.380 | if you've met anyone that maybe at conferences

00:31:59.740 | you've been to that has anything to say about them.

00:32:02.380 | The current stable coin yields are between

00:32:04.860 | like seven and 10% right now,

00:32:07.040 | so it seems kind of attractive.

00:32:08.840 | A lot of them seem to be venture capital backed,

00:32:10.880 | so it seems like there's a little bit less risk there

00:32:14.220 | and the liquidity is great.

00:32:15.780 | So just wondering what your thoughts were.

00:32:17.700 | - I have nothing bad to say about any of those ideas

00:32:20.780 | or platforms.

00:32:22.860 | My only thought, I'm totally in favor of doing it

00:32:25.500 | and I applaud you for being involved.

00:32:27.340 | My only comment is simply,

00:32:30.660 | while I appreciate the long-term potential

00:32:36.500 | of some of these ideas and while I am wholeheartedly

00:32:41.500 | in favor of building and developing and participating

00:32:46.380 | in a fundamental reorganization

00:32:48.580 | of the global financial markets, I'm not scared of that.

00:32:52.580 | I think this still does have to be viewed as speculation

00:32:56.780 | rather than as investment.

00:32:59.420 | And so I am very much in favor of speculation,

00:33:05.100 | but I try to label clearly what is speculation

00:33:08.900 | and what is investments.

00:33:10.980 | And so in these marketplaces, because the technology

00:33:15.980 | and the platforms are so new

00:33:18.380 | and because they are relatively untested,

00:33:21.680 | there will be problems and hijinks

00:33:24.700 | and just things that occur.

00:33:26.100 | And so whether it's a marketplace being hacked

00:33:29.020 | and completely losing, having some fundamental flaw

00:33:34.340 | that's shown, whether it's legislative risk,

00:33:37.580 | I talk, debate with people about things like,

00:33:43.860 | well, is the US American government gonna ban Bitcoin?

00:33:47.420 | I always say, listen, you're dealing

00:33:48.740 | with the same government that for 40 years

00:33:51.420 | banned you owning a gold coin.

00:33:53.760 | So it took 40 something years.

00:33:56.000 | For 40 years, you couldn't even own a gold coin.

00:33:57.780 | And before that, that was every one he used,

00:33:59.620 | legally speaking.

00:34:00.460 | And so, I mean, don't say nothing's impossible.

00:34:04.620 | And so my only point would be label your activities here

00:34:08.920 | very clearly as speculation

00:34:11.980 | and then assess your overall financial position

00:34:15.140 | to make sure that this speculation makes sense in your life

00:34:19.360 | based upon your needs, your goals and your personal risks.

00:34:22.940 | As long as it's labeled speculation, I'm fully on board.

00:34:26.620 | - Do you still consider it speculation

00:34:32.960 | because the platforms are new,

00:34:34.860 | even though the asset itself is a stable coin,

00:34:37.900 | which there are certain stable coins that are audited

00:34:40.980 | and fully backed and rarely have any sort of fluctuation?

00:34:45.820 | - I can't, from personal experience and personal knowledge,

00:34:50.480 | I can't speak effectively enough to every single detail.

00:34:55.480 | And so I can't say,

00:35:00.200 | I don't have a BlockFi account at the moment.

00:35:03.080 | I don't know how to do that.

00:35:05.480 | And so I can't say from that perspective,

00:35:08.000 | from personal experience.

00:35:09.080 | I have read some about it to get an exposure to it,

00:35:12.680 | but I can't say it from personal experience.

00:35:15.160 | And so my only comment would be

00:35:17.380 | that even the whole concept of a stable coin to me,

00:35:20.100 | unless I'm wrong and feel free to tell me why I'm wrong,

00:35:23.300 | the concept of a stable coin is a fundamentally new concept

00:35:27.820 | that while it's related to an external asset

00:35:31.100 | and the idea is, hey, let's tokenize the external asset,

00:35:35.060 | that to me still feels very much like a new

00:35:37.580 | and a brand new and exciting market,

00:35:41.340 | not as a tested and tried and true approach.

00:35:45.480 | Am I wrong?

00:35:46.320 | - No, it's still definitely a new asset,

00:35:51.080 | even though it's linked to another one to link its value.

00:35:54.440 | But yes, it definitely, I could see a future where,

00:35:58.180 | I don't know, the US government wanting their own

00:36:01.680 | US dollar coin tries to,

00:36:04.360 | I don't know, have some sort of law against stable coins

00:36:09.680 | or other ones that they don't control.

00:36:11.340 | So no, there's definitely that potential.

00:36:15.940 | - Yeah. - I can acknowledge that.

00:36:17.460 | - I would like, I have been working very hard

00:36:19.540 | to upgrade my education and make sure that I'm competent,

00:36:22.740 | but I still have not renamed this podcast

00:36:24.540 | as the DeFi podcast, right?

00:36:26.180 | It's not, I'm not there yet.

00:36:28.780 | And so I can't speak to it effectively enough

00:36:31.740 | to say here's how it all works.

00:36:33.520 | My only point would be that you can have,

00:36:37.020 | I guess the best example that most of us could relate to

00:36:40.580 | would be the mortgage-backed securities crisis

00:36:45.580 | of the late 2000s, that you have an asset

00:36:50.580 | that is fundamentally always considered a very safe,

00:36:55.160 | very conservative asset, and then that asset was tokenized,

00:36:59.800 | or more properly, of course, turned,

00:37:01.860 | derivativized, turned into a derivative.

00:37:04.860 | And then at the end of the day,

00:37:07.660 | that derivative was shown to be far less safe

00:37:12.660 | than previously understood.

00:37:16.540 | And so when you had those mortgage-backed securities created

00:37:21.540 | the original creations of that,

00:37:25.120 | the original creations were excellent.

00:37:28.200 | They had the same basic value that they always had.

00:37:34.060 | But then as the securities were traded

00:37:37.860 | and sliced more finely and layered up, et cetera,

00:37:42.860 | the market got a whack underneath it.

00:37:45.060 | And so then one day everyone woke up and realized

00:37:47.700 | what we thought was a grade A asset

00:37:49.860 | is actually a piece of trash.

00:37:51.900 | And so everything collapsed.

00:37:53.700 | Now, I can't tell you, and I'm not arguing to say that's,

00:37:58.140 | I'm not saying that what you've described is that.

00:38:00.860 | All I'm saying is whenever something new is created,

00:38:05.420 | there are inherent risks that are not yet known.

00:38:09.660 | Mortgage-backed securities were a new creation

00:38:13.000 | and it took time for the new risks to be known.

00:38:16.200 | And so this is a new market.

00:38:18.620 | And while the underlying concepts may prove to be sound,

00:38:22.280 | and I hope they are, caution is warranted to say

00:38:25.420 | we don't know what we don't know.

00:38:27.820 | It's no different than anything, right?

00:38:31.180 | A new medical treatment, a new way of building a house,

00:38:35.800 | anything takes time to be tested.

00:38:38.300 | So I say be involved and understand the risks.

00:38:42.820 | No doubt you could articulate it better than I can,

00:38:45.920 | but be aware that this is speculation.

00:38:48.160 | This is not a time-proven strategy

00:38:53.160 | that has been tested through various markets,

00:38:57.440 | through various conditions,

00:38:58.700 | that has proven itself through various attacks.

00:39:02.440 | For all of its benefits and glory,

00:39:06.220 | Bitcoin is not in any way proven.

00:39:09.040 | It is a concept that is being proven,

00:39:12.720 | but even the whole concept of whether it's a stablecoin

00:39:17.720 | or Bitcoin or anything, this is new.

00:39:20.540 | That's not bad, I just say,

00:39:22.360 | from a personal finance perspective, label it speculation.

00:39:25.380 | So that's my thought,

00:39:27.560 | and I look forward to perhaps in the future

00:39:30.760 | talking more about it and learning more myself

00:39:32.860 | about the strategies that you're using.

00:39:35.040 | John in Pennsylvania, welcome to the show.

00:39:36.200 | How can I serve you today, sir?

00:39:37.660 | - Yeah, that's kind of a weird question, I guess,

00:39:41.600 | but things could change,

00:39:43.400 | but there's a really good chance coming up in 2022,

00:39:47.920 | our family will just have a very low-income year,

00:39:53.240 | and we have enough liquid savings

00:39:57.340 | that we'll get through 2022 and probably beyond

00:40:00.740 | without any compromises or issues to our lifestyle.

00:40:04.180 | So, you know, take a vacation or two or whatever,

00:40:06.660 | but I'm trying to think ahead as to anything

00:40:10.220 | that I could do or potentially not do to cause a problem,

00:40:14.260 | to take advantage of a year like that

00:40:16.940 | that has very low income.

00:40:18.340 | Kind of just not being very creative,

00:40:21.140 | the only things I could think of

00:40:22.140 | is if I wanted to use that low-income,

00:40:25.680 | W-2 income to transition any money

00:40:28.580 | from certain accounts to other accounts

00:40:30.700 | for looking ahead,

00:40:32.140 | things like Roth conversions or whatever,

00:40:34.020 | but I'm thinking more outside the box

00:40:37.660 | on things I have never heard of

00:40:39.820 | or just things from a personal finance standpoint

00:40:42.460 | that could be an advantageous year for.

00:40:45.740 | Does anything come to your mind about that,

00:40:48.100 | or is it just sort of just take care of the basics

00:40:51.140 | and keep on with good general personal finance?

00:40:56.140 | - Yes, there are a few things,

00:41:02.380 | but I don't know that they're as brilliant

00:41:04.780 | as I wish they were.

00:41:06.580 | I think the obvious solution is take advantage

00:41:10.580 | of as many free money programs as you can.

00:41:14.660 | So whether this is Medicaid health insurance,

00:41:19.520 | whether this is,

00:41:21.120 | if your income is zero, food stamps, right?

00:41:27.140 | Or WIC, I guess it's called.

00:41:29.940 | Sorry, SNAPs, Nutritional Assistance Program.

00:41:33.420 | You can go into government programs

00:41:37.100 | if you wanna get involved in that.

00:41:39.300 | I think that's a double-edged sword.

00:41:41.100 | I don't think it's worth most of that,

00:41:45.220 | getting involved with most of that stuff,

00:41:47.220 | but a lot of people could do that.

00:41:49.520 | I think the obvious solution is IRA conversions,

00:41:53.560 | converting traditional IRA assets to Roth IRAs.

00:41:58.200 | Sometimes maybe there's some kind of low-income program

00:42:01.320 | that you could take advantage of,

00:42:02.720 | a scholarship fund or something like that,

00:42:05.920 | a disaster relief fund, et cetera.

00:42:08.940 | To me, the only obvious solution that I have

00:42:11.700 | is simply the IRA conversions,

00:42:15.600 | because that's an income-based scenario.

00:42:18.680 | You can fill the income buckets with your conversions.

00:42:22.080 | - Right, and that's kind of where I was going.

00:42:23.800 | I was just trying to think,

00:42:24.880 | is there anything I've never heard of or thought of

00:42:26.640 | that that kind of year would be advantageous

00:42:31.640 | to do that kind of thing.

00:42:33.200 | So if there's nothing really that I'm missing,

00:42:36.760 | then that's probably a good thing

00:42:37.760 | that I haven't been ignorant of some major side of things.

00:42:42.200 | - I think you would consider college tuition.

00:42:46.100 | This is the classic, if you have it,

00:42:50.000 | back to the first call that we began with today.

00:42:52.520 | If you have college tuition,

00:42:54.120 | and if you can arrange to be unemployed

00:42:57.160 | in the year before your child is going to college

00:43:01.960 | so that you can fill out your FAFSA with $0 of income,

00:43:06.640 | that can help you a lot on your numbers.

00:43:09.000 | The only hesitation I have is I think you can go through

00:43:11.360 | and you can be involved in a lot of those kinds of things.

00:43:16.000 | I just question if that's healthy for the psyche.

00:43:18.980 | I believe that welfare damages people,

00:43:24.400 | and I don't want to be damaged.

00:43:25.440 | And so getting on the free money train,

00:43:28.600 | I think, has the risk of damaging me.

00:43:30.880 | And so I want to be super careful about that stuff.

00:43:34.020 | Also, I would say that if you're the kind of person

00:43:36.540 | who can comfortably take a year off,

00:43:38.680 | then most of those things are just not at the scale

00:43:41.880 | where it makes any sense.

00:43:43.200 | And so it just, what's the point of having $250 a month

00:43:48.880 | of SNAP probably for food that you wouldn't eat?

00:43:52.440 | So it's like, there's no reason.

00:43:56.080 | It's kind of how I feel about,

00:43:57.360 | a lot of times about credit cards and things like that.

00:44:00.300 | I've been doing quite a lot of mileage hacking.

00:44:03.520 | I've been testing a bunch of strategies and whatnot.

00:44:05.680 | And the more I do it, the more I recognize

00:44:08.440 | that if somebody doesn't have a higher returning activity,

00:44:13.440 | then this can be a worthwhile use of time.

00:44:17.080 | But there are so many other worthwhile activities

00:44:19.920 | and worthwhile uses of time that I kind of just feel

00:44:23.280 | like a lot of it is a distraction.

00:44:25.280 | And that's how I feel about anything of government programs

00:44:29.600 | or rebates or any of that stuff

00:44:31.520 | that you can qualify for when you're low income.

00:44:34.080 | It's like, hey, if somebody doesn't have something better,

00:44:36.440 | it's really good.

00:44:37.840 | The guy who's making just a little bit of money,

00:44:40.560 | for him to get SNAP is a big deal

00:44:42.640 | and it makes a big difference in his monthly budget.

00:44:45.220 | But that's not you.

00:44:46.680 | And so it's like, it's the opportunity cost

00:44:49.800 | of going and spending time doing that.

00:44:51.760 | And it brings down your perspective.

00:44:53.280 | You wonder about the ethics of it.

00:44:55.160 | Then you start seeing yourself as the kind of person

00:44:57.600 | who needs an extra $3,000 a year of free money.

00:45:01.360 | And it's just, that's not healthy.

00:45:03.120 | And so my only answer is that I know of is IRA conversions,

00:45:07.700 | but beyond that, who knows,

00:45:09.040 | maybe the audience has good ideas.

00:45:11.500 | - Oh yeah, I agree.

00:45:14.000 | And I think the,

00:45:15.040 | what you mentioned about the credit card hacking,

00:45:20.400 | that's true too.

00:45:21.240 | I mean, I find I do it very sporadically

00:45:23.400 | and only when it's very convenient

00:45:24.960 | or very easy and low thinking.

00:45:27.600 | Unless you're someone that really enjoys it,

00:45:31.360 | I think it almost is a wash on how valuable it is.

00:45:36.920 | Just because it takes so much to coordinate

00:45:38.780 | all the different transactions and stuff like that.

00:45:41.540 | So yeah, I appreciate it.

00:45:42.500 | No, that's good.

00:45:43.340 | I'm glad I'm not missing anything major.

00:45:44.900 | One other maybe quick question.

00:45:47.220 | - Go ahead, sure.

00:45:48.060 | - I don't know how many followers you have online.

00:45:49.220 | - Go ahead.

00:45:50.060 | - The other thing I kind of was focusing on

00:45:52.420 | in the next few months, especially,

00:45:54.180 | but also in the next year,

00:45:55.860 | I'm really trying to build up a lot of just basic

00:45:59.260 | general preparation items for me and my family.

00:46:04.060 | And this is something where I kind of bump up

00:46:06.740 | against frugality a little bit too much

00:46:08.320 | and certain things that are really critical,

00:46:11.360 | tourniquets and first aid things

00:46:14.920 | and things I know that are on my list

00:46:16.720 | are high priority items,

00:46:17.840 | but I just keep thinking, oh, I'll get around to it

00:46:20.280 | or I'll purchase those things later.

00:46:22.880 | And a lot of people will do some fear mongering

00:46:26.480 | and talk about how things are gonna be

00:46:28.280 | in short supply in the future.

00:46:29.820 | How do you, I guess, listening to you sometimes

00:46:34.160 | really helps me out 'cause when you're traveling

00:46:35.540 | and things are so difficult to get in other countries,

00:46:37.240 | I feel like you're really gonna put a good spin on it,

00:46:39.280 | how it's like, well, it's just available in America,

00:46:41.200 | so just go get it and don't worry about it.

00:46:43.280 | But when you're thinking about things like that,

00:46:47.000 | when you're living less of a nomad lifestyle,

00:46:48.840 | do you just kind of buy all those things

00:46:51.080 | and just put them aside and say,

00:46:52.080 | okay, this is a one big time purchase,

00:46:53.440 | or do you kind of buy slowly on preparation items

00:46:57.600 | until you kind of have a good stockpile?

00:47:00.960 | What do you do with that?

00:47:02.880 | I'm thinking about that.

00:47:04.540 | - It's a fair question because there are some things

00:47:09.460 | that are fun to spend money on when it comes to prepping,

00:47:12.300 | and there are some things that is not fun

00:47:13.980 | to spend money on, right?

00:47:15.100 | I like spending money on guns.

00:47:16.540 | I like guns, it's fun.

00:47:18.220 | I can make a good argument that guns hold

00:47:21.560 | and increase their value, they're portable,

00:47:24.600 | they're just wonderful, and so it's always fun

00:47:26.860 | to go and buy a new gun.

00:47:28.580 | My least favorite category to spend money on

00:47:31.140 | is medical supplies, especially in abundance, right?

00:47:35.000 | Because medical supplies expire,

00:47:37.120 | and so it's like, well, how hardcore am I gonna be?

00:47:39.500 | It's one thing to say, I should have a first aid kit,

00:47:41.820 | in fact, I'm gonna have a first aid kit.

00:47:44.240 | It's another thing to say, I'm gonna be prepared

00:47:46.180 | for the end of the world as we know it,

00:47:47.460 | and I'm gonna stack bandages,

00:47:48.940 | I'm gonna have two Rubbermaid totes full of extra bandages

00:47:52.560 | in case someday I'm fighting off the golden hordes

00:47:56.420 | in the street and I come home gut shot,

00:47:59.180 | and my wife has to do stomach surgery

00:48:01.340 | on my kitchen table, right?

00:48:02.700 | That's a little hard for me to get excited

00:48:05.940 | about actually going out and spending tons of money

00:48:08.260 | on bandages in a scenario like that,

00:48:11.140 | 'cause that's just a little hard for me to believe.

00:48:13.800 | So here is the best approach that I have come up with.

00:48:19.820 | First of all, to ask yourself the question and say,

00:48:24.280 | how significant is this event?

00:48:28.540 | I was talking to a friend of mine recently,

00:48:30.180 | we were talking about medical preparedness,

00:48:32.500 | and I feel like I'm probably a pretty good prepper,

00:48:36.280 | because I have continually gone from stationary to mobile,

00:48:40.980 | and stationary to mobile, and stationary to mobile,

00:48:43.500 | and so you understand pretty quickly,

00:48:46.500 | what are the things that I need to have,

00:48:48.500 | and what are the things that I don't need to have?

00:48:50.820 | And you recognize, okay, these are the certain things

00:48:53.900 | that are important, so we're talking

00:48:55.020 | about medical preparation.

00:48:56.620 | And he made the point to me, he said,

00:48:59.420 | there are two things that can kill you fast

00:49:03.900 | before you can get to a doctor,

00:49:06.020 | and there are two things, and those two things

00:49:08.980 | are rapid blood loss and/or anaphylactic shock.

00:49:13.980 | And so we talked about tourniquets,

00:49:16.480 | but I've had a tourniquet for a long time,

00:49:19.580 | but he said, what you don't have is an EpiPen.

00:49:21.940 | And he said, you should have an EpiPen

00:49:26.140 | for, and none of my children, thankfully,

00:49:29.460 | we're an allergy-free family, to my knowledge,

00:49:31.860 | none of my children are allergic to anything,

00:49:33.360 | we've never had any allergic responses

00:49:35.980 | that are a problem at all, but he said,

00:49:38.340 | you should travel with an EpiPen.

00:49:40.140 | And so a few days ago, I was in Spain,

00:49:43.100 | and I went to the local pharmacy,

00:49:44.500 | and I paid five euros, and I bought an EpiPen.

00:49:47.020 | And, 'cause it just made all the sense in the world to me,

00:49:49.140 | it's like, if these are the two things that can cause,

00:49:52.180 | if these are the two things,

00:49:54.860 | if they happen to my child, that I can jump in the car.

00:49:57.500 | And in fact, a few weeks ago, my son,

00:49:59.480 | my youngest son, was straddling a fence,

00:50:02.660 | fell down, bashed his head on the pavement,

00:50:06.260 | and gashed his forehead open.

00:50:08.120 | Wife calls me, says, you know,

00:50:10.340 | my son has just fallen down, cut his head,

00:50:12.740 | come home now, he's at the store.

00:50:13.860 | So I went home quickly, and it was one of those things

00:50:16.340 | where, hey, here's a medical emergency,

00:50:18.060 | I didn't know how bad it was, she didn't say,

00:50:19.460 | just said he's gonna need stitches,

00:50:21.340 | and I had to go home and deal with it,

00:50:23.980 | and took him to a local clinic,

00:50:25.380 | 'cause it was on his forehead,

00:50:26.220 | I wanted to make sure it was professionally closed.

00:50:28.660 | Thankfully, they just glued it closed.

00:50:30.720 | So it wound up being not a big deal,

00:50:33.300 | but it's kind of put me in that image, right?

00:50:35.340 | Here I am speeding home to try to pick up my wounded child

00:50:38.660 | in a foreign country, and now I'm gonna race off

00:50:41.060 | and find a hospital.

00:50:41.900 | How do I find a hospital?

00:50:42.960 | Do I have what I need to be able to get to a hospital?

00:50:45.780 | Well, if you know that the two things that are going to,

00:50:50.860 | if you know the two things that could potentially,

00:50:54.620 | that you could die from in about 20 minutes or less, right,

00:50:57.500 | die in 30 minutes or so,

00:50:58.780 | that it might take you to get to the hospital,

00:51:00.300 | or flag down help of some kind,

00:51:02.380 | are rapid blood loss and/or anaphylactic shock,

00:51:05.380 | then it makes all the sense in the world

00:51:07.060 | to go in and buy a bunch of tourniquets.

00:51:09.300 | And so in the past, I was like,

00:51:12.220 | I don't wanna buy a bunch of tourniquets, right?

00:51:13.700 | You're gonna spend this money and you're never use this thing

00:51:15.300 | but now, like, I get it, right?

00:51:17.260 | A fresh, it sounds expensive to spend $30

00:51:19.900 | on a nice cat tourniquet, but then, you know what?

00:51:23.260 | I'm gonna put a tourniquet in every one of my cars,

00:51:25.380 | I'm gonna put a tourniquet anywhere

00:51:26.980 | and several places in my house, like, I'm gonna do it

00:51:29.260 | because that's cheap insurance versus the flip side.

00:51:32.580 | So the first thing is looking at what's gonna happen

00:51:37.180 | and how immediate is it?

00:51:38.620 | It doesn't make any sense in the world for me,

00:51:40.980 | if that's true, for the rest of my life,

00:51:43.040 | not to always have EpiPens around and tourniquets around

00:51:47.380 | 'cause potentially that could save a life.

00:51:50.700 | Now, am I gonna stack things deep

00:51:53.660 | in order to deal with my being gut shot

00:51:57.140 | on my kitchen table?

00:51:58.620 | I don't really, I can't see that scenario being so much

00:52:01.860 | and so when I look at it, as I say,

00:52:04.060 | can I have a balanced approach?

00:52:05.740 | And so with something like food storage, for example,

00:52:08.720 | I think it's probably a little excessive for most people

00:52:12.240 | to start with a goal of saying,

00:52:13.540 | I'm gonna save three years worth of food.

00:52:15.820 | And so I look at it and say,

00:52:18.340 | well, let's start with a little bit.

00:52:19.300 | What's a month of food?

00:52:20.300 | And so for a month of food, that's easy to do

00:52:22.120 | and you probably just have more of what you have

00:52:24.360 | than a few months.

00:52:25.620 | And then by the time you start to get into six months

00:52:27.660 | or so of food, then most of that stuff is pretty cheap.

00:52:31.580 | And so I, again, look at it and say,

00:52:33.580 | okay, if I'm gonna buy buckets of corn, wheat,

00:52:36.420 | rice and beans, that stuff's super cheap.

00:52:39.580 | You put it outside, it should last for 30 years.

00:52:43.540 | It's not that big of deal for me to spend 500 bucks on it

00:52:46.380 | and this stuff is last for decades.

00:52:49.900 | So my model is start by saying,

00:52:53.460 | a short term, three months, six months,

00:52:55.760 | and kind of build out.

00:52:57.620 | And then finally, to try to be well balanced.

00:53:00.740 | So what I think is often missing

00:53:02.900 | is people aren't well balanced.

00:53:05.140 | And a lot of the things that you can do to be well balanced,

00:53:07.460 | they don't cost a lot of money,

00:53:09.080 | it just costs a matter of thinking and hassle.

00:53:11.060 | So if you're gonna be unemployed,

00:53:12.380 | then this is the time just to make a list,

00:53:14.700 | make your lists and then just spend your time

00:53:17.380 | cruising Facebook marketplace every day or so

00:53:20.460 | and just moseying around and seeing what's there

00:53:23.480 | instead of spending a lot of money

00:53:24.940 | because the vast majority of so-called prepping items

00:53:28.360 | are actually really cheap.

00:53:29.840 | And if you have time, just wait for a deal.

00:53:32.620 | So something that's important to me is a generator.

00:53:35.420 | And so if you don't have a generator,

00:53:37.300 | I think you start with a good one, right?

00:53:39.180 | Go and buy a good generator.

00:53:41.460 | But it doesn't have to be a lot of money,

00:53:42.820 | but just go and buy a good generator.

00:53:44.100 | But then maybe at some point,

00:53:45.180 | you might wanna have a backup.

00:53:46.260 | Well, then just wait for a deal to come along.

00:53:48.340 | And so if you have something,

00:53:50.260 | if I have a couple of months worth of preparedness,

00:53:54.340 | if I have a water filter,

00:53:56.340 | if I have a deep pantry

00:53:58.660 | with some spaghetti and spaghetti sauce,

00:54:00.440 | and I've got some of the basics,

00:54:03.400 | then no, I'm not gonna be in a big hurry

00:54:05.960 | to go and spend lots of money.

00:54:07.460 | Most of that stuff,

00:54:08.300 | just sit and wait and find some deals along the way.

00:54:11.740 | - That sounds great.

00:54:13.300 | Yeah, and that's exactly where I'm at.

00:54:15.100 | There's a lot of things where I say I'm

00:54:18.420 | well beyond the basics,

00:54:20.540 | mostly due to your course.

00:54:21.940 | But yeah, it's these things where I feel like

00:54:25.940 | I am waiting for deals and I'm getting things slowly,

00:54:27.660 | sometimes even free.

00:54:29.520 | And sometimes I just think,

00:54:31.020 | oh, it might be too cheap by waiting for certain things.

00:54:33.460 | And maybe in some categories I am,

00:54:34.980 | like the medical things where you said,

00:54:37.420 | blood loss or anaphylactic shock.

00:54:39.420 | So I should probably prioritize that.

00:54:41.100 | That's what it really sounds like I need to do

00:54:42.580 | is look at my list while I have time

00:54:44.700 | and essentially prioritize it

00:54:46.860 | and then just work through that systematically.

00:54:48.780 | A lot of things also are just time-based,

00:54:50.740 | making lists of places to go in every direction

00:54:53.620 | or whatever and having names and directions

00:54:57.220 | and numbers for hotels and things like that.

00:54:59.420 | I started those lists and then I don't finish them

00:55:01.660 | and I abandon them.

00:55:02.500 | So really it's just the things I need to sit down

00:55:04.580 | and spend some time on, I think.

00:55:06.220 | - Even if they're 20% done,

00:55:07.720 | you're far ahead with 20% done.

00:55:09.780 | - Right, right.

00:55:10.620 | - So just having thought through,

00:55:12.820 | and this is what I said in the course,

00:55:14.580 | I don't have every single list laid out.

00:55:17.660 | I would love to be so organized that I had it all laid out.

00:55:20.380 | Right now I'm traveling full-time, so I have nothing.

00:55:23.100 | Everything is something.

00:55:24.260 | But what I will say, just thinking through stuff

00:55:27.780 | is what makes the difference, really.

00:55:30.060 | That's 80% of it is just thinking it through.

00:55:32.460 | So that you said, oh, if I were in this situation,

00:55:35.740 | what are some ideas?

00:55:36.860 | That gets you 80% of the way,

00:55:37.980 | and the last 20% you finish up.

00:55:40.540 | I think the only thing I would say

00:55:42.380 | is that you wanna be thoughtful

00:55:45.700 | when it comes to spending money.

00:55:47.380 | You wanna be thoughtful and make sure

00:55:49.100 | that you have an exit strategy that you're happy with.

00:55:51.920 | I think the great danger with preparedness

00:55:54.380 | is often that it's so emotional for people.

00:55:58.140 | People often get scared about the end of the Mayan calendar

00:56:02.100 | or the Hammurabi blah, blah, blah,

00:56:05.220 | or the nuke attack or something like that.

00:56:07.300 | And so they respond in a place of emotional fear,

00:56:11.220 | and then they start just spending money wantonly.

00:56:14.740 | And then they wind up with the classic pallets of MREs

00:56:19.260 | in the garage after Y2K

00:56:22.780 | that they just never did anything with.

00:56:24.260 | And so I have always wanted to avoid that,

00:56:26.580 | and I've always wanted people to avoid that.

00:56:29.060 | So the first thing is don't do anything out of fear.

00:56:31.660 | If you're acting from a place of emotional fear,

00:56:35.180 | there's just no reason.

00:56:36.220 | Now, be prepared to act against that,

00:56:40.580 | to be prepared against that.

00:56:42.140 | And so I think most of that is financial preparedness.

00:56:45.060 | I'll give a point.

00:56:46.320 | So two years ago, sorry, a year and a half ago,

00:56:49.460 | when it was March of 2020,

00:56:53.940 | and I was looking at the,

00:56:55.260 | I started warning about the coronavirus pandemic,

00:56:59.020 | I was watching the coronavirus pandemic, et cetera,

00:57:01.840 | I was feeling the fear of here is what I consider

00:57:06.840 | to be the worst case scenario, a pandemic.

00:57:09.400 | And so I went to the store, I had money,

00:57:12.600 | I had a credit card, I went to the store,

00:57:14.200 | to the local warehouse store,

00:57:16.680 | and I bought carts and carts of stuff.

00:57:19.000 | And I spent a few thousand dollars.

00:57:23.560 | My exit plan was I'll probably eat most of the stuff up

00:57:26.720 | and/or give it away.

00:57:28.040 | And so my point is always have an exit plan.

00:57:30.320 | So I had other stuff, I bought some medical equipment

00:57:33.720 | that I thought might help, I bought some extra medications,

00:57:36.160 | I bought stuff to treat,

00:57:38.160 | if one of my family members came down with the virus

00:57:41.320 | and they needed to have fluid,

00:57:42.540 | so I stocked up on extra medical stuff

00:57:44.560 | that seemed appropriate, oxygen,

00:57:46.440 | and did the best that I could

00:57:47.440 | with the limited information that I had at that time.

00:57:50.400 | At that time, we were seeing pictures of people

00:57:52.320 | dropping over in the street in China,

00:57:53.840 | we had no idea what was actually the case.

00:57:56.660 | And so I went and I spent money.

00:57:58.880 | And so I think that your lists are the valuable thing to do

00:58:02.760 | because then you know how to spend money

00:58:04.480 | when it's time to spend money.

00:58:06.120 | And I felt like I was executing

00:58:08.980 | that kind of last minute strategy effectively.

00:58:12.640 | I had some basic preparations at the time,

00:58:16.140 | but I saw the risks mounting very quickly.

00:58:20.200 | I was looking at the pandemic and saying,

00:58:22.200 | this is potentially very, very bad.

00:58:25.160 | And because this is very, very bad,

00:58:26.960 | potentially very, very bad,

00:58:29.120 | this is a good move for me to go ahead and spend money.

00:58:34.120 | And so that was a point where there was an acute risk

00:58:37.440 | and I was spending money fast.

00:58:40.020 | Now, thankfully, while the pandemic has been significant

00:58:45.020 | in its impact on all of our lives,

00:58:47.760 | it's more been on the order of run of the mill,

00:58:51.640 | like big significant, as long as you didn't suffer death

00:58:55.600 | because of actually being infected.

00:58:58.160 | For most of us though,

00:58:59.340 | it hasn't had the widespread shortages

00:59:02.340 | that I thought were possible.

00:59:04.040 | It hasn't been a dramatic economic collapse

00:59:07.660 | that I thought was possible.

00:59:08.760 | So far, although we're seeing increasing rates of inflation,

00:59:12.580 | so far it hasn't been a massive catastrophe,

00:59:16.400 | financial, you know, it's not a hyperinflation.

00:59:19.560 | And so, so far we've done pretty well

00:59:23.440 | and it's not been as bad as I feared.

00:59:26.440 | So when I left where I was living,

00:59:28.360 | by that time I made, when we decided to leave,

00:59:30.920 | I had several months and for basically several months,

00:59:33.900 | we bought some fresh vegetables,

00:59:35.300 | but we ate a lot of storage food.

00:59:36.840 | So I ate down several months worth of food.

00:59:39.000 | And then I donated the rest of the food

00:59:40.880 | to a local food shelter, food pantry,

00:59:44.160 | that was systematically, had been throughout the pandemic,

00:59:46.720 | systematically giving away food

00:59:49.080 | to people who were in need of it.

00:59:51.240 | And so I felt like it was no, it was a win-win.

00:59:54.360 | I was just happy to donate a couple thousand dollars worth

00:59:56.560 | of bulk foodstuffs to people who needed it more than I did.

01:00:00.760 | And it was a simple and effective exit strategy.

01:00:03.660 | So when you're looking at money,

01:00:05.080 | ask yourself, what's my exit strategy?

01:00:07.160 | And this is where there's a big difference

01:00:09.080 | between hard tangibles, some that are easily sold,

01:00:12.760 | something like, I don't know, a new gun or ammunition,

01:00:15.880 | versus something that's a little bit more difficult,

01:00:18.520 | like medical bandages.

01:00:20.840 | The medical bandages are important,

01:00:22.380 | but what I would be inclined to do

01:00:23.640 | would be to have some medical bandages and then go cheap,

01:00:26.760 | like buy lots of, you know, sack, linen cloths

01:00:30.940 | or something like that, that, yeah,

01:00:32.680 | it's not as good as proper medical gauze,

01:00:34.960 | but it allows me to feel like I've not been careless

01:00:37.960 | just because it was expensive.

01:00:42.800 | But when it comes to something like, I don't know,

01:00:45.400 | a new gun, if you need one,

01:00:47.160 | very few of us need another one,

01:00:48.960 | but a new gun, it's like, okay,

01:00:50.760 | if I go and I buy a brand new gun today,

01:00:53.600 | that gun just simply won't lose value.

01:00:55.980 | If I put a lot of rounds through it,

01:00:58.920 | it might lose 10% or 20% of its value,

01:01:02.300 | which I might make up if I sell it

01:01:03.760 | private party in the future.

01:01:04.800 | Yes, if I take it back to the dealer,

01:01:06.200 | I'll take a 20% loss on it,

01:01:08.200 | but so you know your downside.

01:01:10.240 | So if you know your numbers

01:01:11.200 | and you know what you're dealing with, you're good to go.

01:01:13.640 | Same thing with my generator example.

01:01:15.720 | If you go on Facebook and I did this, right?

01:01:17.960 | I bought a generator and I had it there, used it sometimes,

01:01:22.280 | and then I just store my stuff on Craigslist or Facebook.

01:01:25.440 | This point, store my stuff on Facebook,

01:01:27.000 | just sell it again and put it in money

01:01:28.600 | and then turn the money into the next piece of gear

01:01:30.680 | in the next place.

01:01:31.520 | And so in the used market, very rarely,

01:01:34.280 | if you're at least thoughtful about shopping

01:01:37.520 | and you're shopping in the used market,

01:01:38.920 | very rarely can you not get out of your stuff

01:01:41.080 | for maybe just a 10% hit.

01:01:44.360 | And so the numbers are actually not as big

01:01:46.740 | as you otherwise think.

01:01:48.200 | What is often the case is that you're unaccustomed

01:01:51.680 | to thinking about tangibles as being financially valuable.

01:01:55.200 | And this is definitely something that did take,

01:01:59.040 | has taken me time to change.

01:02:03.040 | We're so financialized in our thinking

01:02:06.900 | that we exclusively look to our net worth statements

01:02:11.820 | and the digits that are written on our spreadsheets

01:02:14.840 | as reflecting our value.

01:02:16.300 | And if those digits are not changing,

01:02:18.420 | then we feel like we're not making progress.

01:02:20.820 | But that's simply not true, right?

01:02:22.780 | If you buy a generator and you spend $500 on that generator,

01:02:27.780 | you can sell that generator at any point for $400

01:02:31.700 | in 24 or 48 hours.

01:02:33.460 | And so that is a real asset.

01:02:35.580 | And while it's harder to account for on a balance sheet,

01:02:38.700 | when you're spending money on durable tangibles,

01:02:42.380 | it's actually something that does have value.

01:02:45.540 | You're not spending money,

01:02:46.840 | you're just saving it in a different form.

01:02:49.340 | And so that would, I guess, be the last thing, John,

01:02:51.900 | is simply that a lot of the purchases

01:02:54.960 | that you make for prepping are not actual expenditures.

01:02:59.460 | They're either, they're savings

01:03:01.580 | just in physical tangible forms,

01:03:03.900 | or they're insurance, right?

01:03:05.900 | The EpiPen, or I just did a post this morning

01:03:10.900 | on my social media about my GPS transponder

01:03:14.000 | that I travel with, right?

01:03:15.020 | It's insurance, right?

01:03:15.860 | I feel good knowing that I have an SOS button

01:03:18.620 | that I can push literally anywhere on the planet

01:03:20.940 | and help will get there.

01:03:21.780 | It makes me feel good.

01:03:22.620 | So it's insurance.

01:03:23.700 | And so either view it and say,

01:03:25.700 | this is an insurance payment,

01:03:27.460 | or this is just a transfer from fiat money to tangible,

01:03:33.460 | and it's not the same as just going

01:03:37.300 | and spending money wantonly.

01:03:38.920 | - Yeah, no, I agree, and I appreciate the perspective.

01:03:42.740 | That's a very good way to frame it.

01:03:44.420 | And yeah, I can say that's true.

01:03:48.300 | Every little incremental preparation I do,

01:03:51.260 | it does bring more peace of mind,

01:03:53.500 | and I think it's more peace of mind

01:03:56.140 | than the expense that it was.

01:03:58.060 | So it's good advice, thank you.

01:04:00.220 | - Good, my pleasure.

01:04:01.420 | All right, we go on to Houston, Texas.

01:04:03.700 | Welcome to the show.

01:04:04.540 | How can I serve you today, sir?

01:04:05.980 | - Hey Josh, this is John.

01:04:09.240 | Can you hear me?

01:04:10.080 | - John, I can hear you well, go ahead.

01:04:12.240 | - Great, hey, thanks for taking my call.

01:04:13.500 | Love the show.

01:04:14.340 | I'm in my first year of a potential early retirement.

01:04:18.640 | I don't own any property.

01:04:21.740 | I'd be a first-time home buyer.

01:04:24.020 | I'm looking to just buy something once

01:04:25.580 | and own it for a long time.

01:04:28.180 | Potentially buying a piece of land

01:04:30.700 | and building the house myself on it.

01:04:33.620 | Just wanted to talk about financing options.

01:04:37.820 | I have the funds to hold in sort of liquid investments,

01:04:43.580 | such as like equities spread across a few different accounts,

01:04:46.220 | taxable, traditional and Roth accounts.

01:04:49.700 | But I was wondering, with interest rates as low as they are,

01:04:54.340 | banks pretty much just throwing money at people,

01:04:57.580 | I was thinking, man, that's hard to kind of pass up.

01:05:01.700 | Trying to do some kind of financing

01:05:02.980 | rather than just paying it in cash.

01:05:05.540 | So I've looked at a couple options.

01:05:07.220 | I guess one of the things I saw also was

01:05:10.060 | some of these brokerages will lend you money

01:05:12.420 | against your securities.

01:05:14.440 | So you don't have to-- - It's nine o'clock.

01:05:16.180 | - Sell them and realize the capital gains

01:05:18.580 | and you can kind of use that.

01:05:20.220 | I was wondering if you had any thoughts

01:05:22.620 | or just pay it in cash and forget about it.

01:05:26.740 | - Will the banks lend to you without an income?

01:05:31.740 | - Yeah, I think that's gonna be the biggest hurdle.

01:05:38.900 | You know, I'll have a W-2 this year,

01:05:40.740 | but that's just from the last of the income I was making

01:05:44.380 | from my previous job.

01:05:47.940 | And then next year you won't have a W-2.

01:05:50.260 | So I've read about no income type loans,

01:05:55.880 | but I'm willing to bet that the interest rates

01:05:58.460 | on those if they're even still offered,

01:05:59.780 | but it would probably make them not make sense for me.

01:06:02.900 | - And are you single?

01:06:07.220 | Do you have other family members

01:06:08.880 | that are also involved in this decision?

01:06:10.880 | - Just me. - Okay.

01:06:14.220 | I think if I were in your shoes,

01:06:20.860 | I would build it myself and I would just pay cash for it.

01:06:24.780 | And I can give you some ways

01:06:26.500 | to potentially make that more appealing.

01:06:29.660 | It's certainly you wonder sometimes,

01:06:33.620 | and am I being stupid for turning down cheap money?

01:06:38.620 | And I'm not opposed to financing,

01:06:43.060 | I'm not opposed to your financing it.

01:06:44.900 | It's one of those difficult things.

01:06:49.940 | But when I look at it, if it's just you,

01:06:53.620 | then, and if you're going into early retirement,

01:06:56.660 | you're gonna need something to do.

01:06:58.380 | And if you're thinking about building the house,

01:07:00.900 | I think that you would enjoy the project more,

01:07:05.140 | building the house that you wanna live in,

01:07:07.300 | doing it yourself, and making it part

01:07:10.260 | of your just overall plan to do it

01:07:12.660 | to a level that's appropriate for you, but do it frugally.

01:07:15.740 | And you'll probably spend less money

01:07:18.120 | if you just simply pay cash yourself.

01:07:20.500 | And you'll be done with the risks of financing.

01:07:25.020 | Because although I don't think it would be risky

01:07:32.300 | for a financially independent person

01:07:36.680 | to borrow money for a mortgage,

01:07:38.540 | it's not risky in that scenario.

01:07:40.900 | Right, if your mutual funds fall apart

01:07:42.700 | at the stock market, just goes bananas forever.

01:07:46.020 | Like we got big problems and as we see a lot of times,

01:07:49.380 | mortgage companies don't foreclose, right?

01:07:51.020 | Sometimes they put, they're legally prohibited

01:07:55.340 | from foreclosing in some situations.

01:07:57.020 | And so I'm not someone who says

01:07:59.380 | it's just a necessarily risky scenario.

01:08:01.460 | But at the end of the day, it is still really nice

01:08:04.400 | not to have that hanging over your head.

01:08:07.140 | And what I would say is the simplicity

01:08:09.180 | of it could also be helpful.

01:08:11.240 | So here would be some things that I would do

01:08:13.900 | to probably sell myself on a mortgage.

01:08:19.180 | On building the property myself

01:08:21.380 | and just using my own savings rather than financing it.

01:08:24.260 | Number one, I would say I could probably get better deals

01:08:26.980 | and I'll be motivated to get better deals

01:08:29.140 | if I just pay cash for it.

01:08:30.580 | One prior point that I should have started with,

01:08:34.860 | I should have done it in this way.

01:08:36.420 | If you're gonna build a property on land

01:08:38.500 | that you own or have bought,

01:08:40.060 | then you gotta deal with the difficulties

01:08:41.960 | of a construction loan,

01:08:43.360 | which is gonna be more difficult.

01:08:45.380 | And you're gonna, if you do that also,

01:08:47.180 | you'll have constraints on the construction loan

01:08:50.180 | put on you by your lender as far as the certain designs

01:08:53.940 | that they're willing to deal with, et cetera.

01:08:56.540 | And so it sounds to me like you're the kind of guy

01:08:59.140 | who would probably be well suited to say,

01:09:01.060 | this is the house I wanna live in.

01:09:02.220 | I'm gonna build the kind of house that I wanna live in

01:09:03.800 | for the rest of my life.

01:09:04.640 | I've worked hard to do this.

01:09:05.620 | I'm gonna just make my house.

01:09:07.140 | Now, you'll think about saleability.

01:09:09.380 | It'd be foolish not to.

01:09:10.820 | You'll think about code.

01:09:12.940 | Obviously, you'll have to,

01:09:14.180 | in fact, here in Houston, you have no building,

01:09:16.580 | or sorry, you don't have zoning.

01:09:17.940 | You have building codes, but not zoning laws.

01:09:22.180 | So you'll have your own,

01:09:24.020 | but you can build your own house without thinking about,

01:09:28.120 | well, what is the finance officer gonna say

01:09:29.940 | about my plans, et cetera.

01:09:31.740 | And so the construction loan and building your own house

01:09:34.420 | is even more of a reason to just use your own money.

01:09:37.100 | And then if you wanna loan later,

01:09:38.620 | then consider putting into place a traditional loan.

01:09:42.780 | Second thing I would say is that if you do it yourself,

01:09:46.180 | you'll be motivated

01:09:47.100 | because you're actually spending cash rather than debt.

01:09:50.340 | You'll be motivated to get better deals along the way.

01:09:53.340 | And so you'll negotiate a little bit more.

01:09:55.180 | You'll be willing to use more used recycled materials,

01:09:59.920 | which would be great,

01:10:00.980 | both from just a good stewardship perspective

01:10:06.860 | of using good things rather than always buying new stuff,

01:10:09.940 | and also from a cost savings perspective.

01:10:12.220 | And then I think one other benefit,

01:10:15.780 | you could build a house and do it in such a way

01:10:18.220 | that you can skip insurance.

01:10:19.820 | If you get a mortgage,

01:10:21.760 | you're gonna be required to keep insurance.

01:10:23.180 | I don't know what insurance rates are for you,

01:10:24.660 | but if I had a debt-free house and I were living

01:10:27.780 | and that house was a modest representation of my net worth,

01:10:30.380 | at least being from Florida where insurance rates are high,

01:10:32.420 | I would use the opportunity

01:10:33.700 | to skip having homeowner's insurance.

01:10:36.300 | And then you could even talk about things like privacy.

01:10:40.100 | I care a lot about personal privacy.

01:10:43.380 | You have an opportunity, if you're at all interested,

01:10:45.700 | you have an opportunity to have personal privacy

01:10:48.100 | because you can buy the land, own it in an entity,

01:10:54.780 | disconnected from your name.

01:10:56.380 | And that's relatively easy to do,

01:10:58.140 | first of all, when you're paying cash,

01:10:59.740 | and it's even easier to do when you're building a property,

01:11:01.940 | except possibly with a DIY builder,

01:11:05.060 | but you have more privacy than if you do financing.

01:11:07.780 | And so those are some reasons I would look at,

01:11:10.380 | and I think my guess is I would go with

01:11:13.020 | just simply pay cash for it.

01:11:14.580 | Be done with the stress,

01:11:15.660 | you're getting out of the work life,

01:11:16.880 | be out of the financial space, own your house,

01:11:18.900 | have your cheap property tax bill per year,

01:11:21.420 | have your investment portfolio,

01:11:22.740 | and move on with your life rather than staying

01:11:25.340 | in the having monthly bills space.

01:11:27.820 | - Right, yeah, that sounds good.

01:11:31.660 | I have seen that being a cash buyer,

01:11:34.460 | you can get into certain areas and get better deals,

01:11:36.980 | people in different situations wanting to have a quick sale.

01:11:40.780 | So that resonates with me, that second point you made.

01:11:43.920 | Just, I guess, a follow-up on that,

01:11:47.420 | putting the house and the property in an entity,

01:11:52.420 | is that something that I'd really have to get set up

01:11:55.540 | before I purchased it?

01:11:57.240 | Or, I mean, would I lose the privacy

01:11:59.620 | if I purchased it in my own name?

01:12:02.120 | 'Cause I don't have an entity set up right now,

01:12:04.980 | and if I had to move on something quick,

01:12:06.980 | and then I guess I'd probably have to transfer the deed

01:12:10.060 | from my own name to an entity,

01:12:11.860 | would that kind of negate the benefits of it?

01:12:14.260 | - Go and read Michael Bozell's book on this topic.

01:12:20.340 | I forget the name of it, I can look it up.

01:12:22.780 | But go and find his book where he talks about setting it up,

01:12:27.380 | and then investigate the details in your state

01:12:31.340 | of setting up a land trust in your state,

01:12:34.080 | and see what's possible with that.

01:12:37.220 | You do need to, it would be best for you to do a little bit,

01:12:40.460 | if that's interesting to you,

01:12:42.160 | it's best for you to do two things.

01:12:43.720 | Number one, it's best for you to do the research now,

01:12:46.080 | and number two, it's best for you to do some practice now.

01:12:49.500 | My experience with privacy techniques is,

01:12:55.840 | first of all, you can think about how hardcore

01:13:01.680 | you would want to be with regard to privacy, and why.

01:13:06.080 | And being as hardcore as possible,

01:13:09.800 | just because it's cool, in my opinion,

01:13:11.800 | is not the right answer.

01:13:13.840 | You have to have a reason why you care about privacy,

01:13:18.140 | and enough motivation to actually do it,

01:13:21.300 | because it is generally inconvenient to do.

01:13:25.560 | Now, someone like me, right,

01:13:27.760 | making my living on the internet,

01:13:30.280 | being well familiar with what happens

01:13:33.120 | when public personalities get doxed,

01:13:35.520 | I have a higher motivation than most people

01:13:38.780 | to protect my family from the dangers

01:13:41.800 | of the internet world, in which you go viral in a day,

01:13:45.560 | and all of a sudden, for some scandalous thing that you said

01:13:49.120 | or some scandalous thing that you thought,

01:13:51.160 | and all of a sudden, the world comes crashing down upon you.

01:13:54.080 | I sleep well at night knowing that I'm hard to find

01:13:58.160 | on the internet.

01:13:59.400 | And so you may not have that same risk profile,

01:14:01.760 | and it's totally fine for you to say

01:14:03.860 | it's not a big deal to me.

01:14:05.760 | But the reason I said practice is that what I have done

01:14:08.920 | is I have, over the years, I have practiced

01:14:11.000 | a lot of the techniques, and I've decided for myself

01:14:14.280 | which ones I'm actually willing to do now

01:14:16.360 | and which ones I'm actually willing not to do now.

01:14:19.240 | And so I've backed off a lot on some of the privacy

01:14:23.040 | techniques that I've put into place in the past

01:14:25.740 | because they were simply too inconvenient.

01:14:28.680 | And if you want hardcore privacy,

01:14:32.480 | then you, if you want hardcore privacy,

01:14:36.240 | you need to be skilled with the techniques of privacy

01:14:39.300 | in order to actually maintain it.

01:14:41.400 | It may not be necessary for you, right?

01:14:43.560 | Maybe your threat profile is simply,

01:14:47.360 | you know what, I live in Texas,

01:14:49.000 | I'd like my house to be homesteaded

01:14:51.280 | and asset protected for me.

01:14:53.120 | I would just like to make it a little bit more complicated

01:14:57.040 | to look up on the internet.

01:15:00.000 | Well, maybe there, something as simple as a living trust

01:15:02.440 | might give you what you're looking for.

01:15:03.720 | You can still be on the record

01:15:05.160 | with all the utilities companies,

01:15:06.560 | you don't have to use a pseudonym

01:15:07.760 | with all the utility companies,

01:15:09.440 | you don't have to have necessarily all your personal mail

01:15:12.640 | go to another space, and you're good enough

01:15:14.480 | with a living trust.

01:15:15.320 | And so I would say the first thing is

01:15:17.560 | just think about what you would want,

01:15:19.680 | how interested you are in personal privacy

01:15:23.160 | and how willing you are to actually put it in place.

01:15:27.280 | - Okay, that would be the main advantage

01:15:31.640 | would be the privacy aspect

01:15:33.280 | and I guess asset protection potentially as well.

01:15:36.960 | The house actually wouldn't be in Texas,

01:15:41.800 | which has really good asset protection laws around houses

01:15:44.360 | being out of state,

01:15:45.360 | but would those be the two primary advantages

01:15:49.720 | or any sort of financial or tax advantages

01:15:52.720 | to some of these entities?

01:15:53.680 | - No, there's no financial or tax advantages.

01:15:55.480 | All they're gonna do is add cost.

01:15:57.640 | The costs are modest, but they're gonna add cost.

01:16:00.200 | So the cheapest thing you can do

01:16:02.680 | is just buy the house in your name,

01:16:04.400 | register it, be a normal person.

01:16:06.720 | Have all your mail go there, have your car registered there,

01:16:08.880 | that's the cheapest thing you can do.

01:16:10.560 | Privacy adds cost and complexity

01:16:12.600 | and inconvenience to your life.

01:16:14.280 | So if you want the benefits of it,

01:16:17.600 | there are some really good things.

01:16:19.280 | And I think that for a lot of people,

01:16:22.120 | and again, you may have really no threat profile

01:16:25.840 | where it's just at all important to you.

01:16:28.600 | But for a lot of people,

01:16:30.480 | I don't have a tiering system perfectly worked out,

01:16:34.460 | but just think of it as like lower tier,

01:16:37.520 | it's not lower tier, it's middle tier privacy.

01:16:39.880 | If many people did a few basic things

01:16:42.920 | and here are the few basic things

01:16:43.760 | and you have an opportunity

01:16:45.320 | when you're moving to a place to do this.

01:16:48.240 | Number one is, first of all,

01:16:51.440 | don't ever send all your mail to the house.

01:16:53.920 | If you're willing to simply use a post office box nearby,

01:16:58.680 | send your mail to the post office box instead.

01:17:01.320 | Because that's the simplest thing,

01:17:02.800 | is you get on every list and it just floods in

01:17:05.840 | when it's at your own address

01:17:07.980 | and then you never get the stuff off the internet.

01:17:10.320 | Anytime anybody Googles your name

01:17:11.880 | for the rest of your life,

01:17:12.800 | that address is going to be there

01:17:14.640 | because you signed up for everything.

01:17:16.400 | And so kind of 101 is have a post office box.

01:17:21.360 | If you want to have a private home, you can do it.

01:17:25.280 | And you register the home in an entity,

01:17:29.280 | you can do it with a blind entity

01:17:31.640 | where it's not looked through to you.

01:17:33.760 | The complexities come from financing and insurance.

01:17:37.080 | So again, back to your threat profile.

01:17:39.160 | If you want to have insurance on the property,

01:17:41.840 | the insurance company is going to know

01:17:43.140 | who has the insurance policy.

01:17:44.840 | And the same thing with financing company.

01:17:47.400 | That's fine for many people

01:17:49.640 | because what many people worried about

01:17:51.160 | is I'm on the front page of Reddit today

01:17:53.000 | and all of a sudden the crazies start sending

01:17:55.320 | porno magazines to my house.

01:17:57.320 | I don't want that.

01:17:58.160 | And so it's fine if the insurance company has my name,

01:18:00.640 | the financing company has my name.

01:18:02.360 | The opportunity is because you could set up a situation

01:18:06.440 | where you don't need insurance

01:18:07.720 | and you don't need financing,

01:18:09.600 | then it's relatively easy for you to avoid those risks.

01:18:14.600 | And so you can just simply buy a piece of land

01:18:18.200 | and with the exception of the complexity of building,

01:18:23.200 | where is the contractor going to do it?

01:18:25.560 | If you're going to do it yourself,

01:18:26.760 | then there's going to be a lot of your footprint

01:18:30.120 | from a privacy perspective on that property

01:18:32.560 | as an owner builder.

01:18:33.960 | If you have a contractor build a house for you,

01:18:35.800 | then you're good to go.

01:18:37.600 | And again, you have to ask how worthwhile is this?

01:18:40.760 | And then you just simply register your car in an LLC

01:18:45.000 | and register those things to a different address.

01:18:47.180 | And you've got really high quality privacy.

01:18:49.760 | And then final thing is put all your utilities

01:18:51.640 | into a different name.

01:18:53.160 | And so what you would do is simply set up one identity

01:18:55.640 | for your house.

01:18:56.720 | And so it's John Jones who lives at the house.

01:19:00.480 | The utilities are in John Jones's name.

01:19:02.240 | That's easy to do in today's world.

01:19:04.120 | All the magazines come to John Jones at that house.

01:19:07.840 | And whatever your name is just simply resides over here

01:19:11.440 | at a different place a few miles away.

01:19:13.360 | So it's a really phenomenal system.

01:19:16.680 | It's really nice to lay your head at night

01:19:19.320 | knowing that you're harder to find,

01:19:20.880 | that your friends know where you live,

01:19:22.260 | but you're not as easily findable.

01:19:24.520 | You'll lose a few things, right?

01:19:25.640 | You won't be able to legally register to vote

01:19:27.920 | in that scenario.

01:19:29.720 | You won't be able to,

01:19:31.320 | because you've got to be registered to your house

01:19:33.880 | if you're going to legally vote.

01:19:34.760 | And so I don't know anybody who cares about privacy

01:19:38.840 | who's registered to vote.

01:19:39.960 | And there are some other things, but it's really nice.

01:19:42.160 | And if you're going to be in a place for a long time,

01:19:43.900 | it can be one of those things that is easy to set up

01:19:46.580 | in the beginning and is really hard to fix down the road.

01:19:48.840 | So that's why I raise it for you to consider.

01:19:51.080 | - Yeah, great.

01:19:54.120 | Appreciate the insight.

01:19:54.960 | Could you just repeat the name of that author again?

01:19:56.600 | Michael...

01:19:57.440 | - Michael Bazell, B-A-Z-Z-E-L-L.

01:20:01.960 | I think he's still doing it.

01:20:03.480 | It's Intel Techniques.

01:20:04.680 | Let's see if that's still his website.

01:20:07.240 | Should be, I don't know why he would have changed.

01:20:09.300 | So his website is inteltechniques.com.

01:20:12.640 | He has 232 episodes of a podcast.

01:20:16.780 | And oh, look at that.

01:20:17.740 | He's got a new book that I have not read.

01:20:19.980 | I read all his other ones,

01:20:21.900 | but he has a new book called "Extreme Privacy 3rd Edition"

01:20:24.660 | that I have not read.

01:20:26.260 | And so his previous one was the one that I was recommending,

01:20:30.100 | but I would definitely, I will order that

01:20:32.260 | as soon as I finish recording the show

01:20:33.580 | so I can read that book as well.

01:20:35.420 | And I would recommend get his stuff.

01:20:37.780 | If you're new to privacy, don't start with his stuff

01:20:41.060 | because he's hardcore.

01:20:43.000 | Start with J.J. Luna's book.

01:20:45.320 | Have you ever read J.J. Luna's book called,

01:20:49.820 | let's see, my library,

01:20:52.340 | "How to Be Invisible."

01:20:55.260 | Have you ever read that?

01:20:56.460 | - I have not.

01:20:58.200 | - Okay, so pick up a copy of J.J. Luna's book

01:21:01.540 | called "How to Be Invisible."

01:21:03.840 | It's an older book.

01:21:05.080 | The most recent edition was published in 2012.

01:21:09.200 | And so it's a little bit out of date

01:21:11.680 | with regard to some of the current best practices

01:21:15.760 | in the privacy community.

01:21:17.420 | But what Luna does that the others don't do as well

01:21:23.820 | is Luna is motivational and really good at storytelling.

01:21:29.160 | And so Luna's book may put it within you

01:21:34.160 | a desire to be private.

01:21:37.560 | And then if you have that desire to be private,

01:21:40.620 | then go ahead and look at Bazelle's stuff.

01:21:45.080 | The last thing I would suggest for you,

01:21:47.480 | hang on one second, stand by.

01:21:50.400 | The title, I found the title,

01:21:55.600 | what I wanna recommend is actually a listener of the show

01:21:58.720 | and a client of mine who I've done some work with.

01:22:02.440 | He just wrote a new book

01:22:03.520 | called "The Watchman Guide to Privacy."

01:22:06.000 | Reclaim your digital, financial, and lifestyle freedom.

01:22:09.040 | And I think that this is actually probably

01:22:11.880 | a better second step for you versus Michael Bazelle's stuff

01:22:15.560 | 'cause Bazelle is super intense, super hardcore.

01:22:18.960 | And I think a lot of people read his stuff

01:22:21.400 | and just walk away saying, yeah, I'm not gonna do that.

01:22:24.600 | But Luna's stuff is getting a little bit dated.

01:22:26.960 | And so the book I would say

01:22:29.600 | is "The Watchman Guide to Privacy,"

01:22:31.320 | "Reclaim your digital, financial, and lifestyle freedom."

01:22:34.960 | 10 bucks on Kindle.

01:22:36.280 | So go with that or 18 bucks on Amazon

01:22:40.360 | and a really good opportunity for you there.

01:22:44.680 | I just blanked on the name of the book for a moment.

01:22:46.340 | So those are my recommendations.

01:22:47.940 | Start with those books, grab Luna's book

01:22:49.400 | and "Watchman Guide to Privacy."

01:22:50.640 | If it interests you, then you can learn a lot

01:22:53.240 | in Bazelle's stuff as well.

01:22:56.720 | Make sense?

01:22:57.560 | - Yep, great, thanks Joshua.

01:23:00.760 | - My pleasure, thank you for calling in.

01:23:02.780 | All right, we go next.

01:23:04.700 | Two more callers here.

01:23:05.720 | We go to California.

01:23:07.980 | Welcome to the show.

01:23:08.820 | How can I serve you today?

01:23:09.860 | - Hey there, can you hear me okay?

01:23:12.840 | - Sounds great.

01:23:13.680 | - Great.

01:23:16.440 | Okay, well, Southern California is relevant to this.

01:23:19.640 | I'm young and super interested in house hacking and Nomad.

01:23:24.640 | And I'm just getting into it.

01:23:26.640 | I went to, I think his name is James Orr.

01:23:28.720 | James Orr, his website.

01:23:30.560 | Is that the dude?

01:23:31.440 | - Yes.

01:23:32.280 | - Okay, I went to his website and watched through

01:23:35.820 | some of his two hour classes on YouTube and stuff.

01:23:39.620 | And I'm super interested in it.

01:23:40.860 | And he's talking about Northern Colorado

01:23:43.620 | and the markets there and going super deep

01:23:45.260 | into those local markets.

01:23:46.980 | And I'm curious, I mean, it seems like a very difficult

01:23:51.980 | and hard thing to get into real estate

01:23:56.740 | in Southern California.

01:23:58.060 | And I don't have any illusions about that.

01:24:01.100 | But at the same time, some of, you know,

01:24:03.540 | house hacking and Nomad in particular seem like

01:24:06.620 | they could be options for me and my wife.

01:24:09.420 | We have no kids.

01:24:10.300 | And we're saving a lot right now.

01:24:13.500 | So I'm also open to just trying to figure out

01:24:16.460 | what to do with, you know, some of that cash

01:24:19.620 | for midterm, longterm, whatever.

01:24:21.780 | We're currently renting our primary residence house

01:24:24.220 | for all five years of our marriage.

01:24:25.580 | And that's felt like a little bit of a non-optimized

01:24:29.420 | use of money for where we're at.

01:24:31.220 | And so that's what's got me looking into it.

01:24:33.620 | But at the same time, living in Southern California,

01:24:37.420 | we're not like filthy rich or anything.

01:24:39.500 | So I can't like, you know, get million dollar properties

01:24:43.060 | or anything like that.

01:24:44.900 | And just hearing Mr. Orr talk about some of the

01:24:49.900 | particularities and some of the reports he's bringing up,

01:24:52.260 | some of the data he just has on what kind of single families

01:24:56.380 | are available, what they typically go for,

01:24:58.300 | what typical rents are, just that sort of thing.

01:25:01.260 | I was like, wow, that's such good info to have.

01:25:03.740 | That would be probably invaluable in helping

01:25:06.780 | do more research and try to make some sort of a decision

01:25:09.260 | about whether we want to get into that.

01:25:11.220 | We're kind of also looking at just buying

01:25:12.940 | our first home anyway.

01:25:14.260 | So it may happen, even if we don't go the nomad route,

01:25:17.500 | we may just be looking for a house anyway.

01:25:19.300 | So that's kind of all the facts of the situation.

01:25:23.380 | But my question is, where would you go if you were me

01:25:26.060 | to just start trying to learn more about making

01:25:29.340 | a better educated decision that's maybe even numbers driven

01:25:33.100 | based on market statistics and stuff like that?

01:25:36.380 | Like I wish I knew everything that he does

01:25:38.300 | about Northern Colorado about Southern California.

01:25:41.420 | Does that make sense?

01:25:42.420 | - It does.

01:25:43.780 | I would call a real estate agent and I would go on Reddit

01:25:47.620 | and see what I could find in those two places.

01:25:51.300 | First of all, a real estate agent will give you a sense

01:25:53.980 | of what is possible.

01:25:55.540 | Many real estate agents will not be all that clued in

01:26:00.620 | to the technical details, but at least that would be good

01:26:04.620 | to talk with a couple of people who are involved in it

01:26:07.260 | and get an idea of what the numbers are, et cetera.

01:26:10.540 | And then I would bet that with a little bit of digging

01:26:13.060 | on Reddit, you could find some active conversations on it

01:26:18.060 | or I would go to a couple of the big real estate forums.

01:26:23.620 | I would imagine BiggerPockets would be a great place.

01:26:27.100 | I haven't spent much time in many of the early retirement

01:26:31.300 | forums in years now, but I would go into some

01:26:33.860 | of the big early retirement forums and just try

01:26:37.740 | to start a thread and ask the people there

01:26:40.220 | and get a sense of, try to find some of the people

01:26:43.980 | who would have the data and have the experience in your area.

01:26:47.180 | Good thing about Southern California is there are a lot

01:26:49.020 | of people there and you should be able to find them

01:26:52.980 | hanging out somewhere on the internet

01:26:55.340 | with some insight into you, into the situation.

01:26:58.620 | What stands out to me, and that would probably be better

01:27:00.980 | for you, by the way, than necessarily the realtor,

01:27:05.020 | 'cause most real estate agents are not gonna be ready

01:27:07.820 | to go with all that data.

01:27:09.580 | What I would say though is probably it's unnecessary

01:27:14.580 | for you to get that deep into the data.

01:27:18.180 | And one of the things that I believe has caused

01:27:23.380 | a lot of people excessive, just held people back,

01:27:28.380 | and this includes me, is over-analysis.

01:27:33.860 | And I think this is especially true with real estate.

01:27:36.220 | You come across a good idea and you think,

01:27:38.660 | hey, this could be a good idea, and then you say,

01:27:42.220 | well, I'm gonna research it and I'm gonna try

01:27:43.660 | to find the best deal.

01:27:45.620 | And a lot of times people who spend time trying

01:27:47.700 | to find the best deal never make a deal.

01:27:50.260 | And if in something like real estate,

01:27:53.460 | in order for you to actually make money,

01:27:55.940 | and in order for you to actually use the strategy,

01:27:58.100 | you just gotta do it.

01:27:59.820 | So the great thing about real estate is it's pretty easy

01:28:03.700 | to get into in most situations,

01:28:05.840 | and it's pretty easy to get out of.

01:28:08.160 | And I remember before I did my first real estate purchase,

01:28:12.860 | it just made me, I was so scared.

01:28:15.940 | And then after I got in, got out,

01:28:18.820 | then all that fear went away.

01:28:20.500 | I was like, this is simple, right?

01:28:21.820 | People buy and sell houses all the time.

01:28:24.020 | And so the way to look at it is basically,

01:28:26.900 | what's my downside?

01:28:28.660 | And what I would say is, in your market,

01:28:32.220 | I don't think, well, I think that California has headwinds.

01:28:35.380 | I don't expect your market to plummet.

01:28:37.540 | It's not gonna fall apart.

01:28:39.140 | I think you've had, what, something like 2% growth

01:28:41.320 | in San Francisco this year, but many, many home values

01:28:44.860 | in California have increased by double digits

01:28:46.860 | across the state.

01:28:48.260 | California, a lot of people love it.

01:28:50.900 | It's a very strong market, and I think it's a strong market

01:28:53.500 | 'cause there's a lot of wealthy people,

01:28:54.420 | and wealthy people are less susceptible

01:28:56.060 | to financial ups and downs than a lot of other people.

01:29:01.060 | And so I'm not scared of the market

01:29:03.660 | if the numbers can work.

01:29:04.820 | And so what I'd say is, I would just go house shopping,

01:29:07.520 | look at some stuff, and just go look

01:29:10.620 | and physically tour some houses.

01:29:13.180 | And you should have some sense of the rental market

01:29:17.140 | because you have been in the rental market.

01:29:20.380 | Tour some houses that you think might work

01:29:23.180 | and get a sense of what's available for you,

01:29:26.100 | and then talk to some financing agents

01:29:29.260 | and talk to some mortgage brokers

01:29:30.620 | and see what options are available for you

01:29:32.420 | with financing in different scenarios.

01:29:34.740 | And if you're gonna spend a few weeks doing that,

01:29:36.940 | you'll have a very good sense of whether those strategies

01:29:39.540 | will work in your area or not.

01:29:41.980 | And so I've given you my answer for where to find the data,

01:29:46.040 | but I'll tell you that I think the data is interesting,

01:29:50.140 | but not that big of a deal for a scenario

01:29:52.940 | like you're describing.

01:29:54.000 | If you have dual income, no kids, saving plenty of money,

01:29:59.000 | you can probably finagle the financing.

01:30:02.400 | If you get into it and you can put your tenants in place

01:30:04.680 | to help you do it, you're probably good to go.

01:30:07.240 | And you should have enough wiggle room in your budget

01:30:10.000 | that if you have vacancies or unexpected expenses,

01:30:12.500 | you can just cash flow them.

01:30:13.900 | That's the advantage that high income,

01:30:15.640 | or that's the advantage that at least moderate income people

01:30:18.760 | have in the real estate space,

01:30:20.720 | is that you don't have to make everything from it.

01:30:23.580 | And if you'll get in and start,

01:30:25.760 | if you'll get in and be an owner and a buyer,

01:30:28.360 | then you'll position yourself in a sense

01:30:30.400 | where things are actually gonna,

01:30:32.760 | you'll position yourself to where you can actually

01:30:35.480 | take advantage of what's happening.

01:30:36.820 | And even if you only got mortgage pay down,

01:30:40.400 | that's still benefit.

01:30:41.600 | You don't have to make the best deal out there.

01:30:44.120 | And again, telling you from hard won experience

01:30:46.880 | that I used to think I've gotta make the best deal

01:30:49.460 | because I went to real estate seminars and people said,

01:30:51.480 | "Oh, you make your money when you buy

01:30:54.000 | "and I gotta get the best deal."

01:30:55.320 | And so I thought, I gotta get the best deal,

01:30:56.600 | I gotta get the best deal.

01:30:57.840 | And getting the best deal is exhausting sometimes.

01:31:00.200 | And so I've since changed my opinion.

01:31:01.920 | I've since said, you just gotta get a deal.

01:31:03.920 | And then in time, you'll get better deals.

01:31:05.480 | And there's no question that you wanna get the best deal

01:31:07.440 | that you can, but sometimes the best deal that you can get

01:31:10.880 | might be just pay retail.

01:31:12.600 | And in the strategy that you're describing,

01:31:15.120 | even paying retail is not bad.

01:31:17.800 | It's not the best, but it's not bad.

01:31:21.080 | So go and shop and focus on taking action.

01:31:26.080 | And if you get into it and you decide,

01:31:27.560 | "Hey, this doesn't work for me, we don't like this,"

01:31:29.760 | then sell the house and move on.

01:31:31.400 | - Killer, thanks so much for that.

01:31:36.960 | Appreciate it, that's all I have.

01:31:38.760 | - Cool, thanks man.

01:31:40.180 | - All right, Thomas, you said you had another question.

01:31:41.960 | We'll do it.

01:31:42.800 | We'll wrap it up with your second question.

01:31:44.640 | Go ahead, sir.

01:31:45.480 | - Hey, Joshua, thanks for taking the second question.

01:31:53.040 | Actually kind of relates to the last one.

01:31:55.280 | I was, wanted to ask, I remember you talking about

01:31:58.160 | wanting to build a real estate portfolio in the past,

01:32:01.080 | and I just kind of wanted to know

01:32:02.760 | if that was still your plan and what type,

01:32:05.400 | what I guess area of real estate

01:32:07.800 | were you looking at doing?

01:32:10.180 | - My plans personally have been stymied

01:32:15.420 | by my sense of frustration

01:32:18.200 | with the United States of America

01:32:20.300 | and my wondering whether I want to divorce myself

01:32:24.080 | from that particular country

01:32:26.220 | or just go to counseling and go back into it.

01:32:30.780 | And so I left the United States

01:32:33.540 | basically almost three years ago.

01:32:36.880 | And when I left the United States,

01:32:38.700 | I set out a plan to establish myself

01:32:43.540 | so that I didn't have to be connected

01:32:45.880 | to the future of the United States.

01:32:47.840 | I was very concerned about the,

01:32:52.240 | I was very concerned about the long-term future

01:32:56.140 | of the country.

01:32:57.260 | I was very concerned about legal changes

01:33:00.040 | that would affect me, that would cause me moral troubles,

01:33:05.520 | just personal sense of my conscience

01:33:08.960 | and my own ethical ability to live with myself

01:33:12.720 | if I were involved with that country.

01:33:14.880 | And just a concern about the fact

01:33:17.840 | that I hadn't really taken the measure of the world

01:33:21.040 | in a way that I should have,

01:33:22.740 | that I basically, like most of us

01:33:25.200 | who grow up in the United States,

01:33:27.000 | that I was born and raised there

01:33:28.800 | and just seemed like the best place,

01:33:30.120 | and after all, we're the best country in the world.

01:33:32.400 | And so I left with a goal of putting in place a plan B,

01:33:37.160 | the ability to not have to depend upon the United States.

01:33:40.880 | And so over the last few years,

01:33:43.600 | I have systematically executed on that.

01:33:47.720 | So at this point in time,

01:33:49.140 | I could never go back to the United States

01:33:53.040 | the rest of my life.

01:33:54.120 | I could divorce myself from the country.

01:33:57.640 | I could renounce my citizenship,

01:34:00.400 | and I could live in several places around the world

01:34:02.960 | and have a very bright future without that.

01:34:06.460 | So what has been interesting to me along that journey

01:34:09.620 | is that I now,

01:34:14.300 | since I don't have to be in a relationship

01:34:18.580 | with the United States,

01:34:19.500 | I now feel much more peaceful and much more detached,

01:34:22.560 | and I can appreciate more objectively and dispassionately

01:34:27.240 | some of the good things about living in the United States

01:34:32.240 | in a way that I was blinded to previously

01:34:36.640 | by my frustrations with the country.

01:34:40.880 | And so right now, I'm in the process

01:34:45.040 | of basically trying to decide,

01:34:47.660 | for let's say the next five years or so,

01:34:50.240 | five to 10 years,

01:34:51.300 | do I want to be involved with the United States or not?

01:34:55.980 | So along the way, I put most of my investment strategies

01:35:00.980 | on hold, especially with things like real estate.

01:35:04.380 | I don't own any real estate in the United States.

01:35:09.540 | And what I have been questioning is,

01:35:13.340 | well, do I want to be involved in business

01:35:16.800 | in the United States?

01:35:17.760 | And by the way, I primarily want to be involved

01:35:20.680 | in investing in business, not in real estate.

01:35:24.200 | I think that real estate is great for a lot of people,

01:35:27.340 | but I would personally like to be involved in business.

01:35:30.200 | I want to fix and flip businesses.

01:35:32.700 | And so that's something that I have interest in.

01:35:36.520 | That's something that I believe I can build the skills to do

01:35:39.300 | and that's my primary plan,

01:35:42.440 | is not to be not real estate necessarily, but business.

01:35:46.400 | But to answer your question is that I decided

01:35:53.560 | that these personal decisions were of a higher priority

01:35:58.560 | for me than buying houses and buying rental houses

01:36:02.680 | and things like that.

01:36:03.520 | So I made the conscious choice to sit out

01:36:06.680 | and ignore the last few years of real estate.

01:36:10.960 | So where I'm at right now is at the moment,

01:36:13.360 | I am traveling around the world

01:36:15.680 | and I am systematically trying to figure out,

01:36:19.360 | are some of the international options

01:36:21.840 | interesting to me enough for me to commit myself

01:36:25.800 | to not being in the United States?

01:36:28.400 | Or are the lifestyle considerations

01:36:32.160 | of everything being easy and simple and cheap

01:36:34.640 | and I know how it works enough to convince me

01:36:37.560 | to move back to the United States?

01:36:39.720 | So from a real estate perspective,

01:36:41.720 | I'd really like to go to Southeast Asia

01:36:47.160 | before I buy a house in the United States.

01:36:52.160 | I'd really like to go and put boots on the ground

01:36:56.760 | and tour around Thailand and Malaysia and Cambodia

01:37:01.320 | and Vietnam and Taiwan and South Korea

01:37:04.680 | and look for opportunities and ask myself,

01:37:06.900 | are there opportunities here?

01:37:08.360 | Because I think there are a lot of opportunities.

01:37:11.720 | I've spent a lot of time in Latin America.

01:37:14.160 | I understand the markets there.

01:37:16.320 | I see opportunities in some of those places,

01:37:18.480 | but I also don't see necessarily the same

01:37:21.320 | growing economies as Southeast Asia.

01:37:23.240 | And so I'm trying to get myself to Southeast Asia

01:37:25.720 | to spend some time there.

01:37:26.560 | Unfortunately, COVID has derailed my plans.

01:37:28.680 | So just kind of an honest, long-winded way of saying

01:37:35.800 | that my issue right now is,

01:37:38.320 | do I want to have anything to do with the United States?

01:37:42.040 | At the moment, if you were to ask me a year ago,

01:37:45.120 | I think my answer would have been,

01:37:46.940 | I don't wanna go back.

01:37:51.240 | I don't want anything to do with them.

01:37:52.880 | I don't want them in my life.

01:37:55.320 | I don't wanna go back.

01:37:57.400 | Today, I think I'm softened on that.

01:38:00.120 | And I talk, I think, almost every day,

01:38:02.340 | and I talk with my wife almost every other day,

01:38:05.840 | and I try to figure out, well, what do I want?

01:38:08.120 | And the biggest challenge here for me

01:38:09.760 | is simply my children.

01:38:11.240 | I've had a lot of freedom to kind of wander around

01:38:16.240 | because my children have been quite young,

01:38:20.240 | but my children are not as young as they were.

01:38:23.120 | And so in order for me to have the kind of family life

01:38:28.040 | that I envision, I need to make

01:38:30.840 | some of these bigger decisions.

01:38:32.200 | And so I'm right in the middle of deciding that.

01:38:34.480 | So if I go back to the United States,

01:38:36.520 | then I will put in place a certain set of strategies.

01:38:39.840 | If I stay out of the United States,

01:38:42.360 | I will pursue alternative strategies.

01:38:45.040 | And basically, in my head,

01:38:48.000 | although I have no firm deadline,

01:38:50.120 | I'm really trying to come to some clarity

01:38:52.200 | on that personal question over, say,

01:38:54.760 | the next six months or so.

01:38:56.840 | And that's the basic reason why I'm wandering

01:38:59.240 | around the world right now.

01:39:00.600 | So obviously, it's not do or die.

01:39:05.600 | You can change anything, right?

01:39:07.400 | That's one of the things that I have come to appreciate

01:39:09.200 | is I could move back to the United States

01:39:10.520 | and I could leave a year later,

01:39:12.200 | just like I could decide I don't wanna leave

01:39:13.840 | and I could be gone and I could change my mind

01:39:16.480 | a year from now.

01:39:17.640 | But I don't think for the wellbeing of my family,

01:39:20.640 | I think it's more important for me to make a clearer,

01:39:25.400 | give clearer direction where there's more consistency

01:39:28.960 | versus changing my mind all the time.

01:39:31.840 | And so since I have completed my comprehensive plan B,

01:39:37.520 | then I feel a lot better now.

01:39:39.120 | And so right now, over the next six months,

01:39:41.000 | I'm personally trying to decide the answer to that question.

01:39:44.760 | And then that will drive what I personally do

01:39:47.920 | with regard to future real estate and business activities.

01:39:51.280 | That make sense?

01:39:52.120 | - Definitely.

01:39:56.920 | Thanks for sharing, yeah.

01:39:58.400 | Yeah, if you're willing to share,

01:40:01.760 | look forward to seeing what you find.

01:40:04.200 | I mean, I haven't been to all the Southeast Asian countries,

01:40:07.960 | but there are definitely some that,

01:40:09.560 | other ones that I wanna go to still.

01:40:12.120 | Yeah, experiences thus far have been good.

01:40:16.120 | - Yeah, it's obviously a totally different world.

01:40:18.760 | But I mean, the numbers don't lie, right?

01:40:20.800 | If you wanna know where the economic growth is,

01:40:22.920 | the numbers are very obvious.

01:40:24.560 | The economic growth is not in the West, right?

01:40:27.480 | The population growth is not in the West at the moment.

01:40:30.560 | The population growth is in the South.

01:40:33.440 | The global South is where the population growth is.

01:40:35.880 | The global South is where the economic growth

01:40:38.760 | the next couple of decades is going to be.

01:40:40.840 | And so that's where the opportunities are.

01:40:43.920 | If I were 21 years old and single,

01:40:48.680 | I would be living in Ethiopia or in Bangkok

01:40:53.680 | or something like that.

01:40:55.320 | Because that's where the action is going to be

01:40:58.000 | for the next few decades.

01:40:59.760 | I'm not 21 years old and I'm not single.

01:41:01.800 | And so it's more complex for me

01:41:03.520 | to answer some of those other questions

01:41:05.880 | of where is the best place for my family to live?

01:41:08.080 | And that's a harder question.

01:41:09.080 | It goes pretty deep to try to figure that out

01:41:11.160 | 'cause there's no rubric.

01:41:13.920 | There's no manual for it.

01:41:16.360 | In fact, I find it really overwhelming

01:41:17.960 | to try to think through, right?

01:41:19.280 | The reason most of us live where we live

01:41:21.080 | is because that's where we're from,

01:41:22.400 | that's where our family is,

01:41:23.480 | and/or that's where we have a job.

01:41:25.400 | And in my situation, I'm not currently living

01:41:27.840 | where I'm from, I'm not currently living

01:41:29.200 | where my family is, and my job can be done anywhere.

01:41:31.720 | And so I thought that I wanted that freedom, right?

01:41:33.880 | It took me 15 years to build that freedom.

01:41:35.680 | Well, then I got it, and now I just find myself

01:41:37.800 | totally overwhelmed 'cause I don't know

01:41:39.200 | whether I should live in Addis Ababa or Riyadh

01:41:42.200 | or Rio or anywhere, and it's too much.

01:41:45.920 | And so I've tried to approach it,

01:41:48.480 | but right now I'm trying to see it.

01:41:51.440 | And I just wish I'd seen more of the world

01:41:53.040 | when it was easier.

01:41:54.280 | 'Cause right now, because we have four young children,

01:41:58.440 | and I don't regret it, and I'm not complaining,

01:42:01.240 | but I cannot leave my wife at home

01:42:03.440 | with four young children and go bounce around the globe,

01:42:06.880 | say, "Oh, I'm gonna go bounce around the globe."

01:42:08.440 | That's just, it's not appropriate.

01:42:10.360 | And so I'm bringing my wife and my children with me,

01:42:12.880 | but it just makes a different kind of travel experience

01:42:16.600 | and travel arrangement than the other opportunities.

01:42:20.280 | And so at the moment, again, I got plans and opportunities,

01:42:23.680 | I think there's opportunity all over,

01:42:25.240 | but that's my answer is I don't know.

01:42:27.320 | And so I'm mostly focused on trying

01:42:30.600 | to answer the question of where do I want to live,

01:42:33.320 | because I'm at a phase in my family life

01:42:35.480 | where that's the best thing I can do

01:42:37.680 | for the well-being of my family,

01:42:39.760 | which is the reason that I care about making money.

01:42:43.040 | And then once I've decided that,

01:42:45.800 | then the constraints will be obvious

01:42:47.520 | and the proper personal investment plan

01:42:50.080 | into business and real estate and everything else

01:42:53.920 | will be obvious once I've made that decision.

01:42:56.760 | And so I've given myself basically

01:42:59.560 | maybe six more months, and then I'll be somewhere

01:43:04.400 | and decided something.

01:43:07.120 | I just don't know the answer to that yet.

01:43:09.340 | - Great, thank you for the response.

01:43:14.840 | And may God bless you with the wisdom and discernment

01:43:18.080 | to do what's right with you and your family.

01:43:20.800 | - I appreciate that more than you know,

01:43:22.560 | because it is a very significant issue, right?

01:43:26.440 | You feel the responsibility significantly,

01:43:31.200 | and I find it difficult to, again,

01:43:33.600 | there's no rule book, right?

01:43:34.640 | Most people don't think the way that I think,

01:43:37.400 | and it's fine, it's no big deal.

01:43:38.480 | But most people don't look at the world

01:43:40.720 | the way that I look at it.

01:43:42.120 | There's some who do, but it just leads to,

01:43:44.880 | it's kind of a, there are not a lot of people

01:43:47.040 | that you can ask for advice on it.

01:43:48.840 | There are not a lot of people who've done

01:43:50.440 | anywhere near the things that I've done.

01:43:52.280 | And so it's hard to find those people

01:43:54.840 | that can be the trusted confidants

01:43:56.720 | who actually understand enough to give good advice,

01:43:59.920 | but we're working on it.

01:44:01.200 | That's it for today's show.

01:44:02.080 | Thank you all so much for listening and for calling in.

01:44:05.960 | It's been a great pleasure to have this conversation

01:44:09.200 | with you, I'd love to talk to you next week.

01:44:10.440 | Remember, if you go to patreon.com/radicalpersonalfinance,

01:44:13.240 | then you can sign up to support the show on Patreon,

01:44:15.320 | and you can gain access to next week's live Q&A.

01:44:19.400 | Patreon.com/radicalpersonalfinance, bye.

2021-08-27_Friday_QA