2021-10-15_Friday_QA-Business_Student_Loans_Bankruptcy_Babies_Annual_Fees_Houses

00:00:00.000 | Are you ready to make your next pro basketball, football, hockey, concert or live event unforgettable?

00:00:05.440 | Let Sweet Hop take your game to the next level.

00:00:08.080 | Sweet Hop is an online marketplace curating the best premium tickets at stadiums, arenas and amphitheaters nationwide.

00:00:14.840 | Sweet Hop's online marketplace makes it easy to browse and book the best seats.

00:00:19.400 | With no hidden fees and a 100% purchase guarantee, you can feel confident when you book your premium LA tickets with Sweet Hop.

00:00:26.480 | Visit suitehop.com today.

00:00:30.480 | Today on Radical Personal Finance, live Q&A.

00:00:32.880 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight and encouragement you need to live a rich and meaningful life now,

00:00:56.400 | while building a plan for financial freedom in 10 years or less.

00:00:59.680 | My name is Josh Ruschitz. I am your host. Today is Friday, October 15, 2021.

00:01:06.400 | And today, like any Friday, when I can arrange the appropriate technical details, we do live Q&A.

00:01:12.760 | Each Friday when I can, I do a live Q&A show.

00:01:23.800 | If you're not familiar with it or if it's your first time here today, welcome.

00:01:26.920 | I'm glad to have you. Works just like Call and Talk Radio.

00:01:29.560 | Where you call in, ask questions, comments, anything that you want to say.

00:01:33.120 | It's probably the best opportunity that you have to provide input to the show.

00:01:37.360 | Ask any questions. Often I take these at some length and you can make any comments and interact with the show in any way that you would like.

00:01:45.840 | If you would like to join me next week on the Friday Q&A show, I'd love you to do that.

00:01:49.920 | Go to patreon.com/radicalpersonalfinance.

00:01:52.920 | Sign up to support the show there on Patreon and that will gain you access to the Friday call-in shows.

00:02:00.000 | We begin today in the great state of Wisconsin. Welcome to the show. How can I serve you today?

00:02:05.480 | Can you hear me, Joshua?

00:02:06.520 | Sounds great. Go ahead, please.

00:02:08.880 | Hey, good morning. I'm very pleased to be here.

00:02:12.440 | I've been listening to you throughout the summer and I believe I kind of have a radical situation myself.

00:02:17.400 | Sweet.

00:02:19.080 | You and I have a little bit in common.

00:02:23.000 | I own a rental property in West Palm Beach. It's an Airbnb.

00:02:26.560 | I've been a yachtie for the past 10 years of my life, so I've kind of created an income out of the normal, you know, kind of more of like a lifestyle.

00:02:40.400 | And I've been involved in rental properties here in Wisconsin as well since 2014.

00:02:47.600 | So my question is, I am selling my duplex in Wisconsin and I'm going to profit about $125,000.

00:02:57.520 | I'm looking to 1031 exchange for some land for possible tiny home development.

00:03:03.720 | I'm kind of wondering if you could give me some input.

00:03:07.920 | Have you ever done a 1031 before?

00:03:10.400 | No, this is my first time and I have a qualified intermediary in place, but I'm just having a hard time kind of finding a replacement property.

00:03:19.800 | Is a duplex to raw land, is that an allowed transaction under the 1031 rules?

00:03:29.480 | Yes, as far as I understand it, any kind of real estate that will be held for investment or commerce is like kind.

00:03:42.080 | Okay. I don't have anything. I mean, your question doesn't immediately... I don't know exactly what to say.

00:03:49.440 | If you're having trouble finding a deal, you'll have to keep on looking, I guess, until you find one or think creatively about how to do it.

00:03:57.200 | It looks like you've lined everything up. When is the closing date on the duplex?

00:04:01.680 | It's on October 26th, so the clock will kind of start then and I'm just trying to be prepared and have a couple properties identified before closing.

00:04:10.120 | Why are you having so much trouble finding the kind of land that you want to invest in?

00:04:15.480 | Mostly like zoning and building codes, things like that.

00:04:19.320 | The tiny house village community type thing is still up and coming, even though there's a need for it.

00:04:25.880 | A lot of municipalities just don't have the structure in place for this type of thing.

00:04:30.480 | Do you think you'll be able to identify those success prospects before buying the land?

00:04:36.480 | I'm hoping to. There's no guarantee, but I'm also okay with just sitting on the land for a little while until I can generate some more income to start building it.

00:04:48.880 | But I know that it's going to come with some approval and all that kind of stuff, and drawings and plans and things like that.

00:04:59.680 | So we're just kind of in the beginning stages of it, but I was just wondering if you would have any outside-of-the-box advice for us.

00:05:07.680 | Yeah, I don't have any. Nothing comes to mind. I'm a little flat-footed in terms of answering your question because it's not specific.

00:05:14.200 | I would say that the 1031 rules are quite clear. As long as you have the intermediary lined up, they're quite clear and it should be no problem.

00:05:23.320 | The key is you have to line up the dates of the opportunity.

00:05:27.520 | And so if your major concern is the ability to get zoning approval for the type of development that you want to do, then certainly that's going to be more challenging.

00:05:38.440 | And you should be hustling to figure out which municipalities or which counties are more likely to work with you on that versus others, at least as best as you can determine.

00:05:51.120 | And then what I would say is if you're not sure if you'll be able to do it or not, then you'll want to have a backup plan for the land that you acquire,

00:06:00.920 | knowing that, hey, this is land and property that I'm willing to hold even if I can't eventually develop it.

00:06:07.320 | You can make a lot of money developing property and working your way systematically through the zoning and approval process of getting property rezoned, getting new approvals.

00:06:20.080 | You can make a lot of money repurposing the use of land. It's a very useful way to increase the value of the land, but it requires patience.

00:06:28.520 | It's going to require the skills of tenacity and diplomacy, etc. to work your way through.

00:06:34.760 | So my only comment would be do it, but make sure that you have a backup plan so that you can hold the property and then resell it down the line if for some reason you can't accomplish your plan A of getting it rezoned.

00:06:48.320 | Yes, and that's kind of what plan B is, is that we can definitely build something on it.

00:06:53.920 | It may not be what we planned for originally, but we still just plan to make good use of the profits from the rental property that we have in place.

00:07:03.920 | There is going to be a lot of hoops to jump through, but at least we do have a plan B that we would be able to build something on it for investment purposes.

00:07:13.880 | Perfect. Love it. Awesome. All right. We go to Caleb in Illinois.

00:07:18.160 | Caleb, welcome to the show. How can I serve you today?

00:07:21.400 | Hi, Joshua. I had called in a couple of weeks or a couple of months ago and I asked you about your opinion on the Apple strategy.

00:07:30.080 | That had kind of turned into a long conversation about where I should be looking and pointing towards my career.

00:07:36.520 | Yes.

00:07:37.160 | So I've done a lot of introspection here lately and I think I've found some niches I want to move into.

00:07:43.800 | Do you recommend starting a business for yourself for the first time on the side in addition to a full time income or just jumping in head first?

00:07:53.000 | I think it would depend on the kind of business and whether or not the full time income is a help or a hindrance to you and then also on just your overall position.

00:08:04.400 | Most people, I think, are well advised if you have a full time income and if you have the time and the energy to work a business on the side.

00:08:13.600 | I think most people are well advised to do that because it's a very safe option.

00:08:19.080 | And by having that full time income, it can give you the time that you need to learn the business.

00:08:26.240 | Most new businesses fail. So you ask, why do most new businesses fail?

00:08:31.520 | Well, usually most new businesses fail because they don't make enough money.

00:08:35.680 | It's always cash flow problems, not enough making enough money.

00:08:38.680 | And so it takes time in virtually any business. It takes time for you to work out the specific plans that are going to be the most productive, to work out the new sales processes, to figure out what's going to actually be successful.

00:08:52.480 | Now, for a novice entrepreneur, those lessons usually take time and they eat up money.

00:08:58.280 | And so there are many people who have an empty bank account.

00:09:01.160 | They have a business idea, but they don't have a way to support their family while they get their business going.

00:09:06.960 | And so if you're in that situation, then obviously the advice is work a day job that gives you income, start your business on the side until you get your business to a point of profit where you are able to really make it work.

00:09:19.920 | Now, the difference would be if someone is an experienced entrepreneur, somebody has deeper pockets, they have the savings or the reserves to fund the business, or they have the ability just to fund their own life and their expenses while they start the business and build the business from cash flow.

00:09:35.440 | Then that side, that job could actually be an impediment to the business growth.

00:09:40.520 | You could say, "Hey, I've got this job, but this job is keeping me from working the amount of hours that I want to work."

00:09:46.320 | And that's when you would say, "Hey, it makes more sense for me just to go full time into the business."

00:09:51.600 | So it is safer to start a business on the side and keep a primary income for a time as long as that primary income is not conflicting with the sideline business.

00:10:05.560 | And that would usually be the safer approach.

00:10:07.640 | So I would start it that way.

00:10:09.280 | Most business, the vast majority of businesses, I would start it that way, get the paperwork going, get all the accounts smoothed out, work out a sales process, et cetera.

00:10:17.320 | And then when you find the job is getting in the way of your business and you see opportunities to profitably invest the additional hours into the business, that's when I would quit the job.

00:10:31.160 | Yeah, that makes total sense. Thank you.

00:10:33.480 | Congrats on going for and doing the introspection.

00:10:37.360 | Tell us what is your best idea right now.

00:10:41.680 | So I moved to a smaller town and there's a couple of vacuums that exist in the space.

00:10:50.400 | But what has looked most popular to me would be opening a small fitness studio.

00:10:57.160 | I've just talked to a lot of people within the town and I've gone into Facebook groups and searched certain keywords, just gyms and exercise.

00:11:06.160 | And it seems like everyone is just looking for something, but no one has opened one up.

00:11:11.160 | And so I'm just looking to fill that void right now.

00:11:13.160 | Love it. Love it.

00:11:14.160 | In that space, you should look into Alex Hormozy's gym launch protocols.

00:11:19.160 | You probably don't necessarily need to start sign up as a client of his right off the bat, although of course you should consider it.

00:11:25.160 | But I would glean what I can about his process of building a gym.

00:11:29.160 | And when you start a gym, your goal should be to be profitable on day one by pre-selling it using Alex Hormozy's kind of strategy that he's sold so well under his gym launch brand.

00:11:42.160 | So that would be my recommendation number one.

00:11:44.160 | And then I would just remind you that most businesses are vastly less about the idea than they are about the execution.

00:11:52.160 | And novice business owners often think, "Well, I've got this great idea."

00:11:58.160 | Well, ideas are not particularly valuable.

00:12:01.160 | An idea is an idea.

00:12:02.160 | What is most valuable is your execution of the idea and your ability to actually just simply make it happen relatively quickly.

00:12:11.160 | Peter in New York, welcome to the show.

00:12:13.160 | How can I serve you today, sir?

00:12:14.160 | Hi, Joshua. Do you have time for two quick questions?

00:12:17.160 | Let's start with one and then we'll go from there.

00:12:19.160 | All right. Can my student loans be considered a legitimate business expense?

00:12:24.160 | No.

00:12:25.160 | All right. That was easy.

00:12:27.160 | All right. How about the next question?

00:12:33.160 | Yep.

00:12:34.160 | My wife and I are expecting a child early next year, and I was trying to strategize how to best use my paternity leave, and I'm trying to figure out how much of it I should take.

00:12:46.160 | Yeah. So, by the way, back to question number one.

00:12:49.160 | There are some very limited rules around the deduction of professional expenses, but virtually in no cases would your previous education that you took out student loans for be something that would qualify under those rules.

00:13:05.160 | So, you can look them up, but if you tell me, "Hey, I have previous education from student loans," that most likely tells me that was traditional education.

00:13:15.160 | And in that traditional education, you just can't do it.

00:13:18.160 | Otherwise, every lawyer would deduct his law school expenses as student loans.

00:13:23.160 | Every doctor would deduct his student loans, and the rules are very tight around that.

00:13:27.160 | It's not to say that you can't deduct education expenses, but you're not going to be able to do it with your student loans.

00:13:34.160 | Strategy around paternity leave. Are you anticipating that your paternity leave look like, "Hey, my wife and I want to hang out with our new baby, and that's it," or are you trying to figure out how to use that time, that paid time off, as it were, to launch something else?

00:13:54.160 | The short answer is it's a lot of part A. Part B is slightly time dependent on a couple of logistical things involving her potentially being able to go on an international trip for a very brief period of time where I would watch the kid while she's doing those activities.

00:14:20.160 | Some of that has to coincide with when the baby is born, because this trip is, at this point, on the books for about—it's part of her being in business school.

00:14:30.160 | It's on the books for about a month after the due date, but obviously, since that's a little up in the air, I don't know exactly how that's going to pan out.

00:14:38.160 | So I know that sounds kind of vague, but that's part of it.

00:14:42.160 | But the other part was I'm planning to take a minimum of a month.

00:14:47.160 | I have no change in my salary taking a month off.

00:14:51.160 | We have a lot of other opportunities within our organization and our state that allow for varying degrees of paid family leave or the use of vacation timing, etc., etc.

00:15:02.160 | But long story short, it would be between one to three months I could take for paternity leave with varying impacts on the income.

00:15:11.160 | Though, to be honest, I could stop working for three months, and it really won't change anything.

00:15:15.160 | So I was just trying to think about what other factors I should weigh with how long I want to be out of the house/what am I actually going to be doing after four to six weeks.

00:15:26.160 | And those were the things I was trying to think about.

00:15:29.160 | But this international trip is part of it.

00:15:31.160 | But again, it's unclear if she can bail out of it.

00:15:35.160 | Does she have to be 100% committed?

00:15:37.160 | Because if the kid comes a week before, obviously that's probably not going to happen.

00:15:42.160 | But if it's five weeks before, then different story.

00:15:45.160 | I'll give an abbreviated version of my commentary on childbirth because you've probably heard my previous more extended discussions of this topic since I know you're a longtime listener.

00:15:55.160 | The abbreviated version is simply this.

00:15:58.160 | The birth of a child is an extraordinarily special time.

00:16:03.160 | It's one of those things that happens a very small number of times in our life.

00:16:08.160 | There are very few events that are as important as that.

00:16:12.160 | And as such, I believe it deserves to be treated as a special event.

00:16:18.160 | Is this your first child?

00:16:19.160 | It is, yes.

00:16:21.160 | So with a first child, there is usually a lot of planning, some trepidation, a lot of uncertainty, sometimes a small level of fear.

00:16:32.160 | You're going through and making all those decisions step by step by step.

00:16:35.160 | It's a lot.

00:16:36.160 | And so what I would encourage is it's a tremendous opportunity to make it a special and rewarding time for you and your wife.

00:16:47.160 | And that should be your primary focus.

00:16:50.160 | This, in my experience, is an extremely special time.

00:16:55.160 | And especially with your first child where you don't have the logistical challenges of managing your other older children at the birth, it's an even more special time.

00:17:05.160 | And so it's one of those things in life that deserves to be planned for and just simply taken and enjoyed.

00:17:12.160 | I look back with tremendous fondness and appreciation to the birth of our first baby.

00:17:19.160 | We had a very special childbirth.

00:17:22.160 | The baby was born at home, which was an incredibly peaceful experience.

00:17:25.160 | It was just wonderful, right?

00:17:27.160 | Three hours after the baby was born, it was just my wife and me and our baby in our house.

00:17:34.160 | And it was great.

00:17:35.160 | And so it was like this incredible emotional time where we're like, "Hey, our lives are changing. We're moving in a new direction."

00:17:43.160 | And as part of that, it's a special time of togetherness with you and your wife just to settle into something new, to learn something new.

00:17:52.160 | And the other, you know, I share advice around birthing and whatnot, but what I would say is what I have often, every new parent I've ever talked to, I've always encouraged that you need to expect the first few weeks to be much harder than you anticipated.

00:18:06.160 | We spent so much time preparing for childbirth that we were well prepared for childbirth, but we were underprepared for the difficulties of breastfeeding, the difficulties of learning the baby's schedule and figuring it all out, etc.

00:18:19.160 | And so anything you can do to just simply plan to not have any obligations, not have any responsibilities, not have any place you have to go, not have any money you have to make,

00:18:28.160 | just simply to be together and enjoy and provide your wife with a warm, wonderful, comfortable little nest where she and the baby can bond, which is the most important thing for the first few weeks of the baby's life.

00:18:41.160 | To me, that's the goal.

00:18:43.160 | And so what I would say is, unless it's necessary, I would say minimize the number of other projects.

00:18:50.160 | Don't say, "Oh, I'm going to start a business," because you won't.

00:18:53.160 | Minimize the number of commitments that you have.

00:18:56.160 | Don't plan to go anywhere.

00:18:58.160 | Obviously, the trip is important for your wife's career, but if you can just cancel the trip now, cancel it.

00:19:04.160 | She's not going to want to go somewhere a month after the birth of the baby unless it's so important.

00:19:10.160 | And just plan to be together and to provide time.

00:19:14.160 | I would give you an expectation of what your first few weeks will look like if you assume that your wife has the simplest and safest and best natural childbirth experience.

00:19:28.160 | Even for the first week, she's not going to be allowed to carry the baby, which means that you'll be up in the night getting the baby, bringing the baby to her in the night for breastfeeding and all of that.

00:19:39.160 | You'll be helping to care for her, to help her recover from the birth.

00:19:42.160 | You're going to want to be 100% available, and your sleep schedule is going to be messed up.

00:19:46.160 | It's just a time when you don't want to have extra things.

00:19:49.160 | If your wife has a C-section, then now that one week turns into about six weeks of recovery.

00:19:56.160 | Usually, for most women, maybe a month, but it still turns into a doctor's order of six weeks.

00:20:01.160 | And so now the recovery becomes so much more difficult for her, and that requires so much more for you.

00:20:08.160 | So can you do other things during that time?

00:20:10.160 | Of course you could, but I think it's foolish for you to plan on anything except being home and seeing how things go.

00:20:17.160 | Now, assuming that everything goes fine, child is born between the 38- and 42-week window, you and she recovers quickly, has a smooth and successful childbirth, everything's good.

00:20:31.160 | About a month in, that's the time when, yeah, you'll be ready to do stuff, and she's going to be ready to go places and do things.

00:20:37.160 | But I would not start with an international trip.

00:20:40.160 | It takes time for both of you to learn how to deal with carting the baby around, and it takes time to figure out the new skills of how to teach the child what the crying means and what kind of schedule works, etc.

00:20:54.160 | And so any kind of international trip, airplane travel, etc., while airplane travel with an infant is relatively easy, airplane travel with a few-week-old is probably not.

00:21:03.160 | And there's too many things that can be mixed up where the baby just needs some weeks to recover.

00:21:08.160 | That's totally normal with newborns.

00:21:10.160 | And so if I were you, I would cancel the international trip.

00:21:13.160 | I wouldn't do anything.

00:21:14.160 | I would plan to be home for a month, and then I would reconsider then after a month.

00:21:18.160 | After a month, depending on what's happening with her career, then I think, yeah, if she's going to stay at home for a little bit longer with the baby, then, yeah, you can easily start working again.

00:21:26.160 | But I would not try to load up a bunch of extra stuff.

00:21:29.160 | I think that's unwise.

00:21:32.160 | That was very similar to what I was thinking.

00:21:35.160 | Yeah.

00:21:36.160 | It's hard to describe, but it's unique, right?

00:21:41.160 | It's different than anything else.

00:21:42.160 | You know, if you think about, you know, your wedding, okay, well, that was a special experience.

00:21:46.160 | It happens once, but that's kind of a whirlwind, right?

00:21:49.160 | Birth of a baby is different because it's like this intense time, but it's a more extended period of time.

00:21:55.160 | And I just say enjoy it.

00:21:57.160 | Get some extra books that you want to read, and what happens is a lot of it is just you're tired, right, because the baby is figuring out, you know, his sleep schedule, et cetera, and it takes a while to get accustomed to it.

00:22:10.160 | And so I think that's enough.

00:22:13.160 | I don't need to go into it anymore.

00:22:14.160 | I just I would cancel the international trip unless it's so important she's going to be willing to do it.

00:22:19.160 | You know, without then I would just cancel it now.

00:22:21.160 | There's no point.

00:22:22.160 | And I would take it easy and enjoy the process, the transition.

00:22:28.160 | After a month, everything will be different.

00:22:31.160 | After a couple of months, you'll learn the baby.

00:22:33.160 | She'll learn the baby, everything, everyone will be back on a normal schedule, and you'll build those skills.

00:22:37.160 | But it's just a matter of skills, right?

00:22:39.160 | Parenting is a skill.

00:22:40.160 | I remember I couldn't have conceived of taking an international trip with a one-month-old on the first time around.

00:22:48.160 | Fourth time around, we took an international trip with a one-month-old, and it was no big deal.

00:22:52.160 | But my wife had recovered.

00:22:55.160 | The recovery had gone well, and we knew how to handle babies.

00:22:58.160 | But the first time around, just the process of learning how to put your baby to sleep and how to do that and not to just to feel confident as a father and as a mother, it takes time to do that.

00:23:08.160 | So I would wait.

00:23:10.160 | All right, we move on to let's go to John in Pennsylvania.

00:23:14.160 | John, welcome to the show.

00:23:15.160 | How can I serve you today, sir?

00:23:17.160 | Hey, Joshua.

00:23:18.160 | I have two questions.

00:23:20.160 | The first one is just a simple one about credit cards.

00:23:24.160 | I was wondering if I have a couple credit cards with annual fees that I'm not really utilizing the benefits of the annual -- of those particular cards all that much.

00:23:37.160 | I was thinking about downgrading them.

00:23:40.160 | The one thing I was worried about was that they both have pretty high credit limits on them, and I found out that they actually don't take away your high credit limit if they change it to another type of card.

00:23:51.160 | At least that's what they told me.

00:23:53.160 | Other than that, that was my only concern about -- I didn't want to close the cards, you know, just keeping the histories and whatnot.

00:23:59.160 | But other than that, I wasn't sure if there was any other reason not to downgrade a card like that and get rid of the annual fee.

00:24:06.160 | There's a chance I might keep one of them just to keep some of the benefits, but that's about it.

00:24:11.160 | So the reason that you don't automatically close a card where you have an annual fee and when you have reached the point in time where you say, "The value that I'm getting from this card does not exceed the annual fee," is because that will change your credit history.

00:24:27.160 | And it will lower the amount of available credit that you have, and it will also sometimes reduce the average duration of your credit.

00:24:37.160 | So that's why we're always careful about it.

00:24:39.160 | So is that a bad thing?

00:24:41.160 | It depends on what the cards are, and it actually depends.

00:24:44.160 | Because contrary to what I used to advise, I used to advise that having the highest credit limit was always the best idea.

00:24:52.160 | Because having the highest credit limit, you know, meant that you would always have the lowest utilization ratio.

00:24:57.160 | But what I have since changed that advice, because what happens is when you have very high credit limits and you're applying for new cards, you will often get declined for those cards because your available credit is too high.

00:25:11.160 | If you make $100,000 a year and you have $250,000 of available credit across, say, 10 cards, and then you want to go and apply for an 11th card, maybe you're trying to get an introductory sign-up bonus or some new offer, that 11th card looks down and says, "This guy's got $250,000 of credit limit available to him.

00:25:33.160 | For a guy with $100,000 a year income, that's too much."

00:25:38.160 | And so in that scenario, if you think that you might want to get a new card, it actually can be advantageous to close the card or reduce the credit limit in order to lower the available amount of credit so that other card companies might want to actually give you more credit.

00:25:56.160 | Will this reduce your credit history or limit the length of your credit history? It can.

00:26:00.160 | But remember that your credit history is an average duration.

00:26:03.160 | So sometimes, the way that I run my credit card portfolio is I have my long-time credit cards.

00:26:08.160 | I've got those cards with, at this point, I've got some cards that go back to 17, 18-year credit history on some cards, and I'm not going to close those.

00:26:20.160 | But those cards are such massive anchors to the average length of credit that I have that it doesn't make that big of a difference in my credit score if I close any of the newer ones.

00:26:30.160 | So that's the first answer to the question is that, yes, we generally advise don't close the credit cards because that lowers your credit availability and can shorten your credit history.

00:26:43.160 | But with those caveats that I said, it's not like you never do that.

00:26:48.160 | You can keep the length of credit history available to you by simply lowering the credit amount.

00:26:53.160 | One card has $15,000.

00:26:55.160 | You call them up and say, "Will you please lower the credit amount from $15,000 to $2,000?"

00:26:59.160 | That allows you to keep the length of credit alive on your credit score, but it simultaneously allows you to lower your total credit limits from, in my example, $250,000 to $247,000 if I did my math right.

00:27:15.160 | Second answer to your question, let's say that you say, "I do want to keep it. What are my options?"

00:27:19.160 | First thing you can do is you can see if they will give you an offer to retain you as a customer.

00:27:26.160 | So you can go to their cancellation line and you can say, "Hey, I'm not using this card. I don't want to pay you your $500 annual fee. I'd just like to cancel it."

00:27:35.160 | And see if they'll send you to their retention department.

00:27:37.160 | And frequently the retention department will make an offer to you and say, "Okay, well, I'll tell you what. We'll cancel your annual fee this year."

00:27:43.160 | Or, "Would you like to take something else?"

00:27:45.160 | And so you can talk to the retention department.

00:27:47.160 | And often the retention department is permitted to make you an offer.

00:27:52.160 | The second thing you should do is you should look at the downgrade path for that particular card.

00:27:57.160 | So almost all cards will have a downgrade path that will allow you to keep the card and depending on why you got the card, you have your downgrade points.

00:28:08.160 | So let's say you have the Chase Sapphire Reserve and you don't want to pay the $600 annual fee this year for the Chase Sapphire Reserve.

00:28:17.160 | So your downgrade path would be, "Well, could I downgrade it from the Chase Sapphire Reserve to the Chase Sapphire Preferred?"

00:28:24.160 | And your downgrade path there would cut your annual fee from $600 to about $100.

00:28:30.160 | And then maybe you don't even want to pay the $100.

00:28:33.160 | And so you just do a web search for Chase Sapphire Preferred downgrade path.

00:28:38.160 | And I can't remember what the card is that it has.

00:28:42.160 | But it's the -- okay, so then you pop down to the Chase Freedom Flex.

00:28:47.160 | And what that does is it allows you to keep all of your Chase points active in your Chase account.

00:28:53.160 | It allows you to keep your credit limit on your Chase Flex, but you just simply drop off the Chase Sapphire line and you're now on the Chase Freedom Flex.

00:29:01.160 | So search the card and search downgrade path and find out what the card is that's at the bottom tier where you get to a no annual fee card.

00:29:08.160 | And I think you definitely, in most cases, should do that because that allows you to keep your points alive on that system, whether it's Chase or Amex or whatever,

00:29:16.160 | wherever you got the premium card in the first place.

00:29:19.160 | But it allows you to eliminate the annual fee without just straight up canceling the card.

00:29:23.160 | >> Yeah, that makes sense.

00:29:26.160 | And I think this is my second year on both these cards because the first year when it came due, they did do the reduction in the cost.

00:29:35.160 | I think they only did that once and maybe they did it a second time if you're lucky.

00:29:39.160 | And I was -- I had previously called all my cards and got much higher credit limits probably after listening to one of your shows.

00:29:48.160 | I did actually have to reduce -- I think at least for Chase, I did have to reduce some of my overall credit lines just to be able to get a card or two a few years back.

00:29:58.160 | And then I just kind of stopped getting new cards and I asked for some increases and they gave me.

00:30:03.160 | What I was concerned about now was reducing the card because I probably won't be applying for new cards right now.

00:30:10.160 | I don't have an income mostly because I don't think they would give them to me.

00:30:16.160 | But it is nice that they will keep the credit line alive even with the reduced downgrade path.

00:30:23.160 | It's good that you gave me all the same things.

00:30:26.160 | I appreciate that.

00:30:27.160 | It's easy -- I'd say your obvious solution is do the downgrade path and then if later on you want to apply for new cards and you find that your high available credit limit is causing you difficulties, then at that point in time, that is when you go ahead and reduce your credit limits later.

00:30:43.160 | John in Melbourne, welcome to the show.

00:30:45.160 | How can I serve you today, sir?

00:30:46.160 | >> Hey, Joshua.

00:30:48.160 | A couple of podcasts ago, you had talked about having relationships at more than one bank and more than one broker.

00:30:55.160 | Could you amplify a little more your reasoning on more than one broker?

00:30:59.160 | We have everything at one broker.

00:31:01.160 | 401(k), IRAs, company accounts, et cetera.

00:31:05.160 | >> Right.

00:31:06.160 | So I think that this is less important and there are good arguments as to why you should have everything with one institution.

00:31:14.160 | And there is a distinct difference between banks and brokers.

00:31:18.160 | Let me begin with banks.

00:31:21.160 | For simplicity, the argument is have the fewest number of accounts possible.

00:31:27.160 | That's almost always a good idea, to have fewer accounts because then everything is simpler.

00:31:33.160 | It's kind of annoying to keep ten checkbook registers balanced.

00:31:37.160 | It's annoying to have ten different cards all the time.

00:31:41.160 | It's annoying.

00:31:42.160 | What I have discovered, though, is if you have one bank and that bank closes your account or that bank cuts off your debit card or something and you don't have options, then that's really troublesome.

00:31:55.160 | For many people, this is not a problem, right?

00:31:57.160 | Many people would have a very normal credit profile.

00:31:59.160 | They have a paycheck that goes into their bank account.

00:32:01.160 | They use their debit card across town and that's it.

00:32:05.160 | And they don't have much of a danger of their accounts being frozen.

00:32:09.160 | What I have found running businesses where my transactions are very irregular, meaning that there may be months with very high usage and maybe months with very low usage, also with international travel where my profile is quite strange and with my personal movements that I'm not a -- banks don't really like me.

00:32:33.160 | And so because of that, I personally need to be prepared at any point in time to have multiple backup bank accounts.

00:32:41.160 | And so I've learned this, to have multiple bank accounts for every one of my businesses, to have multiple bank accounts personally so that I have options.

00:32:49.160 | In addition, by having multiple bank accounts, I often can get certain services.

00:32:54.160 | So I think when I said the comment that you're alluding to, I was talking about the difficulty of just getting a relatively modest sum of money but in excess -- it was five figures but not -- anyway, it wasn't that big of a lot of money but trying to get the money out of an ATM.

00:33:10.160 | And so if your primary bank -- if you have a primary local bank, then that can work fine.

00:33:18.160 | But I usually -- I do most of my primary banking with a virtual bank.

00:33:22.160 | And so in that situation, I was limited and so I had to go to multiple accounts.

00:33:27.160 | I'd go to Wells Fargo and look, I can do a $1,000 withdrawal from a Wells Fargo ATM over the weekend but I can't do more.

00:33:32.160 | And so what I have learned is that I, for me, I need to have a whole suite of multiple bank accounts set up so that then I can just do an immediate transfer from one bank to another and then use the local ATMs at higher limits.

00:33:47.160 | That's kind of a secondary reason.

00:33:49.160 | There is a balance here, right? The argument is in favor of simplicity for better organization but what about redundancy?

00:33:55.160 | What about the opportunity to cash checks at multiple banks with ease, etc.?

00:34:00.160 | And so I've had too many bank accounts shut off for dumb reasons.

00:34:05.160 | I've talked to too many people who've had their bank accounts shut off for dumb reasons, most of the time including international travel, and that I'm super sensitive to having backups now.

00:34:16.160 | So that's my comment on banks.

00:34:18.160 | Now, what about brokers?

00:34:20.160 | So first, again, by having everything with one brokerage, by having everything with one company, you have greater simplicity and that's valuable.

00:34:30.160 | Let's say you're trying to monitor your accounts and you have accounts spread out across 10 brokerages.

00:34:34.160 | You're never going to get your update to have a sense of how much money you have and what your returns are.

00:34:40.160 | But if you have all of your accounts with one broker and you open up on a quarterly basis your return, your statement for that broker, and you can see what your personal increases in value are, then yeah, that's going to go up definitely and it's going to work better.

00:34:53.160 | In addition, brokers and brokerages are more difficult, meaning there are cost savings to having everything with one agent or with one brokerage.

00:35:04.160 | So if you have a financial advisor and the financial advisor is managing $2 million of your money, instead of having two different advisors each managing $1 million, then in that scenario you're going to save money because of a lower fee rate by having $2 million with one broker rather than $1 million at two or $500 million at four different ones.

00:35:28.160 | So there are good cost savings for having things centralized.

00:35:31.160 | My concern is what happens if that broker is committing fraud?

00:35:36.160 | What happens if that broker is involved in something where all of a sudden everything is frozen?

00:35:43.160 | Now you say, "Well, Joshua, I'm not doing all my investments with Bernie Madoff."

00:35:48.160 | People got wrecked when Bernie Madoff with all their money and they got totally wrecked and it wrecked families left, right, and center.

00:35:57.160 | And so you say, "Well, I'm not so dumb as to put all my money with one guy who's providing outstanding returns."

00:36:02.160 | But I think the same thing still needs to be considered even if you are at a higher level.

00:36:09.160 | So if I've got all my money at Vanguard, what do I do if Vanguard runs into trouble?

00:36:15.160 | What do I do if Vanguard suffers an accounting error?

00:36:18.160 | What do I do if Vanguard gets come in and get the FINRA comes in and says, "Vanguard's been actually doing something wrong here and we need to freeze everything while we work it out?"

00:36:30.160 | I would ask myself those questions.

00:36:32.160 | And I don't think that Vanguard has nearly the same risk that Bernie Madoff has in terms of a broker.

00:36:38.160 | Or I don't think that Vanguard has nearly the same amount of risk as say, you know, let's say that you're investing with a hedge fund.

00:36:46.160 | And the hedge fund puts a--you request a distribution for the hedge fund.

00:36:52.160 | The hedge fund says, "Listen, we will do this, but we can't do it today."

00:36:55.160 | Well, that's in your contract, right?

00:36:56.160 | They have the right to slow the distribution out.

00:37:00.160 | Well, Vanguard has similar things, right?

00:37:02.160 | Imagine yourself in a situation where all your money is in one mutual fund and it's at one company with one technological platform, one system.

00:37:11.160 | And then the stock market is melting down, all of the circuit breakers are tripping, everything's closed down.

00:37:19.160 | Vanguard says, "That's it. We're not allowing distributions today."

00:37:22.160 | And you want desperately all your money out.

00:37:24.160 | You want to sell, but the website is not working because of overreach and overuse.

00:37:29.160 | Everyone's trying to do the same thing.

00:37:31.160 | The app's not working.

00:37:32.160 | You can't get through on the phone.

00:37:33.160 | That's a bad feeling.

00:37:34.160 | So, how do you solve for that?

00:37:36.160 | I don't think it necessarily means you have to go out and have five brokers.

00:37:39.160 | But you always have to ask yourself the question and say, "What do I do if this bank goes bust?

00:37:44.160 | What do I do if this broker goes bust?

00:37:45.160 | What do I do if they are dishonest?"

00:37:48.160 | Hear me clearly.

00:37:49.160 | I think the risk of this is very low with large, well-known names in the United States.

00:37:55.160 | I think it's very low.

00:37:57.160 | But I'm still not going to let it go by without thinking about it.

00:38:01.160 | Because just because it's very low doesn't mean that it can't happen.

00:38:06.160 | It has happened.

00:38:07.160 | It will happen.

00:38:08.160 | It happens all around the world.

00:38:09.160 | We just are usually grateful that it doesn't happen to us.

00:38:12.160 | So, does that automatically mean you have to get multiple brokers?

00:38:15.160 | Not necessarily.

00:38:17.160 | But if all of your money is at one broker and in one basic asset class, then that I'm really uncomfortable with.

00:38:24.160 | So, if you say, "Hey, I've got all my money with one broker, but I also have some real estate.

00:38:29.160 | I also have bank accounts.

00:38:31.160 | I also have physical currency.

00:38:32.160 | I also have a little money offshore, etc."

00:38:34.160 | That makes sense.

00:38:35.160 | It's not such a big risk.

00:38:37.160 | But just worry what happens if your broker is committing fraud, what happens if the regulators swoop in, they close, they freeze everything for a couple of weeks while they work out the books,

00:38:48.160 | and then they figure out how to properly settle accounts and fix the problem.

00:38:53.160 | Are you going to be majorly impacted by that?

00:38:56.160 | If so, then you want to put in place some redundancy.

00:38:59.160 | So, I hope that that's a better explanation rather than kind of the offhand, somewhat flippant comment I made.

00:39:06.160 | That's what I was driving at, is always think about the worst-case scenario and ask yourself, "What do I do in a worst-case scenario?"

00:39:13.160 | Because those things can slip up on you fast, and when they slip up on you, it's too late at that point in time.

00:39:20.160 | Does that make it clearer?

00:39:21.160 | Yes. Thank you.

00:39:23.160 | My pleasure. Anything else, John?

00:39:25.160 | No.

00:39:27.160 | Well, I did want to talk to you maybe at another time about getting money offshore.

00:39:33.160 | Okay. Awesome.

00:39:35.160 | Well, then I'd be happy to talk about it.

00:39:37.160 | I think for—I got a bunch of other callers, so I'll go on to their questions.

00:39:40.160 | But I think that everybody should have some money offshore, and there are very simple ways to do it.

00:39:47.160 | It's 100% legal, totally legal.

00:39:49.160 | I do have a show planned on the recent Pandora Papers that have been in the news, and so that's probably a good time to talk through it in that scenario as well.

00:39:59.160 | All right. Timothy, welcome to the show.

00:40:00.160 | How can I serve you today, sir?

00:40:04.160 | Hi, Joshua. Thanks for taking my call.

00:40:07.160 | I got a quick question for you.

00:40:09.160 | The bottom line is, should I buy a house?

00:40:13.160 | And a little bit of context is I'm not necessarily thinking of it as an investment, but more from a financial planning perspective.

00:40:21.160 | I'm probably two to three years out from retirement, and I'm not real sure what prices are going to do in the next few years, but I was thinking I would buy now.

00:40:33.160 | Just to kind of fix my costs during retirement.

00:40:40.160 | And also, talking to the previous caller, it reminded me of how good it is to own physical stuff as well as opposed to just paper assets.

00:40:53.160 | But I'd appreciate any thoughts you'd have on that.

00:40:56.160 | Sure. First question.

00:40:57.160 | Do you want to own a house?

00:41:03.160 | Yes. Yes.

00:41:05.160 | We would be buying either now or in a couple years.

00:41:08.160 | Yeah. So just simple yes or no.

00:41:11.160 | Okay. Number two.

00:41:12.160 | Can you afford this house that you're thinking about buying?

00:41:18.160 | Yes.

00:41:19.160 | Alright. So then if the answer to those two questions is yes, then it's almost certainly yes, you should go ahead and buy the house.

00:41:27.160 | And I tried to phrase them in a way that was quite clear.

00:41:30.160 | Number one, I said, do you want to own a house?

00:41:34.160 | If somebody wants to own a house, then they should buy one.

00:41:38.160 | There are people who don't want to own a house right now.

00:41:42.160 | I don't want to own a house right now.

00:41:46.160 | Why not?

00:41:47.160 | Well, because I'm trying to figure out what country I want to live in.

00:41:51.160 | And if I buy a house and then I want to leave, my leaving is more complex than it is if I just simply don't own a house and I just live to the end of a lease and/or break a lease.

00:42:03.160 | And so I don't want to own a house right now because I don't know what country I want to live in or what state I want to live in or what city I want to live in.

00:42:10.160 | And so because I desire to get the flexibility, that flexibility has a real value to me, and thus I'm not shopping for a house right now.

00:42:20.160 | So some people might not want to own a house because they don't know what their circumstances are going to be.

00:42:26.160 | So that's why I ask it.

00:42:29.160 | So if you say, I want to own a house, great.

00:42:31.160 | And the second thing is, can you afford a house?

00:42:33.160 | And you didn't think a lot about it, and if you're planning to retire, then I know that your numbers are considered and squared away.

00:42:42.160 | And so if you can afford to own a house and you want to own a house, then the answer is yes, you should buy a house.

00:42:49.160 | Then from there, your thinking process is, well, what kind of house should I buy?

00:42:54.160 | And that's something that you can work your way through yourself.

00:42:57.160 | In general, the ownership of a house has almost always been one of the simplest, best financial moves that people can make.

00:43:06.160 | And recently I have been reviewing John Reed's new book on this project, and he has persuaded me to take a stronger position in favor of home ownership with all of its advantages and its financial benefits,

00:43:22.160 | as compared to previously where I was more ambivalent about it.

00:43:29.160 | And so the short answer is, if the answer to those questions are yes and yes, then it's just a matter of saying, what kind of house makes the most sense for us?

00:43:36.160 | Where would we most like to buy?

00:43:37.160 | Is this the best neighborhood for us?

00:43:39.160 | Is there a decent enough chance that we can buy the house and then on our timeline of five years or 50 years, we could sell it and get our money out?

00:43:47.160 | And most of those questions are unknowable.

00:43:49.160 | But if you want to own a house and you can afford the house that you're looking at, then yes, you should buy a house.

00:43:56.160 | Awesome. Thank you so much.

00:43:58.160 | Yeah, I think we have all those other questions answered.

00:44:00.160 | It was just a matter of now or later.

00:44:02.160 | So thanks again.

00:44:03.160 | Good. My pleasure.

00:44:05.160 | All right. And with that, we go to Ross in Vermont.

00:44:08.160 | Ross, welcome to the show.

00:44:09.160 | How can I serve you today?

00:44:10.160 | Thank you, Joshua.

00:44:11.160 | Longtime listener.

00:44:12.160 | I'm actually in the great state of New Hampshire, which I love a lot more.

00:44:15.160 | You even better. Live free or die, brother.

00:44:17.160 | Exactly.

00:44:18.160 | You can come and visit anytime.

00:44:19.160 | I'd love to.

00:44:20.160 | My wife and I, so I just want to say we really appreciate your life lessons over the last few years.

00:44:26.160 | Longtime listener.

00:44:27.160 | And we have kids and same age, same stage of life.

00:44:31.160 | My wife and I both have full-time jobs and we intend to keep those.

00:44:36.160 | However, we've been looking for several months now at something we can do together that we enjoy as a creative outlet.

00:44:42.160 | And set an example for our children in terms of showing them the fruits of labor.

00:44:48.160 | So we found we kind of stumbled into photography.

00:44:51.160 | I've been doing a side business for several years in the past with videography.

00:44:55.160 | But photography seems to be a good fit for our family.

00:44:59.160 | We recently kind of tested the waters with some friends.

00:45:02.160 | And basically we have a lot of customers throwing their money up saying, you know, take my money.

00:45:08.160 | We want you to capture us over photos.

00:45:13.160 | So as we move forward, I know you've alluded to the fact that with your eldest in the past,

00:45:19.160 | you've set up baking and tried to instill the value of starting a business.

00:45:24.160 | And I was wondering if you could maybe define some resources or books where we can kind of look

00:45:30.160 | and look at basically the best ways to engage our children and instill those values in some type of organized fashion.

00:45:40.160 | How old is your eldest?

00:45:43.160 | She's eight.

00:45:44.160 | Okay.

00:45:45.160 | So this is hard because you're dealing with a child.

00:45:49.160 | And so at this rate, every child is going to be different.

00:45:52.160 | And there's a balance here I see as a father where as with most things where you're saying,

00:45:59.160 | I'd like my children to have a chance to play baseball so that they're exposed to the ideas of baseball

00:46:07.160 | and they know how to throw something really basic.

00:46:09.160 | But on the other hand, if I deal -- if I push them, I don't want to push them into baseball if that's not right for them.

00:46:15.160 | And so first I think it's good to have somewhat low expectations and expect them to move and to switch and to change a lot.

00:46:22.160 | One of the things that when I was younger, I tried a bunch of different things.

00:46:26.160 | And I often felt guilty that I didn't finish all of those things.

00:46:30.160 | And this bugged me for many years because I felt like a failure.

00:46:33.160 | Now, my parents didn't make me feel like a failure.

00:46:35.160 | I just knew that, well, I had bought this thing.

00:46:37.160 | And what I most remember is that I convinced my parents to buy me a leatherworking kit from Tandy Leather when I was a child.

00:46:44.160 | And I did it and I punched some stuff out and I carved some leather and then I lost interest.

00:46:48.160 | And then for the next ten years, this leatherworking kit haunted me because it was sitting there in our home workshop and I would see it.

00:46:54.160 | And I was like, I don't really want to do it.

00:46:56.160 | And I just felt like a loser because I had quit something.

00:47:00.160 | Well, fast forward, I have since learned that something like that is not a character flaw.

00:47:06.160 | I didn't commit myself to finish it.

00:47:08.160 | Rather, it was something that was quite useful because I've gained access and exposure to something that was interesting.

00:47:14.160 | And then I just moved on.

00:47:15.160 | You don't have to finish everything, right?

00:47:17.160 | Finishing a book is not the goal of every book.

00:47:19.160 | You pick up a book and if you spend all your time finishing books that you don't want to read, you waste your time.

00:47:23.160 | So I've learned that kind of this browsing personality of trying this, trying that, etc.

00:47:29.160 | Has actually turned into a real strength, a character strength, something that I use on a daily basis.

00:47:34.160 | But with our children, it's hard to know.

00:47:37.160 | Is this thing that they're going to try, is it going to be something that they're going to browse?

00:47:41.160 | They're going to nibble a little bit and say, yeah, I like that or that was okay.

00:47:44.160 | Or is this something that we're going to really invest into?

00:47:47.160 | And so I want to encourage my children to get involved in all the different things that they're interested in.

00:47:55.160 | And without feeling like they have to go all the way.

00:47:59.160 | And so in order for me to do that, then I want to suggest to them that they do things and start simple.

00:48:04.160 | And then and see how can this grow.

00:48:08.160 | So if it's photography, awesome.

00:48:10.160 | All right, what could we do?

00:48:11.160 | How could we start this in a fairly simple way?

00:48:14.160 | Get the basic equipment and what could you do?

00:48:17.160 | What would be the first step of a simple way?

00:48:20.160 | Taking some pictures, posting them on your Instagram profile or posting them onto a website.

00:48:26.160 | Doing some family photography for free for those who want it.

00:48:29.160 | Or doing some real estate photography for someone else.

00:48:31.160 | Or learning how to take pictures of roses.

00:48:33.160 | There's going to be a skill set, a skill development period where the child is simply not capable of selling anything.

00:48:39.160 | But then it can grow into something bigger.

00:48:42.160 | And beyond that, I have more things.

00:48:46.160 | I've looked at a couple different things.

00:48:48.160 | I've bought all the Kidpreneurs courses that they have.

00:48:51.160 | I haven't finished going through them.

00:48:52.160 | That's a brand of people that are developing entrepreneurship stuff.

00:48:59.160 | I bought all of Caleb Maddox's courses.

00:49:01.160 | All of his stuff that he's done for children.

00:49:03.160 | Just remarkable stuff with his Apex brand.

00:49:06.160 | I'm sure I have a bunch of books on the subject.

00:49:12.160 | So those are some of the things that I've checked out.

00:49:14.160 | But I haven't come and said this is the right thing.

00:49:16.160 | For me it's simpler.

00:49:17.160 | It's a matter of encouraging my children and saying hey here are some things that you can do.

00:49:23.160 | And then just encouraging them to try it.

00:49:25.160 | As I see it now, what I didn't understand when I was a child.

00:49:29.160 | The benefit of childhood is sampling.

00:49:33.160 | You can sample without stress.

00:49:36.160 | As a father who is responsible for me to go and sample different things.

00:49:43.160 | It puts a bigger burden on other people.

00:49:45.160 | If you imagine yourself as a 35-year-old father of children.

00:49:51.160 | You're like hey you know what I'm going to go and work this job for a couple of months.

00:49:53.160 | I'm going to go work that job for a couple of months.

00:49:55.160 | Or I'm going to go try this.

00:49:56.160 | And I'm going to go try that.

00:49:57.160 | I'm going to go try the other thing.

00:49:59.160 | That's really tough to say.

00:50:01.160 | That's the best idea for my family.

00:50:03.160 | But for a child it's totally fine to try this, try that.

00:50:06.160 | And what I have also seen is that you can't predict in advance the confluence of those factors.

00:50:13.160 | You can't predict in advance what it is that actually makes the difference.

00:50:17.160 | I read Steve Jobs biography.

00:50:20.160 | The famous one.

00:50:22.160 | I forget the author now.

00:50:23.160 | But I read the Steve Jobs biography last year.

00:50:25.160 | And it was interesting to read about Jobs and to see how there was a consistency to his interests.

00:50:34.160 | But then there was a diversity of his experiences and how that diversity of experiences influenced him.

00:50:40.160 | The well-known anecdote is hey he took a calligraphy class in college.

00:50:45.160 | And that influenced his interest in design.

00:50:49.160 | But his weirdness went far beyond that.

00:50:52.160 | He went to India for years, at least months and months.

00:50:56.160 | And he studied under a guru in India.

00:50:58.160 | And he lived on a weird farm up in the middle of nowhere.

00:51:01.160 | And he did all this stuff.

00:51:02.160 | But this stuff came together to give him a uniqueness in the marketplace that they were later able to exercise into creating a unique brand behind Apple.

00:51:13.160 | And as I study people I see more and more that what makes people unique is the uniqueness of their experiences.

00:51:20.160 | And so exposure to different things is I believe fundamentally valuable for its own sake.

00:51:26.160 | So I think photography is a wonderful thing for them to do.

00:51:29.160 | There's going to be a space where they have to actually learn how to take pictures.

00:51:34.160 | But in terms of a business I don't know a better business for a talented child.

00:51:39.160 | Because you can take photography.

00:51:41.160 | It's something that can bring personal pleasure.

00:51:44.160 | It's something that can provide a really good income.

00:51:48.160 | And if a child is capable to do it, a child can provide really good income with a flexible schedule to fit in around school studies.

00:51:58.160 | It can create passive income if they get involved with putting their photography or their videography on stock photography websites.

00:52:05.160 | It can create passive income, residual income from their work.

00:52:09.160 | And it can provide legitimate ways for them to build a business from a very early age and be helpful to the whole family.

00:52:18.160 | So I love it.

00:52:19.160 | It's something I'm encouraging with my eldest in.

00:52:23.160 | And I think it's a great idea.

00:52:25.160 | Those are my thoughts on that subject.

00:52:27.160 | Thank you very much.

00:52:28.160 | My pleasure.

00:52:29.160 | All right.

00:52:30.160 | We go three callers left.

00:52:31.160 | Let's do Benjamin in Utah.

00:52:34.160 | Benjamin, welcome to the show.

00:52:35.160 | How can I serve you today, sir?

00:52:36.160 | Hey, Joshua.

00:52:37.160 | How are you?

00:52:38.160 | Very well.

00:52:39.160 | Good.

00:52:40.160 | I have two questions and I want to put you kind of at the center stage and kind of talk about your experiences.

00:52:48.160 | OK, first is as as I look to marry, I'm a 31 year old man financially set, but I'm I'm not retired.

00:52:57.160 | I'm still working to be to job.

00:52:59.160 | That's fine. I'm fine with it.

00:53:00.160 | But you've mentioned before, before you took off on an RV trip, you discussed with your wife and maybe not encouraged, but discussed and maybe not had to convince her, but encourage her to help take that step for you and your family.

00:53:17.160 | And how how did you look for that in a wife when you did get married?

00:53:23.160 | And the same thing when you took off on your international trip, did it take discussion back and forth between you and her?

00:53:31.160 | It sounds like it's been your dream for a while, but I didn't know if it was in part her dream or her idea to take her children and travel to all these different countries as well.

00:53:42.160 | Yeah.

00:53:43.160 | So just some some thoughts on that from your perspective.

00:53:45.160 | So first, there's a real balance between what people know in advance and what people know in hindsight when it comes to choosing somebody that you marry.

00:53:56.160 | Most of the time, the reason that we marry is because we fall head over heels in love and we say, all right, I want to marry this person.

00:54:03.160 | There's not nearly as much logical analysis in it as perhaps there should be.

00:54:09.160 | Now, I think that logical analysis and careful selection of a spouse is very important and is something that people should do more.

00:54:19.160 | I talk to my children about the things that I want them, I think that they should be looking for in a spouse, just because I observe in financial planning, I observe how things are easier or how relationships have a very different quality based upon the specific needs.

00:54:38.160 | Based upon the specific attributes that a spouse has.

00:54:41.160 | Right.

00:54:42.160 | If my wife had chosen somebody who was a low income earner, her life would be it would have been very different than it is married to me.

00:54:52.160 | She also could have chosen somebody who makes 10 times as much money as I do and her life would have been very different.

00:54:58.160 | Everything matters, even things like health.

00:55:02.160 | Right. If you had told me when I was 21 years old that I should choose a woman who enjoys good physical health, I would have said, oh, get out of here, you unromantic person.

00:55:17.160 | I'm going to love her no matter what.

00:55:19.160 | Well, what I have now understood, right, at 36, what I now understand is, you know what, that makes a big difference in the quality of life.

00:55:31.160 | And my life, because of the fact that my wife enjoys good physical health, my life is very different.

00:55:38.160 | It's not to say that people who are not healthy shouldn't get married.

00:55:41.160 | It's just that your life is going to take a very different course depending on these features of your spouse.

00:55:50.160 | And it matters across the board. Right.

00:55:53.160 | How much debt does your prospective wife have?

00:55:56.160 | How healthy is she?

00:55:57.160 | What are her values?

00:55:58.160 | What is her background?

00:56:00.160 | Et cetera.

00:56:01.160 | And I believe that none of us now have to be a slave to our past.

00:56:06.160 | But I always think about it with this lens. Right.

00:56:09.160 | If I were to have a friend of mine, story's unimportant.

00:56:14.160 | I always think about this.

00:56:15.160 | Okay. If my wife died. Right.

00:56:18.160 | I'm now at a very different place in life than I was before.

00:56:21.160 | If my wife died, having been married now for 10 years, having experienced what marriage is really like, what things would be important for me to remarry?

00:56:33.160 | And those things that are important for me to remarry are very fundamental, but I would not compromise on them.

00:56:40.160 | And so at its foundation, I have my list, but like, for example, I think one of the major skills that is a real blessing to me and to my wife is that we're pretty good at communicating with each other.

00:56:53.160 | Now, you can go and you can find the research that says, "Hey, this is important."

00:56:57.160 | But we just did it ourselves without the research.

00:56:59.160 | We figured it out and learned it.

00:57:01.160 | But we're very good at communicating with each other, even if there is tension, even if there's disagreement.

00:57:06.160 | And we have a relatively stress-free marriage.

00:57:09.160 | I would not marry somebody, if my wife died and I had to go and choose and work to attract a different spouse, I would never marry somebody with whom I couldn't communicate easily and simply.

00:57:23.160 | And I've said this publicly before, but like a very simple thing that made all the difference in the world was my wife and I don't play games with each other.

00:57:31.160 | Like, we just don't play games.

00:57:32.160 | And it started when we were dating.

00:57:34.160 | And I said to her, I said, "Listen, make me a promise."

00:57:38.160 | I said, "We're never going to play communication games.

00:57:42.160 | If I call you and you can answer the phone, pick up the phone.

00:57:48.160 | And if you don't want to talk to me, pick up the phone and say, 'Joshua, I'm upset about something.

00:57:52.160 | I don't want to talk to you right now.'

00:57:54.160 | But don't ever play these dumb, you know, college student games where it's like, 'Oh, I'm going to ignore the call.'"

00:57:58.160 | And I said, "And you can know that if you call me on the phone and I don't answer, which I routinely do not answer, you can know it's not because I'm ignoring you or avoiding you or don't want to talk.

00:58:07.160 | Don't just, 'I'm in a meeting. I'm busy. I'm working. And I'll call you back when I can.'"

00:58:12.160 | It sounds silly for me to say it out loud, but I've watched so many of my friends go through these stupid communication games.

00:58:18.160 | And like, they just don't talk to each other.

00:58:20.160 | And there were times before we were married that my wife and I had relationship problems.

00:58:25.160 | But we just simply faced them head on and said, like, "We're not going to talk right now because we're angry at each other."

00:58:31.160 | Fine. Very good.

00:58:33.160 | But we didn't play any games.

00:58:34.160 | We didn't block each other.

00:58:35.160 | I have my friends, like, they block each other on all these things that they can't call each other.

00:58:38.160 | And I understand it, but it's silly.

00:58:40.160 | It's dumb.

00:58:41.160 | And so to this day, like, that has emerged.

00:58:43.160 | And in the context of a more mature marriage, it comes out in the front sense of talking about, you know, what is frustrating.

00:58:49.160 | Like, this week, there were some things that my wife was doing that were very frustrating to me.

00:58:53.160 | Now, I live by rule number one and seven habits for—sorry—in how to win friends and influence people.

00:58:59.160 | Never criticize, condemn, and complain.

00:59:01.160 | And I live by that in my marriage as well.

00:59:07.160 | And so I don't criticize my wife.

00:59:09.160 | I don't condemn her.

00:59:10.160 | And I don't complain at all.

00:59:11.160 | I don't complain about her.

00:59:12.160 | I don't complain to her.

00:59:14.160 | That's my rule.

00:59:16.160 | There were a couple of things that were happening that were very frustrating to me.

00:59:20.160 | And I reached the point in time at which I said—where I started to feel bitter towards her.

00:59:26.160 | I started to feel frustrated that she wasn't doing something that I wanted her to do.

00:59:30.160 | And I realized that I was going to the point where I was going to want to act spitefully towards her.

00:59:37.160 | She didn't do this thing that I thought she should have done.

00:59:40.160 | I thought I had by far—like I had asked in a certain way.

00:59:43.160 | I had laid down my life.

00:59:45.160 | I had given the example.

00:59:46.160 | I felt very justified in my frustration.

00:59:49.160 | And I was to the point where I was going to be spiteful.

00:59:53.160 | And like, what do I do?

00:59:54.160 | I'm like, obviously being spiteful and trying to be mean to your wife is a stupid thing to do.

01:00:01.160 | And so finally I just went and I said, "I need to tell you something.

01:00:04.160 | This is the way that I'm feeling.

01:00:06.160 | I'm feeling this, this, this, this, this.

01:00:08.160 | This is why.

01:00:09.160 | Frustration, frustration, frustration.

01:00:11.160 | This is what I would like.

01:00:12.160 | Statement, statement, statement.

01:00:13.160 | Done."

01:00:14.160 | And she listened and she responded.

01:00:16.160 | We talked back and forth and then we went on our way.

01:00:18.160 | And she didn't freak out.

01:00:19.160 | We didn't start arguing.

01:00:20.160 | She listened.

01:00:21.160 | And then I felt immediately better.

01:00:23.160 | I immediately felt like I could be loving towards her again instead of being frustrated and spiteful.

01:00:28.160 | And the whole situation was improved by the ability to listen.

01:00:31.160 | And this communication style is a fundamental strength that we have that is, I think, a cornerstone of many good relationships.

01:00:41.160 | Now to your question.

01:00:43.160 | My wife and I are exceedingly different.

01:00:45.160 | She thinks, she calls herself, she says, "I'm the rock to Joshua's kite."

01:00:50.160 | I am a flittering about, like I can go here, I can go there.

01:00:54.160 | I'm one of the most flexible people in the world.

01:00:56.160 | I can change on the dime.

01:00:58.160 | I love big ideas.

01:00:59.160 | I'm enhanced by big ideas, big goals, big things, weird, crazy stuff.

01:01:04.160 | I can change on a dime.

01:01:05.160 | She is the exact opposite.

01:01:07.160 | She is very consistent, very stable.

01:01:11.160 | She doesn't get very high.

01:01:12.160 | She doesn't get very low.

01:01:13.160 | She's very just consistent and steady.

01:01:16.160 | And so it actually is a very healthy thing for me that I have a marriage partner who balances out my things.

01:01:25.160 | If I weren't her husband, I'm not sure she would have, it would be unkind for me to say she wouldn't have any fun.

01:01:31.160 | Obviously, she would have fun.

01:01:32.160 | But she has a much richer and more varied and more interesting life because I'm her husband.

01:01:38.160 | On the other hand, I have more stability in my life because she's my wife, and so I think that's a benefit.

01:01:46.160 | So when we talked about these trips, no, my wife has never dreamed of living in an RV and traveling around the country.

01:01:53.160 | That's never been her dream.

01:01:55.160 | I always wanted to do it since I was a kid.

01:01:57.160 | She never dreamed about doing that.

01:01:58.160 | My wife has never wanted to go and bounce around the world randomly and aimlessly.

01:02:03.160 | She enjoys traveling in a traditional sense, going out for a few weeks.

01:02:07.160 | But that's never been her dream.

01:02:09.160 | Whereas for me, I'm like, "Yeah, I want to go to every country in the world.

01:02:11.160 | Absolutely."

01:02:12.160 | So I definitely am the idea generator and the one who's the most enthusiastic about something.

01:02:18.160 | And then what I do is I talk to her and I share with her and I communicate and I give my ideas.

01:02:24.160 | What I have found is also effective is I try to expose her to things that other people do.

01:02:28.160 | So I've told this story, and I repeat it quickly, that when we talked about living in an RV, I was like, "Well, we should do this."

01:02:34.160 | But she didn't have any context for it.

01:02:36.160 | She hadn't spent hours and hours thinking about it, reading about it, watching about it.

01:02:40.160 | So we started watching YouTube channels, the people who do it.

01:02:43.160 | And we do that over the years, right?

01:02:44.160 | We touch RV channels and sailing channels and traveling people.

01:02:48.160 | And I find that's a really good – YouTube with actual true reality TV is a really good way of giving us things to talk about.

01:02:55.160 | Because then we can say, "Oh, we see how so-and-so Pete does it, but that's not us."

01:02:58.160 | Or we like that and we kind of don't like that, et cetera.

01:03:01.160 | But then I am very conscious to listen to her.

01:03:05.160 | And so even the recent travels, we were traveling about.

01:03:11.160 | And she had a fine – a good attitude, but obviously traveling puts more work on her.

01:03:17.160 | She wasn't complaining about it, but I'm very sensitive about the fact that this is a lot on her and this is not her dream.

01:03:23.160 | And so finding that balance where neither of us feels like our dreams are being crushed by the other people is a challenge.

01:03:30.160 | And one of the reasons I wanted to come back to the United States was partly for her, that she has put up with a lot, right?

01:03:38.160 | She's dealt with a very different lifestyle than many people would be able to do.

01:03:41.160 | And she's had a good attitude.

01:03:42.160 | She's not been frustrated about the whole time.

01:03:44.160 | But I know that she's done a lot over the last three years.

01:03:46.160 | And so I've accomplished my whole list of the things that were super important to me.

01:03:50.160 | And they were important to her once I explained them, but they were never as important to her as they were to me.

01:03:55.160 | And so I've accomplished my whole list.

01:03:56.160 | And I thought, "All right, this is the time to test it."

01:03:58.160 | So do we want to live in the United States, right?

01:04:00.160 | Do we want to live the more stable lifestyle?

01:04:02.160 | Or do we want to have homes in other parts?

01:04:04.160 | And so part of it is just a process of communication.

01:04:07.160 | And if you'll choose somebody with whom you can communicate well, then you can find the ways of acknowledging each other's strengths, appreciating each other's strengths, and then working it out together.

01:04:17.160 | And it doesn't have to be a difficult thing.

01:04:19.160 | I have no fear of saying, "It's my idea to travel the world."

01:04:23.160 | People ask my wife, "Does Joshua force you to go along and do this?"

01:04:27.160 | "Does Joshua force you to do all these things?"

01:04:29.160 | And my wife's not a slave.

01:04:31.160 | She's not a stupid woman.

01:04:33.160 | She chooses to do things that she would not ordinarily choose to do because she's my wife.

01:04:40.160 | And I choose to do things that I would not ordinarily choose to do because -- I messed up my language, but you get the point, right?

01:04:47.160 | It's a relationship.

01:04:48.160 | And so that's the answer to your question.

01:04:53.160 | Thank you.

01:04:54.160 | That was very well put.

01:04:55.160 | The communication portion and not playing games along with you being the kite and her being the rock, it explains a lot.

01:05:07.160 | It helps synergize the stories that you've told.

01:05:13.160 | Good.

01:05:14.160 | Good.

01:05:15.160 | And I don't want to go any farther in the simple Q&A show.

01:05:20.160 | Just simply that my life is way, way better because of her.

01:05:29.160 | And I believe that her life is way, way better because of me.

01:05:34.160 | I'm grateful to be married.

01:05:36.160 | When I think about the difficulty of doing it again well, and I think about how difficult it is once you're committed, it makes me redetermine to say to men like you, right, be the most absolute highest caliber man that you are capable of being so that you can attract the absolute highest caliber of a potential spouse.

01:06:02.160 | And then choose very, very carefully.

01:06:05.160 | Because even like I said with regard to physical health, right, in my worldview, in my belief, in my convictions, right, marriage is for life.

01:06:18.160 | And so when I say to my wife, I promise to love you for better or for worse and in sickness and in health, like that's legit.

01:06:27.160 | And so you're not obligated to choose somebody who is sick.

01:06:32.160 | And I'm using this because it's a simple example, right.

01:06:33.160 | You don't have to fix -- you're never going to fix a woman, right.

01:06:35.160 | So don't marry a sick woman.

01:06:38.160 | You're not going to fix her.

01:06:39.160 | You're not going to change her.

01:06:40.160 | Choose very carefully because you can be extremely discriminating and extremely careful of choosing the highest caliber of woman that you're capable of attracting before.

01:06:53.160 | But then once that commitment is there, then everything changes.

01:06:56.160 | And as I see it, you're pretty well locked in.

01:06:58.160 | So best to you.

01:07:00.160 | And I look forward to continuing to talk about the subject.

01:07:03.160 | All right, two more callers.

01:07:04.160 | Lucas in New Jersey.

01:07:05.160 | Welcome to the show, Lucas.

01:07:06.160 | How are you, sir?

01:07:07.160 | >> Lucas: Wow, doing well.

01:07:09.160 | Beautiful summary.

01:07:10.160 | I just got married and that was quite inspiring for a newlywed.

01:07:14.160 | >> Paul: Good.

01:07:15.160 | Congratulations on your marriage.

01:07:17.160 | >> Lucas: Thank you very much.

01:07:19.160 | My question, it's going to sound like a Medicare, Medicaid, Social Security question, but it actually has to do with asset planning.

01:07:25.160 | >> Paul: Okay.

01:07:26.160 | >> Lucas: And asset protection.

01:07:27.160 | So in short summary, and I will do my absolute utmost to keep it short, my mom failed to sign up for one of the parts of Medicare in time, now facing a pretty serious medical condition.

01:07:40.160 | It's going to be quite expensive.

01:07:42.160 | We don't know yet if we'll be able to correct the issue with Medicare and get her the right coverage.

01:07:49.160 | She has no previous employer insurance to fall back on.

01:07:53.160 | She has very low income, almost no income, but assets, her current assets are just slightly too high to qualify for Medicaid.

01:08:03.160 | They have roughly 50 grand in cash between she and my dad, and we are already at this point, at the very beginning of her treatment, accumulating bills that are in roughly that amount.

01:08:16.160 | So what I'm trying to figure out is what kind of asset protection do I need to be thinking about right now, knowing that there's going to be a lot of medical expenses coming down the road very shortly, and they aren't going to have the money to cover it and might not even have the insurance to cover it.

01:08:37.160 | >> Paul: What other assets do they have, just big picture assets?

01:08:41.160 | >> Trevor: Sure. One older model vehicle, and they have a house that they recently purchased and probably have $50,000 to $60,000 in equity in that house.

01:08:53.160 | >> Paul: And your father?

01:08:55.160 | >> Trevor: It's on a traditional mortgage.

01:08:57.160 | >> Paul: Your father is living?

01:08:59.160 | >> Trevor: Yes, he is living. He's self-employed, but he transitioned his business recently and so won't have a lot of income, presumably for the next couple of months or even years.

01:09:12.160 | >> Paul: What state are they a resident of?

01:09:14.160 | >> Trevor: South Carolina.

01:09:16.160 | >> Paul: South Carolina. I'm just pulling up my little cheat chart. Hopefully this is current. It's two years old now. So you'll see the South Carolina bankruptcy exemptions and whatnot here.

01:09:30.160 | So, short answer is, in this situation, the very first thing that you need to do is bankruptcy planning. You need to assume that these medical bills are going to force her into bankruptcy in the future.

01:09:43.160 | And then think about what she and your father would need to do in order to be prepared for that eventuality.

01:09:54.160 | Also, of course, Medicaid planning will be a component of it as well, but you start with bankruptcy planning, which is relatively simple.

01:10:01.160 | What you need to be aware of is, obviously, every single thing that she does is going to be reviewed at some point in time by a judge.

01:10:13.160 | And so we're not hiding anything. Nothing here is going to be hidden. But that date is probably fairly far away.

01:10:21.160 | And so the most important thing that you have to protect her and your dad from is being able to live and being able to have the things that are needed.

01:10:31.160 | Now, obviously, you should work very diligently on the proper signups for Medicare and/or Medicaid if qualified, and try to rectify that and get the very best advice on that that you can.

01:10:44.160 | Push it hard. You sound like the kind of guy who is going to do that anyway, but push it hard. Don't take no for an answer.

01:10:52.160 | Talk to one representative, then go talk to another representative, then go talk to another one, then talk to a lawyer. Push it hard because if at all possible, that is step one.

01:11:02.160 | Step two with regard to bankruptcy planning is you need to look at her assets and compare them to the South Carolina rules on what is exempt from bankruptcy.

01:11:12.160 | So let me go through them. South Carolina does not allow tenancy by the entirety. So depending on how the house is titled and the asset being in your father and hers name, tenancy by the entirety is not going to protect it.

01:11:25.160 | What is the homestead exemption? The homestead exemption on the new house that they have in bankruptcy is $50,000 per owner and $100,000 maximum.

01:11:34.160 | So if they have $50,000 of equity in the house, okay, no problem, good. If it starts to get more than $100,000, do not allow that to happen.

01:11:45.160 | Refinance the house and minimize the equity in the home to those numbers, $50,000 per owner and $100,000 maximum.

01:11:54.160 | South Carolina does not protect assets that are in an IRA or a Roth IRA from bankruptcy. So if she has any assets that are in an IRA or a Roth IRA, those assets, you need to know those assets are going to be used up in court.

01:12:10.160 | So the first thing I would look at is there a way to transfer those assets from a non-exempt account to an exempt account. Best thing here would be a 401k. I don't know if she has, does she have an existing 401k or an old 401k?

01:12:24.160 | No, I don't think for either of them they do.

01:12:27.160 | Okay, so that's a bummer, but be aware of that and then you need to recognize that IRA and Roth IRA money is going to be subject to the claims of the court.

01:12:36.160 | IRA, so statute and such special provisions. I don't know what this means in the South Carolina code, I'll just tell you so you're aware of it.

01:12:45.160 | South Carolina code says IRA exemption is limited to the extent reasonably necessary for support. Does she have any IRA assets?

01:12:52.160 | Yes, they both have small IRAs, less than $20,000 each other time.

01:12:59.160 | Okay, so I think that in this scenario, based upon this little, again this is just a cheat sheet that I use, you'll have to check South Carolina law, but it says IRA exemption limited to the extent reasonably necessary for support.

01:13:11.160 | I don't know what that means, but if you tell me they have $20,000 IRAs each of them, then as far as I'm concerned, that's reasonably necessary for support.

01:13:19.160 | South Carolina will exempt $4,000 of life insurance cash values. Do you know if they have any cash value life insurance?

01:13:26.160 | They do not.

01:13:27.160 | Okay, so that's irrelevant.

01:13:29.160 | And then life insurance proceeds, probably not relevant, but South Carolina will protect 100% of a beneficiary's interest in proceeds and cash surrender values if payable to spouse, child, or dependent.

01:13:43.160 | So you should find out if they have any life insurance and then think through the beneficiaries of that.

01:13:49.160 | But let's say that your dad dies and leaves her $100,000 of life insurance, then it looks like she'll be protected in that because it's payable to a spouse.

01:13:57.160 | That's good.

01:13:58.160 | Annuity and cash value payments, sorry, annuity cash values and/or payments, there's no protection in South Carolina.

01:14:04.160 | 529 plans are protected, probably not important.

01:14:08.160 | What I would additionally do is look up the South Carolina code on physical assets.

01:14:16.160 | I'll try to do it here for a second while I'm talking to you.

01:14:21.160 | But what you want to find out is what is protected under the bankruptcy code in South Carolina for physical assets.

01:14:29.160 | Most likely the car is protected.

01:14:32.160 | In fact, let me just, here, I found my book, stand by.

01:14:34.160 | Okay, so here we go with the personal property.

01:14:39.160 | So South Carolina will exempt, again, we did Homestead.

01:14:43.160 | This book says 59,100 for a single owner and 118,000 for multiple owners.

01:14:50.160 | So it looks like my other chart was a little bit out of date, probably changing with inflation.

01:14:55.160 | So personal property, what is exempt of personal property?

01:14:59.160 | Animals, crops, appliances, books, clothing, household goods, furnishings, musical instruments up to $4,725 total.

01:15:07.160 | Personal property of a burial plot to $59,100 in lieu of Homestead.

01:15:14.160 | So you're going to keep the Homestead, don't buy a burial plot because that's in lieu of Homestead.

01:15:18.160 | Cash and other liquid assets to $5,900 in lieu of burial or Homestead exemption.

01:15:23.160 | That's probably, you're not going to go with that one because you're going to keep the Homestead exemption.

01:15:28.160 | College investment program, trust, or fund, health aids, jewelry up to $1,175.

01:15:35.160 | Motor vehicle to $5,900.

01:15:38.160 | And then personal injury and wrongful death recoveries for person you depended on for support.

01:15:43.160 | And then tools of trade, implements, books, and tools of trade to $1,775.

01:15:48.160 | And then a wild card of up to $5,900 for any property from unused exemption amounts.

01:15:55.160 | So the point is that you should be aware of those things and make sure that you don't touch those assets that would be exempt from the claims of creditors in bankruptcy.

01:16:08.160 | She's going to wind up spending the $50,000 in her bank account on her care.

01:16:15.160 | She's obviously going to do that.

01:16:17.160 | But the $20,000 in the IRA, I would definitely not spend that money.

01:16:21.160 | I would keep that money in the IRA knowing that if we go through bankruptcy, based upon my layman's understanding of what I just read, probably that's going to be protected.

01:16:30.160 | So first thing, bankruptcy protection, bankruptcy planning.

01:16:33.160 | Make sense?

01:16:35.160 | Yeah.

01:16:36.160 | Okay, second thing.

01:16:37.160 | So far so good.

01:16:38.160 | All right, so far so good.

01:16:39.160 | So then the second thing.

01:16:40.160 | Second thing is just cash management.

01:16:42.160 | So the good news here is that her creditors are medical institutions.

01:16:47.160 | And medical institutions should be kinder and a little bit easier to deal with than some other creditors that are more aggressive.

01:17:02.160 | She doesn't owe the IRS.

01:17:03.160 | What will the IRS do?

01:17:04.160 | The IRS will just suck the money out of her bank account.

01:17:06.160 | The IRS will nail a notice on the door and say, "We're seizing your property."

01:17:10.160 | So the IRS is a super creditor.

01:17:12.160 | On the other hand, a hospital is not a super creditor.

01:17:16.160 | A hospital is a creditor that does have a legitimate claim against her.

01:17:19.160 | She owes the money and she's grateful for the care that she's receiving.

01:17:24.160 | It's just looking like she's going to wind up owing more money than she has.

01:17:27.160 | So what would I do?

01:17:28.160 | Well, the first thing I would do is make sure that we differentiate carefully.

01:17:32.160 | In addition to what I've said, differentiate carefully the assets that belong to your mother versus the assets that belong to your father.

01:17:39.160 | This would probably be a good conversation with an attorney.

01:17:41.160 | I'm not an attorney.

01:17:42.160 | I'm just giving what I understand to be the law and what I understand to be good practice.

01:17:47.160 | So what I would do is I would take the $50,000 that's in a joint checking account,

01:17:52.160 | and I would make sure that she gives that to her husband and that he puts the money into his own personal checking account.

01:18:00.160 | A husband and a wife can give each other an unlimited amount of money.

01:18:03.160 | So in this situation, she can give him the money and he can put it into an account.

01:18:08.160 | If she is sued for the money that she owes, she's the one who's going to be sued.

01:18:13.160 | He is not accountable for it.

01:18:16.160 | And what you must make sure doesn't happen is you must make sure that he does not sign any kind of commitment for him to be financially accountable for it.

01:18:23.160 | Husbands and wives are not the same person.

01:18:26.160 | They are not the same person.

01:18:28.160 | And so legally speaking, there are assets that are his and there are assets that are hers.

01:18:33.160 | And so you want to be careful because this transaction is going to be reviewed.

01:18:37.160 | But if they have $50,000 in a joint checking account, each of them has an equal undivided interest in that money.

01:18:43.160 | And so he can take that money and he can move it into a personal checking account and she will have fewer assets.

01:18:50.160 | And so I would definitely do that.

01:18:52.160 | I would also make sure that they have enough money out of the banking system and held in a way that they that is hard to take so that they could physically manage things.

01:19:03.160 | Just imagine that the creditors are garnishing wages, the bank accounts all have levies against them.

01:19:09.160 | They need money to be able to go to the store and buy groceries and eat, etc.

01:19:12.160 | So maybe he puts most of the money in a bank account and then puts some of the money in cash in your gun safe so that it's available to them as part of their savings.

01:19:23.160 | I would keep these records carefully because you're going to wind up in court.

01:19:28.160 | And do not hide anything.

01:19:30.160 | Simply follow this process and keep the records, knowing that the judge can undo anything that's done here if you don't do it properly.

01:19:37.160 | That's what I would do.

01:19:39.160 | When you get to Medicaid, that's kind of a whole process and I'll just stop there.

01:19:43.160 | So I think those are your first steps.

01:19:44.160 | Study the bankruptcy law.

01:19:46.160 | This is probably a good thing for a consultation with an attorney.

01:19:49.160 | I don't know South Carolina law.

01:19:51.160 | As far as I know, not being South Carolinian, what I've just described is legal.

01:19:56.160 | But it would be good for a consultation with an attorney and see what other advice the attorney would have for you of how to maximize things.

01:20:03.160 | And I think the most important thing is to recognize that all this financial stuff is going to come in years down the road.

01:20:09.160 | And if she can get healthy, then they can settle all of this.

01:20:14.160 | They can pay off their bills.

01:20:15.160 | They can go through bankruptcy.

01:20:17.160 | Whatever is needed.

01:20:18.160 | The key is that she gets healthy.

01:20:20.160 | And what you can do is help with these details, but you also have to help with emotional management.

01:20:25.160 | She's got to recognize that don't worry about the money.

01:20:28.160 | Because what will happen is she'll feel guilty and she'll feel like I need to go ahead and die so that my family can't be facing all these medical bills so I'll just go ahead and die.

01:20:39.160 | Which is stupid.

01:20:41.160 | But you've got to encourage her, "Mom, listen, your job is to get healthy."

01:20:45.160 | And then recognize that settling all of these medical bills is going to be years down the road.

01:20:49.160 | And that'll be fine.

01:20:52.160 | What I would do is I would do my very best to keep all of the bills constrained as much as possible to simply medical bills.

01:21:00.160 | And so you guys support your dad.

01:21:03.160 | Don't let him go into credit card debt if it can at all be avoided.

01:21:06.160 | You guys bring him food if necessary.

01:21:08.160 | Keep them on a budget that's modest, but keep the bills as medical bills.

01:21:11.160 | Because if all the bills are medical bills with one institution or just a few simple institutions, then those bills can be settled down the road.

01:21:18.160 | Partly between the insurance and partly between personal.

01:21:22.160 | And/or they can be easily bankrupted out of down the road when that comes to time.

01:21:28.160 | But don't let them get into a bunch.

01:21:30.160 | Don't let them, for example, don't let them take out a mortgage on the house.

01:21:33.160 | Unless it's literally going to save her life.

01:21:35.160 | Don't let them sell the house so that they can pay off the bills.

01:21:39.160 | Let the bills accumulate. Focus on getting her healthy.

01:21:42.160 | And then you can deal with all the medical stuff a year or so from now once she is healthy.

01:21:47.160 | And take those precautionary steps with the home finances, planning that you're going to wind up eventually in bankruptcy.

01:21:54.160 | Thank you. That's really helpful.

01:21:58.160 | We already have an appointment scheduled with a bankruptcy planning attorney.

01:22:02.160 | So that's underway.

01:22:04.160 | And I just want to say thank you.

01:22:06.160 | The education I've received over the last couple of years has prepared me for this situation far more than I realized at the time.

01:22:14.160 | So thank you for everything you do.

01:22:15.160 | Good. I'm so glad to hear it.

01:22:17.160 | It's our job, those of us who are not emotionally involved, it's our job to help people make good decisions.

01:22:22.160 | And what will happen is your mom is going to feel guilty.

01:22:26.160 | She already feels guilty because she didn't check the right box or she didn't choose to spend the $130 a month that she should have.

01:22:33.160 | She's going to feel guilty.

01:22:35.160 | She's going to feel guilty that all her family is loving her, serving her.

01:22:38.160 | She's going to feel guilty.

01:22:39.160 | And you've got to just beat that right at its root and make it clear that, "Mom, this is no big deal.

01:22:45.160 | This is why this whole system exists.

01:22:47.160 | And you manage the stress and help them not make decisions from a place of stress-filled guilt."

01:22:53.160 | And may God be with her and may she recover very quickly.

01:22:57.160 | Today we're going to wrap up in Tampa.

01:22:59.160 | Welcome to the show.

01:23:00.160 | How can I serve you today?

01:23:04.160 | Tampa, Florida.

01:23:05.160 | Go ahead.

01:23:08.160 | And Tampa is gone.

01:23:10.160 | All right.

01:23:11.160 | So we're going to wrap up there.

01:23:12.160 | Thank you all so much for listening to today's show.

01:23:17.160 | That last call is a good place to go.

01:23:20.160 | I would just simply say that what you can do is recognize that when you're in those situations, recognize that they come upon you.

01:23:26.160 | And when I have talked with you about asset protection planning, when I have talked with you about these topics,

01:23:32.160 | remember that you can't predict the day and time at which this stuff happens.

01:23:36.160 | It happens.

01:23:37.160 | And it happens to good people all over the world.

01:23:40.160 | And so these laws are written to protect those people.

01:23:44.160 | And you're not doing anything wrong by following the law carefully.

01:23:50.160 | And do your best to be properly protected all the way through.

01:23:53.160 | But if you haven't done bankruptcy planning yourself, you must do bankruptcy planning.

01:23:57.160 | All of us need to do bankruptcy planning and make sure that we have a plan in place in case we wind up being forced into bankruptcy, if by nothing else, by a medical event.

01:24:06.160 | Thank you so much for listening.

01:24:07.160 | Remember that if you'd like to join me on next week's Q&A call, go to Patreon, search "Radical Personal Finance," sign up there.

01:24:12.160 | If you'd like to speak with me personally on a private, confidential manner, I'm available for private consulting.

01:24:16.160 | Go to RadicalPersonalFinance.com/consult.

01:24:19.160 | RadicalPersonalFinance.com/consult.

2021-10-15_Friday_QA-Business_Student_Loans_Bankruptcy_Babies_Annual_Fees_Houses_etc.