2021-12-10_The_Valuable_Lifestyle_Benefits_of_a_Second_Home
00:00:00.000 | Sweet Hop is an online marketplace curating the best in premium seating at stadiums, arenas,
00:00:05.000 | and amphitheaters nationwide. With Sweet Hop's 100% ticket guarantee, no hidden fees, and
00:00:10.500 | the personal high-level service you expect with a premium purchase, you can relax knowing
00:00:15.000 | you'll receive the luxury experience you deserve. Visit SweetHop.com today to book your premium
00:00:20.340 | tickets to your favorite teams, artists, and all the must-see live events to Sweet Hop
00:00:25.000 | around LA. It's more than just a ticket.
00:00:30.000 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,
00:00:34.000 | skills, insight, and encouragement you need to live a rich and meaningful life now while
00:00:38.160 | building a plan for financial freedom in 10 years or less. My name is Joshua Sheets, and
00:00:43.000 | today I would like to talk to you about a second housing-related idea that I have changed
00:00:50.000 | my mind on. Previously on Radical Personal Finance, I shared with you how I've changed
00:00:56.000 | my mind about the value of a vacation home. Specifically, I have come to appreciate that
00:01:04.000 | there are benefits of a vacation home that I didn't understand when I was younger that
00:01:08.000 | I now understand more clearly. And I see why many people, especially wealthy people, want
00:01:14.000 | to maintain a vacation home. I always was focused on the downsides of a vacation home,
00:01:22.000 | the hassle of caring for a home and having someone come out and fix the septic system
00:01:28.000 | and the frustration and the annoyance of having to go to the same place every year when I'd
00:01:32.000 | like to go ahead and go to a new place this year, etc. But how I've come to recognize
00:01:37.000 | that actually having a vacation home is a big benefit. You can invite your friends and
00:01:41.000 | say, "Come to the lake house this weekend and enjoy more time with your friends," or
00:01:44.000 | your children have a spot where they can invite their friends to come out for a great weekend
00:01:48.000 | on the lake. And by having a bunch of activities for them, then now they feel confident enough
00:01:53.000 | to be leaders in a social circle, and that can just be great for their social life and
00:01:57.000 | enhance their friend network and have deeper relationships, etc. It's just wonderful.
00:02:03.000 | And so I've talked about how I now appreciate things I didn't appreciate. Now, here's
00:02:07.000 | a corollary of that that I've also come to appreciate, and that is the topic of simply
00:02:12.000 | having multiple homes. Now, those multiple homes could be vacation homes, but in this
00:02:19.000 | context, I don't want to restrict them to vacation homes. These concepts are clearly
00:02:25.000 | related, but I want to talk about some things I didn't discuss in the vacation home episode.
00:02:33.000 | Similar to how I used to think about vacation homes as a hassle, I also used to think about
00:02:41.000 | having multiple homes as a hassle. Most of the time, people who have just multiple homes,
00:02:49.000 | they generally tend to be on the wealthier end of the scale. But when I was younger,
00:02:54.000 | I didn't understand why a wealthy person would want the multiple homes. Part of it
00:03:01.000 | would be, of course, as a smug financial planner, you always read stories about, "Well,
00:03:05.000 | so-and-so went broke when they had six estates around the world." And you think, "Of
00:03:08.000 | course they went broke, because they had six estates around the world." And you feel
00:03:11.000 | quite smug and self-righteous about it. "If they were working with me, I would have
00:03:14.000 | told them to be frugal, and of course, they wouldn't have spent all their money that
00:03:16.000 | they earned." There's some truth to that, of course. But I always just thought, "Why
00:03:22.000 | would you want to have six homes?" Again, why not just go and stay at the Four Seasons?
00:03:27.000 | Why not go and stay at a five-star hotel and be in a different place? After all, you
00:03:31.000 | don't have to commit to going to the same place every year. After all, what's that?
00:03:35.000 | Why would you do it? I've spent time at some pretty cool resort places. I'm from
00:03:39.000 | Palm Beach, Florida, which is one of the big resort towns. We have a major seasonal
00:03:43.000 | population. I've, here and there, hobnobbed with the elite of the elite. Over at the
00:03:51.000 | Everglades Club, having dinner with your friends at the Everglades Club on the
00:03:54.000 | island, looking around and I'm thinking, "Here I am. I'm at the poshest of the
00:03:58.000 | clubs, having the nicest of events, and okay, this is fine, but why is this, why?
00:04:05.000 | Why do this? Why go back and forth like this? Why have a home in New York and a
00:04:10.000 | home in Palm Beach? After all, isn't that a hassle to set your life up in such a way
00:04:15.000 | where you have to go between them? And then what about your friends in each places,
00:04:18.000 | and what about your children's appointments, and blah, blah, blah, and all the stuff?"
00:04:21.000 | And so I always thought, "What a hassle. I don't want to have multiple homes that
00:04:25.000 | I have to supervise." Again, a little anecdote I shared at the beginning of the
00:04:27.000 | previous episode where I talked about the rich guy having to go and take care of his
00:04:30.000 | home and his whole weekend is ruined fixing up the second home. But over the years,
00:04:35.000 | I've wrestled a lot with where to live. And this is not something that I expected.
00:04:40.000 | Three years ago, four years ago, I did not expect to be wrestling with where to live
00:04:45.000 | because I was from one place and I lived a very stable life in that one place and I
00:04:49.000 | was happy in that one place and I had a clear vision for the future. And so of course,
00:04:52.000 | that one place was fine. And so I thought, "Okay, the standard living model plus a
00:04:56.000 | vacation is the right model. And why would you want to have multiple homes?"
00:05:00.000 | I understand more now than I did back then. And what's interesting is I have found
00:05:08.000 | it very difficult to figure out where I want to live in the world. And my wife has
00:05:14.000 | found it very difficult to figure out where does Joshua want to live in the world
00:05:18.000 | because for years of my life, I had a dream and the dream was very simple.
00:05:23.000 | I wanted to be able to make my living from anywhere in the world. It took me 15 years
00:05:27.000 | to do it. It shouldn't have taken me 15 years, but it did. But once I did it,
00:05:32.000 | I thought, "This is great. This is wonderful." And then I had to figure out,
00:05:36.000 | "Well, where do I live? What do I do? How do I do this?" And after all,
00:05:43.000 | if I'm going to have the perfect thing, I got to find the perfect thing.
00:05:47.000 | I got to find the perfect place to live. And so you go on this intense search
00:05:51.000 | and you're like, "I'm going to find the perfect place to live." And for me,
00:05:55.000 | I realized over time that I was giving up that concept. For example,
00:06:00.000 | I've talked about this in the international space. One thing that brought me a lot
00:06:03.000 | of personal freedom in my thinking in the international space was when I realized,
00:06:08.000 | "Listen, there is no perfect country. The United States of America is not
00:06:12.000 | the perfect country. England, not the perfect country. Argentina,
00:06:17.000 | not the perfect country. Canada, not the perfect country. No country is the perfect country."
00:06:20.000 | And it brought me incredible freedom through the concepts of flag theory
00:06:24.000 | and PT living when I just thought, "Just use each country for what they're best at."
00:06:30.000 | Want to drive really fast? Of course, you can go to a racetrack.
00:06:33.000 | But want to drive really fast? Then get a fast car and go drive in Germany,
00:06:37.000 | where the Germans consider it their birthright to drive as fast as they want to
00:06:41.000 | on the unrestricted parts of the Autobahn. Want to go gamble and sleep with prostitutes?
00:06:48.000 | Go to Costa Rica. Want to go and hobnob with the poshest of the posh and hang out
00:06:54.000 | on your yacht? Well, go to Monaco. Go to Dubai. Just pick each place
00:06:59.000 | and don't try to make a place what it's not. Want to go and hang out in your beautiful vineyard?
00:07:04.000 | Go to Argentina. Go to Chile. Go to another place and choose a place that has what you want.
00:07:10.000 | Want wildly loud individual freedom? Go to the United States of America.
00:07:17.000 | Want absolutely enforced mask mandates and vaccination and everyone? Go to a country where they have that.
00:07:24.000 | Whatever the issues are, you can have a lot more peace in your life if you just go to a place
00:07:28.000 | where that's there. And so from the internationalization space, it made sense to me.
00:07:34.000 | And so I thought, "Well, I'll put my money in the place where my money is the safest,
00:07:38.000 | where they have the best banks. I'll do my investments where they have the best investments.
00:07:42.000 | I'll get my citizenship from where I'm the freest and where I'm left alone, blah, blah, blah.
00:07:47.000 | But what about where to live? Where do I live?" And over the years, I've watched things change
00:07:56.000 | for various people. And you start looking at places. And what happens is when you open up
00:08:00.000 | the whole world to yourself of where you live, it's a little overwhelming.
00:08:04.000 | Because generally as humans, we live in a place for usually one of three reasons.
00:08:10.000 | Reason number one, that's where we were born and that's where we were raised.
00:08:13.000 | Sometimes not the same thing, but that's where we're from.
00:08:16.000 | You say, "Where are you from?" "I'm from West Palm Beach, Florida." Or, "I'm from Detroit."
00:08:21.000 | So a lot of times, we just live there. Now, in the United States, it's less common,
00:08:25.000 | but most people around the world live in a place simply because that's where they're from.
00:08:30.000 | That's who they are. They live in that village. They don't travel beyond the local area.
00:08:37.000 | So that's where they're from. Of course, in the United States, we're much more restless.
00:08:42.000 | We tend to move a lot across the country. But of course, most Americans don't consider
00:08:45.000 | living outside of the country. But within the country, there's tremendous options available
00:08:49.000 | and we tend to move a lot. But this is where I'm from.
00:08:52.000 | Second reason is this is where my family is. So frequently, you find yourself wanting
00:08:57.000 | to move close to family. You find yourself wanting to say, "How can I be close to mom and dad?"
00:09:03.000 | "How can I be close to grandpa?" "How can I be close to my grandchildren?"
00:09:08.000 | "This is where my girlfriend lives," or "my boyfriend lives."
00:09:11.000 | These are very good and compelling reasons to choose a place to live because the people that are there.
00:09:15.000 | My friends, right? This is where my friends are. This is where the people that I click with are.
00:09:20.000 | Very good reasons to choose to be in a certain place. It's for the people.
00:09:24.000 | In fact, I think this is generally the biggest reason. I find the more I travel, that although I can
00:09:29.000 | appreciate certain things about different locations, the thing that I most care about in a place
00:09:34.000 | is who the people are. Are the people that I love in this place?
00:09:38.000 | And the third reason why we move is because this is where my job is.
00:09:42.000 | I'm living in a little town, a little coal town in Pennsylvania. All the jobs disappeared.
00:09:47.000 | Well, I'm going to go to where I can get a job. And I think that's a fine reason.
00:09:51.000 | If you need to move for a job, totally fine. But what if you take those things away?
00:09:57.000 | What if you're choosing not to live where you're from?
00:10:00.000 | What if you're not intentionally choosing to live where your family is?
00:10:06.000 | What if you are not making your money in a specific geographic location?
00:10:11.000 | Well, now literally the world is available to you.
00:10:14.000 | And I thought, "Oh, this will be great. After all, I've achieved my goal. I can live anywhere in the world.
00:10:19.000 | This is going to be wonderful." And I have found it utterly overwhelming, completely and totally overwhelming.
00:10:25.000 | And it's like, it's too much. You think about, you know, there are times where it's just too much.
00:10:31.000 | Someone is a glutton, right? It shouldn't be possible for us to have as much rich food available to us as possible.
00:10:37.000 | It's why historically many rich kings died of gluttony, because just too much.
00:10:42.000 | We're not meant to handle it. And in some cases it has felt that way with regard to freedom.
00:10:47.000 | It's like, "Oh, this is too much. How am I supposed to choose this?"
00:10:50.000 | And what happens is you can get into this intense analysis.
00:10:53.000 | And after all, you've got to make the best decision.
00:10:56.000 | So what's the place that I'm going to live? Where am I going to live where it's the best?
00:11:00.000 | And you're managing all these factors.
00:11:02.000 | Well, I know these people here. Here's where my family is. Here are the people I love.
00:11:05.000 | I really like the gun laws in the United States, but I don't like the cultural arguments with people.
00:11:11.000 | I really like the cohesive culture in this other place, but I can't have so-and-so.
00:11:18.000 | I mean, I could give silly arguments, but the point is that you look at it and it's a lot.
00:11:24.000 | And it leads to a paralysis of analysis, or at least it can and it has in many cases been for me.
00:11:30.000 | I go around and around and around. I'm like, "Well, look." I tell my wife.
00:11:34.000 | I'm like, "Look, this place has this, this, this, this. We can get A, B, C, D, E that we like.
00:11:38.000 | But it doesn't have this, these things over here and this and that."
00:11:42.000 | And I want to tell you that if you've ever been in that situation, trying to figure out what's the perfect place,
00:11:49.000 | number one, there is no perfect place.
00:11:52.000 | And so you're just going to choose the place that you think is the best or at least the best for now.
00:11:59.000 | But additionally, one of the things you can do is simply say, "What if I don't choose one place?
00:12:08.000 | What if I choose two places?"
00:12:12.000 | And the mental freedom that can come with simply saying, "I'm going to choose two places or more,"
00:12:20.000 | can be really profound because there are many things that you can like about a place
00:12:27.000 | for a certain amount of time and then you get tired of it.
00:12:30.000 | The example that I give is the Florida sunshine. I grew up in Florida.
00:12:34.000 | My favorite days growing up were always days that were cold and gray and rainy.
00:12:40.000 | And I love those days because they always made me feel cozy.
00:12:44.000 | And they're few and far between when you live in South Florida.
00:12:47.000 | Now, having grown up in South Florida, I don't appreciate sunshine because that's all it is.
00:12:53.000 | If you come from Northern Michigan, all of a sudden now, or Quebec, we're in season now in Florida.
00:13:02.000 | And so you see all the Quebec license plates and the Ontario license plates and the giant influx of snowbirds from Canada come down.
00:13:10.000 | You notice them the most.
00:13:12.000 | And so if you're from Quebec, then being able to have sunshine in the winter is phenomenal.
00:13:18.000 | But here's the flip side.
00:13:21.000 | In Florida, you don't get any of the benefits of a white Christmas.
00:13:25.000 | You don't get to enjoy watching the snowfall on Christmas Day.
00:13:29.000 | You don't get to enjoy listening to the songs about sleigh bells ring.
00:13:33.000 | Are you listening? Because there ain't no sleigh bells.
00:13:35.000 | And so you don't ever get that sense of it.
00:13:38.000 | Whereas you can get that sense of it in a very different way, in a more northerly climb.
00:13:44.000 | So what if you have them both?
00:13:47.000 | Then you can choose both.
00:13:48.000 | What if you have a home in the north and a home in the south?
00:13:51.000 | Well, if you're really into having a cold Thanksgiving, maybe even a white Thanksgiving or a white Christmas,
00:13:58.000 | then you might choose to say, "We're going to enjoy staying at our home in the north.
00:14:04.000 | We're going to enjoy a white Christmas.
00:14:06.000 | And then on New Year's Day, we're going to be on the beach in Florida where it's 70 degrees and sunny."
00:14:10.000 | Because we don't want to go through the cold and dreary gray of January and February, etc.
00:14:17.000 | Or you might say, "I personally don't have a four-season wife.
00:14:22.000 | She doesn't have any interest in becoming a four-season woman."
00:14:26.000 | And so that annoys me.
00:14:28.000 | I'm like, "Pete, look, we can go skiing."
00:14:30.000 | She's like, "All right, let's just go skiing.
00:14:32.000 | We don't need to live in the frozen north.
00:14:33.000 | Let's just go skiing in the frozen north."
00:14:35.000 | And so you might have your ski cabin.
00:14:37.000 | And you go and you spend a couple of months there or a whole month there or whatever it is at your mountain cabin
00:14:42.000 | and going to ski slopes, etc.
00:14:44.000 | And you retreat back to the sunny south and you go to your place on the beach in Mexico.
00:14:49.000 | Now, you can expand this beyond different lifestyles, beyond, right?
00:14:52.000 | You might enjoy certain aspects of the big city hustle and bustle.
00:14:57.000 | I always enjoy traveling to a big city.
00:14:59.000 | I enjoy going to New York City at Christmastime and doing all the big city stuff.
00:15:03.000 | I enjoy that.
00:15:05.000 | But I may not enjoy it every day.
00:15:07.000 | And so you might want to have a place out in the middle of nowhere.
00:15:10.000 | The point is that if you open your mind and you say, "What two places could we have?"
00:15:16.000 | that could for you provide a major opportunity, a way to live a better lifestyle.
00:15:22.000 | And that's what I now understand that I didn't understand about wealthy people,
00:15:27.000 | is that it is very common that wealthy people will have multiple homes.
00:15:34.000 | And they do it because they like multiple places and they want to have homes in those places.
00:15:44.000 | I don't have anything more profound to say than that.
00:15:47.000 | It's pretty simple.
00:15:48.000 | You think, "Well, Josh, you should have recognized that years ago."
00:15:51.000 | But I was always so focused on the downsides that I hadn't arrived at a place in my life
00:15:55.000 | where I appreciated the upsides.
00:15:58.000 | But I found this oftentimes with people.
00:16:00.000 | If you're struggling with consulting clients, and I have been able, using this new experience,
00:16:05.000 | I have been able to ask better questions.
00:16:08.000 | See, I believe in a win-win lifestyle.
00:16:12.000 | This, of course, comes from Robert Covey's habit from Seven Habits of Highly Effective People
00:16:17.000 | where he talked about win-win or no deal.
00:16:19.000 | And for me, it's a very big principle that I'm committed to.
00:16:23.000 | And his phrasing of that that I learned when I was a teenager was,
00:16:27.000 | "Always go for win-win or no deal."
00:16:34.000 | The idea being that if we come to a transaction and we come to an agreement where you feel like you win
00:16:44.000 | but I go away feeling like I lose, that is not an enduring agreement.
00:16:49.000 | Meanwhile, if we come to an agreement where you lose and I win, that's also not an enduring agreement.
00:16:56.000 | Obviously, a lose-lose is also not an enduring agreement,
00:16:59.000 | where both of us feel like we're losing is not an enduring agreement.
00:17:02.000 | And so what Covey said is you have to search for win-win arrangements,
00:17:07.000 | which means that you need to not compromise but rather build consensus.
00:17:12.000 | And so, especially in your most intimate relationships,
00:17:16.000 | your business partner says, "I want our business to be in such and such a place."
00:17:21.000 | Your wife says, "I want us to live in such and such a way."
00:17:24.000 | "I don't want to do that."
00:17:26.000 | You have to look and find either a win-win deal where both of you feel like you win
00:17:33.000 | or you have to stay committed to say, "No deal. We're going to keep trying."
00:17:38.000 | And this is hard. This is hard in many situations.
00:17:41.000 | It's not automatic, but you have to keep working at it until you can build consensus.
00:17:48.000 | Compromise often leads to hard feelings. Not always.
00:17:52.000 | Sometimes you can compromise on things that are just not important to you.
00:17:55.000 | Frequently, "Where do you want to go for dinner?"
00:17:58.000 | "Let's go for Chinese food."
00:18:00.000 | "I don't want Chinese food. I got Italian food."
00:18:02.000 | "Okay, I'll compromise."
00:18:03.000 | "I don't care about it. Let's go for Italian food."
00:18:05.000 | "That's fine."
00:18:06.000 | But if you don't like Italian food, don't compromise.
00:18:10.000 | You need to look for the third deal.
00:18:11.000 | "How about Brazilian?"
00:18:12.000 | "All right, great. Let's do that."
00:18:14.000 | You got to find the third option until you reach consensus where everyone is happy.
00:18:19.000 | Compromise often makes people feel bad.
00:18:22.000 | So when you're looking at where to live, oftentimes compromising and saying,
00:18:26.000 | "Well, I really want to be close to Mom and Dad."
00:18:29.000 | "Yeah, but I don't want to live in California."
00:18:31.000 | Or, "I really want to live in California."
00:18:34.000 | "Yeah, but it never gets any snow."
00:18:36.000 | Or versions of that.
00:18:38.000 | And so many times the right solution is just going to be keep looking for a great third option.
00:18:46.000 | But what I want to tell you is when it comes to your housing and where to live,
00:18:51.000 | many times I think you're better off if you expand your ideas.
00:18:56.000 | And you say, "What two places could satisfy us?"
00:18:59.000 | Or, "Could we live in both places?"
00:19:03.000 | And while I feel like this is blindingly obvious now,
00:19:06.000 | I recognize that it was not always blindingly obvious to me in the past,
00:19:10.000 | and it may not be blindingly obvious to you.
00:19:13.000 | So if you're thinking about where to live,
00:19:16.000 | what if you gave yourself two places to live or three places to live?
00:19:21.000 | That way you could have the best of both worlds.
00:19:23.000 | Now obviously in order to do this, you either need to not depend on a specific location
00:19:28.000 | for your constant income.
00:19:31.000 | The working model where you're expected to show up at an office,
00:19:34.000 | the same office or the same job site 250 days per year, this won't work.
00:19:39.000 | But if you generate your income remotely or you live off of your investments,
00:19:45.000 | this will work.
00:19:46.000 | Or if you have some form of seasonal work, this can work.
00:19:49.000 | And this will work. This does work.
00:19:51.000 | Because now you can say, "You know what?
00:19:55.000 | I do want my children to have a close relationship with their grandparents.
00:20:00.000 | I do really want that."
00:20:02.000 | So tell you what, let's go ahead and buy a condo in the same community
00:20:07.000 | where our parents are.
00:20:09.000 | Or let's buy a little house down the street.
00:20:12.000 | Or let's get a bigger house that we can kind of share, but not all the time.
00:20:17.000 | So that way we can have that.
00:20:18.000 | But I don't want to stay there all year.
00:20:20.000 | Let's also have a second place that's very far away,
00:20:23.000 | that's very exotic, that has other benefits.
00:20:26.000 | And while I could circle the globe giving you the advantages and disadvantages
00:20:29.000 | of different places, I think I'll keep this simpler and just say,
00:20:31.000 | ask yourself that question.
00:20:34.000 | If you, as I, have spent a lot of time doing, talking with my wife, right?
00:20:39.000 | "Honey, what's important to you? Here's what's important to me."
00:20:43.000 | You're putting these things down.
00:20:44.000 | And in some cases, my wife and I, like, I can't find the consensus.
00:20:48.000 | She values these things. I value these things.
00:20:51.000 | How do I solve this?
00:20:53.000 | I want her to feel valued and appreciated and have all of the things solved.
00:20:57.000 | And I also want to feel like all the things that are important to me are met.
00:21:00.000 | I don't want to compromise.
00:21:02.000 | I don't want to just say, "You know what?
00:21:04.000 | I'm just going to give up what I want to go with what you want."
00:21:06.000 | I think that's a recipe for bitterness.
00:21:09.000 | Similarly, I don't want her to compromise.
00:21:11.000 | I don't want to say, "Well, honey, I don't care what you say.
00:21:13.000 | We're just going to do what I want because, after all, I'm the one that cares."
00:21:16.000 | Both of these are bad. These are bad.
00:21:18.000 | So you're looking for it.
00:21:20.000 | But one of the things that we have struggled with is,
00:21:22.000 | "Well, where is that location that has everything?"
00:21:29.000 | It's unlikely that one location is going to have everything.
00:21:33.000 | What I found very helpful is, "Okay, what if there were two?
00:21:38.000 | What two locations could we do, could we use?"
00:21:44.000 | Now, don't get scared of this financially.
00:21:46.000 | And let me give you a couple of specific financial tips.
00:21:48.000 | Let's say that you had two locations.
00:21:50.000 | Let's say that you had two places that you were interested in.
00:21:54.000 | As I stated in the show on vacation homes,
00:21:57.000 | I think we often sell our capacity short.
00:22:01.000 | For many people, being able to afford one home is such a challenge
00:22:08.000 | that they can't quite wrap their mind around the idea of having two.
00:22:13.000 | And then that same mindset can continue even after you are no longer living
00:22:20.000 | hand-to-mouth, paycheck-to-paycheck, month-to-month.
00:22:24.000 | And yet, what's true is that you actually could afford two,
00:22:29.000 | especially if you were thoughtful about the kinds of things that you did.
00:22:32.000 | So what might you do?
00:22:33.000 | Number one, you might just simply structure your life in such a way
00:22:38.000 | that you could simply have two places.
00:22:41.000 | You might do that with a vacation rental.
00:22:45.000 | You might set up an arrangement where every summer you rent the house
00:22:48.000 | for three months in the town where your parents are
00:22:51.000 | so that you can spend all summer together.
00:22:53.000 | Or you might set up an arrangement where we always rent your cabin
00:22:56.000 | in January and February so we can go skiing,
00:22:58.000 | and so you can do it in the form of a vacation rental.
00:23:01.000 | And that can be a perfectly affordable thing,
00:23:04.000 | as long as there's some wiggle room in your budget.
00:23:08.000 | In addition, you can choose two places that are different.
00:23:12.000 | You might have a primary place that is expensive,
00:23:16.000 | and then just simply choose a second place that's not so expensive.
00:23:20.000 | Either the rental rates are much more modest
00:23:22.000 | or the cost to purchase is much less significant.
00:23:25.000 | You might do this in a phased approach.
00:23:27.000 | You purchase one house, you pay that house for a period of time,
00:23:31.000 | pay your mortgage payment, and then after five years
00:23:36.000 | you can go ahead and afford a second place.
00:23:38.000 | Or after 15 years you've paid off your mortgage on the first place
00:23:41.000 | and you go ahead and buy the second place.
00:23:43.000 | And you just do it intentionally and you go back and forth.
00:23:46.000 | You can often do this if you'll be willing to take
00:23:48.000 | a different standard of living.
00:23:52.000 | So for example, my family is not well suited to condo living.
00:23:57.000 | It doesn't work for us. I've got a bunch of children,
00:23:59.000 | they're active, it just would be a nightmare to live in a condo
00:24:02.000 | without a big backyard.
00:24:04.000 | But vacationing in a condo is fine, and so for a second home
00:24:08.000 | it would be no problem for us to have a condo
00:24:10.000 | because during that time you just simply live a different lifestyle
00:24:13.000 | and it's a temporary thing.
00:24:15.000 | So you might have a primary property and a secondary property
00:24:18.000 | and they're just different types.
00:24:20.000 | You might also choose a more modest living
00:24:23.000 | than you would otherwise be able to afford.
00:24:26.000 | Frequently as our wealth grows, we'll upgrade our houses
00:24:29.000 | to be more lavish and more ostentatious houses.
00:24:32.000 | Totally fine, but sometimes that doesn't give a lot more joy.
00:24:37.000 | If you've got seven bedrooms and your family occupies three,
00:24:41.000 | having the four extra bedrooms isn't often that big of a deal.
00:24:46.000 | But what you might do is you might keep your current three-bedroom house
00:24:49.000 | and instead of upgrading, you might buy a second three-bedroom house
00:24:52.000 | in a secondary location that is going to give you a different lifestyle
00:24:56.000 | and then go back and forth between them.
00:24:59.000 | What's especially interesting about this is if you make it part of
00:25:04.000 | the diversity of your life or your children's lives.
00:25:08.000 | Many people wouldn't find it all that attractive if you are--
00:25:15.000 | all that attractive to have two houses close to each other.
00:25:18.000 | But if there's a big difference in your houses,
00:25:21.000 | you've got a house in New York and a house in Florida,
00:25:24.000 | a house in Quebec, a house in Florida.
00:25:26.000 | A big difference seasonally between those opens a lot of things up.
00:25:30.000 | You might have a big difference culturally.
00:25:32.000 | You've got a house in Nicaragua and a house in Florida.
00:25:36.000 | It's easy to fly back and forth between Nicaragua,
00:25:38.000 | but the cultural differences between these houses are really significant.
00:25:42.000 | There might be cross-continental much farther away.
00:25:45.000 | We love to spend the summer in Europe,
00:25:47.000 | and we really enjoy that kind of cosmopolitan European thing,
00:25:51.000 | but we also really enjoy the American thing.
00:25:55.000 | Go ahead and instead of upgrading from a three-bedroom house
00:25:58.000 | to a seven-bedroom house, just grab a three-bedroom house in both places.
00:26:02.000 | Now you can start to enjoy those different things to a greater extent.
00:26:07.000 | Of course, you can fill in more and more scenarios.
00:26:10.000 | This is how I think about Asia.
00:26:12.000 | It's like I like Asia, but I don't want to live in Asia full-time, I don't think,
00:26:17.000 | but I do like it.
00:26:19.000 | So how can I just spend part of my year in Asia
00:26:23.000 | so that I get more of a sense of the culture,
00:26:27.000 | more of a sense of being there, more of a sense of the excitement
00:26:30.000 | than is possible with a two-week vacation or even a two-week work trip,
00:26:36.000 | but without actually committing to 12 months a year I'm going to live in Asia,
00:26:40.000 | I'm going to uproot everyone and go there.
00:26:42.000 | And so you can move among them.
00:26:45.000 | Now what's interesting, in addition, is if you're thoughtful about the places,
00:26:48.000 | this doesn't have to be a major problem, and it can actually be a big advantage.
00:26:53.000 | I've thought a lot about this over the years,
00:26:57.000 | particularly within the guise of international planning.
00:27:01.000 | A friend, Andrew Henderson, who runs the Nomad Capitalist platform and business,
00:27:06.000 | he has coined the term "trifecta strategy" to describe his approach,
00:27:12.000 | which is basically having multiple homes.
00:27:15.000 | What has been interesting to me is I've often not been attracted to Andrew's lifestyle.
00:27:19.000 | It's often seemed like just too much moving around for me, especially with children.
00:27:23.000 | The trifecta lifestyle is basically, "Okay, let's choose three homes."
00:27:27.000 | So Andrew has a home in Asia, he has a home in Europe,
00:27:32.000 | and he has a home in South America and a couple other places mixed in.
00:27:37.000 | And so we just go between our homes.
00:27:39.000 | This is really fascinating because it can, with careful planning,
00:27:44.000 | it can result in a very tax-efficient lifestyle
00:27:48.000 | without being a long-term resident of any of three countries.
00:27:55.000 | You may be able--again, a lot of caveats here--
00:27:58.000 | but you may be able to spend significant amounts of time in places
00:28:02.000 | otherwise thought to be high tax.
00:28:05.000 | The example I use here is, well, what if you spent--
00:28:08.000 | you know, you generally wouldn't want to become a Canadian tax resident
00:28:12.000 | because you have high taxes,
00:28:14.000 | but you could spend three or four months a year in Canada.
00:28:17.000 | You could spend three or four months a year in the United States.
00:28:19.000 | You could spend three or four months a year in Mexico.
00:28:22.000 | And that could be a great thing to do.
00:28:24.000 | I've encouraged many people to do this.
00:28:26.000 | Let's say that you're from a country that is relatively--
00:28:29.000 | let's make it clean and simple.
00:28:31.000 | You're a citizen of St. Kitts and Nevis that doesn't impose taxation
00:28:35.000 | on its citizens of any kind,
00:28:37.000 | and you have visas to the United States and to Canada, proper visas,
00:28:41.000 | which allow you to gain easy access for an extended period.
00:28:45.000 | You have a B-1, B-2 visa to the United States,
00:28:47.000 | gives you six months access.
00:28:49.000 | So in this situation, you may thoroughly enjoy spending four months
00:28:53.000 | in the summer at a beautiful cabin in northern Ontario.
00:28:57.000 | Then on the shoulder season, you may love going to your cosmopolitan apartment
00:29:04.000 | in the middle of Mexico City.
00:29:06.000 | And then you may also enjoy keeping an apartment in Miami
00:29:08.000 | and spending your winters in Miami.
00:29:10.000 | It could be a wonderful lifestyle, but by going between those three countries,
00:29:13.000 | you are avoiding your income tax--
00:29:17.000 | you're avoiding them imposing any income tax obligations on you
00:29:21.000 | because you're not a long-term resident of those places,
00:29:24.000 | violating their tax rules.
00:29:26.000 | And so you could use the trifecta strategy as an elegant way
00:29:30.000 | of avoiding any tax obligations,
00:29:33.000 | even though you're spending time in places that are traditionally higher tax.
00:29:37.000 | And again, you can mix and match anything you want.
00:29:40.000 | You could love spending your summer in the south of France.
00:29:43.000 | France is not a tax-friendly place to live,
00:29:45.000 | but if you spend three or four months there in the summertime,
00:29:48.000 | that's not a problem, especially if you've minimized other ties with the country.
00:29:52.000 | Each country requires a careful review of its laws
00:29:55.000 | to make sure you're not violating the laws.
00:29:58.000 | What I find--but the problem is that I don't think anybody actually is going to--
00:30:01.000 | especially any wealthy person--
00:30:03.000 | nobody wants to have some government bureaucrat dictate their lifestyle.
00:30:09.000 | And if you actually think about designing your lifestyle
00:30:12.000 | around tax optimization, that's what you're doing.
00:30:15.000 | You're letting a government bureaucrat dictate your lifestyle.
00:30:19.000 | It's not that you should ignore it, in my opinion,
00:30:21.000 | but the whole point of being rich is that you don't have to let other people
00:30:24.000 | dictate your lifestyle. You can live how you live--how you want to live.
00:30:28.000 | So I don't think it works for most people,
00:30:30.000 | and most people should not do that kind of lifestyle just for tax planning.
00:30:33.000 | I think it's an interesting thing to think about,
00:30:35.000 | but you shouldn't do it just for tax planning.
00:30:37.000 | So what could you do it, though?
00:30:39.000 | You could think about the places in terms of a lifestyle.
00:30:42.000 | And here's where I think it's really fabulous
00:30:44.000 | to consider multiple places and ask yourself,
00:30:47.000 | "Are there many places that I could like being?"
00:30:50.000 | Now, one of the better concepts that Andrew Henderson brings in
00:30:54.000 | is he calls it his "global citizen sandwich."
00:30:56.000 | It's kind of an awkward name, but let me describe what he uses it for.
00:31:01.000 | There can be many places in the world that you like to be,
00:31:07.000 | but they're not necessarily perfect for everything.
00:31:10.000 | And so the example he uses, which I believe is ideal,
00:31:14.000 | would be the three countries of Cambodia, Malaysia, and Singapore.
00:31:19.000 | If you look at these countries, they're all very interesting countries,
00:31:24.000 | but they're interesting for different places.
00:31:26.000 | And so what Andrew talks about is,
00:31:28.000 | how can you gain from a high-value place, such as Singapore,
00:31:33.000 | without the cost and the frustration of actually living there?
00:31:37.000 | And so one of the things that he does that I think is a perfect example
00:31:41.000 | is, "I'm going to choose to live in Malaysia.
00:31:45.000 | Malaysia is a wonderful value for the money, wonderful place to be.
00:31:50.000 | I'm going to live in Malaysia.
00:31:52.000 | I'm going to bank in Singapore, store my money in Singapore,
00:31:56.000 | and perhaps have some business connections to Singapore.
00:32:00.000 | But it's hard to get a great investment return in Singapore,
00:32:03.000 | also possibly hard in Malaysia.
00:32:05.000 | But there's Cambodia, which is a frontier market,
00:32:08.000 | where I really can build a lot of value from the Cambodian economy
00:32:14.000 | without actually living there.
00:32:16.000 | It might not be where I want to live, but I can invest there."
00:32:19.000 | And so if you go around the world thinking about this,
00:32:21.000 | especially in terms of geographic proximity,
00:32:23.000 | you may be able to find your own little corners of the world.
00:32:26.000 | And you could say, "All right, maybe Malaysia, Singapore, and Cambodia
00:32:30.000 | are not for me, but maybe Mexico, Miami, and Nicaragua are for me.
00:32:37.000 | I may really enjoy living in Mexico.
00:32:40.000 | I'll do my banking and financial management in Miami,
00:32:44.000 | and then I'll do my frontier market investing in Nicaragua or Honduras
00:32:49.000 | or something like that."
00:32:50.000 | Or you can put in any number of these.
00:32:52.000 | I really enjoy living in--I don't need to give you more examples.
00:33:01.000 | If you think strategically about what you're trying to get
00:33:06.000 | and you don't try to put it all--force it all onto one place,
00:33:11.000 | I think it can open up options to you.
00:33:14.000 | And what I now understand that I didn't used to understand
00:33:17.000 | is that wealthy people are usually buying and/or establishing
00:33:23.000 | multiple homes because they like to spend time in those homes.
00:33:28.000 | And I'm going to skip the whole commentary on how I've also learned
00:33:33.000 | that even the nicest hotels and even the nicest Airbnbs and whatnot
00:33:36.000 | is kind of a hassle.
00:33:37.000 | It's nicer to have your own home where everything is just set up how it is.
00:33:41.000 | Maybe I'm getting old and crotchety, but I have crossed that point
00:33:45.000 | where it is annoying.
00:33:46.000 | I don't enjoy being in rented facilities all the time.
00:33:49.000 | So consider that.
00:33:51.000 | It may provide an option for you.
00:33:53.000 | If you're frustrated with where to live, if you're frustrated with
00:33:56.000 | where's the one place that my whole family can agree on,
00:33:59.000 | maybe dial down the intensity and say, "What would be the two places
00:34:04.000 | that would represent things that we really value?"
00:34:07.000 | Or maybe even the three places that would represent things
00:34:10.000 | that we really value.
00:34:12.000 | And then could we build a plan to accomplish those things?
00:34:16.000 | I'm telling you, I think you probably could, especially if you just simply--
00:34:21.000 | even if you had to or you chose to moderate your finances.
00:34:25.000 | You might have a perfectly reasonable middle-class home in one place
00:34:30.000 | and a wonderful little condo in the city or a little apartment in the city,
00:34:33.000 | and then just a wonderful little beachside villa.
00:34:36.000 | And if you are full-time in any one of them, you may want something
00:34:40.000 | a little bit more, meaning a little bit more expensive.
00:34:42.000 | But for part-time, it's a wonderful scenario.
00:34:45.000 | I hope that provides you with a useful question to ask yourself
00:34:48.000 | to open up your opportunities.
00:34:49.000 | Thank you so much.
00:34:51.000 | Remember that at the moment I'm doing personal consulting.
00:34:53.000 | You can find details at radicalpersonalfinance.com/consult.
00:34:56.000 | If you would like to work with me to brainstorm and imagine opportunities
00:35:01.000 | that fit best with you, if you'd like to do international tax planning,
00:35:04.000 | figure out how you can live a tax-efficient lifestyle,
00:35:06.000 | maybe use all your tax savings to buy your second and your third
00:35:09.000 | and your fourth properties, etc., we can do that.
00:35:12.000 | Go to radicalpersonalfinance.com/consult.
00:35:15.000 | radicalpersonalfinance.com/consult.
00:35:17.000 | I'll be back with you very soon.
00:35:19.000 | When you're in winter's favorite town,
00:35:23.000 | the snow-covered mountains surround you.
00:35:28.000 | A historic main street charms you
00:35:33.000 | and every day brings a new adventure.
00:35:38.000 | Welcome to Park City, Utah,
00:35:41.000 | naturally winter's favorite town.
00:35:45.000 | Join the experience at visitparkcity.com.