2022-01-07_Friday

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.

00:00:14.800 | Sweet Hop's online marketplace makes it easy to browse and book the best seats.

00:00:19.360 | With no hidden fees and a 100% purchase guarantee, you can feel confident when you book your premium LA tickets with Sweet Hop.

00:00:26.440 | Visit suitehop.com today.

00:00:30.960 | Today on Radical Personal Finance is live Q&A.

00:00:33.520 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insights 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.

00:00:59.440 | My name is Joshua Sheets. Today is January 7, 2022 and it's a Friday.

00:01:04.720 | Today we do live Q&A.

00:01:21.840 | Each and every Friday when I can arrange the technology, which should be far more regularly this next year,

00:01:29.280 | each and every Friday when I can arrange the technology to have an internet connection and a microphone and all that stuff set up, we record a live Friday Q&A show.

00:01:36.480 | Works just like call-in talk radio. You call in, give your phone number, you call in, you chat about anything that you want, you ask any questions that you want,

00:01:43.280 | solicit any advice that you want, raise any objections that you have. You're free to talk about anything you want.

00:01:50.200 | As Rush Limbaugh used to say, "Open line Friday."

00:01:54.400 | So I welcome your calls. If you would like to join me on a Friday Q&A show, you can do that by becoming a patron of the show.

00:02:01.200 | Go to patreon.com/radicalpersonalfinance or just search "Patreon" for Radical Personal Finance. You'll find the show there.

00:02:06.680 | You can sign up to support the show on Patreon and we will get you on a live Friday Q&A call.

00:02:11.880 | Again, go to patreon.com/radicalpersonalfinance.

00:02:15.360 | And let's see, we begin with Jim in New York.

00:02:19.720 | Jim, welcome to the show. How can I serve you today, sir?

00:02:23.080 | Hello, sir. Thank you for all you do. I appreciate it.

00:02:25.320 | My pleasure.

00:02:26.320 | My question is two parts, but I know you might not be able to get to both.

00:02:31.120 | First, how do I prepare for what I believe to be an imminent job loss because of my refusal to get the jab?

00:02:36.480 | My job is in New York City and we've been working from home, but they want us back in the office soon and we're subject to that very draconian mandate.

00:02:44.920 | The second part is that as a job loss, how do I financially withdraw support from the system, aka leave the matrix?

00:02:54.200 | And I can get into my particulars if you wish, but if you want to keep it more general, I'm of course fine with that, too.

00:02:58.920 | Thank you.

00:02:59.600 | What do you mean by leave the matrix?

00:03:02.680 | What does that mean to you?

00:03:03.560 | Well, sure.

00:03:05.040 | So ironically, I think as you had indicated several years ago, I've been listening to you for a while now and I appreciate everything you do.

00:03:13.600 | It seemed to me like you basically did that.

00:03:17.920 | Essentially, you moved to cash purchases.

00:03:20.120 | You stopped buying from, let's say, Amazon.

00:03:23.960 | You stopped investing in the stock market.

00:03:27.120 | You stepped along those lines.

00:03:29.840 | You also attempted or at least did for a while get out of the States.

00:03:35.240 | So I know it's a very broad question and frankly, I guess I'm looking for baby steps on how to at least get somewhere close to that, maybe not the whole way.

00:03:47.920 | And I guess that's what I mean by that.

00:03:49.720 | Understood. OK, so we'll talk about that.

00:03:52.080 | But I should note that one of the reasons why I do all this stuff is partly just because I do wacky experiments and I actually don't recommend almost any of those things that I have done.

00:04:02.320 | So I have learned from personal experience not to recommend those things.

00:04:07.760 | Let's begin with the first question.

00:04:09.600 | Imminent job loss because of a refusal to take a forced medical procedure.

00:04:16.280 | So number one recommendation is I would go back and listen to episodes 192, 193 and 194 of Radical Personal Finance.

00:04:29.160 | First published in May of 2015, episode 192 was called Recession is Coming.

00:04:36.160 | How to not get laid off in the next recession.

00:04:39.480 | 193 is called Make a Backup Plan in Case You Get Laid Off in the Coming Recession.

00:04:43.480 | Simple action steps for you to consider.

00:04:45.520 | Number four was you just got laid off.

00:04:47.160 | Here's what to do next.

00:04:49.040 | Now, in that series of shows, I used the scenario of a recession causing a job loss and then you get laid off as part of a recession.

00:04:58.200 | But there's really no difference in preparing for job loss due to a recession versus preparing for job loss due to being fired versus just really anything.

00:05:08.440 | And so they're universally applicable.

00:05:10.760 | But I went through steps that you can do, things that you can do while you are still working.

00:05:14.840 | Then I went through what to do immediately after you lose your work.

00:05:19.200 | And then I talked about the whole process all the way through.

00:05:23.720 | So that series of shows will give you at least about three hours or so of in-depth, detailed advice on it.

00:05:31.360 | What I would say is to give you a brief version to answer your specific question right now.

00:05:37.840 | Any time that you are facing the loss of income or any kind of disruption, you want to go into what I call emergency mode.

00:05:48.040 | Now, the severity, the intensity of your personal emergency mode will vary depending upon your personal situation.

00:05:58.280 | The guy with a couple million bucks in assets and one hundred thousand dollars in his emergency fund who normally spends four or five thousand bucks a month loses a job, doesn't have much of an emergency.

00:06:09.520 | There's no need to take drastic actions.

00:06:12.360 | The guy who's got a thousand bucks to his name and is living month to month, paycheck to paycheck, needs to take very, very drastic actions.

00:06:20.360 | But basically, one of the things that you should do now, even before you get a final termination notice, is simply say, what can I cut out of my budget and how fast can I cut it?

00:06:31.360 | And make a list of all the things that you can and would cut out of your expenses.

00:06:35.160 | I believe that this is the step that most people are too slow to do.

00:06:40.360 | What usually people do is when they face a loss of income is it usually takes them a little while to learn to grapple with it.

00:06:47.360 | And so they say, OK, I've just got laid off or I've just gotten fired.

00:06:51.360 | I don't have any income coming in. Let's just go ahead and maintain things as normal.

00:06:56.360 | Let's keep the household running as normal. Let's make sure the kids don't get jostled too much.

00:07:00.360 | We don't want them to feel any kind of sense of insecurity.

00:07:04.360 | And so they keep their normal employed expenses going.

00:07:07.360 | And then they start burning through savings, not knowing, of course, when their income might start up again.

00:07:13.360 | Then as they burn through savings, then they start cutting things and they start cutting things.

00:07:18.360 | And as the situation grows more dire, they cut more and more things.

00:07:21.360 | But unfortunately, they frequently run out of money and then they often wind up going into debt, especially things like credit card debt, which when you're unemployed is very, very dangerous.

00:07:31.360 | And so I think that this is the wrong approach.

00:07:35.360 | I say that the best approach is to take drastic, massive action quickly because it's very easy to go back to the other lifestyle once you get the income squared away.

00:07:46.360 | But if you'll take drastic action on your expenses now, as soon as you know that there's a loss of income coming, then you can maintain your cushion.

00:07:56.360 | You can maintain your savings. And being broke sucks.

00:07:59.360 | I think that's what I like to emphasize is being broke sucks. You don't ever want to be broke.

00:08:04.360 | And so you want to avoid draining all your capital reserves on lifestyle.

00:08:09.360 | And so I would go through and I would make an immediate cut. What budget cuts can I make today that just really aren't that big of a deal?

00:08:17.360 | Then I would go through my list of expenses on a monthly basis and say, what could I absolutely cut out the fastest and how quickly could I do it?

00:08:24.360 | And I mean, think extreme. Again, if your situation warrants, think extreme.

00:08:29.360 | Meaning, OK, I don't want to have to pay $150 a month of insurance, but I could park the car in the back and I could put it into a storage only mode and not drive the car and I could ride my bicycle instead.

00:08:40.360 | Right. Go as extreme as you can to get your expenses as low as is reasonable for your family's financial situation so that you can maintain your reserves.

00:08:51.360 | And then your goal is to get another job just absolutely as quickly as possible.

00:08:56.360 | When you lose a job, you do not have a financial crisis. You have a job crisis, an income crisis.

00:09:05.360 | And so identify the problem. The problem is I'm losing my job and because I'm losing my job, I need another job.

00:09:11.360 | So go and create more income. And you can do this in a variety of ways. Hopefully, ideally, you can just simply go and get another job.

00:09:19.360 | Hopefully, you have a network of people that you can activate and you can say, I'm going and getting another job.

00:09:24.360 | And especially if you're being fired from your job because you are refusing a medical procedure, then you at the moment in the current politically charged climate, there are lots of people who will be happy to give you a hand up to offer you and say, hey, we agree with you.

00:09:43.360 | You should have the liberty of control over your body and we want to reach out a hand and help you to come on and work with us.

00:09:50.360 | So your first goal is to get a job as quickly as possible. And I emphasize in that series that you want to be very, very careful to avoid unemployment, especially extended periods of unemployment.

00:10:02.360 | Unemployment is exceedingly dangerous. It's dangerous, obviously, from a financial position, but it's also very dangerous from a psychological position.

00:10:10.360 | And so your job number one, goal number one is get employed.

00:10:14.360 | Now, if your finances will handle it, then I do think there's often an opportunity when you're between jobs to enjoy a little mini retirement.

00:10:26.360 | So I encourage people who have some financial cushion to say, hey, you're between jobs. Why don't you take six months off and go hike the Appalachian Trail or go and do something that you've wanted to do?

00:10:37.360 | Go and spend six months living near mom and dad or go spend a summer on the lake with them, something like that that's hard to do in the normal cycle of employment.

00:10:46.360 | But if your finances don't allow that, your number one goal is to get income coming in as fast as possible.

00:10:52.360 | And if your situation, your financial situation is truly dire, then you want that income to come in as quickly as possible from any source.

00:10:59.360 | You might spend 30 to 40 hours a week working on getting a job, but you might spend another 30 or 40 hours a week doing some kind of door dash, delivering meals or driving for Uber or some gig work that you can find to kind of get you across the border.

00:11:17.360 | And your number one goal is to keep yourself in a strong financial position, keep your savings as a backstop, not dip down into savings, keep your income as high as is reasonable for your situation and find another job as quickly as possible.

00:11:31.360 | That's the goal.

00:11:33.360 | And then I guess the other thing I would say is in this scenario, when you are faced with an involuntary loss of a job, then you should make sure that you're focused on not leaving, not quitting, making sure that they have to force you out and then turn around and sue them for doing that.

00:11:52.360 | I think that the hand wringing and the anger and the frustration over the loss of jobs due to vaccine mandates has been quite overblown.

00:12:02.360 | And I think that we've seen in effect that that hasn't happened.

00:12:05.360 | And those municipalities like yours that are being extremely aggressive on that front, I think, face most likely a whole string of legal challenges.

00:12:16.360 | And once these court cases start moving forward, the evidence, the burden of proof that is on – there is a very high protection of employees.

00:12:27.360 | And the burden of proof that is on these municipalities and on these states to prove in court the efficacy and the necessity of their mandating certain medical procedures is exceedingly high.

00:12:46.360 | It's understandable, and I think the courts will generally – I'm not a lawyer, okay, just saying, one guy.

00:12:53.360 | I think generally speaking it's very understandable why hospitals, doctors' offices, et cetera, can mandate what they're mandating.

00:13:01.360 | And it's probably in many cases the right thing to do because it protects the lives of those who are very vulnerable.

00:13:07.360 | For the general population, though, the burden of proof that these organizations are going to have to present in court is simply a burden of proof that the normal medical industry can't stand,

00:13:18.360 | meaning that the necessary proof in court for employment law is going to be higher.

00:13:25.360 | And so I would make it very clear I would not leave until they force you to leave, and I would get every single document in writing and whatnot to cushion the many, many lawsuits that are coming in that direction.

00:13:38.360 | Now, time will tell. I'm not going to sit around and put my life on hold for those people. I want to move forward.

00:13:44.360 | But keep the documents and join the various lawsuits that will be coming on board because there are very, very high protections for you, and in this case I think your legal case is very good.

00:13:55.360 | Is that a good start to your first question?

00:13:57.360 | That is, sir. Thank you.

00:13:59.360 | Okay. Question number two. I do not recommend you fall off the grid. I don't recommend you leave the matrix.

00:14:04.360 | I don't think it's possible. I don't think it's a very good lifestyle, and I don't think it's advisable.

00:14:10.360 | You mentioned some of the experiments that I have personally engaged in.

00:14:15.360 | For example, back in 2018, I spent a year trying to live on cash.

00:14:19.360 | I was interested in doing that because I was curious if there really is a war on cash, so-called war on cash, right?

00:14:25.360 | There's a political talking point, and some people say, "Oh, there's a war on cash."

00:14:29.360 | And I was curious, is there really a war on cash? Let me find out for myself.

00:14:33.360 | Well, my personal experiments persuaded me that, yes, there is a war on cash and that it's basically not possible to live on cash at this point in time.

00:14:43.360 | It's not possible. It's just not feasible.

00:14:47.360 | The destruction of the cash economy has been so complete and it is so unmanageable that it just made it—it persuaded me of that.

00:14:59.360 | So it was an experiment that I did, but it's not a lifestyle that I engage in.

00:15:04.360 | And what it basically proved to me is the necessity of our designing and implementing systems that run based upon Bitcoin and other relevant currencies

00:15:17.360 | that will solve the needs that we're looking for without resorting to cash,

00:15:22.360 | because I don't believe we're going back to the technology of the 1800s with regards to money.

00:15:27.360 | So I would call that a failed experiment.

00:15:30.360 | Excuse me. The experiment was not a failure, but I do not recommend that anyone try to do what I did.

00:15:35.360 | My lesson from it is that this doesn't work. This stinks, and it's not very fun.

00:15:41.360 | Similarly, even in the recent privacy interview that I did with Gabriel Custodiate,

00:15:49.360 | I talked about the importance of having some kind of in-between.

00:16:01.360 | Because even with things like privacy, I've pushed the envelope really far,

00:16:06.360 | and my basic learning was that this is just not practicable for the vast majority of people.

00:16:15.360 | If you don't have a persuasive reason why you are going to live this way,

00:16:22.360 | some very compelling reason to live this way, then this is just not a good lifestyle for most people.

00:16:30.360 | That was why I tried to talk to him and pushed on saying, "Is there kind of an in-between world?

00:16:35.360 | Is there a world in which you say, 'Okay, here are my privacy-oriented things,

00:16:40.360 | and here are where my other privacy-oriented things are.'"

00:16:42.360 | Now, if I were a judge, I would practice—a federal judge or a law enforcement officer or someone like that—

00:16:50.360 | I would practice every single one of those techniques.

00:16:53.360 | I practice certain techniques because I don't relish the idea of being doxed on the Internet.

00:17:00.360 | I don't relish the idea of being swatted.

00:17:02.360 | I don't relish the idea of the legions of wackos in cyberspace knowing where I sleep at night.

00:17:11.360 | But I am not as hardcore as I once was because my lesson was, "This is not really practicable."

00:17:20.360 | And I would say probably what you talked about with internationalization,

00:17:26.360 | to me, if you want out of the matrix, so to speak, first of all, you're not going to go off the grid.

00:17:32.360 | I think that you're not going to go off the grid.

00:17:37.360 | And I think that to think that you are—Andrew Tate, when I did my interview with Andrew Tate here on the show,

00:17:44.360 | he talked about his lesson.

00:17:46.360 | He said, "It's not possible to go off the grid, so the solution is to go on as many grids as possible."

00:17:51.360 | And he's talked about that many times.

00:17:53.360 | And I think that that is true.

00:17:55.360 | Today, you can't go off the grid and live any kind of meaningful lifestyle.

00:18:01.360 | I can't go off the grid and live the kind of lifestyle that I want to live.

00:18:05.360 | I have no interest myself in moving to a cabin in the woods and kind of being a hermit.

00:18:10.360 | That's not of any interest to me.

00:18:13.360 | And so what I look at is I say, "Are there practical ways where you can actually live the lifestyle you want to live

00:18:21.360 | but not have to face the same risks that other people face?"

00:18:26.360 | And so internationalization is the closest I've ever gotten to living a maximally free lifestyle with as few downsides as possible.

00:18:37.360 | And the example that I give whenever I talk, for example, to Gabriel or other privacy enthusiasts, I always say,

00:18:43.360 | "Listen, one of the simplest privacy things you can do that few privacy enthusiasts talk about

00:18:51.360 | is simply make sure that there are competing jurisdictions in your financial records."

00:18:56.360 | So if I'm living in the United States, I'm going to do a lot better if I'm swiping my debit card from my UK bank account

00:19:05.360 | than if I'm swiping my debit card from my US bank account.

00:19:09.360 | In the same way, when I'm traveling outside the United States, I have far more privacy swiping my US debit card or my US credit card

00:19:18.360 | than I do when I'm in the United States.

00:19:21.360 | And so just simply mixing up the jurisdictions because of the legal framework puts in place different options,

00:19:28.360 | and I believe it makes you less vulnerable to those things that you're concerned around.

00:19:34.360 | Similarly, my observation has been that if you follow the practice of, as Andrew Henderson would say,

00:19:41.360 | going where you're treated best, you can often eliminate a lot of the concerns that you have in the first place.

00:19:47.360 | I remember a few months ago when I first arrived in the United States, it was funny that I had been gone for a long time,

00:19:53.360 | and I used to talk about things like how to protect yourself from the police and how to live in a police state and all that

00:19:58.360 | and stay out of jail and things like that, and I'd kind of forgotten about a lot of that stuff while traveling.

00:20:03.360 | And I immediately got back in the United States and I immediately had to start kind of paying,

00:20:07.360 | "Okay, Joshua, you're going into the world's biggest police state.

00:20:09.360 | You're going into the place where they put more people in prison for all the craziest reasons.

00:20:12.360 | You need to pay attention to what you're doing, pay attention to what you say, who you say it to."

00:20:16.360 | And so like all of these pressures that all of a sudden squirted up in ways that I had forgotten for a long time.

00:20:24.360 | I'm not trying to beat on the United States. I'm not upset about it.

00:20:27.360 | But the point is that my experiments of so-called going off the grid have proven to me that this is probably not a great life.

00:20:35.360 | So if you've got a really strong reason to do it, then of course you will do it.

00:20:41.360 | But for most people, I think it's probably not a great lifestyle to live as a standard practice.

00:20:51.360 | And so to me, what I think works really well is, number one, have some awareness and some education about some of the things that you can do,

00:20:58.360 | some of the options that are available to you.

00:21:01.360 | And then as you press forward, know what you would do if you ever had to,

00:21:06.360 | but it's fine to live kind of a more conventional lifestyle if it works for you.

00:21:14.360 | It's a very tall order to maintain a lot of those things, and there's got to be a compelling reason why it's worth it for you.

00:21:22.360 | So that's my answer.

00:21:25.360 | Well, I appreciate your time. Thank you so much.

00:21:27.360 | My pleasure. We move on to Ryan. Ryan, welcome to the show. How can I serve you today, sir?

00:21:34.360 | Hi, Joshua. Thanks for taking my call. My question is mostly around crypto.

00:21:41.360 | I know that's something you kind of started to get into, and you've probably done more research than me.

00:21:47.360 | So hopefully you can help me out. The question is really surrounding taxation.

00:21:55.360 | I've made a little bit of money in crypto, and I've found a few vendors online that actually accept crypto, and I've paid people in crypto.

00:22:08.360 | And I haven't taken a withdrawal necessarily back to my bank account, but I have paid people with what I guess would be technically profits.

00:22:18.360 | And I don't know if – do I owe gains on that at the end of the year? And if I do, how – are there tax forms that are sent to me the way a typical institution would send you a tax form?

00:22:32.360 | I mean, I just want to stay out of the IRS's light, but there are small transactions.

00:22:42.360 | But I just don't know the implications of paying somebody with what would be profits on crypto. Is there any implications there, technically?

00:22:49.360 | Yes. If you have profits on your cryptocurrency, and if you are a U.S. person, which I'm assuming of course that you are,

00:22:56.360 | then you owe the U.S. government – legally speaking, you owe the U.S. government tax on the profits of that particular trade that you made.

00:23:07.360 | It doesn't matter whether you sell it and convert it back into fiat. It doesn't matter whether you buy goods or services.

00:23:14.360 | All that matters is that you went into a trading position and you exited that trading position.

00:23:20.360 | And so at the time that you exited it, if there was a gain, you owe tax on that gain.

00:23:25.360 | Now, your particular – depending on how you hold your personal – your currency, that will determine the answer to the question of are there forms sent to you.

00:23:36.360 | If you're doing business with a big KYC compliant exchange, then yes, they're probably going to help you with some tax reporting forms.

00:23:48.360 | And they're increasingly going to be sending information directly to the IRS. That's the deal that they're making.

00:23:54.360 | If you are trading your currencies privately, if you're acquiring them privately, then you're not going to get any forms from anybody.

00:24:03.360 | There's no tracking of it other than on the blockchain depending, again, on how your particular – what currency you're involved in or what trades you're engaged in.

00:24:12.360 | And so there's no tracking of it, and you are responsible to maintain your own personal records of your gains, and you are responsible to sell those records – excuse me – to pay – to report, to self-report those gains and then to pay your taxes on them.

00:24:28.360 | It's basically exactly the same taxation. The US tax laws are exceedingly clear.

00:24:35.360 | If you have any profit from obviously a business, any kind of business, or if you have any profit from a trade, then you owe tax on that profit.

00:24:46.360 | And so if you have a peach tree in your backyard that produces bushels of peaches and you sell those bushels of peaches across the fence to your neighbor, then you owe taxes to the US government on the profit from the sale of those peaches to the US government.

00:25:03.360 | Now, of course, you can depreciate the cost of your peach tree. You can deduct the costs associated with producing those peaches.

00:25:09.360 | But to the extent that you have profits, you owe tax on those profits.

00:25:13.360 | It doesn't matter that there was nobody around to write down numbers. It doesn't matter that your neighbor paid you cash over the back fence.

00:25:19.360 | It doesn't matter any of those things. All that matters is that you made profits, and thus you are required by law to self-report those profits, to calculate them, and to self-report them to the IRS on your annual tax filing forms.

00:25:35.360 | Okay, so if all of the transactions took place on Coinbase, the purchase of the coin and then also the transfer of the coin to another person's wallet, all of that took place on Coinbase.

00:25:52.360 | So, in theory, these tax forms should be available for me come the next couple of months, I would guess.

00:25:59.360 | Now, this is the first year I've ever done any crypto, so I just didn't have any prior experience.

00:26:05.360 | But it would make sense, then, I guess, that those forms would be available to me since Coinbase is the largest operator there is, as far as I know.

00:26:13.360 | Hopefully, they're on the up and up as far as producing these forms and I don't have to handwrite all this stuff.

00:26:20.360 | Right. So, you would check, yeah, I don't know much about Coinbase's tax reporting system, but you would, first, I would check and see, will they create forms for me, listing that?

00:26:33.360 | It should be one of the services that a big exchange like Coinbase does.

00:26:37.360 | Will they keep records on my entrances, my exits, etc., and then create the forms?

00:26:44.360 | And then I assume, then, that they would send off the forms to the IRS. And so that would simplify your reporting if, indeed, you do have those tax forms created.

00:26:54.360 | I just don't personally know what forms Coinbase is creating.

00:26:58.360 | I know that all the big exchanges that work with U.S. persons are working very hard to generate all those forms and to make everything smooth and simple,

00:27:10.360 | just like many other, all your other more mainstream, conventional financial institutions do.

00:27:16.360 | So, yeah, I would check Coinbase's FAQ, talk to a representative and ask them, you know, are you going to be creating this reporting for me and sending me these details?

00:27:29.360 | Okay. Can I ask kind of a similar question, a little follow-up?

00:27:36.360 | Sure, go ahead.

00:27:37.360 | Yeah, okay, so I have some intermediate term money.

00:27:43.360 | It's not like urgency money, but it's just money that I guess is in my savings account, and it's just sitting there getting eroded by what appears to be 7-ish percent inflation.

00:27:56.360 | And so I'm looking for a place to put that, and I may be buying some IBONs, but you can only buy so much of that per year.

00:28:05.360 | So the other thing I've been looking at is this stable coin called USDC, and apparently it's like pegged to the dollar.

00:28:14.360 | So one coin is a dollar, and it doesn't move.

00:28:18.360 | But there are all sorts of exchanges out there, like Celsius is a big one, and then there are several others, where basically if you put your coin in their exchange, they pay you a return.

00:28:32.360 | And so USDC, which is considered a stable coin, is paying a return at most of these places of like 10-ish percent, 9-10 percent.

00:28:44.360 | And that is very lucrative, I think, for an intermediate parking place for money that I don't necessarily want to put in equities, risk, loss.

00:28:57.360 | So my question really is, are you familiar with these stable coins, and do you see any risk to leaving these coins in these exchanges?

00:29:09.360 | And if you're not familiar, that's fine, as I thought maybe you might be.

00:29:13.360 | Yeah. Let me give you a one, maybe a three to four sentence answer that I think will be as clear as I can.

00:29:20.360 | And let me not bloviate on this particular question.

00:29:24.360 | Yes, I am familiar with this.

00:29:28.360 | I know a lot of people making a lot of money from these various trades and swaps.

00:29:37.360 | The risks potentially are absolutely massive, and some of them are knowable, many of them are unknowable at this point in time, because the market will systematically show those risks.

00:29:55.360 | So yes, I think that you should consider getting as high of a return as you can from your money, and that since you are involved in this space, you should pursue it.

00:30:08.360 | But I do not know the extent to which these returns are sustainable, and I do not know the extent to which they are a classic Ponzi scheme.

00:30:20.360 | It's hard to know at this stage of time. You're dealing with a brand new market in its infancy, and it is a very, very, it's the wild, wild west.

00:30:31.360 | And so the classic metaphor here, the wild, wild west, is appropriate.

00:30:36.360 | There was more opportunity available for the common man in the west than virtually, than most times, and the opportunity was massive.

00:30:46.360 | But the rules were very thin, and it was very much up to the wits and intelligence and ability of each individual to make sure that he was able to successfully stake his own claim.

00:31:00.360 | And I think that you see exactly the same thing happening in the markets to which you're referring.

00:31:06.360 | And so I would encourage you to pursue them. However, I would continue to classify them as speculation, and I would not be surprised on any given day if any one of my accounts or trades went to absolute zero.

00:31:23.360 | So, is that enough for today?

00:31:26.360 | Yes, that's very helpful. Thank you.

00:31:28.360 | My pleasure.

00:31:29.360 | All right, we move on to 813 Area Code. Welcome to the show. How can I serve you today?

00:31:35.360 | Hi, Joshua. How are you?

00:31:39.360 | Very well. Go ahead.

00:31:40.360 | I just had a quick question on some crypto investments that I have made and wanted to know your thoughts on hold versus sell and anything else that you would start researching on NFTs or whatnot.

00:32:05.360 | Okay, go ahead.

00:32:07.360 | Go ahead with your question.

00:32:13.360 | Looks like he dropped off, so he'll jump back on in a moment, and we will go to James. James, welcome to the show. How can I serve you today?

00:32:22.360 | Good day, Joshua. I've got a question about how you would go about finding a good accountant.

00:32:28.360 | Short answer would be referral and as highly qualified of a referral as possible.

00:32:39.360 | So, and this is the same problem you face when finding a good attorney, finding a good financial advisor, et cetera.

00:32:46.360 | When you're looking for somebody who provides services, there is often a baseline level of qualification.

00:32:55.360 | And so you could ask yourself, does my accountant need to be a CPA? Does my accountant need to be an enrolled agent or other various, you know, whatever the appropriate version of that is for you?

00:33:08.360 | But the only way that you're going to get a good accountant is by getting a referral from somebody who has found one.

00:33:15.360 | And so you would first start by defining what exactly is a good accountant.

00:33:20.360 | You could have a very good accountant, somebody who's very good at properly filling out forms, somebody who's very good at making sure all of the numbers in the account balance.

00:33:31.360 | That could be a very good accountant.

00:33:33.360 | And there are lots of those people.

00:33:35.360 | If you're looking for an accountant who, on the other hand, can provide good tax advice,

00:33:41.360 | the number of accountants who can provide good tax advice is much smaller.

00:33:46.360 | And so you would need to figure out, how do I get referred to somebody who can actually provide that kind of high quality tax advice?

00:33:52.360 | In my experience, at least with accountants, most accountants are very functional in the realm of, you know, properly doing the job of accounting, balancing the books, filling out the forms, et cetera.

00:34:06.360 | If you're looking for an advisor, then you need to find somebody who's working in an industry.

00:34:12.360 | So let's say you're looking for someone who can help you with tax savings on your real estate.

00:34:16.360 | Well, you need to get referrals from real estate investors.

00:34:20.360 | Maybe you're in a certain industry and you're trying to figure out how to make sure you get all that you can in your industry.

00:34:27.360 | Then you want to get referrals within that industry.

00:34:29.360 | If you're looking for tax advice, you need to figure out who is going to be one of the best tax advisors that I can find and then get a referral from somebody for the tax advice.

00:34:38.360 | So the best source of referrals is, I think, number one, people who are successful and who have gone through that search.

00:34:48.360 | So let's say that you know 10 other successful businessmen.

00:34:52.360 | If you ask them and two of them or three of them are using this guy and they say, "Hey, he's really good," that's a good place to start.

00:34:58.360 | Another good place to do it is with a referral from another industry professional.

00:35:03.360 | So in any industry, all of the industry professionals love to refer business around because it's, number one, it's a good way of doing business and it's usually a lucrative source of referrals for them.

00:35:14.360 | So if you're looking for a good financial advisor, then often a good place to start would be with asking as many accountants as you can, "Do you know a good financial advisor?"

00:35:23.360 | Or as many lawyers as you can, "Do you know a good financial advisor?"

00:35:26.360 | Same way if you're looking for a good accountant, then talking to some lawyers, especially if those are lawyers who work in that business, they can often make a referral.

00:35:34.360 | So in short, I would say, number one, define what a good accountant is and then start collecting referrals and then simply test them out.

00:35:43.360 | Finally, I would say be careful about expecting too much from any particular professional.

00:35:52.360 | For example, accountants, it's very hard, in my experience, to find an aggressive accountant.

00:35:59.360 | And so generally, the way I think of it, most accountants don't like it when I say this, but remember that accountants, especially if you're dealing with taxation and tax advice and tax preparation,

00:36:10.360 | most accountants basically work for the IRS in the sense that if they were to start doing things that got too many people audited, that could potentially impact their business.

00:36:25.360 | And so they just have this general conservatism around them.

00:36:30.360 | And that means that oftentimes you might miss out on some of the best savings that you could find by searching in a more aggressive-oriented source of information.

00:36:44.360 | So a lot of times, the people who are the best are people who don't actually work with clients.

00:36:48.360 | That's why I always go to literature, right?

00:36:50.360 | If you find an accountant who writes a book and they publish things, they'll clearly lay things out, but they'll probably take a more aggressive tone than the accountant who is just preparing normal 1040 forms for normal taxpayers on a daily basis.

00:37:07.360 | And so look for the people who are publishing.

00:37:09.360 | And what you'll find is a lot of times, people who are publishing often aren't going to take many clients, but they can give you the advice that you're looking for, which you can then take to your practitioner.

00:37:18.360 | One quick point of clarification.

00:37:20.360 | In law and in accounting and in financial advice, there is always a place called the frontier, meaning there are strategies, tactics, tools that are absolutely proven that you know either they work or they don't work.

00:37:42.360 | And so in the tax planning world, we know that if you put money in your 401(k), then you can exclude the contributions that you made to your 401(k) from this year's income.

00:37:53.360 | We know that works.

00:37:55.360 | On the other hand, we know that saying that you don't owe income tax on money because it's a violation of your Fifth Amendment right to not incriminate yourself, we know that that doesn't work.

00:38:08.360 | That has absolutely been tested in court.

00:38:10.360 | That doesn't work.

00:38:11.360 | And so there's a clear, bright line list of tax strategies and techniques that work and that do not work because they're proven in court.

00:38:21.360 | But there is also a whole world of things that have simply not been tested.

00:38:27.360 | And you can look at them and you can say, "You know what? Based upon a good faith reading of this, I think that this is fine."

00:38:33.360 | An example of this would be something like the wash sale rule on cryptocurrencies.

00:38:39.360 | There was no wash sale rule on cryptocurrencies.

00:38:43.360 | And so unlike stocks where you couldn't sell a stock for a loss and then buy it back, for the last years in cryptocurrencies, you could do wash sales, or at least we think you could do wash sales on cryptocurrencies.

00:38:55.360 | Now the question is, is that legal or is it not legal?

00:38:59.360 | Well, the answer was unknown until the recent legislation, which I need to go and check and see if they included that.

00:39:05.360 | I think they did.

00:39:06.360 | But the answer is we don't know.

00:39:09.360 | You could make a good argument to say that it should be included because this is kind of a standard practice of stock investing that we don't allow wash sales.

00:39:19.360 | And so if the IRS is going to be consistent with its overall normal way of looking at things, then they're going to make sure that you can't do wash sales on cryptocurrencies.

00:39:30.360 | But the fact of the matter is it's not in the law.

00:39:32.360 | It's not addressed.

00:39:34.360 | So you can do wash sales.

00:39:36.360 | It's just it's an aggressive tactic.

00:39:38.360 | And so there's always this world where there's this frontier, kind of the aggressive frontier, the new things, things that are only somewhat known about and they're available to you for a time.

00:39:50.360 | And you might even have differing opinions on whether they're legal or not.

00:39:53.360 | But you have that all the time, right?

00:39:55.360 | Good lawyers who are ethical, honest lawyers will look at various legal issues all the time and come to different opinions.

00:40:03.360 | So this is where you will often not find that in the accounting world.

00:40:08.360 | At least I generally have struggled to find that.

00:40:12.360 | Most accountants, I'm stereotyping, but I think the stereotype is applicable here.

00:40:17.360 | Most accountants are very, very comfortable in the conservative world.

00:40:23.360 | These are the bright line things that we know we can do.

00:40:26.360 | And they're concerned about kind of ruffling anyone's feathers and being too aggressive.

00:40:31.360 | So I would say if you're looking for tax advice, then look for that from your accountant, but also in other places.

00:40:38.360 | And then find a good accountant who's good at actually just simply putting the numbers together and making sure your book's balanced.

00:40:47.360 | Do you think that it's 100% necessary to have an accountant?

00:40:50.360 | Because I've got a job and a small business on the side, and I've just been doing all my own accounting for everything and do a lot of research into what it is.

00:40:59.360 | Definitely not.

00:41:00.360 | I know you should have an accountant, but I don't want to go to one and say, "I'm trying to get into tax advice," and when I'm questioning how aggressive they are.

00:41:09.360 | Yeah. So there is always, in any financial professional who's not an attorney, you do potentially have a risk, a legal risk, if at some point in time you're involved in some kind of legal argument.

00:41:23.360 | A major source of financial leakage, of information leakage, comes from accountants, financial advisors, insurance agents, etc.

00:41:35.360 | Because if you work with an accountant and you hand that accountant all of your financial records, or you work with a financial advisor and you hand that financial advisor all of your records,

00:41:44.360 | and you say, "Here's what I have. Here's where it is," etc., and then at some point in time you're involved in some kind of legal proceeding,

00:41:51.360 | a conflict with a business partner, you're held as a judgment, someone gets a judgment against you as a creditor, you go through a divorce, etc.,

00:42:02.360 | then your legal opponent's attorney can subpoena the records of that financial person and/or the testimony of that financial person

00:42:14.360 | and compel him or her to disgorge the records that you've provided or to give testimony about what you have said to that person in court.

00:42:26.360 | And so the only person that you have a protection against that with is an attorney within the context of requesting legal information.

00:42:35.360 | This is actually why there's a specialty of attorney CPAs, attorney accountants, because they can provide that protection of attorney-client privilege to their clients,

00:42:46.360 | which allows their clients to request proper advice and then also to do it in the context of their accounting.

00:42:53.360 | Now, I don't think you need an accountant to do that. I think you're better off with an attorney.

00:42:56.360 | If you've got legal questions, go and contact an attorney and ask the attorney because then your legal questions are protected under attorney-client privilege,

00:43:05.360 | and the attorney will go and research your issue and give you a legal opinion.

00:43:09.360 | And that's a very, very comforting feeling to know I'm not just shooting from the hip here.

00:43:18.360 | This is the legal opinion. Here's the code or here's the prior case law, and here's how I think it applies.

00:43:25.360 | This is why I'm doing this particular thing.

00:43:28.360 | But to answer your question, no, I don't think that you need an accountant.

00:43:31.360 | I think that, number one, most people who are motivated students will do far better in terms of finding the things that they can apply to their own tax situation

00:43:44.360 | than they will go and find an accountant.

00:43:47.360 | And that's why I gave such an extended answer.

00:43:49.360 | If you're interested in lowering your taxes, the best way to do that is for you to study your own taxes, your own tax system, your own tax return,

00:43:57.360 | and then to figure out what can I apply to my situation.

00:44:00.360 | And that's going to come not with an accountant. That's going to come with you studying it.

00:44:06.360 | Accountants understand what they do on a day-to-day basis, and what they do on a day-to-day basis is going to be based upon the structure of their practice.

00:44:16.360 | And so if you've got someone who constantly does gift leasebacks, then they're going to know all about gift leasebacks.

00:44:23.360 | But if you go to just an average newly minted CPA and you say, "Hey, I've been studying my medical practice and trying to figure out if a gift leaseback would be a good deal for me,"

00:44:33.360 | most of the time that's not something they deal with on a daily basis.

00:44:37.360 | But if you're a physician and all of a sudden you come across a gift leaseback technique and you say, "Wait a second.

00:44:42.360 | This could be great for me with all of my medical equipment," then it's going to resonate with you more, and you're going to have more interest in it.

00:44:49.360 | And then in most accounting situations, the actual needs are simple.

00:44:54.360 | So if you have a job, you don't have any tax savings, things that you can do, basically, other than retirement accounts, college accounts, and a few basic medical credits.

00:45:04.360 | If you have a small business, most of your savings are going to come from your properly documenting the expenses that are associated with your business

00:45:14.360 | and then knowing how to align your personal activities in a way that allows you to get maximum benefit from your business while following the law.

00:45:24.360 | And so those are things that you want to study yourself.

00:45:27.360 | When it comes to actual preparation, if your books are in order, meaning if you've got a good QuickBooks account or if you've got a good spreadsheet, etc.,

00:45:36.360 | then the actual tax preparation is pretty simple.

00:45:38.360 | And for most people, an hour or two with TurboTax or TaxCut or whatever other tax program you want is going to be fine and get you some of the best results.

00:45:48.360 | So I don't see how for most people in a situation like you're describing, I don't personally see a huge amount of value for those people from an accountant.

00:45:58.360 | Now, you're a motivated, interested student.

00:46:01.360 | For someone who's not, then, yeah, definitely an accountant would be good.

00:46:03.360 | But no, I don't think that everyone needs an accountant.

00:46:07.360 | Thank you.

00:46:08.360 | My pleasure.

00:46:09.360 | I said the same thing about financial advisors, right?

00:46:11.360 | I believe that financial advisors can provide certain very important services, but I don't think everyone needs a financial advisor.

00:46:19.360 | It's just a matter of identifying what you're actually looking for from an advisor.

00:46:24.360 | Andrew in Montana, welcome to the show.

00:46:26.360 | How can I serve you today?

00:46:27.360 | Hey, good morning, Josh.

00:46:31.360 | Can you hear me?

00:46:32.360 | I can hear you well.

00:46:33.360 | Go ahead, please.

00:46:34.360 | Hey, first off, thank you for everything.

00:46:36.360 | I've been listening to you for a few years now.

00:46:38.360 | I'm curious to hear your opinion or the pros and cons of contributing to a retirement account versus taxable.

00:46:47.360 | And I guess I'll tell you a little bit specific about my situation.

00:46:52.360 | And I'm talking about contributing above the employer match.

00:46:55.360 | I think I've decided I want to contribute up to that match.

00:46:59.360 | Right now I have some rental real estate that cash flows pretty much all my living expenses.

00:47:05.360 | So my housing, my car, groceries, utilities, and then I pay for probably about like $1,200 a month of my call it fund money with my day job.

00:47:17.360 | And right now I've been maxing my Roth, my 401(k), and then I'm able to buy about $30,000 worth of index funds a year.

00:47:26.360 | And I'm looking to live off real estate in the next two to five years probably.

00:47:33.360 | However, I'm 31 years old.

00:47:35.360 | I have a girlfriend.

00:47:36.360 | I would like to get married, have kids.

00:47:38.360 | So realistically, my cost of living will increase.

00:47:41.360 | I'm aware of that.

00:47:43.360 | And so I'm trying to figure out, like, what's a good portfolio to when I can pull the plug using real estate and how to balance that, putting it into the Roth or 401(k) or taxable.

00:47:56.360 | If you're familiar with the Roth conversion ladder from the Mad Scientist, I assume you are.

00:48:01.360 | I've looked at that and intend on using that but not dead set on it, I guess.

00:48:06.360 | So let me give you a couple of frameworks that will help you answer this question for yourself.

00:48:11.360 | Framework number one is when it comes to investments, you should always invest at the highest net return.

00:48:20.360 | Do you agree?

00:48:22.360 | Yeah.

00:48:23.360 | Okay.

00:48:24.360 | So if you didn't put the money into the – so let me rephrase it differently.

00:48:29.360 | Where will you get the most return from your excess money, your excess savings, by investing it through your 401(k) or investing it somewhere else?

00:48:38.360 | Where will you get the highest return?

00:48:41.360 | That's where it's tough for me because the real estate I bought was in '18, '19.

00:48:45.360 | I bought some rentals under market value then and they've over doubled in what I could tell them for today.

00:48:55.360 | I've made monster gains in real estate.

00:48:59.360 | I've also made great gains in the S&P 500 over the last few years, just as everyone has, I guess, whoever's invested in that.

00:49:08.360 | So I think if I could repeat the real estate, I'd do that all day long, but the gains seemingly now aren't there.

00:49:17.360 | However, right now I live in a duplex and half of it I'm going to move out of that long term and buy more of just a long term home for myself.

00:49:26.360 | So whether I buy that at market rate or if the market crashes, I'm going to buy something regardless.

00:49:32.360 | I can make good gains, even if they're just lifestyle gains, they're not financial gains, with a good long term property that will make me happy.

00:49:43.360 | Right now, that's where I feel like the S&P 500 index funds might be enough for me.

00:49:49.360 | You will have to weigh for yourself the actual answer to that.

00:49:55.360 | I wanted to point this out to you, though, as a framework, that if you can make more money by investing your money into the assets inside your 401k, then you should do that.

00:50:09.360 | If you can make more money by investing into assets that aren't in your 401k, you should do that.

00:50:14.360 | And I want to emphasize this because this is the answer to your question.

00:50:18.360 | And I'll give you a couple of scenarios.

00:50:22.360 | Would Steve Jobs have made more money if instead of investing everything he had into Apple computer, if he had simply taken a job somewhere and put money in his 401k, which of those would have made him richer in the long run?

00:50:41.360 | Yeah, investing in his own company, hands down.

00:50:44.360 | Right. Now, let's say that you have one of the engineers at Apple.

00:50:50.360 | Somebody who is an engineer who likes his job.

00:50:54.360 | He goes to work every day.

00:50:56.360 | He's very content to work in kind of a middle engineering job.

00:50:59.360 | Would that guy make more money investing in his 401k or would he make more money investing elsewhere?

00:51:08.360 | If he's, yeah, probably 401k, assuming he's not doing any entrepreneurship on the side.

00:51:14.360 | Right. And we don't know, but I'm trying to, by picking engineers, sorry, engineers, I'm trying to pick on.

00:51:18.360 | I'm saying like this is someone who's a good fit for this.

00:51:20.360 | So 401k can be wonderful tools for people to accumulate money.

00:51:26.360 | They have access to great investments, right?

00:51:28.360 | The ability to buy an index fund of thousands of companies to do it at pennies of cost.

00:51:34.360 | These companies are widely diversified across industries, across the globe.

00:51:38.360 | Very carefully regulated professional management of those industries.

00:51:43.360 | There's very, very little risk.

00:51:44.360 | This is a wonderful, wonderful solution, especially for somebody who is just not interested in other options.

00:51:53.360 | But it's a terrible solution for somebody who is interested in other options.

00:51:58.360 | And I don't know which you are, but that's the question you're going to face.

00:52:01.360 | Is am I the kind of person for whom a 401k is a really great fit?

00:52:05.360 | Or am I the kind of person for whom a 401k is not a great fit?

00:52:08.360 | And here, of course, I mean the kinds of assets that you can invest in a 401k.

00:52:14.360 | People who generally become really wealthy usually find something and then go all in on it.

00:52:20.360 | Now you can, in time, become very wealthy by investing in a 401k if you have a high income.

00:52:26.360 | And you invest a lot of money for a long period of time.

00:52:29.360 | But the question is where is my highest return going to be?

00:52:32.360 | You may have squeezed all of the return out of your real estate activities that you want right now.

00:52:37.360 | You might be in a position at this point in time where you're ready to go ahead and go towards a more conventional lifestyle.

00:52:44.360 | Then the 401k could be a great fit.

00:52:46.360 | It's a good option for you in that conventional lifestyle.

00:52:50.360 | On the other hand, you might say, "Listen, I'm 31 years old. I've had a good run of it.

00:52:55.360 | But why shouldn't I be the next Ted Turner of real estate?"

00:52:59.360 | Meaning he's the guy who owns all the ranches, right?

00:53:01.360 | "Why shouldn't I go ahead and develop commercial properties?

00:53:04.360 | Why shouldn't I build a $100 million real estate portfolio?

00:53:07.360 | Why shouldn't I? Why not?"

00:53:09.360 | Yeah, and that sounds way more appealing to me.

00:53:14.360 | Like I'm an engineer, but I don't want to do this forever.

00:53:18.360 | Right. So if you're going to do it, and that $30,000 that would otherwise go in your 401k

00:53:25.360 | could be the seed money that you use to build a $100 million real estate portfolio,

00:53:30.360 | then in that situation, investing in the 401k would be the wrong move.

00:53:35.360 | So that's the first lens. Remember that framework.

00:53:38.360 | Where am I going to make more money? And be honest with yourself.

00:53:41.360 | It is totally okay to say, "I've got a job. I'm happy with it.

00:53:45.360 | I want to spend my afternoons and my weekends with people that I enjoy.

00:53:50.360 | I don't want to be out dealing with real estate and knocking on doors.

00:53:53.360 | I want to be drinking craft brews with my buddies."

00:53:56.360 | That's totally fine. I make enough money. I'm going to put money in my 401k.

00:53:59.360 | I'm going to live a great--that's totally fine, but make that choice intentionally.

00:54:03.360 | First framework is where are you going to make more money.

00:54:05.360 | Second framework, okay, does the 401k offer me benefits that something else doesn't?

00:54:13.360 | And I'll point out a couple that are useful.

00:54:15.360 | Number one, the biggest benefit of a 401k as far as I'm concerned is not tax savings.

00:54:20.360 | It's asset protection. That a 401k in the United States is as close as you get to the world's best,

00:54:32.360 | basically, asset protection plan because it is, at least under current law,

00:54:37.360 | it is a totally exempt asset from the claims of creditors, from bankruptcy, et cetera.

00:54:45.360 | And that's because it is a qualified account.

00:54:47.360 | And under federal law, a qualified account is an account that is protected

00:54:53.360 | and is protected from all creditors except super creditors like the IRS and of divorce proceedings.

00:54:59.360 | So IRS and divorcing spouses, they can get into your 401k.

00:55:03.360 | They're super creditors, but everyone else can't.

00:55:06.360 | And so a lot of times people are looking around and say, "Oh, asset protection. What can I do?

00:55:10.360 | Maybe I need to go and set up some kind of fancy offshore trust."

00:55:14.360 | No, in most cases, absolutely not.

00:55:16.360 | What you want to do is maximize your 401k because your 401k is protected.

00:55:21.360 | And because you can access such good assets in there and because you can actually get quite a lot of money in there,

00:55:28.360 | for most people, it would be foolish to walk away from those 401k contributions.

00:55:33.360 | And remember that every year you don't contribute to the 401k, that's a year you don't ever get back.

00:55:39.360 | So you do the math, right? But if you max a 401k out every single year, starting at 30 years old or 25 years old or 35 years old,

00:55:48.360 | over time you can accumulate, even with normal returns, you can accumulate millions and millions of dollars

00:55:56.360 | that is completely protected from the claims of creditors.

00:55:59.360 | And that is really, really valuable, especially in a space like something like real estate,

00:56:04.360 | where asset protection is something that people think about, they talk about, they wonder,

00:56:07.360 | "Is there a good plan for me?" 401k is one of your best plans.

00:56:10.360 | And so a real estate investor who systematically borrows out equity from his real estate portfolio

00:56:16.360 | that's difficult to protect from the claims of creditors and systematically makes sure to maximize those 401k contributions,

00:56:22.360 | to me, that's a good plan.

00:56:24.360 | And so if I were looking at your portfolio and working with you, the first thing I would say is,

00:56:28.360 | "Hey, listen, can we get some of this equity out of the real estate portfolio? You've got big gains here.

00:56:32.360 | Let's get some of this money tucked inside the 401k."

00:56:35.360 | Remember, you can always take money out of the 401k if you need it, but you can't always put it in.

00:56:39.360 | And so there's a big, big weight on the side of making those contributions regularly.

00:56:45.360 | Now, then we get to the question of taxes.

00:56:47.360 | Taxes are useful, and they're useful especially in a case like yours where you are young,

00:56:54.360 | meaning, "Hey, this money could grow pretty well, and I can enjoy this tax-free money for a long time."

00:57:00.360 | In your case, in real estate, real estate is so tax-efficient that it's not, you know, you could probably,

00:57:07.360 | you can run a real estate portfolio in a very tax-efficient way, so that's not a big, big benefit.

00:57:11.360 | What is a benefit is the ability to reduce your earned income.

00:57:15.360 | And for someone who has earned income, there are very, very few opportunities to save the taxes on that earned income.

00:57:23.360 | And so any time you have earned income, the ability to make those contributions into a 401k,

00:57:28.360 | especially big contributions, is potentially a big savings.

00:57:32.360 | And given the fact that you can always take the money out of the 401k in the future, you're pretty well off.

00:57:40.360 | And one of the points I make, and this actually surprised me, years ago there was an episode in the Annals of Radical Personal Finance

00:57:46.360 | where I kind of, I was shocked by the math, but somebody asked me, said, "Okay, Joshua, I'm working for early retirement."

00:57:53.360 | It was a listener who sent me an email, and it said, "I'm working for, towards early retirement.

00:57:59.360 | Is it better for, I think it's better for me, even if I'm going to, if I'm going to retire early and have zero income,

00:58:06.360 | I think it's better for me to make contributions to my 401k and then take it out, even if I pay a 10% penalty at the time I take it out."

00:58:18.360 | And I thought, rather than for me to invest into a taxable account for early retirement.

00:58:23.360 | And I thought, "No, it can't be."

00:58:25.360 | And I sat down and I did the math, and I thought it did.

00:58:27.360 | And so I actually sent it, I emailed it over to Mad Scientist, and I sent it to Mad Scientist, and I said, "Check this out."

00:58:33.360 | I said, "This is something I had never thought of."

00:58:36.360 | And he did the math and he came up, he wound up agreeing with me.

00:58:40.360 | And we talked about it quite a bit.

00:58:43.360 | And then I created the episode.

00:58:44.360 | I think he may have been on that episode or I don't remember, but anyway.

00:58:47.360 | Yeah, I think I remember hearing that.

00:58:49.360 | Yeah.

00:58:50.360 | And so the point is that even if you're working toward early retirement, or if you think that there's a point in time at which your income could go to zero,

00:58:57.360 | or just be covered by your passive income from your real estate portfolio, there's a good chance you're better off actually making 401k contributions,

00:59:06.360 | even if you wind up taking the money out five years from now, 10 years from now, and paying a 10% penalty, especially if you're employed right now.

00:59:13.360 | So in conclusion, through those frameworks, the 401k offers some compelling benefits.

00:59:20.360 | The asset protection, the tax reduction right now when you're working, and the fact that with every year that passes, you lose the ability to make that contribution.

00:59:29.360 | I'm pretty heavily in favor of maxing out those contributions, unless it's going to mean that you can't actually do the thing that you want to do.

00:59:37.360 | And so in your situation, I would bet you can do both.

00:59:40.360 | I would bet you can max your 401k contributions out, and also still do that thing that's going to make you far more money.

00:59:48.360 | But having the money in your 401k as kind of your safer dollars is, to me, a very comforting thing.

00:59:54.360 | Thank you.

00:59:55.360 | Yeah, I think kind of just to summarize, I guess my perspective is if that big property does come along, if the real estate market crashes 25%, and I can now with my experience and comfort with real estate,

01:00:12.360 | if I can buy a bigger thing that has really high potential, I'll just pull up, I probably have 500, 600 in equity in my property.

01:00:20.360 | So I could pretty easily, I think, pull 100 or 200 or 300 out.

01:00:26.360 | Even if the market crashes, I think I could pull that out by a million dollar deal that I could potentially make half 500 on or something like that.

01:00:36.360 | Right. Yeah. Go for it. Go for it.

01:00:39.360 | Cool. Thank you very much.

01:00:40.360 | 401k is not an undoable transaction.

01:00:43.360 | You can always take money out.

01:00:45.360 | Now, in the financial planning space, most of the time, most financial planners are used to beating on people who are just going to take the money out and spend it.

01:00:51.360 | And that's true.

01:00:52.360 | You should be careful about taking the money out and spending it because most of the time, your older, later self would be glad if you still had the money.

01:00:59.360 | But if you're talking about an investment, let's say you're sitting there and you got 300 grand in your 401k, and you're asking yourself, "Should I take the money out and start a business?

01:01:09.360 | Where am I going to get the money from?"

01:01:10.360 | Take the 300 grand out of the 401k, pay the tax, and then go start the business.

01:01:15.360 | And if the business is a winner, you're going to be far ahead.

01:01:17.360 | So if you found the deal of the century and you got 300 grand in your 401k, well, just cash the money out if you can't do a 401k loan.

01:01:24.360 | Cash the money out and go for it.

01:01:26.360 | I remember one year old episode where you're talking to somebody who had a very high net worth, I assume, and they had a business.

01:01:34.360 | You're like, "Hey, do you have a 401k?"

01:01:36.360 | And they're like, "No, obviously not. I trained that to get started or whatever."

01:01:41.360 | Exactly. Exactly.

01:01:42.360 | It's your money. Don't let tax laws or other laws cause you to not be able to use your money the way you want to do it.

01:01:51.360 | It's your money. You can do it.

01:01:52.360 | Just recognize that there are tradeoffs and count the costs, and then you'll figure it out.

01:01:57.360 | All right. We go to Brian.

01:01:59.360 | Brian, welcome to the show. How can I serve you today?

01:02:03.360 | Hi, Josh. It's good to talk with you.

01:02:05.360 | I just joined the Patreon. This is the first Q&A I've been a participant in, but thank you for the opportunity to talk to you.

01:02:12.360 | Welcome.

01:02:13.360 | I had what I hope is a fairly simple question.

01:02:17.360 | We are trying to save up some funds to get a second house out in the country a little bit for when I retire from the military in a couple of years.

01:02:25.360 | Some of the same reasons you discussed in your vacation house episode.

01:02:30.360 | But I'm trying to find the best place to actually keep those savings.

01:02:34.360 | I mean, we're putting away a good amount of cash each month, about $1,000 to $2,000 a month.

01:02:39.360 | And I'd like to put it somewhere that's safe and accessible, but still outpacing inflation.

01:02:44.360 | And I'm keeping it somewhere now, but I wanted to hear your recommendations and thoughts on that.

01:02:49.360 | I don't have a good solution for you.

01:02:51.360 | I wish I did. This is the classic scenario.

01:02:56.360 | But remember, the Federal Reserve has waged a war on savers.

01:03:04.360 | And that war has been going on for, what, at this point, what, a decade?

01:03:09.360 | I mean, there's been a war on savers.

01:03:12.360 | And so there's not a great option.

01:03:15.360 | Let's go through some of the options, and you can see kind of some of the tradeoffs and then figure out what's best for you.

01:03:22.360 | So to begin with, a bank account.

01:03:24.360 | You can just open a savings account.

01:03:27.360 | Have you looked at what your bank would pay you on a savings account right now?

01:03:31.360 | Oh, it is so far below 1% it's not even worth it.

01:03:35.360 | I did look at some of the high-yield savings accounts, and that's really not enough anyway,

01:03:39.360 | because they're like 1.6% or something, still ridiculously way too low.

01:03:43.360 | Right. So when you put money in a savings account, high-yield savings account, you get 1.0.

01:03:50.360 | It's just kind of laughable.

01:03:52.360 | And we're in that phase in which you're looking around saying inflation could be a concern, right?

01:04:01.360 | The Federal Reserve is trying to raise rates where inflation could be a concern.

01:04:04.360 | I'm concerned about inflation, but I'm getting 1.something.

01:04:07.360 | Now, do know that as rates go up, those rates that you earn on your savings will increase

01:04:12.360 | because your banks are looking around and saying, "Where can we put the money and get a guaranteed rate from treasuries or from activities?"

01:04:21.360 | "What's the risk-free rate that we get?"

01:04:23.360 | And then they calculate their rate based upon that.

01:04:26.360 | So your bank rates are going to go based upon the risk-free rate.

01:04:29.360 | They're going to all adjust accordingly.

01:04:32.360 | And so there's no solution there in savings.

01:04:35.360 | Now, savings is great, and I would say that don't overestimate the impact of inflation.

01:04:40.360 | A lot of times people dramatically overestimate the impact of how much they're going to be hurt by inflation in the short term.

01:04:49.360 | And so I think it's fine for you to keep the money in savings.

01:04:52.360 | So you go to a money market fund.

01:04:54.360 | Well, you can tell what the money market fund is paying.

01:04:55.360 | It's kind of the same problem.

01:04:56.360 | You could go to a CD ladder.

01:04:58.360 | Well, a CD ladder would work for you, and you could see what the rates are on those.

01:05:03.360 | Where else could you go?

01:05:04.360 | Well, with a significant amount of money, you could go to open an account with Treasury Direct, right, to buy T-bills.

01:05:11.360 | That would work, but then again, you look at the rates.

01:05:14.360 | And so you go through this whole list, and you don't really find much that's exciting in the mainstream world of finance in the United States.

01:05:23.360 | So this is what sends people to whole life insurance because a lot of times whole life insurance will get people a bit more of a gain because the way the insurance companies can mix into their bond portfolios,

01:05:39.360 | mix in their overall -- some of their equity positions, some of their real estate positions, et cetera, and offer a great deal of stability.

01:05:47.360 | But that doesn't work for any kind of short-term thing.

01:05:50.360 | And so if you're saving for three years from now, you'd be a fool to put that into life insurance.

01:05:54.360 | That does work for kind of very long-term growth of savings, but it doesn't work for any short-term thing.

01:06:00.360 | You could look at a bond portfolio, right, but there again, what's the risk?

01:06:06.360 | If rates go up, what happens to bond prices?

01:06:09.360 | Exactly.

01:06:10.360 | They go down.

01:06:11.360 | They drop.

01:06:12.360 | Right?

01:06:13.360 | So rates go up, bond prices go down.

01:06:15.360 | And so is it catastrophically down?

01:06:17.360 | No, not catastrophically down, but it goes down.

01:06:20.360 | So then you get into the world which is more esoteric, which is can I find something that I can do with the money?

01:06:25.360 | And there's no mainstream -- there are lots of options that people can make more money, but there's nothing mainstream.

01:06:30.360 | You've got to work for it.

01:06:32.360 | Maybe you go ahead and put your money to work as a lender.

01:06:35.360 | Hard money lenders are making double digits with high degrees of safety, but you've got to build the skills in that basis.

01:06:42.360 | Maybe you could go abroad.

01:06:43.360 | There are some places that are paying higher rates in banks around the world, but then again, you do face risk that's currency risk, et cetera.

01:06:52.360 | So I don't have a good answer for you other than to say that if you really care about it, that you could go and become an expert in one of those areas that does have a potential for more return.

01:07:03.360 | You could do yield farming on crypto trades and the DeFi markets.

01:07:07.360 | There's stuff out there, but none of it is risk-free.

01:07:10.360 | And so what I would say is if you've got a pretty short timeline and you're just aggressively saving, I wouldn't worry too much about it.

01:07:19.360 | I would put it into the highest yield savings account that I could find and then recognize that those rates will adjust fairly quickly over the next year or two.

01:07:29.360 | And this is the price that you pay for living in a world denominated by dollars, which the Federal Reserve can artificially suppress and inflate at will.

01:07:37.360 | And so I don't have a great answer, but if I were saving for a goal like that and this is something in the next few years, I would just put the money in a bank account.

01:07:47.360 | And I think the other benefit of a bank account, savings account, et cetera, is if you're assuming you're going to apply for financing, then the money needs to be seasoned as well.

01:07:54.360 | And so you always need to be cautious about that to make sure that your money is properly seasoned when you go to apply for financing and make sure that you don't just,

01:08:02.360 | "Oh, I'm going to cash out this crypto trade over here in order to fund it a day before I apply for a mortgage."

01:08:09.360 | That's not going to work. You need some more time for it there.

01:08:11.360 | So I would go with a bank account and I would look and see, am I willing to take some risk with the portfolio along the way?

01:08:18.360 | And if not, you're not dumb for it.

01:08:20.360 | We live in a -- on the flips, when you have a point in which rates are high and inflation is low, you feel like you're kind of in a great world.

01:08:30.360 | This is when I started selling life insurance, I was in this world.

01:08:33.360 | It was 2008, rates were high and my insurance policies were paying a lot of money, much higher than inflation was.

01:08:40.360 | And it felt great.

01:08:41.360 | And then every single year that I sold life insurance, the dividend rate went down, down, down, down.

01:08:46.360 | It still was okay, but it went down, down, down.

01:08:48.360 | And I would always caution my clients.

01:08:50.360 | I was like, "Listen, there's going to be an inflection point at which this policy is going to suck, right?

01:08:55.360 | Because the dividend rate is going to be down because of the fixed income markets,

01:08:59.360 | but then all of a sudden, returns are going to start to be up because inflation is going to be up.

01:09:03.360 | So the policy will lag, but on the bottom end of this lag, it's not going to be fun.

01:09:07.360 | There's going to be a couple of years where you're going to be angry."

01:09:09.360 | It's like, "Why is your policy performing so bad?"

01:09:12.360 | I'm like, "Well, it's performing bad because there's this lag effect."

01:09:16.360 | And so that's where we are.

01:09:18.360 | We're potentially in that point in the curve where there's a lag effect

01:09:21.360 | and it's annoying to have money in "safe things" because of this lag effect

01:09:27.360 | that we're probably going to be experiencing for the next couple of years.

01:09:31.360 | It makes sense.

01:09:33.360 | Just to clarify, I don't mean safe as in no risk.

01:09:36.360 | I just meant as in nothing outrageously risky in terms of –

01:09:40.360 | not that crypto is definitely outrageously risky.

01:09:42.360 | I just don't have the expertise in it to know what I'm doing,

01:09:45.360 | and I know I don't have the time to build that expertise.

01:09:48.360 | Though right now I'm dropping most of it in a brokerage account,

01:09:50.360 | but I had completely forgotten about the seasoning that you mentioned.

01:09:54.360 | I've got about three or five years, but that's something to keep in mind for sure.

01:09:57.360 | So thank you very much.

01:09:59.360 | With three to five years, I think there are a number of trades.

01:10:02.360 | Five years, equities can work.

01:10:05.360 | Three years, I think some fixed income in your brokerage account could definitely work

01:10:09.360 | and possibly give you a better return.

01:10:12.360 | All right, two callers remaining.

01:10:13.360 | Eric, welcome to the show. How can I serve you today?

01:10:19.360 | Years ahead of where he wants to be.

01:10:21.360 | I called in about a year ago and asked the same question.

01:10:23.360 | Hey, I've got a huge pot of money.

01:10:26.360 | I eventually want to buy a house.

01:10:27.360 | Is there anywhere that I can get anything better than just a savings return on it?

01:10:31.360 | And basically I just came up with put a handful of it in crypto

01:10:35.360 | and then keep what I want for the down payment as seasoned in just a standard savings account.

01:10:42.360 | And now I'm at the point where we are closing on our house on Monday,

01:10:46.360 | and that's going to be our primary house,

01:10:48.360 | and we're going to try and use our second house or our original house as a rental or an Airbnb.

01:10:55.360 | And originally we were going to go the rental route,

01:10:57.360 | and then I was talking to our mutual friend, Mr. Harris, and he's like, "Dude, you need to do an Airbnb."

01:11:02.360 | And so we basically have two property managers coming out, one to give us or I should say two for each.

01:11:08.360 | One that's a property manager for Airbnbs.

01:11:13.360 | We're going to get two quotes on that that would just manage that for us.

01:11:16.360 | And then two for if it was just going to be a standard rental

01:11:20.360 | and basically just going to weigh those options about the cost of it.

01:11:23.360 | But barring the cost, say all things being equal,

01:11:26.360 | that we're going to get the same amount of money from an Airbnb versus a long-term rental on average.

01:11:31.360 | Do you have anything that you might suggest as doing one or the other with a second home?

01:11:37.360 | I'll come to that in a second. I just brought Brian back on.

01:11:40.360 | Brian, I think you heard that. There was a little bit of a hiccup at the beginning.

01:11:43.360 | But what Eric said is that when he was facing it, just put a portion in something aggressive,

01:11:48.360 | kind of a barbell strategy, right?

01:11:50.360 | Portion in something aggressive and then most of it just in traditional savings.

01:11:53.360 | You might consider that as well, right?

01:11:55.360 | Take 80% of your money, put it in a savings account.

01:11:57.360 | Put 20% of your money in some, put it in Bitcoin, right?

01:12:01.360 | And then see what happens.

01:12:04.360 | And then if your aggressive play works out, you wind up with a good return.

01:12:10.360 | If your aggressive play doesn't work out, you still got your 80%.

01:12:13.360 | So that might be a good strategy as well, kind of a classic barbell strategy.

01:12:18.360 | That's true. Right now I'm dropping in a Vanguard Total Market ETF just because of low fees.

01:12:24.360 | It's pretty simple. But no, that's a good idea.

01:12:27.360 | I should try to learn some more on that. Thank you.

01:12:29.360 | That was what Eric did a few years ago. All right.

01:12:32.360 | Brian's gone. All right. So Eric, your question is Airbnb versus just more traditional rental for a second home.

01:12:37.360 | Is that what your question was?

01:12:39.360 | That's exactly it.

01:12:41.360 | So I think it would come down to the only reason you would do the hassle on any property of something like Airbnb

01:12:47.360 | would be if there were enough money in it to make it worth it.

01:12:51.360 | Because, man, is it a hassle to have to deal with people all the time, communications, respond quickly,

01:12:57.360 | no shows, meet people, cleaning constantly, etc.

01:13:01.360 | And so the numbers need to be quite a bit better.

01:13:03.360 | Now, in many markets, they are quite a bit better.

01:13:06.360 | But I would say that you don't think that there's a compelling advantage to the Airbnb potential that's just automatically putting you there?

01:13:17.360 | So we would get a property manager or Airbnb manager for either.

01:13:20.360 | So essentially, the work would ideally be as close to nothing as possible because we'd pay somebody to manage it.

01:13:27.360 | And so those costs included into the final bottom line is what we were comparing.

01:13:33.360 | The only thing that I really had as far as reasons why I'm leaning towards Airbnb is that this way I can block it out.

01:13:41.360 | If we have friends, family, co-workers in town, that they can use our second house,

01:13:46.360 | kind of going what you were saying about the vacation rental of something that you can offer up to somebody.

01:13:52.360 | And then the other benefit, too, is I have a bunch of other stuff mounted.

01:13:57.360 | I'm a ham radio operator and helium, crypto miner, all that stuff.

01:14:00.360 | And I have a bunch of stuff mounted on my roof that I'd like not to move as far as a traditional renter.

01:14:05.360 | So that is one of my goals. But again, if there's a thousand dollar difference per month, I'm definitely going to be swayed to removing all that stuff off the roof and moving it to the new house.

01:14:17.360 | That all being said, I just didn't know if there was any compelling thing like, oh, my gosh, watch out for Airbnbs for X, Y and Z.

01:14:25.360 | Basically, just anything that I hadn't thought of, less on the money side, because that's just all in an Excel spreadsheet.

01:14:31.360 | And ideally, again, both of them are going to have the same time suck with the manager.

01:14:36.360 | I just didn't know if he had thought of any other benefits other than the fact that Airbnb is more flexible.

01:14:40.360 | I think you mentioned what I was going to say would be the biggest thing is that if this is genuinely a vacation home and you want to have the ability to use it yourself,

01:14:49.360 | then doing a short term rental on whatever platform, doing short term rentals will give you the ability to block out the time you want.

01:14:59.360 | Yeah, and it's not really a vacation home. It's just we live very close to Yosemite.

01:15:04.360 | And so it would be, you know, so I mean, very closely within an hour.

01:15:07.360 | And so typically, if you were to fly in to go to Yosemite, you'd have to drive through where we live.

01:15:12.360 | And so it would be a good spot for tourists kind of that regard. But it wouldn't be like a vacation home for us.

01:15:18.360 | We're moving less than a mile away, so it's not going to be super advantageous in that respect.

01:15:22.360 | Well, I mean, you would consider it through that lens and say, is this a big deal one way or the other?

01:15:28.360 | I do think that having the short term rentals can give you the ability to have a vacation home and offset the cost of it.

01:15:37.360 | I got a family member who, you know, we go every year in the Keys, has a nice house in the Keys.

01:15:43.360 | The house is rented out on short term rentals.

01:15:46.360 | And then it's blocked off for the three or four months in the summer that this family member wants access to it.

01:15:52.360 | And it's great because the tenants the rest of the year pay the costs for this family member to have access to it for those three or four months.

01:16:01.360 | And to be able to use it as a proper vacation home.

01:16:05.360 | And so it's set up in a way that it works well. And it's not a money making deal.

01:16:10.360 | It's a lifestyle deal that doesn't cost any money due to the fact of the short term rentals.

01:16:14.360 | Now, he doesn't prioritize, you know, day to day rentals.

01:16:19.360 | He does month or multi month long rentals, but that market works well for it.

01:16:24.360 | And so if you if there's a house that you want to use yourself and you're looking to defray the costs, but have your ability to be in there at Christmas, etc.

01:16:33.360 | Then I think that is a good move.

01:16:36.360 | You would have to ask yourself, how much is it worth for people to actually be able to block off a weekend?

01:16:42.360 | I think that's less compelling than what I described of having your own vacation home that you like to go to.

01:16:47.360 | I think that's much less compelling from a from a risk perspective.

01:16:52.360 | That's kind of an interesting question to ask. What's riskier and what's not riskier?

01:16:57.360 | I've thought a lot about this. I don't have an answer. I just air it as a thing of thing worth considering.

01:17:02.360 | Is it riskier to rent a house out on a short term rental site or to rent it out to one renter with a short term rental site?

01:17:14.360 | You have a lot a much wider client pool, right?

01:17:17.360 | There can be somebody where you have one renter and your renter doesn't pay.

01:17:21.360 | Well, then all of your income goes away. Whereas on a short term rental site, if one renter doesn't show up or something, you don't have as much concentrated risk into one person.

01:17:30.360 | But you do have more significant systemic risk.

01:17:33.360 | Airbnb had a major, major crisis last year at the beginning of the pandemic when they allowed people, they changed the cancellation policy.

01:17:43.360 | And they allowed people to cancel their policy, their reservations and to get their money back.

01:17:49.360 | And basically Airbnb just shafted all of their hosts because people, you know, travel was drying up, everything was closing down.

01:18:01.360 | And all the hosts had planned on all these people showing up and all of a sudden their properties were totally empty.

01:18:07.360 | And it was a major crisis last year.

01:18:10.360 | And so there is systemic risk with Airbnb that's not there with the day to day tenant.

01:18:15.360 | So that would be the only other thing I would say.

01:18:18.360 | If it were me, I would probably just go with a traditional tenant and what you're describing, assuming that the rates are good and there's not a big compelling thing.

01:18:26.360 | Because it's just simpler around if you needed to replace a manager, it's probably easier to get another normal manager than the other.

01:18:36.360 | I guess I would just go with the simpler.

01:18:37.360 | If there's not a compelling case, the Airbnb proposition and I'm not actually going to be using the house, I'd take my stuff off the roof and just rent it out to a normal tenant myself just to have a similar lifestyle.

01:18:48.360 | Yep, that's that's kind of what I was thinking to just, yeah, bite the bullet, take all the stuff off the roof and close it all up.

01:18:55.360 | But yeah, it was just funny because that's where I initially was.

01:18:58.360 | And then I'm talking to Mr. Harris.

01:19:00.360 | He was just like, dude, you got to do Airbnb.

01:19:01.360 | Think of all the flexibility, all the stuff I'll give you.

01:19:03.360 | And then he kind of lured me in with that.

01:19:05.360 | So I just weigh in both the options and just wanted to know if you had any other insight.

01:19:08.360 | But I appreciate the feedback.

01:19:10.360 | Yeah, my pleasure.

01:19:11.360 | And I don't disagree.

01:19:12.360 | It's just you got to make the numbers need to make sense.

01:19:14.360 | And so what you're describing, it just doesn't sound like the numbers are compelling enough for it to make sense.

01:19:20.360 | All right.

01:19:21.360 | We go back.

01:19:22.360 | I think it was James.

01:19:23.360 | James, I think it was.

01:19:25.360 | Welcome to the show.

01:19:26.360 | You're back.

01:19:29.360 | Eight one three area code.

01:19:30.360 | You got disconnected earlier, right?

01:19:31.360 | When we were starting our call.

01:19:32.360 | Go ahead.

01:19:34.360 | Hey, Joshua, how are you?

01:19:36.360 | I'm very well.

01:19:37.360 | How are you, sir?

01:19:38.360 | Okay, it's working now.

01:19:40.360 | That's a good thing.

01:19:42.360 | I had a couple of questions.

01:19:44.360 | A whole long time.

01:19:45.360 | And I apologize, but we got disconnected right when we were done.

01:19:47.360 | That's all right.

01:19:48.360 | I got some some some good information there from the other callers.

01:19:54.360 | So so I appreciate that.

01:19:56.360 | Been listening to you for a couple of years.

01:19:58.360 | So also, I've got my questions about children and and they're learning as they as they get older.

01:20:10.360 | We have a two year old, two and two years and I think almost two and a half.

01:20:19.360 | And she is having a lot of trouble with speech right now, being that she was born right before the pandemic happened and then wasn't around many people for a year and a half.

01:20:33.360 | Right.

01:20:34.360 | And when to see if you had any similar instances like that and what you might have done to help with the speech.

01:20:45.360 | We have her in speech therapy currently, but besides that, her brother, who's 10 months old, is saying more than she is.

01:20:57.360 | She's hit every single mark that she's supposed to up to this point, except the talking.

01:21:05.360 | The professional speech therapist, what in insight has that advisor given you as far as any fundamental causes or reasons or treatments coming from the professional?

01:21:19.360 | She said that she's seeing a lot of children right now around the same age who did not interact with a lot of people in the first year and a half to two years of their life.

01:21:32.360 | And anyone they did interact with typically had a mask on, so they cannot read lips real well.

01:21:37.360 | Interesting.

01:21:38.360 | Which my wife and I never did.

01:21:40.360 | But anyone else that she really interacted with during that time did.

01:21:45.360 | That was her reasoning behind it.

01:21:47.360 | Interesting.

01:21:49.360 | I've heard people argue that as a major reason not to support masks, especially for children.

01:21:54.360 | But I've never dug into it myself to think, you know, whether I believed it or not.

01:21:57.360 | I've never seen the mask thing.

01:21:59.360 | Whatever. Big deal.

01:22:00.360 | But it's interesting to hear that you potentially have a child who's even been affected by that.

01:22:05.360 | So I have zero knowledge in this area.

01:22:09.360 | And so the very best I can say is to be helpful is kind of just a normal kind of a normal guy perspective.

01:22:18.360 | And then also how I would go about finding the information.

01:22:21.360 | Number one would be that probably, right, if you've already done the right thing, which I think is to search for a qualified therapist, a qualified professional who can give you the professional insight into the particulars of your child.

01:22:37.360 | And so get a second opinion if necessary, if that seems warranted.

01:22:42.360 | I think a lot of stuff, just probably not a lot of cause for concern.

01:22:47.360 | Young people are really resilient.

01:22:50.360 | And the education that I have gained of studying children is simply that their children all have their own rate of doing things.

01:23:01.360 | And a lot of times there's not a problem.

01:23:04.360 | It's just this particular child is going at a different rate.

01:23:08.360 | My children are wildly different, all of them.

01:23:10.360 | And I continually remind myself, it's OK, Joshua, just relax.

01:23:14.360 | Now, there can be a point where you say, all right, if this happens, I'm going to get really concerned because this particular thing is a little bit too far.

01:23:22.360 | But if your child is developing at a different rate than others, it's not necessarily a problem.

01:23:28.360 | And what's interesting is on a lot of development stuff.

01:23:31.360 | And again, this is a layman just observing what I read.

01:23:35.360 | On a lot of development stuff, early differences tend to be smoothed out very quickly down the road.

01:23:42.360 | I've heard this in terms of, I talked about this recently when I talked about reading and children reading.

01:23:48.360 | There seems to be, if you do a group of people at, say, 13, a group of children at, say, age 12 or 13, and some of those children started reading at four and some of them started reading at eight,

01:23:59.360 | there's very little difference a couple of years into their reading career based upon when they started.

01:24:05.360 | I've seen things about mathematics.

01:24:07.360 | In the US tradition, we start mathematics very young.

01:24:11.360 | My brother, who has a degree in mathematics, thinks it's crazy.

01:24:15.360 | He's like, why do we make children do it so fast?

01:24:18.360 | Why don't we just wait until children are older and then they can catch up really, really fast instead of doing these agonizing years of mathematics at too young of an age?

01:24:28.360 | I don't know if it's right or wrong, but I've observed that many people report that.

01:24:32.360 | In terms of speech, as long as you're treating whatever it is that you can identify as the underlying cause, meaning you don't want to ignore a medical need that your child has,

01:24:46.360 | you don't want to ignore something that's not met, an emotional need, or you don't want to ignore, did my child experience some kind of trauma that stunted and froze her development?

01:24:59.360 | You don't want to ignore anything that you can, but if you've dealt with that stuff as best you can and you've searched for any answer,

01:25:07.360 | then I would say probably it's a matter of just give it some time because children all grow and grow at different rates.

01:25:15.360 | Then the other thing I would say is just make sure that you are searching out the best information and that you're super, super active about avoiding it.

01:25:24.360 | If the problem that your child faced was not enough interaction due to the constraints of the pandemic,

01:25:32.360 | then get out and get interaction and make sure that you have a play date four times a week with lots of other children.

01:25:39.360 | Make sure that you have your home full of people.

01:25:46.360 | Maybe there was a time in which you didn't have your home full of people, but you realized that that wasn't the right move.

01:25:52.360 | Get your home full of people, full of children, full of whatever it is.

01:25:56.360 | Get the relatives around.

01:25:58.360 | Make sure that you're solving those needs, those underlying causes, and then looking for as many ways as possible to provide input to help her to adapt and grow better.

01:26:10.360 | I think all of that is from the perspective of a layman, not a professional.

01:26:15.360 | I always want to defer to those who have insight, but I would just be making sure that my home were full of people and that we had lots and lots of activity,

01:26:24.360 | lots of play dates, lots of other children, no masks around, and make sure that she's getting the input that she needs now.

01:26:30.360 | I would say children are really resilient.

01:26:32.360 | It's probably not a big deal.

01:26:35.360 | Awesome. I appreciate that.

01:26:38.360 | It's nice hearing it from someone else too to make you not feel like you're crazy.

01:26:43.360 | I listened to the episode that you and your wife had done on the homeschooling and then also on the reading.

01:26:52.360 | Those were very, very, very good.

01:26:54.360 | Thank you for doing those.

01:26:55.360 | This is your oldest child, your first child, who is experiencing the slowness?

01:26:59.360 | Yes.

01:27:00.360 | What I'll tell you also is that you are feeling this intense pressure with your first child to get it right,

01:27:09.360 | and you are feeling this intense pressure to match your child up to all of your peers, and that's because it's your first child.

01:27:17.360 | Obviously, we as parents want the best for our children, but with my first child, I was super intense, really intense,

01:27:24.360 | because you're like, "I got to get this right."

01:27:27.360 | With your following children, you start to realize that that was a little bit silly.

01:27:33.360 | It didn't need to be quite so intense.

01:27:35.360 | It was silly.

01:27:36.360 | As a child, children are going to grow.

01:27:38.360 | It's no big deal.

01:27:39.360 | My child doesn't have to be a superstar, and all of those early differences, they don't really make a difference.

01:27:45.360 | It's like the walking.

01:27:46.360 | You remember how big a deal it was.

01:27:47.360 | My child walked.

01:27:48.360 | I have no idea.

01:27:49.360 | I don't remember the age of any of my children walked.

01:27:51.360 | I just know that they're going to walk, and it doesn't really matter what age, because they're going to walk.

01:27:55.360 | If they're not going to walk, then I'm going to deal with that, but it doesn't really matter.

01:27:59.360 | The things like I'll just say with reading, I've got an eight-year-old, my eldest, who is probably reading at a—I'm not exaggerating,

01:28:10.360 | but probably reading at a 10th grade level.

01:28:12.360 | I haven't done any formal tests, but the books that he's reading are vastly beyond.

01:28:19.360 | On the other hand, I've got a six-year-old who has been incredibly resistant to reading, and it's agonizingly slow.

01:28:28.360 | Now, if it were my first child that were in that situation, then I'm like, "It's got to get going," but at this point in time,

01:28:36.360 | I've done so much reading myself and education, and it's like, "Whatever.

01:28:40.360 | It's no big deal."

01:28:41.360 | The child is going to read.

01:28:43.360 | The child is surrounded by books.

01:28:45.360 | The child is surrounded by written word.

01:28:47.360 | She's going to read.

01:28:48.360 | It's not a matter of if.

01:28:50.360 | It's a matter of when, and in the end, it doesn't matter.

01:28:53.360 | Maybe it would make me feel proud to say, "Well, look.

01:28:57.360 | My child was reading at four years old," but it doesn't matter because whether she starts reading at six or at eight or at 10,

01:29:04.360 | it doesn't matter because it all goes out in the end.

01:29:07.360 | And then I think that also this is where, at least for me, especially things like homeschooling has helped me so much because I've realized that the rate of progress doesn't –

01:29:19.360 | I mean, the rate of my child's progress as compared to a peer group doesn't matter at all to me.

01:29:28.360 | Let me explain.

01:29:31.360 | I was working with my son, and he's doing basically, I guess, a fourth-grade math book, so he's doing long division.

01:29:39.360 | And his fourth-grade math book, he's good at math.

01:29:44.360 | He understands everything super fast, but he doesn't like to write, and so he's kind of sloppy sometimes, and I work on that until we got to long division.

01:29:52.360 | And with long division, he got stuck, and so 24 divided into 573, right, things like that.

01:29:59.360 | The double-digit long division got him a little bit stuck, and it wasn't because he didn't understand it.

01:30:04.360 | It was because he was intimidated by it.

01:30:06.360 | And so I'm his tutor and his math teacher, and so I'm thinking, "Okay, what do I do?"

01:30:10.360 | Well, I started – my instinct is often to be kind of harsh and say, "Well, you got to learn it," right?

01:30:17.360 | But I don't think that – I didn't think that was helpful, and so I just started doing it with him.

01:30:21.360 | And I started basically doing the problems.

01:30:24.360 | I would write the problems. The only thing in his math lesson that I helped him with, but I would write the problems and have him watch me.

01:30:30.360 | And then I started just simply him doing it.

01:30:32.360 | And day after day after day, we did the long division where I basically talked him through it.

01:30:38.360 | I talked him through it again and again and again and again and again and just tried to keep – pound the steps into his head until the problems weren't intimidating.

01:30:46.360 | And what I realized in that process was it doesn't matter whether I give my child five examples and then my child can do it on his own

01:30:56.360 | or whether I give my child 500 examples and my child can do it on his own.

01:31:00.360 | It doesn't matter.

01:31:01.360 | At the end of the day, the only thing that matters is that my child can do long division.

01:31:06.360 | And so the rate at which he learns, the rate at which he does it doesn't matter.

01:31:11.360 | And it doesn't matter how much help I give him.

01:31:13.360 | And this is where I realized kind of the flaws in my own thinking as a teacher due to coming up in the math school system in my high school years where you think,

01:31:25.360 | "Oh, it's got to be done this way. You've got to do it on a certain timeline."

01:31:27.360 | The timelines don't matter if you have a sample set of one.

01:31:31.360 | The key is, is my particular child being challenged at an appropriate rate?

01:31:38.360 | I want to make sure that my particular student is always on that right speed, the right speed where he's not overwhelmed but he's not bored.

01:31:48.360 | You want that right speed of challenge.

01:31:51.360 | And as long as you can maintain that, then you're doing the right thing.

01:31:54.360 | So back to your daughter.

01:31:56.360 | I would say what you need is you want to see is simply progress.

01:32:01.360 | Am I doing the appropriate things that are helping my particular daughter to make progress?

01:32:06.360 | I don't want her to be overwhelmed.

01:32:08.360 | I don't want her to be bored.

01:32:11.360 | I just need to make sure she's making progress.

01:32:13.360 | And so as long as she's progressing and as long as there's opportunities, then that's all you need.

01:32:19.360 | You don't need to compare to any peer group.

01:32:21.360 | It doesn't matter whether your brother's two-and-a-half-year-old has a vocabulary of 8,000 words and yours has a vocabulary of 1,000 words.

01:32:29.360 | It doesn't matter.

01:32:30.360 | Because God has given you this child with this child's makeup, this child's IQ, this child's brain, this child's emotional balances, this child's abilities, and this is the child that you are to raise.

01:32:43.360 | And the only person that matters is her.

01:32:46.360 | And so you've got to be focused on her saying, "Hey, what's right for her?" and then block out all of that peer stuff.

01:32:54.360 | And I'm saying that as a father of four children, that I cared a lot.

01:32:57.360 | Even though I knew I shouldn't care, I cared a lot when it was my first child.

01:33:01.360 | But now I don't care at all.

01:33:04.360 | I care about 5% of what I did care because I just recognize that it doesn't matter what my peers are doing.

01:33:12.360 | What matters is these children.

01:33:14.360 | These children all have their own unique strengths, their own unique needs, et cetera.

01:33:18.360 | And these are the specific children that I'm charged with.

01:33:21.360 | And so that's it.

01:33:24.360 | The only last thing I would add is that I have studied a lot of language acquisition stuff, second language acquisition stuff.

01:33:31.360 | And I would say that verbal expression is one of the least important components of language acquisition, especially in terms of foreign language acquisition.

01:33:42.360 | Because verbal expression can happen like that.

01:33:46.360 | And so as long as you're getting lots of input, the output will eventually come.

01:33:51.360 | And that's how it is.

01:33:52.360 | This set me free when I found experienced language teachers in second language acquisition.

01:33:58.360 | Because I always thought, "Oh, I got to talk. I got to talk. I got to talk."

01:34:01.360 | And most of the time, I don't want to talk.

01:34:03.360 | I don't want to talk in the foreign language.

01:34:05.360 | I don't have anything interesting to say.

01:34:07.360 | And when I finally realized that there were people who basically gave me the permission to say, "Listen, if you just do input, when the time comes, your brain will give the output."

01:34:18.360 | And then I proved it to myself with an experiment I ran.

01:34:21.360 | Then it has given me a total sense of freedom.

01:34:25.360 | Where at this point in time, like with the languages that I'm studying now, I make zero effort right now to talk.

01:34:31.360 | Because I know that talking is the thing that happens the fastest if there's lots of input.

01:34:36.360 | And so what I would be doing in your situation is focusing a lot on input, lots of reading, lots of time together, lots of conversation, lots of emotional closeness, lots of being together, lots of playmates, etc.

01:34:49.360 | And I would think that as long as your professional advisors who know more of what to look for agree, I would think that in time, probably by the time your daughter is four, all differences will be gone.

01:35:01.360 | You wouldn't be able to discern any differences between her and her peers.

01:35:05.360 | Speaking of the time together, I had done your career and income course probably, I'm guessing, last year, the beginning of the year last year.

01:35:17.360 | And it made a drastic change to where I am now with them more, I think, in the last six months than I had been.

01:35:27.360 | It's time spent with my wife since we've been married, which has been six years.

01:35:32.360 | So that was a blessing.

01:35:38.360 | So thank you for doing that as well.

01:35:40.360 | My pleasure. That's amazing.

01:35:42.360 | You will never regret that.

01:35:43.360 | You know, you won't.

01:35:44.360 | I, with all of my personal challenges and whatnot, I make a lot of mistakes in my own life.

01:35:53.360 | And there are a lot of things that I keep trying to improve.

01:35:56.360 | But one of the things that I just can't imagine changing is I can't imagine changing the lifestyle that I'm able to enjoy with my with those that I love.

01:36:06.360 | And I'm doing well and I don't have any complaints.

01:36:11.360 | But I often look and I'm like, well, Joshua, would you be willing to give this up?

01:36:15.360 | And it's just it's such a precious thing to have that time with those that you love.

01:36:21.360 | And especially when they're young.

01:36:24.360 | And I don't think that I don't think it's a forever thing.

01:36:27.360 | I don't think that I'm going to spend necessarily one hundred and sixty eight hours a week with my 15 year old.

01:36:32.360 | I think that that that probably will change and probably rightly so.

01:36:36.360 | Although I'm not. Maybe not. Right.

01:36:40.360 | I look at I look at families who I really enjoy watching the Sailing Zatarra channel and I look at how much, you know, Keith and Renee are on YouTube.

01:36:50.360 | Keith and Renee, when they started sailing with their children, their children, their oldest ones were teens.

01:36:55.360 | And one of the reasons why they started sailing was that they wanted to.

01:37:03.360 | Have more time with their children because they felt like they'd spent so much time making money that they weren't able to have the kind of relationship with their children that they craved.

01:37:12.360 | And so they started sailing. And of course, they have all the typical things of a family.

01:37:16.360 | But you can just see, as I've watched for them for years, you can see the love and the closeness grow, even with their now 19 year old son who they're still with basically all the time.

01:37:28.360 | And so we'll see. I reserve the right change my mind.

01:37:31.360 | But I observe that that that time together, especially in those early years, is just not something that I'm going to give up.

01:37:37.360 | And I'm so glad that you were able to find a way to make it work, because that's what your daughter needs.

01:37:42.360 | Right. Is is is she needs you there on the couch next to her reading storybooks and doing that for lots of time.

01:37:50.360 | And I live by the rule. You learned it years ago from his name left me.

01:37:57.360 | Brian Tracy. Right. He said it's quality of time at work and quantity of time at home that counts.

01:38:04.360 | And I listened to his lecture on one of his lectures, one of his books, I forget, on child raising.

01:38:10.360 | And he talked and he gave that that phrase. And it's just been drilled into my head over the years.

01:38:14.360 | It's quality of time at work and quantity of time at home that counts.

01:38:18.360 | And if you think about the whole concept of quality time, right, the concept of quality time was an idea that was invented by parents who were feeling guilty for the fact that they had moved into a world of dual income households with two aggressive career people with two parents,

01:38:37.360 | both of them pursuing their careers aggressively. And they basically institutionalized their children and they were feeling guilty with the lack of time with their children.

01:38:48.360 | And so they came up with the idea that, well, it's not the matter of it's not the number of hours that count with our children.

01:38:53.360 | It's the quality time. And if we can have more quality time with our children, then we're good. Right.

01:38:58.360 | So we can both still we can still be good parents as we both work 70 hours a week with these great careers, as long as we have three hours together on the weekend of really good quality interaction, whatever that means.

01:39:10.360 | Well, it's a farce. It's nonsense. It doesn't work. It never has. It never will.

01:39:14.360 | Because children don't speak quality. It speaks quantity. They speak quantity. It's a matter of it's a matter of connectedness.

01:39:21.360 | And I don't I'm not saying there's a rule that you have to be with your children 168 hours a week. But but his his his his phrasing of that is something that has just always stuck with me.

01:39:31.360 | And I really believe it's true that at work we can be very productive. Right. It is quality of quality time at work that counts.

01:39:39.360 | Most of us could produce everything we produce and half the time that we that it takes if we had to or we could learn to do it.

01:39:46.360 | And so it's quality of time at works that counts work that counts, but it's quantity of time at home that makes the biggest difference, because all of the quality interactions with my children come when I'm least expecting them.

01:39:58.360 | I want them to happen when I'm sitting down and I'm rested and refreshed and ready to give a seminar on such and such a topic.

01:40:05.360 | And here's my monologue. But they always happen at the wackiest times. And all of a sudden, boom, there you are. And I would have missed it if I weren't present.

01:40:12.360 | So I'm thrilled to hear that. And congratulations on that. Yes. And thank you for that. I appreciate it. Hopefully you'll be able to do another one of these soon.

01:40:24.360 | Absolutely. My pleasure. All right. Thank you, my friends, for listening to today's Q&A show. That wraps it up.

01:40:29.360 | I will look forward to talking with you on the next week episode. And just a comment.

01:40:35.360 | I try to not, well, actually just say this, that I will be doing a lot more Q&A shows this year. This last year has been tough with all the travel.

01:40:43.360 | It's been great. And I'll quickly, I'll soon share some lessons learned from it to try to, again, share with you the lessons I learned from all my wacky experiments.

01:40:53.360 | But it has impeded greatly on my ability to do regular Q&A shows.

01:40:58.360 | And I thought a few months ago that I was in the point where I squared away, but it wasn't. But at this point in time, they should be ready to go.

01:41:05.360 | So if you'd like to join me, I would love for you to be able to join me on next week's show.

01:41:08.360 | You can do that by going to patreon.com/radicalpersonalfinance.

01:41:12.360 | Look me up at patreon.com/radicalpersonalfinance. And I look forward to speaking to you on next week's show.

01:41:17.360 | [Music]

2022-01-07_Friday_QA