2022-01-28-Friday

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00:00:30.000 | It's Friday and today that means live Q&A.

00:00:34.000 | (upbeat music)

00:00:37.000 | Welcome to Radical Personal Finance,

00:00:51.000 | a show dedicated to providing you with the knowledge,

00:00:53.000 | skills, insight, and encouragement you need

00:00:55.000 | to live a rich and meaningful life now

00:00:57.000 | while building a plan for financial freedom

00:00:59.000 | in 10 years or less.

00:01:00.000 | My name is Joshua Sheets, I am your host.

00:01:02.000 | Today is Friday, January 28, 2022.

00:01:06.000 | Today it's a live Q&A or commentary

00:01:10.000 | or whatever you talk about it.

00:01:12.000 | (upbeat music)

00:01:15.000 | Each and every Friday here at Radical Personal Finance

00:01:25.000 | I can arrange the appropriate technology.

00:01:27.000 | We do a live Q&A show.

00:01:29.000 | It's basically open phone lines.

00:01:31.000 | Works just like call and talk radio.

00:01:32.000 | You can call in, talk about anything that you want,

00:01:34.000 | ask me any questions, make any commentary,

00:01:36.000 | get my input on anything that you are interested

00:01:39.000 | in discussing with me.

00:01:41.000 | Any clarifying questions, anything at all,

00:01:43.000 | I don't screen the calls.

00:01:44.000 | It's completely up to you what we talk about.

00:01:47.000 | If you would like to join me on one of these Friday Q&A shows

00:01:50.000 | I would encourage you to go to patreon.com/radicalpersonalfinance

00:01:52.000 | That's the system that I use to screen

00:01:54.000 | the number of callers, keep it down to a manageable level.

00:01:57.000 | Today we have one, two, three, four, five, six callers

00:01:59.000 | waiting on the line.

00:02:00.000 | So if you'd like to join me on one of these Friday Q&A shows

00:02:02.000 | go to patreon.com/radicalpersonalfinance

00:02:05.000 | Join me there and I will be able to,

00:02:08.000 | would love to have you on next week's Q&A show.

00:02:11.000 | I want to add as I begin, before I go to the phone lines,

00:02:14.000 | I want to add three quick comments/corrections

00:02:18.000 | to previous content here on Radical Personal Finance.

00:02:22.000 | We'll go back in order.

00:02:24.000 | Last week on the Friday Q&A show

00:02:27.000 | I received a question regarding

00:02:31.000 | somebody who was selling a house to a friend.

00:02:33.000 | And listener wrote in, Andy wrote in, he said this,

00:02:36.000 | "Quick note about the January 21 Q&A show

00:02:39.000 | regarding selling a house to a friend.

00:02:40.000 | It's my understanding that the buyer getting cash back

00:02:43.000 | from a real estate deal is generally considered fraud.

00:02:46.000 | I'm not a mortgage professional,

00:02:47.000 | but I think it is perfectly legal to include various items

00:02:49.000 | into the price, such as all new appliances,

00:02:52.000 | a boat to go with the lake house,

00:02:53.000 | the big screen TV in the living room,

00:02:55.000 | the lawnmower, et cetera, et cetera.

00:02:56.000 | Technically I believe those are considered collateral

00:02:58.000 | for the loan, so if you defaulted on your mortgage

00:03:00.000 | you'd be expected to leave those items with the home.

00:03:03.000 | Obviously what friends do between themselves

00:03:04.000 | is their personal business,

00:03:05.000 | but I think passing a personal check back across the table

00:03:08.000 | at a real estate closing would be illegal."

00:03:12.000 | And I thought this was a good comment worth my making publicly

00:03:16.000 | linked to an article called

00:03:18.000 | "When Receiving Cash Back at Closing is Legal."

00:03:21.000 | And I would say that in any of these issues

00:03:24.000 | there are a number of legal issues

00:03:25.000 | that you want to be careful of.

00:03:26.000 | You always want to be careful of kickbacks

00:03:28.000 | if they are not appropriate.

00:03:29.000 | You want to be thoughtful.

00:03:31.000 | I tried my best to call things right up the middle on the show.

00:03:36.000 | The problem is this, in the world of finance

00:03:38.000 | there is a never-ending set of laws

00:03:42.000 | that you can run afoul of.

00:03:45.000 | I was looking at a report this last week

00:03:47.000 | from the Mercatus Center

00:03:51.000 | where they recently published a new question

00:03:54.000 | which is saying how many federal crimes

00:03:58.000 | has Congress actually created over the years?

00:04:01.000 | And there's a Wall Street Journal editorial

00:04:04.000 | called "How Many Federal Crimes Has Congress Created?"

00:04:07.000 | And when I'm thinking about that particular issue

00:04:10.000 | you would think it's an easy question to answer.

00:04:18.000 | But it's actually a shockingly hard question to answer.

00:04:21.000 | If you actually start with just simply the federal government

00:04:24.000 | there are estimates

00:04:26.000 | but nobody actually knows how many crimes

00:04:30.000 | Congress has created.

00:04:31.000 | Take a moment and listen to this

00:04:33.000 | from the Wall Street Journal editorial board.

00:04:35.000 | Let me just read a few paragraphs.

00:04:36.000 | "America's ever-expanding criminal code.

00:04:39.000 | The number of federal crimes has increased 36% since the 1990s.

00:04:44.000 | How many federal crimes has Congress created?

00:04:47.000 | The question seems like it ought to have a straightforward answer

00:04:49.000 | that citizens can look up.

00:04:51.000 | In fact, it's more like asking

00:04:52.000 | how many genes are in the human genome?

00:04:55.000 | The answer is in the many thousands

00:04:57.000 | but despite decades of counting no one knows for sure.

00:05:00.000 | A new project by the Heritage Foundation

00:05:02.000 | and George Mason University's Mercatus Center

00:05:05.000 | says it is "the first effort to count the codes

00:05:08.000 | since 2008.

00:05:10.000 | The researchers created an algorithm

00:05:12.000 | with key phrases like 'shall be punished'

00:05:14.000 | and 'shall be fined or imprisoned'

00:05:16.000 | to search tens of thousands of pages in the U.S. code.

00:05:20.000 | In the 2019 code they found 1,510 criminal sections.

00:05:26.000 | By examining some of those sections at random

00:05:29.000 | they estimated that they encompass 5,199 crimes in total.

00:05:34.000 | The Heritage Foundation report notes that

00:05:37.000 | "there is no single place where any citizen can go

00:05:40.000 | to learn all federal criminal laws

00:05:43.000 | and even if there were, some are so vague

00:05:45.000 | that no reasonable person could understand what they mean."

00:05:48.000 | By running their algorithm on past versions of the U.S. code

00:05:51.000 | going back to 1994,

00:05:53.000 | the researchers also estimate the rate

00:05:55.000 | at which criminal laws are proliferating.

00:05:57.000 | There were about 36% more criminal sections in 2019

00:06:02.000 | than 25 years earlier

00:06:04.000 | for an overall growth rate of 1.27% per year.

00:06:08.000 | More than half of the growth took place from 1994 through 1996.

00:06:13.000 | Since the mid-1990s, the biggest annual increases

00:06:16.000 | were in 2005 to 2006 and 2011 to 2012.

00:06:20.000 | These figures, the report emphasizes,

00:06:23.000 | don't cover the 175,000-page code of federal regulations,

00:06:28.000 | which contains an unknown number of crimes

00:06:31.000 | created by executive branch officials

00:06:34.000 | under authority delegated by Congress.

00:06:37.000 | The results can be grimly amusing.

00:06:40.000 | Defense lawyer Mike Chase has highlighted many examples,

00:06:43.000 | such as a 2006 regulation

00:06:45.000 | that creates a potential five-year prison sentence

00:06:48.000 | for bringing more than $5 of nickels out of the United States.

00:06:55.000 | The editorial continues,

00:06:57.000 | but I think that's an appropriate place for me to stop.

00:07:00.000 | One of the things that is wacky in today's world

00:07:03.000 | is that without question,

00:07:05.000 | you and I, on a continual basis,

00:07:08.000 | are constantly committing felonies.

00:07:10.000 | And I think that last example is just so funny.

00:07:15.000 | There's a 2006 regulation

00:07:17.000 | that creates a potential five-year prison sentence

00:07:21.000 | for bringing more than $5 of nickels out of the United States.

00:07:26.000 | So I don't know if what I said last week is a crime or is not a crime.

00:07:32.000 | I have no idea.

00:07:33.000 | I probably do accidentally, erroneously--

00:07:37.000 | I probably do accidentally and erroneously

00:07:40.000 | advocate sometimes for things that are criminal.

00:07:42.000 | I do my best not to.

00:07:44.000 | But then since there are an unknown number of laws on the book,

00:07:49.000 | and you don't know until you're actually charged with it,

00:07:52.000 | sometimes you've even broken one,

00:07:53.000 | I don't worry too much about it.

00:07:55.000 | I think that if you rely on these basic principles--

00:07:59.000 | number one, do things in an upright and straightforward way.

00:08:04.000 | And I believe that what I advocated last week

00:08:07.000 | was a straightforward thing

00:08:09.000 | that go ahead and somebody can take out a mortgage on their house

00:08:12.000 | for whatever the house will appraise for.

00:08:14.000 | And then I said if you want to give a separate gift to somebody in another time,

00:08:18.000 | you can always give a separate gift to somebody.

00:08:20.000 | But you definitely wouldn't want to do it at closing

00:08:22.000 | if there's a mortgage company involved,

00:08:25.000 | unless whatever numbers are involved

00:08:28.000 | are clearly written down on your closing statements for the mortgage.

00:08:33.000 | But pull things straight up the middle.

00:08:35.000 | Do your very best. It's your money.

00:08:36.000 | You have the right to do what you want with your money.

00:08:40.000 | But you also need to be aware of the fact

00:08:42.000 | that there are an unknowable number of crimes on the books,

00:08:47.000 | and from time to time you may be intersecting with those.

00:08:50.000 | And if you want to be really rebellious,

00:08:52.000 | grab $5.05 worth of nickels and take them out of the country.

00:08:58.000 | The second comment I wanted to make is last week I also fielded a question

00:09:02.000 | by a caller who was calling in and talking about

00:09:06.000 | how he was considering getting his parents out of Ukraine

00:09:11.000 | because of some of the war drums that are beating.

00:09:15.000 | I hadn't followed too much.

00:09:16.000 | I'd watched a little bit in the American media.

00:09:18.000 | I read several mainstream media sources,

00:09:21.000 | and I had thought that the situation was more intense than what it was.

00:09:24.000 | So then this week after I gave that advice,

00:09:26.000 | I was curious whether or not it was actually--

00:09:30.000 | I was just curious what the situation was.

00:09:32.000 | So I tried to go and find some more detailed information,

00:09:36.000 | and it seems to me that a lot of the war drums and whatnot

00:09:41.000 | on planning on Ukraine are probably--

00:09:47.000 | I don't know.

00:09:48.000 | I don't understand it.

00:09:49.000 | It seems overblown, at least in the Western media.

00:09:53.000 | And it was kind of a useful reminder to me to always go--

00:09:58.000 | and before I open my mouth and go in too far,

00:10:01.000 | just to look for some other sources.

00:10:03.000 | I don't understand all of the political ramifications.

00:10:07.000 | I do believe that the principle is that if you are ever personally involved

00:10:14.000 | in something that you're concerned about,

00:10:16.000 | it is better to be a year too early than a day too late.

00:10:21.000 | And that's something that I think is what I wanted to leave.

00:10:23.000 | I hope I made that clear, but I wanted to make a moment and actually clarify.

00:10:27.000 | It's better to be a year too early than it is a day too late.

00:10:32.000 | It's better to be two years too early than a minute too late.

00:10:35.000 | When things in life have the potential to be very serious and very significant,

00:10:40.000 | being early means that sometimes you will look foolish, you will be foolish.

00:10:45.000 | But being late can often have more disastrous circumstances.

00:10:49.000 | So just remember that if you personally have enough local knowledge

00:10:53.000 | to be concerned about something, being early is an important--

00:10:57.000 | I believe it's better to be early even if you look foolish than it is to be too late.

00:11:02.000 | Finally, one more correction as we begin.

00:11:05.000 | Two weeks ago, I received a call from a listener

00:11:09.000 | who was talking about his father doing some large Roth conversions.

00:11:14.000 | And a listener corrected me after the show, and he said,

00:11:17.000 | "You didn't comment on the IRMAA effects for a 70-year-old's Roth conversions."

00:11:24.000 | And that was a major omission.

00:11:26.000 | And I had not even thought of it, and the listener is exactly right.

00:11:32.000 | It does need to be planned for, and it just totally slipped my mind in the call.

00:11:37.000 | So I want to take a moment and just tell you what that is

00:11:39.000 | because it deserves attention and planning.

00:11:42.000 | Here's a quote.

00:11:43.000 | "The income-related monthly adjustment amount, better known as IRMAA,

00:11:50.000 | is a surcharge that is added to the current year's Medicare Part B, hospital coverage,

00:11:56.000 | and Part D, prescription drug coverage premiums,

00:12:00.000 | for those who have earned too much income in a given year.

00:12:04.000 | The income that used to determine Medicare's IRMAA

00:12:08.000 | is defined by the Centers for Medicare Services, CMS,

00:12:12.000 | as "adjusted gross income plus any tax-exempt interest

00:12:18.000 | or everything on lines 2A and 8B of the IRS Form 1040.

00:12:24.000 | Some examples of income are wages, Social Security benefits, capital gains,

00:12:29.000 | dividends, pension, and rental income,

00:12:31.000 | and distributions from tax-deferred investments like a traditional 401(k) or IRA.

00:12:37.000 | IRMAA is broken into six different income brackets,

00:12:41.000 | with each bracket having its own income levels and surcharges for the current year.

00:12:47.000 | The IRMAA brackets in 2021 are, basically, you can look them up,

00:12:54.000 | but anywhere starting at $88,000 to $111,000 of income,

00:12:59.000 | you wind up with an additional premium of a few hundred dollars,

00:13:03.000 | and then it goes up to in excess of $500 where it maxes out.

00:13:07.000 | 2021 IRMAA brackets, you can look them up.

00:13:10.000 | According to federal legislation,

00:13:12.000 | Medicare's IRMAA brackets are not slated to be changed until at least 2028,

00:13:16.000 | but have been increased slightly in the past.

00:13:18.000 | And so I didn't even think of that, but it is an important calculation to consider.

00:13:23.000 | So to the listener who is considering those Roth conversions,

00:13:26.000 | if you are in that scenario, then I would encourage you to consider

00:13:29.000 | the cost of the increased premiums for Medicare.

00:13:33.000 | And with that, we go to the phones. Let's begin with Frank.

00:13:35.000 | Frank, welcome to the show. How can I serve you today?

00:13:38.000 | Hi, Joshua. Can you hear me all right?

00:13:40.000 | Sounds good.

00:13:42.000 | All right. So first off, I just want to thank you for your answer to my question

00:13:46.000 | about joining the military a couple of weeks ago.

00:13:49.000 | And special thanks to Brian, who also shared his perspective.

00:13:53.000 | I gained really valuable insight from the both of you. So thank you.

00:13:57.000 | My pleasure.

00:13:59.000 | So now for my next question.

00:14:02.000 | I want life insurance and I need advice for how much I need.

00:14:08.000 | I'm 25 years old and I'll be starting a new job soon where I'll be making about $77,000 a year.

00:14:16.000 | And I have no dependents. However, I am an only child

00:14:19.000 | and feel responsible to make sure my parents are cared for.

00:14:23.000 | And I know that you've talked about annual renewable term insurance for young people.

00:14:28.000 | And I definitely plan on pursuing that.

00:14:31.000 | But additionally, I like the idea of using a whole life insurance policy as a form of an emergency fund like you do.

00:14:38.000 | So where do you recommend I start and how should I structure this in terms of the amount of the mix of whole life insurance

00:14:46.000 | and long term life insurance I should purchase while still allowing for flexibility for future life changes?

00:14:53.000 | Brilliant question.

00:14:55.000 | To begin with, the first thing you have to decide is do I want life insurance?

00:14:59.000 | And you've said yes, because I'm an only child.

00:15:02.000 | I want to care for my parents. And I think that's great.

00:15:05.000 | I think that's exactly what you should do.

00:15:07.000 | And it will make you feel really good as a 25-year-old only child

00:15:11.000 | to know that if your parents' financial security is ever in question

00:15:15.000 | it will make you feel good to know that you have some insurance to care for them.

00:15:19.000 | The first thing you'll have to think is, okay, what's the number that would make me feel good?

00:15:23.000 | And since this is different than the type of analysis to which we can do a needs analysis,

00:15:29.000 | meaning you can't, well, I guess you could a little bit.

00:15:32.000 | Usually the first way we do it is try to get it with a scientific measurement of some kind.

00:15:36.000 | This is called a needs analysis.

00:15:38.000 | So you say, how much debt would I want to pay off?

00:15:41.000 | How much money do I want to have come in for them, etc.?

00:15:44.000 | And you can go through that kind of analysis.

00:15:46.000 | So you could do a needs analysis here.

00:15:48.000 | Let's say you wanted to pay off their mortgage and you know that they owe $200,000 on their mortgage.

00:15:52.000 | And let's say that you wanted to provide them with $3,000 a month of extra income

00:15:56.000 | over an expected lifespan of, say, 30 years.

00:15:59.000 | You could come up with the number.

00:16:01.000 | What you'll usually find is that the number comes out to be somewhere between 10 and 20 times your annual income.

00:16:08.000 | Now, that's pretty much what the insurance companies will cover you for.

00:16:13.000 | Most insurance companies will sometimes cover you up to as much as 20 times your income.

00:16:18.000 | A few companies may go higher to 25, some as high as 30.

00:16:22.000 | But basically 10 to 20 times your income is usually a good round number to go at.

00:16:27.000 | So if I were you, given that you're having an income of $77,000,

00:16:31.000 | I would say just pick a round number, a million dollars, a million five, whatever's comfortable.

00:16:37.000 | The reason I can be a little loosey-goosey with that is simply that when you're talking about term life insurance,

00:16:41.000 | it's not a big decision.

00:16:43.000 | It's simply pretty inexpensive for a 25-year-old nonsmoker to have a million dollars life insurance,

00:16:48.000 | probably $40 a month, $35, $40 a month, somewhere in that range would be my guess.

00:16:53.000 | So it doesn't cost that much to have quite a bit of it.

00:16:56.000 | So the rule is always get your term insurance in force, and then, as you've heard me talk about otherwise,

00:17:01.000 | get your term insurance with a company that you can convert it to whole life insurance.

00:17:05.000 | Now the whole life insurance question is more difficult because you have to go through and you have to say,

00:17:12.000 | "How much money do I want to have?"

00:17:15.000 | You've mentioned the idea of using a whole life insurance policy as an emergency fund.

00:17:19.000 | The trick with whole life insurance is trying to figure out how to get the premiums right

00:17:24.000 | so that you get enough money into it where it's meaningful,

00:17:27.000 | but not so much that it detracts from your other opportunities.

00:17:31.000 | My biggest frustration with whole life insurance is that contributing to a whole life insurance policy

00:17:38.000 | can make people not contribute to other things that are probably a better move.

00:17:43.000 | So if you, on your $77,000 of income, were tempted to put money into a whole life insurance rather than a Roth IRA,

00:17:50.000 | I think that's a mistake, and I'd rather you max out your Roth IRA first.

00:17:54.000 | Similarly with your 401(k), I'd like to make sure that your 401(k) is fully funded.

00:17:59.000 | Because those things allow you to invest into other investments.

00:18:03.000 | If you want safe, secure money in them as well, you can go ahead and just choose cash or fixed income investments in there,

00:18:11.000 | and they'll give you some of the benefits of what life insurance does.

00:18:14.000 | But if you don't make those contributions, you lose them.

00:18:17.000 | So on a $77,000 income, I really want you to get your Roth IRA and your 401(k) money done.

00:18:23.000 | I also don't want money to go into a whole life insurance that could be used for some other big wins.

00:18:28.000 | I don't want your Bitcoin money to go into life insurance.

00:18:30.000 | I don't want your house down payment money to go into life insurance, etc.

00:18:34.000 | And so that's why usually life insurance, whole life insurance, is usually a better fit for wealthier people.

00:18:44.000 | Because wealthier people can max out all their other accounts.

00:18:47.000 | They can have enough money set aside, meaning higher income.

00:18:50.000 | Higher income people can max out other accounts. They can have more money set aside.

00:18:54.000 | And then they're saying, "Okay, what do I do with this surplus?"

00:18:56.000 | And I think that's money that's a better fit for whole life insurance.

00:19:00.000 | So I would start by saying, go with something modest, right?

00:19:05.000 | Run some premiums on, say, $50,000.

00:19:08.000 | Because if you have a small $50,000 policy at $25,000, then that could just be in your mind.

00:19:15.000 | That's an amount that I'll have forever. That's going to be my burial policy.

00:19:19.000 | The cash values that could be in here for an emergency fund now,

00:19:23.000 | I'm going to focus more on those coming in from 5 to 10 years from now.

00:19:27.000 | And I'm going to view my Roth IRA as an emergency fund first.

00:19:33.000 | I believe that your best emergency fund is a Roth IRA.

00:19:36.000 | Because you can put in your $5,000 or $6,000 every seat, every year.

00:19:40.000 | The money is protected from creditors, which is really, really powerful.

00:19:43.000 | If you don't want to take any investment fluctuations, just keep it in a cash account.

00:19:47.000 | If you need the money out for an emergency, you can take it out of that.

00:19:51.000 | That should be your first move for an emergency fund before your whole life insurance.

00:19:55.000 | But I would start with just a small policy.

00:19:58.000 | And then what I would try to do is because you are going to focus on cash accumulation,

00:20:05.000 | try to mix the policy a little bit rich.

00:20:08.000 | So what I mean by that is try to get a policy where you can put some additional premiums in it.

00:20:14.000 | At the very least, you should do something like a whole life paid up at $65,000.

00:20:19.000 | And then see if you can get a few additional premiums into it.

00:20:22.000 | So if you really want a contract that's going to work for emergency fund purposes,

00:20:26.000 | you want to get as much additional premium into the policy as you possibly can up front.

00:20:31.000 | You don't want to do so much that you can't use this policy for the next couple decades.

00:20:36.000 | You're very young in your career.

00:20:37.000 | But I would target something in design with an insurance agent, something like a 20 pay.

00:20:42.000 | And then just make sure that you're also using the Roth IRA and maxing out your 401(k), etc.

00:20:49.000 | Then as your income grows, you can go ahead and do larger conversions when that makes sense.

00:20:55.000 | But don't put money first into a whole life insurance policy until you've done your IRA and you have done your 401(k).

00:21:05.000 | Gotcha. All right. That makes sense.

00:21:10.000 | Good. And congratulations on your job change.

00:21:12.000 | And I appreciate your attitude towards your parents.

00:21:16.000 | I think that it's something that is just often underappreciated, and I applaud you for it.

00:21:20.000 | I think it's a very good reason for you to own life insurance.

00:21:23.000 | Jeff, welcome to the show. How can I serve you today?

00:21:29.000 | Hey, Joshua. I appreciate your time today.

00:21:31.000 | It's been a while since I last called in, but last time we chatted about the merits of living in my Prius for an extended period of time,

00:21:38.000 | which was kind of a fun conversation to have that you may recall.

00:21:41.000 | Did you do it?

00:21:43.000 | I did not. It was right before COVID, and I'm very glad that I did not in retrospect.

00:21:48.000 | So I appreciate your hesitation.

00:21:51.000 | Good.

00:21:53.000 | Question today is around credit card debt management.

00:21:56.000 | I had the opportunity to take the course and appreciate everything for that.

00:22:00.000 | One of the things you emphasized quite a bit was the need to have cash on hand.

00:22:05.000 | I currently have about 80K in credit card debt and about 30K that is with interest from 16 to 20%.

00:22:13.000 | Everything else is at zero.

00:22:16.000 | Question being, would you recommend still keeping a fair amount of cash on hand and continue that sort of pay down cycle?

00:22:24.000 | Or should you use some of that cash balance to expedite the payoff of the balances with interest?

00:22:30.000 | I figured I was thinking about keeping about 10K just sort of as the basis.

00:22:37.000 | What is your total credit limit across all of your portfolio of cards?

00:22:43.000 | Right now I'm sitting at about 75% of that.

00:22:47.000 | Utilization.

00:22:48.000 | Yeah.

00:22:49.000 | Yeah, pretty high.

00:22:50.000 | So that's going to be really tricky because with 75% utilization, and one more quick question, how much total cash do you have?

00:22:59.000 | Right now about 6K, but I was hoping to move that up to about 10 grand just before I had, from a comfort perspective.

00:23:09.000 | Do you have another source of debt?

00:23:12.000 | Could you take a 401K loan?

00:23:14.000 | Could you take a home equity loan and get, say, 30 or 40 grand off of that temporarily?

00:23:19.000 | I do not.

00:23:20.000 | It's all just sort of all income at the moment.

00:23:22.000 | Okay.

00:23:24.000 | Well, let's outline the situation so that you can think it through, and I understand why you're calling me because it's not an obvious answer.

00:23:34.000 | The reason I advocate having money when you have credit card debt is because the money allows you to manipulate the utilization on your card portfolio.

00:23:49.000 | And so the biggest thing that affects your credit score after consistency of payment, which you can't change, right?

00:23:56.000 | If you have late pays or whatever in the past, they're there.

00:23:59.000 | All you can do is just you can pay them now.

00:24:02.000 | The biggest factor that affects most of us is credit utilization, and when you're up at 75%, that's going to make a big, big mark on your credit score, and that makes it very hard to get new loans, to get new cards issued.

00:24:17.000 | And usually in the way the credit card game works, the new cards that are issued are issued to you at 0% when they think that you can pay it.

00:24:26.000 | And you want to get them to 0% so you can surf the whole balance as you're paying your way off.

00:24:30.000 | And so what I was saying is if I've got 20K of cash and 80K of debt, I don't want to pay down the 20K of cash and then just be left with 60K of debt, a la Dave Ramsey, right?

00:24:43.000 | Because then I wind up not having cash.

00:24:46.000 | What I want to do is I want to from time to time, I want to strategically put 20K against my cards, drop the balances, wait for the credit reports to report those lower balances, score goes up, take out a new 0% card, surf the old ones that are expiring over onto that, and then get my 20K in cash back.

00:25:06.000 | And the cash in the bank allows you to make sure you don't have late pays, because if you have money in the bank and you can manage your cash, then you can keep the portfolio going, consistently drawing the balances down, but you can keep your interest rates down when you have cash.

00:25:21.000 | And so having credit card debt is usually not fun, but it's much worse to have credit card debt if you don't have any money.

00:25:30.000 | And that's why I made such a big point of having money.

00:25:32.000 | When you have money, you can pivot, you can adjust.

00:25:34.000 | So to begin, I would say, can you get right now or have you tried to get new 0% offers?

00:25:41.000 | Are you getting declined for new cards right now?

00:25:43.000 | It's been a while, but my credit score is probably in the 600 range, which doesn't really lend itself, at least in my experience, to that.

00:25:54.000 | But yeah, so I haven't really tried.

00:25:59.000 | But the other thing is I'm not expecting to have to roll another one of those balances until really the end of the year.

00:26:07.000 | So I feel like I have some time to accumulate a little more cash.

00:26:10.000 | So that was sort of my hesitancy on if I should just sort of keep building the balance, so to say.

00:26:19.000 | And how much, based upon your income, how much extra on top of minimums, how much extra per month can you make on payments on top of minimums right now?

00:26:28.000 | Somewhere between $1,500 and $2,000.

00:26:31.000 | Okay.

00:26:32.000 | Well, with $1,500 and $2,000, I think you're okay either way.

00:26:35.000 | Because if you have that much extra, if you need to pile up another, you know, get up to $12,000, something like that, that's another three months from now.

00:26:44.000 | And if you don't need to surf those other 0%s until the end of the year, that gives you some time.

00:26:53.000 | I would begin, before I would part with my cash, I would begin by going to an online forum, a credit card forum.

00:27:02.000 | Tell them your credit score.

00:27:04.000 | Tell them you're trying to look for a 0% card.

00:27:06.000 | There's so much amazingly knowledgeable people online.

00:27:10.000 | And to go in and say, "Who should I apply for for a 0% balance transfer card?"

00:27:16.000 | And I would try that with your current credit score before you part with your money.

00:27:23.000 | See what happens.

00:27:24.000 | See if you get a decline or not.

00:27:26.000 | If you get a decline, go through reconsideration and talk to them and see if you can find out what your credit score needs to be.

00:27:34.000 | And then see if you can estimate what your credit score would be with a lower utilization ratio.

00:27:38.000 | Then, I would keep the 2K.

00:27:41.000 | That'll take you a couple weeks to work through that process to find out if you're approved or not.

00:27:45.000 | If you can get your full $30,000 that's at 16% to 20% over onto 0% cards, or at least some of it, that'll give you a target.

00:27:55.000 | So maybe you can get a new card for $7,000 and then just go ahead and put your extra money at that 16% to 20%.

00:28:02.000 | It's very hard for someone in my situation to say, "Yeah, you should be paying 16% to 20% interest."

00:28:07.000 | And so the instinct is go ahead and get those balances down as quickly as you can.

00:28:14.000 | I'm not comfortable with parting with 6 grand.

00:28:18.000 | I don't want you to not have any money.

00:28:20.000 | With $6,000, you could run your minimum payments for how long without missing payments?

00:28:25.000 | About four months, I would say.

00:28:28.000 | Yeah, so if I'm in your shoes, I'm not spending my 6 grand of cash on this, even if it's necessary.

00:28:35.000 | I'm not going below three months of emergency fund.

00:28:38.000 | If you lose your job, something happens, you need to be able to keep your minimum payments going, even at 16% to 20% interest.

00:28:46.000 | And so I would focus on saving as much as I can from the 2 grand a month, pile that up, and then put all of that against the 16% to 20% debt.

00:28:55.000 | I don't think you need 15 grand in the bank, right, because that's a little excessive.

00:29:01.000 | You're better off getting the 16% to 20% returns on your money by getting rid of the high interest debt.

00:29:06.000 | But I'm not going below 3 months of emergency fund.

00:29:10.000 | So if that's four months of minimum payments plus a little bit of extra, I wouldn't part with my cash in that situation.

00:29:16.000 | I would use my excess cash flow and put the excess cash flow against the 16% to 20%.

00:29:25.000 | If you apply for a new card today, you may be able to get some of that balance moved over to 0% and then give it 3, 4 months, 3, 4, 5 months.

00:29:34.000 | That gives you potential to knock those balances down by another 10 grand.

00:29:38.000 | That will improve everything.

00:29:39.000 | Try again and then repeat the process.

00:29:42.000 | But I'm not going below $6,000 in the bank.

00:29:45.000 | That's helpful. I appreciate the 3-month thing is more helpful than an arbitrary number.

00:29:54.000 | I think that's a good way to look at it.

00:29:56.000 | That's the best we can come up with, right?

00:29:58.000 | Because there's no science to what I'm saying.

00:30:00.000 | The science is utilization ratio. The science is how much per month.

00:30:04.000 | But when you're trying to find a place to plant your feet, basically I'm thinking, "If I lose my job, I don't want to bounce credit card payments on week one of a job loss."

00:30:14.000 | So 3 months of minimum payments and emergency fund and other money, that to me feels about right.

00:30:21.000 | It seems irresponsible to go below that and too many things can happen too suddenly.

00:30:28.000 | So that's the best I got for you.

00:30:29.000 | Make sense. Thank you, sir.

00:30:31.000 | Very good.

00:30:32.000 | All right. We'll move on to 913.

00:30:35.000 | Welcome to the show. How can I serve you today?

00:30:37.000 | This is Catherine.

00:30:40.000 | I was calling.

00:30:41.000 | We really enjoy your show and I thought you might have some insight on this.

00:30:47.000 | It's more kind of a homeschooling question for you.

00:30:49.000 | So we have four children. Our oldest is nine. Our youngest is three.

00:30:54.000 | And we do Charlotte Mason, so we're very, you know, lots of books.

00:30:59.000 | So she's a voracious reader.

00:31:03.000 | She applied for a scholarship to start a living library.

00:31:09.000 | It's kind of like a collector's library basically of old kind of out of print books.

00:31:16.000 | So she won the scholarship and got a check for $5,000 to start this library.

00:31:23.000 | And now we're kind of trying to figure out how to best nurture through this process because it's a lot of money.

00:31:32.000 | And then, I mean, we just like practically have a limit on how much space we can use in our house to collect books also.

00:31:40.000 | So wondered how the Sheets family would handle this situation.

00:31:47.000 | I have just made some very large Amazon purchases.

00:31:51.000 | $5,000 sounds like a lot of money until you see the amount of money I just spent on books.

00:31:57.000 | That's crazy.

00:32:01.000 | That is an interesting question. So let me give a little background as a way of giving my brain a moment to process the question.

00:32:07.000 | So first, for those who are unfamiliar with the term, the idea of a living library is basically a way of describing a library of carefully chosen books.

00:32:20.000 | Books that would fit what we would call living books,

00:32:23.000 | which is a term that was popularized and is popular in the community of aficionados of Charlotte Mason's educational ideas.

00:32:33.000 | Basically, high quality books. There's some other things to what a living book is.

00:32:37.000 | So a living library is built by an enthusiastic supporter of books who goes and collects all these books, organizes them, and then offers subscriptions.

00:32:51.000 | There was one where we used to live. I have family members who were involved in it, and they just love it because the books are wonderful.

00:33:01.000 | To be able to have access to the living library at a subscription fee of, I can't remember what the one is that we looked at, that we were going to join, but we moved,

00:33:10.000 | whether it's $150 a month or $100 a month, to have access to a living library is just a steal for those of us who go through a lot of books.

00:33:18.000 | Now that my stammering is over, would this be a labor of love? Is this the idea that this might be a financially productive thing?

00:33:29.000 | What's the thought behind this?

00:33:47.000 | I don't know if you can go to any place that's a little bit quieter or having a hard time with your connection. Go ahead and try your answer over again.

00:33:55.000 | Go ahead, please.

00:33:56.000 | All right. So we visited, there's a woman who has one, she's kind of started, but she's not quite to the point where she can check out books yet.

00:34:06.000 | So we went and visited this, and she was asking her daughter, "How's your library been?" And my daughter said, "It's been a bit."

00:34:20.000 | And she has gone through a lot of books, but I don't know that she took the time.

00:34:38.000 | I'm sorry, Catherine. I know you're trying really hard. It's not, and I think it's on your end, it's not on my end, but the connection is not usable at the moment.

00:34:45.000 | I'm going to go on to another caller, and we'll come back to this in a few minutes. I'll come back to you and see if you can get to a better signal.

00:34:51.000 | Andrew, welcome to the show. How can I serve you today?

00:34:58.000 | Andrew. All right. Let's go on.

00:35:04.000 | John, welcome to the show. How can I serve you today?

00:35:08.000 | Hey, Sasha. Thanks for taking my call. I had a quick question about reducing my cash position, and specifically about buying gold at the risk of contributing to your "he tells everybody to buy gold" reputation.

00:35:27.000 | But it was one of the things I'd been thinking about for quite a while. But we're looking to, like I said, get some cash put back into the markets, maybe a little bit of Bitcoin.

00:35:39.000 | And it also seemed like the right time to finally pull the trigger and buy some gold, even though, of course, when everybody's thinking about buying gold, it's huge, very high prices.

00:35:50.000 | But specifically, what appealed to me in some of your past shows way back was the idea of maybe buying something like a – I'm not really interested in the numismatics aspect of it,

00:36:05.000 | but I do like the idea of having tangible gold that we can have physically, rather than just buying gold through a broker or something.

00:36:17.000 | But I like the idea you had said in the past about having maybe an American Gold Eagle for every year your kids progress through, like from being born until they're 18, and having something to give to them.

00:36:30.000 | Also, I mean, it wouldn't necessarily be for that, but it's just a good thing to anchor to.

00:36:35.000 | And specifically, I was also wondering if you still recommend going to have a relationship with a local gold broker that has a physical shop, rather than maybe the online space for buying gold has gotten more reputable and easier.

00:36:51.000 | Do you have any updated advice about that?

00:36:54.000 | Yeah. So my advice hasn't changed. I think I'll just go through it. You've mentioned a few things, and I'll answer a couple of those specific questions.

00:37:04.000 | I think that owning gold is a wonderful idea. I think everybody should own some gold.

00:37:09.000 | The amount of money, that is one of those things where it's hard to defend specifically, and that's where people get, "Well, how much gold should I own?"

00:37:18.000 | I don't think 100% of your net worth should be in gold. I don't think that 0.01% of your net worth should be in gold.

00:37:24.000 | I don't have a scientific number as far as how exactly you get to it, because this is one of those areas where it's just hard to know.

00:37:33.000 | You have to decide on a portfolio basis what you're actually going to buy.

00:37:42.000 | The best I get to is, I say, number one, I think that if you have 5% of your net worth in gold, I think that's a good starting number.

00:37:52.000 | Every professionally built portfolio from every mainstream financial planner is going to include an allocation to precious metals.

00:38:02.000 | The way that they allocate it, though, is usually to go to mining stocks or to an ETF of some kind.

00:38:09.000 | I think you can get more bang for the buck by simply owning your gold physically, owning it yourself.

00:38:16.000 | But if you have 5% of your net worth in gold, I think that's really great. Maybe as high as 10% I think would be fine.

00:38:23.000 | If some people are very committed and they went higher, okay, I understand, especially if you're following a permanent portfolio strategy or something like that.

00:38:33.000 | I think it's great. I get concerned with gold of the opportunity cost, so I'm not so much of a gold bug where I think everyone should put all of their money into gold.

00:38:43.000 | It can happen, and it actually does happen a lot. One of the things that I've observed happens with people.

00:38:48.000 | Because you can see your gold when you start stacking gold coins, you start to set little mini goals for yourself, and you start to see your money grow.

00:38:56.000 | It's in a digital world where we often don't see our money grow. It can be really motivating to say, "I want to have 30 ounces of gold," or, "I want to have 100 ounces of gold."

00:39:05.000 | "I want to fill up this container. I've got this sleeve for 20 ounces. I want to have more."

00:39:11.000 | I think that's encouraging if it helps people spend less, but it can keep people from investing into higher returning opportunities.

00:39:18.000 | Same conversation we had with the first call on whole life insurance. Nothing wrong with whole life insurance. Nothing wrong with gold.

00:39:24.000 | But what's wrong with it is it might keep you from higher producing opportunities, and so that's the challenge.

00:39:29.000 | If you figure out an amount of money that you want to have in gold, you sit down and then say, "What would that actually represent?"

00:39:37.000 | For a guy with $100,000 net worth to have 5% of his money in gold, $5,000, a handful of coins has it covered.

00:39:46.000 | A guy with $10 million net worth, that's a little bit harder. You don't necessarily want to have those mini gold coins.

00:39:52.000 | But when you go through the process, what you see is that the first thing to start with is just simply some physical gold.

00:39:58.000 | Everyone should be able to get their hands on some physical gold. There are so many benefits for it.

00:40:03.000 | You have something that is a valuable asset that can be held, that has thousands of years of history of usefulness and utility.

00:40:13.000 | Even in the modern world, even though I love to go and laugh at the videos of people trying to give away a gold coin, they can't do it on the streets.

00:40:21.000 | Even in the modern world, it has tremendous utility and it's helpful.

00:40:25.000 | I think the key is when you think about a piece of property that is physical, that's tangible, and that does not have paper titling to it,

00:40:36.000 | it's hard to come up with anything better than a precious metals coin, most importantly a gold coin.

00:40:43.000 | You think, "Okay, well I could have physical property, physical property that's not subject to inflation, and you would have a piece of real estate."

00:40:53.000 | But the problem with real estate is now it's tied, by definition, it's tied to the ground.

00:40:58.000 | That means that it's subject to political risk, it's subject to confiscation, it's subject to the government putting liens on it, etc.

00:41:05.000 | You go through all these attributes of various assets, and if you want something that is a physical, tangible store of value,

00:41:14.000 | that over time has historical evidence to say it holds its purchasing power, that yet doesn't have legal restrictions on titling, etc.

00:41:26.000 | It's hard to come up with anything other than gold.

00:41:28.000 | Now, it's not that gold is without legal restrictions.

00:41:31.000 | Remember that the US government banned the ownership of gold coins for almost 60 years.

00:41:37.000 | Something like almost 60 years it was illegal in the United States for you to own a gold coin.

00:41:41.000 | So it's not that it's without legal risks, but even when it was illegal for you to own a gold coin,

00:41:46.000 | if nobody knew that you had the gold coin, then there was no risk associated with it.

00:41:52.000 | It didn't appear on the blockchain, it couldn't be traced to your wallet on the blockchain.

00:41:57.000 | It couldn't be traced through some kind of, there's no KYC requirements or anything associated with it.

00:42:04.000 | So that's the value of gold.

00:42:06.000 | And when you go into an inflationary period, I think gold is not as great of an inflation hedge as we wish it were,

00:42:13.000 | but over the fullness of time, it's pretty good.

00:42:16.000 | And I think that if you recognize that there's a reason why Federal Reserve Banks all around the world

00:42:21.000 | stockpile tons and tons and tons and tons of gold, that's the same reason why I want to own gold.

00:42:26.000 | I'm bullish on gold, some silver, I'm not a silver bug, I think it makes sense to own what the central banks own.

00:42:32.000 | So now if you apply that down to yourself, you say, well, what would I do?

00:42:37.000 | So first, when you buy a physical gold coin, you're automatically committing yourself to something

00:42:46.000 | that is not going to be as, that's going to have other certain features that need to be considered.

00:42:52.000 | So for example, it's more expensive to buy a physical gold coin than it is to buy an ETF.

00:42:58.000 | And so if you wanted to trade gold and get in and get out, you would do that with paper gold,

00:43:03.000 | but you wouldn't do that with a physical gold coin.

00:43:05.000 | With a physical gold coin, you're going to go in, you're going to pay commission to purchase the coin,

00:43:09.000 | and you have to figure out where your market is to sell it.

00:43:13.000 | You think, okay, someday I'm going to sell this coin, so how am I going to sell it?

00:43:17.000 | And so that definition in and of itself leads you in the direction of saying,

00:43:20.000 | I should buy a gold coin that has a steady resale market.

00:43:26.000 | Now, thankfully, we know what these are.

00:43:28.000 | And so the first thing is to start with the bullion coins of your country of residence.

00:43:33.000 | Most of our countries create, our national mints create gold coins, gold bullion.

00:43:38.000 | That can be important for tax reasons because precious metals are highly taxed in the United States.

00:43:43.000 | They're taxed at 28%.

00:43:45.000 | But if you buy bullion coins of your country, you can avoid the tax on that, which can be helpful.

00:43:51.000 | And then also, most importantly, if you recognize the fact that you might not just be selling this to a gold shop,

00:43:58.000 | then buying bullion coins allows you to have a stronger product.

00:44:03.000 | So if I give you a gold American Eagle and you hold it in your hand and you look at it,

00:44:08.000 | every way that that feels, that that American Eagle feels,

00:44:12.000 | is very much like every other piece of U.S. currency you've ever held.

00:44:15.000 | The Eagle is the same.

00:44:16.000 | Everything that you know about it, it feels and looks like legit, real currency.

00:44:21.000 | It even says, whatever it says on it, United States currency.

00:44:25.000 | It says the dollar figure on it.

00:44:27.000 | And so that automatically lends it an air of authenticity.

00:44:32.000 | Most people have never held a Krugerrand.

00:44:35.000 | The Krugerrand is an amazing coin.

00:44:37.000 | It's a great bullion coin for you to own.

00:44:40.000 | But most Americans have never held a Krugerrand.

00:44:43.000 | But yet they've held lots of American currency.

00:44:46.000 | And so a gold Eagle or a Buffalo, these will have the air of authenticity.

00:44:52.000 | So I think it just makes sense to start with that.

00:44:54.000 | You're going to have to also figure out then your denomination.

00:44:57.000 | How big are the coins that I want to buy?

00:45:00.000 | The larger the denomination of coin that you buy, the cheaper it is to buy.

00:45:06.000 | If you go and you buy a standard, what do they call it, the 800-ounce brick,

00:45:12.000 | that's just the standard thing that you see in the movies when they're robbing the Federal Reserve.

00:45:17.000 | That's the cheapest way that you can buy physical gold,

00:45:19.000 | with the least amount of markup, least amount of commission, etc.

00:45:22.000 | But I think it comes out to $800,000 or something like that.

00:45:25.000 | It's far more than most of us are going to put in in a single transaction.

00:45:28.000 | And so you have this constant scale.

00:45:30.000 | If you buy a 1-ounce gold coin, you pay a lower premium, a lower commission,

00:45:34.000 | than a quarter-ounce coin or a half-ounce coin.

00:45:38.000 | You pay the highest commission on a 10-ounce coin,

00:45:41.000 | but you get this tiny little coin.

00:45:43.000 | So for most people at the level of the listener of Radical Personal Finance,

00:45:47.000 | 1-ounce coins are going to be fine.

00:45:49.000 | With gold at $1,800, let's figure you're trading in coins somewhere around $2,000.

00:45:56.000 | That's not too big of a denomination for where most of us are

00:46:04.000 | in terms of the amount of gold that we have.

00:46:06.000 | So can you buy online?

00:46:08.000 | Absolutely you can buy online.

00:46:11.000 | The online gold marketplace is not sketchy anymore.

00:46:15.000 | There are so many gold brokers and everything that you can just simply buy on.

00:46:18.000 | It's well-regulated. The stuff shows up.

00:46:21.000 | It's insured. It comes right to your door, etc.

00:46:24.000 | Here's my issue with online.

00:46:27.000 | When you buy gold, you're automatically buying something that has these certain benefits.

00:46:33.000 | You're buying something that has a stable, proven marketplace.

00:46:36.000 | I think one of the big benefits of gold is possession is the law.

00:46:40.000 | If you own it, you own it because you hold it in your hand.

00:46:44.000 | Because gold does not have certificates of title associated with it,

00:46:49.000 | you don't have to register it, you don't have to put number plates on the side of it,

00:46:53.000 | you don't have to put a license tag on it, you don't have to insure it,

00:46:56.000 | it's just a gold coin,

00:46:58.000 | then I think you get a big benefit by simply owning it privately.

00:47:03.000 | Why should anybody know that you went and purchased a gold coin?

00:47:07.000 | If you buy from an online dealer,

00:47:09.000 | there is no possible way for you to buy from an online dealer that doesn't leave a paper trail.

00:47:16.000 | Most of the time, paper trail is no big deal.

00:47:19.000 | None of us are doing anything illegal. There's no problem with a paper trail.

00:47:23.000 | But why create a paper trail when you don't need one?

00:47:26.000 | I mentioned that the US government banned the ownership of gold coins.

00:47:30.000 | I'm doing this off the top of my head, but I think it was in like 60 years.

00:47:33.000 | It was illegal to own a gold coin.

00:47:35.000 | That's a law that I would break all day every day of the week if they did that again.

00:47:41.000 | For a government to say, "We're going to ban your owning a gold coin,"

00:47:46.000 | there is no defensible moral reason behind that kind of law.

00:47:52.000 | That is pure power play.

00:47:55.000 | I'm not for an instant going to think twice about owning a gold coin

00:48:01.000 | just because some president and congress people wave their hands and say,

00:48:06.000 | "You're no longer owning this gold coin."

00:48:09.000 | It's insane that they ever did that, but that was the law.

00:48:13.000 | In that situation, why would I ever own something that has a paper trail associated with it

00:48:18.000 | where I own myself up to a legal risk?

00:48:20.000 | I've done nothing morally wrong by owning a gold coin.

00:48:23.000 | I'm not going to put myself in a situation where then the jack-booted thugs come

00:48:27.000 | and start banging on the door and saying, "Open up your safe," or "Open up your bank account."

00:48:32.000 | When you think about the excesses, the government overreach that the US government

00:48:39.000 | again and again and again and again and again has done

00:48:43.000 | and the way that they have screwed people over left, right, and center,

00:48:47.000 | why ever do that?

00:48:49.000 | If I'm going to go and buy a gold coin, I don't want to worry that in 2040

00:48:55.000 | they're going to put my family on a train and send us to camps like they did in 1940.

00:49:00.000 | I don't want to worry that they're going to come and start busting open safe deposit boxes

00:49:05.000 | or coming after what's in my home like they did in 1940.

00:49:09.000 | It's not even a century ago.

00:49:11.000 | So what I do in 2022 is going to make the difference.

00:49:15.000 | I'm not getting on the train and they're not coming to my house.

00:49:18.000 | Our memories are so short, but we're 80 years from this.

00:49:23.000 | We're 80 years from them locking up our fellow citizens in camps.

00:49:27.000 | We're 80 years.

00:49:29.000 | It's within-- I just had a family member die this last weekend.

00:49:35.000 | Within-- this was my wife's grandfather, right?

00:49:40.000 | Within this time period, within his life, the US government locked you in camps--

00:49:47.000 | certain people, the undesirables of that time--

00:49:51.000 | and told you you couldn't own gold coins.

00:49:53.000 | So sorry for making the point, but I think a lot of times people say,

00:49:56.000 | "Well, Joshua, why would you care if there's a paper trail?"

00:49:58.000 | I care because not within the lifetime of living family members,

00:50:04.000 | these people have done this.

00:50:06.000 | And so I say, "Why create a paper trail in the first place?"

00:50:09.000 | So the fact that you can go and deal with a local shop

00:50:13.000 | is the thing that eliminates the paper trail.

00:50:16.000 | Now, if I'm going to buy, let's say, hundreds of thousands of dollars of gold--

00:50:20.000 | well, actually, you know what?

00:50:22.000 | I have a hard time justifying why I do business with an Internet merchant,

00:50:26.000 | unless I was a collector and they had selection.

00:50:29.000 | But generally speaking, if I'm going to go and do transactions

00:50:33.000 | of tens of thousands of dollars,

00:50:35.000 | I see no reason to do that in the country where I live.

00:50:38.000 | That should all be done offshore, and the gold should all be held offshore.

00:50:43.000 | And so I'm not going to go to AppMex and order $100,000 worth of gold coins.

00:50:47.000 | And if I'm doing more modest quantities,

00:50:49.000 | then I should do that work locally, working with a local coin shop

00:50:52.000 | where I can go and I can pay cash.

00:50:54.000 | And if you go and you pick up a gold coin once a month and you pay cash for it,

00:50:58.000 | then you've cut the paper trail. There's no paper trail.

00:51:00.000 | There's no way to prove ownership of anything.

00:51:02.000 | There's nothing associated with it.

00:51:04.000 | There's no identification requirement. There's nothing.

00:51:06.000 | So that's my argument in favor of a coin shop.

00:51:09.000 | And then what you also do is you start to build a network of people

00:51:13.000 | who can advise you on it and who can get you the selection when you need it.

00:51:17.000 | So there are often people who want to go and buy precious metals,

00:51:22.000 | and you can't get it because it's not available physically.

00:51:25.000 | Last year, there was a major disparity in the market

00:51:32.000 | between the paper price of gold and the real price of gold.

00:51:36.000 | The paper price of gold was relatively low,

00:51:38.000 | but you couldn't get your hands on physical gold.

00:51:40.000 | It was a fake price.

00:51:42.000 | To get your hands on physical gold from even a big dealer,

00:51:46.000 | you paid a massive markup because the supply wasn't there.

00:51:50.000 | The paper price was fake.

00:51:52.000 | So when you build a relationship with a dealer,

00:51:56.000 | you then start to build in the opportunity for you to buy more gold in the future,

00:52:01.000 | to get preferential treatment, and then also to sell it.

00:52:04.000 | Because remember, gold is not the thing that you own forever.

00:52:07.000 | Don't get connected to any investment and say,

00:52:10.000 | "Well, this is the thing that I buy and never sell."

00:52:13.000 | It's just a thing. It's just an investment. That's all.

00:52:16.000 | So you need to be able to sell it.

00:52:17.000 | But selling physical gold is much more complicated

00:52:20.000 | than hitting "sell" on a computer screen.

00:52:25.000 | So you need a market to sell it into.

00:52:27.000 | You need a market with a dealer. It's great.

00:52:29.000 | But the dealer is going to give you a dealer price.

00:52:31.000 | It's nice to have a market if you can sell it into individuals,

00:52:34.000 | if you have people that you can sell it to.

00:52:36.000 | There are other ways as well.

00:52:37.000 | But the point is that that's why I believe so strongly

00:52:39.000 | and work with a local gold dealer,

00:52:41.000 | because you start to get some of those other benefits.

00:52:44.000 | And so since gold is in and of itself has many disadvantages,

00:52:49.000 | then I say maximize the advantages.

00:52:53.000 | And I think the people who just respond to an ad on the cable news

00:52:57.000 | that says, "Buy gold now," and they go and they buy the gold

00:52:59.000 | and give the credit card number, they're getting some advantages.

00:53:02.000 | They're owning some gold, but they're usually not doing it in a thoughtful way.

00:53:05.000 | And I think that they're not getting all the benefits that they could.

00:53:08.000 | They're not getting everything that's available for them.

00:53:11.000 | So that's my advice, is yes, work with a local dealer if you can, John.

00:53:16.000 | I appreciate that. Thank you.

00:53:18.000 | That's a good review of everything you have in other shows.

00:53:22.000 | So good to have a reminder from the private key app.

00:53:24.000 | Yeah, my pleasure.

00:53:25.000 | Thank you.

00:53:26.000 | Maybe this year, now that I'm in work mode and have everything set up,

00:53:30.000 | maybe this will be the year that I can go ahead and create the gold course

00:53:32.000 | that has been sitting in my outlines for the last four years.

00:53:35.000 | 812 Area Code, how can I serve you today? Welcome to the show.

00:53:39.000 | Hi, Joshua. This is Andy.

00:53:42.000 | Basically, my question is how would I, as an adult,

00:53:46.000 | go about exploring and understanding career options in a white-collar field?

00:53:56.000 | So kind of background, I have a blue-collar job.

00:53:58.000 | I'm pretty familiar with blue-collar work.

00:54:00.000 | If you asked me to name five careers that I could start

00:54:04.000 | and what it would take to train in them, how much money I could make,

00:54:07.000 | that I would make a good income, $80,000 plus a year,

00:54:11.000 | and what the day-to-day work would be like,

00:54:14.000 | I could explain being an electrician, a plumber, a mechanic,

00:54:19.000 | all these blue-collar fields.

00:54:21.000 | If you said, how could I do that with work from home, white-collar,

00:54:27.000 | knowledge worker job, I don't have a good understanding

00:54:31.000 | of what that work looks like day-to-day, how I would get those jobs,

00:54:35.000 | what the difference is between one and the other, that sort of thing.

00:54:39.000 | I'm curious how I would go about what you think I could do

00:54:42.000 | to learn about those things.

00:54:45.000 | I think the first thing would be why would you want to change?

00:54:49.000 | So if you were to go from a blue-collar job to a white-collar job,

00:54:52.000 | what would be the reason or some of the reasons why

00:54:55.000 | that you're even considering that?

00:54:59.000 | The first would be just I don't hate my job, I don't love my job,

00:55:03.000 | I'm kind of unstable, but I'm not sure that this is the thing

00:55:08.000 | that I'm most suited for and would most excel at.

00:55:12.000 | Second would be the job that I have, I'm pretty well tapped out

00:55:15.000 | on income potential, so if I want to increase my income substantially,

00:55:21.000 | I pretty well would need to change careers and retrain everything,

00:55:26.000 | so I wouldn't want to just only jump to what I know if I decided to do that.

00:55:30.000 | And then third, I listened to your episode about traveling

00:55:35.000 | and how that's not great for your health the other day,

00:55:37.000 | but I just was thinking I really would like the opportunity of I don't have

00:55:41.000 | to go to work or I could live wherever I want or where I don't,

00:55:45.000 | I have a job that I have to show up to every day.

00:55:48.000 | I don't love that being tied to it aspect.

00:55:55.000 | I think there are probably a number of different directions you could go,

00:55:59.000 | but I think the answer is probably simple and it's find one job

00:56:05.000 | that you are attracted to and then go after that one job.

00:56:10.000 | What I mean is I don't think we live in a, we don't live in the modern world,

00:56:15.000 | we don't live in a segregated world in the sense that either you're

00:56:20.000 | a blue-collar worker or you're a white-collar worker.

00:56:23.000 | It's not like you as a blue-collar worker have so much grease under your fingernails

00:56:27.000 | that you could never put on a shirt and a tie and be perceived as a white-collar guy.

00:56:33.000 | Now, there are people who are so culturally,

00:56:41.000 | they only fit in certain cultures. Think of guys I've worked with, right?

00:56:46.000 | Rednecks out in the middle of nowhere and put a tie on the guy,

00:56:49.000 | but at the end of the day, he's a redneck through and through.

00:56:52.000 | He's wonderful running a farm. He's wonderful running heavy equipment.

00:56:59.000 | He's wonderful at that stuff. He will never fit in an office environment.

00:57:04.000 | That's not his thing.

00:57:07.000 | But the fact that you're asking the question, it's not that hard to put on a white collar

00:57:14.000 | and a tie and go into an office environment.

00:57:18.000 | The question would be what would you gain from the office environment

00:57:20.000 | that you can't get elsewhere?

00:57:22.000 | So you mentioned two things, right? You mentioned something that I'm suited for.

00:57:27.000 | I guess you said three things.

00:57:28.000 | Suited for income potential and also the ability to have more flexibility on where I live.

00:57:36.000 | We're in a golden age for all of those.

00:57:41.000 | So I would begin, I think, with an analysis.

00:57:44.000 | My favorite would be to go and start doing some personality analysis,

00:57:48.000 | especially ones that are related to the job.

00:57:51.000 | Dan Miller's disc profile, I think, is a wonderful place to start.

00:57:55.000 | Take one of his tests and say, "Hey, here's the kind of personality I have,"

00:58:00.000 | and then all of a sudden there's a list of careers.

00:58:02.000 | I remember being shocked when I did the disc profile and I found I'm a pretty self-aware guy

00:58:08.000 | and I found that all the jobs that were recommended for me were either jobs that I'd had

00:58:13.000 | or jobs that I had on a list of things that I wanted to do that I thought would be cool to do.

00:58:18.000 | I thought this is a great profile.

00:58:20.000 | So it gives you ideas.

00:58:21.000 | Then you can go and consider and say, "Is that something that I want to do?

00:58:25.000 | Is that something that gives me a sense of clarity, a sense of excitement about it?"

00:58:33.000 | I think that if you're going to go from something that is good,

00:58:37.000 | you have to not just go from something that is good to something that might be good.

00:58:42.000 | I think you have to go from something that is good to something that you are convinced will be great for you.

00:58:47.000 | It has to be something where you say, "This is going to be great for you."

00:58:51.000 | So I would begin with personality assessments.

00:58:55.000 | I would begin with--there are many of them--but personality assessments

00:58:59.000 | and then also look at the opportunities that are available

00:59:03.000 | and then try to get a clearer idea of what specifically you want.

00:59:07.000 | If you want the ability to live wherever you can work through an Internet connection,

00:59:13.000 | that's going to be different than a white-collar job.

00:59:17.000 | So you'll want to craft a new set of words around it.

00:59:21.000 | But I would start by finding one job that you're really, really excited about

00:59:26.000 | and then just go do that and try that.

00:59:28.000 | The good thing about most blue-collar jobs is it's generally not hard to get back into them.

00:59:33.000 | So that is a big benefit of blue-collar jobs.

00:59:38.000 | Once you've done it, you're not going to lose your training.

00:59:40.000 | You're not going to lose your ability.

00:59:42.000 | If you're in a union and you have some kind of union situation where you're based on seniority,

00:59:47.000 | that certainly can go backwards.

00:59:49.000 | But most of the time, once you're qualified for a job, you're qualified and you can get it back again.

00:59:54.000 | So I would just simply find a job that I'm really excited about.

00:59:58.000 | And then I'd be remiss if I didn't say, obviously, consider some form of business on the side,

01:00:03.000 | some form of side hustle.

01:00:05.000 | A side hustle can often be your best way to try something.

01:00:09.000 | And then without losing the security of your income, and then if you like it,

01:00:13.000 | you can go move into it on a more full-time basis.

01:00:19.000 | Thanks.

01:00:20.000 | I guess I think really the point where I'm a little--I feel like I don't have good skills

01:00:26.000 | or good understanding of what to do is the how would I figure out what a job is like

01:00:32.000 | and whether or not I would like it beyond just, oh, the desk profile says that this is something

01:00:37.000 | that people with my personality like.

01:00:39.000 | I can imagine what my day would be like owning my own plumbing business.

01:00:44.000 | I've done that work.

01:00:46.000 | You say, hey, I was a financial planner.

01:00:49.000 | Being a financial advisor is a good way to make money.

01:00:51.000 | You can make lots of money.

01:00:52.000 | I like that part.

01:00:54.000 | I really have trouble imagining what I would actually do if I was a financial advisor.

01:00:59.000 | And I know--and I guess I can ask people I know, but my circle is pretty blue-collar

01:01:05.000 | or pretty--very traditional.

01:01:08.000 | I work for a big company.

01:01:10.000 | I'm a manager.

01:01:13.000 | I don't know a lot of financial advisors or freelance writers or--I don't even know what

01:01:19.000 | those jobs would be if I said, look, I want to make $100,000 a year from my laptop or

01:01:24.000 | in a high-demand field or whatever.

01:01:27.000 | I don't know a software engineer personally that I could ask what's that like to work

01:01:31.000 | for Google.

01:01:32.000 | Does that make sense?

01:01:33.000 | Yeah.

01:01:34.000 | That to me is pretty easy.

01:01:35.000 | So the answer is you find where those people are and you ask them.

01:01:39.000 | And in the world of Facebook groups, LinkedIn groups, Reddit, et cetera, all of that is

01:01:46.000 | just waiting for you.

01:01:47.000 | It's easily findable.

01:01:49.000 | Set up a new Reddit profile.

01:01:51.000 | Go and find a subreddit for software engineers and say, here's my question.

01:01:58.000 | Could you tell me?

01:01:59.000 | And an hour later, you're going to have 300 responses of people telling you what it's

01:02:02.000 | like.

01:02:03.000 | That's the most accessible way and the easiest way.

01:02:06.000 | I think I would also just do it locally.

01:02:09.000 | I think if you call just about anybody up on the phone and you say--this would technically

01:02:16.000 | be called an informational interview.

01:02:18.000 | I think in Dan Miller's 48 Days to the Work You Love book, he talked about that in the

01:02:23.000 | form of an informational interview.

01:02:25.000 | So you pick up the phone, you call someone up and say, hey, my name's Andy.

01:02:31.000 | I'm calling you because I found your number as a local state farm agent and I've been

01:02:38.000 | thinking about becoming an insurance agent.

01:02:40.000 | Right now I'm working as a blue collar guy.

01:02:42.000 | Would you be willing to let me take you to lunch and just ask you some questions about

01:02:45.000 | the career?

01:02:46.000 | Or you're a software developer or you're an accountant.

01:02:48.000 | Would you be willing to let me take you to lunch and ask you about the career?

01:02:52.000 | And if they say, no, I'm too busy for lunch, well, could I just ask you some questions

01:02:57.000 | for about 15 minutes because I'm considering a career change?

01:02:59.000 | I just want to know what the day-to-day life is like.

01:03:01.000 | I'm not looking for anything for you.

01:03:02.000 | I'm not looking for a job.

01:03:04.000 | I just want to know what it's like.

01:03:05.000 | Sure, okay.

01:03:06.000 | I'll talk to you for 15 minutes.

01:03:07.000 | And then just chat on the phone and describe your situation and say, this is what I'm doing.

01:03:13.000 | This is what I'm considering.

01:03:14.000 | Could you tell me what you love and what you don't love about your job and your input?

01:03:18.000 | And if I ever get those calls, I'm happy to answer those calls all day long.

01:03:22.000 | And I think the vast majority of people are.

01:03:24.000 | It's a very non-threatening thing.

01:03:27.000 | Very simple thing to do.

01:03:29.000 | So any business that has somebody that's working in it in the type of field that you're considering,

01:03:38.000 | you can just simply call them and talk to somebody.

01:03:42.000 | That's easy to do.

01:03:43.000 | And then I think that I don't want to say more importantly because I'm often skeptical

01:03:51.000 | that we need better skills when managing the information that we can find so easily on the Internet.

01:03:56.000 | But I would say in addition to that, go start trolling around the web and finding where communities of people are

01:04:05.000 | that are hanging out in what you're doing, in the things that you're considering.

01:04:10.000 | So here again, you may find a user group or a forum that's full of people that are involved in what you're doing.

01:04:18.000 | I think you'll find a lot online.

01:04:20.000 | There's lots of great personal finance forums that have people that would give you great answers to the questions

01:04:26.000 | and share their experiences.

01:04:28.000 | Those are great places to find real feedback.

01:04:32.000 | Then I think Reddit is a great solution.

01:04:34.000 | Go to either career-changing subreddits or go and find the subreddits for the particular careers that you're interested in.

01:04:44.000 | And then say, "Hey, I just registered. Here's my story. I'm doing such and such. I'm looking for this.

01:04:49.000 | I'd love to know what you love and what you don't like about your day-to-day life or what it's actually like."

01:04:54.000 | And in three days of doing that, you will literally have hundreds and hundreds of real-life experiences

01:05:02.000 | that will give you the input that you need to then go back and say, "Okay, based on what I heard from that,

01:05:06.000 | do I think that's a good fit for me or not?"

01:05:10.000 | Okay, great. Thank you.

01:05:12.000 | Yeah. I'm skeptical. One last comment.

01:05:14.000 | I am skeptical that somebody should go into "white-collar work" without a clear benefit to them.

01:05:26.000 | If I went broke, and I'm being very, very honest here, if I went broke, I wouldn't immediately go and get a so-called white-collar job.

01:05:39.000 | By "white-collar job," usually people think of some kind of corporate middle management kind of position.

01:05:49.000 | I would rather run a food truck than have a white-collar job.

01:05:53.000 | I would rather have a hot dog cart than have a white-collar job.

01:05:56.000 | I would probably go and take my pickup truck and start putting my services and run a junk collection service company.

01:06:04.000 | I'd literally go and haul stuff for people before I'd go and just take a white-collar job.

01:06:10.000 | I personally would enjoy those things more, enjoy the hustle of taking my pickup truck, buying a trailer,

01:06:18.000 | and going and hauling junk for people than I would go and enjoy a white-collar job.

01:06:24.000 | So if I'm going to take a white-collar job, I want some more benefit from it.

01:06:29.000 | So for me, I could go and become a financial planner again. Why?

01:06:32.000 | Because I enjoy the intellectual aspect and I like the money.

01:06:35.000 | I might be able to make $100,000 a year hauling junk, but I don't know how I can make $1 million a year hauling junk

01:06:41.000 | unless I start the next solid waste company or waste management company.

01:06:48.000 | And I'm not sure that I'm committed to that.

01:06:50.000 | But I can, without too much trouble, over the course of five or ten years,

01:06:55.000 | I can build a million-dollar-a-year income as a financial planner.

01:06:58.000 | So that to me is a big compelling benefit.

01:07:03.000 | Or you can find something that piques your intellectual curiosity.

01:07:07.000 | Give me a chance to be an executive director of something that's involved in something that I'm interested in.

01:07:12.000 | Yeah, sure, absolutely.

01:07:14.000 | Or I'd choose something based upon the lifestyle.

01:07:16.000 | Tell me I'm going to go and be the executive director of an organization that's going to Geneva

01:07:22.000 | and going back and forth with the UN, and I would enjoy the international aspects of it.

01:07:27.000 | So you've got to find something more than just saying "white collar."

01:07:30.000 | Because it would seem that in the modern age, there are probably more people--

01:07:36.000 | it feels to me like there's more people who are white-collar workers,

01:07:39.000 | who are dissatisfied with their day-to-day existence, than most other things.

01:07:45.000 | When I was working in a corporate environment where I was a low-level consultant,

01:07:51.000 | and I was expected to be in the office 9-5, same office, same computer, same office/cubicle,

01:07:58.000 | I would rather be a blue-collar worker most of the time than that,

01:08:01.000 | as long as the blue-collar work is something that I'm good at.

01:08:04.000 | So make sure that there's enough benefit before you walk away,

01:08:07.000 | because blue-collar work can be very satisfying.

01:08:10.000 | It can have a much easier culture.

01:08:12.000 | You can enjoy it more.

01:08:14.000 | There's a lot of benefits to it that you don't get the same of in "white-collar" spheres.

01:08:21.000 | So be careful.

01:08:23.000 | All right, thanks. Yeah, that makes sense.

01:08:25.000 | I guess I probably should have said more like "intellectual work" rather than "white collar."

01:08:28.000 | I was going to use a colloquial term.

01:08:30.000 | But yes, that right there is the reason that I have not taken an office job

01:08:34.000 | in the large company I work for,

01:08:36.000 | because what I do for them is a lot more appealing than that option.

01:08:41.000 | Totally understand. Totally understand.

01:08:43.000 | And I find a wonderful solution that's perfect for you.

01:08:46.000 | Andrew, welcome to the show. How can I serve you today?

01:08:50.000 | Hey, Joshua. Thanks for taking my call.

01:08:52.000 | I have a question about disability insurance for my wife, who's a homemaker.

01:09:00.000 | I've made a couple calls,

01:09:02.000 | and the only place I've found that was willing to extend disability insurance for her

01:09:09.000 | that I had heard of before was Northwestern Mutual.

01:09:12.000 | And so because I don't have any comps, I want to ask, is this a good deal or not, basically.

01:09:19.000 | I make about $120,000 a year.

01:09:23.000 | They were willing to offer for her coverage $2,000 a month benefit,

01:09:31.000 | one-year elimination period for $60 a month for total disability.

01:09:38.000 | And they didn't really have very many options beyond that.

01:09:44.000 | It was guaranteed renewable, modified on occupation.

01:09:48.000 | Does that sound like a reasonable price for a product that's kind of unique in the insurance market?

01:09:55.000 | Yes, but I want to give you some texture to it.

01:09:58.000 | So the first thing is, you're worried about the price,

01:10:02.000 | and there are no games that are played with the price of this stuff in the marketplace.

01:10:09.000 | There's no games that your Northwestern Mutual agent is playing with the price.

01:10:12.000 | The price is what the price is.

01:10:14.000 | The prices are standardized. They just are.

01:10:18.000 | And especially with disability income insurance, you don't ever try to play around on price

01:10:24.000 | because you're dealing with something where if the company wants to screw you and not pay a claim,

01:10:30.000 | they have options to do that on a disability claim.

01:10:36.000 | So you need to work with a company that you believe will actually pay the claim.

01:10:39.000 | That's different than life insurance, meaning, of course,

01:10:43.000 | you have to believe your life insurance company is going to pay the claim, but death is easy to prove.

01:10:48.000 | There is a true binary reality.

01:10:51.000 | Either you are alive or you are dead. There's no in-between.

01:10:55.000 | Either you are alive or you are dead.

01:10:57.000 | You have the death certificate, which you can send to the insurance company and get your money,

01:11:01.000 | or you don't. It's absolutely binary.

01:11:04.000 | With disability, it is not binary.

01:11:07.000 | It is a range of disability.

01:11:10.000 | It's, "Okay, how disabled are you? Are you 20% disabled?"

01:11:14.000 | Well, 20% disabled from what? 20% disabled from being able to think?

01:11:18.000 | Or 20% disabled from being able to do my job?

01:11:22.000 | Here is where company is very, very important, where you want to work with a good company.

01:11:27.000 | I think that's a great company to work with.

01:11:29.000 | Obviously, I formerly was a Northwestern Mutual agent years ago.

01:11:33.000 | I have not been an agent since 2013 or '14, something like that.

01:11:38.000 | I'm many years away from that.

01:11:40.000 | But if I were buying new disability insurance today,

01:11:44.000 | there's no question that I would go straight to my Northwestern Mutual friends and contacts,

01:11:49.000 | and I would buy insurance from them.

01:11:52.000 | What I think is more important is to say,

01:11:54.000 | "Should you buy disability income insurance on your wife who is a homemaker?"

01:12:01.000 | Prior to being a homemaker, did your wife have a financially—

01:12:06.000 | was she earning money in a career of some kind?

01:12:10.000 | As an accountant, yes.

01:12:12.000 | Okay. And how much money was she making as an accountant?

01:12:17.000 | She had an injury-level position.

01:12:22.000 | I'm not sure. Not a lot.

01:12:24.000 | Is it her ambition to go back to being a professional accountant?

01:12:27.000 | Or is it, "Okay, it's nice to know that I can do it, but I'm enjoying being a homemaker"?

01:12:33.000 | I don't think that's part of her ambition, to go back.

01:12:36.000 | Yeah. So here is the wrinkle with buying a disability insurance policy for her.

01:12:43.000 | And to not bury the lead, I'm not sure that you need one.

01:12:47.000 | Let me explain why.

01:12:52.000 | First, you have been well-educated by your insurance agent on this topic.

01:12:57.000 | You got good information, and I was going to explain it to you.

01:13:01.000 | The problem with being a homemaker is, how do I prove if I'm actually disabled?

01:13:07.000 | How do I actually show that I'm disabled?

01:13:10.000 | Most disabilities are not what is called total disabilities.

01:13:14.000 | Most disabilities are partial disabilities.

01:13:17.000 | So if you come in, and you say, "Hey, look, I'm working.

01:13:21.000 | I'm earning $10,000 a month at my job. I've got a professional job.

01:13:26.000 | Something happened, and I've got a 50% loss of capacity.

01:13:31.000 | Either now I can only work 25 hours a week instead of 50 hours a week of what I was before,

01:13:35.000 | or now I can only perform these certain duties where before I could perform those other duties."

01:13:41.000 | You can have a partial loss of disability, and most disabilities are partial.

01:13:46.000 | If you think about the kinds of things that could result in your being disabled.

01:13:50.000 | If you have an accident of some kind, then most of the time an accident is not going to be completely

01:13:56.000 | and totally debilitating for you.

01:13:59.000 | If you have some kind of illness, it's an unusual illness that completely devastates

01:14:05.000 | and makes you unable to work at all.

01:14:07.000 | Now it's not quite as at all.

01:14:09.000 | Most of the time an insurance company says if you're more than 80% disabled,

01:14:14.000 | then they'll consider you to be totally disabled.

01:14:16.000 | So you don't have to be able to work at all in order to qualify for total disability.

01:14:21.000 | But you do need to get to 80%.

01:14:23.000 | So when you look at a homemaker, because the duties are so varied,

01:14:29.000 | it's very hard to prove any kind of partial disability.

01:14:32.000 | So if your wife had purchased a policy from Northwestern Mutual while she was an accountant,

01:14:40.000 | she would have had a policy that covered her for partial disability or for total disability.

01:14:46.000 | And then if she was disabled from accounting while being an accountant, it would have those terms.

01:14:52.000 | Once she becomes a homemaker and she's getting a policy,

01:14:55.000 | then it's either you're totally disabled or you're not.

01:14:58.000 | So if your wife is totally disabled, that means she can't do more than 20% of the duties

01:15:05.000 | or responsibilities of being a homemaker.

01:15:08.000 | All things considered, how do you prove that?

01:15:11.000 | How do you prove that for a homemaker?

01:15:13.000 | Are you to say, "Well, she can't be a mother."

01:15:17.000 | Well, how do you prove whether you can be a mother?

01:15:19.000 | It's one thing if you've got a little baby.

01:15:21.000 | It's one thing if you've got school-age children.

01:15:23.000 | Are you willing to say that she can't clean the house?

01:15:27.000 | Well, you've got to be pretty disabled to not be able to do cleaning.

01:15:31.000 | She can't cook.

01:15:33.000 | Well, you can cook if you're blind, literally.

01:15:36.000 | Of course, the policy would pay out because there's presumptive total disability in all those policies.

01:15:40.000 | If she's blind, it'll pay out.

01:15:42.000 | But the point is that how do you define that?

01:15:44.000 | And so in order for somebody to collect on a policy like that, as a homemaker,

01:15:49.000 | they've got to be very, very disabled, which is statistically very unlikely.

01:15:54.000 | Does it happen? Yes, but it's statistically very unlikely.

01:15:58.000 | Then you say, "What would happen in that scenario, and is this something that we need to ensure for?"

01:16:04.000 | Well, if your wife were totally disabled, then of course you would have major problems in your household.

01:16:11.000 | But the policy amount that they'll offer of $2,000 per month,

01:16:16.000 | how far does that go to solving your problems?

01:16:19.000 | You're not going to be able to live on $2,000 a month.

01:16:22.000 | You're not going to be able to quit your job to take care of her and get rich on her $2,000 a month.

01:16:30.000 | It's going to come in after a whole year of disability with a one-year elimination period.

01:16:35.000 | And so basically the only circumstance is if your wife is totally disabled,

01:16:41.000 | then you can have the $2,000 a month, but how big of a deal is that to you?

01:16:46.000 | It's much smaller of a deal in terms of your financial impact

01:16:51.000 | than if she were making $8,000 a month in a job and you lost $8,000 of income and you had to take care of her.

01:16:57.000 | And so these policies, when you look at them, yeah, it's fair, but it's just hard to justify that you need it.

01:17:05.000 | And so my wife, prior to our marriage, I sold her a disability income insurance policy,

01:17:11.000 | and she was working at that time.

01:17:14.000 | And so she bought the policy, she had it, then we married.

01:17:19.000 | I picked up paying the premiums on it when she was working and earning a job.

01:17:22.000 | I kept the policy for a couple of years after she became a full-time homemaker,

01:17:27.000 | but then eventually I just dropped the policy because I looked at it and I said,

01:17:31.000 | "This policy, there's nothing wrong with the contract. The contract's a good contract."

01:17:36.000 | But because of the difficulty of insuring a homemaker, the contract is not that big a deal,

01:17:43.000 | and the money from it wouldn't be life-changing for us.

01:17:47.000 | If my wife were totally disabled today, what would I need to do?

01:17:50.000 | I would need to enroll my children in school, I would need to bring in someone to the home to help care for her,

01:17:57.000 | and I would need to keep on working.

01:17:59.000 | And if she had $2,000 a month of disability income insurance, it wouldn't solve any of our problems.

01:18:05.000 | And so I chose not to continue the policy because I did this analysis,

01:18:11.000 | and I thought, "I don't think this is a great buy in the disability income insurance space."

01:18:20.000 | That's great perspective. I appreciate it.

01:18:23.000 | Yeah. And hopefully it came through clear.

01:18:25.000 | It's not the $60 a month, it's just the fact that this doesn't seem like the best scenario.

01:18:32.000 | So here's what I would say.

01:18:34.000 | Number one, what you can sometimes do is if there's a specific thing that you're concerned about,

01:18:42.000 | purchase a short-term disability insurance policy or purchase a policy that's a specific occurrence policy.

01:18:51.000 | So for example, you're worried that your wife might get cancer.

01:18:54.000 | Well, go ahead and purchase a cancer policy that's an indemnity policy if she gets cancer.

01:19:00.000 | Or purchase, instead of the long-term disability, consider purchasing a short-term disability policy.

01:19:06.000 | If you're worried that she might have an accident, a long-term disability contract like this is not the kind of thing that makes a lot of sense.

01:19:14.000 | Sorry, if she has an accident, it's very hard to see the accident,

01:19:19.000 | short of her becoming a total quadriplegic in a car accident or something or a skiing accident.

01:19:24.000 | It's hard to see the accident that would make her unable to be a homemaker.

01:19:28.000 | She might be a mother who can't clean her house, but she could still be a great mother.

01:19:32.000 | She might be someone who can't see, but she could still be a wonderful whatever the situation is.

01:19:38.000 | So what you can do is if you're really worried about an accident, purchase a short-term disability policy

01:19:43.000 | that will kick in with a short-term period, let's say 30 days,

01:19:47.000 | and you can get a policy that will have a coverage of up to perhaps two years.

01:19:52.000 | So that would be kind of like an AFLAC type policy.

01:19:54.000 | You can get from AFLAC pretty easily or one of AFLAC's competitors.

01:20:00.000 | Match that up with a great life insurance policy, and then on your life insurance policy, put a waiver of premium.

01:20:09.000 | And a waiver of premium on a life insurance policy says that if the insured is totally disabled,

01:20:16.000 | the insurance company will pay the life insurance premium for the insured.

01:20:21.000 | And there it is. The definitions of that, read the waiver of premium clauses,

01:20:25.000 | but the definitions are either this is total disability or it's what's called presumptive total disability.

01:20:33.000 | And so, for example, since I know those contracts very well because I own a bunch of them,

01:20:37.000 | in the Northwestern Mutual Contracts, the presumptive total disability says that if the insured loses

01:20:43.000 | the complete and irrevocable loss of sight, speech, or hearing, or the use of two or more limbs,

01:20:52.000 | meaning two legs, two arms, one arm, one leg, then the insured is considered by presumption to be disabled.

01:21:00.000 | So if your wife were in a car accident and she were paralyzed from the waist down,

01:21:06.000 | then that waiver of premium would kick in on the contract.

01:21:10.000 | And then the way that good mutual companies, including Northwestern Mutual,

01:21:15.000 | I hope I'm doing a good job dancing around.

01:21:17.000 | I have no special affinity for Northwestern Mutual at this point in time.

01:21:22.000 | I'm not an employee. I was an employee years ago.

01:21:26.000 | I sold their policies, among others, so I have an in-depth knowledge,

01:21:29.000 | but I try to avoid the insurance wars because I got no horse in the race.

01:21:34.000 | But whether it's Northwestern or New York Life or MassMutual or Guardian,

01:21:38.000 | these are the good insurance companies that you want your insurance contracts with that are going to count.

01:21:43.000 | But what they do is that if there's a waiver of premium in the contract,

01:21:49.000 | then they'll pay the premiums on it.

01:21:54.000 | But in Northwestern's contracts, you can still convert them to whole life insurance.

01:21:59.000 | So what I would do if my wife, if she became disabled, is, again,

01:22:04.000 | I would hire a tutor or send the children to school to minimize the amount needed.

01:22:08.000 | I would hire in other services. I would bring a nurse into the house, take care of her if necessary.

01:22:13.000 | Or I would hire other domestic help to help us with house chores.

01:22:18.000 | And then what I would do is she has a lot of term life insurance.

01:22:21.000 | I would convert all of that term life insurance to whole life insurance.

01:22:26.000 | And then the insurance company would pay the premiums,

01:22:29.000 | and I would flip all of those dividends to coming out as cash.

01:22:33.000 | And if we needed the cash, I would use those dividends as cash.

01:22:36.000 | It wouldn't do much in the beginning years, but once the cash values start to grow

01:22:40.000 | and once the dividends increase, then those dividend payments can become substantial.

01:22:44.000 | And if we didn't need the cash, didn't need those dividends,

01:22:48.000 | then I would just simply keep the dividends accumulating in the contracts.

01:22:51.000 | And that's how I would handle the financial needs.

01:22:55.000 | And so the idea here is, let's pretend my wife has $2 million of term insurance,

01:23:00.000 | or $1 million of term insurance.

01:23:03.000 | Then I would convert the whole $1 million from term insurance to whole life insurance.

01:23:06.000 | The insurance company would pay the premiums.

01:23:09.000 | I would redirect our cash flow.

01:23:12.000 | So let's say that money that I was saving for retirement, I can't save for retirement anymore

01:23:16.000 | because I have to hire more help to care for her, care for our children, etc.

01:23:20.000 | And so I would drain my retirement accounts or divert the money from those,

01:23:25.000 | from that I was putting into those retirement accounts to our day-to-day needs now.

01:23:29.000 | But now the insurance company is making the contributions to the whole life policy.

01:23:33.000 | And that would then wind up giving us at least hundreds of thousands,

01:23:37.000 | if not millions of dollars depending on the age of disability,

01:23:40.000 | that would be available for her in retirement.

01:23:47.000 | Or it would be available as a death benefit for me if she died before I did.

01:23:51.000 | So that's how I dealt with it, is I made sure I dropped the disability insurance

01:23:55.000 | and then I kept the life insurance in force with the waiver of premium

01:24:01.000 | and the disability clause as part of the waiver of premium on a good life insurance policy.

01:24:07.000 | So if I were you, that's what I would do myself,

01:24:10.000 | unless there's some other extenuating circumstances.

01:24:13.000 | Wow. I don't think I would have gone down that path. I appreciate it.

01:24:19.000 | You cut out there right when you were endorsing another company besides Northwestern Mutual.

01:24:24.000 | What was the other one you said?

01:24:25.000 | I'm not endorsing any company. Come on, don't make my life hard.

01:24:29.000 | I'm simply saying I am a firm believer that with insurance,

01:24:36.000 | I want whenever there's a good company, I want my insurance to be with a mutual insurance company.

01:24:43.000 | And so this is with property and casualty.

01:24:45.000 | If you can get your property and casualty insurance with Amica or with USAA,

01:24:50.000 | or state, isn't State Farm Mutual I think?

01:24:55.000 | Try to go with a mutual insurance company.

01:24:57.000 | In the life insurance space, there are basically two big ones and then three and four are also big.

01:25:06.000 | So you have Northwestern Mutual, New York Life, who are long-time competitors and both excellent,

01:25:13.000 | and you have MassMutual, which is also a long-time competitor and excellent,

01:25:19.000 | and Guardian is a long-time competitor and excellent.

01:25:23.000 | And so those are kind of always seen as the big four.

01:25:26.000 | There are many other mutual insurance companies, so you can find them,

01:25:31.000 | but none of them are as big as those big four.

01:25:34.000 | And so in a way of trying to say, "Hey, here are some companies that you might consider that are really good,"

01:25:40.000 | I always list those four, not endorsing them, just saying that any of those four are excellent.

01:25:46.000 | And of course, in many markets, the Northwestern Mutual and New York Life are the leaders.

01:25:52.000 | To be clear, that doesn't mean that there's not a great place for other insurance from other companies.

01:25:58.000 | There are lots and lots of life insurance companies, and they have products that are great.

01:26:03.000 | There are certain companies that certain professions need to go to.

01:26:09.000 | If you're a chiropractor buying disability insurance, you may or may not wind up with any of those.

01:26:14.000 | I've been out of that market so long I'm growing rusty on specific companies.

01:26:18.000 | But there are specific companies that are better for certain careers, for certain things in disability insurance.

01:26:25.000 | So you want to defer to the knowledge.

01:26:27.000 | You may also choose other companies because you have health conditions or something else that is better.

01:26:33.000 | You might smoke a cigar a day.

01:26:35.000 | Well, there are companies that you can smoke five cigars a day,

01:26:38.000 | but as long as you don't touch a single cigarette, they'll give you basically non-tobacco ratings.

01:26:42.000 | Those companies won't.

01:26:44.000 | There are people who have certain medical conditions when you're better off to go with another company

01:26:49.000 | because their underwriters will treat you differently.

01:26:51.000 | Just because a company is good doesn't mean that all insurance should be with that company.

01:26:55.000 | But when I'm trying to give a list of companies that I would consider first and foremost,

01:27:00.000 | assuming there's no medical issues, assuming there's no hobbies that are an issue, etc.,

01:27:04.000 | then when I talk about life and disability insurance, I list off those four.

01:27:10.000 | Well, great. Thank you very much.

01:27:12.000 | My pleasure.

01:27:13.000 | All right. I think if my memory is right, is this Catherine? Catherine, is that you again?

01:27:19.000 | Yeah.

01:27:20.000 | So we were talking about a living library earlier, and I had explained what a living library was,

01:27:25.000 | and then I asked you the question.

01:27:27.000 | I said, "What's the point? Why are you trying to do this?

01:27:30.000 | Is this just a labor of love? Is this a profitable thing?"

01:27:36.000 | And then you were about to tell me how your daughter had met with the other person who had started a living library,

01:27:40.000 | and that was where we couldn't understand you.

01:27:41.000 | So why do this at all?

01:27:43.000 | Right. Right.

01:27:45.000 | So I think the idea came from – when we go to our local library, there's a lot of not great books.

01:27:54.000 | So the idea was to have an access point for other kids in our area to have these books.

01:28:00.000 | And there isn't one in our city at this point in time.

01:28:05.000 | The reality is after we visited this lady's basement and her 5,000 books,

01:28:09.000 | there's no way we can pull this off with – we're a homeschooling, very busy family.

01:28:14.000 | So I feel like maybe we start with just collecting books, and maybe in five years when she's a little more mature –

01:28:22.000 | I mean, even the Dewey Decimal System and trying to figure out how to categorize all these books.

01:28:27.000 | I mean, there's so many pieces to this for a nine-year-old.

01:28:30.000 | I would be making the library basically.

01:28:33.000 | So wanting to parent well through this, but also how to steward this really cool opportunity in her life

01:28:44.000 | without just ordering all these books and then – I don't know.

01:28:51.000 | So I don't know.

01:28:52.000 | Got it.

01:28:53.000 | The grant – did the grant issuer make any stipulations on the $5,000 or require any follow-up with them,

01:29:02.000 | or was it given with pretty broad latitude?

01:29:07.000 | No, it's no strings attached at all.

01:29:10.000 | So it's basically – it was like a young patriot scholarship, and it wasn't even for a library.

01:29:17.000 | She just said that if she won the scholarship, she would like to start a living library.

01:29:21.000 | Cool.

01:29:22.000 | So yeah.

01:29:23.000 | So there's no sort of like we have to meet these requirements.

01:29:26.000 | Cool, cool.

01:29:28.000 | Well, this is the most interesting call I've received in a very long time.

01:29:39.000 | I mean, it gets your wheels spinning in so many – so we opened a bank account for her so she can do a bank.

01:29:43.000 | I mean, so she's learning banking, and we want to have her start writing out all the titles of the books that we already have

01:29:49.000 | so she can start learning how to log books.

01:29:53.000 | But, you know, she's also nine, so kind of what's realistic.

01:29:57.000 | And then the other thought I had, we don't have an e-reader, and we don't have a television or anything like that either.

01:30:03.000 | So we kind of are very cautious about that sort of thing.

01:30:06.000 | But I thought, well, an e-reader, at least she could kind of pre-read the book before we just go and order a bunch of books off list

01:30:12.000 | because, I mean, some books are good, some books – I don't know.

01:30:17.000 | So that's a separate topic.

01:30:19.000 | We'll come back in seconds.

01:30:20.000 | First of all, is this a money-making endeavor?

01:30:22.000 | I can't see any way that this is a profitable money-making endeavor.

01:30:26.000 | I have not – like, considering the Living Library concept, it's a labor of love.

01:30:32.000 | It's a passion project.

01:30:34.000 | There's nobody better than talking with a librarian who runs a Living Library.

01:30:38.000 | I mean, it's just an amazing resource.

01:30:40.000 | My sister, who subscribes to the one where I used to live, she loves it, and it's just an amazing resource.

01:30:46.000 | But it's a passion project.

01:30:48.000 | I don't see how you can make it make sense financially.

01:30:51.000 | So I don't see any business potential here.

01:30:54.000 | My thought, from my personal experience, $5,000, how far does $5,000 go?

01:31:01.000 | For good books, $5,000 doesn't go that far, right?

01:31:06.000 | You might wind up with, I mean, optimistically, 500 books if you can get it at $10 each.

01:31:12.000 | I think that generally many books you can certainly get $3 used, $7 shipping, right, average price of $10.

01:31:21.000 | But in terms of creating a library, I mean, I spent almost $1,000 on books last week.

01:31:29.000 | So that was just for our personal library for my children that it just is big money quickly.

01:31:37.000 | But I'll tell you what, our personal library, we are super keen on lending our books to our friends.

01:31:48.000 | So I have a personal library that kind of works in our local area like a living library

01:31:53.000 | because we've tried to pack it full of really high-quality books.

01:31:57.000 | And I've scoured bookstores, scoured used bookstores all over the world.

01:32:01.000 | I've scoured the internet.

01:32:02.000 | I've ordered stuff from multiple continents.

01:32:05.000 | And so there's a great degree, and our friends really appreciate it because Joshua buys the $50 books,

01:32:11.000 | and they get to take them home and use them for a couple of weeks.

01:32:14.000 | And so I think it's awesome.

01:32:17.000 | My thought is if you just started with the books that will be interesting to our friends

01:32:23.000 | or to your peer group or where you see a need, then that could make a really cool opportunity for them.

01:32:32.000 | And then I would say just focus the money on where you thought it would be most best spent

01:32:40.000 | in terms of who would benefit.

01:32:42.000 | If it's neighborhood children, then what would be some living books that would appeal to the neighborhood?

01:32:47.000 | If it's the homeschool co-op, what would be some of the books that are not met?

01:32:52.000 | I have tons of foreign language books.

01:32:54.000 | That's the thing that is the biggest thing.

01:32:56.000 | And so I've got dozens and dozens and dozens of foreign language books,

01:33:00.000 | and I'm happy to lend those out to people.

01:33:02.000 | And so maybe in your local homeschool co-op, if you bought some great foreign language books

01:33:07.000 | and lent those out, that would be a service to the community,

01:33:10.000 | basically in the spirit of the scholarship, but without going through the formal aspect of it.

01:33:17.000 | That's the best I got, and that's just from personal experience.

01:33:21.000 | I've got a library.

01:33:23.000 | We moved recently, and we've got a whole room that is a library.

01:33:26.000 | My wife's got it all set up with chairs, wonderful reading lights.

01:33:30.000 | And so our friends love to come and check out our books, and they borrow them.

01:33:36.000 | And I buy all the old ones.

01:33:37.000 | I buy all the old living books and whatnot.

01:33:39.000 | But it's for my children, but it's also a help in our local community.

01:33:45.000 | Right, yeah.

01:33:46.000 | Okay.

01:33:49.000 | Okay.

01:33:51.000 | And as far as the responsibility of tracking the books,

01:33:57.000 | would you do that to a 9-year-old, or do you think that that's too much?

01:34:01.000 | I would--

01:34:02.000 | I mean, she's responsible.

01:34:03.000 | Yeah, but I would maybe just do a sign-out sheet, like put your names in the books

01:34:07.000 | and then do a sign-out sheet where people can write down what they're borrowing

01:34:12.000 | and then just make sure the names are in the books.

01:34:14.000 | That's kind of a simple way to do it.

01:34:16.000 | I think that for a 9-year-old, it just seems like--

01:34:20.000 | since I don't see a business opportunity here myself,

01:34:22.000 | I don't think this is a profitable thing.

01:34:24.000 | I think this is just a wonderful community resource.

01:34:26.000 | I would keep it pretty simple and recognize that--

01:34:30.000 | Yeah.

01:34:32.000 | It's funny.

01:34:33.000 | You find the stories of great writers or great--

01:34:36.000 | yeah, many, many great figures.

01:34:38.000 | Sometimes you'll find that they stole a whole bunch of books from the library,

01:34:41.000 | but yet that was the foundation that they used to inspire their love of literature.

01:34:46.000 | I think the best thing that you would have the most fun would be to say--

01:34:50.000 | I guess with my 9-year-old, I would think,

01:34:53.000 | "Who would we really want to be reading books?

01:34:55.000 | Is it neighborhood children who aren't reading?

01:34:57.000 | Is it homeschool people?

01:35:00.000 | How could we use this in a way that we buy books

01:35:03.000 | that other people might not be willing to buy

01:35:06.000 | and yet then provide them for them?"

01:35:09.000 | So books that aren't available at the library,

01:35:11.000 | books that just fill in a cool niche of a need within our local community

01:35:15.000 | or local church, something like that.

01:35:18.000 | Mm-hmm. Good.

01:35:20.000 | Okay. Thank you.

01:35:22.000 | Best I got.

01:35:23.000 | I think it's great that she won the money.

01:35:25.000 | On the e-reader thing--

01:35:28.000 | I've got a good bit of experience with that now.

01:35:32.000 | Do you have--

01:35:34.000 | You've held back because of trying to stay screen-free.

01:35:38.000 | Right. We don't have any sort of experience.

01:35:41.000 | Yeah.

01:35:42.000 | I'll tell you what I have learned.

01:35:45.000 | We have been 100% screen-free up until last year when we started traveling.

01:35:52.000 | When we started traveling, we said, "Okay, we'll go ahead and do it."

01:35:55.000 | And by the way, for clarity, I'm not sure that screen-free,

01:35:58.000 | quote, "completely" is the best plan.

01:36:00.000 | I think there are downsides to it.

01:36:02.000 | For example, I'll get to it in a moment,

01:36:04.000 | we're using e-readers for--

01:36:07.000 | I use them a lot for foreign language.

01:36:09.000 | But one of the things I'm very conscious of

01:36:11.000 | is that if I brought in more foreign language screens,

01:36:14.000 | that could be great, but I just don't want to put that--

01:36:16.000 | I don't want to put twaddle in front of my children

01:36:18.000 | even if it's in Chinese.

01:36:20.000 | I think there might be a place for it in the coming years.

01:36:22.000 | I just haven't done it yet.

01:36:24.000 | But when we started traveling, and we were traveling full-time,

01:36:28.000 | obviously we couldn't cart along too many books with us.

01:36:33.000 | And so I went ahead and grabbed a reader for my eldest, my reader,

01:36:41.000 | and then just started loading it up.

01:36:44.000 | And so we started with a Kindle, and Amazon does a pretty good job.

01:36:48.000 | And the Kindle selection is, of course, huge,

01:36:52.000 | where it's great.

01:36:54.000 | And so one of the things that's nice about it

01:36:56.000 | is you can put all of these great old series

01:36:59.000 | that are all in the public domain on it pretty easily.

01:37:02.000 | So, for example, I put the whole Tom Swift,

01:37:06.000 | the original Tom Swift series for my son on the e-reader,

01:37:11.000 | and he read them, right?

01:37:12.000 | There's 19 books in it, and it's just all there,

01:37:15.000 | and it cost me--it was all free, or 99 cents or whatever

01:37:18.000 | for the whole thing, and it worked its way through it.

01:37:20.000 | And so that was great.

01:37:22.000 | You can't find those at prices I'm willing to pay,

01:37:25.000 | but 99 cents, I've got there.

01:37:27.000 | And with the e-reader, with just a dedicated--it would be

01:37:32.000 | a Kindle paperwhite or some kind of e-reader--it's just a screen.

01:37:36.000 | And so there's no games, there's no bright pictures,

01:37:39.000 | it's just reading.

01:37:40.000 | And so my observation is that there's no downside to his reading.

01:37:45.000 | And, in fact, I think there are upsides to the reading,

01:37:47.000 | where he can bounce around different things.

01:37:51.000 | I think there's been no negative outcome that I have been able

01:37:58.000 | to observe with having an e-reader.

01:38:01.000 | And then some of the positives.

01:38:03.000 | Number one, we can get books that we can't get in print easily.

01:38:07.000 | So the Tom Swift is an example.

01:38:09.000 | I've got all of the G.A. Henty books on there.

01:38:13.000 | For me to go--and, by the way, I put them in collections

01:38:17.000 | so that they're there, and then I also get the individual book.

01:38:19.000 | So he just finished his first G.A. Henty book.

01:38:22.000 | Well, I would love to have a bookshelf with all 65 G.A. Henty books,

01:38:27.000 | but that's a lot, whereas I can get them all free.

01:38:31.000 | So all of the old classics, you start getting through them,

01:38:33.000 | they're all free, and they can put them all on there.

01:38:36.000 | And that means that our limited bookshelf space and/or luggage space

01:38:39.000 | and/or money can now be reserved for some of the others.

01:38:42.000 | And the reading experience is just as good as a physical book.

01:38:46.000 | Sorry.

01:38:48.000 | What is missing with the e-reader experience is the attractiveness

01:38:52.000 | of the package of the book.

01:38:54.000 | So you're missing the dust jacket, you're missing the whole feel of it,

01:38:59.000 | which I didn't used to think was a big deal.

01:39:01.000 | Now I think it is useful.

01:39:03.000 | But we're getting access to the books that we otherwise wouldn't get access to,

01:39:07.000 | and I can put them on there very quickly.

01:39:10.000 | The other thing that has been cool, has been neat for me,

01:39:13.000 | I collected a bunch of statistics, stuff I never tracked before.

01:39:16.000 | So because I could track all of his reading,

01:39:19.000 | I was able to track reading speed a little bit.

01:39:22.000 | I was able to track reading speed.

01:39:26.000 | I was able to track what books were being read

01:39:30.000 | and how long it was taking, total reading time.

01:39:32.000 | And that was interesting to me as a parent to go back through and see.

01:39:36.000 | And so I have all the statistics that I didn't have before

01:39:39.000 | to see how much is he actually reading.

01:39:42.000 | And then I put that into, and I go and I look and compare that to peers

01:39:46.000 | and some of the other research that's been done.

01:39:48.000 | And now I actually have a basis.

01:39:50.000 | And so it's interesting to me as an educator to know the actual statistics

01:39:55.000 | and to know what happens.

01:39:57.000 | It's also interesting to me to watch what my son was actually attracted to,

01:40:03.000 | meaning we put all these different books on there

01:40:06.000 | and we didn't have the attractiveness of certain dust jackets.

01:40:09.000 | But I found it interesting to see which books he would go and read on his own

01:40:13.000 | and which he wouldn't.

01:40:15.000 | And many times it surprised me to see what he would read and what he wouldn't.

01:40:19.000 | And so that was cool.

01:40:21.000 | Now, the biggest benefit I have found of an e-reader is foreign language.

01:40:25.000 | I do all of my reading using--my foreign language reading--

01:40:29.000 | using a special program called LingQ, L-I-N-G-Q, that I've talked about.

01:40:33.000 | And I love LingQ because it just makes foreign language acquisition through reading.

01:40:38.000 | It's an amazing system.

01:40:41.000 | And so I thought, okay, well, maybe at some point I'll turn my children onto this.

01:40:45.000 | But what I did instead was I figured out that you can create the dictionary function

01:40:50.000 | using the Kindle.

01:40:52.000 | And so with the Kindle, if you put a foreign language text onto it,

01:40:55.000 | then you can set it up so that you just tap the word and it translates,

01:40:59.000 | which is, I would say, 60% to 70% of the functionality of LingQ that I treasure

01:41:05.000 | is that with LingQ I can read and I can tap the word.

01:41:07.000 | Oh, look, there's a dictionary.

01:41:09.000 | So it's like 60% of it was just the built-in features on the Kindle.

01:41:13.000 | And so what I started doing was I started--I loaded it up with Spanish books

01:41:18.000 | and then I also did this with French.

01:41:20.000 | And I put a bunch of books on there that I chose and bought

01:41:24.000 | and put on there for him in French.

01:41:28.000 | And it was able to get him up to level much faster because of that instant translation.

01:41:34.000 | And then the other thing that you can do with the Kindle

01:41:37.000 | is you can pair the Kindle with an audiobook.

01:41:40.000 | And so you can do this separately, but you can actually integrate it,

01:41:44.000 | which is pretty cool as well.

01:41:45.000 | So if you buy the Audible audiobook and the Kindle,

01:41:49.000 | and if they're registered on the same account,

01:41:52.000 | then you can put them and link the text.

01:41:54.000 | And so this is a big thing that I use in foreign language.

01:41:57.000 | It's hard to find a book where you can get the same version read and in written text

01:42:02.000 | and in a good audiobook recording as well.

01:42:08.000 | But I found a bunch of them, like Roald Dahl is one.

01:42:12.000 | We don't love the Roald Dahl books, but I put several of them on there.

01:42:15.000 | And so I put Charlie and the Chocolate Factory and Charlie and the Glass Elevator

01:42:19.000 | and James and the Giant Peach all in their French versions,

01:42:22.000 | and then I paired up the Audible version with that.

01:42:25.000 | And that has been phenomenal because you can have that read to you

01:42:30.000 | and read it at the same time and have instant translation.

01:42:35.000 | And I haven't done a public report on my French project this last year,

01:42:41.000 | but my 8-year-old reader, not the others, but the reader,

01:42:45.000 | starting from nothing one year ago with a background of English and Spanish,

01:42:49.000 | that's not nothing, but starting from just that, the background of English and Spanish,

01:42:53.000 | in one calendar year was able to come up to grade level

01:42:57.000 | and is reading in French at grade level of a French child.

01:43:01.000 | And so that was pretty cool, and it was the e-reader that was part of that.

01:43:06.000 | And so I have supplemented that with lots and lots of other written books as well,

01:43:11.000 | but I intend to keep the e-reader going forward in use as well.

01:43:18.000 | In addition to that, kind of related, but other benefit I had from the e-reader,

01:43:23.000 | is because I've learned that if a book is hard and there's resistance to a book,

01:43:30.000 | go ahead and do an audio book, read to him or do an audio book.

01:43:33.000 | Then I've also used the e-reader just last week to make it fast and easy for me to solve problems.

01:43:39.000 | So in his curriculum right now, my 8-year-old is reading Robinson Crusoe

01:43:46.000 | and Julius Caesar.

01:43:52.000 | And so obviously this is tough stuff, right? Neither of these are low-level things.

01:43:56.000 | And so he was resisting, he wasn't resisting Julius Caesar,

01:44:00.000 | but I didn't think he was going to get much out of it, just reading Julius Caesar.

01:44:04.000 | It's not like the kiddie version, and I was like, "I don't think he's going to get it."

01:44:09.000 | But he was resisting Robinson Crusoe, he didn't like Robinson Crusoe.

01:44:13.000 | So I carefully searched on Audible, I chose the narrator that I thought was the best,

01:44:20.000 | and then I went and I found the specific version of the book, version of the text.

01:44:29.000 | I tried several different e-texts of Robinson Crusoe until I found the exact version

01:44:34.000 | that the narrator that I wanted him to listen to was using.

01:44:38.000 | And so then I loaded both of them up on his Kindle, and so he's reading Robinson Crusoe,

01:44:45.000 | but he's got the good narrator that I chose from an Audible book.

01:44:49.000 | And then the same thing with Julius Caesar, as I chose a really well-reviewed version

01:44:55.000 | of a voice-acted version of Julius Caesar that I really liked,

01:44:59.000 | and then I paired that with the Julius Caesar that I put on the text.

01:45:02.000 | And so it's actually just become like I see no downsides to it,

01:45:07.000 | and we've had a bunch of upsides, and that has been really, really nice.

01:45:11.000 | Here's my final comment.

01:45:13.000 | The only thing that I wonder if I would do the same is we started with Kindle just because--

01:45:22.000 | we started with Kindle because, of course, we use that and that's kind of the standard.

01:45:29.000 | I don't personally buy any books from Kindle anymore, and I haven't for years,

01:45:34.000 | myself, from my own library.

01:45:37.000 | And the reason is because they have--I'm going to give away all my secrets.

01:45:45.000 | The reason is that Kindle has tightened up their DRM, and so I used to be able--

01:45:50.000 | I had several systems to strip their DRM off of Kindle and add all my books to my own library.

01:45:57.000 | And I find it very offensive to be locked on their platform and for me to be spending money

01:46:02.000 | and not be able to store the book on my library.

01:46:05.000 | So I don't like that.

01:46:07.000 | And so a couple years ago I switched, and I switched to buying all of my books from Kobo.

01:46:13.000 | And I needed this because I take my books and I load them onto my own software platforms to read them on.

01:46:20.000 | And so I did figure out some workarounds to be able to strip my books from Kobo--

01:46:25.000 | sorry, to strip the DRM from Kobo.

01:46:28.000 | And there are a couple other platforms that you can also still strip DRM from.

01:46:32.000 | And so for my own, all of my books now I buy from Kobo, kobo.com.

01:46:38.000 | And I have one of their e-readers for myself in addition to the apps on my computer and on my devices.

01:46:45.000 | And I've become a big fan of Kobo and of the Kobo e-reader.

01:46:49.000 | So you might look at that and just see.

01:46:51.000 | I think the biggest downside is potentially selection, that the selection is there with Kindle.

01:46:56.000 | But with Kindle you're locked into their system, whereas there are other alternative competing systems where you may not be so locked onto their system.

01:47:03.000 | And you can still buy the books that you want your children to have.

01:47:08.000 | Okay.

01:47:09.000 | Yeah.

01:47:10.000 | There's a fun offbeat conversation.

01:47:12.000 | Thank you.

01:47:13.000 | That was great.

01:47:14.000 | My pleasure.

01:47:15.000 | I know.

01:47:16.000 | I need to get my-- I've been listening to you about the foreign language thing, and I've been kind of hesitant because I was like, "I don't know if that will really work."

01:47:21.000 | I just need to do it.

01:47:22.000 | It does.

01:47:23.000 | It does.

01:47:24.000 | It does.

01:47:25.000 | It's a process.

01:47:26.000 | I've tried not to-- I will do it.

01:47:29.000 | I haven't created like the "Here's my one-year project," because I don't want to be bragging, but I also want other parents to be like, "Hey, I've solved something.

01:47:37.000 | This is exciting to see."

01:47:39.000 | Yeah.

01:47:40.000 | For you, Catherine, I will create the whole standalone episode on the 2021 French project that we did, and I'll share what worked and what didn't.

01:47:47.000 | And I want you to test it because what I don't yet know-- my 8-year-old has high capacity.

01:47:54.000 | There's no question.

01:47:55.000 | He's a smart kid.

01:47:56.000 | But I don't think he has unusually high capacity.

01:47:59.000 | I think it's just the method and also the environment.

01:48:04.000 | And so I'll create a standalone show where I talk about that because the results have been, for me, so encouraging and so great that as long as you've got the money to assign for the book budget, it's just been-- it works.

01:48:19.000 | It has worked.

01:48:21.000 | And so we're starting on a new language soon.

01:48:26.000 | He's ready.

01:48:27.000 | I could push him.

01:48:28.000 | The next one we're doing is German.

01:48:30.000 | And so I've been working on German this last week to get to the point where I could read it.

01:48:34.000 | Even if I can't translate perfectly, I've been trying to get to the point where I could read it because I think that's been a useful key.

01:48:41.000 | And then pretty soon we'll get to a point where I can't coach him.

01:48:46.000 | But my goal is-- my personal goal is getting to at least 100 books read for him in foreign language.

01:48:57.000 | And so I think he's there.

01:48:59.000 | But I'm going to head-- I just bought several dozen more French books to-- and I'll give you the specific titles in the standalone show.

01:49:06.000 | But I bought several dozen more French books to try to just make sure that it's totally cemented because there's no rush.

01:49:12.000 | I'm not trying to impress anybody before we go on to German.

01:49:15.000 | But I want to-- at this point in time, though, what's been great is that now he's reading without preference among the three languages,

01:49:25.000 | which I see as like the foundation of what I can never-- what I never got to myself.

01:49:30.000 | And so I figure if I've tricked him into this, then he can just-- then he can maintain it.

01:49:37.000 | And I'll spend the money on the books.

01:49:39.000 | And it'll just work over the coming years.

01:49:41.000 | And I'll go and spend some time in our target language countries so that there is an opportunity for better verbal acquisition and whatever.

01:49:49.000 | But this is the good, safe, enjoyable, low-friction way.

01:49:52.000 | And it's worked.

01:49:53.000 | So I've got a couple of my friends that I've turned on on Spanish and like, "Try my methods, please.

01:49:58.000 | Try them. Try them."

01:49:59.000 | And so I would love for you to try it, too, and then call me in a year and tell me what your results have been.

01:50:06.000 | Yeah. Yeah. OK.

01:50:07.000 | Cool.

01:50:08.000 | We'll get on it.

01:50:09.000 | Love talking to you, Catherine.

01:50:10.000 | Have a great day.

01:50:11.000 | Yep.

01:50:12.000 | I got two callers left here.

01:50:15.000 | And let's go to 714.

01:50:17.000 | Welcome to the show.

01:50:18.000 | How can I serve you today?

01:50:21.000 | Hi, Joshua.

01:50:22.000 | Yes. Go ahead.

01:50:23.000 | This is Thomas.

01:50:26.000 | Go ahead, Thomas.

01:50:27.000 | I was just wondering, how do you determine how to manage your day with the homeschooling and helping your eight-year-old learn French and Spanish and doing your work and allocating time to build your own skill sets?

01:50:48.000 | Do you have a certain methodology on certain days or certain amounts of time per day that you allocate to each thing?

01:50:56.000 | You're going to expose my flabby, soft underbelly here.

01:51:00.000 | I wish I did.

01:51:03.000 | So I'll tell you what I do.

01:51:05.000 | I'll tell you honestly what I do is that it depends on the context, meaning where we are and what I can do.

01:51:10.000 | And I wish I had a better system, but it just changes.

01:51:14.000 | It changes week to week.

01:51:18.000 | So I got super intense with my eight-year-old because he was not responding well to my wife.

01:51:28.000 | And so there was a point where she was not able to achieve the results that she needed, that he needed, and he needed a more authoritative hand.

01:51:38.000 | And I stepped in and took over all of his schooling.

01:51:42.000 | And that cost me time.

01:51:44.000 | But it's my number one priority is my children.

01:51:47.000 | I'm at a phase of life in where these are the very important years, and there was some stuff that just wasn't working, and that's my priority.

01:51:59.000 | And so if it means that I need to work a little bit less, make a little bit less money, et cetera, I'm going to do that.

01:52:05.000 | If it costs me that, I will do that because that's my priority at this point in time.

01:52:10.000 | So I think the first thing is prioritization.

01:52:12.000 | My priorities are my -- my priority is my family.

01:52:18.000 | And I have a very, very narrow window for me to accomplish certain things with my children in order for me to build the kind of family that I dream of having.

01:52:31.000 | And so that is my -- that is a very high priority for me.

01:52:36.000 | And so I stepped in, took over everything, ran it, ran all of his schooling, which freed my wife up for working with our next student, et cetera, and that was good.

01:52:47.000 | That said, it was extremely disruptive.

01:52:49.000 | So the goal was not to do that forever but just to get him on track with his personal self-discipline and working.

01:52:57.000 | And forgive me for being cagey.

01:52:59.000 | I don't like to talk about my children, not because there's any secrets, but because I feel like parents, it's important to respect the privacy of your children.

01:53:10.000 | So the reason why I -- I've obviously been more vulnerable here and more specific, but the reason why I'm very careful, I don't usually -- I don't say names, of course, but then it's just I want to respect the privacy of children.

01:53:22.000 | I think if you -- if parents expose their children without their permission too much, if I just told stories about my children all the time, it can create a wrong thing.

01:53:33.000 | And so if I am cagey, that's why, is I don't want to expose the people who trust me and their confidence in a public forum.

01:53:42.000 | But anyway, that's the point, is that my son needed some extra attention, and so I gave the extra attention, and then as quickly as possible, I pulled back.

01:53:49.000 | The second thing I'd say is that my -- our personal lifestyle has been highly disrupted based upon moving.

01:53:57.000 | When I created the show recently and I said, you know, don't move around a lot if you want to be productive, it's because my productivity has been harmed significantly by moving around.

01:54:08.000 | That said, we've -- I've solved those things.

01:54:13.000 | I haven't announced this publicly, but we left the United States again. I set up a new house. I have a new homestead. Everything is much better.

01:54:20.000 | And I've been able to solve some of the problems that I -- that I had had with moving around and just not having appropriate scenarios.

01:54:31.000 | And so I've got a monster house now. I've got a monster property. I've got an office that's a separate office that is away from my house.

01:54:42.000 | So hopefully there's less -- fewer crying noises in the background, fewer dogs barking, et cetera.

01:54:48.000 | And that's now giving me opportunities that I didn't have in terms of my business.

01:54:53.000 | And so my answer to you is I think you just kind of juggle based upon what your priorities are at a certain time, and you have to respond and say, hey, here's what my priorities are at the moment, and then respond.

01:55:07.000 | Right now, for 2022, I'm all in on work. It's taken me a few weeks. Over the last few weeks, I have been hustling with dealing with an international move.

01:55:16.000 | That's why the show has been quiet. There haven't been as many episodes as I'd like.

01:55:20.000 | So dealing with yet another international move, moving everything around, just fixing all the stuff has been time-consuming.

01:55:28.000 | But I'm all in on work this next year.

01:55:31.000 | So what I have tried to do is I have tried to streamline for myself. I've tried to streamline out as much as I can from my day that doesn't contribute so that most of the hours of my day are doing things that I want to do.

01:55:49.000 | And so the big ones are commuting, self-employment, and working from home opens up your schedule.

01:55:54.000 | And so if you work your way through these things systematically, you eliminate the commuting, eliminate I don't have meetings with anybody, I don't have people to deal with, I have full control over my schedule,

01:56:09.000 | then you can just focus on the things that are important to you personally, and that's what I've done.

01:56:15.000 | So I can give you more on it, but without bloviating on for 20 minutes, that's my answer, is that it changes from time to time.

01:56:24.000 | Yeah, thanks, Joshua, and totally respect your decision.

01:56:29.000 | And I agree with keeping too much of your kids kind of outside of the public space.

01:56:39.000 | But yeah, thanks.

01:56:40.000 | That was actually what I was kind of looking for, just the thought process on how things can flex and change at will, because sometimes just having planned out something and having it not go directly that way sometimes can be frustrating,

01:57:00.000 | but just having the ability to give yourself the grace of being flexible and changing and acknowledging that things change like that.

01:57:08.000 | And what I will say is I guess one thing that I do well is I do have some basic routines that have served me in some of these things.

01:57:19.000 | And what I would encourage you to do is kind of find triggers that work that bring the things into what you want to do.

01:57:27.000 | So I'll give you just a few examples of how I integrate schooling and whatnot.

01:57:31.000 | My life in some ways looks pretty conventional, but when I wake up in the morning, I wake up, I get up, and I get up before anyone else does, and I read.

01:57:40.000 | That's what I do in the morning.

01:57:41.000 | I'm working out at five in the morning, going running and doing exercises.

01:57:46.000 | That has not ever been a long-term thing for me.

01:57:49.000 | But if I start my day with reading, then it works.

01:57:51.000 | And so I usually will start by reading.

01:57:54.000 | Children start to wake up, usually I cause them to be quiet, so they read in the morning.

01:58:00.000 | I try to keep everyone quiet, so they read or they play with toys quietly.

01:58:04.000 | So then as far as like "homeschooling stuff," what do I do?

01:58:09.000 | Well, we make breakfast in the morning, and so I call the children to breakfast before it's ready to try to help them learn to sit, because my goal is to learn to sit quietly.

01:58:18.000 | And I play, the ten minutes before breakfast, I play, right now we're doing an audio Bible.

01:58:24.000 | And so they listen to the chronological Bible right now.

01:58:28.000 | It's on audible.

01:58:29.000 | I play it on a speaker while I'm finishing, my wife and I are finishing getting breakfast ready.

01:58:33.000 | We sit, we have breakfast together every day, and then I read to them at the breakfast table.

01:58:37.000 | And so I'll usually read, right now we're reading Enid Blyton's series Torres de Mallory in Spanish, so I'm working hard on the younger ones with Spanish.

01:58:45.000 | And so I'll read a chapter of that.

01:58:47.000 | It's not that long, but there's 15 minutes of reading there.

01:58:50.000 | After breakfast, I get up and go to work.

01:58:52.000 | My wife takes the children to go and do schooling.

01:58:55.000 | I usually then come home.

01:58:57.000 | I'm out of the house, and now that we're not traveling, I'm out of the house and I'm in my office from 8.30 to 9.00, 9.00 to 5.00, working.

01:59:05.000 | I don't really see them much during the day.

01:59:07.000 | But then when I come home, it's kind of, it's crazy hours.

01:59:10.000 | So I play, we play and whatnot, but then I read as well at night.

01:59:14.000 | And so we have dinner. I read to them sometimes before dinner to get them calmed down if they've been playing all afternoon.

01:59:20.000 | I read at dinner. We talk for a little while.

01:59:24.000 | When the conversation starts to slow, I read.

01:59:26.000 | That's where I read, I mean, we read a bunch of different books.

01:59:29.000 | And then after dinner also, if it's early enough, then we read again.

01:59:34.000 | And so the schooling stuff is kind of just part of the structure, is that one of the ways that I interact with my children is I read them stories.

01:59:43.000 | And we have lots of stories with lots of things going, and then it kind of pushes everything forward.

01:59:48.000 | And then I just put the stuff into the homeschool curriculum that we need to be done, needs to be done.

01:59:53.000 | My wife and I, we adjust it. We try to aim for about three or four hours.

01:59:56.000 | And then we set up some, for the children, some basic structure as well.

02:00:00.000 | So we try to aim for about three or four hours of work, usually from 9.00 to noon, 9.00 to 1.00, something like that.

02:00:07.000 | Ideally, it's done in three hours, but with dawdling and whatnot, sometimes it takes longer.

02:00:12.000 | And then I try to create an environment that is accomplishing the goals.

02:00:17.000 | And so I fill the house with books.

02:00:19.000 | I have filled the house with books, and I've taken away the alternatives.

02:00:24.000 | The alternatives are you can play outside, or you can read, or you can play with toys.

02:00:29.000 | And so those are the options, and there's no unhealthy stuff.

02:00:33.000 | So another thing, we don't have any restrictions on the children with food.

02:00:37.000 | There's food in the house, but we eat at mealtimes.

02:00:40.000 | But there's nothing unhealthy in the house, so you can just eat whatever's in the house if you're hungry, if you need something, eat what's there.

02:00:45.000 | And so I kind of see it the same way, is just surround with good options, and then everything is positive.

02:00:51.000 | So the homeschool stuff comes in at night.

02:00:53.000 | I read to the children at night.

02:00:54.000 | I do the bedtime routine.

02:00:56.000 | I read to them.

02:00:57.000 | I sing with them.

02:00:58.000 | I put them to bed, et cetera.

02:00:59.000 | And so my stuff is still just around the edges.

02:01:02.000 | It's just really intentionally that I've got certain triggers.

02:01:05.000 | Here's 10 minutes of here.

02:01:06.000 | Here's 15 minutes of the other, and that works well.

02:01:09.000 | And then by eliminating the wrong choices, like the same thing for me personally, is that I try to have a list of things that I can do.

02:01:18.000 | And this is--I'm working hard on it to improve my own--is to say, "Let me just have a broad menu of things I can do, all of which are pointing towards my goals."

02:01:27.000 | So if I'm sitting at my computer and I'm banging my head against it and nothing's working, then, hey, there's the sun outside.

02:01:34.000 | I can walk outside.

02:01:35.000 | I can take my shirt off, and I can go walk in the sunshine for 15 minutes.

02:01:38.000 | Get a little vitamin D. That's a great option.

02:01:40.000 | Listen to something inspiring while I'm walking or think, and then it's a good option.

02:01:45.000 | And instead of sitting and going and goofing off on a time-wasting thing, I've got a positive thing that's pointing me in the direction of my goals.

02:01:53.000 | And so I don't--I hope that's helpful.

02:01:56.000 | I don't know.

02:01:57.000 | It just seems kind of normal to me, but that's how I do it is I just try to make sure that I have lots of things and then try to put them on top of each other.

02:02:04.000 | So if you can find ways where there's a synchronicity and you can stack the benefits, right, to use the permaculture term, stack your functions, then you can get more bang for the buck.

02:02:21.000 | So all my business books that I'm reading now, I'm reading in foreign languages.

02:02:25.000 | So it's slower.

02:02:27.000 | I still read, like, things I need to work for my profession.

02:02:31.000 | I read those in English, but I can learn something and I can also work on a foreign language.

02:02:37.000 | And then that flows over, makes me more confident, builds my options for the future.

02:02:40.000 | So that's what I do.

02:02:42.000 | That answer your question?

02:02:43.000 | Do you have any other question, clarifying question than that?

02:02:48.000 | Yeah, that was great, Joshua.

02:02:50.000 | Yeah, because it was something I was thinking about starting, you know, list two of like things to think about or research when I'm having difficulty kind of getting into flow of working on something that I want or.

02:03:05.000 | So, yeah, having other things built into there is a list of that can work towards other goals as well.

02:03:15.000 | Yeah, we need alternatives, right?

02:03:18.000 | When there's we need alternatives.

02:03:20.000 | It's like a diet.

02:03:21.000 | If you know you're going to be hungry, so you know you're going to be bored.

02:03:25.000 | And so if you have the alternative set up in advance, then you have a better chance of making good choices if you've got good choices ready for you.

02:03:33.000 | So intellectually, same thing.

02:03:35.000 | If you take a guy who who is trying to smoke cigarettes, right?

02:03:40.000 | He's like, I'm going to stop smoking cigarettes. You smoke the cigarette partly by habit, but then there's also certain triggers that happen.

02:03:47.000 | And when that trigger happens, that's when you reach for the cigarette.

02:03:50.000 | So you got to figure out what is the trigger and then identify the trigger.

02:03:55.000 | And then what do you put in place instead of it and then suggest a healthy alternative or a productive alternative?

02:04:04.000 | And so often I I find myself, you know, none of us are robots.

02:04:11.000 | We would all love to work and produce more, but we're not.

02:04:13.000 | And so you don't feel well or or your brain's not working or whatever.

02:04:17.000 | So if you can put an option in place, my option, I didn't.

02:04:22.000 | It's not the foreign language podcast, but I've been working on.

02:04:26.000 | I work on my foreign languages.

02:04:27.000 | It makes me smarter.

02:04:28.000 | It opens up the world to me.

02:04:31.000 | I view it as exercise for my brain.

02:04:34.000 | And so if I'm feeling bad, I can go on Twitter, which I used to do.

02:04:39.000 | I can go on Twitter and start going to political, all my favorite political feeds and get all involved in a certain thing.

02:04:46.000 | But these days I go and I grab a novel that I'm reading in French and it's candy, right?

02:04:51.000 | I'm reading various. It's just it's not twaddle, but it's candy, right?

02:04:54.000 | It's a thriller in French. I'm reading a Clive Cussler novel or something or Tom Clancy or something like that.

02:04:59.000 | But I'm getting smarter in the process and I'm making progress just little by little.

02:05:04.000 | So then I go and do that for 15 or 20 minutes.

02:05:06.000 | That's there's my break. It's something I enjoy.

02:05:09.000 | It's not hard work. And so now I pull back.

02:05:12.000 | And if you if you if you kind of put these things in, I'll just give the foreign language example.

02:05:19.000 | German is not easy for me. I'm a I'm a ranked beginner.

02:05:22.000 | And so it's not relaxing. That's a discipline.

02:05:24.000 | OK, let me sit down and spend 15 minutes listening to German and working on it and trying to do it.

02:05:31.000 | But I now have some I now have enough depth that, for example, when I'm looking for content, I if I if I'm if I have a lot of energy, then I listen to German or read German.

02:05:46.000 | If I don't have a lot of energy, but I can focus, then I listen to French or I read French.

02:05:50.000 | If I don't have any energy and I can't focus, but I just want something kind of cotton candy, then I listen to a Spanish book.

02:05:56.000 | But all of these are kind of me taking breaks.

02:05:59.000 | But yet they're making progress on things that I have written down on my goals.

02:06:03.000 | And so I've got a bench of them in and it's working.

02:06:08.000 | So some more thing like I bought a piano and I've been wanting to regain my piano.

02:06:11.000 | And so I've chosen a trigger. The trigger is I tuck my children in and say, good night, close the door.

02:06:16.000 | And I walk immediately to the piano, open the piano and sit down.

02:06:20.000 | And I don't have a rule on how long I'm going to play the piano.

02:06:23.000 | I'm not dedicated myself to playing 30 minutes, etc.

02:06:26.000 | But every night I put my children in bed and my trigger is then I'm going to go to the piano.

02:06:31.000 | So if you've never thought about triggers, I'd strongly recommend check out James Clear's Atomic Habits book.

02:06:36.000 | He talks a lot about that. Many good books on on habits.

02:06:39.000 | But his is the current. It's great. Phenomenal.

02:06:42.000 | But then figure out, hey, when this happens, what productive thing can I put in place when I'm tired and I'm frustrated?

02:06:50.000 | Instead of going and and browsing Twitter, what can I do instead?

02:06:56.000 | Can I go and take a class or do something else?

02:06:59.000 | And it works over time. Little 15 minute sessions over time.

02:07:03.000 | It builds up big, big, big, big over time.

02:07:07.000 | All right. Let's move. I've got two more questions to answer.

02:07:10.000 | Frank, you said you had a second question. Go ahead.

02:07:13.000 | Yes. So one just kind of popped up when you're answering a different caller's question, but I had another one prepared.

02:07:24.000 | So just a quick one. In my line of work, people bounce around companies and contracts pretty frequently.

02:07:33.000 | So should I basically just completely ignore any disability insurance benefits from my own company at the time?

02:07:42.000 | Like if I'm trying to get disability insurance for myself, I assume I should just get as much as I can.

02:07:50.000 | But as my income gradually increases, also, like how often can I apply for more?

02:07:57.000 | So if you want disability insurance, especially if there's some kind of changing, you can purchase insurance individually.

02:08:04.000 | Any individual who has a job or a business can go to an insurance company and buy disability income insurance.

02:08:11.000 | So you would begin that, you would do that yourself.

02:08:14.000 | And if you own it yourself, then when you change jobs, the coverage goes with you.

02:08:19.000 | If you first buy your own personal coverage, then any coverage that the job does have is added to the personal coverage.

02:08:31.000 | If you do it the other way, you have coverage from a job and then you go and buy personal coverage, then they will count in their calculations.

02:08:41.000 | They'll count the employer provided coverage first and then only give you a small amount.

02:08:46.000 | So if you don't have insurance today, go and get personal disability income insurance.

02:08:51.000 | And then if and when you come to a job where they offer coverage, then you can sign up for that too.

02:08:57.000 | And it's a double dip, right?

02:08:59.000 | They don't take away your insurance coverage because you got group coverage.

02:09:03.000 | They will calculate the amount of coverage that is available to you based upon the money that you're making.

02:09:09.000 | And it's a ratio based upon the income that you have, the job that you have, and they'll make you an offer and say,

02:09:15.000 | "Hey, you're making $75,000 a year. We'll offer you a policy for $3,500 a month or $4,000 a month," whatever the number is.

02:09:24.000 | Then when you move on from, then when your income goes up, you can apply for more coverage.

02:09:30.000 | So if you have one job making $75,000 and you get another job making $150,000, then of course you can go and you can apply for a new policy.

02:09:40.000 | The risks are, has something happened to your health in the meantime that has made you unable to qualify for insurance?

02:09:50.000 | So there are two ways to handle this.

02:09:52.000 | One, with disability income policies, you could add an indexing benefit to the policy.

02:09:58.000 | So frequently an insurance company will let you say, "Hey, we're going to give you $3,600 a month, but as long as you're working, we'll increase this policy by 5% every year."

02:10:08.000 | And so next year it's $3,600 plus 5%. That's one way.

02:10:12.000 | The second way that you can handle it is you can put an automatic purchase benefit on it or an additional purchase benefit, not automatic.

02:10:24.000 | There are automatic riders that you can also add, but an additional purchase benefit.

02:10:28.000 | So you have to pay for it, which is why you've got to think carefully if this is right for me.

02:10:33.000 | But they'll say, you can say to the company, "All right, I'll take a policy for $3,500 a month," and let's say they charge you $100 a month premium.

02:10:42.000 | So we'll give you $3,500 a month of insurance.

02:10:45.000 | And then you say, "I additionally want to purchase an additional purchase benefit that will allow me to buy another $3,000 a month if I can prove it with my income."

02:10:56.000 | And they say, "Okay, we'll give you the first part of it for $100 a month, and then we'll charge you $20 a month for the rider."

02:11:03.000 | And so your total premium is $120.

02:11:05.000 | Then every year you have the opportunity if your income comes up to say, "Hey guys, listen, my income is now $85,000, give me more insurance."

02:11:13.000 | And they say, "All right, we'll give you another $400 a month."

02:11:16.000 | So then your benefit increases from $3,500 to $3,900 a month, and just the process continues on.

02:11:23.000 | So you can put that on your contract if you think that it's a good value for you personally, and then that allows you to buy more insurance as your income goes up.

02:11:33.000 | You have to be making more money for it to go up in that scenario.

02:11:37.000 | Sometimes the indexed income benefits, they just assume that your income is going to go up.

02:11:43.000 | But the insurance company doesn't want to ever get into a situation in where you're going to get paid more money for sitting at home disabled than you are for going to work, because then that runs the risk of them facing adverse selection.

02:11:57.000 | And so they're always going to offer you less of insurance benefit than what you actually gain working, but you can protect your future insurability and just be subject to financial underwriting if that's important to you.

02:12:11.000 | Okay, cool. That's clear. Thank you for that. I don't have a follow-up question to that or anything, but I have a different question if you have time.

02:12:23.000 | Go ahead.

02:12:26.000 | So this is more of a fun one. In some of your more recent episodes, you've talked about if you were in your 20s, you would live in an RV.

02:12:35.000 | And my question is, since, I mean, it's not really a recommendation necessarily, but you've said that you would do it.

02:12:46.000 | So for people my age, I guess the question is why and what would you recommend and what would that look like?

02:12:54.000 | And do you think it would be, or who do you think would be a good fit for it or not a good fit for it?

02:13:02.000 | Also considering that you just recently did an entire podcast about how moving around is not exactly conducive to wealth.

02:13:13.000 | I advise careful analysis and I applaud you for asking the question because one thing I'm good at is I'm good at seeing many sides of an issue.

02:13:22.000 | So when I say that I would live in an RV if I were in my 20s and single, let me explain why.

02:13:31.000 | First, I have always been attracted to the concept of remote work.

02:13:38.000 | I have never been attracted to in-person work since I was 15 years old and I came across my first e-book and this was right when it was like becoming a cool thing.

02:13:49.000 | I've never wanted to have to be in a specific location.

02:13:53.000 | And having experienced the joy that comes from knowing that I can be anywhere and work, that's not something I would give up lightly.

02:14:02.000 | I miss the office camaraderie. I miss the office environment.

02:14:06.000 | I underestimated when I went fully remote, I underestimated how much I would miss the office environment.

02:14:12.000 | But I don't miss it so much that I actually want to go back.

02:14:15.000 | So for me, in today's world, if I were starting over again, there are so many things available that you can do through a computer screen that there's just no reason for me personally why I would want to go into an office environment.

02:14:31.000 | Because once you can do your work through a phone line and/or a computer screen, it opens up so many interesting lifestyle improvements that are attractive to me that I would have a hard time going back.

02:14:45.000 | What are those lifestyle improvements?

02:14:47.000 | Well, one of them is just being able to be in different places depending on where you are, right?

02:14:52.000 | The snowbird, for example.

02:14:54.000 | I grew up in Palm Beach, not on Palm Beach, but I grew up around that environment.

02:14:58.000 | It used to be you had to be rich to be a snowbird.

02:15:01.000 | Today, you don't have to be rich to be a snowbird.

02:15:03.000 | You can have an apartment in New York and you can have an apartment in Florida and you just go back and forth between them.

02:15:08.000 | I love that. I love it from a freedom perspective.

02:15:11.000 | It used to be that flag theory and PT theory, the stuff that I'm into, that used to be the domain of multi-millionaire playboy libertarians, right?

02:15:21.000 | Well, today, you don't have to be a multi-millionaire libertarian playboy to live freely.

02:15:27.000 | You just need, I guess, probably some tens of thousands of dollars in the bank and the ability to make an income through a computer screen.

02:15:35.000 | You can live freer and better than anyone else out there.

02:15:38.000 | Just the ability to live as a tourist is an amazing life hack in terms of your freedom, being left alone, not facing interference, etc.

02:15:48.000 | I find that very attractive.

02:15:50.000 | From a financial perspective, the amount of geo-arbitrage that's available to you is stunning.

02:15:56.000 | It's absolutely amazing what's available to you.

02:15:59.000 | And so, living in an RV can be one of the ways that you accomplish tremendous geo-arbitrage.

02:16:05.000 | The Internet is full of people's stories.

02:16:08.000 | I used to try to profile a lot of them on the show until they become so numerous that it's hard to do sometimes, but they're everywhere.

02:16:14.000 | There's just this great guy who had this YouTube channel.

02:16:18.000 | I haven't followed him in a while, but he was a firefighter, but he was living in the back of his pickup truck.

02:16:23.000 | And the guy saved six figures very quickly.

02:16:26.000 | I've done shows on how truck drivers can do this, living in their truck.

02:16:29.000 | You can save right now. They're such a shortage of truck drivers.

02:16:32.000 | If you're a young single guy, you can easily make $100,000, literally put $100,000 in the bank right now as a truck driver.

02:16:41.000 | The trucking world is so desperate for drivers in the United States right now that if you didn't have a family,

02:16:49.000 | if the truck driving lifestyle wasn't going to really harm you, and you wanted to build up some capital quickly,

02:16:56.000 | there's a golden opportunity right now to go be a truck driver.

02:16:59.000 | You cut your living costs to almost nothing, and you have a high income.

02:17:07.000 | I would consider that. I would personally consider more things that will go farther in the long run.

02:17:15.000 | But the ability to live anywhere is amazing.

02:17:17.000 | So if I were starting over today, I would dedicate myself fully to being the world's greatest marketer.

02:17:23.000 | I would never do something that involved my voice. I would never do something that involved my face.

02:17:27.000 | I would exclusively be a behind-the-scenes marketer.

02:17:30.000 | And that would be how I would generate my income because it gives you every advantage of business, but yet without any of the downside.

02:17:41.000 | And the ability to do it remotely opens up an incredible world of tax planning, opens up an incredible world of geo-arbitrage, etc.

02:17:49.000 | So living in your car may be one component of that.

02:17:54.000 | For me, I've always had kind of a wandering soul. I enjoy traveling. I enjoy going to different places.

02:17:59.000 | Part of this may be simply that when I grew up, we took a lot of trips across the United States, and I loved them.

02:18:06.000 | To me, the happiest place where I can wake up and every morning be in a national park and walk out the front door and walk around the loop, I love that.

02:18:14.000 | I love that environment.

02:18:15.000 | And so we're living in a world in which you can live that way comfortably more than anything else.

02:18:21.000 | You can get a nice rig, maybe a Class B camper van, maybe a truck camper.

02:18:27.000 | And for a single guy or for a couple, you can live like a king.

02:18:31.000 | You have a king-size bed in it. You've got every bit of entertainment at your fingertips.

02:18:37.000 | You can set up the proper system to have fast Wi-Fi. You have air conditioning. You have heating, etc.

02:18:43.000 | You just happen to have a small apartment.

02:18:45.000 | But the view outside your apartment can change so much.

02:18:47.000 | And since I like variety, I find that to be an attractive feature.

02:18:51.000 | I don't want to live in one place and be there all the time.

02:18:55.000 | I like the variety, and especially if I didn't have the responsibility of children, where you always wonder about how that affects them.

02:19:02.000 | That variety is powerful.

02:19:04.000 | You can be in Arizona, and then all of a sudden you'd be in northern Maine.

02:19:07.000 | And you can be in the big city or you can be out.

02:19:10.000 | And so these kinds of things fit together really well.

02:19:14.000 | And the benefit of the car-based lifestyle, living in a car basically, which is what it is, is that your expenses are totally under your control.

02:19:24.000 | And you don't get that in most other living circumstances.

02:19:27.000 | If you live in your car, either in a Prius or in the back of a pickup truck, which is a little rough, I don't think those are best for people.

02:19:34.000 | Because I think that, while I respect those who can, when I have tested that stuff out, I always feel like I'm on the fringe of society.

02:19:41.000 | When I've camped in a Prius for weeks at a time, I've camped in a minivan.

02:19:45.000 | And the problem is you never feel quite – I always felt like a little bit of an outcast.

02:19:51.000 | I've got to find a place to shower, and I've got people looking through my windows, et cetera.

02:19:54.000 | In an RV, I don't feel any of that.

02:19:56.000 | I don't feel like an outcast.

02:19:57.000 | You've got all the comforts.

02:19:58.000 | You've got your shower.

02:19:59.000 | You've got everything set up.

02:20:01.000 | But even in an RV, if you're in the right place, you have the ability to totally control your expenses.

02:20:06.000 | And so if you're an RVer and you're living in a paid-off RV, you can easily and comfortably live on $500 a month.

02:20:14.000 | You need a little bit of money for your insurance for your car, a little bit of money for a cell phone plan, a little bit of money, obviously, to buy groceries.

02:20:20.000 | But if you're not moving, you're not taking much gas, you can go out, especially in the western United States where there's so much government land that you can camp on for free.

02:20:29.000 | And it's just a very, very low-cost lifestyle.

02:20:33.000 | Or if you want to then go to a big RV resort, you can go immediately to $6,000 a month.

02:20:38.000 | Like the options are there.

02:20:40.000 | So that flexibility is a powerful, powerful component of financial planning.

02:20:44.000 | And if you're a young guy and you're trying to get ahead, well, you go -- the way that a lot of people look at it is they go to a city and they get a job and they're making $60,000 a year, but your living expenses are $4,000 a month just for a kind of an ordinary humdrum lifestyle.

02:20:59.000 | That's a good move if you're there to build, right, if you're there to do something.

02:21:04.000 | But you have a lot more freedom if you can make two grand online and then live wherever you want.

02:21:10.000 | And so when I look at that, I put those two things together and they're powerful.

02:21:17.000 | That's not to say it's perfect, right, relationships, et cetera.

02:21:21.000 | You want those relationships.

02:21:23.000 | But what's happening is we're living through a time of a shifting world where you can still have and build powerful relationships without having to be in one place all the time.

02:21:36.000 | And so the RV thing, right, let's say you're involved in an industry.

02:21:40.000 | You go to the industry conferences, you build your friendships there, you use the online connectedness to maintain those friendships, but you personally choose to live in a car.

02:21:50.000 | It's a great scenario.

02:21:52.000 | And there's lots and lots of people all over the country and increasingly all over the world doing it.

02:21:56.000 | And they're doing it because it can be a great thing.

02:21:59.000 | I tried to make clear the biggest challenge that my wife and I face is, number one, the logistics of children.

02:22:09.000 | It is more difficult to live in a car with six, sorry, four children or six of us, with four children than it is with no children.

02:22:18.000 | There's no question about that.

02:22:19.000 | And then number two is often the things that you're trying to build into your children's lives, sometimes those don't work well in that like nomadicism scenario.

02:22:30.000 | It's not to say they're bad.

02:22:31.000 | There are parents and families trying it out, doing world schooling and RV schooling, and they build communities and whatnot.

02:22:39.000 | But there are always things that you give up.

02:22:41.000 | And as a parent, since you're so tuned in to, am I doing the right thing?

02:22:46.000 | Am I getting good results?

02:22:47.000 | That you wonder how these things, when you're trying out a lifestyle that's different, you have to be super careful that it's working for you.

02:22:54.000 | And so moving around, my wife does not nearly enjoy, my wife does not enjoy living in a car.

02:23:00.000 | That's not her thing.

02:23:01.000 | She likes a house.

02:23:02.000 | She wants to be still.

02:23:03.000 | She does not have the wanderlust that I have.

02:23:07.000 | And so you have to look and say what's best for our family.

02:23:13.000 | And her job is a whole lot harder if we were living in an RV.

02:23:17.000 | It was a whole lot harder when we were living in an RV than it is now.

02:23:20.000 | And so I don't want her job to be hard.

02:23:22.000 | I want her job to be easy and joy-filled.

02:23:24.000 | So we'll do RV trips, but I'm not going to live in an RV.

02:23:27.000 | But all that stuff goes out the window when you're a single guy.

02:23:29.000 | And so if you're looking to get ahead, remember that there's a ratio between income, expenses, and investments.

02:23:35.000 | And what you want to do is you want to get your income as high as possible.

02:23:38.000 | Sometimes living in a car might keep you from having a high income, either because you're considered to be a weirdo,

02:23:44.000 | you can't get a job, you're scruffy because you never shave, or something like that,

02:23:48.000 | or because it's keeping you from going after something that's a big, big deal.

02:23:53.000 | There are people who've tried it.

02:23:54.000 | I wouldn't live in an RV in New York City.

02:23:56.000 | But in most places, if you can get your income high by pursuing something, and again, I've talked about the freedom.

02:24:03.000 | When you don't have--one of the things that bugs me is that I had such a skewed sense of risk when I was younger.

02:24:09.000 | I was always conservative.

02:24:10.000 | I always thought I had something to lose.

02:24:12.000 | And now I'm just pissed at myself.

02:24:14.000 | I'm like, "Hey, Joshua, you had nothing to lose.

02:24:16.000 | Why did you play it safe?

02:24:17.000 | Why didn't you go for it?"

02:24:19.000 | All the stuff that I was scared of was all in my head.

02:24:21.000 | It was stupid.

02:24:23.000 | And so whatever you can do to put a foundation under yourself so that you don't play it safe, go for it.

02:24:30.000 | Balls to the wall, 100%.

02:24:32.000 | Go after it.

02:24:33.000 | Take big risks.

02:24:34.000 | Go for it because the downside is so--the landing is so soft in the modern world, and yet we're living in this world where we're scared of risk.

02:24:45.000 | And so one way to handle that is RV.

02:24:47.000 | You can do it with that.

02:24:49.000 | So that's why is that when you put all these factors together, I would--that's what I would do.

02:24:56.000 | But the downside--the biggest downsides are in relationships.

02:24:59.000 | Most people don't want to move around like that.

02:25:01.000 | And so you could build a system where you keep good family relationships.

02:25:05.000 | You could build friends where that doesn't matter so much.

02:25:08.000 | But I've just--I've always loved it.

02:25:11.000 | I've always loved sleeping in my car.

02:25:13.000 | I've done it many times.

02:25:15.000 | I want to do it many times more.

02:25:16.000 | And so whether the car is something as goofy as a Prius or a van or the car is a fancy $500,000 car, meaning a giant RV, like it's still sleeping in a car.

02:25:28.000 | It's just some cars are fancier than another, but I've always loved it.

02:25:31.000 | Yeah, yeah.

02:25:34.000 | And like you, I've watched my fair share of YouTube videos that, you know, just have, you know, show these guys overlanding and just show this completely idealistic, you know, view of doing that kind of thing full time, which is super cool.

02:25:53.000 | But like, and it's something I think I would want to like definitely pursue like in the future.

02:26:01.000 | Definitely not full time, though.

02:26:04.000 | And one of the biggest reasons, like you said, is like the relationships.

02:26:08.000 | Like I'm at a time in my life where, you know, pursuing a suitable wife is like a very important thing to me.

02:26:18.000 | Absolutely.

02:26:19.000 | So the key part of that is having good stability.

02:26:22.000 | Absolutely.

02:26:23.000 | Totally.

02:26:24.000 | Yeah.

02:26:25.000 | And as with anything, there's not either or, right?

02:26:28.000 | You can often find ways to work it in.

02:26:30.000 | But there are times in which bouncing around will not serve you.

02:26:36.000 | That's why I created the show.

02:26:37.000 | And that's why I'm not bouncing around right now.

02:26:41.000 | But I can also appreciate that I can design all kinds of scenarios where bouncing around doesn't hinder you.

02:26:51.000 | And again, I don't begrudge in any way.

02:26:56.000 | I'm thrilled to have the children that I have.

02:26:58.000 | But my financial plans look different than they would if I didn't have the children.

02:27:02.000 | And I'm not making another choice.

02:27:04.000 | I'm not going backwards.

02:27:05.000 | I'm happy with my choice.

02:27:07.000 | I acknowledge that I wish I had played it less safe when I was younger.

02:27:15.000 | I became conservative too quickly.

02:27:18.000 | I shouldn't have been conservative.

02:27:20.000 | But we've talked enough about that and more for the days.

02:27:24.000 | So, Frank, great stuff.

02:27:25.000 | I've got one last question that came in.

02:27:29.000 | Let me see if I can handle this quickly.

02:27:31.000 | It came in in the chat from a patron.

02:27:33.000 | "Dear Jeffrey Joshua, in a scenario of a full withdrawal of 401(k) money before age 59½ to fund a startup business involving purchase of land, construction of the building, and purchase equipment,

02:27:47.000 | is there a way to offset 401(k) withdrawal taxes and/or federal personal income taxes by reporting a loss for the first year in the startup business in the state of Florida?"

02:28:01.000 | And then the second question is unrelated.

02:28:04.000 | So let me just think about that.

02:28:06.000 | So the basic question is I'm thinking about withdrawing all of my 401(k) money.

02:28:12.000 | It's going to be an early withdrawal, and I'm using it to fund a startup.

02:28:15.000 | So we can't do a series of substantially equal payments.

02:28:20.000 | We can't do a 72(t) withdrawal.

02:28:22.000 | This is not a hardship withdrawal, right?

02:28:24.000 | We're not buying a house, so we're not getting a—we don't have medical bills.

02:28:28.000 | We're not taking out a down payment on a house.

02:28:30.000 | So this is just I'm going to cash out my 401(k), and I'm going to buy land, construct a building, and purchase equipment.

02:28:38.000 | Is there a way to offset 401(k) withdrawal taxes?

02:28:41.000 | Yes, I would say so.

02:28:43.000 | The first thing that you're not going to offset is you're never going to offset your 10% penalty tax.

02:28:48.000 | So that's the first thing, is that unless you are taking it out for a qualified distribution, you are not going to offset your 10% penalty tax.

02:28:56.000 | So your flat rate is you're going to be paying a 10% tax.

02:28:59.000 | You have 100 grand on a 401(k), take it out, you're going to have 10 grand for the penalty tax.

02:29:04.000 | But then from there, the amount of the tax that you pay is going to be based upon the income you take from the 401(k),

02:29:12.000 | and the income is going to be the amount of the withdrawal plus the amount of your other sources of income.

02:29:17.000 | So if you work until December 31 at your job, and then you quit your job on December 31,

02:29:24.000 | the following year on January 2, you take a distribution from your 401(k),

02:29:30.000 | that entire year you work on your business and you don't have any income,

02:29:39.000 | and then you file your taxes the following year reporting the withdrawal from the 401(k),

02:29:44.000 | your income is going to be the amount that you withdrew from your 401(k).

02:29:49.000 | The question you're asking is, let's say I take 100 grand from my 401(k) on January 2,

02:29:56.000 | then my business loses $300,000 on paper losses in that year.

02:30:02.000 | So my income is negative $300,000.

02:30:05.000 | Will I still have my $100,000 income or could I wipe it out by some of my business losses?

02:30:13.000 | I believe, I'm 80% confident that the answer is you will not be able to deduct your business losses against your IRA distribution.

02:30:23.000 | The reason I say 80% is I don't have a tax software in front of me to run the scenario.

02:30:28.000 | But going just on the basis of how the Internal Revenue Code works,

02:30:34.000 | and going on the basis of what the code is based on,

02:30:41.000 | no, they're not going to allow you to deduct your business losses against your income.

02:30:48.000 | If that were the case, I would know about it, I would have heard about it, and I would have used it.

02:30:52.000 | But it's not the case.

02:30:53.000 | So what you can do is you can keep your other sources of income as close to zero as possible,

02:31:00.000 | and then your only income for that year is the amount of the distribution.

02:31:06.000 | And then you can just consider the amount of the distribution from the 401(k) based upon--

02:31:18.000 | you can consider the amount of the distribution from the 401(k) and try to keep it below what you can offset with your other tax credits.

02:31:25.000 | So you can still apply your other tax-- your standard deduction, your tax credits, et cetera,

02:31:30.000 | and thus you can be in a relatively low bracket. Thus, your total tax bill could be as low as 10%,

02:31:36.000 | but you're going to pay the 10%.

02:31:39.000 | The only other idea that comes to mind would be if you could somehow split your affairs

02:31:47.000 | in order to take advantage of the 60-day rollover of an IRA.

02:31:50.000 | So you have control of the money for 60 days before you roll it into another account.

02:31:55.000 | And so if there were some way that you could use the money to fund your business,

02:32:01.000 | fund the acquisition of the land, fund the construction loan or something like that

02:32:06.000 | through that 401(k) rollover trick, and then somehow take out a mortgage on the land or the business,

02:32:14.000 | and then make your contribution back in to avoid the distribution, that's the only other idea that occurs to me.

02:32:19.000 | That's the best I got.

02:32:20.000 | Okay, question number two. Is credit history building for foreigners residing in the USA

02:32:25.000 | on non-immigrant visas as for U.S. green card holders, residents, and citizens?

02:32:32.000 | B1/B2 visa, temporary non-immigrant visa that allows the holder to travel to the United States

02:32:36.000 | for either business or tourism purposes. So to be clear, it's about building credit for someone

02:32:41.000 | who's in the U.S. as a visitor. B1/B2 or it could be an ESTA, same thing, but B1/B2.

02:32:46.000 | Scenario, foreigners relocating to the U.S. on a B1/B2 visa would like to buy a house in the U.S.

02:32:51.000 | with a 20% down payment on the mortgage. Should they buy now on foreign national terms

02:32:55.000 | or hold off until they build a credit history to attain better terms in, say, two years?

02:33:01.000 | So my answer is that there's no downside to building a credit profile in the United States.

02:33:08.000 | The United States is a wonderful place for people from all around the world to do banking

02:33:12.000 | and to build a credit profile. So you can file for a tax ID number. What's the--an ITIN,

02:33:21.000 | that's what it is, the International Tax ID Number. You don't have to have any form of residency

02:33:24.000 | in the United States to file for an ITIN. Filing for an ITIN does not create a tax nexus

02:33:30.000 | with the United States. So any non-U.S. person can establish an ITIN,

02:33:36.000 | an International Tax ID Number, analogous to a Social Security Number,

02:33:40.000 | and that number can be used to start building a credit profile.

02:33:44.000 | Now, the way to get started, sometimes you have to go--you can go through the process

02:33:49.000 | of building up a credit file from nothing, starting with a secured credit card or a bank card,

02:33:53.000 | something like that, and building up over time. You can also sometimes transfer in your credit profile

02:34:02.000 | and start off, say, you're a--let's say you're a Swiss citizen living in Switzerland.

02:34:07.000 | You have an American Express account with Amex Europe. You can call Amex and say,

02:34:12.000 | "Hey, I'd like to establish a U.S. card. Can we set this up under my U.S. profile,

02:34:18.000 | and can you go ahead and give me a U.S.-based Amex?" And that can start the process

02:34:22.000 | of building the credit file. And I see no reason why you shouldn't be doing that

02:34:29.000 | or why not to do it, other than the hassle, of course. But if you can set up an address in the U.S.,

02:34:34.000 | that's a difficulty for many people if they don't have someone's address that they can use

02:34:39.000 | and then arrange the relevant address documentation that you sometimes need.

02:34:44.000 | So the best way to do it is if you have a friend or a family member living in the United States

02:34:48.000 | and you say, "Hey, let me take over your power bill and put my name on your power bill."

02:34:53.000 | Well, now you have address verification that you can use to now prove that--proof of address, etc.

02:35:00.000 | You can do this system with a virtual address. It's just that the virtual address,

02:35:05.000 | a lot of times the banks and other credit card companies have gotten picky.

02:35:10.000 | So it requires more explanations to say, "Hey, I actually live in Argentina,

02:35:14.000 | and here's my Argentinian address, but then it's also--here's my U.S. address."

02:35:18.000 | And so you can minimize that by having more address verification for your address

02:35:24.000 | in the United States. And you can build your credit file.

02:35:30.000 | So then the question, "Should they buy now on foreign national terms or hold off

02:35:33.000 | until they build a credit history to attain better terms in, say, two years?"

02:35:36.000 | I don't know. I don't know what the cost would be to buy now and if you have the money.

02:35:44.000 | I've never tried to apply for a mortgage in the United States as a non-U.S. person,

02:35:47.000 | and so I don't know. It would depend on what financing you could get.

02:35:51.000 | So I would say try it. See what mortgage company would be willing to underwrite you

02:35:55.000 | based upon, and then ask the mortgage broker or other lender what they would recommend.

02:36:01.000 | Follow-up, "Can their U.S. business build a credit of its own and own properties

02:36:05.000 | and hold mortgages?" Yes, you could follow the credit-building business for anything.

02:36:10.000 | And so if you have a business in the United States with an EIN,

02:36:13.000 | you could build credit for that EIN no matter what.

02:36:16.000 | You just have to – I don't have to add anything to that. You can build it.

02:36:22.000 | "Can it own properties and hold mortgages?" Of course it can hold properties and own mortgages.

02:36:27.000 | The question is whether the mortgage company will actually underwrite it to you.

02:36:34.000 | There are lots and lots of foreign companies that have a U.S. base, that own property,

02:36:40.000 | and have mortgages. And so there's no reason – if Unilever can do it, you can do it too.

02:36:45.000 | There's no fundamental difference between you and that other company other than the fact that

02:36:50.000 | "Can the mortgage – will the mortgage company underwrite it?" There's nothing hidden here.

02:36:54.000 | None of this is anything hidden. It's just a matter of following the steps,

02:36:57.000 | and the U.S. is very open to that. I just don't know what the system is in terms of the numbers.

02:37:07.000 | I don't know what the numbers are. You have to dig that out.

02:37:10.000 | And final clarification on that is, "Credit history building for foreigners residing in the U.S.

02:37:14.000 | on a non-immigrant basis is the same as for U.S. green card holders and residents and citizens?"

02:37:18.000 | As far as I know, yeah. You have to have the tax ID number.

02:37:22.000 | And so you usually would do that with an international tax ID number.

02:37:26.000 | I assume that it's coded differently in the companies, but remember, U.S. companies, they want to issue debt.

02:37:32.000 | And so you start building up a credit profile, and you can do that. And this gains you access.

02:37:37.000 | I think the biggest benefit is this gains you access to the U.S. credit card market.

02:37:40.000 | And if you need help on this, the Internet is full of advice from just the wonderful credit card hackers

02:37:46.000 | from all around the world that go and take advantage of all the U.S. credit card deals.

02:37:50.000 | So you do need to have a U.S. address. You do need to set it up with an ITIN.

02:37:54.000 | But yes, you can start building the credit file, and that credit file can be helpful to you along the way.

02:38:01.000 | That's it for today's show, Mammoth Show Today, and quite the diversity of topics.

02:38:04.000 | I hope that you have found this interesting and useful.

02:38:07.000 | If you've got a question, I would love to hear from you next week.

02:38:10.000 | You can join us next week by going to patreon.com/radicalpersonalfinance, support the show on Patreon,

02:38:16.000 | and we will be able to welcome you to next week.

02:38:19.000 | So if you want to talk about living libraries or living in a car or disability income insurance or investments or Bitcoin or whatever you want, have at me.

02:38:30.000 | I love it.

02:38:31.000 | Patreon.com/radicalpersonalfinance, and I hope to talk to you next week.

02:38:36.000 | [music]

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2022-01-28-Friday_QA