2022-04-14_Friday_QA
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00:00:30.000 | Today on Radical Personal Finance, it's live Q&A.
00:00:33.000 | Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight,
00:00:53.000 | and encouragement you need to live a rich and meaningful life now,
00:00:56.000 | while building a plan for financial freedom in 10 years or less.
00:00:59.000 | My name is Joshua Sheets. I am your host.
00:01:01.000 | And today we do Friday Q&A, a live Q&A show.
00:01:04.000 | These shows are available to all patrons of this show.
00:01:07.000 | If you'd like to join one of these Friday Q&A shows and call in, like talk radio, go to patreon.com/radicalpersonalfinance.
00:01:22.000 | As I mentioned every Friday here at Radical Personal Finance, when I can arrange the appropriate technology,
00:01:25.000 | which has been hard over the last few weeks, I do a live Q&A show.
00:01:29.000 | And today we're doing it at the last minute, so I don't expect too many callers, but at least we've got a show.
00:01:34.000 | It's been too many weeks without a Friday Q&A show.
00:01:36.000 | I love doing these shows every Friday. It's just that the scheduling and the technology sometimes gets in my way.
00:01:41.000 | If you would like to speak to me on a Friday Q&A show, I would love to have you here.
00:01:44.000 | You can do that by becoming a patron of the show.
00:01:46.000 | Go to patreon.com/radicalpersonalfinance.
00:01:48.000 | Sign up to support the show there, and I would welcome your presence.
00:01:52.000 | Lots to talk about today. It's been a great week, so let's go first to the phones with Brian.
00:01:58.000 | And Brian, welcome to the show. How can I serve you today, sir?
00:02:01.000 | Hi, Josh. I had a slightly different kind of question related to your experience in Malta.
00:02:08.000 | We're going on a trip there this summer, and we've got one day, about 10 hours off the boat, to explore Malta.
00:02:16.000 | I wanted to hear from you on what you think some of the best things to do or spend a day there would be.
00:02:23.000 | Well, 10 hours is not—I was there for a month with my family, so we had a little bit more than 10 hours.
00:02:33.000 | But I really enjoyed Malta. I was there primarily because I was interested in Malta's billing itself as a hub for Bitcoin, for cryptocurrencies, etc.
00:02:44.000 | The University of Malta offers a master's degree in basically cryptocurrencies, and Malta was seeking to be—has been seeking to be—it dubbed itself "blockchain island"
00:02:56.000 | and is seeking to provide kind of a regulatory environment for cryptocurrency.
00:03:01.000 | This is also interesting because Malta has one of Europe's best—it's not necessarily only, but it's certainly the clearest one—citizenship by investment program.
00:03:12.000 | They have a residency by investment program. It's a wonderful tax haven. It's in the European Union. It's a beautiful Mediterranean island.
00:03:20.000 | And so I was there kind of enjoying that, all that stuff, plus the personal side of things.
00:03:26.000 | So what I'll tell you is if you have 10 hours, you are going to simply choose to do basically some of the standard tourist things, depending on where you're coming on a boat. Is that right?
00:03:39.000 | Yes, it's going to be a cruise trip.
00:03:41.000 | Okay, so coming in on the boat, you will most likely dock right in downtown Valletta, which is this beautiful historic walled city that's something like 400 years old.
00:03:54.000 | I don't remember exactly, but it's hundreds of years old. And so you'll be right in the middle of all of the stuff that can be done.
00:04:01.000 | Of course, you're going to be marketed to for all of the things that you can do, the things that you can visit, etc.
00:04:06.000 | So Valletta is really, really neat. They've got a cool Valletta experience or Malta experience, a neat theater there.
00:04:13.000 | You can go and tour the underground. It's not catacombs. It's basically the... So Malta, back up a little bit. The history of Malta is really remarkable.
00:04:24.000 | Malta was founded by the... It's a very old society, but most... Words aren't coming today. Much of what you will see when you are there, the walled city of Malta, was built by the Knights of Malta, which is a Catholic religious order that's very old.
00:04:48.000 | It's technically considered perhaps the oldest nation state in the world today. It is actually a nation state, even though it doesn't have any land, any territory that it controls at the moment.
00:05:01.000 | And they built most of the walled city of Valletta after a devastating war with the invading Turks about 400 years ago.
00:05:12.000 | And so you can get... You'll see that all around Valletta with this beautiful walled city. And then if you go to the downtown Malta experience, they've got a great video presentation, a wonderful theater.
00:05:25.000 | You can do a tour of where they had their hospital and all of the underground stuff that they built. That's really good and will give you a good overview.
00:05:33.000 | They've got a good video that will give you a good overview of the history of Malta. So that is an excellent thing to do.
00:05:39.000 | Then you have to decide, okay, do we want to go and swim and play or do we want to go and do historic things?
00:05:46.000 | If you've got 10 hours, you can go to the Blue Grotto or the Blue Lagoon.
00:05:52.000 | If you're going to go to one or the other, I would encourage you to do the Grotto. It's cooler, but I don't know what the commercial... how to get there and do it in the time that you have.
00:06:02.000 | The Blue Lagoon is really beautiful, but it's a spectacular boat ride there. But it's basically just a beautiful Mediterranean lagoon. It's very pretty, but it's a beautiful Mediterranean lagoon.
00:06:13.000 | The Blue Grotto, on the other hand, has this cool series of caves that's pretty neat to see and that is quite unique.
00:06:20.000 | Or you could go to visit some of the ruins. There's actually... I forget the name of it, but you can find it in the Malta guidebooks and whatnot.
00:06:29.000 | But they claim the oldest building built by humans there. And it's ruins now that it's protected and that's very accessible.
00:06:40.000 | So you could do a tour to some of those old ruins there and those are pretty cool to see, especially if you have time to take the tour and go around and read all the signs.
00:06:47.000 | And then you can just, I guess, soak up the walled city.
00:06:51.000 | They also have... I forget the name of it... there's several old cities that are neat. And so depending on the time that you have, you can go and walk around...
00:07:02.000 | Just a moment, let me come up with a name.
00:07:04.000 | Alright, it's Medina, the city of Medina. And that's another really neat city. It's another walled city.
00:07:10.000 | But it's pretty spectacular, but it's very different than Valletta.
00:07:14.000 | So if I had 10 hours, what I would do is I would start in Valletta, I would do the tour of Valletta.
00:07:21.000 | If I could fit them in, I would then go from there to the old ruins. It's called the Megalithic Temples.
00:07:31.000 | Hagar Khim, Manadra and Tarkshin, I think.
00:07:35.000 | And then if I could, I would then spend a couple hours in the city of Medina and have dinner in Medina.
00:07:42.000 | We were there a couple times at evening time and night time and it's really spectacular.
00:07:48.000 | It's a city, there's no cars in it, it's an old walled city.
00:07:51.000 | And it gives you even more than Valletta, because Valletta has a lot of cars and streets going through it.
00:07:58.000 | Of course the streets are tiny, but Medina has no cars going through it.
00:08:02.000 | And so you can walk around the city, beautiful architecture, and you can really picture... it's no different than it was 300 years ago.
00:08:10.000 | And it's really spectacular. And I love looking at old architecture and thinking about the design behind it.
00:08:15.000 | So for example, one of the things you'll notice about Medina that I noticed, is I noticed all the way the city was constructed.
00:08:21.000 | So Malta gets very, very hot. It's a Mediterranean climate, very dry in the dry season.
00:08:27.000 | And so when you walk around Medina, you see for example that all the streets are tiny.
00:08:32.000 | And the streets are tiny because that maximizes shade. It keeps the streets cool, comfortable places to walk.
00:08:37.000 | It keeps them to be cool and comfortable places for vendors to sell things and to be a part of the city.
00:08:42.000 | And so if you do a little bit of studying on medieval architecture and how ancient cities are designed to do without electricity,
00:08:49.000 | ancient cities are designed to do without air conditioning systems and such, then it's a really neat experience to be in Medina.
00:08:57.000 | So those would be my three.
00:08:59.000 | Okay, that sounds great because that's a lot better than what the ship or some guidebook is going to tell you. So I really appreciate that.
00:09:07.000 | Yeah, my pleasure. And the other thing is Malta is exceedingly small.
00:09:12.000 | And so you can pretty easily, if you don't want to take a guided tour, you can do all that stuff yourself.
00:09:20.000 | So you can rent a car. They have several of the car services that you can rent hourly, right, go to global, things like that.
00:09:28.000 | I rented a car several times and those are cool. You can use ride sharing. I don't remember.
00:09:36.000 | I don't think they have. Yeah, they do have. They have some local version. It's like Uber.
00:09:41.000 | I don't remember the name of it, but that's easy to find. And/or they have a bus system that will take you to all of the systems as well.
00:09:48.000 | So the whole island is connected by bus. So it'll take more time.
00:09:51.000 | So if you have more time and want to spend less money, then the bus system itself will be a great option for you.
00:09:57.000 | All right, we go on. Enjoy your trip. I really enjoyed Malta. I don't think I would want to live there.
00:10:02.000 | I'm not so keen on the island thing. It makes me feel claustrophobic. I got island fever pretty quickly, but I did enjoy my visit there.
00:10:10.000 | We go on to Nick. Nick, welcome to the show. How can I serve you today?
00:10:14.000 | Thank you for taking my call, Joshua. I have a question regarding switching term life insurance.
00:10:20.000 | The story is that two years ago, hearing your show, I decided that I should get a term life insurance for my family, which I did.
00:10:28.000 | And I ended up getting a premium of $90 per month for a 20-year term at $1 million.
00:10:38.000 | And as part of that, there was a nurse that came to our home and took some blood and took some urine.
00:10:46.000 | It's two years later now, and I'm in a significantly better shape than I was then.
00:10:51.000 | So I'm wondering if I was to repeat this process, I would hope that I would get a significantly lower premium or maybe get the same premium but for higher coverage.
00:11:00.000 | And I wasn't sure how to navigate the switching of term insurances.
00:11:05.000 | Yeah, super easy. So the first thing you can do is if you like the policy that you bought, then you can contact your agent and the company and ask for a reconsideration.
00:11:15.000 | And they'll have a system where you say, "Listen, I've got this term insurance policy. I'd like to keep it. Would you be willing to do reconsideration on the policy? Is that something that you offer?"
00:11:24.000 | They don't have to offer it, but many of them will because they want you to keep the policy on the books.
00:11:30.000 | And so if you've had it for a couple years, they know that if you've improved your health, then there's a good chance you're going to go to some other company, buy a new policy and replace their policy.
00:11:41.000 | So they would just assume you keep the current one, but they'll give you new reconsideration.
00:11:46.000 | So if they do that, they'll simply send out a nurse again. They'll do the whole medical exam again.
00:11:51.000 | You won't have to go through underwriting all of the rest of the stuff.
00:11:55.000 | And then if your markers and things have improved enough, then they'll go ahead and give you a better – they may go ahead and give you a better premium and change your rating.
00:12:07.000 | And there's no downside. They can't take the policy away if it's gotten worse. It's not going to go up, so there's no reason not to do that.
00:12:14.000 | Then secondarily, all you need to do is contact – if they don't offer reconsideration or if you want to simply shop the marketplace again, which you should, you simply contact a life insurance agent.
00:12:28.000 | You explain that you'd like to get some life insurance. You explain that you're going to be replacing a policy because you got rated and you've lost weight and everything is better now.
00:12:39.000 | And then you'll just simply apply for a new policy.
00:12:42.000 | Now when you apply for the new policy, then it will be technically what's called a replacement.
00:12:48.000 | That only matters to the insurance agent. It doesn't matter at all to you. You don't need to know about it.
00:12:52.000 | But the insurance agent will note the number of the policy that you are – the name of the company that you're replacing.
00:12:58.000 | And you'll get a replacement notice from the company that you're replacing saying, "Hey, we want you to keep our insurance."
00:13:06.000 | And then you have to just decide in terms of the money when you go to actually apply for it.
00:13:12.000 | You can go ahead and apply for the policy and do like you did before where you give them a first month's premium payment at the time of application.
00:13:21.000 | And then they'll go ahead and you'll have basically two policies enforced simultaneously.
00:13:27.000 | Or if you want to handle the money basically perfectly, then you'll apply for the policy without submitting any premium payment, no consideration.
00:13:36.000 | So the contract will not be enforced because there's no consideration for the contract.
00:13:40.000 | But then they'll do the underwriting. They'll approve the policy. And then they'll tell you the rate.
00:13:45.000 | And then if you like the rate and you wish to accept the policy, then you'll simply accept the policy, pay the first month's premium when you accept the policy, and then go ahead and cancel your other contract.
00:13:54.000 | Okay. So for the current insurance that I have, I pretty much just found it via an ad on YouTube. It was an online-only thing.
00:14:04.000 | How would you advise me to – if I need to go to the market, how would you advise me that I do that?
00:14:09.000 | Yeah. So I'll explain my answer and I'll explain why my answer is.
00:14:13.000 | First of all, I would contact someone whose primary business is life insurance.
00:14:19.000 | And the only way that I know how to do that in the United States is to contact one of the big traditional life insurance companies.
00:14:28.000 | So the big ones in the United States would be New York Life and Northwestern Mutual.
00:14:34.000 | MassMutual would also work fine and Guardian is acceptable.
00:14:38.000 | But New York Life and Northwestern Mutual, more than any other insurance company, are dedicated to the traditional insurance system where they have their own agents, their own offices all across the country, and they're trained insurance agents.
00:14:52.000 | They start people with insurance. They're insurance specialists. That's where their income comes from.
00:14:58.000 | Their agents are not limited to selling their policies, though.
00:15:03.000 | So for example, when I was an insurance agent at the time with Northwestern Mutual years ago, I would sell policies from Northwestern Mutual and I would also sell policies from any other company that brokered their business, which is virtually all of them except those big companies.
00:15:22.000 | And so if you just want a cheap term life insurance policy, that insurance agent can sell it to you, a cheap policy from Banner or from Guardian or not Guardian but American General or Prudential or whoever happens to be the cheapest at that time.
00:15:36.000 | They can do that and then they can also sell you their company's flagship policies as well.
00:15:41.000 | The reason I say that is when you work with an agent like that, you actually speak to somebody who is an insurance agent who is incentivized to provide you with advice and service.
00:15:54.000 | Now that means two things. It means number one, they're incentivized to provide you with advice and service that will help them sell lots of products, but it also means they're incentivized to actually take a comprehensive look at your situation and give you knowledgeable input into your situation and make product recommendations.
00:16:15.000 | You will not pay any more to actually have a relationship with an insurance agent like that than you do by going and responding to a YouTube ad from termlifeinsurance.com.
00:16:27.000 | The way that those businesses work is they are contracted with the same cheap term life insurance companies that all the insurance agents are contracted with.
00:16:45.000 | Their sales funnel is different. They're focused on your responding to an ad and I simply don't think you get as good service when you're going to a phone bank and the phone bank is staffed by insurance agents, etc.
00:16:59.000 | But their model is much more quick selling rather than consultative planning selling, which is what the traditional insurance agents will do.
00:17:09.000 | So I'm biased because I came out of the traditional system, but I don't see how anybody wins.
00:17:16.000 | If you have the choice between working with an insurance agent versus with a phone bank insurance agent, I don't see how you win in working with the phone bank insurance agent versus the traditional knowledgeable person who can take your case and give actual good advice on it.
00:17:32.000 | The only reason why you wouldn't do that is if you were scared of sales pressure or you got connected with some insurance agent that you didn't like.
00:17:40.000 | In my experience, I don't think you should be really concerned about that.
00:17:44.000 | I never knew in my time, I never actually knew any "pushy" insurance agents, meaning that most professional life insurance agents understand that you make your recommendations based upon the actual situation of the client.
00:18:01.000 | And I never knew any personally who did any kind of pushy sales tactics.
00:18:06.000 | Most of that was like the 1950s, the kind of culture that existed many decades ago.
00:18:11.000 | Today, it's all consultative relational selling.
00:18:14.000 | So that's what I would do.
00:18:16.000 | I would call, and the way that I would get it, I would look in Maps or whatever, a Maps app or whatever version of a directory is.
00:18:24.000 | I would find a local New York Life or Northwestern Mutual office.
00:18:28.000 | I would call and speak to the managing director and I would explain, "I'm looking for an insurance policy, need a replacement.
00:18:33.000 | Could you refer me to one of your agents?"
00:18:36.000 | And they'll just simply refer you to one of their agents and that agent will be able to help you and work the process through with you.
00:18:42.000 | So if you were in my shoes, would you take this opportunity to move away from the online only thing and go the brick and mortar?
00:18:48.000 | Or again, if you were in my shoes?
00:18:51.000 | There is no moving away.
00:18:53.000 | So what is most likely to happen, do you receive ongoing solicitations and advertisements from the firm to the email address that you registered with the firm that you worked with the first time?
00:19:06.000 | No.
00:19:07.000 | Okay. So that's normal.
00:19:09.000 | So what has happened, meaning, let me be precise.
00:19:14.000 | I'm surprised that they haven't contacted you at all.
00:19:17.000 | That's bad salesmanship on their part.
00:19:19.000 | Usually they'll have some kind of drip campaign where they send you emails on an ongoing basis at least every few months.
00:19:26.000 | But the point is that you don't have any relationship with the insurance agency that sold you the original policy.
00:19:36.000 | They sold you a policy.
00:19:39.000 | Your relationship now is with the insurance company that holds that policy.
00:19:44.000 | Once they deliver the contract, the contract then is in force and their obligation to you ends.
00:19:50.000 | Now you can call them and buy another policy, and that's fine to do.
00:19:54.000 | But you don't have any relationship with them.
00:19:59.000 | So there's nothing to change.
00:20:02.000 | You may be able to get their insurance agent to answer the phone, but it's unlikely to be the same insurance agent that sold you the policy.
00:20:09.000 | It's more likely to be just a representative to try to help you with the reconsideration, and probably what you'll do is just call the company directly.
00:20:16.000 | So that's another kind of difference between the online phone bank model and the insurance agent model,
00:20:24.000 | is that if you can find a career insurance agent, then you'll have contact with that agent for an ongoing period of time.
00:20:31.000 | Most likely the agent, at least if they're good, he or she will call you regularly.
00:20:38.000 | I was always trained to call my client base every six months,
00:20:42.000 | because basically we know that about every couple of years people's insurance situation is going to change,
00:20:48.000 | and there's new sales there for good clients, for upwardly mobile clients.
00:20:53.000 | So the agent will keep in touch with you.
00:20:55.000 | The agent will have time dedicated to actually handle your customer service stuff himself,
00:21:01.000 | and/or he'll have staff members that will do that.
00:21:04.000 | And so that's where you actually do have a relationship, is if you go with kind of a traditional insurance agency that services your policies.
00:21:12.000 | So you don't have a relationship.
00:21:14.000 | All that will happen is when you replace the contract, if it's been within two years of the time that you bought it,
00:21:20.000 | when the contract gets replaced, then the agency will get a notification that this contract is being replaced, it's going out of force,
00:21:27.000 | and then you may hear from an agent, if they have a replacement department,
00:21:30.000 | you may hear from an agent who will reach out and say, "Hey, wait a second, don't replace the policy."
00:21:34.000 | But the facts that you're describing are exactly the kind of facts where you should replace the policy.
00:21:41.000 | Okay. All right. Okay. Thank you very much.
00:21:44.000 | My pleasure. It's actually pretty simple, and it's their job.
00:21:47.000 | Insurance agents, that's what they're supposed to do, is help you work your way through it.
00:21:51.000 | And good job. Congrats on losing weight and getting your blood markers and everything better.
00:21:55.000 | Scott, welcome to the show. How can I serve you today?
00:21:59.000 | Scott, you're up.
00:22:03.000 | All right, Scott, we'll come back in a moment.
00:22:05.000 | We go to 215 Area Code. Welcome to the show. How can I serve you today?
00:22:13.000 | 215 Area Code. All right.
00:22:18.000 | Can you hear me?
00:22:19.000 | Who's that? Now I can. Hold on.
00:22:22.000 | Yes, I can hear you. Go ahead.
00:22:24.000 | Sorry about that.
00:22:26.000 | I'm sure you've gotten this question before, but I'm trying to evaluate a new job offer
00:22:31.000 | and compare my existing situation with a potential new situation.
00:22:38.000 | I'm just trying to assign dollar values to the intangible things, such as vacation days and health insurance.
00:22:50.000 | And then other, I guess, more complicated issues like my stance in the company being a valued employee
00:22:58.000 | that would probably be one of the less people on the chopping block if there was an economic downturn
00:23:06.000 | compared to taking a year or two to get to that same status at the new company.
00:23:14.000 | So just trying to figure out your process for evaluating all that.
00:23:18.000 | Before we go into any details, which we may need to discuss, I would say that if it's not a clear win for you,
00:23:26.000 | then I think the evidence is on staying where the situation is familiar.
00:23:32.000 | Meaning that if you actually have to sit down and try to calculate the value of the intangibles,
00:23:38.000 | then it's probably not that much of a compellingly better offer.
00:23:43.000 | It's unusual when people are facing this kind of situation. It's unusual to be in a situation where it's not a clearly better offer.
00:23:52.000 | So what would be some examples of this?
00:23:54.000 | Well, so if you had an offer and you said, "I don't like my job now," or "I don't like my company.
00:23:59.000 | It's a bad boss or a toxic work environment or something bad," then this one other one might be better.
00:24:06.000 | You wouldn't be sitting down and parsing the value of extra days off.
00:24:10.000 | You would just simply say, "Hey, it might be better. It's probably better and it pays me enough money."
00:24:14.000 | If there was a big jump in salary or a big jump in your – now you're going to have five weeks of paid vacation
00:24:22.000 | instead of two weeks of paid vacation, or you're going to be able to work from home six months a year,
00:24:27.000 | then it would be obvious.
00:24:29.000 | So if it's not obviously better, then I think there are probably many more reasons to stay put than there are to move.
00:24:39.000 | That doesn't mean you don't change jobs.
00:24:41.000 | It means you stay put until you find something that's obviously significantly better,
00:24:45.000 | something that has a lot more potential or something where it's a clearer benefit to stay.
00:24:49.000 | Because when you have seniority, the great thing about your current job is you know how everything works.
00:24:55.000 | You know what's expected of you. You've been trained already. You don't need to be retrained.
00:24:59.000 | You're high on the totem pole. You're less likely to be fired super quickly in the coming recession.
00:25:06.000 | You're comfortable. You know where the boundaries are.
00:25:10.000 | There are a lot of reasons to stay put unless you find a really much better offer.
00:25:15.000 | So I would say the first question is if it's not so much better, then why not stay where you are
00:25:22.000 | and then wait until you find a newer, better third option?
00:25:29.000 | Okay. Yes, all that makes sense.
00:25:35.000 | If that makes sense, then I don't think we need to go much farther.
00:25:39.000 | What I would say is here is my decision-making framework that I use in looking at decisions.
00:25:47.000 | The only time a decision is difficult is either when you have two equally good options or two equally bad options.
00:25:59.000 | So if you have two equally good options, then it's hard to know what's better.
00:26:04.000 | Or if you have two bad options, it's hard to pick between the bad options.
00:26:08.000 | But in that situation, that's when decisions are difficult.
00:26:12.000 | If you have a good choice and a bad choice, then the decision is not difficult to make.
00:26:17.000 | It's obvious you take the good choice.
00:26:19.000 | So it's only difficult to make if you have two good or two bad.
00:26:22.000 | And so what do you do if you have either two good options, which it sounds like you do,
00:26:27.000 | or if you have two bad options?
00:26:29.000 | As I see it, you have two strategies that you can employ.
00:26:32.000 | Strategy number one is you need to figure out a way to magnify the situation such that the options actually become quite differentiated.
00:26:43.000 | Let's say that you have a good job working at a buggy whip manufacturer,
00:26:51.000 | and you are being offered a good job working at an automobile for this newfangled horseless carriage that's being invented.
00:26:59.000 | Well, you would have a hard time knowing what to do.
00:27:02.000 | You're like, "Listen, we're a really good buggy whip manufacturer,
00:27:05.000 | but I've also got this good job available at the horseless carriage company, so what should we do?"
00:27:11.000 | Well, you focus in and you find some way to magnify the benefits.
00:27:15.000 | And in that situation, you look at it and say, "You know what?
00:27:19.000 | I think people are going to be going for these horseless carriages.
00:27:21.000 | I think the buggy whip job is about to be destroyed,
00:27:24.000 | and I'm going to choose something where it seems like it's the company of the future."
00:27:30.000 | Or you figure out some other benefit to focus in on.
00:27:34.000 | You have to analyze those two options, and you have to magnify or minimize some feature until you can clearly differentiate between the jobs.
00:27:45.000 | Because once you can magnify a feature or minimize a feature to where you can clearly differentiate,
00:27:51.000 | then the decision will be easier for you to make.
00:27:54.000 | Because you'll say, "It's actually job B. That's a much better position,
00:27:58.000 | because I now see that job B offers me entry to a growing company,
00:28:03.000 | or it offers me the ability to join an international firm," or something like that.
00:28:10.000 | So that's strategy number one, is magnify the difference between the companies.
00:28:13.000 | Strategy number two is find a third choice.
00:28:16.000 | If you are looking at two good options or two bad options,
00:28:20.000 | and you really think it through and you really analyze it,
00:28:23.000 | and you just can't compellingly differentiate them,
00:28:26.000 | yeah, they're still close.
00:28:28.000 | Then I think your only real practical solution is to find a third option.
00:28:32.000 | And so you say, "Let me not choose one of these, but rather let me go and find a third option,
00:28:38.000 | something I haven't yet thought about, something that's going to give me a much, much better option."
00:28:42.000 | And when you bring in a third option, then you need to bring in a really good third option,
00:28:47.000 | then your decision is obvious.
00:28:49.000 | So that's my decision-making framework that I use,
00:28:52.000 | and it sounds to me, based upon what you're saying, without asking any clarifying questions,
00:28:56.000 | you have two good options, but you can't really differentiate between them.
00:28:59.000 | So either you magnify something to where it becomes obvious that you should stay
00:29:05.000 | or obvious that you should go, or you just simply stay,
00:29:09.000 | because it's easier for you to stay now and then go and find a third job offer
00:29:13.000 | and spend another six months or another year working on it until you bring in a really attractive job offer.
00:29:21.000 | Okay. Yeah, that gives me a lot to think about.
00:29:24.000 | And I guess I can't really completely compare them yet because the actual offer is still not there.
00:29:33.000 | It hasn't reached me yet, so I'll take all that into consideration when comparing the two.
00:29:38.000 | And hopefully it's an easy comparison.
00:29:40.000 | Right, right. And I want to make very clear that your analysis should involve you choosing the things that are important to you.
00:29:50.000 | And it doesn't matter—money is one thing, but it's not the only thing.
00:29:55.000 | Maybe the fact that your commute with job A is 10 minutes and your commute with job B is 45 minutes,
00:30:01.000 | that may be a compelling enough thing for you to magnify.
00:30:05.000 | But look at the offers, and then if it's not obvious to you which you should choose,
00:30:10.000 | then redo the analysis, and if it's still not obvious, then sit tight and wait for a third option.
00:30:17.000 | All right, we go to 507 Area Code. Welcome to the show. How can I serve you today?
00:30:23.000 | Hi, Josh. Can you hear me now?
00:30:24.000 | Sounds good, yes.
00:30:26.000 | Awesome. Thanks. I'm Scott from Area. I was having some issues.
00:30:31.000 | So my wife and I are regular tithers to our church, and we also have money that is in an investment account
00:30:39.000 | that's for several purposes, kind of 5 to 15 years out, not retirement related.
00:30:45.000 | I was thinking the other day about—because they can take, accept stock donations,
00:30:51.000 | and what I was wondering is if every couple years I take my gains that I have appreciated on my stock,
00:31:00.000 | donate them to the church at the appreciated value, and then simply just buy them back to increase my cost basis
00:31:10.000 | for whatever I do want to sell them for their intended purposes, I would have to pay less taxes on that.
00:31:16.000 | I know that there's donor advice funds and stuff like that, but I thought I might kind of cut out the middleman.
00:31:22.000 | I was wondering if you had any thoughts or suggestions on that tactic.
00:31:29.000 | Let me look and just think about, for a moment, the wash sale rule and make sure—yeah, it wouldn't apply
00:31:41.000 | because you're not selling at a loss, you're gifting at a gain.
00:31:47.000 | I think it's a good idea. So let's just begin with background philosophy to set the table.
00:31:51.000 | So number one is, yes, if you're going to give on an ongoing basis to an organization,
00:31:57.000 | if that organization is organized in such a way that your contribution is a tax-deductible contribution,
00:32:04.000 | then it makes sense to save as much money on taxes as you possibly can.
00:32:10.000 | And so what you're describing is, I have appreciated securities, I can gift those securities to my church,
00:32:18.000 | my church will then sell the securities at market value, and I will receive a tax deduction
00:32:26.000 | for the full market value of those securities.
00:32:29.000 | And then on the back side, I'll just simply go out and purchase those securities at their current price,
00:32:36.000 | and I will get—and I've given, instead of giving cash, I've given securities,
00:32:43.000 | but now I have a higher cost basis in my stock so that when it continues to appreciate,
00:32:47.000 | I'll have saved some money because I gave it.
00:32:51.000 | It's an interesting question. I have not—nobody has suggested that tactic to me,
00:32:56.000 | and I have not thought of it myself. And so my worry is, in all the years that I've been doing this,
00:33:03.000 | why haven't I thought of that before, and why hasn't anybody asked me about that before?
00:33:07.000 | So is there something that I'm missing? Is there some rule that I'm missing?
00:33:11.000 | But I can't think of why there would be a rule on that.
00:33:15.000 | The wash sale rule is, of course, the first thing that you think of,
00:33:19.000 | but the focus of the wash sale rule is if you sell a security at a loss,
00:33:24.000 | to take a deduction on the loss, and then immediately buy the security back,
00:33:29.000 | that's what the wash sale rule covers.
00:33:32.000 | What you're describing, I don't see how it would apply.
00:33:37.000 | I don't see how there would be any problem.
00:33:40.000 | You can gift any asset that you want to gift to a charity,
00:33:45.000 | and the rules, especially with a publicly traded stock that has a clear value,
00:33:49.000 | those rules are ironclad, crystal clear, no problem whatsoever.
00:33:53.000 | And you can buy a security at any time you want.
00:33:56.000 | And so you're not actually rebuying the same shares,
00:33:59.000 | you're not dealing with anything with private companies,
00:34:02.000 | you're just simply giving away some of your stocks and you're buying more stocks.
00:34:06.000 | And so I can't see any law that that would violate, or any problem that that would violate,
00:34:10.000 | and I think it would save you money.
00:34:12.000 | So why wouldn't you do it?
00:34:15.000 | I can't think of any law it would violate, so I don't see any legal reason.
00:34:18.000 | I think the only reason practically that you might not do it would simply be,
00:34:22.000 | is your church equipped to handle that?
00:34:26.000 | If you go to a little country congregation where there's a part-time pastor
00:34:31.000 | and 42 congregants, then gifting them shares of stock is probably not something
00:34:36.000 | that's actually a blessing to them.
00:34:39.000 | But on the other hand, if you go to a large megachurch where there's a sophisticated financial operation
00:34:44.000 | and they're accustomed to dealing with large gifts,
00:34:47.000 | then gifting the stock directly and then them selling it, yeah, they're equipped for it.
00:34:51.000 | So that's the only reason I can think of why you wouldn't do it,
00:34:54.000 | and you can judge that for yourself.
00:34:58.000 | Yes, and I do know, I've already talked to the finance person there,
00:35:01.000 | that they've got forms and stuff already set up for that,
00:35:04.000 | so they are capable of accepting stock donations.
00:35:08.000 | And it just strikes me, I just had that revelation the other day,
00:35:12.000 | so I was just like, wait, why didn't I think about this before?
00:35:15.000 | So that's kind of assuring that you haven't been asked.
00:35:21.000 | I don't know if you're familiar with capital gains harvesting,
00:35:27.000 | which when we've had lower income I've been able to do.
00:35:31.000 | So it's kind of the same concept as that,
00:35:33.000 | except instead of forcing a taxable event at a 0% capital gain,
00:35:39.000 | I'm just able to donate it.
00:35:42.000 | Cool, I was just curious if there's anything obvious that I was missing,
00:35:46.000 | and much like you, it seems like a good idea for funds I'm already going to be donating.
00:35:53.000 | Totally agree.
00:35:56.000 | Well, you feel silly, like I feel like the dum-dum.
00:35:59.000 | It's like, why have I not consistently thought of that?
00:36:03.000 | And you're right, it's no different than just a variation on capital gains harvesting,
00:36:07.000 | which of course is a long-run, long and honored tradition.
00:36:12.000 | So I think probably the reason it's not more widespread is simply that
00:36:17.000 | the actual ownership of stock is actually pretty low,
00:36:24.000 | meaning that Americans own shares in publicly traded companies,
00:36:28.000 | but those shares are generally in mutual funds,
00:36:31.000 | and those shares are generally held inside of retirement accounts.
00:36:35.000 | The number of people who actually own publicly traded securities
00:36:39.000 | that are not in mutual funds and that are not in retirement accounts is pretty low.
00:36:45.000 | And so I think that's probably why it's not more widely talked about.
00:36:52.000 | But I will be stealing the idea and adding it to my repertoire of little tax tricks.
00:36:57.000 | So thank you for the idea. I appreciate it.
00:37:00.000 | Absolutely. Thank you, and I appreciate your time and all of your content.
00:37:03.000 | My pleasure. We go to 302 Area Code. Welcome to the show. How can I serve you today?
00:37:11.000 | Hi there, Joshua. This is Luke.
00:37:14.000 | Luke, welcome.
00:37:16.000 | Thank you. So I've been considering for some time leaving my job to pursue
00:37:23.000 | for a period of time, three, maybe six months, pursuing some personal projects,
00:37:28.000 | both just creative in nature for my own and my own enjoyment,
00:37:32.000 | but also some that would be personal business projects.
00:37:36.000 | However, this is a question about timing and the economy that we're in right now.
00:37:42.000 | If we were in a normal time in the economy, I would feel totally comfortable
00:37:49.000 | leaving my job to do this for, again, three, six, maybe more months with the savings that I have.
00:37:59.000 | I'm wondering, given the things going on in the world right now and with our economy right now,
00:38:09.000 | whether you think that would be a bad time to leave stable employment without
00:38:17.000 | expecting that I'm going to have a fruitful endeavor coming forth in three to six months from this?
00:38:23.000 | Tell me about your financial obligations. Are you supporting family members, loved ones?
00:38:29.000 | Do you have high ongoing obligations or are they pretty modest?
00:38:35.000 | They're very modest. I'm single. I don't have any explicit obligations to anyone.
00:38:40.000 | In that scenario, without even digging into the details, I would say, "Go ahead and quit."
00:38:47.000 | I'll give you my framework as to why I think that.
00:38:50.000 | But I don't think that if you're a single healthy guy with few obligations, no big liabilities,
00:38:58.000 | you don't have seven children in private school, etc.,
00:39:02.000 | then I think it makes all the sense in the world to just go when it's best for you.
00:39:06.000 | Because I think that your options are very many in that situation.
00:39:12.000 | Number one, there's always need. There's always work.
00:39:16.000 | So you need to analyze your career and ask yourself, "How resilient am I?"
00:39:21.000 | Let me help you with this. Do you have a college degree?
00:39:26.000 | Do you have specialized skills in areas that are in demand?
00:39:35.000 | Part of the issue that I've had is I have a liberal arts degree.
00:39:39.000 | I'm a somewhat technically inclined mind, but the work that I've been doing is a consulting job
00:39:45.000 | where a lot of the knowledge I've built up over the few years I've been working is in an area I don't care to continue in.
00:39:55.000 | I think I could go back and get a similar job again,
00:40:00.000 | but it wouldn't be necessarily advancing my career in a direction I want to go.
00:40:04.000 | I'm not going to belabor the analysis. I think you should just go with your original plan.
00:40:09.000 | The reason is simple. We don't actually have any idea of what's going to happen to the economy in the coming months or years.
00:40:18.000 | I think there's every reason to think that a recession is likely.
00:40:23.000 | There's every reason to think that a recession is likely.
00:40:25.000 | There's every reason to think that inflation is significant and unlikely to change in the short term.
00:40:34.000 | I think there's every reason to think that the world is in a very precarious place right now with regard to supply chain disruptions.
00:40:41.000 | I think that forecasting global famine over the coming year or two is not a crazy forecast.
00:40:48.000 | All of these things concern me, but for each and every one of them, we can argue the other side.
00:40:54.000 | If you were supporting seven children in private school and you needed to feed them and you didn't have money,
00:41:03.000 | then I would think my answer would be different.
00:41:06.000 | But if you're a young, single, capable guy with a college degree, statistically, it's unlikely for you to be without options.
00:41:15.000 | The people who get hurt the most in recessions, you go back to the 2008-2009 recession,
00:41:20.000 | the unemployment rate among people with a college degree was exceedingly low.
00:41:24.000 | People with skills and with self-awareness and with work ethic, they were never out of work.
00:41:31.000 | It was unskilled laborers, people without a college degree, people without technical skills,
00:41:36.000 | people without self-awareness about their marketability in the job market.
00:41:39.000 | Those are the people that got destroyed.
00:41:41.000 | If you don't belong to that class of people, then statistically, the odds are pretty high and pretty doable of your being able to be employed.
00:41:53.000 | In addition, you should consider your flexibility in terms of where to live and how to live.
00:41:58.000 | If I have seven children in private schools, then my job search is going to be confined to the city where I live, the town where I live.
00:42:07.000 | But if I'm a single guy and I can pick up and move across the country to take a job opportunity,
00:42:12.000 | then there's virtually – it's almost inconceivable that you wouldn't be able to have work.
00:42:17.000 | And if you're the kind of guy who's listening to a show like this, to the point where you actually sign up and you call up to ask me a question,
00:42:25.000 | it's just simply a marker of your intelligence, your dedication, etc.
00:42:30.000 | You're not a typical – you're not a loser.
00:42:33.000 | It's not possible for you to listen to a show like this and be a loser or be uneducated or be ignorant in some way.
00:42:43.000 | Not in some way, but you're not the kind of person who's going to struggle with that.
00:42:49.000 | And so, what we have is we have these abstract fears about macroeconomic things that we can't control,
00:42:56.000 | and yet those abstract fears are always going to be there.
00:42:59.000 | So, I think that you should just ignore those things and you should do what's right for your life.
00:43:06.000 | You have savings. You have money.
00:43:08.000 | And what you might do is you might simply say, "Maybe six months ago, my plan for my six-month sabbatical was to go and live high on the hog.
00:43:18.000 | I was going to go and rent a penthouse apartment in Singapore and live there and spend lots of money.
00:43:23.000 | But I also have been thinking about doing this thing that was cheaper."
00:43:27.000 | You just might choose the cheaper thing now and then maybe save the six months in the penthouse in Singapore for the future.
00:43:34.000 | You might also put – you might also choose to have a little bit bigger of a reserve fund than you otherwise would.
00:43:43.000 | Maybe you said, "I was willing to spend down to $10,000 of savings before, but now I want to make sure that I keep $20,000 in the bank,"
00:43:50.000 | or whatever number yours is because it gives me a little bit more of a cushion.
00:43:54.000 | And then finally, what I would do is I would think about what I would do if I went totally broke and if I couldn't find a job.
00:44:02.000 | So if I couldn't find a job and I actually ran out of money, what would I do?
00:44:08.000 | Would I move into mom and dad's garage? Would I buy a van and convert it and live in my van?
00:44:14.000 | Would I go and volunteer on an organic farm in Mexico for a few months waiting?
00:44:19.000 | What would I do? And just think about that, and I think that's good enough in terms of a planning perspective.
00:44:25.000 | So two other things to consider would be can you get laid off?
00:44:30.000 | So one of the strategies that is always worth considering is if you did think there was a recession and if your timing is not necessary,
00:44:39.000 | is there some way that you could engineer a layoff from your company instead of just simply quitting?
00:44:45.000 | It's not possible at all companies in all places, but it's one of those things where if you could engineer a layoff with multiple months of severance,
00:44:53.000 | unemployment, income, etc., and then take your sabbatical, that's maybe worth doing.
00:44:59.000 | And if you're fairly flexible and when you could take it, then watch things.
00:45:02.000 | Look at your industry and say, "Do I think that layoffs are coming?"
00:45:06.000 | If you don't know that right now, then I would just say go with what's right for you now.
00:45:13.000 | And then the second thing I have forgotten, so I guess I'll just share my story.
00:45:20.000 | I got laid off right in June of 2008, and it was totally out of the blue.
00:45:26.000 | And I often wondered about that because I had been planning to leave that job in January of 2009.
00:45:35.000 | I had been saving money, but my company had given me extra money for a college scholarship,
00:45:40.000 | and so I felt this sense of obligation that I was going to work there for at least a year.
00:45:44.000 | And so I was kind of sticking it out.
00:45:46.000 | I did not like my job.
00:45:47.000 | I did not like my work.
00:45:49.000 | And so when I got laid off in June of 2008, it felt like freedom.
00:45:54.000 | It felt like the prison doors had opened and I was out, and I was happy about it.
00:45:58.000 | But what I vividly remember is I was going – I remember driving to Miami and doing insurance classes to get my life insurance license.
00:46:09.000 | When I was listening every day, I would listen to NPR, and I would listen to Marketplace and to – I don't remember.
00:46:17.000 | It's been so long since I listened to NPR, the evening show that they did, All Things Considered.
00:46:22.000 | And I would listen, and I would just hear the world was falling apart, and the whole financial world was just collapsing.
00:46:28.000 | And here I was.
00:46:29.000 | I had been laid off.
00:46:30.000 | I was going into a commission-only, zero-salary business.
00:46:35.000 | And I thought to myself so many times, like, if it had been September of 2008, and it was October 2008, and November 2008, would I have had the guts to quit my job?
00:46:46.000 | And the answer is probably not.
00:46:48.000 | I probably wouldn't have had the guts to do it.
00:46:50.000 | And yet I was so glad that I had been done with the job, and I've just thought of that over the years.
00:46:55.000 | And I've realized I should have had the guts to do it, even if it looked like the whole world was falling apart, for all the reasons that I've just articulated to you.
00:47:03.000 | I had virtually no financial responsibility.
00:47:06.000 | I had plenty of money saved.
00:47:07.000 | I had plenty of characteristics that would allow me to get any job at some point when I wanted one.
00:47:12.000 | And so it would have been the wrong decision to have allowed these external circumstances, even if it was one of the most spectacular financial crises in a very long time.
00:47:23.000 | It would have been the wrong decision for me to allow that to control my actions and my life plan.
00:47:28.000 | So that's the lens through which I'm giving you the advice to say, as long as those conditions are there, then I think that you should just go with your plan A and deal with the economy as it develops.
00:47:41.000 | Because the thing that you don't have in abundance in life is time.
00:47:45.000 | And so there's always going to be a reason not to do something that you've decided you want to do.
00:47:50.000 | And I think it's much better to get in the habit of deciding what you want to do and then doing it.
00:47:54.000 | And that's a much more important productive personal habit than is, oh, I'm going to wait and see if the circumstances get better for me to live my life the way I want to live it.
00:48:07.000 | Very fair. Thank you for the affirmations and the advice.
00:48:12.000 | Yeah, I don't want to be living in fear or necessarily worry about the future.
00:48:20.000 | There's always something to worry about.
00:48:24.000 | Maybe buy a tent, buy a couple of buckets of wheat so at the worst case you have a roof over your head and food to eat.
00:48:31.000 | I think you are good to go.
00:48:33.000 | And enjoy your time, enjoy your sabbatical, and enjoy your personal projects.
00:48:38.000 | And with that, we come to the end of our Q&A show.
00:48:41.000 | Thank you so much for being here. I was glad we had a bunch more callers than I expected.
00:48:44.000 | If you would like to be on next week's show, make sure you go to patreon.com/radicalpersonalfinance and sign up there and we would welcome you to next week's Q&A show.
00:48:53.000 | And then in addition to that, remember that my brand new Bitcoin course, bitcoinprivacycourse.com, that has been the hit, major hit.
00:49:03.000 | I get such great feedback from that.
00:49:05.000 | And so I'd love to have more students in it though.
00:49:08.000 | And I think this is such a wonderful time to be buying Bitcoin, a wonderful time to be buying it right, buying it privately, owning it privately, and using it privately.
00:49:17.000 | So if you are interested in how to do that, go to bitcoinprivacycourse.com.
00:49:22.000 | I look forward to seeing you there.
00:49:25.000 | The holidays start here at Ralph's with a variety of options to celebrate traditions, old and new.
00:49:32.000 | You could do a classic herb roasted turkey or spice it up and make turkey tacos.
00:49:37.000 | Serve up a go-to shrimp cocktail or use simple truth wild caught shrimp for your first Cajun risotto.
00:49:44.000 | Make creamy mac and cheese or a spinach artichoke fondue from our selection of Murray's cheese.
00:49:49.000 | No matter how you shop, Ralph's has all the freshest ingredients to embrace all your holiday traditions.
00:49:54.000 | Ralph's, fresh for everyone.
00:49:56.000 | for everyone.