2023-02-17_Friday

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00:01:00.000 | Welcome to Radical Personal Finance,

00:01:02.000 | a show dedicated to providing you with the knowledge, skills,

00:01:04.000 | insights, and encouragement you need

00:01:05.000 | to live a rich and meaningful life now

00:01:07.000 | while building a plan for financial freedom

00:01:09.000 | in 10 years or less.

00:01:10.000 | My name is Josh Rasheeds, I'm your host,

00:01:11.000 | and today is Friday, February 17, 2023.

00:01:15.000 | Though you might not know it due to the absence of music,

00:01:18.000 | today is Friday Q&A.

00:01:20.000 | Apologies, I went to start everything just before the show

00:01:24.000 | and it has disappeared from the places

00:01:26.000 | where it was supposed to be

00:01:27.000 | and I don't have the backup systems at my fingertips.

00:01:30.000 | So if you're new to the show,

00:01:31.000 | welcome each and every Friday here

00:01:32.000 | at Radical Personal Finance

00:01:33.000 | when I can arrange the appropriate technology.

00:01:35.000 | We do a live Q&A show, works just like call-in talk radio.

00:01:39.000 | You call in, talk about anything that you want,

00:01:42.000 | ask me any questions that you want,

00:01:43.000 | opine on anything that you want.

00:01:45.000 | You set the course of the call.

00:01:47.000 | And so I do that each and every Friday

00:01:49.000 | when I can arrange the appropriate recording setup.

00:01:52.000 | If you would like to gain access

00:01:53.000 | to one of these Friday Q&A shows,

00:01:54.000 | you can do that by becoming a patron of the show.

00:01:56.000 | Go to patreon.com/radicalpersonalfinance,

00:01:58.000 | patreon.com/radicalpersonalfinance,

00:02:00.000 | and that will gain you access to one of these shows.

00:02:03.000 | We begin with Annette in North Carolina.

00:02:06.000 | Annette, welcome.

00:02:07.000 | How can I serve you today?

00:02:09.000 | Hi, Joshua.

00:02:10.000 | I have a question for you.

00:02:12.000 | I am starting a third grade reading literacy website

00:02:16.000 | for my county,

00:02:18.000 | and I wanted to know what three things

00:02:20.000 | would you have on the website and why?

00:02:24.000 | I would...

00:02:26.000 | I love the question.

00:02:28.000 | A specific question creates great answers.

00:02:30.000 | So number one thing I would have on the website

00:02:32.000 | is I would have a...

00:02:36.000 | some compelling way to demonstrate...

00:02:39.000 | So first, a couple of questions.

00:02:41.000 | Who are you hoping will be looking at your website?

00:02:45.000 | Okay, so let me give you a back...

00:02:47.000 | I am not a reading specialist.

00:02:49.000 | I'm a math major,

00:02:50.000 | but I am concerned about reading.

00:02:53.000 | My county is like 17 points behind the state,

00:02:56.000 | and African-American students are at the bottom.

00:02:59.000 | And so I went to people to try to get some help.

00:03:02.000 | Nobody was interested,

00:03:03.000 | so I went to school to learn how to code,

00:03:05.000 | and I have gathered some resources.

00:03:08.000 | I bought that book that you mentioned in the...

00:03:11.000 | I think it was the read-along.

00:03:13.000 | And so I'm just trying to...

00:03:17.000 | I'm trying to gather resources.

00:03:19.000 | This is just a first start at this,

00:03:21.000 | just putting resources that we have in the county already.

00:03:25.000 | And so I'm looking towards parents to begin with

00:03:31.000 | and maybe the children, the students.

00:03:34.000 | Right.

00:03:35.000 | So the first most important thing, I think,

00:03:37.000 | is to persuade people of the value of reading.

00:03:40.000 | If you hear how I try to talk about it,

00:03:42.000 | I try to demonstrate a little bit

00:03:44.000 | of the clear and obvious research that exists...

00:03:50.000 | Excuse me, on how incredibly influential reading is

00:03:54.000 | on all of the metrics that we care about.

00:03:56.000 | Reading helps to improve academic outcomes substantially.

00:04:01.000 | Reading improves empathy.

00:04:03.000 | Reading helps children to be more successful.

00:04:05.000 | Reading is the corner...

00:04:07.000 | It is the cornerstone thing.

00:04:10.000 | In the Read Aloud Handbook,

00:04:13.000 | Jim Trelease, the author,

00:04:15.000 | which is the book that I think you're referring to,

00:04:17.000 | Jim Trelease talks about it and he says,

00:04:20.000 | "If somebody created a pill that would deliver

00:04:22.000 | all of the academic benefits of reading,

00:04:25.000 | there would be a line for miles and miles around."

00:04:28.000 | It is the single most important thing that can happen.

00:04:31.000 | It can help children to improve their test scores,

00:04:33.000 | academics across the board.

00:04:36.000 | And so I think the first thing is just to demonstrate

00:04:39.000 | a little bit of the research to inspire people

00:04:41.000 | that this is fundamentally the thing

00:04:44.000 | that can alter the course of someone's life.

00:04:47.000 | The second thing that I think is important

00:04:49.000 | is to emphasize the value of reading aloud.

00:04:52.000 | And so I would focus...

00:04:55.000 | I didn't talk much...

00:04:56.000 | In the episodes that have been publicly released,

00:04:58.000 | I haven't talked about audiobooks.

00:05:00.000 | But I think the best gateway drug,

00:05:02.000 | especially for poor families,

00:05:04.000 | for families where parents are working, etc.,

00:05:06.000 | the gateway drug that you want to get kids hooked on

00:05:09.000 | is audiobooks.

00:05:10.000 | I see that as the key thing.

00:05:12.000 | Because if somebody listens to lots of stories read aloud,

00:05:18.000 | that person is far more likely to eventually become

00:05:22.000 | a skilled and fluent reader with his eyes

00:05:25.000 | if he's had lots of stories read aloud.

00:05:28.000 | So obviously we want to get moms and dads and grandmas

00:05:31.000 | and grandpas and neighbors, etc.,

00:05:33.000 | reading stories aloud themselves,

00:05:35.000 | pulling out books and showing people

00:05:38.000 | and reading to them in person.

00:05:40.000 | But given that that can be challenging,

00:05:43.000 | I think our gateway drug is audiobooks.

00:05:45.000 | And audiobooks, carefully selected and chosen,

00:05:48.000 | are just wonderful, and children respond to them.

00:05:51.000 | So I would focus on trying to get people to be aware

00:05:54.000 | of the audiobooks that are available to them,

00:05:56.000 | perhaps the ones that are there in your local library system.

00:05:59.000 | I would speak with the local librarian

00:06:01.000 | about the audiobooks that they have,

00:06:04.000 | and I would make sure you choose some good quality audiobooks

00:06:07.000 | that have rich, beautiful stories,

00:06:09.000 | that are high-quality children's literature, etc.,

00:06:11.000 | and focus on audiobooks.

00:06:13.000 | And then the third thing I would say,

00:06:15.000 | if I had to just choose three,

00:06:17.000 | every bit of academic research that I have seen on this

00:06:22.000 | indicates that it doesn't matter what children read,

00:06:26.000 | it matters that they read.

00:06:29.000 | So what I mean is I would encourage parents

00:06:32.000 | not to try to guide children's reading too much,

00:06:35.000 | too proactively.

00:06:36.000 | If you look at people who are readers as adults,

00:06:41.000 | they generally become readers

00:06:43.000 | because at some point along the way

00:06:45.000 | they got hooked on a book or a series of books

00:06:50.000 | or a genre or something that they really loved.

00:06:53.000 | For me as a reader, I remember when I was a boy,

00:06:55.000 | it was Hardy Boys.

00:06:56.000 | When I discovered the Hardy Boys books

00:06:58.000 | and I discovered all of the incredible adventures

00:07:00.000 | that my heroes Frank and Joe Hardy could have,

00:07:03.000 | it opened up the world to me,

00:07:04.000 | and I read dozens and dozens of those books.

00:07:06.000 | For some people it's Babysitter's Club

00:07:08.000 | or it's Goosebumps or it's Harry Potter

00:07:10.000 | or it's something that grabs them.

00:07:14.000 | And so I think that there's a danger

00:07:16.000 | that people try too hard to direct

00:07:18.000 | the reading choices of children.

00:07:21.000 | Now obviously we want to protect children

00:07:23.000 | from things that are harmful,

00:07:25.000 | but the risk of them coming across something that's harmful

00:07:27.000 | is very low compared to the risk of them

00:07:29.000 | not coming across anything at all.

00:07:31.000 | And so it's really important that we surround children

00:07:33.000 | with books and that they have the opportunity

00:07:35.000 | to choose the books that appeal to them

00:07:37.000 | without our interference.

00:07:39.000 | The sustained free reading is the key factor

00:07:45.000 | where the child chooses the book that he's interested in

00:07:48.000 | for whatever reasons he's interested in

00:07:49.000 | and is just given time to read it.

00:07:51.000 | And so I would work to just make sure parents

00:07:54.000 | and school administrators and teachers and whatnot

00:07:57.000 | don't try too hard to direct the children.

00:08:01.000 | Don't try in the early years too hard

00:08:03.000 | to direct the children to high-quality literature

00:08:07.000 | or highbrow literature or quality, et cetera.

00:08:10.000 | Just give free reign.

00:08:11.000 | And then once you see that you've got a reader

00:08:13.000 | and you've got a reader who's addicted,

00:08:15.000 | then go ahead and start giving that reader

00:08:18.000 | advice and recommendations.

00:08:20.000 | Those would be kind of what I think are the top three

00:08:22.000 | to educate people on.

00:08:25.000 | - All right, thank you so much.

00:08:27.000 | Bye.

00:08:28.000 | - My pleasure, and I'm glad you are here

00:08:29.000 | and I'm glad you're taking up.

00:08:30.000 | Read carefully the Read Aloud Handbook

00:08:32.000 | that you have gotten because all of it is in there.

00:08:37.000 | And then I would say check out probably

00:08:39.000 | the Read Aloud Revival podcast.

00:08:41.000 | I have never listened to this.

00:08:42.000 | I've read her book called The Read Aloud Family.

00:08:47.000 | It's a second stringer to Read Aloud Handbook

00:08:51.000 | by Jim Trulise, but it's a good book.

00:08:53.000 | It's a very encouraging book.

00:08:55.000 | But she has a podcast called Read Aloud Revival

00:08:58.000 | the author of that.

00:08:59.000 | So I would go and look through her podcast

00:09:01.000 | and see if she discusses some of these themes.

00:09:03.000 | And if you're interested in becoming an activist

00:09:05.000 | for this issue, which I think is a wonderful choice,

00:09:08.000 | that's a community that I would look for.

00:09:11.000 | (upbeat music)

00:09:14.000 | ♪ Blessing in the morning ♪

00:09:16.000 | ♪ Come back Sunday morning ♪

00:09:18.000 | - California's top casino and entertainment destination

00:09:20.000 | is now your California to Vegas connection.

00:09:23.000 | Play at Yamava Resort and Casino at San Manuel

00:09:26.000 | to earn points, rewards, and complimentary experiences

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00:09:42.000 | - Justin in Orlando, welcome to the show.

00:09:44.000 | How can I serve you today?

00:09:46.000 | - Hey Joshua, and I can agree on the Hardy Boys.

00:09:49.000 | I think I have a lot of accelerator reader points

00:09:51.000 | back in the day, thanks to the Hardy Boys.

00:09:53.000 | - Absolutely. - They were great.

00:09:55.000 | (laughing)

00:09:57.000 | Question for you, and you can tell me

00:10:00.000 | if you don't like the question, or if it's too personal,

00:10:02.000 | but it's not so much of what should I do,

00:10:04.000 | but I was just kind of thinking and wondering,

00:10:07.000 | what do you do with your extra money

00:10:10.000 | in terms of investing or keeping in cash?

00:10:13.000 | You have life insurance policies you talked about before,

00:10:16.000 | but tell me if you don't like the question,

00:10:17.000 | I can ask something else.

00:10:19.000 | - Yeah, I don't love to talk a ton of personal details.

00:10:23.000 | So I'll answer the question kind of broadly,

00:10:28.000 | but I'll just say I practice what I preach.

00:10:32.000 | So my comment would be,

00:10:35.000 | the first most important investment category

00:10:38.000 | is into lifestyle.

00:10:40.000 | And so anything, there are a lot of little investments

00:10:43.000 | that people can make into lifestyle

00:10:45.000 | that can result in freedom.

00:10:48.000 | So I've invested into my lifestyle.

00:10:51.000 | I don't think that the idea,

00:10:54.000 | I have abandoned the concepts of hardcore,

00:10:59.000 | living on 10% of what I make kind of things

00:11:03.000 | just to stretch and to strain forever.

00:11:06.000 | I'm at a point in my life stage

00:11:08.000 | in which lifestyle is important to me.

00:11:12.000 | Meaning that I want to live in a house

00:11:15.000 | that fits my long-term goals.

00:11:17.000 | I want to travel the world with my children.

00:11:20.000 | This is the stage of life in which I want to spend money.

00:11:24.000 | If I could go back and do it over again

00:11:26.000 | and be 15 years old

00:11:28.000 | and be taught about extreme savings and whatnot,

00:11:31.000 | then I would embrace extreme savings at 15 years old.

00:11:34.000 | I would embrace extreme savings as a young single man.

00:11:40.000 | But I am at a stage in which I'm in

00:11:44.000 | and going into my highest expense years

00:11:47.000 | because of my family decisions and family obligations.

00:11:52.000 | So my eldest is nine and I have a newborn

00:11:55.000 | and I have five children.

00:11:56.000 | And so these are the years in which I'm mostly focused

00:11:59.000 | on buying lifestyle.

00:12:01.000 | And that lifestyle primarily revolves

00:12:03.000 | around time with my children

00:12:06.000 | and opportunities for my children.

00:12:08.000 | So I spend a lot of money on travel.

00:12:12.000 | I spend a lot of money

00:12:13.000 | on educational opportunities for them.

00:12:15.000 | I spend a lot of money on their education.

00:12:18.000 | Those are the things that are important to me.

00:12:20.000 | And I don't have much interest

00:12:22.000 | in kind of cheapening out on it.

00:12:26.000 | I enjoy pushing myself and my children

00:12:29.000 | into poverty-level conditions

00:12:32.000 | as a way of stretching us and keeping us flexible.

00:12:35.000 | But I enjoy staying at nice hotels

00:12:38.000 | and taking, you know, I enjoy flying nice airlines

00:12:42.000 | and taking nice taxis

00:12:44.000 | and enjoy staying in nice hotels much more

00:12:47.000 | than I enjoy shoestringing it.

00:12:49.000 | And so to me, and let me just pause for a moment.

00:12:52.000 | Why am I starting with this

00:12:53.000 | rather than talking about investing?

00:12:55.000 | I'll start logically.

00:12:57.000 | The only reason any of us should ever save

00:13:00.000 | and invest money is if we have something,

00:13:06.000 | if there's an expenditure that we would like to make

00:13:09.000 | with money in the future that we value more

00:13:12.000 | than the expenditure that we can make

00:13:14.000 | on the money today.

00:13:16.000 | So that's why you save money.

00:13:19.000 | Other than that, you should consume money.

00:13:21.000 | There's no point in saving money.

00:13:23.000 | So when you're saving for the future,

00:13:25.000 | there has to be something in the future

00:13:27.000 | that you want more than what you can spend

00:13:30.000 | the money on today.

00:13:31.000 | That's why you save.

00:13:33.000 | So why drive a $2,000 car

00:13:36.000 | when you could drive a $100,000 car?

00:13:39.000 | Well, because you want a $500,000 car

00:13:42.000 | in the future, or because you want a car

00:13:45.000 | that has more, that you want the $100,000 car

00:13:50.000 | and you want financial freedom

00:13:52.000 | so you don't have to work, et cetera.

00:13:54.000 | So when you reach, when you look at lifestyle,

00:13:57.000 | all of kind of conventional financial wisdom

00:14:01.000 | is focused on the idea of having more

00:14:06.000 | in the future.

00:14:07.000 | And that makes a lot of sense

00:14:09.000 | when you're 15 years old.

00:14:10.000 | But it doesn't make a lot of sense

00:14:12.000 | when you are looking forward to having more

00:14:16.000 | when you're 95 years old.

00:14:18.000 | What's the point of having more money

00:14:19.000 | at 95 years old if you could have more money

00:14:21.000 | at 35 years old?

00:14:23.000 | So that's what I'm trying to argue

00:14:25.000 | is simply that I'm at a stage in my life

00:14:27.000 | in which I am choosing to consume

00:14:29.000 | and I intend to substantially increase

00:14:32.000 | the consumption of money

00:14:33.000 | because I want to spend the money now

00:14:37.000 | more than I want to have more money

00:14:40.000 | in the future.

00:14:41.000 | And to me, that's the logical, rational choice,

00:14:43.000 | especially given the stage of where I am

00:14:46.000 | with children.

00:14:47.000 | I would rather travel the world

00:14:49.000 | with my children and take them

00:14:51.000 | to a hundred countries

00:14:53.000 | rather than me have tons of money

00:14:56.000 | when I'm 30 years older

00:14:58.000 | so that I alone, or my wife and I alone,

00:15:01.000 | can go to the hundred countries.

00:15:02.000 | So I'm primarily focused on consuming

00:15:05.000 | over the next decade

00:15:07.000 | and I'm making decisions that are focused on that.

00:15:09.000 | The second primary form of investment then

00:15:12.000 | is to invest into building income sources

00:15:16.000 | with my money

00:15:17.000 | that allow me to generate cash flow

00:15:20.000 | on a better structure.

00:15:24.000 | So I don't want to work 80 hours a week.

00:15:26.000 | I don't want to work 60 hours a week.

00:15:28.000 | I want to work and be productive

00:15:30.000 | but I want to invest money

00:15:32.000 | into things that allow me to produce

00:15:33.000 | ever increasing amounts of money

00:15:35.000 | on a few hours of work per day

00:15:37.000 | because that enhances my lifestyle goals

00:15:40.000 | not just financially.

00:15:41.000 | And so I've made a lot of moves in that direction

00:15:44.000 | and that's a primary focus for me.

00:15:45.000 | Because if you can create cash flow

00:15:48.000 | on a modest amount of time

00:15:51.000 | then you can have more financial abundance

00:15:55.000 | while also having more lifestyle abundance

00:15:56.000 | which is primary.

00:15:58.000 | Now flipping that around, what about extra money?

00:16:00.000 | Well I think the standard approach for extra money

00:16:03.000 | should always be simply stocks

00:16:06.000 | because there is no other solution

00:16:11.000 | that provides the highest potential

00:16:14.000 | of long term wins

00:16:16.000 | with less risk and with less frustration

00:16:21.000 | than just simply buying the securities

00:16:24.000 | of publicly traded companies.

00:16:26.000 | When you understand how truly incredible it is

00:16:29.000 | that you can purchase these securities

00:16:32.000 | especially when wrapped up in a mutual fund

00:16:34.000 | or an ETF at a very low cost

00:16:36.000 | and you can have zero obligation

00:16:38.000 | and yet have substantial long term benefit and growth

00:16:42.000 | to me that's an incredible value proposition.

00:16:45.000 | That should be the standard.

00:16:47.000 | So we should not deprecate

00:16:50.000 | the value of owning stocks.

00:16:53.000 | We should not deprecate the value of just a mutual fund,

00:16:56.000 | a standard mutual fund.

00:16:58.000 | Rather, in the same way

00:17:00.000 | that when we are doing analysis of investment returns

00:17:04.000 | and we look at the risk free rate of return

00:17:07.000 | of government debt

00:17:08.000 | and that's the baseline

00:17:10.000 | we should use the same philosophy

00:17:12.000 | when it comes to just simply owning a mutual fund

00:17:14.000 | and say this is the baseline.

00:17:15.000 | Now prove to me that the alternative investment is better.

00:17:19.000 | And when you genuinely understand

00:17:21.000 | how incredible a run of the mill mutual fund is

00:17:27.000 | compared to all of the work

00:17:29.000 | and all of the hassle

00:17:30.000 | and all of the everything else that's required

00:17:33.000 | to pursue an alternative path

00:17:39.000 | mutual funds will shine most of the time.

00:17:43.000 | Then finally a third stage.

00:17:45.000 | I have myself remained uncommitted

00:17:49.000 | to a specific geographic place.

00:17:52.000 | And that uncertainty has caused me

00:17:55.000 | to not be willing to make certain investment decisions

00:17:58.000 | that I would make if I committed to a place.

00:18:01.000 | And I've wrestled with this for the last few years.

00:18:03.000 | I'm content with it because it's a decision I've made.

00:18:06.000 | But if I were committed to a place

00:18:08.000 | meaning that this was the specific place that I live,

00:18:10.000 | this is our town, this is kind of like our home

00:18:13.000 | then I would purchase real estate

00:18:16.000 | and I would invest into local businesses in the place.

00:18:20.000 | And so what I am doing is just waiting to see

00:18:23.000 | whether or not I choose a place

00:18:26.000 | that I'm going to be committed to

00:18:27.000 | or whether I continue this kind of weird lifestyle that I live.

00:18:31.000 | And so in addition to those things that I said

00:18:33.000 | then I'm mostly focused on just stockpiling dry powder

00:18:37.000 | and waiting for opportunities as I see them.

00:18:41.000 | So those are my answers and the logic behind them.

00:18:44.000 | I'm at a stage in which I'm consuming

00:18:46.000 | and I want geographic freedom

00:18:49.000 | and we'll see what other investments I make in the future.

00:18:54.000 | - Yeah, thanks.

00:18:55.000 | That's helpful to hear you think through.

00:18:56.000 | I didn't think you were going to say

00:18:57.000 | that you were investing in commodity futures

00:18:59.000 | or anything crazy.

00:19:00.000 | So that's about in line with what I expected

00:19:02.000 | but it's always helpful to hear how you think through these things.

00:19:05.000 | - I guess that means I've done my job right.

00:19:07.000 | If my answer is as predicted

00:19:09.000 | then hopefully I am consistent in doing my job right.

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00:19:44.000 | Kyle in Washington, welcome to the show.

00:19:46.000 | How can I serve you today?

00:19:47.000 | - Well, I wasn't going to ask you this

00:19:51.000 | but I just, as long as we're getting personal

00:19:53.000 | I thought I might ask you a follow up to that.

00:19:55.000 | - I'm trying to get away from personal.

00:19:57.000 | Go ahead.

00:19:58.000 | - All right, I'll go.

00:19:59.000 | - Go ahead.

00:20:00.000 | - All right, I'm going to do it then.

00:20:02.000 | Okay, so what type of real estate seminar

00:20:05.000 | did your father talk you out of?

00:20:07.000 | - Do you remember Russ Whitney?

00:20:10.000 | - No, I haven't actually heard that name.

00:20:12.000 | - Okay, so there was an organization that was like

00:20:15.000 | I think they did a motive.

00:20:17.000 | So here was the basic structure when I was in college.

00:20:21.000 | There was a motivational seminar.

00:20:24.000 | I forget what it was called.

00:20:25.000 | I think it may have been called Get Motivated.

00:20:27.000 | And the way the business model worked

00:20:29.000 | is they sold tickets to I think

00:20:34.000 | a three day motivational seminar.

00:20:36.000 | And those tickets, again I think it may have been called

00:20:41.000 | Get Motivated but this is going back a long time

00:20:43.000 | so I don't remember.

00:20:44.000 | And then they would bring in, no actually excuse me,

00:20:46.000 | it wasn't a three day seminar, it was a one day seminar.

00:20:48.000 | So they brought in tickets to,

00:20:51.000 | it was a one day Get Motivated seminar.

00:20:53.000 | So I went to Miami, downtown Miami Convention Center

00:20:56.000 | and it was kind of the first time I had ever been

00:20:59.000 | to a big motivational seminar.

00:21:01.000 | And it was incredible.

00:21:02.000 | I forget all the speakers that were there at this point.

00:21:05.000 | In fact I can't specifically identify a single name.

00:21:09.000 | But it was one of the most incredible days of my life.

00:21:13.000 | Just that first initial motivational seminar.

00:21:15.000 | The tickets to that seminar were very inexpensive.

00:21:19.000 | I'm sure they charged something

00:21:21.000 | but it was one of the like, okay $29, something like that.

00:21:24.000 | Some nominal fee compared to getting a day of content

00:21:27.000 | was great.

00:21:28.000 | And then the way that the speakers did it

00:21:30.000 | is they gave a great talk.

00:21:33.000 | They had about five or six, seven, eight speakers,

00:21:35.000 | something like that.

00:21:36.000 | They would give a really good talk.

00:21:37.000 | They would usually probably have 45 to 90 minutes,

00:21:39.000 | somewhere in that scenario.

00:21:42.000 | And then they would sell from the stage

00:21:44.000 | their next follow on appointment.

00:21:46.000 | And so this technique is so powerful.

00:21:49.000 | You listen to a great presentation

00:21:50.000 | and then they sell and say,

00:21:52.000 | if you're interested in this,

00:21:54.000 | then you can go on to the next step.

00:21:56.000 | So at the time, Russ Whitney was running seminars.

00:22:00.000 | And he or one of his guys talked about real estate investing.

00:22:04.000 | And I was talking to my buddies about real estate investing.

00:22:06.000 | And he said, I'm hosting a three-day seminar.

00:22:09.000 | And again, there was some laughably low entrance fee

00:22:12.000 | for that three-day seminar, right?

00:22:13.000 | $99, something like that.

00:22:15.000 | So I immediately signed up for his three-day seminar.

00:22:18.000 | Then I went to his three-day seminar.

00:22:20.000 | And they had a very well done structure.

00:22:23.000 | So day one was solid, consistent real estate content.

00:22:27.000 | In hindsight now, of course, I understand.

00:22:29.000 | It was just the basics.

00:22:30.000 | But when you've never been involved in real estate,

00:22:32.000 | then it sounds incredible

00:22:34.000 | in terms of all the things that can be done.

00:22:36.000 | When you understand that you can have tax-free real estate money

00:22:40.000 | and you can use other people's money and whatnot,

00:22:42.000 | these basic concepts,

00:22:43.000 | when they're beautifully presented, are so powerful.

00:22:46.000 | And then they did what Russ really excelled at,

00:22:49.000 | was techniques.

00:22:51.000 | So I forget who the instructor was,

00:22:53.000 | but the thing I specifically remember,

00:22:55.000 | it wasn't Russ himself.

00:22:56.000 | It was one of his guys.

00:22:57.000 | But what I specifically remember

00:22:59.000 | was he dropped all of the markers of financial success.

00:23:03.000 | So when he came in, he came in in a three-piece suit,

00:23:06.000 | beautiful, blue, dark, blue three-piece suit with a red tie.

00:23:11.000 | And he talked about it during the seminar.

00:23:13.000 | He was like, "This is my banker suit.

00:23:14.000 | "This is what I wear when I go see a banker."

00:23:15.000 | But it conveys the impression.

00:23:20.000 | He casually let fall all of the markers of wealth,

00:23:23.000 | of his own wealth, right?

00:23:25.000 | So he made the comment and he showed a picture

00:23:27.000 | of his Prevo bus sitting out in the parking lot.

00:23:32.000 | And about how he just goes on this bus

00:23:34.000 | because he doesn't like hotel rooms.

00:23:35.000 | And you're thinking, "Wow, this is a guy who's so rich

00:23:37.000 | "that he's got this $300,000 bus

00:23:39.000 | "and he doesn't want to use a perfectly good hotel room

00:23:41.000 | "'cause that's how rich he is."

00:23:43.000 | And shows the deals.

00:23:44.000 | And of course, he showed the,

00:23:45.000 | "I bought this property for $17,000

00:23:48.000 | "and I sold it for $125,000.

00:23:52.000 | "And you can do this too.

00:23:54.000 | "And then on day two or three,

00:23:58.000 | "anyway, I'm going too long,

00:24:00.000 | "but then they talk about the options for education.

00:24:03.000 | "And then of course, they go to the big package deal

00:24:05.000 | "and they have a consulting deal.

00:24:06.000 | "And the consulting deal is you sign up

00:24:08.000 | "and you pay $20,000, something like that,

00:24:10.000 | "or $1,500 a month.

00:24:11.000 | "The numbers escape me."

00:24:13.000 | But I was so on fire about what could be done

00:24:16.000 | that I was completely ready to sign up

00:24:19.000 | for the big package consulting deal.

00:24:21.000 | And that was what my dad talked me out of.

00:24:24.000 | And so looking back,

00:24:26.000 | Russ Whitney turned out to be basically

00:24:28.000 | a charlatan and a crook.

00:24:29.000 | Of course, most of what he said was okay.

00:24:33.000 | It was okay, good knowledge,

00:24:35.000 | but in terms of the structure,

00:24:36.000 | it was a lot of flim-flam stuff

00:24:39.000 | that a lot of advertising

00:24:41.000 | and very little actual substance.

00:24:44.000 | And Russ himself later declared bankruptcy

00:24:47.000 | and was just one of the long line

00:24:49.000 | of disgraced real estate gurus.

00:24:52.000 | But that's who it was.

00:24:53.000 | It was Russ Whitney.

00:24:54.000 | I don't know where he is today or what he's doing,

00:24:55.000 | but that's the story.

00:24:58.000 | - It'll be a fun Google after the call.

00:25:01.000 | - John Reed on his Guru Ratings page

00:25:03.000 | has comments on him.

00:25:05.000 | And Russ was sued specifically

00:25:08.000 | for a lot of his techniques.

00:25:09.000 | So they would use constant,

00:25:11.000 | I forget what they were,

00:25:12.000 | but just these, you know,

00:25:14.000 | making the room cold or hot

00:25:16.000 | and artificial table rushes

00:25:18.000 | and all of this stuff.

00:25:19.000 | He would use all these techniques.

00:25:20.000 | And having gone through that

00:25:22.000 | and experienced the emotion of it,

00:25:24.000 | I discovered just how powerful those things are.

00:25:28.000 | And it's why we gotta be so careful

00:25:29.000 | to use our emotions

00:25:33.000 | and harness them in a positive sense

00:25:34.000 | and also to be very careful

00:25:36.000 | of when we're being run by emotions

00:25:38.000 | and we don't have them regulated.

00:25:41.000 | - Yeah, I like that.

00:25:46.000 | It's easy to fall in love

00:25:47.000 | when you read, you know,

00:25:48.000 | I'm reading, I forget the guy's name,

00:25:51.000 | the Nothing Down guy.

00:25:53.000 | - Yeah, Robert Allen.

00:25:57.000 | - Allen, thank you.

00:26:00.000 | And yeah, it's really easy to say,

00:26:02.000 | oh yeah, I'm not gonna spend a single cent.

00:26:04.000 | I'm gonna buy all these properties.

00:26:05.000 | So easy.

00:26:07.000 | Look how easy Robert Allen's doing.

00:26:09.000 | - Right.

00:26:10.000 | - Have you got another one for me?

00:26:12.000 | - I guess I was just gonna say

00:26:14.000 | that the lesson,

00:26:16.000 | and I may have been meaning to do this

00:26:18.000 | as a standalone podcast,

00:26:21.000 | so if I repeat it in the future, it's fine,

00:26:23.000 | but that's what a Friday Q&A show is.

00:26:25.000 | One of the lessons that I have learned is,

00:26:28.000 | and part of what I described just there

00:26:30.000 | was there were three events in my life

00:26:32.000 | that have led me personally to hate mobs.

00:26:37.000 | I have been a part of one mob

00:26:40.000 | that was amazing to me,

00:26:42.000 | and I'll just tell the story briefly

00:26:43.000 | because it ties into what I said

00:26:45.000 | about psychology.

00:26:47.000 | There was a time in which I went out

00:26:50.000 | with a mob of people,

00:26:52.000 | and we had pitchforks and torches,

00:26:55.000 | and we went out to kill the beast.

00:26:57.000 | Now, obviously the reference should be obvious,

00:27:00.000 | but when I was in high school,

00:27:01.000 | I acted in, I was in the chorus

00:27:03.000 | for our high school production

00:27:06.000 | of the Disney musical Beauty and the Beast.

00:27:09.000 | And one of the things I vividly remember

00:27:11.000 | is during the mob song,

00:27:12.000 | where the villagers are going out

00:27:14.000 | to get the beast, right?

00:27:15.000 | ♪ He's got fangs, razor sharp ones ♪

00:27:17.000 | ♪ Da-na-na, da-na-na-na-na-na ♪

00:27:18.000 | That song, is we were acting in it,

00:27:21.000 | but as we're going out with pitchforks,

00:27:23.000 | singing about we're going out to kill the beast,

00:27:26.000 | and there's the Gaston is pumping us up

00:27:29.000 | in the show,

00:27:31.000 | one of the things I remember,

00:27:32.000 | and still just now,

00:27:33.000 | my skin is filled with goosebumps,

00:27:36.000 | I remembered every night I would be filled

00:27:39.000 | with these emotions,

00:27:40.000 | these genuine emotions of hatred

00:27:43.000 | for the beast,

00:27:45.000 | and like a genuine desire

00:27:46.000 | to go and kill this thing.

00:27:48.000 | And it was just a play,

00:27:49.000 | it was just a stage production,

00:27:51.000 | but I would experience these emotions,

00:27:53.000 | and it scared me to my core.

00:27:56.000 | It, to this day,

00:27:58.000 | I'm so scared of mob psychology

00:28:01.000 | because of that initial experience.

00:28:03.000 | The second time I experienced a mob psychology

00:28:06.000 | was in what I described to you,

00:28:08.000 | where I remember being a part of the room,

00:28:11.000 | and I remember being manipulated

00:28:12.000 | from the front of the room

00:28:14.000 | to go and basically,

00:28:15.000 | as a 19-year-old kid,

00:28:17.000 | be ready to sign up

00:28:18.000 | for a tens of thousands of dollar

00:28:19.000 | consulting package.

00:28:21.000 | And I remember how much I'm wrestling

00:28:22.000 | with the decision,

00:28:23.000 | and I was ready to do it.

00:28:25.000 | And I think about that a lot,

00:28:27.000 | about how could I have been so stupid,

00:28:29.000 | and so obvious,

00:28:31.000 | as my father wasn't trying to discourage me

00:28:33.000 | from becoming a real estate investor,

00:28:35.000 | he wasn't trying to say,

00:28:36.000 | "No, Joshua, you can't do it."

00:28:37.000 | He was just giving the voice of reason

00:28:39.000 | to say, "Maybe you shouldn't sign up

00:28:41.000 | for something that costs

00:28:42.000 | tens of thousands of dollars

00:28:43.000 | when you haven't first read a few books

00:28:45.000 | or gotten to know some people

00:28:46.000 | or gone and worked in a real estate office.

00:28:48.000 | Maybe you can accomplish

00:28:49.000 | your emotionally important goal to you

00:28:51.000 | of financial independence through real estate,

00:28:53.000 | but you can do it in a sensible way."

00:28:54.000 | And I remember how much I hated him

00:28:56.000 | for that, like, trying to jump on my dreams

00:28:59.000 | and to beat my dreams down.

00:29:01.000 | And now I see the wisdom in it.

00:29:03.000 | The third time was actually

00:29:05.000 | a different money seminar.

00:29:07.000 | So after I got on the list,

00:29:09.000 | and I don't, I think it was,

00:29:10.000 | no, actually, it was separate.

00:29:11.000 | So I was in a bookstore,

00:29:13.000 | and I bought T. Harv Ecker's book

00:29:15.000 | called "The Millionaire Mind."

00:29:17.000 | Really interesting book.

00:29:19.000 | I enjoyed a lot of what he said.

00:29:21.000 | But in Ecker's book,

00:29:23.000 | his standard marketing approach

00:29:25.000 | for his seminar was he would give away

00:29:27.000 | tickets to his seminar in the book.

00:29:32.000 | And so I got the book,

00:29:34.000 | and I got these two tickets.

00:29:35.000 | So I called up, and I signed up.

00:29:36.000 | And once again, I went to Miami

00:29:37.000 | for T. Harv Ecker's seminar.

00:29:39.000 | And I really enjoyed the seminar, right?

00:29:42.000 | There was some really good,

00:29:43.000 | useful concepts in it.

00:29:45.000 | But I remember this one technique

00:29:46.000 | that they used in the seminar.

00:29:48.000 | I don't think he's around.

00:29:49.000 | I don't think they do it anymore,

00:29:50.000 | so I'm telling you the sauce.

00:29:53.000 | But they were doing this.

00:29:54.000 | We were specifically instructed

00:29:56.000 | to bring to, so there's an all-day seminar,

00:29:59.000 | and then we were specifically instructed

00:30:01.000 | to bring to the evening seminar

00:30:04.000 | a $100 bill.

00:30:06.000 | And I think we were instructed

00:30:09.000 | to bring a lighter as well.

00:30:10.000 | And the guy from the stage

00:30:12.000 | is going on and on about how

00:30:14.000 | if you're gonna master money,

00:30:15.000 | and if you're gonna get all the money stuff

00:30:17.000 | out of fixed in your head,

00:30:19.000 | then you've gotta make sure

00:30:20.000 | that money doesn't have any control over you.

00:30:23.000 | And you have to prove it to yourself

00:30:25.000 | by burning money.

00:30:27.000 | You've gotta show that you don't care about money.

00:30:29.000 | And the way that we're gonna do this

00:30:30.000 | is we're gonna burn this $100 bill.

00:30:33.000 | And so I remember,

00:30:35.000 | $100 is a lot of money.

00:30:36.000 | And I didn't wanna burn a $100 bill,

00:30:38.000 | but I also didn't wanna miss out

00:30:39.000 | on the lesson from the stage.

00:30:41.000 | And they're building the whole thing up,

00:30:43.000 | and the doors are closed,

00:30:44.000 | and everyone has their $100 bills,

00:30:45.000 | and it's kind of this mob ritual scenario.

00:30:49.000 | And we're right up at the moment

00:30:51.000 | where everyone's gonna start burning

00:30:53.000 | their $100 bill.

00:30:54.000 | And I'm sitting there saying,

00:30:55.000 | do I do it?

00:30:56.000 | Do I go along with the crowd

00:30:57.000 | and burn my $100 bill, or do I not?

00:30:59.000 | I think this is stupid,

00:31:00.000 | but what do I do?

00:31:01.000 | And in the very last moment,

00:31:04.000 | they stop everything.

00:31:05.000 | And the lesson is,

00:31:07.000 | you idiot,

00:31:08.000 | why would you ever burn a $100 bill?

00:31:10.000 | But, like,

00:31:11.000 | and so the lesson was the opposite

00:31:13.000 | of what we were hearing.

00:31:15.000 | They were trying to say,

00:31:16.000 | you have to,

00:31:17.000 | the real lesson they were trying to teach

00:31:19.000 | was you have to show your respect

00:31:20.000 | by money every bit of it.

00:31:21.000 | You should never even consider it.

00:31:22.000 | But I've always wondered,

00:31:24.000 | would I have burned the money or not?

00:31:27.000 | And what scares me is I don't know the answer.

00:31:30.000 | I can't confidently say that,

00:31:33.000 | I can't confidently say,

00:31:34.000 | no, I would definitely not have burned the money

00:31:36.000 | 'cause I'm smarter than that.

00:31:37.000 | But I also know that I was wrestling with those things.

00:31:40.000 | And so for me,

00:31:41.000 | that question of mob psychology is really scary

00:31:45.000 | because I realize how easily I have been manipulated

00:31:49.000 | and how easily I could be a part of a mob.

00:31:51.000 | And it's one of the most dangerous,

00:31:54.000 | that idea of mob psychology

00:31:56.000 | is one of the most dangerous things

00:31:59.000 | in the human condition that I know of.

00:32:00.000 | And so I don't judge people who do stupid things

00:32:04.000 | when they're part of the mob

00:32:06.000 | because I kind of see myself being susceptible

00:32:08.000 | just like them.

00:32:09.000 | But I try to learn for myself

00:32:11.000 | and try to teach others to say,

00:32:13.000 | let's exercise our logical brain

00:32:15.000 | and then be careful about the times

00:32:17.000 | we put ourselves in an emotional state

00:32:18.000 | that could lead to stupidity.

00:32:20.000 | Emotions are really valuable.

00:32:22.000 | And so we want to harness the positive ones

00:32:24.000 | but not give way to the negative ones.

00:32:26.000 | - Yeah, that was fantastic answer.

00:32:34.000 | You got, I got a lot more personal out of you

00:32:37.000 | than I thought I would with that.

00:32:38.000 | Thank you.

00:32:39.000 | - My pleasure.

00:32:40.000 | Did you have any other questions

00:32:41.000 | or that was just your prod, your poke for today?

00:32:45.000 | - No, I've got another.

00:32:47.000 | If you've got, if you wanna let me ask too,

00:32:49.000 | I'll ask too.

00:32:50.000 | - Go ahead with your second

00:32:51.000 | and I'll go quickly and then go on.

00:32:52.000 | Go ahead.

00:32:53.000 | - Okay, yeah.

00:32:54.000 | So what ideas do you have for generating earned income

00:32:58.000 | for a child to fund Roth IRA?

00:33:01.000 | And this seems like something

00:33:02.000 | you may have already covered in the past.

00:33:03.000 | So if you wanna direct me to your catalog,

00:33:05.000 | you can move on.

00:33:06.000 | - I've been thinking about this for years

00:33:08.000 | and I have been,

00:33:09.000 | at some point I wanna develop this into a course.

00:33:13.000 | So I don't wanna give away all my great ideas,

00:33:16.000 | but I'll just give a few.

00:33:18.000 | So I think the first ones are simply

00:33:21.000 | if the parent has a way to employ the child,

00:33:24.000 | that should be the ideal scenario.

00:33:26.000 | I think that people often,

00:33:29.000 | sorry, that's the most applicable thing.

00:33:31.000 | Obviously, if the parent has a business

00:33:34.000 | and the parent can employ the child in the business,

00:33:36.000 | then clearly that's an obvious solution.

00:33:40.000 | But I think people overcomplicate it.

00:33:42.000 | They say, well, I have to have my own business

00:33:44.000 | into which I can employ my children.

00:33:46.000 | No, you can just employ your children.

00:33:48.000 | And so maybe you decide that these are some things

00:33:50.000 | that I want my children to do

00:33:51.000 | and I wanna pay them for it.

00:33:53.000 | And so whether it can be mowing the lawn,

00:33:55.000 | it can be pressure washing the roof or the driveway

00:33:57.000 | or those kinds of things,

00:33:59.000 | and you can just simply pay your children.

00:34:01.000 | And I think that's a fair and useful thing to do.

00:34:04.000 | I believe in the concept of family chores,

00:34:06.000 | but I also believe that it's important

00:34:08.000 | that we pay our children.

00:34:09.000 | Incidentally, one of the reasons why I think

00:34:12.000 | some of us who have been more hard-nosed

00:34:14.000 | should soften on this,

00:34:15.000 | is that we need our children

00:34:17.000 | to get accustomed to handling money.

00:34:19.000 | And so I have, over the past years,

00:34:21.000 | I have paid my children an allowance.

00:34:23.000 | If you had told me 10 years ago

00:34:25.000 | that I would do that,

00:34:27.000 | I would have been very surprised.

00:34:28.000 | Because I would have been of the mindset,

00:34:30.000 | well, an allowance is welfare, right?

00:34:32.000 | And I don't wanna teach my children welfare.

00:34:34.000 | I don't wanna teach them that they can just have money.

00:34:36.000 | But the reason I started to pay my children an allowance

00:34:39.000 | was I realized I want them

00:34:41.000 | to get accustomed to handling money.

00:34:44.000 | And if they don't have,

00:34:46.000 | and since my young children

00:34:49.000 | largely can't do much to actually earn money,

00:34:54.000 | if I wait until they're working and earning money,

00:34:57.000 | then they'll lose years of handling money.

00:34:59.000 | And I want them to get experience of spending money.

00:35:02.000 | I want them to waste money

00:35:03.000 | and discover how frustrating that is.

00:35:05.000 | I want them to learn how to separate their money

00:35:07.000 | into giving and saving and investing, et cetera.

00:35:10.000 | And so in order for that to happen,

00:35:12.000 | I need to make money flow through their hands.

00:35:14.000 | And the most obvious way to do that is with an allowance.

00:35:17.000 | So back to the idea of paying your children for things.

00:35:20.000 | Well, paying your children for things

00:35:22.000 | is a good way of getting money into your children's hands.

00:35:26.000 | And it is the appropriate thing

00:35:29.000 | if you can find anything in your life

00:35:31.000 | where you can just simply hire them and pay them.

00:35:34.000 | The second thing that I think is important to do

00:35:36.000 | is to look for jobs for your children

00:35:39.000 | within your social and peer group.

00:35:41.000 | One of the things that my father did really well for me

00:35:45.000 | was he encouraged me to go and get jobs.

00:35:49.000 | And I remember growing up,

00:35:51.000 | most of the jobs that I had at a young age

00:35:53.000 | were jobs that I got from within our family network.

00:35:56.000 | And so in our church,

00:35:59.000 | there was a guy who had a landscaping company,

00:36:01.000 | and I would work for the landscaping company on my time off,

00:36:03.000 | just an extra helper.

00:36:04.000 | It worked out fine.

00:36:05.000 | I worked for a tile setter who was in our church.

00:36:07.000 | I worked for a carpenter who was in our church.

00:36:11.000 | And so we just used the social community,

00:36:13.000 | and he encouraged us to go and take those jobs.

00:36:18.000 | And I don't think he was pulling strings.

00:36:20.000 | Like, he wasn't paying, saying,

00:36:22.000 | "Hey, here's $500 for you to hire my son."

00:36:25.000 | But even if he had, that would have been smart

00:36:27.000 | because I learned so much from those experiences.

00:36:30.000 | And so if you have a social network

00:36:32.000 | or you know people who have those simple jobs

00:36:36.000 | that they can hire your children,

00:36:38.000 | there's a lot that can be done.

00:36:40.000 | And by the way,

00:36:41.000 | it doesn't have to be actually a formalized business.

00:36:43.000 | And so one guy hired me to spread manure

00:36:46.000 | on his banana plants, right?

00:36:47.000 | He would get a truckload of manure

00:36:48.000 | and he needed someone to spread it.

00:36:49.000 | Well, there was several days of work.

00:36:51.000 | Other people, of course, would hire you to mow their grass

00:36:53.000 | and all those things and do cleaning and house cleaning.

00:36:56.000 | I worked for a neighbor, and we did house cleaning.

00:36:59.000 | They would get contracts to do pre-construction--

00:37:02.000 | or sorry, post-construction, pre-moving house cleaning.

00:37:05.000 | And so I would go and clean houses

00:37:07.000 | after the construction phase

00:37:08.000 | when the family was ready to move in.

00:37:10.000 | And you put all these things together,

00:37:12.000 | and none of them are much money,

00:37:16.000 | but on the whole,

00:37:17.000 | they are a good amount of money and a good experience

00:37:20.000 | if you just look for them and actively work for them.

00:37:23.000 | The key is you can't work with big companies

00:37:26.000 | because they can't take the legal risk, etc.

00:37:29.000 | But if you can just find local small employers,

00:37:31.000 | that's a good scenario.

00:37:33.000 | Then you move on to the types of things

00:37:36.000 | that your children can do

00:37:37.000 | that can grow into a bigger opportunity.

00:37:40.000 | So obviously the classics are, okay, modeling

00:37:44.000 | or something like that for our family business.

00:37:46.000 | But I don't think it's that necessary--

00:37:49.000 | I don't think it's that necessary

00:37:51.000 | that we give them so many opportunities at a young age.

00:37:53.000 | What I think is more important that we teach them,

00:37:55.000 | once they're at the age where they can actually be productive,

00:37:57.000 | how to exercise and develop skills

00:38:00.000 | that other people will pay for.

00:38:02.000 | So I've used the example of balloon tying.

00:38:06.000 | Somebody who's good at balloon tying

00:38:08.000 | can make a couple hundred dollars in a day at a festival.

00:38:12.000 | And so if you teach your children to say,

00:38:15.000 | "Let's learn how to tie 5 to 10 balloon animals,"

00:38:18.000 | and then paint you in clown makeup

00:38:19.000 | and go to the street festival that happens twice a year,

00:38:22.000 | there's a few hundred dollars in that day

00:38:24.000 | for somebody to work.

00:38:26.000 | Or if you look--

00:38:27.000 | and I have friends who work for a family decorating business,

00:38:30.000 | and during the holidays they go and do--

00:38:32.000 | and it's just seasonal work,

00:38:33.000 | but they go and do extra work during those times.

00:38:36.000 | And so if we're proactive about finding opportunities

00:38:39.000 | that are businesses for our children,

00:38:41.000 | then we can guide them just basically to see

00:38:46.000 | that you don't need to go and work for $8.25 an hour

00:38:50.000 | at an everyday part-time job

00:38:52.000 | if instead you can learn how to make a few hundred dollars

00:38:56.000 | by working at a balloon tying business at a festival.

00:39:02.000 | And teaching people to keep their eye out

00:39:05.000 | for highly paid work that is seasonal

00:39:08.000 | to me fits in better with the needs of children.

00:39:12.000 | And a lot of it just comes from you encouraging

00:39:16.000 | and supporting it.

00:39:17.000 | I'll just give two examples.

00:39:19.000 | One, an early job that I had was--

00:39:23.000 | when I was a young man--

00:39:24.000 | I had a job working at a boat dealership cleaning boats.

00:39:27.000 | And that job came about completely organically.

00:39:30.000 | It wasn't a connection that anyone had made for me.

00:39:34.000 | What it was is my older brother had had a fundraiser

00:39:38.000 | where they would have a barbecue for his school.

00:39:40.000 | And I had worked--

00:39:41.000 | and they would have a fundraiser

00:39:42.000 | where they would cook thousands of chickens,

00:39:44.000 | barbecue chickens, and sell the meals as, again, a fundraiser.

00:39:48.000 | And so I was just there hanging out,

00:39:50.000 | but I was a diligent worker helping

00:39:52.000 | with all of the process of the barbecuing, et cetera.

00:39:55.000 | And there was-- the father of one of the co-workers

00:39:58.000 | was there at the event with us.

00:40:00.000 | And he liked the way I worked.

00:40:02.000 | He said, would you like a job?

00:40:03.000 | And he just offered me a job.

00:40:05.000 | Well, every Saturday, my dad had to take me 30 minutes to work

00:40:08.000 | and come pick me up, 30 minutes at the end of the day.

00:40:11.000 | But his willingness to do that and support me

00:40:14.000 | allowed me at a very young age to have this job

00:40:17.000 | of washing boats every Saturday.

00:40:20.000 | And it was an important part of my life.

00:40:23.000 | Similar things-- there was a point in which I had a job

00:40:26.000 | working for a DJ who would DJ weddings and things like that.

00:40:30.000 | And I was primarily just a grump assistant

00:40:32.000 | to help set up the whole--

00:40:34.000 | all the speakers and the light bars and all of that stuff.

00:40:36.000 | But it was a neat experience.

00:40:38.000 | But in order for it to happen,

00:40:39.000 | my parents had to have confidence in me

00:40:41.000 | that even though I was a fairly young teenager,

00:40:44.000 | that they would allow me to be out late at night,

00:40:46.000 | on Friday nights and Saturday nights, et cetera,

00:40:49.000 | to help this DJ work.

00:40:50.000 | And it was a useful part of my overall experience in life.

00:40:54.000 | So I don't think that it's so necessary

00:40:56.000 | that we have the exact business.

00:40:59.000 | But it is more necessary that we encourage

00:41:01.000 | the children to develop it.

00:41:03.000 | And so if it's to say, hey, here's a camera.

00:41:05.000 | Why don't you go to this local business and say,

00:41:07.000 | can I shoot a quick sizzle reel for your website?

00:41:12.000 | And that's a money-making opportunity

00:41:15.000 | that a local business owner would be happy to spend $500

00:41:18.000 | to get a sizzle reel for his Facebook page

00:41:20.000 | or something like that.

00:41:21.000 | And yet, that's something that the child

00:41:23.000 | can do very, very quickly.

00:41:24.000 | So I do have a good long list of things

00:41:28.000 | that I think are really worthy considerations.

00:41:31.000 | But more importantly is just simply the attitude

00:41:33.000 | and the proactivity of the parents.

00:41:38.000 | Sure.

00:41:39.000 | And the ability for you to put that in the raw

00:41:42.000 | just comes down to, for example,

00:41:45.000 | the parent documenting what work the child did for who

00:41:48.000 | so that you don't-- as long as you can pass the SNP test

00:41:51.000 | at the auditing.

00:41:53.000 | Right.

00:41:54.000 | Right.

00:41:55.000 | Absolutely.

00:41:56.000 | All right.

00:41:57.000 | Thank you, sir.

00:41:58.000 | My pleasure.

00:41:59.000 | We move on to Ori in Minnesota.

00:42:00.000 | Ori, welcome to the show.

00:42:01.000 | How can I serve you today?

00:42:02.000 | Hey, Joshua.

00:42:07.000 | My family is considering maybe possibly moving

00:42:11.000 | to South Florida.

00:42:14.000 | West Palm Beach down to Boca Del Rey, that sort of area.

00:42:19.000 | I'll actually be there on a trip in the next two weeks.

00:42:25.000 | But I know you have lived there in the past.

00:42:28.000 | And in that area, I just kind of wanted

00:42:30.000 | to hear your thoughts about the area in terms

00:42:32.000 | of nice places to live, communities,

00:42:36.000 | kind of just general thoughts on the area.

00:42:38.000 | I mean, I know it's beautiful.

00:42:40.000 | We vacation there.

00:42:41.000 | And I obviously love it in the winter.

00:42:42.000 | I haven't really been there in the summer.

00:42:44.000 | But I just kind of wanted to hear your thoughts in general

00:42:47.000 | on life in South Florida.

00:42:49.000 | Sure.

00:42:50.000 | Obviously, it's my neck of the woods.

00:42:52.000 | And it has a lot going for it.

00:42:55.000 | But it also has some disadvantages.

00:42:58.000 | So let's start kind of on the macro level of Florida

00:43:01.000 | versus other states.

00:43:03.000 | I believe that Florida has an extremely ideal mixture

00:43:09.000 | of so many things, or at least things

00:43:11.000 | that I look for in a place to live.

00:43:15.000 | Florida is not an extremely polarized state.

00:43:19.000 | It's a very, very balanced state,

00:43:21.000 | which is probably the healthiest kind of situation for us

00:43:25.000 | to live in on most levels.

00:43:29.000 | So Florida is not-- it's a Republican state.

00:43:33.000 | The Republican legislature controls the state.

00:43:37.000 | But in many ways, they're very balanced.

00:43:39.000 | They're not a Republican state in the same way

00:43:41.000 | that Idaho is a Republican state.

00:43:45.000 | It's a very kind of mixture state.

00:43:48.000 | And when you move into South Florida,

00:43:50.000 | you get also a really interesting mix.

00:43:52.000 | You have this strongly Republican red state.

00:43:55.000 | And then you have these intense blue pockets.

00:43:57.000 | And of course, there are many benefits

00:43:58.000 | that you get with having those intense blue pockets.

00:44:02.000 | So it's a state that has, as far as I'm concerned,

00:44:06.000 | an ideal mixture of freedoms.

00:44:08.000 | The freedoms that I care about that you may or may not

00:44:10.000 | care about, number one, really high quality

00:44:13.000 | homeschooling laws, great educational freedom.

00:44:16.000 | So you can pretty much do what you want.

00:44:19.000 | It's not a zero regulation state like Idaho

00:44:23.000 | or something like that.

00:44:24.000 | But it's not an intrusive state.

00:44:26.000 | Homeschooling laws basically require that once a year,

00:44:28.000 | you have your educational outcomes reviewed

00:44:31.000 | either by a certified teacher or you

00:44:33.000 | have your children go through standardized testing.

00:44:36.000 | Those are basically the requirements.

00:44:37.000 | And so it's fairly simple, high degrees of freedom.

00:44:40.000 | It's a fairly free state with regard to medical freedom.

00:44:44.000 | You can pretty much do the things that you want to do.

00:44:47.000 | You don't face a bunch of onerous, heavy-handed laws

00:44:50.000 | in terms of medical freedoms as far as how you

00:44:52.000 | handle your health decisions.

00:44:55.000 | It's a pretty good state with regard to things like gun laws

00:45:00.000 | and protecting your home, et cetera.

00:45:03.000 | It's a generally well-run state with regard

00:45:06.000 | to the state finances.

00:45:08.000 | It's got a huge attractiveness as a zero income tax state.

00:45:11.000 | But unlike some other income tax states that don't have

00:45:14.000 | kind of a big business support or you worry about--

00:45:18.000 | so Wyoming, for example, zero income tax state

00:45:20.000 | because of oil revenue.

00:45:23.000 | So if oil revenue goes down, well,

00:45:25.000 | where does Wyoming get its things from?

00:45:27.000 | Well, Florida is a zero personal income tax state.

00:45:30.000 | And that's basically enshrined in the culture.

00:45:32.000 | It's a very, very safe protection for the culture

00:45:37.000 | because it's so much a part of what it means

00:45:39.000 | to be a Floridian.

00:45:40.000 | Like Floridians, longtime Floridians,

00:45:42.000 | the idea of filing a state income tax is unthinkable

00:45:45.000 | to them because it's very much a part of it.

00:45:48.000 | And where the state gets its revenue is from corporate tax

00:45:52.000 | and other sources as well.

00:45:55.000 | So it's a really good state there.

00:45:57.000 | There is no better state for wealthy people

00:46:01.000 | in terms of wealth protecting laws.

00:46:04.000 | There's no wealth tax.

00:46:05.000 | There's no estate tax.

00:46:09.000 | There's no state income tax on personal income.

00:46:12.000 | And then when you get into the asset protection laws

00:46:15.000 | where you have unlimited exemption for your primary homestead

00:46:18.000 | in terms of asset protection, you have unlimited exemptions

00:46:21.000 | for retirement accounts.

00:46:25.000 | And by state law, IRAs, Roth IRAs,

00:46:28.000 | Floridians, the same protection as 401ks.

00:46:31.000 | You have unlimited exemption for things like annuities,

00:46:34.000 | life insurance, cash values, et cetera.

00:46:37.000 | From an asset protection state, I don't know of a better one

00:46:40.000 | that allows you to protect more of your assets.

00:46:43.000 | Now, there's not really anything beyond those categories,

00:46:45.000 | but it does protect those categories very, very well.

00:46:49.000 | So I think that Florida is a really wonderful,

00:46:52.000 | balanced state where it has so many of the things

00:46:55.000 | that you appreciate about a red state,

00:46:57.000 | so many of the things that you appreciate about a blue state.

00:46:59.000 | It's very, very balanced.

00:47:00.000 | So now you go to Florida Geography and you try to figure out,

00:47:03.000 | well, what are the different regions that you can live in?

00:47:07.000 | So in terms of big metro areas,

00:47:10.000 | you basically have four big metro areas.

00:47:12.000 | You have South Florida, which consists of the three counties

00:47:16.000 | of Miami-Dade, Broward, and Palm Beach.

00:47:19.000 | That's the South Florida area.

00:47:21.000 | And it's a little bit--they're kind of indistinguishable,

00:47:23.000 | but there's just one long line of development.

00:47:26.000 | That's South Florida.

00:47:27.000 | Then over on the left coast, you have Tampa and St. Pete.

00:47:32.000 | That's another big urban center.

00:47:34.000 | In the middle, you have Orlando.

00:47:36.000 | And then up on the top right, you have Jacksonville.

00:47:38.000 | And that's basically it in terms of big cities.

00:47:41.000 | One of the great things about Florida is basically

00:47:45.000 | every lifestyle is available to you.

00:47:49.000 | So you can be in downtown Miami or downtown Tampa, et cetera,

00:47:53.000 | and experience the big city lifestyle.

00:47:55.000 | On the other hand, you want to have a rural beach town,

00:47:58.000 | you go up to some of the cities south of St. Augustine

00:48:00.000 | or over on the Gulf Coast, you can just have this incredible,

00:48:04.000 | laid-back, relaxed beach lifestyle, et cetera.

00:48:07.000 | You go through the middle of the state,

00:48:09.000 | Florida is a huge ranching and beef production state.

00:48:12.000 | And so you just have incredible remote,

00:48:15.000 | rural areas in central Florida.

00:48:17.000 | You want horse country.

00:48:19.000 | You go up north of Orlando into--I always forget the name

00:48:21.000 | of that region there--but amazing horse country.

00:48:24.000 | You want the southern hills, you go up in the Panhandle,

00:48:27.000 | or you go up in the northern border, Gainesville, et cetera,

00:48:30.000 | and you just have totally diverse lifestyle choices.

00:48:34.000 | And that diversity involves weather, et cetera.

00:48:37.000 | So it's got all the different lifestyles that are represented,

00:48:40.000 | and you can usually fix those things in terms of

00:48:44.000 | how close you want to be to different issues.

00:48:47.000 | Meaning how close you want to be to downtown, city, et cetera.

00:48:51.000 | It's pretty accessible.

00:48:53.000 | Now, what's the unique geography of South Florida?

00:48:56.000 | All of the South Florida geography is dictated

00:48:58.000 | based upon the Everglades.

00:49:00.000 | So the Everglades is a giant barrier that keeps

00:49:04.000 | South Florida from expanding westward.

00:49:07.000 | If you go across Alligator Alley and you cross,

00:49:10.000 | you see there's this giant thing.

00:49:12.000 | And since it's all now protected, there's basically no development

00:49:15.000 | that can happen to the west of this narrow strip

00:49:18.000 | along the corridor.

00:49:20.000 | So that puts a lot of development pressure onto the tri-counties.

00:49:25.000 | So Miami and Broward and West Palm Beach face this.

00:49:29.000 | And until you get up and to northern West Palm Beach,

00:49:33.000 | basically, actually central West Palm Beach,

00:49:37.000 | in central West Palm Beach, you start to expand out

00:49:40.000 | into the western farming regions.

00:49:43.000 | So west of, if you go at 441,

00:49:49.000 | west of Western Palm Beach is, you get Cluiston,

00:49:53.000 | Belle Glade, et cetera.

00:49:55.000 | These are all big farming regions, and you don't have the same,

00:49:58.000 | you don't have the same block by the federally protected wetlands.

00:50:02.000 | You have farming regions.

00:50:04.000 | And so what has been happening is West Palm Beach itself

00:50:06.000 | is spilling to the west, out there with new communities,

00:50:09.000 | new housing developments being made from this farmland.

00:50:12.000 | But that doesn't happen in Broward and Miami

00:50:15.000 | because of the constraints of the coast and the Everglades.

00:50:19.000 | So in terms of choices, you have a couple different lifestyles

00:50:24.000 | that are available.

00:50:25.000 | So Miami is super, super interesting from a cultural perspective

00:50:29.000 | because of the intense Latin culture.

00:50:32.000 | So if somebody wants to live in the Latin culture,

00:50:35.000 | and they want to, they speak Spanish,

00:50:38.000 | or they have a Hispanic background,

00:50:40.000 | I think Miami can very fairly be called the capital of the Americas.

00:50:44.000 | It is the most intensely Hispanic culture that is expressed,

00:50:49.000 | and really because it brings all of that together

00:50:52.000 | from all of South and Central America,

00:50:56.000 | there's just an incredible, intense Latin melting pot.

00:51:00.000 | You have all the Caribbean there, et cetera.

00:51:02.000 | So culturally, that's super interesting.

00:51:05.000 | It's like, I guess you can speak English in Miami,

00:51:10.000 | but I don't ever use English as a first language.

00:51:13.000 | Whenever I'm in Miami, I just automatically default to Spanish.

00:51:17.000 | And so for some people, that's a pro.

00:51:19.000 | For some other people, it's a con.

00:51:21.000 | Miami, however, is super intense,

00:51:24.000 | and I think it has a lot of the worst things of the big city.

00:51:28.000 | Like the heat is horrific.

00:51:29.000 | Now, Florida is well-prepared for the heat,

00:51:32.000 | but still it's a concrete jungle.

00:51:33.000 | The traffic, the rates you pay for car insurance, et cetera,

00:51:37.000 | are double what you pay when you go up north, farther to the north.

00:51:41.000 | So very bad traffic, too much urban development,

00:51:44.000 | and it's not very smart urban development.

00:51:47.000 | They've been doing it.

00:51:48.000 | There are several new train lines that have gone in.

00:51:50.000 | Brightline now has train connections from West Palm Beach

00:51:57.000 | through Broward and into Miami.

00:52:00.000 | Miami has some connectedness on their metro rail, et cetera,

00:52:03.000 | but it's still a car-intensive city, and it's not super, super great.

00:52:08.000 | So who does I think Miami appeal to?

00:52:10.000 | Well, if you're young and you're single and you want to wear white pants

00:52:15.000 | and a fancy shirt and a gold watch, et cetera,

00:52:18.000 | you kind of do the party lifestyle

00:52:19.000 | and you want to have that young, intense experience,

00:52:23.000 | then I think Miami is a great fit.

00:52:25.000 | If you have an affinity for Latin culture,

00:52:27.000 | then I think Miami is a great fit.

00:52:31.000 | If you want to live the downtown lifestyle,

00:52:33.000 | you want to live in brickle towers or something like that,

00:52:36.000 | or you want to have a great downtown penthouse and go to heat games

00:52:42.000 | or walking across the street to the American Airlines Arena,

00:52:45.000 | et cetera, then that's great.

00:52:46.000 | And if you've got all the money in the world

00:52:48.000 | and you want to move on to one of the private islands

00:52:51.000 | and just kind of have that full Miami lifestyle,

00:52:53.000 | then I think Miami is good for that.

00:52:56.000 | So moving north, you get into Broward.

00:52:58.000 | Broward has all those same benefits of the beaches and whatnot,

00:53:02.000 | but Broward is where you start to get into

00:53:04.000 | kind of more the retirement culture mixed with the business culture.

00:53:08.000 | So downtown Fort Lauderdale, you have lots of businesses,

00:53:11.000 | lots of big opportunities with kind of that downtown region,

00:53:14.000 | but then you start to get into the farms of housing communities.

00:53:19.000 | So the basic feature of South Florida is endless, endless,

00:53:24.000 | endless suburban developments.

00:53:27.000 | It's all very car-centric.

00:53:29.000 | They're all very beautiful,

00:53:30.000 | but you're going to be living in a suburban development

00:53:33.000 | where you have a homeowners association, et cetera.

00:53:36.000 | That's just the lifestyle.

00:53:37.000 | And so if that appeals to you, you can find something in Broward,

00:53:40.000 | and that's a good, you know, they're fits.

00:53:42.000 | Then it's all just variations on the same.

00:53:44.000 | Coming up through Boca, you can--I mean, there's options.

00:53:48.000 | Boca, West Palm Beach, and then you get into northern West Palm Beach

00:53:51.000 | and moving into Jupiter.

00:53:52.000 | So as you get to West Palm Beach,

00:53:54.000 | you start to have less traffic, less congestion, and more options.

00:53:59.000 | Prices go down quite a lot because of that basic factor of the Everglades,

00:54:04.000 | but they're still a lot higher than they are farther north

00:54:08.000 | in, say, Palm City, et cetera.

00:54:10.000 | So you get--so I like West Palm Beach

00:54:13.000 | because I think you get the best of both worlds.

00:54:15.000 | In West Palm Beach, especially now as kind of the downtown has developed,

00:54:20.000 | you get basically everything you want in a big city

00:54:23.000 | but without the oppressive constancy of Miami.

00:54:27.000 | And so you can get out of it pretty quickly and you can get into it.

00:54:31.000 | It's just not as intense as the giant interchanges of the highway in Miami.

00:54:37.000 | And then north of West Palm Beach,

00:54:38.000 | you can start to get into a much more laid-back culture.

00:54:41.000 | You go up to Hobe Sound, et cetera, and you can be genuinely rural.

00:54:45.000 | Or you can live--you know, Martin County, if you want to live on the water

00:54:48.000 | but you want to have it a very kind of quiet lifestyle,

00:54:51.000 | Martin County, Stewart, Palm City, et cetera,

00:54:53.000 | there's just so many little enclaves that are really, really wonderful.

00:54:57.000 | So I think central and northern Palm Beach County

00:55:00.000 | are probably some of the ideal scenarios

00:55:03.000 | because you can access the business of West Palm Beach.

00:55:06.000 | You can access the beaches.

00:55:08.000 | You can access Broward and Miami fairly easily.

00:55:11.000 | When you want to fly in and out,

00:55:12.000 | you've got three great airports for domestic connections.

00:55:16.000 | Palm Beach International is very, very convenient.

00:55:19.000 | And then for international connections,

00:55:20.000 | Fort Lauderdale and Miami are both wonderful airports.

00:55:23.000 | And so there's my kind of lay of the land.

00:55:25.000 | It's just a matter of saying, "Is this the lifestyle that we want?"

00:55:28.000 | And, you know, beyond--I mean, that's my overview,

00:55:31.000 | but I think it's a great region.

00:55:35.000 | Great. Thank you, Joshua.

00:55:37.000 | We'll definitely look around when we're down there

00:55:39.000 | and think about our options. Appreciate it.

00:55:41.000 | Yeah, my pleasure.

00:55:43.000 | We move on to Pennsylvania.

00:55:45.000 | Welcome to the show. How can I serve you today?

00:55:49.000 | Hello, Joshua. Thank you for taking my call.

00:55:51.000 | So I had a question about when, if ever,

00:55:55.000 | does it make sense to make double payments on your mortgage

00:55:59.000 | or when to invest in a property

00:56:02.000 | to lower your interest that you're paying over time?

00:56:06.000 | So I bought a property recently,

00:56:08.000 | and I'm using the upstairs as a rental unit.

00:56:13.000 | And in coordination with a side business I have,

00:56:17.000 | that pretty much covers the cost of the mortgage.

00:56:19.000 | So--well, mortgage and utility.

00:56:22.000 | With that in mind,

00:56:25.000 | at what point should I be investing--

00:56:27.000 | like, diversifying into the property

00:56:30.000 | versus just stocks and other investments?

00:56:32.000 | What interest rate is your mortgage?

00:56:37.000 | That's 5.625%.

00:56:40.000 | Okay.

00:56:45.000 | Basically, the only reason that I can see--

00:56:49.000 | be careful with that word "only."

00:56:52.000 | Let me change that adjective to "major."

00:56:55.000 | The major reasons that I can see

00:56:58.000 | that you should make double payments on your mortgage are these.

00:57:03.000 | The first is if making that extra payment

00:57:06.000 | is personally motivating to you.

00:57:11.000 | What I mean is, every single month,

00:57:14.000 | do you find that you're willing to work extra,

00:57:19.000 | or do you find that you're willing to lower your consumption

00:57:23.000 | in some other area because of the tangibility

00:57:26.000 | of making that extra mortgage payment?

00:57:30.000 | This is what is, I think, the most important reason,

00:57:33.000 | is that if you are going to--

00:57:36.000 | if making the extra--

00:57:38.000 | so let's say your mortgage payment is $2,000 a month,

00:57:41.000 | or $1,500 a month,

00:57:43.000 | and you're thinking of, "Should I put the $1,500 at--"

00:57:47.000 | Sorry.

00:57:48.000 | Your standard mortgage payment is $1,500 a month.

00:57:50.000 | You have an extra $1,500 a month,

00:57:52.000 | and you're thinking, "Should I put the money

00:57:54.000 | "into a savings account or into an investment account,

00:57:57.000 | "or should I put it into the mortgage?"

00:57:59.000 | Generally speaking, if your stock account,

00:58:02.000 | your 401(k) doesn't beat the rate of return

00:58:06.000 | that you're going to make on your extra payment to the mortgage,

00:58:10.000 | we're all done for.

00:58:11.000 | Everything breaks and falls apart.

00:58:13.000 | Even at 5.625%, I still think that that holds true.

00:58:17.000 | Now, it was easy for me to say that was 3%.

00:58:19.000 | It may be harder when we're saying at about 8%,

00:58:21.000 | but at the end of the day, your stocks in your 401(k)

00:58:24.000 | have to substantially outperform mortgage payments,

00:58:27.000 | or our entire financial system unhinges itself.

00:58:31.000 | Like, it's all--all of our assumptions are no longer valid.

00:58:34.000 | We're in a new era, which is possible.

00:58:36.000 | I don't think it's the case, but it's possible.

00:58:39.000 | And if you can't make more than 5.625% on your investments,

00:58:46.000 | then, again, everything collapses.

00:58:48.000 | The financial question as to whether you should pay down debt

00:58:52.000 | or invest the money is exclusively a question of interest rate,

00:58:58.000 | of higher rate of return.

00:59:00.000 | So if you don't--your investment should exceed 5.625%,

00:59:04.000 | which means that every single time you put that into a calculator,

00:59:07.000 | you're better off investing the money than you are paying off debt.

00:59:12.000 | That's the math.

00:59:13.000 | But what the math often ignores is motivation.

00:59:18.000 | So a lot of people are not motivated to go and make an extra $1,500

00:59:23.000 | so that they can invest the money at higher than 5.6%.

00:59:27.000 | Whereas a lot of times, having a clear, tangible goal of,

00:59:31.000 | "I want my house paid off in 10 years.

00:59:33.000 | I want my house paid off by my 40th birthday."

00:59:36.000 | This clarity of goal is motivating to people in a way

00:59:41.000 | that the investment accumulation is not.

00:59:44.000 | This motivation is enhanced by a couple of factors

00:59:47.000 | that are unique about debt payoff.

00:59:49.000 | Number one, debt payoff is certain.

00:59:52.000 | You can be guaranteed of your 5.625% savings

00:59:56.000 | when you lower your mortgage value.

00:59:58.000 | Debt payoff is predictable.

01:00:00.000 | Your mortgage payment is going to go down, and you can model that.

01:00:04.000 | You can put a chart on your refrigerator, and you can say,

01:00:06.000 | "See, by my 40th birthday, this house is going to be paid off."

01:00:10.000 | That clarity of mind and intentionality can cause people

01:00:14.000 | to make unbelievable improvements in their financial life,

01:00:18.000 | spending less, making more because of that clarity.

01:00:21.000 | I don't experience, and I haven't seen people experience,

01:00:25.000 | that same clarity when it comes to investment returns.

01:00:29.000 | That's because, number one, in the beginning,

01:00:32.000 | your investment contributions are not going to lead to a number

01:00:37.000 | that is going to cause you to see how it's a meaningful difference.

01:00:40.000 | Let's say that you get all motivated about putting your extra $1,500 a month

01:00:43.000 | into your account, and you say, "Guess what?

01:00:46.000 | By my 40th birthday, I'm going to have $250,000 in my 401(k),

01:00:51.000 | whereas if I didn't do that, I would have $150,000 in my 401(k)."

01:00:56.000 | Well, so what?

01:00:58.000 | Now, obviously, that $100,000 is a lot of money,

01:01:01.000 | but at the end of the day, you're not financially independent

01:01:04.000 | with $250,000 in your 401(k).

01:01:06.000 | It can pay off a lot when you're 65, if you have it in there at 40,

01:01:11.000 | but it's going to take you a long time to see that.

01:01:14.000 | The other thing that's so difficult is you can't predict with certainty

01:01:18.000 | what that actual account balance will be.

01:01:20.000 | So what if you're all motivated, and you're focusing,

01:01:23.000 | and you're saving money, and you're putting that extra $1,500 in there,

01:01:26.000 | and for some reason it's motivating and clear to you

01:01:28.000 | that I'm going to have $250,000 in my 401(k) because of this sacrifice

01:01:32.000 | that I'm making and the fact that I'm working this extra part-time job.

01:01:35.000 | And then along comes a random year in the stock market

01:01:39.000 | where it goes down 20%.

01:01:41.000 | All of a sudden, your $250,000 account balance

01:01:43.000 | that you were excited about drops to $160,000.

01:01:46.000 | And because of the ephemerality of that,

01:01:49.000 | because of the fact that it's hard to connect with,

01:01:51.000 | you're immediately like, "Well, they're going to want my goal."

01:01:55.000 | Now, we all know that maybe the next year you'll be super happy

01:01:58.000 | because it'll come up 20%, and all of a sudden you're looking great.

01:02:01.000 | But that certainty that you have with paying off debt, etc.,

01:02:05.000 | is a really powerful, powerful movement.

01:02:08.000 | So the third factor I would say is,

01:02:12.000 | is there something that not having a mortgage payment

01:02:15.000 | is going to allow you to do that if you had the mortgage payment

01:02:20.000 | you wouldn't otherwise allow yourself to do?

01:02:24.000 | I think in reality, as I've argued publicly,

01:02:26.000 | which I assume you've heard,

01:02:28.000 | I think in general you're always better off with the money in the bank

01:02:31.000 | rather than no mortgage payment.

01:02:33.000 | If I could choose between having $100,000 in the bank

01:02:37.000 | and a $150,000 mortgage

01:02:41.000 | versus having a $0 in the bank and a $50,000 mortgage,

01:02:47.000 | or even a $0 in the bank and a $0 mortgage,

01:02:50.000 | I would choose the $100,000 in the bank

01:02:52.000 | because I have freedom of decision in that situation

01:02:54.000 | that I don't just by not having a mortgage payment.

01:02:57.000 | But sometimes having a $0 mortgage balance

01:03:00.000 | does indeed open up new options in your thinking.

01:03:03.000 | And because it's so clear and so tangible,

01:03:05.000 | you don't have to rely on financial engineering

01:03:08.000 | and what your financial advisor tells you.

01:03:10.000 | You just know, "I don't have any bills."

01:03:12.000 | That can allow you to sail the world.

01:03:15.000 | That can allow you to do those things that start a business

01:03:18.000 | or have more children,

01:03:20.000 | that you wouldn't otherwise do.

01:03:22.000 | So financially, you're almost certainly better off

01:03:25.000 | in the long run investing the money

01:03:28.000 | versus prepaying a mortgage.

01:03:31.000 | But motivationally, if the clarity and the focused nature

01:03:36.000 | of prepaying the mortgage can cause you

01:03:39.000 | to feel very motivated,

01:03:42.000 | then that motivation is the X factor

01:03:44.000 | that can't fit easily into a spreadsheet.

01:03:47.000 | But I'm convinced it's real.

01:03:51.000 | - Okay, thank you.

01:03:53.000 | Yeah, I wouldn't say it's about a motivational thing.

01:03:55.000 | It would be more the math equation of rate of return

01:03:59.000 | over the past year in the market

01:04:01.000 | and in the situation we're at with the stock market.

01:04:05.000 | So whether spreading that money out

01:04:07.000 | into something other than just retirement account

01:04:10.000 | and stocks and bonds is an important factor to consider.

01:04:15.000 | But no, I think I'll just look for other areas

01:04:18.000 | to improve that rate of return versus the mortgage.

01:04:23.000 | So thanks for your time.

01:04:25.000 | - Yeah, if the businesses that you can buy

01:04:27.000 | in the stock market don't give you,

01:04:29.000 | on the aggregate, a higher rate of return

01:04:33.000 | than paying down a mortgage on a piece of property,

01:04:37.000 | our entire financial system is upended

01:04:40.000 | and we will be in genuinely a new era,

01:04:43.000 | regardless of what the one-year returns are.

01:04:45.000 | To me, that's just an obvious truth.

01:04:47.000 | Our entire system of finance is based upon the idea

01:04:51.000 | that businesses are going to be productive.

01:04:54.000 | Now, if that changes, we're in a brave new world.

01:04:57.000 | Missouri, welcome to the show.

01:04:58.000 | How can I serve you today?

01:05:02.000 | St. Louis, Missouri.

01:05:05.000 | 314-- - Hey, Joshua, you hear me?

01:05:06.000 | - Yep, no, go ahead.

01:05:09.000 | - Good deal.

01:05:10.000 | My wife and I got married last year

01:05:13.000 | in honor for our one-year anniversary.

01:05:15.000 | We're taking a European trip,

01:05:17.000 | and as part of that trip,

01:05:18.000 | we're going to spend four to five days in Malta.

01:05:21.000 | I know you had been there previously.

01:05:24.000 | I think it was last year,

01:05:25.000 | maybe the year before, on your family travels,

01:05:28.000 | and just wanted to get your opinion about it

01:05:31.000 | and if you had any recommendations while I was there

01:05:34.000 | relating to touristy things to do

01:05:37.000 | and any international plan B or backup plans,

01:05:42.000 | anything you have would be great.

01:05:43.000 | - It's funny.

01:05:44.000 | It's such an out-of-the-way place.

01:05:45.000 | You're the second or third time

01:05:46.000 | I've gotten questions about Malta,

01:05:49.000 | and it's such an unusual place.

01:05:51.000 | I went there because of my interest in their cryptocurrency.

01:05:54.000 | They want to become like Crypto Island,

01:05:57.000 | and they have just some other interesting components of it,

01:06:01.000 | but I also have been a lot of other places in Europe.

01:06:04.000 | It's an interesting place.

01:06:07.000 | So let's start with the tourist stuff.

01:06:09.000 | The tourist stuff is fairly straightforward.

01:06:11.000 | It's a beautiful Mediterranean island,

01:06:13.000 | and have you found,

01:06:15.000 | do you already have your places to stay lined up?

01:06:19.000 | - Yes, we do.

01:06:20.000 | - Good, so you'll have a hotel or a resort or whatever,

01:06:24.000 | and it's a fairly small place

01:06:26.000 | that has just this really interesting history,

01:06:30.000 | so you'll certainly want to spend at least a day or two

01:06:33.000 | in the downtown Valletta area

01:06:35.000 | because the history of that is really remarkable.

01:06:40.000 | That is what is incredible about Malta,

01:06:45.000 | is the long-term history.

01:06:47.000 | Downtown Valletta is so interesting.

01:06:49.000 | They have great tours,

01:06:50.000 | great insight into the history, et cetera.

01:06:54.000 | There is a city that is one of my favorite old cities,

01:07:00.000 | and I'll come up with a name in a moment

01:07:03.000 | because it was formerly kind of the capital city refuge area.

01:07:09.000 | It's called the Medina Old City,

01:07:11.000 | and one of the things that I think is interesting about Medina

01:07:15.000 | is it's an old-walled city,

01:07:16.000 | but it gives you an insight into the cities of the past,

01:07:21.000 | and I was amazed from,

01:07:23.000 | I really care about it from an architectural perspective,

01:07:26.000 | meaning I'm fascinated by the stone architecture,

01:07:31.000 | the narrow streets, how comfortable it is,

01:07:33.000 | even in a blazing hot climate, et cetera,

01:07:36.000 | and so make sure you spend time for a tour of Medina.

01:07:42.000 | There is also an interesting set of very old buildings.

01:07:47.000 | They claim, let's see, what is their claim?

01:07:49.000 | The oldest human buildings in existence,

01:07:53.000 | these old ruins, I forget what they are,

01:07:54.000 | but they're very famous, world heritage sites,

01:07:56.000 | these old ruins, I forget the name of them.

01:07:58.000 | That's also worth accessing.

01:08:01.000 | You can access all of these things on the public bus system.

01:08:04.000 | They have a public bus system that covers the entire island of Malta,

01:08:08.000 | and then you can, of course, go over to the other island of Gozo.

01:08:13.000 | Malta is made up of basically five islands,

01:08:15.000 | two of which are inhabited,

01:08:17.000 | but you can go to Gozo if you want to go and experience that as well.

01:08:23.000 | Then Malta has several kind of well-known tourist attractions,

01:08:28.000 | all of which are easily booked.

01:08:29.000 | They have the Blue Grotto,

01:08:32.000 | this amazing old caves that you can travel into,

01:08:37.000 | and then they have various sightseeing things to go and spend a day

01:08:40.000 | in the Blue Lagoon and some of the other stuff that they have.

01:08:44.000 | So five days, you can fill up five days with those activities

01:08:49.000 | in a very straightforward way, and it's perfectly accessible.

01:08:54.000 | Those are the recommended.

01:08:55.000 | I've done all those, and those are the recommended activities.

01:08:59.000 | In terms of transportation, again,

01:09:02.000 | you can get around the entire city on the bus system,

01:09:05.000 | and they have scooters and whatnot that you can rent and ride as well.

01:09:09.000 | You mentioned Plan B.

01:09:10.000 | Were you interested in other things more than just tourist stuff?

01:09:15.000 | Yeah, I had done a little bit of research as far as a residence is concerned,

01:09:21.000 | that kind of thing.

01:09:22.000 | It seemed pretty expensive for if you were just to invest and give a bunch of money.

01:09:28.000 | I think one option that I read up on was to buy like a $325,000 piece of real estate.

01:09:35.000 | That would get you access, but I'm not in the situation to do that right now.

01:09:39.000 | Right.

01:09:40.000 | It was just a general question.

01:09:42.000 | If there was anything like Canada opening a foreign bank account,

01:09:48.000 | that kind of thing, that you have in mind.

01:09:50.000 | Yeah. I don't recommend Malta for banking.

01:09:53.000 | I do recommend Malta for a lot of Plan B stuff,

01:09:57.000 | but it is all premium-level Plan B.

01:10:00.000 | So what Malta is most well-known for in the international circles

01:10:06.000 | is their Citizenship by Investment program.

01:10:10.000 | For those who have the almost seven figures,

01:10:14.000 | it is the best way to get yourself a very, very quick,

01:10:19.000 | very, very doable Plan B citizenship.

01:10:22.000 | Malta calls it their exceptional citizenship program.

01:10:26.000 | Basically, the way it works is you go to Malta,

01:10:29.000 | you make a very large donation directly to the Maltese government,

01:10:34.000 | you rent or buy property on the island,

01:10:37.000 | you make some other donations, etc.

01:10:40.000 | It comes out to just under, basically, just a little bit less than a million dollars,

01:10:44.000 | and you and your family can all become Maltese citizens.

01:10:48.000 | As Maltese citizens, you now have a Grade A citizenship

01:10:54.000 | that allows you to travel the world, live and work in Europe, etc.

01:10:59.000 | The problem is the price tag.

01:11:01.000 | It's about an 18-month process to do the entire thing,

01:11:06.000 | but in 18 months you can be a European citizen.

01:11:10.000 | For those who are interested in that and who have the money,

01:11:13.000 | I would say you should move fast.

01:11:15.000 | One of the things that is, that this particular program

01:11:18.000 | has been under attack since it was incepted.

01:11:24.000 | And there have been other programs in Europe previously,

01:11:29.000 | and the pressure from the European Union has caused all of those programs to close.

01:11:34.000 | Previously Cyprus, etc., some other countries had these kinds of programs.

01:11:38.000 | Malta is the last remaining program.

01:11:41.000 | Interestingly, just this morning we received news from the nation of Portugal

01:11:47.000 | that Portugal has cancelled its Golden Visa program.

01:11:50.000 | The Portuguese Golden Visa has been an extremely attractive option

01:11:54.000 | that many, many Americans and global citizens have taken advantage of

01:11:58.000 | to go to Portugal, purchase real estate in Portugal,

01:12:02.000 | and be granted a visa to live in Portugal.

01:12:05.000 | That visa can eventually lead to citizenship.

01:12:08.000 | I use this just as an example to say that these things close.

01:12:11.000 | For those who have the almost seven figures,

01:12:13.000 | and that makes sense for you to simply purchase a second citizenship,

01:12:17.000 | and you want one that gives you incredible global freedom,

01:12:20.000 | travel access, as well as the ability to live anywhere in the European Union,

01:12:24.000 | Malta is the ticket, and you probably should get on it quickly,

01:12:27.000 | because we don't know how long it will last.

01:12:30.000 | Now coming back from that, Malta also has a Golden Visa program,

01:12:34.000 | and so that's what you're referring to,

01:12:36.000 | is that you could invest a lot less than a million dollars,

01:12:40.000 | several hundred thousand dollars, and you can get residency rights in Malta.

01:12:44.000 | In addition, Malta has several attractive tax programs,

01:12:48.000 | including for some people to situate a company there,

01:12:51.000 | and/or for your personal residence to be there.

01:12:54.000 | But all of those are at the top levels of income and significantly expensive.

01:13:02.000 | So unless that makes sense for your business life,

01:13:05.000 | I would just focus on enjoying my vacation much more

01:13:08.000 | than I would focus on doing any kind of that level plan B stuff.

01:13:14.000 | That's great. Thanks so much for all my questions.

01:13:17.000 | Enjoy your trip. While you are there, where are you flying in from?

01:13:21.000 | We're actually spending a few days in Italy first.

01:13:25.000 | We'll be flying into Rome, and then we're going to travel down to Naples.

01:13:30.000 | Then we actually catch a flight from Naples to Malta,

01:13:34.000 | and then after four days we'll fly out to London.

01:13:40.000 | Okay. Wonderful. So you can fly.

01:13:44.000 | There is also a ferry, so you can take a ferry,

01:13:48.000 | depending on how much time you have.

01:13:50.000 | One of the things that I think is super interesting is

01:13:52.000 | you can take a ferry across from Malta to Sicily,

01:13:55.000 | and then you can take the train from Sicily up into Italy, to Rome,

01:14:00.000 | so back either way, and then you can also, of course, take it across Europe.

01:14:04.000 | Then there are also a couple of interesting inexpensive flights that are from Malta.

01:14:09.000 | Ryanair has a flight that you can go to Israel on Ryanair,

01:14:13.000 | pretty inexpensively from Malta, and also to Turkey.

01:14:16.000 | So if you have more time, once you're in Malta,

01:14:19.000 | there are some interesting inexpensive flight destinations

01:14:21.000 | that you can exploit as well.

01:14:24.000 | But enjoy it. It's a really fascinating time.

01:14:26.000 | Let me make one book suggestion for you that I read with my children

01:14:32.000 | that you may enjoy, and I'll give you the title.

01:14:35.000 | There is a book called A Knight of St. John,

01:14:43.000 | A Tale of the Siege of Malta.

01:14:46.000 | So it's called A Knight of St. John, A Tale of the Siege of Malta

01:14:50.000 | by Captain F.S. Brereton.

01:14:53.000 | And this is a remarkably--it's a very interesting book.

01:14:57.000 | Brereton is a very unknown author.

01:15:01.000 | G.A. Henty is the one who gets all the attention

01:15:04.000 | for his historical novels, but Brereton is a really interesting novel.

01:15:08.000 | Captain Brereton.

01:15:10.000 | And this particular book talks about the siege of Malta

01:15:14.000 | from the--I think it was the 1400s--with the Turks.

01:15:19.000 | And it talks a lot about the interesting history

01:15:22.000 | of the Knights of St. John.

01:15:24.000 | While you are there in Malta, you will tour

01:15:28.000 | some of the establishments of the Knights of St. John.

01:15:32.000 | They're now known as--they were known as the Hospitallers,

01:15:36.000 | and they're also known as the Sovereign Order of Malta.

01:15:41.000 | And they moved from there.

01:15:43.000 | So this is a really fascinating bit of history,

01:15:45.000 | where originally many of the Christian crusaders

01:15:53.000 | went out from Europe, and they went to the Holy Land

01:15:58.000 | on the Crusades.

01:16:00.000 | And while they were on the Holy Land,

01:16:02.000 | they wanted to participate in very--while they were there,

01:16:05.000 | they saw the need of these charitable works.

01:16:09.000 | And they started to create this--again,

01:16:15.000 | I think it was called the Hospitallers' Order

01:16:17.000 | or something like that.

01:16:19.000 | And if you go and you read about the Order of Malta,

01:16:23.000 | you'll see the whole history.

01:16:25.000 | But while they were there, they established--

01:16:33.000 | so they established these charitable works,

01:16:35.000 | and they started focusing on establishing hospitals

01:16:38.000 | and whatnot, providing care.

01:16:39.000 | Anyway, long story short, they wound up setting up

01:16:42.000 | a base at Rhodes.

01:16:45.000 | And then there was the siege of Rhodes,

01:16:47.000 | and then all of the knights were driven from Rhodes

01:16:49.000 | eventually to Malta.

01:16:51.000 | And then while they were in Malta,

01:16:52.000 | they were later attacked by the Muslims from Turkey.

01:16:58.000 | And it was just this incredible--just these incredible battles.

01:17:03.000 | So one of the fascinating things about Malta

01:17:05.000 | is that basically it has been attacked by everyone.

01:17:08.000 | Because of its strategic location,

01:17:10.000 | sitting right there in the Caribbean,

01:17:13.000 | then they've been attacked by the Turks, the French.

01:17:20.000 | They were attacked in World War II.

01:17:21.000 | There's an incredible history of their resilience

01:17:23.000 | in World War II, et cetera.

01:17:25.000 | And so there has been a constant history of siege

01:17:28.000 | by all of the surrounding nations who've wanted to control

01:17:31.000 | this very strategic island right in the middle

01:17:33.000 | of the Caribbean.

01:17:35.000 | So back to the Sovereign Military Order of Malta.

01:17:38.000 | It's a super interesting organization

01:17:40.000 | because it is a sovereign country that for many decades,

01:17:47.000 | at least decades, had no land.

01:17:50.000 | And so Sovereign Military Order of Malta,

01:17:54.000 | which has nothing to do with the current day--

01:17:56.000 | sorry, not nothing to do, but is not the Maltese government

01:17:59.000 | of the nation of Malta--is a country,

01:18:03.000 | it's an independent state that does not have land.

01:18:07.000 | It's a UN state.

01:18:10.000 | Now, they now have a building that they work in,

01:18:12.000 | and it's a very small thing,

01:18:13.000 | but it's a Catholic fraternal order that is dedicated

01:18:17.000 | to charitable works all around the world,

01:18:19.000 | especially hospitals, et cetera.

01:18:21.000 | So if you read a little bit in advance before you go,

01:18:24.000 | I think it'll help you to appreciate things

01:18:26.000 | a little bit more.

01:18:27.000 | And my children really enjoyed that book called

01:18:29.000 | A Night of St. John, as far as it's an adventure story,

01:18:32.000 | and they really enjoyed it because then you can go

01:18:34.000 | and you can see how everything develops.

01:18:36.000 | That would be my literary recommendation for you

01:18:38.000 | in advance of your trip.

01:18:41.000 | >> Well, thank you.

01:18:42.000 | I'll be sure to be up on it.

01:18:44.000 | >> My pleasure.

01:18:45.000 | And with that, we come to the end of our Q&A show.

01:18:48.000 | Thank you for bringing me a great and interesting set

01:18:51.000 | of questions.

01:18:53.000 | I've enjoyed it very much.

01:18:54.000 | If you would like to join me on next week's Q&A,

01:18:56.000 | go to patreon.com/radicalpersonalfinance,

01:18:59.000 | patreon.com/radicalpersonalfinance,

01:19:01.000 | and that will gain access to next week's Q&A,

01:19:03.000 | where you can call in and talk about anything you want.

01:19:05.000 | Have a great weekend.

01:19:06.000 | Be back with you as soon as I can.

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2023-02-17_Friday_QA