2023-10-13_Friday

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00:01:01.000 | Today on Radical Personal Finance is live Q&A.

00:01:03.000 | ♪

00:01:19.000 | Welcome to Radical Personal Finance,

00:01:21.000 | a show dedicated to providing you with the knowledge, skills,

00:01:23.000 | insight, and encouragement you need

00:01:25.000 | to lead a rich and meaningful life now,

00:01:27.000 | while building a plan for financial freedom in 10 years or less.

00:01:30.000 | My name is Joshua Sheets.

00:01:31.000 | Today is Friday, October 13, 2023.

00:01:35.000 | And on this Friday, as we do on every Friday,

00:01:38.000 | in which I can arrange the microphone,

00:01:40.000 | we record a live Q&A.

00:01:42.000 | Call in, talk about anything you want.

00:01:45.000 | ♪

00:01:52.000 | Each and every Friday here at Radical Personal Finance,

00:01:54.000 | we have an internet connection in front of a microphone

00:01:56.000 | and plug all the wires together.

00:01:58.000 | We record a live Friday Q&A show.

00:02:00.000 | Works just like call-and-talk radio.

00:02:01.000 | Call in, ask, talk about anything you want.

00:02:03.000 | Ask any question you want.

00:02:04.000 | Bring up any topic you want.

00:02:06.000 | It is your chance to set the agenda.

00:02:08.000 | If you would like to gain access to one of these Friday Q&A shows,

00:02:11.000 | you can do that by becoming a patron of the show

00:02:13.000 | at patreon.com/radicalpersonalfinance.

00:02:15.000 | patreon.com/radicalpersonalfinance

00:02:17.000 | and that will gain access for you to one of these Friday Q&A shows.

00:02:21.000 | I do that to help limit the flow of callers to a manageable amount.

00:02:25.000 | Usually we have somewhere between five and ten different callers

00:02:29.000 | and it works out well.

00:02:30.000 | Today we begin with Adele in Texas.

00:02:33.000 | Adele, welcome to the show.

00:02:34.000 | How can I serve you today?

00:02:35.000 | Hi, Joshua.

00:02:39.000 | Thanks for having me.

00:02:40.000 | My pleasure.

00:02:41.000 | I bought your international skate plan.

00:02:43.000 | I bought your international skate plan.

00:02:45.000 | Of course, it's excellent.

00:02:48.000 | I'm working on level two right now.

00:02:50.000 | Great.

00:02:51.000 | The course has raised some questions for me,

00:02:53.000 | mainly about citizenship and residency.

00:02:56.000 | If you don't mind, I'd like to give you a little bit of background

00:02:58.000 | and then ask you a couple questions.

00:03:00.000 | Sure.

00:03:04.000 | First of all, I'm a Canadian citizen.

00:03:06.000 | I'm married to an American.

00:03:08.000 | We're both in our very early 50s.

00:03:11.000 | We would like to retire within the next year.

00:03:14.000 | On the last part.

00:03:17.000 | My husband has an adult daughter from a previous marriage.

00:03:20.000 | [inaudible]

00:03:25.000 | Last seven years.

00:03:26.000 | I make it back to Canada twice a year to visit family and friends.

00:03:31.000 | I have a couple of Canadian bank accounts, but no other ties to Canada.

00:03:36.000 | My mother, my father, my sibling have all passed,

00:03:38.000 | so they are no dependent for me and really no one to look after back in Canada.

00:03:44.000 | With every passing year, I become more disenchanted with the situation in Canada.

00:03:48.000 | More oppression, higher cost of living.

00:03:52.000 | I can't believe I'm saying this, but I doubt I would ever move back.

00:03:56.000 | This is my question.

00:03:58.000 | After living in the States for the last 10 years,

00:04:01.000 | I'm wondering if I should become a US citizen.

00:04:04.000 | There's downsides.

00:04:06.000 | I'm trying to think of the upsides.

00:04:09.000 | For me, the upsides are that I have a business in the US

00:04:12.000 | and so does my husband who's in real estate.

00:04:16.000 | It's my impression that citizenship may provide some security that residency doesn't

00:04:22.000 | because I have to renew my residency every decade.

00:04:26.000 | One is an uninterrupted income.

00:04:29.000 | This might just be an assumption.

00:04:31.000 | It's my sense that we can continue to operate in the United States,

00:04:35.000 | make US dollars, and live abroad.

00:04:39.000 | I don't know that if we are earning our US dollars in Idaho,

00:04:44.000 | would we still be taxed because that's American earned income,

00:04:51.000 | even though we're living abroad.

00:04:53.000 | Another one is -- I guess I should break it down into some manageable questions,

00:04:59.000 | but freedom.

00:05:01.000 | I like to travel.

00:05:02.000 | This is probably the big push for me is that it's my understanding if I'm out of

00:05:07.000 | the country more than six months of the year, I lose my residency status.

00:05:12.000 | My goal is to be able to travel frequently and a lot and not be encumbered by these rules.

00:05:18.000 | Okay.

00:05:20.000 | That's the benefits to me, the big benefits of getting citizenship.

00:05:25.000 | Also, if my husband passes away, he's American, and there's no sign of that happening.

00:05:31.000 | But I've always felt a little insecure, like would I be able to continue to live in the US?

00:05:38.000 | What if they didn't renew my residency?

00:05:40.000 | We have a home here.

00:05:42.000 | We have pets.

00:05:43.000 | We have -- you know, he has pension and Social Security benefits, and we have assets here.

00:05:48.000 | So I just feel like my -- it would be more tenuous if he were to pass away,

00:05:54.000 | and I weren't a citizen.

00:05:57.000 | So those are -- those are I guess are my big concerns right now.

00:06:03.000 | But becoming a citizen means taxation for the rest of my life.

00:06:07.000 | And, you know, I don't really like that idea.

00:06:11.000 | I mean, right now we both have to file taxes together.

00:06:15.000 | But just if he were to pass away and I decided I didn't want to live in the US anymore,

00:06:22.000 | now I'm still filing a tax return for the rest of my life.

00:06:25.000 | So are there any other downsides you can think of?

00:06:29.000 | Let me ask the question, and you just started to lead into it.

00:06:33.000 | There are many people around the world who would dearly love to be US citizens.

00:06:38.000 | Why would you not want to be a US citizen?

00:06:47.000 | Yeah, I think for me it's a big thing is the tax thing.

00:06:51.000 | And it's really just -- I mean, not like I'm expecting him to pass away,

00:06:58.000 | but I really don't like the idea of having to file a tax return for the rest of my life

00:07:02.000 | if I chose not to live in the US.

00:07:05.000 | We are like currently pursuing residency in Mexico, part-time only at the moment.

00:07:14.000 | But maybe one day we might want to be full-time.

00:07:17.000 | You know, anyway.

00:07:19.000 | So at the moment you don't have any clear plans or any strong dreams,

00:07:26.000 | you and he, to live outside the United States.

00:07:28.000 | But you do enjoy traveling abroad, but you don't have any plans to move abroad.

00:07:32.000 | Is that right?

00:07:35.000 | Not at this time.

00:07:36.000 | But I should say he is pursuing his Greek citizenship through his mother,

00:07:41.000 | who was born in Athens.

00:07:44.000 | We've always enjoyed Europe.

00:07:46.000 | Great.

00:07:47.000 | But we don't have any plans to move to Europe at this point.

00:07:50.000 | Right.

00:07:51.000 | And at the beginning of your call, the connection wasn't great.

00:07:54.000 | It may be on my end, but I didn't want to mess it up just in case in the call.

00:07:58.000 | What is the nature of your business or income?

00:08:04.000 | So he currently is employed, and he also gets income from rental properties.

00:08:11.000 | I am self-employed with an escort in Idaho.

00:08:14.000 | I work online as a health coach, and I've been in business since 2018 here.

00:08:20.000 | Okay.

00:08:21.000 | And about just Ballpark, what is your household income?

00:08:24.000 | And Ballpark, what is your current net worth?

00:08:29.000 | Our current net worth is about $700,000, and the Ballpark --

00:08:37.000 | my business hasn't done great this year.

00:08:39.000 | So I would say it has fluctuated with his income between $200,000 and $280,000 a year.

00:08:48.000 | Okay.

00:08:49.000 | So all of the benefits that you mentioned of becoming a U.S. citizen are true.

00:08:56.000 | While you are a long-term resident of the United States,

00:09:01.000 | you don't have the same security of being able to stay in the United States forever,

00:09:07.000 | no matter what, as you would have if you were a citizen.

00:09:12.000 | And of particular import is what you said about being gone a lot,

00:09:18.000 | is that if you wanted to maintain the United States as your home forever,

00:09:24.000 | that was your clear plan, but you also wanted to go and travel abroad continually

00:09:29.000 | for the next five years, you would have probably a problem with your residency visa

00:09:35.000 | and your ability to renew it, because there are not insignificant physical presence

00:09:41.000 | requirements of you in the United States.

00:09:43.000 | It's not as clear-cut as the Canadian physical presence requirements are

00:09:47.000 | for people with a Canadian residence permit,

00:09:49.000 | but there are physical presence requirements.

00:09:52.000 | Whereas if you were a citizen, you could acquire your citizenship,

00:09:56.000 | you could move abroad for 20 years, and you don't even need to keep anything current,

00:10:00.000 | you don't even need to do anything.

00:10:02.000 | If you want to prove I'm a citizen, when you come back, get yourself back to the border,

00:10:05.000 | then by law you are required to be allowed in.

00:10:09.000 | And so that, for many people, can be a significant factor,

00:10:13.000 | and that does affect quite a lot of people.

00:10:15.000 | Where I've seen this the most is, you know, I worked with a client of mine one time

00:10:19.000 | who was from Brazil, and his mother had a Brazilian residency visa,

00:10:25.000 | and she had moved abroad for a number of years and then wanted to move back

00:10:28.000 | to the United States.

00:10:30.000 | And so she had a visa, and yet just when she left, she just left,

00:10:36.000 | and then in her case she was able to go back,

00:10:38.000 | but that's where you don't always have that security,

00:10:41.000 | is that if you're a resident, you always have to go through some formalities

00:10:44.000 | to maintain that permission, whereas a citizen does not have that.

00:10:48.000 | And it sounds to me like that would be a very valuable piece of mind.

00:10:53.000 | I also think that many people underappreciate the value of U.S. citizenship

00:11:00.000 | as an incredible plan B, especially in the internationalization space.

00:11:05.000 | As I have wrestled with this myself over the years,

00:11:08.000 | wrestling with the idea of, "Would I renounce my citizenship?

00:11:11.000 | Could I? Would I? Should I?" etc.

00:11:14.000 | Where I came to more confidence in the fact that I probably will never

00:11:18.000 | renounce my citizenship was when I realized how much time and money

00:11:22.000 | I was spending wandering around the world, putting in place all these other things.

00:11:27.000 | And basically every other flag that I have, while I've worked hard to put in place

00:11:34.000 | some of the best ones, and I've spent a lot of money and a lot of time to do it,

00:11:38.000 | they all pale in comparison compared to the value of my American flags,

00:11:44.000 | of all the things that I have.

00:11:46.000 | The United States has so many benefits going for it.

00:11:50.000 | Everything from just the fact that if I'm an American citizen,

00:11:54.000 | I have the right legally to work in the United States.

00:11:57.000 | It's basically impossible for me to consider, unless I were disabled

00:12:00.000 | and unable to work, or incarcerated, or something like that.

00:12:04.000 | It's basically impossible for me to consider being impoverished.

00:12:07.000 | And that is a tremendous thing, to know that I could access the U.S. job market

00:12:12.000 | with no problem and be able to support my family.

00:12:15.000 | What an incredible foundation for my financial life and my confidence.

00:12:21.000 | Every other aspect of it, the food security of the United States,

00:12:24.000 | the agricultural productivity, the general diversity of the society,

00:12:29.000 | the fact that there are so many corners where I can go and I can fit in,

00:12:33.000 | and I can find my people, and I can live a quiet and happy and safe and peaceful life, etc.

00:12:38.000 | The United States is the world's greatest plan B.

00:12:42.000 | If there were one nation, only one nation, that I could spend time in

00:12:46.000 | and be in for the rest of my life, it would be the United States.

00:12:49.000 | To me, there's no question about that.

00:12:52.000 | And so, as I've looked at that, I've realized,

00:12:56.000 | "Well, if I'm going to spend thousands of dollars each year

00:13:00.000 | to maintain this other residency, why would I not be willing to maintain

00:13:07.000 | the United States stuff as a great backup plan, even if it is a hassle?"

00:13:11.000 | Yes, it's a hassle for me to fill out a tax return every year.

00:13:14.000 | Of course it's a hassle.

00:13:16.000 | It's a hassle for me to maintain all the data, etc.

00:13:18.000 | Of course it's a hassle.

00:13:19.000 | But why would I not be willing to do that?

00:13:21.000 | And you mentioned the taxation issue.

00:13:24.000 | The taxation issue is true, but it is really only true for those

00:13:28.000 | who have very high levels of income, and that income is the kind of income

00:13:34.000 | that can't most effectively...

00:13:38.000 | It's the kind of income that can be done from any marketplace.

00:13:42.000 | So, if you have a household income of $200,000 or $300,000

00:13:46.000 | and you want to live completely income tax-free,

00:13:49.000 | you can do that easily with a household income of a few hundred thousand dollars

00:13:53.000 | with the foreign earned income exclusion.

00:13:55.000 | It's easy to do that.

00:13:57.000 | And beyond that, you can cut your tax rates massively,

00:14:01.000 | just even far beyond that.

00:14:03.000 | Now, on the other hand, if you're making, say, $10 million a year,

00:14:07.000 | and that $10 million a year is something that's generated with earned income,

00:14:12.000 | and it's something that you can easily do from anywhere in the world,

00:14:16.000 | now all of a sudden writing a check every year for a couple million dollars

00:14:19.000 | to a country that you don't particularly feel all that enthusiastic about,

00:14:22.000 | to me that's a much bigger ask.

00:14:24.000 | Now it becomes much more probable that you would want to move abroad--

00:14:33.000 | sorry, excuse me, that you would want to lower your income.

00:14:36.000 | And similarly with investments,

00:14:38.000 | since you cannot eliminate your investment taxes

00:14:43.000 | by moving outside of the United States for U.S. citizens,

00:14:46.000 | if you had substantial investment income

00:14:50.000 | and that investment income couldn't be sheltered

00:14:53.000 | using some of the other systems that are out there,

00:14:55.000 | then certainly you would consider not being a U.S. citizen.

00:15:03.000 | But with what you've described, with about a $700,000 net worth,

00:15:08.000 | and the nature of the income that you described,

00:15:10.000 | with a W-2 employee plus rental income--

00:15:13.000 | your taxation on the rental income doesn't change by being abroad--

00:15:17.000 | the W-2 employee, you could change some income taxes for your husband,

00:15:23.000 | depending on what he could negotiate with his company.

00:15:27.000 | You could change taxes, but you're not--

00:15:29.000 | unless you saw your income going to a million dollars a year,

00:15:32.000 | to me this doesn't seem like a big concern.

00:15:35.000 | I also don't think that any of this is permanent.

00:15:38.000 | So if you wanted to become a U.S. citizen,

00:15:40.000 | and you became a U.S. citizen,

00:15:42.000 | and then five years from now you chose to renounce your U.S. citizenship,

00:15:47.000 | you would have slightly more hassle--

00:15:51.000 | I'm thinking for a moment--

00:15:54.000 | no, you wouldn't have any more hassle

00:15:56.000 | because permanent residents are still subject to the exit taxes.

00:16:00.000 | So it basically would be the same.

00:16:03.000 | So in your situation, from what you're describing to me,

00:16:06.000 | I would see many more benefits to your being a U.S. citizen

00:16:10.000 | rather than significant downsides.

00:16:13.000 | And then if the downsides approached, you're not stuck.

00:16:17.000 | You would have all the same exit possibilities

00:16:20.000 | that a U.S. citizen would have, and more.

00:16:23.000 | So let's fast forward. Let's say it's five years in the future.

00:16:26.000 | Your business has taken off massively,

00:16:28.000 | and you just get tired of the paperwork.

00:16:31.000 | And now you and your husband are Greek citizens,

00:16:33.000 | you're Canadian citizens, you're American citizens,

00:16:35.000 | and you've set up a beautiful little house

00:16:38.000 | wherever you happen to want to be.

00:16:41.000 | And you're living in a tax haven,

00:16:43.000 | or you're doing something that's a very tax-efficient lifestyle,

00:16:45.000 | and you decide, "We're done with it."

00:16:47.000 | Well, in that situation, you could just easily renounce your citizenship.

00:16:53.000 | And by the way, I would say you probably could go either way.

00:16:57.000 | So in my thinking--and I've had a very hard time verifying some of this legally,

00:17:02.000 | because I haven't spent a lot of money for lawyers on this,

00:17:06.000 | and my ability to do legal research is limited--

00:17:09.000 | but I've always thought of it basically like this.

00:17:11.000 | First of all, the benefit of your not being a U.S. citizen--

00:17:16.000 | to flip around to the other perspective and make sure you understand it clearly--

00:17:20.000 | your benefit of your not being a U.S. citizen from a tax perspective

00:17:24.000 | is that you and your husband could have a business together.

00:17:27.000 | He could maintain his citizenship.

00:17:30.000 | You, being a Canadian citizen, could do business in a tax haven,

00:17:36.000 | and all of your income for you as a non-citizen

00:17:42.000 | could be structured to be tax-free.

00:17:44.000 | And as the spouse of a non-U.S. citizen person,

00:17:51.000 | you have an unlimited ability to transfer your money between the two of you.

00:17:54.000 | And so that structure, with one spouse being a U.S. citizen

00:17:59.000 | and one spouse not being a U.S. citizen,

00:18:01.000 | can be simultaneously a fantastic tax structure

00:18:05.000 | if there's trust and confidence and you're not getting divorced,

00:18:08.000 | while also giving you easily the ability to access the United States in the future

00:18:12.000 | if you wanted to, because he could always apply for you for a spousal visa,

00:18:15.000 | and you could move to the United States and again enroll in the U.S. tax system.

00:18:20.000 | So that's always how I've thought about it,

00:18:22.000 | is that if I renounced my citizenship at some point,

00:18:24.000 | I would be the one who would do it.

00:18:26.000 | My wife would keep hers, my children would keep theirs,

00:18:28.000 | and now I can earn as much money as I want,

00:18:31.000 | my family can have all their things covered,

00:18:33.000 | but they have the choice to choose in the future.

00:18:35.000 | But I just don't see that as, unless there's something

00:18:37.000 | that you would expect to change with your own situation,

00:18:43.000 | I don't see that as being of primary importance,

00:18:47.000 | and I don't see any of this as irrevocable.

00:18:49.000 | So as far as I can tell, and this question bugged me for years,

00:18:53.000 | as far as I can tell, there's no law that would say

00:18:57.000 | that if you became a citizen, and then you renounced your citizenship,

00:19:01.000 | and then five years later you wanted to apply for a spousal visa,

00:19:05.000 | there's no law in place that would say that you couldn't apply for a spousal visa

00:19:09.000 | and go through the whole process again.

00:19:11.000 | I don't know if there's discrimination,

00:19:13.000 | I would guess there probably is some discrimination for that kind of situation.

00:19:17.000 | - Yes, I would tell.

00:19:19.000 | - But I can't find any law that would say that that can't be done.

00:19:22.000 | And if anyone knows differently, just let me know.

00:19:24.000 | So I guess the point is that from what you described,

00:19:26.000 | unless there's some reason why you think your financial situation

00:19:30.000 | would change and justify it, I think having full and unfettered access

00:19:34.000 | to the United States as a world-class backup plan,

00:19:39.000 | and also the fact that it's your home,

00:19:41.000 | and having that security for you if your husband did die

00:19:44.000 | or something like that, to me sounds like worth having.

00:19:47.000 | - I appreciate that, Joshua.

00:19:54.000 | I think one of my values is freedom,

00:19:56.000 | so the idea of just being beholden for taxes for the rest of my life,

00:20:00.000 | but you make it an option to be able to renounce,

00:20:06.000 | although I hear it's getting harder to renounce.

00:20:08.000 | They change the fee from $1,000 to $5,000, and it's getting harder,

00:20:12.000 | but then it may get harder again in the future.

00:20:14.000 | But right now, it feels like the best course of action to get citizenship,

00:20:22.000 | pros and cons to everything.

00:20:24.000 | - There are, and it's an infuriating decision.

00:20:30.000 | And I have many times been jealous of people like Canadians

00:20:33.000 | because it feels that the whole world of getting U.S. citizenship

00:20:39.000 | or renouncing U.S. citizenship feels like such an all-encompassing decision.

00:20:43.000 | And it's like, why should a country have this much control over you?

00:20:46.000 | Why can't you just say, "I really value this country and this connection,"

00:20:50.000 | and then make my choice based upon what the country has to offer to me

00:20:53.000 | at that particular time?

00:20:55.000 | But I can't see any hope of that changing within my lifetime.

00:20:59.000 | - Do you have time for a quick question about the foreign income?

00:21:07.000 | Go ahead.

00:21:09.000 | - So I work remotely and entirely online, so I can work anywhere in the world.

00:21:15.000 | But if I am registered as an S-Corp, and I'm based in the LSU, Idaho,

00:21:23.000 | and I'm earning this income, if at the point where we're no longer living

00:21:31.000 | in the United States, would that qualify for the exemption?

00:21:36.000 | Or do I still have to pay because I'm still earning dollars in the U.S. technically?

00:21:44.000 | - So a lawyer would always say it's complicated, because it is,

00:21:50.000 | because there's all kinds of connections as far as what kind of work

00:21:54.000 | are you doing, etc.

00:21:56.000 | But because of the way the foreign earned income exclusion is structured,

00:22:02.000 | it's much, much simpler than any other country's tests.

00:22:11.000 | For example, it doesn't matter where you sell your products.

00:22:16.000 | So you could have all of your customers could be in the United States,

00:22:19.000 | and that would be no problem.

00:22:21.000 | The foreign earned income exclusion is based upon where--so there's two tests.

00:22:27.000 | So number one, it's that your tax home must be in a foreign country.

00:22:32.000 | That word "tax home," what does that mean?

00:22:35.000 | Well, basically, as best I can tell, a tax home is your main place of business

00:22:41.000 | or employment or where you conduct your work.

00:22:45.000 | And so that's the fuzzy one, but as far as I can tell,

00:22:48.000 | there's not much testing on that.

00:22:50.000 | And then when you get to the foreign earned income exclusion,

00:22:53.000 | how you qualify, there's two tests.

00:22:55.000 | There's the bona fide residence test, and then there's the physical presence test.

00:22:58.000 | So let's just keep it simple and say that you qualify for the physical presence test.

00:23:03.000 | And let's pretend you spend zero days inside the United States.

00:23:07.000 | Well, your qualification is easy and automatic in that circumstance.

00:23:11.000 | So now you can exempt your first $120,000 from the taxes.

00:23:19.000 | The only wrinkle comes is that's only for your income taxes.

00:23:23.000 | So you could have your Idaho corporation, and that Idaho corporation will pay you your salary.

00:23:30.000 | But because you yourself qualify for the foreign earned income exclusion,

00:23:34.000 | your Idaho salary is exempt from taxation because you're under the foreign earned income exclusion.

00:23:42.000 | It's excluded from taxation.

00:23:43.000 | It doesn't matter where your customers are.

00:23:45.000 | It doesn't matter where your clients are.

00:23:47.000 | It doesn't matter where even your business is.

00:23:48.000 | It's you yourself are abroad.

00:23:51.000 | That wouldn't be the case for things like dividends.

00:23:55.000 | So this is for earned income only.

00:23:58.000 | So if you had a lot of dividends or royalties or some other form of income,

00:24:02.000 | that is not affected by the foreign earned income exclusion.

00:24:06.000 | Now, the second component of it involves your wage taxes,

00:24:10.000 | your self-employment taxes or your employment taxes.

00:24:13.000 | And that for most people at the levels that we're talking about is usually a bigger factor.

00:24:18.000 | Your income taxes, your federal income taxes on $120,000 of income are generally pretty modest

00:24:26.000 | if you have any deductions or exclusions whatsoever.

00:24:28.000 | It's just pretty modest for many people.

00:24:31.000 | Not if you don't have children or not if you have other income sources,

00:24:37.000 | but there's so much that you can be done.

00:24:40.000 | So at that level of income, it's actually your employment taxes that become a bigger deal.

00:24:45.000 | So on $100,000, it's 15.3%.

00:24:48.000 | So $15,300 on $100,000.

00:24:51.000 | Now, you can get rid of that by then putting in place a foreign corporation.

00:24:55.000 | And so the normal structure is that you would have a foreign corporation that you own,

00:25:01.000 | and then your foreign corporation would own in the United States a single-member LLC.

00:25:06.000 | And for the IRS, a single-member LLC is a disregarded entity.

00:25:12.000 | It doesn't exist from a tax perspective,

00:25:14.000 | but it still allows you to run all your business through that entity in the United States.

00:25:18.000 | And then you yourself are an employee of the foreign corporation.

00:25:22.000 | So that's a simple structure that works well, but it does add cost and complexity.

00:25:27.000 | You have to file some extra tax returns every year,

00:25:30.000 | and you have several thousand dollars of just maintenance costs of maintaining the structure.

00:25:35.000 | And you lose out on your contributions to the Social Security system.

00:25:38.000 | So that also in many cases is not a great idea because you might want to collect those credits,

00:25:44.000 | and they may be very helpful for you in your overall planning,

00:25:47.000 | especially if you yourself came in late into that system.

00:25:51.000 | Then you might want to accumulate those credits so that you have full coverage in the Medicare system

00:25:56.000 | and that you have a Social Security benefit that can help protect for your financial security.

00:26:02.000 | But did I answer your question? I think I did.

00:26:07.000 | You did, yeah.

00:26:09.000 | So obviously there's a tipping point because on $100,000, $15,000,

00:26:13.000 | it could be a wash with the extra taxation and filing and accounting help,

00:26:19.000 | and then you lose out on Medicare and all that stuff.

00:26:23.000 | So yeah, I think there'd be a tipping point.

00:26:26.000 | I need – it sounds like I need a tax accountant for this type of thing when the time comes.

00:26:33.000 | I guess if I had to say what I have learned over the years, I have been a very enthusiastic tax researcher.

00:26:41.000 | I have enjoyed doing everything I can to get taxes to zero, et cetera.

00:26:48.000 | Over the years, I've realized that I just don't think it's wise for anybody

00:26:53.000 | to put taxes as a primary reason for doing anything.

00:26:58.000 | If you move from a place that you love where you pay high taxes

00:27:03.000 | and you move to a place that you hate just so you can pay zero taxes,

00:27:07.000 | that is not a recipe for success, especially when we're talking about income taxes.

00:27:12.000 | Income taxes in the United States are generally low for people who are low and modest income earners.

00:27:21.000 | If you're a high income earner, then income taxes are high.

00:27:24.000 | But then you have to ask yourself the question,

00:27:26.000 | did I get rich and start making a high income so that I could make all my decisions about taxes,

00:27:32.000 | or do I want the freedom to live how and where I want?

00:27:36.000 | I think it's ironic that a lot of people who are the most enthusiastic –

00:27:40.000 | or excuse me, the most vocal pursuers of freedom,

00:27:44.000 | of saying, "I want to live free, I want to live free," et cetera,

00:27:47.000 | often wind up having their decision choices made by a dogged pursuit of zero taxes or something like that.

00:27:58.000 | It doesn't seem really free to me.

00:28:01.000 | So I look at taxes as an important secondary criteria.

00:28:06.000 | It's primarily best to think about how and where do I want to live,

00:28:10.000 | and then let me be aware of the tax system and ask myself,

00:28:14.000 | would I rather make certain trade-offs based upon this tax jurisdiction or that tax jurisdiction, et cetera?

00:28:23.000 | Are there low tax jurisdictions that are attractive to me?

00:28:26.000 | Can I structure my affairs in a way that without too much frustration,

00:28:30.000 | I live a relatively low tax lifestyle?

00:28:34.000 | And I think that there are many cases in which it can be done.

00:28:36.000 | So taxes are a very important secondary consideration, or maybe like a lower tier primary,

00:28:41.000 | but I don't think they should in any way ever be the primary consideration that drives your life decisions.

00:28:48.000 | And if they are, then I think you wind up being unhappy with that after a few years.

00:28:56.000 | I 100% agree.

00:28:58.000 | I was just wondering if there's any other drawbacks to becoming a U.S. citizen that I'm missing

00:29:03.000 | other than the fact that I could be taxed for the rest of my life unless I went out.

00:29:08.000 | But you didn't bring any other drawbacks up.

00:29:12.000 | So I appreciate your analysis of the situation very much, and I know what to do now.

00:29:18.000 | So thank you for your time, Joshua.

00:29:20.000 | My pleasure.

00:29:21.000 | The other drawbacks that I didn't mention there or the things that I think about is,

00:29:28.000 | number one, I worry about conscription a lot.

00:29:32.000 | That's a frustration, but that probably is not a concern for you at this point in time.

00:29:38.000 | I worry about conscription for my children, things like that.

00:29:40.000 | That was a big motivator for me of going abroad.

00:29:44.000 | Legal, there are some other things that are important.

00:29:49.000 | Your business opportunities can be constrained in certain markets based upon being an American citizen.

00:29:55.000 | International banking becomes very complicated if you are an American citizen.

00:30:00.000 | If you are one who wants to have access to the world's best banking system outside of the United States,

00:30:06.000 | it's really nice not to be a U.S. person.

00:30:11.000 | However, you already are a U.S. person as a permanent resident.

00:30:15.000 | And so for you, I'm not mentioning that a lot.

00:30:19.000 | And if somebody doesn't like the United States, so they don't want to see themselves living there,

00:30:25.000 | then I think that those are good reasons not to set up a permanent relationship.

00:30:30.000 | In your situation, after listening to you and the factors that you said,

00:30:33.000 | to me it seems like being a U.S. citizen is probably a good idea.

00:30:38.000 | But there have been several other times when in almost an exact conversation like this,

00:30:43.000 | I've given the opposite advice.

00:30:45.000 | But for you, it does seem like a good thing.

00:30:47.000 | So good luck to you.

00:30:48.000 | I hope it works out.

00:30:49.000 | And then back it up with the Greek one as soon as you're able to get that done as well.

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00:31:23.000 | Nick in New York. Nick, welcome to the show. How can I serve you today?

00:31:27.000 | Hi, Joshua. I have a question regarding stocks versus bonds.

00:31:32.000 | In the past, in past episodes, you've said how owners make more money than lenders.

00:31:39.000 | And there is a fraction of Twitter of the bowtie variety that I believe you're familiar with

00:31:45.000 | that seems to be advocating now 20 to 30 year bonds at 4 or 5% as the ideal, let's say, at the moment vehicle.

00:31:56.000 | And while I do understand if someone is already, let's say, at the fire setting where they have 25 times their yearly needs,

00:32:05.000 | you can lock that in 20 years and then benefit from the current interest rates.

00:32:09.000 | I don't really know how this applies to someone in the building wealth phase.

00:32:15.000 | So what I'm essentially asking is for someone still building, is the traditional DCA advice into stock market,

00:32:25.000 | is it applicable today or have these very large interest rates changed the calculus that we're supposed to be following?

00:32:36.000 | I wish I was smart enough to answer that. Honestly, I wish I were.

00:32:43.000 | I never feel dumber than when I listen to smart, persuasive people talk about investing and investing advice

00:32:50.000 | because it always just makes me feel like everyone else knows more than I do.

00:32:54.000 | Everyone else has more insight, better history, experience, etc.

00:32:58.000 | And I just, it often makes me feel dumb.

00:33:01.000 | And so the best I can do for you is do what I do for myself, which is try to say,

00:33:06.000 | number one, I should do what I understand and I should try to create an argument for myself

00:33:12.000 | and try to create a fairly simple and focused approach to answer, so to know why I'm doing what I'm doing.

00:33:24.000 | So let me lay out how I think about it because I'm not a good prognosticator.

00:33:28.000 | I don't have any experience on Wall Street. I don't have any particularly unique investment insight.

00:33:34.000 | And so I'm not that smart, but I think this approach makes sense.

00:33:40.000 | Number one, the most important thing is to have an investment strategy that you yourself understand

00:33:48.000 | and that you yourself are committed to.

00:33:51.000 | And so if you have that, then you can gain fully and reap the rewards of your investment strategy.

00:34:01.000 | When I was a young green financial advisor, I was very enthusiastic about stocks and mutual funds

00:34:10.000 | and I'd read all my favorite books and I couldn't understand why anybody wouldn't want to invest in the stock market.

00:34:17.000 | And as I have grown older, I have interacted with many people who didn't want to invest in the stock market

00:34:23.000 | because they said, "I don't trust the stock market," things like that.

00:34:28.000 | And I no longer make fun of those people. I don't criticize them. I don't say that they're wrong.

00:34:35.000 | I encourage them to invest into something that they know and feel confident in.

00:34:40.000 | Because stocks are not the only investment. T-bonds are not, treasuries are not the only investment.

00:34:49.000 | And the most important thing is that you invest into something that you know and are confident in.

00:34:55.000 | Many people have gotten rich investing in the weirdest things that you and I would never be involved in,

00:35:00.000 | but they knew it and they were interested in it and it worked for them.

00:35:04.000 | So if there is a strategy that you know well and are confident in and believe in, that's the strategy for you.

00:35:13.000 | In the same way that I think just about any diet plan can help somebody to lose weight,

00:35:21.000 | I think just about any investment plan can help somebody to invest effectively and successfully.

00:35:30.000 | It is a worthy argument to say, "Is one diet better than another?"

00:35:36.000 | But in order to qualify a diet as better than another, you have to do some intense qualification.

00:35:42.000 | You have to say the factors upon which you're going to rank a diet

00:35:46.000 | and how you're going to compare one to another, etc.

00:35:50.000 | And so it becomes very complex.

00:35:52.000 | At the end of the day, simplicity works.

00:35:55.000 | And some of the most effective dieters are those who have a very simple diet.

00:35:59.000 | It may not be the ultimate perfect one, but it's simple.

00:36:02.000 | And it's because they apply it consistently, it works for them.

00:36:05.000 | And investment strategies are the same way.

00:36:08.000 | The guy who comes home from work every day and takes his pocket change out of his pocket,

00:36:15.000 | or probably better is I knew a guy one time who anytime he had a $5 bill, he always saved it.

00:36:20.000 | That was it.

00:36:21.000 | So somebody gave him $5 change, at the end of the day it went aside.

00:36:24.000 | He always saved his $5 bills.

00:36:26.000 | And every year he took a great vacation on his $5 bills.

00:36:29.000 | And that was his little trick that worked for him.

00:36:32.000 | So the advice of dollar cost average into a high-quality mutual fund, of course it works.

00:36:39.000 | Buying an index fund, of course it works.

00:36:41.000 | Buying a great actively managed fund, of course it works,

00:36:44.000 | because you're engaging in behaviors that work over time.

00:36:48.000 | Is it going to work better than buying a portfolio of treasuries because interest rates are high?

00:36:56.000 | Well, how would you define better?

00:36:59.000 | And I'm not ignorant of Bowtied Bull as the primary leader of the Bowtied community

00:37:03.000 | and the conversation happening right now.

00:37:05.000 | I'm coming to that.

00:37:06.000 | But I'm trying to lay some ground rules that I can understand that I think most people can understand.

00:37:10.000 | Do what you know, and almost any plan will work fine.

00:37:13.000 | Because the nuts and bolts of building wealth are really simple.

00:37:18.000 | It's earn as much money as you can, spend less than you earn so you create investment capital,

00:37:23.000 | invest that capital as wisely as you can at the highest possible rate of return that you can

00:37:28.000 | in a way that's in accordance with your goals.

00:37:30.000 | That's it.

00:37:31.000 | It's not any more complicated than that.

00:37:33.000 | And if you're a believer in your current strategy,

00:37:36.000 | then you should be very skeptical of changing for any reason.

00:37:40.000 | So understand what you do and a plan that you know and understand,

00:37:44.000 | even though that plan is suboptimal, is that to someone else's plan,

00:37:50.000 | it's better for you because you know it and you believe it and it's a behavioral thing.

00:37:54.000 | And money is primarily a behavioral thing, not a knowledge thing.

00:37:57.000 | Next, a lot of investment advice or investment strategies are very cyclical.

00:38:05.000 | So the focus right now on high interest rates is important,

00:38:09.000 | but it's a cyclical thing.

00:38:11.000 | And so if you're the kind of person who is so involved in your investments

00:38:14.000 | that on a monthly, quarterly, several-year basis,

00:38:19.000 | you're making changes to your portfolio, then you should follow those changes.

00:38:24.000 | But if you're not that involved and you don't want to learn enough to be involved

00:38:30.000 | and to be that engaged with what you're doing, then you shouldn't do that.

00:38:37.000 | And it's a matter of perspective on yourself.

00:38:41.000 | So a guy like Bull, who comes from Wall Street and who's highly involved in stuff

00:38:48.000 | and who's built an enormous business and platform doing this stuff,

00:38:54.000 | he cares deeply about investing.

00:38:56.000 | And of course, he's changing all the time.

00:38:58.000 | And so that kind of response and adapting to the markets

00:39:05.000 | is a natural part of his mentality, and I think it's the right thing for him.

00:39:10.000 | But that doesn't invalidate somebody who's not so interested

00:39:14.000 | just simply buying shares of companies and holding them for the long term.

00:39:19.000 | Make fun of that guy all you want.

00:39:21.000 | Some years, one guy will look like a genius.

00:39:23.000 | Some years, the other guy looks like a genius.

00:39:25.000 | But at its core, accumulating shares of high-quality companies at low prices,

00:39:30.000 | getting them at a low average share price because your dollar cost averaging,

00:39:34.000 | I can't find any flaws in that logic.

00:39:37.000 | It's interesting to talk about whether and what may or may not happen because of this,

00:39:42.000 | but I can't find any flaws in that fundamental logic.

00:39:45.000 | And if you buy into that thesis that the greatest companies in the United States

00:39:49.000 | and the world are going to continue to work hard to make money,

00:39:52.000 | there's going to be setbacks and trouble, etc.,

00:39:54.000 | but at its core, professional businessmen are going to find ways to make money

00:39:58.000 | and expand their markets, etc.

00:40:00.000 | The world's not going to disappear in a giant mushroom cloud.

00:40:03.000 | Everywhere, all at once, then I think it works.

00:40:07.000 | Now, the third level that I go to is level of goals.

00:40:10.000 | What are your goals?

00:40:12.000 | So if today you took all of your money and you could start making 5% interest income on it this year,

00:40:21.000 | what would that do for you in terms of your personal scenario?

00:40:26.000 | Well, if you got $10 million in the bank, which is bull's point,

00:40:28.000 | if you got $10 million in the bank and you can just sit back

00:40:31.000 | and take $500,000 of straight zero-risk income from treasuries,

00:40:39.000 | then obviously that's a great move.

00:40:42.000 | And it's probably a much smarter move than sitting back and trying to sell shares

00:40:47.000 | and trade and do dividends, etc.

00:40:51.000 | I mean, 5% risk-free from treasuries?

00:40:53.000 | That's incredible.

00:40:54.000 | You take zero risk with your money and you continue to have an enormous cash flow.

00:40:59.000 | But if you've got $25,000 in the bank, as you described,

00:41:03.000 | you didn't say you had that, but I'm saying if you're still in the accumulation phase

00:41:06.000 | and you have a modest amount, then 5%?

00:41:09.000 | Who cares? It doesn't do anything for you.

00:41:11.000 | You need the long-term growth.

00:41:13.000 | And so accumulating money in treasuries might be okay if you're averse to stock market investing,

00:41:19.000 | but to me, I would see that as a much more appropriate for you to be in an accumulation phase,

00:41:24.000 | hoping for excess market returns.

00:41:27.000 | But then I would steer you in the direction I always do of saying,

00:41:30.000 | "Are you investing in your income? Are you growing a business?

00:41:33.000 | Is there a better investment?" etc., rather than just doing it in an entirely abstract perspective.

00:41:38.000 | So in summary, I don't see anything fundamentally wrong with the standard advice of

00:41:45.000 | save money, buy good quality investments in companies,

00:41:50.000 | and dollar-cost averaging over time.

00:41:54.000 | I do believe that owners are always going to get richer than lenders in the fullness of time.

00:42:01.000 | But I do also note that it's times like this that make the appeal of broader strategies,

00:42:09.000 | such as the permanent portfolio, a little bit more appealing.

00:42:14.000 | Whereas if not all of your money were invested in stocks,

00:42:17.000 | then you wouldn't feel like you were missing out.

00:42:20.000 | If you had 25% of your money in long-term treasuries,

00:42:23.000 | like something like the permanent portfolio would encourage you to do,

00:42:26.000 | then you gain through the various cycles.

00:42:29.000 | So if you don't like this current structure,

00:42:33.000 | instead don't necessarily think about going all your money into treasuries.

00:42:36.000 | Look around and see if there's some other alternative strategy

00:42:39.000 | that might give you more of the exposure that you're looking for,

00:42:43.000 | and be something that you can understand and commit to that makes sense.

00:42:47.000 | Having the perfect strategy is not necessary.

00:42:52.000 | I couldn't tell you what the perfect strategy is.

00:42:55.000 | Maybe someone else can.

00:42:57.000 | But having a strategy that you understand and believe in is fine.

00:43:01.000 | And whatever that happens to be for you, that's what you should do.

00:43:07.000 | Right. Yeah. So, I mean, this is...

00:43:10.000 | It's not my area of expertise, right?

00:43:12.000 | I'm probably following what 99 out of the 100 personal finance books say

00:43:17.000 | regarding the DCA in the stock market with appropriate level of risks.

00:43:22.000 | So, yeah, I was wondering, again, if a new book would be written today,

00:43:26.000 | if that book would say something different because of the current situation,

00:43:32.000 | I guess, that we live in.

00:43:35.000 | But your point is understood, that many strategies will work,

00:43:40.000 | and you don't have a crystal ball to necessarily encourage someone

00:43:46.000 | to go more of the bond route than the stock market route today.

00:43:51.000 | Yeah. So, this is where you get into the area of personal financial advice,

00:43:57.000 | meaning that here is where you have to look at the level of your goals.

00:44:01.000 | Why are you investing in the first place?

00:44:03.000 | What is a successful investment?

00:44:05.000 | And then bring that back and say, "What should I do?"

00:44:08.000 | And so, I think if you were asking this question directly to Bull,

00:44:12.000 | I think what he would say is probably something like, "What are your goals?

00:44:16.000 | What are you trying to do?"

00:44:18.000 | And if you are in the accumulation phase,

00:44:21.000 | I don't think he would tell you to put your money into treasuries.

00:44:26.000 | I think he would tell you to start a business and have your own thing

00:44:29.000 | and start making Wi-Fi money.

00:44:31.000 | That would be his advice because that's going to be a much better approach for you

00:44:37.000 | over the long term.

00:44:39.000 | It's only when you have made it, meaning you have a huge amount of money

00:44:47.000 | in your investments and you're thinking about then,

00:44:50.000 | "How do I create income from this?"

00:44:53.000 | that I think you would then seriously consider that question.

00:44:56.000 | And so, for somebody who's sitting with a portfolio of millions of dollars

00:45:01.000 | and who's sitting down and looking at a risk-free rate of return--

00:45:04.000 | risk-free rate of income, more than 5%,

00:45:09.000 | and then looking at all the uncertainty of the stock market,

00:45:12.000 | now I would give a different set of advice

00:45:15.000 | and I would seriously consider pursuing something like that.

00:45:18.000 | But you have to match that to a set of goals.

00:45:21.000 | And so, someone in that situation has to say, "How much money do I need?

00:45:24.000 | Do I need to grow my portfolio? Do I not?"

00:45:26.000 | And what you discover is that while your risk tolerance

00:45:32.000 | might increase as your wealth grows,

00:45:36.000 | your need to take risk decreases.

00:45:39.000 | And so, it's just not necessary anymore.

00:45:41.000 | You don't need to take risk.

00:45:43.000 | And so, why take unnecessary market risk if there is an alternative?

00:45:48.000 | - Right. Okay, I understand.

00:45:51.000 | - This is the problem with basically all advice

00:45:54.000 | and with all people who speak generally,

00:45:57.000 | is you have to filter the advice through where you are at the time

00:46:01.000 | and what your overall goals are.

00:46:03.000 | And I do my best to make that clear every time I answer one of these questions.

00:46:07.000 | You have to say where you are.

00:46:09.000 | But let me give a non-financial example to drive this point home.

00:46:14.000 | I have young children.

00:46:16.000 | I do not allow my children to--

00:46:20.000 | Generally speaking, I don't allow my children to use computers

00:46:23.000 | or digital devices with a few limited exceptions.

00:46:28.000 | We use digital devices for a lot of audio books.

00:46:31.000 | I use several apps specifically for a few components of their education.

00:46:35.000 | But it's very, very limited.

00:46:38.000 | I don't do that because I'm opposed to the use of devices.

00:46:42.000 | I make a living from a computer screen.

00:46:45.000 | And my computer is on all the time.

00:46:48.000 | My phone is very rarely out of reach.

00:46:52.000 | I do that because from a developmental perspective,

00:46:56.000 | I want them to first have the gift of a quiet mind,

00:47:02.000 | an active imagination, and an undistractable character.

00:47:08.000 | And I don't believe that inserting those devices at an early age

00:47:13.000 | is an appropriate way of helping them to develop those character qualities.

00:47:18.000 | So if somebody just heard me say,

00:47:22.000 | "I don't allow my children to use computers

00:47:27.000 | or to spend a lot of time on screens,"

00:47:30.000 | they might draw a very erroneous conclusion

00:47:33.000 | that I don't think that your children should use those devices.

00:47:37.000 | It has to do with age, development, and purpose.

00:47:41.000 | So the same thing--

00:47:44.000 | When my children are 15,

00:47:46.000 | I want them to be spending quite a lot of time on computer screens.

00:47:50.000 | I'm hoping that they're not spending all their time gaming.

00:47:53.000 | I'm hoping that they're programming.

00:47:55.000 | I'm hoping that they're editing videos and making money

00:47:58.000 | and learning how to set up funnels

00:48:00.000 | or whatever the running accounting software, etc.

00:48:03.000 | That's going to be very different at 15 versus at 7.

00:48:07.000 | So the same thing with investment advice.

00:48:10.000 | In order to understand what advice is correct,

00:48:13.000 | that's where you have to say,

00:48:15.000 | "Where is somebody in the stages of wealth building?

00:48:18.000 | Where is somebody in terms of the goals, etc.?

00:48:21.000 | Then apply the investment strategy that fits the goals.

00:48:26.000 | A content creator like me or like Bull,

00:48:30.000 | we can't do that in public

00:48:34.000 | without a whole lot of contextualization.

00:48:37.000 | That contextualization can be done in a podcast, maybe,

00:48:40.000 | where I may take 30 minutes to talk about something.

00:48:43.000 | In 280 characters, Bull's not doing it.

00:48:46.000 | You have to do that and you have to say,

00:48:48.000 | "Does this advice make sense for me right now?

00:48:51.000 | If I did this, would this get me closer towards my long-term goal

00:48:54.000 | or farther away?"

00:48:56.000 | That's for you to decide.

00:48:58.000 | - Right. Got it. - Make sense?

00:49:00.000 | - Okay.

00:49:02.000 | I have a quick comment, if I may.

00:49:05.000 | I only caught this part of the previous caller

00:49:08.000 | talking about Greece and Canada.

00:49:10.000 | I spent a good chunk of my life in Greece.

00:49:13.000 | I think there is a certain romanticizing

00:49:16.000 | that can happen from the outside.

00:49:19.000 | I think it's a beautiful country.

00:49:22.000 | Probably, today, it's more socially conservative

00:49:25.000 | than the US, perhaps.

00:49:27.000 | But I think that the freedom that you have within the United States

00:49:30.000 | where you don't like something that your state does

00:49:32.000 | and you go to another state,

00:49:34.000 | that doesn't exist anywhere else as far as I know.

00:49:36.000 | If you're in Europe,

00:49:39.000 | changing really means changing country.

00:49:42.000 | And then you don't achieve all that much

00:49:44.000 | because there is a top-down push from the EU

00:49:47.000 | for anything really important.

00:49:50.000 | So I would consider long and hard

00:49:54.000 | for someone who's in the US

00:49:56.000 | and has so many degrees of freedom,

00:49:58.000 | giving that up, not just adding an option,

00:50:01.000 | but giving that up to go in a setting that's more constrained.

00:50:06.000 | - Yeah. Absolutely.

00:50:08.000 | Your advice and your comments are exactly correct.

00:50:11.000 | That caller, I don't think, was interested in moving to Greece.

00:50:15.000 | Her husband was pursuing claiming Greek citizenship by ancestry.

00:50:20.000 | So having Greek citizenship would give them another passport,

00:50:24.000 | would give them the ability to live anywhere in the EU

00:50:27.000 | that they wanted to live,

00:50:29.000 | but it wouldn't involve them specifically moving to Greece.

00:50:32.000 | And I think your point is well taken, though,

00:50:34.000 | which is why I try not to be a US hater.

00:50:37.000 | And I think that many people become very...

00:50:43.000 | just out of whack when they leave the United States

00:50:46.000 | and they build their entire brand on hating on the United States.

00:50:49.000 | The United States has much higher levels of freedom

00:50:54.000 | for the average resident or citizen

00:50:57.000 | because you can find your people much more broadly.

00:51:00.000 | And in a nation of 330 million people

00:51:03.000 | who are all united by a common language

00:51:06.000 | and a broadly common culture,

00:51:10.000 | the subcultures in the United States are so enormous

00:51:14.000 | that you can be surrounded,

00:51:16.000 | even if you're a part of a very small subculture,

00:51:20.000 | you can be surrounded by many, many, many of your community members

00:51:25.000 | and live various lifestyles with those community members.

00:51:29.000 | And that's not the same with Europe.

00:51:32.000 | The European Union may represent something like 450 million people across Europe,

00:51:37.000 | but those cultures from the 26, 27, I don't remember,

00:51:42.000 | from the member nations are much, much smaller.

00:51:46.000 | And then because they're broadly divided by intense linguistic variation,

00:51:51.000 | intense cultural differentiation, etc.,

00:51:54.000 | when you go into a place...

00:51:56.000 | If I went into Greece and I wanted to live there,

00:52:01.000 | I could certainly live there and I could be part of the expat community,

00:52:04.000 | but to acculturate and to learn the language and to be accepted,

00:52:07.000 | it's going to be several generations before I'm accepted.

00:52:10.000 | And then even then, my own subgroup,

00:52:14.000 | my peer group or whatever,

00:52:16.000 | the small community that I'm a part of,

00:52:19.000 | it's just tiny compared to a place like the United States.

00:52:22.000 | So your point, I think, is absolutely correct.

00:52:27.000 | Yeah, and I think you experienced this yourself with COVID,

00:52:30.000 | but the restrictions in Greece during COVID were much, much stricter

00:52:34.000 | than even a state like New York, where I live.

00:52:37.000 | And things that Americans take for granted,

00:52:40.000 | like homeschooling your kids, that's unheard of in Greece and in most of the EU.

00:52:44.000 | So I think there is a certain, you know,

00:52:46.000 | the grass is greener on the other side that's going on.

00:52:49.000 | And so I just, you know, because I heard that last part of your,

00:52:52.000 | the previous caller, I thought that I would just,

00:52:54.000 | I would just mention this in case, you know,

00:52:56.000 | she hasn't heard this already from someone else.

00:52:58.000 | Absolutely. There's a long list.

00:53:00.000 | COVID definitely increased my appreciation of the United States,

00:53:04.000 | as I have stated publicly otherwise.

00:53:07.000 | Because for all of the issues in the United States,

00:53:10.000 | there were tens of millions and more than that,

00:53:15.000 | of people who pretty much think kind of what I think and agreed with me.

00:53:20.000 | And so they weren't a minor group in any way.

00:53:23.000 | And other things, First Amendment issues, freedom of speech,

00:53:25.000 | the United States is one of the most robust places.

00:53:28.000 | And you watch right now where many nations, England,

00:53:31.000 | other places that are prosecuting people for saying things that they disagree with.

00:53:37.000 | There's no legalized freedom of speech.

00:53:40.000 | The United States is important.

00:53:41.000 | I have beef with two people, two groups of people.

00:53:44.000 | I have beef with Americans who have a blind adherence

00:53:48.000 | or a blind commitment to the idea that the United States is superior in every way,

00:53:54.000 | on every issue.

00:53:56.000 | That seems crazy to me, because we can make a long list where it's not.

00:54:00.000 | On the other hand, then there's the opposite,

00:54:03.000 | where people try to paint the United States as behind or inferior on every issue.

00:54:09.000 | And that's also wrong.

00:54:11.000 | And so I see that the best way to approach it is to say,

00:54:15.000 | there is a buffet of options across 50 United States,

00:54:21.000 | across the territories and possessions of the United States where I could live.

00:54:26.000 | People don't talk a lot about moving to Saipan or to Puerto Rico or to Guam, etc.,

00:54:32.000 | even though there's some interesting reasons to consider those options.

00:54:36.000 | And then the world is a buffet.

00:54:38.000 | And for each person, there may be options that are uniquely best for that person.

00:54:44.000 | And you don't have to have a commitment to one nation.

00:54:47.000 | And I see this as kind of a broad application of the principle of federalism

00:54:52.000 | that works so well in the United States, the competition among the states.

00:54:56.000 | My hope is that over the coming years,

00:55:00.000 | there'll be more competition among the states and also among the countries of the world,

00:55:05.000 | and more and more countries will prosper because of that.

00:55:08.000 | So, great question, Nick. Thank you so much for calling in.

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00:55:42.000 | I had a couple of other callers that were on the line, but they have jumped off,

00:55:45.000 | so let me deal with a couple of written questions that I have not gotten to yet.

00:55:51.000 | I have a long list here that has not been done.

00:55:55.000 | Kevin says, "Joshua, what books are you currently reading?"

00:55:59.000 | I am currently reading that new book I mentioned on the show.

00:56:04.000 | What's the title? The Two-Parent Privilege.

00:56:06.000 | That's kind of the most interesting book.

00:56:09.000 | As it's probably clearly become obvious by Melissa Kearney, who is the author,

00:56:16.000 | as it's probably become obvious in some of my content,

00:56:19.000 | I've become much more interested in some of the societal things that affect people

00:56:26.000 | and some of the research and whatnot than money at the current scenario.

00:56:30.000 | So I'm reading The Two-Parent Privilege.

00:56:32.000 | I'm reading a book called Boys Adrift by Leonard Sachs

00:56:37.000 | that a listener begged me to read and I hadn't gotten around to it.

00:56:39.000 | I've been aware of it for a while, but I'm reading that.

00:56:43.000 | So those are my personal reading right now.

00:56:46.000 | I have some novels that I'm reading and then a lot of stuff with my children

00:56:52.000 | I have been really enjoying going through

00:56:55.000 | and kind of trying to shore up the errors in my own reading, things I've never read.

00:57:03.000 | For example, this coming month I'm going to be reading through The Iliad with my eldest child.

00:57:11.000 | I'm excited because I've never read The Iliad or The Odyssey.

00:57:14.000 | So those are my next projects, to read some of the classics.

00:57:18.000 | I'm kind of trying to fix some of my education.

00:57:20.000 | That has been a big focus for me at the moment.

00:57:24.000 | Next question. Some of these questions I'm going to take and expand them.

00:57:29.000 | Jordan writes in and says, "Hi Joshua.

00:57:31.000 | My wife and I are expecting a baby and the pregnancy is high risk with a necessary planned c-section.

00:57:36.000 | The baby is due in March. We have no other children.

00:57:39.000 | I also expect to have minor surgery for kidney stones in the next 12 months.

00:57:43.000 | Should I change my health care plan, currently in open enrollment,

00:57:47.000 | to the highest cost and lowest deductible plan where I would not be eligible for an HSA for the next year?

00:57:53.000 | Currently I'm on a plan where I am eligible for the HSA and I max out that contribution.

00:57:58.000 | I would plan to max it out again if I stay on this plan.

00:58:01.000 | If helpful I could send a screenshot."

00:58:03.000 | No need for a screenshot, Jordan.

00:58:04.000 | What you do need to do is create a spreadsheet.

00:58:07.000 | This is a simple exercise and you can do it.

00:58:10.000 | It will answer your question directly.

00:58:12.000 | The answer is probably.

00:58:14.000 | You probably should make that switch.

00:58:16.000 | If you know that you are going to go through your entire deductible,

00:58:23.000 | you know that you are going to have a $30,000 c-section,

00:58:28.000 | you know that you are going to have your own surgery that is going to go through as well,

00:58:32.000 | then that is the great thing about pregnancy.

00:58:36.000 | It is planned. You know you are pregnant.

00:58:39.000 | You know the delivery is coming one way or the other.

00:58:43.000 | The baby is not going to be in there 11 months from now no matter what.

00:58:48.000 | Probably yes, but just set it up with a spreadsheet.

00:58:53.000 | Put in there the cost of the premium for the different options.

00:58:57.000 | Put in there the cost of the deductible for the different options.

00:59:02.000 | Then put in there any potential tax savings for making your contributions to the HSA

00:59:08.000 | and see what the numbers are.

00:59:10.000 | In most cases I think it will be--

00:59:15.000 | It is not always a huge savings.

00:59:18.000 | When I have done these spreadsheets in the past,

00:59:20.000 | they often--it is like, okay, well, it is either I pay more in premiums

00:59:23.000 | and less in deductible or less in premiums and more in deductible.

00:59:26.000 | Okay, if it is close, I do not know what to tell you.

00:59:30.000 | I would say probably option one would be that it may be easier to plan

00:59:38.000 | for higher premiums with a lower deductible thing, so that works out.

00:59:42.000 | On the other hand, the baby may miscarry and you may not have the C-section,

00:59:46.000 | so maybe you should go with the other option.

00:59:49.000 | But you are going to have to create your own spreadsheet for that,

00:59:57.000 | and that will answer it for you.

00:59:59.000 | Next, Jared writes, "We have about 12 months until my wife's parents move in with us.

01:00:04.000 | We are likely to add on a space for them to include their own living area.

01:00:08.000 | What actions should we and my in-laws be taking to prepare?"

01:00:14.000 | Good question.

01:00:15.000 | Hopefully this is a planned event, obviously, about 12 months.

01:00:19.000 | This does not sound like anything acute where their home got blown away

01:00:22.000 | in a hurricane or something.

01:00:24.000 | Excellent.

01:00:25.000 | This is a planned event.

01:00:27.000 | It sounds also like this is going to be a long-term event.

01:00:30.000 | What actions should we and my in-laws be taking to prepare?

01:00:34.000 | The most recent episode I released was talking about this specifically,

01:00:37.000 | but in the context of a different question.

01:00:39.000 | I would say you just want to focus on your relationship,

01:00:41.000 | and you want to focus on how to have healthy, good communication among you

01:00:46.000 | or between you.

01:00:48.000 | Then, obviously, you want to put in place appropriate boundaries for good living.

01:00:54.000 | If this is a planned event, they're moving in,

01:00:57.000 | and undoubtedly you have a good relationship with them.

01:01:02.000 | It's wonderful, then, that you can be closer

01:01:05.000 | and get the good things out of that relationship.

01:01:08.000 | Every good relationship revolves around good communication.

01:01:12.000 | Good communication doesn't just mean smiling at each other

01:01:16.000 | and waving as we go by.

01:01:17.000 | Good communication means developing healthy communication styles,

01:01:21.000 | especially the ability to handle conflict.

01:01:24.000 | Hopefully there's no basic fundamental expectation of conflict,

01:01:28.000 | but in human relationships we always have conflict.

01:01:31.000 | We want to have the ability to communicate about conflict.

01:01:37.000 | How do you do that?

01:01:39.000 | It depends on the relationship.

01:01:41.000 | I think it's wonderful if you actually talk about communication

01:01:46.000 | and you actually put in place--

01:01:49.000 | if you don't naturally have good communication skills,

01:01:52.000 | then I think it's useful in many cases to talk about good communication skills.

01:01:57.000 | There are certain things that you can do that can create that ability.

01:02:02.000 | One thing you might do would just be to have a conversation

01:02:06.000 | and say, "What are the kinds of conflicts that we're likely to have

01:02:11.000 | in being in close quarters, living together?

01:02:16.000 | What are some of the issues that we're likely to face?"

01:02:19.000 | Let's talk about those before we are emotionally involved in them.

01:02:24.000 | I think this is one thing that often works out well in business advice

01:02:27.000 | for people who are starting companies together.

01:02:30.000 | Let's say there's two business partners who are planning to work together

01:02:36.000 | and they're in the early stages of their enterprise

01:02:38.000 | and they're basically trying to figure out what to do.

01:02:40.000 | If they can come together with an experienced consultant

01:02:43.000 | who will ask them a list of hard questions,

01:02:46.000 | then in talking about them it'll open up to them the world.

01:02:50.000 | "What are you guys going to do if you disagree on a marketing strategy?"

01:02:54.000 | "What are you guys going to do if partner A gets divorced

01:02:58.000 | and now you've got a three-way partnership with partner A's ex-spouse?"

01:03:02.000 | "What are you guys going to do if partner B wants to do X, Y, and Z?"

01:03:07.000 | Talking about the problems that could come

01:03:10.000 | and then seeing how those conversations come is a really helpful thing.

01:03:14.000 | I think this is, when it's done well,

01:03:16.000 | this is probably one of the big benefits of marriage counseling.

01:03:19.000 | You have a couple that comes together and they start talking about issues.

01:03:23.000 | I don't think that marriage counseling is particularly relevant

01:03:28.000 | for helping people make decisions about what they would or wouldn't do

01:03:32.000 | in any particular situation.

01:03:34.000 | To me, after 12 years of being married,

01:03:40.000 | the idea that my wife and I, prior to marriage,

01:03:44.000 | could have sat down and said, "Who's going to vacuum the floor

01:03:47.000 | and create a contract between us about who does the vacuuming

01:03:50.000 | and who does the dishes and who mows the lawn?"

01:03:53.000 | To me, that's asinine.

01:03:55.000 | Marriage is a relationship and it changes all the time

01:03:58.000 | based upon who can and should do different things.

01:04:02.000 | Yet, talking about those things is probably really healthy

01:04:06.000 | because it exposes our communication style

01:04:09.000 | and our ability to communicate and accept one another.

01:04:13.000 | If I find out that my wife has this idea about what marriage is going to be like

01:04:19.000 | and I have the other idea about what marriage is going to be like,

01:04:22.000 | then the way that we talk about our disagreements is pretty useful

01:04:25.000 | to see do we have the ability to resolve these disagreements.

01:04:30.000 | I think one thing that can often be helpful

01:04:34.000 | is establishing rules for communication.

01:04:38.000 | I don't know necessarily how this would work with in-laws,

01:04:42.000 | but if I imagine being in this situation,

01:04:45.000 | I would want to have some kind of structure

01:04:50.000 | or some kind of ground rules for communication.

01:04:54.000 | I don't know the application because I haven't faced this in terms of in-laws,

01:04:57.000 | but I use the example to inspire your creativity.

01:05:01.000 | I use the example of something that my wife and I did before

01:05:03.000 | we were married or engaged.

01:05:06.000 | I just simply said to her, "We're never going to play games,

01:05:10.000 | we're going to play communications games."

01:05:13.000 | The rule was around calling and texting.

01:05:16.000 | I said to her, "If you call me, I will answer the phone if I'm available

01:05:24.000 | and I will never play games with you.

01:05:27.000 | If I don't answer the phone, it's because I'm busy.

01:05:30.000 | It's not because I'm ignoring you.

01:05:32.000 | If I'm in a meeting or I'm working or I can't talk on the phone,

01:05:35.000 | then I'm not going to answer the phone.

01:05:37.000 | You don't ever have to worry about the fact that you called me

01:05:40.000 | and I saw your name on the screen and I was mad at you and I didn't pick up."

01:05:45.000 | I said the same thing both ways,

01:05:47.000 | "Don't ever not pick up the phone because there's some kind of game going on."

01:05:52.000 | To me, having that established at a very early age,

01:05:57.000 | excuse me, early point in our relationship was a tremendous blessing

01:06:00.000 | because we were young and young people played so many dumb games about,

01:06:04.000 | "I'm mad at him. I don't want to talk to him right now."

01:06:07.000 | "It rang twice and then she hit end. What does that mean? What's going on?"

01:06:12.000 | Just have a rock solid knowledge that if you don't pick up the phone,

01:06:16.000 | it's because you're busy and you can't talk on the phone.

01:06:19.000 | I don't have to worry about it.

01:06:21.000 | It's never been any other way and it has eliminated a huge point of stress.

01:06:27.000 | Having regular times to connect and to communicate.

01:06:31.000 | In the context of a relationship with a husband and a wife,

01:06:35.000 | having a time where you sit down for tea every night is really important

01:06:38.000 | because then you can iron things out on a small basis.

01:06:41.000 | With in-laws, I think some expectations such as,

01:06:45.000 | "We're going to have a meal together every week."

01:06:47.000 | "We're going to have two meals together every week."

01:06:50.000 | We can iron out, we can establish the basis that we're the kind of people

01:06:55.000 | who share a couple meals together every week.

01:06:57.000 | That will allow us to have a natural format for resolving conflict

01:07:03.000 | rather than an unnatural format.

01:07:09.000 | On the other hand, setting some expectations about,

01:07:12.000 | "We're going to have two meals together a week."

01:07:14.000 | "That seems really healthy."

01:07:16.000 | Or whatever the version is that you're going to do.

01:07:19.000 | "We're not going to be together all the time."

01:07:21.000 | "We're not going to be each other's living space all the time."

01:07:24.000 | "There's going to be boundaries and separation."

01:07:27.000 | Just simply establishing those things.

01:07:30.000 | The fact that we're not inviting you in at 6 o'clock on Tuesday night

01:07:34.000 | to come in and chat doesn't mean we don't love you.

01:07:36.000 | It's that this is our family time and we need to be for dinner.

01:07:40.000 | Those kinds of ground rules are useful.

01:07:43.000 | I don't think this would be appropriate with in-laws

01:07:47.000 | because it would be a difficult thing to work.

01:07:49.000 | But I do share as another example of something that I benefited from

01:07:52.000 | and my wife benefited from.

01:07:54.000 | Early in our relationship, we mutually read through a book on communication.

01:07:59.000 | It wasn't a structured thing. Nobody said to do it.

01:08:02.000 | I had read a book called Crucial Conversations that was recommended to me.

01:08:06.000 | I liked it. I shared it with her. She read it.

01:08:09.000 | It became something really useful. I think it's a really good book.

01:08:12.000 | I still recommend it, although I haven't read it in a decade.

01:08:15.000 | But basically, it laid out the idea that when you are having conversations with people

01:08:24.000 | and there's intensity behind it,

01:08:28.000 | here is how you use that intensity for a positive end.

01:08:33.000 | To this day, I think we still use some of the language for that.

01:08:36.000 | If there's something we disagree about or something like that,

01:08:38.000 | then it works out well to have some context.

01:08:42.000 | You can always create safety in the conversation.

01:08:44.000 | That's all I remember from the book at this point.

01:08:46.000 | Safety not meaning physical safety, but you just want to create an environment

01:08:50.000 | where somebody feels safe to share how he or she really feels.

01:08:55.000 | That takes practice.

01:08:57.000 | If it comes to that, again, I would have a hard time imagining doing this within laws,

01:09:03.000 | but reading through a book on communication or talking about communication itself

01:09:08.000 | is probably useful.

01:09:10.000 | Beyond that, I think that you want to think about the space, obviously.

01:09:14.000 | It's wonderful for somebody to have their own living area and to be close to you.

01:09:21.000 | It's much more difficult if you're living in the same space.

01:09:26.000 | I'm not sure two women can share a house with peace for an extended period of time

01:09:36.000 | without some kind of really superhuman ability to just resolve things.

01:09:48.000 | I thought I would be a wonderful husband and hire a housekeeper for my wife.

01:09:55.000 | So I hired a housekeeper that came in and worked in our house and helped out and whatnot.

01:10:00.000 | Finally, after, I don't know, it was a year, year and a half, my wife put up with it.

01:10:04.000 | She's like, "I don't want a housekeeper in my house. I don't want her here."

01:10:08.000 | So we went with her from five days a week to one day a week.

01:10:12.000 | It sounds silly, I think, but I'm also not a woman, and my wife is not into that.

01:10:18.000 | I watched my mom and my sisters over the years.

01:10:21.000 | In the most positive relationship, it just seems very hard for two women to share a house,

01:10:27.000 | two women to share a kitchen, two women to share a common living space.

01:10:31.000 | But each of them, if your wife can have her space and her mother can have her own space,

01:10:36.000 | that's really ideal.

01:10:39.000 | That should be, I think, the ideal structure.

01:10:42.000 | It doesn't need to be a big space, but it needs to be a clearly separate space

01:10:45.000 | where each of them are in charge of their own space,

01:10:48.000 | and there's some expectations set around that.

01:10:52.000 | Beyond that, I think the practicalities can work their way out.

01:10:56.000 | I'm sure you wouldn't be doing this and inserting potential conflict into your family

01:11:03.000 | unless you had a high degree of confidence that this was going to be a win.

01:11:07.000 | I think in most cases, when you have that degree of confidence, then it can be a win-win.

01:11:12.000 | It'll be a blessing for you, it'll be a blessing for your wife to have her parents close,

01:11:16.000 | and it'll be a blessing for them to be with their daughter and, who knows, grandchildren,

01:11:19.000 | whatever else your family looks like.

01:11:21.000 | I think that it is wonderful, but you do need to pay careful attention to those specific details.

01:11:28.000 | That's it for today. I think that's enough.

01:11:30.000 | Thank you so much for listening to today's show.

01:11:32.000 | I'll be back with you very soon with another great show.

01:11:34.000 | If you'd like to join me on next week's Q&A show, go to patreon.com/radicalpersonalfinance.

01:11:41.000 | With Kroger brand products from Ralph's, you can make all your favorite things this holiday season

01:11:46.000 | because Kroger brand's proven quality products come at exceptionally low prices.

01:11:51.000 | And with a money-back quality guarantee, every dish is sure to be a favorite.

01:11:56.000 | Whether you shop delivery, pickup, or in-store, Kroger brand has all your favorite things.

01:12:06.000 | Ralph's. Fresh for Everyone.

01:12:08.000 | (dramatic music)

2023-10-13_Friday_QA