2023-12-27_How_to_Save_Money_for_a_Down_Payment_on_a_House
00:00:00.000 | We move on to Kansas. Kansas, welcome to the show. How can I serve you today?
00:00:03.320 | Thank you. Thank you, Josh, for taking my call.
00:00:06.080 | I have a quick question about how to, uh, I guess,
00:00:10.360 | accumulate a large sum of money, decent down payment on the house.
00:00:14.600 | Um, our income on a yearly basis is pretty good,
00:00:18.920 | but I'm just not seeing how we can both live comfortably
00:00:23.840 | now and save a good enough down payment without making a huge sacrifice,
00:00:28.960 | like moving in with family or a huge decrease in lifestyle.
00:00:33.000 | So I was wondering if you could advise on how some people might get this done.
00:00:36.640 | So the question basically is how could we free up more money in our budget so
00:00:41.680 | that we could accumulate this big chunk of money, right?
00:00:44.200 | Yeah. Or, or even make more money. I mean,
00:00:48.520 | like my career, but I could, I could do better, I guess.
00:00:53.000 | Household income is about how much?
00:00:56.880 | Uh, breaking up just a little bit,
00:01:01.880 | one Oh what?
00:01:03.440 | 108.
00:01:05.620 | Great. And your normal monthly living expenses in your current lifestyle are
00:01:09.760 | about how much?
00:01:10.600 | Uh,
00:01:13.660 | maybe we could modestly,
00:01:20.120 | we could, we could get by maybe about 5,500.
00:01:22.760 | And how old are you and your family?
00:01:26.680 | Uh, 38.
00:01:29.800 | Wife is 38.
00:01:31.680 | You're married and both of you are 38. Do you have children?
00:01:35.920 | We do. Yes.
00:01:38.160 | How old are your children?
00:01:39.040 | Uh, one is out of the house. Uh, so three in the house, uh,
00:01:45.480 | 14, 12 and 11.
00:01:47.880 | Okay. Uh, of the $108,000 of income,
00:01:52.720 | how much do you earn and how much does your wife earn?
00:01:55.960 | It's all me. She, she doesn't work.
00:01:57.720 | And you're currently renting a home?
00:01:59.840 | Yes.
00:02:01.560 | Where do you live?
00:02:02.880 | In a suburb of Dallas.
00:02:05.880 | Okay. How much do you have saved right now?
00:02:09.880 | Kind of embarrassed to say, uh, only a couple of thousand.
00:02:15.800 | Okay. And do you have investments say like 401k IRA,
00:02:21.080 | things like that?
00:02:22.200 | No, no. We, uh, we,
00:02:26.640 | I had some years and years ago we cashed them out and just haven't,
00:02:30.120 | haven't contributed in anything since.
00:02:31.560 | Do you owe any money on anything? You have car payments, credit cards,
00:02:34.880 | anything like that? Student loans?
00:02:36.080 | Student loans. That's it.
00:02:38.880 | How much are the student loans?
00:02:40.160 | Uh, I think between the two of us, somewhere around
00:02:45.640 | 80.
00:02:49.280 | Okay. And the monthly payment on those, how much?
00:02:55.080 | Um, right now
00:02:56.600 | maybe, maybe 150. I think it's another, it's 150 and something. It's very small.
00:03:04.520 | Okay. So you're not paying those off aggressively or anything like that.
00:03:08.280 | You're just paying them systematically and going to leave them on their normal
00:03:12.360 | schedules, right?
00:03:13.200 | I mean, yeah, obviously I would love to do it sooner than that, but we're just,
00:03:17.760 | we've got that goal and we've got saving for a house and we're just like,
00:03:21.720 | how do we get traction in any direction with,
00:03:23.680 | with all the things that we want to do?
00:03:25.560 | How much money do you need to save for a house?
00:03:28.200 | Uh, about, I'd say probably about 20.
00:03:37.160 | $20,000? Yeah. Okay.
00:03:41.640 | And what have you tried that has not worked up till now?
00:03:48.760 | Well, uh, the first thing was, uh,
00:03:53.520 | just trying to, uh, to just
00:03:59.080 | save a little bit here and there to put towards debt.
00:04:04.360 | So we paid off the credit cards, car loans. We've, we've been doing that.
00:04:09.800 | So that's kind of where the extra has been going so far. But, um,
00:04:14.360 | with the larger amounts in the student loans were just like, if we just,
00:04:18.840 | keep going after debt,
00:04:19.880 | it might be a couple of years before we can get to start the saving.
00:04:23.000 | Cause I was wondering if we should still just go that route or should we start,
00:04:28.000 | you know, just, I don't know. I'm kind of, we're stuck here.
00:04:32.200 | Okay. So the numbers of your situation are pretty respectable.
00:04:36.080 | So let me begin with what I would say is probably at the core of it.
00:04:40.400 | And I'm going to do it by asking some questions. These weren't,
00:04:43.760 | these aren't original with me, but I believe they're really, really useful.
00:04:48.120 | So let me ask you a question. You right now,
00:04:49.400 | you have a 14 year old, a 12 year old and 11 year olds.
00:04:51.480 | You're 11 year old boy or girl girl. Okay. And you love her.
00:04:56.160 | I would imagine, right? Yeah. Okay.
00:04:59.160 | So I want to play a game.
00:05:01.320 | I want you to imagine that your wife just calls you.
00:05:06.280 | She's just left the doctor's office where she's taken your 11 year old girl.
00:05:11.360 | And she tells you that she has some pretty bad news and she asks you to sit
00:05:16.040 | down.
00:05:16.880 | She informs you that the doctor has just told her that after some very detailed
00:05:22.200 | tests with 100% certainty,
00:05:27.640 | your daughter has a very rare terminal disease.
00:05:31.840 | And this terminal disease exactly 12 months from today on December 22,
00:05:39.600 | 2024, it will kill her no matter what this disease has a 100% fatality rate.
00:05:44.600 | There is zero chance of her survival beyond 365 days from today.
00:05:52.120 | Now there's good news and bad news. The bad news of course,
00:05:56.240 | is that she's going to die.
00:05:57.560 | The good news is that there is an antidote.
00:06:01.840 | There is a treatment that is available.
00:06:04.040 | The bad news of the treatment though, is that it's expensive.
00:06:07.560 | It costs $20,000 and the guy who developed the treatment that has a 100% cure
00:06:12.560 | rated absolutely will save her life as long as it's administered sometime prior
00:06:18.440 | to December 22, 2024.
00:06:20.520 | This will save her life,
00:06:23.920 | but the guy who develops it hates government and he hates insurance and he hates
00:06:28.640 | charity and he hates debt.
00:06:31.640 | So you have to pay for the treatment out of pocket and it costs $20,000.
00:06:37.960 | You cannot borrow money to pay for it.
00:06:40.360 | You cannot get government money to pay for it.
00:06:43.040 | You cannot ask for friends and family to pay for it and health insurance will not
00:06:47.920 | pay for it.
00:06:48.760 | You have to pay the $20,000 out of your own savings from money that you earn and
00:06:53.960 | do not spend.
00:06:59.080 | So as a father, if you were presented with that scenario,
00:07:06.480 | do you think that it would be possible for you to,
00:07:10.160 | over the next 365 days,
00:07:12.360 | save and accumulate $20,000 in order to save the life of your 11 year old girl?
00:07:17.680 | Yeah, yeah, I would.
00:07:22.360 | You absolutely would, right?
00:07:25.040 | There's not a man in the world who would not. Every single one of us would.
00:07:29.520 | So if that is true,
00:07:35.000 | then what it shows us is simply that this question is primarily a matter of,
00:07:40.000 | this question that you're asking me is largely a matter of importance and
00:07:47.080 | emotion rather than of something technical or financial, right?
00:07:52.280 | It's a matter of if it matters to you enough, you will do it.
00:07:58.240 | You haven't saved this money for a down payment prior to now because it has not
00:08:04.640 | been important to you to do so.
00:08:06.640 | If it were important to you to accumulate $20,000 to buy a house,
00:08:11.640 | then you would do so. And it's totally fine.
00:08:16.720 | There may be many good reasons why it hasn't been important to you up till now,
00:08:19.960 | but if you want to accomplish this goal,
00:08:22.240 | then what you need to do is you need to dial up the intensity of the emotion so
00:08:27.080 | that you really,
00:08:27.800 | really care because if you really,
00:08:29.800 | really care, you will find a way to make this happen.
00:08:34.880 | So let's pretend that the emotion is super high, right?
00:08:37.480 | And there's this weird scenario and you really have to come up with the $20,000
00:08:41.080 | to save the life of your daughter.
00:08:42.360 | What are some of the things that you would do over the next 365 days in order to
00:08:47.320 | accumulate this $20,000?
00:08:49.040 | Okay.
00:08:53.360 | I think one would be look for ways to earn more.
00:09:00.880 | Even if it's, you know, overnights, weekends,
00:09:03.160 | whatever I got to do in addition to my full-time job.
00:09:05.800 | I guess even prior to that,
00:09:10.080 | I'd be combing through the budget with a fine tooth comb and
00:09:14.880 | cutting every Netflix and, you know, subscription and this and that,
00:09:19.960 | that I had kind of going to bare bones, you know, wherever we could.
00:09:28.560 | Yeah, those are the two things that mind first cutting expenses and increasing,
00:09:33.160 | you know, what I bring in.
00:09:34.800 | Right.
00:09:36.040 | So those are your options.
00:09:37.920 | And so basically when we're dealing with something that's on a one year timeframe,
00:09:42.640 | so let's go back to the radical personal finance framework for wealth, right?
00:09:46.480 | There are five things that you can do with money that will build your
00:09:50.960 | assets. The first thing that you can do is increase income.
00:09:54.400 | That's step one, increase income. Number two is decrease expenses.
00:09:58.760 | That's the second part of the framework. You can decrease expenses.
00:10:01.520 | Number three of the framework is invest wisely, invest wisely.
00:10:06.120 | And we can go on for avoid catastrophe. Number five, optimize lifestyle.
00:10:09.600 | On a one year timeline. The only two things that matter are one and two.
00:10:14.120 | You can't invest on a one year timeline successfully for a goal like this and
00:10:18.880 | avoiding catastrophe and optimizing lifestyle is completely separate.
00:10:22.000 | You're trying to optimize your lifestyle by purchasing a home.
00:10:24.680 | So you have two levers that you can push the lever of increasing your income and
00:10:29.600 | the lever of decreasing your expenses.
00:10:31.720 | And the question as to which of those levers you push has to do with what your
00:10:37.080 | opportunities are and how committed you are to the outcome.
00:10:41.560 | So you can be hardcore. For example,
00:10:45.200 | you could increase your income by working more hours and $20,000 is
00:10:50.040 | absolutely a goal that you could accomplish by working more hours. Years ago,
00:10:54.240 | I forget the name of the guy's blog,
00:10:55.800 | but there was a guy who had accumulated a huge amount of student loan debt.
00:10:58.920 | He was living in Texas and he created this,
00:11:01.600 | he decided he was going to get out of debt,
00:11:03.040 | set himself a hardcore goal to get out of debt.
00:11:06.200 | And he had a normal 40 hour a week job,
00:11:09.080 | but he wound up building this side hustle business on the weekends of basically
00:11:14.080 | installing, I think it was like installing,
00:11:16.960 | I had a caller last week that was talking about like water features,
00:11:19.320 | something like that. He was doing some kind of construction work and he started
00:11:23.160 | out just doing it for a friend as a day laborer.
00:11:25.680 | And then he figured out that he could do it.
00:11:27.280 | And so he would spend his weekends installing things and he made thousands of
00:11:30.200 | extra dollars from doing just basically weekend handyman day labor work,
00:11:34.960 | but where he was actually making real money,
00:11:36.800 | installing landscaping or something like that.
00:11:39.280 | And so there's any number of side hustles that's available to you.
00:11:43.040 | Some people will go out and they drive for Uber on the weekends,
00:11:46.760 | they deliver pizzas, they go and do landscape work, they pick up a night shift,
00:11:50.840 | they do all kinds of night and weekend work.
00:11:53.120 | And that is one way that you can save and accumulate more money.
00:11:57.280 | I don't usually recommend a lot of that stuff because the longterm return of
00:12:02.680 | those things is not often great.
00:12:07.560 | And I prefer to have you focused on your career and say,
00:12:11.520 | how can you go from $108,000 to $158,000 over the next two or three years?
00:12:16.520 | That's generally where I spend most of my time. However,
00:12:20.600 | for a short term goal like this,
00:12:22.520 | if you can find some kind of side hustle on the weekends that works for you,
00:12:26.440 | then that can be a great winner. A lot of times there are things like tutoring.
00:12:31.080 | There's any number of just basic ways to make money,
00:12:34.480 | extra money on the weekend with assets that you currently have,
00:12:38.040 | the car and the driveway, things like that, where you could,
00:12:40.760 | you could save and accumulate, you know, $20,000. And by the way,
00:12:44.920 | you may not even need to do the full $20,000.
00:12:47.840 | If you made $500 a weekend and you simultaneously were able to cut $1,000 a
00:12:52.840 | month from your budget,
00:12:54.520 | then you would be there basically in the course of 12 months.
00:12:58.440 | And so there are ways that you could do that.
00:13:01.400 | That would be the first thing to increase income.
00:13:03.320 | There are other short term things that can be done. So what could you sell?
00:13:07.680 | Do you have a bunch of junk in the house that you could sell?
00:13:10.160 | Do you have a do you have a car that you could sell, right?
00:13:14.720 | Maybe you have a car that you don't need and it's worth $30,000 and you could
00:13:18.680 | replace it with one that would be worth $10,000 that would do what you need,
00:13:22.160 | but you could get 20 grand.
00:13:23.920 | Well there's 20 grand that you could free up for a down payment on a house.
00:13:26.560 | Look at other assets that you have in your home. So for example,
00:13:31.120 | is there a way that your wife could earn money?
00:13:33.320 | Does she really enjoy photography and you have a good camera?
00:13:38.200 | And if she just told her friends, Hey, I'll do, you know,
00:13:40.360 | baby pictures or things like that for you guys that she could go out and she
00:13:44.500 | could make three, four, $5,000.
00:13:46.360 | Could she bake bread and sell it to all the neighbors? Could she, is there,
00:13:51.280 | could she do something with her skills? Does she have professional training?
00:13:54.720 | That if she worked for a little time here and there,
00:13:57.400 | there's some things that she could do.
00:13:58.960 | I often don't love to get stay at home moms to focus on that because there's so
00:14:04.040 | much more that they can often do from a cost savings perspective and a lifestyle
00:14:08.640 | perspective. But if she's doing it for a year, that could be a great move.
00:14:12.640 | Also with the age of your children,
00:14:14.260 | your children are very rapidly approaching independence.
00:14:17.460 | And so unless you're homeschooling all the time,
00:14:19.840 | then she may have time and she's been a stay at home mom for a long time.
00:14:23.140 | But now maybe there's some new, again,
00:14:25.300 | family business that she could start or some new enterprise that might bring in
00:14:29.340 | five or $10,000 this year and, and be a good longterm winner.
00:14:33.420 | So look around and see what do we have? Well, we have time, we have stuff,
00:14:37.900 | we have skills, et cetera. Don't neglect focusing on your career.
00:14:42.460 | Go to your boss and ask and say, Hey, you know,
00:14:45.240 | I've got some unexpected expenses. I need to make more money. Um, you know,
00:14:49.280 | is there something that I could do if you haven't recently negotiated?
00:14:52.600 | By the way, this is so full stop on that thought. Uh,
00:14:55.880 | is there something I could do? Is there a bonus that I could get?
00:14:58.520 | Is there a performance metric that I could hit?
00:15:00.360 | Is there some way that I could increase my income really substantially because I
00:15:03.880 | have a need to make more money? Now, full stop separate from that.
00:15:07.320 | Then you, I ask you, have you recently negotiated your pay?
00:15:11.880 | Have you gone out and looked for jobs?
00:15:13.900 | A lot of times I have found that many of my clients,
00:15:16.500 | I'll get them just to go out and look for jobs, take a couple of interviews.
00:15:20.100 | They'll get an offer and someone like you,
00:15:21.960 | you might be making $108,000 right now.
00:15:23.940 | They've got an offer from someone that was making say 142, uh,
00:15:28.100 | something that's related to them. They don't really want to switch,
00:15:30.740 | but now you can go back to your current boss and you can say, listen,
00:15:33.620 | I've got a job offer here for, for, from a competitor for $142,000. You know,
00:15:38.640 | I don't really want to go there,
00:15:40.220 | but I really need to make more money for my family.
00:15:42.240 | And sometimes your current boss will go ahead and match the match the offer.
00:15:46.060 | Um, you have to remember that if you're a good worker and you're, and you,
00:15:49.380 | you're worth your money,
00:15:50.500 | that for him to replace you as much more expensive than it is for him to pay you
00:15:54.020 | another 15, $20,000 in a year.
00:15:55.940 | And so that would be something that you should consider.
00:15:58.760 | So basically for short term thinking like this, for an aggressive one year goal,
00:16:03.420 | you really want to look and say, what are the big short term wins that I can make?
00:16:07.280 | Can I work extra hours? Can I do side work?
00:16:09.680 | Is there something that I could do related to my career?
00:16:12.140 | Can I renegotiate my current income?
00:16:14.300 | Can I get another job offer and then come back to my current boss?
00:16:17.860 | Can I sell some stuff to raise the money? What can I do? That's,
00:16:21.340 | that's number one is increase income. Number two is decrease expenses.
00:16:25.060 | And so decreasing expenses is,
00:16:27.740 | has kind of the modest version and then the extreme version.
00:16:31.340 | And you would choose based upon what's appropriate for where you are at this
00:16:36.500 | point in time. The modest version is what you said, okay,
00:16:40.120 | we're going to cut Netflix. That's great.
00:16:42.400 | It'll save you $240 at the end of the year.
00:16:45.320 | I don't know if that's, that's not going to get you to $20,000.
00:16:49.680 | So you need to go through the budget really carefully and say,
00:16:52.760 | is there a way that we could cut expenses?
00:16:55.680 | Now the challenge that you will face in doing that is that the
00:17:00.760 | expenses that you probably have are things that are investments into your
00:17:05.920 | children. So you've got sports clubs and team fees and, you know,
00:17:10.120 | jujitsu lessons or those kinds of things. And,
00:17:12.600 | and you have to balance the value of those as compared to what you're spending
00:17:16.480 | on it, but do go through your budget and reassess.
00:17:19.600 | What I love to do and try to get people to do is you go through all of your
00:17:24.400 | expenses for the year,
00:17:25.560 | order them from biggest to littlest and then tackle them in that order,
00:17:29.440 | because that's where you can often get the biggest wins.
00:17:31.560 | I don't want you to start with the little skipping coffee stuff.
00:17:36.400 | That's good. And you can do that, but I want to look for any big wins.
00:17:40.240 | And so you talked about moving in with family because normally housing is one of
00:17:44.280 | your biggest expenses. You can calculate the price of that.
00:17:48.720 | I don't know if that's something that you should do or shouldn't do,
00:17:51.800 | but it is true that ordinarily,
00:17:54.760 | if you're stuck where you are and you can't figure out a way to get ahead,
00:17:58.040 | you should work with family. And I'm a hundred percent in favor of, you know,
00:18:02.720 | the family unit, et cetera.
00:18:04.400 | But there's a reason that immigrants who are willing to do unpopular things get
00:18:08.480 | ahead a lot faster than those of us who have grown more comfortable.
00:18:12.680 | And so it's very normal that multiple families get a house together.
00:18:17.640 | Everyone doesn't have much space and immigrants who have that like hardcore,
00:18:21.840 | we'll do whatever it takes mentality, get ahead very quickly.
00:18:24.160 | So if there's a family member that you could go and stay with for six months,
00:18:28.840 | that might be all you need to make this happen.
00:18:31.960 | If you eliminated your rental payment for six months and simultaneously you
00:18:36.640 | eliminated your, you know, your, your internet bill, your water bill, all the,
00:18:40.720 | you know, all the stuff that could make a difference such that three or four or
00:18:45.560 | five, six months from now,
00:18:47.000 | you could be able to be in a position to where you could afford to buy a house.
00:18:50.480 | Also, by the way, that can be something, excuse me,
00:18:54.600 | that's something that's really smart for you to consider because it could make it
00:18:58.880 | easier for you to actually make the transaction.
00:19:01.440 | And so let's say that you're coming up on the end of your lease at the end of
00:19:05.920 | February, and you could get out now, put your stuff in storage, et cetera,
00:19:10.920 | and you could go and stay with family and start house shopping while also saving
00:19:15.520 | money. And you could just say, we're cutting everything down.
00:19:18.920 | That plus the stuff that I've already said, for example, selling a bunch of stuff,
00:19:23.160 | maybe you could raise $5,000 from garage sailing.
00:19:26.720 | You could raise $5,000 from extra income and you could save $10,000 in three
00:19:31.080 | months of, of, of staying at your parents or something like that.
00:19:34.600 | That's not that hard of a choice. If it means that you're quickly at a goal,
00:19:39.280 | I would have no fear about doing some anything for three months.
00:19:41.800 | That's perfectly fine. Three years. Okay. That's hard to recommend,
00:19:45.720 | but three months could be perfectly fine.
00:19:47.280 | And then by already being out of a lease that then when you find a house,
00:19:51.240 | you're ready to move quickly and it's just a simpler process.
00:19:54.160 | So I think that idea has a lot of merit as long as you could get there quick
00:19:57.400 | enough.
00:19:57.720 | And if you could find something that's appropriate in terms of somebody's
00:20:01.640 | ability to help you, by the way,
00:20:02.800 | one of the things that I like about this is this does allow family members to
00:20:06.040 | help you in a way that often they can't otherwise do when people don't
00:20:10.840 | accumulate money. As most people don't, it's hard for them to give cash gifts,
00:20:14.840 | but they can give very valuable gifts often in doing things like saying, Hey,
00:20:19.120 | come and stay with us. We'll put some extra cots in the, in the,
00:20:22.680 | in the study for the children to stay on or they can have bedrolls on the floor
00:20:26.360 | and we have one extra bedroom. And, you know, after all, they're at,
00:20:29.520 | they're at school all day anyway. So let's just get, make it happen.
00:20:32.280 | And oftentimes someone in that position would say, I'll,
00:20:35.680 | even if my electricity bill goes up a hundred dollars and my water bill goes up
00:20:38.560 | a hundred dollars, that's fine.
00:20:39.720 | I'll cover all of that because that's an easy way of contributing to the family
00:20:44.200 | or, and you just cover food or something like that.
00:20:46.480 | And so doing something really radical like that could potentially give you quick
00:20:50.980 | action.
00:20:51.820 | Now then you just go down the list and you systematically renegotiate each of
00:20:55.340 | the things that are on your list. And so how can you defray options?
00:20:59.300 | It may be the other way around.
00:21:01.140 | It may be that you could bring in an extra border into your home right now.
00:21:05.180 | Maybe that you could park, you know,
00:21:07.340 | somebody could pay you money to park in your backyard or something temporarily.
00:21:11.260 | Look and say, how can I use the house to make a little bit of money,
00:21:14.780 | but go through the expenses systematically and cut them to the bone.
00:21:18.420 | And then finally, I would just say that you mentioned, okay,
00:21:21.260 | I'm not saving much for retirement or anything like that,
00:21:23.700 | but I think it'd be perfectly reasonable for you to stop doing any investing for
00:21:28.540 | retirement on a short term basis to accumulate for this kind of goal as well.
00:21:33.060 | So some variation of those couple dozen things is probably going to lead you to
00:21:38.100 | where you want to be. Now, whenever possible, my final kind of tip is this.
00:21:42.660 | If it's possible, uh, and, and
00:21:48.100 | whenever there's some kind of extreme lifestyle change,
00:21:50.740 | I do always look for a way to justify it to the best, you know, possibility.
00:21:56.140 | So I always look for kind of a radical way to optimize it.
00:22:00.300 | So here's the example. Maybe it doesn't,
00:22:04.100 | maybe right now it's December,
00:22:05.900 | but are your children in just kind of a normal industrial school or are they
00:22:10.980 | homeschooled?
00:22:11.820 | They're in a normal public school.
00:22:14.900 | Perfect. So you have, maybe it's here we are in December and you have, you know,
00:22:19.420 | January, February, March, and April, but I don't know. Maybe your wife is from,
00:22:23.740 | is your wife from Texas as well?
00:22:25.300 | Or is she from some exotic foreign country that I can use as my example?
00:22:28.380 | And no, she's from the U S bummer. All right. Well, next time, Mary, uh,
00:22:34.020 | Mary in Italian or an El Salvadorian or something like that.
00:22:36.660 | And the point is that sometimes there may be ways that you could do it.
00:22:40.140 | And so you might do something like this summer vacation,
00:22:43.980 | maybe June, July, August.
00:22:46.060 | And what you do is you terminate your apartment or your current house
00:22:50.740 | in, um, in April,
00:22:53.460 | and you send the family to go and live on an organic farm in Mexico.
00:22:58.100 | While you stay at your parents' house for three months and everyone's going to
00:23:01.580 | be homeless for three months, but it's only the summertime.
00:23:03.820 | They're down there in language school and working on the, on the woofing farm.
00:23:07.580 | While you're kind of working like mad going a hundred and 120 hours a
00:23:12.700 | week at three jobs. And then at the end of the summer,
00:23:15.940 | then you're in a position to where now we can go ahead and move into, uh,
00:23:19.340 | into a house.
00:23:20.220 | And so what I'm looking for is a way to basically pull radical ideas,
00:23:24.540 | but then make them optimal.
00:23:25.820 | So it may not be super fun to say,
00:23:29.340 | let's go and all live in one bedroom at
00:23:34.060 | dad's house. That may not be super fun,
00:23:36.220 | but if it's the summertime and maybe your eldest can go to grandma's house and
00:23:40.740 | then your wife and two younger children can go to grandpa's house and where
00:23:45.180 | they're going to be volunteering at a summer camp, uh, et cetera,
00:23:48.460 | something like that,
00:23:49.340 | then that may be the time that you can be homeless for a few months and it's,
00:23:53.660 | it's okay. And as long as you have a backup plan,
00:23:56.020 | cause you may not be able to find a house or negotiate it.
00:23:57.940 | So as long as you have a backup plan for what happens in August when they're
00:24:00.380 | back in school or something like that, then that can work. So look,
00:24:04.980 | think strategically about where is my family? What do we have?
00:24:09.180 | What can we get rid of? What can we, how can we adjust?
00:24:12.180 | What resources do we have, et cetera. But at the end of the day,
00:24:15.060 | recognize that it's going to be your emotion and how much you desire this goal
00:24:20.060 | that's going to drive your, your actual decisions.
00:24:23.300 | And probably you don't have to do all of these things to the max.
00:24:28.620 | What I have found a lot of times is if you will set this as a clear intention
00:24:32.300 | and a clear goal, what will happen is you'll this month,
00:24:35.420 | you'll find $500 a month that you can cut out of your savings. Sorry,
00:24:39.100 | a cut out of your cut out of your spending this month cause you're just being
00:24:42.340 | sloppy. We are, we're all sloppy.
00:24:44.180 | And so you can cut $500 a month out cause you care. Well,
00:24:47.300 | that's quickly got you on track for six grand at the end of the year.
00:24:50.100 | You can go to your boss and you can say, boss, is there anything,
00:24:53.660 | are there any extra projects that I could pick up in exchange for a little bit
00:24:57.220 | higher compensation? Or is there something that you, that you,
00:24:59.780 | that you've been wishing to get done? Cause I need to work some overtime.
00:25:02.860 | And I thought it'd be best for me to work for my company instead of going and
00:25:05.460 | getting a side job and your boss may pitch you a project that, you know, here,
00:25:09.740 | do this thing. And, and here's an extra eight grand.
00:25:12.260 | This is worth eight grand to me to get this thing done in the next three months.
00:25:15.980 | And so there's your, there's your side hustle right there.
00:25:18.300 | And then your wife may have, again,
00:25:21.020 | do a couple of photo shoots with her camera now that she's got time and doesn't
00:25:24.540 | have a bunch of little baby children around and she can go in and make a few
00:25:27.620 | thousand dollars. And then all of a sudden your father-in-law sees that, Hey,
00:25:31.300 | these guys are going crazy. They're, they're really working.
00:25:33.380 | They sold the second car and your father-in-law says,
00:25:35.980 | here's $10,000 to help you out. And boom, you're, you're done.
00:25:38.860 | And so that's the normal course.
00:25:41.500 | And so what matters is that you identify clearly what you want.
00:25:44.980 | You figure out how to dial up the emotion,
00:25:48.180 | probably not with some weird tragic story like I described,
00:25:52.380 | but recognize that that what I described, you didn't hesitate.
00:25:56.620 | Nobody ever hesitates. We know if I, if it mattered enough to me,
00:26:00.300 | I would get it done no matter how, I don't know how, but I would get it done.
00:26:03.300 | I would find a way to get it done.
00:26:04.660 | And so recognize that this is primarily an emotional problem,
00:26:08.500 | not a logical problem, and then start working your way through the logic.
00:26:11.780 | So that's how I'd approach it.
00:26:12.900 | Thank you. Thank you. That, that definitely helps.
00:26:17.460 | I think we were kind of
00:26:22.020 | struggling between priorities. And I think that you,
00:26:25.620 | you kind of sharing this stuff really kind of put it in perspective.
00:26:29.380 | A year's time is not very long, but as long as it's enough time to get it done,
00:26:33.260 | we were just, I guess, trying to make too much,
00:26:35.820 | too much traction in too many different directions.
00:26:38.780 | And we weren't really moving much at all with regards to,
00:26:43.740 | you know, do we eliminate all the debt and try to just pay all that off first?
00:26:46.980 | Or do we say like, how do we do this? But I think you're right.
00:26:50.420 | I appreciate that framework.
00:26:51.620 | Right.
00:26:52.660 | And what you should be doing right now is you should go and visit with a
00:26:57.440 | mortgage broker, a local mortgage broker,
00:26:59.400 | get pre-qualified with a local mortgage broker to find out what
00:27:04.240 | specifically your borrowing capacity is on a piece of real
00:27:08.960 | estate, how much of a down payment you need,
00:27:12.120 | and then look around at houses in your area so that you understand,
00:27:16.680 | is there a house that would be available to us?
00:27:18.840 | I think that's a great thing to do because it'll nurture your desire, right?
00:27:22.400 | And in the same way,
00:27:23.240 | I really believe in creating a clear vision of what you want.
00:27:26.880 | And so as a man,
00:27:28.640 | it ought to make you angry to take your wife to a beautiful house and you
00:27:33.320 | walk through and you see your eyes light up and you think this would be a great
00:27:36.080 | place to raise my family.
00:27:37.200 | And then you look yourself in the mirror and you get pissed off at what a bad
00:27:40.240 | provider you are, that you can't give your family what they deserve.
00:27:42.640 | It's a pretty good, useful emotion to stoke in yourself.
00:27:45.680 | And so go start looking at houses and build the desire and build the anger
00:27:50.120 | and holding those two things together as I find a really good,
00:27:54.080 | good rule for goal achievement. If you have emotion,
00:27:58.800 | generally speaking, we work better if we just have one goal.
00:28:01.800 | And so if you want to be debt free, then make your goal to be debt free.
00:28:06.080 | But I don't think that you should, if your only debt is these student loans,
00:28:10.480 | I would go buy a house first, if you can make that,
00:28:12.800 | if you can get a short term plan there. And then once you get the house done,
00:28:16.200 | then go back and get debt free.
00:28:17.760 | But the key is to just choose one thing that you really want to do and then go
00:28:23.240 | all into it. And the point is that if you can do that,
00:28:26.360 | we all of us can do almost anything for months at a time,
00:28:30.400 | possibly a couple of years. We can't do anything for five years.
00:28:35.000 | You know,
00:28:35.560 | if you think about living a life of deprivation and frustration and working for
00:28:39.560 | jobs, you can't do that for five years and make it.
00:28:42.920 | Cause then you would be looking down and saying, well,
00:28:45.040 | I'm not going to miss my teens years right now. Like this is,
00:28:48.680 | I'm not going to go work for jobs, but you can do anything for six months.
00:28:52.000 | You can do anything for a year and six months or a year where everyone's on the
00:28:55.760 | same team, everyone's focused. All expenses are cut.
00:28:59.360 | All available income is maximized. Everything that can be sold is sold.
00:29:04.440 | That intensity of focus leads to incredible outcomes.
00:29:09.160 | And so nurture that. And then everyone knows, Hey, six months from now,
00:29:12.800 | we're going to be done with this.
00:29:13.920 | We'll be in the new house and then we can go ahead and lighten things up,
00:29:17.480 | et cetera.
00:29:20.760 | Okay. Okay. Sounds good. Thank you, Joshua. I appreciate you.
00:29:23.640 | Call me back in a year and tell me about wrong, wrong mute button.
00:29:27.840 | Call me back in a year and tell me about the, uh, the awesome house.
00:29:31.120 | I would really love to, uh, love to hear about it and congratulations.
00:29:34.320 | Merry Christmas to you and yours. And with that, we conclude, uh,
00:29:37.120 | just a very short Q and a show today, two callers, uh, happy,
00:29:40.440 | Merry Christmas to all of you guys.
00:29:41.920 | I look forward very much to continuing to work with you in the future.
00:29:45.160 | Thank you so much. If you'd like to join me on next week's Q and a show,
00:29:48.040 | you do that by going to patrion.com/radical personal finance,
00:29:50.800 | patrion.com/radical personal finance.
00:29:53.160 | I look forward to talking to you next week.
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