2024-01-05_Friday

00:00:00.000 | Today on Radical Personal Finance, it's live Q&A.

00:00:19.000 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:21.760 | skills, insights, and encouragement you need to live a rich and meaningful life now, while

00:00:25.600 | building a plan for financial freedom in 10 years or less.

00:00:28.360 | My name is Joshua Sheets, today is Friday, January 5, 2024.

00:00:34.000 | And on this Friday, as we do on any Friday in which I can arrange the appropriate recording

00:00:37.880 | technology, we record a live Q&A.

00:00:40.960 | Open microphones, you call in, talk about anything you want.

00:00:44.400 | If you'd like to gain access to one of these Friday Q&A shows in the future, and you're

00:00:54.200 | listening to the recorded version, going out on the podcast, or on YouTube, etc., you can

00:00:58.360 | do that by becoming a patron of the show.

00:00:59.760 | Go to patreon.com/radicalpersonalfinance, patreon.com/radicalpersonalfinance, sign up

00:01:04.960 | to support the show there on Patreon, and that will gain access for you to one of these

00:01:08.440 | Friday Q&A shows.

00:01:09.440 | I use that paid methodology of simply screening the calls so I get a reasonable number of

00:01:14.280 | calls that I can handle in 45 minutes to two hours, somewhere in there.

00:01:18.080 | Usually winds up being between four to 10 callers, things like that.

00:01:22.040 | We begin today with Andy in Indiana.

00:01:24.360 | Andy, welcome to the show.

00:01:25.360 | How can I serve you today?

00:01:26.360 | Hi Joshua, thanks for taking my call.

00:01:27.360 | My pleasure.

00:01:28.360 | I see you have the music back.

00:01:29.360 | Indeed.

00:01:30.360 | Glad to hear that.

00:01:31.360 | You commented a couple of weeks ago, a couple of months ago, about you wish people would

00:01:40.440 | call in and argue with you a little more.

00:01:42.480 | So I wanted to call in and prod a little bit about the idea of mindset and how much that

00:01:51.040 | gets talked about online in general and how you had talked about that with several callers

00:01:56.760 | you had in the last couple of weeks about house buying.

00:01:59.960 | And so I hear that, I think you do this less than a lot of online podcasters and YouTubers

00:02:07.480 | and stuff, but there's a lot of get your mindset right, things will follow if you get your

00:02:10.840 | mindset right.

00:02:12.280 | And I listened to you specifically, the three calls you've had on people looking to buy

00:02:18.160 | houses the last couple of call-in shows.

00:02:21.960 | I think that was kind of your approach was, hey, you need to think about this a little

00:02:24.560 | differently and it's a mindset thing and a motivation thing.

00:02:29.880 | And it seems to me that there's sort of a tiered level and a lot of us who are not at

00:02:36.000 | as high a level of success on things, it's really, I would say more of like a toolkit

00:02:41.560 | thing.

00:02:42.560 | And so it's not just the mindset of, well, if you had to raise this $20,000 to save your

00:02:47.960 | child's life, of course you'd get it done.

00:02:49.920 | Well, if you told me I need $2 million in six months to save my child's life, absolutely

00:02:55.520 | I would do anything I could to get that.

00:02:58.680 | But I don't have the tools in my toolbox to earn $2 million in six months and I probably

00:03:03.600 | can't figure out how to do that.

00:03:08.200 | Maybe I can beg and borrow and steal and maybe I'd go rob a bank or something.

00:03:12.120 | But I think my problem would be in that instance, I actually have no idea how you earn $4 million

00:03:19.480 | a year and I need a different toolbox.

00:03:21.280 | Maybe I need a different mindset to find that toolbox.

00:03:24.120 | But I think sometimes things like how should I buy a house really could be, your mindset

00:03:31.160 | is go to a mortgage broker, they walk you through some numbers, that's what you can

00:03:34.360 | afford, go to a realtor, they find it, here's a different way to walk through the numbers

00:03:38.560 | and a different way to calculate what you can earn and look on Zillow instead of MLS

00:03:44.920 | and more like sort of practical things that people will figure out for themselves if their

00:03:49.840 | mindset is right but also could just be told to them by a different advisor.

00:03:55.400 | Does that make sense?

00:03:56.400 | I think I hear you saying two things.

00:03:59.160 | I hear your critiques as number one, you can say to somebody you should just have a different

00:04:07.500 | mindset and somehow that's going to magically solve something for them and that's not always

00:04:12.320 | true.

00:04:13.320 | And then the second critique that slipped in at the end was basically, instead of talking

00:04:18.280 | about mindset, wouldn't it be better if you told someone go meet with a mortgage broker,

00:04:22.760 | sit down and go through the numbers, see what you can afford, etc.

00:04:27.960 | Was I accurate?

00:04:28.960 | Were those the two primary critiques you were driving at?

00:04:33.320 | I think I didn't maybe say that very well.

00:04:35.200 | I think the critique would basically be mindset.

00:04:40.940 | If you have the proper mindset, you'll find the tools eventually but if someone can just

00:04:47.140 | show you, hey, there's a specialty tool here, that's much quicker.

00:04:52.260 | You give lots of financial advice where there's some very esoteric piece of financial knowledge

00:04:58.020 | and you don't say, you do what I'm saying here, you should just go ask an insurance

00:05:07.160 | broker who will tell you exactly what the right number is for this and that's how you

00:05:10.760 | get your answer.

00:05:11.760 | As opposed to saying, well, if you read a bunch of books and focus your mind on being

00:05:16.360 | a person who's well insured, eventually you're going to come across this number and then

00:05:19.560 | you'll know what to do.

00:05:22.960 | That was the critique with the house buying things in particular.

00:05:27.420 | Coming from people who are, several of them were on the, we're just trying to save up

00:05:34.740 | 20 grand to make a down payment, this is a more mainstream, I'm not the person that's

00:05:40.540 | got hundreds and hundreds of thousands of dollars and doesn't know where to put it,

00:05:44.180 | sort of financial problem.

00:05:45.740 | I think you have good insight on there's different ways to look at the problem and use a different

00:05:52.220 | tool to solve your problem and then sometimes you get advice that's more like change your

00:05:58.220 | mindset and then you'll figure it out instead of, well, most mortgage brokers will tell

00:06:02.420 | you this but they don't tell you this other important thing and if you think about this

00:06:06.100 | other important thing, that's the actual clue to this problem.

00:06:10.340 | Sure.

00:06:11.340 | Let me try to respond and then you can follow up with step two because, first, with regard

00:06:18.660 | to mindset, I believe myself that there's a real truth that the mindset that you have

00:06:30.020 | about money dramatically affects the decisions that you make, the opportunities you're exposed

00:06:38.500 | to and how you take advantage of those opportunities when they come into your life.

00:06:46.340 | I'm mostly aware of it, of the truth of the mindset being important by my own personal

00:06:55.500 | lack of, call it a wealth-oriented mindset.

00:07:02.900 | Because I grew up in humble circumstances, I am aware of how uncomfortable or how, especially

00:07:14.340 | when I was younger, how I thought that the only way to generate significant income, generate

00:07:21.780 | significant savings was through more hard work, was through working a little bit longer,

00:07:27.260 | being a little bit more frugal, etc.

00:07:29.660 | And then I know very distinctly for me when I became a financial advisor and started becoming

00:07:35.380 | exposed to people who were wealthy who had never gone that pathway and had never needed

00:07:40.900 | to live the frugality and the kind of the hardcore saving, etc., but who had a different

00:07:47.980 | way of interacting with the world, I realized there was something different.

00:07:52.460 | The problem was that when I went looking for advice or input on how to adapt and change

00:07:59.940 | my mindset, I found that world of gurus quite slippery.

00:08:07.980 | And I found it full of people who wanted to teach me how to change my mindset, enriching

00:08:13.980 | the guru in the process.

00:08:16.540 | And so I have believed for many years now that our mindset, our philosophy with regard

00:08:24.780 | to money drives us, but I have never known how to completely and carefully articulate

00:08:32.100 | that across the board in a coherent kind of all-encompassing package.

00:08:39.020 | I have changed quite a lot in my own method of thinking.

00:08:43.340 | My own fixed beliefs have changed a lot over the past years, and so I've tried to embrace

00:08:48.620 | opportunity and I've experienced dramatic change myself, but never having been to the

00:08:53.580 | mountaintop, I can't look back and say to someone, "Here's all of the mindset things

00:09:01.180 | that are necessary."

00:09:02.780 | But I do believe that in many financial decisions, just like in many life decisions, the usefulness

00:09:10.940 | of a coach is primarily related to influencing somebody's desire and influencing their perspective

00:09:19.300 | in some way.

00:09:20.940 | And so I try to incorporate that in how I answer a question or how I think about it

00:09:26.860 | to say that a lot of times we already know what we need to do, and there are very few

00:09:32.020 | people who are analytical enough to have explored all the options and genuinely be sitting with

00:09:38.940 | a conundrum, with two choices, and either one of them could work and they're just not

00:09:46.500 | genuinely sure what to do.

00:09:48.660 | Most – maybe I'm just making up an 80/20 rule, but it seems to me like about 80% of

00:09:52.620 | financial problems are actually indeed problems of emotion and problems of purpose, problems

00:09:59.100 | of clarity of mind.

00:10:01.300 | And so those things genuinely are a mindset problem.

00:10:04.820 | So I released a standalone episode that had been part of a Q&A and it was a guy, I think

00:10:09.580 | he was in Texas, and he said, "I'm trying to save a $20,000 down payment."

00:10:13.660 | To me, the fact that the idea that someone doesn't know how to save a $20,000 down payment,

00:10:19.580 | that is an ideal question for a discussion of mindset or a question of clarity of goal,

00:10:27.380 | etc.

00:10:28.380 | Because saving $20,000 related to his income was a perfectly reasonable amount of money

00:10:35.260 | for him to save based upon his income.

00:10:37.140 | I do try and I did try in that specific circumstance to probe on the income and make sure we're

00:10:43.300 | talking about something reasonable because I wholeheartedly agree with you.

00:10:46.820 | I would never say to somebody, "If you had to save the life of your child, could you

00:10:50.860 | come up with $2 million two months from now?"

00:10:53.060 | Of course not.

00:10:55.100 | The only way out is some massive fraud or robbery of some kind for most people in that

00:11:00.780 | scenario.

00:11:01.780 | But $20,000 off of $130,000 annual income, that's something that can be done through

00:11:06.500 | a series of small steps.

00:11:08.860 | Now the other questions that I think on last week's Q&A show that I was a bit ambivalent

00:11:15.940 | on, I think what motivated my frustration on that or my lack of willingness to commit

00:11:27.300 | to clear, confident advice has primarily to do with uncertainty over the real estate market

00:11:36.980 | broadly and uncertainty about someone's individualized level of commitment to a specific property

00:11:47.220 | or something like that.

00:11:49.340 | This is genuinely puzzling to me because what I have observed in my own life and in lives

00:11:54.380 | of other people is that I'm quite willing to commit myself to a course of action even

00:12:04.060 | if it's very difficult or not entirely correct or someone else might advise me against it

00:12:12.780 | because I can assess my own level of commitment.

00:12:17.460 | If I want a house, I'll get the house.

00:12:19.340 | Can I afford it or not?

00:12:20.340 | If I want the house, I can afford it.

00:12:22.980 | Obviously good analysis is necessary and hopefully I stick in some good appropriate analysis

00:12:27.420 | to make sure that I'm not going to impoverish my family or put myself into bankruptcy over

00:12:31.900 | a house, etc.

00:12:32.900 | At the end of the day, I pretty much live my life doing most of what I want to do and

00:12:37.060 | my primary driving factor is that I want to do it and so therefore I figure out a way

00:12:41.740 | to do it.

00:12:42.740 | I don't go around asking if I can do it.

00:12:44.620 | I figure out a way to do it and to make it happen.

00:12:48.340 | But I have a very hard time giving advice to other people not being able to judge another

00:12:54.260 | individual's certainty with regard to his goal and I don't know how to do that very

00:13:03.100 | well.

00:13:04.100 | I guess the other thing is that I should probably drive more practical.

00:13:11.060 | I think it would be good for me to create more standalone resources and go through and

00:13:16.860 | say, "Okay, here's how you know what you can afford a house.

00:13:19.100 | You go and speak to a mortgage broker and here's what you look at and here's how the

00:13:23.860 | whole process works."

00:13:25.500 | I guess I've kind of tried to steer away in my own thinking broadly from subjects that

00:13:31.100 | are pretty easily answered with a library run, but I also recognize that a lot of people

00:13:37.300 | don't know what the inside of a library is and they may be coming across a podcast like

00:13:40.940 | mine and my own lack of interest in the topic shouldn't be necessarily a deciding factor

00:13:52.260 | of my giving them bad advice on it.

00:13:54.060 | Because you are right, my interest in quite esoteric topics, when my interest is high,

00:14:00.980 | my specificity of advice is very detailed.

00:14:06.500 | But usually that's because it's something I couldn't find in a book and so I had to

00:14:10.540 | go out and figure it out myself and come up with some wacky six-step plan to solve it.

00:14:15.980 | And then because my interest is high, my enthusiasm to share that with other people is high and

00:14:20.540 | I just don't have that interest for a lot of the nuts and bolts day-to-day personal

00:14:24.380 | finance discussion.

00:14:26.300 | But point taken.

00:14:27.300 | What are your thoughts on that?

00:14:29.580 | Thank you.

00:14:30.580 | Yeah, I think that was clarifying and helpful.

00:14:33.940 | I can respond back or if you have another caller, that was a good response.

00:14:38.900 | I think maybe that clarifies for me.

00:14:42.140 | I think maybe the point I'm trying to make is that you seem to have a very good skill

00:14:49.740 | at knowing what you want and being able to articulate that and gain clarity on a question.

00:14:56.540 | And I think a lot of people don't have that naturally, myself included, and need tools

00:15:02.660 | to figure out what we want or where we go or if this is a good idea.

00:15:09.180 | And I think it's common for all of us when you first start something, when you first

00:15:14.620 | start to understand it, it's very obvious.

00:15:16.940 | And then after you become some level of an expert in a topic, it gets harder and harder

00:15:21.580 | to remember what it was like to be ignorant about that.

00:15:26.180 | And so, for example, knowing whether or not you want a house, it doesn't sound like you

00:15:33.580 | have ever struggled very much to think, "Do I want this house?

00:15:36.620 | How do I know which house?

00:15:37.620 | There are seven houses that look really nice.

00:15:40.060 | This is very overwhelming.

00:15:41.060 | How should I prioritize all these things?"

00:15:43.980 | Whereas myself, that sort of thing is quite a bit of a struggle.

00:15:48.540 | And so, I have found specifically finding tools to sit down and be able to use decision-making

00:15:55.580 | tools.

00:15:56.580 | And so, I think maybe a modified point of the critique I was trying to make was it seems

00:16:03.900 | to me like sometimes the problem is you're talking to someone like me who is ignorant

00:16:08.940 | of how to go about evaluating something and the advice to give is more of change your

00:16:17.860 | motivation, change your mindset rather than, "Oh, you seem to be someone who has no clue

00:16:22.500 | how to evaluate what you're trying to accomplish, what you're doing, what your options are.

00:16:27.100 | Maybe you should read this book or take this course or use this tool to understand what

00:16:33.260 | your options are, how to make decisions better, whatever the specific issue is."

00:16:37.580 | >> JASON: Yeah.

00:16:39.900 | I think also just for the sake of honesty, our discussion would need to include that

00:16:46.540 | there's probably a very significant percentage of a general population and any individual

00:16:52.140 | person could fall within this percentage, but there's a significant percentage of the

00:16:56.460 | general population that I am simply incapable of really helping or serving because I look

00:17:05.660 | at the world in such a radically different way.

00:17:08.340 | And I'll illustrate that with a very poignant example.

00:17:11.740 | I have a brother of mine who has gone through many challenges with his career, many challenges

00:17:17.940 | with his finances, etc.

00:17:19.500 | We have a close relationship.

00:17:21.260 | We talk frequently.

00:17:23.460 | There is no animus of any kind between us.

00:17:29.140 | Our relationship is free, open, of mutual respect.

00:17:34.620 | He respects me, I respect him, etc.

00:17:38.300 | I for the life of me cannot seem to come up with any useful advice for him with regard

00:17:46.320 | to anything related to his career, his finances, his life in any way whatsoever.

00:17:55.220 | We have spent hours going in circles with me listening carefully, him listening carefully,

00:18:01.500 | me going back and forth.

00:18:02.820 | And basically at this point in time I've come to the conclusion that we live mentally

00:18:10.860 | and intellectually on different planets.

00:18:12.420 | And to be clear, he's super smart.

00:18:15.000 | His brain just functions in a completely different way than mine does.

00:18:19.420 | And I cannot relate to his struggles and he cannot relate to my struggles.

00:18:24.380 | They're totally different.

00:18:25.380 | So when I share my troubles and my hardships to him, they're like, "Why do you struggle

00:18:30.460 | with that?"

00:18:31.780 | And having such a close relationship to me where we have had such extensive communication

00:18:37.180 | over such a long period of time and yet having to recognize that I am basically incapable

00:18:42.660 | of providing useful advice for him has forced me to just to realize that at the end of the

00:18:48.300 | day we can't all learn from one person and we can't all interact with one person.

00:18:59.060 | And so with that as context, when you described to me the difficulty of the hypothetical example

00:19:06.340 | you made of choosing among seven houses, I can understand the difficulty of choosing

00:19:11.140 | among seven countries to live in.

00:19:12.900 | I have a hard time thinking of the difficulty of choosing among seven houses because to

00:19:17.780 | me the house is a house is a house.

00:19:19.260 | It's a commodity and it's going to be fairly obvious.

00:19:23.660 | Whether it serves the vision or it doesn't serve the vision or it is new and unlikely

00:19:29.380 | to cost me a lot of money or it's old and it's cheap.

00:19:32.540 | To me, the idea of there being seven similar houses is difficult to imagine but I can totally

00:19:40.980 | imagine choosing among seven countries to live in.

00:19:44.800 | So it just may be one of those things where you and I, we have to go and one person can't

00:19:52.020 | give us good useful frameworks, we need to keep on looking.

00:19:55.420 | And in the same cases like with my brother, we can be good friends, we can respect one

00:19:59.460 | another, we can talk about all kinds of things that we can talk about but there are just

00:20:04.140 | certain things that for whatever reason we can't seem to understand.

00:20:09.700 | We're both with the best of intentions trying at the deepest levels, we just can't seem

00:20:15.260 | to understand how one another thinks or why someone struggles with something.

00:20:20.180 | And to add to that, probably we have the same thing is that we can't understand our own

00:20:25.140 | hearts as to why we struggle with certain things.

00:20:28.140 | There are some areas of my life where my behavior is objectively superb and there are some areas

00:20:35.300 | of my life where my behavior is objectively terrible.

00:20:38.740 | And you go through any process where you set a goal and you think this should be simple,

00:20:42.500 | this should be obvious and you fail at it again and again and again and you think what

00:20:46.380 | is wrong with me?

00:20:47.380 | It's like how is it that in one area of my life I can be such a high performer and in

00:20:50.820 | another area of my life I can be such a loser?

00:20:53.620 | And even just understanding ourselves is difficult.

00:20:56.180 | So my hope is that I can do a good job.

00:21:02.940 | I'll do the best job I have possible.

00:21:05.420 | I'll do the best job that I'm able to with the skills, resources, knowledge, etc.

00:21:11.880 | And I appreciate critiques and feedback because I'll try to even consider it and ponder them

00:21:17.100 | and try to think about how to do it better.

00:21:19.380 | But at the end of the day this is one of the reasons I'm so excited about the revolution

00:21:23.840 | in connectivity that we have that any other individual who also has similar skills or

00:21:29.260 | different skills or complementary skills can go and create content, attract an audience

00:21:35.300 | and be able to provide useful feedback and useful advice with a completely different

00:21:40.420 | perspective.

00:21:41.820 | And that's probably what is necessary.

00:21:43.700 | So if you find that I'm unable to articulate something in a way that's truly helpful, don't

00:21:50.260 | stick with me.

00:21:51.260 | Go and find someone else and look for someone else until you find someone who speaks your

00:21:55.380 | version of brain language in a way that really connects on a deep level.

00:22:00.060 | Thank you.

00:22:02.300 | That's helpful.

00:22:04.380 | And for the record, I do appreciate all of your mindsets.

00:22:08.380 | It's been tremendously helpful in my life.

00:22:11.860 | I thought that was it.

00:22:14.700 | And I will keep trying to talk appropriately about mindset without becoming just another

00:22:23.940 | guru who makes his money by telling people that they should believe about money kind

00:22:28.860 | of the way that I do.

00:22:29.860 | Anything else, Andy?

00:22:30.860 | No, I think that's good.

00:22:31.860 | Thank you.

00:22:32.860 | And you're definitely not one of those gurus.

00:22:33.860 | Not yet.

00:22:34.860 | There's still time.

00:22:35.860 | There's still time.

00:22:36.860 | We all start somewhere.

00:22:37.860 | I'm going to go ahead and close out the show.

00:22:38.860 | Thank you.

00:22:39.860 | Thank you.

00:22:40.860 | We all start somewhere.

00:22:41.860 | I'm just kidding.

00:22:42.860 | All right, Marcus in Virginia.

00:22:43.860 | Marcus, welcome to the show.

00:22:44.860 | How can I serve you today?

00:22:45.860 | I'm doing well, Joshua.

00:22:46.860 | Can you hear me?

00:22:47.860 | Sounds good.

00:22:48.860 | Yes, sir.

00:22:49.860 | I'm happy to be here.

00:22:50.860 | A long time listening to your show.

00:22:51.860 | Epic, epic show episode you did on the last call where you talked about the experiences

00:23:00.980 | of what men are experiencing in church.

00:23:02.580 | I love that episode.

00:23:03.820 | I pulled over and screamed to the roofs off when you said what you said.

00:23:07.740 | So thank you for what you do.

00:23:10.380 | I'm calling you.

00:23:11.380 | I need some advice.

00:23:12.380 | I'm an entrepreneur, but I've fallen into the trap of doing that hybrid situation where

00:23:17.900 | I'm working a nine to five, but I also have several entrepreneurial endeavors on the side

00:23:22.460 | that generate passive income for me.

00:23:26.180 | I am tired.

00:23:28.380 | I am exhausted because I have a logistics company that I do Monday through Friday from

00:23:37.060 | 8 a.m. to 3 p.m. virtually.

00:23:43.540 | And then Wednesday through Sunday I work IT help desk at night.

00:23:51.060 | And that's Wednesday through Sunday.

00:23:53.700 | And I do it from 3 p.m. in the afternoon to midnight.

00:23:57.460 | So I'm exhausted.

00:24:00.660 | So my question is I want to give up the IT job because the logistics job that I have

00:24:08.780 | or the self-employed thing that I do on the side, I can make the same amount of money

00:24:15.320 | doing that that I make doing the IT help desk at night.

00:24:21.580 | And I would make the exact same amount of money that I make per month.

00:24:26.300 | I would just beef up the amount of deliveries that my logistics business does.

00:24:31.560 | And I would make the same amount of money.

00:24:33.660 | The job gives me medical dental vision, and I've calculated what that is.

00:24:38.720 | And I pay through my employer $331 a month to have the employer benefits and HSA and

00:24:45.500 | all that.

00:24:46.660 | But with Obamacare, I can do the same thing and get a plan for the same amount or a little

00:24:53.380 | bit more.

00:24:54.420 | So for medical and dental.

00:25:00.140 | And so I wanted to call in and ask, do I go the self-employed route?

00:25:05.620 | Because I'm tired.

00:25:07.180 | To give you a breakdown of why, I do medical carrier work and I do medical equipment delivery.

00:25:12.420 | So I deliver specimens, labs, pharmaceuticals from hospitals.

00:25:15.860 | A lot of hospitals where I live.

00:25:18.700 | And I get paid about $6 to $12 per package.

00:25:23.300 | And on average, Monday through Friday, I deliver about anywhere from 21 to 32 packages a day.

00:25:30.780 | And I can do that in four hours, which gives me the rest of my day to do everything else.

00:25:38.820 | So in essence, I make more per day, just taking on more deliveries versus working a nine to

00:25:44.200 | five job for eight hours.

00:25:45.620 | The equivalent is I'm working eight hours and I'm making less.

00:25:48.700 | Does that make sense?

00:25:49.700 | I understand.

00:25:50.700 | How old are you right now?

00:25:51.860 | So I'm 36.

00:25:53.860 | I just made 36 in December.

00:25:55.980 | December.

00:25:56.980 | Thank you.

00:25:58.900 | And are you married?

00:25:59.900 | Single children?

00:26:00.900 | Single, no kids.

00:26:02.900 | Okay.

00:26:03.900 | Tell me the vision.

00:26:06.300 | What's the vision five years from now?

00:26:10.180 | The vision, if I continue to follow your show, is family, married, but I'm not this absentee

00:26:19.380 | father, right?

00:26:20.380 | I'm home.

00:26:21.420 | I'm present.

00:26:22.420 | I can be home because of my investments and my different compensation, the different businesses

00:26:28.220 | that I have on the side that supplement my income.

00:26:31.460 | Right now I'm a veteran, so I received disability compensation.

00:26:34.540 | I have a cannabis dispensary vending machine business.

00:26:40.720 | I just picked up my second location.

00:26:44.460 | And so that's going to grow.

00:26:45.900 | I have a third machine on the way.

00:26:49.820 | I have an ATM portfolio of about 10 to 13 ATMs that produce cashflow for me.

00:26:54.780 | I have three rental properties that kick off.

00:26:58.860 | So as you can see, I have a progression towards affluence, right?

00:27:04.540 | And I'm working towards one day just being completely self-sustaining so I can be home.

00:27:10.020 | So I can be home and daddy doesn't have to be this apparition that you see pictures of

00:27:15.220 | him all over the world, but he's not home because he has to work three jobs.

00:27:18.820 | That's what I grew up in.

00:27:19.820 | My dad worked three jobs to support 11 siblings.

00:27:25.020 | And so I don't want that.

00:27:26.820 | And so that's the vision.

00:27:28.580 | But coming out of COVID, to give you some insight, I almost lost my life to COVID in

00:27:34.820 | 2021.

00:27:36.780 | I got sick and I was hospitalized for a month and a half.

00:27:40.780 | And last year, the company that does the logistics, the dispatching company that sends us the

00:27:46.980 | deliveries, they lost a major hospital.

00:27:51.500 | The hospital had just fired us because they put out a bid and someone outbid us and won

00:27:56.420 | the contract.

00:27:57.580 | Now luckily the company couldn't do what we do, so they fired them and brought us back.

00:28:03.020 | So we're back up and running as if normal and the income is fine, but it's self-employed

00:28:08.060 | income and Virginia is an at-will state.

00:28:10.660 | So they have the ability to lay you off and we can't have them sign a long-term contract

00:28:16.540 | saying, "Hey, you have to work with us for at least five years.

00:28:21.100 | You can't just terminate us like you did before."

00:28:25.000 | So hence my apprehension.

00:28:28.100 | The IT help desk job is not a necessary job.

00:28:31.500 | It's a hedge against a potential loss of the contract again.

00:28:36.220 | Okay.

00:28:37.220 | But I'm tired.

00:28:38.220 | Understood.

00:28:39.220 | How much money do you currently...

00:28:41.100 | What's your current net worth?

00:28:44.380 | Current net worth is 400,000.

00:28:48.460 | And across all of your sources of income, what is your current monthly income?

00:28:54.700 | My currently monthly income, I mean, there's real...

00:28:58.260 | Ballpark, ballpark, just big numbers, big numbers.

00:29:01.900 | About 8,000 a month.

00:29:03.460 | And current monthly expenses, big picture.

00:29:07.540 | Big picture monthly expenses about monthly or...

00:29:15.060 | Yes, monthly.

00:29:17.060 | Monthly expenses are about 6,000.

00:29:24.540 | Why are your monthly expenses so high for a single guy?

00:29:29.460 | They're high because of debt.

00:29:33.100 | I don't require money to do some of these entrepreneurial and different...

00:29:39.740 | These things.

00:29:40.740 | I'm not including the rental properties.

00:29:42.100 | So the rental properties have mortgages on them.

00:29:44.220 | So I'm just including the personal debt.

00:29:46.420 | Okay.

00:29:47.420 | So that's enough personal details for the moment.

00:29:48.580 | We'll come back to it in a moment.

00:29:50.220 | One more question and then I'll give you some thoughts.

00:29:54.140 | What is the biggest obstacle for you?

00:29:58.860 | What is the biggest impediment or obstacle right now for you?

00:30:06.680 | What don't you have enough of right now that you would need in order to go up two levels

00:30:13.860 | in your current wealth building plan?

00:30:16.900 | What is holding you back at the moment more than anything else?

00:30:22.200 | To go up two levels in an IT job, I need certain...

00:30:25.340 | No, no, no, no, no, no, no, no.

00:30:26.340 | Two levels in your overall plan.

00:30:28.500 | I'm just...

00:30:29.500 | Think big picture.

00:30:30.500 | What's keeping you from doubling up over the next couple of years?

00:30:33.780 | Is it lack of money?

00:30:34.780 | Is it lack of time?

00:30:35.780 | Is it lack of energy?

00:30:36.780 | Is it lack of context?

00:30:37.780 | What's the biggest impediment to your significant success over the next couple of years?

00:30:46.300 | Lack of time.

00:30:47.620 | Okay.

00:30:48.620 | What would you do if you had more time available under your control?

00:30:55.340 | I would double down and focus on getting more ATMs, getting the second CBD dispensary profitable,

00:31:07.220 | getting the rental properties are going, and I'll take more deliveries, the logistics business,

00:31:12.620 | but the goal is to get rid of that eventually too, because it's me delivering those packages.

00:31:18.140 | And that's not sustainable long-term for my age and body wise.

00:31:21.940 | I can't...

00:31:22.940 | When it's a great day, it's a great day, but when it's snowing, it hurts.

00:31:26.420 | When it's raining, it hurts.

00:31:28.380 | And I have to do those deliveries.

00:31:30.040 | So that will be gone.

00:31:31.500 | That's the goal to get rid of that too.

00:31:33.120 | And so replacing that passive income so that I can have...

00:31:38.380 | If I had more time, I would increase the vendings, the ATMs, and the real estate.

00:31:46.620 | Okay.

00:31:47.940 | The first thing I would point out, this is a pet peeve of mine.

00:31:50.840 | You didn't do anything wrong, but I don't think you have a single source of passive

00:31:54.700 | income.

00:31:55.860 | You have several businesses that provide you with residual income, but you work very hard

00:32:00.740 | for every dollar that you make.

00:32:02.660 | And I point this out because I think that people with a mindset of building various

00:32:10.660 | businesses, investments, et cetera, are often attracted to the term of passive income.

00:32:16.140 | You say, "Well, if I own a string of ATMs or a string of cannabis dispensing vending

00:32:20.940 | machines," or whatever the version is, it's passive.

00:32:23.140 | No, it's not passive.

00:32:24.920 | You have to work really, really hard to go out and find those locations, to place your

00:32:28.800 | machines there.

00:32:29.800 | You have to work to go and service them, to keep them in proper running order.

00:32:33.780 | The income is residual.

00:32:35.940 | It may grow over time.

00:32:37.440 | It may even be, in some cases, exponential, but it is not passive.

00:32:42.200 | And so I used to use passive income for that term, but I think that when we use passive

00:32:47.200 | income for that kind of stuff, we're selling a lie.

00:32:51.120 | And what's happening is the reason it's important to be honest is that if we're not honest with

00:32:55.280 | the fact of what it is and what it's not, then we may be successful and not actually

00:33:01.240 | realize it.

00:33:02.240 | So, if we were to go back 10 years and I were to tell you that if you woke up with three

00:33:06.260 | rental houses and 10 ATMs and three vending machines, wouldn't you feel like you were

00:33:13.360 | winning?

00:33:14.360 | You would have said, "Of course I'd feel like I'm winning.

00:33:15.360 | I'd be doing amazing."

00:33:17.140 | But in reality, you don't currently feel like you're winning because you're hustling all

00:33:20.480 | the time, even though you've built this infrastructure.

00:33:23.200 | So I exclusively reserve the use of the term passive income to things like dividends and

00:33:33.860 | stock appreciation from publicly traded companies that I don't manage, control, or even choose

00:33:38.900 | among necessarily.

00:33:40.900 | And I'm also willing to consider it for something like royalties, where it's an intellectual

00:33:48.480 | property that has been done and created and it's not something that I'm trying to enhance,

00:33:53.820 | not something I'm trying to build, et cetera.

00:33:56.140 | And since most of the time, even when we create royalties, we're generally trying to continue

00:34:00.880 | to grow the brand and not just live on the current royalties.

00:34:04.520 | Since that's the case, then I usually just use it for stocks because that's the only

00:34:09.700 | thing that's actually truly passive, that you truly do nothing for and have the income.

00:34:14.260 | Everything else, I relabel it.

00:34:15.460 | So I relabel it as residual income or renewals or a low, whatever word is appropriate for

00:34:23.900 | it.

00:34:24.900 | But I don't label it as passive because it's not passive.

00:34:27.780 | And so that is kind of just a personal pet peeve that I think will be helpful to some

00:34:30.660 | people.

00:34:31.660 | It's not directly related to advice for your situation.

00:34:34.660 | Now back to your situation, you need to start always, begin with the end in mind.

00:34:40.560 | And so when I asked you what the vision is, you said, "I'd like to be a family man and

00:34:46.740 | I'd like to be home with the children," et cetera.

00:34:50.140 | That's a, "I'd like to have enough money that I don't have to be gone all the time the way

00:34:54.300 | that my dad was with me."

00:34:55.900 | Do you agree?

00:34:56.900 | I agree.

00:34:57.900 | Okay.

00:34:58.900 | So question, are you currently dating anybody who might become the mother of your children?

00:35:04.580 | Yes.

00:35:06.300 | Okay.

00:35:07.900 | When will you know whether she's likely to become the mother of your child?

00:35:17.860 | Are we in the process of getting married and stuff?

00:35:21.940 | Yeah.

00:35:22.940 | Just saying, you said you're dating someone, great.

00:35:25.700 | We hadn't entered into the factor before.

00:35:27.860 | So is this the kind of thing that, "Hey, a year from now, we'd like to have babies,"

00:35:31.140 | or "I don't even know, I just met her, it might be five years," or where are you in

00:35:35.100 | this process?

00:35:36.100 | How soon do you think realistically, based upon the prospect that's in your life right

00:35:40.700 | now, how soon do you think you might be having babies?

00:35:43.700 | A year and a half, two years.

00:35:48.100 | Okay.

00:35:49.100 | Awesome.

00:35:50.100 | So the reason I ask that is because one of the big, and this doesn't apply to you, just

00:35:54.900 | fact finding, but if you had said, "Well, I'm not dating anybody," one of my first points

00:35:59.420 | was going to be that you might be doing all this for reasons that aren't actually helpful,

00:36:03.900 | meaning you're never going to meet a girl if you're spending all your time working and

00:36:06.900 | you're not going on dates.

00:36:08.260 | And so we got to get things in the right priority.

00:36:11.300 | And if you have a $400,000 net worth and you have a lot of goals and visions and things

00:36:16.300 | that you're trying to do, but your primary reason for doing those things is so that you

00:36:20.260 | can be a present father with your children, then we got to remember that along the way

00:36:25.660 | we can't neglect to go and meet a wonderful girl and have children.

00:36:29.300 | And the longer that you wait to do that, the harder it becomes.

00:36:32.620 | And so don't settle for the idea that somehow it's going to be easy if you're 50 years old

00:36:37.940 | and you got all the money, that then that's the time to go and have babies.

00:36:40.340 | No, the time to have babies is now, as soon as you find and set up an appropriate family

00:36:44.700 | situation, find a girl who is going to be a good mother, marry her, et cetera, then

00:36:48.260 | start having babies.

00:36:49.980 | Don't wait until 50 because the biggest, what we're looking for is to say, what is the biggest

00:36:54.740 | obstacle?

00:36:55.980 | And the biggest obstacle to you living that kind of life that you described is not financial.

00:37:01.820 | If you have a $400,000 net worth and you're 36 years old and you're a hardworking guy

00:37:05.620 | with all of these businesses that you're working on and properties that you're controlling,

00:37:09.420 | et cetera, you are dramatically ahead of the curve.

00:37:12.580 | You're so far ahead of many other people that you have to then make sure that you're not

00:37:17.460 | getting focused on a fake goal.

00:37:19.780 | And financial independence is in some cases, and even in many cases, a fake goal.

00:37:24.460 | You don't need to be financially independent with $2 million in the bank and $100,000 of

00:37:30.620 | passive income, truly passive income, in order for you to be a present father.

00:37:36.060 | It's not that difficult.

00:37:37.260 | You don't actually need that.

00:37:39.060 | And so I used to think I needed that and then I found I didn't.

00:37:44.900 | And basically just to share kind of my story is that I became obsessed with the FIRE movement

00:37:49.940 | early on and I had something similar of a vision to what you have.

00:37:56.380 | I wanted to be, it wasn't so much to be, I always knew I was going to be a very present

00:38:02.460 | father because I couldn't conceive of anything different, but it wasn't to sit home all day.

00:38:08.140 | And I don't think actually, by the way, as a man, I don't think that should be your ambition,

00:38:11.140 | but I'll come back to that in a moment.

00:38:12.820 | But it was more of a matter of being in control of my life.

00:38:15.860 | I wanted to be able to come and go as I wanted.

00:38:17.860 | I wanted to be able to fulfill my vision of the things I wanted to do with my children.

00:38:21.520 | And virtually none of those things involved me having the constraints of a job requiring

00:38:26.580 | me to go to the job all the time.

00:38:29.180 | And so when I sat down and looked at it, the first thing I came across when I finally became

00:38:33.660 | clued into the world of early retirement, I was like, "Well, I'll do this with money."

00:38:37.300 | So I started working, working, working, practicing extreme frugality, saving, et cetera, but

00:38:41.540 | I got my timing wrong because here I was married, having babies, et cetera, and I realized the

00:38:47.340 | entire edifice of early retirement doesn't work for me because it would destroy the most

00:38:53.980 | important years for me to actually accomplish the goal.

00:38:56.880 | So I need a different goal.

00:38:58.340 | And what I realized was the single biggest obstacle for me living my life the way I wanted

00:39:03.420 | to live was simply to have a job or a business that provided me with flexibility and enough

00:39:09.620 | money to live on.

00:39:11.220 | Because if I said, "If I have enough money to live on and I can make this job or business

00:39:16.020 | from anywhere, then it provides me with basically all of the lifestyle of being financially

00:39:21.780 | independent except the ultimate ease to know that I can lie around in bed all day and do

00:39:26.220 | nothing."

00:39:27.220 | And I realized that Paula Pant has this great line that you can afford anything, but not

00:39:39.860 | everything.

00:39:40.860 | I don't know if she would talk about it.

00:39:42.460 | You can afford anything, but not everything.

00:39:44.740 | And I look at it like that way.

00:39:46.060 | It's to say that my goal is to be able to do anything I wanted, but not to do nothing.

00:39:52.300 | And so financial independence would give me the opportunity to do nothing.

00:39:56.700 | So then the question is, is that necessary?

00:39:58.060 | Well, it's not necessary for me to do nothing, nor is it even particularly desirable.

00:40:05.020 | Now I think we all have a sense in which we really want that to be the case.

00:40:08.740 | We want to sit back and do nothing because that appeals to us, but we all know deep down

00:40:13.580 | that that's not actually good for us.

00:40:16.340 | We all know deep down that it doesn't actually feel good for a long period of time.

00:40:21.300 | And so if we can be a little bit rational and recognize that it's just not good for

00:40:26.540 | us to do nothing and it doesn't feel good to do nothing, then we can set the whole thing

00:40:31.140 | aside.

00:40:32.180 | And I came to the realization that financial independence is not a necessary step for me

00:40:37.680 | to live my life.

00:40:39.180 | And it also – and just to define the term here, what I mean by financial independence

00:40:43.380 | is the ability to live off of the passive income from my portfolio of investments rather

00:40:48.180 | than from things that I'm actively working in and involved in, etc.

00:40:52.780 | So when you do that, it makes it much more feasible and achievable.

00:40:57.300 | And it's not that you can't and shouldn't accumulate assets and it's not that your

00:41:01.080 | ambition long-term shouldn't be to be able to live on the passive income from your portfolio

00:41:05.900 | of investments, but rather that it's not a necessary thing in order for you to live

00:41:10.380 | something like the life that you want to live.

00:41:12.980 | And so this was among many reasons, one of the reasons I became an entrepreneur.

00:41:19.460 | And the basic entrepreneurial businesses that I have pursued have been specifically chosen

00:41:28.360 | to provide me with the highest levels of flexibility and control over my life.

00:41:33.920 | And it hasn't always been easy and it's not easy, but I have always exercised that

00:41:38.220 | control so at least I get that to myself.

00:41:42.360 | And one more comment because I guess it fits in here better than later when I was going

00:41:45.180 | to say it.

00:41:46.180 | In terms of being an absentee father or a present father, as you know, I am a very devoted

00:41:54.560 | father, much more devoted and much more involved in the lives of my children than certainly

00:42:01.020 | the vast majority of fathers out there.

00:42:03.540 | There are various memes and jokes and they're real, they're true in terms of people go

00:42:06.980 | and say, "Dad, do you know the birthdays of your kids?"

00:42:10.380 | And things like that.

00:42:13.020 | I am very, very involved with my children.

00:42:17.180 | Still however, I believe that that's a false god, a false idol, a false goal even.

00:42:22.260 | That the definition of success for a parent, especially for a father, is not measured by

00:42:33.200 | your physical presence 168 hours a week.

00:42:39.940 | That's not the goal.

00:42:40.940 | And in fact, having that as the goal I think can in and of itself be a rather damaging

00:42:50.420 | form of helicopter parenting taken to the extreme.

00:42:56.580 | I'm probably currently living the most extreme lifestyle in terms of physical presence because

00:43:03.440 | my wife and I live a very home-focused lifestyle.

00:43:07.800 | But I'm still acutely aware of how important it is, especially as my children grow older,

00:43:13.840 | that I not always be there.

00:43:15.960 | And so it's just kind of a false goal.

00:43:19.760 | In addition, I think it's a goal that can become a very feminine ideal rather than a

00:43:25.240 | masculine ideal.

00:43:27.020 | What I mean is that your wife doesn't probably actually want you there all the time.

00:43:32.580 | And if you were there all the time, she probably is not going to be very attracted to you.

00:43:37.280 | Because as a father, you want to be setting an example.

00:43:42.040 | And part of that example involves a high degree of involvement with your children in their

00:43:47.360 | lives, et cetera.

00:43:49.340 | But there's also another important component in which your destiny is to be a visionary

00:43:58.100 | leader of society in addition to your family.

00:44:03.340 | And there'll be different periods in your life at which you're more with your family

00:44:06.820 | and periods at which you're more with your society.

00:44:08.820 | I wouldn't go and run for political office now, as an example.

00:44:13.340 | But I also don't want to have my ambition to be completely at home and just to be there

00:44:19.940 | all the time as a full-time, never-leaving, stay-at-home dad.

00:44:25.020 | I don't think that's really healthy for dads.

00:44:26.900 | I don't think it's healthy for children any more than it's healthy for moms to have the

00:44:31.740 | only and exclusive thing that they do be their home and their children.

00:44:36.120 | Because then when their children are gone, what do they have left?

00:44:40.820 | There needs to be other dimensions of life.

00:44:43.100 | So as adults, we all need to have a multivaried lifestyle.

00:44:46.220 | Now, I doubt you'd agree with any of those things, but my first instinct in listening

00:44:50.700 | to what you're saying to me is that you don't have to achieve on this intense of a time

00:44:58.780 | schedule in order for you to accomplish your goal, which is to be a present father.

00:45:05.120 | You can dial back the intensity a partial amount and still achieve your goals because

00:45:14.080 | you've done the necessary foundational work in order to see to the success and the future

00:45:22.480 | of your family.

00:45:24.000 | So that's kind of big overarching point number one, is that when we get clear about the goal,

00:45:28.640 | which is to be a present father, then what we should see from that is that it's not necessary

00:45:34.440 | that you be entirely financially independent, able to live exclusively from the income from

00:45:38.520 | your portfolio in order for you to do that, nor is it particularly even desirable, especially

00:45:44.200 | in the first few years when you're dealing with very small children, et cetera.

00:45:50.000 | Where I think the sweet spot is where you want to be the maximally available is somewhere

00:45:55.640 | around I would say maybe seven, age about seven to about age 13.

00:46:02.400 | To me that's the sweet spot where as a father being with my children all day every day just

00:46:08.320 | feels like a dream.

00:46:09.680 | The reason I say that is somewhere around the age of seven, then children become intellectually

00:46:16.400 | active enough for me to really enjoy being together with them, talking with them, teaching

00:46:21.800 | them, et cetera.

00:46:23.680 | Whereas before that they're babies, they're children and the games and things like that

00:46:27.400 | are very simple and they're not super intellectually fulfilling and you don't feel like you're

00:46:32.640 | shaping the destiny of the child when you're doing those simple things.

00:46:38.160 | You are, you still should do those simple playing together and being together, et cetera,

00:46:43.520 | but it doesn't have anywhere near the same feeling that I have when a child is old enough

00:46:47.040 | to be intellectually curious, et cetera.

00:46:50.000 | Then I say 12 or 13 because by the age of 12 or 13 we want to be very, very intentionally

00:46:55.360 | pushing children towards independence and very, very strong forms of independence.

00:47:01.320 | Those strong forms of independence means that just quite literally not with us.

00:47:06.560 | We want to be pushing children to adult roles as they're capable in their early teens and

00:47:12.480 | throughout but keeping the relationship one of connection but not the day-to-day always

00:47:18.240 | being physically present.

00:47:20.160 | You need them to be going out into the world on their own, away from you, into their own

00:47:25.480 | unique circumstances so they can fight the battles of life, be exposed to the challenges

00:47:29.740 | of life, et cetera, and then be connected back with you.

00:47:33.600 | Those are big words with lots of different ways of applying it.

00:47:36.040 | What I mean is that the sweet spot in my mind is basically 7 to 13 and you give or take

00:47:41.880 | a year or two here and whenever it's convenient for you, but that's where you definitely want

00:47:46.120 | to have maximum connection, maximum freedom in your life and in your schedule.

00:47:54.920 | Let's pivot now back to the money.

00:47:57.080 | The first point I'm trying to make broadly is simply that you don't need to achieve full

00:48:01.000 | financial independence and that what you need to achieve is control over your schedule and

00:48:11.120 | enough money to provide a comfortable living for your family under your own terms and that

00:48:16.720 | could probably be achieved as an initial step along the way as you're working towards full

00:48:22.600 | independence.

00:48:24.240 | If that's true, then you should look at all the different opportunities and say, "What

00:48:28.400 | are the opportunities that are leading me to this potential outcome?"

00:48:33.560 | If we talk about the three or four things that you've said, each of them is going to

00:48:37.360 | have a different constraint.

00:48:38.360 | You have a logistics job and when you labeled it logistics, that was a job that you said

00:48:43.240 | of doing medical deliveries for a per delivery fee, is that correct?

00:48:46.800 | Yeah, per package fee.

00:48:49.400 | Yes, sir.

00:48:50.400 | Okay.

00:48:51.400 | You have a logistics job and that sounds to me as basically a dead-end job that pays you

00:48:57.280 | a decent rate in a pretty quick amount of time, is that correct?

00:49:01.680 | Correct.

00:49:02.680 | All right.

00:49:03.680 | IT job, that sounds like a fixed job and how much do you make with the IT job?

00:49:09.960 | $21.50 an hour.

00:49:12.680 | Is there a future that you're interested in with the IT job of advancing in some way?

00:49:17.680 | Yes, but it requires those higher level certifications, which the tests aren't easy.

00:49:24.360 | I've attempted one of the certifications and failed and those are $500, $600 tests.

00:49:30.520 | I don't want to keep, I want to be able to commit the time.

00:49:35.480 | I feel there's a future in IT, hence why I got into it this way, but the higher pay comes

00:49:42.040 | with advanced certifications.

00:49:44.520 | And then with regard to these other businesses, what is the constraint right now of your growing

00:49:51.760 | the ATM business?

00:49:57.240 | Right now, the ATMs are growing.

00:50:02.000 | I fill them, they operate, they run.

00:50:06.360 | I have 12 ATMs, 10 of them active, two of them in my garage.

00:50:12.320 | And so I haven't placed those two yet.

00:50:14.280 | And the ATMs, the beauty about them is as the money grows, it's just recycled money.

00:50:20.880 | So the cash that's flowing inside of them, it takes me seconds.

00:50:25.040 | Go to the bank, fill them up, put $5,000, $10,000 in there, and then I don't have to

00:50:31.040 | visit that ATM for two to three months as the income goes.

00:50:36.040 | So it becomes more relaxed and less obstructive as time passes.

00:50:42.920 | And how much money can you earn from one ATM?

00:50:46.120 | What do you expect or forecast as your normal operating income from one ATM?

00:50:52.580 | Just a mean ATM, not the best one, not your worst one, but just a normal average ATM of

00:50:57.000 | your current 10?

00:50:58.640 | $800 a month.

00:51:02.040 | Okay.

00:51:03.040 | So right now with your 10 that are in the field, you're making say $6,000 a month?

00:51:12.760 | Yes.

00:51:13.760 | Okay.

00:51:14.760 | So we're getting pretty deep in the weeds.

00:51:18.720 | And for the sake of my podcast, I don't want to go deeply through each and every one of

00:51:23.060 | these things or provide the specific suggestions on each of these things.

00:51:28.140 | But let me just sketch it out in big picture.

00:51:30.740 | What you need to analyze is you need to analyze your constraints.

00:51:34.820 | And so a homework assignment I would give you is write down each of your different jobs

00:51:42.940 | that you're doing.

00:51:44.160 | You have your logistics job, you have your IT job, you have your ATM job, and you have

00:51:50.500 | your new cannabis vending machines jobs.

00:51:53.140 | And then you have your real estate job.

00:51:55.100 | And maybe something else as well that you're considering.

00:51:58.560 | You need to identify and think about that job individually.

00:52:03.420 | And then ask yourself a series of intelligent questions about it.

00:52:07.860 | I'm making up these questions on the spot, but these are the kinds of things that you

00:52:13.900 | want to think about.

00:52:14.900 | Number one would be something like, what is the ultimate opportunity that I have with

00:52:22.420 | this job/business/investment?

00:52:25.360 | So logistics job.

00:52:27.220 | Notice that that's kind of what I was hinting at.

00:52:29.220 | Logistics job is, all right, I can make a little cash, but it's kind of a dead end thing.

00:52:34.340 | They can hire anybody to drive around and deliver these things at the same fee that

00:52:39.100 | I'm making.

00:52:40.240 | So the long-term opportunity is not super great.

00:52:44.200 | On the other hand, with an IT job, you might say the long-term opportunity, if I had these

00:52:48.120 | five certifications, is I could make $75,000, $100,000 a year pretty comfortably with a

00:52:55.000 | pretty stable job, good security, et cetera.

00:52:58.440 | What's the long-term opportunity of the cannabis machines?

00:53:01.160 | I don't know, but you'll put that in.

00:53:02.640 | What's the long-term opportunity of the real estate, et cetera?

00:53:05.700 | So get clear on kind of what the best case long-term opportunity is.

00:53:10.920 | Another kind of question you would want to ask yourself is something along the lines

00:53:13.840 | of what is keeping me from maximizing this opportunity?

00:53:17.720 | So let me give two examples that are very obvious.

00:53:20.480 | What's keeping you from maximizing the logistics job?

00:53:24.480 | Well, one thing just might be the number of deliveries.

00:53:26.720 | There's just no more than four hours a day available.

00:53:29.640 | Okay, great.

00:53:30.640 | So you know that there's just not a market there.

00:53:32.820 | But then we get into things like, well, what's keeping me from maximizing the real estate

00:53:37.880 | business?

00:53:39.460 | It might be deal flow.

00:53:41.060 | There may not be any good investments that I can purchase right now.

00:53:44.420 | What is commonly the case with things like real estate businesses, well, what's keeping

00:53:48.420 | me from maximizing this is I don't have enough money for down payments on properties.

00:53:54.420 | Or this might be the same thing for another business.

00:53:57.140 | It's like, what's keeping me from buying more ATMs?

00:53:59.620 | You obviously have enough of them.

00:54:01.420 | So what's keeping you from doing there is not money.

00:54:04.540 | It's not even machines or availability of machines.

00:54:07.780 | It's availability of locations.

00:54:10.060 | What's keeping me from getting the locations?

00:54:11.380 | Well, the time to go out and talk to the business owner to wherever your placement scheme would

00:54:15.820 | say that you would put one of those machines in.

00:54:18.420 | And so in order for that to create, you have to have more time.

00:54:22.120 | And so if you look at these and you go through them one at a time and you ask yourself some

00:54:25.900 | intelligent questions, another kind of question would be, what's the long-term vision?

00:54:30.460 | Is this something that I would be doing in the long term, five years from now when I've

00:54:34.700 | got two children at home or not?

00:54:37.220 | And so example would be if you've got ATM machines that are making you $800 each and

00:54:44.180 | it's super simple for you to make your rounds with whatever frequency you need to to replace

00:54:48.340 | the cash, et cetera.

00:54:50.080 | And lo and behold, you can have 20 of them making say $15,000 a month from 20 machines.

00:54:56.540 | Obviously that's something that you're still going to be doing five years from now.

00:54:59.800 | On the other hand, you're not going to be doing the logistics job.

00:55:02.940 | So you need to free up your time, which is your most valuable asset.

00:55:10.860 | And you need to drop off your lowest returning activities of time from your schedule so that

00:55:17.860 | you have the time to invest in your highest returning opportunities.

00:55:22.420 | Because right now you have full control over your time and you have 168 hours a week.

00:55:28.460 | So you need to get rid of anything that is not the highest and best use of your time

00:55:34.860 | and focus in on the things that are the highest and best use of your time.

00:55:38.980 | And in order for you to do that, you need to analyze and be clear what is the highest

00:55:42.820 | and best use of my time and then do more of that.

00:55:46.540 | And I guess the best image for this comes down to basic idea of an hourly wage.

00:55:52.020 | If you set yourself an hourly or an annual wage target, so the obvious example is if

00:55:58.300 | somebody is earning, you know, somebody wants to earn $100,000 a year.

00:56:03.580 | Well, $100,000 a year is $20.

00:56:06.660 | Hold on.

00:56:09.140 | What's the mathematical relationship?

00:56:10.580 | There's a simple formula that just flipped me.

00:56:14.700 | So $100,000 a year, divide that into 50 weeks, give yourself.

00:56:19.020 | >> 100,000 a year?

00:56:21.860 | >> Yeah, just a second.

00:56:23.860 | >> Divided by 50 weeks?

00:56:24.860 | >> All right.

00:56:25.860 | So that's $50 an hour.

00:56:26.860 | There we go.

00:56:27.860 | I forgot the mathematical relationship between the hourly rate and the annual outcome.

00:56:32.860 | So if you make $50 an hour on average for a 40-hour week for a 50-week year, then you

00:56:37.860 | make $100,000 a year.

00:56:40.420 | And so if you're making right now $50,000 a year, then what you have to focus on is

00:56:46.540 | you have to say, how do I go from doing $25 an hour work to doing $50 an hour work?

00:56:52.140 | Now if you want to go from $100,000 a year to a million dollars a year, you have to go

00:56:57.740 | from doing $50 an hour work to doing $500 an hour work.

00:57:03.060 | The problem is that you only have a certain number of hours.

00:57:05.980 | And so any hour that you work for below your target hourly rate, that's an hour that you

00:57:12.140 | can never get back.

00:57:13.300 | And that's an hour that is going to keep you from achieving your ultimate long-term goal.

00:57:18.040 | And so if you're doing medical deliveries at $6 to $12 a package, and you're going and

00:57:23.740 | let's just say it's $6 a package, and you're delivering four of those in an hour, and you're

00:57:29.300 | making $24 an hour, but your goal is to make $100,000 a year, you can't do that anymore.

00:57:35.860 | Because making those deliveries is keeping you from doing $50 an hour work that's going

00:57:40.820 | to make you $100,000 a year, et cetera.

00:57:43.740 | So the point is that you have to systematically prune out of your schedule the low return

00:57:49.720 | activities and put in the highest returning activities and always focus on the most important

00:57:55.620 | things.

00:57:56.740 | And this is just a variation of an application of the 80/20 principle, which is simply that

00:58:02.020 | 20% of your activities are going to give you 80% of your results.

00:58:05.980 | And financially, 20% of your investments are going to give you 80% of your outcomes.

00:58:10.040 | Or 20% of your decisions are going to give you 80% of your long-term results, et cetera.

00:58:16.400 | So you need to decide and prioritize what is your most, your best returning business.

00:58:25.300 | You need to do that in light of your goal of whatever your lifestyle goal is, and then

00:58:32.400 | systematically get rid of everything that you're doing that doesn't, is not necessary

00:58:38.500 | for you to achieve that goal.

00:58:40.460 | So if your highest returning business is ATMs, then you should be focused, laser focused

00:58:45.660 | on placing those ATMs.

00:58:47.680 | And the only reason you would bring something else in, like an IT job or a logistics job

00:58:52.620 | or et cetera, is because it's giving you something that is otherwise a constraint.

00:58:56.980 | So there's a lot of guys who will have a job, and they'll have a job because that job gives

00:59:01.780 | them income that they're using to save for a down payment or to, you know, buy more Bitcoin

00:59:06.940 | miners, or buy more ATMs, et cetera.

00:59:09.220 | You need cashflow.

00:59:10.580 | And so a job is a good provider of cashflow for you, but that job can't be getting in

00:59:15.060 | the way of your businesses, and it can't be destroying your health, et cetera.

00:59:18.720 | So I want to stop it there.

00:59:20.060 | Does that kind of method of analysis make enough sense to you that you think you can

00:59:22.900 | take it a few steps further on your own?

00:59:26.540 | I think so.

00:59:27.940 | I feel like I want to get rid of the IT job because my highest returning, even though

00:59:34.900 | it's, my highest returning is the logistics because I make 192 in four hours.

00:59:41.340 | And that's not four hours because I'm limited to four hours.

00:59:43.420 | That's four hours because I'm that quick with, I have 32 deliveries per day average.

00:59:49.020 | And so at $6, that's 192, where I'm working eight hours for 2150, 2150, and I'm making

01:00:01.940 | 172.

01:00:03.100 | So the highest use of my time is the logistics temporarily to make the extra cash so that

01:00:08.140 | I can invest in the more residual income so that I can eventually walk away from it.

01:00:16.260 | That's what is screaming out to me.

01:00:18.460 | Sure, sure.

01:00:19.460 | So as you're making those decisions, just don't discount the long-term value of something

01:00:25.900 | that could be very useful for your family in the future.

01:00:28.740 | So I don't want to add more confusion.

01:00:30.620 | But what I would say is that if you can get a few certifications, having always a great

01:00:36.420 | backup career can be a good move for you as well.

01:00:39.420 | You probably don't need it.

01:00:40.420 | Actually, nevermind.

01:00:41.420 | I take that back.

01:00:42.420 | You have enough net worth at this point in time that you should be fine.

01:00:44.540 | You should be able to handle those details.

01:00:48.220 | And if you can just keep pressing forward on your businesses and you don't need the

01:00:56.020 | cash from the IT job, give it up.

01:00:57.940 | You can always go back and get it in the future.

01:00:59.860 | And if the logistics job is enough to give you cash flow in a short amount of time, then

01:01:05.300 | that's fine too.

01:01:06.300 | I'm going to quit there just because we've gone pretty deep into it.

01:01:09.180 | Call me back on a future Q&A show and we can dig further.

01:01:11.540 | I just want to close with this, close yours and I go on to the next caller, close my comments

01:01:15.940 | to you to say, get clear on what you want, as clear as possible.

01:01:23.860 | Imagine what is necessary to get you what you want and then think about what the constraints

01:01:30.660 | are to getting you on that pathway.

01:01:33.700 | And then only do what you need to do and then use that as kind of the filtering framework

01:01:39.420 | for what you're doing.

01:01:40.420 | And then call me back on a future show and we can go through the details again.

01:01:43.340 | Tyler in Bogota.

01:01:44.340 | Tyler, welcome to the show.

01:01:45.340 | How can I serve you today?

01:01:46.340 | >>Tyler: Hey, not actually in Bogota, but thanks, Joshua.

01:01:49.340 | >>Joshua: Your VPN is in Bogota today, so that works great.

01:01:53.380 | >>Tyler: Yes.

01:01:54.380 | Yeah, I had a quick question.

01:01:57.180 | You've talked in the past several times, at least you've mentioned it, about that you

01:02:00.900 | treat some of your whole life insurance policies as a glorified emergency fund.

01:02:05.780 | I have both myself and my wife have annual renewable policies that have conversion options

01:02:12.940 | on them.

01:02:14.140 | And I was just kind of thinking through, wondering if you could maybe walk me through your thought

01:02:17.460 | process on how much you would recommend having in whole life if you were to use it as an

01:02:22.460 | emergency fund.

01:02:23.780 | How would go about doing that?

01:02:24.780 | And maybe your thought process on thinking through what makes sense given our situation

01:02:29.940 | and how much you might recommend that we keep in that kind of setup.

01:02:34.300 | >>Joshua: Yeah.

01:02:35.740 | Let me give you kind of a big picture framework to that and then you can decide if we want

01:02:39.980 | to talk more details rather than kind of just probing for specifics in your situation.

01:02:47.380 | So first of all, I think you have to value life insurance.

01:02:54.780 | You value life insurance such that you have it.

01:02:57.260 | Somebody who doesn't value life insurance shouldn't buy whole life insurance of any

01:03:01.420 | kind because it doesn't value life insurance.

01:03:03.940 | Number two, you need to value having insurance that is enforced forever, that is permanent.

01:03:10.700 | And that is necessary.

01:03:14.820 | It can't be something where you just don't care at all about the insurance.

01:03:18.800 | You have to actually appreciate having insurance.

01:03:21.660 | And what that means is that generally you're going to be someone of a certain financial

01:03:25.120 | class and a certain asset base where the idea of having insurance that's around when you

01:03:31.140 | die at 107, it feels good and you can see how that can be useful and appropriate.

01:03:35.900 | Now most people, their first initial steps are to say, "Well, okay, I could see that

01:03:42.900 | it would be nice to have a little bit of money around that's around forever.

01:03:46.540 | So maybe there would be $50,000 for a funeral and final expenses, and it might be nice to

01:03:51.820 | have another $50,000 for cash," or whatever number is relevant for your situation.

01:03:56.940 | And so when I used to sell life insurance, I would often start with a $100,000 policy,

01:04:01.460 | something like that.

01:04:02.780 | And then you go and the idea is that I'm solving for death benefit first, which is always the

01:04:07.660 | appropriate ethical way to sell life insurance.

01:04:10.500 | Quite literally, you can't buy a life insurance policy unless there's a justification for

01:04:15.780 | the death benefit.

01:04:18.180 | So if you go and you look and you say, "$100,000 of death benefit for me, $100,000 death benefit

01:04:26.700 | for my wife, what does that look like in premiums?"

01:04:28.820 | And you talk to an insurance agent and the insurance agent says, "Well, your premiums

01:04:31.780 | for that are X number of dollars per month."

01:04:33.700 | And you look at an illustration and you say, "All right, where is this going to be in five

01:04:37.940 | years in terms of cash accumulation, et cetera?

01:04:41.320 | Is that a number that's relevant to my life?"

01:04:44.460 | So for someone who's making $150,000 a year, then to have some life insurance policies

01:04:51.860 | that might be a death benefit of $100,000 and might after, sorry, total $200,000 for

01:05:00.220 | the family and might have, say, $30,000 of cash value after five years, something like

01:05:05.820 | that, that's an okay start on an emergency fund.

01:05:08.860 | It's a few months worth of expenses.

01:05:10.300 | It's a good start.

01:05:12.120 | But for someone who obviously is at different levels, you have to make it be more.

01:05:17.180 | And so you want to have enough money in the policy where it's actually going to make sense

01:05:22.060 | to where it's in the amount that you're targeting.

01:05:26.460 | And so if the number is really small from a cash accumulation perspective as compared

01:05:32.860 | to your goals, then you need to ramp up the total policy size.

01:05:36.220 | And then the two levers that you push there is you ramp up the death benefit, obviously,

01:05:40.900 | to have more capacity, and then you start smushing the premiums earlier into the policy.

01:05:46.460 | And so in many cases, if you can sit with an insurance agent, let's say you build a

01:05:50.260 | 10-pay life program and your goal is to put 10 years' worth of premiums and it's an amount

01:05:55.900 | that feels good, like this will be a good amount of money that's there in my emergency

01:06:05.820 | fund for myself, then that'll provide you with a starting point and you get there based

01:06:09.740 | upon premium.

01:06:10.980 | What this shouldn't do is it shouldn't do a few things.

01:06:13.420 | Number one, it shouldn't limit your other advantaged investing, so 401(k)s, things like

01:06:19.260 | that.

01:06:20.260 | This should be complementary to 401(k), Roth IRA, HSA, et cetera.

01:06:25.020 | It should not be instead of because I think that those things are superior to whole life

01:06:28.740 | insurance.

01:06:29.740 | Number two is it should not be something that is harming you, and there's other obvious

01:06:37.740 | stuff, so it shouldn't be keeping you from making a job change that you want to make,

01:06:41.260 | making a house change that you want to make, et cetera, making those lifestyle decisions.

01:06:45.380 | It should be a number that is significant but is also something that you can commit

01:06:48.660 | to kind of consistently because the problem with life insurance payments is they got to

01:06:53.820 | be made consistently.

01:06:55.820 | You can carve off a lump sum, put it in a bank account with the insurance company and

01:06:59.540 | just pay the policy from that if you have the money, but if you're doing this out of

01:07:04.260 | your just normal income, there's got to be an amount that is feasible, and that's feasible

01:07:08.980 | if you get laid off, that's feasible, et cetera.

01:07:13.220 | That's how I would always approach it, and then the details make sense.

01:07:16.700 | I guess I shouldn't have gone that route.

01:07:18.140 | I should have asked you numbers about your own situation, but if you talk with an insurance

01:07:23.180 | agent and you look at a policy and you look at your income and you look and you say what

01:07:27.180 | can I maintain over time, then it should be a fairly apparent number, and if you're looking

01:07:33.060 | for a percentage, you know, a few percent of annual income, 3 to 5 percent of annual

01:07:37.260 | income was often something that I would look at because that kind of percentage would never

01:07:43.020 | keep you from doing investments into retirement accounts, but it wasn't so significant that

01:07:50.340 | it – I wish I had answered it the other way, Tyler.

01:07:56.300 | Does that help at all or you want to get into some details of your situation?

01:07:59.540 | Yeah, maybe just some details would be helpful because the reason I'm asking is I have a

01:08:05.020 | lot of idle cash on the sideline right now that are just in high yield savings accounts

01:08:09.300 | that I do value insurance and I kind of admired your philosophy of using the whole life policies

01:08:16.860 | as a venue for emergency savings.

01:08:20.220 | I just wasn't sure where the numbers shake out.

01:08:23.660 | And your income is how much?

01:08:26.660 | 185.

01:08:27.660 | And current net worth is how much?

01:08:29.940 | About 750.

01:08:30.940 | Okay, and how much cash is currently on the side?

01:08:35.900 | About 200.

01:08:37.820 | And right now, any idea what your expenses are, just ballpark either on a monthly or

01:08:42.080 | annual basis?

01:08:43.080 | About 5,500 a month.

01:08:45.500 | So you've got quite a lot of extra cash.

01:08:48.340 | So in that situation, I would say two things.

01:08:53.500 | Number one, when we're trying to do – so in what I have described, we're not trying

01:09:00.900 | to do bank on yourself or infinite banking or some kind of hardcore thing.

01:09:06.500 | I think that can work in some circumstances but limited circumstances.

01:09:11.780 | So I'm setting that aside for the moment.

01:09:14.660 | So what we want to shoot for is an amount of money that we can do basically over 10

01:09:20.340 | years or so that's going to be really doable.

01:09:23.340 | And so if you looked at premiums of say $10,000 a year and you look at those policies, $10,000

01:09:33.220 | a year over 10 years would be $100,000 into a policy.

01:09:36.960 | That would buy you several hundred thousand dollars of permanent death benefit.

01:09:42.300 | You would break even in the cash value accumulation probably depending on the policy design within

01:09:48.180 | four to six years, three to five years, somewhere in that range.

01:09:52.260 | I got to be careful because I don't even have policy illustration tools anymore.

01:09:57.240 | And so I would look at something like $10,000 for the household.

01:10:01.700 | That would be a starting point and then just see how it feels.

01:10:10.060 | And if you've got $5,500 a month of expenses, you still have other…

01:10:14.980 | So maybe somewhere in that range, $4,000 a year for you, $4,000 for your wife, $8,000.

01:10:21.900 | That would be around less than 5% of your household income.

01:10:26.620 | I would talk to an agent and try to look at something in that range of like $8,000 a year

01:10:35.740 | for 10 years and then see what that would buy you.

01:10:46.300 | And I would make sure that a significant portion of it is additional premiums.

01:10:52.580 | So anything that's uncomfortable in time, if there's some kind of change, would be

01:10:57.420 | able to be dropped off if necessary as well.

01:11:01.580 | And then see what those numbers would feel like five to 10 years from now in terms of

01:11:06.380 | the amount of money in cash value.

01:11:07.700 | Is that sufficient for you in terms of an emergency fund with your other things that

01:11:13.020 | you have as well?

01:11:14.020 | >>BETSY EVES: Okay.

01:11:16.300 | And would you prioritize doing that cash flowing it as a premium or taking a lump sum?

01:11:23.860 | Do you have any preference?

01:11:24.860 | >>AJ DAHLIA: Well, you don't really have…

01:11:26.420 | So you only have two choices.

01:11:28.460 | So what we're trying to do, especially if this is going to be an emergency fund, is

01:11:31.660 | you can't run the risk of it becoming a modified endowment contract.

01:11:35.260 | And a modified endowment contract means that if your policy becomes a modified endowment

01:11:40.540 | contract, then you lose the ability to take a tax-free loan from the policy.

01:11:49.540 | And that kind of destroys the whole thing.

01:11:51.800 | So how does a contract become a modified endowment contract?

01:11:55.380 | Well, first of all, if you pay into it for fewer than seven years, it's automatically

01:12:01.260 | a modified endowment contract.

01:12:03.740 | And so single premium life insurance is a great product, and it's a modified endowment

01:12:09.780 | contract from day one.

01:12:11.500 | There is something called the seven-pay test that has to be met, that there's a ratio of

01:12:16.780 | death benefit to premiums, and that ratio can't be too high.

01:12:21.340 | I can't explain to you how you calculate it.

01:12:23.420 | It's in all the illustration software.

01:12:25.540 | But basically, you have to make sure that you have enough death benefit as compared

01:12:29.940 | to the ratio of death benefit to premium.

01:12:37.100 | And so you have to pay at least seven years of premiums into the contract, and you can't

01:12:42.020 | put so much in that it becomes unstable.

01:12:45.660 | Unstable is not the right word.

01:12:48.380 | For whatever reason, about 20 minutes ago, my brain just turned off, so I apologize.

01:12:53.260 | So that's the rule.

01:12:54.640 | So in order to defeat that, you have to have a big enough policy, and you have to pay into

01:12:58.260 | it for a long enough period of time.

01:12:59.660 | So that's why I'm saying something like 10 years.

01:13:01.660 | A 10-year quick pay contract will never be a mech, but it's not something that you're

01:13:06.180 | planning to do forever.

01:13:08.000 | And so that aggressive extra premiums and things that you put into it allows it to very

01:13:13.260 | quickly accumulate cash, unlike what we call an ordinary life contract, just a kind of

01:13:18.300 | a long-term, very slow thing that accumulates more in the long run.

01:13:22.720 | This kind of contract would fit your goal of developing a contract that would be suitable

01:13:30.900 | for your emergency fund.

01:13:34.700 | So you can't just put $200,000 into it on day one.

01:13:39.040 | What you can do is you can, the insurance companies all have some form of like a service

01:13:45.820 | account, an insurance servicing account, and those accounts can basically function like

01:13:51.020 | a cash management account.

01:13:52.800 | So if you want to have both of those things, you could take your $200,000 of cash, you

01:13:58.900 | could design a policy for your wife and for you that's total annual premiums of $20,000

01:14:06.100 | per year, paid over 10 years.

01:14:09.060 | You could deposit your $200,000 with the insurance company.

01:14:12.620 | They will give you a normal market rate on your money, et cetera.

01:14:18.140 | They all have FDIC insured versions and things like that.

01:14:22.340 | And then they'll just take $20,000 a year from your $200,000 initial deposit and use

01:14:26.980 | that to pay the insurance premium.

01:14:28.820 | And then if you wanted the money back, you could do that later.

01:14:30.980 | So you could manage it in that way, but what you can't do is just make a lump sum premium

01:14:35.420 | payment into the life insurance policy or you'll lose your ability to take out the tax-free

01:14:40.860 | loans when you need it and the tax-free gains first, excuse me, the return of premium first,

01:14:45.980 | which kind of destroys the whole point of it being as an emergency fund.

01:14:49.500 | Okay.

01:14:50.500 | And is that, so the point I mentioned earlier too is I've got policies that have conversion

01:14:55.580 | riders on them.

01:14:56.580 | Is this something I can do with that or is that more of a conversation?

01:14:59.180 | No, absolutely.

01:15:00.180 | No, you would convert the term that you already have.

01:15:03.540 | Okay, great.

01:15:05.020 | Okay.

01:15:06.020 | So I see like I could also potentially just keep the money in my high yield account and

01:15:10.820 | have the trickle from that to pay the premium for 10 years as well.

01:15:15.700 | Got it.

01:15:16.700 | The balance, it's a difficult balance because I can't give a formula that makes sense.

01:15:20.860 | I always used to use these words.

01:15:22.620 | I'd say something that's doable and meaningful and both of those are important, meaning that

01:15:26.740 | with insurance, because we're dealing with a contract that you have premium payments

01:15:30.260 | to go into and there's always non-forfeiture benefits.

01:15:33.700 | So let's say you go into a contract and you're planning to put money into a life insurance

01:15:38.140 | contract for 20 years and you get 10 years in and you can't do it anymore and you have

01:15:42.500 | to stop making premium payments.

01:15:43.980 | That's fine, right?

01:15:45.180 | You can just reduce the amount of insurance, take the policy paid up, you can do policy

01:15:49.340 | loans for a time to pay the premiums.

01:15:50.780 | There's always options.

01:15:51.780 | But at the end of the day, it's not like just putting money into an investment account and

01:15:56.140 | if I run into a difficult time, I just stop putting money into an investment account and

01:15:59.180 | don't have to do anything.

01:16:00.180 | This is a contract and so you need to do something that's doable where you feel like I can see

01:16:04.540 | this plan through because a well-made insurance plan is something that is going to make sense

01:16:09.040 | for the long term.

01:16:10.380 | And so the big mistake that junior insurance agents make that I made is you get super hyper

01:16:16.060 | aggressive about selling insurance.

01:16:18.700 | And I learned this the hard way.

01:16:19.860 | I was pretty good at motivating people, pretty good at saying like, "Hey, this is going to

01:16:22.900 | be fantastic," etc.

01:16:25.020 | And somebody in the thrill of the moment and the throws of all of their future money signs

01:16:30.180 | up, starts writing you big checks.

01:16:31.740 | You're highly motivated as an insurance agent to take those checks because your commissions

01:16:35.300 | are based on them.

01:16:36.500 | You get into it and all of a sudden, sometimes six months later, sometimes three years later

01:16:40.340 | etc.

01:16:41.340 | And they're like, "I just can't do it anymore.

01:16:42.820 | It was just too much."

01:16:44.220 | And they just abandon the whole thing, cancel the contract and go away.

01:16:47.540 | And that's really bad because whole life insurance doesn't have good returns when it's only owned

01:16:53.380 | for a short period of time.

01:16:54.500 | You wind up losing all your money basically.

01:16:56.900 | And so it's got to be something that's really doable.

01:16:58.940 | So I learned very quickly to always dial back my enthusiasm a little bit and say, "Hey,

01:17:04.540 | it's got to be doable."

01:17:06.220 | The flip side is it's got to be meaningful.

01:17:08.140 | Is that because you got to get the contract, the money in, there's this really difficult

01:17:13.140 | kind of balance that the earlier somebody starts doing life insurance, the lower the

01:17:17.300 | cost of the mortality, the lower the mortality cost inside the contract.

01:17:22.320 | And so the better it is to do it earlier and the longer you have for the money to accumulate.

01:17:26.900 | And so the best life insurance contracts are the ones that are taken out at the youngest

01:17:30.900 | age and have the most money put into them.

01:17:33.620 | That's when they perform the best.

01:17:34.620 | And so these two things are in conflict with each other.

01:17:37.220 | That you want something that's really doable and yet the best performance always comes

01:17:40.660 | when you get the biggest contract at the youngest age possible.

01:17:43.940 | And so you want something that's meaningful.

01:17:46.300 | And so it's a delicate balance of doable yet meaningful where it's got to be enough money

01:17:52.180 | where it's going to make a difference to you.

01:17:53.860 | Because if you sign up at your current age and you say, "Well, I'll go ahead and put

01:17:57.140 | $100 a month into it."

01:17:58.980 | And then five years from now, you've got an account that's got $10,000 in it, that doesn't

01:18:02.740 | do much for you.

01:18:03.740 | It's not a genuine store of money.

01:18:06.260 | It's just a tiny little asset that doesn't make much of a difference.

01:18:09.580 | The plan didn't work.

01:18:11.140 | And so I don't have a formula for it other than that kind of soft tension between doable

01:18:16.500 | and meaningful.

01:18:18.040 | That's where the tension always is.

01:18:19.640 | And then we also want to remember that life insurance never makes us rich.

01:18:25.360 | And so we don't want to put money into it that would be otherwise destined for a great

01:18:30.140 | business or a career advancement, et cetera.

01:18:33.140 | It's got to be those lower amounts, but those lower amounts that accumulate over a long

01:18:36.940 | period of time wind up being really, really valuable and they wind up changing your psychology

01:18:42.340 | and allowing you to go for the bigger riskier opportunities as well.

01:18:46.220 | So it's one of the most debated subjects in financial planning because it's so complicated

01:18:52.940 | and it's rightly complicated.

01:18:54.700 | And that means that if it were so obvious to give the exact formula for it, then everyone

01:18:59.220 | would do it.

01:19:00.260 | But it's not.

01:19:01.420 | There are things that are obvious.

01:19:02.580 | If you have access to a 401k, you should max it out every year.

01:19:05.740 | That's obvious.

01:19:06.740 | There's only tiny exceptions to that.

01:19:08.540 | So that's why everyone agrees on that.

01:19:09.940 | But with how much to go into life insurance, that balance of doable and meaningful and

01:19:13.740 | what role is this contract likely to play in 10 years, in 50 years, in 70 years.

01:19:21.180 | Great.

01:19:22.180 | Thanks, Joshua.

01:19:24.020 | My pleasure.

01:19:25.020 | And that is our last caller for today.

01:19:28.660 | Thank you all so much for listening to today's podcast.

01:19:30.780 | If you would like to be on next Friday's Q&A show, you can do that by becoming a patron

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01:19:39.780 | Remember that we're still taking participants for the Panama event, January 22.

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01:19:48.500 | about anything.

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01:20:02.580 | Thanks.

2024-01-05_Friday_QA