2024-01-19_Friday

00:00:00.000 | Today on Radical Personal Finance is live Q&A.

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

00:00:21.960 | skills, insight, 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.

00:00:28.040 | My name is Joshua Sheath, today is Friday, January 19, 2024.

00:00:32.540 | And on this Friday, as we do each Friday, in which I can arrange the appropriate recording

00:00:36.320 | and broadcasting technology, we record a live Q&A.

00:00:39.880 | You call in, talk about anything you want.

00:00:43.280 | If you've been listening to these shows, looking for a chance to talk to me, bring up your

00:00:53.920 | topic of conversation, bring up any questions that you have, I'd love for you to do that.

00:00:57.740 | You can do that by becoming a patron of the show.

00:00:59.240 | Go to patreon.com/radicalpersonalfinance, patreon.com/radicalpersonalfinance, sign up

00:01:03.800 | to support the show there on Patreon, that'll gain you access to one of these Friday Q&A

00:01:07.160 | shows.

00:01:08.160 | Friday Q&A calls, that gives me the ability to meter the calls a little bit, just make

00:01:14.160 | sure I don't have too many calls.

00:01:15.960 | By the way, if those of you who want to talk to me, this is probably your cheapest way

00:01:18.800 | to do that.

00:01:19.800 | I've had people, of course, I want you to stay around for years and years as a patron,

00:01:23.360 | I've had people sign up, sign up for one month, talk to me on Q&A calls each week for a month

00:01:28.900 | or something like that, and then they're done and they're out of here.

00:01:31.420 | Also remember though, so if you'd like to talk to me, that's a fair way to do it.

00:01:34.540 | However, also remember that right now, consulting calls are open during the month of January.

00:01:37.860 | If you'd like to book a private consultation with me, go to radicalpersonalfinance.com/consult,

00:01:46.260 | probably one of the most competent, most discreet financial advisors that you can talk to.

00:01:52.420 | I don't have any conflicts of interest, don't sell any products, I'm just simply here to

00:01:55.260 | talk to you about anything that you want.

00:01:57.460 | You can judge by the way that I handle these Q&A calls and see if you think it might be

00:02:01.340 | useful.

00:02:02.340 | But if you think I might be able to serve you, go to radicalpersonalfinance.com/consult.

00:02:06.780 | We begin with Andrew in Minnesota.

00:02:07.780 | Andrew, welcome to the show.

00:02:08.780 | How can I serve you today?

00:02:09.780 | Andrew Hiltzik, CFO Alphabet and Google: Yeah, good afternoon, Josh.

00:02:10.780 | I just want to first off say thanks and appreciate the opportunity to do this on a regular basis.

00:02:20.140 | My question is to just get general advice.

00:02:23.180 | I'm interested to start my own podcast around building wealth and investing specifically

00:02:28.980 | in a niche to build mid-six-figure to mid-seven-figure wealth.

00:02:34.500 | Or I want to be mindful to Christians with respect to tithing, generosity in general,

00:02:41.540 | biblical financial advice.

00:02:43.940 | And I'm just curious if you have any recommendations on how to build a brand around that concept

00:02:49.580 | that would eventually generate income over months to years that I could potentially live

00:02:55.860 | off of.

00:02:56.860 | You said podcast.

00:02:58.980 | Do you mean audio podcast or do you mean video podcast?

00:03:05.540 | Either/both.

00:03:06.740 | I would assume just to get...

00:03:08.620 | I'm not a content creator by any way currently.

00:03:15.620 | So I think I'd get started generally doing audio, but I'm definitely open to video and

00:03:21.340 | even just a common webcam videotaping the conversation.

00:03:25.300 | Right.

00:03:26.300 | So let me begin with that.

00:03:29.900 | I would say that the era of audio-only podcasting is basically behind us.

00:03:36.180 | And so if I were starting over today, even as I think about with my own stuff, I would

00:03:40.780 | never again start an audio-only podcast.

00:03:44.540 | And let me explain why that is so you can see if I'm right or wrong.

00:03:48.740 | Because there are many audio podcasts.

00:03:51.020 | Many people listen to audio podcasts.

00:03:53.420 | But audio podcasts face some significant challenges that other forms of media do not.

00:03:59.940 | The first problem that you face with audio podcasts is the problem of findability.

00:04:07.340 | Now if somebody wants to go and look for an audio podcast, there is no problem of findability.

00:04:13.440 | You can go to Apple Podcasts, you can go to Stitcher, you can go to Spotify.

00:04:21.980 | You can go wherever you want.

00:04:23.040 | You can find podcasts.

00:04:25.000 | But that's only serving the people who are going and looking for those audio podcasts.

00:04:31.740 | And so those people can go and find an audio podcast.

00:04:35.460 | And that's great.

00:04:36.740 | But once they find it, they can't really share it.

00:04:40.400 | And this is the first big problem with audio-only podcasting.

00:04:44.140 | Audio-only podcasts are not shareable.

00:04:46.580 | And thus they basically never go viral.

00:04:49.840 | A show can sort of kind of go viral.

00:04:54.020 | Although I haven't heard of an audio podcast going viral in years, there are certainly

00:04:58.520 | many large audio podcasts.

00:05:00.520 | But a podcast itself, like a specific episode of a podcast cannot go viral because there's

00:05:07.200 | no easy way to share it.

00:05:09.140 | There's no easy way to share a clip from it.

00:05:11.580 | There's no functional way that it can go.

00:05:14.760 | So you might have a show of mine that you really enjoy.

00:05:18.300 | And so you'll send an episode to a friend and that friend may click on a link and listen

00:05:22.480 | to the episode.

00:05:23.480 | I do that occasionally when someone sends me a link.

00:05:25.800 | But they can often listen without subscribing.

00:05:28.440 | And the listening is often buried in a long format of show.

00:05:33.380 | I of course produce a long format podcast and my listeners that are here for the long

00:05:38.400 | format, they like that.

00:05:40.000 | I like the medium.

00:05:41.720 | It fits what I like to do.

00:05:43.840 | But in general it means that it's very hard for people to find the content.

00:05:48.120 | And a specific podcast episode or a specific audio podcast only moment never goes viral.

00:05:55.040 | Let's pretend that the problem of shareability was instantly solved.

00:05:57.840 | Let's pretend that you recorded a podcast and you had somehow some custom software that

00:06:02.760 | could take a perfect three minute clip from an audio podcast.

00:06:06.480 | And so anytime somebody wanted to share that clip of some profound thought that you've

00:06:10.240 | had with your audio podcast and they wanted to share that with all their friends on social

00:06:14.000 | media and they click that, you're still left with just audio.

00:06:19.360 | And unless there's some kind of automated transcription service that's transcribing

00:06:24.440 | it and putting words on it, it's such a boring video and you've all lost all of our attention

00:06:28.260 | span that nobody's going to sit there and pay attention to a three minute audio only

00:06:32.220 | clip.

00:06:33.220 | And so you don't even have something that can go viral the way that a three minute video

00:06:39.900 | clip from a show or something like that could go viral because there's nothing interesting

00:06:43.340 | to see.

00:06:44.360 | And so when your listeners are sitting there scrolling and swiping while they're sitting

00:06:47.620 | on the bus or whatever, then they're not likely to sit there for long enough to listen to

00:06:53.980 | your audio, especially in a TikTok generation where now our attention spans are even shorter.

00:06:59.620 | Now the second big problem with podcasts is that there's no algorithm to feed your content

00:07:05.040 | to someone else.

00:07:06.420 | So if you have an audio only podcast that is positioned on a traditional audio only

00:07:12.780 | platform and somebody listens to your episode, there's no algorithm that's going to pitch

00:07:17.660 | them the next episode.

00:07:19.520 | There's no algorithm that's going to say, "Hey, have you checked this out?"

00:07:22.420 | Now compare and contrast that with YouTube.

00:07:24.840 | If I go to YouTube and I search for something, I'll get a lot of interesting search results

00:07:31.900 | and I'll find a video and I'll watch two or three videos.

00:07:34.220 | Then the next day when I'm flipping through my YouTube feed, all of a sudden YouTube pitches

00:07:38.380 | me a video on the thing that I watched yesterday.

00:07:40.940 | And I say, "Oh, that's cool."

00:07:42.300 | And if I watch one person's video, then all of a sudden now it'll pitch me another person's

00:07:46.300 | that video.

00:07:47.360 | And many of the channels or things that I consume on an ongoing basis are things that

00:07:52.080 | I consume based upon the fact that they were recommended to me by the algorithm.

00:08:00.380 | And so that recommendation engine of the algorithm is really, really a valuable thing about the

00:08:05.420 | video platforms and it doesn't exist on any of the audio platforms.

00:08:10.740 | So the third thing that has happened is with the absolute collapse of the price of bandwidth

00:08:18.980 | that most of us basically have enough data that we don't much care whether we're listening

00:08:25.440 | to audio or we're watching video.

00:08:28.140 | So when I started Radical Personal Finance in 2013, it was a very pivotal moment in the

00:08:33.360 | technology of audio podcasting because we had gone past the stage at which you had to

00:08:39.080 | take your iPod, plug it into your computer and upload all your podcasts that you downloaded

00:08:43.280 | from iTunes.

00:08:44.280 | That was where I started listening to audio podcasting.

00:08:46.220 | Some people were before that, but that's where I ended in.

00:08:47.980 | It was past that stage, but we weren't yet to the stage where bandwidth was cheap.

00:08:54.340 | We were at the smartphone revolution where people didn't have to deal with iTunes and

00:08:58.880 | plugging their iPod and MP3 players into the computer, but we hadn't yet reached absolute

00:09:03.880 | zero cost bandwidth.

00:09:05.640 | And so audio podcasts were very attractive because you could download all kinds of podcasts,

00:09:11.320 | have them all ready for you and you could, while you're driving around, easily listen

00:09:14.400 | to those things.

00:09:15.520 | And that was where the mega podcast listeners kind of started and came from.

00:09:20.960 | That's dead and gone.

00:09:22.160 | I don't do that anymore and I'm a podcast creator.

00:09:25.080 | I do not today listen to any audio only podcasts and the audio podcasts that I do listen to,

00:09:31.760 | I usually stream them on something like YouTube because it's more convenient for me to have

00:09:36.880 | it there than it is for me to use podcast players.

00:09:41.280 | And actually that's not true.

00:09:42.360 | Excuse me, there is one podcast that I do listen to that is an audio podcast that's

00:09:46.560 | not on YouTube.

00:09:49.760 | But beyond that, the whole world of kind of audio podcast listening has dramatically decreased.

00:09:56.800 | Now what has increased is video.

00:09:59.040 | So video is absolutely enormous and video in all of its formats, long form video, two

00:10:06.720 | hour video, two second video, all of video, we are living in the day and age of video.

00:10:13.720 | Now let me pivot for just a moment to writing.

00:10:16.360 | Writing is not dead and gone.

00:10:17.720 | Writing is still extremely powerful and extremely useful.

00:10:21.500 | But the methods of writing have changed and writing has the great benefit of being scannable

00:10:27.520 | and having the ability to go viral in an appropriate forum.

00:10:31.740 | And so as I see it, the future is for strong writers and for strong video creators to really

00:10:39.040 | flourish in the future.

00:10:40.680 | Now that doesn't mean that you can't have an audio only podcast because there is still

00:10:46.760 | a great contingent of people that may want to listen to your content because it is convenient

00:10:51.440 | for them.

00:10:52.440 | They might not live in a place where they have great connectivity, etc.

00:10:55.640 | And so those people, creating an audio podcast feed is certainly something that should be

00:11:01.320 | done but I would not recommend it as a primary platform for almost anybody in today's age.

00:11:09.960 | Now here is one comment however where I would say it is worth considering.

00:11:14.680 | If creating the audio podcast is something that is useful for you personally as a way

00:11:21.660 | to articulate your thoughts and to force you and if it is the simple first step to going

00:11:28.440 | from being a consumer to being a producer, then you should do that.

00:11:32.920 | But you should as quickly as possible add in other forms of content that have the opportunity

00:11:37.900 | to go viral, to be shared more easily in a compact, concise way and also that have the

00:11:43.940 | opportunity to get algorithms working on your side sharing your content in some way, shape,

00:11:49.040 | or form.

00:11:50.040 | And audio podcasts as I see it suffer enormously from those two major problems in today's world.

00:11:55.960 | Yeah, that makes sense.

00:11:59.040 | Okay, good advice.

00:12:01.800 | When would you find it appropriate to spend money on advertising on any social media advertising

00:12:10.760 | platform spending a few hundred dollars a month there to try to kickstart that going

00:12:16.320 | viral or searchability?

00:12:18.840 | When you have some saleable product where you can profit from it.

00:12:23.520 | So for the business model to work, you have to have some kind of product that you can

00:12:27.960 | sell and if you have that, then go ahead and start spending money on ads.

00:12:32.360 | Okay, sounds good.

00:12:35.440 | Okay, thank you very much.

00:12:38.680 | My pleasure.

00:12:39.680 | And feel free to call back and we can go over more steps but I feel strongly about that.

00:12:45.640 | The era of audio only podcasting, the great rise in it, it's still there just like radio

00:12:50.520 | is still there but it's not where the excitement is, it's not where the masses are and I believe

00:12:55.320 | that it suffers from those two enormous flaws.

00:12:58.320 | Peter in New York, welcome to the show.

00:12:59.320 | How can I serve you today?

00:13:00.320 | Hey Joshua, can I ask you some questions about cash management both strategic and tactical?

00:13:09.320 | Yes.

00:13:10.320 | All right.

00:13:12.880 | My portfolio has gotten a little out of whack and I'm happy to go into that but I wanted

00:13:18.200 | to first strategically try to figure out if my stock to cash balance should also include

00:13:27.640 | my real estate holdings or not and then I had some specific tactical questions about

00:13:32.840 | getting the stock portion or the cash portion of my portfolio built back up.

00:13:37.960 | What is your target percentage and allocation towards cash?

00:13:42.880 | So with investable money, I'm interested in 90% mutual funds and 10% cash.

00:13:49.600 | And how much total cash does that represent in terms of your portfolio?

00:13:55.360 | So it depends on whether the real estate's in there or not.

00:13:57.760 | That's what I'm trying to figure out first which is my network when you throw in the

00:14:03.800 | real estate is like double what it is if you just looked at the investable assets.

00:14:10.040 | So I'm trying to figure out what my cash number should be if it should include the total number

00:14:17.760 | with the real estate or not.

00:14:20.360 | What's the net worth with real estate and what's the net worth without real estate?

00:14:25.200 | With real estate it's about 5 million and without the real estate it's about 2 million.

00:14:33.680 | And how did you come up with a 10% target?

00:14:36.040 | What's the logic behind that target?

00:14:39.160 | I just picked, Warren Buffet always said 90% S&P index and 10% short term treasuries.

00:14:46.000 | So I said that sounds like a good mix to me.

00:14:48.760 | And currently is the money in treasuries?

00:14:53.200 | So currently my cash position's gotten a little bit whacked.

00:14:58.880 | The biggest chunk of it is in a high yield savings account.

00:15:05.160 | And then the next biggest tranche is the cash balance of the whole life insurance policy

00:15:10.840 | and then after that is in a checking account.

00:15:15.780 | Why did Warren Buffet say 10% treasuries, 90% mutual funds?

00:15:21.960 | I think the idea always was just to have some cash on the sideline for interesting opportunities

00:15:27.160 | that come around.

00:15:28.160 | I always had the sense it was for dry powder purposes.

00:15:31.760 | So I'm fine with it.

00:15:33.440 | We just always have to ask that question.

00:15:35.840 | Why are we doing this?

00:15:38.120 | And so I have some thoughts and I have a framework but before I give that to you, what specifically

00:15:42.640 | is your first question then?

00:15:46.440 | So my real question is I've gotten out of whack because I simultaneously had a large

00:15:53.760 | inheritance tax bill, which is how the real estate portion of the portfolio got really

00:15:58.740 | big all of a sudden, and I had a car that I came off of a lease that I bought.

00:16:05.440 | So I simultaneously had a huge tax bill and a huge car loan bill and all of my usual sort

00:16:11.920 | of emergency fund cash that I had went to that.

00:16:15.560 | I've been doing a little 0% credit card games and have a whole life insurance loan that

00:16:20.760 | I'm paying back.

00:16:22.200 | And I'm trying to, you know, the credit card game is sort of easy to do the three card

00:16:26.280 | Monty.

00:16:28.040 | The real question I had is with the whole life insurance loan, how beneficial it is

00:16:33.200 | to drag that out versus paying it down, you know, give it that it's even though I'm paying

00:16:40.080 | myself back as my highest interest debt right now.

00:16:43.240 | That's really the tactical question I have.

00:16:46.880 | But also I was trying to figure out do I, does the number that I'm shooting for need

00:16:51.420 | to reflect the fact that I've got these big real estate holdings or can it just, you know,

00:16:56.760 | print out what's in the 401k and everything else that's invested.

00:17:01.000 | I don't know of a way that we could answer that cat, that last question categorically

00:17:09.240 | until we project a few scenarios.

00:17:12.440 | And so there's, when you think about your cash holdings, then you want to say, well,

00:17:18.920 | what are, what are my targets?

00:17:20.280 | What are my scenarios?

00:17:21.280 | That's why I pressed on the 10% number.

00:17:23.320 | You could imagine, for example, let me, let me just set out a couple of scenarios to try

00:17:27.120 | to prove the point.

00:17:28.480 | Let's say that somebody has a $10,000 net worth and so he's trying to take Warren Buffett's

00:17:37.240 | advice and he's trying to keep $9,000 invested in mutual funds and $1,000 in cash.

00:17:45.200 | Well that's obviously dumb, right?

00:17:47.160 | Somebody with a $10,000 net worth should have all $10,000 in cash because you're going to

00:17:51.880 | need that money to move apartments and put down first, last and security.

00:17:57.120 | You're going to need that money to fix the car when it breaks.

00:18:00.160 | When you have $10,000 net worth, the 10/90 rule doesn't make any sense because it needs

00:18:05.280 | to be a hundred percent cash and zero percent mutual funds at that level of net worth.

00:18:09.640 | Now if somebody's got a hundred bazillion dollars and they're trying to keep 90% in

00:18:15.920 | mutual funds, so somebody's got a hundred bazillion dollars and they're trying to keep

00:18:33.560 | 90% in mutual funds and their 10% means that they've got $58 million sitting in cash and

00:18:41.880 | they have no intention of buying a business or anything like that, then what's the point

00:18:45.960 | of having $58 million sitting in cash?

00:18:48.920 | Now you could understand Warren Buffett giving that advice about kind of a dry powder target

00:18:54.000 | but I don't think it's very helpful for us to begin there.

00:18:56.840 | I think we need to begin first by saying what are some reasons we might want to have cash

00:19:01.640 | and then target those reasons.

00:19:05.080 | So the example, this is where we get into kind of day-to-day normal stuff, three to

00:19:09.360 | six months worth of expenses in cash.

00:19:11.480 | Why?

00:19:12.480 | Well we might lose our job.

00:19:13.480 | If we lose our job we don't want to be in a difficult situation, we want to be able

00:19:16.960 | to get a good next job, we want to make sure we have money so if we have six months of

00:19:21.000 | expenses, that six months of wiggle room, I think I could probably get a job fairly

00:19:26.120 | quickly within that, especially if I'm fairly employable.

00:19:29.200 | Now let's say that instead of being fairly employable you have a job where you have a

00:19:33.800 | very unique skill set and maybe you can make a lot of money when you're working but it's

00:19:38.680 | not uncommon at all for you to have say eight months without a contract or ten months without

00:19:42.920 | a contract.

00:19:44.000 | Well now in that situation we would immediately go and say I need to have a year's worth of

00:19:48.640 | emergency fund, a year's worth of expenses because I might go a year without having income.

00:20:00.040 | So now the goal is a year.

00:20:02.340 | Now if someone has real estate then let's say we want to look at it and we say what

00:20:06.960 | could likely happen.

00:20:07.960 | Well the worst scenario that might happen is I would have a hurricane with a bad tornado

00:20:14.440 | spawned from it that rolls across all four of my rental houses at the same exact time

00:20:20.240 | destroying all four of them.

00:20:22.540 | Well I have insurance policies, my deductibles on each property are $25,000 and so if I have

00:20:27.880 | $100,000 in cash then that covers my deductibles on four properties.

00:20:32.160 | It's probably more extreme than I need to think about but that's kind of a starting

00:20:35.460 | point because now we're putting a name on the cash and we're giving it a job to do and

00:20:39.920 | now we understand how much we might want to have.

00:20:42.680 | Similarly in the real estate space if we're looking at it and we recognize you know what

00:20:47.160 | from time to time I have a two month vacancy I need to make sure that I'm always prepared

00:20:51.000 | to have money for a two month vacancy and I need to make sure that my average turnaround

00:20:55.560 | on a house when someone moves out and kind of fixing it up is say $4,000 so I need enough

00:21:01.120 | money to cover my expenses for mortgage expenses and other stuff for a two month vacancy on

00:21:05.960 | average plus $4,000 turnarounds plus 50% of a roof or something like that.

00:21:12.400 | And so the only way we can arrive at the appropriate amount of cash to have on hand is based upon

00:21:17.760 | the kinds of scenarios that we would envision needing that money for.

00:21:21.960 | And then that's actually what funds a lot of kind of what I say about where and how

00:21:27.960 | cash should be stored.

00:21:29.300 | So I tell people they should start their cash savings by having a certain amount of money

00:21:33.300 | that they have at home.

00:21:35.060 | And so why do I say that?

00:21:36.520 | Physical currency.

00:21:37.520 | Well how do you figure out what amount of physical currency you should have?

00:21:40.680 | Well you make up a scenario.

00:21:42.360 | So my scenario is you know all of a sudden they pass some law against homeschooling or

00:21:48.460 | something like that and it's going to be retroactive and I've got to flee the country so they don't

00:21:52.860 | put my children in prison.

00:21:54.500 | And so I need to make sure that I have $10,000 of cash to go down to the airport and buy

00:22:00.140 | plane tickets out of the country so they don't arrest me and my children.

00:22:03.600 | And I need to make sure that I have enough money to flee and have three months of expenses

00:22:07.180 | in a foreign area, foreign land.

00:22:08.820 | So maybe if I have $20,000 in currency that allows me to go and get on an airplane and

00:22:13.420 | start over somewhere else.

00:22:15.500 | You know I'm using kind of a goofy but real scenario.

00:22:18.960 | Or you might look and say if everything went bad and I lost everything I had at least I

00:22:24.160 | have three months of expenses and so I want to have that in physical currency.

00:22:28.380 | Or you look at how much money do you keep in a bank account in another country.

00:22:32.700 | Well my answer is something like two years worth of living expenses.

00:22:36.380 | That's a target.

00:22:37.380 | Why?

00:22:38.380 | Well maybe my home currency is collapsing and I have to move abroad because there's

00:22:41.340 | hyperinflation where I'm from and I need two years to kind of figure things out so I keep

00:22:45.820 | two years worth of living expenses abroad and I invest everything else etc.

00:22:49.700 | So I've given enough examples now but that's the way that you figure out how much cash

00:22:54.740 | you need.

00:22:56.020 | And a guy with $100 million doesn't need $10 million of cash just because of a 90/10 rule

00:23:02.340 | and a guy with $10,000 doesn't need $1,000 of cash just because of a 90/10 rule.

00:23:07.980 | There needs to be a name that's put on it based upon probable potential life circumstances

00:23:14.320 | that may happen and how you might use cash to negotiate those circumstances.

00:23:19.460 | Got it.

00:23:21.940 | Got it.

00:23:23.300 | I've always sort of done the standard three to six months reserve has always been my usual

00:23:29.100 | just to cover living expenses on the odd chance that nobody's working for a little while.

00:23:34.460 | And I think that's reasonable.

00:23:35.660 | Beyond that, yeah, beyond that I've never really targeted for anything other than that.

00:23:40.980 | I mean occasionally it's nice to have some if there's some dip in the market or something

00:23:45.140 | like that but really that's all I've ever earmarked it for.

00:23:48.060 | And so I didn't give trading examples but a trader will go through a similar thought

00:23:53.220 | process.

00:23:54.220 | You know I never commit more than let's say you had some rules.

00:23:56.540 | Let's say you said I'm never going to commit more than 10% of my net worth to a position

00:24:00.420 | and I always want to have enough money to be able to take advantage of a really great

00:24:05.780 | buying opportunity when it's there.

00:24:07.140 | I want to have that dry powder.

00:24:08.500 | So then that person might say I'm going to always keep 10% of my net worth in cash so

00:24:13.460 | that I have the ability to jump on something when I see it or whatever other logic works

00:24:18.180 | based upon your particular strategy.

00:24:21.100 | My point is it's fine to accept a rule of thumb.

00:24:27.660 | You routinely hear me use rules of thumb because rules of thumb work.

00:24:31.900 | If somebody has six months of expenses and that fits if somebody always has an emergency

00:24:38.200 | fund that covers three to six months of expenses by definition that amount of money will scale

00:24:45.700 | to somebody's lifestyle.

00:24:47.740 | And so people who live a lifestyle of say $3,000 a month they don't have $30,000 emergencies.

00:24:55.780 | They just don't because everything in their life is scaled to their expenses.

00:25:00.320 | On the other hand a guy who lives a lifestyle of $15,000 a month it wouldn't be uncommon

00:25:05.040 | for him to have a $30,000 emergency.

00:25:07.940 | It's just a different expression of emergency because our financial transactions are always

00:25:14.920 | scaled to our normal life.

00:25:16.580 | So the rule of thumb is perfectly fine to use because it kind of automatically fits

00:25:22.920 | most of those circumstances.

00:25:24.520 | You wanted to buy out a lease on a car you're the kind of guy who has six months of expenses

00:25:28.820 | for you buying a lease on a car.

00:25:30.420 | I don't know what you paid but let's just say $40,000 to buy out your lease.

00:25:33.780 | Okay done great this was no problem because that's the scale of your financial life.

00:25:38.220 | So I don't want to keep you too much longer on the whole life loan just from a practical

00:25:47.380 | standpoint is it beneficial to drag out paying that out for however the policy and no okay

00:25:54.540 | so it doesn't matter how I do that.

00:25:58.140 | It gets paid off when it's paid off and neither here nor there on the rate of doing it.

00:26:04.500 | Right so my answer to you was the first thing we look at is do we need the cash right now

00:26:10.300 | or are we simply kind of rebuilding the supplies.

00:26:14.820 | If we're rebuilding our reserves then my first answer and I'll just give it to you we don't

00:26:19.380 | need to go through it in a question and answer way is you start by funneling extra amounts

00:26:24.300 | from your income towards just simply building cash again.

00:26:28.860 | So for a guy like you who's wealthy who could sell property for a guy like you who has the

00:26:33.940 | ability to open up your stock account sell $100,000 and have it covered immediately.

00:26:38.380 | I don't think you need to freak out and start selling property unnecessarily.

00:26:41.900 | You don't need to start incurring taxable gains unnecessarily.

00:26:44.860 | You just want to go ahead and say hey I spent down a lot of cash let's rebuild up the reserves

00:26:49.420 | and the ideal way to build up reserves is to simply build them up from income.

00:26:53.980 | And so you want to of course make sure that you maximize qualified account contributions

00:26:59.660 | because as the calendar year passes you'll lose the ability to make those contributions

00:27:04.220 | but after you've maximized 401ks, HSAs, etc. whatever your qualified accounts or otherwise

00:27:10.500 | you're using then just stop additional investing unless there's a really great deal and you're

00:27:16.140 | just buying bargain shares of something.

00:27:18.620 | Stop additional investing and start rebuilding cash just from income flows and then that

00:27:23.700 | in and of itself should handle it.

00:27:26.780 | The first thing I would pay off would be the life insurance loan and the reason is that

00:27:30.620 | if you're successfully surfing your 0% balances and I'm assuming maybe you took my credit

00:27:36.580 | card course or at least you're familiar with the concepts I taught in that is that if you're

00:27:40.460 | successfully surfing those balances and they're small balances let's say it's 20% of your

00:27:45.700 | total credit line then those are pretty cheap balances and anytime you need to you can always

00:27:50.980 | just take out another life insurance loan and pay them down if you need to.

00:27:55.740 | But so I would rather go ahead and pay down the life insurance loan first, pay off that

00:27:59.940 | interest, surf the balances using the 3% or 5% offers if necessary while just simply paying

00:28:06.820 | them down out of cash flows.

00:28:09.100 | And then if something happens and let's say that they reduce your credit limits or credit

00:28:14.500 | score goes down or something like that then what you do is just go ahead and take out

00:28:18.860 | another policy loan against the cash values, use that to pay down the credit card balances

00:28:24.020 | until you get a more advantageous offer and then switch back.

00:28:26.860 | So you kind of go back and forth.

00:28:28.540 | But there's no reason to want to maintain a life insurance policy loan on your policy.

00:28:34.660 | There's no benefit to maintaining it.

00:28:37.860 | The only reason to have it is if it was useful for you to do something else but once you've

00:28:42.620 | used it you want to take it out, put it back, pay it down and get the policy restored back

00:28:47.780 | to full operating condition by not having a loan on it.

00:28:51.140 | Got it.

00:28:52.140 | All right.

00:28:53.140 | Thank you.

00:28:54.140 | Great.

00:28:55.140 | My pleasure.

00:28:56.140 | All right.

00:28:57.140 | We move on to the state of Washington.

00:28:58.140 | Welcome to the show.

00:28:59.140 | How can I serve you today?

00:29:00.140 | Is that me?

00:29:01.140 | Can you hear me?

00:29:02.140 | That's you.

00:29:03.140 | Whoever you is.

00:29:04.140 | Yep.

00:29:05.140 | Oh cool.

00:29:06.140 | My name is Kevin.

00:29:07.140 | I had a, I guess a technical question like a short story as building a house this year

00:29:15.300 | and I was trying to think of ways that I could generate additional cash flow from possibly

00:29:21.180 | my taxable investment account or turning off 401k contributions or even HELOC on the current

00:29:28.180 | property which is going to be sold at the end, stuff like that.

00:29:32.060 | Because I'm going to have to be paying interest only payments on the loan as the stuff progresses

00:29:36.380 | throughout the year as it gets built.

00:29:37.900 | How much money do you need?

00:29:42.180 | Very unknown at the moment.

00:29:46.620 | Very unknown.

00:29:47.620 | The first check I wrote was 6,500 bucks and I'm sure that's going to get bigger and quicker.

00:29:52.260 | Are you borrowing money?

00:29:53.260 | Do you have a construction loan for the construction?

00:29:56.100 | Yes.

00:29:57.300 | We will have a construction loan but just try to cash flow it if I can, as much as I

00:30:03.780 | can.

00:30:04.780 | All right.

00:30:05.780 | Well let me give you two models to think about, two just frameworks to put in your thinking.

00:30:09.100 | I think that if these models are accurate then you'll be able to answer all of the day-to-day

00:30:14.340 | questions.

00:30:15.460 | So let's begin with model number one.

00:30:17.700 | Model number one is if you want to have the lowest possible cost to the construction then

00:30:26.620 | you should not borrow money for it.

00:30:30.460 | Anytime we do anything with borrowed money we spend more money because psychologically

00:30:36.740 | it's just easy to spend money.

00:30:40.260 | Maybe it's just me but at least that's always been my experience.

00:30:43.540 | If you actually have to watch your dollars leave your bank account you take much better

00:30:50.220 | care of those dollars than if those dollars leaving your bank account are there because

00:30:53.980 | of your construction loan than if those dollars are there because of your credit card or whatever

00:31:00.940 | the SBA loan, etc.

00:31:03.340 | New business people who go and borrow money to start their business waste money left,

00:31:09.260 | right, and center in a way that you don't when it's actually your money that you saved.

00:31:14.540 | And so if you came to me and you said I am going to pay cash for everything and because

00:31:22.780 | of that I'm going to stop contributing to my 401k, I'm going to stop saving anything,

00:31:28.140 | etc.

00:31:29.140 | I'm just paying cash.

00:31:30.140 | I think that's a perfectly reasonable and even advisable plan because of those psychological

00:31:36.660 | effects.

00:31:37.660 | You'll make generally speaking better decisions, you'll spend less money, your overall cost

00:31:42.820 | to create the house that you want will be lower.

00:31:45.580 | Now does that mean that you have to do it debt free?

00:31:48.500 | It doesn't sound like that's even a choice that you're making but I would say no because

00:31:53.420 | there may be certain things that are just set.

00:31:57.820 | So for example you have to borrow money to buy the land or you have to borrow money to

00:32:02.700 | get the shell built out and that's going to cost you X number of dollars and I'm definitely

00:32:07.060 | going to borrow money for that.

00:32:08.680 | So that's okay and it's fine to do half and half but if you did something like say I paid

00:32:16.420 | cash for the land, I have to borrow money to get the house shell built so that it's

00:32:21.460 | dried in and everything but everything after that I'm going to pay cash and do it myself

00:32:26.300 | little by little even if it takes you a couple years to do that etc.

00:32:30.140 | Because of those behavioral changes I think that's often a perfectly fine thing to do

00:32:34.900 | and a smart thing to do.

00:32:37.340 | And so it's fine to stop saving and investing, it's fine to do that stuff.

00:32:41.660 | Now if you're, that's framework number one and I think for most people you're better

00:32:46.500 | off just to do that.

00:32:48.940 | I don't think almost anyone would regret not contributing to their 401k for a couple of

00:32:55.780 | years if that allowed them to have a lower balance at the end, to know that they had

00:33:02.020 | squeezed every penny as much as possible so that they bought the right things and also

00:33:08.260 | to make sure that they had enough money to comfortably buy the things that make the house

00:33:12.300 | really nice to have.

00:33:14.100 | Because the opposite argument for what I've described is that sometimes people pinch their

00:33:18.180 | pennies so hard when they're building a new house that they wind up not creating the house

00:33:24.620 | to the level that they really want.

00:33:26.740 | And so they buy all the cheap fixtures and eight years in everything's rusted and you're

00:33:30.340 | pulling it all out.

00:33:31.340 | It would have been better if you just increased your budget 30% and bought the nice fixtures

00:33:35.580 | that would have lasted for a longer period of time and helped the house as well.

00:33:40.460 | And so if debt is one way you do that or just not saving is one way you do that, that's

00:33:43.860 | a reasonable choice.

00:33:46.260 | Now beyond that when we get to the topic of should I stop putting money in my 401k or

00:33:52.620 | should I cash flow from my stocks, those are two separate questions, let me deal with those

00:33:56.260 | separately.

00:33:58.300 | If you don't contribute to your 401k, you lose your 401k contribution for the year once

00:34:03.380 | the calendar year is finished.

00:34:05.300 | And so if that's an important component of your long-term wealth building plan, as it

00:34:09.740 | is for most people, recognize that every calendar year that passes that you don't max your accounts

00:34:15.660 | is a calendar year that you won't be able to contribute.

00:34:18.260 | It doesn't mean you can't still invest later, it doesn't mean you can't still get rich,

00:34:22.340 | but it's a calendar year that you won't be able to contribute.

00:34:24.900 | And so if you want that contribution, then you've got to do that, which would lead us

00:34:29.460 | to say if you have taxable investments, yeah, you should sell them, etc.

00:34:35.100 | Now moving to the other thing that you alluded to, should I divert my cash flow from my taxable

00:34:39.980 | accounts?

00:34:40.980 | Sure, you should divert all cash flow.

00:34:43.300 | Wherever it comes in, any cash flow should be treated the same and it should go to your

00:34:48.580 | highest financial priority, which is to build this house.

00:34:52.060 | If you have to sell investments, then it's more a matter of tax planning the future of

00:34:56.860 | the investment and would I rather kind of pay for the things that I'm buying or would

00:35:02.300 | I rather not pay for the things that I'm buying.

00:35:04.660 | But in general, I believe that for most people, the first principle that I described is going

00:35:09.660 | to be your most important one.

00:35:11.300 | You'll make better decisions, you'll be more careful, more thoughtful, and you'll feel

00:35:14.780 | better at the end when you're dealing with your money for stuff rather than overspending

00:35:19.260 | by 82% because you did it all with debt.

00:35:22.780 | Yeah, it's pretty much everything I thought through on my own as well.

00:35:28.540 | But buying the land and everything else, all my cash is gone effectively.

00:35:34.460 | So the other thing you pointed out was good.

00:35:40.940 | So you got to get more cash and obviously that's what you're saying, but that's going

00:35:44.300 | to come from either selling some of your investments to free up cash or it's going to come from

00:35:48.860 | making more money or it's just going to come from waiting until you can save more money.

00:35:53.260 | And so you take a look at the situation and figure out what makes sense for you.

00:35:58.700 | But those are the frameworks that I think will answer your questions.

00:36:02.140 | Good enough?

00:36:03.140 | Yeah, cool.

00:36:04.140 | Thank you.

00:36:05.140 | Yeah.

00:36:06.140 | My pleasure.

00:36:07.140 | All right, move to David in Texas.

00:36:08.140 | David, welcome to the show.

00:36:09.140 | How can I serve you today?

00:36:10.140 | Hey, Joshua.

00:36:11.140 | This is a "What would Joshua do?"

00:36:14.060 | type of question.

00:36:15.740 | WWJD, baby.

00:36:16.740 | And so, yeah, exactly.

00:36:20.740 | And we've spoken in the past in the consulting, so you might remember some of my intricacies.

00:36:26.460 | But anyway, I have a full-time technical W2 job and then I also have a side business that

00:36:35.980 | probably around half of my full-time W2 job.

00:36:40.700 | The company that just offered me this new job, and the job I was working was about to

00:36:52.380 | get shut down for the project.

00:36:53.820 | So this new job offered me to move actually closer to family.

00:36:59.980 | It's about an hour closer.

00:37:01.300 | We live out in the country where I would call ourselves prepared.

00:37:05.500 | We run five acres, small home with a shop and some other stuff for being off-grid.

00:37:12.740 | But anyway, this other company offered to move us closer, which is actually closer to

00:37:19.980 | family.

00:37:20.980 | It's about an hour closer to family.

00:37:23.600 | And so we'd be about 10 to 15 minutes closer.

00:37:25.780 | I'm sorry, 10 to 15 minutes from family in this new area.

00:37:31.200 | But the dilemma is, do I stay and pursue my part-time side job and let it grow while spending

00:37:42.960 | more time with family?

00:37:44.540 | Or do I continue to do this technical job with the side job, being closer to family

00:37:51.780 | and help?

00:37:52.780 | I don't know what answers you need from me.

00:37:56.940 | Do you need more time with your family?

00:38:02.520 | Time is a commodity right now.

00:38:04.040 | I have a two-year-old and a three-month-old.

00:38:05.640 | Oh, sorry.

00:38:06.640 | Do you mean my wife and kids or do you mean my extended family?

00:38:14.000 | Do you need to spend more time with your family right now?

00:38:20.280 | I would like to.

00:38:24.040 | But as a husband and father, I'm also trying to not neglect that aspect of having a good,

00:38:33.360 | strong income.

00:38:34.360 | I don't ask the question as a joke.

00:38:39.360 | I ask it as a genuine question.

00:38:40.960 | Let me just give some examples.

00:38:42.400 | I mean, a guy – let's say that you come in and you've got a 15-year-old kid and you

00:38:47.920 | come in and surprise your 15-year-old kid in his bedroom and he's sitting there cutting

00:38:52.960 | himself.

00:38:53.960 | Well, obviously, you need more with your family.

00:38:56.600 | And so you quit your job, you sell everything, you go and hike the Adirondack Trail and you

00:39:00.760 | fix your son, whatever can be done.

00:39:04.200 | You go crazy, you act like a maniac and you fix it.

00:39:07.400 | You pour all of your energy and all of your focus onto this.

00:39:10.760 | And the thing that you obviously desperately need in that situation because your son is

00:39:15.440 | abandoned and going – I don't mean to be too hyperbolic here, but he's down a very

00:39:22.200 | wrong path.

00:39:23.200 | He could be dead in two years.

00:39:24.960 | Then you desperately need time with your family.

00:39:27.400 | And so as a father, then you completely reorient everything else in your life and you fix that.

00:39:33.520 | And that basic principle applies at different times.

00:39:36.720 | I mean, let's say you've got a – I don't know.

00:39:41.120 | You've got two children right now, but let's say you've got four children, a four-year-old,

00:39:44.880 | a three-year-old, a two-year-old and a one-year-old, and your wife is falling apart and the burden

00:39:50.960 | is just enormous and you're worried about her health, et cetera, then obviously, yes,

00:39:55.160 | you need more time with the family.

00:39:57.200 | On the other hand, if you're doing your job well and you're a good husband and your

00:40:00.320 | wife is strengthened and she's doing well and you've got healthy children, et cetera,

00:40:05.200 | then you don't need more time with your family.

00:40:08.200 | And that's where I think that there's something that is happening in our current age.

00:40:12.280 | And I'm probably guilty of perpetuating this, but there's some kind of idea that

00:40:16.800 | has been created that somehow an ideal man is a man who's with his family 168 hours

00:40:22.680 | a week.

00:40:23.920 | And while I clearly care very much about family, your family, you being there for yours, me

00:40:30.320 | being there with mine, I don't think that's the ideal.

00:40:34.200 | I don't think that that's a proper framework.

00:40:36.600 | I don't think that we look at the idea of time with family and say that 168 hours a

00:40:44.600 | week is the perfect standard, 158 hours a week with our family is a grade B, and so

00:40:52.480 | therefore, 40 hours a week with our family is an F, and we've got to move ourselves better

00:40:57.720 | by spending more time with our family.

00:41:01.120 | I have made statements such as it's quality of time at work that counts and quantity of

00:41:06.160 | time at home that counts.

00:41:07.240 | I think that that is true and that matters.

00:41:10.040 | I want to be with my family.

00:41:11.800 | I have made lifestyle decisions that have allowed me to be with my family 168 hours

00:41:16.680 | a week, but I reject the idea that that's the only correct path and that that is the

00:41:22.080 | only thing that you as a husband are responsible for doing.

00:41:25.680 | So as you said, the amount of income that your family has matters.

00:41:30.460 | It matters a lot.

00:41:32.320 | And your work matters.

00:41:34.440 | It matters a lot.

00:41:35.440 | It is important.

00:41:36.440 | Your work is important.

00:41:38.280 | Your contribution to the world through your work is important.

00:41:41.600 | Your sense of mission in your job is important.

00:41:45.200 | The things that you do are important.

00:41:47.800 | And so as a man, you have to look at your family and you have to say, "Do I need more

00:41:52.640 | time with my family?

00:41:54.280 | And what is the cost of that time versus how kind of other things are going well?"

00:41:59.600 | And here's where you want to consider your family situation.

00:42:02.600 | You want to, I mean, there's a huge difference between a guy who has a wife who's a full-time

00:42:07.880 | mother, he can get in his car, he can go off and work a long day just totally confident

00:42:13.600 | that his children are well cared for, that they know that mommy and daddy love me.

00:42:17.400 | That's a very different scenario than husband and wife who both have demanding jobs and

00:42:22.320 | they rush off in the morning and they don't even see the kids because the babysitter or

00:42:25.840 | the au pair gets the children ready for work, etc.

00:42:28.960 | And so there's not an ideal perfect standard.

00:42:36.800 | It's a standard that will adjust and will adapt throughout your life.

00:42:40.800 | And in terms of time with family, the thing that I don't even want to say it again because

00:42:45.080 | I've said it a bazillion times quite literally on the – not quite literally, that was not

00:42:48.960 | right.

00:42:49.960 | I've said it many, many times on the show and I feel like I'm just always over here

00:42:52.640 | beating this drum and I should quit beating that drum and find a new drum to beat on.

00:42:56.880 | But things like the age of your children matters.

00:42:58.920 | If you've got a two-year-old and a three-month-old, as a father, there's really very little – like

00:43:05.520 | obviously you want to play with your children and be there and build a relationship, etc.

00:43:09.600 | But you're being there with them more and let's say you could free up five hours a

00:43:13.960 | day, it's not particularly productive especially if your wife is there with them for those

00:43:19.580 | extra five hours a day.

00:43:21.520 | It's not that productive.

00:43:22.800 | And so again, if your wife is falling apart, if she needs your help, if she needs your

00:43:26.320 | support in some way, then you roll up your sleeves and you strengthen your home.

00:43:30.200 | But if your home is strong and things are going well, then you keep focusing on building

00:43:34.400 | what you need to build, building the empire, building your dynasty, building your vision,

00:43:38.480 | etc.

00:43:39.480 | Yeah, it's the former.

00:43:41.800 | She's struggling and we want more kids.

00:43:45.400 | Okay, so now, good.

00:43:47.440 | So perfect.

00:43:48.440 | Thank you for interrupting me because I was – so if your wife is struggling, then you

00:43:52.360 | need to strengthen your wife and you have to then look at your wife, your individual

00:43:58.160 | wife, not a generic woman but your woman, you need to look at your household and you

00:44:02.880 | need wisdom and you need to apply wisdom and say, "How do I strengthen my wife and

00:44:07.960 | how do I strengthen my household?"

00:44:10.320 | One way of doing it might be for you to be involved and for you to be there.

00:44:14.840 | I have done this, right?

00:44:16.320 | I have many young children.

00:44:17.920 | I have done this.

00:44:19.520 | I have done this repeatedly on different occasions.

00:44:22.700 | In many ways, I'm much better at running my household than my wife is in terms of just

00:44:27.800 | keeping everything running very, very well.

00:44:29.940 | And so if she's struggling, then I step in and I try to work on things.

00:44:34.660 | We've had various discipline issues with various children.

00:44:38.740 | And if my children are disrespecting my wife and they're not obedient, then I have to

00:44:43.340 | step in and I have to correct that.

00:44:45.920 | But I don't look at it as a long-term career.

00:44:48.980 | I look at it as I have a responsibility to change this and as soon as I get this child's

00:44:53.900 | behavior changed and fixed so that he or she is back in a proper place of respectful obedience

00:44:59.840 | and respect for my wife, etc., then my goal is not to just to be there.

00:45:06.260 | And it's kind of a balance, right?

00:45:07.600 | Because if my wife is struggling, the goal is not for me to just take over.

00:45:12.120 | The goal is for me to strengthen her, to help support her so that she's no longer struggling,

00:45:17.380 | and then for her to grow and be stronger in her area of domain and her area of responsibility.

00:45:24.500 | And that sometimes comes from you, right?

00:45:27.580 | A three-month-old is rough.

00:45:29.660 | We've had a rough year with our fifth baby.

00:45:33.460 | Last year was really difficult and a lot of it was difficult just because of having a

00:45:37.380 | baby in the house.

00:45:38.780 | And so you adapt to that, but don't think it's a long-term thing.

00:45:41.940 | It doesn't have to be a long-term thing.

00:45:43.380 | It's just this is what it's like dealing with babies.

00:45:45.660 | And you may have a particularly difficult baby.

00:45:47.460 | You have a sick baby, etc.

00:45:48.980 | And all that stuff is draining.

00:45:50.760 | So you figure out what is there.

00:45:53.180 | Now I would remind you, though, that you being home is a great solution.

00:45:58.820 | It's not the only solution.

00:46:00.200 | And so sometimes a better solution is find somebody who can lighten the load for her.

00:46:06.660 | Find a housekeeper who can come in, who can clean the house so she doesn't need to do

00:46:10.500 | that.

00:46:11.500 | Find a really great place to put your two-year-old for the morning so she has a break.

00:46:17.140 | Find someone, a family member, who can come over and be in the home a couple days so she

00:46:21.140 | can have some time to herself and go for a walk around the neighborhood, etc.

00:46:25.820 | Sometimes it is just you being there.

00:46:28.260 | But look at it holistically and then make your job decisions, your career decisions

00:46:32.900 | in light of what you think is the best solution for your family.

00:46:39.180 | If the stress is primarily due to the difficulties of a three-month-old baby, then just recognize

00:46:44.300 | that this is not necessarily a long-term thing.

00:46:47.540 | And so don't commit yourself to a long-term solution of quitting a job or something like

00:46:52.300 | that when good chance four months from now you're out of the woods, she's back to her

00:46:57.740 | normal self, she's feeling good, she's fully recovered, she's sleeping, the baby's back

00:47:02.180 | healthy, etc.

00:47:03.580 | And then finally, don't neglect whatever solving the actual needs are.

00:47:07.900 | So for example, with a baby, don't neglect, you know, why is this baby not sleeping so

00:47:11.420 | that my wife is frazzled because she's not sleeping.

00:47:13.480 | Is there something that can be done?

00:47:14.900 | Be really good at driving your family through all of those things on a comprehensive way.

00:47:20.020 | >> Yeah, it's actually the opposite.

00:47:23.180 | It's actually our two-year-old that's very strong-willed and bucking against the power

00:47:27.660 | as it were.

00:47:29.420 | And so the problem is right now we bought five acres in a property and we're kind of

00:47:35.460 | isolated.

00:47:36.460 | We're not, I mean, I guess that's the whole point of buying five acres on land.

00:47:40.060 | Really pretty property, but we're not near family.

00:47:42.100 | We're about probably an hour away from family.

00:47:44.620 | And so, and we put our oldest daughter on Mother's Day out.

00:47:47.580 | We don't really like a full daycare schedule.

00:47:50.460 | It's like two days a week just so we could be present.

00:47:53.660 | And so with the W-2 job, we would have to either move or, and they've actually said

00:48:02.100 | they would accommodate a hybrid schedule.

00:48:04.700 | So I would basically drive an hour two days a week or three days a week and then work

00:48:08.580 | from home two days a week so that we could keep, you know, the house.

00:48:12.220 | But I honestly don't know if that's the best for our family, you know, because again, we're

00:48:17.060 | isolated a little bit further out from the city versus again, my wife, you know, us being

00:48:22.860 | a little bit, you know, maybe 10 to 15 minutes from family.

00:48:25.780 | But one thing we realized, Josh, was unless it's very convenient for family to help, they

00:48:30.180 | just don't.

00:48:31.780 | And yeah, I think that's just, we were starting to realize that both of our parents are past,

00:48:37.620 | my parents and her parents are not in the picture, so they're not helpful.

00:48:42.180 | And so we just realized people that have jobs don't really, don't really got other way to

00:48:48.460 | help.

00:48:49.460 | And so it's unfortunate, but it's just kind of the way it is with our siblings.

00:48:54.780 | So.

00:48:55.780 | I would not say that you were wrong if you left your job, moved or whatever the actual

00:48:59.980 | circumstances are so that you could be there, you know, as a stay at home dad or very close

00:49:05.900 | to that for a significant period of time.

00:49:09.340 | And in many ways, it kind of feels like that's almost what we have to do in today's world.

00:49:14.220 | If you've got a big vision of the family that you're trying to build and the work that's

00:49:17.660 | going to be involved in that, etc, then you have to do that.

00:49:21.500 | I have sacrificed enormously in my career, in my business, in all of my own pursuits,

00:49:29.180 | because I have a vision for the family empire that I desire to build and the dynasty that

00:49:33.900 | I desire to leave behind.

00:49:35.800 | And so it's costly and it's financially costly and costly in many ways.

00:49:41.640 | And so I respect you for that decision if that's what you choose to do.

00:49:46.120 | And I'm not trying to, I'm not going to be able to, nor am I willing even to give you

00:49:49.360 | an answer on this just to help you think it through.

00:49:51.980 | So just understand what the core issues are.

00:49:55.040 | The reason I was saying like I would respect you for that is that for whatever reason,

00:49:59.960 | our culture is not, and this is very key to kind of the American culture, every positive

00:50:11.680 | good or value has a negative flip side, right?

00:50:16.480 | Confidence and assertiveness are positive traits, but the flip side is aggression or

00:50:24.560 | mowing people down and lack of empathy, right?

00:50:27.600 | So everything can have a positive trait.

00:50:30.020 | In the United States, we are a very independent people, and that leads to a lot of positive

00:50:36.520 | traits.

00:50:38.480 | But what has happened is we have taken our individualistic independence and we've taken

00:50:44.160 | it to the absolute maximum, to the point where you see this in our culture, where the greatest

00:50:48.800 | sin that anybody could think could be foisted against them is for somebody to try to minimize

00:50:55.960 | their libertarian freedom to do whatever they want to do.

00:50:59.160 | And so who are you to tell me I can't do that?

00:51:01.380 | You can't tell me.

00:51:02.380 | It's like this extreme, ugly form of independence.

00:51:06.160 | And so our culture lacks any sense of coherent interdependence as a cultural value.

00:51:12.700 | And so we have no collective culture.

00:51:16.480 | And that lack of collective culture expresses itself in our families, our churches, our

00:51:22.520 | neighborhoods, et cetera, that we just don't work together.

00:51:26.800 | And so it's tragic.

00:51:29.800 | It's a very lonely existence compared to some aspects of a collective culture.

00:51:35.360 | It has its positive upsides.

00:51:36.880 | You listen to somebody who comes from a very collectivist culture, and they talk about

00:51:40.760 | the pressure that's put on them and the control that's put on them, and they're just happy

00:51:44.460 | to be left alone.

00:51:45.800 | So everything has a positive and a negative.

00:51:48.800 | But I affirm that in the American culture, it's very unlikely for you to get the kind

00:51:56.200 | of support that you would like to get from your family members, from your community,

00:52:01.960 | et cetera.

00:52:02.960 | We're all—it's the same for everybody.

00:52:06.520 | And so what that means is it has put an enormous pressure on people who have children, and

00:52:12.880 | it's much, much harder to have children today because of this, where you basically have

00:52:19.480 | to bear the load alone.

00:52:21.720 | And so that—and it's one reason many people don't want to have children or don't want

00:52:26.500 | to have more children, et cetera, is because they know they've got to bear the load alone.

00:52:31.680 | And so I don't have any great solutions.

00:52:36.160 | I've just accepted that this is the way it is, and I'm just going to have to bear the

00:52:40.480 | load alone, which means I have to build stronger shoulders, my wife has to build stronger shoulders,

00:52:45.840 | and we'll just—I'll make up my own strategies to get through it, and I'll arrange my life

00:52:52.160 | to do it.

00:52:53.160 | And it's kind of ultimately what I've come to.

00:52:57.640 | And again, I'm not casting any harm or any blame on anybody.

00:53:04.200 | I have wonderful family members.

00:53:05.640 | I've got great friends.

00:53:06.640 | I've got neighbors, et cetera.

00:53:07.960 | But we don't know how to really work together, nor are we particularly willing to work together.

00:53:16.560 | And so like in—here's just an example.

00:53:20.080 | I'm stereotyping, but I believe this stereotype is true.

00:53:23.240 | If you went to your siblings or your in-laws or whomever it is in your family, and you

00:53:27.320 | say to them, "Hey, guys, listen.

00:53:29.400 | There's a town that is—or even just our friends, right?"

00:53:32.440 | And we said, "Look, there's a town that's 300 miles away, and they've got houses that

00:53:36.780 | are great houses, mansions for 50 grand apiece.

00:53:40.280 | If all of us moved there, we could all be neighbors, and we could live a great life,

00:53:44.520 | and we could support one another, we could encourage one another, et cetera."

00:53:47.440 | In the American culture, it doesn't fly.

00:53:49.920 | It doesn't work.

00:53:50.920 | It's never worked.

00:53:52.280 | People won't do it.

00:53:53.280 | Nobody will move.

00:53:54.280 | Nobody is willing to work together.

00:53:55.280 | Nobody is willing to sacrifice my independence to go and do that.

00:53:58.920 | Meanwhile, all around the world, people that are from more collectivist cultures, one person

00:54:03.080 | goes to another country, gets a residence visa, gets a house, brings over two of his

00:54:08.680 | siblings.

00:54:09.680 | He's got his brother there, and everyone's putting their money in the pot.

00:54:11.560 | They got 18 people living in a two-bedroom apartment, and all of a sudden, 10 years later,

00:54:15.840 | everyone's rich because they're willing to work together.

00:54:19.300 | It happens every single day, and it's this cultural values of collectivism versus individualism.

00:54:24.440 | Not ironically.

00:54:25.440 | That was my father.

00:54:26.440 | My father came from Pakistan, and three, four siblings living in a house, four-bedroom,

00:54:34.080 | two-bath house for 10 years before they split up.

00:54:40.720 | It sounds like you probably took the ... If you were in my position, you probably took

00:54:46.480 | the, "Hey, I'm going to be the family, raise my kids," because I want a strong family.

00:54:52.720 | We both would like three, four, maybe five kids.

00:54:55.800 | My wife is rethinking that now, though, with the realization that, "Oh, David is not ... He's

00:55:03.120 | out of the home, and he's working back at a W-2 job."

00:55:09.680 | I don't want to forsake that for ... I guess ... We're Coast Fire, right?

00:55:14.840 | Just putting that out there.

00:55:17.480 | Is there anything that you look back now ... I don't think I would have any regrets from

00:55:22.640 | a time perspective of just being like, "Wow, I had so much time with my kids in their formative

00:55:28.920 | years and even as they grew up."

00:55:31.960 | Are there things from a financial perspective?

00:55:33.760 | I guess that's the only thing that I am concerned about, that 2024 and onward are just rocky

00:55:40.280 | years and my side job is now my main job and my only job.

00:55:45.840 | All of a sudden, we have to, from an income perspective, we have to go on a rice and beans

00:55:51.980 | type of diet.

00:55:52.980 | Maybe it'll be worth it.

00:55:53.980 | I don't know.

00:55:54.980 | David: If I were doing it over again, I would not change any of the decisions that I myself

00:55:59.560 | have made because we have five children, my wife and I.

00:56:04.800 | If I just left her at home all day and said, "You got to be super mom," especially with

00:56:09.880 | things like homeschooling and whatnot, it's impossible for a woman to do that in our world.

00:56:18.080 | It's also ... One more comment on that.

00:56:20.320 | It's impossible because of the standards that are imposed upon us by our society or on ourselves.

00:56:28.780 | If we were to go back 75 years ago, and I see this all around the world more clearly

00:56:32.860 | than I do in the United States, but I know it's there in the United States, the standards

00:56:36.660 | for what was expected from a parent were relatively modest.

00:56:41.300 | It was expected that you fed your children at least as much as you could and they ate

00:56:45.480 | a couple times a day.

00:56:47.660 | It was expected that they went to school, and beyond that, children had an enormous

00:56:52.220 | degree of freedom.

00:56:53.780 | Our culture was very open to children and they could come and go.

00:57:00.700 | They could come and go in the house.

00:57:02.020 | They could go and play in the neighborhood.

00:57:03.500 | They entertained themselves.

00:57:04.500 | They took care of themselves, et cetera.

00:57:06.140 | I just finished reading with my perfect example, if you want a picture of the world before.

00:57:10.980 | I just finished reading the third of the Moffat series of books to my family.

00:57:15.940 | It's Elizabeth Estes.

00:57:16.940 | I think it's Elizabeth.

00:57:17.940 | Anyway, her name is Estes.

00:57:20.220 | She wrote this great trilogy of books, amazing children's author.

00:57:23.740 | The first one is called Meet the Moffats.

00:57:25.820 | Forget the second one.

00:57:26.820 | The third one is called Rufus.

00:57:28.560 | They're all about these children that are living in a fairly typical town, New York,

00:57:34.420 | something like that, actually in New York State.

00:57:37.540 | The mother is a widow and she has four children.

00:57:40.940 | She's a dressmaker.

00:57:41.980 | That's how she earns her income.

00:57:43.280 | They're clearly basically in poverty.

00:57:46.340 | But what's so fascinating about the story is that basically the children are free-range

00:57:51.780 | kids all the time.

00:57:55.100 | They sleep at home and they have dinners with their mother, but beyond that, they come and

00:57:58.940 | go around the town as they wish and they are what today we would call free-range kids.

00:58:04.620 | This was entirely normal.

00:58:06.320 | This was the normal way of being.

00:58:08.300 | The children are not a great impediment to your life in that situation.

00:58:13.200 | Well, fast forward to today, if you let your children walk to the park half a mile away,

00:58:18.640 | the police are going to get four calls on why are these unsupervised children walking

00:58:23.400 | to the park.

00:58:25.120 | Basically every single layer of our society has built up to like with this intense protectionism

00:58:32.200 | where nothing can happen.

00:58:33.760 | You can't ask your sister to take your children and first of all, no one would take their

00:58:39.640 | kids to the mall and just leave them.

00:58:41.200 | A lot of us grew up in the day in which that was a fairly normal thing.

00:58:44.360 | No cell phones.

00:58:45.360 | Okay, I'll take you to the mall.

00:58:46.360 | I'll pick you up at 6 o'clock.

00:58:47.360 | But even if you ask them to take them today, of course, you can only take our children

00:58:51.560 | to a supervised place with lots of referees and lots of padding where we're going to

00:58:55.680 | pay $30 for playtime and latte.

00:59:00.000 | So you ask your sister to do that.

00:59:01.160 | Oh no, I can't do that because she's got to have car seats.

00:59:04.800 | And so she's got two children and your two children need to have two car seats and of

00:59:09.160 | course four car seats can't fit in the car so she can't do it.

00:59:12.480 | And so basically that's our society in a nutshell is it makes everything about it is forcing

00:59:18.120 | families to be individualized, forcing families to do it all themselves.

00:59:22.560 | You have to take your children because you're the only one with car seats and your friends

00:59:25.240 | can't pick them up and so you can't even get an afternoon off.

00:59:28.000 | And so why am I ranting about this?

00:59:30.060 | Just to say that this is what has happened.

00:59:32.320 | And so children are instead of being a relatively not that big of a deal, they become an enormous

00:59:41.400 | nuisance in our society based upon the way that they are.

00:59:44.840 | And this is one of the many reasons why birth rates have collapsed around the world.

00:59:48.920 | Now you can change that, right?

00:59:50.280 | You got five acres and so your kids can be free-range kids.

00:59:52.880 | I live on a farm.

00:59:53.880 | My children are free-range kids to a significant degree.

00:59:57.120 | And what happens is you have more of them then you realize I don't have to be quite

01:00:00.840 | so uptight as I was with the first time around and I can just let them hang out and that's

01:00:05.320 | actually good for them and you wind up with a bigger car and so you can fit them and things

01:00:11.640 | change.

01:00:12.640 | And so they don't over time you become your standards can change and you recognize it's

01:00:17.320 | not such a demanding thing.

01:00:19.740 | But it is still demanding and it would be a very unusually strong woman who would be

01:00:28.500 | able to have four or five children in a situation like you're describing and be able to do it

01:00:36.080 | without significant input and help from you.

01:00:39.340 | I know a few women who do it and they are incredible women, incredibly strong women.

01:00:45.660 | But if you want to have a large family then you've got to make sure that your wife is

01:00:50.540 | on board with that and a significant component of that is just going to be meeting her needs

01:00:55.720 | and taking care of her.

01:00:57.140 | And so that's what I did is that I made that decision and I have sacrificed a lot to do

01:01:04.820 | it and I believe that it's the decision that I'll be happy with at the end of my life.

01:01:09.340 | I'm quite happy with it right now but it is a lot.

01:01:13.300 | And what I have seen also is that my wife is much, much stronger today than she was

01:01:18.580 | 10 years ago.

01:01:21.060 | And so being a mother and being a father these are skills that develop over time.

01:01:29.100 | I'm a vastly better father today than I was 10 years ago and she is as well.

01:01:34.320 | And so I can do more, she can do more, etc.

01:01:39.260 | And it's just a matter of kind of changing your perspective.

01:01:41.180 | And last story, like literally today my eldest two are away at a short-term camp and I'm

01:01:50.300 | sitting at the table with my younger three and just thinking like, "This isn't difficult.

01:01:54.940 | This is – the house is quiet."

01:01:56.980 | Anytime you go from five to three it's like, "This is easy.

01:02:00.900 | I could do this in no time."

01:02:02.460 | But it wasn't that way when I had three children.

01:02:04.780 | And so just recognize that if you've got a vision you're going to have to press through

01:02:09.020 | and I think it's the vision that will pay off at the end of your life.

01:02:12.780 | And you've worked really hard to get to this point.

01:02:14.580 | And if you have to take 10 years and go on to kind of a sideline career track and then

01:02:19.700 | 10 years from now you step back in then that would be fine.

01:02:23.420 | What you should do – but this was actually – I intended to say this but I got sidetracked

01:02:28.420 | with my monologue.

01:02:29.420 | What you should do and what I have done is always try to keep a good backup plan.

01:02:33.740 | So every year for example I pay the CFP board – I can't remember what their dues are.

01:02:39.220 | It's like $600 a year, something like that.

01:02:41.940 | And every year that stupid bill comes in.

01:02:44.780 | And every year I sit there and I look at it and I don't today care at all about being

01:02:49.060 | a certified financial planner.

01:02:50.380 | It makes no difference to me whatsoever.

01:02:52.220 | It's like the day that I passed the exam and I put it on my business card it completely

01:02:56.980 | lost all meaning to me.

01:02:59.100 | It's like you graduate from high school and then you're enrolled in college and

01:03:05.380 | all of a sudden your high school graduation – wow, what does it mean?

01:03:07.940 | I'm a freshman again.

01:03:09.380 | And so I don't care at all about being a certified financial planner.

01:03:13.500 | I practically don't even tell anyone although I've tried to change that.

01:03:16.540 | But I've always kept all those designations and I pay that $600 bill every year because

01:03:21.260 | it's my backup plan so that if for some reason my business failed or I needed it I

01:03:27.380 | can go and I can quickly get re-employed and in a month I can have a job making a few hundred

01:03:33.380 | thousand dollars a year and I can get the interview because of the credentials, etc.

01:03:37.860 | And I can make that happen.

01:03:39.900 | And so those things are really important.

01:03:41.980 | And so look at your job and your career and ask yourself, "Do I have an easy on-ramp

01:03:46.980 | back-in?"

01:03:47.980 | Because I think the people who suffer the most of dialing back their career for a time

01:03:56.020 | are those who wind up becoming irrelevant and obsolete.

01:04:01.940 | Their skills start to atrophy and if they don't have the ability to get back in then

01:04:06.540 | it really hurts them.

01:04:07.540 | And where you see this hurt a lot of – where this is the most obvious is when you look

01:04:11.760 | at moms, mothers who become stay-at-home mothers.

01:04:15.020 | They pay an enormous price in their career options because they step out of the workforce

01:04:21.100 | to raise children.

01:04:22.480 | And so they're at the top of their career and they're 30 years old and she goes home,

01:04:27.540 | spends 10 years raising babies and then she wants to go back in.

01:04:30.180 | Well, she's looking around at all of her friends and they're all 10 years ahead and

01:04:34.860 | she's not able to compete with them in the workforce.

01:04:38.900 | And so that can be a frustrating thing.

01:04:41.180 | And so if she doesn't value the fact that she's got four children that they don't

01:04:45.700 | have and then it's a big price for her to pay.

01:04:49.940 | And the same thing can apply to someone in your situation.

01:04:52.820 | So it's a price that I would pay.

01:04:55.220 | It's a price that I have paid, I am paying and I would pay again.

01:04:58.780 | But it's also something where you want to be smart.

01:05:01.180 | Keep your certifications, keep your contacts, keep yourself connected, make sure you have

01:05:05.260 | a good backup plan so that if you quit your job you can go back in again and start over

01:05:10.140 | again and create the money that your family needs.

01:05:13.100 | And if you off ramped, aside from like healthcare maybe going on to the exchange, are there

01:05:20.380 | any other financial uh-ohs that you've experienced?

01:05:31.180 | Most of the issues are psychological rather than practical.

01:05:40.340 | Once you reach this point, especially if you've accumulated assets and you're coast

01:05:43.740 | fi, etc. you know how to do the tactical everyday stuff.

01:05:49.340 | You know how to make sure you don't overspend your income.

01:05:51.600 | You know how to do all that stuff.

01:05:53.160 | So a lot of it is psychological because as a man you want to compete and slipping into

01:06:04.860 | irrelevant oblivion is a big price to pay.

01:06:09.560 | It's basically part of the same standard speech that I give to men who are retiring.

01:06:14.500 | I don't think men should retire from work even when they can afford to.

01:06:18.060 | And the reason is that work provides us with a lot of things that a lot of self-worth and

01:06:26.500 | self-image that cannot be achieved sitting at home.

01:06:31.900 | In your work you are respected, you're looked up to, you're a leader, you have influence,

01:06:36.480 | you have authority, you have power, etc.

01:06:39.320 | And when you leave your job you lose those things and you become just another guy.

01:06:43.900 | If you're old, just another old guy.

01:06:45.300 | And it doesn't matter how much money you have, you're just another old guy.

01:06:48.860 | And I think even in a lot of cases this can cause problems in your marriage.

01:06:53.340 | That one reason your wife is attracted to you is because you're confident, you're a

01:06:57.460 | leader, you're looked up to, you're respected, other people respect you and that increases

01:07:01.020 | her attraction to you.

01:07:02.700 | She's attracted to you because you're a high status man in some circle, in your job, in

01:07:07.820 | your business, in whatever it is that you do.

01:07:10.020 | And you come home and you're just kind of the guy sitting around the house, there are

01:07:13.540 | a lot of psychological costs to that.

01:07:16.500 | And if you don't have some way to manage those costs then that can be the biggest thing that

01:07:21.660 | affects you.

01:07:22.660 | It's not the money, it's not living on your income.

01:07:26.000 | You can do that and your expenses can go down and you can live well on not a ton of money.

01:07:31.200 | But if you experience those psychological things they can be pretty heavy.

01:07:35.780 | Now it's not insurmountable.

01:07:37.860 | I have taken an enormous amount of joy in the work that I do with my children's education.

01:07:45.740 | There is no possible way that anyone else in the world would be able to, any school

01:07:54.420 | or any tutor that I found would be able to help my children to achieve at the level that

01:07:59.460 | I have been able to coach them into in their academics and in other non-academic pursuits

01:08:05.100 | as well.

01:08:06.100 | Because I'm trying to build a well-rounded education.

01:08:08.100 | So I take a lot of joy in that and a lot of sense of self-worth in that.

01:08:12.360 | But it is also a weakness in my life that I'm trying to change.

01:08:17.180 | Is that being alone and independent, it's not good for a man to be alone.

01:08:21.820 | And being alone and independent, it comes with a cost.

01:08:29.420 | It's not good.

01:08:30.580 | And so it's a decision that I made but if I were to make it over that would be the biggest

01:08:34.940 | thing that I would work hard to fix and I'm working hard to fix, to be more connected.

01:08:39.020 | Especially with babies and whatnot.

01:08:40.020 | I used to travel.

01:08:41.020 | You got me in story mode.

01:08:43.020 | I used to travel.

01:08:44.020 | I used to be involved in all the communities.

01:08:46.300 | I used to go to all the conferences like I tell other people to do, etc.

01:08:49.620 | And it got to the point where if I left it was just so hard on my wife.

01:08:53.660 | I couldn't leave her in a difficult situation, be gone for a week here and a week there and

01:08:58.540 | whatnot.

01:08:59.540 | There's men who do it.

01:09:00.540 | There's women who can handle it.

01:09:01.540 | But since I don't have to do it, it didn't feel like I should do that.

01:09:09.060 | How can I put that on her and cause her to bear that heavy load of me being gone traveling

01:09:14.140 | when I don't have to go and do it?

01:09:16.180 | But that has caused me to in many ways feel less relevant, less connected, less accomplished,

01:09:23.140 | less successful.

01:09:25.540 | And it has come at the cost of just basically being a devoted father.

01:09:30.660 | And so again, I accept those costs but it's not something that I want to continue.

01:09:36.820 | And so even this year I'm traveling more.

01:09:38.700 | I'm away more.

01:09:39.700 | I'm connecting with people more.

01:09:41.260 | I'm working to connect people with more.

01:09:43.540 | But it was an intense period of life.

01:09:46.020 | My eldest is 10 and my youngest is a year.

01:09:49.700 | And it's been an intense period of life.

01:09:51.420 | And so I don't see any way around it in our culture.

01:09:54.460 | It used to be that if you could figure out a community where there's a lot of women and

01:10:00.160 | grandmothers and whatnot who could help your wife and a great community of people, the

01:10:03.580 | children can run out the door and spend all day playing, go there.

01:10:07.220 | But lacking that, you're just going to have to do it.

01:10:09.220 | But try to handle these costs and be intelligent about how you approach them.

01:10:14.540 | >>Joseph: And sorry, last question.

01:10:16.940 | If I wanted to off-ramp, like let's say I was like, "Hey, I'm going to do the technical

01:10:22.140 | full-time position and the side hustle until X years."

01:10:26.260 | At what age?

01:10:27.260 | I mean, you've done this for a long time now.

01:10:29.260 | At what age is, I mean, as I've said, two and three months old, at what age do you start

01:10:36.780 | having those experiences where they're actually, I mean, I know kids are always learning, but

01:10:43.540 | is there a certain age where it's like, "Okay, you're really developing those strong ties."

01:10:48.540 | >>Tavis: Six.

01:10:49.620 | Six is magic.

01:10:51.240 | Six is magic.

01:10:52.240 | And it's like with babies, I mean, I love my babies.

01:10:55.060 | They're cute, et cetera.

01:10:56.620 | But I don't really have an emotional connection to babies like my wife does.

01:11:00.980 | A mother somehow builds, thank God she does, right?

01:11:06.420 | Because the baby wrecks her life for a year.

01:11:09.660 | But a mother, my wife sees her babies and she's just filled with this exuberance and

01:11:15.460 | joy and what a cute baby.

01:11:16.980 | For me, it's like it's a baby and I have to take care of it.

01:11:20.260 | And I take care of it and whatnot, but it's not really, I don't really connect with babies.

01:11:26.020 | And then they're one and they're walking and then they're two and eventually they start

01:11:30.300 | talking and then they're three and they're four and whatnot.

01:11:34.100 | And I try to do my best to be the dad who plays.

01:11:37.020 | I want to be the dad who plays with my children and whatnot, because I know that that stuff

01:11:40.420 | matters and so I do it as much as I'm able to.

01:11:44.540 | But the joy for me is never about the kid.

01:11:48.420 | The joy for me as a father is about who the young man or the young woman will be, where

01:11:55.220 | you really start to see that stuff is around five, around six and beyond.

01:12:01.860 | And so in my mind, the ages from six to about 12 are golden, because depending on the level

01:12:10.540 | of intellectual and emotional maturity, at six-ish, and again, there's no hard line,

01:12:17.220 | but around six, you're dealing with a child who can think.

01:12:21.100 | And of course, they love to ask questions and it's question after question after question

01:12:24.580 | after question.

01:12:25.740 | And so being with a human being who can think is infinitely more satisfying to me than interacting

01:12:32.500 | with a human being who's just driven by his or her emotions.

01:12:36.380 | And then there's that just golden period from six to 12, where there's not really any need

01:12:43.860 | for outside experience.

01:12:47.380 | There's not really any need for outside.

01:12:49.700 | What I mean is children don't need friends outside of their family if they have a lot

01:12:54.260 | of siblings.

01:12:55.260 | Obviously, you work to do that, because socialization is important.

01:13:00.620 | And so you try to make sure they have friends and you try to make sure that they have opportunities

01:13:05.260 | to learn to play well with others, et cetera.

01:13:07.260 | Those are important social skills, but there's no real need.

01:13:10.220 | They don't have an emotional need for that.

01:13:11.740 | Their whole source of supply of stability comes from their family, from their siblings,

01:13:16.860 | from their parents, et cetera.

01:13:18.980 | And so it's just that to me, that's the golden time where you have an individual who can

01:13:22.620 | think and you have an individual that you can really pour into.

01:13:26.380 | And you don't need to encourage independence in a child that young.

01:13:31.940 | Now when you get to a child who's, say, 11, 12, et cetera, then now you need to start

01:13:38.140 | making sure that the child is developing his or her own independent interests.

01:13:43.780 | And you need to make sure that there's more and more confidence and self-confidence is

01:13:47.820 | being built in strength.

01:13:49.020 | And so you're intentionally maintaining the closeness of relationship, and you're trying

01:13:55.220 | to keep your children connected to you emotionally, but you're trying to make sure that they have

01:13:59.660 | room to explore and investigate their own things and to have space to make their mistakes

01:14:07.380 | and have to respond to other people and learn lessons, et cetera.

01:14:10.300 | So to me, those are the golden years that things really pay off and they start to remember

01:14:15.420 | stuff, et cetera.

01:14:17.220 | And so I love traveling with my children.

01:14:21.300 | I love doing their school.

01:14:22.740 | I love supervising all those things.

01:14:24.900 | I really enjoy it because my older children, they're able to think and they ask me questions

01:14:29.380 | and it leads to interesting conversations, et cetera.

01:14:31.380 | And I really feel like you're building something and you don't yet have to deal with their

01:14:35.460 | independent ambitions and you don't yet have to coach them to independence because of their

01:14:41.940 | youth.

01:14:42.940 | And so I'm circling back on one question.

01:14:46.980 | So on the, like I said, we're about an hour away from family, but we're on five acres.

01:14:54.540 | Would that play a factor?

01:14:55.540 | I mean, would you, forget about the job and all that.

01:14:58.220 | Would you, would it be better to be closer to family, sell our house on five acres and

01:15:05.420 | move into the city?

01:15:08.180 | It's not my preference just because I feel like for the last like seven years, I mean,

01:15:13.260 | listening to you and other people and just making my own thoughts, I think living out

01:15:18.260 | in the country is a better decision.

01:15:20.780 | But regardless, what weight or factor do you put on that in terms of raising a family?

01:15:29.900 | One primary reason that I live where I live is I live on a very large property where I

01:15:35.900 | can simply tell the children, go outside.

01:15:38.460 | My wife can tell the children, go outside.

01:15:40.900 | Do not come in until I call you for dinner.

01:15:43.940 | And that I believe is really, really important both for the sanity and good functioning of

01:15:51.700 | our household and also for children.

01:15:55.340 | That today in today's world, one of the most important gifts that we need to give our children

01:16:02.000 | is significant quantities of unstructured playtime outside.

01:16:08.460 | And that is something that is really, really important.

01:16:11.900 | And it's important on every level.

01:16:14.620 | Physiologically, we are living in right now, I'm not using hyperbole, we are living in

01:16:19.500 | an epidemic of myopia, nearsightedness.

01:16:23.180 | And a significant causal factor seems to be that the epidemic of myopia is that children

01:16:31.800 | are not outside and they're constantly engaged in some form of close work, always reading

01:16:38.060 | a book, on a screen, writing, something up close.

01:16:41.300 | And so quite literally, our children's eyes are losing the ability to focus normally and

01:16:47.860 | to function normally because they're spending all their time with stuff that's in their

01:16:51.620 | faces.

01:16:52.620 | They're also not getting enough sunlight.

01:16:54.140 | And so their eyes are not being stimulated sufficiently with sufficient sunlight.

01:16:59.160 | And so minimum, children need to be outside for at least two to three hours a day, ideally

01:17:07.020 | more.

01:17:08.020 | And that's to say nothing of the benefits of free play, of the benefits of exploring,

01:17:13.660 | the physical benefits of running and throwing and climbing and etc., and interacting with

01:17:18.840 | their siblings, etc.

01:17:20.220 | It's fundamentally important.

01:17:22.500 | And it's very, very difficult to do that in the city.

01:17:25.880 | It's very difficult to do it in the suburbs.

01:17:28.180 | And so, you know, depending on what you're talking about, obviously many children have

01:17:31.900 | raised that.

01:17:32.900 | But again, back to the issues with being reported to CPS is that you will get reported that

01:17:38.820 | you will have Child Protective Services knocking on your door if you let your children go out

01:17:43.840 | alone to the park.

01:17:46.900 | The American culture is utterly broken right now on this topic.

01:17:49.920 | And so if you went back to say 1940s Brooklyn, then the children weren't hindered by living

01:17:56.800 | in a tenement house because they were outside playing in the street and on the abandoned

01:18:00.840 | lot, etc.

01:18:01.840 | And that was normal.

01:18:02.840 | Today, the children growing up in Brooklyn, they can't play in the street.

01:18:05.900 | And so this is one of the problems.

01:18:07.440 | And what's your solution?

01:18:08.440 | Well, either we change the culture, and some people are doing that.

01:18:12.240 | Either we normalize again the fact that it's perfectly reasonable for your eight-year-old

01:18:17.120 | and your nine-year-old to ride their bikes half a mile to go to the park and play at

01:18:22.480 | the park for a couple hours and then come home.

01:18:25.400 | So either we normalize that or what's your solution?

01:18:28.240 | Your solution is to go to a place where you can do that on basically the sanctity of your

01:18:32.920 | own property and/or in a culture that accepts that, and a rural culture is more accepting

01:18:37.960 | of that.

01:18:39.300 | And so I believe that it's necessary that children have multiple hours a day of outside

01:18:45.560 | play.

01:18:46.840 | And if you look at kind of a barren suburb quarter acre or half acre even, etc., it's

01:18:52.520 | got one tiny little swing set in it, what are they going to do?

01:18:57.440 | They got nothing to do.

01:18:58.440 | And here's the other aspect, is that basically everything associated with living in the suburbs

01:19:03.160 | or living in the city, to keep your sanity as a father, you want to keep everything nice.

01:19:08.480 | And so you don't want your children digging in the backyard and destroying your nice pretty

01:19:13.480 | yard.

01:19:14.480 | But if you got five acres, you can say, "Listen, do you see this place near the house?

01:19:18.560 | You don't dig here.

01:19:19.560 | The rest of it where I can..."

01:19:20.560 | That's basically my rule with my children.

01:19:21.560 | I'm like, "Don't bring the stuff onto the porch.

01:19:24.320 | If I don't see it, it's okay.

01:19:26.120 | And you can have as much of a mess as you want out there, but I don't want to see it."

01:19:30.320 | And it works.

01:19:31.440 | So then they can get those benefits.

01:19:33.240 | So yeah, I would...

01:19:35.120 | In terms of your lifestyle, I think that you'll...

01:19:39.640 | Since it's unlikely that your siblings would be able and willing to change their lifestyle

01:19:45.600 | structure such that you're willing to spend 15 to 20 hours a week working together so

01:19:54.240 | that you can send your children over on Tuesdays and Wednesdays, and they can send their children

01:19:58.200 | over on Thursdays and Fridays, et cetera, and interacting.

01:20:01.920 | Unless there's some strong indication that you can work together on a close basis, you're

01:20:07.480 | better off being an hour away and having five acres than the opposite.

01:20:10.800 | Okay.

01:20:11.800 | That's helpful.

01:20:12.800 | Yeah, I think the word for this year is being intentional.

01:20:16.920 | We have to just...

01:20:17.920 | They're not going to come see us.

01:20:18.920 | We have to go see them.

01:20:19.920 | We have to be intentional about it.

01:20:20.920 | Whether we're 10 minutes or an hour away.

01:20:24.920 | All right.

01:20:25.920 | Thanks, Joshua.

01:20:26.920 | Have a good weekend.

01:20:27.920 | My pleasure.

01:20:28.920 | Just recognize as you're making all these decisions that the pregnancy stuff...

01:20:30.920 | Or sorry, the baby stuff, there's no...

01:20:34.960 | Don't make long-term decisions over short-term factors.

01:20:38.880 | I've never met a mother who wanted to have a baby when she had a three-month-old.

01:20:42.480 | So just relax and get through it.

01:20:45.200 | Do your best to help her recover.

01:20:47.080 | Work really hard to have her physical energy.

01:20:50.240 | Work really hard to have her sunlight.

01:20:52.320 | Work really hard to help her get fully...

01:20:54.480 | To have as much sleep as possible, even though it's not going to be all connected, et cetera.

01:20:59.120 | Work really hard if she has any symptoms of postpartum depression, anything like that.

01:21:02.960 | Work really hard at that stuff.

01:21:04.520 | And then recognize six months from now, you're going to be in a very different situation.

01:21:08.920 | Anyway, thanks for the stimulating conversation.

01:21:12.400 | That sort of kind of was about finances, but about the actual purpose of finances much

01:21:17.200 | more.

01:21:18.200 | Thanks, Joshua.

01:21:19.200 | I appreciate it.

01:21:20.200 | Yeah, my pleasure.

01:21:21.200 | My pleasure.

01:21:22.200 | All right, that wraps up our final call for today.

01:21:24.960 | And let's see as we go, announcements.

01:21:26.720 | I said as we go, remember I'm doing consulting appointments right now during the month of

01:21:29.840 | January.

01:21:30.840 | Go to radicalpersonalfinance.com/consult.

01:21:31.840 | Sign up there, radicalpersonalfinance.com/consult.

01:21:36.200 | Or if you just like to call me up and talk to me next week on the show, go to patreon.com/radicalpersonalfinance,

01:21:41.920 | I hope that these conversations are useful.

01:21:47.280 | I always wondered on radical personal finance, of course, it's easy for me to do on a Friday

01:21:51.920 | show, but I always think carefully about the content and things that I cover.

01:21:58.520 | And the point of it is that these are the reasons that we have money.

01:22:03.160 | And we have a culture that has made the foolish decision to focus primarily on numbers on

01:22:10.760 | a balance sheet.

01:22:12.640 | And we do that, we make that focus because numbers are easy to measure.

01:22:17.720 | Money as a goal is something that is easy to measure because it is numerical.

01:22:23.840 | But just because something is easy to measure doesn't mean that that is the ideal measurement

01:22:29.040 | to shoot for.

01:22:30.480 | Money is a tool that allows us to live the life that we want, have access to certain

01:22:34.200 | things, et cetera.

01:22:35.440 | And so we need in personal finance, we need to spend a lot more time talking about the

01:22:38.920 | reasons that we are accumulating money and the reasons we're making the decisions we're

01:22:45.040 | doing rather than exclusively focusing on the numbers of zeros and dollars.

01:22:50.880 | The end of your life, that's why basically I hope it came through, but at the end of

01:22:54.160 | your life, would you trade half a million dollars in net worth at the end of your life

01:23:01.240 | to have two more children?

01:23:02.720 | It's a serious question.

01:23:05.840 | What is your ambition?

01:23:06.840 | Is your ambition to be 80 years old and have an additional half a million dollars in net

01:23:09.880 | worth or would you rather be 80 years old and have an additional two children and maybe

01:23:14.920 | an additional eight grandchildren, et cetera?

01:23:18.320 | The answers to those questions need to drive your life now because money is the thing that's

01:23:23.600 | basically the easiest to solve.

01:23:25.400 | There's always opportunities to go and work.

01:23:28.080 | But if you're living in a culture that is unfriendly to children and you want to have

01:23:30.680 | children, then you're going to have conversations kind of like the one that we just had.

01:23:33.960 | Thank you so much for listening.

01:23:34.960 | I'll be back with you very soon.

01:23:35.960 | I want you to go to RadicalPersonalFinance.com/consult to book a personal consultee call with me

01:23:40.360 | and Patreon.com/RadicalPersonalFinance to be on next week's podcast.

01:23:46.000 | [music]

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