2024-03-01_Friday

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

00:00:18.500 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:21.280 | skills, insights, and encouragement you need to live a rich and meaningful life now, while

00:00:25.160 | building a plan for financial freedom in 10 years or less.

00:00:27.680 | My name is Joshua Sheets.

00:00:28.680 | I'm your host.

00:00:29.680 | This is Friday, March 1, 2024, Episode 999 of Radical Personal Finance.

00:00:37.440 | On this Friday, as we do on every Friday in which I can arrange the equipment to record,

00:00:42.080 | we do live Q&A.

00:00:46.040 | If this is your first time here with us at Radical Personal Finance, welcome.

00:00:53.720 | I'm glad that you are here.

00:00:54.880 | I record these live Friday Q&A shows whenever possible, and I love doing them.

00:00:58.720 | If you would like to gain access to one of these Friday Q&A shows, you can do it at patreon.com/radicalpersonalfinance.

00:01:02.120 | Patreon.com/radicalpersonalfinance.

00:01:03.120 | If this is not your first time here with us, then as you know, we've been doing this quite

00:01:09.720 | a while.

00:01:10.720 | I've got 10 years, 999 episodes, but if I haven't talked to you, then remember, I would

00:01:15.440 | love to talk to you.

00:01:16.440 | I always love it when new people join the Patreon, new people call in, talk about interesting

00:01:20.880 | new topics, raise questions.

00:01:22.440 | Remember, your questions can be technical, they can be philosophical, you can talk about

00:01:26.520 | anything that you want.

00:01:27.520 | The mics are open, the calls are open, I don't screen them other than just trying to

00:01:30.480 | keep the numbers down with an appropriate, with a slight paid filter, so that I don't

00:01:34.640 | have 57 callers each and every day.

00:01:36.640 | But we begin today with Jeremy in Montana.

00:01:39.440 | Jeremy, welcome to the show.

00:01:40.960 | How can I serve you today, sir?

00:01:42.640 | Yeah, I was curious if you think that having an openness to talk about money is important.

00:01:49.920 | I was raised where money was like a really taboo topic, even amongst my immediate family,

00:01:55.560 | and I feel that it kind of maybe stifled or hindered my development coming into adulthood.

00:02:04.160 | And the reason I ask is, I was listening to your episode with the private money, and obviously,

00:02:10.680 | I don't want you to rehash that whole episode, I thought it was well done, but it just caught

00:02:14.920 | me off guard at times, because I see value in normalizing talking about finance and money

00:02:22.280 | and investing, and I think that it's an opportunity to help friends and family realize

00:02:28.880 | there can be a better solution to their lives, that if they are living in poverty, that that's

00:02:34.920 | not something they have to forever be stuck in.

00:02:38.360 | And it just seemed like I was a little conflicted, because I understand the liability side, the

00:02:44.960 | insurance side, and even like what you were talking about with pro athletes and people

00:02:48.920 | not appreciating them giving money and buying meals and stuff, but I just thought that maybe

00:02:55.160 | there's like a happy medium or something that could be established between those two.

00:03:01.840 | There's definitely a tension in that podcast that you're defending, in which I defended

00:03:06.520 | the idea of being quite circumspect and private about your money.

00:03:12.380 | In the latter part of that episode, I tried to work through a little bit of that tension,

00:03:16.640 | saying, for example, that if you don't talk about money, you may be limiting your impact,

00:03:21.640 | you may be limiting your ability to even encourage someone in the way that you're describing.

00:03:27.360 | For example, if I always lie down about my wealth, and I just don't ever, I just let

00:03:33.720 | everyone assume I'm totally broke and have no money, no assets, et cetera, then what

00:03:38.640 | if my sharp young nephew or niece doesn't come to me and talk to me, and I could guide

00:03:45.480 | my nephews and nieces on a better path?

00:03:48.320 | How do I work through that?

00:03:49.720 | How do I have the kind of impact in my community that I would like to have?

00:03:55.360 | And it is a balance, and that balance will probably change in different contexts.

00:04:02.120 | It will also probably be a balance that has different levels.

00:04:05.720 | So I would like people to, I think each person should make an informed decision based upon

00:04:12.160 | the potential benefits and the potential risks of anything that you say or anything that

00:04:17.640 | you do, and not forget about those goals that you're describing.

00:04:23.520 | So I can think of a couple levels or a couple of filters through which we should pass this.

00:04:28.720 | So the first filter would be, is the person with whom I am speaking or considering speaking

00:04:34.120 | about money, is this person trustworthy?

00:04:37.320 | Or I have people in my life that are quite close to me with whom I would never speak

00:04:44.240 | about my finances in any way, shape, or form, because these are people who I know tend to

00:04:51.840 | speak quite openly about other people's secrets.

00:04:55.660 | So if I'm engaging with somebody who brings consistently private information or personal

00:05:02.760 | information to me, at the least, or a gossip at the worst, then I immediately put an enormous

00:05:10.760 | red flag on that person, and I say I will never reveal personal or sensitive information

00:05:15.900 | to this person, because this person is untrustworthy.

00:05:18.760 | The ability of a man or woman to understand and protect people's privacy, that is a very

00:05:26.960 | important component.

00:05:29.760 | And I would draw a distinction here between secrecy and privacy.

00:05:35.560 | And what I mean here is that I don't want – for example, in my life, I don't want

00:05:40.560 | to ever do anything that would ever have to be a secret.

00:05:45.320 | I don't want to keep any secrets.

00:05:47.740 | I want to live a life that is without secrets.

00:05:51.480 | But that's not to say that I'm not going to do things that are private.

00:05:55.580 | And so in the intimacy of my relationship with my wife or my relationship with a good

00:05:59.960 | friend, you might speak about things that are private, but we would not want to speak

00:06:04.960 | about things that are secret.

00:06:06.920 | And there's a balance there, because sometimes money could be simply private, sometimes money

00:06:10.760 | could be secret.

00:06:13.800 | And that's another filter, is that if you're going to talk to somebody, you might share

00:06:17.840 | in some safe context with people who are circumspect, know how to control their mouth, know how

00:06:23.880 | to protect people's privacy, protect people's interests, etc.

00:06:28.160 | You might share some private details.

00:06:30.680 | And there may be appropriate areas for that.

00:06:33.800 | So an example would be, as a financial advisor, I frequently know quite a lot about quite

00:06:40.000 | a lot of people's private details of their lives.

00:06:43.360 | Many people tell me truthfully about their financial position.

00:06:49.160 | And I have a very privileged source of information because I talk to people about money.

00:06:55.200 | So I know far more about, not everyone, but I know an enormous amount of personal private

00:07:02.600 | information of just about anybody in my life, many friends, many acquaintances, etc.

00:07:07.940 | People come to me and talk to me about things.

00:07:10.360 | But I am also extremely circumspect, I'm extremely careful, I never, ever reveal other people's

00:07:18.120 | information.

00:07:19.480 | Even on the show, I occasionally will tell stories about friends or clients, but that's

00:07:23.960 | why I just never use names.

00:07:25.440 | I try to use only details that are necessary.

00:07:29.440 | I speak in generalities, etc., because I have a responsibility to protect people's privacy.

00:07:34.840 | Now there is an interesting line here that I've spoken about previously.

00:07:39.120 | I don't have any legal ability to maintain the confidentiality of any information that

00:07:45.700 | somebody shares with me.

00:07:47.640 | Years ago, I did podcasts on this, talking about why it's actually dangerous to talk

00:07:51.520 | about your finances with someone who is a financial advisor.

00:07:56.160 | Let's say that a guy is getting ready to commit some kind of fraud or getting ready to commit

00:08:02.200 | some kind of some questionable shady dealing that would approach fraud.

00:08:07.480 | Maybe it's not outright fraud, but maybe it would approach fraud.

00:08:11.120 | He's preparing to hide money from his wife in a divorce or hide money as he signs a prenup

00:08:17.080 | or something like that.

00:08:18.560 | Well, if he talks to me as a financial advisor about his money and he shares all these details

00:08:24.580 | with me, I'll have all those details and I'll put all those details into my notes.

00:08:29.960 | Those notes will be in case notes that are filed under his name.

00:08:33.040 | Everything is there in the files.

00:08:36.240 | If then an investigator is able to obtain a subpoena or able to subpoena me or obtain

00:08:42.720 | a warrant of some kind, then all of the information that the guy has disclosed to me or to his

00:08:48.120 | accountant or to his insurance agent or etc., all of that can be subpoenaed and I can be

00:08:56.080 | obligated to testify in court.

00:08:58.240 | All of my client case notes and records and that etc. can be disclosed in court.

00:09:03.760 | So the only person with whom he could protect that personal information would be a lawyer,

00:09:10.520 | which is why for people who have an intense need for privacy in their lives for some reason,

00:09:15.680 | I've recommended that they work with someone who's like a lawyer CPA type where they can

00:09:20.280 | actually offer that legal attorney-client confidentiality.

00:09:24.040 | Now, obviously a lawyer can't maintain information confidentially if somebody is planning to

00:09:31.920 | commit a crime, but that still matters.

00:09:36.440 | So as a person, I guess my point is that I've developed a habit of just never ever, I don't

00:09:42.200 | ever talk about people's personal details with anybody.

00:09:46.240 | But that's privacy.

00:09:48.080 | It's not secrecy.

00:09:49.080 | There's nothing that I do, for example, in a client conversation that I would ever keep

00:09:52.740 | secret from my wife, but I never ever even tell my wife who I talk to, who I work with,

00:09:58.240 | who hires me etc.

00:09:59.880 | She has no clue whatsoever who among our friends and family have been clients of mine etc.

00:10:05.720 | Because it's just simpler not to talk.

00:10:07.420 | So if you know people who are trustworthy or you're interacting with people who are

00:10:10.200 | trustworthy who give you the expression of confidentiality, you know that if I go to

00:10:16.800 | this person and I talk about a matter of the heart, can I trust that this person, if I've

00:10:23.920 | told this person that I have feelings for this woman over here, that this family member

00:10:29.060 | at the next family gathering is not going to start ragging on me in public and betraying

00:10:34.980 | my trust, then that would be an appropriate context to then talk about more trustworthy

00:10:40.500 | things, talk about money etc.

00:10:44.240 | In the context of things like family relationships, close family relationships with say parents

00:10:50.360 | and children, then I think that it's very important to talk about money and that privacy

00:10:55.480 | should not be maintained in those circumstances, as long as we're dealing with normal healthy

00:11:00.240 | relationships.

00:11:02.360 | And so here there's a balance.

00:11:03.660 | So for example, I do not tell my children at this point in time how much money I control.

00:11:09.720 | I don't tell my children how much money I earn, because they have no need to know those

00:11:14.880 | details.

00:11:15.880 | But I do talk to them about money.

00:11:17.800 | I talk to them about the principles of money, the concepts of money etc.

00:11:22.160 | Why don't I talk to them about how much money I myself have and control?

00:11:27.320 | Well it's because number one, there's no need to know and more importantly, I don't want

00:11:33.140 | them to gain some kind of false impression.

00:11:36.200 | I don't want them to look down on people who have more money than I have or who have less

00:11:43.120 | money than I have.

00:11:44.120 | It's not necessary.

00:11:45.180 | Now fast forward, let's say that I'm working with a mature son or a mature daughter.

00:11:49.920 | Now I want them to have a sense of our family finances and so appropriate disclosure might

00:11:55.380 | be to talk about how much we spend.

00:11:57.200 | They may not need to know all of the details of all of our investment holdings, but as

00:12:02.340 | teenagers I think it's perfectly reasonable that my teenage children should understand

00:12:07.300 | what our normal expenses are.

00:12:08.700 | They need to have an expectation of what is the scale of life cost.

00:12:12.000 | How much does it cost us to have a roof over our heads?

00:12:14.140 | How much does it cost us to have food on the table?

00:12:16.320 | How much does it cost us to take a two week trip to Europe?

00:12:19.360 | What is the scale of these things so that they can be prepared for what they need to

00:12:23.360 | earn and kind of what life costs?

00:12:26.440 | Now fast forward.

00:12:27.440 | Let's say that I'm 60 years old and now I have a 35 or a 40 year old son and I'm thinking

00:12:34.560 | about retirement.

00:12:35.560 | Well now I definitely want to recruit my son into my life to give me counsel, give me insight

00:12:43.960 | and start to look out over my finances.

00:12:46.440 | And so I think that one thing that parents who are older should do is bring their children,

00:12:53.000 | trustworthy children into their financial situation so that their children can help

00:12:57.560 | them and understand where they are.

00:13:00.400 | It's very helpful for both parents and children to understand where we're at in terms of a

00:13:05.840 | financial position.

00:13:07.160 | I've worked with many clients for example of parents who are modestly wealthy and in

00:13:12.640 | some cases the children are very wealthy.

00:13:15.800 | And if the parent is modestly wealthy and is scrimping and saving to try to pass along

00:13:20.680 | money to the children, the children really want the parent to know that listen you don't

00:13:24.640 | need to do that.

00:13:25.640 | I've got plenty of money.

00:13:26.800 | I want to see you enjoy and use up your money yourself.

00:13:31.160 | And then things can go the other way as well is that if you have a parent who is very wealthy

00:13:37.560 | and the children are confident that the parents are very wealthy then it instills confidence

00:13:42.600 | into the children that no I don't need to set aside a large fund to take care of my

00:13:47.560 | parents.

00:13:48.560 | They're all taken care of etc.

00:13:49.560 | So I do think that communicating about money in these kinds of confidential situations

00:13:55.240 | is a wise practice, but that there's always a way that we can communicate about things

00:14:00.800 | that is appropriate.

00:14:02.600 | One more layer of filtering.

00:14:04.640 | There are different levels of wealth and there are different types of things that simply

00:14:10.840 | can be understood without being said.

00:14:13.920 | So for example, there's the classic meme of some millionaire next door type who works

00:14:19.880 | as a janitor and he drives a $500 car or something like that.

00:14:25.420 | They write stories about him at his death because he's a one-off example.

00:14:30.380 | Wealthy people don't drive $500 cars, doesn't happen.

00:14:34.960 | That's not a proper expression.

00:14:37.500 | But you can also see based upon how someone manages his assets, the things that he purchases,

00:14:43.560 | the ways that he spends etc., you can see who is wealthy.

00:14:47.120 | It's very difficult to hide wealth and generally wealthy people don't want to hide wealth,

00:14:54.080 | but there are still benefits of not disclosing everything.

00:14:58.120 | So I would say certainly it's valuable to talk about money and people should talk about

00:15:03.480 | money and talking about money among friends and family is a healthy thing.

00:15:08.600 | It's probably a better subject of conversation because your friends will guide you, will

00:15:12.520 | encourage you etc., but you don't have to talk about every dollar and every dollar's

00:15:18.080 | location and everything that you have purchased just because you're talking about money.

00:15:23.680 | And I would say a good metaphor that we would use would be how we talk about our most intimate

00:15:30.280 | relationships.

00:15:31.280 | I can talk with you quite a lot about my marriage relationship with my wife and I can do that

00:15:38.120 | in one way in public, I can do it another way in private in a confidential situation

00:15:44.520 | and I can do that without ever exposing any detail that could potentially be harmful to

00:15:50.680 | my wife or to me or to our relationship and that's what I was talking about in terms of

00:15:55.680 | secrecy versus privacy.

00:15:58.320 | The things that might be injurious to my wife or to our relationship if I disclosed something,

00:16:04.680 | those things aren't secrets, but they're definitely private.

00:16:07.720 | They're not things that I would be and have embarrassed to be disclosed, but they're things

00:16:11.720 | that don't need to be disclosed and shouldn't be disclosed because that keeps a confidence

00:16:15.600 | of relationship.

00:16:17.360 | So you can speak broadly about money on many different levels.

00:16:20.880 | You can make the points that you want to make, you can spend your money etc. while still

00:16:24.800 | also being circumspect and not necessarily publishing your social security number on

00:16:29.800 | a billboard.

00:16:30.800 | Yeah, that makes sense.

00:16:34.900 | I guess I've probably historically been maybe a little bit more open trying to like create

00:16:43.560 | disciples of five so to speak and probably would be wise to take a step back on some

00:16:49.680 | of those things.

00:16:50.680 | So I appreciate your feedback.

00:16:52.840 | If you don't mind, do you have time for one more quick question?

00:16:56.720 | Go ahead.

00:16:57.720 | Awesome.

00:16:58.720 | So I just signed up for your camp coming up in I guess what a month and a half or so?

00:17:06.160 | Yes.

00:17:07.160 | And super excited about that.

00:17:08.160 | Just curious if there's any ways or things that you think people need to prepare in advance

00:17:16.560 | to get the most out of it.

00:17:18.360 | I know you talked about the different tracks and whatnot.

00:17:21.800 | Just curious if there's questions or specific things that we should be coming and being

00:17:26.400 | prepared for or just show up and have fun.

00:17:28.880 | Absolutely.

00:17:29.880 | The camp is sold out now.

00:17:30.880 | So rather than answering that in public, you will receive at the beginning of next week,

00:17:35.680 | you will receive some extensive communications from me, survey, etc. and we'll communicate

00:17:41.920 | about those things among those who purchased tickets to the camp rather than my using public

00:17:46.840 | air time here for that.

00:17:47.840 | Okay?

00:17:48.840 | All right.

00:17:49.840 | Sounds good.

00:17:50.840 | Thank you.

00:17:51.840 | Have a great weekend.

00:17:52.840 | My pleasure.

00:17:53.840 | Good questions, Jeremy.

00:17:54.840 | I guess the only other comment I wanted to say that I think is important enough for me

00:17:58.000 | to say is just that in general, I don't know how old you are, but in general, as I get

00:18:07.200 | older, I increasingly learn not to tell people about my opinion about things unless they

00:18:16.160 | ask me for it and in many ways, unless they pay me for it.

00:18:19.920 | So it's hard because whenever I get enthusiastic about something, I want to be an evangelist

00:18:25.880 | for it.

00:18:26.880 | I want to persuade others.

00:18:27.880 | And so if I get super interested in, you know, financial independence, then I want to go

00:18:33.760 | and recruit others.

00:18:35.200 | But in general, most people aren't interested and the older I get, I just try.

00:18:41.280 | It's not always appropriate.

00:18:42.280 | You do want to share your opinions.

00:18:43.640 | That's normal human relationships.

00:18:45.360 | But in general, I'm not that interested in telling people about my ideas or the things

00:18:50.840 | that I want to persuade them of unless they've asked because I know what that feels like

00:18:55.480 | on the other side.

00:18:57.040 | And so I want to drop enough hints or breadcrumbs about things that are possible to stimulate

00:19:02.660 | some ideas, but I'm not going to go on and on and on.

00:19:05.560 | And so if I were going to talk about financial independence, I would say, you know, financial

00:19:09.720 | independence is very, very accessible and it can actually be done pretty quickly and

00:19:13.600 | there's some cool ways to do it.

00:19:15.360 | And then if someone's interested, I would say you can save a certain percentage of your

00:19:18.600 | income, you know, in a certain amount of time.

00:19:21.440 | You can accomplish it by building a business or you can, here's what house hacking works.

00:19:25.840 | Super, super cool.

00:19:26.840 | I have friends who are doing it.

00:19:28.000 | Those are all ways of kind of generally bringing up topics in a really healthy way to stimulate

00:19:32.320 | and help people who might be interested in that information.

00:19:35.240 | But none of that requires the disclosure of confidential personal information of here's

00:19:38.980 | how much money I have and here's how much money I'm saving and I'm going to be financially

00:19:42.640 | independent on this date.

00:19:44.160 | Because those kinds of things, what good do they do?

00:19:48.280 | They're more likely to inspire jealousy, frustrations, risks to your family, risks to your wealth,

00:19:55.120 | etc.

00:19:56.120 | People don't need to know any of that personal information for you to talk about ideas effectively.

00:20:01.000 | Blake in Georgia.

00:20:02.000 | Blake, welcome to the show.

00:20:03.000 | How can I serve you today?

00:20:04.000 | Hey Joshua, thanks for having me.

00:20:06.800 | Long time, first time.

00:20:08.480 | Welcome.

00:20:09.480 | So my first question, I have some UTMA accounts for my kids and in a previous Q&A, I heard

00:20:15.920 | you say those are not the best accounts and I wanted to understand why and what is better

00:20:22.000 | and I saw what the 529s now with the new, I don't know how new it is, the Roth conversion.

00:20:27.920 | Is that the way to go or am I, is there something else I don't even know about?

00:20:31.640 | The basic problem with UTMA accounts, Uniform Transfer to Minors Act or UGMA accounts, Uniform

00:20:38.720 | Gift to Minors Act is simply when your child becomes an adult, all of the money that you

00:20:46.680 | have transferred or gifted to the child immediately becomes part of, comes under the child's control.

00:20:55.400 | So you can't exercise discretion over the accounts.

00:20:59.440 | When you put the money into that account, then you're saying that at 18 years old, on

00:21:04.880 | my child's birthday, my child is going to control this money, regardless of whether

00:21:11.760 | or not, you know, he or she is going to school, regardless of whether he or she is addicted

00:21:16.560 | to drugs, regardless of whether he or she needs this money, regardless of if it should

00:21:21.180 | stay invested, no, you're saying that on my child's 18th birthday, he or she legally controls

00:21:27.160 | this money.

00:21:28.320 | Now the rebuttal to this is ordinarily, but that's only if he or she knows about it.

00:21:32.760 | Okay, fair enough.

00:21:34.560 | Then you don't tell him about it.

00:21:36.840 | And then he turns around and sues you at 22 years old.

00:21:39.620 | And now you have a legal obligation because the money is his, but you haven't told him

00:21:43.200 | about it for the last four years.

00:21:44.720 | Well, I can't confirm for certain because I've not reviewed those cases.

00:21:49.280 | I think, going on memory, I think that I have heard that there have been lawsuits like that.

00:21:54.440 | And there's a clear legal case for your child to sue you.

00:21:59.160 | So it's not that it's a bad thing.

00:22:01.840 | It's simply that I would call it suboptimal, subpar.

00:22:04.520 | I wouldn't cash out a UTMA account or try to make any changes.

00:22:07.360 | You can't.

00:22:08.360 | Just keep it there.

00:22:09.360 | But I have not seen the circumstance in which I have recommended that account.

00:22:14.920 | I should come up with a case study as to when I would recommend it, but I haven't done that

00:22:19.040 | homework.

00:22:20.040 | But I've just not seen an example in which I would recommend it.

00:22:22.480 | And I don't like the idea of you're giving up control over money for a very modest tax

00:22:31.120 | benefit.

00:22:32.120 | Right.

00:22:33.120 | You're talking about with 529s or…

00:22:37.160 | UTMAs.

00:22:38.160 | Okay.

00:22:39.160 | Well, that's why I never did a 529 because I saw a very modest tax benefit that I didn't

00:22:42.680 | think was worth the strings being tied to it.

00:22:45.440 | Agreed.

00:22:46.440 | Agreed.

00:22:47.440 | And I have been a very prominent promoter of that exact same thing, that for most people,

00:22:53.040 | a 529 plan gives only a very modest tax benefit, and in many cases, it's probably not worth

00:22:58.740 | the surrendering of the control.

00:23:00.960 | So the same principle applies to the UTMA account.

00:23:03.960 | Why not just keep the money yourself, manage it yourself?

00:23:06.600 | And if you want to give your children money, just give them money.

00:23:10.160 | Why put it into an account that's segregated that has to be there?

00:23:13.760 | And to ask the question is to answer it, to say, "Well, there can be circumstances in

00:23:17.080 | which this is appropriate."

00:23:18.640 | You want to actually affect that transfer.

00:23:22.000 | But in most cases, you don't need a separate account for you to set aside money for your

00:23:26.680 | child's future.

00:23:27.680 | That makes sense.

00:23:28.680 | One more question about a previous podcast.

00:23:35.320 | I heard you say a while ago, basically, along the lines of, "You're responsible for the

00:23:41.960 | way your children turn out or behave," and that really helped me take more responsibility

00:23:46.800 | for the things I didn't like about how my children behaved.

00:23:49.680 | Do you remember, by any chance, where I could find that again?

00:23:52.880 | No idea.

00:23:53.880 | No idea.

00:23:54.880 | I have, right now, it got delayed for a few weeks.

00:23:58.280 | Check back in a few weeks, and ideally, you will be able to have a searchable archive

00:24:03.400 | of all the previous podcasts as they're all transcribed, and you can search them, and

00:24:07.920 | you may be able to find that.

00:24:09.200 | But I don't even know what search terms you would use to find that.

00:24:13.860 | So I would just say you gain the benefit from the principle, and that's all you need.

00:24:21.080 | It's one of those things that clearly we acknowledge that, at the end of the day, our children

00:24:25.000 | are human beings, they're separate entities, they're separate persons, and they're born

00:24:31.480 | as persons.

00:24:32.480 | There's, of course, the endless debate about nature versus nurture, etc.

00:24:38.160 | All of us have seen what we perceive to be good parents who've had catastrophic results,

00:24:43.680 | and all of us have seen what we perceive to be horrific parents whose children have turned

00:24:47.540 | out really well.

00:24:48.760 | So our children ultimately have agency, but at the end of the day, as parents, even if

00:24:53.680 | it's only a metaphorical truth, as I spoke about recently in response to a term that

00:24:58.680 | a listener introduced me to, even if it's only a metaphorical truth, it's something

00:25:02.280 | that we should live by.

00:25:03.280 | And I think that every time I review the nature versus nurture stuff, I become pretty persuaded

00:25:09.820 | that the argument that it's all nature is pretty silly, and that the environment in

00:25:17.520 | which a child is raised, how his or her parents interact with a child, etc., it really does

00:25:24.620 | guide a child and set a child forward on a path.

00:25:29.360 | Awesome.

00:25:30.360 | Thank you.

00:25:31.840 | My pleasure.

00:25:33.560 | We move on to Adam in Washington.

00:25:36.520 | Welcome, Adam.

00:25:37.520 | How can I serve you today?

00:25:39.880 | Hello, Joshua.

00:25:40.880 | It's a pleasure to be able to call in, and first, thank you for all the content over

00:25:48.080 | the years.

00:25:49.080 | I mean, the introduction of different ideas, from investing in your children, money as

00:25:54.120 | a renewable resource, there's lots of really fascinating ideas, so thank you.

00:25:58.760 | My pleasure.

00:25:59.760 | Thank you.

00:26:00.760 | Yeah.

00:26:01.760 | So a question I have for you today is around homeschooling, and so that's one of the things

00:26:06.520 | that I never really thought much about until you started talking about it, or not started

00:26:09.840 | talking about it until I started listening to you talk about it.

00:26:12.960 | And the question I have particularly is around business education, and so I'm curious if

00:26:17.200 | you found any interesting resources for teaching kids, both kind of at an industry level and

00:26:23.440 | at a function level, sales, marketing, human resources, growth, strategy, and then also,

00:26:29.620 | some exposure to different industries, if you've seen that done at all in the homeschooling

00:26:34.360 | world.

00:26:35.360 | I mean, I look at it, I'm having a hard time finding anything that even comes close to

00:26:38.800 | that, and I'm wondering if you've kind of got a deeper understanding.

00:26:43.800 | There are people, many people who are promoting this kind of experience, this kind of education.

00:26:50.160 | I have, a couple of years ago, I signed up for, I bought somebody's information product

00:26:56.700 | called, I think, Kidpreneur, but I never dug into their program.

00:27:00.760 | I just signed up for it and paid for it, and then kind of took a quick glance and meant

00:27:04.560 | to come back, and I haven't gotten around to getting back to it yet.

00:27:08.720 | But they had something built around that.

00:27:12.000 | A few years ago, I signed up for Caleb Maddox's Apex Kids thing.

00:27:23.040 | I tried to use some of his things with my children, and that's his more overall personal

00:27:29.980 | development for kids kind of approach.

00:27:33.080 | That didn't really take with my particular children, and so I let that go.

00:27:37.520 | I have a number of books on the topic.

00:27:42.360 | I have a book called How to Turn $100 Into $1,000,000, and it's been in the library.

00:27:47.520 | I haven't required the reading of it, but my 10-year-old has read it a couple of times,

00:27:51.920 | enjoys it, and I think it's a good opening to it.

00:27:56.520 | I know that there are people who are trying to build this kind of approach, and I intend

00:28:02.160 | to introduce more of these ideas as I get into the teenage world.

00:28:08.720 | So I have a plan in terms of my own curriculum that I am building for my children.

00:28:16.480 | I have a plan to introduce more of these contexts at a later time.

00:28:25.120 | So there is a course that is on my plan from the Ron Paul Curriculum, where they teach

00:28:32.360 | Business 1 and Business 2 as part of the Ron Paul Curriculum, kind of a homeschooling curriculum.

00:28:37.360 | The author of that course in the Ron Paul Curriculum – I can't remember his name

00:28:44.820 | off the top of my head, forgive me – but he also has a website that he is building

00:28:49.800 | teaching business skills to teens, taking them through the process.

00:28:53.720 | That's another resource that is on my planned list that I haven't reviewed personally

00:28:59.040 | yet.

00:29:00.320 | But on the whole, I am skeptical of the idea of "teaching business" for two reasons.

00:29:08.220 | Number one, I am skeptical of making the concept of education practical.

00:29:16.360 | What I mean is, I have complained, just like a lot of other people have complained, "Well,

00:29:22.600 | why do we have to learn all this stuff that we never use in life?

00:29:24.820 | Why are we taking algebra?

00:29:25.820 | You never do algebra in real life.

00:29:28.220 | Why are we taking chemistry?

00:29:29.220 | We never do chemistry in real life.

00:29:31.360 | Why don't they teach normal, useful stuff in school?

00:29:33.700 | Why don't they teach you how to do your taxes in school?"

00:29:36.440 | That's a very common refrain.

00:29:38.360 | If you go to any social media thread and you post something or find something about what

00:29:43.000 | should children study in school, you'll find that a lot of people feel this way about

00:29:48.080 | their education.

00:29:49.080 | "Why wasn't it more practical?"

00:29:51.600 | I have the opposite regret.

00:29:53.360 | I pursued a very practical education, I got a degree in business, and I now look back

00:29:58.080 | and I just think, "That was a waste of four years.

00:30:00.440 | Why did I waste four years of my life studying business when I could have studied something

00:30:04.840 | actually interesting?

00:30:06.280 | If I could have studied philosophy or humanities or history or something that would actually

00:30:10.640 | be interesting to me?"

00:30:12.720 | And I know how silly that sounds, but the reason is that I think we need to get past

00:30:19.040 | the idea of education being a functional commodity, and we should embrace education as an opportunity

00:30:27.080 | for truly creating free human beings.

00:30:30.600 | I'm a proponent of a liberal education, and the goal of a liberal education is to liberate

00:30:35.240 | people.

00:30:36.240 | And I would consider it a very sad person who has gone through years of schooling and

00:30:46.800 | has only come out the other side with the ability to do business.

00:30:50.960 | Now, you're not saying this, I'm just kind of trying to set out a basic framework.

00:30:55.640 | That business is one component of life, and it's an important component, but it is not

00:31:00.560 | the purpose of an education.

00:31:02.960 | And I reject pretty strongly now that the idea of school subjects or the curriculum

00:31:09.160 | that we choose should be primarily practical in nature.

00:31:12.280 | I think that our goal with education is to spread a delectable buffet, a delectable feast

00:31:19.880 | in front of our children from an enormous diverse array of options, and then allow them

00:31:26.160 | to choose among those options and be exposed to this broad general experience of life so

00:31:33.400 | that they can create and chart their own path.

00:31:37.200 | The second objection that I have is to think that somehow business is something that is

00:31:42.120 | difficult to learn or difficult to teach.

00:31:45.720 | I don't think that you would need much more than, you know, six months or a year of a

00:31:51.560 | business curriculum to know just about everything you need to know to get started.

00:31:56.760 | It's very different, learning the skills of business is very different than, say, learning

00:32:02.960 | to be a skillful writer or learning to be skilled at mathematics.

00:32:07.600 | There's just an enormous learning curve with writing and mathematics that doesn't exist

00:32:14.280 | in business.

00:32:15.680 | And academic knowledge related to business is not an effective way of building business

00:32:21.160 | skills beyond the basic fundamentals.

00:32:24.960 | And so I think that a better way to approach the concept of business education rather than

00:32:30.880 | from a general perspective should be to give specific skills that could be leveraged into

00:32:38.520 | a specific job or a specific career.

00:32:41.240 | So here are a couple of examples from my list.

00:32:44.360 | One of the things, one of the opportunities that I think is – well, the basic skill

00:32:49.840 | of business is the skill of sales.

00:32:52.280 | So anytime we can find something related to sales, then I want to encourage that.

00:32:58.320 | But sales skills are hard to teach academically and they're better taught when there's an

00:33:02.480 | opportunity to sell.

00:33:04.600 | And so that's something that I look – I want to look for opportunities to teach for

00:33:10.200 | a young person to sell and encourage them to sell so that they can start to acquire

00:33:16.200 | those skills.

00:33:17.200 | But I'm not going to start going through five books on selling if there's no context for

00:33:22.160 | it.

00:33:23.160 | However, there are skills that I think could relate to things like selling but also relate

00:33:29.340 | to a specific career.

00:33:31.060 | So when my students are in their teenage years, I intend to require an enormous amount of

00:33:39.000 | writing from them.

00:33:41.360 | Writing and speaking.

00:33:42.360 | I believe that the most important literacies for students to be really skilled at are the

00:33:48.540 | active literacies of public speaking or speaking in general both in a private context and in

00:33:55.800 | a public context and also in writing.

00:33:59.520 | The ability to write is fundamental.

00:34:01.720 | And so I would – I plan to introduce things like let's do a copywriting course and let's

00:34:06.520 | practice copywriting.

00:34:08.200 | It's a very useful form of writing.

00:34:11.560 | It is writing so it's perfectly functional in terms of a component of an English curriculum

00:34:17.240 | yet it is something where you can genuinely build a phenomenal career as an independent

00:34:24.360 | copywriter.

00:34:25.360 | It's a career that a child can do from any corner of the world and make tens of thousands

00:34:29.600 | of dollars per year, nay hundreds of thousands of dollars per year, even as a teenager.

00:34:34.660 | And it's also something that is enormously useful in one's own personal business if someone

00:34:41.840 | has his own personal business.

00:34:45.720 | And so that to me is one of those really foundational things and I'm much more excited about a

00:34:51.400 | child going through a copywriting course than I am about some general business education.

00:34:57.500 | The second example I would use is something like accounting or bookkeeping.

00:35:03.700 | Although this market is changing right now and I don't know where we'll be three or

00:35:07.740 | four years from now, but it is very doable for a teenager to not only learn about bookkeeping

00:35:17.540 | and accounting but also to become credentialed and certified either as a bookkeeper or as

00:35:24.540 | an accountant and build an independent business in the teenage years that allows a teen to

00:35:33.140 | earn adult wages but in a teenage context.

00:35:36.420 | And yet that's a fundamental business skill.

00:35:38.660 | You are understanding, starting to understand financial statements, understanding the basic

00:35:43.180 | functioning of taxes, again financial statements are the most important thing, but that can

00:35:49.300 | be leveraged both to create income now but then also as a general component of business

00:35:54.380 | education.

00:35:55.660 | So I'm pretty excited about this idea of saying what are some basic skills and let's learn

00:36:00.140 | the business skills but in the context of the meta skills, the meta skills that can

00:36:04.340 | be applied in various businesses.

00:36:06.500 | And I think with an encouraging environment, say yeah, try that, go ahead and do that,

00:36:11.620 | and don't force a child to stick with something for a very long time but encourage them to

00:36:16.060 | try something, I think that's a good way of gaining expertise.

00:36:19.500 | And then finally, I have the personal MBA reading list, both the actual book written

00:36:25.440 | by Josh Kaufman as well as the reading list, I have that scheduled as part of kind of overall

00:36:30.700 | exposure to business concepts.

00:36:33.060 | While I acknowledge that reading 100 books on business is pretty large, but I think that

00:36:39.860 | in general if someone reads 10 or 15 or 20 books on business, especially if they're books

00:36:45.340 | that are being studied in specific application to a business, then I think that's an abundantly

00:36:51.660 | useful business education.

00:36:53.780 | So those are my ideas, probably less well stated than I would like, but those are my

00:36:58.900 | ideas on a business education, that it's important but I don't think it's more important than

00:37:04.280 | academic subjects.

00:37:05.660 | I think that business is one of the easier things to learn and that it should be a modest

00:37:10.700 | component of, certainly a very modest component of the younger years.

00:37:15.420 | And then as we move to the teenage years, it should be a component but not an overwhelming

00:37:19.840 | component because the major goal of education is not strictly practical but rather it is

00:37:26.200 | an important component and what we want to do is help our children and fit them for a

00:37:31.260 | couple of careers.

00:37:32.260 | In conclusion, one of the reasons I'm very passionate about homeschooling is I think

00:37:37.620 | that it's the best context for both of these things together.

00:37:41.060 | So my basic mental model for a really good teenage homeschool curriculum is that an academic

00:37:48.940 | curriculum is imposed upon the student during his or her teenage years to the tune of about

00:37:56.980 | three to four hours a day of work.

00:37:59.140 | So ideally, student starts at eight and is done at noon.

00:38:01.980 | And I think with three to four hours of focused work a day, you can produce top-tier academics

00:38:07.380 | in a homeschooling context because of the efficiency of time use as well as the efficiency

00:38:12.980 | of education because you don't have to be held back by classroom movements but the student

00:38:17.460 | can always be right at his frontier of learning where learning is efficient.

00:38:22.140 | Then the student should be encouraged from noon to night and also we can eliminate homework,

00:38:27.420 | we can eliminate all the rest of the stuff, the student should be encouraged from noon

00:38:30.420 | to night to develop his or her own businesses, his or her own expressions of business and

00:38:39.540 | those things can be learned in the context of a job, a business, a skill that's being

00:38:45.220 | developed and that that's the best way to learn those skills.

00:38:48.780 | And then I see myself not as providing a formal academic curriculum to teach you the skills

00:38:54.500 | of business but rather mentoring and coaching through the real experiences of being in business.

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00:39:30.740 | Yeah, yeah, that makes sense and I guess the lens I was thinking about through more was

00:39:35.620 | the world of stories, one of the things that you mentioned a few months ago, I think, was

00:39:40.740 | reading your kids the biography of Marie Curie as a way to introduce them to this whole world

00:39:46.060 | of books as the ultimate instructor or the best tutor in the world.

00:39:52.660 | And I guess one of the ideas that you put out there even earlier than that was around

00:39:57.220 | spending money to learn things related to your industry and give yourself a personal

00:40:01.700 | education budget.

00:40:02.700 | So I've been spending a whole bunch of money on Harvard Business School case studies related

00:40:07.420 | to the industry that I work in and I found that it's been some of the best money I've

00:40:11.460 | ever spent going through these different stories and seeing it through that lens.

00:40:16.660 | So I appreciate your answer.

00:40:21.020 | For someone who has a high interest in business, we want to encourage that.

00:40:24.860 | I don't want to be recently trying to keep these comments short.

00:40:30.500 | We want to encourage business but I'm nervous about an exclusive focus on business.

00:40:35.740 | I would not want to graduate an 18-year-old who is only skilled with business but is not

00:40:43.580 | well informed about other important components of what it means to be highly educated.

00:40:49.140 | I also don't want to graduate an 18-year-old who exclusively has academic knowledge and

00:40:54.620 | academic skills and doesn't have any experience applying learning to the world and doesn't

00:41:00.940 | have any context of business, doesn't have any sense of how to make money in the world.

00:41:06.080 | So I want to shoot right up the middle.

00:41:08.300 | I don't want to sacrifice either of those things and I definitely do want to encourage

00:41:12.260 | business knowledge and I think that your expression of Harvard Business Review case studies is

00:41:17.420 | really great.

00:41:18.420 | There's a whole lot of other skills that need to be applied.

00:41:21.380 | So things like gaining access to people.

00:41:31.460 | I think one of the high school projects that we want to teach high schoolers is we want

00:41:36.980 | to make sure that they are systematically building the skills of gaining access to important

00:41:42.860 | people and we want to figure out a reason for them to gain access to important people

00:41:47.220 | which is probably going to involve some kind of sales skills, some kind of advocacy for

00:41:51.220 | something, etc.

00:41:52.980 | And so all of these I see are related to business and that they will serve a child well who

00:42:00.640 | then wants to pursue business in an entrepreneurial way.

00:42:04.300 | Yeah, that makes sense.

00:42:06.980 | And two other kind of quicker ones if that's okay.

00:42:10.860 | You mentioned investing in your children's bodies.

00:42:15.300 | I thought that whole series was great by the way.

00:42:19.660 | Just on balance and something I've got three kids under five years old and my five-year-old

00:42:24.460 | and three-year-old are really interested in gymnastics which is like quickly becoming

00:42:28.580 | a huge time investment like as they get better and better at it, they get invited to spend

00:42:32.780 | more and more time doing it.

00:42:34.260 | I'm wondering if your kids have expressed an interest in that or if you've dabbled with

00:42:38.220 | that at all.

00:42:39.220 | Kind of in the spirit of that, investing in balance and finding a way to invest in your

00:42:43.700 | kids' bodies from a strength standpoint.

00:42:45.340 | And the other one just to put it out there, you can answer them together and I'll be done.

00:42:51.180 | You had mentioned at some point that you were self-recording English-Spanish translations

00:42:56.780 | and you were considering releasing it.

00:42:58.300 | I was wondering if you had an update on that and it'd be something I would love to listen

00:43:01.420 | to as I dabble in that world of learning another language.

00:43:05.060 | Thank you.

00:43:06.060 | Yeah.

00:43:07.060 | To the subject of the books, it's an ambition of mine and my ambitions are far beyond my

00:43:12.180 | capacity to deliver them in a timely manner.

00:43:14.380 | And it's an enormous point of frustration that I myself am fixing because these things

00:43:19.820 | need to exist.

00:43:20.900 | I just am working on expanding my team to make it happen and I find the same limits

00:43:26.020 | that we all do.

00:43:27.020 | But it's a new day, working better and making progress on that.

00:43:30.180 | With regard to the physical stuff, I was just quite literally before recording this podcast,

00:43:36.260 | I was just talking with my wife about this and I'll just share specifically what we're

00:43:39.540 | talking about.

00:43:40.540 | I'm almost finished with this book called Range by David Epstein and I've been reading

00:43:45.340 | this book as a rebuttal to some of my other readings.

00:43:49.100 | I read a book called Peak by Anders Ericsson and a book called Talent is Overrated by Jeff

00:43:53.140 | Colvin.

00:43:54.500 | Both excellent books, but especially Talent is Overrated, Colvin, I think, would advocate,

00:43:59.140 | he does advocate for a highly specialized form of training that if we want to produce,

00:44:07.700 | say, you know, someone's interested in gymnastics, then if we want our child to be a world-class

00:44:12.860 | gymnast, then we should sign up for the gymnastic gym, we should be there four hours a day with

00:44:17.660 | kind of what I think we would think if I say a Soviet-style gymnastics training program,

00:44:23.260 | I think that would resonate, you know, with what the Soviets often did.

00:44:25.940 | They would find a student who, a young child who displayed some basic promise, they would

00:44:30.340 | take the child away from his or her parents, put him under a coach and all the child's

00:44:36.580 | life would be gymnastics or boxing or hockey or whatever it happened to be, and to this

00:44:41.980 | very intense level of development.

00:44:44.340 | So David Epstein's book, Range, is very much a rebuttal to that, basically saying that

00:44:51.500 | it's not the only way that people learn is to just do one thing all the time and only

00:44:56.740 | do that well.

00:44:58.420 | And I'm pretty nervous about what I think could be called the tiger mom, you know, idea

00:45:03.500 | that you have a mom who comes along and says, "My child is going to be great at this," and

00:45:07.340 | push, push, push, push, push.

00:45:08.580 | I don't see that as appropriate parenting.

00:45:11.260 | I see that as more harmful than helpful, even though it may result in somebody developing

00:45:16.740 | genius-level skills in an environment.

00:45:19.500 | And the conversation that I had with my wife just today was a good approach to this is

00:45:24.140 | seasonality.

00:45:25.620 | And I think that's one thing that is often missing.

00:45:29.260 | I assume it's still this way.

00:45:30.740 | When I was in high school, we had sports.

00:45:33.220 | We had basically fall sports and spring sports, and I think this is still the case.

00:45:36.880 | So you have your football season, you have your basketball season.

00:45:40.180 | You have your baseball season, you have your swimming season.

00:45:43.340 | And an athlete could do multiple sports.

00:45:46.460 | And I think there's abundant evidence to say that that's probably a good thing and not

00:45:51.420 | a bad thing, because right now where you see this is parents, you know, they push their

00:45:57.500 | child into Little League, and then they push their child on their travel team.

00:46:00.540 | And it's like you've got a dad or a mom who's just trying to fulfill his own dreams with

00:46:04.740 | his child.

00:46:05.740 | And yes, the child may be good at baseball, and ultimately is burned out by 18 and never

00:46:09.260 | wants to see a baseball again.

00:46:10.540 | I don't see that as a proper frame.

00:46:14.260 | So I think seasonality is an answer, is to say, "Hey, we're really into gymnastics.

00:46:18.900 | Great.

00:46:19.900 | Let's do it.

00:46:20.900 | Let's do it for three months.

00:46:21.900 | And let's be really into gymnastics for three months, and then let's quit it.

00:46:25.980 | And let's go do rock climbing, and rock climbing is going to be our thing for three months.

00:46:30.220 | And then after that, it's going to be baseball.

00:46:31.900 | Let's do baseball."

00:46:32.900 | And we want to expose our children to a diverse level of things, and then listen to them.

00:46:37.860 | And if they really, really, really want to go back to gymnastics, great, let's go back

00:46:41.180 | to gymnastics.

00:46:42.580 | But we can guide appropriately.

00:46:44.380 | We want to think about those basic skills.

00:46:46.620 | Every sport's going to have a different set of skills.

00:46:48.500 | Every sport's going to cultivate something unique.

00:46:51.340 | But not let it take over your life to where you're spending hours and hours every week

00:46:55.740 | doing it.

00:46:56.740 | You can do that for three months.

00:46:58.020 | So call it a season and say, "For this season, we're going to do gymnastics."

00:47:02.740 | Then what would you guys like to do next?

00:47:03.980 | And let's take a break.

00:47:04.980 | Let's have an off-season.

00:47:06.260 | And then let's think about what we're going to do in the fall or the spring.

00:47:08.860 | I think that's a good way of approaching it.

00:47:10.980 | Awesome.

00:47:11.980 | Thank you.

00:47:12.980 | My pleasure.

00:47:13.980 | All right.

00:47:14.980 | An enormous number of callers, so we'll go a little faster.

00:47:17.380 | Preston in Arizona.

00:47:18.380 | Welcome to the show.

00:47:19.380 | How can I serve you today?

00:47:20.380 | Hey, Joshua.

00:47:21.380 | Appreciate you taking the time to talk to us today.

00:47:24.980 | My question is based on, generally, what's an appropriate amount to invest in a single

00:47:32.420 | investment, more specifically, in your own company stock?

00:47:38.180 | So for some context, have about $300,000 worth of company stock.

00:47:46.180 | You're dropping out on me.

00:47:51.460 | $300,000 a company stock.

00:47:53.140 | Go ahead.

00:47:54.140 | Okay.

00:47:55.140 | Maybe a little bit more, $70,000, the best over the next few years.

00:48:00.340 | There's an opportunity to buy more today.

00:48:02.020 | I have the expectation that the stock is going to perform very, very well over the next few

00:48:06.540 | years.

00:48:07.540 | I just want to keep in mind maybe some ideas that you have on what's an appropriate amount

00:48:15.100 | of allocation for one investment, particularly company stock.

00:48:20.060 | This is a hard question because I could present a few different models that I have learned

00:48:25.980 | and heard, but at the end of the day, I think it's going to be a gut call by you.

00:48:30.940 | Because if your company stock performs well, and you know, you feel like, and you believe

00:48:37.540 | that it's going to perform well, then you're going to want to be invested in it heavily.

00:48:41.420 | So in hindsight, let's look back.

00:48:44.540 | Imagine that you are an early engineer at Facebook, or an early engineer at Tesla, and

00:48:50.860 | you're being paid in company stock.

00:48:53.340 | And imagine you're talking to your financial advisor, and your financial advisor is saying

00:48:56.820 | to you, "Well, you really should be prudent.

00:48:58.900 | And after all, we have an enormous amount of isolated risk between your employment and

00:49:03.060 | your company.

00:49:04.060 | And after all, you should know about the company stock.

00:49:05.460 | So why don't you go ahead and put it all into an index fund?"

00:49:07.860 | Well, fast forward 10 years.

00:49:09.740 | You're not very happy with that advice, are you?

00:49:12.540 | No.

00:49:13.540 | Okay.

00:49:14.540 | So now we can say the flip side.

00:49:17.540 | Let's say that you have all your company in stock, and I don't know what bankruptcy to

00:49:21.060 | refer to.

00:49:22.060 | It seems kind of dumb to talk about WorldCom or Enron at the moment, but those were kind

00:49:25.540 | of classic examples that you're an early employee, etc.

00:49:30.740 | Well, now you would appreciate that diversification.

00:49:34.140 | So at the end of the day, every man is going to have a different gut feeling, a different

00:49:40.060 | decision and be willing to take a different amount of risk on his beliefs.

00:49:45.460 | And then you're going to have to consider your phase of life and to say, "Can I afford

00:49:48.900 | to take this risk?"

00:49:50.540 | So let's just – I can't give you a perfect answer because knowledgeable, smart people

00:49:56.460 | would give you a variety of models.

00:49:58.920 | So I'm going to give you some filters to pass it through instead because I think that's

00:50:02.260 | the most useful.

00:50:03.260 | Number one, think about – on a recent Q&A, I went through kind of an elaborate discussion

00:50:07.900 | around Bitcoin.

00:50:09.500 | Go back and listen to the most recent Friday Q&A where a listener called and said, "Should

00:50:15.060 | I sell my real estate and move to Bitcoin?"

00:50:17.140 | And I gave an elaborate discussion of how you would decide whether to do that and how

00:50:21.360 | to do that and whatnot.

00:50:22.660 | I think a lot of that applies to your situation.

00:50:26.420 | So since that's already there, let me go to a few more things.

00:50:30.720 | Number one, think about your stage in life.

00:50:32.980 | There's a big difference between being very young and wanting and really needing to make

00:50:40.180 | big wins versus being very old and not needing to make big wins but wanting to avoid big

00:50:47.300 | losses.

00:50:48.580 | And so it makes all the sense in the world to me for a younger man who is at a company

00:50:55.340 | that's giving him company stock and he believes in the company, it makes all the sense in

00:50:59.300 | the world to me for him to keep it in company stock even though there's an intense concentration

00:51:04.860 | of risk because it may turn out to be a great long-term move for him if he believes in the

00:51:11.780 | company as you do with yours, that I think it's going to perform well.

00:51:16.380 | On the other hand, there's a great deal of risk to the guy who is older in his career

00:51:21.420 | to have an extreme concentration in his company stock especially that if he loses his job

00:51:27.940 | and he loses his stock value at the same time, then it's a double whammy.

00:51:31.580 | So you want to think about the phase of life.

00:51:33.700 | You want to think about the alternative use of the dollar.

00:51:36.220 | So if you sell the stock, what are you going to do with the money?

00:51:39.580 | And then go through that way of thinking that I described in the Bitcoin course, okay, if

00:51:43.300 | I sell the stock, am I going to put it in the index fund?

00:51:46.060 | Well, now I know I'm not going to get much wins but at least I'm not going to get much

00:51:50.460 | losses ideally as compared to the current scenario.

00:51:54.700 | And then just simply go with the scenario that feels best for you.

00:51:59.700 | And while you're doing that, make a plan to say here's how I would know if things are

00:52:05.620 | going to change.

00:52:06.620 | So here's how I would know if I'm going to go ahead and sell my company stock.

00:52:13.020 | I would get married and want to buy a house.

00:52:14.900 | Well, this would be the money that I would use to buy a house and if I could pay cash

00:52:17.580 | for a house, that would be fantastic because imagine starting your life as a young man

00:52:21.580 | with a debt-free house, that would be well worth it.

00:52:25.340 | That would be a smart move.

00:52:27.020 | Or if I didn't start feeling confident in the company, I'm going to start selling stock

00:52:32.700 | but that's also my sign that I'm going to look for a job.

00:52:36.060 | I think this kind of subjective discussion, even though it's not specific, is the best

00:52:42.020 | way that you're going to come to arriving at what you personally think and believe.

00:52:46.780 | And I think it's a better answer than only put 10% of your net wealth in any one thing,

00:52:52.580 | etc.

00:52:53.580 | You need to ask yourself, where am I in my wealth building journey?

00:52:56.900 | Am I looking for a big win?

00:52:59.160 | Is this company a big win?

00:53:00.780 | Is there a better use of the dollar?

00:53:02.900 | And not just play the conservative angle if you don't need to play the conservative angle.

00:53:07.500 | But if you do need to be conservative, then go ahead and start being conservative.

00:53:11.580 | Okay.

00:53:12.580 | Yeah.

00:53:13.580 | That's helpful.

00:53:14.580 | I appreciate your thoughts.

00:53:17.140 | Thank you.

00:53:18.140 | I don't have a mathematical model to offer to you, but I do have my own personal regret

00:53:26.620 | of not being more aggressive.

00:53:30.700 | And there are some who have regrets from being aggressive.

00:53:38.540 | And so you yourself, for example, you might have your salary and then your company stock

00:53:43.340 | that you receive as part of your compensation package.

00:53:46.100 | You might not take your entire salary and go and buy more company stock.

00:53:50.900 | But so you might choose your diversification that way.

00:53:54.180 | But in general, if you believe in the future of the company and you have no other information

00:53:59.740 | that would say that you're wrong, I think you're going to want to bet on yourself and

00:54:03.680 | bet on the company and have the confidence that comes with trusting yourself versus trying

00:54:10.300 | to take some external person's framework to say, "Well, we never own individual stocks.

00:54:16.380 | It's too much concentration of risk," et cetera.

00:54:18.860 | I think you'll feel better betting on yourself than the other way.

00:54:23.020 | Andrew in Mexico City.

00:54:24.620 | Welcome, Andrew.

00:54:25.620 | How can I serve you today?

00:54:26.620 | Hi.

00:54:27.620 | Good afternoon, Joshua.

00:54:28.620 | Thank you for your time today.

00:54:30.380 | I had a question on behalf of my wife and I.

00:54:32.860 | We recently created a revocable living trust in order to have a say in how our life's work

00:54:39.820 | would be drawn down.

00:54:41.460 | In the event of our early passing, a percentage would remain with our family, pay for education,

00:54:47.260 | healthcare expenses.

00:54:48.260 | We have that pretty nailed down.

00:54:50.320 | Our primary plan, assuming that we live long and healthy lives, is to eventually donate

00:54:54.500 | a majority of it to charity, charitable causes during our lifetimes.

00:54:59.340 | We're in our mid-30s right now.

00:55:01.140 | We have time to identify those organizations closer to our 60s and 70s.

00:55:06.260 | What I'm having trouble with is how to identify high-quality organizations that make a significant

00:55:11.100 | difference in the communities in which they operate and have a high likelihood of continuing

00:55:15.260 | to do so in the future.

00:55:17.180 | We need to get these written down in case of our early passing and we don't get the

00:55:21.740 | chance to spend or donate the money before or during our retirement years.

00:55:25.960 | How would you go about identifying these organizations in a way that doesn't involve Google searches

00:55:31.060 | just until the end of time?

00:55:32.060 | I guess I'm just looking for an effective way of going about this since there are so

00:55:36.420 | many options.

00:55:37.420 | And the pressure at the moment is that you need to state in your new trust documents,

00:55:43.500 | you need to state specific organizations, is that right?

00:55:46.940 | Correct.

00:55:47.940 | That page is currently blank.

00:55:49.660 | We created this trust about a year ago and we've had many discussions.

00:55:52.700 | It just kind of feels like we're stalled out at the moment and just need to see a fresh

00:55:57.260 | way of how to name these particular organizations, yes.

00:56:01.020 | Do you have any personal experience with volunteering for an organization, your mother working for

00:56:08.580 | an organization, etc.?

00:56:09.580 | Is there just an organization that you've been around?

00:56:12.620 | Yes, we're both on the board of directors for a small non-profit based in Minnesota

00:56:19.520 | that is involved in high school education.

00:56:22.580 | So we do have experience with operating non-profits, how they operate, actually operating them,

00:56:29.220 | finding effective ways of spending money on tight budgets, etc.

00:56:33.820 | How would you feel if you just simply chose the organization that you currently are involved

00:56:40.120 | in, just to fill it in for now, recognizing that you have time to come back in the future?

00:56:44.300 | Would that solve your problem?

00:56:46.940 | That is at the top of our list.

00:56:49.380 | I think the budget of that organization is probably smaller than what we'd be leaving

00:56:55.380 | behind.

00:56:56.380 | So we're trying to find some other organizations as well.

00:56:59.420 | And this particular organization does have a bit of a cap in the impact that we can make

00:57:06.860 | in terms of quantity of students.

00:57:10.100 | We've reached that.

00:57:11.300 | So I think that anything over and above, there wouldn't be as good of a use of the funds.

00:57:18.180 | You are hitting on a subject, a question that is one of my most pressing interests and passions.

00:57:29.640 | I am pretty obsessed at the moment with this exact question that you're talking about.

00:57:35.820 | How do we identify effective ways of causing change in the world so that we can support

00:57:42.420 | them?

00:57:43.420 | This is an enormous passion of mine, and it's something that I desire very strongly in the

00:57:49.340 | coming months and years to try to figure out.

00:57:54.820 | About all I know right now is I'm pretty dissatisfied with virtually all of the advice that I hear

00:57:59.620 | anybody giving, and I'm dissatisfied with the advice that I myself can give.

00:58:02.820 | I don't know the answers to it.

00:58:04.740 | So let me just tell you a few of the models to talk about.

00:58:09.140 | So a good starting point, there are a number of publications that rate charities.

00:58:14.700 | Charity Navigator I think is probably the most prominent one.

00:58:18.260 | So I would begin there.

00:58:20.540 | Charity Navigator is an organization that is focused on identifying the basic functioning

00:58:25.740 | of various not-for-profit organizations and identifying their metrics, what's their income,

00:58:33.460 | what's the compensation of their employees, their boards, et cetera, what percentage of

00:58:37.700 | their efforts go to project work versus administration, et cetera.

00:58:44.480 | And I have no reason to think that they do a bad job or are in any way untrustworthy.

00:58:51.660 | And so I would encourage you to start there.

00:58:53.820 | And I would basically say to you, just pick a couple of topics or interests that are from

00:59:02.200 | an organization like Charity Navigator for now just to fill it in, because that's where

00:59:07.860 | you start.

00:59:08.860 | Now, my questions are bigger because I question a lot of the basic fundamental assumptions

00:59:17.460 | that people have.

00:59:18.460 | And I'll give one example that is like the Pilata example.

00:59:21.820 | I forget the guy's first name, but years ago when I was doing my – I have a designation

00:59:27.640 | called a Chartered Advisor in Philanthropy, C-A-P designation.

00:59:33.120 | And it was a series of classes and courses that I went through.

00:59:35.380 | It was one of my more interesting ones that I did because we did it – I was a financial

00:59:41.120 | advisor and we had basically a cohort of like 20 people.

00:59:45.820 | And there were about three or four of us from financial services.

00:59:48.480 | There were about three or four lawyers in the cohort.

00:59:51.120 | There were about three or four executive directors of not-for-profit organizations.

00:59:56.640 | There were – I forget the other things, but basically this interesting cohort of interdisciplinary

01:00:02.540 | people and we all did the classes together.

01:00:04.320 | And we read an essay by a guy named Pilata, I think Dan Pilata or something like that.

01:00:09.560 | And it was quite controversial at the time.

01:00:11.120 | This is more than a decade ago, but – or not – yeah, more than a decade ago.

01:00:15.160 | It was very popular because Pilata was making the case that one of the worst metrics to

01:00:22.400 | look at is the metric that most people start with, which is what percentage of an organization's

01:00:28.160 | budget goes to organization overhead versus actual impact.

01:00:34.800 | And Pilata's argument was that while people say, "Oh, a well-run charity is one that

01:00:39.360 | has a very thin overhead and puts most of its money into project work, et cetera,"

01:00:43.920 | that that's nonsense.

01:00:45.420 | That the best run – a well-run charity is one that makes the biggest impact on the desired

01:00:51.060 | focus, on the desired area, rather than overhead.

01:00:55.300 | What's better?

01:00:56.300 | To have an organization, for example, that has a 10% overhead budget and contributes

01:01:01.780 | 90% to the project but has a total budget of say $100 million so that $90 million is

01:01:08.860 | going to the project work or an organization that has a 30% overhead but 70% goes to project

01:01:17.300 | work but has a budget amount of say $1 billion.

01:01:21.300 | Well, obviously, $700 million is a much bigger impact than say $90 million to the actual

01:01:28.980 | cause.

01:01:29.980 | And so if you had to increase the overhead of the organization from 10% to 30% but at

01:01:36.100 | the end of the day, you could increase the impact from $90 million to $700 million, then

01:01:43.740 | wouldn't that be a much better move?

01:01:46.380 | And the point has stuck with me since then.

01:01:48.180 | Now it's been debated.

01:01:49.180 | There were a lot of people that disagreed with that.

01:01:50.940 | But this is an example that has always stood by me because prior to coming into that essay,

01:01:55.300 | I would have firmly sided on that, "Well, the mark of a good organization is one that

01:02:01.340 | spends the least amount on overhead and the mark of a bad organization is one that has

01:02:08.620 | a high overhead ratio where a lot of people working for it are making too much money,"

01:02:12.580 | things like that.

01:02:13.580 | I now don't believe that.

01:02:15.100 | So we want to look for impact.

01:02:16.580 | The problem is how do you judge impact if you're not intimately familiar with the industry?

01:02:22.420 | And I don't think you can be intimately familiar by perusing any marketing brochures or even

01:02:31.900 | charity navigator to – how can you get that level of familiarity?

01:02:37.740 | You have to go to something where you actually know, something that you're actually going

01:02:40.900 | to be involved in.

01:02:42.060 | So on the whole, the long-term answer that I would love to give to you is to say you

01:02:47.460 | and your wife choose an issue or a couple of issues that are really important to you

01:02:55.940 | and then dedicate a significant portion of your time and your resources towards investigating

01:03:03.020 | those particular issues.

01:03:05.740 | And so you say, "We really want to make a change in education."

01:03:09.380 | I think you mentioned the organization you're involved with is involved in education.

01:03:12.340 | Okay.

01:03:13.340 | Well, what's the change?

01:03:14.340 | You want to really be as knowledgeable in that space as possible.

01:03:18.540 | And in the process of becoming knowledgeable about that space, then you'll be aware of

01:03:22.900 | the organizations that need your help, the organizations that are doing things, and you'll

01:03:29.380 | be aware of the impact of those organizations.

01:03:32.140 | And those things are all impossible to find from a public perspective, but they're pretty

01:03:36.820 | easy to find when you start building relationships and contacts in that industry.

01:03:41.860 | I find this in any new industry is that from the outsider's perspective, all I have is

01:03:46.580 | marketing literature.

01:03:47.580 | But once I start meeting some people and the microphones are off and the cameras are off

01:03:52.220 | and they'll just quietly say, "Well, this company over here, they don't do anything

01:03:55.740 | and these guys are the scammers."

01:03:57.380 | And I can't say that publicly, but these guys are the scammers and these guys are the good

01:04:00.140 | guys.

01:04:01.140 | And the same thing I think is happening in charitable organizations.

01:04:06.620 | And then the other comment I would make is you need to question the entire premise of

01:04:10.380 | is a not-for-profit organization actually the way that you're going to accomplish your

01:04:14.860 | goals.

01:04:16.340 | That's something that I think is too often accepted as a given.

01:04:43.820 | It's too often accepted as a given that a not-for-profit is a superior option, but

01:05:01.580 | is not something that should be accepted.

01:05:04.160 | And so you may want to, in the fullness of time, as you get closer to the actual disbursements,

01:05:09.900 | you may want to regularly revisit this.

01:05:12.100 | And sometimes you may want to put individuals on there, you may want to put companies that

01:05:15.940 | are even for-profit companies, and then include also not-for-profits in it.

01:05:19.780 | So short answer, charity navigator, longer answer, choose one area of interest or two

01:05:24.560 | areas of interest and make that the research project that you and your wife are involved

01:05:29.980 | in.

01:05:30.980 | And if you have one area of interest and you go to four or five galas for the organization

01:05:36.560 | or some fundraisers, donate a small amount of money, get on the mailing lists, get involved,

01:05:41.260 | etc.

01:05:42.260 | Then over the next three, five, ten years, as you pay attention, you'll get a much better

01:05:47.320 | sense of who's actually doing well, who's making an impact in the fields that you care

01:05:52.760 | about.

01:05:53.760 | Wonderful.

01:05:54.760 | Thank you.

01:05:55.760 | My pleasure.

01:05:56.760 | We move on to Sheldahl in Minnesota.

01:05:57.760 | Welcome, Sheldahl.

01:05:58.760 | Hi, Joshua.

01:05:59.760 | Say, I want to get your thoughts on a framework on valuing a business, attempting to help

01:06:16.540 | a couple of brothers.

01:06:18.880 | They own a bar in a small town in middle America.

01:06:23.720 | They inherited it from their parents and so everything's free of any debt.

01:06:28.840 | It includes the land, building, and the business.

01:06:33.800 | The older brother spends five to ten hours a week doing some bookkeeping, inventory,

01:06:38.160 | that kind of stuff, and he takes a small salary for that.

01:06:40.880 | Other than that, they're basically receiving, since they own the land and the building,

01:06:47.280 | they're basically renting those facilities to the business and paying themselves rent

01:06:51.440 | checks.

01:06:52.440 | So that, along with distributions, they're getting about $80,000 a year in profit or

01:07:00.000 | cash flow from the business.

01:07:05.840 | Basically one wants to buy the other out and have his son kind of run the business.

01:07:11.720 | The younger brother's not necessarily ready to sell, but feeling like just to keep things

01:07:22.120 | cordial in the family or whatever, they're considering it.

01:07:25.200 | The hard part is, since the younger brother doesn't necessarily want to sell, he likes

01:07:31.080 | getting his $40,000 a year in income, the two of them still have to come to a price

01:07:36.640 | for the business to buy the other person out.

01:07:41.680 | So I'm wondering what you have for kind of setting up a framework, what you think we

01:07:45.560 | should be looking at, what kind of questions we should ask as we work through this.

01:07:48.600 | Are you in the middle, kind of representing both of them or do you have one party on your

01:07:52.960 | … You're representing just one party in this negotiation?

01:08:00.280 | I'm basically friends with both, so I'm just trying to help bring conversation among them

01:08:06.880 | and try to keep things friendly as we talk through it.

01:08:11.480 | We've talked about bringing in their accountant that's worked with them for a number of years

01:08:17.000 | with the business to kind of go through some annual reports and put together some histories

01:08:22.800 | and stuff like that.

01:08:24.120 | I'm not legally representing either of them at this point.

01:08:29.800 | Okay.

01:08:30.800 | Well, I think there are at least three different valuations that could be applied to just about

01:08:37.760 | any business, and I think probably more, but let's start with three.

01:08:44.160 | The first valuation is the easiest.

01:08:47.500 | It's going to be some form of industry standard.

01:08:51.260 | Every different industry is going to have some kind of generally accepted industry standard.

01:08:56.080 | There's somebody who is a broker of bars in your region that you can reach out to and

01:09:01.640 | contact, and that would be the first person I would look for, is find a business broker,

01:09:06.720 | find a business website, find a broker who has worked with these kinds of businesses,

01:09:14.760 | and then just get some insight, what do these things sell for, and figure out how it's calculated,

01:09:21.380 | what the pre-multiple numbers are, what the multiple is, et cetera.

01:09:27.120 | Work through that list, and you'll get some sense of the industry valuation.

01:09:34.200 | The problem is that that's not really the most impactful thing.

01:09:39.400 | The second form of valuation is, well, what would I need to do to replace this?

01:09:44.160 | If I'm a part-time owner of a business like this, and I'm making $40,000 a year with a

01:09:52.320 | very modest amount of work, maybe even no work, or just a few hours here and there to

01:09:57.000 | make sure things are being run honestly, that's a pretty significant thing to replace.

01:10:02.360 | $40,000 of income is quite a lot.

01:10:07.560 | Let's use the 4% rule as an example.

01:10:10.120 | If I needed to replace that $40,000 a year with mutual funds, and I'm using the 4% rule

01:10:16.120 | of drawing money on mutual funds, I need about a million dollars in mutual funds.

01:10:20.360 | That's a lot.

01:10:22.120 | I would be pretty surprised if a brother was ready to, if one is ready to offer the other

01:10:27.680 | a million dollars on this kind of business.

01:10:30.200 | And yet, if this guy wants to replace this $40,000 that he's getting, he kind of needs

01:10:35.400 | a million dollars.

01:10:36.400 | You see the logic?

01:10:37.960 | Yeah.

01:10:38.960 | Yep, that's what I kind of think about the different options or different ways of looking

01:10:44.180 | at it.

01:10:45.180 | Like, okay, there's challenges.

01:10:46.560 | Right.

01:10:47.560 | And so he's got a pretty good deal.

01:10:50.120 | Now we could argue left, right, and center that, well, obviously you're a lot safer with

01:10:54.440 | a million dollars in mutual funds than you are with one little bar in the middle of nowhere.

01:10:58.760 | But at the end of the day, I'm not thinking about that.

01:11:01.600 | I'm thinking about the fact that, hey, I've done this business for a while.

01:11:05.960 | People's drinking habits are unlikely to change very frequently, especially in the Midwest.

01:11:11.240 | There's not going to be a big change.

01:11:12.700 | We own everything outright.

01:11:14.080 | There's not really any risk.

01:11:15.960 | I got $40,000.

01:11:16.960 | How am I going to replace that?

01:11:17.960 | And so you can do this valuation with real estate.

01:11:21.240 | He may go out and say, well, if I'm going to take the money that he's going to pay me,

01:11:27.280 | then how many houses do I need to buy to replace my $40,000 a year free and clear?

01:11:32.860 | And that's going to be the most compelling valuation.

01:11:36.400 | Because the same question, let's say that a guy calls me and says, should I sell this

01:11:39.920 | investment and buy a different one?

01:11:41.520 | Well, the answer is, what are you going to replace it with?

01:11:43.820 | And virtually all of the things that he could replace it with to get $40,000 of income,

01:11:55.780 | all the things that he could replace it with are probably going to be on the level of,

01:12:00.160 | again, that million dollars.

01:12:01.360 | So that's the second level of valuation.

01:12:04.260 | And then the problem is then you have a third level of valuation, which is, what is it going

01:12:09.720 | to take for me to feel secure?

01:12:12.000 | Or what is it going to take for me to be confident that this was the right move?

01:12:16.300 | So in this discussion with two owners, and one owner wants to pass it along to the son

01:12:21.580 | and kind of get them involved, then if I'm the guy who's being asked to sell, I'm going

01:12:27.060 | to be thinking about, what are the growth prospects here?

01:12:30.900 | What if we can grow this thing and now my share can turn not from $40,000 but into $75,000?

01:12:44.020 | How do I get better than that?

01:12:45.780 | And so there's the walkaway number, and the walkaway number is usually the highest.

01:12:50.900 | And so I think I've ordered these numbers and what I think would usually be the three

01:12:56.260 | numbers.

01:12:57.520 | Number one is going to be – and we can argue about the order a little bit, but usually

01:13:01.980 | the industry average is going to be the lowest.

01:13:04.740 | Then the how do I replace this is going to be significantly higher.

01:13:08.960 | And then in many cases, the walkaway number of here's what it takes for me to walk away

01:13:12.540 | happily today is going to be the real number that we're going to get to, but that's often

01:13:17.100 | going to be the highest because it's not tied to any specific outcome.

01:13:24.140 | It's just a number that feels good.

01:13:25.700 | Okay, that's definitely enough money.

01:13:27.220 | You can be ridiculous about it.

01:13:28.820 | If somebody walked in here and offered us $5 million for this bar, we'd sell today,

01:13:32.660 | obviously.

01:13:33.660 | Well, no one's going to do that.

01:13:35.140 | So we're coming down from it, but what that actual walkaway number is, is going to vary.

01:13:41.280 | So the pathway that I would see that might result in some kind of successful negotiation

01:13:48.020 | is going to be less about the valuation of the business and more about the settling of

01:13:54.140 | the life path.

01:13:55.860 | Why would somebody want to sell in the first place?

01:13:59.380 | For example, I might be getting older.

01:14:01.020 | I might not want to come in to do the work, etc.

01:14:03.780 | All right, well, you want to sell.

01:14:05.100 | What do you need from it?

01:14:06.100 | Well, I need income.

01:14:07.140 | And so maybe we can have a higher buyout number, but we can deliver it in the form of income

01:14:13.500 | payments that are going to come in for 15 years or 10 years because that's a way of

01:14:17.760 | satisfying both of those things, that I'm getting a higher number, but the number instead

01:14:22.620 | of being paid out up front is being paid out of the profits of the business.

01:14:26.460 | I don't know what all the other alternatives are because I don't know their situation,

01:14:29.700 | but I would try that track to understand why they would want to sell.

01:14:36.300 | And the person who wants to buy out his brother, he's going to need to build a case that would

01:14:40.500 | cause the seller to want to sell.

01:14:43.780 | And that's going to involve the number.

01:14:45.740 | It's going to have to be high enough to make it better.

01:14:48.460 | And it's also going to probably need to involve some alternative pathway because most people

01:14:55.260 | are not investors, especially most business owners.

01:14:58.280 | And so they've got comfort and experience with the bar.

01:15:01.740 | You can't just build that same confidence in with, "Hey, here's a mutual fund or here's

01:15:06.180 | a piece of real estate.

01:15:07.180 | It's a different market."

01:15:08.180 | So, I don't know that I'm giving you any insight, but there is no one number.

01:15:13.380 | There are at least those three numbers.

01:15:15.580 | Okay.

01:15:16.580 | That at least gives us a starting point.

01:15:23.020 | Any successful negotiation is going to have to be win-win.

01:15:27.300 | And so the person who wants to convince his brother to sell has to sit down and say, "What

01:15:32.220 | does my brother want?

01:15:33.860 | What does he actually want?"

01:15:35.780 | And in order for the brother to sell without causing harm to the family relationships,

01:15:48.980 | the brother has to be persuaded without coercion that selling is better than keeping and that

01:15:56.180 | he's better off selling than keeping.

01:15:59.620 | And that often requires some creativity.

01:16:02.780 | So I would ask myself if I had a son and I'm trying to convince my brother to sell me half

01:16:07.260 | of a business, then I might do something like say, "Let's set the baseline of what our business

01:16:16.100 | has been and maybe we sell over a period of time as my son is able to increase the profits

01:16:23.780 | of the business."

01:16:25.300 | And if he can increase profits by 50%, then not only will we make some money because we

01:16:35.260 | brought him in, but now here's a vesting schedule and we're going to sell out 5% of the business

01:16:40.620 | to him per year as he's able to increase the profits.

01:16:44.500 | I don't know.

01:16:45.500 | Some kind of creative solution.

01:16:46.780 | But you've got to begin with what's going to cause the selling brother to be happier

01:16:54.220 | after having sold than he was when he had it.

01:16:58.220 | And that's the only way of navigating this without bringing harm to the family relationships.

01:17:02.620 | It has to be a genuine deal where both people are better off.

01:17:07.100 | Okay.

01:17:08.100 | All right.

01:17:09.620 | Thank you.

01:17:11.180 | Yeah.

01:17:12.180 | Hard question.

01:17:13.180 | I don't know if there's a solution, but that's where I would begin to work on one.

01:17:16.780 | Joe Sellius in North Carolina.

01:17:18.580 | Welcome to the show.

01:17:19.580 | How are you today?

01:17:24.580 | Hi.

01:17:25.580 | This is Jose Luis.

01:17:26.580 | Jose Luis.

01:17:27.580 | There we go.

01:17:28.580 | I don't know why.

01:17:29.580 | I looked at your name and it said Joe Sellius, and I should have seen Jose Luis.

01:17:32.020 | Sorry about that.

01:17:33.020 | That's funny.

01:17:34.020 | That's very common, actually.

01:17:35.020 | Now you know your fake name to use whenever you want to convince people of it.

01:17:40.620 | Joe Sellius.

01:17:41.620 | Yes.

01:17:42.620 | Oh, I've heard that before many times.

01:17:43.620 | Go ahead, sir.

01:17:44.620 | So this question is about homeschooling and behavior.

01:17:49.260 | Most of the time our homeschooling goes smoothly.

01:17:54.420 | Sometimes our son, who is almost eight and a half, he delays and complains, and that

01:18:00.180 | ruins the mood and ruins pretty much the day.

01:18:03.900 | I remember that in a past episode, you mentioned that I think it was your oldest son that maybe

01:18:10.540 | initially had some behavior issues related to homeschooling, and you had to step in.

01:18:16.300 | I would like to know if you have some strategies that you can share that work, that maybe you

01:18:20.140 | still use.

01:18:21.140 | Specifically, I would like to know if you actually use deadlines, like do you have to

01:18:24.580 | do this math by certain time before you move on, and if you don't do this, what happens?

01:18:29.780 | Sure.

01:18:30.780 | Anyway.

01:18:31.780 | It's about behavior and compliance.

01:18:33.780 | Yeah.

01:18:35.380 | So let's begin with acknowledging a couple of the facts that you just shared.

01:18:40.500 | You have an eight-year-old and you have a boy.

01:18:43.180 | So one of the reasons that I myself homeschool, and I especially would want to homeschool

01:18:48.340 | an eight-year-old boy, is quite simply that school, generally speaking, is a toxic environment

01:18:56.380 | for boys.

01:18:58.700 | It's a toxic environment because all of the things that make a school run smoothly are

01:19:06.060 | unnatural for boys.

01:19:09.300 | Sitting still in a chair to focus on a piece of paper and keep your pencil moving for long

01:19:14.940 | periods of time, to show deference and respect to the teacher standing in front of the class,

01:19:21.460 | to do that for hours and hours every day, frequently with quite boring subject matter

01:19:27.220 | that kills the mind, this is not something that boys generally do well in.

01:19:32.840 | And I think this is one of many reasons why boys are consistently falling behind.

01:19:39.820 | Girls thrive in that environment, and what has happened in the school system is that

01:19:45.500 | the entire structure of the industrial school system has been reoriented for the success

01:19:52.060 | of girls and for the failure of boys.

01:19:55.580 | You have primarily female teachers who create a very feminine environment, and it's an environment

01:20:01.940 | that works beautifully for the strengths of girls, and it's an environment that works

01:20:08.140 | almost exactly the opposite of the strengths for boys.

01:20:12.100 | And so one of the reasons I homeschool is I don't want my young boys to be in that toxic

01:20:17.900 | environment where they're going to wind up facing nonstop disciplinary actions.

01:20:24.740 | They're going to wind up facing nonstop feeling like they're always the problem just because

01:20:29.460 | they want to move while they read, and they want to bounce up and down and yell, etc.

01:20:34.420 | And worse, they might wind up drugged and diagnosed with some wacky condition and drugged.

01:20:40.620 | It's entirely toxic for boys.

01:20:43.300 | And I would encourage you to think seriously about it, because what you don't want to do

01:20:46.900 | in a homeschool environment is take the toxicity of the industrial school system and then insert

01:20:53.440 | that into your home environment.

01:20:57.800 | And that's what I think many people do.

01:21:00.040 | And so I'm trying to be picturesque to point out the problem.

01:21:05.220 | This is one of the reasons that's very important to me as to why I want to homeschool, especially

01:21:11.020 | in the younger years.

01:21:12.020 | Now, all these things can be worked out, but it's astonishing to me how beautifully well

01:21:22.200 | my eight-year-old daughter adapts herself to long school days as compared to her ten

01:21:30.400 | and her six-year-old brothers, who are completely different.

01:21:35.580 | And we need to be aware of that, because in homeschooling environment, we do not need

01:21:40.440 | to try to force an industrial system onto a child before the child is ready.

01:21:46.960 | And at eight, a child is probably just barely ready.

01:21:51.180 | Now, I'm not saying – I myself, I'm not an unschooling advocate, nor am I a wild and

01:21:57.380 | free advocate.

01:21:58.680 | I think that there's a balance.

01:22:00.780 | But we should begin with the fact that we're looking to help and set our students up for

01:22:05.760 | success, not for failure.

01:22:07.960 | So my goal is not to create an environment that's going to lead to failure, but rather

01:22:12.820 | create an environment that's going to lead to success and is going to lead to increasing

01:22:17.940 | levels of skill over time.

01:22:20.460 | And I really want to protect the ego of a young child, and I want him to feel like he

01:22:27.380 | can win.

01:22:28.380 | I want him to feel like he can succeed, especially in the early years, because psychologically,

01:22:34.520 | if he views himself as defective or inferior in some way, that has very damaging long-term

01:22:41.420 | results.

01:22:43.100 | So with an eight-year-old, I think you should begin at the level of your curriculum.

01:22:47.860 | Is your curriculum something that is going – that works well not only for boys in general

01:22:56.180 | and eight-year-old boys in particular, but is it something that's going to work well

01:23:00.540 | for your particular eight-year-old boy?

01:23:03.900 | And I'm going to – I'm speaking broadly.

01:23:07.380 | You have to figure out how to apply this stuff, but this is a very big deal to me.

01:23:11.940 | One of the complaints – be careful, because I'm not complaining, but I'm not attracted,

01:23:16.860 | for example, to most worksheet-based curricula.

01:23:20.660 | I don't think that they're useful.

01:23:22.100 | I don't think they're helpful.

01:23:23.100 | They don't inspire the mind.

01:23:24.380 | They don't engage with the mind.

01:23:26.100 | And so look at your curricula and ask yourself, if I'm an eight-year-old boy, is this curriculum

01:23:30.620 | that we're going through, is this something that's going to engage with me?

01:23:34.100 | Is this something that's going to inspire me to want to learn?

01:23:38.620 | Because we don't want learning to taste like eating sawdust.

01:23:41.940 | We want learning to be as appetizing as possible, especially in the early years, because our

01:23:48.460 | most important goal in the young years of education should not be to try to maintain

01:23:55.860 | – to try to stick to some external schedule.

01:23:59.080 | There is no schedule anywhere in the United States of what any particular child is always

01:24:06.580 | capable of doing.

01:24:08.060 | Different people have different ideas on curriculum and etc., but it's all made up.

01:24:12.540 | There's no national standard.

01:24:14.180 | There's generally no state-level standard.

01:24:16.380 | In the younger years, you have complete and total freedom to do anything that you want.

01:24:22.260 | And all you're basically trying to do is give basic skills and inspire a love of learning.

01:24:27.940 | Those are the goals.

01:24:29.180 | And I want to do both of them.

01:24:30.300 | And if I have to err, I want to err on the side of inspiring the mind and inspiring a

01:24:34.260 | love of learning rather than even the basic skills.

01:24:37.340 | Because the basic skills can come very easily when the student is ready for it, but if we

01:24:42.500 | destroy the love of learning with an oppressive environment, then that's not so great.

01:24:48.980 | So look at the curriculum and then look at what the child is attracted to and say, "Can

01:24:54.700 | I emphasize these things?

01:24:57.020 | And do I have to do these other things?"

01:24:59.260 | So I'll give a few examples from my own experience.

01:25:02.580 | Number one, ask yourself, "Is this thing that we're going to do even necessary?"

01:25:07.820 | So things like spelling, you know, spelling worksheets.

01:25:11.060 | These are a common component of elementary school curricula.

01:25:14.820 | I don't know if they're necessary or not, but so far right now as one homeschooling

01:25:20.020 | dad, I've just tossed them out.

01:25:21.980 | I don't see any point.

01:25:23.700 | My answer is, my guess is that let's just put in a few more thousands of pages of reading

01:25:30.660 | and probably the spelling will mostly fix itself and it really doesn't matter right

01:25:34.860 | now.

01:25:35.860 | So let's just set that aside because here's this thing that's dreadfully dull, dreadfully

01:25:40.820 | like uninteresting.

01:25:42.380 | Let's just toss spelling aside and let's just focus on more reading.

01:25:47.140 | And then, now is that true or not?

01:25:49.460 | I don't know.

01:25:50.460 | But if I have a child who's fighting a spelling worksheet, maybe it doesn't need to be done

01:25:53.100 | right now.

01:25:54.100 | So here's another example.

01:25:56.460 | Is there a way that we can keep making progress, but progress on a level that's appropriate?

01:26:03.140 | So my eldest child, now 10, he was horrific at writing.

01:26:10.620 | Writing, which is considered to be kind of a standard thing that elementary school students

01:26:15.500 | are supposed to be, he had an enormous pencil allergy.

01:26:19.480 | And I think that most young boys have an enormous pencil allergy.

01:26:23.100 | And he would go through worksheets and workbooks of let's practice letter formation and whatnot

01:26:27.540 | and none of it worked.

01:26:28.900 | It was like pulling teeth.

01:26:30.660 | And so, we have to impose discipline, we have to say you have to finish this, you have to

01:26:35.380 | write it.

01:26:36.380 | And a boy will find every excuse to sit and dawdle for hours over this thing that he doesn't

01:26:41.100 | like to do.

01:26:42.340 | And so I tried to understand what is actually happening, what's going on here.

01:26:46.980 | So first of all, when you're dealing with very young children, just toss the whole thing

01:26:50.140 | out for three months.

01:26:51.620 | And if you're struggling with something, whatever it is, just come back in three months, try

01:26:54.980 | it again.

01:26:55.980 | If it doesn't work in three months, we'll try it in another three months.

01:26:58.460 | Again, you're under no external obligations to be on any particular schedule.

01:27:03.300 | And so I tossed the writing curriculum, I said, we're not doing that.

01:27:06.300 | And so a year ago, I had a nine-year-old child who is reading at a college level and can't

01:27:14.980 | write at a first grade level.

01:27:17.140 | But to me, that's not a problem because one of the reasons I homeschool is so that we

01:27:22.460 | don't have to fit a standardized median approach, but rather so we can help each student to

01:27:29.220 | advance right at the frontier of learning in an appropriate way.

01:27:35.420 | So what I mean is that only in an industrial school system do you need to be writing on

01:27:41.580 | a fifth grade level and reading on a fifth grade level and doing math on a fifth grade

01:27:45.680 | level and whatever the other skills are.

01:27:48.180 | In homeschooling, you don't need to do that.

01:27:49.940 | You can be reading on a college level and writing at a first grade level.

01:27:53.320 | And as long as you are aware of the deficiencies and aware of what you're working towards,

01:27:58.140 | then no problem.

01:27:59.140 | We'll work towards it.

01:28:00.140 | And over the coming months, we'll make progress.

01:28:03.140 | The goal is not to stay behind forever, but we want to be careful and not try to feel

01:28:08.700 | like we're on someone else's imposed schedule.

01:28:13.280 | So with the writing, what I did, how I dealt with that was, number one, as I tried to see,

01:28:18.920 | is there any evidence that my child has a learning disability?

01:28:23.560 | Some expression of dysgraphia or etc.

01:28:27.460 | I couldn't detect any evidence of anything fundamentally wrong.

01:28:31.260 | I just figured I've got a boy here who doesn't like to write.

01:28:33.900 | No problem.

01:28:34.900 | I can deal with that.

01:28:35.900 | I scrapped writing and I brought in art because one of the reasons that young children don't

01:28:41.860 | like to write is because it literally hurts.

01:28:43.740 | Their hands hurt from holding pencils and things.

01:28:46.900 | So I brought in art and I said, let's just do lots of art.

01:28:49.380 | What are we doing with art?

01:28:50.380 | Well, it's fun.

01:28:51.640 | The children enjoy drawing, but we're building up those pencil skills.

01:28:54.660 | It's the same basic function of motor control and building up the strength in the hands

01:29:04.420 | as is writing words, but we're just approaching it in a different way.

01:29:08.580 | So we did that and we did that for several months.

01:29:11.220 | And then I figured out that in order to write effectively, what we want to do is we want

01:29:16.700 | to pull apart the act of writing from the act of composing.

01:29:21.860 | So being a skilled writer is two basic skills.

01:29:25.420 | It involves the skill of taking abstract thoughts and turning them into words.

01:29:31.300 | And secondly, it involves the skill of putting words down on paper in the artificial manner

01:29:38.140 | that is writing, which is not like the way that we speak and doing proper punctuation,

01:29:43.100 | spacing, et cetera.

01:29:44.860 | And I mean, if we went back a year and a half, year and a year ago, and I showed you my son's

01:29:49.860 | writing papers, it was terrible.

01:29:51.760 | He could form the letters, but no spacing, no sense of spacing, no sense of scale, et

01:30:00.460 | cetera.

01:30:01.460 | None of that worked.

01:30:02.460 | So I pulled those apart.

01:30:03.780 | And so I said, "We're going to begin by focusing a lot on narration."

01:30:08.500 | And the narration that we were doing in our family was quite weak, and I was trying to

01:30:12.140 | figure out what to do about it.

01:30:13.740 | And so I just really started focusing on narration.

01:30:16.940 | And so I'm practicing hand strength with drawing, with art, and I'm practicing formulating ideas

01:30:25.000 | with narration.

01:30:26.700 | Narration just means, "Hey, tell me about the chapter of the book that you just read,"

01:30:29.780 | or "Tell me about the page," or whatever it happens to be.

01:30:31.740 | That's narration.

01:30:32.820 | And the child is practicing taking abstract thoughts and turning them into words.

01:30:37.060 | That's what narration does.

01:30:38.780 | Then I came back to it, I can't remember, four or five months later, and then I introduced

01:30:42.180 | copy work, a new book, a new copy work.

01:30:45.820 | And what I found was that there was an enormous difference between the four months prior and

01:30:52.540 | now.

01:30:54.100 | And so now we went in one year from being way behind "grade level" to now being substantially

01:31:02.340 | ahead of "grade level," as best I can tell, by just giving some time and working on those

01:31:07.700 | basic skills.

01:31:09.020 | And I did it without needing to resort to a whole lot of problems and challenges, etc.

01:31:16.120 | So if you're getting feedback, pushback, a lot of negative energy, I think we should

01:31:20.260 | first take responsibility for that and say, "Before I try to impose discipline or force

01:31:25.800 | a student to do something, can I change something about the task or the environment that would

01:31:30.820 | help him to succeed?"

01:31:32.140 | A couple more examples from just practical stuff.

01:31:35.980 | Math, right?

01:31:36.980 | Math is often a challenge.

01:31:38.980 | So once again, what is the challenge with math?

01:31:41.540 | Well, math doesn't need to be done formally at a young age.

01:31:48.460 | It's something that can be deferred with no problem.

01:31:51.580 | You don't really need to do any formal workbook math until fifth grade, and you can make up

01:31:55.860 | whatever you're behind in a few months in fifth grade.

01:31:58.540 | So let's give ourselves a break.

01:32:00.420 | But let's look for, let's try a curriculum that appeals to us.

01:32:06.020 | Let's break it apart.

01:32:07.020 | So what I do whenever there's a problem is I try to say, "How can we dial back the ease

01:32:12.060 | just a little bit?"

01:32:13.060 | So I view resistance, if I get resistance as either complaining or dawdling or resistance

01:32:22.540 | of any form, I just say, "Let's go back a level and make it a level easier."

01:32:27.540 | So with reading, if there's something that I've assigned to be read, read with the eyes,

01:32:31.920 | and there's resistance, then the first thing I do is say, "Let me make the reading shorter."

01:32:36.000 | Instead of it being a 30-minute reading, let's make it a 10-minute reading.

01:32:39.780 | Or before that, I'll do, "Let's keep it a 30-minute reading, but let's add an audiobook."

01:32:44.300 | If that didn't work and there's still resistance, then let's pull it back from a 30-minute

01:32:48.460 | reading to a 15-minute reading with an audiobook.

01:32:51.460 | If that doesn't work, let's pull it back to a 15-minute reading with dad doing the reading,

01:32:55.780 | because now we have a relational dynamic and it's not impersonal with an audiobook narration.

01:33:00.020 | If that doesn't work, let's just toss the book aside, let's come back to it in three

01:33:03.380 | months and let's try it in three months.

01:33:04.980 | And every time I do that, I find that three months is kind of magical, six months is magical

01:33:09.740 | and everything gets a little bit better.

01:33:11.780 | So I don't think that we should focus first and foremost on discipline, et cetera, especially

01:33:17.380 | at the younger age.

01:33:18.380 | Now, flipping, the ability to concentrate is a superpower that we want to develop in

01:33:25.460 | a student.

01:33:26.660 | So let's focus on approaching it as a skill to be developed rather than as something that

01:33:38.660 | has to be overcome with discipline.

01:33:40.920 | So with my, this has been with both of my older children, math is what I have chosen

01:33:46.460 | to use as the application of that, because math is hard.

01:33:51.340 | And I teach my children, why do we do math?

01:33:53.540 | We do math because math is hard and math makes us smart.

01:33:56.500 | We don't do it because it's useful.

01:33:57.540 | We don't do it because you need it.

01:33:58.720 | We do it because it's hard.

01:33:59.940 | It's a workout.

01:34:00.940 | It's making our brain smart.

01:34:02.340 | And so let's start and let's figure out what is the amount of focused math that we can

01:34:08.780 | do that doesn't result in loss of focus and loss of concentration.

01:34:14.900 | So I had some significant challenges with my daughter, my eight-year-old daughter, and

01:34:21.300 | I spent some time and I pulled it back to exactly this.

01:34:24.420 | Let's focus on math for 15 minutes and I'm going to make it as easy as possible.

01:34:28.180 | I'm going to sit next to you.

01:34:29.460 | I'm going to sit next to you while you do math and let's remove all the distractions

01:34:33.340 | and let's see how many minutes of focused activity we can do.

01:34:37.220 | And then as soon as we lose focus, let's stop and let's see if we can do more tomorrow.

01:34:41.700 | So if we did eight minutes of focused work today, great, wonderful.

01:34:45.120 | Let's see if we can get to nine minutes and nine minutes and stop and 10 minutes and stop,

01:34:49.180 | etc.

01:34:50.180 | And I found that to work really effectively is let's pull back the scale of it and let's

01:34:54.700 | focus on doing what we can do and then when we reach the limit, let's stop there.

01:35:00.820 | And I think that that's also a better model.

01:35:03.100 | Once we've – and think of it like weightlifting.

01:35:05.220 | You don't take your eight-year-old into a gym and put a 200-pound barbell on his back

01:35:09.380 | and say squat.

01:35:10.740 | You say let's start with how many squats can you do right with body weight.

01:35:16.100 | Then what can we – how much squat can you do with a bar with good form?

01:35:20.260 | And you want to keep adding the weight steadily but you want to be doing it with good form.

01:35:23.740 | And I think the same basic principle applies to homeschooling.

01:35:27.080 | So before we get to anything of rewards or punishments or if you're not done in this

01:35:32.500 | time, let's do all of that stuff first and then let's bring in any additional systems

01:35:40.180 | that we need.

01:35:41.540 | But in general, I think that – I'm trying to think for a moment.

01:35:46.280 | I am not currently using any form of rewards or penalties or any of those things because

01:35:58.300 | I don't see that that's helpful.

01:36:01.420 | I think that it's better to focus on the core of what we're doing and then go from there.

01:36:07.140 | So right now, your school day should be probably two hours, maybe three hours maximum.

01:36:13.660 | It should be broken up into 10 to 15-minute lessons.

01:36:19.000 | No lesson should be longer than about 15 minutes and there should be a big fat break.

01:36:24.700 | Before school, there should be a whole big play outside session with lots of energy and

01:36:28.980 | lots of movement.

01:36:29.980 | There should be a big fat play outside session right in the middle and then you should be

01:36:33.340 | done and go from there.

01:36:35.060 | And if you look at it and say, where are we going over time, then – and let me give

01:36:41.020 | one more example, practical example because I can actually speak practically on this.

01:36:43.860 | I have a six-year-old boy who is doing school.

01:36:49.460 | The problem is that he doesn't seem to have much interest in academic stuff.

01:36:55.260 | So we keep bringing in a little measure and so we had an exciting start to first grade.

01:37:01.940 | Okay, let's go through and let's do some workbooks and things like that.

01:37:06.180 | Well, this boy is not interested in reading.

01:37:08.380 | He's just not interested, doesn't want to learn to read.

01:37:11.300 | You go through the same thing, just not grasping it.

01:37:14.120 | So my wife scrapped the entire curriculum and she inserted night training.

01:37:19.200 | And so quite literally, she built – I forget what she calls it but those things that you

01:37:23.060 | take a lance and you joust with and put the younger boys on their bicycle and they go

01:37:27.500 | out and they do night training every day and we have swords, we do sword fighting and we

01:37:30.780 | do night training, et cetera.

01:37:32.380 | All those things, they're all physical.

01:37:34.060 | He's a super physical child.

01:37:36.340 | But I'm not going to give up on the skill, I'm just going to focus on what we can do.

01:37:42.340 | And so we use one – a couple of – I found a video-based learn to read program that we

01:37:49.780 | do for 10 minutes every day.

01:37:51.620 | I don't require performance on it, I just require 10 minutes of input.

01:37:56.380 | And then I'm focusing on concentration with audiobook listening.

01:37:59.940 | And so I require a certain amount of audiobook listening.

01:38:02.580 | He doesn't have to read with his ears – sorry, with his eyes but he does have to read with

01:38:05.380 | his ears.

01:38:06.380 | And we do a lot of reading aloud too.

01:38:08.520 | My wife does a lot of reading aloud.

01:38:09.820 | We do art, we do picture study, we do all the other stuff.

01:38:12.580 | And so I'm seeing this work with this child who is very resistant to learning to read

01:38:17.700 | and I would expect that – I don't know if it will happen six months from now, a year

01:38:20.900 | from now.

01:38:21.900 | I would expect that the learning to read thing will just naturally solve itself.

01:38:25.300 | It seems to resolve – most of these problems seem to resolve themselves with either a few

01:38:29.940 | more trips of the moon around the earth or in some cases, a couple more trips, revolutions

01:38:36.140 | of the earth about the sun.

01:38:37.740 | So these approaches I think should be our primary thing, especially at a young age and

01:38:44.340 | don't resort to discipline or punishments or etc. unless you've gone through a long

01:38:50.380 | list of these approaches – making the curriculum more attractive, bringing it down to its level,

01:38:57.220 | shortening the lessons up, requiring total concentration for five minutes and then being

01:39:01.460 | done.

01:39:02.460 | Do all of that stuff before you get to punishments, rewards, things like that.

01:39:08.380 | Excellent.

01:39:09.380 | This is very helpful.

01:39:11.980 | It has opened the doors to a new approach to our problem that we haven't considered.

01:39:20.500 | Good.

01:39:21.500 | I'm glad.

01:39:22.500 | Thank you, Joshua.

01:39:23.500 | Yeah, I tried to give you as many practical examples as I could from this perspective

01:39:26.740 | and even if we were dealing with a teenager, I think the same basic psychology applies

01:39:34.000 | is let's celebrate what we can do and let's focus on what we can do and let's be super

01:39:41.460 | focused on building these things as muscles, as skills.

01:39:45.780 | I do talk to my children about this.

01:39:47.580 | I don't allow things like toys at the desk and my comment to them is that I teach them

01:39:54.740 | your basic superpower in the fullness of time as an adult is going to be your ability to

01:39:59.420 | do deep work, your ability to focus on hard tasks for extended periods of time.

01:40:05.800 | That's what we're developing but we're not going to get there in a month or even a year.

01:40:10.700 | It's going to be multiple years but we're not going to sabotage ourselves.

01:40:13.880 | So we don't have to do an hour of deep work at this stage.

01:40:17.580 | What we do need to do though is keep the toys off the desk and then celebrate what we can

01:40:21.500 | do.

01:40:22.500 | So don't take the structure – recognize that schooling in a school system and homeschooling

01:40:29.300 | or home education, better said, are very different things.

01:40:34.220 | The reason schools need schoolteachers is that teaching a classroom of 30 young people

01:40:42.420 | is a very specialized skill set where you need specialized training in classroom management

01:40:50.060 | and psychological control and you have to build all these systems to keep a classroom

01:40:56.600 | of 30 students on task.

01:40:59.380 | But in your home, you don't need any of those things.

01:41:02.400 | You need an engaged adult who is able to look where the child is and bring the child to

01:41:10.980 | appropriate educational resources and provide some structure to it and you can make enormous

01:41:16.940 | advances in that context and it doesn't need to be painful.

01:41:20.440 | So anytime you get up against that level of pain, drop back a little bit, reassess and

01:41:24.660 | then come back and three months now, six months from now, you'll find that probably the pain

01:41:29.020 | is gone.

01:41:30.020 | Lucas in New Jersey, welcome to the show, how can I serve you today?

01:41:33.900 | Hey Joshua, I had a question for you, a fairly simple one.

01:41:39.900 | How would you think about what services to outsource for someone who struggles to ask

01:41:45.820 | for help in general but also I'm a new business owner, I have a W2 job and that's all part

01:41:53.940 | of the plan but time is getting really short.

01:41:56.260 | So any tips on what to outsource, things like house cleaning, accounting, lawn care, is

01:42:00.300 | there a philosophy here that you maintain?

01:42:02.300 | Have you done a personalized time study, a time diary, a time journal for yourself?

01:42:07.060 | No, I haven't.

01:42:09.100 | So I think before you ask that bigger question, you need to collect some data for yourself

01:42:15.460 | and so I would commend to you a personalized time diary where you actually just track everything

01:42:23.460 | that you do, ideally for a week and get a sense of what you're doing.

01:42:29.340 | There are a variety of apps for it, the one I use is called Timelines for iOS, I really

01:42:35.500 | like it, it's the best, I've tried half a dozen of them but the one called Timelines

01:42:39.860 | for iOS is really good and I'm looking at my tracking right now that says recording

01:42:45.180 | podcast and so I can go back and look at my week's data, I can go back and look at exactly

01:42:50.060 | how many minutes I have saved and that is a really helpful idea to get a sense of where

01:42:56.100 | your time is currently going because before you decide what tasks to outsource, you want

01:43:02.780 | to begin with where is the time actually going.

01:43:08.020 | Then I think there is a really phenomenal, let me just refer you to this resource, there

01:43:15.620 | is a fabulous new YouTube channel by this guy, forget his name but the YouTube channel

01:43:20.820 | is called Spoon Fed Study, Spoon Fed Study.

01:43:25.260 | The dude's really, really sharp and he's a doctor, went to Harvard, then did his residency

01:43:31.980 | at Yale and went back to Harvard, I don't know, Ivy League guy, super smart and he just

01:43:38.140 | released a study or a video that inspired me this week where he gave his formula for

01:43:45.860 | increasing, I can't remember what he titled his video but if you look up Spoon Fed Study,

01:43:52.420 | you'll see it as the most recent one.

01:43:54.260 | But the basic formula that he described is start with a time journal, number one is a

01:43:58.260 | time journal, number two is assign a dollar value to all of the activities that are in

01:44:06.220 | your time diary.

01:44:09.860 | Some activities are fairly easily calculated.

01:44:14.220 | Your job, your W2 job is probably the easiest one.

01:44:17.140 | You might say I have 40 hours and you know based upon your annual income and maybe you

01:44:22.140 | put in your commuting time, etc., my hourly rate is $50, okay, great, now you know that.

01:44:26.980 | Your side hustle, your business, you might look at that and say my hourly rate here is

01:44:30.740 | $80.

01:44:31.740 | But you would also want to include into your hourly rate, the other things that he recommends

01:44:36.140 | and this was the novel twist that I really appreciated, is you want to assign positive

01:44:40.780 | dollar values and negative dollar values to other things that you do.

01:44:45.020 | So you might include exercise, you would say well my exercise time is $250 an hour because

01:44:51.580 | after all if I can stay healthy, this is going to be of an enormous payoff for me.

01:44:56.020 | However my drinking beer time is minus $300 or my TikTok time is minus $300, this is a

01:45:02.220 | negative activity.

01:45:03.980 | And then what he focused on is then you create a daily score and the way that you score yourself

01:45:09.900 | is you try to get your daily money score up to the highest level and there are three levels

01:45:18.100 | to that.

01:45:19.100 | Number one, you eliminate.

01:45:20.100 | Number two, you add in.

01:45:21.100 | But then number three, you compound so you outsource and you go through and you start

01:45:26.420 | thinking what could I outsource and if you find, but you need that data to do that.

01:45:33.020 | Now I confess I'm not great at this, I'm a pretty bad outsourcer, I'm a pretty bad manager,

01:45:39.300 | I don't enjoy that process, I never have.

01:45:44.140 | I'm building the skills and I want to be better at it because it's an enormous limiting factor

01:45:47.780 | in my life so I'm speaking honestly that I'd like to get better at it but I can't tell

01:45:52.340 | you how to do it well, I only know that you need the data and then figure out what would

01:45:57.860 | make sense to you.

01:45:59.980 | And in general, don't be scared of outsourcing household stuff if it's straightforward.

01:46:06.460 | You might find that in your area you can just order in meals and you can have a private

01:46:11.100 | chef that brings you every three days your meals for the next three days and that might

01:46:15.080 | be an amazing use of money for you.

01:46:17.780 | I recently had interaction or some time back I had interaction with an entrepreneur on

01:46:23.180 | Twitter and he had a laundry service and he had calculated the value of the laundry service

01:46:30.260 | where every few days or every week somebody would come to his home, pick up his laundry,

01:46:35.220 | they would take it all, they would wash it, they would fold it, they would bring everything

01:46:37.860 | back and he had all the numbers calculated and it was an amazing value for his life.

01:46:43.420 | I think you're going to have to try different things and see what works.

01:46:46.780 | There's some outsourcing that can work really well with big compound effect in a business.

01:46:51.900 | If you can find the right partner, the right vendor who can really increase your leverage

01:46:56.420 | in a business then that can work really well.

01:46:59.200 | Sometimes though it's harder to do those big wins and it might be easier to just outsource

01:47:03.780 | the simple tasks.

01:47:05.180 | But I can't provide any better guidance than I just refer you to Spoonfed Study, great

01:47:09.460 | channel, very smart guy and I really enjoy his approach to things.

01:47:14.940 | Yeah, I'll definitely take a look.

01:47:18.060 | Thank you for the recommendation.

01:47:19.060 | My pleasure.

01:47:20.060 | And then hopefully over the next year because I am committed, I have to grow substantially

01:47:24.980 | beyond my own personal capacity.

01:47:27.580 | Hopefully I can share better in a future time from actual experience of things that have

01:47:33.420 | worked.

01:47:34.420 | A lot of the stuff that I've outsourced hasn't worked and it hasn't worked great for a significant

01:47:40.420 | period of time and I'm probably the problem in a lot of that.

01:47:44.140 | So I'm working on it as well.

01:47:46.060 | Thomas in California, welcome to the show.

01:47:47.420 | How can I serve you today?

01:47:48.420 | Joshua, thanks for taking the call.

01:47:49.420 | I just had a question.

01:47:50.420 | I think maybe a month ago or so you mentioned something about reading a book on the Rothschilds

01:48:02.740 | and you said a couple other biographies that you might have been digging into surrounding

01:48:07.900 | kind of like family culture and family dynasty.

01:48:12.660 | I was just wondering what book were you reading and if you had other recommendations on that?

01:48:16.700 | Sure.

01:48:17.700 | The one that I'm still reading it because I read many of the time.

01:48:20.700 | Right now I'm reading a book by Ben Hubbard called MBS about the ruler of Saudi Arabia

01:48:28.820 | and it is super interesting.

01:48:30.860 | Saudi Arabia is changing massively right now and if we compare Saudi Arabia of today to

01:48:39.420 | Saudi Arabia of five years ago, it's just night and day different.

01:48:43.140 | We've heard some of this stuff publicly but we know about the killing of the journalist

01:48:49.140 | – I can't know the name, Jirogi, I'm sorry, I can't summon his name.

01:48:58.860 | And then also when all the Saudi princes were locked up in the Hilton for a long period

01:49:03.380 | of time.

01:49:04.380 | So I'm super interested in that and I'm really enjoying this biography by Ben Hubbard

01:49:07.940 | of MBS.

01:49:09.500 | The book that I'm still reading on Rothschilds is called The House of Rothschild by Neil

01:49:15.140 | Ferguson and it's a big, I mean it's a 25-hour biography, I'm listening to it

01:49:21.220 | and it's enormous, it's a very, very thick book.

01:49:27.260 | But it's an in-depth look at the Rothschild family and so it's called The House of

01:49:32.220 | Rothschild by Neil Ferguson.

01:49:34.380 | I find it, I'm also finding it very interesting and working my way through that.

01:49:39.300 | Other biographies that I'm reading right now, those are the two biographies that I

01:49:42.540 | have going right now.

01:49:43.540 | I have about six or seven other books going as well, but those are the two biographies.

01:49:53.700 | And then on that note, have you ever considered or donated reading into like a family constitution

01:50:00.460 | and any thoughts on that?

01:50:04.740 | Sort of, I haven't been able to take it much beyond that.

01:50:08.020 | So these are, earlier in the show, I think before you jumped on the line, I was talking

01:50:13.140 | about my interest in charity and this is the other, you're bringing up the other subject.

01:50:25.740 | So this is episode 999 of Radical Personal Finance and when I started the show, I committed

01:50:29.660 | to a thousand episodes and I thought that those thousand episodes were going to be really

01:50:34.760 | focused on, you know, just, I don't know what I thought.

01:50:40.700 | But anyway, I'm getting into a thousand episodes and so I've reassessed and really thought

01:50:44.020 | like what are my interests?

01:50:47.020 | What do I really want to keep on talking about?

01:50:51.060 | And one of the, so I have a few, but two of them have come up in today's podcast.

01:50:56.780 | Number one is the charity stuff.

01:50:58.860 | Number two is this question of family dynamics and family fortunes and family wealth.

01:51:05.060 | Forgive me, that's my phone, what a rookie mistake.

01:51:08.100 | You'd think that with 999 episodes of the podcast I would have my phone on, do not disturb.

01:51:12.820 | Forgive me.

01:51:15.340 | One of them, one of the things that I'm super interested in is this concept of family wealth

01:51:21.000 | and I realized that it's an enormous hole in modern American financial planning because

01:51:32.220 | modern American financial planning assumes individuality as its core principle.

01:51:39.340 | Americans are very likely to say things like, "Oh, my son's got to make it on his own.

01:51:45.100 | 18 years old, you know, boot him out the door."

01:51:48.580 | Americans are very likely to say, "Well, you've got to do it on your own.

01:51:51.420 | You know, you don't need, no concept of family wealth, no concept of family inheritance."

01:51:56.300 | I used to think that was the right pathway because that was the culture I was raised

01:52:03.100 | in and the values that were instilled in me.

01:52:06.340 | Then over time, I really started to question that and it started when I considered the

01:52:13.300 | biblical accounts of inheritances and the concept of wealth being passed down within,

01:52:22.780 | you know, the patriarchal families in the Bible and things like that.

01:52:26.500 | I started to question a lot of my assumptions and then I looked around the world and I still

01:52:31.220 | see this.

01:52:32.220 | So, I'm fascinated by this question because basically every culture has some version of,

01:52:42.380 | in English we say, "shirt sleeves to shirt sleeves in three generations" and it seems

01:52:45.620 | like every culture has some variation of this, but I don't think it has to be that way.

01:52:52.020 | And so, I'm trying to figure out what are those things that are core and really make

01:53:00.540 | the difference.

01:53:01.540 | I'm pretty obsessed with this question as well.

01:53:04.340 | So, the concept of a family constitution is something that I can get behind, but I don't

01:53:11.300 | know how to do it or to implement it or to make it practical and I don't know what it

01:53:15.500 | means, but I'm immediately positive in my feelings towards it, but I have no idea what

01:53:21.780 | to do with it.

01:53:22.780 | So, if you can teach me what you've been learning about, I would be very grateful.

01:53:26.900 | It's something that I'm still studying as well and I'm going to do a lot of reading

01:53:37.460 | into it.

01:53:38.460 | So, I'm just trying to obtain more sources before I leave.

01:53:45.100 | Is there anything that you've found really helpful so far, any book or essay or anything

01:53:49.220 | like that?

01:53:50.220 | Yeah, there's a couple.

01:53:53.380 | So, one book that I thought was particularly good called Stewardship in Your Family Enterprise

01:54:00.940 | by Dennis T. Jaffe, A-F-F-E, the Ph.D. in the subject, I've been meaning to read some

01:54:12.820 | of the other works.

01:54:15.140 | There was another one I read recently, it was called, I believe it was The Myth of the

01:54:23.940 | Silver Spoon.

01:54:24.940 | Okay.

01:54:25.940 | Myth of the Silver Spoon?

01:54:27.940 | It kind of addresses the whole shirts, sleeves, just shirts, sleeves and myth of the silver

01:54:33.540 | spoon.

01:54:34.540 | Yeah.

01:54:35.540 | Those are, I think, the main two that addresses that I've read recently.

01:54:46.380 | I'm fascinated by the subject as well.

01:54:50.780 | I'm grateful for the recommendations.

01:54:52.060 | I will get those and read those because I have not read either of those yet.

01:54:54.940 | I have a list.

01:54:55.940 | I don't remember if they're on them, if either of those is on it, but I have a list of this

01:54:59.260 | that I'm going to start digging more into.

01:55:03.740 | Especially as my children start to grow out of just baby years – I mean, we've been

01:55:07.940 | under the tidal wave of baby stuff for a decade – but especially as we get to the fun years

01:55:13.500 | of integration of a lot of these things, I want to see – not only do I want to be able

01:55:19.680 | to do it myself – I want to build an effective, useful, influential family dynasty, but I

01:55:29.140 | also want to equip others to do it.

01:55:32.460 | I think that the American model that we've naturally imbibed from our culture is wrong.

01:55:41.100 | It's not that it's all wrong or all useless, but it's broadly wrong.

01:55:46.860 | I'm not sure if it's intentionally wrong, meaning there's a vast conspiracy by the

01:55:51.900 | wealthy to not talk about how they manage their family fortunes.

01:55:56.420 | I don't think there is, but who knows?

01:55:58.980 | Maybe there is.

01:55:59.980 | I think it's just that we've taken our individualism and our individualistic culture

01:56:05.340 | to an enormous extreme, and we've made unwarranted jumps in that process.

01:56:12.700 | Then in some cases, we've had forebears who were men of vision, but in many cases,

01:56:19.220 | because of the egalitarian nature of our society, it seems that a lot of people who get rich

01:56:26.220 | get accidentally rich, and they don't wind up knowing what to do with it in an effective

01:56:35.140 | way.

01:56:36.380 | It seems like in American financial planning and the way that we think about personal finance,

01:56:42.220 | there are a couple of archetypes that are very common.

01:56:47.540 | The most common archetype in formal financial planning is that of the career man who builds

01:56:53.680 | up his wealth in his retirement account, and the basic idea is you work, work, work so

01:57:01.740 | that you can save money so that you can retire, and as soon as you have enough money to retire,

01:57:05.980 | you retire so you can live the good life.

01:57:08.300 | That was what I spent an enormous amount of time thinking was the appropriate structure

01:57:12.940 | of life.

01:57:13.940 | Well, that's a question that's all answered in the context of financial planning, because

01:57:19.300 | it's just a numbers calculation.

01:57:20.980 | You're not trying to leave significant wealth behind to your children.

01:57:23.620 | It's okay with half a million for each child, fine, but it's just money, it's just cash.

01:57:28.420 | Then the second archetype that often happens is that of the unexpectedly successful businessman,

01:57:36.540 | the guy who starts a business, grows really big, but it grows really big really fast.

01:57:41.580 | I guess being a product of the '90s myself where we had the tech boom, it seems like

01:57:49.260 | so many of the wealthy in our society were suddenly wealthy, and so this archetype often

01:57:57.220 | results in just people not having a vision.

01:58:01.400 | Maybe there's a set of advisors who know how to advise on this effectively, but I haven't

01:58:05.340 | found them yet.

01:58:06.340 | I'm going to go look for them, but I haven't found them yet, and I don't know what they

01:58:12.980 | say.

01:58:13.980 | Now, we have dynastic families in the United States, but some of them, a lot of them are

01:58:20.140 | just failures.

01:58:21.140 | I read a book on the Rockefellers last year, and you see how quickly their fortune was

01:58:26.860 | squandered.

01:58:28.700 | Similarly, you look at the – well, anyway, we have this entire structure of these enormous

01:58:38.580 | not-for-profit entities.

01:58:39.940 | We have a lot of the institutions that our society has built, it seems like they always

01:58:46.580 | abandon their founding principles, and their founders themselves would be rolling over

01:58:50.940 | in their graves.

01:58:52.720 | When I look at this, I don't see a lot of shining light examples, but yet I think we

01:58:58.560 | desperately need those shining light examples.

01:59:01.340 | So we need to find out where are the success stories.

01:59:04.860 | We hear stories of some of them around the world of the 1600-year-old Japanese company,

01:59:09.900 | but I want to find where are the success stories, what are the principles, what are the things

01:59:14.140 | that could work out, because I think that we're building a generation of men, perhaps

01:59:18.700 | like you and I, who are looking for a vision that goes beyond just retirement and are looking

01:59:25.060 | for a vision that goes beyond just consumption and hedonism, et cetera, but are looking to

01:59:31.700 | build something.

01:59:32.940 | But we don't seem to have that many fathers who can lay out how it's done and integrating

01:59:40.540 | moral character development, family culture development, with financial development as

01:59:45.620 | well.

01:59:47.060 | And I hope that we can make progress in the next decade on this area, because to me, this

01:59:52.140 | is a very inspiring vision, and I think it would be inspiring to a lot more men if we

01:59:58.380 | could articulate some of the principles, and it's something that we need as a society.

02:00:03.940 | I wholeheartedly agree.

02:00:08.460 | And I think the undertone of, I guess, the American culture that you can't pass on wealth

02:00:17.100 | and it's going to ruin your children anyway, so don't even try, is bogus.

02:00:22.980 | And I really think that there is a better way to do it.

02:00:26.860 | And as you mentioned, passing on the moral and character values as well, having that

02:00:31.900 | all ingrained and entwined with the financial responsibility of stewardship, I'm hoping

02:00:41.500 | that the gears are turning and we're going to start to see, start to happen.

02:00:46.820 | I think we are.

02:00:47.820 | I think the baby boomers, and I'm not imputing any specific baby boomers, but on the whole,

02:00:54.580 | I think you don't sound like a baby boomer to me.

02:00:57.260 | You sound like someone who's probably similar in my own age to some degree.

02:01:02.060 | I think our, if I'm right about that, our generation of men, I think we look at a lot

02:01:06.420 | of the baby boomers and I feel a great sense of scorn for a lot of the baby boomers because

02:01:13.220 | many of their lives, not all, I'm generalizing clearly, but many of their lives just seem

02:01:19.500 | utterly shallow and meaningless and they possess enormous wealth and enormous influence and

02:01:26.460 | they seem hell-bent on spending it as fast as they can and not doing anything that's

02:01:30.860 | going to last.

02:01:32.260 | And so it seems like, on the whole, it seems like a generation that profited from one of

02:01:41.420 | the most incredible times in economic history, and yet what do we have to show from their

02:01:47.380 | culture?

02:01:48.740 | And it feels to a lot of men in my generation, perhaps yours as well, like we were handed

02:01:53.100 | a broken, failing culture with problems on every side, and the men who should have been

02:02:01.300 | visionaries to lay out the solutions and pave them for us didn't do that.

02:02:06.900 | And so, and all they want to do is go and golf every day and drink up their money and

02:02:11.220 | now they're all potheads.

02:02:13.100 | So it's, you know, I don't know, maybe this is just the fourth turning and this is always

02:02:21.060 | what happens, who knows, but it really annoys me and I don't want to be much like that,

02:02:29.180 | like those baby boomers that I see.

02:02:30.980 | I'd like to be a different old man.

02:02:38.300 | So we'll press on and we'll find some solutions.

02:02:40.700 | We'll press on.

02:02:42.580 | If you have more solutions or resources to share, then, you know, into hearing about

02:02:48.180 | them and look in the research as well.

02:02:52.140 | I anticipate doing that.

02:02:53.220 | So just know that this is one of my top few priorities in the coming years, that these

02:02:58.460 | are the subjects that interest me.

02:02:59.980 | This is what I'm going to be digging into to try to understand and doing my best to

02:03:03.860 | learn.

02:03:05.340 | I'm still in the reporter phase.

02:03:07.020 | I don't have much to offer.

02:03:08.300 | I'm a learner and I want to learn, but I got to find the examples, find the people who

02:03:13.620 | have written what they've done and then learn from them and then I'll do my best to share

02:03:17.580 | those as we go.

02:03:18.580 | Thank you for the question.

02:03:25.460 | And with that, we wrap up today's Q&A call.

02:03:27.740 | I hope I wasn't excessively negative there at the end.

02:03:32.820 | That's not my goal to be negative, but we do need to be honest.

02:03:35.540 | And again, there's always exceptions and we want to honor the exceptions.

02:03:39.740 | But I think we want our money to provide for ourselves, provide for those that we love,

02:03:48.740 | provide the luxuries, the enjoyment, the consumption, but we have been gifted a legacy by those

02:03:55.700 | who've come before us and we have a responsibility to enhance that legacy for those who come

02:04:01.540 | behind us.

02:04:02.820 | And it's not enough to do it exclusively with money, but it's also not enough to do it exclusively

02:04:07.260 | with ideas.

02:04:08.580 | Money and ideas need to go together and that's what I see.

02:04:11.300 | Thank you for listening to today's podcast.

02:04:12.300 | If you'd like to be with me next week, I would urge you to go to patreon.com/radicalpersonalfinance.

02:04:16.340 | Sign up for – I thought I could do it in 100 miles an hour.

02:04:20.100 | Sign up to support the show at patreon.com/radicalpersonalfinance and I look forward to welcoming you next week.

2024-03-01_Friday_QA