2024-08-09_Friday

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

00:00:18.760 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:21.720 | skills, insights, and encouragement you need for the rich and meaningful life now, while

00:00:25.400 | building a plan for financial freedom in 10 years or less.

00:00:28.120 | My name is Joshua, I'm your host, today is Friday, August 9, 2024.

00:00:32.820 | And on this Friday, as we do on any Friday in which I can arrange to record a live show,

00:00:37.000 | we have a live show.

00:00:38.840 | Open line Friday, you call in, talk about anything you want, raise any topic, raise

00:00:42.120 | any question, you drive the show.

00:00:46.800 | If you would like to gain access to one of these Friday Q&A shows, you can do that by

00:00:54.360 | becoming a patron of the show, go to patreon.com/radicalpersonalfinance, support the show on Patreon and that will gain access

00:01:03.000 | for you to one of these Friday Q&A shows, and I will welcome you to do that.

00:01:07.400 | We begin today with Daniel in California.

00:01:09.400 | Daniel, welcome to the show.

00:01:10.400 | How can I serve you today, sir?

00:01:11.400 | Hey Joshua, thanks for having me.

00:01:12.400 | My pleasure.

00:01:13.400 | Yeah, I was hoping for some personal advice from you today.

00:01:18.440 | Great.

00:01:19.440 | I'm pretty good at thinking things through, so I spent the last few minutes waiting for

00:01:24.640 | the pop on the call and trying to elegantly frame the question, but I'll just jump right

00:01:29.040 | into it.

00:01:30.040 | Basically, I'm in my late 20s and trying to figure out some direction with a career.

00:01:35.840 | I've got a few different things that I've had going for quite some time, different kind

00:01:40.880 | of part-time jobs and pseudo careers in different fields, and I've bounced between things a

00:01:46.200 | bit.

00:01:47.200 | I'm really trying to narrow in on one thing, and so I'm not quite sure what direction to

00:01:53.820 | pivot in.

00:01:54.820 | I was hoping I could maybe lay that out to you.

00:01:56.360 | Okay.

00:01:57.360 | Yeah, so the business I quite literally grew up in was a commercial real estate appraisal

00:02:02.240 | business.

00:02:03.240 | So there's a family business that I've worked for for some time, and most of my corporate

00:02:08.220 | background is in real estate appraisal.

00:02:12.080 | I've also gone back and forth between that and the idea of vocational ministry inside

00:02:17.360 | the church.

00:02:18.360 | Both of those have kind of panned out to an extent, to somewhat, but they each kind of

00:02:25.120 | have their problems, and so I'm kind of bouncing between these two things and also maybe considering

00:02:29.800 | a third option.

00:02:32.840 | The family business, you know, there's a lot of opportunity there.

00:02:37.520 | There's a lot of opportunity to be an owner in this business, to grow it, but every time

00:02:41.840 | I kind of jump fully into that, there's just tensions that arise, family dynamics that

00:02:48.480 | come up, things that kind of inhibit further growth.

00:02:55.200 | So I've looked at that, jumping into the business, I've looked at maybe having a career in real

00:02:59.440 | estate appraisal apart from that, but to be honest, the appraisal work itself is at times

00:03:05.440 | a little bit soul-crushing for me, so that's why I was kind of pivoting into ministry.

00:03:09.120 | So that has its own roadblocks.

00:03:10.680 | I live in Los Angeles, and it's been tough to kind of pursue that full-time.

00:03:17.200 | It's kind of a lifestyle where I would have to do that and do something else, and I'm

00:03:21.880 | not quite sure that I want to have all these different careers for the rest of my life.

00:03:27.760 | So yeah, I'm really kind of not sure what questions to ask as I kind of interpret, like,

00:03:33.080 | okay, how do I narrow in on something and just focus and pursue something?

00:03:38.200 | I don't know if that makes any sense whatsoever.

00:03:40.280 | - Absolutely.

00:03:41.280 | Let's start with the family business.

00:03:42.480 | Who started it?

00:03:43.480 | Are there other people in the family involved?

00:03:45.120 | How big is it?

00:03:46.120 | What's the potential of it?

00:03:47.120 | Tell me a little more.

00:03:48.320 | - Yeah, so my dad started it in the early '90s.

00:03:54.840 | There's about eight people that work there.

00:03:58.400 | The business is actually in New Orleans where I'm from.

00:04:01.280 | I live in Los Angeles because life kind of brought me out here a few years ago, and I've

00:04:05.240 | worked remotely with a lot of travel back and forth for that business.

00:04:10.600 | The potential for growth, there's my parents are partners in the business.

00:04:14.720 | We have one other partner, and then myself as a part owner right now.

00:04:20.680 | - Do you have other siblings?

00:04:23.240 | - I do, yeah.

00:04:24.240 | I have two other siblings.

00:04:25.240 | One of them works for the company along with his wife.

00:04:27.000 | The third one does something else entirely.

00:04:30.480 | - And what's the source of the tension in the family business?

00:04:33.440 | Give me some examples.

00:04:36.160 | - Yeah, so, without getting too much away on the air, I guess, in case they ever listen

00:04:45.240 | to this, just like a bit of tension between myself and my parents.

00:04:52.960 | Whenever I kind of move back to New Orleans and try to invest fully in the business, there's

00:04:58.480 | just things that come up about ways that I should live my life and different things like

00:05:02.400 | that that kind of create a lot of tension and threats of disownment.

00:05:10.360 | And then the business always gets pulled into that as much as we try to separate business

00:05:14.720 | and personal issues.

00:05:17.380 | The family issues are more personal, separate from the business, but then we'll be sitting

00:05:22.680 | in the office, and if there's a disagreement about business, then all of a sudden personal

00:05:27.720 | things get brought up, and it's like, "Wait, that doesn't really have a place here."

00:05:33.280 | - Broadly speaking, do you and your parents share similar worldviews, similar philosophies,

00:05:39.080 | similar lifestyles, or is there a radical difference there?

00:05:42.480 | - Yes and no.

00:05:45.440 | For the most part, they raised me to have kind of the same faith as them, similar worldview,

00:05:53.160 | but there are some areas of tension.

00:05:55.680 | - Okay, well, let's start with the family business.

00:05:58.720 | Financially speaking, almost certainly your best long-term financial opportunity is to

00:06:04.720 | get involved in something related to a family business.

00:06:08.000 | Now that kind of commentary would need to always be qualified based upon the specific

00:06:12.440 | type or nature of the business, but if you can get involved in a family business where

00:06:18.340 | you have an inside track to leadership in the business and you have the knowledge and

00:06:25.520 | accumulated experience from people who are trustworthy, you trust them and they trust

00:06:30.640 | you, financially speaking, that's probably your best opportunity, 'cause that can cut

00:06:35.480 | 10 or 20 years off of your learning curve of starting any other business.

00:06:40.640 | So if you come in at, say, 30 years old and you have a clear pathway to running the business,

00:06:49.800 | then that's probably 20 years ahead of where you otherwise would be.

00:06:54.760 | So we always wanna prioritize that because it's the fast track.

00:06:58.960 | Now simultaneously, there are a whole set of potential downsides of family business.

00:07:05.480 | If the family can't function well together and if there's not a clear sense of shared

00:07:11.000 | purpose and vision and a camaraderie and a sense of synergy among you and any other family

00:07:18.560 | members that are involved in the business, then it could be a complete source of just

00:07:23.720 | wasted time, where you invest years into the business and eventually the family stuff undoes

00:07:29.800 | it.

00:07:30.800 | Unfortunately, a lot of that is really not gonna be up to you.

00:07:34.080 | A lot of it will be up to your parents.

00:07:36.480 | If they're the ones who started the business, they're the ones who nurtured the business,

00:07:40.880 | they're the ones who built it, they're the ones who control it.

00:07:43.980 | You may own 5% of the business, which means that your voice is completely worthless in

00:07:48.400 | actual day-to-day stuff.

00:07:50.880 | And so in order for the family business to really be a good long-term opportunity for

00:07:57.200 | you, I think your parents would have to have the vision that they're working very hard

00:08:05.020 | to pass the business over to you, and that there's going to be a—to you and to your

00:08:12.680 | brother or sister, whoever's involved with you—there's going to be a transition period

00:08:19.760 | where they're still calling the shots.

00:08:22.960 | But if they're doing it effectively and they have a vision for getting out, then it

00:08:29.120 | can be really great.

00:08:30.360 | If they don't have a vision for getting out, then it could just be a complete nightmare

00:08:33.800 | for you and you never should get involved in the first place.

00:08:36.940 | So you need to engage in an honest assessment.

00:08:39.820 | And I really see that this is one of those—it can be extremely good and it can be extremely

00:08:44.400 | bad.

00:08:45.840 | And there's probably not so much in the middle.

00:08:49.040 | And with what you're describing, it's probably on the road to being extremely bad unless

00:08:53.480 | you can present some evidence to yourself that no, mom and dad actually are intentionally

00:08:59.080 | wanting to get out of this.

00:09:02.600 | Now I would say that you're at an ideal age to start these conversations.

00:09:07.080 | Twenty-two is probably too young for you to be talking—for mom and dad to be talking

00:09:12.280 | with you seriously about taking over the family business because you have not been tested.

00:09:18.020 | You have not demonstrated your worth and value in the marketplace.

00:09:22.040 | You haven't had enough time to mature and set the course of your life.

00:09:26.280 | Thirty?

00:09:27.400 | That seems like a pretty good age—30 to 35, 30 to 40.

00:09:31.980 | With a kind of an intentional transition period, this would be really good.

00:09:35.680 | The challenge is, do your parents have the vision to extricate themselves and to move

00:09:41.280 | into the elder senior advisor role, which is going to mean that they have to be willing

00:09:48.920 | to turn over responsibility, turn over vision, turn over actual ownership, turn over actual

00:09:56.120 | control.

00:09:57.240 | That requires a lot of trust from them.

00:09:59.620 | So you need to get some kind of assessment as to see, are we actually going in this direction

00:10:04.480 | or not?

00:10:05.820 | Do you think it would be comfortable if you fly to New Orleans and you spend a weekend

00:10:09.720 | with your parents?

00:10:10.960 | Would it be comfortable to just spend hours talking about the future of the business and

00:10:15.420 | how they see you being involved in that?

00:10:17.080 | Is that something that could flow smoothly among you?

00:10:20.420 | I definitely think it could, yeah.

00:10:21.820 | I actually have a trip coming up next week, a regularly scheduled trip to New Orleans

00:10:27.000 | there.

00:10:28.200 | So I would suggest that this be a standard part of your discussion.

00:10:31.920 | What you need to be confident about is, what do your parents actually see?

00:10:37.080 | What's their vision?

00:10:39.960 | They may not have thought about it.

00:10:42.000 | So I don't think you should be super hasty about any particular decision.

00:10:45.480 | If they haven't thought about it and they don't have a vision, okay, fine, well, we'll

00:10:48.520 | just start talking about it and it may take a couple of years.

00:10:51.880 | But you need to have confidence that they're actually planning to turn the business over

00:10:58.440 | to you and then we got to talk about your sibling and see how that would work out.

00:11:03.440 | But it needs to be something that they're working very intentionally towards.

00:11:07.680 | It's not the kind of thing that's likely to be three years, but it shouldn't be 20 years

00:11:12.760 | and it probably shouldn't even be 10, maybe 10 as the longest, and I'm just kind of making

00:11:18.120 | these numbers up.

00:11:19.120 | I'm trying to say that you don't want to arrive yourself at 40 years old and at that point

00:11:24.560 | in time find out that, no, mom and dad don't have even the slightest hint of giving up

00:11:29.880 | control and you're going to be sitting around until you're 70 when they're finally dead

00:11:34.400 | and gone and then you can finally do it.

00:11:36.280 | But by that time you're going to be fighting with your sibling nonstop and it's just going

00:11:39.040 | to be a nightmare.

00:11:40.040 | It would have been better off for you to go off on your own and build your own thing.

00:11:44.720 | So just kind of start those conversations.

00:11:48.520 | If you can do that, then financially that would probably be your biggest opportunity.

00:11:52.920 | Now we then have to go to the lifestyle of do you actually like the business?

00:11:56.600 | Is this because we don't want something that's soul crushing?

00:11:59.400 | But maybe that's just the current job that you're in and maybe it could grow from there.

00:12:04.920 | But it's important that you really have confidence that mom and dad, if I can demonstrate my

00:12:10.760 | competence and my trustworthiness, mom and dad really want to turn this thing over to

00:12:17.680 | me.

00:12:18.680 | If that's there, then you could proceed forward down kind of the pathway in a systematic way.

00:12:24.120 | If it's not there and you become convinced it's not there, don't even do it because I've

00:12:30.520 | seen this with my own grandfather and his father.

00:12:33.760 | My own grandfather lost 15 years of his life because his father needed some work done.

00:12:41.160 | He couldn't run the family business anymore.

00:12:43.900 | My grandfather said, "All right, I'll do it."

00:12:46.080 | But my great grandfather was never willing and able to give up control.

00:12:53.200 | My grandfather could never please his father.

00:12:56.040 | He was never able to cross over and gain the respect of his father, even though objectively

00:13:03.000 | I don't see any reason that that shouldn't have been obvious.

00:13:06.240 | But my great grandfather was such a control freak and such a terrible manager of human

00:13:13.400 | relations and had no vision for kind of what he's actually growing and building in the

00:13:18.120 | long run that it robbed my grandfather of a decade and a half of his life.

00:13:23.120 | So just be super careful of that because you don't want to lose a decade and a half of

00:13:26.440 | your life.

00:13:27.440 | Yeah.

00:13:28.440 | I think the thing I'm comparing it to, again, so it would be kind of a total career pivot,

00:13:36.200 | which what I've been considering is law school.

00:13:40.400 | So while I'm working for my parents and doing these other odd jobs, I have been kind of

00:13:44.320 | on the side just studying for the LSAT, about to take it tomorrow, putting together the

00:13:48.880 | application package, you know, my practice test, I'm taking it for real, practice tests

00:13:54.480 | are coming in like upper 160s, low 170s, so like there could be some opportunity for a

00:13:58.520 | good school there and maybe some scholarship opportunity.

00:14:01.360 | But I'm hesitant with the whole idea of, I know I'm only 28, but there's still this kind

00:14:05.840 | of sense of like, man, do I start from scratch, do three years of school, grind it out at

00:14:12.440 | a firm for a few years before I really start making progress in that career?

00:14:16.880 | I'm in my mid thirties at that point, not quite sure how to gauge all of that.

00:14:20.720 | Are you married?

00:14:21.720 | Do you have children?

00:14:22.720 | No, I'm single.

00:14:25.000 | There is someone I would like to move towards marriage with, but yeah, currently single.

00:14:29.280 | I would go to law school.

00:14:31.640 | No question in my mind about it.

00:14:32.800 | If you're scoring well on the LSAT and you have an interest in it, I think you should

00:14:36.200 | go to law school.

00:14:37.840 | One of my great regrets for myself is that I didn't go to law school.

00:14:40.640 | I may still go in the future, don't cry for me, but in hindsight, I look back on it and

00:14:46.240 | I see that my mind is perfectly suited for the legal business and the legal business

00:14:51.200 | has so many different expressions of it.

00:14:56.400 | I would encourage you to go to law school.

00:14:57.940 | It won't take that long, even if you do go ahead and marry.

00:15:01.160 | If you find a woman who's fantastic, go ahead and marry, but you won't regret getting it

00:15:07.000 | done and all you got to do is basically get through the first year where it's the most

00:15:11.720 | intense, and then you'll be able to go to these other aspects and that will give you

00:15:15.760 | an extremely valuable career plan that you can use in so many expressions.

00:15:22.000 | And I would see that as an ideal fit even for your inclinations to Christian ministry,

00:15:28.520 | that having the ability to be a self-employed lawyer with even just a modest independent

00:15:36.720 | practice that gives you control over yourself, you'd be giving up the highest potential income,

00:15:42.000 | but it would give you the foundation to have the flexibility for effective Christian ministry.

00:15:49.120 | And you're never going to be free of effective Christian ministry.

00:15:52.560 | You are called to be a minister because you are a Christian man.

00:15:56.620 | Now that's different than signing up for a job working for a big church that's going

00:16:01.240 | to pay you a big salary, and so finding a balance where you can effectively express

00:16:06.600 | your ministry work and also earn income and support your family, and sometimes those things

00:16:12.160 | are aligned, sometimes they're not.

00:16:13.880 | To me that would be ideal, but I don't see any reason why you wouldn't prioritize going

00:16:19.000 | to law school based upon what you described.

00:16:20.840 | And then on the other side of law school, there are lots of new opportunities open to

00:16:25.120 | you.

00:16:26.120 | There is the legal career, but it's such a phenomenal foundation for so many other aspects

00:16:30.920 | of corporate work, business work, that it's just an incredibly flexible and effective

00:16:36.180 | course of education.

00:16:37.960 | Well, that's highly encouraging to hear.

00:16:41.480 | Yeah.

00:16:42.480 | I would say go for it.

00:16:43.480 | Before you go too deep, sound out your mom and dad.

00:16:46.560 | Get a sense of where they're going.

00:16:48.520 | Start talking with your sibling that's in the business.

00:16:51.840 | And I would be blunt about it, meaning that there's no reason to pussyfoot around here

00:16:58.000 | and like, "Ah, well, I'm not so sure."

00:17:00.040 | Clearly, you don't want to overstep your boundaries.

00:17:06.220 | You're not trying to take the business from your mom and dad, but you're trying to get

00:17:09.740 | a clear idea of, "Hey, what are you thinking?

00:17:12.100 | What's the future for me here?"

00:17:13.860 | Because I'm rolling up on 30.

00:17:16.860 | There might be a woman out there, I'm thinking about my life, I'd like to understand.

00:17:21.160 | I'm interested in this career, I'm interested in the business, I'm worried about what that

00:17:25.460 | would look like, given some of our other questions and other challenges, what are your intentions?

00:17:30.900 | I think that if I were talking to your parents, what I would tell them is it's the responsibility

00:17:36.300 | of the parental generation to be intentionally, in a very focused way, vacating the seats

00:17:43.100 | of leadership and moving into the seats of being an advisor.

00:17:46.940 | It's the same exact model in business as it is as a parent.

00:17:50.340 | As a father, in the early years of my children's lives, I'm working really, really hard to

00:17:56.100 | control them, to control what they do, to control how they do it, to control how they

00:18:01.020 | spend their time.

00:18:02.300 | I'm being super, super intentional to control their activities, control their development,

00:18:08.100 | all of those things in a very controlling way.

00:18:11.220 | Then as they start to hit double digits in age, then I'm very intentionally pulling back

00:18:18.860 | my control, and I'm very intentionally pushing them into situations that are going to continue

00:18:24.820 | to stretch them.

00:18:26.140 | I want them to be exposed to challenges that they don't quite feel prepared for, I want

00:18:30.940 | them to be stretched, I want them to be pushed, I want them to be pushed beyond a little bit

00:18:35.660 | of their ability.

00:18:36.700 | Not pushed to the point of being broken, but I want them to fail continually because they're

00:18:40.660 | being pushed.

00:18:41.980 | And then the goal is, very aggressively, I'm moving them towards independence so that when

00:18:48.700 | my children reach adulthood, I am no longer trying to push them in any way.

00:18:56.460 | I'm there as an advisor who's ready for them when they ask a question and who's simply

00:19:01.680 | focusing on maintaining a good relationship.

00:19:04.460 | And then as adults, I would only step in if I saw a potentially fatal error, just like

00:19:11.120 | I would with anybody else.

00:19:12.540 | But I'm not going to be in controlling their lives or manipulating them or doing any of

00:19:15.660 | those kinds of things.

00:19:17.260 | So with a business, it should be a similar pathway, especially if I have children that

00:19:21.700 | I'm bringing up in a business.

00:19:23.220 | In the early years, I'm going to really put the yoke on them.

00:19:27.060 | I'm going to try to break them, put heavy responsibility, heavy control, this is how

00:19:31.180 | we do it.

00:19:32.180 | You know, you're going to work your way up from the bottom.

00:19:35.220 | There's a reason why some of that's there.

00:19:37.320 | But that's not a 30-year thing.

00:19:39.500 | There's a bit of hazing, right, a bit of an apprentice program, a little bit of indentured

00:19:42.820 | servitude with some significant challenges.

00:19:45.420 | But it's not a long-term thing.

00:19:47.300 | It's just a test to see, do you really want it?

00:19:50.140 | Do you have the character to get through it?

00:19:52.240 | Think of it like a boot camp of sorts.

00:19:54.300 | Why do you go through a boot camp experience in most militaries?

00:19:57.460 | Well, part of it is to very quickly convey a whole lot of knowledge and a whole lot of

00:20:02.180 | understanding.

00:20:03.180 | But a lot of it is to test the person, to see, are you the kind of person who breaks

00:20:06.320 | under pressure?

00:20:07.520 | So in a business-wise, we're not doing a boot camp, but you're trying to put on and

00:20:11.820 | say, are you the kind of person who breaks under pressure or are you a man of character?

00:20:16.220 | Once there's evidence that, no, this guy's a man of character, he can handle it, then

00:20:21.940 | they should be pulling that off intentionally.

00:20:24.100 | And then it's a matter of teaching, teaching, teaching, teaching, teaching, raising up to

00:20:28.460 | positions of authority and leadership and power, putting responsibility onto the shoulders,

00:20:34.340 | and then intentionally moving into a position of being a senior advisor.

00:20:39.020 | And so ideally, by the time, if I'm running a family business and my children are taking

00:20:44.060 | over, by the time I'm hitting my 50s and 60s, I'm basically out of it and I've turned it

00:20:49.520 | over to the children who were in their 30s and 40s.

00:20:52.920 | And by setting that cycle, hopefully, well, I'm still there, I'm still involved, but I'm

00:20:58.160 | no longer driving it, then we're raising up maturity.

00:21:01.760 | And that's what we need in the next generation.

00:21:03.400 | So I see a parallel there, and that's what I think, that's what, in my mind, your parents

00:21:07.720 | should be doing.

00:21:09.080 | But in order to do that, they have to be willing to let you fail, they have to be willing to

00:21:13.120 | let you make mistakes, and they have to be willing to give up control, which is understandably

00:21:18.080 | difficult.

00:21:19.080 | For people who have the kind of personality and character to go out and start a family

00:21:23.480 | business and then to nurture it into maturity and to deal with all of that, to then intentionally

00:21:32.180 | pull back requires a very different mindset than a lot of people have, which is why it

00:21:36.800 | fails so many times.

00:21:38.480 | Yeah, that really helps me clarify kind of the question that's in front of me.

00:21:46.560 | That's super helpful.

00:21:47.560 | Good.

00:21:48.560 | I'm glad.

00:21:49.560 | Keep in touch, talk with them, and then let's see where things go in the coming months.

00:21:53.160 | Daniel in Texas, welcome to the show.

00:21:54.160 | How can I serve you today?

00:21:55.820 | Thanks, Joshua.

00:21:56.820 | Hope you're having a good day.

00:21:59.520 | And you as well.

00:22:00.520 | I have a question about franchises for you.

00:22:03.520 | Okay.

00:22:04.520 | A basic question is, how do you feel about owning a franchise?

00:22:09.280 | And a second layer with that is, obviously, numbers matter for a franchise, all that kind

00:22:16.080 | of stuff, but in general, but also especially when you bear it in mind against buying an

00:22:20.160 | existing business, starting something else from scratch.

00:22:24.040 | I feel very positively inclined towards franchises.

00:22:28.000 | And let me just dwell on that for a moment.

00:22:30.040 | I was going to do a separate show on this, I'll stick it in here, and who knows whether

00:22:33.040 | I do it in the future, but I consider my biggest business mistake that I never understood until

00:22:40.080 | literally about probably three years ago was my biggest business mistake in my own life

00:22:47.640 | was thinking that the basic element of being a businessman was having a good business idea.

00:22:54.560 | For whatever reason, I always thought, I studied business, I got a degree in business, I wanted

00:22:59.180 | to be a businessman, I wanted to be an entrepreneur.

00:23:01.400 | And I thought for years and years and years that, okay, that means I need to come up with

00:23:06.000 | a good business idea.

00:23:08.160 | And so I would spend my time looking for a good business idea.

00:23:10.880 | And even the business that you know of radical personal finance, it was founded on the concept

00:23:17.240 | of a good business idea, meaning a style of show, a type of content that would be unique

00:23:22.120 | in the marketplace.

00:23:23.720 | That was at its core.

00:23:25.680 | In hindsight, that was the dumbest, most short-sighted thing I could ever do.

00:23:30.160 | It would have been so much smarter to just simply choose a business that is working and

00:23:34.880 | then go do it.

00:23:36.260 | And I never even thought of it.

00:23:38.040 | And so franchising is kind of a shortcut pathway to choosing a business that's working and

00:23:43.660 | going and doing it.

00:23:45.420 | So I think that it should be a primary opportunity that many people look into because it is the

00:23:53.540 | most direct pathway to having all of the benefits of business ownership.

00:23:59.880 | And it usually doesn't require good luck.

00:24:02.440 | It usually doesn't require a unique idea.

00:24:05.120 | It simply requires an appropriate concept, an appropriate market to apply that concept

00:24:11.140 | to, appropriate financial capacity for the business owner, and appropriate execution

00:24:17.820 | on the plan mixed with just a little bit of serendipity with the marketplace.

00:24:22.700 | So I'm hugely in favor of it.

00:24:24.640 | Now we can go on to part two.

00:24:26.600 | Yeah, I mean, I guess that's with that, if you're taking that, how that compares maybe

00:24:35.520 | against as well like a franchise versus buying an existing business.

00:24:40.960 | So there, I think it's going to come down to the actual concepts of the specific franchise

00:24:46.680 | or franchises that you're interested in, the specific dollar figures involved.

00:24:52.200 | And then alternative businesses.

00:24:54.640 | So we can understand the value of a franchise from the franchisor's perspective.

00:25:00.080 | I have frequently recommended to people that they franchise their business because it's

00:25:03.480 | a great way to get a lot of additional value out of a business, especially in a business

00:25:08.840 | that can't quite, that's unlikely to just spread with you running everything and owning

00:25:12.920 | everything.

00:25:14.320 | But in the value, the time that can be saved by coming into a business that is structured,

00:25:20.720 | that is systematized, and especially if there's a potential for a brand name to be building

00:25:25.480 | and sending you business directly from the value of the brand is really, really valuable.

00:25:30.440 | On the other hand, it's not a magic thing.

00:25:34.080 | And there's lots of businesses that are well run, that have good business owners there,

00:25:38.960 | and they just aren't or weren't the kind of people who are aggressively trying to get

00:25:42.920 | every dollar they could possibly get from it.

00:25:45.240 | So they just run their business and they're good to go.

00:25:47.980 | And you can come in and you can buy them.

00:25:49.240 | And especially in today's world with the retiring baby boom generation, I think that if you

00:25:53.560 | can come across one of those, then it's worth doing.

00:25:57.860 | It's hard sometimes to come across them because they're often not advertised until the very

00:26:02.840 | end when they're with a business broker, whereas franchises are aggressively advertised so

00:26:07.600 | they're easier to look at and consider.

00:26:11.000 | Right.

00:26:12.960 | Do you have any thoughts on, and obviously each franchise does things a little bit different,

00:26:20.720 | do you have any feelings on when it comes to actually the back-end brands, the ongoing

00:26:29.160 | royalties and stuff, how much past a certain point is not worth it?

00:26:35.680 | I'm going to guess that the answer to that is going to depend on how long the franchise

00:26:42.920 | has actually been in business.

00:26:45.120 | So let's assume that you're dealing with a mature franchise.

00:26:48.180 | It must be working.

00:26:49.720 | Unless there's something about newer contracts versus older contracts, it must be working.

00:26:54.880 | One of the things I'm enormously grateful for is just the power of the free market,

00:26:58.480 | that in general, the market works all that stuff out for us.

00:27:02.340 | And so in many cases, if you pay what someone's asking, it's probably going to work out.

00:27:08.560 | Think of this like when you go to sell a car or sell a house or something like that.

00:27:12.760 | The very first thing that you do, if you're going to sell a car or a boat that you have,

00:27:16.720 | is you go to the marketplace and you kind of get a sense of what is happening in the

00:27:20.480 | marketplace.

00:27:22.200 | And you get a sense of kind of this is the market number.

00:27:27.120 | Then you look at your actual product and you say, "Well, is my car extra shiny?

00:27:31.520 | Is it in extra good condition?

00:27:32.920 | Well, if so, then I'll go ahead and mark it up at a premium."

00:27:36.360 | And then you look at your motivation.

00:27:37.360 | Do I really need to sell quickly?

00:27:39.040 | Well, let me mark it down a little bit.

00:27:41.260 | But in your own business, you generally look to the marketplace first, so the marketplace

00:27:46.080 | keeps prices consistent.

00:27:48.080 | Now it's no different when selling a business that you're going to go to the marketplace

00:27:51.360 | and you're going to look at your competitors and you understand that if you're selling

00:27:54.480 | a franchise, you're in competition with all the other franchisors, all the other offerings

00:27:59.320 | that are out there.

00:28:00.600 | So you're probably going to choose a fair price.

00:28:02.360 | And if some bozo walked in off the street, took your contract the way that you offered

00:28:06.600 | it, signed it with no negotiation, it's probably good enough.

00:28:10.400 | Now, should you negotiate?

00:28:11.900 | Should you push?

00:28:12.900 | Yeah.

00:28:13.900 | And should you inform yourself and look at other competitors?

00:28:15.680 | Of course, because we need to make sure that we're not dealing with a scammer.

00:28:19.400 | But I think the biggest danger would just be, "Am I franchisee number three?"

00:28:23.440 | Well, if I'm franchisee number three, then there's just not a lot of experience that

00:28:27.320 | we have to know that this model really works.

00:28:30.000 | But beyond that, I think that whatever they're asking is probably going to be competitive

00:28:35.540 | with other options that are out there.

00:28:37.960 | Okay.

00:28:38.960 | Cool.

00:28:39.960 | That's all I needed to know.

00:28:41.600 | Thank you, sir.

00:28:42.600 | Yeah.

00:28:43.600 | My pleasure.

00:28:44.600 | All right.

00:28:45.600 | We move on to Nick in New York.

00:28:46.600 | Welcome to the show, Nick.

00:28:47.600 | How can I serve you today?

00:28:48.600 | Hi, Joshua.

00:28:49.600 | Can you hear me?

00:28:50.600 | Sounds good.

00:28:51.600 | Yes.

00:28:52.600 | So my high-level question is how much do you push your children to study a topic that you

00:28:58.400 | think is good for them, but they're not necessarily naturally attracted to?

00:29:03.400 | And so the details of this is that I have two kids, and my daughter is eight years old.

00:29:09.280 | She's very smart.

00:29:10.280 | I think my biased opinion, but she's very sort of classically smart, right?

00:29:14.760 | So she's very much into reading classical novels.

00:29:17.440 | She has developed a vocabulary that's much richer than other kids of the same age.

00:29:24.800 | And pretty much if you give her free time, what she'll do is she'll just start reading

00:29:28.860 | a book.

00:29:30.680 | Now she's reading world record Guinness books, but sort of interesting books to her.

00:29:36.280 | About two years ago, I realized that at school she was struggling a little bit with math.

00:29:42.360 | And so at the time I decided to start working with her.

00:29:45.520 | She goes to public school.

00:29:47.080 | So I decided to start working with her, and we started doing Life of Fred.

00:29:51.160 | And we pretty much covered all the gaps that she had, and we went further ahead.

00:29:56.820 | So she's, in theory, she could deal with, let's say third grade and fourth grade material

00:30:03.360 | at the moment, even though she's starting third grade this fall.

00:30:07.040 | Now all of that said, she's not naturally attracted to math.

00:30:10.800 | So she would do it if I told her to, right, because she's just very obedient.

00:30:16.440 | She was very excited when we were doing Life of Fred, but in hindsight, I realized that

00:30:20.280 | she was excited because of the story aspect of Life of Fred, rather than because she was

00:30:24.760 | very excited about the math itself.

00:30:28.080 | And I am sort of, in my social circle is a high achievement circle.

00:30:32.520 | So parents are sending their kids to Sunday math school, and they're participating international

00:30:40.880 | math competitions.

00:30:41.880 | They're teaching their kids, similar age, how to touch type.

00:30:45.800 | And so I'm vacillating between making sure that she's, quote unquote, ahead of her peers

00:30:53.680 | and ahead of public school and spending time with her, versus allowing her to just develop

00:31:00.420 | the way that she would naturally develop, where it seems, again, that she's more of

00:31:04.040 | this classical woman interested in novels and that kind of thing.

00:31:12.760 | People, not things and concepts.

00:31:14.800 | Correct.

00:31:15.800 | Correct.

00:31:16.800 | So, and that's where I am, right?

00:31:18.080 | She's eight years old, and I don't know if it's sort of, she's still young enough where

00:31:22.640 | I should say, no, come and study with me.

00:31:25.060 | I want to make sure that you do this or whether I start making sure that she's okay at school,

00:31:31.800 | but letting her spend the time where her talents seem to lay.

00:31:36.440 | Right.

00:31:37.440 | Right.

00:31:38.440 | It's a good question.

00:31:39.440 | And I'm not going to give you any kind of clear, specific answer because you're going

00:31:43.560 | to test different ideas, different concepts, and see what's working at this particular

00:31:50.560 | point in time.

00:31:52.200 | So let me just begin with some big picture philosophies.

00:31:57.080 | Philosophy number one is that in general, I think most of us are better off leaning

00:32:02.880 | into our strengths and really developing our strengths to a very high level versus trying

00:32:09.880 | to spend all of our time on our weaknesses.

00:32:12.920 | So putting this in a scholastic perspective, let's imagine that your eight-year-old daughter

00:32:18.020 | loves nothing but novels, and she reads and she reads and she reads and she reads.

00:32:26.000 | And you encourage her in that classical direction.

00:32:30.700 | Many times, somebody who is a committed reader will naturally become a committed writer.

00:32:36.860 | If she goes on and develops that and spends her teenage years and adolescent years writing

00:32:44.200 | and publishing novels, and she arrives at the age of 18 and she's looking out at the

00:32:49.160 | world and she's published five or six novels of her own and sold some thousands of copies

00:32:55.200 | of them, she will be highly sought after as a student to the most prestigious and exclusive

00:33:03.780 | colleges.

00:33:04.780 | She'll have lots of pathways that are open to her because she's very strong in a particular

00:33:11.360 | area.

00:33:12.840 | Now let's pretend that instead of doing that, you say, "No, I'm going to cut back

00:33:17.920 | on the reading and I'm going to put in math, and we're just going to do math."

00:33:22.000 | And let's assume that she scrapes in and she does AP Calculus in her senior year of

00:33:29.240 | high school, and she scrapes in by the skin of her teeth and gets a three on the AP Calculus

00:33:34.280 | AB exam.

00:33:36.860 | That doesn't help her in any way because she's not a standout person.

00:33:40.800 | She doesn't have any particular area of strong expertise.

00:33:45.240 | Yes, she learned calculus, but there's a decent chance that her path would be like

00:33:50.360 | mine.

00:33:51.360 | I couldn't even begin to talk about calculus or do calculus anymore.

00:33:55.080 | I did calculus and I forgot it all immediately after being done with it, then boom, done.

00:34:01.000 | So if you had to choose between focusing on encouraging strengths and areas of standout

00:34:08.080 | genius versus shoring up weaknesses, I think we're far better off focusing on strengths.

00:34:15.760 | That's philosophy number one.

00:34:17.840 | Philosophy number two is this.

00:34:19.200 | I don't think that there's anybody who's really incapable of performing at a genius

00:34:26.500 | level if there's sufficient levels of interest.

00:34:30.360 | So last year, and I never did do kind of like a summation podcast of everything that I learned,

00:34:35.560 | but I spent a lot of time last year, or I guess maybe early this year, digging into

00:34:40.180 | the concepts of genius and tried to review and understand what people talk about.

00:34:46.440 | And in essence, if you look at the world's genius performers, at least in what are sometimes

00:34:52.860 | called friendly learning environments, if you look at world genius performers, it's

00:35:00.120 | something that can be nurtured but not forced.

00:35:03.800 | So let's use musicians as an example.

00:35:06.800 | World-class musicians tend to be the children of musicians.

00:35:12.560 | And if you listen to the stories of the world-class genius musicians, they get an early start

00:35:17.920 | on the development of their genius because they were raised in a musical environment.

00:35:24.560 | Their parents had instruments, their parents valued playing instruments, and their parents

00:35:30.860 | invested into them learning and practicing music, so they got an early start.

00:35:36.760 | But there has to come a point in time in order to become a true genius where the young person

00:35:43.920 | or the child has to make a conscious choice for herself to say, "I am going to do this.

00:35:51.560 | This I want."

00:35:53.000 | And it has to be an internally directed, self-motivated thing.

00:35:57.160 | If you're going to sit and you're going to practice your violin for seven hours a day

00:36:00.920 | and do the kind of intentional, focused practice that's going to lead to your truly becoming

00:36:05.920 | world-class, it can't be forced on you externally.

00:36:10.480 | And so the child who's going to become a world-class mathematician is going to have to cross over

00:36:16.800 | and be self-motivated.

00:36:18.180 | You can't force your daughter.

00:36:20.700 | Even though I don't think that there's any math, I doubt that there's any particular

00:36:26.500 | kind of math gene or any kind of natural mathematical ability.

00:36:32.360 | People think there is, but I just see so many stories of people who when they're in school,

00:36:38.820 | they, "Oh, I'm not good at math."

00:36:41.460 | And then they're 33 years old and all of a sudden they just start, they take an interest

00:36:45.020 | in math and they're like, "I love math.

00:36:47.140 | This is great."

00:36:48.140 | And I think that not being good at math is much more likely due to poor teaching methodology

00:36:54.900 | and inadequate tutoring, inadequate teaching, unattractive presentation styles than it is

00:37:01.220 | that there's any genetic ability with math or any kind of natural ability that is expressed

00:37:07.020 | in mathematics.

00:37:08.780 | But in order for your daughter to go and become a mathematician, she would have to encounter

00:37:14.280 | a spark, something that actually so intrigued her that she wanted to do it.

00:37:20.300 | That's what world-level, world-class genius depends upon.

00:37:25.060 | So that's my philosophy number two, is that we want to try to expose our children to a

00:37:30.860 | broad array of things and we want them to be competent.

00:37:34.380 | Your daughter's going to have an easier time if she's competent with math.

00:37:37.740 | So how do you reconcile these things?

00:37:40.300 | I would say you reconcile it by requiring a basic level of performance in everything

00:37:47.620 | that's important to you without it becoming overwhelming.

00:37:51.460 | So you're going to require your daughter to be good at math.

00:37:54.620 | And I don't think that there's any reason why she's not going to be good at math, especially

00:37:59.420 | with the fact that you are tutoring her.

00:38:01.680 | If you look at the standard math pathway in your local public school where your daughter's

00:38:08.860 | enrolled, there is no reason she can't get straight As at math.

00:38:13.220 | That pathway has to accommodate children who never do homework, whose parents have no interest

00:38:19.540 | whatsoever, who are years behind where everyone else should be.

00:38:23.580 | So what I have noticed is that if we emphasize consistency and small doses of study on a

00:38:32.820 | consistent basis as compared to large doses of extreme effort, then we can significantly

00:38:40.980 | outperform our peers without it being totally overwhelming.

00:38:48.960 | So in the mathematical example, you might say, "When school's in session, I'm just going

00:38:54.940 | to make sure that she's doing the math work that is being assigned in her schoolwork.

00:39:01.600 | But when school's out of session, we're going to do 30 minutes a day of math."

00:39:04.980 | And it may be Life of Fred, it may be Math Academy, it may be Khan Academy, but you just

00:39:08.980 | find your own kind of supplemental program.

00:39:11.600 | And then what I would also do is I would try to insert ideas that are going to be helpful

00:39:16.540 | to her.

00:39:17.540 | So instead of just always doing drill and kill math, then emphasize the narrative benefits

00:39:22.480 | of math.

00:39:23.480 | Put in living math books, keep on doing Life of Fred.

00:39:26.940 | And if your daughter is doing that and doing it consistently, then she's going to be outperforming

00:39:32.980 | in the fullness of time, but you're not going to be hindering her development of genius.

00:39:36.980 | And then the final thing I would say is I don't think it's wrong or dumb to require

00:39:42.660 | certain things of our children.

00:39:44.380 | I think it's good and healthy, but we want to make sure that our requirements are not

00:39:48.760 | onerous.

00:39:49.980 | So requiring your daughter to sit down and do 20 minutes of math every day seems totally

00:39:55.240 | reasonable to me and very unlikely to poison her against mathematics.

00:40:01.020 | Requiring her to sit down and do two hours of math every day when she doesn't really

00:40:04.140 | like it, is not really interested in it, that might be a little bit too extreme and is likely

00:40:08.720 | to turn her off and make her despise the subject.

00:40:11.340 | So finding that individual balance to me would be the strategy to look for.

00:40:15.060 | Yeah, that's a good idea.

00:40:18.380 | That's also me.

00:40:19.380 | I don't like pressuring people to do things that they don't want to do.

00:40:22.340 | And so when I sensed that she wasn't interested anymore, we did do Life of Fred twice, the

00:40:28.160 | books that are appropriate for her age and a bit older.

00:40:31.200 | But then again, because she was looking at the story, the story was no longer novel.

00:40:36.580 | So she lost interest.

00:40:39.180 | I don't know if you know of any other books or websites that are, as you said, narrative

00:40:43.060 | based math.

00:40:44.620 | I think Life of Fred is the best.

00:40:46.660 | I have a complete Life of Fred collection from apples all the way up through trigonometry.

00:40:52.260 | The only one I haven't gotten yet is calculus.

00:40:55.180 | So that tells you how much I care about it.

00:40:57.060 | I have purchased, I'm building a collection of every single book that Stanley Schmidt

00:41:02.820 | has written.

00:41:03.980 | So I think it is the best.

00:41:06.300 | And the neat thing about Life of Fred, I assign it to my children in addition to another math

00:41:12.020 | curriculum.

00:41:13.020 | So I use two math curricula.

00:41:14.860 | And Life of Fred generally is about, most lessons seem to be about 15 or 20 minutes.

00:41:20.820 | And they're very, very doable, at least we're in the, I mean, my eldest is doing the beginner's

00:41:28.980 | algebra book now.

00:41:30.580 | And still it's about 17 minutes, 20 minutes, something like that for him to work through

00:41:33.940 | the lesson, do the problems and be done with it.

00:41:36.620 | So I think that would be my number one recommendation to you.

00:41:40.060 | - Right, what is the second book or set of books that you're doing?

00:41:46.140 | - So you're gonna go, yeah, so the pathway goes, you start with apples and then you think

00:41:50.940 | you go through goldfish or ice cream or something like that.

00:41:54.620 | Maybe it's ice cream.

00:41:55.620 | And that's the elementary.

00:41:59.340 | Then you go to kidney, liver and mind shaft, and hopefully this is piquing the interest

00:42:05.460 | of somebody.

00:42:06.700 | That's the middle school math is kidney, liver and mind shaft.

00:42:10.220 | Then after that, you go into the decimals book and fractions.

00:42:15.140 | Then after that, you go into the pre-algebra book.

00:42:17.540 | And then there's pre-algebra zero with economics, pre-algebra one with physics and pre-algebra

00:42:23.340 | two with chemistry.

00:42:25.300 | And that takes a child all the way through pre-algebra, which would be about normally

00:42:29.420 | in the US system, eighth grade math.

00:42:32.300 | Then you go into the high school series and so then it's beginning algebra one, advanced

00:42:36.860 | algebra two, geometry and trigonometry.

00:42:40.340 | And then from there into calculus and then into the advanced college math books.

00:42:44.100 | He takes it all the way through a four-year undergraduate degree of mathematics.

00:42:48.380 | So what you're looking for is if you've done the A through I or whatever it is, then you

00:42:52.460 | need to get kidney, liver and mind shaft.

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00:43:25.380 | - Yeah, he does have on his website, he sort of, I don't remember where he stops, but he

00:43:31.100 | encourages parents not to move too fast.

00:43:34.140 | Again, I don't know.

00:43:36.300 | So that his point is that children's brains may not be ready for something.

00:43:41.580 | And by trying to shoehorn them into that something, then as you said earlier, you can sort of

00:43:45.580 | poison them.

00:43:46.660 | - So I think you just test it.

00:43:48.220 | So this is something I've tested myself and am testing.

00:43:52.420 | I heard various people say, both Schmidt himself and a couple of other math teachers that I

00:43:59.100 | listen to, is they make a big point to say, don't do conceptual math too early.

00:44:03.540 | So first of all, I would say conceptual math would start at about algebra.

00:44:07.140 | Even pre-algebra is not particularly conceptual.

00:44:09.860 | But so you can certainly go into the middle years of kidney, liver and mind shaft before

00:44:14.500 | needing to go farther.

00:44:16.900 | But I tested it and I'm open to stopping, but I haven't seen that there's been any reason

00:44:23.300 | to stop.

00:44:24.300 | So just for context, my almost 11 year old is doing algebra now and I haven't observed

00:44:32.540 | any problem with it.

00:44:34.580 | So I simultaneously totally agree with the ideas that we should be careful.

00:44:38.420 | I think we should be cautious of workbook math too early.

00:44:41.340 | I think it's perfectly reasonable to not start any formal mathematics even until 10 or 11

00:44:46.420 | and start in like fifth grade.

00:44:48.260 | But I do think you should look at your actual daughter and see, and if she's not overwhelmed

00:44:53.640 | by it, then just keep going.

00:44:55.660 | And then recognize that that's the power of narrative, is that you don't have to get every

00:44:59.340 | problem right.

00:45:00.780 | The stories will start to help to convey the concepts.

00:45:04.640 | And if she goes through it once and it's a little bit too advanced, but she comes back

00:45:09.540 | two years later, then it'll be easy for her and that's the benefit.

00:45:15.180 | So we should go at the level that the child is capable of going and not unnecessarily

00:45:20.780 | hold her back nor unnecessarily push her too strong.

00:45:24.240 | Got it.

00:45:25.240 | All right.

00:45:26.240 | Thank you very much Joshua.

00:45:28.580 | Let me just add one more thing.

00:45:30.900 | I use myself as a meter.

00:45:33.700 | I have a daughter that is just older than yours and I have basically a complaining meter

00:45:40.380 | that I use.

00:45:41.380 | And so my daughter has everything that I present to her ever, she complains about it incessantly

00:45:47.480 | before we even start.

00:45:49.120 | So I'm pretty immune to complaining, but I also listen to how much there is.

00:45:54.520 | And we usually go through phases.

00:45:57.260 | So I'll just use languages.

00:45:58.260 | When I introduced my daughter to Spanish, well it was French, I introduced her to French

00:46:02.220 | and she hated every minute of it and complained nonstop.

00:46:05.260 | So I did it in little bites here and there.

00:46:07.220 | And then as the complaining became less, then I increased the load a little bit.

00:46:12.240 | Well, today she loves French, says French is her favorite lesson, French is her favorite

00:46:16.560 | subject.

00:46:17.560 | So if she could just do nothing but French, that would just be happy, that would make

00:46:20.500 | her happy.

00:46:21.500 | It's like, why do we have to do anything today except French?

00:46:23.600 | And there was just a year ago where she just complained nonstop and never wanted to do

00:46:26.380 | anything with French.

00:46:27.760 | So I listened to the complaints and then I vary the amount of work based upon it.

00:46:32.900 | So similarly, then after French, I moved on to German.

00:46:35.540 | I said, okay, let's start German.

00:46:37.240 | Complain, complain, complain.

00:46:38.420 | I adjusted the content a little bit, complain, complain, complain.

00:46:41.900 | And then I kind of tested a little bit and I realized, yeah, we're not making progress

00:46:44.980 | here.

00:46:45.980 | So I went way back, stopped with the advanced stuff, went back to the beginning, built it

00:46:49.520 | up, and all the complaining dialed back to just a little bit of complaining.

00:46:53.880 | And what I'm looking for with knowing her is I just want just a little bit of complaining,

00:46:58.140 | but I know I'm just going to press it forward.

00:46:59.560 | And then pretty soon the complaining starts to disappear and then we ramp it up.

00:47:03.340 | So that's an actual example, but that's, I think, what you're looking for, is you're

00:47:08.160 | not looking for tears.

00:47:09.560 | You don't want tears.

00:47:10.960 | But a little bit of complaining is a good metric to see where, okay, we're actually

00:47:14.600 | making progress here.

00:47:15.780 | This is hard.

00:47:16.780 | I don't love it.

00:47:17.780 | Okay, good.

00:47:18.780 | We're right at the right area.

00:47:19.780 | So then just swap in and out different things and use that kind of complaining meter to

00:47:26.440 | assess how you're doing and where you should be focused.

00:47:29.920 | - Makes sense.

00:47:30.920 | Thank you.

00:47:31.920 | - Yep.

00:47:32.920 | My pleasure.

00:47:33.920 | All right, we go on to Timothy in Virginia.

00:47:35.560 | Welcome, Timothy.

00:47:36.560 | How can I serve you today?

00:47:37.560 | All right.

00:47:38.560 | Timothy is gone.

00:47:39.560 | All right.

00:47:40.560 | Let me pivot here.

00:47:41.560 | Since Timothy dropped off, wait a second and see if he pops back on.

00:47:47.500 | Let me read you a couple of written questions prepared.

00:47:52.400 | The first written question or the first written is a comment that actually came in from a

00:47:56.720 | listener in response to my recent episode on Child Protective Services.

00:48:03.420 | So a listener writes in and says, "Joshua, I just listened to your recent episode on

00:48:07.400 | how to protect yourself during a CPS investigation, Child Protective Services.

00:48:12.320 | This episode resonated with me because a few years ago, my family was investigated several

00:48:17.400 | times by CPS over the course of about 18 months.

00:48:21.680 | It was one of the most difficult personal trials we've ever faced and it nearly tore

00:48:26.340 | our family apart.

00:48:28.120 | But thanks to God's divine intervention and the wisdom of some very good attorneys, we

00:48:32.400 | were able to successfully convince CPS to close their case.

00:48:37.580 | Without going into any details of our case to maintain confidentiality, I'd like to

00:48:42.440 | share a few aspects of my experience that listeners should be aware of that were not

00:48:47.000 | mentioned in the episode.

00:48:50.000 | First and most important, in most states, there is a mandated reporter legislation that

00:48:57.460 | requires teachers, daycare workers, church staff, camp counselors, or anyone who interacts

00:49:04.960 | with children daily to report any suspected abuse to CPS.

00:49:11.280 | Any bump, bruise, or scratch on your child could be interpreted by a teacher as suspected

00:49:17.320 | abuse, including minor injuries young children often sustain during normal play.

00:49:24.320 | Secondly, in each case that was filed, the social worker interviewed my children at their

00:49:29.920 | school prior to interviewing us, without our knowledge or consent.

00:49:36.680 | When they knocked on our door, they already had the testimony of our children as evidence

00:49:41.000 | against us.

00:49:42.520 | My attorney informed me this is legal and standard practice in my state.

00:49:47.720 | Thirdly, CPS reports are public records, and you have the right to obtain them as part

00:49:53.340 | of your legal defense strategy.

00:49:55.960 | And lastly, CPS does serve the public good by protecting children experiencing abuse.

00:50:01.900 | As I got to know the caseworkers, I began to appreciate how hard they work to ensure

00:50:05.840 | the well-being of children who have no one to look out for them at home.

00:50:10.600 | It's a very tough job.

00:50:12.200 | Whether or not you are being investigated for just cause, they deserve your respect

00:50:16.920 | and appreciation.

00:50:18.960 | It's important to know that once you are under the gaze of CPS, it is highly likely that

00:50:23.440 | you will face multiple investigations.

00:50:26.300 | To that end, I highly recommend installing surveillance cameras throughout your home.

00:50:31.380 | This is something I did after the first CPS investigation, and from that point onward,

00:50:36.520 | I was able to provide video evidence to the caseworker for each incident.

00:50:42.000 | I'm convinced this contributed significantly to ending their case.

00:50:46.800 | We are doing much better today as a family, and we are so thankful.

00:50:50.840 | There's more I could share about my story, but I prefer to keep that private.

00:50:54.520 | I will say this.

00:50:55.600 | You are absolutely right that CPS operates under a totally different legal structure

00:51:00.120 | than the police.

00:51:01.680 | You really are guilty until proven innocent.

00:51:05.420 | You need a good family law attorney, and you need to be cooperative and respectful to the

00:51:10.640 | caseworkers.

00:51:11.640 | Thanks again for posting such a good episode.

00:51:14.400 | Would you be willing to share this message with others?

00:51:17.780 | So this is a good email and a good outline.

00:51:22.480 | I want to go through and just add a couple of comments to this.

00:51:25.720 | I should have included, I thought about it, I was trying to decide how extensive to make

00:51:30.400 | the outline.

00:51:31.400 | For the first two points, it is really important, so I want to emphasize them.

00:51:34.720 | First, on the concept of a mandated reporter, this indeed is the fact.

00:51:40.060 | You should assume that any person who is employed in some kind of capacity interacting with

00:51:48.320 | children is a mandated reporter.

00:51:52.680 | So I would say the obvious ones are healthcare professionals, doctors, nurses, psychiatrists,

00:52:00.000 | anybody like that, all educators, teachers, school counselors, daycare administrators,

00:52:06.400 | and then other clergy, usually a mandated reporter, so pastors and priests and rabbis,

00:52:15.580 | usually public servants, law enforcement, public safety officers.

00:52:20.540 | There might be other people, coaches, lawyers, things like that.

00:52:25.940 | These are the types of occupations that are mandated reporters.

00:52:29.280 | So if this mandated reporter sees or observes anything that could be construed as abuse

00:52:36.760 | of any kind, then he or she legally is obligated to report it to the appropriate government

00:52:44.760 | officials.

00:52:45.760 | And it's important that you know this.

00:52:47.800 | And just from a defensive strategy perspective, it's important that you understand that if,

00:52:54.680 | for example, let's say your child falls down, if you have children, and especially if you

00:52:59.680 | have boys, and if you allow your children to be boys, there's a decent chance that generally,

00:53:05.480 | normally, there's going to be bumps, bruises, cuts, lacerations, scrapes, things like that.

00:53:12.800 | So if any of that is obvious, for example, on the face, you need to make certain that

00:53:18.400 | your child very clearly remembers what happened, happens, and that you say it.

00:53:26.080 | So if your child fell down on his bicycle or fell out of a tree and scraped his face

00:53:30.480 | up, then you need to make certain that when you take your child to school, that your child

00:53:34.880 | tells the teacher, "I fell down and scraped my face."

00:53:38.520 | Obviously, the mandated reporter is going to ask and give a chance to talk about it,

00:53:43.240 | but it's important to understand where injuries come from.

00:53:48.240 | And normally speaking, if there's a perfectly normal and ordinary explanation for an injury,

00:53:54.040 | then that can minimize the risk of filing a report.

00:53:57.800 | It is also important to have documentation of certain things.

00:54:01.800 | So let's say one of your children gets injured, and you seek medical help, then it's important

00:54:10.880 | to make certain that you document with the physician, and ideally with your notes and

00:54:17.160 | everything, exactly what happened.

00:54:19.000 | Because sometimes things might come back years later, and it's important that you have those

00:54:24.080 | written records and that the people involved, that there's contemporaneous evidence of what

00:54:30.400 | actually happened.

00:54:31.760 | Think of it like a court case.

00:54:32.860 | If you've ever watched an actual court case, I watched the Johnny Depp Amber Heard trial,

00:54:38.760 | much of it, when that was happening a couple years ago, and I found it so fascinating to

00:54:43.760 | just look at the importance of contemporaneous documentation, that if so-and-so was injured,

00:54:49.540 | then so-and-so went to the doctor, and in the doctor's notes, we can find this assessment.

00:54:54.920 | We can find this clear evidence that was taken by the physician.

00:54:58.700 | And so think about that and make certain that if there's an injury, that you document the

00:55:03.280 | injury in some way yourself, that you make records and contemporaneous records of it,

00:55:10.220 | in addition to, if you seek medical care, that the reason for the injury is documented

00:55:17.240 | and understood.

00:55:19.140 | And if there's been some kind of weird thing happening, let's say that your child had a

00:55:28.280 | weird bruise, fell down and smacked his face on a rock and is bruised in some way that

00:55:34.120 | would be the kind of bruising that an abusive adult would cause, if an adult were abusing

00:55:40.040 | the child, then document it properly and just be aware of the fact that there are mandated

00:55:45.360 | reporters who, if they see that continually, will step in, as they should.

00:55:50.520 | I think that those kinds of laws are appropriate, but you need to be aware of them.

00:55:55.420 | The next point that the listener writes about is the fact that the social worker interviewed

00:56:00.360 | the children at their school without speaking to the parents.

00:56:07.560 | This is indeed legal and it is common.

00:56:11.000 | It's legal and common.

00:56:13.800 | And I thought about talking about this, but I wasn't sure what to say about it, again,

00:56:19.880 | because we're kind of walking this fine line where I want abusive people, abusive adults

00:56:24.640 | to be found, to be caught, and to be prosecuted, and I want children to be put in safe situations.

00:56:30.480 | So I thought, you know, what do you do?

00:56:33.960 | First of all, if you've done nothing wrong and are doing nothing wrong with your children,

00:56:40.680 | then probably there's no harm to the interview in the first place.

00:56:46.660 | When you're dealing with a normal situation and a normal child and something that has

00:56:51.180 | happened that has caused something to happen, then generally the explanation should make

00:56:59.480 | sense.

00:57:00.480 | I'm thinking here of an example where one of my boys fell out of a tree, fell out of

00:57:04.120 | a tree, fell on a rock underneath the tree.

00:57:07.480 | The rock hit his stomach, knocked the wind out of him, and caused him to experience a

00:57:12.980 | lot of pain and have bruising.

00:57:14.880 | Took him to the doctor, had a full checkup done, and go back to documentation, and, you

00:57:22.240 | know, we document, okay, here's the tree, here's the rock, here's where he fell from.

00:57:26.360 | Go to the doctor, explain, fell out of a tree, you know, about this high as best we can figure

00:57:30.360 | out.

00:57:31.360 | Here's what happened.

00:57:32.360 | You know, it's documented.

00:57:33.960 | If somebody, if in a normal situation, somebody came along and asked the child what happened,

00:57:39.880 | I fell out of a tree is a pretty obvious thing that wouldn't cause any harm.

00:57:44.520 | Where I most worry about interviews is when children are very young or if children have

00:57:50.520 | diminished capacity and don't have the ability to, don't have the ability to clearly understand

00:57:59.380 | what is happening.

00:58:00.940 | So here is a paragraph, I don't, I can't remember if I read this in the other one, but from

00:58:05.940 | Defending the Innocent for Child Protective Services, "The charges are going to dictate

00:58:10.400 | what steps to take next.

00:58:12.200 | Depending on the severity of the charges, this will dictate what you can and should

00:58:15.200 | do.

00:58:16.200 | If the allegations include direct harm to a child, assault, neglect, you will have to

00:58:20.520 | let them," them being CPS, "see the child.

00:58:23.340 | This does not mean that you have to allow CPS into your house.

00:58:26.620 | Have them meet with the child on the front step briefly and in your presence and be sure

00:58:29.820 | to record the discussion.

00:58:32.040 | Inform CPS that the meeting is being recorded.

00:58:34.460 | Do not allow CPS to talk with the child alone, ever.

00:58:38.260 | Child Protective Services will be able to make up evidence they need from the child's

00:58:41.620 | testimony and you will have no defense against it.

00:58:44.980 | Children do not testify in court and the words they use are taken at face value, even though

00:58:50.180 | you can explain it.

00:58:51.800 | That evidence will be used against you.

00:58:54.060 | An example would be if they took the child to the car and asked, "Has mommy or daddy

00:58:58.060 | ever put something in your behind?"

00:59:00.020 | The child will answer, "Yes."

00:59:01.820 | "What was it?" will be the next question.

00:59:04.260 | And of course the answer will be, "I don't know."

00:59:06.900 | Now you're losing your son and facing 15 years in prison because you used a rectal

00:59:10.300 | thermometer on a three-year-old and the child couldn't explain you were taking his temperature.

00:59:14.740 | So that's an example of the kind of miscommunications that can happen in an interview.

00:59:20.180 | So how do you handle this?

00:59:21.380 | Well, first, I think you just try to explain what's happening and talk to your children

00:59:26.420 | as best you can and explain what's happening.

00:59:29.220 | I don't think that in general it's appropriate to try to make specific, you know, to talk

00:59:37.300 | on and on about, "Well, here's what you do if you talk to a CPS agent," or something

00:59:41.300 | like that, unless you had a specific cause for concern.

00:59:45.140 | So the example that I used was homeschooling.

00:59:47.260 | I know many people that homeschool in, I know some people who homeschool in countries where

00:59:52.540 | homeschooling is illegal.

00:59:54.700 | They know that they are breaking the law.

00:59:56.860 | They're breaking the law because the law is immoral and their conscience is clear doing

01:00:01.380 | it.

01:00:02.380 | But because they know that they're doing something that is illegal, they have to take

01:00:05.860 | extra measures to instruct their children on how to keep their children out of problem

01:00:10.580 | and out of trouble.

01:00:12.300 | So the parent will coach the child.

01:00:14.500 | If you're interacting with somebody who's asking you these kinds of questions, this

01:00:17.980 | is what you say.

01:00:19.340 | And so you give these answers and nothing more, and you don't talk to the person anymore

01:00:24.060 | about this subject.

01:00:25.500 | I think that's appropriate and an appropriate amount of defense if you have a particular

01:00:29.300 | reason why you yourself might be being targeted in a culture where you face an adversarial

01:00:35.580 | government.

01:00:37.020 | In general, it seems that it's more important just simply to make it understood about how

01:00:45.500 | to deal with people in general, and that that would be the appropriate way to go about it.

01:00:54.680 | So there are a lot of predators in the world, and an immoral CPS agent who is pursuing a

01:01:02.780 | false case is only one of those predators.

01:01:05.760 | So I think it's most important that we teach children, generally speaking, to avoid predators,

01:01:11.900 | and we teach them the specific tools and techniques of avoiding predators.

01:01:17.240 | One of my big concerns is that our society has decided that for whatever reason, parents,

01:01:24.060 | especially parents who have their children in government schools, should expect that

01:01:27.920 | unknown strangers are going to talk to their children about matters including sex and sexuality.

01:01:35.400 | This is flat-out evil.

01:01:38.040 | It is absolutely evil that some stranger would come and talk to your child about matters

01:01:43.900 | relating to sex and sexuality.

01:01:46.020 | I'm much more concerned about that than I am about CPS.

01:01:49.480 | So I think it's appropriate that we teach our children that these are the conversations

01:01:54.800 | that you have with other people, these are the conversations you don't, similar to how

01:01:58.740 | we have a responsibility to teach our children to have complete and total control and autonomy

01:02:03.400 | over their bodies, to say, "Nobody touches you without your permission.

01:02:09.280 | These are the behaviors and the things that people can't do to you.

01:02:15.740 | People can't remove your clothes.

01:02:17.140 | People can't touch you on your body here.

01:02:19.340 | These are the people who are allowed to touch you."

01:02:21.680 | And so the appropriate way to do it is meeting mom or dad or a physician if we're in a doctor's

01:02:27.340 | office and mom or dad is with you.

01:02:30.040 | And so being very proactive about teaching our children about abuse and teaching them

01:02:34.540 | about appropriate conversation boundaries, teaching them to avoid one-on-one conversations,

01:02:39.860 | I think is more important to protect them from the predators they're likely to face

01:02:43.280 | with teachers or administrators or other perverts that they're surrounded by rather than just

01:02:48.580 | worrying about CPS, but it naturally extends to that.

01:02:52.220 | I worry a little bit about how to do this well.

01:02:54.460 | I don't know how to do it well.

01:02:55.500 | I hate, for example, with the police conversations.

01:02:59.060 | I wish we could go back to an era in which I could tell children, "Hey, if you're in

01:03:03.900 | trouble, go and find the policeman."

01:03:05.300 | I still want them to look for a policeman when a child is facing trouble.

01:03:13.300 | But I also have to teach them to be careful and teach them how to not talk to the police

01:03:18.420 | in an appropriate circumstance.

01:03:20.020 | So it's difficult.

01:03:21.020 | I don't have perfect understanding of it.

01:03:22.780 | But I think in general, we should teach our children, you don't have private conversations

01:03:28.140 | with people about really almost any, there's no reason for you to have private conversations

01:03:34.420 | with other people.

01:03:35.420 | When people start asking personal questions, personal questions about the family, that's

01:03:39.180 | an appropriate time to say, "I'll be happy to answer your questions when my mommy or

01:03:42.980 | daddy is with me."

01:03:43.980 | And I think in general, that's a good rule that is going to properly protect appropriate

01:03:49.060 | parents from legal risks of rogue government agents without endangering children who are

01:03:56.060 | genuinely in danger.

01:03:58.260 | I really hate to try to insert uncertainty into a child's mind, but realistically, children

01:04:04.660 | are surrounded by lots of danger.

01:04:07.620 | And so we need to appropriately teach them about the danger without inappropriately creating

01:04:12.740 | fear.

01:04:13.880 | And the best pathway I know to do that is to do it very intentionally.

01:04:18.460 | As parents, it's our responsibility to have children teach them about boundaries for their

01:04:22.060 | bodies, teach them about boundaries for conversations, teach them about the types of tools and tactics

01:04:27.580 | that perverts will use to try to engage with them, and then to answer their questions very

01:04:32.260 | honestly so that they're not out talking to strangers about things that strangers have

01:04:35.860 | no business being involved in.

01:04:38.020 | The next comment that the listener mentioned about was talking about the idea that, talking

01:04:45.780 | about getting the CPS reports and then putting cameras in place.

01:04:50.940 | And that seems like a great idea.

01:04:52.380 | I didn't think about that, but absolutely, I think that's a great idea.

01:04:56.300 | And what I understood here from the email is that this listener put cameras inside the

01:05:02.460 | house, certainly not in private areas, I would assume, but within the public areas inside

01:05:08.420 | the house.

01:05:09.420 | And so there was documentation of what was happening and what is happening inside of

01:05:12.620 | the house.

01:05:13.660 | And so given the fact that a CPS investigation is probably a longer-term thing, and in this

01:05:18.340 | case it was multiple investigations, if you do have a reason for heightened concern, then

01:05:24.300 | putting in place a proactive strategy to create evidence that could be used in your defense

01:05:29.540 | is a smart idea.

01:05:32.980 | I hope I've struck an appropriate tone with this.

01:05:35.140 | I don't want to strike a paranoid tone because I'm not paranoid and I don't think we should

01:05:39.660 | be paranoid, but we need to be cautious.

01:05:43.220 | And so the main thing I wanted you to be aware of is exactly what this listener said and

01:05:47.660 | exactly what I said in that show, that when dealing with CPS, you are guilty until proven

01:05:52.860 | innocent.

01:05:53.980 | So you will need to present the appropriate evidence to resolve the case.

01:05:59.420 | So think about that and at least be aware of that.

01:06:03.300 | So if CPS knocks on your door and you deal with that agent differently than how you would

01:06:10.140 | deal with an FBI agent knocking at your door, with an FBI agent knocking on your door, the

01:06:14.940 | answer is, "Hello, sir, why are you here?

01:06:18.860 | And can I have a business card?

01:06:20.140 | And I don't answer questions, I'm sorry, I understand you're doing your job and it's

01:06:24.140 | just an investigation, it's just a few questions, I don't answer questions, thank you very much."

01:06:29.700 | And then you would immediately contact a lawyer and you would only ever speak with the FBI

01:06:35.100 | in the presence of a lawyer, and you would only answer questions with that safeguard

01:06:38.860 | and only answer what you're legally compelled to answer.

01:06:41.780 | That is not what you do when CPS is at your door.

01:06:44.300 | If CPS is at your door, you need to answer enough questions to diffuse the situation.

01:06:50.620 | I don't know the level of corruption of CPS in your country, but for good conversation,

01:06:55.780 | let's assume that it exists but is low.

01:06:58.600 | So you want to give good answers, but not violate any of those things that I said, and

01:07:03.500 | then quickly get a lawyer to help you through the process.

01:07:07.140 | Remember, the truth is always your best defense.

01:07:10.660 | Don't abuse your children.

01:07:12.260 | Protect your children from anybody who would abuse them.

01:07:15.180 | This is your responsibility.

01:07:16.900 | I care much more about that than I do care about CPS.

01:07:20.340 | So you need to be a lion protecting your children against perverts and people who would abuse

01:07:26.100 | your children and would prey on them.

01:07:28.840 | Teach your children self-defense.

01:07:32.060 | Teach your children to trust their fear.

01:07:35.460 | I always go back to Gavin DeBecker's book called "The Gift of Fear," a good book for

01:07:39.780 | you to read, and teach your children to respect their perspectives.

01:07:45.120 | Teach them to defend themselves.

01:07:46.540 | I'm not just talking about punching, but having noisemakers and teaching them to talk to people.

01:07:51.320 | Teach your children what to do if somebody tries to tell your children about a secret.

01:07:56.780 | So your children should be trained that if so-and-so comes and says, "Hey, let's keep

01:08:01.740 | this a secret," that's an immediate time to go and talk to mommy and daddy, because that

01:08:07.460 | concept of secrecy has been abused over the years by many abusers.

01:08:14.660 | Teach your children to deal with shame appropriately, not to hide it, but to confess it and speak

01:08:20.980 | to you about intimate, difficult things so that you can protect them from the predators

01:08:25.300 | and the perverts that surround them today.

01:08:27.340 | All right.

01:08:28.340 | Going on to a question from a listener.

01:08:29.340 | "Hey, Joshua.

01:08:30.340 | I seem to have terrible luck with being available for your Q&A times.

01:08:32.540 | I'll chat again soon."

01:08:33.620 | I did have one question for the show, if you're able to work it in.

01:08:36.420 | "My partner and I have been receiving a little less than $200,000 a year for about three

01:08:40.100 | years now for the sale of our business.

01:08:42.320 | We provided owner financing, and that note will pay off at the end of this year.

01:08:46.260 | Prior to that, we ran the business and basically just drew whatever we wanted out of it when

01:08:49.820 | we needed cash.

01:08:51.460 | Since the sale, we have basically been funding our life with the money that comes in and

01:08:55.700 | keeping our salaries completely separate.

01:08:58.180 | We maintain a joint account for bill pays and things like that, but have historically

01:09:01.580 | kept our savings separate.

01:09:02.940 | We're in our mid-30s.

01:09:04.620 | Net worth together is just over $2 million, and I earn about $200,000 full-time, and my

01:09:08.940 | partner earns $120,000 part-time.

01:09:11.860 | My question is, how would you recommend managing finances after the payments stop?

01:09:15.980 | And now that we do not enjoy a big cash slush fund from a profitable company that we ran,

01:09:20.380 | we've gotten pretty sloppy about doing things like budgeting or planning.

01:09:23.620 | We'd be curious if you have any thoughts on how to transition into a more structured expense

01:09:27.500 | and budgeting system after not doing that for more than 10 years."

01:09:32.140 | So great question, and I do.

01:09:34.740 | So very specifically, you don't need to budget so much as you need to put controls in place

01:09:41.620 | to make certain that you never overspend your income.

01:09:45.540 | So what would be an example of a perfect set of controls for you to put in place?

01:09:49.380 | Well, you would take your income, which would be your paychecks.

01:09:53.700 | When you receive your paycheck on Friday, you would take it down to the bank.

01:09:58.380 | You would cash that paycheck.

01:09:59.820 | You would put all of that physical cash in your pocket, and you would spend that.

01:10:04.120 | And if you needed to buy something, you would spend it out of the physical currency that's

01:10:07.440 | in your wallet.

01:10:08.700 | And if you ran out of currency in your wallet, you would stop buying things.

01:10:11.660 | That would be the perfect set of controls.

01:10:13.940 | Now obviously, none of us do that.

01:10:16.260 | No one does that in today's world, but we should.

01:10:19.500 | And if we're going to try to build a system, we want to get as close to that as possible.

01:10:23.740 | And the point here is that budgeting is not so important as it is not overspending.

01:10:29.320 | That's the basic thing.

01:10:31.100 | And what people often think of when it comes to budgeting is they often think of some form

01:10:35.380 | of tracking.

01:10:36.380 | Well, tracking is nice, but tracking is historic.

01:10:40.740 | Tracking means you can look back at the end of the month and you can figure out what you

01:10:43.340 | spent money on last month.

01:10:45.620 | That's less important than proactive controls.

01:10:49.640 | So the idea of budgeting is that you're going to sit down, you're going to figure out how

01:10:54.780 | much money is going to come in next month, you're going to put it all into various categories

01:10:58.840 | and buckets, and then you're going to take those categories and buckets and you're going

01:11:02.580 | to spend money out of them.

01:11:04.220 | But a lot of times this doesn't happen for most people because they just simply do too

01:11:09.940 | much.

01:11:10.940 | They've got too many things.

01:11:11.940 | Who wants to sit around and categorize expenses?

01:11:14.620 | Now you can use various software systems and things that help you make your buckets fancier

01:11:18.620 | and automatically categorize your transactions.

01:11:21.820 | I think that that's nice, but unnecessary.

01:11:24.860 | What is the most necessary is that you not overspend.

01:11:28.860 | So let me explain to you how you do that.

01:11:32.200 | Since you're not going to do the cash thing, you need to do the digital equivalent of that,

01:11:36.800 | which is to put your money into an account, a bank account, and then spend your money

01:11:40.740 | from that account.

01:11:42.720 | The first thing that you want to avoid is the use of a credit card.

01:11:46.720 | Why?

01:11:47.720 | Well, because a credit card makes it possible and easy for you to overspend by accident.

01:11:53.980 | You just kind of accidentally spend a little bit more than you intended to, and now you

01:11:57.840 | have to pay back thousands of dollars more to the credit card bill.

01:12:01.900 | There are good reasons to use a credit card.

01:12:04.560 | The most important one being the point of sale protection that you get for unauthorized

01:12:11.180 | expenses and fraud by using a credit card as compared to a debit card.

01:12:16.800 | That protection is useful and valuable.

01:12:21.240 | The problem with a debit card is not necessarily that you won't get your money back.

01:12:24.720 | Generally, your debit card issuer gives you good protections against fraud, but that your

01:12:30.320 | bank account might be wiped out in the meantime, whereas with a credit card, you can go back

01:12:34.500 | and settle things and deal with it.

01:12:37.380 | But I think you can fix this electronically and get rid of the risk of overspending.

01:12:42.120 | So what I teach people to do is to set up a system, usually that involves at least two

01:12:47.600 | checking accounts, and one checking account is your bills-paying checking account.

01:12:52.460 | Another checking account is your spending checking account.

01:12:55.120 | So imagine this.

01:12:56.120 | You have a paycheck that comes in.

01:12:57.440 | There's $15,000 in the paycheck.

01:13:00.040 | You take off the top the amount of money that you're going to save, go ahead and set aside

01:13:04.960 | whatever percent.

01:13:05.960 | Let's say you set aside $3,000 of it.

01:13:08.080 | That gets automatically put to savings, and you're left with $12,000.

01:13:12.160 | The $12,000 goes into checking account A. Checking account A is the account that you

01:13:17.160 | have your automatic bill pay set up.

01:13:19.340 | So all of your bills automatically draft to that checking account.

01:13:22.920 | Then you're going to take whatever's left over.

01:13:25.400 | Let's say you had $4,000 of bills, and you're left with $8,000.

01:13:30.680 | So now you take $8,000 and make a transfer to checking account B. Checking account B

01:13:37.360 | is the card that you spend money from based upon your actual point-of-sale transactions.

01:13:45.260 | And the idea is I want you to be able to pop open an app on your phone, look in your checking

01:13:49.020 | account, see how much money is in there, and then if there's money in there, go ahead and

01:13:53.060 | spend it.

01:13:54.060 | If there's not money in there, then stop spending money.

01:13:56.420 | And I want your card to bounce if you try to spend money that you don't have in there.

01:14:00.660 | And if you do that and just maintain a little buffer there, and you just say, "I never spend

01:14:04.620 | below $3,000," then pretty well you've solved the problem, and you've guaranteed that I'm

01:14:10.580 | not going to overspend, because I did my savings, and I just put the money from my income into

01:14:15.240 | the account.

01:14:16.240 | I'm not going to overspend.

01:14:17.460 | And then if you're just dealing with a small checking account that's just for expenses,

01:14:20.700 | then I think we can pretty well get rid of the worries about point-of-sale risk of a

01:14:25.320 | debit card versus a credit card.

01:14:26.860 | You're always going to run it as a credit card.

01:14:29.500 | Don't put your pin in.

01:14:30.500 | You're just going to run it as a credit card.

01:14:32.580 | And if somebody wiped out your account, well, you just lost your spending money until you

01:14:37.100 | can replenish it.

01:14:38.100 | That's a very low risk as compared to the much higher risk of you just overspending

01:14:46.960 | because you always use a credit card.

01:14:48.660 | So don't use credit cards.

01:14:49.920 | Don't spend on them.

01:14:50.920 | Too easy to overspend.

01:14:52.280 | Spend on a debit card that has a spending account associated with it, and then just

01:14:55.800 | skip the budgeting.

01:14:56.800 | If you're not into budgeting, skip it.

01:14:58.520 | But if you do that system that I described, you won't ever overspend, and you will basically

01:15:01.920 | have accomplished the goal of budgeting.

01:15:04.400 | You covered your bills with planning them out in advance, and all of your point-of-sale

01:15:08.220 | spending, the stuff that you do spontaneously, is all done with a card.

01:15:11.520 | And then finally, whenever possible, use Apple Pay or Google Pay instead of actually running

01:15:16.780 | the actual card because that additionally helps to protect you from fraud.

01:15:19.940 | So that would be my suggestion for you.

01:15:21.900 | The idea being don't try to force yourself to be someone you're not.

01:15:24.620 | If you're not the kind of guy who sits around and makes spreadsheets for fun, don't try

01:15:27.740 | to become the kind of guy who's going to make spreadsheets and just force himself to do

01:15:30.940 | it.

01:15:31.940 | You want to be the kind of guy instead who puts in place a simple system that protects

01:15:35.080 | him against overspending.

01:15:36.080 | That's it for today's Friday Q&A show.

01:15:37.080 | Thank you for listening.

01:15:38.080 | If you'd like to join me on next week's show, remember you can do that by going to patreon.com/radicalpersonalfinance.

01:15:42.080 | Patreon.com/radicalpersonalfinance.

01:15:43.080 | Sign up to support the show on Patreon, and that will gain access for you to one of these

01:15:48.480 | Friday Q&A shows.

01:15:49.840 | Have a great weekend, and I'll be back with you very soon.

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2024-08-09_Friday_QA