417-Friday_QA
00:00:00.000 | Hey parents, join the LA Kings on Saturday, November 25th for an unforgettable kids day
00:00:04.960 | presented by Pear Deck. Family fun, giveaways, and exciting Kings hockey awaits. Get your tickets
00:00:10.240 | now at lakings.com/promotions and create lasting memories with your little ones.
00:00:14.960 | Radical Personal Finance is sponsored by YNAB, the modern, up-to-date way for you to budget
00:00:19.680 | the money that's in your checking account and actually tell it where to go in a really
00:00:23.040 | convenient and remarkable fashion. Budgeting is so important if it's forward-looking. That's
00:00:28.400 | to the benefit of the old envelope system. But in today's world, when you spend on a
00:00:32.800 | checking account or on a credit card, how do you actually budget? The answer is YNAB. You should
00:00:38.400 | know that by now. Three 34-day trial. Try it out. See how it works. Make sure to take their training
00:00:43.280 | videos and learn how the program works. It's fantastic. I think if you aren't a budgeter,
00:00:48.480 | if you signed up YNAB, I can't prove this, but I bet you'll probably wind up with at least an
00:00:53.120 | extra thousand bucks at the end of the year, almost no matter who you are, if not more.
00:00:57.120 | RadicalPersonalFinance.com/YNAB. You need a budget. RadicalPersonalFinance.com/YNAB for a
00:01:03.840 | free 34-day trial. Also by Personal Capital. YNAB handles budgeting. Personal Capital does a great
00:01:09.760 | job with tracking and with also tracking investments. The way that I do it is I use
00:01:13.840 | Personal Capital for an overview of all of my accounts, and I use YNAB exclusively for budgeting
00:01:19.520 | the accounts that I'm going to spend money out of. Personal Capital is completely free.
00:01:26.480 | Comment on tomorrow's Saturday show. Tune in for a comment on the compensation model with Personal
00:01:31.840 | Capital. But for now, plan for Personal Capital for free at RadicalPersonalFinance.com/PersonalCapital
00:01:36.880 | and check back tomorrow for info on how they make money.
00:01:55.120 | (Music)
00:01:59.760 | Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge,
00:02:03.520 | skills, insight, and encouragement you need to live a rich and meaningful life now, while also
00:02:09.920 | building a plan for financial freedom in 10 years or less. My name is Joshua Sheets. I'm your host,
00:02:14.560 | and today I'm your answerer. Today is Friday. That means we do a Q&A call. I've got callers
00:02:20.000 | sitting here on the line live. It'll be, I guess, what, open mic Friday, something like that?
00:02:24.720 | For those of you who are new to the show, on Fridays, as much as I'm able to do it and around
00:02:37.200 | my travel schedule, basically every Friday we try to do, I have a live Q&A call. I pre-record
00:02:41.440 | these calls about a day or two early before Friday, but then they're released to you in the
00:02:46.240 | feed on Friday. On today's call, we're going to have a couple of callers calling in. I've got
00:02:52.160 | them waiting here on the line, and we're just going to go to the phones. It's basically my way
00:02:56.320 | to create similar to a live talk show, and I really enjoy this ability to speak to you and speak to
00:03:04.560 | you live. If you'd like to join on a Friday Q&A call, the best way to do it, or the only way to
00:03:10.080 | do that, is to become a patron of the show. The patron model is where you, if you find value for
00:03:15.600 | the content that I create and you'd like to support me and help me be able to continue to do it the
00:03:19.520 | way that I do it, if you find value in that, then go to radicalpersonalfinance.com/patron.
00:03:25.040 | Sign up as a patron of the show, and then I'll share with you the notifications and the call-in
00:03:32.160 | information so that you can join on one of these Friday Q&A calls. That's the basic concept of it.
00:03:37.600 | We'll go to the phones in just a second. If you'd also like access to me, so again,
00:03:41.040 | these patron calls are probably the most reliable way for you to do that at the moment. I have
00:03:45.200 | plenty of time to visit, but of course that does result in the public release of your question and
00:03:50.080 | of our conversation. So you might need to edit private details or something like that in order
00:03:54.720 | to make sure that you aren't overly exposing yourself on a public podcast. If you'd like to
00:03:59.600 | speak with me privately, that option is also available to you. You can book a private paid
00:04:04.400 | consulting call with me. Go to radicalpersonalfinance.com/phonecall. Again, radicalpersonalfinance.com/phonecall.
00:04:11.520 | That will forward you through to a page where if you'd like to set up a time to speak to me
00:04:15.280 | privately, just you and me for consulting, then that's a great way for you to do it. So if you
00:04:20.080 | enjoy my answers or the way that I approach the questions and the problems here on the show,
00:04:26.640 | then this would be the way for you to go ahead and to join there, would be to schedule a call
00:04:31.360 | at radicalpersonalfinance.com/phonecall. Finally, I don't take emails anymore in terms of private
00:04:37.360 | emails. I do read them, but I'm not able to respond to them. But what I would encourage you to do is
00:04:41.520 | if you'd like to give me feedback on a show, go by the show page and comment on the show page
00:04:46.160 | at radicalpersonalfinance.com. And then from time to time on many Saturdays throughout this year,
00:04:50.640 | I'll sit down and I'll take those comments and I'll make clarifications or answer your questions
00:04:54.960 | as well. So I encourage you to do those things. Final quick announcement before we go right to
00:05:01.680 | our first caller, who's David from Canada, in just a moment here. If you have not yet taken
00:05:06.800 | my demographic survey, could you please do me a favor and just go to radicalpersonalfinance.com/survey
00:05:11.600 | and it'll take you just about, literally about 20 seconds. It's about a six question demographic
00:05:18.080 | survey. You put in your age. I can't even remember all the questions. It's six seconds,
00:05:23.600 | six questions, about 20 seconds worth. It's anonymous. There's an option on there to put
00:05:29.040 | your email address in there. You can put it in or not put it in. I don't care. But just put it,
00:05:33.280 | fill in the information there on that survey. That'd be super helpful. As I'm bringing new
00:05:37.600 | advertisers onto Radical Personal Finance, I need to have some sort of demographic data to be able
00:05:42.080 | to share with them who you are, who you, my listener is. And that'd be very helpful to me.
00:05:47.280 | You can do it right on your phone. There's a link in the show notes for today's show,
00:05:50.320 | which shows up on your podcatcher, whatever podcatcher you're using, whether that's
00:05:54.240 | the Apple Podcasts app or any of the rest of them. Just click on it, click on the description. You'll
00:05:59.280 | see a link that will forward you through or just type it in straight on your phone or on
00:06:02.960 | your computer at radicalpersonalfinance.com/survey. All right, announcements out of the way. First
00:06:08.800 | caller, let's go to David in Canada. Welcome to Radical Personal Finance. How can I serve you
00:06:13.680 | today, David? Well, thank you so much, Joshua. I am very excited to be on the call. Your podcast
00:06:21.040 | has shaped and directed a lot of my financial independence thinking over the last couple of
00:06:26.320 | years and definitely helped me in a number of areas and I really appreciate it. So I've only
00:06:30.960 | recently joined as a patron and will hopefully be there for many years because it's definitely
00:06:36.160 | worthwhile for me. Awesome. So here's my question. I've been following the Dave Ramsey plan and I'm
00:06:43.920 | through baby step three, which is build up your emergency fund. So I've paid off all my non-real
00:06:48.480 | estate debt and I've built up an emergency fund and now I'm trying to decide what to do next.
00:06:52.720 | According to his plan, it would be, you know, focus in and pay off my house essentially.
00:06:58.000 | And I'm open to that idea. My wife is excited on that idea. Her security,
00:07:04.960 | she would feel much more secure if we do that. And I think it's a good idea, but I wanted,
00:07:11.920 | you've often had a different angle on a lot of things. And so I wanted to hear your thoughts.
00:07:15.920 | Basically, what I've got is I work a nine to five job. I've also got six rental properties and I've
00:07:22.560 | also got a cleaning company that runs. I don't do the cleaning, but I'm an owner in it. And so I'm
00:07:29.520 | just trying to decide where to focus, sort of maintain the intensity I've had over the last year
00:07:35.600 | and where to focus my efforts and finances. Recently I've heard you talk about the idea of
00:07:42.800 | having a significant amount of money in the bank, just as what that does in your spirit, just to have
00:07:49.440 | breathing room. And so I just, I don't know, do you have a thought on that or should I provide
00:07:53.520 | some more info? Absolutely. Well, first let me just clarify for those who are familiar with Dave
00:07:58.160 | Ramsey's baby steps. So again, Dave Ramsey, uber popular personal finance pundit and teacher. And
00:08:03.840 | so his seven baby steps, step one is to save a thousand dollars cash. Step two is to pay off
00:08:09.760 | all the debt, except your mortgage debt on your own personal residence, or possibly as you mentioned,
00:08:17.920 | possibly a mortgage on an investment portfolio. Step three is to fund an emergency fund with
00:08:24.080 | three to six months worth of expenses. And then step four is not pay off home. Step four is to
00:08:29.040 | invest 15% of your income for retirement. Then his step five is save money into ESAs or five to nine
00:08:37.840 | plans for college. Step six is to pay off the home early. And then step seven is kind of,
00:08:42.640 | doesn't really mean anything, get rich and give money. And I don't know what step seven is.
00:08:46.720 | So basically you've done all this stuff. So you said that you're considering paying off your home
00:08:52.000 | early. You didn't mention retirement. Was there a reason that you went straight to paying off your
00:08:56.240 | home? Well, I do have the retirement steps in place according to that plan. I mean, at this
00:09:02.560 | point it's 15%. Once your home's paid off, you step that up according to his plan. And I do have
00:09:07.200 | that in place as well. And also I've got five kids. So children's education is a fairly high
00:09:15.120 | priority in our home. And those I don't feel like I have as much of a question about. I feel like
00:09:20.960 | I've got a fairly good plan on that. In fact, when your episode to a 13 year old, my daughter
00:09:27.680 | lashed right onto that and has been researching CLEP and a number of other options to mitigate
00:09:33.120 | the cost of college. So I feel like I'm good on those fronts. But what I'm wondering is,
00:09:42.960 | I know you mentioned when you had a home, you felt like the amount you put in a down payment
00:09:50.240 | ended up tying your hands later on. Yes. Yes. Okay. So I just wanted to be clear on that
00:09:55.600 | simply because you had jumped right to a question on paying off home, but you said you were through
00:09:59.120 | his baby step three. So there are a couple of ways to approach this. First of all,
00:10:04.720 | why would you focus intensely on paying off your home?
00:10:09.280 | The idea of not having that payment, which in Canada, we can't even write off the interest on
00:10:18.080 | our personal home. So there's really no, even the argument that those make about having an interest,
00:10:25.040 | you can write that off against taxes. In Canada, we can't on our personal residence,
00:10:29.440 | only on investment properties. So there's really not, I can't find any much value in carrying a
00:10:36.000 | mortgage other than I've got that, I don't have all the cash tied up in the personal residence.
00:10:43.680 | I run as the financial arm of the business. So when the business needs money, I front it. We
00:10:52.080 | try to run the business without debt. And as it continues to grow, there's going to be a continuing
00:10:58.160 | need for me to have money to inject at different times in that business. And so I'm just trying to
00:11:03.760 | figure out if I need to, what's that really just whether to focus in on getting the mortgage paid
00:11:11.200 | off or whether I should also be building up a larger cash reserve. Okay, so that's why you
00:11:20.240 | would. Now, why wouldn't you focus heavily on paying off the mortgage? What would you do instead?
00:11:26.640 | Why wouldn't you choose to do that? That's a great question. Why would I not pay off the mortgage? I
00:11:37.920 | mean, I'm basically sold on the idea of paying off the mortgage and just wanted to get a second,
00:11:44.400 | get another opinion before I commit into that process. But can you think of any reasons why
00:11:52.960 | you wouldn't? Well, I mean, you know, keeping, I mean, I can build up cash on the outside and
00:12:00.480 | use that to grow a business. That would be a reason not to to immediately pay it off until,
00:12:05.760 | you know, the business reaches a whatever size within that. But other than that, I can't find
00:12:12.400 | a lot of good reasons to keep paying interest to the bank. So sounds to me like that. You answer
00:12:18.000 | your question then. And I'm not being a smart aleck when I say it that way. What I'm trying to
00:12:23.280 | get at is the specifics of your situation, why you would and why you wouldn't. And the answers to
00:12:33.200 | that question will determine what you should do, not somebody else's philosophy or framework or
00:12:41.520 | plan. Simple example. If you all of a sudden, let's say you have this excess money, but then
00:12:47.200 | if all of a sudden one of your children was injured in a horrible accident and you all of a
00:12:52.240 | sudden needed lots of extra money for medical bills, you would immediately stop paying extra
00:12:57.440 | on your mortgage and you would allocate that money towards the care of your child because you have a
00:13:02.240 | more important use for the money than paying down the mortgage quickly. That's just an example to
00:13:09.600 | prove the point that whether you should pay the mortgage off or not is primarily based upon
00:13:15.200 | whether you have a better use for the money. Now, I am 100% in favor of paying off all debt,
00:13:25.520 | and especially a personal mortgage, because when I look at the amount of peace and rest that that
00:13:35.120 | can bring to a family's finances, I see that as having a tremendous benefit, especially if you
00:13:42.000 | are in the stage where that's very valuable to you, meaning you're still working. What ages are
00:13:47.520 | your children? - We have one-year-old twins, and then the other three are eight, nine, and 12.
00:13:53.920 | - So at this stage of this one to 12 years old, having something like a paid-off mortgage would
00:14:00.880 | be extremely valuable to you. It would possibly open up opportunities for you to pull back if
00:14:06.240 | you wanted to pull back on your nine to five. It would bring a tremendous amount of peace to your
00:14:10.320 | wife. It would help her to feel much more confident and just at rest and secure, which could do wonders
00:14:16.480 | for your marriage and for your family life. It can free up some of your time and some of your
00:14:20.720 | expenses to be able just simply to pay out of your income for the expenses that your children need.
00:14:26.560 | If you didn't have a mortgage payment each month, you would be able to more easily write a check for
00:14:31.120 | football uniforms or ballet classes or write a check and take your children on nice experiences.
00:14:39.680 | If you know that you've accomplished those basic goals, hey, you're saving for retirement,
00:14:44.160 | if you're saving for retirement, you have your house paid off, you won't feel guilty about
00:14:49.520 | spending lots of money on your children, on great experiences. And I think that's something that is
00:14:53.760 | very, very important. During this stage of your parenting with children from one to 12,
00:14:58.640 | spending more money on them will be much more valuable than down the road. So it's better to
00:15:05.360 | figure out a plan where you can spend the money on them now, on experiences and the things that
00:15:10.000 | will really help them than you to just to be richer at 80 years old when they're grown and
00:15:14.960 | gone and on their own. So I can see a lot of arguments for paying off the mortgage. And I
00:15:19.360 | think that's a fantastic purpose. It's a fantastic goal to have, and it can bring tremendous benefits
00:15:26.960 | to your life. Now, the only reason why you wouldn't pay off the mortgage is if you had a
00:15:31.760 | better use for the money. And so you can do that in a financial calculation. The simple example
00:15:38.000 | would be in terms of the benefit, the cost of the financing versus the potential return of other
00:15:44.400 | investments. What is the current rate on your mortgage? Well, I am up around almost 4 percent,
00:15:53.840 | although that should be I'll be refinancing that in the next year. Okay. And you think you get
00:15:58.080 | below 4 percent if you were to refinance? Oh, absolutely. Yeah. I got to complete this term
00:16:02.880 | and then I'll be able to. Yeah. Okay. So if you look at 4 percent now, as you mentioned, in Canada,
00:16:08.160 | you don't have the deductibility of the interest. And all that that does is it just changes the
00:16:13.760 | actual cost of the interest for some U.S. Americans. So if there is a U.S. American who's
00:16:19.680 | listening to this and they do have the and we still have the home mortgage interest deduction,
00:16:25.920 | which is possible that it might go away in this next year with the forthcoming tax law changes.
00:16:31.040 | We don't know yet, but there are bills and suggestions sitting in committee right now in
00:16:36.480 | the Congress here in the United States that could result in that tax law being changed. And if your
00:16:42.960 | tax situation is such that you can benefit from itemizing that mortgage interest deduction,
00:16:48.000 | all that does is it cuts the net cost of the interest a little bit. So let's just say it
00:16:51.600 | cuts it from 4 percent to 3 percent. Well, you do the same exact calculation. You just factor that
00:16:56.640 | tax savings in. And this is one of my biggest pet peeves, is that when people recognize, oh,
00:17:01.440 | my mortgage interest is deductible, they pretend that that means that there's no cost to it. Well,
00:17:06.320 | there still is a cost. It just means you have to adjust the nominal interest rate, which would be
00:17:11.760 | 4 percent. You have to just the nominal interest rate by the value of the tax deduction in order
00:17:18.240 | to get your real interest rate. In my simple example, it would be 3 percent because of the
00:17:22.560 | value of the tax deduction. And then you would use that and compare it. So, David, for you,
00:17:27.280 | what you look at and if you're doing the financial analysis is you need to look at your life and your
00:17:31.280 | situation and say, do I have a place to invest this money that would get me in excess of 4 percent?
00:17:38.640 | So let me ask you that question. Is there a place in your life that if you just simply took the
00:17:44.080 | money that you would spend on paying off the mortgage and put it somewhere else that you could
00:17:48.400 | get a simple and easy and reliable rate of return that's in excess of 4 percent?
00:17:53.040 | There's lots of theoretical, but nothing that's going to be a guaranteed return.
00:18:00.640 | How about your rental portfolio? Do you have mortgages on your rental portfolio
00:18:03.440 | that are higher than 4 percent? Actually, all my rentals are lower. I had to do a little
00:18:08.960 | finagling to get the mortgage on the personal property because of the complications of the
00:18:14.080 | mortgages on the rental properties. So it was less than ideal terms when I got this house.
00:18:19.200 | So it's probably my weakest mortgage and most expensive in terms of interest.
00:18:24.160 | Okay. So that's tilting the favor very highly in terms of paying off the mortgage.
00:18:29.840 | If you don't have a reliable place where you could invest the money with a very high degree
00:18:34.960 | of confidence of earning in excess of 4 percent, given your investments, given your investing
00:18:41.040 | acumen, given your comfort, then that tilts the decision highly in favor of paying off the
00:18:46.480 | mortgage. Now, the reason I ask about the rental properties is because for most people, you can get
00:18:50.880 | a much lower rate of interest on your personal residence versus any mortgages or debt that you're
00:18:58.640 | servicing on a rental portfolio. And so in that circumstance, if you have what would be common
00:19:06.240 | in the United States here is that somebody has a 4 percent mortgage on their personal residence,
00:19:12.160 | but they're paying a 7 percent mortgage on a rental property. So in that case, I would
00:19:15.920 | seriously consider paying off the rental properties before paying off the personal
00:19:20.080 | mortgage. But if your situation doesn't say that, then that's another mark in favor of
00:19:24.720 | the personal residence. Now, the only other so you want to answer the financial question,
00:19:29.040 | which you've answered satisfactorily for now, if you come and think of it later,
00:19:32.400 | then you want to look at that. You want to think of it and ask yourself that question again. And
00:19:38.480 | if you come up with something that's better, you need to seriously consider that. So then the only
00:19:42.240 | other couple of questions you would ask yourself is ignoring the financial. Is there a place that
00:19:48.240 | you can invest the money that has a much higher potential in business? So as an example, do you
00:19:55.360 | have any interest in leaving your nine to five jobs in order nine to five job in order to be a
00:19:59.840 | full time real estate investor and or businessman? That is something I've been wrestling with. I have
00:20:06.960 | an entrepreneurial bent and definitely an interest there. I have been remaining with my current
00:20:15.760 | employer. I wouldn't say solely, but in large part because I feel we'll say a calling to remain
00:20:24.320 | there in this season until. As as a ministry field for myself, until I hear otherwise from
00:20:34.240 | from the Lord, we'll say. Sure, absolutely. And that's a very reasonable that's a very
00:20:39.520 | reasonable approach. So in that kind of circumstance, then you're basically in a
00:20:43.120 | holding pattern. You feel a burden to be where you are. You don't feel any freedom to go from
00:20:48.880 | there to something else. So you're not going to make active steps to leave because it's not just
00:20:54.640 | a matter of an intellectual. Well, I want to do this other thing. In many ways, I am in similar.
00:21:00.000 | I'm in a very similar situation in some areas of my own life where there are things that if I were
00:21:04.320 | just choosing, I would say, well, I would like to do this, but I don't feel a freedom to do that.
00:21:08.640 | And so I consciously choose to suppress and subject my own will so that I can move in faith
00:21:14.400 | in the things that I do. So in that situation, then you would just consider, well, should I be
00:21:19.040 | making preparation? Should you be making preparation for possibly changing or is there something else
00:21:24.960 | that you can do that would change? Now, here's let me tell you why I'm going on this line of
00:21:28.560 | thinking. The reason I'm going on this line of thinking is so that you could consider and say,
00:21:34.880 | conference unlocked. Sorry about that. Just lost a couple of callers and I wanted to unlock it so
00:21:39.280 | they could get back in. The reason I go on that line of thinking is to emphasize that sometimes
00:21:46.560 | there might be if you were preparing to leave your job, let's say that you said, well, I'm doing this
00:21:51.760 | job, but I don't want to continue. I'm not going to continue this job forever. And I want to be
00:21:59.840 | able to switch. Well, now if you look at your cashflow situation, you might need to invest the
00:22:06.080 | money into your business. Perhaps you can purchase a little bit of advertising to bring on a few more
00:22:11.920 | accounts that would dramatically increase your cashflow. Or perhaps you look at some of your
00:22:17.520 | rental properties and say, well, if I pay off this mortgage here, then I can refinance this other one
00:22:22.720 | and then I can improve my cashflow situation. Because sometimes paying off a mortgage,
00:22:26.960 | especially if it's something like a low interest rate, fixed, low interest, fixed rate mortgage
00:22:32.400 | over a long term, paying it off doesn't buy you much additional cashflow. And so if it doesn't
00:22:37.520 | buy you much additional cashflow, then sometimes you would have to make a different decision to
00:22:41.600 | get you more cashflow. So consider that. And then the final area of consideration is just simply,
00:22:46.560 | is there a way in which your life would be improved from a safety perspective or from a lifestyle
00:22:53.440 | perspective with using this money in something, even if it's not the financially correct thing
00:22:58.560 | to do? And my example there is to say, would this be better served? Is there a better use for this
00:23:07.520 | that if you bought a little vacation property or if you used it on some need that your family has,
00:23:12.880 | does that bring you more value than paying off the mortgage? After listening to you,
00:23:16.720 | I doubt that it is. It sounds to me like the right decision for you is to focus heavily and aggressively
00:23:23.280 | on paying off the mortgage. Now, if you did do that under your current assumptions, how long
00:23:28.320 | do you think it would take you in order to be able to clear that mortgage debt? It'll depend on the
00:23:35.200 | rate of growth of the business, because I've basically got that business. I can focus 100%
00:23:41.040 | of the income from that business on whatever the goal is. So I mean, my income there is about two
00:23:48.240 | grand a month right now. Plus, I can pull some from the personal. And it seems to be growing.
00:23:55.360 | So I expect that I'd be able to pay it off in probably, it might be five years, but I'd like
00:24:00.480 | to be less. What's the current balance of the mortgage? One, but 160. And what's the value of
00:24:08.560 | the house? Around 250. Okay. So yeah, if you've got a plan there, you just look at each amount
00:24:16.240 | of money and say, is there a way that I can get a higher return from the business? And that's where
00:24:20.240 | you've heard me say in past episodes, but I will repeat for you. I think there is a lot of value
00:24:26.320 | of accumulating the money. Instead of just chunking, let's say you have an extra $2,000 a
00:24:33.440 | month, instead of just chunking the $2,000 every month towards the mortgage, I think there's a
00:24:38.160 | huge amount of value of accumulating that outside of just in a separate checking account or savings
00:24:45.200 | account and planning to in the future, just write a check for the whole thing. That's probably the
00:24:50.320 | biggest thing that I didn't realize in the past was how valuable it was to have lots of excess
00:24:55.200 | money, just simply sitting in a checking account. Especially if I were in your shoes, where I knew
00:25:00.080 | that there was a possibility that I might want to leave this nine to five job in the future.
00:25:04.880 | And if I knew that I'm trying to work on this business, I think I would prioritize setting as
00:25:09.520 | much excess money aside in just a savings account and not throw an extra $2,000 a month at the
00:25:15.440 | mortgage. That way I would be able to have the cash. It would be liquid for me to make investments
00:25:20.960 | into my business. And in the future, I can lower down the mortgage balance. The point of that is
00:25:27.440 | to show that there is no difference in terms of a risk profile, which most people want to pay down
00:25:34.080 | the mortgage because it lowers the risk of their life, bring security. If you have a $160,000
00:25:40.080 | mortgage, and let's fast forward at the end of two years from now, you've succeeded in putting
00:25:45.840 | aside a total of $48,000 towards that mortgage. So now you've dropped your mortgage balance from
00:25:53.520 | 160 to $112,000. And then you get laid off. There's a big recession, you get laid off and
00:26:00.000 | you lose your job. In that circumstance, you're no safer than you were of having a $160,000 mortgage
00:26:07.280 | because you just have the standard monthly payment. Now, if you had done what I recommend,
00:26:11.600 | which is to put that $48,000 aside into a savings account, and you get laid off, well, now you're
00:26:19.440 | much safer because $48,000, let's say that your standard monthly payment is $1,000, $48,000 in
00:26:26.400 | the bank, even though you may still have $160,000 mortgage, that $48,000 buys you 48 months of
00:26:34.400 | mortgage payments. And so you're much safer having the money aside. That assumes that you don't spend
00:26:39.600 | the money. And that also assumes that you're able to maintain as high of a psychological motivation
00:26:45.120 | towards that goal. And that is actually what I see the biggest weakness in my suggestion,
00:26:50.960 | is for many people, when they can look at that statement every month, and I've been in this too,
00:26:55.120 | when I had a mortgage and when I was prepaying extra, it's very exciting to stay very focused
00:27:01.040 | on that goal when you can see the numbers dropping substantially. And so that keeps that intense
00:27:08.000 | emotional focus there for the family, for us to lower expenses in other places, because you can
00:27:12.800 | see it going down. So you have to judge for yourself, will it be psychologically motivating
00:27:17.680 | for you and for your wife to keep your expenses low so that you can get this mortgage cleared as
00:27:21.920 | quickly as possible? Because perhaps with this psychological motivation, you can have the whole
00:27:26.000 | thing gone in three years, just because you're very, very laser focused on it. And you're imagining,
00:27:30.240 | well, at that point in time, I have a 15 year old, I have some three year olds and children in
00:27:33.680 | between, we'll have that mortgage payment gone and we'll be totally free and available. You have to
00:27:39.840 | decide that. I don't know of any way to give you advice. It's a matter of what you would find to be
00:27:44.000 | psychologically motivating. Absolutely. Thank you very much. That very much gives me,
00:27:50.880 | that's exactly the type of answer I was looking for of something that sort of approaches from a
00:27:55.920 | different angle than I was thinking. And so I appreciate that. We'll have to listen back through
00:28:01.040 | it with my wife and see what we can come up with. Absolutely. Thanks for calling in. Let's go next
00:28:05.360 | to Ursula in Hawaii. Ursula, welcome to Radical Personal Finance. How can I serve you? Hi, Josh.
00:28:11.520 | I am a long time listener, first time caller. It feels so strange for me to hear people say that,
00:28:16.800 | because that's always the thing you hear on talk radio. And it's so funny, but it's on my own show.
00:28:21.840 | So thank you for saying that. It's just so funny to me. Welcome. Thank you. So
00:28:27.520 | my husband and I are originally from California. And we have relocated to Hawaii because he found
00:28:36.720 | a job. We have a young eight month old. He is the best thing in our lives. But he kind of came to
00:28:44.960 | us as a surprise. And I'm in graduate school. It's still in California. And I've been going
00:28:51.440 | back and forth with a young baby that's really hard on our family. It's really hard for my
00:28:58.800 | husband to be apart from him for such a long period of time. In fact, I'm going back tomorrow
00:29:02.880 | to finish another semester. We did that last semester. And this semester, he got the job
00:29:08.400 | here last semester. And basically, I wish I had found a show earlier, because instead of going
00:29:13.920 | to graduate school, I would have probably just kept working and saved my money. But so the problem,
00:29:22.720 | well, I guess it is a problem. What's going on? I'm sorry, I'm so nervous. No problem.
00:29:29.440 | So I have, so I'm doing a master's in speech and language pathology, which requires an internship
00:29:42.960 | as well. And as I told you, I'm going back and forth between Hawaii and California. And
00:29:48.800 | my program is, there's a lot of hurdles to jump in order for me to do my internship here. So after
00:29:56.000 | the semester, I'll be done with all my classes, but I won't be able to do my internship. And so
00:30:00.240 | I kind of feel like I don't really have, well, where I'm going with this is that
00:30:09.600 | I really admire your show and I'm rambling. Oh my gosh. Okay. I got to stop. You're going to,
00:30:14.800 | are you going to ask a question? Is pathology, is speech and language pathology, is that
00:30:19.760 | where you're treating children or people who have speech impediments or problems? Or does
00:30:26.640 | pathology mean something different? What is speech and language? No, that's exactly it.
00:30:31.280 | So you treat children and adults that have speech and language issues. So children who
00:30:39.280 | have developmental disabilities and also adults who have had strokes or have some kind of
00:30:45.440 | degenerative condition or some type of traumatic brain injury. And how close are you to finishing
00:30:52.080 | your coursework? So my coursework will actually be done this semester. Like I said, I'll be going
00:30:58.720 | back and forth to finish up my classes. And, but I will need, I still have three more semesters
00:31:06.480 | of an internship to do. And why is it so difficult to find internships in Hawaii? Is there not
00:31:13.120 | the need for therapy? Is there, are there not a lot of other practitioners there?
00:31:18.320 | No, there are. It's just that my program is very specific about the place where I'm going to be
00:31:24.320 | doing my internship. And there's also, there's also the fact that they need their own supervisors
00:31:34.880 | to supervise me, you know? Sure, sure. And they need to come to the clinic site. But basically,
00:31:41.120 | I am very fortunate to be able to mostly stay at home with our son, with the exception of going
00:31:47.920 | to school a couple of days a week. And California is easier for us because we actually have family
00:31:52.560 | members that help with him. Whereas I wouldn't be able to do this here if I was doing my internship,
00:31:58.640 | I'd have to find something on the weekend. But I would like to do, I have some ideas of
00:32:04.720 | about some lifestyle businesses, you know, like how you started your podcast.
00:32:10.640 | I have some ideas about, you know, with my background, about what I can do. And the
00:32:17.200 | information I get online is just so overwhelming, because there's so much great things and so many,
00:32:22.720 | it's so much crap that's out there. Oh, yeah. But so I, like I said, I really admire your show and
00:32:29.120 | admire what you do and admire how you've been helping people. You certainly have helped me and
00:32:34.240 | give me some food for thought, even though I'm not at a point where I can actually implement
00:32:38.480 | some of the strategies you talk about. But I just I'm wondering about your
00:32:42.720 | creative process. And I know you've talked about in the show, how you prepared yourself to be in
00:32:51.200 | the position that you're in. And you had to like have a transition job for a little bit,
00:32:55.440 | because you're supporting your family. But in any case, I'd like to know more about that.
00:33:02.160 | Maybe I can make a decision about whether I'll stay here for a few years and work on that and
00:33:08.000 | then move back to California to finish my program down the road. Yeah, I'd be happy to tell you
00:33:12.640 | about that and give you some advice. With your permission, let me ask you just a couple questions
00:33:16.880 | about the California program. So your son is this is your first child for you and your husband?
00:33:23.040 | Yes. And so you were hoping to have children, but he came earlier than you planned. You were
00:33:29.520 | working towards finishing school, and then he showed up as a surprise. Is that accurate?
00:33:33.680 | That's accurate. Yeah. Okay. Now, if you given the fact that he's there,
00:33:38.400 | has that affected your career plans? Yeah, it has. I have always thought that I would
00:33:48.640 | stay at home with the children once I had them. But in my mind, I would have finished school,
00:33:53.680 | worked for a year, and then stay at home for the first five and figure it out from there. But that
00:33:59.520 | was something that I always was able to do. I always wanted to do, I'm sorry. And I'm very
00:34:05.200 | fortunate that my husband is in a position that we can actually do that now. And since he's come,
00:34:11.120 | I would much rather not have to be in a position where I have to leave somewhere to go to work,
00:34:17.920 | especially being in Hawaii where I don't know anyone and leaving him with strangers.
00:34:22.640 | Is there any pressure, for example, from your parents or from other people? Is there any
00:34:30.320 | pressure as to why you need to finish your master's degree? Or if you do need to finish it,
00:34:35.040 | why you need to finish it on a certain time schedule? Yes. So there's several reasons why
00:34:41.680 | I'd like to finish my master's degree. There's certainly pressure, mostly because I've already
00:34:48.000 | I've already invested so much into it financially and also time-wise that I feel like,
00:34:55.040 | and it's also such a competitive program. I'm in such a fortunate position to be able to have
00:35:00.640 | gotten into it that I just kind of feel like it would be a waste if I didn't finish because I
00:35:07.120 | was given this opportunity. How much money and time have you invested into your master's degree?
00:35:15.280 | So far, I have invested about, I want to say, $22,000.
00:35:23.360 | And how much money and time remains for you to be able to finish your master's degree?
00:35:28.640 | Well, so there's currently at this point, there's two years, one semester of classes,
00:35:35.600 | which is just coming up and then three of internships and probably another
00:35:43.520 | five, 10 grants. So let's first talk about that. I am a heretic when it comes to the modern kind
00:35:54.640 | of standardized acceptance of certain things, but I'm also not an irrational heretic. I recognize
00:36:00.400 | that you do need to consider the amount of time that you've invested. The first thing that I
00:36:05.520 | encourage people to do is to always practice what's called zero-based thinking, which means
00:36:13.040 | the answer to this question. Knowing what I now know, if I had to do it over again,
00:36:18.320 | is there anything that I would do differently? So let me ask you the question. Knowing what you
00:36:23.120 | now know, knowing that you're living in Hawaii and knowing that you have an eight-month-old son,
00:36:27.600 | if you were going to do everything over again, is there anything that you would do differently than
00:36:32.400 | what you've done or what you're doing currently? Yes. What would you do differently?
00:36:40.400 | Well, for one, you mean would I have done differently or would I be doing something
00:36:48.240 | different currently? You can answer whichever one you prefer. So yeah, I mean, knowing what I know
00:36:54.560 | now, I probably wouldn't have started the Masters. I would have worked at that point and saved money
00:37:03.200 | and that's probably what I would have done. Now, if you wouldn't have started the Masters,
00:37:11.920 | why? What's changed between when you started it and today that causes you to say, "Well,
00:37:16.640 | three years ago I really said this is important. I want to start the Masters, but today I don't."
00:37:21.360 | What's different for you? It's the time commitment that I have to put towards the Masters and also
00:37:32.800 | the monetary commitment because both take away from me being able to spend time with my son.
00:37:39.680 | Having spent that money, obviously, not obviously, but I had to get loans to do the program and then
00:37:44.960 | I have to pay them back. And so that would take time to clear up and also the actual time that I
00:37:50.400 | have to invest in studying, going to class, and commuting to and from school. Does this Masters
00:37:56.880 | degree, is it primarily oriented around preparing you for a career in speech and language pathology?
00:38:02.960 | Yes. Or is it primarily related to the career?
00:38:06.000 | Yes. Do you have any interest now that your son is here,
00:38:10.480 | do you have any interest in pursuing this career aggressively or have your interests changed?
00:38:15.840 | No, I don't have any interest in pursuing it aggressively. Once I finished the program,
00:38:23.280 | my idea was to work very part-time and just as little as possible to meet our financial goals.
00:38:32.880 | Right. So let me just kind of give you some ideas, some things to think about
00:38:37.440 | around the concept of zero-based thinking. I won't be able to give you any answer, nor should I,
00:38:42.720 | because the answers are going to be intensely personal, but I can at least give you a few
00:38:46.480 | ideas and some things to think about. Zero-based thinking is an incredibly valuable thing to
00:38:52.560 | consider and it's very hard to consider. Zero-based thinking is also closely wrapped up with the
00:38:59.360 | concept of what's known as the sunk cost fallacy. And so this comes from the world of accounting,
00:39:03.920 | and it goes something like this. It says basically, well, in accounting, if we've spent money on
00:39:10.880 | something and it's not working very well, we need to continue spending more money on it.
00:39:16.400 | The idea is we invested, we had this new program for our business and for our company. We thought
00:39:22.000 | that if we could go ahead and launch this thing, it would do really well. So we've invested $50,000
00:39:28.400 | into it over the last few years. Now, things have changed and we look at it now and we say this new
00:39:33.680 | program for our company is not a good use of money. It's not going to result in a win. So the
00:39:40.000 | question is, what do we do now? Well, because we've spent $50,000 on it, it's very easy to look at
00:39:45.280 | that and say, I've got to get something out of this. I've got to make this work. And so we want
00:39:50.160 | to put more money into it. But this is a fallacy. And the reason it's a fallacy is because the $50,000
00:39:55.120 | is gone. It's been spent. It's a sunk cost. There's no way to get it back. And so today,
00:40:01.840 | what we need to do is we need to start with a fresh decision and say, today, if we were knowing
00:40:06.960 | what we now know, if we were going to do this over again, would we put more money into it?
00:40:11.120 | That's got to be the question that we answer. If the answer is yes, then we go ahead and continue
00:40:15.760 | to pursue it. If the answer is no, then we should look to say, how can we end this program? And how
00:40:21.600 | do we get out as quickly as possible? So in investments, this is where you see this a lot,
00:40:27.600 | where an investor, let's say an investor is buying stocks in various companies. It's so easy for an
00:40:33.040 | investor to look at an investment that they have made and say, well, I've already invested this
00:40:37.440 | amount of money into this investment. And because I've invested this amount of money into it,
00:40:42.320 | I want to make sure that I get the full benefit out of my investment. So because I want to get
00:40:48.720 | the full benefit out of my investment, I've got to keep going. I've got to hold this,
00:40:52.080 | even though it's losing. Skilled and experienced investors have learned to come against this.
00:40:56.960 | You don't chase your losers. You don't put more good money after bad. You cut your losses. You
00:41:02.960 | say, oh, well, I lost money there, and I move on. So when we bring it over from-- in the world of
00:41:08.800 | finance, it's simple and it's relatively straightforward. When we bring it over from
00:41:12.480 | the world of finance and we start to look at our personal lives, it's much more difficult.
00:41:17.040 | But the concept still should be applied. And so that question that you ask yourself,
00:41:21.600 | which I learned years ago from Brian Tracy, is so phenomenal. It's something that should be
00:41:25.520 | asked about every single area of life, at your job. Knowing what I now know,
00:41:30.640 | if I were going to take this job, would I do it again? If the answer to that is yes,
00:41:37.200 | then you know you're on the right track. Yes, I would take this job again. If the answer is no,
00:41:41.520 | then what you immediately start doing is you say, well, if I wouldn't take this over again,
00:41:45.840 | I shouldn't have it now. So how do I get out? How quickly can I get out? And what's the cheapest way
00:41:50.880 | for me to get out? It might be as simple as looking for another job. It might be as simple
00:41:55.600 | as looking and saying, well, let me go and switch within my company. You just look to change the
00:42:00.640 | situation. If you have an employee, knowing what you now know about this employee that you've
00:42:05.360 | hired, if I were going to hire them over again, would I do it? If the answer is yes, great. If
00:42:10.720 | the answer is no, you should immediately look into saying either, how do I change things so
00:42:16.160 | that the answer is yes, or most likely, how do I fire this employee as quickly and as simply as
00:42:21.680 | possible so that I can get something else in? The reason this is so important is because we all have
00:42:27.200 | a limited amount of time, a limited amount of money, and a limited amount of resources. And
00:42:31.760 | if we hang on to things that are not in our own personal best interest, then it keeps us from
00:42:37.040 | pursuing something that's better. So if we stay in a job that's only mediocre, that keeps us from
00:42:43.280 | pursuing a job that's perfect or that's ideal. If we stay in an investment that's mediocre,
00:42:49.200 | that keeps us from pursuing an investment that's fantastic. If we keep an employee that's mediocre,
00:42:55.440 | that keeps us from bringing in an employee that's fantastic. And so it's very important to always
00:43:01.200 | look at every aspect of our lives and to say, "Okay, knowing what I now know, if I were going
00:43:06.640 | to do this over again, is there anything that I would do differently?" And listen to those answers
00:43:11.840 | and again, start to make the changes. Now, let's bring it over to the question of education,
00:43:15.840 | careers, et cetera. You now have new information that you didn't have three years ago. Three years
00:43:22.240 | ago, you thought you had plan A, and today you have new information, you have a new plan. So
00:43:27.760 | when you have new information and you have a new plan, you have to sit down and you have to say,
00:43:32.160 | "Well, maybe I should make some changes." Now, the trouble with this, especially in this area for you
00:43:38.320 | is that this area that you're facing challenges in covers so many deep questions and deep concerns,
00:43:45.920 | and it's not just a matter of you. So let's just pretend that we're just a matter of you,
00:43:50.160 | and I'll sketch that out and we'll talk about some of the other pressures that are on you that come
00:43:54.640 | in externally. I faced this myself when I was pursuing a master's degree. At that time, this
00:43:59.840 | was a few years ago, I was with Northwestern Mutual, and because I was with Northwestern Mutual,
00:44:05.520 | I had the opportunity to have them pay for my education. So I had done a whole long list of
00:44:10.720 | credentials and designations and things like that, but then I got myself in the situation and I said,
00:44:15.520 | "Okay, I can go ahead and do a master's degree." And I thought it would be great. I'd have a
00:44:19.440 | master's degree and it would be paid for. Well, I came to the perspective, and as I started working
00:44:24.000 | my way through classes, I started Radical Personal Finance. And I got myself in a situation where I
00:44:29.600 | realized I didn't really care all that much about the master's degree. I wanted to start
00:44:33.600 | Radical Personal Finance. But by then I had already invested my time and my effort and my work into
00:44:40.560 | the classes and I was only a few classes away. And so I had the decision to make. I said, "Do I need
00:44:45.600 | to continue this or should I cut my losses and run?" Well, when I calculated it, it wasn't that
00:44:51.200 | I didn't value the master's degree at all. It was a matter that I didn't value it very much.
00:44:56.880 | But the actual benefit, I could get free of the master's degree and I could finish it pretty
00:45:00.640 | quickly. And so for me, I charted out a course and I said, "I'm going to give myself three months to
00:45:05.920 | finish this thing." And so I basically pulled back. I didn't really meet with clients. All I did was
00:45:10.800 | study and pass exams for three months. And I finished that before I left to start Radical
00:45:15.680 | Personal Finance. I invested because I could do it. Now, I didn't really want to do that,
00:45:20.560 | but I recognized that the cost of finishing was pretty low and I had some value and some benefit
00:45:26.400 | for it. And I figured three months in the grand scheme of things was going to be an acceptable
00:45:29.840 | cost. For you, it's much more difficult because it's not three months. It's three years as you've
00:45:35.920 | etched out here. You have to do the coursework and then the internships, et cetera. Now, for me,
00:45:41.120 | it was easier also because I was going to use the master's degree. It would give me an aspect of
00:45:46.160 | differentiation. For example, I think best of my knowledge, I'm one of the few – well, now that
00:45:50.080 | Michael Kitsis has started a podcast, which by the way, those of you who have enjoyed Michael
00:45:53.920 | Kitsis and are a financial planner, we finally got him after two years of working on him, three years
00:45:58.000 | of working on him, he's finally got his podcast launched. But as far as I know, he's probably the
00:46:02.640 | only other podcast host that has a master's degree in financial planning. So I looked at that and
00:46:06.640 | said, "Well, it'll be of some value to me to go ahead and have this master's degree." And it was
00:46:12.640 | also valuable for me as a point of differentiation. It was a fallback plan. If I failed building my
00:46:17.680 | lifestyle business, I could go back into the world of financial employment and I would be separate
00:46:22.320 | and distinct and have an additional competitive advantage based upon having the master's degree.
00:46:27.200 | So for me, that was a relatively simple decision. Now, for you, it may not be so simple because it
00:46:33.440 | sounds to me like your primary heart is towards your son, that at this point, your son's impact
00:46:39.040 | on your life has changed many other aspects of your life and now you're saying, "Well, I don't
00:46:43.600 | really want to go and do this full-time career of speech and language pathology. I don't really want
00:46:48.640 | to go and pursue this." So for you, things are different and a master's degree certainly doesn't
00:46:54.320 | contribute to the possibility of your being a better mother. It's not going to make you a better
00:46:58.880 | mother. It's not going to make a difference in your relationship with your son or with your
00:47:02.240 | children. Now, let's talk about... So for you, it could be very simple and I would encourage you
00:47:11.440 | and your husband to sit and think about this. If it were just you making the decision or better,
00:47:16.000 | just the two of you making the decision, would you decide on course A or course B and then factor in
00:47:23.360 | other people from an outside perspective? And here's what I mean. It sounds to me like your
00:47:28.080 | primary focus is on your son and your focus is your desire to be present in your home, to be there
00:47:36.000 | and work with him. And yes, you'd like to have some part-time income and some part-time career,
00:47:40.560 | but it's primarily focused on your home. The challenge is that there are other people
00:47:46.960 | involved in your life. So as a simple example, when my parents were younger, my dad was in the
00:47:52.400 | military, my mom was in school and she was in a similar position. They were living in Pearl Harbor,
00:47:56.720 | excuse me, they were living in Hawaii. He was stationed at Pearl Harbor for a time and she was
00:48:01.120 | in Hawaii trying to go to school and she had two small children at that point in time. Now for her,
00:48:06.400 | she needed, they had made an agreement with her parents that she would finish her college degree.
00:48:12.320 | So it wasn't easy, it wasn't fun, but she finished her college teaching degree because
00:48:18.240 | she had made that agreement with her parents as a component of their getting married. My dad had
00:48:22.720 | committed that yes, we'll make sure that she finishes her college degree and that was an
00:48:27.600 | important family commitment. And this similar things often occur in many families, especially
00:48:32.320 | with your being a woman. There's a lot of pressure from parents, et cetera, to make sure that their
00:48:37.440 | daughters are well-suited in a career with career skills, with marketable career skills,
00:48:43.120 | with an excellent education to be able to list at the bottom of resume in case their daughter is
00:48:48.640 | abandoned, in case your husband were to leave you and you were to find yourself as a divorcee
00:48:53.520 | trying to support your son and going out into the working world. And I don't think that's altogether
00:48:57.760 | bad, but that's one of the major pressures. There's also a major pressure on you societally
00:49:02.880 | that you have to recognize. And this is something that my wife has felt, most women have felt,
00:49:08.960 | where in the wake of the feminist revolution, which says women and men are equal and so therefore
00:49:14.480 | every aspect of life should be the same, there's this intense focus on career and education,
00:49:21.840 | especially for women. That's why today a majority of... One reason why in colleges today,
00:49:27.200 | a majority of the attendees of college are female rather than male. Now, I think men feel this as
00:49:34.320 | well, but there is a social acceptance that's different from men versus women. And I think also
00:49:40.480 | men and women face a different feel, a different pool towards their children. And so you've got
00:49:46.240 | to look at this and say, "Am I trying to finish my master's degree because this is what will
00:49:50.560 | impress society? This is what will be culturally appropriate because I'm kind of the ideal modern
00:49:57.040 | woman. I have a master's degree, I have a high-powered career, and I'm a super mom. Or
00:50:01.840 | am I trying to finish my master's degree because it's important to me, for the reasons that it's
00:50:07.120 | important to me?" My experience, financial planning, is there have been many mothers that I
00:50:11.680 | have worked with who, when given the opportunity to answer that question free of social pressure,
00:50:18.160 | free of the social pressure to be super businesswoman and super mom, many of them have
00:50:22.960 | said, "You know what? I don't care about the world of the career. I care about being home with my
00:50:29.600 | family. That's where my primary care and importance is." But this causes you to go directly against
00:50:35.600 | the culture of our day, which can be very, very difficult. It's especially difficult when it comes
00:50:39.760 | down to spending money. I've done financial counseling with many couples who, because of
00:50:44.800 | the social pressure to be super mom and super career woman, have invested tens of thousands,
00:50:51.360 | hundreds of thousands of dollars into the mother's education. And yet then, a few years later,
00:50:58.800 | things have changed, and she says, "I don't really want to pursue the career. I don't want
00:51:02.320 | to do it part-time. I don't want to do it full-time. I want to be at home with my children."
00:51:06.800 | Well, in that circumstance, what was the benefit of spending $150,000? As I have sat there and
00:51:12.080 | looked at the financial counseling, $150,000 of debt at times. It's very, very difficult.
00:51:17.600 | So, it's not my place to tell you what to do or to even tell you how to do it, but I would
00:51:24.240 | encourage you and your husband to spend a lot of time thinking about the answer to that question,
00:51:30.000 | knowing what I now know. If I were going to do this over again, would I do it any differently?
00:51:35.520 | And incorporate into that all of the information, the fact that you have a beautiful baby boy now,
00:51:42.000 | the benefits of that, the benefits of that on your family. Factor into that your own personal desire,
00:51:47.920 | your own personal goals, how you and your husband are going to work and build your family
00:51:52.960 | lifestyle together. Factor into that the parental pressure and the social pressure, and decide for
00:51:59.040 | yourself what is the appropriate course of action. And don't bow your knee to an external pressure
00:52:06.080 | that doesn't involve your actual life. It's the same thing that any of us face. And so,
00:52:12.160 | I'm emphasizing here the social pressure on mothers because it's substantial,
00:52:16.480 | but we all feel the same pressure. An early retiree, somebody who chooses a lower standard
00:52:20.800 | of living, so quote unquote, has to face the same thing. Do I value my time and my freedom,
00:52:26.960 | or do I value the higher income, et cetera? And then after going through that thinking process
00:52:32.240 | with you and your husband, after going through that process, I think you'll be able to figure
00:52:36.320 | out a better plan for this. And it may be a plan, for example, one thing that seems to me,
00:52:41.120 | it might be best for you to finish up your coursework because you're in that mindset of
00:52:46.640 | the academics of the coursework. And if you're close to finishing coursework, you've already
00:52:50.800 | invested this amount, perhaps it would be a really good idea for you to finish the coursework.
00:52:54.160 | And then perhaps you might look at that point into transferring. Maybe there's a transfer
00:52:58.960 | university that maybe it's not as prestigious of a program as the one you're in now,
00:53:03.440 | but at least it could be local. And then you could do your clinicals and your internships
00:53:07.600 | to be able to get some of the benefits. Maybe if you just finish the coursework,
00:53:10.720 | but don't even do the internship, you have that as a fallback plan, where if you decide that you
00:53:15.440 | do want to go back to it in the future, you want to enter that career, then again, you could just
00:53:20.640 | brush up on some of the changes in the coursework. If this is a year from now or 10 years from now,
00:53:25.440 | you brush up on the coursework, transfer your credits, your credits should transfer into a
00:53:29.440 | different university and do your clinicals and your internships. Maybe you should go ahead and
00:53:34.000 | finish, but maybe I know this is unlikely because you've just moved to Hawaii, but maybe there's an
00:53:39.360 | opportunity where you can go ahead and your husband can find a job in California that would
00:53:44.720 | allow you to finish it. Or maybe you just look at it and say, "Okay, you know what? It's only three
00:53:49.520 | years. Let me buckle down. We've only got another couple of years and another $8,000 to invest."
00:53:56.240 | And then we'll have it. That way, it's there as a backup plan. If you want to go back and do the
00:54:00.560 | career on a part-time basis, or if you want to dig into the career full-time, maybe when your
00:54:05.520 | children are a little bit older and aren't quite as dependent upon you, then you have it as a
00:54:09.280 | backup plan. I don't know the right solution, but that's how I would approach answering the question.
00:54:13.440 | - That's really helpful, Josh. It gives me different perspectives. And like you said,
00:54:20.160 | the societal pressure is really, really great, but it's also the fact that it's very important
00:54:28.000 | for me to, like you said, to stay at home with my son and devote my time to him, but having a fall
00:54:38.560 | back plan is really important to me. - Absolutely.
00:54:40.880 | - Which is why, so in the grand scheme of things, if I am not allowed, because I've looked into it
00:54:48.800 | and I can't really transfer to Hawaii to finish my program, but I was thinking we were just gonna do
00:54:57.040 | a back and forth thing for the next few years. I'd take a semester off here and there,
00:55:02.720 | just because it's hard on our family to be apart for so long. But so my main concern is my ability
00:55:12.560 | to help my husband achieve our financial goals, because that's something that we've talked a lot
00:55:19.600 | about. And he's helped me in achieving my goal of devoting my time to our son. And I feel like in
00:55:27.200 | our partnership, we've agreed that we would help each other out with our goals. And his main goal
00:55:32.960 | is to purchase a home. He really wants to buy a home. And so I would like to help him achieve that
00:55:42.640 | and so since we are gonna be going back and forth and I am gonna be taking a few semesters off here
00:55:49.920 | and there, ideally, I would like to devote my time while I'm here a few hours a week to starting a
00:56:00.720 | lifestyle business. So with the knowledge that I have, with the background that I have,
00:56:08.400 | utilize that in some way. And so yeah, and I think that that's where I'm headed towards,
00:56:19.200 | you know, and seeing where that goes and I don't know. But I'm not too sure about how to start it
00:56:26.960 | and how to go about it. - So let me just give you some ideas on that in terms of to focus.
00:56:34.240 | In general, the term, so the idea behind the term lifestyle business just simply means
00:56:38.880 | a business that is not an all-consuming obsession with growing big, but rather a business that's
00:56:45.680 | designed to bring specific benefits, monetary benefits, income to our family to enhance our
00:56:52.640 | lifestyle without causing major problems with our lifestyle. And in general, the place that you
00:56:59.200 | should start in looking for a lifestyle business is start by doing an assessment and an inventory
00:57:04.960 | of your skills and trying to figure out where, based upon my skills, my experience and my
00:57:10.240 | knowledge, how can I bring to the market something that is the most valuable. Now,
00:57:14.240 | if you have specialized education in the world of speech and language pathology,
00:57:17.840 | or if you are achieving it, make sure that you don't spurn that benefit. Lifestyle businesses
00:57:27.440 | are very difficult. Certainly, some people are able to take an education that they have worked
00:57:33.040 | hard to accomplish, especially as measured by a college degree, go into a completely unrelated
00:57:38.080 | field and make it big. But this is very, very difficult to do. And if you're gonna do it,
00:57:42.960 | my encouragement to you, if you're gonna finish the degree, make sure that you actually want to
00:57:48.800 | build a business in the degree. Otherwise, it's a waste of time and it's only a sunk cost fallacy.
00:57:54.720 | So if you're gonna go three years more and be apart from your husband, have the challenge of
00:58:00.720 | how to do that, make sure that you're at least gonna use the degree. Otherwise, better to cut
00:58:04.720 | your losses and go get a real estate license and build a lifestyle business selling real estate so
00:58:09.600 | that you can find an undervalued property in your local area to get a discount, negotiate it on the
00:58:14.640 | private market, achieve your family goal of buying a house, if that's the primary financial goal.
00:58:22.160 | Much better off having a lifestyle business as a real estate agent than a speech and language
00:58:27.200 | pathology degree if you're not actually gonna work in it. So a big litmus test for me, if I were
00:58:32.560 | giving you personal counsel, I would say, if you finish this thing, you better be convinced you're
00:58:37.680 | gonna use it. Otherwise, cut your time and don't waste another three years doing this if it doesn't
00:58:43.360 | fulfill your long-term goal. Now, let's assume for a moment, 'cause it sounds to me like it's
00:58:47.840 | important to you both as a backup plan for your own knowledge, education, career plans, etc. It
00:58:54.000 | sounds to me like it's important to you to finish it and you're probably gonna figure out a way to
00:58:57.680 | do that. Well, in that context, make sure that you're building a lifestyle business with that
00:59:02.880 | speech and language pathology degree. And you can do this. One great benefit to having this
00:59:07.520 | certification is you can charge a very high hourly rate. I have a friend of mine who does this. You
00:59:12.640 | can work part-time. You can establish yourself part-time and gain a very high income on an hourly
00:59:18.320 | rate, which will help you and your family and your financial goals based upon that. And you can do it
00:59:24.480 | with a high degree of flexibility. So focus on that. Now, you probably will need to work with
00:59:30.160 | a clinic, obviously, to have the internship and to have the supervisory requirements of your
00:59:35.360 | internship program met. But then look to see, is there a way that I could do this from Hawaii?
00:59:39.840 | And so what I would be looking at over the next few years is I would be looking at,
00:59:43.440 | if you, you know, people often think of the internet, I think you should. Is there some way
00:59:47.600 | that you can offer speech and language pathology at a discounted rate through the use of Skype,
00:59:52.880 | through the use of video conferencing, that this will allow you to reach clients in other places
00:59:57.840 | in the world in a different way? And based upon the Hawaii time zone, is there a way that you can
01:00:04.160 | take advantage of the Hawaii time zone in order to work with clients in another place that would
01:00:09.680 | work around your son or work around your family schedule? So make sure that your lifestyle
01:00:15.040 | business, if you're going to finish the degree, make sure your lifestyle business is entirely
01:00:19.120 | focused on that. There's no shame as an adult in quitting something because your goals have
01:00:26.800 | changed. The only shame in quitting is if you're quitting because you have the same goal, but
01:00:31.840 | somehow, you know, you don't want to follow through. But there's no shame in quitting if
01:00:35.680 | your goals have changed. If you're going to do this, Bill, I would, how I would start, I would
01:00:39.760 | be establishing myself as a thought leader right now. I would be taking all of my education and my
01:00:44.400 | experience in learning speech and language pathology. And if I woke up in your shoes and I
01:00:49.600 | wanted to build a lifestyle business in that, I would be seeking to teach parents what they needed
01:00:54.800 | to do to avoid my services. And I would teach those parents everything that I knew about speech
01:01:01.920 | and language pathology techniques. Or if, let's say, you're working with somebody who's trying to
01:01:06.480 | help their spouse recover from a stroke or trying to help their parent be able to speak more clearly
01:01:11.440 | in wake of a medical event, I would give every bit of helpful information that I could for free. I
01:01:17.760 | would, if it started a podcast, I would create training materials on YouTube, etc. And what I
01:01:22.400 | would be doing is two things. Number one, the more you give away for free, the more the people that
01:01:28.400 | value time more than money will want to hire you. You can go on the internet and you can find every
01:01:35.120 | bit of information that you need in order to fix your car. But just because it exists out there,
01:01:40.800 | doesn't mean that every single person is going to go and do it for free. Many of us value our time
01:01:46.240 | more than we value the cheapness of fixing it ourselves. And so a mechanic, the best thing a
01:01:52.880 | mechanic can do is give away all the information and then their potential customers will just bring
01:01:58.240 | the car and say, "I don't want to do it. Can you just do it for me?" And so you should approach
01:02:02.000 | your business in the same way. Give away and teach, and then the people who want to buy will
01:02:06.800 | come to you and say, "Will you do this for me?" And then secondarily, you can prepare carefully
01:02:12.400 | built out materials to teach people with the use of products and courses like I do here on Radical
01:02:17.760 | Personal Finance. I give away everything for free. So those who have a lot of time to dedicate can
01:02:23.360 | get all the benefit for free. And that's great for a 13 year old who's listening to my show,
01:02:28.960 | who has time and not a lot of money. But if I come in and somebody is 36 years old,
01:02:33.440 | they don't have time to listen to my whole archive of shows, even though it's all for free.
01:02:37.200 | They would rather spend $100 and get a clear, concise summary that's useful to them that they
01:02:43.280 | can act on versus go and spend 100 hours listening to something to gather it together. So you can do
01:02:48.000 | the same thing as you build your lifestyle business. That's how I'd approach it.
01:02:52.480 | Josh, you have been so wonderful. Thank you. It's so refreshing to get advice
01:02:56.560 | from a different perspective, something not so mainstream, because if you don't really have,
01:03:05.040 | don't really look at things differently. And just in general, it's just so refreshing.
01:03:11.280 | Good. I appreciate the compliment. The subject even that we talked about here,
01:03:16.160 | in terms of your career, when you asked the question of husbands and wives,
01:03:21.040 | when I raised the word feminism, I opened myself up to being beat upon by the modern culture.
01:03:28.800 | But having worked as a financial planner, I am convinced that for many people,
01:03:33.440 | for many moms especially, who have a deep heart to want to be with their children,
01:03:39.120 | it is incredibly freeing for them just to say, "No, I actually really want to be with my children."
01:03:44.400 | And I get so sick and tired of the pressure that's brought to bear on women to be supermom.
01:03:50.080 | And when I look at my wife and the work that she does, I don't know how she could possibly
01:03:55.680 | integrate into that a money-making career and be as effective as a mother.
01:03:59.680 | So I have no interest in going out and telling people what they should do. As far as I'm
01:04:06.160 | concerned, you can arrange your relationship with your husband and your relationship with
01:04:10.000 | your children pretty much however you want to do it. That's not my business. But I do get
01:04:15.440 | frustrated that you have to overcome this intense social pressure when, to me, I look at it and say
01:04:24.640 | it's much simpler. It's much simpler if you just recognize what's more important. And I do it with
01:04:31.760 | fear and trembling because I don't know how to give advice in this area without knowing somebody's
01:04:35.760 | intentional areas. But anyway, so I do it with fear and trembling. I hope it's useful to you to
01:04:43.920 | consider and in conversation with your husband, I'm confident that you'll figure out the right path.
01:04:49.760 | Sometimes you can buckle down. I'll just finish the story with my mom when she was younger,
01:04:56.720 | when she was finishing her college degree. At that time, my dad was in the Navy and he was in
01:05:02.320 | the submarine forces. And they would go out for six-month cruises. And so he was gone for six
01:05:08.560 | months at a time. And he went on three individual cruises during that time, which he was stationed
01:05:14.320 | in Pearl Harbor. And it was not easy. Frankly, I am amazed, especially in the military. I don't know
01:05:22.880 | how any military marriage can survive. I don't know how. I think it's possible. Some do, but I
01:05:30.480 | don't know how. It's only by the grace of God that a military marriage can survive. And my parents'
01:05:35.280 | marriage certainly was tested. But in hindsight, recognizing the investment that was needed to be
01:05:41.520 | made, this was important and they found a way to make it work. And a lot of people can find ways
01:05:47.040 | to make it work. Not necessarily fun, but that can give you a lot of motivation to get it done
01:05:51.840 | quickly. And so if you need to do that, if you need to keep an apartment in California and fly
01:05:56.480 | back and forth, just look to get it done as quickly as possible. And if you are going to do that path
01:06:00.800 | and finish this out, I would encourage you to do it as quickly as possible because your son has an
01:06:06.640 | intense need for you at eight months, but he also has a much more intense need for you almost at two
01:06:12.720 | or at three. At eight months, yes, he's communicating, but his communication is much
01:06:16.960 | more minimal than at two. So the quicker you can get it done in some ways, the better. What that
01:06:23.120 | looks like, I don't know. Lean on your family network, lean on your friend's network, try to
01:06:27.040 | minimize the cost as much as possible, but you'll figure it out. Thank you so much, Josh.
01:06:34.160 | Thanks for calling in, Ursula.
01:06:35.280 | All right. Well, talk about going to difficult subjects. Well, the name of the show is Radical
01:06:43.840 | Personal Finance. So hopefully those were helpful calls to you. I encourage you on today's. There
01:06:48.720 | were a couple more callers that dropped off during the call. If you would like to join on a call like
01:06:52.800 | this and have a conversation with me, I would welcome you to. I really enjoy that. And at the
01:06:58.480 | moment, it's only open to patrons. But as you can tell, if you'd like to be on and discuss the
01:07:02.320 | details of your situation, please come by and join. RadicalPersonalFinance.com/patron.
01:07:09.840 | Take the output from these calls and don't try to think in terms of the individual caller's
01:07:16.720 | perspective. Think and try to seek how to apply the thinking process behind those callers to your
01:07:22.960 | own life. Even in terms of thinking about Ursula's question where she's talking about, "Well, what do
01:07:28.400 | I do? How do I handle this?" You may be facing a similar situation. And in many of these situations,
01:07:34.640 | there's no objectively right answer. The only right answer is based upon a prioritization of
01:07:39.600 | what's important to you. I could see very easily why you would go one way or the other. For you,
01:07:46.000 | you might, by asking that zero-based question thinking, just look and say, "No, I don't care
01:07:49.680 | about this degree. Chuck the thing and move on." Remember, half of college students drop out and
01:07:55.040 | don't finish their degree. That's the data. And in the long run, it really doesn't matter
01:07:59.600 | for so many people. My mom, in the circumstance I described, yeah, she finished her teaching degree.
01:08:06.160 | To this day, she's never... Just making sure I'm right. Yeah. To this day, she's never used it.
01:08:12.400 | So it was important to finish because it was part of a commitment that she made to her parents.
01:08:16.560 | It was important to them, especially as a wife and mother, that she have that. Many mothers have
01:08:22.880 | needed that in terms of when they were abandoned by their husband. They needed that educational
01:08:27.600 | background to make sure that they could support their family. But in hindsight, would their life
01:08:32.720 | be any different if she hadn't done it? I don't think so. But on the flip side, some people,
01:08:38.000 | it's very important to them. They are going to aggressively pursue their career. So make sure
01:08:42.720 | that you take the information and you apply it to your situation. Ask yourself that zero-based
01:08:47.040 | thinking question. Knowing what I now know, if I were going to do it all over again,
01:08:51.200 | is there anything I would change? If so, get about changing it as quickly as possible.
01:08:56.960 | Oh, and please go take my survey, radicalpersonalfinance.com/survey.