Always_Look_for_the_Most_Direct_and_Effective_Path_To_Your_Goals
00:00:00.000 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,
00:00:03.880 | skills, insight, and encouragement you need to live a rich and meaningful life now while
00:00:08.760 | building a plan for financial freedom in 10 years or less.
00:00:11.780 | My name is Joshua.
00:00:12.780 | I am your host.
00:00:13.780 | Today I'm going to talk to you about taking the easy path to your goals or rather taking
00:00:17.860 | the direct path to your goals.
00:00:19.360 | I'm going to do this in the context though of a show that I have been wanting to do for
00:00:23.160 | a good number of months.
00:00:24.320 | I'm going to introduce it by talking about taxes.
00:00:27.440 | I wanted to wait a few months until this comment that I read on the internet would disappear
00:00:31.400 | so I wouldn't embarrass the person who wrote the comment originally.
00:00:35.120 | But when I saw this comment, I immediately screenshotted this sucker and I have wanted
00:00:39.400 | to do this show since then.
00:00:40.680 | So here's the comment.
00:00:42.880 | This was posted online in a personal finance forum.
00:00:48.080 | The commenter writes this.
00:00:49.080 | Sorry, it was in a personal finance group on Facebook.
00:00:51.800 | The commenter writes this.
00:00:53.840 | Quick service announcement.
00:00:55.520 | Thanks to the CARES Act that was recently signed into law, over-the-counter medication
00:01:00.800 | and feminine supplies are now HSA eligible.
00:01:05.640 | Retroactive to January 1, 2020.
00:01:09.840 | Keep those receipts and don't forget to log that mileage.
00:01:13.760 | And then the hashtag, sticking it to Uncle Sam.
00:01:18.320 | Now, I don't know if this strikes you as funny as it does me, but to me, I sat there and
00:01:25.960 | cackled for several minutes when I read this post.
00:01:31.920 | I just sat and cackled because I thought, "What a ridiculous juxtaposition of perspectives."
00:01:43.800 | The hashtag is what pushes it over the top.
00:01:45.880 | Sticking it to Uncle Sam.
00:01:47.280 | And I thought, "Okay, how much over-the-counter medication and feminine supplies are you going
00:01:54.760 | to actually be spending such that it's actually going to make a difference and you're going
00:01:59.120 | to stick it to Uncle Sam?"
00:02:00.320 | And I want to drive the lesson home here for you because it's important that you think
00:02:05.120 | about this stuff.
00:02:06.320 | So let's just assume, I don't know how much you can pay in over-the-counter medical supplies,
00:02:11.360 | but let's say you spend $20 per month on over-the-counter medications, Tylenol, Advil, something like
00:02:18.480 | that.
00:02:19.480 | And depending on, I don't know how much you spend on feminine hygiene supplies, but let's
00:02:24.560 | say you spend another $20 a month on feminine hygiene supplies.
00:02:28.400 | So your total in a year is $480 of total deductions that you have.
00:02:37.840 | Now, let's figure out how much this deduction is worth.
00:02:41.400 | So what the commenter here is saying, remember that he's saying that thanks to the CARES
00:02:45.680 | Act that was recently signed into law, over-the-counter medication and feminine supplies are now HSA
00:02:51.480 | eligible.
00:02:52.480 | So what would it mean to fund a health savings account?
00:02:55.360 | Well, you can put pre-tax money into the health savings account.
00:02:58.520 | And then if you take the money out and you spend it on qualified medical expenses, then
00:03:04.920 | you can pay the money without paying any income taxes on the money.
00:03:10.080 | And then, so let's figure that out.
00:03:11.720 | Well, it all depends on your tax rate, of course, but if you're HSA eligible, let's
00:03:15.000 | just assume you're paying an effective tax rate of let's make it 20%.
00:03:20.080 | So that means that you're going to save $96 per year on your $480.
00:03:25.960 | You'll save $96 of tax.
00:03:27.920 | Now with an HSA, one of the nice things about an HSA is that if you have that with an employer
00:03:36.960 | where you can do an automatic payroll deduction into the HSA, then you can fund that prior
00:03:43.640 | to employment taxes as well.
00:03:46.080 | So that would be 7.65% in the United States.
00:03:50.200 | So $480, 7.65% would be $36.
00:03:54.720 | So you're possibly at 36 plus 96, you're possibly at $132 of savings.
00:04:01.120 | Now the reason why I didn't want to do this show soon when I saw the screen check, didn't
00:04:06.400 | want this to be searchable, I don't want to embarrass anybody, is on the one hand, I have
00:04:10.380 | a profound amount of admiration for somebody who is detail-oriented like this and who is
00:04:15.880 | willing to understand these details and who's willing to dig into stuff.
00:04:24.520 | I appreciate that.
00:04:25.520 | That's a good character quality that someone is saying, "Okay, I'm going to use an HSA
00:04:29.760 | and now I'm going to save my receipts for feminine hygiene supplies and over-the-counter
00:04:34.400 | medication."
00:04:35.400 | Great.
00:04:36.400 | But on the other hand, it doesn't matter.
00:04:45.440 | That was a generous, when I said $40 a month between over-the-counter medication and feminine
00:04:50.160 | hygiene supplies.
00:04:51.640 | That's generous and you have a total savings of potentially a hundred and something dollars.
00:04:57.640 | It's just not that big a deal.
00:05:01.400 | And what I fear, because I've done this many times myself, what I fear is that somebody
00:05:07.960 | in this situation genuinely does use the hashtag, sticking it to Uncle Sam in a non-ironic fashion.
00:05:19.600 | Now if it were used in an ironic fashion, right, "Ha ha, there's this tiny little savings
00:05:24.320 | and I'm sticking it to Uncle Sam," it's funny, right?
00:05:27.360 | But I kind of got the sense that it wasn't being used here in an ironic fashion.
00:05:31.800 | There's no way to know from the context.
00:05:33.320 | It just seemed like it was a serious thing and I thought, "This is bad.
00:05:37.640 | This is dangerous."
00:05:38.800 | Because if you think you're getting more from your actions than you are, you wind up putting
00:05:46.000 | yourself in a tough spot because you're not doing anything that is actually effective.
00:05:51.480 | Now I don't intend this to sound arrogant or bragging in some way, but last week, you
00:06:00.760 | know, tax day in the United States was extended out from April 15th to July 15th due to the
00:06:05.720 | coronavirus pandemic.
00:06:08.000 | And so last week I finished doing my taxes, submitted my return, and for 2019 I legally
00:06:15.760 | paid $0 of federal income tax, including $0 of employment tax.
00:06:23.080 | And that was awesome.
00:06:25.680 | Followed every law and just simply by leaving the United States and going abroad, I legally
00:06:30.360 | cut my tax bill to $0.
00:06:33.640 | Now that's something that certainly there were a lot of expenses associated with my
00:06:36.480 | doing it.
00:06:37.480 | It wasn't an easy process.
00:06:39.120 | My tax forms were an absolute bear to fill out, utterly overwhelming to work through
00:06:44.800 | all of those.
00:06:45.800 | So it was not easy, but it was extraordinarily effective.
00:06:50.920 | And it was quite gratifying.
00:06:51.920 | It was very, very gratifying for me to send in that return to the IRS with $0 of tax liability.
00:07:01.120 | And I thought, and I've had this tweet in the back of my hand, I'm like, "That's sticking
00:07:05.160 | at Uncle Sam.
00:07:07.080 | Just leave.
00:07:08.080 | Don't play his game.
00:07:09.080 | Don't, you know, that's sticking it to Uncle Sam.
00:07:10.680 | Actually just stop."
00:07:12.600 | Now I'm not trying to advocate vigorously that everybody has to do what I have described.
00:07:22.640 | I'm not.
00:07:23.640 | I understand that there are many good reasons not to do that.
00:07:26.000 | And I hope that you have enough respect for my own self-awareness to know that if you,
00:07:31.000 | I'm not trying to, wouldn't tell you what to do.
00:07:33.560 | But what I saw in it was I saw a very clear lesson that a lot of times you can just walk
00:07:41.000 | away from all the stuff.
00:07:43.440 | Now I have studied tax planning for a very long time.
00:07:46.960 | And this is an epiphany for me.
00:07:48.920 | I've been interested in taxation for a very long time.
00:07:51.080 | I've studied the topic extensively.
00:07:53.800 | I've read book after book after book.
00:07:55.440 | I mean, just last week I caught up, I spent the last few days catching up on all of my
00:08:02.280 | continuing education credits for my certified financial planner designation and a bunch
00:08:07.800 | of other, you know, my CLU and CHFC.
00:08:09.840 | I got behind on my CE and I just, I went out of compliance on all that stuff.
00:08:14.560 | And I decided to go ahead and bring it back into compliance.
00:08:16.720 | So I needed to do 61 hours of CE.
00:08:20.760 | And so I did 61 hours of CE.
00:08:23.420 | But I'll tell you the courses that I did.
00:08:24.960 | I did small business tax planning.
00:08:27.860 | So I read a 550 page book on small business tax planning and I took 120 page exam on it.
00:08:34.000 | I did a course on divorce tax planning and that one was a 315 page book and took an exam
00:08:42.160 | on that.
00:08:43.160 | I did a course on financial planning tax strategies.
00:08:46.520 | That was a 350 page book and, you know, another course.
00:08:51.520 | I did a course on asset protection tax strategies.
00:08:54.120 | You might be noticing something of a theme here, right?
00:08:56.060 | That was an almost 400 page book and an exam.
00:09:00.540 | And so with those four courses, I was able to get my, that plus one other, I was able
00:09:05.760 | to get my 61 hours of CE done.
00:09:08.640 | But as I was doing it, I've come to the point where as I go through all this stuff and you
00:09:16.020 | spend all your time going through these tiny little details, like my friend here who writes
00:09:22.460 | that you can now deduct over-the-counter medication and feminine supplies, and you read these
00:09:28.240 | crazy rules and I love this stuff.
00:09:31.760 | I want to make that clear.
00:09:32.760 | Like I love this stuff.
00:09:34.440 | One of the things that I was finally able to find in one of these courses was I was
00:09:37.160 | finally able to find the IRS regulations of how you can take a company vehicle and basically
00:09:42.060 | bulletproof your company vehicle use as being almost 100% without the need to keep mileage
00:09:46.600 | logs and all these modifications you can do to your pickup truck and turn it into that.
00:09:50.800 | I was like, I was thrilled to find that.
00:09:52.040 | I'm like, yes, I got another tool in my arsenal.
00:09:54.440 | Here's how I can teach somebody to be more bulletproof.
00:09:56.560 | The whole time I'm thinking about how utterly stupid this entire system is and how I am
00:10:02.600 | wasted dozens of hours.
00:10:06.680 | Now that I'm outside the United States, doing my US taxes is not simple or easy at all because
00:10:13.180 | of my offshore corporations.
00:10:15.400 | It's not simple and easy at all.
00:10:17.720 | It's one of the forms that I did, the 5471.
00:10:20.960 | The IRS estimates I think it's a 32-hour form is their estimate.
00:10:24.320 | I went through the thing and it's mind-boggling.
00:10:27.000 | I'm sitting here saying, "This is such a waste of time."
00:10:32.080 | I'm calculating how much time do we waste on this every single year?
00:10:38.480 | It's an insane system.
00:10:40.080 | I cannot think of anybody who would actually sit down and design this system and think
00:10:44.960 | that it actually made sense.
00:10:47.040 | Just the rules upon rules upon rules upon rules upon rules.
00:10:50.800 | It's a crazy system.
00:10:54.120 | Over the years I've just thought, "It's crazy.
00:11:02.520 | It's a crazy system."
00:11:04.480 | And yet the pathway through it is fairly simple.
00:11:08.720 | It's the simplest pathway if you want to be done with most of that stuff, not all of it
00:11:12.160 | if you're a US citizen because of course as a US citizen you have the other insane system
00:11:18.020 | where the US government never lets you leave until you officially renounce your citizenship.
00:11:23.140 | They follow you all over the world, make you report everything that you do.
00:11:26.040 | It's just another utterly horrific system.
00:11:29.640 | But what else is new?
00:11:31.320 | But the simplest solution in most cases is just simply leave.
00:11:34.480 | If you leave everything changes.
00:11:37.240 | I thought over the years and especially over the last couple of weeks as I've done all
00:11:42.240 | this tax stuff and I've been planning to do this show on this funny little thing I saw
00:11:47.360 | online.
00:11:48.680 | I just thought, "Isn't that the story of my life?"
00:11:52.040 | Because the reason why that comment strikes me so much, public service announcement, you
00:12:00.080 | know, "Thanks to the CARES Act, over-the-counter medication and feminine supplies are now HSA
00:12:05.360 | eligible.
00:12:06.360 | Keep those receipts and don't forget to log that mileage, sticking it to Uncle Sam."
00:12:09.920 | The reason why that comment resonates with me so much is because that's me.
00:12:15.920 | That's the kind of stuff that I would do.
00:12:18.720 | And that's the kind of stuff that I have wasted years of my life doing.
00:12:22.840 | Doing these piddly little detail-oriented things that appeal to my OCD, weird tiny little
00:12:32.400 | detail-oriented mind and yet give you just crap for results.
00:12:40.760 | Absolute crap for results.
00:12:42.000 | I mean, the time required to properly log your receipts for over-the-counter medication
00:12:49.840 | and feminine supplies is stupid.
00:12:53.160 | Just like the vast majority of the time that you do piling up all your records, just complying
00:12:58.680 | with all of the requirements of the IRS to have your records and books in order, it's
00:13:02.520 | just, it's asinine.
00:13:03.760 | It's stupid.
00:13:04.760 | It's such a waste of time.
00:13:07.680 | It's stupid.
00:13:08.920 | And what happens is that energy sucks you down and keeps you from doing something that
00:13:13.960 | actually is going to grow something.
00:13:17.440 | This guy who wrote this comment, I'm sure he's a smart guy, but if he took the time
00:13:20.760 | that he spends in tracking his receipts for over-the-counter medication and feminine supplies
00:13:28.680 | so that he can store those up for his HSA, if he put that into making a little bit of
00:13:31.760 | money or developing a skill or adding something on, the return on investment would generally
00:13:38.840 | I can't imagine be a lot higher.
00:13:40.200 | Now you can make the detail argument, right?
00:13:41.760 | You can say, "Oh, it's not that much, Joshua.
00:13:43.720 | Come on.
00:13:44.720 | You check out on two things, keep the separate receipt, plop it in.
00:13:47.080 | It doesn't have to be that much."
00:13:48.320 | And you're right.
00:13:49.520 | You're right.
00:13:50.520 | And that's why I said I admire somebody who is careful with the details.
00:13:53.760 | I don't want to be loose with my language.
00:13:57.120 | But there's a personality trait that I have, right, and that this guy has that causes you
00:14:02.920 | to spend so much time sucked down in the details that you miss the forest for the trees.
00:14:08.460 | You miss the big path.
00:14:11.400 | And for me, that's revelatory, right?
00:14:15.200 | Instead of complying with all the craziness of the thousands and thousands and thousands
00:14:20.520 | of pages of IRS codes where it's just not possible.
00:14:25.180 | It's not even possible to understand it, let alone do it.
00:14:28.080 | And so you know, you feel every time, you know, I sent that document off.
00:14:33.360 | When I do my taxes, I just assume this is going to be leaked.
00:14:36.280 | It's going to be on the internet.
00:14:38.720 | And you know, here I am, I talk about the stuff public, it's going to be on the internet.
00:14:42.320 | I'm going to face an auditor and everything's going to be published on the internet.
00:14:45.440 | So let me do it.
00:14:46.880 | And so I had this like intense pressure when I fill that stuff out, like to get it exactly
00:14:51.960 | right, because I know it's going to be ripped to shreds by somebody.
00:14:55.440 | And yet I feel utterly incompetent doing it.
00:15:00.880 | And you know, sometimes you wish you were blissfully ignorant.
00:15:05.880 | It's easier for other people to be blissfully ignorant.
00:15:07.840 | But in theory, I should know what I'm doing in theory, and I feel utterly incompetent
00:15:13.120 | filling those forms out.
00:15:16.760 | I'm not sure anybody doesn't feel incompetent myself.
00:15:19.920 | Even the, you know, the full-time tax lawyers.
00:15:24.040 | It's so complex.
00:15:25.040 | It's a simple, obvious solution is just leave, walk away.
00:15:30.160 | And you can do that in most places.
00:15:32.360 | And what I have experienced with doing that, I have experienced this tremendous burst of
00:15:40.640 | energy.
00:15:41.640 | Now, I like to make the intellectual argument that there's no 100% tax rate.
00:15:48.400 | People think about, is there a point in time at which it makes sense for me to do less
00:15:51.920 | with regard to taxes?
00:15:53.480 | And the answer is no.
00:15:54.920 | Even in a high tax country like the United States, you know, you can get up, if you're
00:15:58.720 | living in California or New York City, you can get up to over half your income, right?
00:16:02.560 | 50, 55% depending, you know, you're dealing with the investment tax, you're dealing, how's
00:16:06.280 | your income structured?
00:16:08.320 | You can get up to that 50% number.
00:16:10.920 | It's not easy, but you can get up to that 50% number and higher.
00:16:14.880 | And so you say, well, there's no 100% tax rate.
00:16:17.760 | That's true.
00:16:19.040 | There's not.
00:16:21.040 | But what I have found is just knowing that I was out of the system to a high degree by
00:16:26.720 | leaving the United States brought me just this incredible freedom and willingness to
00:16:32.240 | make more money.
00:16:33.240 | Now, I don't know if that's unique to me just because I get bent out of shape over stuff.
00:16:38.280 | A lot of people seem a lot less uptight about taxes than me.
00:16:41.520 | They just go with it.
00:16:42.520 | No big deal, you know, pay my fair share and go on.
00:16:44.880 | I admire that mentality.
00:16:46.800 | I think it's a healthier mentality probably than my uptightedness, but I still struggle
00:16:51.960 | with it.
00:16:52.960 | And just being free of it has been like this incredible boon to my brain and to my willingness
00:16:58.480 | to earn more and do more and make more.
00:17:02.760 | But it's much more effective to go for the big wins first.
00:17:10.200 | Now, I just want to draw the lesson out with some other examples because over the years
00:17:15.280 | I've done quite a lot of financial planning for people, I've realized that in some ways
00:17:21.880 | what I get paid for is simply taking something that's obvious and saying it to somebody.
00:17:30.960 | Taking something that's obvious and saying it to them.
00:17:34.160 | I was reminded of this yesterday.
00:17:37.040 | I saw a tweet from a friend of mine on Twitter, Brent @TheFoodTruckCEO, and he wrote this.
00:17:43.360 | He said, "I always thought I wanted to retire early.
00:17:46.720 | Turns out I just wanted to get out from my soul-sucking corporate job.
00:17:50.560 | Financial independence will always be a focus, but retirement is the last thing on my mind.
00:17:54.200 | Make sure you're aiming at the right target."
00:17:57.020 | My answer to him was, "Me too."
00:17:58.920 | Because in a lot of ways that was my experience.
00:18:02.560 | I remember that when I was in jobs that weren't a good fit for me, that was when I got super
00:18:07.800 | interested in the early retirement financial independence movement because I saw it as
00:18:12.160 | the way out.
00:18:14.240 | And it was only when I got forced to actually sit down and do the analysis and I realized,
00:18:20.040 | you know what?
00:18:21.040 | I don't actually want retirement.
00:18:23.240 | I just want to get out of that.
00:18:25.040 | I want to go to something else.
00:18:27.360 | And so many times I see that as the solution, and I've made that a central focus of radical
00:18:31.960 | personal finance because it's meant so much to me.
00:18:34.560 | If I don't want to – it's not that I need to go through this long-winded pathway
00:18:39.200 | of spending years and years and years living like a miser and saving.
00:18:44.200 | I just need to change my job.
00:18:46.120 | And if I can change my job from something that's not such a good fit for me to something
00:18:49.880 | that's a better fit for me, that solves the majority of the problems.
00:18:54.840 | You know, Brett left the corporate world and he started a pizza business as a pizza trailer,
00:18:59.640 | a food trailer, and he goes around and makes pizza for it.
00:19:02.400 | He does great at it.
00:19:03.400 | He's super into it, does a really good job at it.
00:19:05.340 | And that's been the kind of thing that I've often thought, you know, I would do that.
00:19:09.160 | I always joke with my wife, we have a long list of businesses.
00:19:11.560 | If I go broke, I'm going to do this.
00:19:12.720 | If I go broke, I'm going to do that.
00:19:14.240 | And when I think about going back to the corporate environment versus running a barbecue truck
00:19:17.800 | or running a pizza truck or something like that, I would love the barbecue truck, would
00:19:21.680 | love the pizza truck.
00:19:22.680 | And I think a lot of people would.
00:19:23.680 | I wouldn't dread the work.
00:19:27.000 | It doesn't have anything like the leverage of other kinds of businesses in terms of total
00:19:30.680 | earning power, but it's still, it's very meaningful, really enjoyable work for the right personality
00:19:38.040 | type.
00:19:39.480 | And so I point it out to you because you may not need to go through this long-winded process,
00:19:45.360 | sorry, long process.
00:19:47.320 | You may not need to live on 20% of your income for 10 years so you can retire.
00:19:51.840 | You may just need to go get another job.
00:19:53.840 | You may not need to save millions of dollars so that you can finally afford to buy that
00:19:58.320 | house in Florida.
00:19:59.440 | You might just need to get out of New York City and go anywhere else and get another
00:20:04.040 | job.
00:20:06.040 | You may not need the college degree.
00:20:08.160 | You may just need the certification over here.
00:20:10.800 | You may just need to read this book.
00:20:14.160 | You know, I've been re-reading one of my favorite books.
00:20:17.800 | It's called The Personal MBA by Josh Kaufman.
00:20:21.160 | It's a great book, wonderful book.
00:20:23.840 | And Josh, I'm re-reading it.
00:20:27.000 | He wrote it in English.
00:20:28.000 | I'm re-reading it in French to work on my French skills.
00:20:30.680 | And Josh wrote that book.
00:20:32.240 | And it just, because it's like, what's the point of going and taking an MBA if I just
00:20:36.440 | read some books and did what was in them that would make a much bigger difference?
00:20:39.760 | And that was his story when he wrote the book.
00:20:41.720 | He was working at a big job.
00:20:43.600 | He started reading.
00:20:44.600 | He started publishing a blog.
00:20:45.600 | He sent one email to Seth Godin.
00:20:48.320 | Seth Godin published a link to his blog on Seth's site and the rest was history.
00:20:54.120 | And he learned and applied and then he became basically financially independent and he's
00:20:57.920 | been a full-time dad virtually for the last few years doing very little in the business
00:21:03.000 | world because of his success in a very short period of time.
00:21:06.600 | Again and again and again I see this played out in almost everything.
00:21:11.360 | And my encouragement to you is that you sit down and take the time to do the analysis
00:21:15.520 | of how do I solve this problem in the most efficient way.
00:21:20.520 | This is an area where I'm skilled and unskilled simultaneously because I'm skilled at often
00:21:26.960 | seeing the solution, but I'm often unskilled in doing it.
00:21:32.760 | Most things are really simple.
00:21:35.400 | Most things are really simple.
00:21:36.860 | And the people who often do the best are often those who are not the smartest, but who just
00:21:43.160 | simply do something.
00:21:45.440 | Almost every business has these elegantly simple solutions.
00:21:48.840 | I remember when I was in sales, I studied sales.
00:21:51.640 | And the simplest way to increase your income in sales, know what it is?
00:21:55.080 | Let's say you're making $100,000 a year.
00:21:58.480 | You want to increase your income as a salesperson.
00:22:01.760 | The simplest and most direct path for you to double your income from $100,000 a year
00:22:07.880 | to $200,000 a year is to double the time that you spend face to face or talking to prospects
00:22:14.520 | and clients.
00:22:16.900 | The simplest thing that you can possibly do is simply increase the amount of time that
00:22:21.960 | you spend talking to people.
00:22:24.180 | It's actually one of the things where I think, although I haven't heard, some of you are
00:22:26.920 | financial advisors.
00:22:27.920 | I think the coronavirus epidemic is going to turn out to be a huge blessing for you.
00:22:33.320 | Because what it's forced is it's forced people to stop relying on driving all over the town
00:22:36.960 | and doing everything face to face, but rather to get good at doing things online.
00:22:42.960 | When I started in the business years ago, I would drive all over town, drive here, drive
00:22:47.080 | there.
00:22:48.080 | Then I got better and I got people coming to my office.
00:22:49.880 | But then I started doing a lot of stuff digitally and it made all the world of difference.
00:22:53.040 | Because you can go back to back and you can do eight, 10 meetings in a day, hour, just
00:22:56.680 | back them up.
00:22:58.200 | That radically transforms things because it allows you to spend a lot more time face to
00:23:01.440 | face with prospects and clients, which has a direct impact on your business.
00:23:06.920 | Very simple metric, but yet incredibly effective.
00:23:10.360 | Most businesses have these simple metrics.
00:23:12.320 | Most lives have these simple things that you can look at and say, "If I just change this
00:23:15.840 | one thing, it'll radically transform basically everything."
00:23:22.320 | What I find when I do that analysis and then I start actually being willing to do some
00:23:26.400 | of the answers is, number one, there's a great lack of coherence with some of the things
00:23:34.960 | I used to believe.
00:23:37.880 | A simple example, the latte factor.
00:23:41.800 | Classic term coined by David Bach.
00:23:45.680 | Basically if you take the amount of money that you spend on a daily latte, then you
00:23:49.600 | invest it, you'll have a lot of money.
00:23:51.640 | So just eliminate the latte and you'll be rich.
00:23:54.960 | The reality is, is it true?
00:23:57.480 | I think it's unquestionably true.
00:24:01.080 | I still recommend that people understand the latte factor.
00:24:05.720 | I think that this is why financial advice needs to be personalized.
00:24:09.440 | If somebody is working, they're making a modest wage, then spending that $5 a day on a daily
00:24:18.520 | latte really can deeply harm their results, their financial results in a very real and
00:24:24.680 | meaningful way.
00:24:26.160 | It's a significant expense.
00:24:27.760 | And if they would stop spending the $5 a day, they'd be better off, significantly better
00:24:33.560 | off.
00:24:36.720 | But from my perspective, when I look at it, I often come down and say, "Is that really
00:24:42.240 | worth paying attention to?"
00:24:44.580 | Because I spend a lot of time living hyper frugally, avoiding the latte, not buying the
00:24:49.820 | glass of wine, taking the cheap thing, et cetera.
00:24:54.200 | And in some cases it really drains on you.
00:24:57.200 | Now, if I didn't have the income or I didn't have the ability, I'd still do that stuff
00:25:01.320 | because that's how you create a fund.
00:25:03.920 | If you don't have any money saved, you need to stop buying lattes, stop buying glasses
00:25:08.800 | of wine so that you can save enough money to start getting financially independent,
00:25:11.960 | start to have something to invest.
00:25:13.920 | But once you reach a certain point in time, that stuff becomes a net negative because
00:25:18.800 | it's easier and simpler for you to focus on doubling your income.
00:25:22.760 | And I think that those opportunities are much more widespread than we often think.
00:25:29.080 | I'm always torn when people say, "Well, just double your income," because I say, "Well,
00:25:32.200 | not everybody can do that.
00:25:33.280 | Don't you know that?"
00:25:35.280 | But I think a lot more of us can do that than we often want to admit.
00:25:40.400 | It's just that nobody's come along and said, "Hey, do that."
00:25:47.480 | So I think a major super skill of the coming years that you and I can hone is going to
00:25:53.520 | be this.
00:25:54.520 | Look for the most direct paths to your goals.
00:25:57.480 | Look for the things that are going to make things simpler and easier.
00:26:01.020 | Look for the ways to do things quickly.
00:26:04.880 | I've given enough examples so far.
00:26:09.600 | Look for the ways that you can get somewhere quickly.
00:26:13.000 | Instead of focusing on how can I retire, focus on how can I not want to retire?
00:26:17.920 | What can I do there?
00:26:21.160 | Instead of focusing on how can I trim my expenses by $10 a month or 10%, look for how can I
00:26:27.160 | trim my expenses by 90%.
00:26:30.080 | Instead of looking for how can I cut my tax bill by $52 by saving receipts for feminine
00:26:37.040 | supplies, look for how can I cut my tax bill by $152,000 by moving from London to Dubai,
00:26:46.920 | from Toronto to the Cayman Islands, or to Panama City, or from Los Angeles to Dallas.
00:26:54.680 | How can I make these moves that are going to be simple, yet provide massive, massive
00:27:00.520 | savings?
00:27:01.520 | It's just an 80/20 analysis.
00:27:05.400 | What are the 20% of decisions that can give me 80% of the results?
00:27:08.720 | Then step two is focus on the major stuff, not the minor stuff.
00:27:12.400 | Focus on the big picture things.
00:27:15.120 | If you have to let the over-the-counter medication and feminine supplies receipts drop so that
00:27:21.400 | you can get an advanced degree, so that you can increase your earning ability, so that
00:27:26.320 | you can start a side hustle that turns into a small business, if you have to let those
00:27:29.980 | things drop, let them drop.
00:27:32.280 | Now, they might not.
00:27:33.280 | It might be simple for you to go ahead and save the receipts, in which case, fine, do
00:27:37.840 | it.
00:27:38.840 | There's no reason not to, unless the opportunity cost is significant.
00:27:43.880 | But recognize that if focusing on that stuff is keeping you from the big win, move to the
00:27:50.320 | big win, dude.
00:27:53.360 | Focus on the big win.
00:27:56.360 | I think in most situations, you and I would be shocked at how quickly we could make progress
00:28:03.320 | if we just focused ruthlessly and relentlessly on the high priority, high impact processes.
00:28:14.040 | I confess I'm not as good at it as I'd like to be.
00:28:15.920 | It's a big focus of my life going forward.
00:28:18.000 | Focus and prioritize ruthlessly.
00:28:19.680 | But I just see day after day after day opportunities for wins.
00:28:25.720 | You know, just one more example.
00:28:28.160 | Client of mine, been working with over the last few months, built a medical practice
00:28:32.680 | from, had an insight, graduated from medical school, built a medical practice, and I think
00:28:38.200 | it was about five years, something like that, five or six years, built it into an eight-figure
00:28:44.800 | sale.
00:28:45.800 | An eight-figure sale in about five or six years.
00:28:49.400 | The eight-figure sale, the profit puts him in a place where he's financially independent
00:28:52.800 | five or six years out of medical school.
00:28:56.880 | And I've thought about his story a lot as far as how he did it, and I've realized how
00:29:02.280 | different that path is.
00:29:06.320 | I think it's a good closing thing to focus on because a lot of my audience is very high
00:29:12.960 | income entrepreneurs and professionals.
00:29:16.000 | But I've thought, you know, if years ago when I was a mainstream financial advisor, if that
00:29:21.640 | guy had come to my office and sat down with me and said, "Look, Josh, I'm making, I don't
00:29:26.520 | know, a couple hundred thousand dollars a year.
00:29:28.120 | I'm making, you know, I'm a physician."
00:29:30.320 | And he said, "I want to retire."
00:29:31.720 | I would have laid out for him this multi-decade plan, would have said, "Put your money in
00:29:37.840 | stocks and buy some, use retirement accounts and save money and live frugally and you'll
00:29:45.880 | be retired and hey, you can get really, really rich about 30 or 40 years from now."
00:29:49.960 | That's what I would have told him.
00:29:53.040 | And yet, is there anything wrong with that?
00:29:57.280 | No, it's pretty sound advice, right?
00:30:00.160 | Financial advisors give that advice every day.
00:30:01.520 | I've given it and it's not wrong.
00:30:06.440 | But somebody else came along and said, "Listen, if you'll just simply build your practices,
00:30:12.640 | start with one, build out to several offices, you can grow this super fast.
00:30:18.280 | There's plenty of ability to use other people's money.
00:30:20.160 | You basically use your medical credentials as a way to establish yourself the front end
00:30:25.640 | profit and then grow quickly.
00:30:28.480 | And in five years, you can have a private equity firm come along and make you an eight-figure
00:30:32.120 | offer, sell out and set yourself up for life in about five years.
00:30:39.920 | And not set yourself up for life, you know, not buying lattes and whatnot, but just set
00:30:44.800 | yourself up for life at the very highest of lifestyles."
00:30:47.280 | I didn't even think of that back then, to my own shame.
00:30:55.240 | So it makes me wonder, one of the reasons why do I pursue all these radical strategies,
00:30:58.440 | it makes me wonder, what am I not thinking of today?
00:31:02.040 | What am I ignoring today?
00:31:04.400 | Where am I not focusing on today?
00:31:06.840 | Can't change the past, but we can go forward.
00:31:11.960 | So in your life, look for the most direct path to your goal and be wide ranging in your
00:31:17.360 | thinking.
00:31:18.360 | Instead of saving feminine hygiene supply receipts and over-the-counter medication and
00:31:24.800 | thinking that you're sticking up to Uncle Sam, move, do something drastic.
00:31:31.200 | Instead of worrying about the latte, build a multi-million dollar business if you're
00:31:37.560 | interested in that kind of thing.
00:31:40.120 | Don't feel like you have to change, right, if you're content with what you're doing,
00:31:44.000 | fine.
00:31:45.200 | But focus and look for the most direct path to your goals.
00:31:48.320 | Before you worry about retiring, build a life you don't want to retire from.
00:31:52.660 | Before you worry about saying, "Well, I want to move to Colorado when I retire," just move
00:31:57.560 | to Colorado.
00:31:58.560 | Get a job there.
00:32:00.240 | There's jobs everywhere.
00:32:01.240 | I wish I had an elegant way to wrap up the podcast, but I've said what I want to say.
00:32:06.480 | I just want to encourage you.
00:32:08.760 | Focus on the big things.
00:32:09.760 | Thank you for listening to today's show.
00:32:10.760 | I'll be back with you soon.
00:32:11.760 | I hope I see you soon.