Everything_Financial_Radio_interview_with_Dennis_Tubbergen
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00:00:39.660 | Welcome to the Everything Financial Radio program.
00:00:42.640 | I am your host, Dennis Tubergen.
00:00:44.340 | Everything Financial Radio is brought to you each week
00:00:48.080 | by PLP Services.
00:00:50.340 | Each week we talk to a guest expert on the program
00:00:54.980 | and we talk about what's going on out there in the markets
00:00:58.580 | and in the economy that will affect you and your money.
00:01:02.460 | This week, returning to the Everything Financial Radio program
00:01:05.760 | is Mr. Carl Denninger.
00:01:07.720 | I have him on the line with me now.
00:01:11.140 | Carl is a blogger, an economic commentator,
00:01:14.900 | an all-around bright guy.
00:01:16.140 | You can read his work at market-ticker.org.
00:01:19.580 | He's also the author of "Leverage,
00:01:22.040 | "How Cheap Money Will Destroy the World."
00:01:24.380 | And Carl, welcome back to the program.
00:01:27.280 | Thank you very much for having me, Dennis.
00:01:29.380 | Carl, let's give the listeners maybe that aren't aware
00:01:34.760 | a bit of a background or a bit of an overview
00:01:39.020 | as to the role of federal spending on medical care
00:01:45.040 | as compared to the rest of the budget
00:01:47.300 | and just kind of outline the topic for the listeners.
00:01:51.700 | Sure.
00:01:54.700 | Medical spending is divided into two main parts
00:01:58.640 | in the federal budget.
00:02:00.040 | Medicare, which is for old people,
00:02:02.640 | and Medicaid, which is for people that don't have any money
00:02:05.440 | or at least very little money.
00:02:08.180 | And those two parts are the major elements.
00:02:12.080 | You hear a lot about things like VA,
00:02:14.920 | which of course is for veterans,
00:02:17.060 | but the truth is that the VA spending
00:02:20.220 | on veterans' medical costs is extremely small.
00:02:23.200 | You can't find it in the budget in terms of percentages.
00:02:27.200 | Between Medicare and Medicaid, that is,
00:02:30.900 | last fiscal year was about 37% of all of the money
00:02:34.940 | that the federal government spends.
00:02:37.580 | When people in the political sphere talk about entitlements,
00:02:42.180 | they always put together Medicare, Medicaid,
00:02:45.780 | and Social Security.
00:02:47.660 | And they do this for a reason, because first off,
00:02:50.860 | it makes the number much bigger and looks more difficult.
00:02:54.500 | And secondly, it ties a program
00:02:57.300 | that has a temporary funding problem,
00:02:59.400 | but which was anticipated by the people that wrote the law,
00:03:03.840 | which is why you pay a 13% payroll tax approximately,
00:03:07.740 | that's Social Security.
00:03:09.440 | They knew that there would be a large group of people
00:03:12.980 | that would eventually go through the system,
00:03:14.820 | and therefore the system had to run a surplus
00:03:16.980 | for a period of time to cover that,
00:03:19.120 | but that those people would eventually all pass away
00:03:21.360 | because we all die.
00:03:23.620 | So they always conflate that
00:03:24.920 | with the other two parts of the program.
00:03:27.560 | Medicare has a very small tax, so about 2.5%.
00:03:32.840 | Medicaid, of course, has no tax.
00:03:34.400 | It's a straight handout.
00:03:36.440 | So when you take those programs and you put them together,
00:03:38.780 | you take one that has temporary issues but is solvent
00:03:42.280 | because there is enough money that has been put aside
00:03:45.040 | in the form of Treasury bonds to cover this,
00:03:47.520 | with two others that there is no solution to
00:03:50.080 | at present growth rates,
00:03:52.080 | and then you say, "We can't fix it
00:03:53.420 | "because you'll end up having to throw granny down the stairs."
00:03:57.720 | This is a lie, and yet it is the way
00:04:01.120 | our federal government has operated for the last 30 years,
00:04:04.100 | and nobody on either side of the political aisle,
00:04:06.760 | nor any of the current candidates,
00:04:08.260 | will take this issue on.
00:04:10.500 | The reality is that Medicare and Medicaid
00:04:14.100 | in the last two years have been growing in expense
00:04:16.400 | at a rate of about 9%.
00:04:18.940 | There was a very short-lived low in that
00:04:23.220 | about four years ago in that growth rate,
00:04:26.220 | which led a whole lot of political pundits
00:04:28.280 | to claim that the problem had been solved
00:04:30.120 | and that basically we were saved
00:04:32.620 | and everything was going to be fine.
00:04:35.100 | But this year, we are back on that track,
00:04:38.100 | and through June, which is the last month
00:04:40.560 | that we have numbers for at this point,
00:04:42.940 | numbers of 8.8, I believe, 8.7 or 8.8,
00:04:46.200 | which is indistinguishably,
00:04:48.240 | you know, the same statistically as 9.
00:04:50.540 | At this rate, the spending on that program
00:04:54.620 | will go from $1,300 billion, that's $1.3 trillion,
00:04:58.020 | which was last fiscal year,
00:05:00.720 | to $1,800 billion before the next president's term ends,
00:05:05.720 | first term.
00:05:06.560 | At that point, we will be blowing a $400 billion a year
00:05:11.400 | additional hole in the federal budget
00:05:13.560 | because the growth of revenue last fiscal year
00:05:17.000 | was only 1.68%.
00:05:18.500 | - So, Carl, a lot of our listeners
00:05:22.400 | are gonna be familiar with the law of 72,
00:05:24.440 | so at 9% growth, I'm just throwing some numbers out there,
00:05:27.920 | that means spending will double in eight years
00:05:30.720 | if that trajectory continues.
00:05:33.820 | So in eight years, presumably,
00:05:36.280 | this takes up 70-some percent of the federal budget?
00:05:38.920 | That just can't happen.
00:05:41.020 | - In 10 years, it takes up more
00:05:42.960 | than all of the federal budget.
00:05:44.520 | And no, that can't happen.
00:05:48.760 | - So what are we gonna see from here?
00:05:51.100 | I mean, are we headed for more money printing,
00:05:55.240 | more quantitative easing?
00:05:56.440 | Are we headed for a major economic reset?
00:06:00.480 | What's the end game here?
00:06:02.100 | What are the possibilities?
00:06:03.440 | - Well, money printing does not solve the problem
00:06:06.180 | because you can print money, but you can't print value.
00:06:09.280 | Okay, so what has to be understood here
00:06:12.180 | is what you're doing here is transferring value
00:06:16.020 | from one person to another.
00:06:17.660 | The people to whom the value is being transferred
00:06:20.120 | is the medical and insurance complex.
00:06:22.760 | People love to rail about, for example,
00:06:24.900 | the Aetna situation where they attempted to buy Humana.
00:06:29.900 | The government came after them and said,
00:06:32.240 | "No, that will tend to lessen competition."
00:06:35.080 | And then they said,
00:06:36.280 | "Well, we're losing all the Obamacare exchanges."
00:06:37.980 | And they had warned the government
00:06:39.240 | they were going to do this.
00:06:40.480 | The problem is that Aetna and Humana together,
00:06:43.480 | it's $110 billion worth of revenue
00:06:47.020 | between both of those companies.
00:06:48.960 | So if you have a $1,300 billion annual expense line item,
00:06:53.960 | and you have two companies that have
00:06:56.400 | a combined operating margin that's in the 9%, 10%, 12% area,
00:07:01.000 | but their revenue, the total amount of money they take in
00:07:03.640 | is only $100 billion.
00:07:06.000 | This is absolute nonsense to claim
00:07:08.500 | that this is somehow responsible for the issue.
00:07:10.800 | And yet these are two of the larger
00:07:12.700 | health insurance companies in the United States.
00:07:15.080 | The problem isn't there.
00:07:17.040 | The problem is that we have firms like Mylan
00:07:21.240 | that take a product that costs $20
00:07:24.020 | over the counter in France,
00:07:25.780 | and turn it into a $300 product in the United States
00:07:29.520 | because they have no competition.
00:07:31.600 | And they do that by getting laws passed
00:07:33.760 | that prevent you from flying to France,
00:07:35.600 | filling up your suitcase full of these things,
00:07:37.300 | and bringing them back and selling them for $30,
00:07:39.860 | which would be a 50% profit.
00:07:42.140 | But if you try to do that, you go to prison.
00:07:44.600 | And there is a body of law that's over 100 years old,
00:07:48.600 | 15 United States Code, that says that any act
00:07:52.280 | that is undertaken by persons
00:07:54.480 | with the intent of restraining trade,
00:07:57.320 | fixing prices, or creating monopolies,
00:07:59.660 | is a federal felony.
00:08:01.480 | It's not a fine.
00:08:03.020 | It's 10 years in jail.
00:08:06.020 | But we have never, never in the history that I can find,
00:08:10.160 | indicted a drug or pharmaceutical or hospital management
00:08:13.620 | or a healthcare manager or a health insurance executive
00:08:18.640 | on these charges.
00:08:20.360 | - Well, if you're just joining us,
00:08:23.240 | we are chatting today with Mr. Carl Denninger.
00:08:25.240 | Carl is the prolific author.
00:08:27.940 | You can read his work at market-ticker.org.
00:08:31.340 | His latest book is also "Leverage,
00:08:33.540 | How Cheap Money Will Destroy the World."
00:08:35.780 | So Carl, it seems to me that being a free market capitalist,
00:08:40.820 | I often joke I'm a libertarian capitalist,
00:08:42.820 | there's probably four of us left on the planet now.
00:08:46.100 | It seems to me that just some free markets
00:08:48.620 | probably fixes this problem.
00:08:50.700 | - Free markets fixes the problem immediately,
00:08:54.600 | because if you could fly to France and fill your,
00:08:58.460 | for that matter, any other country than you,
00:09:01.080 | where you can buy Epipens without a prescription,
00:09:03.380 | they're over the counter.
00:09:05.220 | If you could do that and go to France
00:09:07.840 | and fill your suitcase full of them and come back,
00:09:10.060 | you could sell them at a tidy profit,
00:09:11.860 | and Mylan would sell exactly zero of them for $300
00:09:14.860 | when anyone could buy one from you for 30.
00:09:17.260 | The pricing disparities that exist across all of medicine,
00:09:23.140 | it's not just pharmaceuticals.
00:09:24.400 | Pharmaceuticals happens to be the really easy one
00:09:27.140 | to go after, but it's not just there, it's everywhere,
00:09:30.500 | is an outrage, and the only reason it exists
00:09:34.100 | is because laws and regulations have been put in place
00:09:37.420 | at the behest of this industry
00:09:39.220 | to prevent you from doing exactly that.
00:09:41.780 | So if we solve this problem, if we just said,
00:09:44.460 | "Okay, look, if you guys can either cut this out
00:09:47.920 | "and voluntarily agree that these are all going to go away,
00:09:50.560 | "and if you don't, we're going to start
00:09:51.920 | "putting people in prison,"
00:09:53.920 | then the cost of medical care in this country
00:09:56.260 | would come down by anywhere between 50 and 80%.
00:10:00.600 | 50% if we went to a socialist system,
00:10:02.940 | because that's about what they spend
00:10:05.640 | as a percentage of GDP in socialist countries,
00:10:08.140 | but capitalism is more efficient than socialism
00:10:10.480 | because you have competition.
00:10:12.280 | So if we were to actually bring competition
00:10:14.240 | back into the game, we'd see a decrease of about 80%,
00:10:18.560 | and if you take bills that you can find,
00:10:22.400 | and I have a few of them people sent me,
00:10:24.900 | for things that people had done in hospitals
00:10:28.660 | 30 years ago, 40 years ago, for example, birth of a baby,
00:10:32.900 | you would find, and you inflate that by the CPI,
00:10:35.780 | you would find that you could go to a hospital
00:10:37.240 | and have a baby for, eh, $900,
00:10:39.740 | and today, it's 10 times that much.
00:10:45.140 | So the 80% reduction is not fanciful at all.
00:10:48.720 | It's probably about where you actually see things end up.
00:10:54.120 | - Well, Carl, we've got just a couple minutes left
00:10:56.660 | in this segment.
00:10:58.000 | Do you think this will ever happen?
00:11:01.700 | I mean, when you look at where the political contributions
00:11:04.900 | come from, it comes from big banks
00:11:08.000 | and financial institutions, one,
00:11:09.800 | and it comes from pharmaceutical companies, number two.
00:11:12.380 | So I would assume that it is not a surprise
00:11:15.380 | that that's the fact.
00:11:17.140 | - Well, that's the fact, but there's nowhere in those laws
00:11:22.560 | that says that these actions are exempt
00:11:24.660 | from the antitrust statutes.
00:11:27.660 | So of course, go ahead and suggest to anyone
00:11:31.340 | in the political sphere that some indictments
00:11:34.800 | ought to be issued tomorrow, and you're gonna be met
00:11:36.740 | with guffaws and all sorts of things like this.
00:11:40.140 | The problem is, from a political point of view
00:11:43.620 | and from an economic point of view,
00:11:45.280 | if we don't do this, the federal government's budget
00:11:48.420 | will collapse, and when you take what the Federal Reserve
00:11:51.320 | has done with tampering with interest rates
00:11:53.760 | and you add on to that the impact on bond ladders
00:11:56.720 | and pension funds and other defined benefit plans,
00:12:00.900 | not only will the federal government's budget collapse,
00:12:04.300 | but the pensions of every firefighter, teacher,
00:12:07.460 | and police officer, all state employees,
00:12:10.400 | are going to go with it within the next 10 years.
00:12:13.580 | So we either do this, or you're going to have
00:12:17.820 | literal destruction of a huge swath
00:12:21.780 | of the people in this country.
00:12:24.280 | - Well, our guest today is Mr. Carl Denninger.
00:12:27.260 | He is a prolific writer.
00:12:29.260 | You can read his work at market-ticker.org.
00:12:32.700 | His book, Leverage, How Cheap Money Will Destroy the World,
00:12:35.500 | will be the topic of conversation in the next segment
00:12:38.000 | with Carl when Everything Financial Radio returns.
00:12:40.740 | Stay with us.
00:12:41.840 | ♪ That's the way you do it
00:12:45.380 | ♪ Money for nothing and your chance to breathe
00:12:49.540 | - Welcome back to the Everything Financial Radio program,
00:12:55.720 | brought to you by PLP Services.
00:12:57.820 | My guest today is Mr. Carl Denninger.
00:13:00.360 | Carl's book, Leverage, How Cheap Money Will Destroy the World,
00:13:03.720 | his blog, you can read at market-ticker.org.
00:13:07.900 | Carl, I want to pick it up in this segment
00:13:09.500 | where we left it off in the last segment.
00:13:12.840 | You had talked about the fact that within the next 10 years,
00:13:16.440 | if we don't fix this problem, pensions will collapse.
00:13:20.240 | It'll affect many, many public workers.
00:13:22.780 | I mean, we've already seen the beginning of that.
00:13:26.180 | To what extent, as you mentioned briefly,
00:13:30.060 | has Fed policy with low, artificially low interest rates,
00:13:34.520 | with quantitative easing programs,
00:13:37.120 | driven this problem, and in what way?
00:13:41.600 | - The Federal Reserve has exacerbated the problem.
00:13:44.400 | They, of course, have nothing to do with antitrust law
00:13:47.640 | and whether or not it's enforced,
00:13:49.100 | but what they have done is destroyed the return
00:13:53.680 | that bond investors can earn in reasonably safe securities,
00:13:58.680 | especially on the longer duration paper.
00:14:01.420 | And why this becomes important to people,
00:14:03.620 | and even though the majority of the people
00:14:05.960 | that listen to your program probably have
00:14:07.520 | absolutely nothing to do with buying
00:14:08.960 | these kinds of instruments on their own,
00:14:11.100 | is that by law, and just by common sense,
00:14:15.100 | any company that has an actuarial kind of exposure,
00:14:18.540 | in other words, a pension company, you retire at 65,
00:14:22.200 | the actuaries say you live to be about 85,
00:14:25.000 | so they have about a 20-year exposure
00:14:26.880 | where they have to pay benefits to you.
00:14:29.380 | And in order to match that duration of expected expense,
00:14:33.880 | they build a portfolio of laddered bonds.
00:14:36.720 | So one piece of them, 120 of them, comes to maturity.
00:14:40.960 | This year, another 20th comes to maturity.
00:14:43.120 | Next year, and on and on throughout the expected duration.
00:14:46.520 | When the Fed tampers with interest rates,
00:14:48.840 | as they have done, and depresses them,
00:14:52.160 | what happens is that in the first year,
00:14:54.760 | 5% of your portfolio gets replaced with bonds
00:14:57.380 | that yield much less than they should.
00:14:59.880 | And that doesn't look so bad,
00:15:01.280 | 'cause it's only 5% of your portfolio,
00:15:03.680 | but the yield on those certificates might be cut in half
00:15:07.220 | from what it otherwise would have been.
00:15:09.680 | So you say, well, you know, okay,
00:15:12.080 | so we go from a 6% yield to a 3% yield,
00:15:15.680 | and that's pretty bad, that's a 50% cut,
00:15:18.960 | but it's only 5% of the portfolio,
00:15:21.600 | so it's a tiny little piece, it's a 20th, okay?
00:15:25.720 | And it doesn't really hurt all that much,
00:15:27.840 | it's a few percentage points.
00:15:29.960 | Unfortunately, what you've just done is built a loss,
00:15:32.880 | a permanent reduction over the next 20 years
00:15:36.520 | into your cash flow, because if the Fed
00:15:40.360 | was to stop doing this tomorrow,
00:15:42.980 | all of those bonds that had been bought
00:15:45.200 | over the last seven, eight, nine years
00:15:47.640 | would still be in the portfolio.
00:15:49.660 | And because you could buy a new bond at a higher yield,
00:15:53.760 | what that means is that the trading price
00:15:55.600 | with existing ones immediately falls
00:15:57.520 | to compensate for that forward projection.
00:16:00.440 | So the pension manager can't sell the old ones
00:16:03.440 | and replace them, because they just crystallize to the loss.
00:16:06.880 | He's stuck with the next, you know,
00:16:09.960 | however long his maturity is,
00:16:11.400 | if he's got a 20 year duration,
00:16:12.920 | he's stuck with it for another, you know, 14 years,
00:16:15.840 | where he's going to be earning this sub-return
00:16:18.600 | that is less than what he projected
00:16:20.400 | and less than what he needs.
00:16:22.760 | The longer this goes on, the worse it gets.
00:16:26.800 | And we are now about halfway through
00:16:30.520 | most of these fund managers' duration ladder
00:16:34.920 | in terms of the distortion that the Fed has put on.
00:16:37.560 | This is not something that was just a one or two year thing
00:16:39.820 | for an emergency, they've now been doing it
00:16:41.480 | for, I guess, since 2007.
00:16:44.080 | And so we are in a situation today
00:16:47.080 | where pension fund managers have a critical
00:16:50.560 | and growing funding problem
00:16:53.540 | into the back of a ramping cost
00:16:56.120 | that is running in excess of 9%.
00:16:59.240 | Now how are you going to make those two numbers match?
00:17:01.560 | You're not.
00:17:02.400 | - Well, if you're just joining us,
00:17:05.080 | we're chatting with Carl Denninger today.
00:17:07.360 | Carl is the author of "Leverage,
00:17:09.120 | "How Cheap Money Will Destroy the World."
00:17:10.580 | And Carl, we've got about three and a half minutes
00:17:12.520 | left in this segment.
00:17:13.680 | Moving ahead, what do you expect Fed policy will be?
00:17:18.640 | Are they in a situation where they're going to continue
00:17:20.880 | to raise interest rates, or is that just a bunch of talk?
00:17:23.720 | - I don't know.
00:17:28.380 | You know, there's this old problem
00:17:30.320 | about taking pain now to avoid worse pain later.
00:17:34.840 | Nobody wants to do it.
00:17:36.260 | The impact on pension funds is easily projectable
00:17:41.520 | and predictable, and it's a function of arithmetic.
00:17:44.960 | The impact on the budget, however, is tomorrow.
00:17:48.680 | If the Fed was to lift rates materially,
00:17:51.160 | the interest on the $17 trillion in national debt,
00:17:54.280 | most of which has been rolled down into the short end,
00:17:56.600 | which is a horrible thing for the government
00:17:58.120 | to have done, but it's what they did,
00:17:59.920 | is going to spike.
00:18:02.380 | And the relatively small amount of interest expense
00:18:05.400 | that we have today will double or triple.
00:18:09.460 | So in order to avoid a calamity,
00:18:13.320 | you'd have to somehow find a way to get rid
00:18:15.680 | of the federal budget deficit at the same time.
00:18:19.260 | And again, the only way to do that,
00:18:21.360 | the only place that there's enough money to do it
00:18:23.960 | is to go after the medical side.
00:18:25.880 | So will the Fed lift rates?
00:18:29.720 | They should have done it a long time ago.
00:18:32.360 | I think they're going to be forced to do it eventually,
00:18:35.920 | but my fear is that they're gonna sit on this decision
00:18:38.240 | for another few years until it gets to the point
00:18:41.320 | that we have a fiscal crisis,
00:18:43.640 | not just at the government level,
00:18:45.040 | which is potentially manageable,
00:18:47.480 | but throughout the private sector as well
00:18:49.480 | at a degree that nobody's going to be able to cover.
00:18:53.560 | - So Carl, what does all this mean
00:18:56.640 | for currencies around the world?
00:18:58.400 | Every currency around the world now is a fiat currency,
00:19:01.800 | and certainly, when you look at what's going on
00:19:04.280 | in Venezuela, look what's going on
00:19:05.840 | in many parts of the world.
00:19:08.280 | You know, there's certainly a lot of stress on currencies
00:19:12.480 | and a lot of price inflation.
00:19:14.360 | Are we gonna see the same thing here?
00:19:16.120 | - I don't know.
00:19:19.180 | The thing that I think is always so interesting
00:19:22.360 | is everyone gets all amped up
00:19:23.800 | about currency differentials and such,
00:19:25.440 | but at the end of the day,
00:19:26.840 | it really doesn't matter how many dollars
00:19:28.080 | you have in your pocket.
00:19:28.960 | What matters is what they buy.
00:19:30.660 | And so what people really ought to be talking about
00:19:34.700 | is value, not dollars or pesos or francs or euros or yen,
00:19:39.700 | and yet everyone wants to try to play
00:19:43.980 | this beggar thy neighbor devaluation game
00:19:46.760 | to attempt to tip the trade balance in their favor,
00:19:49.640 | and yet what no one ever wants to deal with
00:19:52.320 | is the fact that this is a zero-sum game.
00:19:54.200 | That which you get in one place
00:19:55.480 | has to come from somewhere else.
00:19:57.660 | So we're focusing in the wrong place
00:20:01.720 | as a society and at a policy level,
00:20:03.760 | but this is just the discourse that we have
00:20:06.200 | within the political and economic sphere today.
00:20:09.200 | I don't see an end to it anytime soon,
00:20:11.680 | but what I am very concerned about
00:20:13.400 | is that if you see something get out of control
00:20:15.680 | in the United States,
00:20:17.940 | you could very easily see a quarter of the wealth
00:20:21.300 | that people have vaporized in the space
00:20:23.820 | of a couple of years.
00:20:24.980 | That wouldn't be hard to imagine happening at all.
00:20:27.940 | - Well, we're gonna have to leave it there.
00:20:28.860 | Our guest today has been Mr. Carl Denninger.
00:20:30.780 | His book, "Leverage, How Cheap Money Will Destroy the World."
00:20:33.620 | I'd encourage you to pick it up.
00:20:35.100 | Carl, thank you for joining us.
00:20:37.340 | - Anytime, thank you.
00:20:38.300 | - We'll be back after these words.
00:20:40.020 | ♪ Give me your money ♪
00:20:41.220 | ♪ Money, money, money ♪
00:20:43.660 | ♪ Always sunny ♪
00:20:45.700 | ♪ In the rich man's world ♪
00:20:49.280 | - You are listening to the Everything Financial
00:20:53.900 | radio program brought to you by PLP Services.
00:20:56.900 | You know, we offer a number of resources
00:21:03.000 | to help you make good decisions
00:21:05.820 | about what to do with your money.
00:21:08.340 | And in particular, we have a resource
00:21:10.900 | that will help you get some perspective
00:21:13.260 | on the best way to maximize your social security benefits.
00:21:17.260 | In today's low yield environment,
00:21:19.500 | these decisions have never been more important.
00:21:23.000 | In fact, when you take a look at 10 years ago
00:21:25.380 | and the types of yields you could get on your money
00:21:27.460 | and the yield you can get today,
00:21:30.200 | if you could get an extra three, four, five, 10,
00:21:32.900 | or even $12,000 from social security every year
00:21:35.960 | by learning how to maximize your benefits,
00:21:38.860 | think about how much capital you'd have to have
00:21:42.420 | at today's low interest rates to do the same thing.
00:21:44.980 | With that end in mind, we'd like to invite you
00:21:48.660 | to attend one of our free
00:21:50.440 | social security maximization workshops.
00:21:53.440 | We've got one coming up on Thursday, September 8th
00:21:56.200 | at Stonewater Country Club out in Caledonia Township.
00:21:59.880 | Also have one at Boulder Creek Golf Club
00:22:02.580 | out in Belmont on Tuesday, September 13th.
00:22:05.600 | Both events begin at 6 p.m. and conclude at 7.30 p.m.
00:22:10.100 | with a complimentary dinner.
00:22:11.740 | The meeting is free, the information is free,
00:22:14.020 | and dinner is free.
00:22:15.300 | Consequently, they fill up quickly.
00:22:18.060 | All you have to do to get more information
00:22:20.180 | or to register is visit socialsecurityradio.com.
00:22:24.580 | The website again is socialsecurityradio.com.
00:22:29.100 | I'm pleased to have joining me
00:22:30.620 | on the Everything Financial radio program
00:22:33.460 | returning guest Joshua Sheets.
00:22:37.020 | Joshua is the host of the very popular podcast
00:22:41.500 | Radical Personal Finance.
00:22:43.700 | And Joshua, welcome back to the program.
00:22:46.560 | - Awesome to be back with you, Dan.
00:22:48.940 | - Well Joshua, let's start by talking a bit
00:22:53.340 | about a topic that you discussed on your podcast of late
00:22:57.500 | which caught my interest.
00:22:59.500 | And it's how to live a rich life now.
00:23:02.540 | And the subhead was most material riches
00:23:06.420 | are easily accessible to you today.
00:23:08.420 | Now that's a very compelling and provocative topic.
00:23:12.060 | So let's spend a little time discussing it.
00:23:14.380 | And maybe to get started, define if you would, rich life.
00:23:19.220 | I think that maybe has a little bit different definition
00:23:21.980 | for just about anybody that hears it.
00:23:23.980 | - Yeah, it definitely does.
00:23:26.220 | And that's actually one of the major points
00:23:28.400 | that I try to bring out in my podcast
00:23:31.140 | is to get people to define it for themselves.
00:23:33.940 | So I have some definitions that are important to me.
00:23:36.700 | And I have some definitions that I think
00:23:38.140 | are worth other people considering.
00:23:39.940 | But I want people to think,
00:23:40.980 | what does a rich life mean to me?
00:23:42.640 | And what I'm confronting is, especially for you and me,
00:23:45.660 | is in the mainstream financial planning culture,
00:23:48.820 | we have this tendency to talk about riches
00:23:53.500 | and living a rich life as something that happens
00:23:55.620 | a long time in the future when we're old and gray
00:23:58.200 | and retired and when we have millions of dollars.
00:24:00.420 | But I look around and I recognize
00:24:02.300 | that it's a lot easier to get there now
00:24:04.980 | than it is to wait until we're old and retired.
00:24:07.300 | And I think oftentimes we miss the aspects of riches.
00:24:12.300 | One of the things that many of my listeners
00:24:14.220 | and many of my clients when I was working
00:24:15.580 | as a financial advisor would talk about
00:24:17.100 | was the aspect of financial freedom.
00:24:19.580 | And one of the things that I learned
00:24:21.820 | was that financial freedom to most people
00:24:23.740 | isn't best represented by a brand new Mercedes
00:24:26.900 | in the driveway or a big, fancy luxury home on the water.
00:24:30.180 | Financial freedom is usually represented by choices.
00:24:33.020 | And I came to the conclusion that you could get there,
00:24:35.680 | meaning you could get to a place of having control
00:24:38.000 | over your choices much faster than you could get
00:24:40.340 | to the position of being a multimillionaire.
00:24:42.400 | You just make different life choices.
00:24:44.220 | So I break living a rich life down
00:24:46.140 | into material aspects and immaterial aspects.
00:24:50.500 | But just as an example, I think most listeners
00:24:52.880 | of your radio show or my podcast
00:24:55.860 | are already living a richer life today
00:24:59.620 | than the richest person in the world 75 years ago.
00:25:03.060 | Just think about it.
00:25:03.980 | Number one, climate controlled.
00:25:06.220 | Almost all of our listeners right now
00:25:08.060 | are listening to us in a climate
00:25:09.740 | that's perfectly suited to their ideal body temperature.
00:25:12.700 | Whether it's cooled or heated,
00:25:14.640 | they're already enjoying that.
00:25:16.060 | Think about how hot it would have been
00:25:18.580 | for the richest person in the world 75 years ago
00:25:21.980 | or how cold it would have been in some places
00:25:24.220 | and how much easier we have it.
00:25:25.780 | And yet when's the last time you heard somebody
00:25:27.880 | express appreciation for the simple comfort
00:25:31.380 | and convenience of a climate controlled environment
00:25:33.820 | or think about the access to information
00:25:35.900 | and education and entertainment.
00:25:38.100 | Today, every one of our listeners
00:25:39.340 | has a smartphone in their pocket
00:25:40.660 | or sitting on their car dashboard
00:25:42.620 | that has access to entertainment,
00:25:45.220 | unlimited amounts of entertainment
00:25:47.180 | for essentially free right on YouTube
00:25:50.060 | from all around the world.
00:25:51.740 | That's a luxury that the richest person in the world
00:25:54.860 | didn't have access to even 50 years ago.
00:25:57.340 | And yet today we take it for granted
00:25:58.940 | and we grumble about the fact that our car isn't brand new
00:26:01.780 | while we have access to some of the riches
00:26:04.100 | that you couldn't even achieve 50 years ago.
00:26:06.920 | - So when you mention financial freedom
00:26:13.180 | and define that by saying control over choices,
00:26:18.060 | could you expand on that a bit?
00:26:19.780 | - Sure.
00:26:21.460 | I think that, and on my show I've done,
00:26:24.420 | I did the immaterial aspects of riches
00:26:26.780 | and the material aspects.
00:26:28.020 | And I like to disconnect them
00:26:29.500 | because we are so stuckered in to a losing game
00:26:33.980 | by the advertising media on all sides
00:26:36.500 | that causes us to think that we somehow need
00:26:39.140 | a lot of material things to be rich.
00:26:42.300 | But if you actually think about it,
00:26:44.140 | the feelings of richness are often evoked by your choice.
00:26:49.020 | I can live a rich life by having an afternoon free
00:26:51.540 | from work that I don't wanna do
00:26:52.820 | to sit and read a book or watch a movie
00:26:54.500 | or do something that I do wanna do.
00:26:56.740 | And so what I think people want from being rich is control.
00:27:01.740 | They want control over their day.
00:27:03.820 | They want control over their time.
00:27:05.820 | They want control over the choice of their activities.
00:27:08.900 | Well, that can be achieved
00:27:10.560 | without yet becoming a multimillionaire.
00:27:13.200 | If you want control over your day,
00:27:15.240 | then transition from a job or a career
00:27:17.900 | that doesn't allow you that control
00:27:19.660 | to something that does allow you that control.
00:27:22.020 | I'm 31 years old and my birthday
00:27:23.500 | was just a couple weeks ago.
00:27:24.760 | And I consider myself at this point in time financially free.
00:27:28.780 | Why?
00:27:29.620 | Because I'm a multimillionaire?
00:27:30.460 | No, I'm not there yet.
00:27:31.300 | I'm working towards it, but I'm not there yet.
00:27:33.140 | But I consider myself financially free
00:27:35.220 | because I left a career and job
00:27:37.500 | that had a tremendous amount of control
00:27:39.620 | and I started my own business
00:27:40.940 | that gives me full control over my day.
00:27:43.940 | I can start my day at any time that I want.
00:27:46.340 | I can do the work that I've chosen to do.
00:27:48.740 | I don't accept a lot of external calendar appointments
00:27:51.980 | on my schedule, so I have control over when I do my work.
00:27:56.280 | And that gives me a tremendous amount of freedom.
00:27:58.820 | Now, it's not the freedom that's ultimately best enjoyed
00:28:01.380 | by having a stream of dividend income
00:28:03.780 | from publicly traded companies
00:28:05.460 | that's much higher than my expenses
00:28:07.300 | that I can just sit back and do nothing.
00:28:09.440 | I still need to work.
00:28:10.620 | But having that control to choose work that's meaningful
00:28:13.860 | makes me feel financially free.
00:28:16.100 | At the end of the day, we all know
00:28:17.860 | that life is composed primarily of our experiences
00:28:21.620 | and not so much our things.
00:28:23.420 | When we're dead and gone,
00:28:24.380 | our things are gonna stay here with us.
00:28:27.540 | We can't use them anymore.
00:28:28.940 | And most people, when they get to the end of their life,
00:28:30.860 | they're gonna be much more concerned
00:28:32.300 | with their experiences,
00:28:33.820 | the richness of their relationships,
00:28:35.880 | the diversity of their experience,
00:28:37.660 | the richness of life
00:28:39.460 | that's not just measured by material things.
00:28:42.620 | - So essentially, Joshua,
00:28:45.900 | financial freedom is somewhat time freedom.
00:28:49.780 | And in your case, as I was listening to you explain
00:28:53.660 | or describe your personal transition
00:28:56.460 | going from a job to a business,
00:28:58.860 | that's probably something that many of our listeners
00:29:01.500 | envy very much.
00:29:02.740 | Can you talk about how you would go about
00:29:05.540 | planning such a transition?
00:29:07.180 | - Absolutely.
00:29:09.260 | The key thing is to first recognize
00:29:11.300 | that it's something that you actually want.
00:29:13.940 | Many people have ideas and dreams
00:29:17.540 | about how great running their own business is.
00:29:20.100 | And then those ideas and dreams
00:29:21.860 | can be shattered by actual experience.
00:29:24.980 | I think every business owner has had the opportunity,
00:29:28.300 | has had the thought at some point
00:29:30.460 | in their entrepreneurship game,
00:29:32.420 | man, I wish I could just go back to the world of employment.
00:29:35.260 | I don't recommend that everybody become an entrepreneur.
00:29:38.260 | It's tough, it's challenging.
00:29:39.860 | So be sure that it's something that you want.
00:29:42.320 | The next thing is to recognize
00:29:43.820 | there are gonna be some benefits from it
00:29:45.220 | and there are going to be some costs and some drawbacks.
00:29:48.340 | So you need to list those benefits out
00:29:50.780 | and you need to recognize what you're giving up.
00:29:54.100 | But the transition to entrepreneurship is relatively simple.
00:29:56.660 | You find something that the marketplace is going to value
00:30:00.220 | that you want to provide,
00:30:02.180 | and then you build a business model behind it
00:30:04.260 | that'll work.
00:30:05.260 | You can also and should also pay very careful attention
00:30:08.380 | to some of the formal technical financial planning techniques
00:30:10.860 | that we teach in order to make it a good transition.
00:30:15.060 | You can go out and start a business
00:30:16.580 | when you're completely broke and deeply in debt.
00:30:19.060 | It's really stressful.
00:30:20.540 | Now, if you're in that situation,
00:30:22.060 | I recommend you still consider doing it,
00:30:24.100 | but it's also very wise
00:30:25.780 | to get yourself on a solid foundation.
00:30:28.100 | I think the best way for most people to approach transition
00:30:30.900 | is to do it on a part-time basis.
00:30:32.660 | Work a full-time job,
00:30:34.020 | start a business on the side on a part-time basis.
00:30:36.460 | That way you're not putting too much risk on the side gig.
00:30:39.460 | And then when you get to the point in time
00:30:41.580 | where you can see some clear and measurable things
00:30:43.900 | that you could do to increase the business
00:30:45.980 | to a point where it's able to support yourself,
00:30:47.900 | then go ahead and start pursuing that transition
00:30:50.140 | to a full-time business.
00:30:51.340 | - So when we talk about entrepreneurship, Joshua,
00:30:58.700 | this becomes a pretty important topic
00:31:01.580 | given where the economy is today.
00:31:04.780 | I interviewed Mr. Gerald Salente of Trends Research Institute
00:31:08.460 | and during our interview,
00:31:10.380 | he pointed out that actual real income is down
00:31:15.180 | for the average American over the last 18 years.
00:31:17.980 | And even according to the US Department of Labor
00:31:22.300 | and the Bureau of Economic Analysis,
00:31:25.620 | median household income is down over the last five years.
00:31:28.500 | So this is becoming really almost a necessity
00:31:33.500 | for some people.
00:31:34.540 | So if someone has this as an idea,
00:31:37.060 | but they don't really have any skills
00:31:39.060 | in the area of becoming an entrepreneur,
00:31:42.140 | what advice would you give them to go acquire those skills?
00:31:45.140 | - The key advice that people in that situation need
00:31:49.300 | is a change of mindset.
00:31:51.380 | You're right about the trends in our economy
00:31:53.620 | and it's only gonna get worse in the future.
00:31:56.420 | We've been done a disservice as a society
00:31:59.900 | wherein we've primarily been taught the concept
00:32:02.420 | that if you just get a good job, everything will be fine.
00:32:05.820 | But there are a number of pressures and stresses
00:32:08.260 | that are collaborating to make that no longer the case.
00:32:11.580 | If you notice how many of the unemployment roll,
00:32:14.020 | how many of the employment, the jobs,
00:32:16.420 | did many of them disappeared after the 2008 recession,
00:32:19.380 | many of those jobs have not come back and will not come back
00:32:22.100 | and the pressure is only gonna get more and more intense.
00:32:24.700 | I pay a lot of attention
00:32:25.780 | to the developments of automation.
00:32:28.460 | And frankly, I feel very, very bad.
00:32:31.940 | I feel bad for many of the people who are working hard,
00:32:34.900 | for example, the fast food industry,
00:32:36.420 | striking and trying to pressure for what they call
00:32:39.460 | a living wage, increases in the minimum wage.
00:32:41.740 | The problem with that type of approach,
00:32:43.500 | the problem with striking for more money
00:32:45.580 | is that employers are consistently looking
00:32:47.860 | to remove your job and to transfer that
00:32:50.220 | to some sort of automated system.
00:32:52.260 | And I would guess within about five years,
00:32:54.820 | most of us will be completely accustomed
00:32:56.580 | and comfortable with ordering our food through a computer
00:32:59.220 | instead of through a person.
00:33:01.020 | So the key mindset is not looking to say, what can I get?
00:33:05.340 | That's the mindset that leads to me striking and advocating
00:33:08.460 | and trying to get people to give me more money.
00:33:10.340 | I'm looking for what I can get.
00:33:11.740 | The mindset of an entrepreneur is looking to,
00:33:13.420 | what can I give?
00:33:14.340 | What service can I provide?
00:33:15.940 | And so the first thing to do is to look around where you are
00:33:18.580 | and try to see what is something
00:33:20.260 | that I have the capability to offer to somebody else
00:33:23.220 | that they might be willing to pay me for.
00:33:25.380 | That's the fundamental transformation of entrepreneurship.
00:33:27.900 | Now, if you don't know, just look around
00:33:29.660 | and see what other people are doing
00:33:31.180 | and ask yourself, can I do what other people do?
00:33:33.380 | And you can do this at any level.
00:33:35.060 | For example, a couple of neighborhood kids
00:33:36.860 | in my neighborhood, they've been off on summer vacation
00:33:40.260 | over the last few months.
00:33:41.380 | And they started a car washing business.
00:33:43.100 | And there's three young men, eight years old, one,
00:33:45.380 | nine years old, the other, and 10 years old, the third.
00:33:47.820 | And they came by my house, knocked on my door,
00:33:49.660 | and asked me if I wanted my car washed.
00:33:51.740 | They had a bucket ready to go.
00:33:53.220 | They're using my hose, their bucket, their soap,
00:33:55.500 | and they're washing my car for me.
00:33:57.780 | Well, they've gone and they've created
00:33:59.580 | a little tiny business simply based
00:34:01.940 | on going around and asking people,
00:34:03.620 | would you like me to wash your car?
00:34:05.740 | That's the fundamental basis of entrepreneurship
00:34:08.700 | of every kind.
00:34:09.620 | You're just looking for something
00:34:11.020 | that people might be willing to pay you for
00:34:12.940 | and then asking them, would you be willing to pay me?
00:34:15.740 | Now, the good way to start is with something
00:34:18.140 | that you have the skills and capabilities of doing.
00:34:20.660 | An eight-year-old young man is probably not
00:34:22.900 | going to have the capacity to do comprehensive financial
00:34:25.820 | planning like I do.
00:34:27.140 | But his business is no different than mine.
00:34:29.740 | And if you find an area where you
00:34:31.220 | think you might have a product or a service
00:34:33.860 | that somebody might be willing to buy, you offer that.
00:34:36.340 | You put that out in the marketplace
00:34:37.840 | and you see if there's any interest.
00:34:39.420 | Then you go back and you try to develop additional business
00:34:42.100 | and some services behind it.
00:34:43.500 | Car washing business, I kind of took these young guys
00:34:46.140 | under my wing and I'm trying to counsel them and give them
00:34:48.600 | some additional ideas.
00:34:49.780 | Here are some additional products that you can offer.
00:34:52.340 | You're offering a basic wash, but what about a basic wash
00:34:55.620 | and a vacuum?
00:34:56.500 | Well, we don't have a vacuum.
00:34:57.980 | So you need to go out and get a vacuum, acquire the tools,
00:35:01.140 | build the skills.
00:35:01.900 | That skill is pretty simple.
00:35:03.260 | What about some other skills you can offer?
00:35:05.380 | Can you wax cars?
00:35:06.460 | We don't know how to do that.
00:35:07.660 | Well, go learn the skills.
00:35:09.020 | I'm using a simple example because I
00:35:11.100 | think it's something that we can all relate to.
00:35:13.140 | And today, if I lost all of my money,
00:35:15.300 | if I lost all of my business, I would go and now consider
00:35:18.420 | starting a car washing business.
00:35:20.100 | Because that's something that I can go and I can sell.
00:35:22.620 | I can go door to door.
00:35:23.620 | I can ask people if they'd like their car washed.
00:35:25.660 | And I could build a business on it.
00:35:27.420 | There are tons and tons and tons of these
00:35:29.620 | all throughout our society.
00:35:31.700 | And if you just start paying attention
00:35:33.280 | to what's something I can provide to the marketplace,
00:35:35.860 | then your mindset will open up the opportunities to you.
00:35:39.780 | Well, we are chatting today with Joshua Sheets.
00:35:43.060 | Joshua is the host of the popular podcast,
00:35:46.540 | Radical Personal Finance.
00:35:48.380 | I'll continue my conversation with Joshua.
00:35:50.700 | When everything financial radio continues, stay with us.
00:35:53.700 | [MUSIC PLAYING]
00:35:56.740 | (SINGING) Money, money, money, money, money, money.
00:36:04.700 | This is the Everything Financial radio program,
00:36:07.220 | brought to you by PLP Services.
00:36:10.220 | Today, we are listening to an interview
00:36:12.940 | that I conducted with Mr. Joshua Sheets a while ago.
00:36:18.620 | This aired back about two months ago.
00:36:21.220 | But Joshua's got such a great perspective,
00:36:24.020 | I thought I would share it with you once again.
00:36:27.100 | So I'll get back to that interview now.
00:36:29.940 | I have the pleasure of chatting today with Joshua Sheets.
00:36:33.580 | Joshua is the host of the podcast, Radical Personal
00:36:37.100 | Finance.
00:36:37.740 | I would encourage you to check it out.
00:36:39.660 | And we're chatting today with Joshua about how
00:36:43.180 | to live a rich life now.
00:36:45.260 | And on your podcast, Joshua, you talked about the fact
00:36:49.620 | that it's possible to build a plan
00:36:52.300 | to achieve financial freedom in 10 years.
00:36:55.980 | So the floor is yours.
00:36:58.460 | Our listeners, I'm sure, would love to hear that.
00:37:01.940 | This show, I just finished this series of three shows
00:37:04.260 | on Radical Personal Finance.
00:37:05.420 | And it came because I've done over 350 episodes
00:37:08.060 | of the podcast.
00:37:08.740 | And the tagline of my show is how to live a rich life
00:37:11.860 | now while building a plan for financial freedom
00:37:14.500 | in 10 years or less.
00:37:15.300 | And I've done hundreds of shows.
00:37:16.620 | I never had fully explained that.
00:37:18.500 | So that was where I came into this series.
00:37:20.940 | But I'm convinced that you don't have
00:37:22.700 | to wait for a 40-year retirement plan
00:37:25.540 | in order to live a lifestyle of financial freedom
00:37:29.020 | and that there are many paths to financial freedom.
00:37:32.100 | Now, notice I'm being careful with my words.
00:37:34.180 | I'm using the word "freedom."
00:37:36.540 | I didn't say 10 years--
00:37:38.620 | how to be a multimillionaire in 10 years or less,
00:37:40.740 | although I believe that is possible for many people.
00:37:43.700 | I didn't necessarily even say how
00:37:45.340 | to be financially independent--
00:37:47.700 | independent of the need to work in 10 years or less,
00:37:49.940 | although I believe that is possible for many people.
00:37:53.260 | I talked about financial freedom.
00:37:54.780 | And the reason is that in my work as a financial planner,
00:37:57.160 | I noticed that so many people get so focused on only being
00:38:01.180 | financially free when they're 65 years old
00:38:03.340 | and have a million and a half dollars.
00:38:05.140 | But guess what?
00:38:06.580 | You don't have to wait until then to experience
00:38:09.180 | financial freedom.
00:38:10.220 | And if you put all of your focus and hope
00:38:12.220 | on that future experience, you miss out
00:38:15.260 | on some of the aspects of financial freedom today.
00:38:18.020 | So I cover the basic aspect of financial freedom.
00:38:21.580 | For example, having your income higher than your expenses.
00:38:25.740 | If you have your income higher than your expenses,
00:38:28.820 | then to a great degree, you are financially free,
00:38:32.180 | just simply because you have more money coming in
00:38:34.220 | than you need to spend.
00:38:35.260 | Now, even better, if you could have that income coming in
00:38:39.140 | in a way that's ideally suited for you
00:38:41.940 | through a job that's appropriate to you
00:38:44.100 | or through a business that's appropriate to you,
00:38:46.180 | now you've got an even higher degree of freedom.
00:38:48.700 | If you look at the wealthy, notice the fact
00:38:51.500 | that the mega rich don't ever retire.
00:38:54.660 | Donald Trump's running for president.
00:38:56.060 | He wants the hardest and worst job in the world,
00:38:57.740 | even though he doesn't need it.
00:38:59.100 | He wants it.
00:39:00.100 | Well, why is he trying to get one of the hardest jobs
00:39:02.740 | in the world when he doesn't need it?
00:39:04.420 | Because it's something more than money.
00:39:06.340 | And if you look at all of the wealthy,
00:39:07.580 | you almost never see that they retire.
00:39:09.100 | Why?
00:39:09.940 | Because they've found an occupation that fits them
00:39:12.180 | and they're financially free,
00:39:13.500 | even though they're still working.
00:39:14.940 | People don't wait to be a billionaire.
00:39:16.820 | Just find that occupation now.
00:39:18.780 | Another aspect, being debt free.
00:39:20.340 | If you're debt free, that gives you a huge degree
00:39:22.860 | of financial freedom, gives you choices over your life.
00:39:25.540 | And then I also go in and I explain
00:39:27.020 | that in 10 years or less, you probably can build a plan
00:39:30.100 | for financial freedom, complete financial freedom.
00:39:32.420 | It's as simple as if you're an employee,
00:39:34.380 | if you live on about 30% of your income
00:39:37.020 | and save 70% of your income,
00:39:39.340 | you can be financially independent in about a decade.
00:39:42.580 | Well, that's easy?
00:39:44.180 | No, but many people can do that and are doing that.
00:39:47.620 | And you can make a plan in a decade
00:39:49.180 | to dramatically increase your income,
00:39:51.060 | to decrease your expenses and save a lot of money.
00:39:53.660 | There are thousands of people all around the US
00:39:55.540 | that are doing that.
00:39:56.660 | If you don't believe me, I'll send you to the forums
00:39:58.340 | where they're all interacting.
00:39:59.580 | Or you can build a plan to build a business.
00:40:01.700 | If you need to have that multimillion dollar approach,
00:40:05.100 | you can build a plan to build a business
00:40:07.460 | and sell it out in under a decade.
00:40:09.300 | Now, is that guaranteed?
00:40:11.500 | No, that's difficult.
00:40:13.420 | Most businesses fail.
00:40:15.060 | But is it possible?
00:40:15.900 | It sure is.
00:40:16.720 | And so, depending on your financial plan,
00:40:18.880 | you'll set out different goals,
00:40:20.500 | depending on what you're trying to accomplish,
00:40:21.820 | and you'll be able to accomplish them.
00:40:23.980 | But I don't believe you have to wait
00:40:25.420 | until you're 65 years old
00:40:27.100 | and have $2 million in your 401(k)
00:40:29.260 | to enjoy the fruit of a rich life now or financial freedom.
00:40:33.460 | You can achieve it far faster.
00:40:35.060 | >> And Joshua, you made just a very basic point.
00:40:39.820 | In fact, I wrote a book called "Finding Financial Freedom"
00:40:42.180 | and I made the same point in that book.
00:40:44.700 | The first thing you have to do is get to a point
00:40:46.180 | that your income is higher than your expenses.
00:40:49.180 | And it might be interesting to talk about the fact
00:40:51.180 | that sometimes it's easier to increase income
00:40:53.980 | than it is to reduce expenses.
00:40:55.640 | >> Absolutely.
00:40:57.740 | I think they both have their place.
00:40:59.660 | Expenses, for many people, are so loose and sloppy
00:41:03.280 | that that's easier to cut.
00:41:04.580 | But for many people, they're already being very careful,
00:41:06.820 | and all they need to do is adjust their income.
00:41:09.620 | I remember years ago, I heard,
00:41:11.100 | I think it was Zig Ziglar tell a story.
00:41:13.260 | And Zig told the story about how they had done a test
00:41:16.140 | and they put a newspaper ad for a job
00:41:20.140 | in two different newspapers
00:41:21.420 | in two different major metropolitan areas.
00:41:24.300 | The ad was identical qualifications,
00:41:28.020 | description of the job.
00:41:28.980 | The only thing that was different
00:41:30.340 | was that in one ad they offered
00:41:31.900 | something like $40,000 a year.
00:41:33.900 | In the other ad, they offered some six-figure numbers,
00:41:36.220 | say $120,000 per year.
00:41:38.420 | And they got five times the respondents
00:41:42.220 | for the $40,000 a year job than the $120,000 a year job.
00:41:46.180 | Why?
00:41:47.020 | Was there any difference in qualifications?
00:41:48.440 | No, the ad was the same.
00:41:50.260 | It was just the number.
00:41:51.420 | And so many people have not investigated
00:41:53.380 | how to earn more income,
00:41:55.020 | and thus they're walking away
00:41:56.320 | from all kinds of opportunities that are available to them
00:41:59.360 | in their current job or transitioning to a different job
00:42:02.300 | or starting a different business.
00:42:04.060 | And there's so many opportunities
00:42:05.620 | for people to increase their income.
00:42:07.980 | >> Well, we're going to have to leave it there.
00:42:08.900 | Our guest today has been Mr. Joshua Sheets.
00:42:11.380 | He's host of the podcast, "Radical Personal Finance."
00:42:14.820 | And Joshua, thank you for joining us today.
00:42:16.520 | We hope you'll come back.
00:42:18.320 | >> I'd love to.
00:42:19.780 | >> Well, before I close today,
00:42:20.780 | let me remind you that we do have
00:42:22.980 | a couple of free Social Security maximization workshops
00:42:26.460 | coming up here in the Grand Rapids area.
00:42:29.040 | These meetings begin at 6 p.m.
00:42:32.040 | and conclude at 7.30 p.m. with a free dinner.
00:42:35.380 | The meeting is free, the information is free,
00:42:37.420 | and dinner is free.
00:42:39.180 | If you're between the ages of 55 and 69
00:42:42.060 | and would like another perspective
00:42:43.720 | on the best way to collect your Social Security benefits,
00:42:47.140 | I would encourage you to attend.
00:42:48.900 | You can get more information
00:42:50.140 | by visiting the website socialsecurityradio.com.
00:42:54.500 | The website, once again, is socialsecurityradio.com.
00:42:59.100 | On September the 8th, which is a Thursday,
00:43:02.560 | you will find us at Stonewater Country Club
00:43:05.260 | out in Caledonia Township.
00:43:08.060 | On Tuesday, September 13,
00:43:09.980 | you'll find us at Boulder Creek Golf Club in Belmont.
00:43:13.580 | Again, both meetings begin at 6 p.m.
00:43:16.840 | and conclude at 7.30 p.m. with a complimentary dinner.
00:43:21.140 | To get more information or register,
00:43:23.100 | once again, the website is socialsecurityradio.com.
00:43:27.620 | If you'd like to go back and listen
00:43:28.720 | to any of the interviews that I do
00:43:30.180 | with the guest experts here
00:43:31.380 | on the Everything Financial Radio program,
00:43:33.400 | you can visit the website everythingfinancialradio.com
00:43:37.380 | and you'll find them listed there.
00:43:39.980 | That's our show for this week.
00:43:41.500 | Hope you got something you can use.
00:43:43.260 | Bye.
00:43:44.100 | - Hey parents, join the LA Kings on Saturday, November 25th
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