REPLAY_RPF0193-Backup_Plan_For

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00:00:30.000 | - Yesterday I shared with you the fact that

00:00:33.000 | recession is coming in the future,

00:00:36.000 | and one of the most important things you can do

00:00:39.000 | is to plan not to lose your job.

00:00:44.000 | But obviously, even though you might plan

00:00:47.000 | not to lose your job and do all those things yesterday,

00:00:50.000 | there are going to be certain things

00:00:52.000 | that are outside of your control.

00:00:55.000 | So today, I want to talk to you about

00:00:59.000 | how to make a plan of what you will do

00:01:02.000 | if you lose your job.

00:01:05.000 | (upbeat music)

00:01:08.000 | Welcome to the Radical Personal Finance Podcast.

00:01:23.000 | My name is Joshua Sheets.

00:01:25.000 | This is episode 193, part two of our three-part series

00:01:29.000 | here on what to do if you lose your job.

00:01:32.000 | Today I'm going to help you think it through,

00:01:35.000 | and there are a bunch of reasons for this.

00:01:37.000 | Most importantly, by having thought it through,

00:01:39.000 | you'll probably react a little bit better

00:01:41.000 | and respond a little bit better if it happens to you.

00:01:43.000 | But more importantly, there's some stuff

00:01:45.000 | you've got to be doing now

00:01:47.000 | so that you're better off if you lose your job.

00:01:50.000 | (upbeat music)

00:01:53.000 | Whether or not you actually implement

00:01:56.000 | some of the things that I talk to you about

00:01:58.000 | in today's show, that's up to you, and I hope you do.

00:02:00.000 | But I know that many of you won't,

00:02:02.000 | simply because that's the fact, that many times

00:02:04.000 | many of us listen to ideas that are good

00:02:06.000 | and we don't actually implement them.

00:02:08.000 | Even if you don't do anything

00:02:10.000 | with the content of today's show,

00:02:12.000 | I think you're still going to be better off,

00:02:14.000 | and that's why I'm going ahead and doing it for you.

00:02:16.000 | My hope is that you'll do something with it.

00:02:18.000 | If you don't do anything, obviously,

00:02:20.000 | you will probably just grab a few things

00:02:22.000 | and start implementing just a few things,

00:02:24.000 | and hopefully that will help you

00:02:26.000 | to fare a little bit better.

00:02:28.000 | See, a lot of this type of planning

00:02:30.000 | is defensive risk management planning.

00:02:32.000 | It's insurance planning.

00:02:34.000 | But it's not about buying an insurance policy.

00:02:36.000 | It's about the things that you can do

00:02:38.000 | to prepare yourself

00:02:40.000 | for when everything goes wrong.

00:02:42.000 | Things go wrong in everybody's life.

00:02:44.000 | But depending on our level of preparation

00:02:46.000 | for those things,

00:02:48.000 | the impact is different.

00:02:50.000 | And my hope is that some of these ideas

00:02:52.000 | that I have to share with you today

00:02:54.000 | will help you to make a plan

00:02:56.000 | and put that plan in place

00:02:58.000 | so that if you lose your job,

00:03:00.000 | whether that's because you get fired

00:03:02.000 | at a one-off scenario due to a mistake

00:03:04.000 | that you made, an honest mistake it could be,

00:03:06.000 | or something else,

00:03:08.000 | or whether you get laid off,

00:03:10.000 | or you get fired,

00:03:12.000 | or something else,

00:03:14.000 | or whether you get laid off

00:03:16.000 | in a round of layoffs in a coming recession,

00:03:18.000 | something like that,

00:03:20.000 | or your business that you're working for

00:03:22.000 | just simply goes belly up,

00:03:24.000 | my hope is that these ideas

00:03:26.000 | will help you to have a plan in place.

00:03:28.000 | It's impossible to guarantee

00:03:30.000 | not losing your job.

00:03:32.000 | I've been laid off.

00:03:34.000 | I realized today when I was preparing

00:03:36.000 | some of my notes here

00:03:38.000 | that I've actually been laid off twice.

00:03:40.000 | That's a decision which we'll come to

00:03:42.000 | in the course of today's show.

00:03:44.000 | There are many factors beyond your control

00:03:46.000 | and it's important to have a plan.

00:03:48.000 | Now, as I emphasized yesterday,

00:03:50.000 | I believe the best plan

00:03:52.000 | is to simply be in front of the trends.

00:03:54.000 | And the farther you can think ahead

00:03:56.000 | in life, in every area of life,

00:03:58.000 | the better.

00:04:00.000 | So, for example,

00:04:02.000 | let's say that you are going to plan

00:04:04.000 | to be able to protect yourself

00:04:06.000 | and protect your family

00:04:08.000 | if you get attacked by a violent thief.

00:04:10.000 | And in order to do that,

00:04:12.000 | you have put in place

00:04:14.000 | a variety of preparation

00:04:16.000 | measures.

00:04:18.000 | First, you have gone ahead

00:04:20.000 | and studied some

00:04:22.000 | basic martial arts, so you have some

00:04:24.000 | basic hand-to-hand self-defense tools.

00:04:26.000 | You carry a knife on your person,

00:04:28.000 | so you have a basic bit of

00:04:30.000 | defensive equipment.

00:04:32.000 | You carry a concealed firearm.

00:04:34.000 | You carry some pepper spray.

00:04:36.000 | And you're well prepared

00:04:38.000 | in case something happens.

00:04:40.000 | I think all of those things would be good

00:04:42.000 | things for you to do.

00:04:44.000 | But make sure to start

00:04:46.000 | with the fact of

00:04:48.000 | this advice.

00:04:50.000 | Don't go to stupid places with stupid people

00:04:52.000 | and do stupid things.

00:04:54.000 | If you follow that advice,

00:04:56.000 | you can avoid a lot of the situations

00:04:58.000 | in which you ever need

00:05:00.000 | any of those things.

00:05:02.000 | The vast majority of us, thankfully,

00:05:04.000 | will never be in a violent confrontation

00:05:06.000 | in our life.

00:05:08.000 | But you can help improve your odds

00:05:10.000 | by not going to

00:05:12.000 | stupid places with stupid people

00:05:14.000 | and doing stupid things.

00:05:16.000 | I can't remember who that was, but I heard say that one time.

00:05:18.000 | It was a firearms instructor

00:05:20.000 | who gave that, and I said, "That is the best way to describe

00:05:22.000 | it ever." So that was what yesterday was about,

00:05:24.000 | is let's get out in front of the trends.

00:05:26.000 | I can't predict the day-to-day

00:05:28.000 | vagaries of the stock market,

00:05:30.000 | but I do have inside knowledge

00:05:32.000 | on my own industry, and I might

00:05:34.000 | have some inside knowledge on my own company.

00:05:36.000 | And so I can see what's

00:05:38.000 | coming to a certain extent, and I can change my

00:05:40.000 | course.

00:05:42.000 | And that's where we start with

00:05:44.000 | regard to preparation,

00:05:46.000 | is change your course ahead

00:05:48.000 | of time so you don't get caught unaware

00:05:50.000 | and get laid off.

00:05:52.000 | But now today, we recognize the fact

00:05:54.000 | that things can

00:05:56.000 | happen, and

00:05:58.000 | even though

00:06:00.000 | you might be doing something intelligent

00:06:02.000 | with upstanding people

00:06:04.000 | in a safe location,

00:06:06.000 | bad things happen.

00:06:08.000 | And so being prepared

00:06:10.000 | with a defensive plan is important, and today

00:06:12.000 | is that defensive plan.

00:06:14.000 | By thinking through your defensive

00:06:16.000 | plan, you'll be able to

00:06:18.000 | avoid a lot of the emotion

00:06:20.000 | that other people are going to face.

00:06:22.000 | If you study people who

00:06:24.000 | are often forced to respond

00:06:26.000 | to stressful situations,

00:06:28.000 | think of law enforcement officers,

00:06:30.000 | think of first responders who are responding to an

00:06:32.000 | accident, think of military people

00:06:34.000 | who are going into a firefight.

00:06:36.000 | What do they do in advance of those

00:06:38.000 | situations to prepare?

00:06:40.000 | Well, many things, but

00:06:42.000 | specifically today, they will think

00:06:44.000 | through,

00:06:46.000 | "What am I going to do in that situation?" And they'll practice

00:06:48.000 | it, and they'll rehearse it.

00:06:50.000 | The more intense and the more stressful

00:06:52.000 | the situation is likely to be,

00:06:54.000 | the more the person going into it

00:06:56.000 | is going to have practiced it again and again and again

00:06:58.000 | and again.

00:07:00.000 | That way, when they're in the middle of the difficult situation,

00:07:02.000 | there's a higher probability

00:07:04.000 | that they're not going to be shell-shocked,

00:07:06.000 | that they're not going to be caught

00:07:08.000 | and stupefied by the

00:07:10.000 | adrenaline and by the shock of the situation.

00:07:12.000 | They're much more likely to be able to continue

00:07:14.000 | to function. It's not

00:07:16.000 | guaranteed, but it's a much higher

00:07:18.000 | likelihood. And there are various ways

00:07:20.000 | to do that. You can do it with an all-out

00:07:22.000 | practice and a rehearsal.

00:07:24.000 | That's what people in those difficult

00:07:26.000 | and stressful environments will do, is they'll rehearse

00:07:28.000 | again and again, physically rehearse.

00:07:30.000 | But you can also do it just mentally.

00:07:32.000 | You can just think through some things.

00:07:34.000 | At least having thought through something

00:07:36.000 | will make it much more likely

00:07:38.000 | that everything's going to be fine and you'll come

00:07:40.000 | out the other side.

00:07:42.000 | Chances are, if you've practiced in advance,

00:07:44.000 | even something simple, like for me,

00:07:46.000 | one of the things I've tried to pay attention

00:07:48.000 | to is, if I'm going to be in a stressful

00:07:50.000 | situation, I think of car accidents, I think of

00:07:52.000 | any kind of

00:07:54.000 | difficult medical situation,

00:07:56.000 | breathe, breathe, relax,

00:07:58.000 | breathe, slow down, think, relax.

00:08:00.000 | And I found myself

00:08:02.000 | when I've been in some situations like

00:08:04.000 | that, unexpectedly had a couple car accidents

00:08:06.000 | and all of a sudden, my mind was

00:08:08.000 | kicked in, just telling myself, breathe,

00:08:10.000 | relax, breathe, relax. Now, of course,

00:08:12.000 | I'm nothing special, but

00:08:14.000 | just thinking of it in advance is my point. It'll help

00:08:16.000 | you to it. And being laid

00:08:18.000 | off or being fired is a tough

00:08:20.000 | situation. I

00:08:22.000 | remember very keenly

00:08:24.000 | what it was like to be laid off. It was

00:08:26.000 | emotionally devastating.

00:08:28.000 | It's tough because it attacks your

00:08:30.000 | self-confidence. No matter how

00:08:32.000 | much you can justify it, you still

00:08:34.000 | have a

00:08:36.000 | tendency to feel worthless,

00:08:38.000 | to feel like you're not

00:08:40.000 | valuable, because obviously, if you were valuable, they would have

00:08:42.000 | kept you around. The truth

00:08:44.000 | is, people get laid off all the time for

00:08:46.000 | all kinds of reasons. So,

00:08:48.000 | let's think it through and consider

00:08:50.000 | what you would do.

00:08:52.000 | Just by talking it through and planning a little bit, I believe

00:08:54.000 | that this will help you in the future

00:08:56.000 | so that even though you may

00:08:58.000 | still experience those feelings,

00:09:00.000 | the stress of those feelings

00:09:02.000 | and the negative impact of those feelings, my

00:09:04.000 | hope is that that'll be

00:09:06.000 | a little bit reduced for you.

00:09:08.000 | Emotionally, getting

00:09:10.000 | laid off and having to change your lifestyle

00:09:12.000 | because of it is

00:09:14.000 | extremely difficult

00:09:16.000 | for many people.

00:09:18.000 | I think of a

00:09:20.000 | specific person that I had

00:09:22.000 | occasion to interact with. This person

00:09:24.000 | had spent years as a salesperson

00:09:26.000 | and had a very established

00:09:28.000 | career as a salesperson

00:09:30.000 | in a very large national company.

00:09:32.000 | He was here in Florida.

00:09:34.000 | This person had

00:09:36.000 | a great job.

00:09:38.000 | They'd been there

00:09:40.000 | forever. They were

00:09:42.000 | well-ranked. I still don't

00:09:44.000 | know why they were laid off, but

00:09:46.000 | they were laid off. I never

00:09:48.000 | could figure it out.

00:09:50.000 | The challenge was that they were in the

00:09:52.000 | expensive phase of life.

00:09:54.000 | They'd moved into the

00:09:56.000 | comfortable upper middle class

00:09:58.000 | lifestyle house, quite fancy.

00:10:00.000 | Not super fancy, not ostentatious,

00:10:02.000 | but very comfortable

00:10:04.000 | with a very comfortable mortgage payment.

00:10:06.000 | The kids were in

00:10:08.000 | private schools.

00:10:10.000 | They were enjoying the normal

00:10:12.000 | status symbols of life.

00:10:14.000 | They were not foolish.

00:10:16.000 | They were normal.

00:10:18.000 | They were prudent. Didn't have

00:10:20.000 | an unreasonable debt load. It wasn't like

00:10:22.000 | they had hundreds of thousands of dollars

00:10:24.000 | of credit card debt.

00:10:26.000 | But they were laid off.

00:10:28.000 | Because

00:10:30.000 | they had spent so much time at that

00:10:32.000 | company, basically

00:10:34.000 | all of their identity was wrapped up in

00:10:36.000 | that company.

00:10:38.000 | Because they were so active in the community,

00:10:40.000 | they were known as being

00:10:42.000 | identified with that company.

00:10:44.000 | So then,

00:10:46.000 | what do you do?

00:10:48.000 | Well, I watched them go

00:10:50.000 | for a long time and not make quick decisions

00:10:52.000 | because they couldn't

00:10:54.000 | face the difficulty

00:10:56.000 | of the humiliation of making quick

00:10:58.000 | decisions. The thought of pulling the kids

00:11:00.000 | out of private school was a devastating thought

00:11:02.000 | because of the impact on the kids.

00:11:04.000 | Ultimately, they had

00:11:06.000 | to do that, but they waited too

00:11:08.000 | long. Selling the fancy

00:11:10.000 | house was a devastating thought because

00:11:12.000 | it was an admission of, in their

00:11:14.000 | mind, going back from

00:11:16.000 | the higher lifestyle that they had

00:11:18.000 | achieved to that

00:11:20.000 | lower lifestyle. And that was

00:11:22.000 | humiliating.

00:11:24.000 | But they had to sell the house.

00:11:26.000 | Unfortunately, though, they'd moved

00:11:28.000 | so slowly because

00:11:30.000 | of lack of prior planning

00:11:32.000 | that it really, really was difficult

00:11:34.000 | to recover.

00:11:36.000 | The story impacted me hugely because

00:11:38.000 | to see a grown person so

00:11:40.000 | devastated from a simple job

00:11:42.000 | loss to me was pretty shocking.

00:11:44.000 | I couldn't do

00:11:46.000 | in that circumstance, I couldn't do very much

00:11:48.000 | to help. They were working to find another sales

00:11:50.000 | job, but their confidence was shot.

00:11:52.000 | And it's tough to find a good

00:11:54.000 | sales job, and it's tough to get started

00:11:56.000 | in sales when your confidence is shot.

00:11:58.000 | So,

00:12:00.000 | I've thought about it a lot since that

00:12:02.000 | meeting. I think about it constantly

00:12:04.000 | for me, and I plan.

00:12:06.000 | And I think, and I run the scenarios,

00:12:08.000 | I run the war game.

00:12:10.000 | I say, "Okay, if I lost everything, what would I do?"

00:12:12.000 | Well, that keeps me from

00:12:14.000 | taking out debt on cars because

00:12:16.000 | then I wouldn't be in a situation like they were in

00:12:18.000 | to have to sell the car all of a sudden.

00:12:20.000 | I keep monthly

00:12:22.000 | expenses low, not just for this, but

00:12:24.000 | this was a situation that influenced me.

00:12:26.000 | Keep monthly expenses low so that

00:12:28.000 | I can quickly pivot and take any kind

00:12:30.000 | of job that comes along to keep my mortgage

00:12:32.000 | and keep my family in our house.

00:12:34.000 | I look at things, every aspect of

00:12:36.000 | our spending, and I think about, "Okay, if I had

00:12:38.000 | to cut this, how would I do it?" I look at our food

00:12:40.000 | budget and I say, "Okay, if I needed to cut from $500

00:12:42.000 | a month to $200 a month, how would I do it?"

00:12:44.000 | Okay, I'd stop eating meat, and I'd move

00:12:46.000 | to beans and eggs for protein.

00:12:48.000 | We'd eat fewer fresh vegetables, and we'd

00:12:50.000 | eat more canned ones from the pantry.

00:12:52.000 | We'd eat more rice and more

00:12:54.000 | pasta and more bread than we eat right now,

00:12:56.000 | and no, that wouldn't be good for the long

00:12:58.000 | term, but it would certainly be fine for

00:13:00.000 | the short term. We'd buy some multivitamins

00:13:02.000 | to help replace some of the lost nutrients

00:13:04.000 | and try to make up for it that way.

00:13:06.000 | Okay, well, let's say if I really

00:13:08.000 | had to cut to the bone, then I'd

00:13:10.000 | cancel the internet and I'd go work from the library.

00:13:12.000 | We would not spend any money

00:13:14.000 | on entertainment. We'd get it all for free online

00:13:16.000 | from the library. We'd get DVDs

00:13:18.000 | from the library or whatever we needed to do.

00:13:20.000 | We'd read for free from the library. We'd go on

00:13:22.000 | walks instead of things that cost money.

00:13:24.000 | I haven't been in the situation of

00:13:26.000 | having a 13-year-old in private

00:13:28.000 | school and having to tell him or her,

00:13:30.000 | "Okay, I've got to pull you out," but I've thought

00:13:32.000 | about, "Okay, what would I do?" I'd try to position it as an

00:13:34.000 | adventure, not a sacrifice.

00:13:36.000 | Although they would need to know why we

00:13:38.000 | were doing it, how could I moderate

00:13:40.000 | that? And the

00:13:42.000 | reality is in the modern day, it's

00:13:44.000 | pretty easy to live a pretty

00:13:46.000 | incredible lifestyle for

00:13:48.000 | not much money at all.

00:13:50.000 | But we're primarily trapped

00:13:52.000 | in our heads

00:13:54.000 | into our normal.

00:13:56.000 | So, in my mind,

00:13:58.000 | thinking it through in advance

00:14:00.000 | allows you to escape

00:14:02.000 | the trap before it happens.

00:14:04.000 | You'll probably be

00:14:06.000 | blindsided.

00:14:08.000 | It'll probably upset

00:14:10.000 | you, but hopefully it'll only last

00:14:12.000 | for a couple of days.

00:14:14.000 | The emotional upset, if you get laid off,

00:14:16.000 | will hopefully only last for a couple of days

00:14:18.000 | instead of for weeks or months

00:14:20.000 | because months

00:14:22.000 | are devastating.

00:14:24.000 | So yesterday I led with the overall

00:14:26.000 | kind of motivational type stuff.

00:14:28.000 | Today I want to flip it and start with some of

00:14:30.000 | the tactical financial things first, and then

00:14:32.000 | we'll go back and work on the

00:14:34.000 | career-related items.

00:14:36.000 | The tactical financial things that

00:14:38.000 | you need to think through primarily focus

00:14:40.000 | on two different areas. Number one,

00:14:42.000 | what would be the effect in your household of

00:14:44.000 | losing the direct income from

00:14:46.000 | your job, losing your paycheck,

00:14:48.000 | the actual money that gets

00:14:50.000 | direct deposited into your checking account?

00:14:52.000 | And then what would be the effect

00:14:54.000 | of losing some of the indirect benefits,

00:14:56.000 | losing your insurance benefits, retirement

00:14:58.000 | benefits, or any other miscellaneous

00:15:00.000 | benefits associated with your job?

00:15:02.000 | They both matter, but usually

00:15:04.000 | it's the income and paycheck that has the most

00:15:06.000 | immediate effect.

00:15:08.000 | So let's start there.

00:15:10.000 | What would you do if suddenly I

00:15:12.000 | took away your paycheck?

00:15:14.000 | I cancelled

00:15:16.000 | your income. No severance,

00:15:18.000 | no anything, just today.

00:15:20.000 | Gone.

00:15:22.000 | How wealthy

00:15:24.000 | are you?

00:15:26.000 | In this context,

00:15:28.000 | I particularly like

00:15:30.000 | Buckminster Fuller's definition of wealth.

00:15:32.000 | His definition of wealth

00:15:34.000 | was how many months can you live your

00:15:36.000 | current lifestyle if you lost your job?

00:15:38.000 | That's how wealthy you are.

00:15:40.000 | If you could live for

00:15:42.000 | five months, then you're five months wealthy.

00:15:44.000 | If you could live for a year, then you're one year

00:15:46.000 | wealthy. It's kind of a nice

00:15:48.000 | definition of wealth. I like it.

00:15:50.000 | Especially in this context.

00:15:52.000 | So think about that. How wealthy

00:15:54.000 | are you? If you were to

00:15:56.000 | compare your assets,

00:15:58.000 | your savings and your investments

00:16:00.000 | to your monthly expenses,

00:16:02.000 | how many months could

00:16:04.000 | you live?

00:16:06.000 | Now, some of you, I don't know if it's

00:16:08.000 | most or if it's some. I know this audience

00:16:10.000 | probably has a much higher

00:16:12.000 | level of wealth than the general population,

00:16:14.000 | but some of you could live for the rest of your lives.

00:16:16.000 | That's awesome.

00:16:18.000 | Many of you could live for many months

00:16:20.000 | and many years without even noticing

00:16:22.000 | the direct loss of income.

00:16:24.000 | But across the nation,

00:16:26.000 | I'm sure there are some of you listening who

00:16:28.000 | could maybe get through a few months.

00:16:30.000 | Because

00:16:32.000 | as US Americans, and I'm

00:16:34.000 | sure it's similar in other western countries

00:16:36.000 | that are listening,

00:16:38.000 | we don't have much in terms of

00:16:40.000 | savings.

00:16:42.000 | Many US Americans are

00:16:44.000 | a paycheck or two away from bankruptcy

00:16:46.000 | or at least

00:16:48.000 | insolvency.

00:16:50.000 | So think about that.

00:16:52.000 | Start putting things in place now

00:16:54.000 | to protect yourself.

00:16:56.000 | The first thing you can do is

00:16:58.000 | protect yourself by not having

00:17:00.000 | a high consumption, highly

00:17:02.000 | leveraged lifestyle.

00:17:04.000 | If you have low

00:17:06.000 | fixed expenses, then you have flexibility.

00:17:08.000 | Now, obviously

00:17:10.000 | this would have to be adjusted

00:17:12.000 | for your situation in terms of scale.

00:17:14.000 | If you're making, say, $10 an hour

00:17:16.000 | and you have only a few hundred dollars

00:17:18.000 | set aside in savings, then

00:17:20.000 | you could be wiped out by something as

00:17:22.000 | simple as a $199 a month

00:17:24.000 | car payment if you were to lose your job.

00:17:26.000 | It's happened to many people.

00:17:28.000 | On the other hand, if you're accustomed to making

00:17:32.000 | say, half a million dollars a year

00:17:34.000 | and you have a few hundred thousand dollars in cash

00:17:36.000 | that's just sitting there in liquid

00:17:38.000 | accounts,

00:17:40.000 | then having a $2,000 a month

00:17:42.000 | boat payment is probably not going to wipe

00:17:44.000 | you out. But on the other

00:17:46.000 | hand, if you are highly leveraged

00:17:48.000 | and have a lot of monthly payments, no matter how

00:17:50.000 | incredible your

00:17:52.000 | income is, you still could be

00:17:54.000 | wiped out. I'll

00:17:56.000 | give you some fun homework here

00:17:58.000 | to think about. Go

00:18:00.000 | if you have a Netflix subscription, or I don't

00:18:02.000 | know if it's on Amazon Prime or wherever you consume

00:18:04.000 | your online media, go and watch

00:18:06.000 | a movie, a documentary called

00:18:08.000 | The Queen of Versailles.

00:18:10.000 | My wife and I watched it on Netflix some months ago

00:18:14.000 | and it was fascinating. Absolutely

00:18:16.000 | fascinating. It tells the story

00:18:18.000 | of a couple named Jackie

00:18:20.000 | and David Siegel.

00:18:22.000 | They are the owners of Westgate

00:18:24.000 | Resorts, one of the largest timeshare

00:18:26.000 | companies in the nation.

00:18:28.000 | In 2008,

00:18:30.000 | the real challenge was in 2008

00:18:32.000 | they

00:18:34.000 | basically went

00:18:36.000 | successively through a process of

00:18:38.000 | losing all of their wealth.

00:18:40.000 | I don't know what the level of his

00:18:42.000 | net worth was before

00:18:44.000 | the financial crisis.

00:18:46.000 | Some hundreds of millions,

00:18:48.000 | I don't know if it was a billion dollars, but

00:18:50.000 | he and his wife were in the process

00:18:52.000 | of building a house they called Versailles.

00:18:54.000 | It was a 90,000, it is a 90,000

00:18:56.000 | square foot house in

00:18:58.000 | Florida, New Orlando.

00:19:00.000 | One of the biggest

00:19:02.000 | houses in the United States. It has

00:19:04.000 | 11 kitchens and 13

00:19:06.000 | bedrooms and 30 bathrooms and a

00:19:08.000 | 20 car garage and a two lane bowling

00:19:10.000 | alley and an indoor roller skating rink and

00:19:12.000 | three indoor pools and two

00:19:14.000 | outdoor pools and a video

00:19:16.000 | arcade and a ballroom with a 500

00:19:18.000 | person capacity, a two story

00:19:20.000 | movie theater with a balcony inspired

00:19:22.000 | by the Paris Opera House, a

00:19:24.000 | fitness center with a 10,000

00:19:26.000 | square foot spa, yoga studios,

00:19:28.000 | 20,000 bottle wine cellar, exotic

00:19:30.000 | fish aquarium, two tennis courts,

00:19:32.000 | a baseball diamond and a formal outdoor

00:19:34.000 | garden and an elevator in the master bedroom

00:19:36.000 | closet.

00:19:38.000 | So, it's a big house

00:19:40.000 | and

00:19:42.000 | massively expensive.

00:19:44.000 | Well, his

00:19:46.000 | the value of his real estate

00:19:48.000 | started to change substantially in

00:19:50.000 | 2008 and

00:19:52.000 | the

00:19:54.000 | his financing

00:19:56.000 | dried up and basically

00:19:58.000 | everything turned and it's the most dramatic

00:20:00.000 | scene. Even though the house

00:20:02.000 | Versailles was not finished at the time, the

00:20:04.000 | house they were living in was certainly quite

00:20:06.000 | opulent and quite large and in the most

00:20:08.000 | absurd scene, here comes

00:20:10.000 | this man, David, comes

00:20:12.000 | home and starts yelling at his family for

00:20:14.000 | leaving the lights on

00:20:16.000 | in a house that, I don't know, has four or five

00:20:18.000 | air conditioners and

00:20:20.000 | he's coming in and he's mad that somebody left

00:20:22.000 | the front door open and that

00:20:24.000 | somebody is leaving the lights on

00:20:26.000 | and it's almost just this crazy

00:20:28.000 | perspective when you look and

00:20:30.000 | say, "Are you kidding me?"

00:20:32.000 | That you're dealing with this kind

00:20:34.000 | of scale and it's stressing you out that the

00:20:36.000 | lights are on? Well, it was just a reflection of

00:20:38.000 | the stress that he was facing, trying to

00:20:40.000 | figure out how to renegotiate

00:20:42.000 | a billion dollars of debt and trying

00:20:44.000 | to go all over the world and find somebody who could lend

00:20:46.000 | him money. But the point is

00:20:48.000 | you've still

00:20:50.000 | got to make

00:20:52.000 | sure that your fixed expenses are

00:20:54.000 | low, especially as regards

00:20:56.000 | your level of income.

00:20:58.000 | And one of the important

00:21:00.000 | things to consider as far as the flip side

00:21:02.000 | of scale is

00:21:04.000 | that in many ways, if you are accustomed

00:21:06.000 | to a high lifestyle, it would

00:21:08.000 | behoove you to be even more conservative

00:21:10.000 | than those who

00:21:12.000 | are just scraping by

00:21:14.000 | because if you need

00:21:16.000 | a $10 an hour job to pay your bills, you

00:21:18.000 | can have one at the end of the day, anytime you want one.

00:21:20.000 | But if you need a half a million

00:21:22.000 | dollar a year job to pay your bills,

00:21:24.000 | that might take a little bit more

00:21:26.000 | time to find. It usually does.

00:21:28.000 | If you're at the lower

00:21:30.000 | end of the pay scale, it's not that tough to get

00:21:32.000 | a new job. If you're at the higher

00:21:34.000 | end, it's a bit tougher.

00:21:36.000 | If you're at the lower end of the

00:21:38.000 | pay scale, anytime you want, you can go out and make money

00:21:40.000 | as a day laborer. I used to

00:21:42.000 | hire guys in a previous job. I used to

00:21:44.000 | hire guys here in West Palm Beach when I needed some

00:21:46.000 | day labor and

00:21:48.000 | would go up and there was, you know,

00:21:50.000 | there's the places in every city where

00:21:52.000 | usually it's primarily

00:21:54.000 | Spanish immigrant workers

00:21:56.000 | primarily who would

00:21:58.000 | come there and they'd hang out together and you'd come

00:22:00.000 | by and I'd come by in my pickup truck

00:22:02.000 | and try to deal with them. The amazing

00:22:04.000 | thing though, I loved doing it because

00:22:06.000 | it was kind of the microcosm of the labor market

00:22:08.000 | in general, was they

00:22:10.000 | wouldn't work for less than $10 an hour at a

00:22:12.000 | minimum and the better workers

00:22:14.000 | would always get more.

00:22:16.000 | It's one of the reasons why I always

00:22:18.000 | get a little bit annoyed by the minimum wage debate

00:22:20.000 | because the market demand sets the

00:22:22.000 | rates. It doesn't matter what the minimum wage happens to be.

00:22:24.000 | Just go, if you

00:22:26.000 | want to see the labor market in a

00:22:28.000 | microcosm, go hire some day laborers

00:22:30.000 | and you'll see the market forces at work.

00:22:32.000 | You pull up and you tell

00:22:34.000 | the guys the kind of work that you need

00:22:36.000 | and they'll bid against one another depending

00:22:38.000 | on who needs the work and most of the time they'll have

00:22:40.000 | a similar price, again $10 to $12

00:22:42.000 | an hour depending on labor seems to be

00:22:44.000 | normal, at least it was a few years ago.

00:22:46.000 | But then sometimes one guy will come forward and work for

00:22:48.000 | less and that's the labor market in a

00:22:50.000 | microcosm. Employees

00:22:52.000 | competing against employees and

00:22:54.000 | employers competing against employers

00:22:56.000 | and depending on the supply and depending

00:22:58.000 | on the demand, rates go up

00:23:00.000 | and rates go down. If you get there late in the

00:23:02.000 | morning and there are still a lot of

00:23:04.000 | guys there, the rates go down because

00:23:06.000 | if they don't get picked up in the morning in the day labor market

00:23:08.000 | then they might not be able to work that day.

00:23:10.000 | But rates are high

00:23:12.000 | when there's a lot of demand and

00:23:14.000 | not much supply. So, little

00:23:16.000 | side trip there but make sure

00:23:18.000 | you recognize that. If you need a half a

00:23:20.000 | million dollar a year job to maintain your lifestyle

00:23:22.000 | consider being conservative

00:23:24.000 | because you don't get those tomorrow

00:23:26.000 | when you need $10 like

00:23:28.000 | you can when you need $10 an hour.

00:23:30.000 | Having a low fixed

00:23:32.000 | expense lifestyle can be a huge help

00:23:34.000 | to you if you lose your job.

00:23:36.000 | Again, if you have no debt

00:23:38.000 | it doesn't matter practically

00:23:40.000 | how big your

00:23:42.000 | house is, if you don't have a mortgage on it

00:23:44.000 | you can go take a job at the closest retail shop

00:23:46.000 | and you'll still be able to eat and

00:23:48.000 | maybe pay the property taxes.

00:23:50.000 | Having low expenses

00:23:52.000 | always buys you flexibility.

00:23:54.000 | Next, make sure that you have

00:23:56.000 | easily available cash reserves

00:23:58.000 | and frankly the more the better.

00:24:00.000 | Up to a point of course.

00:24:02.000 | Sometime in the next few weeks I'll do a show

00:24:04.000 | called "How Big Should My Emergency Fund Be?"

00:24:06.000 | in which I'll

00:24:08.000 | give you the CFP board formulas

00:24:10.000 | which those of you who are financial planning students

00:24:12.000 | will need to pass the CFP exam.

00:24:14.000 | I'll give you the formulas and the formal technical

00:24:16.000 | ways, but in general

00:24:18.000 | the more the better, up to a point.

00:24:20.000 | If you look at your situation

00:24:22.000 | and think about it, the answer might

00:24:24.000 | be intuitive for you.

00:24:26.000 | How many months can you live without income if you lose your

00:24:28.000 | job? How stable or unstable

00:24:30.000 | is your job or your living situation?

00:24:32.000 | Do you have multiple

00:24:34.000 | sources of income in your house or just

00:24:36.000 | one? If

00:24:38.000 | you have just one, you're

00:24:40.000 | working and let's say you have a stay-at-home spouse,

00:24:42.000 | then

00:24:44.000 | you need a bigger emergency fund than if both

00:24:46.000 | of you are working and have streams of income.

00:24:48.000 | Or you need a bigger emergency fund than if

00:24:50.000 | one of you is earning income and you have

00:24:52.000 | a side business.

00:24:54.000 | If you have lower fixed needs, then you can have

00:24:56.000 | a smaller account. Higher, you need more.

00:24:58.000 | If you're accustomed to having

00:25:00.000 | a fluctuating income

00:25:02.000 | or if you think that might happen,

00:25:04.000 | then you should have a higher amount of

00:25:06.000 | savings. I've been accustomed

00:25:08.000 | to working on 100% straight commission,

00:25:10.000 | which means I need more

00:25:12.000 | cash available to me to get me through the

00:25:14.000 | tough times than somebody who's working on a regular

00:25:16.000 | weekly salary paycheck.

00:25:18.000 | I personally get

00:25:20.000 | very concerned and a bit sad

00:25:22.000 | when I see people who work in

00:25:24.000 | seasonal, volatile industries

00:25:26.000 | who take on high monthly payments

00:25:28.000 | and operate without large

00:25:30.000 | cash reserves. I think

00:25:32.000 | the mortgage industry is a good example. In the past,

00:25:34.000 | in 2008, I was a financial advisor

00:25:36.000 | and – or 2009, basically –

00:25:38.000 | and I remember meeting with a lot of people in the mortgage

00:25:40.000 | business and just watching them as

00:25:42.000 | their industry was imploding.

00:25:44.000 | They had levered

00:25:46.000 | their lifestyle up

00:25:48.000 | with all kinds of fancy stuff

00:25:50.000 | and all kinds of fancy payments associated.

00:25:52.000 | Then, one by one,

00:25:54.000 | they lost everything.

00:25:56.000 | So, don't do it.

00:25:58.000 | Life goes in seasons.

00:26:00.000 | Sometimes you plant and sometimes

00:26:02.000 | you harvest, but you need to pay attention to

00:26:04.000 | what season you're in. You need to recognize

00:26:06.000 | that the season is going to change.

00:26:08.000 | I wish more of us were farmers

00:26:10.000 | or at least had some closer connection

00:26:12.000 | to the natural

00:26:14.000 | cycle of seasons because farmers have to think

00:26:16.000 | in terms of an annual cycle and the money comes

00:26:18.000 | at the end of the season. The money comes when you

00:26:20.000 | sell your crops in the fall

00:26:22.000 | and yet there are going to be other parts

00:26:24.000 | of the season.

00:26:26.000 | Don't spend all the money

00:26:28.000 | in winter

00:26:30.000 | when you need it to buy your seed in the spring

00:26:32.000 | just because the money is flowing in

00:26:34.000 | in the fall doesn't mean you go and spend it all in the fall.

00:26:36.000 | It's got to get you through the year.

00:26:38.000 | Practically speaking,

00:26:40.000 | try to keep lines of financing

00:26:42.000 | and lines of credit open

00:26:44.000 | and available to you in advance in case

00:26:46.000 | you ever need them.

00:26:48.000 | You need to establish the home equity

00:26:50.000 | line of credit on the house before you get laid

00:26:52.000 | off. That way it's there and it's available

00:26:54.000 | to you if you need it. You don't have to answer

00:26:56.000 | the income questions at that point in time.

00:26:58.000 | You've already established it.

00:27:00.000 | Keep the credit card lines

00:27:02.000 | of credit available to you before

00:27:04.000 | you get laid off so that they're there

00:27:06.000 | if or when you ever need them.

00:27:08.000 | Now obviously you need to consider carefully

00:27:10.000 | if you can trust yourself.

00:27:12.000 | If you have

00:27:14.000 | a problem with compulsive

00:27:16.000 | spending, it'll probably save you money to not have the

00:27:18.000 | credit cards even available to you.

00:27:20.000 | But if you are a normal,

00:27:22.000 | disciplined person, it

00:27:24.000 | might be helpful to you to have those things available

00:27:26.000 | because

00:27:28.000 | when you need the money, that's not the time

00:27:30.000 | to go out and try to get the credit.

00:27:32.000 | Have the lines of credit established to you

00:27:34.000 | before you ever -- and available to you before

00:27:36.000 | you ever need it.

00:27:38.000 | Consider not only working in the system

00:27:40.000 | of cash and cash reserves, but

00:27:42.000 | also stockpiling some of the

00:27:44.000 | basic needs of life, whatever's appropriate

00:27:46.000 | to you. But especially if you're

00:27:48.000 | at the lower end of the income scale

00:27:50.000 | on the wealth scale, this will make a much

00:27:52.000 | bigger difference in your life than many other

00:27:54.000 | things. In my family,

00:27:56.000 | we try to buy in bulk whenever it makes sense.

00:27:58.000 | So if there's a sale

00:28:00.000 | at the grocery store on something that

00:28:02.000 | will last, that my family uses,

00:28:04.000 | I'll buy the entire shelf out.

00:28:06.000 | I remember coming home one time

00:28:08.000 | with something like 30 or 40 jars of

00:28:10.000 | peanut butter. We eat a lot of peanut butter and

00:28:12.000 | I just bought the shelf out.

00:28:14.000 | Or simple things -- we don't have

00:28:16.000 | as much freezer space as we probably

00:28:18.000 | should -- but simple things like

00:28:20.000 | stocking up on Thanksgiving turkeys.

00:28:22.000 | When turkey's two bucks a pound

00:28:24.000 | and you can buy six of them and

00:28:26.000 | have one every other month, that's a lot

00:28:28.000 | better than buying chicken at $5.50

00:28:30.000 | a pound. So stock up.

00:28:32.000 | Now the cool thing is, that will

00:28:34.000 | help you in times of fluctuating income.

00:28:36.000 | Consider

00:28:38.000 | doing simple things like having

00:28:40.000 | some reserves of food.

00:28:42.000 | For us, we need it for hurricane season. For some

00:28:44.000 | of you, it may be the prospect

00:28:46.000 | of facing winter blizzards.

00:28:48.000 | But it works both ways.

00:28:50.000 | Because if you buy more food when it's

00:28:52.000 | cheap and on sale, you'll save money

00:28:54.000 | as you normally use it.

00:28:56.000 | But you'll also have food in your pantry

00:28:58.000 | if you're laid off.

00:29:00.000 | And so if you have three months

00:29:02.000 | of food worth in your pantry, then that's

00:29:04.000 | three months of cash that you wouldn't have to

00:29:06.000 | spend on food, and you

00:29:08.000 | could use the cash to

00:29:10.000 | keep your electric bill paid.

00:29:12.000 | Or, if you have

00:29:14.000 | three months of food in your pantry

00:29:16.000 | and, let's say you normally spend $500

00:29:18.000 | a month on food, then you can

00:29:20.000 | stretch the $1,500 emergency fund

00:29:22.000 | into six months of food

00:29:24.000 | by simply buying less.

00:29:26.000 | You buy half of what you normally

00:29:28.000 | would buy

00:29:30.000 | at the store, and you supplement the other half

00:29:32.000 | out of your pantry.

00:29:34.000 | And

00:29:36.000 | obviously, if the

00:29:38.000 | currency were stable and you just had all

00:29:40.000 | the money, then the

00:29:42.000 | major savings is

00:29:44.000 | the fact that you're getting things at a discount.

00:29:46.000 | But that's compelling over time.

00:29:48.000 | And it can make a big difference

00:29:50.000 | when you need it. I remember

00:29:52.000 | reading a story, and I'll post a link to it in the show notes,

00:29:54.000 | but I remember years ago reading this

00:29:56.000 | story on the Prudent

00:29:58.000 | Homemaker blog, and this lady shared

00:30:00.000 | her family's experience with

00:30:02.000 | their food storage program.

00:30:04.000 | They were a Mormon family, and in the

00:30:06.000 | Mormon church, they recommend

00:30:08.000 | to people that they have a

00:30:10.000 | year's worth of food on hand as a prudent

00:30:12.000 | item of preparedness.

00:30:14.000 | And this lady told the

00:30:16.000 | story, her husband was a real estate

00:30:18.000 | agent in Las Vegas.

00:30:20.000 | And all of a sudden, the bottom fell out

00:30:22.000 | of the Las Vegas real estate market, and

00:30:24.000 | he didn't have a sale or work for a year.

00:30:26.000 | And it's pretty remarkable

00:30:28.000 | because she tells the story of how

00:30:30.000 | essentially the fact that they had

00:30:32.000 | food stored got them through that year.

00:30:34.000 | Pretty remarkable.

00:30:36.000 | It's definitely worth

00:30:38.000 | reading. I'll link it in the show notes.

00:30:40.000 | These are some skills that

00:30:42.000 | have atrophied in our culture.

00:30:44.000 | My father

00:30:46.000 | grew up on a ranch in Colorado,

00:30:48.000 | and his parents,

00:30:50.000 | they shopped once a year.

00:30:52.000 | In the fall before winter,

00:30:54.000 | that was when they went to town.

00:30:56.000 | This wasn't Little Home

00:30:58.000 | on the Prairie. They had a

00:31:00.000 | car, they could drive to town,

00:31:02.000 | but it was too expensive for them to drive to town

00:31:04.000 | all the time, so they would shop basically

00:31:06.000 | once a year. After they sold

00:31:08.000 | the cattle, then they would take the money and they would buy

00:31:10.000 | the supplies they needed. But those skills are

00:31:12.000 | largely atrophied in many of us.

00:31:14.000 | I guess I'm probably more

00:31:16.000 | sensitive to these things than

00:31:18.000 | many people. I've

00:31:20.000 | personally been so broke that I was

00:31:22.000 | putting gas in the tank $5 at a time

00:31:24.000 | to make one

00:31:26.000 | trip. I remember

00:31:28.000 | that vividly. And so

00:31:30.000 | some of the things of life that I really appreciate,

00:31:32.000 | I'm often thankful when I can simply

00:31:34.000 | pull into a gas station and

00:31:36.000 | swipe the card and not pay any attention

00:31:38.000 | to the numbers on the screen. That's a luxury.

00:31:40.000 | I'm close enough to being

00:31:42.000 | that broke that

00:31:44.000 | for me, I still appreciate that.

00:31:46.000 | I hope I never lose that appreciation

00:31:48.000 | because there are billions of people

00:31:50.000 | in the world who don't have that luxury

00:31:52.000 | that so many of us have.

00:31:54.000 | I've traveled a bit in countries

00:31:56.000 | where dads and moms regularly

00:31:58.000 | can't feed their kids.

00:32:00.000 | Consider that.

00:32:02.000 | I don't

00:32:04.000 | want that to happen to my family and it's my

00:32:06.000 | responsibility to do everything I can to make

00:32:08.000 | sure that it doesn't.

00:32:10.000 | And also to help make sure it doesn't

00:32:12.000 | happen to others.

00:32:14.000 | Most of us are pretty insulated from that

00:32:16.000 | level of poverty in the United States.

00:32:18.000 | We live in time of

00:32:20.000 | mass prosperity as

00:32:22.000 | a society and mass availability

00:32:24.000 | of the simple things of

00:32:26.000 | life. But

00:32:28.000 | individually it could happen to any

00:32:30.000 | one of us. It happened to many families

00:32:32.000 | in the recessions of 2008

00:32:34.000 | and 2009.

00:32:36.000 | And another one will come.

00:32:38.000 | So put the plans in

00:32:40.000 | place so that it doesn't happen to you.

00:32:42.000 | Now

00:32:44.000 | adjust these things to

00:32:46.000 | your scale.

00:32:48.000 | Whatever is appropriate in your lifestyle.

00:32:50.000 | When you

00:32:52.000 | combine cash

00:32:54.000 | savings and material

00:32:56.000 | savings of the things that you need in your life

00:32:58.000 | with

00:33:00.000 | having low fixed costs

00:33:02.000 | and if possible

00:33:04.000 | no debt, then you can

00:33:06.000 | weather the storm of a layoff or a

00:33:08.000 | recession much better.

00:33:10.000 | So for some people

00:33:12.000 | this starts with food in the pantry. For others

00:33:14.000 | maybe it means having a cheap camper

00:33:16.000 | as a backup plan. For others maybe you

00:33:18.000 | have a paid off vacation home or

00:33:20.000 | say backup property to

00:33:22.000 | retreat to if your local economy falls apart

00:33:24.000 | and your personal house goes into

00:33:26.000 | foreclosure. But think

00:33:28.000 | defensively and then

00:33:30.000 | put things into place.

00:33:32.000 | Think about

00:33:34.000 | what would you do if I took away your

00:33:36.000 | income? Start with taking it away for

00:33:38.000 | a month, take it away for three months,

00:33:40.000 | take it away for six months,

00:33:42.000 | take it away for a year

00:33:44.000 | and work through those mental

00:33:46.000 | exercises. Take it away for two years.

00:33:48.000 | Work

00:33:50.000 | through those exercises. See what you would

00:33:52.000 | do.

00:33:54.000 | That was

00:33:56.000 | some thoughts regarding income. What about benefits?

00:33:58.000 | Quickly here, there are some

00:34:00.000 | things here you'll want to do and some things

00:34:02.000 | that you'll not

00:34:04.000 | need to do but just mention a few things.

00:34:06.000 | Go through your group benefits or

00:34:08.000 | think through them and see what you would lose

00:34:10.000 | if you lost your job.

00:34:12.000 | Would you lose your health insurance?

00:34:14.000 | If you did, what would you do?

00:34:16.000 | Now this one's a lot easier now after

00:34:18.000 | the Affordable Care Act than it used to be

00:34:20.000 | because now we can basically ignore

00:34:22.000 | the concept of pre-existing conditions

00:34:24.000 | for years. We had to carefully plan

00:34:26.000 | around that and make sure

00:34:28.000 | that you could afford the COBRA coverage.

00:34:30.000 | Even still, even though we can ignore the pre-existing

00:34:32.000 | conditions, that doesn't help if you have a medical condition

00:34:34.000 | and you can't afford the premiums for the COBRA

00:34:36.000 | coverage. You need to recognize what

00:34:38.000 | those costs would be and account for them in your

00:34:40.000 | emergency savings.

00:34:42.000 | Many times

00:34:44.000 | people will say, "I've got a three-month

00:34:46.000 | emergency fund," but they haven't

00:34:48.000 | accounted for that, the cost of

00:34:50.000 | health insurance.

00:34:52.000 | For most people, the cost of basic individual

00:34:54.000 | health insurance has substantially

00:34:56.000 | increased in the last few years.

00:34:58.000 | That can be a real challenge to work into your

00:35:00.000 | budget. So don't worry

00:35:02.000 | too much about the details here. Just recognize

00:35:04.000 | that you are going to need to come up with some cash

00:35:06.000 | to pick up some health insurance premiums.

00:35:08.000 | What about life insurance?

00:35:10.000 | That one's more problematic

00:35:12.000 | because you might be forced

00:35:14.000 | out of your group life insurance and not be able

00:35:16.000 | to get any more. So if you're

00:35:18.000 | depending on your group life insurance plan

00:35:20.000 | for your family's

00:35:22.000 | needs, and if

00:35:24.000 | you're healthy enough to get an individual policy,

00:35:26.000 | do that now. Follow

00:35:28.000 | through now and shop and see if you can

00:35:30.000 | get one. If you're not healthy

00:35:32.000 | enough, at least take a look at what

00:35:34.000 | the terms are for that group life

00:35:36.000 | insurance plan and know in advance

00:35:38.000 | what would happen if you got laid

00:35:40.000 | off. Sometimes they are

00:35:42.000 | most of the time they are convertible

00:35:44.000 | from a term life insurance policy to a

00:35:46.000 | whole life insurance policy, but most

00:35:48.000 | of the time you won't be able to afford that

00:35:50.000 | massive increase in premiums.

00:35:52.000 | Sometimes you can continue them as term

00:35:54.000 | insurance coverage, you just need to review the terms of your

00:35:56.000 | policies. Would you lose

00:35:58.000 | your disability income insurance?

00:36:00.000 | That one's trickier because there

00:36:02.000 | are pros and cons to both sides of

00:36:04.000 | owning disability insurance through your job

00:36:06.000 | versus other places, so we'll cover that

00:36:08.000 | in detail when we do disability insurance in the future,

00:36:10.000 | but at least understand what your coverage

00:36:12.000 | transfer options are. It's really not that

00:36:14.000 | tough. Get a copy of your group benefits

00:36:16.000 | program and read it.

00:36:18.000 | Call up your HR coordinator and ask them.

00:36:20.000 | Find out or think

00:36:22.000 | through what would happen to your pension accounts.

00:36:24.000 | For most people now who are covered

00:36:26.000 | by some system

00:36:28.000 | of a 401(k), it's pretty simple.

00:36:30.000 | They're pretty simple to transfer.

00:36:32.000 | If you have a defined benefit pension, those are less

00:36:34.000 | simple. There's not

00:36:36.000 | a lot that you can do here to change it,

00:36:38.000 | but at least have a general idea of what would happen.

00:36:40.000 | One of the things that I forgot about when I was

00:36:42.000 | laid off back in 2008 was that I

00:36:44.000 | wasn't fully vested in my 401(k)s

00:36:46.000 | employer contributions,

00:36:48.000 | so I forfeited the employer

00:36:50.000 | contributions because I wasn't fully vested.

00:36:52.000 | Now, there wasn't a lot I could do about

00:36:54.000 | that, but it did impact my financial

00:36:56.000 | life.

00:36:58.000 | Give these things some thought, and if you see

00:37:00.000 | any holes or any problems in

00:37:02.000 | your plan, then start

00:37:04.000 | affecting them and start plugging the holes.

00:37:06.000 | Now, overall,

00:37:08.000 | the major thing to focus on,

00:37:10.000 | and here's where we get out of the

00:37:12.000 | specific weeds of finance,

00:37:14.000 | the major things to focus on is

00:37:16.000 | the plan of getting

00:37:18.000 | your next job as quickly as possible.

00:37:20.000 | There are a few things that you

00:37:22.000 | can be doing to prepare for that.

00:37:24.000 | Now, many of these things are things

00:37:26.000 | you should be doing anyway so that you don't get

00:37:28.000 | laid off. That's the beauty about this

00:37:30.000 | way of thinking, like I emphasized yesterday.

00:37:32.000 | All of those things that I mentioned in yesterday's

00:37:34.000 | show will help you to keep from getting

00:37:36.000 | laid off, but they'll also make you more employable

00:37:38.000 | and improve your

00:37:40.000 | chances of getting another job.

00:37:42.000 | Have you ever noticed how the people

00:37:44.000 | for whom things go well, it seems like things

00:37:46.000 | always go well and they always get more and more

00:37:48.000 | opportunities? And then some people

00:37:50.000 | it seems like nothing seems to go well, nothing

00:37:52.000 | seems to go well, nothing seems to go well, and it

00:37:54.000 | just gets worse and worse?

00:37:56.000 | Now, there may be many reasons for that. Some of those

00:37:58.000 | things are within their control, and some

00:38:00.000 | of those things are outside of their control.

00:38:02.000 | But, you can

00:38:04.000 | tilt the odds in your favor

00:38:06.000 | with good, proper, prior

00:38:08.000 | planning.

00:38:10.000 | And, this

00:38:12.000 | type of approach will help you

00:38:14.000 | from getting laid off, because you should

00:38:16.000 | be looking for your next job or next opportunity

00:38:18.000 | regardless. Not necessarily

00:38:20.000 | actively all the time out

00:38:22.000 | beating the streets and applying for jobs,

00:38:24.000 | but keeping your ears open.

00:38:26.000 | One of the key things you can do is

00:38:28.000 | keep yourself light and

00:38:30.000 | flexible financially.

00:38:32.000 | Simple example, one of the

00:38:34.000 | benefits to renting is

00:38:36.000 | you can move across the country or

00:38:38.000 | across the world on relatively

00:38:40.000 | short notice.

00:38:42.000 | One of the biggest challenges

00:38:44.000 | of 2008 and 2009,

00:38:46.000 | which were the most recent recessions

00:38:48.000 | that are

00:38:50.000 | fresh in our memory,

00:38:52.000 | was not necessarily that there were no jobs,

00:38:54.000 | but that the jobs

00:38:56.000 | were in a place that was different than

00:38:58.000 | many of the workers. But, many of the

00:39:00.000 | workers were stuck in the

00:39:02.000 | old place without the job,

00:39:04.000 | because they couldn't sell their house.

00:39:08.000 | And, as each phase of the financial

00:39:10.000 | crisis continued on,

00:39:12.000 | each prior phase

00:39:14.000 | just exacerbated the problem for

00:39:16.000 | the next phase. And so,

00:39:18.000 | more and more people are upside down on their properties,

00:39:20.000 | their property values are falling, they're

00:39:22.000 | losing their jobs, more and more supplies

00:39:24.000 | coming on the market, prices are being

00:39:26.000 | pressed down, and now

00:39:28.000 | fewer people can afford to move because they can't

00:39:30.000 | get out of their house. Finally, they say, "I've got

00:39:32.000 | to move." They get out of their house, it goes into

00:39:34.000 | foreclosure, the bank takes out the property,

00:39:36.000 | it depresses the price still further, and it's just this

00:39:38.000 | never-ending cycle, is what it felt like.

00:39:40.000 | Simple example,

00:39:42.000 | if you're light and flexible financially,

00:39:44.000 | if you're renting, you can just move

00:39:46.000 | across the country or world. You put in your

00:39:48.000 | notice if you need to.

00:39:50.000 | Most people, if you're on a lease,

00:39:52.000 | you're rarely ever more than 12 months away

00:39:54.000 | from the end of a lease, and probably

00:39:56.000 | you would have some indication

00:39:58.000 | right before you signed your 12-month

00:40:00.000 | lease, so you're probably six months or so

00:40:02.000 | away. And, if you need to break the lease,

00:40:04.000 | the penalties are usually less

00:40:06.000 | severe than

00:40:08.000 | trying to sell your house when it's

00:40:10.000 | underwater.

00:40:12.000 | So, even the financial things

00:40:14.000 | and the financial decisions can tie into

00:40:16.000 | getting that next job as quickly as possible.

00:40:18.000 | Do a good

00:40:20.000 | job right where you are today,

00:40:22.000 | and if you

00:40:24.000 | do that consistently over time, then you'll

00:40:26.000 | always be able to go back to a previous job if you need

00:40:28.000 | one. Oftentimes,

00:40:30.000 | the best people to hire you, if or when you

00:40:32.000 | need it in a hurry, are going to be

00:40:34.000 | previous employers who were happy with your

00:40:36.000 | work. I proved

00:40:38.000 | this myself when I was in high

00:40:40.000 | school or college, but at

00:40:42.000 | one point, I got laid off from a print shop.

00:40:44.000 | I had agreed to start working with a print shop,

00:40:46.000 | and it was a bad deal. We had bad

00:40:48.000 | communication when coming

00:40:50.000 | in, and I was coming in under the

00:40:52.000 | understanding that I was

00:40:54.000 | coming in as basically a small

00:40:56.000 | time business consultant, and

00:40:58.000 | my employer thought I was coming

00:41:00.000 | in as a front

00:41:02.000 | desk worker. Now, I don't know how we

00:41:04.000 | got such bad communication.

00:41:06.000 | It should have been obvious, but it was pretty

00:41:08.000 | obvious within a couple of weeks that it wasn't

00:41:10.000 | a great fit, and so

00:41:12.000 | a few weeks into it, all of a sudden, we realized

00:41:14.000 | this isn't working, and both of us mutually

00:41:16.000 | agreed to call it off. So, as I left

00:41:18.000 | that job, I needed a job, and as

00:41:20.000 | I left that job, I called a previous employer

00:41:22.000 | and actually drove from getting

00:41:24.000 | laid off to the other employer,

00:41:26.000 | and they hired me on the spot for the rest

00:41:28.000 | of the summer. Another

00:41:30.000 | time, when I got back from

00:41:32.000 | studying abroad, I needed work. I had decided to

00:41:34.000 | drop out of college at that time, and I needed work,

00:41:36.000 | and I called a former employer, and I said,

00:41:38.000 | "I need work," and he said, "Well, give me a couple days." A couple

00:41:40.000 | days later, he said, "I've got a project. Here's the project.

00:41:42.000 | Here's what I can offer you," and it worked out,

00:41:44.000 | and especially in

00:41:46.000 | the younger years, encourage your children

00:41:48.000 | to just do

00:41:50.000 | a good job because those

00:41:52.000 | times, I really needed those jobs.

00:41:54.000 | That wasn't $200,000 a year

00:41:56.000 | for a finance professional job. That's different,

00:41:58.000 | but still, when you need a job, you need

00:42:00.000 | a job, and it makes a big difference.

00:42:02.000 | In my mind,

00:42:04.000 | one of the biggest things that can be helpful

00:42:06.000 | as you make plans of what you

00:42:08.000 | would do in case you get laid off

00:42:10.000 | is to see yourself now

00:42:12.000 | as a business owner

00:42:14.000 | because, practically

00:42:16.000 | speaking, you are a

00:42:18.000 | business owner.

00:42:20.000 | You are the president of your own

00:42:22.000 | personal services corporation.

00:42:24.000 | At the moment,

00:42:26.000 | you just simply happen to have one

00:42:28.000 | customer who is your best customer,

00:42:30.000 | and that customer is

00:42:32.000 | your current employer.

00:42:34.000 | But like every business

00:42:36.000 | owner, you're always looking for

00:42:38.000 | more customers and better customers.

00:42:40.000 | So,

00:42:42.000 | you're looking to serve your current

00:42:44.000 | customer better, which is

00:42:46.000 | what we talked about yesterday, and you're

00:42:48.000 | keeping your eyes and ears open for

00:42:50.000 | how you can attract to yourself

00:42:52.000 | more and better

00:42:54.000 | customers. And when you find

00:42:56.000 | a better customer than your current

00:42:58.000 | customer, you're going to transition over

00:43:00.000 | to them. That's called switching jobs.

00:43:02.000 | So, there are

00:43:04.000 | a lot of simple things that you can do if you

00:43:06.000 | put that mindset

00:43:08.000 | on. If you see yourself

00:43:10.000 | as a business owner, you start

00:43:12.000 | by just simply paying attention to what the overall

00:43:14.000 | goals are of your personal services

00:43:16.000 | corporation. Why does your business

00:43:18.000 | exist? Well, it exists

00:43:20.000 | to fund the lifestyle of the owner, right?

00:43:22.000 | And to fulfill the goals of the owner.

00:43:24.000 | So, this connects directly back to

00:43:26.000 | what we always talk about is jobs and

00:43:28.000 | work and businesses are a way of funding our ideal

00:43:30.000 | lifestyle. So, that's why your business exists.

00:43:32.000 | So, you should be constantly

00:43:34.000 | thinking about what those goals are and how

00:43:36.000 | to most effectively reach them.

00:43:38.000 | You want to keep a list of

00:43:40.000 | other potential customers

00:43:42.000 | that you might be interested in serving.

00:43:44.000 | If you

00:43:46.000 | have a list of other

00:43:48.000 | customers, other potential employers

00:43:50.000 | or other areas of the market,

00:43:52.000 | other industries you're interested in,

00:43:54.000 | then if you

00:43:56.000 | get laid off, you can go to that list

00:43:58.000 | and quickly move into another

00:44:00.000 | business sector.

00:44:02.000 | So, very practically,

00:44:04.000 | keep a list of jobs or businesses

00:44:06.000 | that you're interested in. I've

00:44:08.000 | told this before on the show, but I went and

00:44:10.000 | looked it up and this was something that

00:44:12.000 | I've done over time and it helped me

00:44:14.000 | immeasurably when I was laid off in 2008.

00:44:16.000 | I had maintained a list

00:44:18.000 | of jobs and businesses that

00:44:20.000 | seemed fun to me. Anything that

00:44:22.000 | just struck me as, "Wow, that would be fun."

00:44:24.000 | Now, I think when I've told this story

00:44:26.000 | on the show before, I've said that there were

00:44:28.000 | 150 things on that list. I thought

00:44:30.000 | there were, but just for fun as I was

00:44:32.000 | preparing this

00:44:34.000 | outline for today's show, I went

00:44:36.000 | and looked at the spreadsheet.

00:44:38.000 | On that time, I was keeping it in a simple

00:44:40.000 | Google spreadsheet, so everything that you do

00:44:42.000 | on the internet lasts forever.

00:44:44.000 | I was able to find it and

00:44:46.000 | that was convenient for me

00:44:48.000 | as a way to record it. Since then, I do a lot

00:44:50.000 | of stuff just in notebooks.

00:44:52.000 | One of the things I looked when I looked at the

00:44:54.000 | spreadsheet, I realized I hadn't touched it since 2008,

00:44:56.000 | since I was laid off.

00:44:58.000 | So, I stopped filling this one in,

00:45:00.000 | even though I have other lists.

00:45:02.000 | So, I went and found it and I

00:45:04.000 | had to laugh when I

00:45:06.000 | read it. I went and got my

00:45:08.000 | wife and I said, "Look, you've got to see this."

00:45:10.000 | I explained to her the history of this spreadsheet

00:45:12.000 | and she laughed as well.

00:45:14.000 | So, listen to some of these ideas

00:45:16.000 | and I'm just sharing this as a simple

00:45:18.000 | encouragement, not to be

00:45:20.000 | too focused on me, but just

00:45:22.000 | listen to some of these ideas.

00:45:24.000 | They're very, very informal.

00:45:26.000 | It's just me jotting down ideas that

00:45:28.000 | stand out to me, but listen to

00:45:30.000 | the themes here.

00:45:32.000 | The reason I laughed is because

00:45:34.000 | I see all of these themes still in my

00:45:36.000 | life, seven years later,

00:45:38.000 | of each of the transitions that I've personally made.

00:45:40.000 | Here are just a few.

00:45:42.000 | I'd like to market a study abroad

00:45:44.000 | program. I'd like to be a

00:45:46.000 | freelance copywriter. I'd like

00:45:48.000 | to be a financial consultant or advisor.

00:45:50.000 | I'd like to be a motivational

00:45:52.000 | speaker. I could be an

00:45:54.000 | organization or decluttering

00:45:56.000 | consultant. The business could be

00:45:58.000 | called Simple. I'd be your simple

00:46:00.000 | Sherpa, your guide to a simple life.

00:46:02.000 | Clean and refresh. I could help

00:46:04.000 | people make a clean sweep journal. That was one

00:46:06.000 | of the ideas that I had in the past.

00:46:08.000 | I could create and sell an "I wish I had

00:46:10.000 | known" e-book. Sell it on the internet.

00:46:12.000 | For example, I wish I'd known

00:46:14.000 | how to live in my car. I could

00:46:16.000 | start a roof cleaning business.

00:46:18.000 | I'd be passionate about working for Metro

00:46:20.000 | PCS. That was my idea back then.

00:46:22.000 | I could own or work in a cigar

00:46:26.000 | shop or be a cigar writer.

00:46:28.000 | I could work for Early to Rise in

00:46:30.000 | Boca Raton. That was a financial newsletter I used to

00:46:32.000 | read every day, and their offices

00:46:34.000 | were near me. I could write a financial

00:46:36.000 | course for college students.

00:46:38.000 | Making speeches is what I'd do.

00:46:40.000 | I could travel the world as an international

00:46:42.000 | trainer and speaker. I could

00:46:44.000 | create a magazine for adventure motorcycle

00:46:46.000 | travel. I could work

00:46:48.000 | as an account representative at a local staffing

00:46:50.000 | company, the one that was at my company

00:46:52.000 | at that time. That would allow me to speak to people.

00:46:54.000 | I could work as a local trainer for a local

00:46:56.000 | consulting business. I could teach

00:46:58.000 | in a high school. Develop and run

00:47:00.000 | a property management company.

00:47:02.000 | I could create positive motivational helmet

00:47:04.000 | stickers for motorcyclists.

00:47:06.000 | I don't know if any of you pay attention. You see these guys,

00:47:08.000 | the Harley riders usually, and they

00:47:10.000 | got the black motorcycle helmet,

00:47:12.000 | and they're just these most cynical, disgusting stickers

00:47:14.000 | usually. I thought, "I wonder if there's a market

00:47:16.000 | for positive, motivational, uplifting

00:47:18.000 | ones." I could read and

00:47:20.000 | create audio books

00:47:22.000 | in English and Spanish.

00:47:24.000 | I could do sales for a local

00:47:26.000 | motivational speaker or company.

00:47:28.000 | I could be a commercial real estate developer.

00:47:30.000 | I could start dumpsterlist.com.

00:47:32.000 | Everyone's trash is

00:47:34.000 | someone else's treasure. I could be

00:47:36.000 | an Allstate agent or other kind of insurance

00:47:38.000 | agent. I could sell financial

00:47:40.000 | products. I had some listed here

00:47:42.000 | of how I came across

00:47:44.000 | a financial company. I could be a

00:47:46.000 | recruiter. I knew a recruiter, and I decided I'd

00:47:48.000 | talk to them. I could do sales for a car

00:47:50.000 | dealership, any kind of sales job.

00:47:52.000 | I could sell clothes for big men.

00:47:54.000 | I could become an expert on human body language

00:47:56.000 | or face language.

00:47:58.000 | How about an information publishing idea? I could publish

00:48:00.000 | informational products in the art of mind reading.

00:48:02.000 | I could write a bestselling book.

00:48:04.000 | Be a coach, a personal

00:48:06.000 | coach, a life coach, a money coach.

00:48:08.000 | I could be an interior decorator.

00:48:10.000 | I could start a website dedicated to high mileage

00:48:12.000 | cars. I could start the

00:48:14.000 | success channel for satellite radio.

00:48:16.000 | I could write an e-book called "Teach Your Child

00:48:18.000 | to Be Rich." I could be a sports

00:48:20.000 | announcer. That's just some of the

00:48:22.000 | 70 things. The reason I

00:48:24.000 | do that, I hope it's

00:48:26.000 | not too personal. It is a little bit personal.

00:48:28.000 | Those are just my silly ideas.

00:48:30.000 | One of the things that I laugh at is I see

00:48:32.000 | every one of those themes reflected in Radical

00:48:34.000 | Personal Finance. The MetroPCS

00:48:36.000 | thing was at that time, MetroPCS

00:48:38.000 | was the only company that offered

00:48:40.000 | just a flat rate service for cell

00:48:42.000 | phones with unlimited

00:48:44.000 | access. I hated the

00:48:46.000 | AT&Ts and the T-Mobiles that were popular

00:48:48.000 | back then. I was like, "No, I could go

00:48:50.000 | and do sales for them because that's a model that I like."

00:48:52.000 | What do you see in Radical Personal

00:48:54.000 | Finance? You see a show on how to

00:48:56.000 | live a good deal on your cell phone plans

00:48:58.000 | or how to live in your car.

00:49:00.000 | Even at that time, I was interested in all these weird things

00:49:02.000 | that most people aren't. Or organizational

00:49:04.000 | decluttering consultants, so I bring on

00:49:06.000 | minimalists onto the show.

00:49:08.000 | Working and starting and running study abroad

00:49:10.000 | programs, that's why I bring on so many people

00:49:12.000 | with international travel and extol

00:49:14.000 | the virtues of that. That's

00:49:16.000 | personal to me, but

00:49:18.000 | if you have a similar list, then

00:49:20.000 | what it allows you to look at,

00:49:22.000 | and at that time, this was the list that I worked from

00:49:24.000 | and wound up becoming a financial advisor

00:49:26.000 | because I'd known a few people. The Allstate

00:49:28.000 | thing, for example, I had a friend of mine

00:49:30.000 | who was an upper-level Allstate

00:49:32.000 | rep, and I was like, "That seems pretty cool."

00:49:34.000 | Ultimately, that wasn't a good

00:49:36.000 | fit, but I see the themes now.

00:49:38.000 | Just simply by writing down

00:49:40.000 | any time you have an idea of

00:49:42.000 | "There's a job I'd like to have. There's a business

00:49:44.000 | I'd like to do," then you'll create

00:49:46.000 | listings and you'll have a place to start from because

00:49:48.000 | in tomorrow's show, I'm going to go through,

00:49:50.000 | "Okay, you got laid off.

00:49:52.000 | What do you want?" One of the key points

00:49:54.000 | of that show is

00:49:56.000 | knowing what you want.

00:49:58.000 | It's impossible to find a job if you don't know

00:50:00.000 | what you want, but it's hard to do

00:50:02.000 | when you're under pressure and you've got to feed your family.

00:50:04.000 | Now is the time to make

00:50:06.000 | the plan and just keep those notes.

00:50:08.000 | Write down those ideas

00:50:10.000 | and look at them from time to time

00:50:12.000 | and try to see how are

00:50:14.000 | they connected? What's

00:50:16.000 | consistent about them?

00:50:18.000 | That'll help it

00:50:20.000 | because I try to help my friends find

00:50:22.000 | jobs and they come to me and say, "I need work."

00:50:24.000 | I'm like, "Okay, what do you want to do?" "I don't know. I just

00:50:26.000 | need a job." That is an impossible

00:50:28.000 | question to answer. I've never been able

00:50:30.000 | to help a single person in that situation, but if they say,

00:50:32.000 | "Well, I'm actually interested

00:50:34.000 | in the idea of

00:50:36.000 | selling. I like to sell."

00:50:38.000 | "Okay, what kind of things?" "I also like cars."

00:50:40.000 | "Great. Now, pick up the phone.

00:50:42.000 | Here, call this person, this person, this person."

00:50:44.000 | You've got to know

00:50:46.000 | what you're trying to do.

00:50:48.000 | Compare it to sales. The essence

00:50:50.000 | of professional selling

00:50:52.000 | is to figure out what your product

00:50:54.000 | is and then figure out

00:50:56.000 | who's the right customer for that

00:50:58.000 | product and then you figure out

00:51:00.000 | how to reach them.

00:51:02.000 | In finding a job, you need to figure out

00:51:04.000 | what your product is,

00:51:06.000 | what types of services

00:51:08.000 | does your personal services corporation

00:51:10.000 | offer, who would be

00:51:12.000 | the right fit for those types

00:51:14.000 | of services, and then making

00:51:16.000 | the connection is easy.

00:51:18.000 | So, simple

00:51:20.000 | thing you can do now to prepare to be laid off

00:51:22.000 | is keep lists of

00:51:24.000 | future goals, future ideas,

00:51:26.000 | future businesses, future jobs.

00:51:28.000 | Keep lists of what you think

00:51:30.000 | your skills are. It's a lot easier

00:51:32.000 | to sit down and write your resume if you

00:51:34.000 | have a list of all

00:51:36.000 | of the skills that you think you

00:51:38.000 | have. Keep a list of

00:51:40.000 | companies you admire. If you hear of a

00:51:42.000 | job that sounds fun, write it down.

00:51:44.000 | If you have certain hobbies that

00:51:46.000 | you're interested in, write them down.

00:51:48.000 | Look for ways if you hear of somebody making

00:51:50.000 | a little bit of money on them, look for ways.

00:51:52.000 | Overall,

00:51:54.000 | start thinking like an independent

00:51:56.000 | consultant. And here I'm just

00:51:58.000 | expanding the theme,

00:52:00.000 | the concept of running your own

00:52:02.000 | personal services corporation. Think like a consultant

00:52:04.000 | and recognize

00:52:06.000 | that you need to establish your brand

00:52:08.000 | in the industry, whatever

00:52:10.000 | that industry is.

00:52:12.000 | Whether or not your company approves

00:52:14.000 | and pays for it or whether you need to do it,

00:52:16.000 | get out there within your industry.

00:52:18.000 | Go to the conferences, read the books, the blogs,

00:52:20.000 | the trade journals, the articles.

00:52:22.000 | Look for what the other companies are doing and

00:52:24.000 | keep current on them. Expand

00:52:26.000 | your brand by volunteering

00:52:28.000 | to teach a class at a local university

00:52:30.000 | or write columns for your

00:52:32.000 | industry trade journals. Focus

00:52:34.000 | on building your reputation as an

00:52:36.000 | individual, as an independent consultant.

00:52:38.000 | Of course, you need to

00:52:40.000 | promote your business because they're your

00:52:42.000 | best customer, but that's what you would be doing if you were

00:52:44.000 | a consultant.

00:52:46.000 | Build your own reputation, especially

00:52:48.000 | online. That was one of my major frustrations

00:52:50.000 | with the large corporate

00:52:52.000 | financial services companies is

00:52:54.000 | you spend all your time building their reputation

00:52:56.000 | and not your own. Focus

00:52:58.000 | on enhancing your marketing

00:53:00.000 | skills. What's

00:53:02.000 | going to make you stand out as a consultant?

00:53:04.000 | Are

00:53:06.000 | there designations, credentials,

00:53:08.000 | certain types of education that

00:53:10.000 | you need? Simple example.

00:53:12.000 | Again, just

00:53:14.000 | speaking from what I've experienced. Simple example

00:53:16.000 | of financial credentials.

00:53:18.000 | I don't put a lot of stock into

00:53:20.000 | necessarily all of the academic

00:53:22.000 | importance of

00:53:24.000 | education. Education

00:53:26.000 | is education and it's vital

00:53:28.000 | whether or not it's related to academia.

00:53:30.000 | But if there are things like credentials

00:53:32.000 | or designations in the financial business that you

00:53:34.000 | can get, get them.

00:53:36.000 | Because here's the thing.

00:53:38.000 | My name looks a little bit ridiculous

00:53:40.000 | as far as all of the

00:53:42.000 | credentials, but

00:53:44.000 | if I were applying for a job

00:53:46.000 | as a financial advisor, just

00:53:48.000 | purely on the worst way possible

00:53:50.000 | off of a resume,

00:53:52.000 | automatically my resume goes to the

00:53:54.000 | top of the chart or to the top of the

00:53:56.000 | stack. Now the cool thing is

00:53:58.000 | I don't ever plan

00:54:00.000 | to do that, but all of those things help

00:54:02.000 | me to do a better job now for my

00:54:04.000 | existing clients that I'm never in that situation.

00:54:06.000 | So whatever it is in your

00:54:08.000 | industry, take that and look for it.

00:54:10.000 | If it's designations or credentials

00:54:12.000 | or a degree or a certain type of

00:54:14.000 | education, get it.

00:54:16.000 | And whether that's formal,

00:54:18.000 | you need an MBA, you need another

00:54:20.000 | advanced specialization,

00:54:22.000 | do that stuff.

00:54:24.000 | Or whether it's less formal,

00:54:26.000 | starting a website where

00:54:28.000 | you talk just about your

00:54:30.000 | business, where you review all the books

00:54:32.000 | in your business, and you've established

00:54:34.000 | the industry blog or the industry podcast,

00:54:36.000 | that will help

00:54:38.000 | not only your current

00:54:40.000 | company, but also

00:54:42.000 | helps your resume float to the top

00:54:44.000 | of the stack.

00:54:46.000 | Every industry needs

00:54:48.000 | this type of work.

00:54:50.000 | It will help you now,

00:54:52.000 | it'll help your current

00:54:54.000 | company, but it'll also open up

00:54:56.000 | opportunities for you.

00:54:58.000 | And the vast majority

00:55:00.000 | of us need to be building a public

00:55:02.000 | platform

00:55:04.000 | for a few reasons.

00:55:06.000 | Again, planning to be laid off.

00:55:08.000 | If you build a public platform

00:55:10.000 | for your voice and your content,

00:55:12.000 | you're creating leverage for yourself,

00:55:14.000 | both positive net leverage

00:55:16.000 | and potential

00:55:18.000 | negative leverage in this sense.

00:55:20.000 | Positively, you're going to be

00:55:22.000 | viewed as an asset

00:55:24.000 | to your company, because

00:55:26.000 | after all, you're a consultant

00:55:28.000 | to your company. You're a personal services

00:55:30.000 | corporation, and they're your best client.

00:55:32.000 | And so, as part of your work as a

00:55:34.000 | consultant, you're going to be helping to

00:55:36.000 | build their reputation and their brand.

00:55:38.000 | But, as

00:55:40.000 | far as the potential negative sanction,

00:55:42.000 | is negatively,

00:55:44.000 | you're going to have a little bit

00:55:46.000 | of leverage. You're going to be viewed as having

00:55:48.000 | a voice and a platform, and

00:55:50.000 | the employer is going to treat you

00:55:52.000 | carefully.

00:55:54.000 | Doesn't mean you won't get laid off,

00:55:56.000 | but it at least

00:55:58.000 | improves your chances of not getting laid

00:56:00.000 | off, and

00:56:02.000 | it helps a little bit

00:56:04.000 | with your leverage.

00:56:06.000 | You need an independent communication

00:56:08.000 | system,

00:56:10.000 | and that helps you in your industry.

00:56:12.000 | So, it's a win-win-win.

00:56:14.000 | If you're in the right industry

00:56:16.000 | and your company is laying you off, and

00:56:18.000 | you're established as a voice,

00:56:20.000 | all you do is just put out a notice, and

00:56:22.000 | your competitors will hire you right up.

00:56:24.000 | And, that'll probably

00:56:26.000 | happen before the layoffs if you're smart.

00:56:28.000 | Because,

00:56:30.000 | the fact that you are a public figure,

00:56:32.000 | knowing what's going on in your industry is going to

00:56:34.000 | help information flow to you,

00:56:36.000 | and you're going to be ahead a little

00:56:38.000 | bit of everybody else.

00:56:40.000 | And then, even if your whole industry goes

00:56:42.000 | down and you need to pivot to a new industry,

00:56:44.000 | then your expertise and your platform

00:56:46.000 | is going to give you a solid place to work from.

00:56:48.000 | So,

00:56:50.000 | consider that. Build your

00:56:52.000 | platform before you need it. Think like a consultant.

00:56:54.000 | Next,

00:56:56.000 | build and maintain your network

00:56:58.000 | in an organized, systematic

00:57:00.000 | way.

00:57:02.000 | Be proactive about this.

00:57:04.000 | Harvey McKay wrote a great book. It's called, "Dig

00:57:06.000 | Your Well Before You're Thirsty."

00:57:08.000 | The time to build a network is before you need it.

00:57:10.000 | So, be proactive about it.

00:57:12.000 | Another great book by a guy named Keith

00:57:14.000 | Ferrazzi, years ago. These books are old,

00:57:16.000 | old. But, he wrote a book called, "Never

00:57:18.000 | Eat Alone." And, if you want to talk about

00:57:20.000 | proactive networking, the book is

00:57:22.000 | just as relevant as it used to be.

00:57:24.000 | Go and find Keith Ferrazzi's book, "Never Eat Alone."

00:57:26.000 | But, just the simple stuff.

00:57:28.000 | Keep contact information.

00:57:30.000 | Save the contact

00:57:32.000 | information of all of your current

00:57:34.000 | fellow employees. Take the company

00:57:36.000 | list home. Make sure you have

00:57:38.000 | that information, because you never know if you need to get

00:57:40.000 | in touch with somebody.

00:57:42.000 | If you move from one place to another, you need

00:57:44.000 | that, in the old days, the Rolodex,

00:57:46.000 | today, the contact book.

00:57:48.000 | If you keep all of your contacts on your

00:57:50.000 | company's cell phone, and they're not backed up,

00:57:52.000 | and you get laid off, and your company's cell phone

00:57:54.000 | goes away,

00:57:56.000 | not smart.

00:57:58.000 | This is, again,

00:58:00.000 | probably too focused on me, but

00:58:02.000 | just as an example, I can only speak from

00:58:04.000 | experience. I haven't lost, I don't think I've lost contact

00:58:06.000 | information for anyone I've met since I was about 18.

00:58:08.000 | Because, I was

00:58:10.000 | obsessive compulsive about this,

00:58:12.000 | because I was reading all the business books, and I knew I needed

00:58:14.000 | to do it, and so I share that with you.

00:58:16.000 | Because of that,

00:58:18.000 | I was able to have all kinds of people's information.

00:58:20.000 | Now, that doesn't mean I have a relationship with them,

00:58:22.000 | but at least I have a name and a number.

00:58:24.000 | I could go, and if you say, "Well, Joshua,

00:58:26.000 | you're going to Canada."

00:58:28.000 | Okay, and I can go, and I can search my database

00:58:30.000 | for who do I know in Canada.

00:58:32.000 | And I could come up with, you know, it comes to me right now,

00:58:34.000 | I could come up with a name and number of

00:58:36.000 | the couple that I met in Colombia,

00:58:38.000 | that I had dinner with one night there,

00:58:40.000 | that I met at a hostel, and they had spent

00:58:42.000 | their time driving around Central

00:58:44.000 | and South America for

00:58:46.000 | about a year, and we had a great time,

00:58:48.000 | and they invited me to come see them in Canada.

00:58:50.000 | I could go find that info.

00:58:52.000 | And so, when I got started

00:58:54.000 | in sales and financial

00:58:56.000 | advice, that helped me

00:58:58.000 | immeasurably.

00:59:00.000 | Because instead of sitting there and saying, "Well, I know

00:59:02.000 | 100 people that I'm going to call on, and I'm going to sit there

00:59:04.000 | and cold call out of the phone book,"

00:59:06.000 | I was able to make hundreds and hundreds

00:59:08.000 | and hundreds of phone calls.

00:59:10.000 | And if worse came to worse,

00:59:12.000 | I had to do it again, and my family were starving,

00:59:14.000 | I'd go get a network marketing gig

00:59:16.000 | of a business or a product that I believed

00:59:18.000 | in, and I've got those hundreds of people

00:59:20.000 | that I could reach out to.

00:59:22.000 | Now, I don't want to do that, but

00:59:24.000 | it's a backup plan.

00:59:26.000 | So something as simple as keeping your contact

00:59:28.000 | information and keeping it organized

00:59:30.000 | is incredibly valuable. And the higher you go,

00:59:32.000 | you'll notice that the network,

00:59:34.000 | the contact information,

00:59:36.000 | the ability to get through to the people that matter

00:59:38.000 | is one of the biggest deals.

00:59:40.000 | And you've got to build that proactively.

00:59:42.000 | Focus on helping people.

00:59:44.000 | Add value constantly.

00:59:46.000 | It's not slimy, it's not

00:59:48.000 | self-seeking. The key

00:59:50.000 | is add value. The key is help.

00:59:52.000 | Build a local

00:59:54.000 | group, a local support group, or a

00:59:56.000 | mastermind group, or people that you're connected with.

00:59:58.000 | Just the guys or gals

01:00:00.000 | you have breakfast with or drinks with every Thursday.

01:00:02.000 | Volunteer

01:00:04.000 | in the local organizations.

01:00:06.000 | Pretend that you move to a new town

01:00:08.000 | and you don't know a soul. What would you do?

01:00:10.000 | Well, you'd get involved.

01:00:12.000 | So, get involved.

01:00:14.000 | Build the network.

01:00:16.000 | Look to help people.

01:00:18.000 | To advance people.

01:00:20.000 | And then, if you're ever thirsty,

01:00:22.000 | because you got laid off,

01:00:24.000 | your well will be

01:00:26.000 | dug.

01:00:28.000 | But you've got to do it now.

01:00:30.000 | Make the plan now.

01:00:32.000 | Be recruitable. Take the calls that you get from recruiters.

01:00:34.000 | Depending on your type of industry, you may or may not get this.

01:00:36.000 | But take the calls and save the recruiters'

01:00:38.000 | contact information. Keep a special file.

01:00:40.000 | And in the tomorrow's show, you'll see why that's important.

01:00:42.000 | In addition,

01:00:44.000 | consider having a backup

01:00:46.000 | side business.

01:00:48.000 | Here's the thing. Let's say

01:00:50.000 | that you were a business consultant.

01:00:52.000 | And you came in and you are

01:00:54.000 | consulting Joshua Sheets

01:00:56.000 | on his business. And Joshua

01:00:58.000 | tells you, "Hey, you know,

01:01:00.000 | Mr. and Mrs. Consultant,

01:01:02.000 | thank you so much for coming in.

01:01:04.000 | The reality is

01:01:06.000 | I have one really great customer

01:01:08.000 | for my business. This really

01:01:10.000 | great customer is, I don't know,

01:01:12.000 | Acme Corporation.

01:01:14.000 | And Acme Corporation

01:01:16.000 | is my number one customer.

01:01:18.000 | They pay me $100,000 a year."

01:01:20.000 | And you say, "Well, do you have

01:01:22.000 | any other customers?" "No, no. Just

01:01:24.000 | Acme Corporation."

01:01:26.000 | "What if you lose Acme Corporation?"

01:01:28.000 | "Well, I'd be

01:01:32.000 | down to nothing."

01:01:34.000 | And that's the problem that every

01:01:36.000 | single one of us who are

01:01:38.000 | employees faces.

01:01:40.000 | People talk about risk.

01:01:42.000 | This is one of the things most entrepreneurs think about.

01:01:44.000 | Most entrepreneurs,

01:01:48.000 | if they woke up and only had one customer, that would make

01:01:50.000 | them sweat.

01:01:52.000 | That would be a real problem for me.

01:01:54.000 | I wouldn't want to face that situation. Now, you might

01:01:56.000 | do it for a time, but you'd

01:01:58.000 | be aware of it and you'd be working to build

01:02:00.000 | things like I'm talking about

01:02:02.000 | as backup.

01:02:04.000 | I prefer to have hundreds of customers.

01:02:06.000 | Right now,

01:02:08.000 | on Radical Personal Finance, I've got 175

01:02:10.000 | customers.

01:02:12.000 | And

01:02:14.000 | I see those 175 customers

01:02:16.000 | are paying me $1,747.50 a month.

01:02:18.000 | So if 10 people get mad at me and leave,

01:02:24.000 | stop being my customers,

01:02:26.000 | I'm in a much better shape

01:02:28.000 | than if I had one.

01:02:30.000 | Think about it.

01:02:34.000 | But don't just think about it,

01:02:36.000 | work on it.

01:02:38.000 | Build a little side hustle. Build a little side business.

01:02:40.000 | In yesterday's show, I talked about

01:02:44.000 | working and working a lot of hours.

01:02:46.000 | In my mind, this is a double-edged

01:02:48.000 | sword. You've got to be careful here.

01:02:50.000 | If your best potential

01:02:52.000 | is at your company,

01:02:54.000 | and if you're really connected to it,

01:02:56.000 | then I think you're probably going to be

01:02:58.000 | well-served by really focusing your

01:03:00.000 | time and efforts on that company.

01:03:02.000 | Because there should be, if there are

01:03:04.000 | opportunities for advancement, if you have

01:03:06.000 | the ability to work effectively,

01:03:08.000 | if you have the opportunity to move into the upper levels

01:03:10.000 | in your company, in your industry,

01:03:12.000 | then focus

01:03:14.000 | and specialization is really, really key.

01:03:16.000 | And we only have

01:03:18.000 | 168 hours in a week, and there's got to be a balance

01:03:20.000 | between all of the demands of life.

01:03:22.000 | So it might

01:03:24.000 | pay you to focus on

01:03:26.000 | working exclusively

01:03:28.000 | with this company and really helping it advance.

01:03:30.000 | And especially as time, as you

01:03:32.000 | move up the ranks, the CEO

01:03:34.000 | of Walmart is not working a little

01:03:36.000 | side hustle. Walmart is their

01:03:38.000 | deal. They've got to spend all their time

01:03:40.000 | on that. And the higher you go in

01:03:42.000 | corporate management or the higher you go in

01:03:44.000 | a company, the more

01:03:46.000 | time and the more focus and the more energy

01:03:48.000 | is going to be devoted to that one

01:03:50.000 | specific company.

01:03:52.000 | But many of you listening are not in that

01:03:54.000 | type of upper level situation. And if

01:03:56.000 | you're not, or if you don't want to be,

01:03:58.000 | for example, my company

01:04:00.000 | or my industry, it's okay,

01:04:02.000 | I've got a job, but it's just a job. It's a

01:04:04.000 | J-O-B. I'm ready

01:04:06.000 | to work hard, but they don't treat me

01:04:08.000 | very well. Be careful, but

01:04:10.000 | sometimes it actually is true. Or

01:04:12.000 | there's not a lot of opportunity for advancement,

01:04:14.000 | or you know what, I just don't really care that much. Okay,

01:04:16.000 | fine. It's your life.

01:04:18.000 | But make sure you're putting in time on a

01:04:20.000 | backup business or a side business.

01:04:22.000 | Don't spend all of your

01:04:24.000 | time working for one company unless you've

01:04:26.000 | got major incentive to really

01:04:28.000 | shine there.

01:04:30.000 | Try to bring on a second customer or

01:04:32.000 | a few extra customers.

01:04:34.000 | Having something on the side will help you

01:04:36.000 | if you get laid off.

01:04:38.000 | Finally, spend some

01:04:40.000 | time now thinking through and studying

01:04:42.000 | how to get a job. Study

01:04:44.000 | resume writing or job finding. Flip

01:04:46.000 | through a career book from time to time. Keep things

01:04:48.000 | apparent. I'm not saying

01:04:50.000 | I don't keep my resume up to date, but

01:04:52.000 | it might be a good idea if you think you need to

01:04:54.000 | if you're sending it out to recruiters.

01:04:56.000 | And just a simple thing like

01:04:58.000 | keeping good records on your accomplishments.

01:05:00.000 | This one I struggle with.

01:05:02.000 | I don't pay much attention to this stuff.

01:05:04.000 | And then you go to write down the fancy

01:05:06.000 | brochure and it's like, "I don't know what I did.

01:05:08.000 | I don't know who I joined or what awards

01:05:10.000 | I won." So just

01:05:12.000 | something simple like keeping records of your

01:05:14.000 | accomplishments will make it easier in the future

01:05:16.000 | for you to produce a resume

01:05:18.000 | or to update it. Keep

01:05:20.000 | track of dates. Have a calendaring system

01:05:22.000 | where you can know, "Okay, I started

01:05:24.000 | this job here and I left this job there."

01:05:26.000 | Very simple,

01:05:28.000 | but it matters.

01:05:30.000 | And you'll see in tomorrow's show

01:05:32.000 | how it matters.

01:05:34.000 | Hope this has been useful for you.

01:05:36.000 | I'm doing

01:05:38.000 | my best. It's kind of

01:05:40.000 | out of my head as far as how I think about

01:05:42.000 | this stuff. I've never really heard anybody else talk about it

01:05:44.000 | so I'd be happy to have your

01:05:46.000 | feedback if this is useful.

01:05:48.000 | Hopefully you'll see the

01:05:50.000 | connectedness but also the

01:05:52.000 | distinctions between all these different steps.

01:05:54.000 | And I believe that

01:05:56.000 | evidence will show this out.

01:05:58.000 | I watch some people and it's like they've got the golden

01:06:00.000 | touch. You look at them

01:06:02.000 | and you say, "What do they do?" Well, they do these

01:06:04.000 | kinds of things. And they don't

01:06:06.000 | ever get laid off because they're the ones

01:06:08.000 | who are in charge of laying people

01:06:10.000 | off. Well, you don't start

01:06:12.000 | there. So you've got to do all the stuff in yesterday's show

01:06:14.000 | to build up.

01:06:16.000 | And while you're getting to the position of where you're the

01:06:18.000 | one in charge of making the layoff decision, which is the

01:06:20.000 | far worst position to be in, I'm

01:06:22.000 | convinced. I do not envy people

01:06:24.000 | who have to lay employees

01:06:26.000 | off. That's a heavy thing to do.

01:06:28.000 | But while you're working your way up, you need to have these plans

01:06:30.000 | in place. And then

01:06:32.000 | all of these ideas fit together

01:06:34.000 | and tomorrow I'm going to talk about how to

01:06:36.000 | find a job. And again, remember

01:06:38.000 | that one of the great ways to avoid getting laid off

01:06:40.000 | is to be looking for a job in advance. And so

01:06:42.000 | all the things that I'm going to talk about tomorrow

01:06:44.000 | will fit together and

01:06:46.000 | fit into this content of this

01:06:48.000 | show. And you can get a job now

01:06:50.000 | or you can get a job if

01:06:52.000 | you get laid off. So I hope this is

01:06:54.000 | helpful to you. Thank you so much for listening to

01:06:56.000 | today's show. Thank you for those of you who support

01:06:58.000 | the show, the 175 of you.

01:07:00.000 | If you would like to help

01:07:02.000 | me grow that number to 176,

01:07:04.000 | I would be grateful

01:07:06.000 | to you. I'm doing my

01:07:08.000 | best to be a good employee for you.

01:07:10.000 | Working hard for you, doing everything I can

01:07:12.000 | to bring you all the ideas that I believe

01:07:14.000 | are important. And I leave

01:07:16.000 | you in the judge's seat.

01:07:18.000 | You can judge whether it's worthy or not.

01:07:20.000 | But if you find my work to be helpful,

01:07:22.000 | if you find it to be compelling,

01:07:24.000 | please go to radicalpersonalfinance.com/patron

01:07:26.000 | and you

01:07:28.000 | can put a little number in a box and you can

01:07:30.000 | become a patron. The lowest number

01:07:32.000 | is a buck a month. So if you think

01:07:34.000 | Joshua's doing a good job and he's a good employee

01:07:36.000 | at a buck a month, that'd be great.

01:07:38.000 | If you want to put in 500 bucks a month because

01:07:40.000 | I'm doing a good job for you, you can put that

01:07:42.000 | number in there as well. Radicalpersonalfinance.com/patron

01:07:46.000 | and I'll be back with you all tomorrow.

01:07:48.000 | Thank you so much.

01:07:50.000 | [Music]

01:07:52.000 | Thank you for listening to

01:07:54.000 | today's show. Please subscribe

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01:07:58.000 | app so you don't miss a single episode.

01:08:00.000 | Just search the App Store

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01:08:06.000 | If you have received value from

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01:08:10.000 | becoming a patron. Your financial support

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01:08:24.000 | If you'd like to

01:08:26.000 | contact me personally, my email

01:08:28.000 | address is joshua@radicalpersonalfinance.com

01:08:30.000 | or connect with the

01:08:32.000 | show on Twitter @radicalPF

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01:08:36.000 | This show is

01:08:38.000 | intended to provide entertainment,

01:08:40.000 | education, and financial

01:08:42.000 | enlightenment, but your

01:08:44.000 | situation is unique and I cannot

01:08:46.000 | deliver any actionable advice

01:08:48.000 | without knowing anything about you.

01:08:50.000 | Please, develop a team of

01:08:52.000 | professional advisors who you find

01:08:54.000 | to be caring, competent,

01:08:56.000 | and trustworthy, and consult

01:08:58.000 | them, because they are the ones

01:09:00.000 | who can understand your specific needs,

01:09:02.000 | your specific goals,

01:09:04.000 | and provide specific answers to

01:09:06.000 | your questions. I've done my

01:09:08.000 | absolute best to be clear and accurate

01:09:10.000 | in today's show, but I'm one person

01:09:12.000 | and I make mistakes. If

01:09:14.000 | you spot a mistake in something I've said, please

01:09:16.000 | come by the show page and comment

01:09:18.000 | so we can all learn together.

01:09:20.000 | Until tomorrow, thanks for being here.

01:09:22.000 | Some people take the straight path

01:09:24.000 | in life, but at Arizona State

01:09:26.000 | University, we respect your twists

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