RPF0131-Lens_of_Scale
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00:00:14.720 | Today I'd like to give you a lens for your mental glasses and we're going to call this lens scale.
00:00:22.560 | I'd like you to view the world, especially the world of financial advice,
00:00:27.680 | through the lens of scale.
00:00:30.640 | Welcome to the Radical Personal Finance Podcast. My name is Joshua Sheets and today is Wednesday,
00:00:51.600 | January 7, 2015. Thank you for being here. This is the show where each and every day I come to you
00:00:59.120 | and try to give you the information that you need to successfully pass through the maze that is the
00:01:06.800 | field of financial advice. Hopefully going to help you avoid the landmines and find the real targets,
00:01:13.920 | the real good stuff that can help you.
00:01:20.080 | One of the things that I want to talk about today is basically applying a concept that I think of as
00:01:26.720 | a concept of scale to your mental filters as you are looking at the world of financial advice and
00:01:34.000 | consuming financial media. I haven't really ever heard anyone talk about this, so this may be one
00:01:38.720 | of the ideas that's unique to me. Just something that's come to me is as I've thought about trying
00:01:43.840 | to answer the question that I get asked often of how do I find a good financial advisor, and I
00:01:49.360 | realize that I kind of do this myself as I apply a filter of scale to everything that I consume.
00:01:56.720 | Let me explain. When people ask me how to find a good financial advisor, I immediately ask back,
00:02:06.160 | "Well, what do you want a financial advisor to do for you? What do you need?" Because the term
00:02:12.880 | financial advisor is an extremely ambiguous term. That can include a lot. That could include,
00:02:19.840 | on one end, I was thinking of this morning I was very briefly having some internet problems with
00:02:26.160 | my internet, and so I was using the opportunity just to real quick do some quick shopping around
00:02:30.880 | and see if I could get a better deal on my internet service. I was thinking, "Why am I doing
00:02:34.400 | this? Why am I sitting down and just taking 15, 20 minutes to make a couple of quick phone calls
00:02:38.560 | and see if I can get a better deal on my internet service?" Well, because if I can knock off, it's
00:02:43.040 | part of my January working on utilities and how can I decrease my utility consumption, but if I
00:02:49.120 | can knock off 20, 30, 40 bucks a month from my internet bill just by making some phone calls
00:02:55.680 | and asking for some better deals, then that's a dramatic benefit to my financial life. That's a
00:03:01.840 | huge benefit. On the one hand, if I can find a financial advisor, somebody who can guide me
00:03:10.000 | through that process of just simply how can I get a better deal on my internet plans, that can save
00:03:16.880 | me a substantial amount of money over time. Now, on the flip side, I've also been thinking about
00:03:21.440 | some articles. I was talking with a friend, I think it was last night, about some articles that
00:03:26.960 | I was reading in the context of some of my tax planning shows before the holidays about the band
00:03:34.480 | U2. I was reading some articles when I was preparing the show about some of the moves that
00:03:39.440 | they made moving their world headquarters for their – or excuse me, moving their royalties
00:03:44.880 | from Ireland to Amsterdam. Essentially, what had happened is for a long time, Ireland was
00:03:52.960 | offering something called an artist's exemption where artists could avoid paying taxes on their
00:04:00.160 | songwriting royalties but not other aspects of their business, not their tours or their
00:04:06.400 | performances. They could avoid paying tax on their songwriting royalties, which was a huge savings.
00:04:13.040 | According to a couple of articles, this was old news. This is years ago that the
00:04:19.360 | articles came out. I was just reading some very old articles about it. This was a plan that many
00:04:26.240 | artists had taken advantage of. Mick Jagger, Keith Richards, other artists had really done just a
00:04:34.880 | really phenomenal job with their planning. U2, however, needed to move and they moved their
00:04:39.360 | benefits from – they moved their royalties out of Ireland into the Netherlands. I was thinking
00:04:47.920 | to myself, "What an interesting tax problem to work on and what an awesome specialized field
00:04:53.520 | of financial advice." But to find that type of financial consultant who is able to help with
00:05:01.040 | how do we transition this property ownership from one tax jurisdiction to another tax jurisdiction,
00:05:07.760 | that's an incredibly, incredibly specialized field of knowledge but it also falls under the
00:05:13.520 | frame of financial advice. I've realized that I see this constantly throughout the financial media.
00:05:21.120 | I'll have somebody sitting in my office who's relatively low income just getting started on
00:05:26.000 | their savings plans and they don't have much money saved in a savings account even as just
00:05:30.080 | a basic buffer or to take advantage of things like bulk buying to save money or taking advantage of a
00:05:37.120 | deal on new equipment that they need for their life. They're talking to me about how do I hold
00:05:41.920 | gold and silver coins offshore. I'm thinking, "Why would you even bother with spending any time
00:05:47.840 | on that concept?" Yes, it's certainly interesting and it's certainly a useful planning mechanism
00:05:54.080 | but come on. There's no reason in the world that you should be buying gold and silver coins
00:05:59.520 | offshore unless you're doing it as pure speculation. If you're doing it as pure speculation,
00:06:04.080 | why would you be speculating with a physical instrument like that? It's just way too much
00:06:08.400 | hassle, way too much cost and way too much of a problem. Now on the flip side, you also scratch
00:06:14.080 | your head a little bit if you're working with somebody who's incredibly wealthy to whom somebody
00:06:20.400 | for whom a latte every day or two or three times a day is completely irrelevant or they can go and
00:06:27.440 | buy anything that they want to buy and you're thinking, "Why are you wasting your time on
00:06:31.360 | this minutiae of these tiny little deals when you could be doing much bigger deals?"
00:06:37.280 | I realized that as a general population of interested individuals, we're not taught to apply
00:06:45.680 | the lens of scale to our lives to say, "What do I actually need now? What's important to me now?"
00:06:52.240 | If I'm living in the United States and I'm married and have a family and have a business or
00:06:59.760 | just basically a median wage earner, I don't have any dramatic income tax liability for which
00:07:07.600 | the sole purpose is going to be a reason for me to expatriate to another country.
00:07:11.920 | I can easily wipe it out with a few simple techniques. For me to spend time thinking
00:07:17.440 | about how do I move my business to Puerto Rico or how do I move to the Cayman Islands,
00:07:22.160 | I mean, hey, if you want to go to Puerto Rico or the Cayman Islands or Asia in some capacity,
00:07:26.720 | that's fine. But there's no point in spending a lot of time thinking about it at that stage
00:07:32.800 | when you could be spending your time thinking about and learning about ways to increase your
00:07:36.960 | income. That's a better investment of your time. One of the things that I think we need to be very
00:07:41.840 | careful of and very conscious of is the fact that we all have a limited amount of time.
00:07:46.720 | And we should spend that time in ways that are going to enhance our goals, in ways that are
00:07:54.560 | going to get us closer to what we want. When you invest your time into learning about something
00:07:59.920 | or into studying something, make sure that it actually matters. Make sure that it's actually
00:08:04.320 | important. Now, the good thing is you can build habits at an early age. So let's say you build
00:08:10.880 | a habit of thrift and frugality at an early stage when you're not earning a lot of money. Well,
00:08:15.920 | that habit will follow with you. And even when it's irrelevant, you probably still fall into the
00:08:20.000 | habit of making wise choices that are going to enhance your wealth. But make sure that if you're
00:08:27.040 | just at the beginning stage, don't spend a lot of time focusing on things that aren't going to help
00:08:32.480 | you. Focus your education and your learning and your reading and your study on things that are
00:08:38.080 | immediately going to help you. When you're starting off in life, you probably need to focus
00:08:43.440 | primarily on your income and on your expenses, not on your investment plan. You need to focus
00:08:48.240 | on becoming hugely valuable to your employer and to your customers. You need to focus on your
00:08:53.280 | expenses. So at an initial stage, figuring out how to save money on groceries with excellent
00:09:02.080 | couponing strategies can be an incredibly valuable use of your time. Maybe playing some kind of
00:09:07.840 | credit card points game so that you can stay at a fancy hotel on vacation and fly there for free.
00:09:12.880 | This might be an incredibly valuable use of your time. But at some stage, it might not be.
00:09:21.040 | When you're just getting started, don't spend a lot of time focusing on
00:09:26.640 | how to buy large commercial properties such as shopping malls. Spend your time focusing on
00:09:34.240 | how, within your means, within your bracket, so to speak, how can you get a good deal on fixing
00:09:41.120 | and flipping starter homes? Or how can you get into the mobile home business and figure out an
00:09:46.560 | arbitrage opportunity on that? Don't spend a lot of time thinking about how do I move gold bullion
00:09:52.640 | coins to Switzerland. That's unnecessary for you. Focus on something that you can actually
00:09:59.760 | apply to your specific scenario. Now on the flip side, if you're trying to run a $10 million
00:10:05.600 | investment portfolio or a $50 million investment portfolio, it's kind of hard to figure out how
00:10:14.160 | to do that on $40,000 or $50,000 pieces of real estate. Now, in order to maximize your time,
00:10:20.720 | unless you've been able to build a business structure that can handle it with those small
00:10:24.160 | properties, you're going to need to necessarily increase the size of your deal
00:10:27.760 | and move to a different market. Now, obviously, there are caveats to that. For example,
00:10:36.560 | invest in what you know, invest in what you're focused on. But focus,
00:10:40.080 | invest in what you actually have an ability and a capacity to move intelligently with.
00:10:47.680 | But don't spend time where it doesn't matter. For somebody with a low income,
00:10:56.240 | perhaps tax qualified accounts are not necessarily as important. For somebody with a medium income,
00:11:02.640 | tax qualified accounts can be incredibly important. For somebody with a massive income
00:11:07.680 | and massive net wealth, the tax qualified accounts that are easily available are not
00:11:15.280 | really that important. So you've got to figure out where am I in or where are you in your
00:11:22.000 | plan? Where are you? How big are you? How big of a fish are you? And where should you be spending
00:11:28.800 | your time? And that's going to affect how you find the type of advice that you need.
00:11:33.440 | I would love it. One of the changes that I would love to see in our culture is that we've stopped
00:11:41.120 | thinking about investing purely within the context of stocks and bonds and insurance contracts and
00:11:47.520 | real estate and because those are the probably some of the major ones. I would love it if we
00:11:53.600 | would start looking at investing comprehensively and recognize that we're going to be investing
00:11:58.800 | in different things at different points in our life. Think of the concept of investing in something
00:12:05.120 | like the tools of your business. On yesterday's show, I shared how one of the things that I'm
00:12:11.680 | doing is I need to improve some of my skills with just some of the simple software tools that I use
00:12:18.080 | every day. But I need to become lightning fast and completely comfortable with some of the software
00:12:23.040 | tools. I've recognized that I'm not quite as quick with Evernote. I'm not quite as quick with
00:12:28.480 | Nozbe, my to-do list as I need to be. I'm not fully comfortable with all the keyboard shortcuts.
00:12:34.240 | I'm not fully, it's not fully intuitive for me at this point. So I need to upgrade my skills.
00:12:39.440 | And I'm often shocked at how few people think about something like this.
00:12:44.880 | If you're working every day with a program, you should be investing in training for that program
00:12:53.040 | and a knowledge for that program. Whatever it is, and you should learn how to become ruthlessly
00:12:58.560 | efficient. Consider for example, if you were a photographer perhaps on the side or a commercial
00:13:04.160 | photographer and you're looking to do better and use that photography as part of your economic
00:13:12.240 | engine, isn't it worth a little bit of time learning to become expert with Photoshop or
00:13:16.560 | whatever the applications are that you use to edit your pictures? And if you can be faster and more
00:13:22.000 | proficient, take the time to understand how the presets work and setting those things up,
00:13:26.160 | that is incredibly valuable to you. And that might very well be the best investment of your money
00:13:33.520 | and in your time. But on the flip side, at some point in time, that's probably not going to be
00:13:41.920 | the best investment of your time. And only you are going to know where that change is going to happen.
00:13:51.040 | One of the challenges of, I think I talk about this probably a little too much on the show, but
00:13:57.760 | I think I'll overemphasize it because it's under-emphasized in our culture.
00:14:03.440 | Because of the things that we in the professional financial services business have done, we've
00:14:08.160 | focused all in financial stuff and we've essentially broken the term financial advice to simply mean
00:14:14.800 | stocks, bonds, and maybe real estate and banking products and insurance products.
00:14:19.120 | And that's to our detriment. We've hurt ourselves by doing that. So because it's become
00:14:25.040 | overemphasized and when people think about investing, they immediately think about stocks
00:14:28.480 | and bonds, then that's probably why I tend to overemphasize skills and tools.
00:14:34.480 | But back to the concept of scale now. Let's say that you've got $10,000 extra in your annual
00:14:41.440 | budget that you're trying to figure out how to invest. Do you really need to invest $10,000 in
00:14:46.880 | Photoshop training? I'd be surprised. Maybe you do, but I'd be surprised. But do you need to
00:14:54.800 | invest $1,000 in Photoshop training and $9,000 in studying with a world master? I don't know.
00:15:00.880 | Only you can know that. I can't know whether studying with a world master, whether you're
00:15:07.680 | the type of person who's going to implement those techniques, implement those skills,
00:15:11.440 | implement that networking opportunity, and that's going to make a bigger difference than
00:15:15.520 | the growth of the McDonald's stock that you hold in your portfolio will. Only you can know.
00:15:20.880 | But you need to apply that concept and look at it holistically. At one stage,
00:15:25.440 | investing the $10,000 into studying with a master and your Photoshop skills might be good,
00:15:29.920 | but then the next year, you've got $20,000 extra. It might be the time to start buying some
00:15:34.880 | McDonald's stock or buying the rental house next door or investing in opening the storefront
00:15:42.320 | location for your business. Whatever's applicable to your life. Make sure that you're thinking about
00:15:51.920 | the advice that you're getting within the context of scale and you're looking for advice that's
00:15:58.640 | going to help you at this stage of your life. If you're just getting started and focusing on
00:16:07.040 | your budget planning, and I do a show on Radical Personal Finance about estate planning, complex
00:16:14.000 | estate planning, it might be interesting for you to listen to if you're just going to look at it
00:16:17.840 | as entertainment. But if you have two shows sitting there in your feed and one is about
00:16:22.640 | budget planning and the other is about estate planning, skip the estate planning one.
00:16:26.480 | Now, on the flip side, if you're a multimillionaire and there are two shows sitting on
00:16:31.840 | your feed and one is about budget planning and one is about estate planning, skip the budget
00:16:35.920 | planning. It's probably not something that you need to spend time thinking about.
00:16:40.080 | Probably not. Could be. Only you are going to know that.
00:16:45.760 | My concern is that in our society, we spend a little bit too much time making one-size-fits-all
00:16:54.240 | suggestions. We spend a little bit too much time talking about retirement accounts and not enough
00:17:01.760 | time talking about how to please your boss or how to please your customers.
00:17:07.920 | Both are important, but in terms of what's going to make the biggest difference,
00:17:15.040 | having a happy boss or happy customers is going to make a much bigger difference now than the
00:17:21.440 | right retirement account. Now, fast forward, we got to get the right retirement account
00:17:27.120 | because otherwise, there may be some problems. Let me give you a couple of scenarios just that
00:17:33.520 | I was thinking about. I've been thinking about doing an update to my how I would become a
00:17:41.840 | multimillionaire at Walmart show. That's one of the more popular shows that I've gotten more
00:17:47.600 | positive feedback on, but I've also gotten a number of people saying, "Josh, you just don't
00:17:51.280 | understand what it's like." I've wanted to provide a bit of a rebuttal for that thought process.
00:17:59.200 | Someday, maybe I will. I try to be very realistic and in touch with reality.
00:18:07.760 | I'm not a big fan of just platitudes without substance, just simply saying, "We've all got
00:18:18.000 | to pull ourselves up by the bootstraps without saying, 'How do we actually do it?'" I'm also not
00:18:22.160 | a fan of stupidity and of people making stupid choices. I think it's our responsibility to teach
00:18:28.560 | and to help other people to not make stupid choices and also to encourage them to help
00:18:38.000 | themselves and to come alongside and help as we're able to. There's a lot in that. I won't
00:18:43.920 | go any deeper into it right now, but I think constantly about how can I help somebody who's
00:18:48.960 | just starting off. Let me give a couple of case studies that occurred to me. I was thinking about
00:18:53.440 | this from the context of entry-level jobs. Again, I've shared with you that one of my dreams with
00:18:59.840 | this show is that someday, somebody will reach out to me and say, "Joshua, I was broke. I was poor.
00:19:07.120 | I didn't have any money. I didn't have anybody who was teaching me anything. I stumbled across
00:19:11.440 | your show on my phone and I started listening and now I've been able to do it. My goal is to provide
00:19:17.760 | information that can be implemented by somebody along the way." Here was just an idea that I
00:19:23.520 | thought of as I was thinking about how would I focus on developing a financial plan. I was
00:19:31.280 | thinking about somebody starting as an entry-level fast food worker. We often make the joke in our
00:19:38.080 | society about burger flippers, that you're just going to flip burgers. This joke really annoys me
00:19:44.720 | personally. If you want to get me going face-to-face, just make some snide remark that's
00:19:51.280 | critical of people flipping burgers. I think that it's an incredibly valuable starting point. I think
00:20:00.080 | that just for people who are willing to go and work at gainful employment and provide valuable,
00:20:07.440 | important services in exchange for a fair wage that's set by the market, to me that's what things
00:20:12.640 | are built upon. What annoys me is I've done a bit of financial planning for people associated with,
00:20:19.520 | for example, with McDonald's franchises. McDonald's has one of the most amazing
00:20:24.960 | development programs of many of the companies. McDonald's has a really amazing development
00:20:32.320 | program. There have been many, many people who have started flipping burgers as teenagers and
00:20:39.760 | built massive empires of wealth. I like to hold that perspective. Yes, I hold it realistically
00:20:49.840 | with an appreciation of the challenges that certain people can face, but it is important
00:20:55.120 | to me to hold that as a perspective. I was just thinking. I was kind of reprising my Walmart
00:21:00.800 | example. I was thinking, "What if I started off in fast food?" Knowing what I now know,
00:21:05.200 | if I were coaching myself or coaching someone else who was from a disadvantaged background,
00:21:10.240 | didn't have the opportunity for prestigious schooling, didn't have a wide social network,
00:21:17.440 | and basically just was able to start off on an entry level as a fast food worker,
00:21:25.040 | what would I encourage them? First of all, I would affirm them for their choice.
00:21:30.720 | I would say, "Awesome. What a tremendous place to start. You're gainfully employed. You're
00:21:34.480 | willing to work. You're willing to spend some of your human capital in exchange for financial
00:21:39.120 | capital in a fair open market trade." That is what the entire modern economic system is based upon.
00:21:45.840 | Now, let's do it with a little bit of vision and think about where you're going. Why not set your
00:21:53.360 | goals and aspirations high, as high as you can see them being? Now, your goals and aspirations
00:21:58.560 | might be simply to become a manager or they might be to become an owner, but everything starts with
00:22:04.320 | a dream. Everything starts with a goal and with an aspiration. Let's think about that plan in the
00:22:10.000 | beginning and let's think about where we should focus our time. What's the best investment at
00:22:14.640 | this point in time for you to be focusing on? Where should you be spending your time and energy?
00:22:20.640 | Should you be spending your time and energy thinking about how to beat the stock market
00:22:26.400 | or should you be spending your time and energy at becoming really excellent at your job?
00:22:31.040 | I would commend to you that the first thing that you need to do is become really, really excellent
00:22:35.600 | at your job. And the great thing is this doesn't really require that much money. It does require
00:22:41.360 | focus and effort. First step to success in an employment situation is find out who your boss
00:22:48.480 | is and make them happy. Figure out who is my boss and make your boss happy. It's better to be second
00:22:57.120 | in line and to encourage somebody than it is to, well, just start with that. Find out who your boss
00:23:05.840 | is and make them happy. That's the golden secret to employment. This is the same in every business,
00:23:11.360 | by the way. If you are a business owner, then your boss is your employees, excuse me, is your
00:23:16.160 | customers and you need to keep your customers and your clients happy. So figure out who is,
00:23:20.320 | who sends you money, who pays you money and make them happy. Start with effort. What you've got
00:23:27.760 | if you're starting off is you don't have a lot of financial capital but you have a lot of human
00:23:31.920 | capital. So start with effort, focus, hustle, be there on time, move quickly all the time.
00:23:36.960 | This one bugs me so much. I'm about to, my wife and I, we kind of have a little joke and I hope
00:23:45.760 | it doesn't sound snobby but recently, finally, we joined one of the warehouse clubs and in our area
00:23:51.040 | it was Sam's Club. I cannot stand shopping there. It's not that they don't have decent inventory and
00:23:59.600 | decent prices but the staff is horrific, at least the one at the place where I go. When I watch the
00:24:07.360 | person check my stuff out, it's just like moving slow as molasses. It's horrible. It's so annoying
00:24:15.280 | to me. Maybe that's again, I don't know, maybe I shouldn't. It bothers me. And so that plus just
00:24:22.800 | the annoying customer service experience, it's not worth the savings to me to get the bad experience.
00:24:32.720 | Now, we'll see. I got to sit down and actually run the numbers and see whether it's been worth it.
00:24:36.960 | But it's just, we laugh to ourselves. I hope it's not rude but we kind of say, "Well, let's see if
00:24:42.800 | we could find somebody and pick somebody who's actually going to move quickly and efficiently."
00:24:47.760 | And there's one person, there's one young man there who does and I try to work with him and
00:24:52.160 | encourage him for his effort for actually working quickly. But these things matter.
00:24:58.080 | Just simply the speed that you move matters. I remember when I first joined Northwestern
00:25:05.920 | Mutual, one of my former managing directors, he would say to me, his office was up on an upper
00:25:12.560 | floor of the building and his office window overlooked the parking lot. And he would talk
00:25:17.920 | about when he was hiring new representatives to work for him, one of the factors in his
00:25:24.800 | consideration was he would just always look to see how quickly somebody moved across the parking lot.
00:25:29.280 | Did they amble and saunter or did they move with purpose? And he said, "Certainly this wasn't my
00:25:36.400 | – this wasn't the deciding factor for whether I was willing to give somebody an opportunity or not,
00:25:41.920 | but it was a contributing factor." And because it was a contributing factor,
00:25:47.200 | he said, "Over the years, I noticed that it was pretty true. The people who really did well,
00:25:52.880 | they rarely ambled, they rarely sauntered, they worked, they were focused, they hustled."
00:26:00.400 | And so one of the things that – I mean, this is a free investment. Invest in
00:26:05.200 | hustling, invest in moving, move quickly. Don't have to run, but move with purpose.
00:26:09.920 | There's a dramatic difference where I noticed this with fast food franchises. One of the places I've
00:26:17.280 | always wanted to work, I've always been intrigued by, is I've always wanted to work at Chick-fil-A.
00:26:22.560 | And I know they're primarily a Southern thing, but here in Florida, Chick-fil-A restaurants are
00:26:28.400 | extremely popular. And one of the observations that I have is I actually enjoy going there
00:26:34.960 | because the employees seem like they actually care. And I'm so interested. I would love to
00:26:41.680 | figure out if any of you have read case studies or actual market research on this, something,
00:26:45.920 | I would love it if you'd send me a link. But I'm interested to know why. What is it? The employees,
00:26:51.840 | if you walk into Chick-fil-A, at least the ones here, and I hope and I assume it's nationwide,
00:26:57.840 | but if you walk into a Chick-fil-A, if they're busy, they've got people that immediately they
00:27:02.160 | see you, they jump to a register. And some other fast food franchises nearby, they simply don't.
00:27:09.760 | And I'm just trying to figure out, is it the recruiting? Is it a recruiting process? Is it
00:27:15.440 | higher wages? Is it being closed on Sunday that allows you to attract a different caliber of
00:27:20.720 | person? Is it training? I don't know what it is. If any of you are knowledgeable, come by today's
00:27:26.640 | blog post and comment and let me know. And if you've read any studies, I'm fascinated to know.
00:27:31.440 | But it makes a difference in my purchase habits is even though the price is higher,
00:27:36.320 | they command a higher price for their food, slightly higher than many other restaurants,
00:27:41.760 | just because the experience is actually pleasant. Then often, if my family and I are eating,
00:27:47.600 | we'll go and frequent their store over another store. Now, does that translate into higher wages
00:27:52.720 | for the employees? I think it probably does. And they can command the higher price. So it seems
00:27:56.960 | like a virtuous cycle. They seem to be doing well. But I don't know. I'm interested if any of you
00:28:01.280 | have information on that. I'd love to know about that. But just something simple like that,
00:28:08.880 | training somebody. And as a young person, practicing these habits doesn't cost money,
00:28:12.880 | but this is a valuable investment of your time. Making sure that when you're at work, you're
00:28:17.840 | working. Don't goof off. You need good relationships with coworkers. So I think it's
00:28:22.800 | important not to be standoffish, but there's a proper balance there between good relationships
00:28:30.720 | and not goofing off. One of the big ones is learn how to be fast and efficient with the systems of
00:28:37.280 | the restaurant or whatever this is in your industry. So practice, read the training manual,
00:28:42.480 | follow, practice, practice, smile, look great, move quickly, make your boss happy.
00:28:46.880 | Make them not only happy, make your boss ecstatic about your work. And then go and ask for more
00:28:54.000 | responsibility. Make certain that you are fully satisfying the responsibility that you currently
00:29:02.640 | have, and then ask for more. Make full use of the company's training programs. As I was considering
00:29:10.720 | this show, I was thinking about doing this with a specific focus on McDonald's and doing what I did
00:29:15.840 | with the Walmart and go through all the McDonald's programs. I just was reading some of the
00:29:19.440 | information on their Hamburger University. And again, since I'd worked with a couple of clients
00:29:22.560 | that had come from there, they have an amazing training program, a specific management training
00:29:28.720 | program called Hamburger University. And it's a really valuable tool. So take advantage of those
00:29:34.640 | things. Ask to be able to go. Ask to participate. Ask for the extra training. Now, what about your
00:29:41.520 | personal financial life? Well, you got to think about what's your wealth plan. And you need to
00:29:47.520 | save as much money as possible. It's challenging to save when you're just getting started, which
00:29:52.960 | is why the first place to focus would probably be on your income. Getting those increases in wages,
00:30:00.880 | it's tremendously important at an early start. But then also making sure that you're able to
00:30:06.640 | save the difference so that you have investment money. And it's probably going to be very much
00:30:14.480 | in your best interest to focus on investing in what you know. So if you know and are becoming
00:30:20.880 | expert in working within a fast food industry, becoming a manager, learning how to train,
00:30:27.840 | learning how to be trained, probably is a good idea if you like the industry to focus on that.
00:30:33.760 | So what you want to be thinking about is you want to be thinking about what are the savings targets
00:30:38.080 | to move into ownership? What are the best investments? You should be close enough to
00:30:43.280 | figure out, do I actually want to be an owner? And you may or may not. But then you got to figure
00:30:49.040 | out, what do I need to do? So therefore, you spend time researching the franchise costs of
00:30:54.000 | your restaurants. Research other franchise agreements for other restaurants. Research
00:30:58.960 | who the owners are in your town of your franchise or other franchises. Meet them. Let them know that
00:31:04.160 | you'd like to be an owner someday and that you're saving your money. At least with the franchise
00:31:09.280 | owners that I've connected with and the people in that type of industry that I've connected with.
00:31:15.840 | If somebody were to simply say, "I'm interested in being where you are someday," and then prove it,
00:31:24.160 | with the associated work ethic and hustle and excellence and commitment,
00:31:29.120 | all of the business owners and franchisees that I know in those types of businesses,
00:31:36.240 | every single one would at some point, after you've proven your commitment, would take you
00:31:43.920 | under their wing and help you. They'd probably hire you away if it were for a competitor franchisee,
00:31:50.480 | they would hire you away and they would help you. But you've got to do both things. You've got to
00:31:55.840 | demonstrate by your actions, your intent, and then make your intent known in a proper way.
00:32:02.320 | But if you have a focus on that, well, now you have a clear investment goal. So you research,
00:32:07.440 | "How much money do I need to purchase this franchise?" You should know everything there
00:32:12.400 | is to know about your franchise agreement. So if it's McDonald's and your franchise fee is a million
00:32:17.440 | bucks, how much of that is financeable? How much of that is not financeable? What are the terms?
00:32:23.680 | How much do you need? It may be that you decide, "You know what? Saving for this McDonald's franchise
00:32:28.880 | is very much a good use of my time and focus." Or maybe that buying a Subway franchise for 50,000
00:32:34.480 | bucks is a better deal. So you've got to concurrently manage these things. You've got
00:32:39.120 | to make sure that your investment capital doesn't get fritted away on lifestyle expenses,
00:32:44.160 | and you've got to make sure that your income is increasing constantly so that you can set
00:32:48.400 | aside more investment capital. So the best investments are going to be focusing on getting
00:32:54.800 | promotions, and you're probably going to want to just be saving, studying the operations of the
00:32:58.720 | business, looking for ways to improve it. As you get promotions, you're able to earn more. You get
00:33:03.280 | to keep your expenses low so you could set that franchise fee aside. And your experience is
00:33:08.720 | incredibly valuable. Your experience is probably transferable. If I were thinking about starting a
00:33:14.800 | franchise, I would certainly want to—or starting that type of business—I would desire to work in
00:33:20.400 | a few different franchises. I would want to look around and see, "How does McDonald's do it? How
00:33:27.200 | does Burger King do it? How does Chick-fil-A do it? How does Subway do it?" And I'd want to have
00:33:31.120 | experience within their different systems, and to me, that would be a valuable investment of my time
00:33:35.920 | to learn. Then as part of your looking around, then you back out and you take a macro view and
00:33:43.040 | you say, "What's growing? What's declining? Is there a segment of the market that's growing?
00:33:47.920 | Is there a new franchise that's growing in value? What are the prices? What are the benefits? What
00:33:54.240 | are the disadvantages? Is it better for you to start by investing in, I don't know, a Jamba
00:34:02.080 | Juice franchise or one of these frozen yogurt places? What are the fees there? What are the
00:34:06.320 | returns?" Focusing on learning the business skills associated with that. Should you buy McDonald's
00:34:14.720 | or Subway, or should you start your own idea? As you apply this over time, smart investment,
00:34:21.920 | growth in skill, growth in ability, applied to a useful occupation, over time you become wealthy.
00:34:30.640 | And I don't think it takes that long. And then you increase your lifestyle after you're on track for
00:34:37.200 | your wealth. There's got to be a payoff in wealth building. There's got to be a time at which you
00:34:44.880 | stop saving and start enjoying. But if you delay it just a little bit more than the average person,
00:34:51.360 | then on the backside, you get that compound interest going for you, and you can experience
00:34:55.920 | much higher lifestyle benefits than the average person. And don't discount the value of that. That
00:35:03.200 | can be a tremendously, tremendously valuable growth over time. It really can. Now, I certainly
00:35:11.200 | recognize that this is highly idealized. There are many realities of life that are not at least
00:35:20.400 | accounted for in the scenario that I've just laid out. There can be many things that can happen.
00:35:26.080 | And those things have to be dealt with. They have to be protected from. They have to be dealt with.
00:35:31.920 | But the general framework is the same. And it's the same no matter what industry. It might be,
00:35:38.000 | you know, another entry level. I was thinking of doing a case study on a laborer. And I was
00:35:41.840 | thinking how important it is for a laborer to simply set aside the money for their tools.
00:35:46.640 | I have a friend of mine who runs an electrical company. And I was just, I'm just shocked when
00:35:52.960 | I hear of how few workers or potential workers have the simple realities of what they need,
00:36:00.880 | such as reliable transportation and purchasing the basic tools of their job.
00:36:06.000 | Since I've never, you know, not spent a lot of time in that type of trade,
00:36:12.000 | I never realized how much, how big a deal it is for a tradesperson, a skilled tradesperson,
00:36:17.600 | to have the tools that they need to do their job. That's going to be a far more important investment
00:36:22.240 | for a young apprentice tradesperson than anything else. But over time, these things will transition.
00:36:28.160 | So let's transition from an entry level now and let's flip it. Now let me stick with my fast food
00:36:31.920 | example. Pretend that now you're in a situation where you own one or a couple of fast food
00:36:40.080 | franchises. Now at this point in time, what's your best investment? Well, I think you need to make a
00:36:45.360 | realistic assessment of the growth potential of your business and the safety of your business.
00:36:50.720 | And ask yourself at what scale you need your business to be in order for you to meet your
00:36:55.440 | goals. Do you need one franchise, two franchises? At what point in time do you start needing to
00:37:02.480 | transition out from everything being in one industry in one town to get a little bit more
00:37:07.280 | diversification? Do you need to transition out and split some assets up into some other assets?
00:37:13.360 | So now we're going to get into owning shares of other companies. Maybe they're private investments,
00:37:20.880 | maybe they're publicly traded companies, maybe we need to get some alternative asset classes.
00:37:25.280 | Perhaps if somebody has 10 million bucks set aside, maybe this is the kind of person that
00:37:31.040 | does need to set aside a few hundred thousand bucks or a million bucks of gold in another
00:37:35.920 | country. But the person who is the manager at the McDonald's, there's no reason in the world to
00:37:42.080 | be thinking on that scale unless you have a bunch of wealth. So my point is simply this,
00:37:48.400 | apply scale and apply the concept of scale to where you are. The owner of many McDonald's
00:37:57.360 | franchises needs to be spending a tremendous amount of time focusing on their tax efficiency.
00:38:04.880 | The frontline manager much less so. And there's going to be two different financial advisors for
00:38:12.240 | those two people. Two very different financial advisors. Negotiating the terms of a contract
00:38:20.080 | to buy out a competitor's stores, that's going to be a tremendously important area of time for
00:38:27.600 | that person to focus on. Not necessarily for the owner to focus on, not how quickly they walk
00:38:33.120 | across the parking lot. Figuring out what sector of the market is really going to be growing or
00:38:43.280 | paying attention to local real estate trends to make sure that your stores are in the right
00:38:47.920 | vicinity, that's going to be much more important than spending time at Hamburger University.
00:38:52.240 | Figuring out how to improve your efficiency with the new machine software.
00:39:00.240 | So I encourage you as a way to use this information, just simply to establish a filter
00:39:08.080 | for yourself called scale. And look at the information, look at the advice that you get
00:39:12.720 | through the concept of scale. Take what is useful and reject what is not. If you do this over time,
00:39:19.600 | then I think you can really build a strong, you can build an ability to pay attention to what
00:39:26.800 | matters. And I guess that's my, the thrust of what I wanted to share today is pay attention
00:39:32.720 | to what matters for you and just ignore what doesn't. Stay away from the new shiny, sexy
00:39:40.480 | object of whatever the coolest new thing is and focus on what matters. And hopefully you're
00:39:46.240 | working from, as I described yesterday, you're working from a perspective of, you're working
00:39:53.840 | from a list of goals, a vision for what you're trying to accomplish. And now you're looking at
00:39:58.560 | saying, what do I need to apply at this stage of my life? So me, Joshua Sheets, I need to be
00:40:04.880 | focusing on how do I improve my moment to moment productivity to handle all the different tasks
00:40:10.480 | that are associated with my business. I need to improve my ability to work with virtual help,
00:40:16.160 | virtual assistance. I possibly at some point need to consider about my business structure,
00:40:21.120 | but at the moment, due to the constraints of the small size at the moment of this business,
00:40:25.680 | my area where I need to be spending time is in the virtual outsourcing, how to get
00:40:33.520 | excellent at that. Some of these very basic skills. Now flip it and let's, let me use kind of,
00:40:38.720 | I'll use Dave Ramsey. Does Dave need to be spending any time at all sitting and thinking
00:40:45.040 | about his moment to moment productivity? Does he need to be spending any time like I do on
00:40:50.080 | understanding the basics of WordPress? No, he has the capital to where he can easily hire all that
00:40:55.760 | done. And he needs to be spending his time on big picture vision, focus of how to set up the
00:41:01.600 | marketing of a big picture vision of the company, excellent human resources development from a,
00:41:07.200 | from an executive perspective, not from a, from a line perspective, from a moment to moment
00:41:11.600 | perspective. And he ought to spend a little bit of time brushing up on his financial planning
00:41:15.040 | knowledge. It's my little jab and actually spend a little time, you know, going through a CFP class.
00:41:21.520 | That would, that would make me feel better. But my point is you can use these examples and look
00:41:26.240 | at where you are. And if you look at where you are and understand, then you can figure out where is
00:41:31.680 | the most effective point for me to be spending time. And this is one of many ways in which you
00:41:37.680 | can beat the market. This is one of many ways where you don't have to settle for the average return.
00:41:44.880 | But you can invest in a way that's appropriate to you and beat the market. I hope this is helpful.
00:41:51.520 | Let me know, give me some feedback and let me know if this is helpful for you. Again,
00:41:54.800 | this is just an idea that I've thought of. And I categorize advice this way. When I read an article
00:42:00.000 | on this tax saving strategy, I immediately, I immediately ask myself for whom is this helpful?
00:42:05.520 | Is this helpful for entry level? Is this helpful for advanced?
00:42:11.360 | What is the scenario that I'm dealing with? And almost all strategies are going to have somebody
00:42:18.160 | for whom they're helpful. But where you get swindled is if you're trying to apply a rich
00:42:25.360 | man's strategy to a poor man's portfolio. And also where you waste your time is when you're
00:42:31.600 | trying to apply a poor man's strategy to a rich man's portfolio. Now, a lot of meaning of that,
00:42:36.560 | depending on your situation, but consider how to apply the lens of scale. And as you're consuming
00:42:42.160 | information, consuming advice this coming year, make sure that you're focusing on the advice
00:42:47.600 | that's useful to you. And then make sure that over time, here's the last thing that I need to
00:42:52.960 | mention. Make sure that over time, you're not stuck in the rut of consuming advice that's not
00:42:58.480 | helpful to you. Meaning if you focus all the time on becoming really, really excellent with software.
00:43:05.360 | So for right now, I need to become really expert with my software systems. But let's say that three
00:43:11.120 | years from now, I'm still going on and on and getting super great at software. I'm sitting here,
00:43:16.560 | I'm a WordPress wizard. That would be a total waste, I hope, assuming I'm on track for my plan,
00:43:22.720 | that would be a total waste of time. Three years from now, I need to, if all goes well,
00:43:29.440 | and I hope it does, I can't control this and who knows where we'll be. But three years from now,
00:43:34.240 | I should be doing nothing on a website or almost nothing on a website other than just the most
00:43:38.320 | basic using things. I shouldn't be spending time designing something or fixing things or making
00:43:44.160 | sure plugins work or making sure things are right. I should be spending time on the big picture stuff.
00:43:49.280 | And who knows, three years after that, maybe there's a whole team of people working on that.
00:43:53.840 | So there are multiple problems along the way that can happen if you don't apply this concept of
00:44:00.320 | scale to your situation. You could be spending time thinking about things that don't help you
00:44:05.520 | very much. You could be spending time as the junior apprentice and you could be putting money
00:44:10.480 | in a skilled trade and you could be putting your money into a Roth IRA when what you need to be
00:44:16.160 | doing is beefing up your tool collection and buying the specialized tools that are going to
00:44:20.880 | increase your output and making sure that you're very efficient and skillful with those specialized
00:44:26.160 | little time-saving devices. That's a problem if you're spending time on things that aren't helpful
00:44:32.960 | to you. Now on the flip side, if the business owner is the guy who is running a 40-person
00:44:40.320 | construction crew, if this person is spending their time trying to figure out how to use a new,
00:44:45.120 | I don't know, I won't display my ignorance by inserting the machine name, but that's probably
00:44:53.360 | not a good use of time. So make sure that you're aware of where you are in the process and you're
00:44:58.960 | applying a good thought process and focusing on what matters to you at this stage. I hope this
00:45:06.240 | was helpful to you. I'd love some feedback. Let me know if you've read anything on this or heard
00:45:13.840 | anybody else. I never have, so it's just a lens I use and I hope it serves you. As I've thought
00:45:19.200 | about it, it's been very useful for me as a planner, especially if you're a financial advisor
00:45:25.760 | or financial planner. I think you've got to have this because so many times you get questions on
00:45:30.640 | things that just don't matter and you can cut right through all of the nonsense a lot of times.
00:45:35.680 | Not that things are wrong, but it's like somebody comes to you that doesn't have any assets and
00:45:40.800 | they're asking about asset protection. Well, what's your liability that you're worried about
00:45:44.320 | and what assets are you trying to protect? Ignore it and let's deal with that planning in a moment.
00:45:48.400 | Let's focus on the marketing plan that's going to build some assets. Things like that. As a planner,
00:45:53.760 | you can cut through a lot of the nonsense advice and just simply show someone, "Here's what's
00:45:59.600 | applicable to you. Joshua, should I make this investment decision?" "Well, I don't know."
00:46:04.240 | Without two questions, you can show, "Well, someone else should make that investment decision,
00:46:09.120 | but this one is foolish for you. Why are you spending any time and energy on this?"
00:46:14.320 | That was the primary concept that I was hoping to convey. Thank you so much for listening for today.
00:46:18.400 | I value each and every one of you that's listening. Thank you for being here. I'm excited about this
00:46:24.240 | new year. Today wasn't an in-depth financial planning show. I have just been completely
00:46:29.280 | overwhelmed. What I should have done was I had released a bunch of interviews that I had ahead
00:46:34.400 | while I was gone because I wanted to make sure that through the holidays, I think that's the
00:46:36.960 | last time I'm ever going to do that. I'm going to take those two weeks off even from producing
00:46:40.960 | shows. I guess here at the start of this business, I wanted to really be focused on
00:46:44.640 | making sure that I was still consistently providing content while I was away, but I
00:46:49.360 | should have probably taken those two weeks off and then scheduled interviews for this week so
00:46:53.040 | I could get caught up. Man, I've just been overwhelmed, but it's a good overwhelm.
00:46:58.080 | Thank you all so much. Talk to you tomorrow.
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