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00:00:30.620 | I really hate to interrupt your otherwise perfectly glorious
00:00:34.020 | Friday or perhaps Saturday or weekend
00:00:36.500 | or other beautiful day that you're enjoying,
00:00:39.300 | but we need to talk.
00:00:41.640 | You need to get ready for global recession
00:00:44.240 | and $20 per gallon gasoline in 2015.
00:00:48.800 | Thought you should know.
00:00:49.980 | ♪
00:00:52.980 | ♪
00:01:05.980 | Welcome to the Radical Personal Finance Podcast.
00:01:08.360 | My name is Joshua Sheets and today is Friday,
00:01:11.720 | January 16, 2015.
00:01:14.960 | We're going to do a little bit of economic prognostication today.
00:01:18.000 | I know I said I wouldn't.
00:01:19.100 | I know I said I wouldn't, but, you know, hey,
00:01:22.040 | sometimes a guy's got to do what a guy's got to do, right?
00:01:26.140 | I got to do this today.
00:01:27.680 | ♪
00:01:38.820 | Thank you so much for being with me today.
00:01:40.260 | My name is Joshua Sheets and if this is your first time
00:01:43.460 | tuning in to the Radical Personal Finance Podcast,
00:01:45.460 | this is the show where each and every day I unpack for you
00:01:48.200 | all of the things that you need to know to get rich
00:01:50.500 | and stay rich.
00:01:51.600 | And one of those things you need to know is
00:01:55.800 | what's going to happen in the future.
00:01:58.240 | So today we're going to talk about that.
00:02:00.780 | I'm going to lead off with an article here
00:02:03.580 | from the Bloomberg Business Week.
00:02:07.720 | I also have, let's see, Bloomberg Business Week
00:02:10.520 | and LA Times.
00:02:11.580 | Let's go with the Bloomberg article.
00:02:13.280 | Headline, dateline is January 16, 2015.
00:02:17.960 | Headline, "Consumer prices in the United States
00:02:20.200 | drop the most in six years as fuel falls."
00:02:26.400 | The cost of living in the U.S. declined in December
00:02:28.700 | by the most in six years, reflecting a plunge
00:02:31.840 | in energy costs that's keeping inflation from rising
00:02:34.640 | toward the Federal Reserve's goal.
00:02:36.920 | The consumer price index dropped 0.4%,
00:02:39.580 | the biggest decline since December 2008,
00:02:42.120 | after falling 0.3% in November.
00:02:45.280 | A Labor Department report showed Friday in Washington.
00:02:48.520 | The median forecast of 89 economists surveyed
00:02:51.260 | by Bloomberg called for a 0.4% decline,
00:02:55.300 | excluding volatile food and fuel.
00:02:57.400 | The so-called core measure was unchanged,
00:03:00.240 | failing to rise for only the second time since 2010.
00:03:04.500 | The biggest drop in clothing costs since 1998,
00:03:08.140 | combined with falling airfares and cheaper new
00:03:11.540 | and used cars, signal the deceleration
00:03:13.980 | in inflation is spreading beyond energy,
00:03:16.280 | as Japan and Europe are in or near a recession,
00:03:19.680 | and some emerging markets cool.
00:03:22.060 | Sustained broad-based price declines test
00:03:24.860 | Federal Reserve Chair Janet Yellen's view
00:03:26.660 | that the drop in fuel won't reverberate through the economy.
00:03:30.540 | "This is a number that consumers will love,
00:03:33.340 | but economists will worry about," said Russell Price,
00:03:36.140 | senior economist at Ameriprise Financial Incorporated
00:03:39.140 | in Detroit, who correctly projected the year-over-year
00:03:42.480 | change in the core index.
00:03:44.440 | As plunging commodity prices, quote,
00:03:46.940 | "filter through the system, it should take nine months
00:03:49.420 | to a year, then we should start to see inflation
00:03:51.980 | in the United States and around the world
00:03:53.560 | start to pick back up," close quote.
00:03:56.320 | CPI estimates in the Bloomberg survey ranged
00:03:58.700 | from a 0.8% drop to a 0.1% advance.
00:04:03.200 | Now, isn't that interesting?
00:04:06.700 | How's that for a headline for Friday?
00:04:11.440 | By the way, don't you just love the horrific nature
00:04:16.440 | of economic news that, well, consumers are happy,
00:04:21.420 | but this is a number that consumers will love,
00:04:24.560 | but economists will worry about.
00:04:25.880 | Don't you love that?
00:04:27.220 | So sad, poor economists.
00:04:29.000 | But as I record this show at the moment,
00:04:31.260 | at 3.32 p.m. Eastern Standard Time,
00:04:33.960 | the S&P 500 index is currently sitting at 2010.91 points,
00:04:39.700 | up almost 18.5 points for the day,
00:04:42.440 | and the Dow Jones Industrial Average is 17,447 points,
00:04:47.440 | up 126 points, almost about 3/4 of 1% for the day.
00:04:53.040 | So isn't this a fun day?
00:04:55.540 | And I decided to preempt the Q&A show
00:04:58.440 | since I did three Q&A shows earlier this week,
00:05:00.560 | and we're gonna talk a little bit about economics today.
00:05:03.460 | And I hope you find it important
00:05:05.720 | 'cause I think you need to know what's gonna happen
00:05:07.260 | in the future.
00:05:08.460 | And I'm gonna share that with you today.
00:05:10.220 | Decided to do some crowdsourcing
00:05:12.420 | and did some informal polling
00:05:15.500 | among the Radical Personal Finance Facebook community.
00:05:18.540 | I shot a quick video and put it out on the Facebook page,
00:05:21.800 | asking all of you to let me know,
00:05:24.740 | what is your general feeling about the economy right now?
00:05:28.340 | Do you feel good?
00:05:29.340 | Do you feel like it's in a good shape or a bad shape
00:05:31.440 | or kind of neutral about it?
00:05:33.280 | And I wasn't necessarily looking for any kind of economic,
00:05:38.440 | indicator or any statistical analysis,
00:05:40.240 | just wanted to know how you felt.
00:05:41.840 | And the majority of the responses that I received
00:05:45.240 | corroborated my own, I guess, hypothesis
00:05:48.840 | would be the right word,
00:05:50.120 | that everyone feels pretty good right now, really do.
00:05:53.200 | My primary indicator for everybody feeling good
00:05:57.760 | is actually my Facebook feed.
00:05:59.120 | I personally measure economic data
00:06:01.200 | based upon my Facebook feed.
00:06:02.840 | And I see, well, what are people talking about on Facebook?
00:06:07.080 | And I've been fascinated to watch
00:06:09.400 | the gasoline price updates.
00:06:11.680 | And my Facebook feed, and maybe yours as well,
00:06:16.680 | has just been packed with people
00:06:18.920 | taking pictures of the price that they're paying at the pump.
00:06:21.920 | And I saw one recently,
00:06:23.880 | it was something like $1.88 a gallon or $1.89 a gallon
00:06:27.200 | that somebody is paying for their gasoline.
00:06:32.000 | And I just thought, wow.
00:06:33.320 | I personally, I was surprised
00:06:37.400 | 'cause I really did never expect to see
00:06:39.360 | gasoline under $2 a gallon in my lifetime.
00:06:42.120 | And what an interesting turn of events.
00:06:44.520 | I certainly didn't predict it.
00:06:46.080 | But here, quoting from an LA Times article that I have here,
00:06:51.600 | that evidently the American Automobile Association, AAA,
00:06:55.480 | says that on Friday today,
00:06:57.280 | a gallon of regular gas's average price is $2.08
00:07:01.560 | across the country.
00:07:04.720 | Fascinating, down 4.7% last month,
00:07:07.240 | the largest decline since December of 2008.
00:07:11.040 | So, where are we in the economic cycle?
00:07:16.040 | That's usually what people would ask.
00:07:20.520 | And I'll tell you, by my informal polling,
00:07:24.560 | everything feels pretty good.
00:07:25.920 | Stock prices are high, gasoline is low.
00:07:29.600 | That leads to a good amount of disposable income
00:07:32.440 | for many people.
00:07:34.240 | And so, when I start to feel pretty good,
00:07:37.640 | then I immediately recognize that I have a need
00:07:40.840 | to warn people against the other side.
00:07:43.920 | See, one of the most valuable services
00:07:47.280 | that I believe a financial advisor can provide for anybody
00:07:50.960 | is essentially to talk to you
00:07:53.400 | and talk you off of the ledges.
00:07:57.720 | For example, in portfolio management,
00:08:01.480 | the biggest influence and the biggest factor
00:08:03.800 | on the performance of your investment portfolio is you.
00:08:07.360 | What do you actually do
00:08:08.920 | with regard to your investment portfolio?
00:08:12.160 | And there are various aspects to it.
00:08:14.040 | Number one, do you fund it?
00:08:15.540 | Do you save money?
00:08:17.400 | Number two, what do you do when things are good
00:08:21.400 | or things are not good?
00:08:22.720 | And so, a primary skill of a good financial advisor
00:08:25.500 | needs to be, in essence, to help people help you
00:08:29.420 | to manage your emotions.
00:08:31.160 | And so, when everyone's euphoric, I get to be bearish,
00:08:33.740 | and when everyone's bearish, I get to be encouraging.
00:08:37.080 | And so, today, I'm gonna share with you a few thoughts
00:08:40.120 | that I'd like you to consider as far as some things
00:08:44.020 | that I think might be helpful for you
00:08:46.360 | at this phase of the economic and business cycle.
00:08:50.960 | And I've had a few different influences on my thinking.
00:08:55.960 | Interestingly, two things came together
00:08:59.200 | on the show recently.
00:09:01.360 | I answered yesterday, the day before yesterday,
00:09:06.960 | I answered the question from Banika from Sri Lanka.
00:09:09.800 | And I hadn't, I've never been to Sri Lanka,
00:09:13.180 | but I was, the last time I really ever thought
00:09:16.280 | about the country of Sri Lanka prior to receiving his email
00:09:19.660 | or was in 2004, when the tsunami hit that part of Asia
00:09:24.660 | and brought widespread, massive devastation
00:09:31.760 | to that part of Asia.
00:09:33.880 | And I was thinking about this because this week,
00:09:37.040 | I've been watching some Hurricane Katrina documentaries.
00:09:39.800 | And what's interesting about both of these
00:09:41.920 | two natural disasters is I was traveling for both of them.
00:09:46.440 | When the 2004 tsunami hit India, excuse me, not India.
00:09:51.440 | Well, I guess it did hit India a little bit.
00:09:55.140 | It was primarily Indonesia, and then also Sri Lanka
00:09:58.900 | and Thailand and some in India.
00:10:00.780 | But when in 2004, when that tsunami struck,
00:10:04.420 | I was actually in Hong Kong over the Christmas
00:10:07.660 | and New Year's holiday.
00:10:09.060 | And it was a unique experience for me to be in another,
00:10:13.060 | to be in Hong Kong watching the news come in
00:10:15.140 | much closer to it than I would have felt perhaps
00:10:18.180 | if I had been in the United States at the time.
00:10:20.260 | And then Hurricane Katrina, I was in Costa Rica
00:10:23.700 | for the duration of Hurricane Katrina.
00:10:26.580 | So I really didn't have any personal impact,
00:10:30.440 | any personal connection to Katrina.
00:10:31.980 | I didn't watch the news.
00:10:32.900 | I heard something about a hurricane
00:10:34.660 | that was going on in the United States,
00:10:35.980 | but I was pretty unplugged at that point.
00:10:38.620 | And so I didn't have any of the connection
00:10:40.180 | that most US Americans had with the event.
00:10:43.520 | And obviously I saw discussions of it.
00:10:46.540 | But after going to New Orleans a few months ago for a visit,
00:10:50.480 | I decided I wanted to learn a little bit about it.
00:10:52.140 | So I've been watching some documentaries,
00:10:53.540 | and just so happened this week,
00:10:54.720 | I finally was able to get to them
00:10:56.880 | and see some documentaries.
00:10:58.620 | And it just was an interesting thing to think about,
00:11:03.000 | what would I do?
00:11:03.840 | 'Cause that's where my brain always goes,
00:11:05.500 | is how would I plan for this financially?
00:11:07.720 | What would I do if I were living in a place
00:11:11.060 | that was just completely devastated?
00:11:12.420 | How would my plans, my financial plans survive?
00:11:16.600 | Would I be able to get through it?
00:11:19.100 | Would I be able to prosper through it?
00:11:21.040 | Would I be able to help others?
00:11:22.580 | How would my planning hold up in this event?
00:11:26.340 | And so thinking about the tsunami,
00:11:29.180 | thinking about Katrina, thinking about gas prices,
00:11:31.700 | and then thinking about just this economic phase
00:11:35.700 | that we're in, made me decide to do this show.
00:11:37.960 | And the theme of today's show,
00:11:39.560 | which I hope to develop in three different ways,
00:11:43.120 | is you need to be out of sync with the rest of the world
00:11:47.440 | in order to succeed.
00:11:48.560 | And the three themes that I want to develop today are,
00:11:54.560 | the three are, one, now's the time to begin preparing,
00:12:00.360 | if you haven't, for global recession.
00:12:03.740 | When things are feeling good, you should be preparing
00:12:08.840 | for when things aren't so good.
00:12:10.440 | And when things aren't so good,
00:12:12.640 | you should be preparing for when things are good.
00:12:15.360 | Because guess what?
00:12:16.920 | There are difficult times coming.
00:12:19.560 | If I suckered you into listening to the show
00:12:24.320 | because you were hoping for me to give you
00:12:27.080 | a prognostication on the fact that we're going to be
00:12:30.360 | in global recession in 2015, I'm sorry to disappoint you,
00:12:34.440 | but the English language can be tricky sometimes.
00:12:36.840 | You have to read carefully.
00:12:38.600 | I didn't say that necessarily,
00:12:40.600 | although you certainly could interpret it this way,
00:12:41.960 | I didn't say that 2015 will have global recession
00:12:45.360 | and we'll have $20 per gallon gas.
00:12:48.440 | But I did say that you need to prepare in 2015
00:12:51.960 | for a global recession at $20 per gallon gas.
00:12:55.440 | Because I view those two things as inevitable.
00:12:58.340 | In the future, there will be a global recession.
00:13:00.860 | And in the future, we will be paying for $20 a gallon gas.
00:13:05.440 | Or more, who knows?
00:13:06.860 | Now, on what basis do I say that?
00:13:08.500 | Well, in my short lifetime, which is fewer than 30 years,
00:13:13.500 | I clearly remember paying for gas that was under a dollar.
00:13:18.920 | And also in my lifetime, I've paid for gas
00:13:21.460 | that was over $4.
00:13:23.200 | So a fourfold increase from a dollar to $4
00:13:28.200 | within my lifetime leads me to believe
00:13:30.760 | that it's certainly not even,
00:13:32.760 | wouldn't even be the least bit surprising
00:13:34.400 | to experience another fourfold increase
00:13:36.640 | in the coming decades.
00:13:38.740 | And fourfold increase from $3 or $4 a gallon
00:13:41.620 | gets you pretty close to 20.
00:13:43.380 | So now's the time to be preparing
00:13:45.660 | for times of economic hardship.
00:13:47.260 | And now's the time to prepare for recession,
00:13:50.340 | 'cause it's coming.
00:13:52.140 | That's the first thing.
00:13:53.660 | Number two is now's the time to be taking advantage
00:13:57.340 | of where we are in the economic cycle
00:13:59.860 | and the business cycle.
00:14:01.400 | This is the time.
00:14:02.340 | And I'll get to that.
00:14:04.780 | And then number three is,
00:14:05.780 | let's talk about gas prices at the end.
00:14:08.060 | We'll wrap up with some impact of how
00:14:10.960 | if gas prices are affecting your budget,
00:14:13.260 | maybe we should talk about that.
00:14:14.860 | One of the keys for wisdom is to be able
00:14:19.880 | to look forward and see the future and see what's coming.
00:14:21.820 | Now, certainly I'm not prescient enough
00:14:24.260 | to know everything that's coming exactly when.
00:14:26.900 | But, and one of my favorite sayings,
00:14:31.240 | I think it was Zig Ziglar who popularized it,
00:14:33.780 | is he said, "In general, economists have successfully
00:14:37.420 | "predicted the last 11," or excuse me,
00:14:39.780 | "have successfully predicted all 11
00:14:42.080 | "of the last three recessions," or something like that.
00:14:44.940 | We're prone to look for, or wired in some way,
00:14:48.320 | to look for bad news and to look for problems.
00:14:52.340 | But one of the things that we can do
00:14:53.940 | is we can plan for those.
00:14:55.700 | And now's the time to be planning.
00:14:57.400 | Now's the time to be planning when things are easy.
00:15:00.860 | The best example of this would be something like insurance.
00:15:05.340 | I come from a background of being an insurance salesperson,
00:15:09.020 | and so this is intimately familiar to me.
00:15:12.540 | My heart sinks when I read things from people
00:15:16.260 | or hear a notification that Joe was just diagnosed
00:15:19.380 | with cancer, or Susie just had a heart attack.
00:15:22.480 | Those things make my stomach drop
00:15:25.980 | because I just, as a financial advisor,
00:15:28.100 | I immediately think, were they ready?
00:15:30.600 | Were they ready?
00:15:31.580 | Did they do what they needed to do when times were good?
00:15:36.260 | Insurance is one of those tricky things
00:15:38.300 | that you gotta buy it when you don't need it.
00:15:40.700 | You gotta buy it when you're strapping and healthy
00:15:44.740 | and just in great shape and you have no risk factors.
00:15:48.500 | That's the time that you have to buy it.
00:15:50.620 | And the time when you're most desperate to have it,
00:15:53.180 | when you most desperately need it, you can't get it.
00:15:57.180 | It takes a remarkable amount of maturity and forethought
00:16:01.900 | and planning and vision to be able to look forward
00:16:06.900 | to the future and do something
00:16:10.180 | that lowers your consumption now
00:16:12.780 | so that in the future you will be able to be protected.
00:16:18.860 | And that's what insurance is.
00:16:20.300 | But if you can apply that maturity of thought
00:16:25.300 | to every aspect of your life,
00:16:27.740 | then you can start to smooth out some of the bumps
00:16:30.260 | that so many people go through.
00:16:31.860 | And then because you can smooth out some of the bumps,
00:16:35.820 | you'll be able to help some other people
00:16:37.820 | smooth out the bumps in their lives.
00:16:39.700 | Do the planning now that you need to do
00:16:43.060 | while things are easy.
00:16:44.180 | And I wanna challenge you this weekend,
00:16:47.500 | if you're listening to this on Friday or Saturday
00:16:49.420 | or whenever, I wanna challenge you to do some thinking
00:16:52.780 | about what you can do and what you need to be doing
00:16:56.240 | in your life to prepare for the next global recession.
00:17:00.460 | 'Cause there will be one.
00:17:02.080 | We have no idea on the timing,
00:17:04.720 | but there certainly will be one at some point.
00:17:08.700 | And if you'll plan now and build the things
00:17:11.160 | that you need to do now,
00:17:12.840 | then you will be able to get through it.
00:17:16.720 | I'd like to give you this as an exercise.
00:17:22.480 | And let me give you the question
00:17:26.700 | and then ask you to pause and actually think it through.
00:17:31.060 | Pause the recording and just give it some thought
00:17:33.420 | and think of some of your ideas.
00:17:34.540 | And then I'll share some of mine.
00:17:36.300 | If you wanna do this as a journaling exercise,
00:17:38.260 | that'd be great too.
00:17:39.180 | Oftentimes though, our lives are so fast paced
00:17:42.140 | that if we don't at least just think through it,
00:17:45.340 | it's unlikely that you'll remember to do this later.
00:17:48.260 | But the question is this.
00:17:49.500 | What would happen if your,
00:17:55.900 | what will your life look like
00:17:57.740 | if we go into a global recession that is fairly severe?
00:18:02.740 | Could be recession, depression, whatever.
00:18:04.460 | Let's just call it recession for now, keep it short.
00:18:06.800 | Global recession that's fairly severe
00:18:09.240 | and your employer has to lower their workforce
00:18:14.240 | by 20 to 30% and you get fired.
00:18:18.640 | And because of the severe nature of the global recession,
00:18:25.100 | you are unable to find a job for let's say a year
00:18:28.900 | and you're gonna be out of work for a year.
00:18:30.940 | Or if you are a business owner,
00:18:34.800 | then let's assume that your profits are measurably affected.
00:18:40.220 | You suffer a, let's call it a 50% decline in your sales
00:18:43.880 | and you have to deal with that for a year.
00:18:45.980 | What would you do?
00:18:48.000 | If you are married,
00:18:51.260 | pretend that you and your spouse both lose your job
00:18:54.780 | at the same time.
00:18:55.680 | What would your plan be?
00:18:59.340 | Now here's where I'll encourage you just to pause
00:19:04.340 | and I'm gonna continue on,
00:19:05.820 | but go ahead and take a moment
00:19:08.620 | and think about what you would do
00:19:12.420 | and then add to that thought.
00:19:16.980 | What would the world be like?
00:19:17.860 | Think about what would you actually be going through
00:19:20.620 | and then think what are the things
00:19:22.900 | that I could be doing today
00:19:25.060 | that would help me to get through that situation
00:19:30.060 | a little bit better.
00:19:31.580 | And I'll go ahead and pause now,
00:19:32.740 | so feel free to pause and think through that scenario.
00:19:36.020 | Now, I hope you came up with your list.
00:19:42.400 | This truly is a valuable exercise.
00:19:46.900 | The most valuable thing about the exercise
00:19:49.220 | if you actually do it,
00:19:51.140 | is that it opens your mind to a possibility
00:19:55.420 | that most people don't think about.
00:19:57.940 | Most people when they're fired are shocked by it
00:20:01.700 | and they've not thought about what they would actually do
00:20:04.740 | and what they're going to do.
00:20:06.500 | I remember the time I was fired from a job,
00:20:09.060 | I don't know what language to use, fired, laid off.
00:20:11.820 | I guess it's fired, maybe I'll use the word fired
00:20:14.940 | when we talk about for cause 'cause you were a dumb dumb
00:20:18.900 | and did something that deserved determination of your job,
00:20:22.220 | laid off, general conditions
00:20:23.860 | that affect more than one person.
00:20:26.140 | So I'll use those words.
00:20:27.060 | So I guess I was laid off.
00:20:28.740 | And I remember just how utterly shocking it was to me
00:20:32.340 | because I thought I had done everything that I needed to do.
00:20:36.260 | I was a star employee, I received glowing,
00:20:38.620 | I thought I was, I received glowing reports,
00:20:42.200 | I had just gotten a raise, all these things.
00:20:44.500 | And then I just remember sitting in that office just stunned
00:20:48.140 | because I thought it would never happen to me.
00:20:50.340 | And I think that's how most of us go through life
00:20:52.300 | is we think, "Oh, it'll never happen to me.
00:20:54.420 | "It'll happen to somebody else."
00:20:56.420 | But realistically, statistically,
00:20:59.500 | it's massively likely to happen to you and to me.
00:21:03.220 | The only thing that would make it unlikely
00:21:06.580 | is if we have more of the reins of our own destiny
00:21:11.580 | and we're self-employed in some way.
00:21:13.460 | And in that scenario, it's massively likely
00:21:15.300 | that something will happen
00:21:16.780 | that will measurably impact our business revenues
00:21:21.100 | and profitability.
00:21:22.320 | Just happens in most businesses at some point in time.
00:21:26.740 | So because people are shocked,
00:21:28.420 | what happens is oftentimes people don't know what to do.
00:21:32.020 | And it's nice that many large firms have,
00:21:36.780 | try to come up with these transition plans
00:21:39.240 | and help people with career coaches and resume coaches
00:21:42.360 | and these kinds of things, that's nice.
00:21:44.140 | But the reality is most people don't work
00:21:45.880 | for large companies that are gonna put those resources.
00:21:47.860 | Most people work for small companies
00:21:49.460 | and the small employer feels awful about it,
00:21:53.000 | but has to care for what they're trying to do.
00:21:56.800 | If you'll force yourself to do the hard work
00:22:01.620 | of thinking something through in advance,
00:22:03.500 | it will prepare your mind for it
00:22:06.500 | and it'll prepare you for solutions.
00:22:08.600 | And I call this war gaming.
00:22:11.820 | If you think about it, if you look at training
00:22:15.220 | for any kind of event in which there's going
00:22:19.240 | to be intense pressure, the pros,
00:22:22.180 | the world-class professionals in any field
00:22:26.660 | go through a period of training
00:22:30.880 | where they think about what's going to happen
00:22:32.980 | and they role play it.
00:22:34.800 | So whether that's a field of athletic competition
00:22:37.700 | on an individual basis, an individual athlete,
00:22:40.460 | as part of their training, they will think through
00:22:42.900 | the scenario they're gonna perform, their routine.
00:22:45.780 | They'll go through it again and again
00:22:47.140 | and again and again mentally.
00:22:48.660 | If it's some kind of race course,
00:22:50.860 | maybe a slalom course or something,
00:22:52.300 | they'll think it through every aspect of their body
00:22:55.060 | very, very carefully.
00:22:55.940 | It's important for high performance.
00:22:57.900 | If you are on a team sport, you'll think through
00:23:00.420 | what's this gonna be like.
00:23:01.780 | If you are in the military, you'll train again
00:23:05.060 | and again and again for various situations.
00:23:07.340 | If you're on a SWAT team, you see them in the movies,
00:23:10.340 | you know, the SWAT guys breaching the door,
00:23:12.340 | practicing again and again and again
00:23:13.940 | so that by the time you're actually doing it for real,
00:23:16.500 | you've gone through it many, many times.
00:23:18.740 | If you're a firefighter, part of your training,
00:23:20.460 | you're in a burning building, what do you do?
00:23:22.380 | How does this work?
00:23:23.280 | And you go through it so that when the real thing happens,
00:23:26.340 | you aren't caught blindsided by it.
00:23:29.260 | Well, we need to apply that to our own lives
00:23:32.340 | and think, what would I do in that scenario?
00:23:34.740 | I know for me, I had some experiences
00:23:39.820 | as a financial planner in the last recession in 2008
00:23:43.900 | that were really tough for me
00:23:45.420 | is because as I watched the,
00:23:46.860 | 'cause economic malaise linger on
00:23:50.180 | and there are those who would say it's still lingering.
00:23:52.900 | That's not my point today.
00:23:54.100 | But as I watched things linger on,
00:23:56.420 | I saw people be affected that never thought
00:23:58.960 | they were gonna be affected.
00:24:01.020 | And as I watched people go through a job loss,
00:24:04.700 | what I noticed was that many times
00:24:08.500 | they weren't able emotionally to deal
00:24:10.820 | with the reality of the job loss.
00:24:12.720 | Specifically, remember one prospective client.
00:24:18.500 | This person never became a client,
00:24:20.380 | but he was laid off from a job
00:24:22.660 | that he'd had for several decades.
00:24:24.940 | And he was in a crucial point of life
00:24:29.420 | where he was living a high lifestyle
00:24:31.900 | as a well-paid executive,
00:24:34.140 | was living in a beautiful house in a ritzy part of town,
00:24:38.220 | kids in private school, private high school,
00:24:40.900 | which is a very expensive period of a parent's life.
00:24:44.220 | And so he was doing well income-wise,
00:24:47.140 | but his expenses were rather high.
00:24:48.840 | And then most of, due to the financial planning
00:24:52.740 | that's taught, he wasn't extremely affluent,
00:24:55.020 | but the assets that he did have
00:24:56.700 | were primarily tucked aside in retirement accounts
00:25:00.060 | and with minimal accessibility for actual cashflow.
00:25:05.780 | And as I watched him go through the just intense emotion
00:25:10.060 | of trying to figure out what do I do?
00:25:11.960 | How do I take my, do I take my kids out of school
00:25:14.020 | and suffer the embarrassment
00:25:15.780 | of walking into the private school and saying,
00:25:17.940 | I'm sorry, I can't afford the tuition anymore.
00:25:19.740 | Do I put my house on the market?
00:25:21.420 | It just was clearly something that was overwhelming for him
00:25:26.420 | 'cause he'd never thought about it.
00:25:29.700 | And so because he'd never really thought about it,
00:25:31.860 | he'd become so comfortable
00:25:34.500 | in his middle executive lifestyle,
00:25:39.500 | he'd become so comfortable that there wasn't,
00:25:41.900 | he couldn't conceive of the thought
00:25:45.320 | of essentially starting over.
00:25:46.980 | And he didn't have much of the great planning in place
00:25:49.820 | necessary to be able to maintain his lifestyle.
00:25:54.420 | And as I watched many people personally
00:25:56.300 | and also vicariously through reading
00:25:58.540 | about different people's experiences,
00:25:59.780 | one of the things I've noticed
00:26:01.120 | that when people get fired,
00:26:02.260 | oftentimes they wait too long
00:26:04.380 | to start making changes in their lifestyle.
00:26:08.380 | Now I'll make my statement, I recognize there are caveats,
00:26:12.900 | but I think that if you get laid off or if you get fired,
00:26:16.020 | the most important thing that you can do
00:26:17.780 | is immediately cut things to the bare bones,
00:26:22.160 | immediately,
00:26:24.960 | because you don't know how long it's gonna last.
00:26:31.520 | Now I recognize that there may be exceptions to that.
00:26:36.520 | There may be intelligent,
00:26:38.460 | there may be an intelligent course of action
00:26:40.020 | to finish out a school year or finish out this
00:26:42.740 | or finish out something else.
00:26:44.140 | And with good planning,
00:26:45.300 | hopefully you're not right on the edge
00:26:46.620 | such that you gotta have to sell the house right away.
00:26:49.860 | But I think, and so I recognize that that is true,
00:26:54.860 | but my point is that by taking drastic action immediately,
00:26:59.980 | it sets your mind in the right place.
00:27:02.020 | If you don't adjust your lifestyle,
00:27:05.980 | it's easy just to simply feel as though,
00:27:07.980 | well, I'm just gonna go on with my life,
00:27:09.340 | everything's gonna be perfect,
00:27:10.300 | I'm gonna find a job in months, month, month, month,
00:27:12.740 | months later, and all of a sudden we wind up deeply in debt,
00:27:16.240 | no money, no assets,
00:27:17.620 | and now it takes years to dig out of that,
00:27:19.960 | where if we just cut back immediately
00:27:22.780 | and cut our lifestyle immediately,
00:27:25.920 | then you can be better off.
00:27:28.020 | So here would be the question.
00:27:29.860 | If you were fired, if you were laid off
00:27:31.620 | and you knew that you weren't going to have a job
00:27:34.040 | for the next year, what would you cut?
00:27:35.940 | How could you get down to the bare bones?
00:27:39.780 | What would be the bare bones?
00:27:41.620 | What's your backup plan?
00:27:42.860 | What would be the plan if you knew you were going
00:27:46.780 | to be out of work for three months, six months,
00:27:49.140 | 12 months, 24 months?
00:27:51.780 | Remember, they extended the unemployment stuff to 99 weeks.
00:27:58.340 | What would happen if you were out of work for two years?
00:28:00.820 | Now, use that thought process and think about it,
00:28:07.180 | and you'll come up with the right answers for you.
00:28:08.940 | I don't know what they are.
00:28:10.940 | I have ideas for me, but that's for me.
00:28:14.280 | What would they be for you?
00:28:16.820 | What would you need?
00:28:19.740 | Now, here's the next part of that.
00:28:21.100 | What would you need to do today to prepare for that?
00:28:23.980 | So certainly, if you have resources built up,
00:28:28.060 | if you have cash, it's a simple example, savings,
00:28:31.400 | that can help hugely.
00:28:33.860 | If you have liquid cash that can just simply be tapped,
00:28:38.060 | that's a massive help.
00:28:40.100 | If you have a low-cost lifestyle, low fixed costs,
00:28:44.420 | minimal fixed debt obligations, minimal high,
00:28:49.420 | you have just low lifestyle costs, that can help you hugely.
00:28:53.260 | If you have a high savings rate,
00:28:54.560 | then that automatically implies that you have
00:28:56.980 | a lower-cost lifestyle in proportion to your actual income.
00:29:01.580 | Even if you do have a high-cost lifestyle,
00:29:05.540 | do you have a high fixed-cost lifestyle
00:29:07.780 | or a high discretionary-cost lifestyle?
00:29:10.200 | As an example, two people could be spending $8,000 a month,
00:29:16.060 | $10,000 a month.
00:29:19.940 | I don't know what number.
00:29:20.780 | I mean, it's hard to know on a general show like this
00:29:22.820 | what number to use.
00:29:23.660 | Let's just pick $10,000 a month.
00:29:25.940 | But for one person, that $10,000 a month
00:29:28.860 | is just a basic standard of living.
00:29:31.160 | This is, let's call it, $4,000 a month mortgage,
00:29:36.180 | principal and interest taxes and insurance costs
00:29:38.340 | of an overhead on a house.
00:29:40.060 | Let's call it $600 a month for a car payment.
00:29:42.300 | Another $500 a month for another car payment
00:29:44.260 | would be about normal in that kind of lifestyle,
00:29:47.580 | at least where I live.
00:29:48.640 | You would have a high utility costs, call it $500 a month.
00:29:56.060 | High, just embedded costs to the lifestyle.
00:30:01.060 | Now, it's very different than another person
00:30:05.660 | whose fixed costs are $3,000 a month,
00:30:07.940 | but they're spending $10,000 a month
00:30:09.780 | on things that they enjoy
00:30:10.800 | that they could easily pull out of.
00:30:13.380 | There are no contracts involved, no commitments.
00:30:16.420 | They don't have to finish out the lease payment.
00:30:18.820 | You could just adjust much more quickly.
00:30:21.940 | So being flexible and being adjustable
00:30:24.240 | is a massive benefit in that situation.
00:30:27.100 | You might wanna consider having some cash on hand.
00:30:31.040 | You might wanna consider having some of the things
00:30:33.260 | stored up that you would need to buy.
00:30:35.100 | This is one of those scenarios
00:30:37.240 | where it might be useful for you to have some reserves.
00:30:41.740 | I don't know what that is.
00:30:44.840 | I bulk buy razors, so it would be,
00:30:48.080 | to shave with, I haven't shaved in a few months,
00:30:50.120 | but I still have lots of razors.
00:30:52.760 | I guess I don't have to buy razors,
00:30:54.400 | but the point is that if you have the things
00:30:56.840 | that you need and use regularly
00:30:58.280 | and you have them in supply, that gives you flexibility.
00:31:00.760 | So we talked about the alpha strategy.
00:31:03.400 | Talked about that in previous shows.
00:31:06.020 | Now, here'd be the more useful things.
00:31:09.260 | Could you get a job quickly?
00:31:12.340 | And what would be required to get a job quickly?
00:31:16.260 | Well, I would suggest that would be
00:31:21.140 | where the care and feeding of your social network
00:31:23.460 | would be important.
00:31:24.920 | Do you have a list, whether it's just mental or real,
00:31:27.920 | I'm not, I don't think that most people
00:31:30.000 | are gonna have a list of here
00:31:30.840 | are the first 10 people I would call,
00:31:32.120 | but who are the first 10 people that you would call?
00:31:34.960 | I remember I didn't, I wasn't smart enough to plan for it,
00:31:40.120 | but I'll just share one personal anecdote.
00:31:41.600 | It was kind of happens accidental,
00:31:43.600 | but I remember there's one job
00:31:45.200 | that I've been legitimately fired from in my life,
00:31:47.680 | and it was kind of,
00:31:50.040 | I don't know if it was legitimately fired.
00:31:51.300 | It wasn't working for me,
00:31:52.140 | and it wasn't working for my boss,
00:31:53.980 | and we both figured it out concurrently,
00:31:56.580 | and we agreed in a meeting, like,
00:31:57.580 | listen, this isn't working.
00:31:58.820 | I was working in a print shop at the time.
00:32:00.740 | And I remember leaving there,
00:32:02.220 | and I finished around 11.30 in the morning.
00:32:04.380 | It just was clear it wasn't working,
00:32:05.660 | and I was driving home.
00:32:07.260 | It was in, I think it was in college.
00:32:10.460 | And I was driving home, and I didn't know what to do.
00:32:14.820 | So I was like, I don't know, I don't have a backup plan.
00:32:17.260 | So I pick up my phone,
00:32:18.180 | and I called the boss that I had worked for
00:32:20.480 | at the company I had worked for the previous summer.
00:32:22.420 | And it was like, absolutely,
00:32:23.580 | come and have lunch with me tomorrow.
00:32:24.740 | And I had a job by the next day.
00:32:26.340 | And I just thought, wow,
00:32:28.660 | I didn't intend to put that in place.
00:32:32.500 | I wasn't smart enough to do that.
00:32:34.580 | But the reality was that it was nice to have a backup plan,
00:32:37.660 | and I had a job the next day.
00:32:39.300 | It's pretty cool.
00:32:40.440 | Now, from this perspective, a few more years now,
00:32:43.020 | I look at that, and I say, that's important.
00:32:45.400 | So I need to be planning for that.
00:32:47.020 | I need to know who are the people that I would call.
00:32:49.420 | Who are the people that I've done good work for?
00:32:51.520 | Can I go back to every single one of my bosses,
00:32:54.220 | and would they rehire me?
00:32:55.700 | Would they rehire you?
00:32:58.120 | If you needed a job, could you call any of your former bosses
00:33:02.620 | and would they be glad to have you back?
00:33:04.620 | I hope so.
00:33:06.300 | For me, I hope it is.
00:33:08.580 | I think it is.
00:33:09.420 | I mean, I've never tested it,
00:33:10.240 | 'cause most of the times I don't really wanna go back
00:33:11.700 | to things I've done before.
00:33:13.300 | But it's nice to have that,
00:33:14.420 | that if I needed to support my family,
00:33:15.740 | I could just immediately call at least a list of,
00:33:18.820 | for me, 20 or so different former bosses.
00:33:21.980 | So that means today, while I'm happily employed
00:33:25.700 | and times are good and gas prices are low,
00:33:27.860 | I need to be working hard and being indispensable at my job,
00:33:31.780 | which incidentally will probably help me
00:33:33.460 | to avoid being fired,
00:33:34.860 | but that's not the point of this mental exercise.
00:33:36.860 | It is one of the things I need to be doing.
00:33:38.220 | I need to be indispensable so that I'm not on that list.
00:33:41.060 | I need to be working hard and building things up now.
00:33:44.060 | But having that social network,
00:33:45.860 | knowing, staying in touch with people,
00:33:47.440 | having simple things like contact information.
00:33:50.100 | I was that nerd in high school,
00:33:56.500 | and I hope this doesn't sound too self-important.
00:33:59.220 | My goal is not to do that.
00:34:01.020 | I'm just talking out of what I do know
00:34:02.780 | and what I've learned.
00:34:04.100 | I was that nerd in high school that,
00:34:06.380 | since the time I graduated high school,
00:34:08.300 | I don't think I've lost anybody's contact information
00:34:10.660 | that I ever met.
00:34:11.780 | And it just was all accumulated and accumulated
00:34:14.660 | and accumulated over time.
00:34:16.340 | That has served me so many times
00:34:19.180 | to be able to pull up a list of people
00:34:24.140 | that I've had some contact with
00:34:25.900 | that I could reach out to and ask for help.
00:34:28.580 | Could reach out to, and if I needed to create a job,
00:34:31.420 | at this point, there's 5,000 people in my cell phone,
00:34:35.300 | and that I could go through there one by one
00:34:38.080 | and make 5,000 phone calls,
00:34:39.540 | and I bet that within the first couple hundred,
00:34:44.180 | I would have a list of opportunities.
00:34:46.260 | I might have to go and completely relearn
00:34:48.060 | some new industry, some new skill, some new something,
00:34:50.980 | but I could at least find out
00:34:52.100 | about some kind of opportunities,
00:34:53.420 | and that's a much more efficient way
00:34:55.420 | to approach a job search than just going on
00:34:58.020 | whatever the jobsearch.com site of the day happens to be.
00:35:01.720 | So giving care and feeding to your social network,
00:35:08.380 | helping people, serving people, giving.
00:35:10.720 | Serving is the key thing, serving people in advance,
00:35:13.500 | and being excellent, being trustworthy,
00:35:18.140 | being honest, being forthright, being dependable.
00:35:22.100 | These are all things that really matter.
00:35:24.100 | What skills do you have or could you develop now
00:35:28.620 | that would help you?
00:35:29.620 | If you have sales skills, and I have sales skills,
00:35:35.500 | I could take those sales skills
00:35:36.760 | and I could transfer them to another market.
00:35:38.420 | A good salesperson is always,
00:35:40.260 | there's always an opportunity for a good salesperson.
00:35:42.300 | That was what attracted me
00:35:43.140 | to the sales field in the first place.
00:35:44.900 | Every business lives and dies based upon top-line revenue.
00:35:49.060 | I mean, that drives more than anything else.
00:35:51.900 | If you got enough top-line revenue,
00:35:53.260 | you can figure out the stuff in the middle
00:35:55.180 | to get to the bottom-line profit,
00:35:57.460 | but if you don't have top-line revenue,
00:35:58.840 | there's very little else that you can do
00:36:00.820 | until you can build that, and that's sales.
00:36:02.420 | That's a key skill, sales and marketing skills.
00:36:06.180 | What skills do you have that you could transfer?
00:36:08.840 | Have you developed them to a high level of proficiency?
00:36:13.800 | Could you develop them to a high level of proficiency?
00:36:16.500 | If you get used to developing them,
00:36:20.540 | you often won't need them,
00:36:21.880 | but sometimes I hurt so much when I think of people
00:36:25.220 | that are close to me and I care about
00:36:27.980 | that need work, need a job, need something,
00:36:31.100 | and they'd say, "Well, I need work."
00:36:34.440 | I think, "Well, what skills do you have?"
00:36:35.620 | I ask them, "What skills do you have?"
00:36:36.860 | "I don't know," or if you just have one or two skills.
00:36:39.940 | We've gotta keep our skills current.
00:36:42.180 | We've gotta continually be expanding our skills,
00:36:44.380 | and they need to be diverse.
00:36:45.260 | Yes, they need to go deep in certain areas,
00:36:47.900 | but if we're only just deep in one thing
00:36:50.100 | and the market moves on and that one thing
00:36:51.980 | either is out of style or is just simply
00:36:56.980 | too crowded of a market, we've gotta be able
00:37:01.180 | to be flexible and transition.
00:37:03.500 | The world of the future, the economic situation
00:37:06.040 | that we're facing in the future is far different
00:37:07.900 | than the past, and one of those key things
00:37:10.080 | is flexibility, flexibility, flexibility.
00:37:12.840 | In addition to the skills, what resources do you have
00:37:17.260 | that you could employ?
00:37:18.380 | Many people are just so, my observation,
00:37:23.380 | many people are so uptight and so proud
00:37:25.920 | of doing what they do that they don't think
00:37:29.060 | to of all the resources and all the skills
00:37:31.940 | that they could apply.
00:37:33.660 | Sitting in my garage at the moment,
00:37:36.300 | I've got at least a dozen businesses
00:37:38.660 | that I've got the basic tools and equipment for
00:37:41.820 | that I could use to feed my family.
00:37:43.580 | I've got a pressure washer sitting out there.
00:37:48.260 | I could go and start a job pressure washing roofs.
00:37:52.300 | Down here in Florida, we've got the moss
00:37:53.640 | that grows all over our roofs, and I could
00:37:55.700 | just walk around and pressure wash roofs.
00:37:58.180 | That's pressure washers, the foundation
00:37:59.680 | of a car cleaning business, of a siding business,
00:38:02.160 | of going around, and in my neighborhood,
00:38:03.840 | we've got these horrible rust stains,
00:38:05.200 | and I can talk about, I don't actually
00:38:07.360 | have pressure clean them off my house.
00:38:08.960 | I shouldn't say rust stains.
00:38:10.200 | Point is, pressure cleaner is money.
00:38:12.200 | Is it a lot?
00:38:13.020 | No, but there's a little bit.
00:38:14.200 | There's a little bit.
00:38:16.320 | I've got a lawnmower.
00:38:20.080 | I certainly could create a lawnmowing business.
00:38:21.720 | People do it all the time here in Florida.
00:38:23.840 | It's a pretty simple, straightforward business.
00:38:28.360 | You just need some clients, and that's where
00:38:29.480 | the sales skills and those marketing skills
00:38:31.120 | and the ability to knock on 200 doors,
00:38:33.240 | 300 doors in a day comes in, and out of it,
00:38:36.640 | you talk to a few hundred people,
00:38:38.400 | you're gonna find a handful of people that need something.
00:38:41.300 | I've got all the basic tools of carpentry.
00:38:44.920 | I've got some construction experience,
00:38:46.560 | these types of things, so even just
00:38:48.160 | that basic, straightforward, manual type of work,
00:38:52.000 | you can create work, but if you don't have those skills,
00:38:55.920 | this is where I've often felt sorry
00:38:57.320 | for some of the, and I'm so grateful that,
00:39:01.720 | again, it was due to no foresight of my own,
00:39:04.740 | but my father always worked to get me involved
00:39:07.400 | in all kinds of different jobs,
00:39:09.080 | and the best thing that he ever,
00:39:10.080 | one of the great things he did for me
00:39:12.000 | was that I did a different job in a different industry
00:39:14.640 | every single summer, every single year
00:39:17.500 | from basically seventh grade on,
00:39:19.800 | and you start to accumulate these diverse skills.
00:39:22.880 | That helps so much.
00:39:24.720 | Instead of me, when I've tried to do career counseling
00:39:27.040 | with some people, friends of mine that have needed it,
00:39:30.280 | I was like, "Well, what do you do?"
00:39:31.400 | Well, I don't know.
00:39:33.120 | I have one friend I care greatly about,
00:39:35.240 | but this friend was always involved
00:39:37.480 | in one specific athletic sport,
00:39:40.480 | and in talking with him at one time,
00:39:42.740 | I just realized that his entire life
00:39:44.840 | was overwhelmed with this one sport,
00:39:49.600 | and he developed this world-class proficiency
00:39:53.480 | in one unique competitive sport,
00:39:56.000 | but it left him so bereft of other useful skills
00:39:59.920 | that it's very tough for him to figure out,
00:40:01.680 | okay, what are my career plans now?
00:40:03.440 | What industries can I transfer into?
00:40:06.340 | I commend just the thinking process to you,
00:40:11.860 | building up your skills, building up your resources,
00:40:14.640 | the business resources, the tools of various trades,
00:40:20.440 | the skills to apply them, the skills of learning,
00:40:24.900 | the social network to get the opportunity,
00:40:27.220 | and make sure you keep your expenses low.
00:40:30.880 | If you keep your expenses low,
00:40:32.680 | you can always have the opportunity.
00:40:33.880 | You're not forced into a point of desperation.
00:40:36.820 | It's certainly, there's certainly a big difference
00:40:42.400 | between if you can avoid lifestyle creep,
00:40:45.900 | or at least avoid the fixed lifestyle creep.
00:40:48.180 | Most people can't, that are making a few hundred thousand
00:40:53.440 | dollars a year, they can't go and survive
00:40:56.760 | on half a hundred, 50 or 60 thousand dollars a year.
00:41:01.220 | But if you can, that gives you so much confidence.
00:41:05.580 | I remember talking to a prospective client one time,
00:41:09.360 | who was a bond trader, made hundreds of thousands
00:41:12.980 | of dollars per year as a bond trader, no debt,
00:41:16.080 | very low lifestyle expenses, just had the ability
00:41:18.920 | to go bag groceries at Publix,
00:41:21.440 | and it just really stuck out to me as a unique,
00:41:23.760 | a unique scenario.
00:41:27.560 | How great is that, as far as a lifestyle consideration?
00:41:32.560 | The last thing, lest I belabor this point too much,
00:41:37.000 | is having some kind of side business established now.
00:41:42.000 | Something that you've built up now,
00:41:45.120 | that you could transition into.
00:41:47.360 | And it's a lot easier to take a side business,
00:41:50.020 | that you have some ability with,
00:41:51.600 | and take something that's established
00:41:54.080 | to the equivalent of a full-time income,
00:41:56.740 | than it is to take something from zero
00:41:58.160 | to a full-time income.
00:41:59.960 | So be working on that now, and building that up now,
00:42:03.980 | so that you have a backup plan.
00:42:06.320 | If you start to put these things together,
00:42:08.520 | and you say, how can I be unfireable at my job,
00:42:12.360 | by being so incredibly valuable?
00:42:14.240 | That's the first thing, and I wouldn't rely on that,
00:42:19.200 | because things change.
00:42:20.160 | Though you may be unfireable, the business may change.
00:42:22.700 | Or the owner of the business might just simply decide,
00:42:25.560 | we're gonna go in a different direction.
00:42:26.740 | That was what happened to me,
00:42:27.580 | at the company I got laid off from.
00:42:29.380 | We're changing the direction of the company.
00:42:30.680 | And I didn't know they were preparing the company for sale,
00:42:33.960 | and trying to adjust some things of the business operations.
00:42:38.320 | So, makes sense to me now, but at the time,
00:42:40.500 | I was affected, and I didn't know what they were doing.
00:42:43.140 | But the point is, be unfireable.
00:42:44.940 | Be that person that is so valuable.
00:42:47.920 | That starts today, by going to your boss and saying,
00:42:50.780 | what can I do that will help you?
00:42:52.300 | What can I do to improve your life?
00:42:54.700 | Give me more responsibility, please.
00:42:56.740 | Ask for more responsibility.
00:42:58.540 | Discharge that responsibility with honors,
00:43:02.220 | and ask for more.
00:43:03.180 | Discharge that, ask for more.
00:43:04.940 | Make sure you get into a part of your company
00:43:06.900 | that is economically productive.
00:43:09.020 | You wanna be specifically in a place
00:43:11.140 | where you're either creating revenue, or cutting revenue.
00:43:14.460 | You don't wanna be a cost.
00:43:16.220 | It's much better to be in a place
00:43:18.120 | where there's a measurable contribution of your,
00:43:21.360 | you can measure your contributions
00:43:25.200 | to the profit of the company.
00:43:26.040 | This is what I, again, what I love about sales,
00:43:28.100 | is the salespeople, they work for free until they produce.
00:43:31.120 | So, the cost of a salesperson is always less
00:43:33.760 | than the business that they bring in,
00:43:34.800 | 'cause they're paid on commission.
00:43:36.360 | That's what's wonderful about sales.
00:43:38.240 | You can always measure your production.
00:43:40.840 | So, be unfireable now.
00:43:42.560 | Build that network that you would need
00:43:44.040 | to get another job quickly.
00:43:45.860 | That's a key thing to focus on.
00:43:49.820 | That's where the networking comes in.
00:43:51.080 | That's where being involved in the industry.
00:43:52.500 | That's where being involved in an industry.
00:43:54.460 | Make sure that you're building up your own brand.
00:43:57.020 | Make sure that you are a leader in your industry,
00:43:59.420 | pushing forward and causing the change in your industry,
00:44:03.320 | so that you're not blindsided by it.
00:44:05.500 | Make sure that you have a side business,
00:44:08.040 | a side plan, a side hustle, something established
00:44:11.180 | that's your backup plan, your baby, that you control.
00:44:14.700 | If there's something that's applicable to you.
00:44:17.200 | And then, make sure that you've got
00:44:19.480 | those basic financial planning steps in place.
00:44:22.300 | Having money, having money that's not all subject
00:44:26.680 | to the vagaries of the marketplace.
00:44:29.320 | Having resources, however you define those, set aside.
00:44:33.940 | Thinking about things in advance,
00:44:35.640 | and putting yourself through that mental process
00:44:38.940 | of considering them, of considering what's gonna happen.
00:44:44.080 | Think about that from the economic perspective.
00:44:46.800 | If you wanna do, like I've been thinking about it,
00:44:48.520 | okay, Hurricane Katrina, what would I do?
00:44:50.520 | Tsunami, that's, tsunami would be tough to plan for.
00:44:54.780 | But you can create backup plans.
00:44:57.040 | What would I do?
00:44:58.400 | How could I insulate myself from this?
00:45:01.940 | Second and third themes, I just wanna say,
00:45:03.660 | look for things that are on sale.
00:45:05.680 | So right now, with gas prices low, I don't know this.
00:45:08.820 | I haven't market tested this, but I'm gonna bet you,
00:45:11.700 | especially if gas prices persist at a relatively low cost
00:45:15.700 | for some months and months, we'll see, I don't know.
00:45:19.340 | I'm gonna bet you that fuel efficient cars
00:45:21.140 | are gonna start to be discounted.
00:45:22.920 | I remember so clearly, it was a couple years ago
00:45:27.140 | when fuel prices were in the four,
00:45:30.260 | almost five bucks a gallon, how you could go out
00:45:33.780 | and you could buy a one ton pickup truck for nothing.
00:45:36.820 | You could go out and you could buy a Suburban for nothing.
00:45:40.180 | That was the time to be buying Suburbans and pickup trucks.
00:45:43.540 | Well, if gas prices persist over time,
00:45:46.580 | it persists to be low, excuse me,
00:45:47.820 | if gas prices continue at a low rate,
00:45:50.220 | then over time, the value of fuel efficiency
00:45:52.540 | will decrease to the general consumer.
00:45:55.420 | So that's the time that you need to be out of sync.
00:46:00.500 | You need to think, ah, okay,
00:46:01.820 | time to go ahead and buy that Prius.
00:46:03.620 | Again, gas prices are high.
00:46:07.220 | Prius, Prii have a high value.
00:46:10.460 | Gas prices are low, they're discounted.
00:46:13.140 | So look for that.
00:46:13.980 | If you need to adjust something,
00:46:15.940 | if you need to adjust something,
00:46:18.740 | think in advance for that.
00:46:20.500 | And always strive to be a little bit out of step.
00:46:23.380 | It's kind of tough to know exactly when
00:46:25.780 | the stock market is gonna peak,
00:46:27.920 | exactly when the stock market is gonna bottom.
00:46:30.060 | That one's tough.
00:46:31.740 | But A, you don't have to be completely right on that,
00:46:34.140 | but you don't have to be completely right
00:46:35.620 | of exactly when gas prices are gonna peak
00:46:37.500 | or trough in your own personal life to know,
00:46:40.700 | can I get a good deal on a one-ton truck right now
00:46:43.260 | if you need a one-ton truck?
00:46:45.940 | So just look for that.
00:46:46.780 | Look for an opportunity to buy and sell
00:46:49.260 | with things that are out of whack,
00:46:52.000 | when prices are out of whack.
00:46:55.260 | Final theme on the show,
00:46:56.860 | I just wanna give you a little bit of a challenge
00:46:58.820 | and ask you a question.
00:46:59.980 | Are the low gas prices right now
00:47:03.700 | measurably impacting your budget?
00:47:06.900 | If they are, you got a problem.
00:47:11.380 | You're not doing a very good job
00:47:14.500 | with your financial planning.
00:47:15.940 | I recognize that there are exceptions.
00:47:20.880 | I get it.
00:47:22.500 | But you need to be careful.
00:47:24.800 | If you are bouncing up and down
00:47:26.780 | about the fact that gas prices have decreased
00:47:29.280 | from $3 and something to $2 a gallon,
00:47:33.340 | you're not doing a great job with your financial planning.
00:47:36.380 | You're really not.
00:47:37.320 | That means that you've got your priorities.
00:47:40.980 | Unless you're, at no stage,
00:47:43.500 | that means you've got your priorities out of whack.
00:47:45.700 | Now, enjoy it, sure.
00:47:47.660 | I like to save money.
00:47:48.500 | It's enjoyable.
00:47:49.900 | But I'm not that rich,
00:47:53.340 | but I haven't really noticed what the gas prices are doing.
00:47:56.300 | And I'm kinda stealing this from an essay I read years ago.
00:48:02.700 | I'll go find it and put it in the show notes.
00:48:04.540 | But Joshua Kennan wrote a brilliant essay on it.
00:48:06.820 | His point was that you're doing it all wrong
00:48:09.780 | if gas prices are affecting your household lifestyle.
00:48:12.620 | If you're poor, if you don't have a lot of money,
00:48:15.560 | then you can't afford to be driving.
00:48:20.220 | You can't afford to have an expensive car.
00:48:22.360 | You can't afford to have,
00:48:23.780 | you can't afford to be driving a ton.
00:48:27.540 | In that scenario, you should get rid of the driving
00:48:30.420 | and solve that problem,
00:48:31.380 | rather than trying to wish for low gas prices.
00:48:33.980 | Cars and the ability to consume lots of gas,
00:48:38.820 | this is a lifestyle luxury,
00:48:40.780 | and it should be treated as such.
00:48:42.060 | I'll go find that essay and I'll put it in the notes.
00:48:44.300 | But that means, if you're that close to the edge,
00:48:46.960 | that means there's no margin in your life.
00:48:48.680 | That means there's no margin in your finances.
00:48:51.460 | It's an absolute travesty that the second biggest purchase
00:48:53.880 | that most people make in their life is their cars.
00:48:56.420 | I think everybody oughta drive a nice car
00:49:00.380 | after they get rich.
00:49:01.620 | Don't go out and buy fancy cars that consume lots of gas,
00:49:06.740 | and don't set up this lifestyle in place
00:49:09.980 | where you're driving dozens, I mean hundreds of miles a day.
00:49:13.600 | If you are driving hundreds of miles per day,
00:49:17.860 | hey, thank you, 'cause that means
00:49:19.480 | you have a chance to listen to my show.
00:49:21.420 | Make sure you're doing it with a massive payoff.
00:49:25.120 | Make sure that you're earning a ton of money,
00:49:27.220 | or you're getting a huge benefit of some kind for that.
00:49:31.420 | Because otherwise, you're probably better off
00:49:32.940 | to structure your life in such a way
00:49:34.980 | that it doesn't require a lot of driving.
00:49:37.680 | Give some thought.
00:49:40.420 | I'll go find that essay, but give some thought.
00:49:42.580 | It's an important thing for you to consider
00:49:44.960 | that if these small things, if consumer spending,
00:49:49.020 | which is what gasoline is,
00:49:50.500 | if this is gonna make a measurable difference
00:49:52.260 | in the amount of money that you have every month,
00:49:53.780 | you're spending too much money,
00:49:54.940 | and you're never gonna be rich.
00:49:57.500 | That's the key.
00:49:58.820 | Cars are great, driving is great,
00:50:02.940 | but this stuff is a luxury,
00:50:04.380 | and you've gotta structure your life in such a way
00:50:08.660 | that the luxuries are paid for by the wealth.
00:50:12.140 | If you find yourself in a situation
00:50:13.940 | where you're doing anything more than a casual,
00:50:17.420 | hey, this is great, I mean, I get that
00:50:19.700 | not every Facebook post of a gas sign
00:50:21.460 | means that somehow I've got loads of money.
00:50:24.540 | But if it causes that much of a blip in your lifestyle
00:50:28.780 | where it's measurably, you're feeling
00:50:30.900 | how much extra money you have because of gasoline,
00:50:33.980 | that should be a major red flag for you
00:50:35.900 | with your financial plan.
00:50:37.900 | Now, if it is a red flag, there's hope.
00:50:41.900 | Fix the problem.
00:50:42.940 | If you're a struggling single parent with multiple kids,
00:50:47.140 | and you're not able to save much money,
00:50:49.140 | and you're just making just enough money
00:50:51.020 | to keep things going, my heart goes out to you.
00:50:54.500 | I'm not being critical of you as a person.
00:50:56.940 | Take the savings.
00:50:59.020 | That can be a major savings.
00:51:00.900 | Take the savings now and change your lifestyle
00:51:03.660 | so that when the next thing happens,
00:51:06.140 | when the gas prices go back up,
00:51:09.500 | it doesn't destroy your budget.
00:51:11.020 | That's the point.
00:51:13.340 | Think in ahead.
00:51:14.220 | I'm gonna close with a final thought,
00:51:18.460 | just with embellishing that thought.
00:51:22.700 | The gas prices will, in the future, go up to $20 a gallon.
00:51:26.700 | Could your lifestyle sustain that?
00:51:31.740 | For most of us, the answer is no.
00:51:34.860 | But I promise, over time,
00:51:37.380 | gas prices will go up to $20 a gallon.
00:51:39.700 | So think about how you could set up your lifestyle
00:51:43.780 | in such a way that that wouldn't affect you,
00:51:46.940 | 'cause you can make some progress there.
00:51:51.820 | I hope that was an encouraging show.
00:51:54.820 | That was the primary guts of what I just wanted
00:51:58.220 | to get across.
00:51:59.060 | Just wanna get across, think counter-culturally.
00:52:01.740 | If your Facebook feed looks like mine
00:52:03.380 | and you're feeling pretty happy about the future,
00:52:06.580 | build on that time for the rest of the time.
00:52:09.620 | Think in terms of being a farmer.
00:52:11.220 | The spring is a time to plant,
00:52:13.900 | and a lazy farmer who doesn't plant in the spring
00:52:15.860 | doesn't reap in the fall.
00:52:17.100 | Winter feels like it's gonna go forever,
00:52:19.940 | but you know what?
00:52:20.780 | Spring is coming.
00:52:21.620 | Summer feels great, and you might be tempted
00:52:26.020 | to go and run and play all day,
00:52:28.060 | but if you don't tend your crops,
00:52:29.300 | you're not gonna have the harvest
00:52:30.340 | that you need to get you through the winter.
00:52:32.020 | So enjoy the season of life where you are.
00:52:35.140 | Enjoy the low gas prices,
00:52:37.420 | but make sure that you're planning for them.
00:52:39.900 | Enjoy the generally good-feeling economy.
00:52:42.460 | Seems to be a good feeling.
00:52:43.460 | Everyone's feeling fairly positive about it.
00:52:45.980 | But make sure that you're preparing for the next recession.
00:52:49.860 | Make sure that when the next recession hits,
00:52:52.220 | that you are improving your lifestyle
00:52:55.620 | so that you'll be able to help somebody else.
00:52:58.460 | So you'll be able to help your family,
00:52:59.600 | help take care of yourself,
00:53:00.920 | that your plans won't be thrown off track,
00:53:03.500 | but also so that you'll be able to lend a helping hand
00:53:05.740 | to some other people who are really struggling and hurting.
00:53:08.580 | But you gotta lead by example.
00:53:12.020 | Hope this was useful.
00:53:13.220 | I wish everybody a phenomenal weekend.
00:53:15.460 | It's a beautiful day here in Florida.
00:53:17.540 | I'm done recording.
00:53:18.380 | It's been a sunshiny, beautiful day.
00:53:21.020 | In the mid-60s, it's been cold today,
00:53:24.180 | which is great for us.
00:53:25.160 | And I'm gonna go and have a lovely evening with my family.
00:53:28.220 | I wish you guys a beautiful weekend and a lovely next week.
00:53:32.660 | And next week, gonna have some great shows.
00:53:35.980 | I'm gonna get some interviews lined up
00:53:38.420 | and I'm gonna be digging into college.
00:53:40.460 | I've been doing some market research with you,
00:53:42.740 | the audience, listening to you as far as the show topics
00:53:45.860 | that you guys have the most interest in.
00:53:48.140 | And I'll be adjusting the show topics toward that.
00:53:51.100 | I'm gonna be going deep into 529s next week
00:53:54.420 | on the college topic.
00:53:55.980 | I'm gonna be bringing in more investing topics,
00:53:57.560 | a lot more retirement topics this coming year.
00:54:00.500 | Just listening to you.
00:54:01.340 | If there's something you want me to talk about,
00:54:02.920 | feel free to send me an email.
00:54:04.620 | I would love to hear from you as an individual.
00:54:06.380 | And happy Friday.
00:54:07.660 | Have a great weekend.
00:54:13.860 | - Thank you for listening to today's show.
00:54:16.020 | If you'd like to contact me personally,
00:54:18.180 | my email address is Joshua@radicalpersonalfinance.com.
00:54:23.180 | You can also connect with the show on Twitter, @radicalpf,
00:54:26.780 | and at facebook.com/radicalpersonalfinance.
00:54:30.620 | This show is intended to provide entertainment,
00:54:33.780 | education, and financial enlightenment.
00:54:37.580 | But your situation is unique,
00:54:39.380 | and I cannot deliver any actionable advice
00:54:43.100 | without knowing anything about you.
00:54:45.280 | Please, develop a team of professional advisors
00:54:49.740 | who you find to be caring, competent, and trustworthy,
00:54:53.940 | and consult them because they are the ones
00:54:57.300 | who can understand your specific needs,
00:55:00.200 | your specific goals,
00:55:02.500 | and provide specific answers to your questions.
00:55:06.260 | I've done my absolute best to be clear and accurate
00:55:09.100 | in today's show, but I'm one person and I make mistakes.
00:55:13.040 | If you spot a mistake in something I've said,
00:55:15.340 | please help me by coming to the show page and commenting
00:55:18.740 | so we can all learn together.
00:55:20.900 | Until tomorrow, thanks for being here.
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