RPF0488-QA
00:00:00.000 | Hey parents join the LA Kings on Saturday, November 25th for an unforgettable kids day presented by Pear Deck.
00:00:06.400 | Family fun, giveaways, and exciting Kings hockey awaits.
00:00:09.600 | Get your tickets now at lakings.com/promotions and create lasting memories with your little ones.
00:00:14.720 | Today on Radical Personal Finance is a special live Q&A.
00:00:18.800 | [Music]
00:00:35.120 | Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge,
00:00:38.160 | skills, insight, and encouragement you need to live a rich and meaningful life now while
00:00:42.480 | building a plan for financial freedom in 10 years or less.
00:00:44.880 | My name is Joshua and today we have a special live Q&A.
00:00:47.680 | Usually we do these shows on Fridays and today it's Monday.
00:00:51.440 | Let's see what happens.
00:00:53.200 | I don't know if Friday questions are going to be more fun than Monday questions,
00:00:56.400 | but whatever, I'll do my best.
00:00:58.400 | [Music]
00:01:06.880 | So we come up on the 500th show of Radical Personal Finance.
00:01:10.880 | I thought it'd be fun to do some more audience related things.
00:01:13.120 | I want to share that with more of you and so I just had to open up a couple of days
00:01:16.960 | of Q&A calls for you, the listener, to be able to join in even if you are not a patron.
00:01:22.960 | Usually these Friday Q&A shows are restricted to patrons of the show,
00:01:28.480 | but I thought it'd be fun to go and have an open mic.
00:01:31.280 | So if you'd like to call into the show, just search, look in the description as you're
00:01:34.800 | listening to me right now.
00:01:35.760 | Obviously this is being recorded live, but you're not hearing it live.
00:01:39.280 | Look in the description on your phone and there'll be a link there in that description
00:01:43.280 | or on the computer to my Twitter page where I posted some info on when I'm doing these
00:01:47.360 | shows today, Monday, October 2, also Tuesday and Wednesday this week at 1 o'clock p.m.
00:01:52.640 | Eastern Standard Time and the phone number and all the information that you need is listed
00:01:56.720 | right on that page.
00:01:58.000 | So we're going to start with Joe in New Jersey.
00:02:00.960 | Joe, welcome to Radical Personal Finance.
00:02:03.040 | How can I serve you today?
00:02:03.920 | Great to be on the show.
00:02:07.680 | So my question kind of revolves around my unique compensation package.
00:02:13.280 | Warning, there's a lot of first world problems in my story, but nonetheless.
00:02:19.200 | (Laughter.)
00:02:20.000 | And we are all very blessed to live, most of us, obviously.
00:02:23.680 | I have listeners throughout the world, but those of us who live in the first world are
00:02:27.360 | very blessed and privileged to live here.
00:02:29.120 | Absolutely.
00:02:29.680 | Go ahead.
00:02:30.180 | Very true.
00:02:31.360 | Very true.
00:02:31.920 | So I work for a major tech firm as a software engineer, and one unique part of our
00:02:37.520 | compensation packages is that it's very heavy on company stock.
00:02:41.280 | So quarterly, after a single one-year cliff, we see a lot of this stock vest and come into
00:02:48.720 | my control.
00:02:49.280 | I'm spleeted to have my first vesting, and quarterly thereafter, in February of 2018.
00:02:55.920 | Given where the market is right now, I'm kind of hesitant to do anything outside of
00:03:01.440 | tax advantage accounts by throwing this into low-cost index funds.
00:03:05.760 | My instinct tells me to pay off as much debt as I can and possibly even go into paying
00:03:12.560 | down the principal on my mortgage, even though I do have a fairly advantageous rate.
00:03:16.560 | I have a 7-1 ARM that should convert -- the 7 expires in 2023, I believe, and I'm currently
00:03:26.800 | sitting on a 287 rate.
00:03:29.920 | So I'm kind of hesitant to put this into equities as I would, you know, following kind
00:03:36.400 | of the typical channels that I've read in the past.
00:03:39.600 | But I'm wondering if there's something I might be missing, if there's other tax advantages
00:03:47.680 | I might be missing out on, if there's just a different way to think about this.
00:03:51.760 | Because given the bull run we've been on, I have to imagine that there's a correction
00:03:55.040 | coming, and given how much I'm going to be -- how much money I'm going to be getting
00:03:58.640 | every single time, it seems kind of risky to throw everything in equities.
00:04:03.440 | >>TED: Let's come back to the correction question in a moment.
00:04:08.080 | I'll do one quick comment on that.
00:04:09.680 | I have always loved the statement that economists -- I first heard Ziegler say it, so I want
00:04:17.680 | to give him credit -- that economists have successfully predicted all 17 of the last
00:04:22.880 | three recessions.
00:04:23.760 | And I feel that way a little bit myself.
00:04:26.320 | I expected -- my personal guess last year was that I thought that by the end of 2016
00:04:34.560 | or during 2017 -- those were the statements that I made to my wife -- I said, "I think
00:04:40.560 | by the end of 2016 or during 2017, that we'll probably be back into a recession."
00:04:46.560 | It seems like we're long overdue, and I have mentally made my -- personally, that's what
00:04:51.840 | I thought would happen.
00:04:52.640 | Now, all of the evidence that we have at present seems to indicate that I was wrong in that
00:04:57.440 | prediction.
00:04:58.320 | I can't see that I was wrong in saying that somehow recessions are a thing of the past.
00:05:03.200 | It's old and outdated and from the 18th century, so thus we're not going to have recessions
00:05:07.360 | again.
00:05:08.080 | But I was certainly wrong on my timing.
00:05:09.920 | So that is very thorny, of course, to predict that.
00:05:14.640 | Let's come back to that in a minute.
00:05:15.600 | Let's start with the most useful way to approach a question like this, which is your personal
00:05:20.160 | situation.
00:05:21.040 | Run me through some numbers.
00:05:22.400 | Ballpark, your household annual income is how much?
00:05:25.920 | Including salary, stock, like I spoke about, and cash bonus, it should end up somewhere
00:05:31.920 | around $350,000.
00:05:32.800 | And how much is your house worth?
00:05:37.200 | Last appraisal put it somewhere at $490,000.
00:05:43.520 | And how much is the mortgage balance presently?
00:05:45.920 | Somewhere in the realm of $345,000.
00:05:50.560 | And other major assets, retirement accounts, about how much?
00:05:53.920 | Ballpark?
00:05:55.300 | Ballpark retirement accounts should be in the realm of $150,000.
00:06:00.400 | OK.
00:06:01.600 | And other investable assets or investment assets that aren't inside of a retirement
00:06:07.040 | account, specifically stocks, equities, things like that?
00:06:09.120 | Another $50,000 on top.
00:06:13.760 | So $200,000 total, $150,000 retirement, $50,000 taxable.
00:06:17.360 | OK.
00:06:18.080 | Cash or cash equivalents, emergency funds, that type of thing, about how much?
00:06:21.760 | In the realm of $25,000.
00:06:26.640 | And then any other major investment assets, real estate, business interests, et cetera?
00:06:30.640 | No, just personal vehicles, that sort of thing.
00:06:35.520 | OK.
00:06:36.240 | $345,000 on the mortgage.
00:06:38.960 | Other debts?
00:06:39.600 | Yes.
00:06:45.120 | Student loan debt, that should be paid off with that February vesting in the realm of $40,000.
00:06:52.080 | OK.
00:06:52.580 | And so any other debts other than that?
00:06:55.280 | No.
00:06:59.540 | We've been fairly aggressive with the debt.
00:07:01.280 | So that's the last of it.
00:07:02.720 | That's great.
00:07:03.520 | And so this particular vesting that you're looking at is about $40,000, right?
00:07:09.600 | No, that's just the amount we would pay off the student debt for.
00:07:14.880 | How much?
00:07:15.380 | All in before Uncle Sam gets in there, assuming the stock price holds as it is today.
00:07:24.240 | Should be in the realm of $100,000 in February.
00:07:26.880 | OK.
00:07:27.380 | You mentioned tech, and you mentioned that this is your first-- I think you said something like
00:07:32.240 | this is your first year-- you've reached this first year cliff vesting, and now you're getting
00:07:36.800 | your first quarterly.
00:07:37.760 | How long have you been with this company?
00:07:39.280 | I started on January 9th of this year.
00:07:44.160 | So this is fairly new in terms of your work there.
00:07:47.680 | And that, I think, should be a major area of focus for you to pay attention to.
00:07:56.240 | Because when you're new at a company, and if it's in tech, of course, there's a difference
00:08:01.520 | in how in your future that you've got to pay attention to.
00:08:04.640 | It's less stable probably than some other things.
00:08:08.080 | Before this particular company, do you have a good, strong history of employment, good
00:08:11.840 | strong history of finding opportunities, or is this kind of a breakout position for you?
00:08:15.600 | I would certainly call it a breakout position, but I definitely have a strong history in
00:08:21.680 | the industry.
00:08:22.400 | The only difference between working at my current company is that I've just worked for
00:08:26.800 | much earlier stage companies in the past, just because it was sort of a lifestyle thing.
00:08:31.280 | I was a little bit younger at the time.
00:08:33.280 | I liked the startup vibe.
00:08:34.880 | But I ended up joining the big company because I sort of hit the adult milestones.
00:08:40.640 | Got married, bought a house, had a child, that sort of thing.
00:08:43.360 | So comp was always an issue.
00:08:45.440 | And stability, of course, too.
00:08:46.880 | Even though this is a technology company, like you said, they're a little bit more volatile.
00:08:50.720 | I actually have no problem saying what company it is, if you don't mind.
00:08:56.320 | Sure, go ahead.
00:08:56.880 | It's Facebook.
00:08:58.960 | So we do have a little bit of a decent track record, in air quotes.
00:09:04.960 | Let me moderate my anti-Facebook rants then, out of respect for you.
00:09:09.680 | Out of respect for your employment.
00:09:11.440 | Actually, maybe this is my inside track here.
00:09:13.920 | I can ask you all my Facebook questions.
00:09:17.840 | Although I think that's better put in a private forum.
00:09:20.320 | Full Q&A.
00:09:20.820 | So I guess the best way to approach – the Facebook thing is relevant, because obviously
00:09:29.040 | that makes a big difference in terms of the stability of the company.
00:09:31.520 | Just to say tech, I wasn't expecting such a large expression of a company.
00:09:39.120 | As you said, Facebook.
00:09:40.320 | So that is a relevant detail.
00:09:41.520 | Thank you.
00:09:42.020 | The options that you just sketched out.
00:09:45.600 | Option number one is take the money, put it all into equities.
00:09:48.960 | And option number two was take the money, pay off debts, and keep some cash left over.
00:09:54.240 | Are those the two options that you're trying to decide between?
00:09:56.400 | Essentially, and I imagine there's probably some kind of middle ground in there as well.
00:10:01.600 | And the only thing I would just reiterate is that after the February vesting, much less
00:10:08.000 | money in quantity, but quarterly vesting does take over and I should see windfalls every
00:10:12.400 | quarter of about – depending on stock fluctuation – 20 to 25,000.
00:10:17.600 | So I guess the key thing I would identify with these two decisions is neither of them
00:10:23.760 | is particularly time-pressing and neither of them is probably going to be particularly
00:10:28.960 | impactful on your current lifestyle.
00:10:30.640 | That's what makes it hard, because oftentimes when related to personal finance questions,
00:10:36.160 | there are things that are very timely or there are things that are related to – that are
00:10:41.360 | going to improve your lifestyle.
00:10:42.480 | Let's say you don't – you didn't own a home and you're getting to the point where
00:10:46.000 | like we'd really like to own a home and this lifestyle choice of owning a home and
00:10:50.480 | this particular kind of home, this will make a big difference on our family life.
00:10:54.080 | Well, in that situation, it's relatively easy because you look and say, "Is this
00:10:58.000 | the right home?
00:10:58.560 | Is this the right time?"
00:10:59.680 | And you prioritize those things that are going to make a big difference in your lifestyle.
00:11:03.360 | But whether or not you face – you have student loans and whether or not you have an extra
00:11:09.680 | in your current situation, whether or not you have an extra 20 or $30,000 in the bank
00:11:14.160 | is – and/or whether or not you have your retirement accounts fully funded and you have
00:11:19.360 | a non-qualified stock account with $60,000, $70,000 of an index fund in it, neither of
00:11:28.480 | these is going to make a particularly big difference in your life.
00:11:33.680 | So that's why this is a fairly unemotional – it's kind of an academic intellectual
00:11:39.200 | question of what's best to do but there's not a lot of emotion behind it.
00:11:42.080 | Is there anything that – with regard to the money that does have more emotion?
00:11:47.200 | Are there any long-held goals that you and your wife have had that – the things you'd
00:11:51.200 | wanted to pursue that would have more of an emotional weight to them?
00:11:56.560 | No.
00:11:57.840 | Like you said, I think we're fairly rational when it comes to the decision around this
00:12:02.640 | money and all money, really.
00:12:03.760 | I suppose the only thing you could really say as far as long-term goals would be just
00:12:07.840 | relatively debt-free college for our children.
00:12:13.200 | We plan on having at least two, maxing out at three kids.
00:12:16.720 | What else would be on the docket?
00:12:19.840 | Having an appropriately sized home for those children.
00:12:25.520 | Other than that, we're fairly modest people.
00:12:27.600 | I wouldn't say we're completely tuned out to the idea of financial independence much
00:12:34.880 | earlier than most Americans.
00:12:36.000 | We'd certainly like to not necessarily have to work full-time in our, let's say, 50s and
00:12:42.480 | 60s, but we're both lucky enough that we kind of do what we love.
00:12:47.360 | I'm a software engineer, like I said.
00:12:48.720 | I don't feel like I go to work every day.
00:12:50.400 | My wife currently stays home but that might change.
00:12:55.120 | We're both incredibly blessed but nothing too big as far as life goals.
00:12:59.440 | >> And how old are you currently?
00:13:01.120 | >> I turned 32 this week and my wife is 31.
00:13:06.880 | >> Well, in terms of how to approach it, I guess I would think carefully to see if there
00:13:15.280 | is any major life goal first.
00:13:18.080 | It's okay if there's not, but if there is, you don't want to ignore it because oftentimes
00:13:23.520 | those things I think can be very, very important, very, very valuable.
00:13:26.640 | Of course, you're just trying to be prudent and trying to make kind of good intellectual
00:13:30.240 | decisions.
00:13:30.640 | So let's just tackle this intellectually.
00:13:32.160 | With regard to timing the market, it does feel like markets are high and it does feel
00:13:40.640 | to me like we're due for a correction.
00:13:44.320 | There are good arguments, technical arguments that could be made in that direction.
00:13:51.120 | I lack confidence though making big decisions in that based upon that personally, especially
00:13:59.360 | big single decisions.
00:14:01.280 | If you are investing kind of broadly in the mainstream approach toward investments using
00:14:06.160 | equities, using low-cost investment funds, and your basic theory is that in general,
00:14:15.520 | these companies are going to do well.
00:14:17.600 | They're going to grow due to management decisions, taking advantage of new markets,
00:14:23.360 | et cetera.
00:14:23.920 | And the basic theory that underlies this is what's called the efficient market hypothesis.
00:14:30.480 | Basic idea, depending on which version of the efficient market hypothesis we accept,
00:14:34.800 | is generally the prices of companies are going to be pretty well priced.
00:14:41.680 | You're going to pay about what a company is worth when you go and buy the stock.
00:14:45.920 | From this theory and from this philosophy, it comes out the natural movement to say that
00:14:53.440 | you can probably buy into the market at just about any time because you don't have any
00:15:00.000 | special inside information that the market is high.
00:15:03.200 | You don't have any special information that every other of the thousands of analysts that
00:15:08.000 | are judging the market that they don't have.
00:15:10.400 | It's a very competitive environment.
00:15:12.720 | And so most likely, the market price today reflects all of the currently known information.
00:15:18.480 | Now, it's easy to think that we have some kind of contrarian insight.
00:15:23.840 | For example, it's easy for me to look at the market and say, "Man, it just seems – everything
00:15:27.600 | seems so high.
00:15:28.400 | It seems like we're due for a correction."
00:15:30.320 | But the market is made up of millions and millions of people who are all buying and
00:15:34.960 | selling, trading these assets that they have, and each of them thinks that they're making
00:15:40.640 | a good move.
00:15:41.360 | And so on the aggregate, I think a good dose of humility is in store when it comes to making
00:15:47.600 | specific investment decisions.
00:15:48.960 | You kind of have to look at it and say, "You know what?
00:15:50.800 | Really?
00:15:52.080 | I can't know – I don't know any more than all of these other traders do."
00:15:57.600 | You might know more about how to write good software and how to get your code to be very
00:16:02.560 | elegant and very efficient.
00:16:04.960 | But at the end of the day, you don't know more about the market than I do or than anybody
00:16:08.720 | else does.
00:16:09.680 | And so the way that you handle this while being confident to make a decision is you
00:16:15.600 | look at it and you say, "I'm looking forward over the course of decades."
00:16:20.960 | And if you're 32 and you're saying, "I might like to be financially independent
00:16:24.400 | in my 50s or 60s.
00:16:25.840 | It's not very important to me that I'm financially independent in five years."
00:16:29.760 | Over the course of a few decades, chances are things are probably going to work out
00:16:34.880 | pretty well.
00:16:35.840 | And so if you did invest your surplus into the market and you did it all at one time,
00:16:42.080 | I think that would be a very reasonable thing to do because you could look forward and say,
00:16:46.720 | "This fits my overall investment strategy.
00:16:49.040 | I've got a couple of decades for prices to continue to – they'll go up and they'll
00:16:52.240 | go down.
00:16:52.560 | They'll go up and they'll go down.
00:16:53.600 | But on the whole, I'm betting that things will go up."
00:16:56.800 | So that's not – so I think that you're invested in this mentally in terms of this
00:17:03.520 | overall philosophy and given these philosophical constraints of mainstream investing, of the
00:17:09.840 | efficient market hypothesis, it makes sense not to worry about any particular unique fluctuation
00:17:16.000 | in the market.
00:17:17.040 | It makes sense just to go ahead and say, "I'm going to go ahead and put some money
00:17:20.640 | in.
00:17:21.040 | There's almost never a bad time to buy."
00:17:22.800 | The theory is this.
00:17:25.040 | Current market prices reflect all currently known information.
00:17:28.480 | So it's possible that next week some new information will come out.
00:17:33.600 | Or some circumstances will change that will affect market prices.
00:17:37.040 | But at the moment, market prices are fair.
00:17:39.200 | They reflect all currently known information.
00:17:41.360 | I don't think that's going to make a big difference to your lifestyle.
00:17:45.280 | But it will help you to start moving towards more accumulation.
00:17:49.440 | I think that you've got a lot of room to use this new job.
00:17:53.520 | I think you've got a lot of room to start piling up many more substantial assets.
00:17:58.160 | Sounds like you've done a great job of, "Hey, we've got a house that's appropriate
00:18:01.840 | for us," given your current income of $350,000 a year.
00:18:07.600 | A house valued at $490,000 is a perfectly reasonable decision.
00:18:13.840 | You're a little light in terms of where you could be if this income continues in the coming
00:18:19.760 | years.
00:18:20.000 | You're a little light in terms of investment assets.
00:18:22.080 | So I'd love to see you move in that direction.
00:18:23.600 | But I think that's just a reflection of the fact that this is a new job, a big step
00:18:27.040 | up, a breakthrough career opportunity for you.
00:18:29.280 | And that will happen in the next couple of years.
00:18:31.520 | Emotionally, I think there's a good case to make for paying off the student loans.
00:18:35.760 | I think that would put you in a situation where you have no debt other than the mortgage,
00:18:44.400 | and that's a secured asset, which is probably well-financed.
00:18:48.480 | And you can clear yourself of that if you ever move from the house.
00:18:51.600 | I think if I woke up in your shoes just emotionally, I would pay off the student loans myself
00:18:56.640 | because I don't like having that debt, especially debt that is unsecured debt for which I'm
00:19:01.840 | personally liable and the fact that I can't – I don't get any protection from those.
00:19:08.160 | But that's kind of an emotional decision, not so much a clear logical decision.
00:19:12.160 | And how I'd balance in terms of the proper thing to do is, of course, well, how much
00:19:16.880 | – what's the interest rate?
00:19:18.160 | Calculate all that.
00:19:19.200 | If I woke up in your shoes, I'd pay off the student loans, especially with $100,000
00:19:22.320 | windfall.
00:19:22.960 | I'd pay off the $40,000 of student loans.
00:19:25.200 | Then the flip side is if I were you, I'd pile up more of an emergency fund.
00:19:29.920 | Rather than pursuing equities right away, I personally would want to build a stronger
00:19:34.880 | emergency fund than just $25,000.
00:19:37.440 | Do you have any idea of how much your monthly expenses are right now?
00:19:41.040 | Michael Munger Yeah.
00:19:43.760 | Generally, I target around a budget of $6,500.
00:19:48.080 | So if you extrapolate that out to somewhere between an intelligent emergency fund of four
00:19:53.920 | to six months.
00:19:54.480 | We're right on the cost, right on the cost.
00:19:57.360 | Trevor Burrus: Good.
00:19:58.480 | Okay.
00:19:58.720 | So $6,500 is good.
00:20:00.000 | The issue is – well, the $6,500 – my calculator stopped working.
00:20:07.280 | I try not to do live math, but I guess it is.
00:20:12.240 | With $6,500, a six-month emergency fund is going to – $6,500 a month.
00:20:20.480 | A six-month emergency fund is $39,000.
00:20:25.600 | For you as a single income earner with your wife not presently bringing an income into
00:20:31.120 | the household, I think a six months would be a target.
00:20:33.760 | So $40,000 emergency fund would be good.
00:20:35.840 | I personally – I think there's a lot of power in a little bit more.
00:20:41.120 | So I guess depending on how you wind up with taxes, if I woke up in your shoes, I'd probably
00:20:45.360 | take some of the windfall, set aside some of it, and try to come up with some kind of
00:20:49.040 | fun, memorable way to spend the money.
00:20:51.760 | I'd knock out the student loans and I'd probably put 25 grand in my emergency fund,
00:20:56.320 | and I'd do that with this particular $100,000 windfall.
00:21:00.480 | Bring me up to a $50,000 emergency fund, make me debt-free except for the house, and then
00:21:04.240 | I'd schedule something fun for the family, a special way to celebrate our success with
00:21:09.520 | this earning ability.
00:21:11.520 | Then I'd probably develop a formula or a theory to follow with those quarterly disbursements
00:21:18.320 | going forward.
00:21:18.880 | I guess that's how I'd handle it.
00:21:20.080 | Questions, comments, Joe?
00:21:20.960 | Joe Fornear No, this was pretty much confirmation of
00:21:26.240 | the thoughts I had before I called.
00:21:29.920 | But hearing it from somebody whose opinions that I've kind of taken to heart in the past,
00:21:34.240 | gives me a lot more confidence to pull the trigger on exactly what you've outlined.
00:21:39.840 | Marc Thiessen Good.
00:21:40.800 | Well, congratulations on having an awesome breakout in your career.
00:21:45.440 | I think that's really tremendous and it shows even just the power of a career and a career
00:21:52.320 | growth.
00:21:53.040 | So I congratulate you on achieving such an incredible career.
00:21:56.720 | I'm sure you've worked very, very hard to develop the skills in order to build that.
00:22:01.680 | Just remember, you're going to start to be targeted with all kinds of opportunities.
00:22:07.120 | Just because you're earning new money, don't lose any – or big money, which from what
00:22:11.600 | you described, you're earning big money for the first time.
00:22:13.840 | Don't lose confidence in your willingness to think things through carefully and use
00:22:19.440 | common sense in all of your decisions.
00:22:22.960 | But it sounds like you've got that wrapped up and hopefully, I'll continue to serve you
00:22:25.760 | in coming years.
00:22:27.360 | Hannah, North Carolina, welcome to Radical Personal Finance.
00:22:29.600 | How can I serve you today?
00:22:30.480 | Hannah Neumann Hi, thanks.
00:22:32.320 | Excuse me.
00:22:34.000 | Sorry, that was really gross sounding.
00:22:35.440 | Marc Thiessen All good.
00:22:36.800 | Hannah Neumann Yeah.
00:22:38.960 | So thanks for taking my call.
00:22:41.120 | I'm calling, seeking your advice on how to proceed in a relationship with somebody that
00:22:49.280 | I'm mentoring.
00:22:50.000 | So she's a young woman.
00:22:51.120 | She's 15.
00:22:51.920 | She's living in poverty currently.
00:22:54.720 | Her mom is a single mom.
00:22:57.360 | And she saved up several – almost $1,000 over the summer.
00:23:04.960 | And then her mom lost her job.
00:23:08.400 | There was a series of unfortunate events.
00:23:10.720 | And so she gave all her money to her mom.
00:23:13.200 | She didn't ask me my advice on it then.
00:23:18.560 | But I do feel I have a space to speak to both mom and daughter.
00:23:25.520 | And I was wondering, is that a good thing for a 15-year-old to be doing?
00:23:31.680 | Should I be pointing her towards, "Hey, there's a lot of upcoming expenses in your
00:23:37.920 | future.
00:23:38.420 | How would you proceed in this situation given the tiny amount of information I've just
00:23:44.960 | given you?
00:23:45.460 | I can give you more."
00:23:46.640 | Marc Thiessen Yeah, that is a really interesting question
00:23:49.680 | because it brings in so many other – so many things.
00:23:54.480 | So a couple of questions.
00:23:56.320 | With regard to the mother and the mother's actions and behavior, do you see that the
00:24:02.800 | mother – is the mother a responsible mother?
00:24:06.000 | Is she – well, sorry.
00:24:08.000 | Is the mother abusive towards her daughter?
00:24:10.240 | Kate Sills No.
00:24:11.840 | Marc Thiessen And by all accounts, obviously, they're
00:24:14.480 | living in poverty.
00:24:15.280 | And that's not necessarily – that doesn't indicate necessarily yes or no.
00:24:19.360 | But from other accounts, does the mother seem to be responsible in her life and in
00:24:23.600 | her lifestyle?
00:24:24.320 | Kate Sills She is a great mom.
00:24:30.080 | She has never successfully held a job for very long, largely because some of her own
00:24:41.680 | actions.
00:24:47.520 | So probably I sort of think of her as a good woman but not particularly – she doesn't
00:24:57.680 | take all the right steps to escape poverty, so to speak.
00:25:01.680 | Marc Thiessen And so these types of job actions, are we
00:25:04.160 | talking – is the mother, to the best of your knowledge, is she addicted to drugs or
00:25:08.160 | to alcohol?
00:25:09.200 | Or are these more –
00:25:09.840 | Kate Sills No, no, no.
00:25:10.320 | Marc Thiessen OK, good.
00:25:10.960 | All right.
00:25:11.460 | Man, it's tough.
00:25:13.840 | Just this weekend, I was having a conversation with some family members.
00:25:18.560 | We were at a family birthday party.
00:25:19.840 | And we were talking about some of the – just the different situations of people that are
00:25:26.560 | close to us and some of the different relationships that have developed for us, each of us with
00:25:35.360 | different people.
00:25:36.560 | But just some really, really struggling people that we are – we're in their lives, they're
00:25:41.760 | in our lives.
00:25:42.240 | We're trying to help them.
00:25:43.200 | And I often struggle to know how to help people at the most basic level of success.
00:25:54.000 | I think of – I asked Dan Sullivan a question one time.
00:25:59.840 | Dan Sullivan is a well-known executive coach.
00:26:02.960 | He has a program called Strategic Coach.
00:26:04.800 | And it's exclusively open to people who are earning $100,000 or more.
00:26:10.400 | That's his minimum entry requirement for anybody to even apply to be part of the coaching
00:26:14.320 | program is you have to be a six-figure income earner.
00:26:16.720 | And I asked Dan Sullivan one time, I said, "You've done all this incredible coaching
00:26:21.920 | work," and he's widely renowned in the coaching world as being really good at helping
00:26:25.600 | people to go from $100,000 a year to a million and beyond.
00:26:29.360 | I said, "You've done all this work in the coaching world to help people go from $100,000
00:26:34.480 | and up."
00:26:35.280 | And I said, "What about helping people go from zero to 100?
00:26:38.960 | How do you do that?
00:26:39.760 | What thoughts and ideas and suggestions do you have to help people go from zero to 100?"
00:26:43.680 | And Dan said, "I don't know.
00:26:46.160 | I don't know how to help people get that."
00:26:50.560 | He says, "It's not my thing."
00:26:52.080 | And I often personally feel that way when it comes to personal finance, that so many
00:26:56.240 | people face challenges with regard to what I'm imagining based upon what you're describing,
00:27:03.360 | personal problems.
00:27:05.440 | They have prickly personalities.
00:27:09.200 | They struggle to do the basic skills of success, show up on time, work hard, just very basic
00:27:15.760 | things that aren't necessarily as obviously identifiable as a moral failing like being
00:27:20.720 | an alcoholic, but they're not as diagnosable.
00:27:26.400 | If somebody is an alcoholic, you can say, "Well, here, you have a problem.
00:27:29.200 | Let's work on a solution and a treatment plan, and let's work on an accountability
00:27:33.520 | plan, and let's fix this."
00:27:35.040 | But if somebody just has a prickly personality or somebody who doesn't do a very good job
00:27:39.920 | at thinking ahead, it's a lot harder to know how to help them.
00:27:42.240 | And so I often struggle with scenarios like you're describing with a mother in this
00:27:49.360 | circumstance because you kind of see the things that need to be done, but you don't know
00:27:53.680 | how to help them learn.
00:27:55.040 | And I do not have good answers for the mother.
00:27:59.360 | But maybe we could talk it through with the daughter, which is obviously the question
00:28:04.400 | that you're asking.
00:28:05.120 | I have some thoughts, but before I do, I just want to hear, because you're the one
00:28:09.120 | who knows the situation.
00:28:10.160 | What do you think?
00:28:10.720 | Do you think that the daughter did the right thing, is doing the right thing here?
00:28:13.600 | I think the daughter did the right thing the first time around.
00:28:22.480 | I really would like for her…
00:28:26.880 | So she aspires to go to college, and I would like for her to have several thousand dollars
00:28:36.560 | in the bank before she goes to college.
00:28:38.880 | She would be in a situation where she could probably get scholarships and very minimal
00:28:45.680 | debt, and the Pell Grant and things like that would be able to get her through college.
00:28:53.760 | But I worry that she wouldn't…
00:28:56.000 | One thing goes wrong at home, mom asks her to come back.
00:29:01.040 | I'm worried that she's kind of setting herself up for a codependent relationship rather than
00:29:06.720 | when I left home, my parents didn't need my help.
00:29:16.480 | I was able to set up sort of an independent life from my parents relatively quickly, whereas
00:29:25.040 | I feel like if she…
00:29:26.960 | Even if her mom stops asking her for money come college time, I worry that she would
00:29:37.040 | just be so close to the edge and so used to that really, really tight relationship with
00:29:43.440 | her family that she wouldn't actually be able to make it through college if she doesn't
00:29:51.840 | have some financial buffer before heading off.
00:29:55.760 | Does that make sense?
00:29:57.760 | - Yeah, it does.
00:29:58.880 | So kind of the counseling questions, there's almost the counseling questions of the relationship
00:30:05.440 | and then there's the financial question of how to help someone get a few thousand dollars
00:30:09.360 | as a buffer and establish their own independent life.
00:30:13.120 | Here's how I think through the issues and I want to be very humble in my thoughts.
00:30:16.800 | I think in a situation like this, the most important thing is to actually be close to
00:30:21.680 | the situation as you are and to try to see what's actually going on because I don't
00:30:27.360 | think the external description is always going to be the appropriate…
00:30:31.440 | You got to be close enough to actually know what's actually going on in this circumstance.
00:30:38.000 | So I think that first and foremost, parents have a responsibility towards their children.
00:30:43.360 | Ideally, the appropriate model for parents is that parents should be in the situation
00:30:49.200 | where they're able to support their children and provide for their children and it's
00:30:56.880 | ideal if they can do that without necessarily the work of the children.
00:31:02.080 | That's really an ideal model.
00:31:04.960 | There's a biblical proverb that I have often thought was inspirational that it says, "A
00:31:09.520 | righteous man leaves an inheritance to his children's children," and the implication
00:31:14.160 | is that there is work that's being done that's not only sufficient to support me
00:31:19.840 | but also my children and my children's children.
00:31:22.080 | I've always found that to be very inspirational.
00:31:24.960 | The challenge is I think there's also a responsibility from children to their parents
00:31:30.320 | and I admire when a child takes that responsibility on seriously.
00:31:36.800 | Now as an adult, it's usually a little bit easier because the adult can – an adult
00:31:42.000 | child is an independent person.
00:31:44.480 | And so for me as an adult, I have a responsibility to help and support my parents and I can do
00:31:51.360 | that as an autonomous adult who's able to earn money, have my own household, etc.
00:31:56.560 | So there's more of an equal footing with my parents in the sense that we're adults.
00:32:00.480 | But as children, I think that there is still some of that responsibility, that there is
00:32:05.200 | a sense of family responsibility and there are many families throughout the world who
00:32:08.880 | if it weren't for the contributions financially to the family of the children, the family
00:32:12.560 | would starve.
00:32:13.520 | And so I admire the ethos of a child supporting her mother, especially a single mother, a
00:32:21.600 | single mother living in poverty.
00:32:23.200 | I admire that and I think that's a rightful instinct.
00:32:26.320 | But of course we want to protect the child, the more vulnerable one, and we want to make
00:32:31.760 | sure that she's not being taken advantage of and that's why we look for those questions
00:32:36.880 | about the mother.
00:32:37.520 | Is this being used because this is actually an important need in the family?
00:32:42.000 | We're going to go hungry.
00:32:42.800 | We're going to go without housing.
00:32:44.240 | Or is the daughter being abused and her earnings are being abused to allow the mother to make
00:32:49.600 | frivolous purchases, things like that?
00:32:51.600 | And I don't know how to judge that from an external perspective.
00:32:55.920 | But I do think that I admire the ethos and I think it's important and valuable for
00:33:01.120 | that daughter to work and support the family.
00:33:03.280 | I don't think that there's some kind of arbitrary line that somehow before 18 children
00:33:08.560 | should just play, play, play, and then after 18 then it doesn't matter what mom or dad
00:33:13.840 | do.
00:33:14.340 | Children – there's a long line of history and even today of young children, 9 years
00:33:21.520 | old, 10 years old, 12, 13, 14, 15 years old, working and supporting their families.
00:33:26.560 | And I think that's – we should honor that.
00:33:29.040 | So I mean I guess those are the dimensions that I look at.
00:33:33.280 | I do think that it would be valuable to teach the child and help to teach the daughter some
00:33:41.840 | of the things to be careful of in terms of the codependent relationship.
00:33:45.600 | And here would be my idea in terms of how the daughter could help the mother.
00:33:49.280 | Depending on what the money was spent on, one way that I think the daughter could help
00:33:52.800 | the mother would be to use some of her earnings to take more responsibility for herself.
00:33:58.400 | So maybe if she had $1,000 saved as an example, maybe she can make a small gift to the mother.
00:34:04.000 | But perhaps if the mother needs the money for something, perhaps she could say, "Mom,
00:34:09.280 | I want to help.
00:34:10.000 | Tell you what.
00:34:10.640 | Why don't – instead of you giving me money for my lunch or instead of you trying to help
00:34:16.480 | me clothe myself, I'm going to use some – I'll take these responsibilities over
00:34:20.400 | for myself and I'll start buying my clothes.
00:34:24.320 | I'll start paying for my lunch.
00:34:26.400 | I'll start doing some of these things."
00:34:28.800 | And that way, the daughter is taking some of the burden from the mother financially
00:34:33.840 | but we don't run into the kind of the dangers of the money back and forth.
00:34:37.760 | That's one idea that I have supporting the family also in terms of if you see the mother
00:34:44.880 | making bad decisions, maybe there's a way where – hopefully you have access to be
00:34:49.440 | able to work with the mother.
00:34:50.400 | But maybe there's a way where you can encourage the daughter in some basic ways that she can
00:34:55.200 | improve things.
00:34:56.400 | For example, maybe the mother is overspending in an area that's causing real problems.
00:35:01.520 | I think of a family that I knew growing up.
00:35:05.040 | It was actually close friends.
00:35:06.400 | And this particular mother was a single mother.
00:35:10.160 | She had been abandoned by her husband and had three beautiful girls and she worked night
00:35:15.680 | and day to provide for her girls.
00:35:18.160 | But one of the things that happened is because she was so overworked to provide for her
00:35:26.000 | daughters, that leads to a lot of times inefficiency where she's too tired to cook from scratch.
00:35:32.080 | She's too tired to do some of those frugal things that can help but there's just no
00:35:35.760 | way that she could do those.
00:35:37.280 | And so in that context, I've thought of that situation and I thought, "Well, maybe
00:35:41.360 | there'd be a way that the daughters could contribute meaningfully to the family finances
00:35:46.320 | by helping with some of those things that are time-intensive but make a real difference
00:35:50.480 | to the savings of the family."
00:35:54.240 | They're just things that the mother just has no time to be able to do.
00:35:57.200 | She can't do them because she's got to work and she's got to earn the income.
00:36:02.160 | And then maybe that establishes a good basis for that relationship to be healthy and then
00:36:09.760 | to work together but the daughter to increasingly grow in her earning ability, increasingly
00:36:15.040 | grow in her ability to support.
00:36:16.400 | Is that helpful at all?
00:36:17.400 | Is that kind of the direction that your question is going, Hannah?
00:36:19.520 | Hannah Zinkham: Yeah, those are some helpful ideas.
00:36:22.400 | I know we've definitely discussed you need to be buying your own clothes now that you're
00:36:27.920 | earning money and things like that.
00:36:30.480 | So she has taken on some of those.
00:36:33.080 | These were the specific money was for a car repair and they had gotten behind on utilities.
00:36:39.560 | So that's when she gave her mom all the money all at once.
00:36:45.280 | But I do think there are some good principles there and I don't know.
00:36:52.160 | Ted Kelly: Yeah, car repair and utilities, I mean how do you fault that?
00:36:55.920 | Those are real needs.
00:36:57.120 | Those are real, real needs.
00:36:59.520 | If a single mom doesn't have a car and she's already got a checkered earnings history and
00:37:03.800 | she doesn't have the ability to get to work, that's a huge need.
00:37:07.360 | That's a real, real need.
00:37:08.960 | And then utilities, that's a real need as well.
00:37:12.440 | And so I don't know of a single easy answer in a circumstance like that.
00:37:18.920 | I do think that as she's fortunate that you're there, my thought would just be in terms of
00:37:25.760 | her going to college, yes, her to have some savings will make a big difference.
00:37:31.540 | But I think that over time, she'll be able to get the scale up enough where she could
00:37:36.120 | – where we're not just dealing with $1,000 and then she's back to school full time.
00:37:41.040 | But when she can start to get into a few thousand dollars, then that'll provide for her.
00:37:46.600 | I have no magic question.
00:37:48.760 | But it's certainly a challenging situation.
00:37:51.080 | I'm glad you're there, frankly.
00:37:52.680 | I mean that's the only solution that I know of is to have somebody who's thoughtful,
00:37:57.120 | who's not emotionally invested, who's in the situation, who can work with the mother
00:38:01.180 | and the daughter and provide useful counseling and provide the help when they need it.
00:38:05.240 | Hannah S.: Well, hopefully I can be useful.
00:38:08.600 | We'll see.
00:38:09.600 | Paul Battelle: Well, you're there for a reason and I love to hear that.
00:38:15.680 | We often I think go too quickly to kind of big solutions when in reality somebody needs
00:38:21.920 | a friend to come by and help.
00:38:23.920 | Any other questions or comments before I go on, Hannah?
00:38:25.920 | Hannah S.: No, thank you.
00:38:27.560 | Paul Battelle: Oops, I thought I had one more call and that one just dropped off.
00:38:32.280 | I guess that's it for Callers for Today show.
00:38:34.600 | So let me just close with this encouragement to you.
00:38:38.240 | I love hearing circumstances like Hannah just described because Hannah's there.
00:38:41.760 | Let me just encourage you.
00:38:43.480 | Get involved in any opportunity that you have to help somebody.
00:38:49.620 | When you find out of a person in need, get involved and help.
00:38:54.280 | Look especially to single parents.
00:38:57.560 | Single moms and dads face a Herculean task to establish their families and to build.
00:39:05.560 | Just a few weeks ago, my wife was just flat on her back, sick for a few days and I was
00:39:11.800 | refreshed in how hard it is to get anything accomplished on my list, all my things I want
00:39:18.360 | to do without her to help me with our children.
00:39:24.020 | If she were not here, it would be tough, tough, tough.
00:39:30.560 | Three small children do not a great productive day make when productivity is measured by
00:39:36.360 | things checked off a to-do list.
00:39:38.120 | So get involved and there are a lot of things that you can do that are very, very simple
00:39:41.500 | that are very, very helpful.
00:39:43.080 | If you know of a single mom who's in need, go by and help her with some home projects.
00:39:50.760 | Maybe you can help her fix the roof, help her paint the house, help with the landscaping.
00:39:56.440 | There are all kinds of things that we can do that don't necessarily involve transferences
00:40:01.460 | of money, although money is important.
00:40:04.360 | Oftentimes money comes with certain challenges, especially if you see somebody who is challenged
00:40:09.160 | in their management of money, which can be for many reasons.
00:40:12.080 | Sometimes you don't want to give direct money, but money is really useful.
00:40:15.840 | Buy groceries, do anything you can to help out because people who are in these situations
00:40:20.840 | face really, really challenging circumstances.
00:40:24.040 | It's only in the context of community, of friends and friends, neighbors and neighbors,
00:40:28.640 | church members to church members that they can really oftentimes have the things that
00:40:33.720 | they need.
00:40:34.720 | So use Hannah's example, get involved, mentor the children, and get involved, get close
00:40:38.720 | to the situation so that you can give good, helpful, useful help.
00:40:42.400 | That's it for today's show.
00:40:43.400 | If you'd like to join for tomorrow's show, details in the description.
00:40:47.800 | Call in.
00:40:48.800 | Talk to you soon.
00:40:54.840 | This show is part of the Radical Life Media network of podcasts and resources.
00:41:00.480 | Find out more at RadicalLifeMedia.com.