RPF0529-Friday

00:00:00.000 | Hey there treasure hunters and bargain seekers!

00:00:03.400 | Are you on the lookout for a local thrift store that has it all?

00:00:06.600 | Look no further!

00:00:07.840 | Pix Exchange is your thrifting paradise right here in the heart of Torrance.

00:00:11.920 | Pix Exchange offers a wide variety of new and used clothing, shoes, new scrubs, uniforms,

00:00:17.480 | new and used furniture, all at low prices.

00:00:20.280 | Don't miss out on the ultimate thrifting experience at our Pix Exchange parking lot anniversary

00:00:24.480 | sale at our Torrance location.

00:00:26.200 | Visit pixexchangehhh.org for more details.

00:00:30.400 | It's Friday and after far too long, Friday means Q&A.

00:00:35.000 | Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge,

00:00:54.840 | insight, education and encouragement you need to live a rich and meaningful life now, while

00:00:59.440 | also building a plan for financial freedom in 10 years or less.

00:01:02.720 | My name is Joshua and I am your host and on Fridays whenever possible, I like to do a

00:01:07.000 | Q&A show.

00:01:08.000 | It's been far too long, we missed the entire month of February, but it's March and we're

00:01:12.720 | back and it's Friday.

00:01:23.520 | I do love to do these shows because it really helps me to have feedback, direct feedback

00:01:27.920 | from my listening audience instead of you being the great amorphous blobby mass out

00:01:33.440 | in the hinterbooties.

00:01:35.200 | I actually get to talk with real people, which I really love and talk about real situations.

00:01:40.040 | And so I love to do these.

00:01:41.680 | I want to do them at least weekly.

00:01:42.840 | I really enjoy them.

00:01:44.440 | The challenge of course is one technological on my end.

00:01:47.680 | We missed February as I was working through some changes in my office environment.

00:01:50.800 | I have to figure out how to make sure that I can be in the right place to do them.

00:01:55.240 | And then secondarily, making sure that I have enough calls.

00:01:57.320 | I do restrict these programs to patrons of the show.

00:02:01.520 | And today we're going to have a great show.

00:02:02.920 | I've got, it looks like six callers lined up, which is a good balance for a show, but

00:02:07.440 | I need more callers.

00:02:08.440 | So that means I need more patrons.

00:02:10.200 | If you would like to interact with me on a show like this, I'd love to have you do it.

00:02:13.880 | And by the way, you can interact with me on anything.

00:02:16.440 | Sometimes I get angry comments from you guys, comments on the blog and comments where you're

00:02:20.320 | frustrated and I always just say, why don't you come and call and talk to me about it?

00:02:24.160 | I really would love to do that.

00:02:25.240 | I love to answer financial planning questions and I love to do it in this context because

00:02:30.160 | it's so real, it's personal.

00:02:31.600 | We can talk about actual situations.

00:02:33.080 | It's what I love about Financial Talk Radio, but I'm happy to answer your questions on

00:02:37.440 | anything in the world that you want to do.

00:02:39.620 | So if you'd like to join a show like this in the future, come on by at radicalpersonalfinance.com/patron,

00:02:44.320 | radicalpersonalfinance.com/patron and sign up to support the show there and I'd be happy

00:02:49.320 | to have you.

00:02:50.320 | The first caller is Mark in Washington.

00:02:52.680 | Mark, welcome to Radical Personal Finance.

00:02:54.280 | How can I serve you today?

00:02:55.280 | Thank you, Joshua.

00:02:58.760 | My situation is that I am unable to get disability insurance.

00:03:03.280 | My employer does not offer it and my wife and I will be moving to her home country where

00:03:09.800 | she grew up.

00:03:11.400 | I've gone to brokers to find disability insurance, but none of them will make a market with someone

00:03:18.960 | who's going overseas.

00:03:20.960 | The best I got was a five-year term.

00:03:25.840 | It was a 180-day exclusion.

00:03:28.560 | It's pretty pricey and they would only pay out for the five years.

00:03:34.120 | So that did not seem like the long-term plan that I was wanting and it's pretty pricey.

00:03:39.800 | So I'm wondering your advice on what I can do as an alternative to that if I can't get

00:03:46.960 | that disability insurance.

00:03:48.400 | I know once we move, I will be trying to look into see if I can get that in-country.

00:03:54.920 | I don't know if that's available or not or if that would be an option.

00:03:58.840 | That's definitely something to look into.

00:04:01.040 | But apart from that, what would you suggest I change in our financial plan if I cannot

00:04:06.880 | get disability insurance?

00:04:08.720 | What is your occupation?

00:04:10.960 | So I can't say in a public way.

00:04:15.480 | It's close to teaching.

00:04:17.360 | Okay, so something like that.

00:04:18.720 | Okay, got it.

00:04:19.720 | Yeah.

00:04:20.720 | Just wanted to make sure you're not, you know, you're working as an oil derrick.

00:04:23.000 | You're going offshore to work on oil, right?

00:04:25.000 | No, no, no.

00:04:26.000 | It's nothing dangerous.

00:04:27.000 | Okay, got it.

00:04:28.000 | Yeah.

00:04:29.000 | Fair enough.

00:04:30.000 | So real quick for the audience's benefit, before we get to your specific situation,

00:04:34.960 | the very best way to avoid this problem is by getting disability income insurance long

00:04:41.520 | before you know of travel plans and especially to get it in the individual marketplace.

00:04:47.320 | When I used to sell individual disability insurance policies, I would frequently emphasize

00:04:52.640 | to my customers and clients that if you own an individual disability insurance policy

00:04:58.720 | and if at the time of insurance application you can truthfully state that, "No, I don't

00:05:05.560 | have any plans to travel.

00:05:07.080 | I don't have any plans to change my job," you can be issued a disability insurance policy

00:05:13.160 | that is guaranteed renewable to a certain age.

00:05:17.140 | Usually that age would be 65.

00:05:19.120 | What a guaranteed renewable contract means is as long as you pay the premiums each year

00:05:25.360 | going forward, even if something were to change in your circumstances such as a few years

00:05:31.920 | after having the contract, you decided to move to a different country, you decided to

00:05:36.320 | change jobs, you decided to pursue a private pilot's license or get a scuba certification

00:05:43.120 | or engage in jumping out of airplanes, things like that, as long as you had that policy

00:05:49.400 | in force, they can't remove that contract from you.

00:05:52.280 | It's guaranteed renewable.

00:05:53.620 | They have to renew it when you pay the premiums.

00:05:56.480 | That is very valuable.

00:05:58.320 | It's one of the benefits of owning a policy in the individual marketplace versus owning

00:06:03.300 | a policy as part of the group marketplace.

00:06:06.040 | Now it still needs to make sense financially.

00:06:08.500 | In the world of insurance, of course, you're thinking forward and you're saying, "Well,

00:06:11.640 | I think there will be things that will happen in the future, but I'm not so sure if I'm

00:06:15.240 | willing to pay for them today."

00:06:16.880 | You still, of course, have to think, "Is this worth it?"

00:06:19.560 | But get the policy now.

00:06:22.260 | If you think 20 years from now or 10 years from now you're going to get rich and you

00:06:26.360 | might want to pick up the flying airplanes after you get rich, get the policy put in

00:06:31.220 | place today and make sure your policy is guaranteed renewable so that this doesn't happen to you.

00:06:37.360 | Now, frequently, however, we don't think ahead, which is in the situation where Mark is, or

00:06:41.800 | we don't know.

00:06:42.800 | For all examples, maybe Mark, you had a great group policy.

00:06:46.840 | It didn't make financial sense for you to have an individual policy.

00:06:49.520 | Now your job is changing and you're in this circumstance.

00:06:53.120 | With regard to your shopping, you said you've shopped with a couple of brokers.

00:06:56.760 | Have they quoted it with the specialty companies such as the subsidiaries of Lloyd's of London

00:07:02.960 | and companies like that which do market and make a market for these types of specialized

00:07:07.800 | insurance programs?

00:07:08.800 | That is a great question.

00:07:11.600 | They did not give me a policy from Lloyd's of London.

00:07:14.960 | I don't know if they shopped it.

00:07:16.760 | I assume if they had, they would have come back to me with a specialty policy like that.

00:07:22.040 | I did go to a non-captive agent, so I was assuming that they would search all those

00:07:27.960 | options, but I do not know for sure that they did search a specialty broker like that.

00:07:34.720 | Frequently they would.

00:07:35.720 | So usually the way that this works inside the insurance business is an agent will work

00:07:41.640 | with a broker.

00:07:43.320 | For example, a big one is a broker called DI Broker.

00:07:47.440 | A licensed insurance agent can call up a company like DI Broker and with their relationship

00:07:55.560 | with them, DI Broker will shop it out.

00:08:00.880 | When you have specialty insurance cases, they will shop it out to subsidiaries of Lloyd's

00:08:07.280 | of London.

00:08:08.280 | Lloyd's is the name that everybody knows, but they write this type of stuff through

00:08:11.080 | some of their subsidiary companies.

00:08:13.080 | So as an example, a number of years ago I had a client who had a very specialized job

00:08:19.000 | as a TV, a part-time TV hostess.

00:08:24.280 | It's the type of, when you get into a world of acting and entertainment, you can't place

00:08:29.440 | that type of policy with a standard run-of-the-mill insurance company.

00:08:34.720 | Or I had a client who was a nurse and they were planning to move abroad and they were

00:08:40.200 | moving to Africa.

00:08:41.880 | So of course when they know that they're moving, they couldn't get it.

00:08:44.680 | So I was able to get a quote for them from Lloyd's and from some of their subsidiaries.

00:08:48.920 | Lloyd's doesn't only insure movie stars' faces and your cheekbones for millions of

00:08:53.400 | dollars.

00:08:54.400 | They do work with normal individual people.

00:08:56.280 | So make sure that things have been well shopped.

00:08:58.160 | But let's assume that they have been, because what you will usually find is when you're

00:09:04.440 | moving to another country outside of First World, outside of the United States, outside

00:09:10.000 | of Europe, outside of these more stable insurance marketplaces, it is often difficult to get

00:09:15.760 | the coverage.

00:09:16.760 | And when they do offer it, they will often control their risk by offering a smaller policy.

00:09:22.240 | And so what they offered you was a policy with a term of up to five years of payments

00:09:27.360 | with 180-day waiting period.

00:09:29.800 | Is that correct?

00:09:30.800 | Mark Miller That's correct.

00:09:31.800 | That's correct.

00:09:32.800 | Which was not guaranteed renewable.

00:09:33.800 | Davey So now we have the challenge and it becomes

00:09:37.000 | a basic financial calculation where we say, "Is this worth having?"

00:09:41.280 | Now if you were to become disabled, Mark, and not be able to work for three years, would

00:09:48.760 | that leave you financially destitute in your current financial situation?

00:09:53.200 | Mark Miller If we had to make it without our social network,

00:10:01.640 | I would guess we would make it probably in a year and a half before we would need to

00:10:07.680 | rely on others.

00:10:08.680 | However, we do have a really, really strong network.

00:10:12.920 | And so we would not be destitute in that sense, but we would need to depend on others.

00:10:18.280 | Davey So philosophically, insurance works best

00:10:22.800 | when it covers catastrophic circumstances that can't be protected by other means of

00:10:28.560 | planning.

00:10:30.560 | Insurance works best for those needs, not for relatively predictable day-to-day things.

00:10:36.560 | For somebody who's financially prudent, there's very little reason for you to take out insurance

00:10:41.880 | on losing your job because you can solve that problem with maintaining a good marketability

00:10:48.360 | in the marketplace and by having savings, having an emergency fund.

00:10:52.620 | But it's very hard to solve for total lifetime disability by having savings.

00:10:58.680 | It would be an unusual 25-year-old or 30-year-old worker who has the ability where if they were

00:11:03.640 | totally disabled and never able to work for the rest of their life to just sit back and

00:11:07.800 | live for another 80 years without earning income.

00:11:11.100 | So insurance works great for those long-term needs.

00:11:14.640 | Now with long-term disability insurance, when they're offering you a policy like that where

00:11:19.080 | they'll only cover you for five years and it kicks in after six months, you're not getting

00:11:24.040 | that totally catastrophic coverage and you're still self-insuring for a bunch of the risk.

00:11:31.120 | Statistically, it's very likely that at some point in the next five years, you will be

00:11:36.440 | unable to work for a week due to sickness.

00:11:39.800 | It's statistically relatively unlikely that you'll be unable to work for more than six

00:11:44.320 | months.

00:11:45.680 | But it's dramatically more unlikely that you'll be unable to work for 12 months than it is

00:11:50.840 | that you'll be unable to work for 12 years.

00:11:53.460 | So in this situation, my gut instinct is to say if you could make it a year to a year

00:11:59.640 | and a half based upon your own financial resources, and then if you have a strong network that

00:12:04.680 | you could fall back on, if the policy is what you consider to be expensive, you're probably

00:12:10.960 | better off just simply putting that money into a larger savings program, into self-insurance,

00:12:18.680 | than you are into buying insurance, especially if you're working in a relatively safe job,

00:12:26.320 | the actual day-to-day characteristics.

00:12:28.360 | So I would probably move in that direction, recognizing, look, they're not going to pay

00:12:33.000 | me any money for six months.

00:12:34.440 | If they do pay me money from six months, it's only coming in from six months to five years.

00:12:39.160 | You can calculate the total maximum benefit of the policy.

00:12:42.960 | Let's say that they would pay you, and what was quoted to you, what was the monthly benefit

00:12:47.400 | and the total maximum benefit of the policy?

00:12:49.720 | You know, I was trying to pull that up, and I somehow misplaced the policy.

00:12:54.640 | My recollection was it was roughly 60% of income, which would have been, well, it wouldn't

00:13:03.480 | be making 60 a year roughly, and they're going to cover about 60% of that, is my recollection.

00:13:08.800 | - Okay, so $60,000 a year times .6 comes out to $36,000 per year.

00:13:14.640 | So times 4.5 years, or sorry, it would be times five years, 60 months of total benefits

00:13:20.640 | under a total disability scenario.

00:13:23.040 | So $36,000 a year times five comes out to $180,000.

00:13:27.640 | So the total maximum lifetime benefit of this policy is $180,000.

00:13:32.360 | That's the total it could pay out.

00:13:34.280 | Now take the monthly premium and ask yourself, okay, how long would it take me to save $180,000

00:13:43.520 | with the monthly premium and start to run that ratio?

00:13:46.440 | There is no mathematical answer.

00:13:49.240 | This is going to be a gut call from you.

00:13:51.140 | How likely am I to get disabled?

00:13:53.400 | From what you're describing to me, you might make the decision like I recommended to my

00:13:58.640 | client in the past, who it was a very similar situation.

00:14:02.080 | In this case, they were going to work as a nurse in Africa.

00:14:05.640 | We got a policy, but it had a five-year total lifetime benefit, 180-day waiting period,

00:14:11.040 | and it was expensive.

00:14:13.120 | And I just said, "I don't think this is worth it.

00:14:15.320 | I think you're better off setting the money aside."

00:14:18.040 | So that's probably where you're going to end up.

00:14:19.800 | So let me give you some ideas and strategies to protect yourself even so.

00:14:23.340 | Number one, save money, because the more money you have saved, the better off you are.

00:14:28.860 | And even if you're saving in things like retirement accounts, etc., save money, because if you

00:14:34.500 | have enough to live on for five years, then you've pretty much negated the need for this

00:14:39.460 | policy.

00:14:40.960 | Of course, there's a small flaw in that thinking, because if you had enough saved for five years,

00:14:46.380 | this policy could cover you for five years and then your savings could go farther.

00:14:49.660 | But this is in the range where it's very hard to predict what happens.

00:14:52.580 | But the more savings you have, the less insurance you need.

00:14:55.820 | Once somebody is financially independent and able to retire and live on their money, their

00:15:00.900 | need for disability income insurance is completely eliminated, because they now are covered by

00:15:06.540 | their assets.

00:15:08.120 | So when you can't get disability insurance, pursue your assets.

00:15:12.180 | Look at building your assets.

00:15:13.920 | Number two, while you're saving, make sure that you are extra careful with all of the

00:15:19.220 | simple, common, everyday risk minimization techniques.

00:15:24.540 | When you are going to look out in your yard and you see that your tree needs to be trimmed,

00:15:30.460 | hire the guy for $100 to trim your tree instead of you going and climbing up the ladder, because

00:15:35.620 | that $100 to hire the guy to trim the tree is going to be a better use of the money when

00:15:40.460 | you're not spending the $100 on insurance.

00:15:46.580 | Put on the safety goggles when you are using a saw.

00:15:49.780 | Wear a helmet when you're on a bicycle.

00:15:52.400 | Put on your seatbelt when you're in the car.

00:15:54.600 | When you go skiing, put on a ski helmet, et cetera.

00:15:57.420 | Just pursue all those safety things and become safety conscious, because many of the things

00:16:02.460 | that happen to people frequently come due to negligence on their own part, negligence

00:16:08.440 | in them wearing proper safety equipment, et cetera.

00:16:11.320 | So wear and use proper safety equipment.

00:16:15.300 | If you look at injuries that are likely for your situation, things that would be likely

00:16:20.040 | to keep you from being able to work, you may be able to come up with ideas that would help

00:16:24.740 | you avoid that.

00:16:25.740 | For example, if you have a physical job, then a physical back injury would be something

00:16:31.420 | that would keep you from being able to perform that physical job.

00:16:34.540 | If you're in something that's like teaching, a physical back injury, you might be teaching

00:16:38.880 | from a wheelchair, but you could teach from a wheelchair.

00:16:41.700 | But if you had a physical job where the risk is an injury to your back, then focus on strengthening

00:16:46.340 | your back.

00:16:47.340 | Focus on flexibility.

00:16:48.540 | Focus on good posture.

00:16:50.540 | Focus on protecting yourself with proper safety equipment, et cetera.

00:16:53.500 | Good lifting practices, things like that.

00:16:55.560 | You can minimize your risk substantially even if you don't have insurance.

00:17:00.140 | Then with regard to insurance, look into something to see if there are any small policies that

00:17:06.200 | are available to you that are portable, that are with you.

00:17:08.700 | In the old days, I used to recommend that people purchase something called a long-term

00:17:13.700 | care insurance cash policy, not an indemnity policy, but a cash payout policy.

00:17:20.500 | Since I'm out of the marketplace for a few years, I don't know if these are still available.

00:17:23.920 | In the past, there was only one company that was still selling them when I was actively

00:17:27.060 | selling these.

00:17:28.180 | But the idea was that in a case of a severe disability income insurance need, a severe

00:17:34.500 | disability need, you might be able to qualify as needing care under the definitions of a

00:17:40.820 | long-term care policy.

00:17:42.700 | In those long-term care policies with a cash policy, they would make the payment to you

00:17:47.620 | if you satisfied the policy definition for needing care, whereas most policies only compensated

00:17:55.380 | you and reimbursed you for actual care expenses incurred.

00:18:00.100 | So I used to recommend that, but I don't know if that's still available.

00:18:03.100 | Check with your disability insurance broker.

00:18:04.820 | Then finally, work on good health insurance.

00:18:07.460 | Get the best health insurance you can and consider being willing to add some additional

00:18:11.980 | bells and whistles to your health insurance policy to cover you.

00:18:14.700 | Those are the risk mitigation techniques that I know of and that I would apply in case of

00:18:21.980 | this problem.

00:18:22.980 | Also recognize, especially if you're traveling abroad, you may be able to negotiate something

00:18:26.540 | with your actual company for them to cover you in some kind of a private agreement, some

00:18:32.900 | kind of private insurance agreement.

00:18:34.780 | So if you were doing work for a specific company and they couldn't cover you under that external

00:18:41.380 | policy or they wouldn't buy one for you, you may be able to establish some kind of salary

00:18:45.380 | continuation agreement with them, which would provide you and your family an additional

00:18:49.540 | level of protection.

00:18:51.100 | Those are my ideas.

00:18:52.100 | Mark, anything else that I missed?

00:18:53.100 | That's super helpful.

00:18:54.500 | Are you allowed to say the name of the company that did those long-term care and cash policies?

00:18:59.980 | Yeah, I'm allowed to.

00:19:02.140 | I just have to come up with the name.

00:19:05.460 | It was a company in Florida.

00:19:07.260 | It was a little company in Orlando.

00:19:09.260 | The guy that I sold it to was a rancher.

00:19:11.780 | He faced the problem that his ranch made him enough money to live on, but it wasn't productive

00:19:15.500 | enough on paper for him to actually be able to qualify.

00:19:20.500 | So I sold him this policy, but I warned him.

00:19:22.460 | I said, "Every couple of years, this company, we need to check on it because I don't know

00:19:26.900 | if they're going to still be in business in a few years."

00:19:31.820 | Because the numbers didn't work.

00:19:33.460 | They mispriced the insurance.

00:19:35.280 | So I don't know the name.

00:19:37.020 | And if you do buy one of these policies, caveat emptor.

00:19:42.340 | You need to pay attention because most of these companies went out of business, and

00:19:45.580 | that was a major challenge for them.

00:19:50.580 | But ask your broker.

00:19:51.580 | That would be a good place for your insurance broker to earn some money.

00:19:56.140 | That's what they do.

00:19:57.140 | Brian in Oklahoma, welcome to the show.

00:19:58.140 | How can I serve you today, please?

00:19:59.580 | Thanks, Joshua.

00:20:00.580 | My question dealt with unquantified and unknown risks that may appear sometime in your life.

00:20:13.500 | And I think about this as I reach middle age and I have got four kids and a fifth on the

00:20:20.260 | way, whether those risks are things that can just happen in the course of life, some can

00:20:28.500 | be insured.

00:20:29.500 | It's appropriate based on the last conversation you had.

00:20:32.460 | Some can be quantified and insured.

00:20:34.700 | Some can be quantified and self-insured.

00:20:40.260 | But then there's some that are very difficult to quantify and just the way life is can come

00:20:47.820 | at a moment's notice.

00:20:50.600 | And I wonder what you would recommend from how you assess those risks, how you self-insure

00:20:58.460 | for those risks or think about dealing with those risks if and when they do occur and

00:21:03.700 | where those fit into a larger financial plan.

00:21:06.780 | Because one could say you're financially independent, but I think that that's kind of a farce when

00:21:14.580 | none of us knows what will happen tomorrow.

00:21:18.460 | Right, right.

00:21:19.880 | So I can think of a couple of examples that your question sparks, but do you have any

00:21:25.340 | specific examples that you were considering that we can work from?

00:21:30.060 | Maybe some could be an unforeseen legal dispute that leads to legal expenses.

00:21:38.060 | You could have something like a disability of yourself or someone that you love or care

00:21:43.700 | about.

00:21:44.700 | Those are things that kind of come to mind.

00:21:48.980 | But I think it's anything that's, you know, there may not be an insurance market for this

00:21:53.600 | type of risk or if there is one, it might be prohibitively expensive.

00:22:00.740 | Or there, yeah.

00:22:01.740 | So.

00:22:02.740 | Right.

00:22:03.740 | So here would be my thoughts.

00:22:06.060 | I think that we should always start by recognizing that we cannot eliminate risk from the world.

00:22:15.260 | We cannot eliminate risk.

00:22:17.180 | It's just simply not possible.

00:22:18.680 | And we cannot guarantee safety.

00:22:22.260 | One of the biggest kind of political philosophy issues that I have with many modern conversations

00:22:27.860 | is people are constantly looking and saying to somebody, "Well, you need to guarantee

00:22:31.700 | my safety."

00:22:32.700 | For example, we look to government and say, "You have to guarantee my safety."

00:22:35.620 | Well, government can't guarantee your safety.

00:22:37.800 | They can try to help and there are maybe appropriate measures for that, but they can't guarantee

00:22:43.300 | safety.

00:22:44.500 | And none of us can guarantee safety or remove risk.

00:22:47.740 | In a sinful and fallen world, that is the natural result of sin is that our world faces

00:22:54.500 | difficulties.

00:22:55.660 | So if you're expecting a child, you have no way to guarantee that your next child is not

00:23:00.820 | going to be diagnosed from birth with cystic fibrosis or some serious muscular dystrophy

00:23:06.600 | and is going to die when they're 15 years old.

00:23:08.740 | We live in a tragic and fallen and sin-filled world with the natural expression of that

00:23:14.500 | being risk, catastrophe, storms, etc.

00:23:18.780 | It's impossible to eliminate whether you go from the mundane to the ultimately catastrophic.

00:23:24.540 | The mundane is a car accident today on the way to work.

00:23:27.900 | The catastrophic is maybe Al Gore is right and the world's going to burn up in the next

00:23:32.940 | five years and the entire peninsula of Florida is going to be overwhelmed by a giant tsunami

00:23:39.160 | wave from the ocean.

00:23:41.860 | So I think it's first healthy to recognize that it's impossible to eliminate risk and

00:23:48.620 | to really deal with that because that's where we come into a question of faith.

00:23:52.700 | Okay, well, how am I going to deal with this?

00:23:54.700 | And of course, many people have no faith and they deal with risk anyway because we're all

00:23:58.700 | in it together.

00:23:59.700 | You can't escape it ultimately.

00:24:01.620 | Second, I think there are some basic techniques that can be applied no matter the risk.

00:24:08.340 | The first one is stability.

00:24:10.860 | If you're a stable person, emotionally stable, psychologically stable, you have a stable

00:24:16.480 | family life, a stable marriage, if you have a stable business, a stable home environment,

00:24:21.640 | if your finances are stable and on a good ground, your job is stable.

00:24:26.740 | If you're a stable person, then usually you can handle many of those things that come

00:24:32.800 | at you.

00:24:34.540 | There's nothing that'll make an unstable person's life worse than a minor catastrophe, but a

00:24:42.500 | stable person can usually deal with those things in stride.

00:24:46.460 | I think many of us, even if we're relatively wealthy, many of us can appreciate how stressful

00:24:53.100 | it is to have an unexpected flat tire when you have no money, when you're broke, when

00:24:58.260 | you're arguing with your wife, your husband, when your child is misbehaving.

00:25:03.580 | Many of us can recognize how stressful that is.

00:25:06.660 | Even if it weren't a financial problem, let's say that you're on the road, Brian, you have

00:25:11.380 | four children, five children.

00:25:13.020 | Let's say you're on the road with your four children that are not in their mother's tummy

00:25:16.540 | and your children are just at the end of their rope.

00:25:20.460 | They're tired, they're cranky, everybody's yelling at each other.

00:25:23.580 | You've just snapped at them and now you have a flat tire.

00:25:27.100 | Well, that's a really stressful situation taken even more stressful.

00:25:32.520 | But if you are a stable personality, your children are under control, you've thought

00:25:36.740 | ahead about their needs being met, their stomachs are not empty, they're not cranky, they're

00:25:43.420 | not tired, you've planned when you're going to travel so that you're not pushing the limits,

00:25:49.640 | you haven't been upset and on edge all day, you're not fighting with your wife, and you

00:25:53.900 | guys have had a great time, well, the same event can happen, the same flat tire, and

00:25:59.380 | yet it can be experienced very differently by somebody who's stable and in control.

00:26:05.580 | And so I think that's very important to recognize that you can't plan for all these things financially,

00:26:11.340 | but a stable life can absorb a lot more of these things.

00:26:16.660 | And that's one of the reasons why I prefer to take a lower risk approach to life because

00:26:22.100 | I personally have experienced and recognized that if I take a lower risk approach to life,

00:26:29.140 | it's possible that I won't wind up being as wealthy in the long run with money.

00:26:34.140 | But it seems like there's a very strong argument that I'll have a much more peaceful and happy

00:26:40.420 | and joy-filled existence than if I'm always on the edge trying to shoot for the moon,

00:26:45.380 | living a high-risk lifestyle.

00:26:47.680 | So stability in every area of life makes a difference.

00:26:51.420 | Next, stability in terms of money makes a big difference.

00:26:56.180 | You can't, of course, plan ahead for everything, but let's use your example of an unforeseen

00:27:02.420 | legal dispute.

00:27:04.380 | If you think about the legal system, you can't guarantee that you're not going to have a

00:27:10.020 | legal dispute, but you can lower the risk of that legal dispute.

00:27:14.940 | For example, you can make sure that you don't make a practice of drinking and driving.

00:27:19.020 | You can make sure that you attend to the maintenance around your home, or your business, thus making

00:27:25.840 | it less likely that you'll be found guilty of negligence in somebody's injury.

00:27:30.940 | You can think thoughtfully about your finances, and in advance you can study something like

00:27:35.580 | asset protection, and you can make sure that your assets are sheltered in legally sheltered

00:27:41.260 | accounts.

00:27:42.260 | You can make sure that your businesses are properly set up so that if you have one business

00:27:46.900 | that goes bad and you suffer a major lawsuit there, that that business damage is contained.

00:27:52.220 | And you can make sure that you are building yourself and just taking good protection,

00:27:57.140 | good insurance.

00:27:58.580 | That's why something like good liability insurance on your home is important.

00:28:02.180 | A good umbrella insurance policy is always a good idea.

00:28:05.580 | Those simple risk mitigation techniques have a broad application, and if you think through

00:28:12.460 | those risks and come with them, they wind up having a few things in common.

00:28:17.880 | One is savings, two is low debt, three is proper insurance for your stage of life, and

00:28:24.880 | four is good proactive planning and basically paying attention in advance, soliciting the

00:28:30.000 | advice of experts before you engage in something new and risky, and then minimizing the risk.

00:28:35.940 | Those are the techniques that can be applied to any circumstance in any situation, and

00:28:41.400 | somebody who's applying those techniques will seem to suffer less catastrophe.

00:28:46.380 | And if they do face catastrophe, they'll be able to work through it.

00:28:50.660 | Many people have worked their way through bankruptcy.

00:28:53.080 | Many people have worked their way through legal judgments that were held against them.

00:28:58.480 | Many people work their way through, and it's much easier to survive if you're focused and

00:29:04.580 | just stable about it.

00:29:07.260 | One inspiring story, just as an example.

00:29:11.500 | I've always been inspired by the example of one of my grandfathers who was a farmer.

00:29:17.120 | He had a business go bankrupt early in his career because he made a bad decision.

00:29:23.440 | It was a road construction company that he started.

00:29:25.420 | He made a bad decision.

00:29:26.820 | He took a contract without doing proper due diligence, and the contract destroyed all

00:29:30.540 | the value of his equipment.

00:29:32.040 | He finished the job, but it put him deeply in debt.

00:29:34.600 | His business partner walked away from it, wanting to declare bankruptcy.

00:29:38.700 | My grandfather chose not to declare bankruptcy, but it took him several decades to pay that

00:29:42.960 | money off.

00:29:44.180 | Throughout the course of his lifetime, he suffered just like what every farmer does.

00:29:47.720 | Sometimes good years, sometimes bad years.

00:29:50.080 | He suffered legal judgments.

00:29:51.640 | Somebody sued them for, I can't remember the details of it, so it doesn't matter.

00:29:56.420 | Somebody sued them and fighting different things out.

00:29:59.700 | But just by staying on the basics, he made his way through the loss of that business.

00:30:03.880 | He maintained the integrity of his family.

00:30:06.020 | He maintained the integrity of his business, and he worked a long and healthy career.

00:30:10.520 | He generated and built a beautiful and strong family.

00:30:13.680 | At the end of his life, he was fairly wealthy because of those efforts.

00:30:18.800 | Disasters aren't permanent.

00:30:20.280 | We all face them, but by taking a broad approach and thinking about them, we'll be able to

00:30:27.240 | navigate through them.

00:30:28.480 | That's my best answer for you right now, Brian.

00:30:31.840 | Thank you very much.

00:30:32.840 | I appreciate that.

00:30:33.840 | It gave me a lot of good things to think about.

00:30:35.800 | I guess one more thought is people often discount the connectedness of life, but it's really,

00:30:45.440 | if you fail in any one area, frequently that'll have a resulting effect.

00:30:50.720 | Somebody who is not careful with their finances will probably, and I have no data to prove

00:30:58.480 | this.

00:30:59.480 | I've not studied this with scientific data, but I have a good sense of what I have studied,

00:31:03.840 | and I think this would fit with our common experience.

00:31:07.400 | But somebody who's careless with money is also often the type of person who may be careless

00:31:13.600 | with what they put in their body or who may be careless with putting on a helmet before

00:31:18.000 | they go and engage in an athletic endeavor.

00:31:20.720 | Carelessness seems to be a character quality that goes in every other area.

00:31:26.680 | That person may engage in risky sexual relationships with other people.

00:31:31.080 | That person may engage in risky business relationships with other people without thinking because

00:31:36.040 | there's a habit of carelessness.

00:31:38.640 | Now on the flip side, if you bring in and teach your children the habit and the character

00:31:43.840 | quality of carefulness as a virtue, and you train them in carefulness with their toys

00:31:51.320 | when they're little, and you train them in carefulness with their possessions, and you

00:31:55.160 | train them in carefulness with the money they earn, and you train them in carefulness with

00:31:59.320 | their moral integrity, and you train them in carefulness with the relationships that

00:32:03.800 | they're engaging in, that has a spillover effect into other areas of life.

00:32:08.760 | Frequently, people try to diagnose one problem without taking it in an integrated way and

00:32:14.560 | saying what's the virtue, what's the character quality that's necessary?

00:32:18.900 | And if you'll teach that character quality, the person can frequently figure it out.

00:32:22.800 | But if you just teach the technique such as, "Hey, here's how you save money," and don't

00:32:28.480 | teach that virtue, that character quality, I think the actual chance of success is severely

00:32:34.440 | diminished.

00:32:35.440 | Ross in Washington, welcome to Radical Personal Finance.

00:32:38.040 | How can I serve you today, sir?

00:32:39.040 | Hi, Josh.

00:32:40.040 | We really appreciate the show.

00:32:41.040 | We're a family of seven.

00:32:42.040 | We've recently paid off all our debt.

00:32:43.040 | We maxed out 401(k) out.

00:32:44.040 | I'm fairly new to investing.

00:32:45.040 | I'm trying to figure out what strategies I want to apply.

00:32:46.040 | We're really leaning towards dividends.

00:32:47.040 | We're in index funds right now.

00:32:48.040 | And I guess I'd just like to know how I would get started, books, growing capital, and

00:32:49.040 | all that stuff.

00:32:50.040 | I'm a little bit of a gambler.

00:32:51.040 | I'm a little bit of a gambler.

00:32:52.040 | I'm a little bit of a gambler.

00:32:53.040 | I'm a little bit of a gambler.

00:32:54.040 | I'm a little bit of a gambler.

00:33:01.040 | You currently are invested in index funds, and the idea is how would I identify the best

00:33:08.120 | strategy for me?

00:33:09.120 | Is that a good summary of your question?

00:33:11.920 | Yeah.

00:33:13.200 | So multiple answers to this.

00:33:14.600 | The first thing, of course, is to learn.

00:33:16.920 | Learning is inexpensive.

00:33:19.240 | Lack of learning is very expensive, but learning is inexpensive.

00:33:21.840 | And there's never been a better time to learn about a subject like investing in the history

00:33:28.400 | of the world.

00:33:29.400 | There's never been a better time.

00:33:30.960 | There is so much information available for you with no cost.

00:33:36.120 | So I would start by pursuing your area of interest.

00:33:39.600 | If your area of interest is dividend investing, there are many good dividend investing blogs

00:33:45.080 | written online by competent, qualified people, some of whom I've had on the show in the Archives

00:33:49.040 | of Radical Personal Finance, which is search dividends, and you'll find some past shows.

00:33:53.200 | There are many qualified people who host podcasts specifically on dividend investing.

00:33:58.200 | If you go on YouTube, you'll find information specifically on dividend investing.

00:34:02.920 | First thing I would – next thing – or first or next thing I would do concurrently,

00:34:05.920 | I would go down to the library and I would look through all the books on investing and

00:34:09.960 | I would check out about a dozen of them on dividend investing, and I would perform an

00:34:14.400 | overview of the reading in that area.

00:34:18.440 | If you've never read it, if you've never read consistently in an area like dividend

00:34:23.360 | investing, then I would start by just reading one or two books, but then I would read systematically

00:34:29.520 | and start to understand what are the themes, and I would challenge myself with that information

00:34:33.960 | to say, "Okay, what is it about dividend investing that I like?"

00:34:38.760 | List the benefits of dividend investing.

00:34:41.040 | List the disadvantages of dividend investing and try to understand what is it about dividend

00:34:46.360 | investing that I like.

00:34:48.200 | If you sit down and you read about a dozen books on something, pretty much you'll put

00:34:53.600 | yourself in a situation where you understand the different approaches to that subject.

00:35:01.600 | My little aphorism that I really love that I think is important is spend as much time

00:35:08.880 | learning about a subject – sorry, spend as much time learning about an investment

00:35:13.600 | as it takes you to earn the money that you're going to put into the investment.

00:35:17.480 | You do the math, but if you're going to engage in a certain investment strategy, you

00:35:22.840 | want to know the risks and the disadvantages.

00:35:27.200 | This type of reading is called syntopical reading, which means to go and to understand

00:35:33.160 | a whole field.

00:35:35.160 | If you are going to engage in dividend investing, I would say that that's a good way to do

00:35:40.200 | it.

00:35:41.200 | Now, balance, of course, the learning versus the doing.

00:35:44.560 | Some people get paralyzed by learning and they never get to the doing.

00:35:48.500 | Some people just jump into doing and they learn by losing money.

00:35:51.880 | I think there's a good balance there.

00:35:54.400 | I don't know how you can figure out how to advise yourself there, but if you're listening

00:35:59.400 | to a couple of podcasts on dividend investing and you're reading about dividend investing

00:36:03.400 | and you're reading articles on it and you're talking with other people who've done it that

00:36:07.120 | you've interacted with in an online forum on dividend investing, now you're starting

00:36:11.200 | to understand it.

00:36:13.120 | Challenge yourself to know the pros and the cons.

00:36:16.800 | My next piece of advice would be come back and survey your particular skills, your particular

00:36:24.040 | situation, your particular goals, and understand why is this approach to investing appealing

00:36:31.440 | to me.

00:36:32.440 | Let me give you an example.

00:36:34.240 | I don't have much interest in dividend investing, but it's not because there's anything wrong

00:36:39.820 | with it.

00:36:40.820 | It's not convinced.

00:36:41.820 | It's a perfectly valid strategy.

00:36:43.760 | But for me, I don't enjoy the idea of studying individual companies that are publicly traded.

00:36:50.000 | I don't think I have any special unique skill in that area.

00:36:54.200 | I would either just follow the advice of somebody that I've chosen to or pursue some other investment

00:37:00.040 | strategy.

00:37:01.040 | It doesn't really appeal to me personally because of my personal goals.

00:37:05.040 | But there are other people who take a great deal of interest in it and it's exactly the

00:37:09.120 | opposite.

00:37:10.520 | But understand the risks and the problems with it.

00:37:13.680 | In my mind, you should be able to defend your investment strategy and say why it's good

00:37:20.120 | and why it's good for you.

00:37:21.800 | You should also understand the shortcomings, the disadvantages of that strategy, and understand

00:37:27.840 | how to know if those disadvantages are affecting you or not.

00:37:32.520 | So learning, reading syntopically is really valuable to make sure that you're well-equipped.

00:37:40.480 | Once you have mastered the basics, and let me give this back.

00:37:45.240 | So there's a school of education called the classical educational model.

00:37:52.120 | And there's a famous essay that is often referred to as a starting point for people who are

00:37:55.800 | interested in the classical education model by Dorothy Sayers.

00:37:59.360 | It's called The Lost Tools of Learning.

00:38:01.960 | There's an audio recording of it in the archives of Radical Personal Finance, a standalone

00:38:05.960 | audio recording of Dorothy Sayers' essay called The Lost Tools of Learning.

00:38:09.440 | But in that essay, she presents the idea that children learn in different stages.

00:38:16.360 | There's a grammar stage, a logic stage, and then a rhetoric stage.

00:38:20.040 | This is not her idea.

00:38:21.040 | This is classical education.

00:38:23.280 | This is the three foundations of the trivium of classical medieval educational philosophy.

00:38:28.880 | The trivium and the quadrivium.

00:38:29.880 | And the trivium has really come to be very popular in classical educational circles.

00:38:36.080 | But the basic approach is that you learn the grammar of something first, which is you learn

00:38:40.840 | the words.

00:38:41.840 | You learn what the words mean.

00:38:42.840 | You learn the basic concepts.

00:38:45.400 | Then a child, and so that would be perhaps a primary school child, and then the child

00:38:50.200 | should move on to logic.

00:38:51.800 | And so a young brain is not prepared to deal with logic, but a middle-aged or middle school

00:38:57.120 | type of brain is prepared to deal with logic.

00:39:00.160 | And then the third stage is rhetoric.

00:39:01.920 | Rhetoric of speaking about it, talking about it, defending it, et cetera.

00:39:05.160 | Well, I think that's a natural approach to apply to any kind of self-learning that you're

00:39:09.280 | trying to apply.

00:39:11.080 | You start with grammar.

00:39:12.880 | You learn what the words mean.

00:39:14.660 | You learn the basic ideas about a subject without judging it, without trying to say

00:39:20.520 | what's wrong.

00:39:21.520 | You just learn what those arguments are.

00:39:23.680 | Learn what those words mean.

00:39:25.400 | You can apply this to dividend investing.

00:39:27.920 | You can apply this to how to become financially independent.

00:39:31.320 | You can apply it to a political topic, a religious topic.

00:39:34.460 | You learn the definitions of the words.

00:39:36.920 | And that's the best way to do it is to start with a couple of books where you'd actually

00:39:39.920 | read them carefully.

00:39:41.520 | Then you move on to the logic stage where you start to interact with the ideas and you

00:39:44.640 | start to say, "This particular person is defending dividend investing because of this simple

00:39:50.280 | example.

00:39:51.600 | Companies that pay dividends pay out more money.

00:39:54.220 | You get richer investing in companies that have dividends."

00:39:57.200 | The logical problem is, is that true?

00:40:01.720 | And of course, the answer is not necessarily because it's a logical fallacy to only look

00:40:07.540 | at dividends and not to look at total return.

00:40:12.160 | And so then you come back to the issue and say, "Well, my goal is to become financially

00:40:15.120 | independent.

00:40:16.120 | And so the only way for me to become financially independent is to spend dividends."

00:40:20.560 | But that's actually logically untrue.

00:40:23.040 | Even if you're 50 years old and you're living on dividends, you could just as easily live

00:40:27.760 | on the sale of the actual securities.

00:40:30.720 | In fact, from a tax perspective, the dividends are somewhat tax inefficient, whereas the

00:40:35.120 | sale under long-term capital gains taxes can be more efficient.

00:40:38.820 | So you now recognize I have to look at total return.

00:40:41.400 | I can't just look at dividends because I can actually spend total return.

00:40:46.200 | And it's not that I can only spend dividends.

00:40:48.440 | So thinking through it logically.

00:40:50.440 | And then rhetoric would just be teaching others in this case.

00:40:53.640 | But the key is study the subject first with grammar, understand the words, understand

00:40:58.160 | the concepts, understand the meanings, and then start dealing with the logic and then

00:41:01.440 | apply it to your particular life.

00:41:03.840 | That helpful, Ross?

00:41:04.840 | Any follow-up questions?

00:41:05.840 | No, great.

00:41:06.840 | Thank you.

00:41:07.840 | Cool.

00:41:08.840 | Thank you for listening.

00:41:09.840 | And good job on getting out of debt.

00:41:10.840 | I hope that you continue to make incredible progress.

00:41:14.600 | All right, next.

00:41:17.120 | He's off.

00:41:18.120 | Let's go to Kevin in California.

00:41:20.120 | Kevin, welcome to Radical Personal Finance.

00:41:21.800 | How can I serve you today?

00:41:22.800 | Yeah.

00:41:23.800 | So I'm trying to figure out what's the, I guess, most efficient way or best way to

00:41:29.720 | fund a land purchase.

00:41:31.280 | And I was planning on using my equity in my home, whether that was like hard equity or

00:41:37.120 | appreciation or whether to just do a refinance or just a flat-out new loan for the land itself.

00:41:43.120 | So what are your thoughts?

00:41:44.860 | How much is the value of your personal home?

00:41:47.280 | A little over 400.

00:41:49.840 | And how much is the current value of the mortgages on the property?

00:41:54.480 | I owe 230.

00:41:56.640 | So you have $170 of equity available in the home?

00:41:59.640 | Yes, give or take.

00:42:01.600 | And the land purchase would be how much?

00:42:04.960 | Roughly 80.

00:42:08.480 | And do you have any savings that you would plan to apply for or are you planning to finance

00:42:13.200 | the entirety of the purchase?

00:42:15.520 | I guess that's part of the crux of what I can't decide on.

00:42:18.160 | I have a taxable investment account that I could easily purchase the land with.

00:42:25.800 | That would incur a taxable event and I don't know if that's the most efficient way to do

00:42:28.800 | it.

00:42:29.800 | Whether I can just use a loan to purchase it.

00:42:33.720 | What's the game plan for this land?

00:42:35.760 | What are you hoping to accomplish by buying it and investing in it?

00:42:40.000 | To build the long-term home.

00:42:43.160 | So the idea is you'd buy this land, you'd build a house on it, and then you'd sell the

00:42:48.040 | house that you're living on right now and move to this new house that you'd plan to

00:42:51.440 | build?

00:42:52.440 | That's one option, either to sell this house or rent it out because it's in a pretty desirable

00:42:57.920 | neighborhood and a nice little town.

00:43:01.680 | What's your timeline?

00:43:02.680 | Well, the land's on the market now and I guess not too long, I guess.

00:43:10.000 | But if you buy the land, when would you build?

00:43:12.120 | Would you build 10 years in the future or would you start building next year?

00:43:17.040 | Oh, probably within two to three, be completed.

00:43:20.520 | So this is fairly quickly.

00:43:21.520 | And how much would you be paying for the home?

00:43:24.440 | Sorry, how much would it cost you to build the house?

00:43:28.280 | I'm guesstimating $350 to $400.

00:43:33.360 | $350 to $400, okay.

00:43:36.720 | How much money do you have outside of the equity in your house that you'd be willing

00:43:41.240 | to spend on the project?

00:43:43.240 | I'd probably be able to cut with another $100 pretty easily.

00:43:52.440 | Have you shopped mortgages, interest rates, any of that stuff at this point in time?

00:43:58.180 | Very little.

00:43:59.180 | I know I think the rates I've seen are around like 4.25 or 4.1, something along those lines.

00:44:04.640 | What's the rate on your current mortgage?

00:44:07.440 | Three and a half.

00:44:12.880 | So the first thing I would do is based upon this information, I would try to get clear

00:44:18.680 | on my different options, which perhaps you've done this, but just in terms of my own thinking

00:44:24.640 | process as I try to answer your question.

00:44:26.900 | So I would look at it and I would say, option A, I can use the cash investments that I have.

00:44:33.400 | I'm just going to say, pretend I sell them, the investments that I have, $100,000, and

00:44:37.760 | I can buy the land with no mortgage.

00:44:42.400 | Then you list down on that, what does that cost me?

00:44:45.000 | The cost of that is of course the tax liability that you now incur on the sale of those assets.

00:44:52.960 | So you have to calculate that in.

00:44:55.520 | And then the benefits of that is I can move quickly and I'm not taking out more debt.

00:44:59.600 | I'm not paying interest.

00:45:01.420 | So you would calculate those numbers and get clear on it.

00:45:04.320 | As you're considering whether you should sell those assets, you need to look and say, what

00:45:09.520 | do I expect to happen with these investment assets?

00:45:12.740 | Is this probably a good time to sell?

00:45:15.080 | Is this not?

00:45:16.160 | You don't want to hang on to an asset that should be sold simply because you have a tax

00:45:21.040 | liability.

00:45:23.240 | Sometimes it's good to go ahead and sell and take the tax liability.

00:45:27.120 | On the other hand, you don't want to sell an asset that, an investment asset that you

00:45:31.160 | think has a lot of room to run and really has a strong future, even if you might need

00:45:36.880 | the money now.

00:45:37.880 | You're not going to hold it until you do that.

00:45:39.520 | So you're going to have to look at that and say, what's best for me there?

00:45:43.120 | Say option A is to sell the assets and pay cash for the land.

00:45:48.080 | Then the question is, where can I get the money to build the house from?

00:45:51.720 | And in this case, you would investigate, would I take a construction loan?

00:45:56.060 | Would I pay for it out of cash flow?

00:45:58.640 | Look to see, do I qualify for a construction loan?

00:46:01.520 | If I did qualify for a construction loan, would I qualify for a refinance of that construction

00:46:07.160 | loan to a traditional mortgage?

00:46:09.880 | And check those numbers.

00:46:12.000 | Ask talk to some mortgage brokers and look to see what those costs would be.

00:46:16.160 | In addition, then, look at the home equity line of credit and figure out what would be

00:46:20.020 | available for you in terms of how much money could you take out on a HELOC, under what

00:46:25.120 | terms.

00:46:26.220 | And then talk to a mortgage broker and see if I refinanced my primary mortgage, how much

00:46:31.220 | could I take out from that primary mortgage if I refinanced it and what would be the rates

00:46:36.680 | at that primary rate.

00:46:39.760 | And so lay out your options, A, B, C, D. Calculate the costs of each, calculate the benefits

00:46:45.960 | of each, and factor those into your overall plans.

00:46:49.840 | If your overall plan is you want to wind up in a situation where you're going to own both

00:46:55.600 | of these houses, one you're living in, two that you're renting, then try to think through

00:47:02.120 | what would be the best situation to be in when you get there.

00:47:05.680 | My guess, without that numerical data, is it's probably a good time and a good way to

00:47:13.560 | go ahead and refinance your primary mortgage now.

00:47:17.440 | If you refinanced your primary mortgage now at the highest amount possible and you put

00:47:25.280 | it on the very long fixed interest loan, that would free up cash for you right now, which

00:47:31.720 | you could use for the purchase of a home, and would put in place financing that could

00:47:37.940 | be maintained should you, two or three years from now, go ahead and rent the house out.

00:47:44.080 | The challenge is affordability.

00:47:45.960 | If you're going to build something, how much cash flow do you have?

00:47:48.680 | Will you be able to swing it?

00:47:49.680 | Will you be able to make payments if you make a construction loan or however you're going

00:47:53.240 | to finance that second house in terms of making the transition?

00:47:57.640 | If you do that, make sure, of course, that you wouldn't be violating your mortgage by

00:48:00.800 | getting a mortgage by having it on a house that you could rent out.

00:48:04.280 | My guess is it's a whole lot easier for you to go ahead and refinance now on your primary

00:48:09.960 | house when it is still your personal residence, rather than trying to get financing on it

00:48:14.840 | as a rental.

00:48:16.200 | Since this is an idea that's a few years out, it would seem to me that you probably could

00:48:20.920 | go ahead and do that refinance since there's no specific plans.

00:48:26.460 | You can go ahead and answer all the questions appropriately that, "Yes, this is my primary

00:48:30.760 | residence."

00:48:31.760 | The only challenge, of course, would be the cost of interest.

00:48:34.280 | You'll have to calculate current interest rate versus new interest rate.

00:48:39.000 | That's how I'd approach it.

00:48:40.000 | Was that helpful?

00:48:41.000 | Yes.

00:48:42.000 | Actually, I have one kind of spawned question from your answer.

00:48:47.840 | Instead of doing a construction loan or something along those lines, do you have any thoughts

00:48:52.560 | on taking out a loan against your own account?

00:48:57.880 | Have you heard of that process?

00:49:00.600 | Taking out a loan against your own investment account?

00:49:03.400 | Yes.

00:49:04.400 | That's collateral, I guess.

00:49:06.760 | I get very scared about that, depending on how it's structured.

00:49:09.640 | I get very scared because, depending on the investment, are any of your investments leveraged

00:49:15.880 | currently?

00:49:16.880 | No.

00:49:17.880 | Are they derivatives or are they direct securities?

00:49:21.120 | It's just Vanguard index funds.

00:49:28.200 | That's simple, of course.

00:49:29.440 | I don't want debt against my investments.

00:49:33.320 | I'm not sure that I couldn't be persuaded that, as a form of bridge financing, that

00:49:40.160 | there aren't a couple of tactical ways to do it, but I'm certainly not going to do it

00:49:45.200 | as a long-term scenario.

00:49:48.120 | Here's why.

00:49:49.600 | If I take out debt against my investments, I was different.

00:49:52.840 | That's why I ask about what kind of investment it is.

00:49:55.120 | If you have an account where you're trading derivatives, then it's not, depending on what

00:50:02.240 | you're actually investing against, you can get into some things where your account could

00:50:06.840 | go to zero without too much trouble.

00:50:08.600 | It's a little hard for a Vanguard index fund to go to zero because there's so many companies

00:50:14.200 | involved.

00:50:15.200 | There's so much involved, but you should always be prepared with stocks, a pure stock portfolio.

00:50:20.920 | You should always be prepared for your account value to decline by 50%.

00:50:24.720 | That will happen at some point during a normal average investment lifetime, if the past is

00:50:30.080 | any indication of the future.

00:50:32.840 | You don't know when it can happen.

00:50:33.840 | You don't know how fast it could happen.

00:50:35.640 | The problem is, if that happens while you're in a vulnerable situation, everything becomes

00:50:43.880 | worse.

00:50:45.400 | If you are using that account and using that financing, and you're putting yourself in

00:50:50.520 | a situation where you're using that financing with a margin account on your investments,

00:50:56.400 | and you're using that to pay for your real estate, and you're depending on your cash

00:51:01.240 | flow to get you through, well, if there's a 50% decline in the market, that means that

00:51:05.440 | there's something really bad happening in the business environment.

00:51:09.620 | Something that's really bad happening in the business environment could have a spillover

00:51:12.480 | effect which could freeze up other forms of real estate financing, as we can remember

00:51:17.120 | 10 years ago.

00:51:18.460 | In the same time, your job may be at risk, and you may take a pay cut, or you may get

00:51:22.240 | laid off.

00:51:23.240 | Now, you're stuck in a real bind where your investments are down by 50%.

00:51:27.120 | They have to be sold at a loss to cover your loan.

00:51:29.600 | You can't refinance your real estate, and now you're stuck all the way around.

00:51:34.520 | I don't want to be stuck all the way around.

00:51:36.360 | I'd rather play it more conservatively and limit the number of moving things that can

00:51:41.160 | be moved.

00:51:42.160 | I'd rather sell my assets and take the tax penalty, or pay the tax, incur the tax, especially

00:51:50.480 | if there's a gain.

00:51:51.480 | You're only paying a tax if there's a gain, and the gain is a good thing, and then use

00:51:54.660 | that to go and pay for the house.

00:51:57.100 | The second reason I hate debt, and I hate it in these cases, is it's very easy to wind

00:52:02.340 | up overspending.

00:52:04.100 | It's much easier to spend more than you should.

00:52:08.240 | That's the basic thing, problem with debt.

00:52:11.140 | You go into it saying, "My budget is $350,000," but all of a sudden when you're in it, you

00:52:16.420 | start thinking, "Well, we'd like to have some upgraded fixtures.

00:52:19.800 | We'd like to have the nicer roof instead of the cheaper roof.

00:52:22.660 | We'd like to have these things," and all of a sudden you're in it for 425 or 450.

00:52:26.980 | Then you've got cost overruns, and things get out of hand, and now you're in it for

00:52:29.740 | 550.

00:52:30.820 | That's not unusual.

00:52:33.540 | That's not an unusual story.

00:52:36.060 | By doing it with minimal debt or constrained debt and not putting yourself in a precarious

00:52:41.300 | position, I think you play the safe game, and I think the safe game leads to the happy

00:52:46.100 | life.

00:52:47.100 | Agreed.

00:52:48.100 | I guess one quick final question is, would you consider doing a show about financial

00:52:55.700 | planning or state planning for parents with special needs children, or is that already

00:52:59.900 | in the hopper by chance?

00:53:01.100 | I have needed to do that show for a very long time.

00:53:06.060 | I'm intending to do more financial planning shows.

00:53:10.060 | The challenge is, the reason I haven't done it so far is simply financial planning shows

00:53:15.140 | are the least popular with the audience as measured by audience engagement and downloads.

00:53:20.300 | They're also the most time-consuming for me, and they have the most limited me to create,

00:53:25.700 | and they have the most limited audience.

00:53:28.940 | It's kind of hard as a show host to say, "I'm going to spend 10 hours, a dozen hours to

00:53:35.300 | sit down to create this free podcast that I'm going to put out with very limited revenue

00:53:41.460 | either from an advertisement placement or something like that, with very limited revenue

00:53:46.660 | potential for that podcast and for me to put 12 hours into preparing a one-hour show that's

00:53:52.900 | careful, that's precise, that's concise, that's reasonable, that's well-structured, and then

00:53:58.340 | to not have the audience really engage with it."

00:54:03.860 | It's a lot easier and more beneficial from my perspective as a business to sit down and

00:54:09.140 | say, "Well, let me just rant and rave about something off the top of my head," which will

00:54:13.300 | have big audience engagement, and it's easier for me to do with 15 minutes of preparation

00:54:18.700 | instead of 12 hours.

00:54:20.740 | Over the last year, I've really lost my previous momentum with financial planning shows, and

00:54:25.540 | that's why I haven't done it thus far.

00:54:27.700 | I want to do it though because I really want to serve the careful financial planning market,

00:54:32.060 | but what I've been trying to solve behind the scenes has been the problem of the follow-up

00:54:36.620 | item.

00:54:38.380 | So I want to do a show on it, but I want to have a follow-up.

00:54:41.580 | I need to have a follow-up sales, something to sell as a follow-up for people who are

00:54:46.940 | interested in the show.

00:54:48.380 | So if I create, let's say, a three-hour lecture on special needs, and then I release the first

00:54:54.260 | hour as a free podcast, but hours two and three can be purchased for X number of dollars

00:55:00.820 | by anybody who's interested in the subject and who's interested in it, and I have a few

00:55:04.540 | interviews lined up with some special needs experts, things like that, now I have a business

00:55:09.220 | case for doing more careful financial planning, technical financial planning stuff.

00:55:13.980 | So that's why I haven't done it so far, but I do intend to do it, and that's the direction

00:55:18.180 | that I'm going.

00:55:19.180 | So keep an eye on the podcast feed, and hopefully it'll be coming your way as soon as I can

00:55:24.240 | make it happen.

00:55:26.020 | It's not that I want to do it.

00:55:27.860 | I just got to figure out how to do it in a way that makes sense.

00:55:31.420 | In the meantime, if you have special needs children or if you want to talk to me about

00:55:35.840 | something specific regarding special needs, feel free.

00:55:38.820 | I'm always available for phone consulting at RadicalPersonalFinance.com/phonecall.

00:55:43.620 | Matthew in Tennessee, welcome to Radical Personal Finance.

00:55:45.780 | How can I serve you today, sir?

00:55:50.820 | Matthew, Matthew.

00:55:53.160 | Okay, no Matthew.

00:55:55.840 | Ram in Michigan, welcome to Radical Personal Finance.

00:55:58.000 | How can I serve you?

00:55:59.000 | Ram Ramachandran Yes, Joshua.

00:56:00.000 | I have a quick question.

00:56:01.000 | Actually, I'm looking for shopping around for a mortgage loan.

00:56:07.000 | I'm a first-time home buyer.

00:56:10.800 | So somehow I, I mean, somehow I learned based on the internet or whatever, if I do continuous

00:56:20.160 | shopping with different bankers on my mortgage loan, there is a chance that my credit score

00:56:26.300 | may go down.

00:56:28.400 | And by having this kind of fear, I'm a little reluctant to go and shop around.

00:56:35.560 | And I mean, I don't know how can I, without shopping, how can I get a best interest rate?

00:56:40.560 | I have a very good credit score right now.

00:56:45.440 | So I mean, I'm a little confused how to shop around and get the best interest rate.

00:56:51.680 | So I need your help here, please.

00:56:53.120 | Okay.

00:56:54.120 | Where are you in the home buying process?

00:56:56.080 | Have you already chosen a home or are you in the pre-choosing process?

00:57:01.680 | I did not choose the house.

00:57:03.120 | I just approached a couple of real estate agents and they asked me to go and talk to

00:57:10.240 | the bankers and get the pre-approved for a mortgage loan.

00:57:14.280 | So I'm in the process of finding a mortgage lender and getting my loan pre-approved.

00:57:20.480 | Right.

00:57:21.480 | So the normal process is for, in terms of this kind of shopping process, the normal

00:57:27.640 | process is you need to have the actual property in place before you do the final shopping.

00:57:35.120 | But of course, a real estate agent wants to know that you're not just kicking the tires,

00:57:39.040 | that you actually are willing to buy.

00:57:41.500 | And also, if you're making an offer with financing, they're going to need to submit that offer

00:57:47.560 | to the seller of the house with the property.

00:57:50.960 | So the best, the normal way to approach this is to find a mortgage broker that will work

00:57:58.040 | with you with a number of different lenders.

00:58:01.520 | And that mortgage broker will then pre-approve you for a certain amount.

00:58:06.960 | Let's say, I don't know what you're shopping for, let's just say $300,000.

00:58:10.780 | So they'll pre-approve you for that $300,000 amount.

00:58:13.960 | They'll say yes, based upon the credit score, the information here, $300,000 is no sweat.

00:58:19.920 | Now when you go out and are looking at properties, your real estate agent now knows that you

00:58:25.720 | are legitimately qualified for a $300,000 mortgage.

00:58:29.220 | And then of course, they'll show you properties in that range.

00:58:32.160 | When you go to submit an offer on a property, let's say you find a property for $200,000,

00:58:38.200 | then frequently you'll have your mortgage broker provide for you a pre-approval letter

00:58:45.520 | that has a much lower amount.

00:58:46.720 | You don't want to submit a pre-approval letter with the offer that says that you're qualified

00:58:50.620 | for $300,000 when you're offering for $200,000.

00:58:53.780 | So they'll go ahead and that broker will provide for you a new letter that's saying that if

00:59:02.240 | you'll just simply, that you're qualified for $205,000 or something like that.

00:59:07.440 | That's all part of the game.

00:59:08.920 | So you'll usually pick one broker to work with in that context.

00:59:13.280 | Now once you have the actual offer on the property, and once the property is accepted,

00:59:21.360 | once the property is accepted, the offer is accepted, then in that situation you will

00:59:26.440 | be able to go ahead and start shopping for a loan.

00:59:31.200 | It's not until you actually have the property and then working with the mortgage broker

00:59:35.560 | that you lock in the loan that you actually have the final deal.

00:59:39.540 | So in terms of the shopping process, you're a little premature to go around and have everybody

00:59:45.500 | start pulling credit reports because that can indeed cause you problems.

00:59:49.680 | But what I would do is I would try to find somebody locally that maybe work with you

00:59:55.000 | and give you a good deal, and then find research talking with your real estate agent and others,

01:00:04.880 | and go ahead and talk with them and see do they recommend.

01:00:08.280 | You might want to get an offer from your bank, you might want to get an offer from one of

01:00:10.960 | the online places, and you might want to work with somebody locally.

01:00:14.880 | But usually my experience has been that they're really pretty competitive.

01:00:18.080 | A good local broker that has multiple banks that they work with will usually be pretty

01:00:22.720 | competitive.

01:00:23.720 | And unless you have a strong relationship, say with a local credit union or with a bank

01:00:28.440 | that you have a strong relationship with, and you know they're very competitive in the

01:00:32.040 | marketplace, usually it seems like most people are best served by working with one independent

01:00:38.960 | broker who works with multiple companies.

01:00:44.040 | When you get to that situation, it's less my experience and knowledge, and if anybody

01:00:48.720 | knows differently feel free to jump in, but my experience and knowledge is that your problem

01:00:53.800 | is primarily going to be whether the broker wants to work with you and have you shop with

01:01:01.920 | them and shop with them and shop with them, not so much about the actual hard inquiries

01:01:07.160 | on your credit report.

01:01:09.280 | Because there is some hand-holding in this process, frequently local brokers will say,

01:01:14.800 | "Hey listen, you either need to pick because I've got these 10 companies I can place these

01:01:20.280 | loans with, or you need to pick."

01:01:27.280 | When you're actually going to the point where you're actually submitting the applications,

01:01:30.360 | things like that, those hard inquiries aren't going to cause that big of a problem.

01:01:35.040 | They're going to look at all the other metrics and your credit score.

01:01:37.720 | Okay, I got it.

01:01:40.120 | So another one simple final question, Joshua.

01:01:42.840 | So let's say if I go and get the pre-approval loan from some lender, and then I'll tell

01:01:49.280 | to my real estate broker, the agent, that okay, I'm good with the pre-approved loan.

01:01:53.840 | So he'll go and show a couple of properties for me, and I'm interested in one.

01:01:57.960 | So once I decide to purchase a property, that time can I go back and shop around again one

01:02:03.400 | more time with different people, and then I can go with different lender after?

01:02:08.360 | Because let's say somebody else is giving me a better interest rate, that time can I

01:02:14.600 | ignore this pre-approved loan and move on to a different guy, or I have to stick to

01:02:18.480 | this pre-approved guy?

01:02:19.880 | No, that'll be, you can absolutely do it, you can absolutely work with different people

01:02:28.280 | even up until the loan is finalized.

01:02:30.040 | So you can absolutely work in a competitive environment.

01:02:33.080 | The challenge is simply figuring out how to do it.

01:02:37.640 | Because if you're working with three people online, then it's relatively simple.

01:02:41.780 | But a lot of times if you're working with a local mortgage broker, then they're already

01:02:47.560 | involved in that shopping process.

01:02:50.100 | So my observation has been there's not going to be that much variability in rates.

01:02:58.520 | It's a pretty standardized market, and what can happen is because the rates could change

01:03:04.000 | frequently, your biggest risk is the actual rates changing across the industry, not so

01:03:11.840 | much which particular company happens to have the very cheapest.

01:03:19.480 | They're very competitive, at least that's my observation.

01:03:21.520 | >>Steve: Okay, I got it.

01:03:23.080 | >>Adam: And then one last tip for you, make sure that if you haven't listened to it, go

01:03:26.580 | back and listen to episode 305 of the show called Mortgage Credit Certificates, the coolest

01:03:32.500 | mortgage interest credit you've never heard of.

01:03:35.360 | That show is all about the mortgage interest credit, and that is a program where you'll

01:03:40.800 | have to investigate to see whether your state offers it, and you'll have to investigate

01:03:44.880 | to see whether you would qualify, whether your property qualifies for it.

01:03:48.760 | But that is one of the unique focuses, the unique questions that comes up.

01:03:57.200 | If you do qualify for the mortgage credit certificate, you've got to go ahead and make

01:04:01.480 | that happen early.

01:04:03.280 | And then also go and listen to episode 318 of the show, which is all about how to get

01:04:10.440 | the best possible mortgage as well.

01:04:13.200 | Matthew in Tennessee, welcome to Radical Personal Finance.

01:04:15.040 | Let's try you again.

01:04:16.040 | Are you with us this time?

01:04:17.040 | >>Matthew: I am.

01:04:18.040 | Thank you, Joshua.

01:04:19.040 | >>Joshua: Very good.

01:04:20.040 | How may I serve you, sir?

01:04:21.040 | >>Matthew: Thank you for taking my call today.

01:04:22.040 | So my question is around content creation.

01:04:24.800 | When you have a breadth of knowledge in an area, especially one that is nuanced, how

01:04:29.600 | do you create content without going into all the nuance every time?

01:04:33.220 | If you were to create a show with all the nuance, it would be like four hours long every

01:04:36.600 | time because that is how unique each situation can be.

01:04:39.760 | So my question is, how do you know when it's time to stop on a particular subject and just

01:04:44.120 | ship the show?

01:04:45.800 | >>Joshua: You are – that is probably the biggest softball setup that – which we didn't

01:04:51.720 | plan – anyone has ever offered me to cover one of the most difficult things that I am

01:04:58.120 | often challenged to figure out.

01:05:02.040 | So here's my thought.

01:05:03.040 | Number one, it's hard.

01:05:04.480 | And especially that's been a hard lesson for me.

01:05:07.520 | Because when I started Radical Personal Finance, I wanted to provide the depth because I couldn't

01:05:15.360 | find the depth.

01:05:18.240 | And I'll share this just from my own experience.

01:05:20.760 | I used to listen to Dave Ramsey or Clark Howard or Rick Edelman or other people as well.

01:05:27.800 | And when they'd answer a question, they would answer the five-minute question and I would

01:05:31.440 | be so frustrated because I'm like, "You missed everything.

01:05:34.080 | You could do this, this, this, this, this, this, this."

01:05:36.400 | And when I first started, I had a big chip on my shoulder.

01:05:39.240 | I'm going to show them how much better it is.

01:05:42.080 | Well, what I've learned is that there's a method to their methodology.

01:05:50.360 | And I now look at – now with almost four years of experience, I now look at Dave Ramsey

01:05:56.520 | and I understand why he does what he does.

01:05:59.400 | And I feel like I was ignorant before of how effective he is.

01:06:04.680 | Because by keeping it simple, he actually moves people to action.

01:06:09.880 | And the people who don't want simple are not his audience.

01:06:12.640 | But there's a much bigger audience of people who want simple who he can serve.

01:06:17.600 | And what today I look at it and I used to be frustrated by and say, "Man, why doesn't

01:06:22.600 | this guy answer the question actually fully?"

01:06:26.760 | Today I look at that and I say, "I need to be more like Dave Ramsey because he moves

01:06:30.960 | people to action and he does it by keeping simple."

01:06:35.440 | And it's been very hard for me to learn that lesson, but it's also a very real lesson.

01:06:40.520 | And so my thought on it – and the other thing has been that it has to do with personal

01:06:45.360 | confidence.

01:06:46.360 | I think a few years ago, I probably had more of a desire to show everybody how smart I

01:06:51.600 | was than I do today.

01:06:53.160 | I was less confident.

01:06:54.800 | And so as somebody who knows something about a subject, I often have had the desire to

01:07:00.560 | rebut every rebuttal.

01:07:02.780 | And this used to tie me up in knots because I would sit down and I would create this concept,

01:07:07.400 | okay, concept A. And I know that in concept A, the way my brain works, I already know

01:07:12.760 | the rebuttal arguments to my presenting concept A are rebuttal one, rebuttal two, rebuttal

01:07:17.440 | three.

01:07:18.440 | And so I would go ahead and say, "Well, the rebuttal to rebuttal one is rebuttal A1,

01:07:22.160 | A2, A3 and rebuttal."

01:07:24.360 | And I would create these things.

01:07:25.680 | Well, then it becomes an absolute monstrosity.

01:07:28.800 | And you lose people and no one wants to listen to a two-hour explication of concept A, rebuttal

01:07:34.760 | one, answer to rebuttal one, two, three, et cetera.

01:07:37.380 | And so the audience, well, not no one, the audience that wants to listen to that is very

01:07:41.680 | small.

01:07:43.280 | And I've realized as I've become more confident as a broadcaster that if I want to serve people,

01:07:50.040 | I have to offer content in different ways and in different ways.

01:07:57.040 | And I have to recognize that some people aren't going to like the way I offer other content.

01:08:02.500 | And so what I am desiring to do in the future, what I'm not doing as well as I want to do,

01:08:09.000 | is I'm desiring to have more variety to reach more people.

01:08:13.680 | But the cost of that variety is annoying some people.

01:08:17.960 | And it's very difficult for me to be okay with that because I personally am a people

01:08:24.040 | pleaser.

01:08:25.040 | I want to make everybody happy.

01:08:26.300 | But by way of example, I recently did a show on the example of why I hate pickup trucks.

01:08:32.760 | And it was caustic.

01:08:34.040 | It was very unusual.

01:08:36.380 | I said the word idiot more than I've ever said in my life.

01:08:40.340 | It was not my normal tone.

01:08:42.400 | And I knew that it was a risk when you write satire and use hyperbole, that's a risk because

01:08:47.340 | some people may not understand it.

01:08:48.860 | But when looking at it, I said, "This might cut through."

01:08:53.480 | It might cut through to somebody who really wants it.

01:08:56.540 | It might provide some additional entertainment value.

01:08:59.280 | It is a real concept and I can try something new.

01:09:02.320 | I got all kinds of people who are like, "Joshua, you were such a jerk.

01:09:05.200 | You're so arrogant."

01:09:06.200 | And I'm like, "Do you not listen to the rest of the show?

01:09:07.920 | Do you not recognize that this is something different and unusual that I'm making a point?

01:09:17.480 | But do you not recognize this?"

01:09:20.240 | But of course, if I label it as, "This is out of the ordinary," then it removes all

01:09:24.200 | of the power and the punch of it.

01:09:26.540 | So what I think it is, what I currently try to do is I'm currently trying to say, "How

01:09:33.200 | can I package things in different ways for different people?"

01:09:36.560 | I want to create something that in some cases is one minute, is five minutes.

01:09:40.640 | In some cases, it's five hours.

01:09:42.740 | And to have different things for different people and let people choose because the person

01:09:47.080 | who's really interested in a subject will dig in, let's say, five minutes, 50 minutes,

01:09:52.440 | and five hours.

01:09:53.600 | The person who wants the five hours will also enjoy the five minutes and the 50 minutes.

01:09:58.080 | But if everything is five hours, if everything is over the top, people aren't going to be

01:10:03.240 | able to tune in.

01:10:04.240 | Many people are going to say, "I can't listen to five hours," and they'll skip it.

01:10:07.280 | So it happens to all of us.

01:10:09.000 | We have a podcast and if every podcast is two hours long, then sometimes you have two

01:10:13.940 | hours and you want it and sometimes you have five minutes.

01:10:16.880 | So I believe that the value is just recognizing that for the person who really needs the concept,

01:10:22.920 | they'll dig it through.

01:10:24.640 | But if you just do one thing, you'll miss out on impacting as many people as you want.

01:10:31.340 | So it's been hard for me to learn that.

01:10:33.160 | It's been hard for me to learn to just be okay with people being mad at me, to be okay

01:10:38.360 | with the fact that someone's not going to understand, to be okay that when I go into

01:10:42.520 | an esoteric subject, someone's going to get all ticked off because I'm talking about guns

01:10:47.920 | or I'm talking about this.

01:10:50.960 | Just learn to be okay with it and say, "Listen, you listen if you want, you don't listen if

01:10:55.360 | you want.

01:10:56.360 | You're an adult.

01:10:57.800 | You have a thumb that works.

01:10:59.720 | Use it.

01:11:00.720 | But in the meantime, I'm not going to be dissuaded from what I'm trying to do because I'm worried

01:11:06.800 | about your nasty message."

01:11:09.000 | It's not an easy question to answer.

01:11:10.920 | Got it.

01:11:14.280 | When you first started Radical Personal Finance, did you have a sense of responsibility in

01:11:20.400 | that you were concerned that maybe somebody would come by that podcast and make an incorrect

01:11:27.440 | decision?

01:11:28.440 | Now, mind you, it is free.

01:11:29.440 | So to the individual listeners of Radical Personal Finance or any podcast, they should

01:11:34.320 | understand it's not a response tailored exactly to their situation and should treat that accordingly.

01:11:40.800 | But at the same time, did you have a sense of responsibility at the beginning that, "Gosh,

01:11:46.320 | I hope that I'm nuanced enough that if somebody comes by, this is actually..."

01:11:51.720 | Because depending on how you take personal financial advice, something can be completely

01:11:55.640 | wrong in your unique situation and you just may not be, for lack of better wording, may

01:12:00.720 | be ignorant to that.

01:12:02.120 | Did you have that at all when you were starting Radical Personal Finance or does it exist

01:12:05.600 | today?

01:12:06.600 | Or is that something where you said, "I'm just creating a free show and it's their responsibility

01:12:09.620 | to follow up further to get their perspective on their unique situation?"

01:12:15.440 | I've always felt that responsibility because when I started, I was a long frustrated financial

01:12:21.040 | advisor, angry that my clients would spend more time listening to another financial pundit

01:12:28.800 | and they didn't ask me for the specific application of what they were doing.

01:12:32.840 | And that was one of my deep abiding frustrations that a client would listen to something that

01:12:39.340 | somebody on the radio said and they would say, "Well, this must be true."

01:12:44.240 | But the person on the radio was lacking the context of this particular situation.

01:12:49.880 | And almost any financial decision could be right or wrong to the degree that there is

01:12:56.340 | objective right and wrong based upon the individual circumstances.

01:13:00.720 | And it used to drive me nuts, especially as a long-term...

01:13:05.040 | I'd sold a lot of insurance policies over the years.

01:13:08.220 | And it used to drive me nuts when somebody would give what I perceived to be careless

01:13:14.900 | advice on life insurance policies or disability insurance policies or long-term care insurance

01:13:20.200 | policies.

01:13:21.840 | That really frustrated me.

01:13:23.820 | And so the way that I tried to handle it was to say, "Let me talk about how to get from

01:13:29.540 | here to there."

01:13:30.600 | And even when I do the Q&A shows, as I've done in this particular show, what I try to

01:13:37.440 | do is whenever I'm answering a question, not to say, "Do this," but to say, "Here's the

01:13:44.920 | process of how I'm approaching it, how I'm analyzing it.

01:13:49.080 | And then based upon this method of analysis, here's the answer that I'm coming to."

01:13:53.500 | And that's my hope is that that'll help people to think about the method of analysis while

01:14:00.060 | picking up a few tips and not just simply go straight to the end answer.

01:14:05.000 | That's my personal hope.

01:14:07.400 | Now successful or not, I don't know.

01:14:08.840 | I've certainly tried to pull back on some of the intensity of that method of analysis

01:14:15.280 | because there's only a small, very, very small number of people who are actually that interested.

01:14:21.640 | And I love to serve those people who are deeply interested, but I also have intentionally

01:14:27.200 | tried to pull back on the level of detail and to just be a bit more to the point so

01:14:34.120 | that my ideas will be impactful on a broader audience.

01:14:39.280 | >>JAMES: You got it.

01:14:42.600 | Thank you for taking the time to answer that.

01:14:44.640 | >>DAVE: Thank you for the nice softball question.

01:14:47.080 | It's always nice when somebody sets it up and says, "Here's a fun question.

01:14:52.360 | Talk about yourself."

01:14:53.360 | It's a great example for the final teaching moment so that it's not all about me.

01:14:58.240 | It really is a great example of the value of asking people about themselves.

01:15:04.800 | If you want to be a good friend, I mean, I do the show, but it's very hard for me to

01:15:10.080 | want to talk about myself and what I'm learning and struggling with if someone doesn't ask.

01:15:16.280 | And so the same thing can be applied in social situations as we all try to be better listeners,

01:15:20.480 | engage with people by just asking them about themselves.

01:15:23.800 | One comment, I'm going to release this as a...

01:15:26.000 | I'm going to kill the music.

01:15:27.480 | I'm going to give you a bonus speech, which I'm going to...

01:15:32.800 | In that line, I'm going to put the bonus speech here, and then I'll probably cut the audio

01:15:36.080 | and release it later.

01:15:37.440 | But here's what I want to say.

01:15:40.040 | You are an adult.

01:15:44.360 | Act like one when it comes to what you listen to.

01:15:48.820 | That means multiple things.

01:15:50.120 | Number one, it means you actually have to listen to what somebody is saying.

01:15:55.120 | This seems to be a skill that we have frequently lost, lost more and more in our culture.

01:16:00.480 | But listen to what somebody is saying.

01:16:03.520 | Don't automatically assume that because they're saying X, then they obviously must mean the

01:16:09.720 | antithesis.

01:16:10.720 | But listen to what somebody is actually saying.

01:16:13.720 | Two, listen widely, but recognize that you're listening voluntarily.

01:16:18.920 | When somebody's saying something, don't get mad and write to them and say, "I can't believe

01:16:23.080 | you're saying such and such."

01:16:25.600 | At least engage with their content.

01:16:28.280 | When I say things that I think are helpful and valuable, I'm saying them because I think

01:16:33.560 | they're helpful and valuable, not with an intentional goal of making you mad.

01:16:38.500 | I don't care if you're mad.

01:16:40.520 | I don't care if you're happy.

01:16:42.440 | What I care is that you engage with the substance of what I'm saying.

01:16:46.680 | And it's really amazing to me how many emails and comments and things I get from people

01:16:52.720 | who are frustrated because I said something they didn't like, but they actually didn't

01:16:58.000 | deal with what I said.

01:17:00.760 | And it almost feels like an epidemic in our culture.

01:17:04.400 | So recognize this.

01:17:06.800 | I'm not asking you to listen.

01:17:08.920 | I'm hoping that I can serve you, but if at any point in time I stop serving you, just

01:17:15.480 | stop listening.

01:17:17.520 | That is your right as a human to walk away and disengage.

01:17:24.280 | Don't send me an email saying, "Well, I just can't believe you said such and such, and

01:17:28.280 | that's it, and I'm out."

01:17:30.680 | That changes my mind not a bit.

01:17:33.280 | I'm not stupid.

01:17:34.800 | I know when I say something that is controversial that it's controversial.

01:17:40.480 | If you want to make me think, rebut what I'm saying.

01:17:44.680 | Just don't come by the blog page and write a comment saying, "Well, I just can't believe

01:17:48.960 | you said that because that was so offensive."

01:17:51.480 | Come by and say, "Joshua, you're wrong," and make an argument.

01:17:55.680 | Make an actual argument about why I'm wrong.

01:17:58.480 | Present your evidence, present your facts, present your reasoning, and argue why I'm

01:18:02.680 | wrong.

01:18:04.120 | When I get an email from you writing to me about why I'm wrong, I sit and I read it

01:18:09.440 | very carefully, every single line, every single word, and I consider your perspective.

01:18:15.600 | I put myself in your shoes, and I stop and I think, "Okay, based upon how this person

01:18:21.480 | is communicating, what's the merit of their argument?"

01:18:26.280 | I consider your argument.

01:18:29.440 | When you write to me saying, "I just don't like your stuff," I usually respond back and

01:18:34.640 | say, "There are lots of other good podcasts."

01:18:37.480 | But please, don't waste your time.

01:18:39.080 | I want you to go and get what you need.

01:18:40.760 | If I can't deliver that, I'm fine.

01:18:42.480 | Go.

01:18:43.480 | I believe in the free market.

01:18:44.480 | I believe in the freedom of information.

01:18:46.200 | I believe in the freedom of ideas.

01:18:48.560 | So go and find somebody.

01:18:51.160 | But you're not going to change my mind unless you actually make an argument.

01:18:57.480 | We've created a culture where being offended all the time is a badge of honor instead of

01:19:03.760 | a culture that loves truth.

01:19:06.000 | In the last decade of my life, I have changed many, many things that I believed.

01:19:15.040 | But I've changed them based upon argument, not based upon offense.

01:19:21.800 | The mark of an adult is being able to listen to somebody that you find offensive or being

01:19:27.460 | able to listen to an argument that you disagree with and consider it on the merits of the

01:19:35.200 | argument, not just simply based upon the fact that you disagree with it or you find it offensive.

01:19:42.880 | If we can't do that and we can't think, then we're doomed.

01:19:50.040 | And unfortunately, if my email inbox is any reflection of that, we're doomed.

01:19:58.920 | So I beg of you, if you want to argue me on a point, argue it with me.

01:20:05.960 | But don't tell me how mad you are because of something I said.

01:20:11.120 | You don't have a right to not be offended.

01:20:16.440 | You don't have a right to control what shows up voluntarily in your phone and on the internet.

01:20:26.280 | You do have a right to simply stop listening.

01:20:30.040 | And you do have a right, of course, to say what you believe.

01:20:34.440 | So if there's something that you believe that you think disagrees with what I believe, feel

01:20:39.800 | free to argue it with me.

01:20:41.840 | Or please use your freedom of speech.

01:20:45.480 | Start your podcast.

01:20:47.420 | Start your blog.

01:20:48.600 | I will help you do that.

01:20:51.520 | I've done that to many people who say, "I just don't really like radical personal finance."

01:20:56.400 | Great, I will help you.

01:20:58.840 | I'll help you start a podcast.

01:21:00.640 | I'll help you start a blog that disagrees with me because I believe in truth.

01:21:07.520 | And I believe that a vigorous debate about concepts and ideas has value and is a method

01:21:18.120 | of arriving at truth.

01:21:19.640 | It's not the only method, but it is a method.

01:21:25.200 | If there's something that I'm wrong in, tell me I'm wrong.

01:21:29.240 | I will read your comment.

01:21:31.120 | I'll read your argument.

01:21:32.360 | I'll read your email.

01:21:33.640 | I'll read that very carefully.

01:21:36.880 | And I'll follow your logic.

01:21:39.640 | I'll consider what you have to say.

01:21:42.180 | My only request is if you have any interest in understanding what I have to say and why,

01:21:46.880 | then feel free to do the same thing.

01:21:48.960 | But don't waste your time telling me how offended you are.

01:21:54.800 | It doesn't change my mind.

01:21:57.560 | Thank you for listening, for allowing me to get that off my chest.

01:22:00.840 | With that, I wish you all the best.

01:22:05.400 | Thank you for listening to today's show, You Radical You.

01:22:08.480 | Before you go, I have one question for you.

01:22:10.960 | Was there an idea in today's show that helped you?

01:22:13.880 | Were you inspired?

01:22:14.880 | Were you motivated?

01:22:15.880 | Did you get an idea on how you can earn more or spend less money or invest more wisely

01:22:20.840 | or perhaps protect yourself from catastrophe and insulate yourself from financial disaster

01:22:26.440 | or just improve your life and your lifestyle?

01:22:28.440 | Well, if so, I have three requests for you.

01:22:31.560 | Number one, take action.

01:22:34.760 | Listening doesn't improve your life.

01:22:36.760 | Doing, however, can revolutionize your life.

01:22:40.640 | Number two, take the idea or concept that you learned from me and go and teach somebody

01:22:46.400 | else.

01:22:47.600 | If you want to really learn something, go and teach it to others.

01:22:51.280 | That ripple effect of you to someone else will systematically transform your life and

01:22:56.720 | the lives of all those around you.

01:22:58.960 | Number three, if you thought there was financial value in what you just heard, I'd ask you

01:23:03.640 | to come by and pay for it at RadicalPersonalFinance.com/patron.

01:23:07.680 | Now however much you want to pay, that's up to you.

01:23:10.120 | But if the show is worth a dollar a month, come by RadicalPersonalFinance.com/patron

01:23:14.120 | and sign up to support the show at a dollar a month.

01:23:16.280 | If the show is worth $20 a month to you, I'd be happy to have your $20.

01:23:20.400 | Hey, if it's $1,000 a month, write me a check.

01:23:24.000 | Don't send it to me on Patreon, but I'd be happy to have that as well.

01:23:28.200 | RadicalPersonalFinance.com/patron is where you can do that.

01:23:31.120 | Thank you.

01:23:32.120 | Hey, parents.

01:23:33.120 | Join the LA Kings on Saturday, November 25th for an unforgettable kids day presented by

01:23:37.840 | Pear Deck, family fun, giveaways, and exciting Kings hockey awaits.

01:23:41.880 | Get your tickets now at LAKings.com/promotions and create lasting memories with your little

RPF0529-Friday_QA