RPF0583-Mega_Friday

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00:00:31.340 | Today we do live Q&A.

00:00:49.840 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:52.840 | skills, insight, and encouragement you need to live a rich and meaningful life now, while

00:00:57.120 | building a plan for financial freedom in 10 years or less.

00:01:00.640 | Today on the show we have a live Q&A. Today was a free Q&A. I don't know, maybe some of

00:01:05.200 | these people are patrons, but I put out a note on the show and I said, "Free and open

00:01:09.480 | Q&A today. I have internet, so this'll be fun." I think we got quite the diversity of

00:01:14.040 | questions lined up.

00:01:21.900 | Every Friday that I have internet access in my current travel schedule, I try to set up

00:01:25.880 | and do a live Q&A show. Unfortunately, that has been more spotty than I wanted it to be.

00:01:33.640 | Today I am doing a live Q&A show with callers, anybody caller who's just a listener of the

00:01:39.080 | show. I'm excited about that and to make use of my resources when I have them.

00:01:44.120 | We go first to Daniel in Houston, Texas. Daniel, welcome to the show. How can I serve you today?

00:01:48.600 | I recently read through or listened through Richest Man in Babylon and had some questions

00:01:57.100 | about how you balance the principle of saving at least 10%, which you could argue you should

00:02:03.520 | save more than that to compensate for taxes, etc. these days, but putting that towards

00:02:11.000 | insurance as well.

00:02:14.260 | Is your question that you would like to save more than 10% or is your question how should

00:02:19.620 | you allocate the money that you save among different types of ways that you could save

00:02:25.060 | money?

00:02:26.060 | I guess maybe what different types. I currently put about 5% in my 401(k). That's what my

00:02:32.580 | company matches. Then I'm also putting about another 5% in savings. I thought about putting

00:02:38.480 | more than that, but I also want to get disability insurance and some extra life insurance on

00:02:46.940 | top of that outside of what my company provides. Obviously, if I'm doing that, I'm not putting

00:02:52.260 | as much money in the savings. I guess I was curious what your thoughts were and how you

00:02:56.420 | kind of balance those two.

00:02:58.340 | That makes sense.

00:02:59.340 | It's interesting and it's hard because if you're only saving 10% of your income, in

00:03:07.980 | a lot of ways you kind of wonder, is that enough? What do I actually do about this?

00:03:13.140 | So in The Richest Man in Babylon, which is my favorite personal finance book, someday

00:03:18.620 | soon I'm going to release, I'll save that for another day, but it's my favorite personal

00:03:24.100 | finance book. And the recommendation is to save 10% and to always save 10%. For most

00:03:31.180 | people who aren't saving anything, then that advice is going to totally change their world.

00:03:39.380 | But if you're already saving or you're accustomed to saving, I can't see any good reason not

00:03:44.260 | to save more than 10%. And I think there are good reasons to seriously consider saving

00:03:49.780 | more than 10%. So I'm not stuck to the number. If you're only saving 10%, I think in many

00:03:54.780 | ways it really doesn't matter where you save it. There are many good options and there's

00:03:59.780 | nothing wrong with any of the modern options. For example, if you just save money in a savings

00:04:05.300 | account and you just set money aside, I think that's a really powerful thing. And a lot

00:04:11.020 | of people would say, well, that's ridiculous. You're not earning interest. I think that

00:04:15.060 | as you start to accumulate money, you start to change how you look at the world and you

00:04:20.500 | start to look for things to invest that money in. I've known a lot of very wealthy people

00:04:26.300 | who never purchased stocks. They never used IRAs. They just simply saved money in a savings

00:04:32.980 | account and they bought things from time to time that they thought were good investments.

00:04:38.140 | And I've seen those things work out all over the place. So there's something to be said

00:04:42.420 | for just putting money in a savings account, or there's something to be said for just stacking

00:04:46.340 | up hundred dollar bills in a safe. Those things are valuable, but it all will depend on the

00:04:51.260 | context of the actual person and what opportunities for investing they have in front of them.

00:04:57.860 | I've also seen a lot of benefit. I think there are benefits in kind of percentages that go

00:05:03.760 | beyond that. So I think there's a lot of benefit in thinking about money in terms of your safe

00:05:09.500 | money, your aggressive money, and your home run money. That's a concept I used to use

00:05:14.660 | with clients when I was talking with them about their investments. I look at things

00:05:19.780 | like your own business as an opportunity for your home run dollars. That's where you're

00:05:25.620 | really going to make it wealthy. Most people who become very wealthy become wealthy because

00:05:29.580 | of their own business. And so it has the highest potential in terms of return on investment.

00:05:36.860 | Your aggressive money, I think of that like investing in other people's businesses by

00:05:40.260 | buying stocks. Safer dollars, I think of that of things like very safe assets, bonds, cash,

00:05:47.020 | value life insurance. Those are those stable, very boring things that will grow predictably.

00:05:51.860 | But how to identify the difference between those and what percentages to do, I have no

00:05:56.180 | idea. There are a bunch of different models. Here's what I would say to you specifically.

00:06:00.900 | Disability insurance is not savings. That's protection. And you should just buy that because

00:06:05.660 | you need it. And that shouldn't count into your savings. If you are then looking and

00:06:10.940 | saying, "Now I'm going to save 10% of my income," just strive for 10% of your gross income.

00:06:16.660 | So it's an actual number. My answer of what to do with that is twofold. First, if you

00:06:23.500 | don't already have at least about $10,000 saved in actual accessible money, meaning

00:06:31.060 | stacks of currency, meaning savings accounts that you can get your hands on right away,

00:06:36.860 | then start with that because that opens up life options for you. Then if you have extra

00:06:42.660 | bonus money, like employer matches in a 401k or something like that, take advantage of

00:06:49.700 | that. And then if you're trying to figure out what to do with the balance of it, I see

00:06:52.580 | nothing wrong with a Roth IRA to fund a Roth IRA. And then start to work out your best

00:06:59.100 | guess on what your long-term career plans would be. Start to work on what your best

00:07:03.300 | guess on the assets that would most suit you. And don't be cowed by the financial planning

00:07:11.060 | industry that says, "Well, that means you have to buy stocks." Look at your own proclivities

00:07:16.280 | and interests and be willing to invest in them.

00:07:19.180 | I'll give you an example. One of the things that I've always tried to do is to invest

00:07:23.860 | about 5% of my income back into myself. Now how this works into the richest man in Babylon,

00:07:28.740 | I don't know, but it doesn't. But I think it's a really good move to always invest 5%

00:07:34.820 | of your income back into your own skills, back into your own knowledge. And so when

00:07:38.720 | I was younger and broker, that meant buying lots of books. Now it means buying courses,

00:07:43.700 | buying things that have more opportunity, going to seminars, things like that. I think

00:07:48.340 | that's probably more productive than putting money in your 401(k). But I guess I would

00:07:52.740 | just say pick a system that you like and follow it because any system will work if you do.

00:07:59.080 | That's my first answer. Does that along the tenor of your question, Daniel?

00:08:02.580 | Yeah, that does. And I guess I probably may have been helpful. I do already have, we have

00:08:06.960 | about six months worth of savings. So that is already in place. So you would basically

00:08:12.520 | say that, I mean, it would be, yes, of course I want to be saving, but obviously I know,

00:08:18.600 | I mean, disability insurance, you're very big on. So that's not a one or the other,

00:08:24.560 | it's kind of a both and.

00:08:26.120 | Right. So yeah, disability insurance is not a savings. That's just a cost. It's just like

00:08:31.360 | taxes. You're not saving because you're paying taxes, it's just a cost, just like groceries.

00:08:35.860 | The Richest Man in Babylon is a big picture approach to try to get people to do some basic

00:08:41.800 | things. What I would say is make your own wealth plan. What is your wealth plan? And

00:08:48.580 | if you don't know it yet, that's fine. But what is it? Is it the fact that you're going

00:08:53.800 | to trade commodities on the internet or you've become super interested in crypto or you're

00:08:59.920 | going to buy single family houses and fix them up or you're going to buy a farm and

00:09:04.440 | populate that farm with cows or you're going to become a CEO of a Fortune 500 company.

00:09:11.320 | You know, try to work out your own path based upon what intrigues you, what you're interested

00:09:15.280 | in and then invest the money into that, whatever that is. And the paths will vary. I would

00:09:22.400 | much rather myself, I would much rather buy a farm than be a Fortune 500 CEO. So I'm more

00:09:30.280 | interested in figuring out how do I buy a farm truck? How do I buy cows? How do I buy

00:09:35.520 | infrastructure? And how do I set up the kind of lifestyle that I would want to live? But

00:09:39.640 | if I were a Fortune 500 CEO and that were my goal, I would buy myself an MBA. I would

00:09:44.400 | focus on enhancing my skills and my network. And then I would just put money in stocks

00:09:48.900 | because I'm not going to have the time to deal with, I would just buy mutual funds.

00:09:52.360 | I'm not going to have the time to deal with how to invest my money and what to do personally

00:09:57.680 | on it while I'm building a company. And I would just focus on my particular career.

00:10:01.680 | So it all is going to depend on your own personal wealth plan. Next we go to Fia in Vancouver,

00:10:07.040 | British Columbia. Welcome to the show. How can I serve you today?

00:10:09.240 | Hi Josh, thanks so much for taking my call. I'll just give you a bit of backstory to my

00:10:15.680 | question. So my husband Mike and I retired just over a year ago after pursuing financial

00:10:22.440 | freedom for quite some time. And in the early stages of our retirement, we decided to start

00:10:29.480 | a bit of a passion project being a blog, focusing on sharing our journey to financial freedom,

00:10:36.200 | how to find contentment in financial freedom and also strategies for helping raise your

00:10:41.080 | kids financial literacy.

00:10:43.000 | Are you willing to share the name of your blog?

00:10:44.000 | I'm working on that only if it's okay with you.

00:10:47.600 | Go ahead. Yeah, please.

00:10:50.320 | The blog is freedom101.ca.

00:10:51.320 | Great. Okay, keep going. So freedom101.ca.

00:10:54.320 | Yeah. So I've spent about a year focusing on just trying to develop good content, what

00:11:02.720 | I hope is good content for readers to use as a resource. And it occurred to me in the

00:11:08.640 | recent past that Mike and I really want to shift our goals to more of a giving back phase

00:11:15.280 | of life. So we would like to try and fund some financial literacy programs for youth,

00:11:23.080 | both locally and a bit more globally. And my thought is that the blog might serve as

00:11:28.360 | a good platform to both as a resource for people, but also as a way to hopefully monetize

00:11:34.840 | and fund the programs we're looking to contribute to. And my focus right now has all been really

00:11:40.840 | content based. And I'm wondering if you have tips or recommendations on how to transition

00:11:44.960 | to a monetizing focus as opposed to content.

00:11:49.640 | I mean, just make sure I understand the question. A monetizing focus for the blog or a monetizing

00:11:56.040 | focus for how to develop a curriculum or program that would help children?

00:12:00.480 | Both, actually. I'm wondering if I can utilize the blog to create a stream of revenue that

00:12:09.000 | could then be turned over either in the form of using the blog as a non-profit, but could

00:12:14.000 | then be turned over to building programs and resources to be utilized in schools for the

00:12:20.720 | financial literacy components.

00:12:23.520 | Okay. Interesting question. So I'll give you my ideas. These are just some of my personal

00:12:31.680 | ideas. All of these ideas will be tinged with my own thoughts and approach. Feel free to

00:12:37.920 | disagree with them, but this is the best I've got. So I'm going to sidestep any question

00:12:43.160 | about monetizing a blog simply because that is very well covered in the online space and

00:12:50.040 | I don't have anything unique to add to that.

00:12:53.800 | But I have thought a lot about how to teach kids about money. And I so I've thought a

00:12:59.320 | lot about how to teach kids about money. And I'll give you some of my ideas that maybe

00:13:04.380 | someday I'll be able to pursue or maybe not.

00:13:08.320 | So first, I think that we need to teach children about money and we need to teach them about

00:13:15.560 | financial independence. But that's not that I don't see any way that that happens in the

00:13:21.160 | context of the FIRE community, for example. The concepts of FIRE might be very helpful

00:13:29.300 | to somebody who is older, somebody who's a high school senior, that type of thing. And

00:13:33.680 | I think that it would be very helpful to teach, for example, high school seniors and say,

00:13:39.360 | "Listen, if you'll save 50% of your income, you can be financially independent in under

00:13:42.680 | two decades," you know, and share those lessons. I wish that I had known that at 18 years old.

00:13:47.440 | I didn't. So and I know a lot of people who wish that. So if you're targeting high schoolers,

00:13:53.480 | then I think that's where the world of FIRE type of stuff could come in.

00:13:58.600 | I would say that if your goal is to actually teach, you should completely avoid any involvement

00:14:05.480 | with the school system and you should avoid any involvement with the curriculum of kind

00:14:11.120 | of mainstream schools, mainstream school systems. First, if you are going to be active and involved

00:14:16.960 | in the schools, that means that you will have to be involved with the official system of

00:14:22.720 | curriculum development. And that system stinks. They will take anything fun and interesting

00:14:28.360 | that you have and they'll destroy it because it has to make mass appeal. Now, along the

00:14:34.080 | way, you could find some teachers who are individually, catch the vision and who would

00:14:38.960 | individually go with it. But if you try to move and do anything with the Leviathan of

00:14:44.800 | the official school program, whether it's in Canada or the United States, there's no

00:14:48.720 | possibility to impact those things. And I don't see any reason why you should. I, for

00:14:54.160 | example, I would not pursue trying to teach, trying to create a curriculum that teachers

00:14:58.400 | could teach because teachers are with only a few exceptions. They're not well equipped

00:15:03.160 | to teach about money. Most teachers, for example, they're not entrepreneurs. They're generally

00:15:08.200 | people who have pursued the path of teaching because they enjoy teaching, because they

00:15:14.520 | love children and they want to impact children's lives. And they want the benefits of a stable

00:15:20.040 | career within the government system. And so that is not an entrepreneurial attitude. So

00:15:25.800 | you can't take, for example, entrepreneurship and expect a teacher to a teacher to do it.

00:15:31.800 | Now, the best thing to study, make sure you study what junior achievement has done in

00:15:35.560 | the United States. And I assume probably other countries as well, although I've only was

00:15:39.480 | only involved with them in the United States. What they did was they recruited entrepreneurs,

00:15:44.320 | business people to come into the classroom and they worked with teachers. And I used to

00:15:48.280 | teach junior achievement and some teachers, they loved it. Some teachers hated it. So

00:15:52.240 | you'll always find different solutions. But I think that if you start by saying, I'm going

00:15:56.320 | to go and change or try to work within the Leviathan of government education, I can't

00:16:02.760 | imagine that's just going to be beating your head against the wall. I see no reason to

00:16:05.640 | do that. What I think you could do is do an end run completely around that system. So

00:16:10.520 | first, if you're trying to reach high schoolers, then package your content in a way that is

00:16:15.640 | easily digested by high schoolers through the Internet. There's no there's not a high

00:16:21.240 | schooler in the world that you can't reach through video on YouTube. There's not a high

00:16:25.600 | schooler in the world that you can't reach through an online platform there. And there's

00:16:30.480 | no reason to worry about the people who aren't looking for the information. Your job is to

00:16:35.760 | be in a place where you're serving the people who are looking for the information. So just

00:16:40.200 | adjust the concepts and meet the high schoolers and you can do that on online. Now, for younger

00:16:47.920 | children, I think the biggest thing to do for younger children is we've got to figure

00:16:52.120 | out how to help them to be involved in entrepreneurial activities where they can actually make money.

00:17:00.440 | One of the worst things and I'm not familiar with the laws in British Columbia, but one

00:17:05.160 | of the worst things that has happened in the United States of America is we have excluded

00:17:09.960 | children from the workforce. And so children basically don't have the opportunity to work.

00:17:15.520 | And from time to time, we give them a little token, you know, idea of go start a lemonade

00:17:20.240 | stand. But it's a even even that it's gotten better now. But even that all of a sudden,

00:17:25.880 | the government, you know, comes in and says, well, no, you can't have a lemonade stand

00:17:30.040 | because you don't have the official licenses. So there's almost no opportunity for children,

00:17:35.320 | most children to actually be able to to earn income and to practice and to work. And so

00:17:41.720 | they're there. But in the in the system, they're basically taught that the only way to be successful

00:17:48.640 | in life is to go to college and get a good job. And there are a few people who buck that

00:17:53.440 | system and who figure it out themselves. But they're usually very strong personalities.

00:17:57.960 | They're usually very independent thinkers. And and they're the ones I don't I think you

00:18:02.680 | don't really have to worry about all that much about. But but they're they're very few

00:18:07.680 | in number. So what I've considered is I've thought, how do we inspire ideas? How do we

00:18:13.520 | inspire people to how do we inspire people to develop projects where they can do at a

00:18:21.760 | very young age? My favorite quote on this is I've always loved Jim Rohn's quote. He

00:18:27.160 | used to talk about this and he always would say that children need to have two bicycles,

00:18:31.640 | one to ride and one to rent. And that's kind of what I've tried to teach my own children.

00:18:35.520 | You need to have one bicycle to ride and one to rent. And I am constantly keeping my eyes

00:18:40.040 | open to try to figure out what are some things that that that children can do where they

00:18:46.840 | can earn money while sidestepping all of the legal regulations that keep them out of the

00:18:52.080 | workforce. And I've got a bunch of ideas. But what I think would be most effective,

00:18:57.920 | effective is if you develop an independent curriculum for parents who want to teach their

00:19:02.080 | children and then profile stories and ideas of people who are doing things and show hands

00:19:08.880 | on the types of things that people are doing that can work out really well, then and put

00:19:14.600 | that together into an informational package and then market it in people who are not involved

00:19:20.200 | in the government schools. Now, my personal interest is I enjoy working and being around

00:19:25.680 | the community of people who are engaged in home education. And usually by the time if

00:19:30.440 | you work in that world of people who are involved in home education, much of your work is done

00:19:35.940 | for you where you're already finding parents who are very dedicated with their children.

00:19:41.140 | You're finding children who are usually much better students or much more focused. And

00:19:46.880 | you're finding you're finding people who have already broken out of kind of the mainstream

00:19:52.960 | mode. So much of your work is done there. But what I haven't seen is I have not seen

00:19:58.300 | in that community, I have not seen any effective personal finance entrepreneurial curriculum.

00:20:04.680 | I would dearly love to develop it myself. Maybe I'll get to it soon. I don't know. But

00:20:09.880 | what I would do if I were you is I would develop a curriculum and I would develop a website

00:20:13.400 | around the subject of teaching children entrepreneurship. And I would make a practice of going out and

00:20:20.160 | profiling and interviewing case studies, people who are doing it and trying to show people

00:20:26.840 | the things that can be done and the way that you can actually multiply money through entrepreneurship.

00:20:32.520 | And then I would use that. And on the second phase of it would be personal finance. There

00:20:36.720 | is a huge hunger in the market for that type of content because parents struggle with ideas

00:20:43.120 | and so I would profile things like independent work that can be done online, independent

00:20:48.440 | businesses that children can do. I would focus on low cost, high value startups that people

00:20:53.440 | can do. You know, I bought this last just last week we're at a farmer's market and I

00:20:59.440 | went and I bought and I was talking to some of the there was a bunch of homeschoolers

00:21:02.880 | that had their children had tables out. And one of the young men, he was I think 14 years

00:21:08.640 | old, he had a table where he was selling microgreens and this was his parents work to try to help

00:21:13.640 | him develop a business. And they had worked with him to try to help him establish a business

00:21:22.240 | growing microgreens and selling them. And I was so impressed with him and I was impressed

00:21:27.000 | with what he was learning. He was doing good salesmanship, the whole thing. But businesses

00:21:31.200 | like that are perfectly suited to to children and young people. So that's what I would do

00:21:37.760 | to bring all those things together in a concise statement. If I were trying to impact this

00:21:42.920 | part of the market, I would establish a website that was specifically focused on teaching

00:21:47.440 | children entrepreneurship. I would go and I would interview all of the authors who are

00:21:52.000 | talking about entrepreneurship, the big famous ones, people like Gary Vee, who have had a

00:21:56.600 | very loud voice, some of the academics, and I would specifically interview them on the

00:22:01.280 | topic of how do we teach entrepreneurship to children and young adults. And then I would

00:22:06.680 | develop a curriculum and I would develop a portfolio of ideas that a parent could use,

00:22:11.720 | whether their children are in the government schools and they're providing extra help,

00:22:14.920 | or especially for the home education community, that a parent could use with their children

00:22:19.480 | to help their children develop a business. I would partner with some of the organizations,

00:22:23.760 | the small business people, the junior achievement people like the entrepreneurship organizations

00:22:27.920 | that are already doing it. And I would use those out those those organizations outside

00:22:32.240 | of the schools to try to help expand the marketing message. And then on that basis, after you

00:22:39.520 | have kids generating income, then you can add on the personal finance component and

00:22:44.040 | the FIRE stuff. So that's kind of my outline. That's what I would do if I were trying to

00:22:49.240 | pursue that. I don't know if that's helpful or anything along the lines of what you're

00:22:52.040 | thinking, but I'll pause there. Any of that in line with what you and your husband have

00:22:56.760 | considered?

00:22:57.760 | Yeah, it's incredibly helpful to hear you put it into a much more concise form there

00:23:02.160 | because we were really struggling with how to gain some movement within the school system.

00:23:09.760 | There has been some movement in Canada in terms of them encompassing some financial

00:23:14.160 | literacy within our actual curriculum, but the teachers are now screaming for resources

00:23:19.640 | to back up that content of the curriculum. And so it hasn't really had the impact that

00:23:24.880 | I think was intended behind it. So something outside the school would probably be much

00:23:30.640 | easier to achieve, as you mentioned, rather than dealing with the bureaucracy that is

00:23:34.600 | putting that system right now.

00:23:38.400 | It's very helpful.

00:23:41.120 | When you take something and you try to make it appeal, when you take something and you

00:23:45.440 | try to make it politically balanced and you try to be moderate in your opinions and you

00:23:53.760 | try to give general information, then you wind up with what's already done, which has

00:23:59.920 | no attractive value. There's no attractive value. But if you are willing to take an extreme

00:24:06.400 | position, if you're willing to take an extreme perspective, and you can't fake this, you

00:24:11.360 | probably don't share the ideas that I do. You probably don't have quite the strongly

00:24:16.760 | held opinions that I do that are very abrasive to some people. But if you take a more extreme

00:24:22.240 | position, then you'll attract people to that extreme position.

00:24:25.520 | I guess the best example I would give here would be somebody like Gary V. If you study

00:24:29.560 | the online entrepreneurship world, I'm not aware of anybody who's more influential right

00:24:34.480 | now than Gary Vaynerchuk. And yet he is an extreme abrasive figure. But because of that,

00:24:41.200 | he's able to break through the noise and show people, hey, there are different ways. You

00:24:46.120 | can do this differently. I personally don't have any idea of how you would work within

00:24:51.720 | the school system, but I see no reason to work within the school system.

00:24:56.000 | Now, the only kind of people group that I don't know that I would struggle is, how do

00:25:03.040 | you reach the people who are the poorest? How do you reach the poorest children? In

00:25:09.240 | my mind there, I don't think you have any chance of doing that in the official system.

00:25:13.520 | I think you have a twofold approach to do that. One, if you can provide a teacher with

00:25:19.640 | tools, that teacher may be able to take the role of the parent in some way and apply some

00:25:28.840 | of those concepts. But here, I don't see any reason why you shouldn't just focus on parents

00:25:32.860 | and let the teachers find it. So you'll have a teacher who is working in an inner city

00:25:37.120 | school and every child in their class is from just awful background and they're completely

00:25:44.480 | poor. That teacher can use the resources that you develop for parents, and you can make

00:25:49.500 | it, make your profit from the parents and build a large business selling the curriculum

00:25:55.200 | to parents. And if you want to offer scholarships to teachers here and there, that's fine. And

00:25:59.720 | they'll do that with their students. But I think the second solution is to work with

00:26:03.200 | community organizations. And what I have seen is I think the kind of the urban farming,

00:26:09.440 | urban gardening movement, in my mind, there's no more impactful way, no more kind of, I'm

00:26:17.160 | not aware of a more effective way to reach the children that are in that world. Because

00:26:24.360 | you can bring in, and in the concept of farming and gardening, you can use the unskilled labor

00:26:32.040 | of a child and you can show them how they can turn that unskilled labor into profitability

00:26:37.000 | because of the communal environment. So I look at some of these organizations. My favorite

00:26:41.360 | is what the urban farming guys are doing in Kansas City. I look at what some of the, many

00:26:46.720 | of the people in the, again, the urban farming, urban gardening world are doing. And I think

00:26:51.000 | they're having the most effective inroads into the poorest communities and developing

00:26:58.040 | the platforms to, you know, developing the platforms to do it. And I think that if you

00:27:04.240 | started with something like that, and I don't know if that's any of your interest, it's

00:27:06.840 | an interest of mine. But if you start with that and then you develop that and add on

00:27:10.800 | the makerspace community, then I think you can really start to provide opportunities

00:27:17.040 | for children and young people to start to be productive and to see how the fruit of

00:27:22.200 | their labors can really make a difference. So check out what the urban farming guys are

00:27:27.120 | doing in Kansas City if you haven't seen that, and hopefully that would be inspirational

00:27:30.960 | to you as well.

00:27:31.960 | I definitely will do that.

00:27:34.960 | And keep in touch. So your blog is freedom101.ca and we will look forward to hopefully seeing

00:27:40.160 | more from you on the topic. I would love to see you and your husband tackle it. I'd love

00:27:44.600 | to see dozens and dozens of people tackle it. I'd like to tackle it. If I could figure

00:27:48.080 | out how to make it work, I would dearly love to tackle it myself. But in the meantime,

00:27:52.000 | we'll just have to defend on the audience. Mike in New Jersey, welcome to the show. How

00:27:55.720 | can I serve you today?

00:27:56.720 | Hey, thanks, Josh. Really appreciate it. So my question is, I guess, in a nutshell, looking

00:28:04.880 | for some direction on what to do with some extra cash. So to give you the backstory,

00:28:09.600 | I'm 40, married, two kids. My wife is a stay at home. I have a 10-year-old son and a one-year-old

00:28:16.240 | daughter. Very awesome stuff.

00:28:19.440 | Financially, so where we are, I fully fund my 401(k) year over year to the full amount.

00:28:28.680 | And then similarly, over the last several years, have opened up and fully funded Roth

00:28:34.200 | IRA accounts, both for myself and for my wife.

00:28:37.880 | I also have contributions set up for a 529 plan for my older child. I need to get on

00:28:45.240 | the stick and set one up, I feel like, for my one-year-old at this point. But after that,

00:28:50.560 | of course, we pay our mortgage. That's our only debt that we have on our house.

00:28:56.040 | And then basically, after all the typical monthly expenses, all the extra cash and available

00:29:01.760 | dollars has really just been going into an online savings account. And this is since

00:29:06.840 | before my son was even born. And so, it's earning a measly half of a percent, I think,

00:29:14.120 | at this point.

00:29:15.760 | So where I am now, I've got roughly $150,000 that I'm ready to play with or to do something

00:29:23.200 | with to get it out of there and to actually try and do something smarter with it. And

00:29:29.160 | I'm really having a hard time kind of getting beyond thinking of anything other than just

00:29:35.640 | going to Vanguard, opening a low-cost index fund account, and just putting it in there

00:29:41.640 | for the total stock market index or something along those lines.

00:29:45.400 | And at this point, of course, we're at an all-time high, essentially, in the stock market.

00:29:49.960 | And I know it's not about timing the market, but more about time in the market. But I still

00:29:57.200 | feel a little hesitant to put all that money in one shot right now.

00:30:02.440 | So I was just eager to hear your perspective and thoughts as to whether or not, if you

00:30:07.200 | were in my shoes, if you would think to do something similar and just kind of play the

00:30:13.080 | index fund game at this point, or if you'd have any other ideas.

00:30:19.080 | Why do you think you shouldn't just go ahead and plan to invest it into index funds?

00:30:26.600 | Yeah, I don't know. I guess because for me, it's basically all of our money that's liquid

00:30:36.160 | at this point that I would be putting in the market. Of course, we know the risks associated

00:30:41.080 | with that. And I know you don't lose the money until you actually sell. So if I put it all

00:30:47.400 | in there tomorrow and the market took a bath and lost half of its value, I didn't lose

00:30:53.160 | anything until I sell. And I really wouldn't put anything in there that I'm not comfortable

00:30:57.520 | with that risk. Of course, keep probably a 10-month safety account always available,

00:31:05.240 | probably in that same online savings account. But I don't know. I've been struggling this

00:31:10.400 | for maybe about a year and just watching my money really not do anything and not even

00:31:16.960 | keep up with inflation.

00:31:18.960 | So let me just, you went right to the question of, should I invest the money all at once,

00:31:25.880 | which I'll give you some thoughts on. But first, I want to just ask about the investment

00:31:30.680 | idea, regardless of how or when you put it in there. Why do you feel uncertainty about

00:31:39.480 | just simply saying, "You know what? I'm just going to go ahead and start putting this money

00:31:42.580 | into Vanguard Total Stock Market Index Fund."

00:31:44.840 | Yeah, you know what? I guess I feel maybe I stated it not super clearly. I like the

00:31:52.840 | idea of index funds. I think it's a great idea and that's what I do for the Roth IRAs

00:31:58.680 | that we have. And I just think it's a good move. Personally, I like that. I am comfortable

00:32:03.560 | with that. I guess the question's more along the lines of, is that kind of tunnel vision?

00:32:09.160 | Am I thinking too narrowly? Should I look beyond that to other investment vehicles?

00:32:14.920 | And then as you touched on it, I did mention, you know, putting kind of going all in, big

00:32:20.260 | bang approach, just put everything in at this point versus maybe trying to take that $150K

00:32:26.400 | and do a little bit of dollar cost averaging and maybe go in spurts with it. So those are

00:32:32.840 | certain things that I've been thinking about as well.

00:32:35.320 | Okay. So two questions. The first question is, should I put the money into an index fund

00:32:41.480 | or should I do something else with it? The second question is, if I've decided to put

00:32:45.280 | the money into the index fund, how and when should I put it in? So let me just answer

00:32:49.120 | the first one very briefly. If you don't have an alternative, if you're happy with that,

00:32:54.320 | then you should do it. Now, I may not do that. You know, Joe next door might not do that.

00:33:00.920 | But if you are happy with that, you should do that. And there's nothing wrong with it.

00:33:05.280 | You're not being stupid for doing it. It all comes down to your particular options in life,

00:33:11.160 | your particular satisfaction with your career, your lifestyle, your particular interests,

00:33:15.760 | the things that you like to do. Those are very subjective. And so it sounds like you've

00:33:19.900 | already made that decision. So go for it. There's nothing wrong with just having a bunch

00:33:25.520 | of money in a stock market index fund because that is, I mean, a Vanguard total stock market

00:33:30.640 | index fund is such a massively diversified, safe basket of assets. You've got thousands

00:33:38.440 | of companies from all over the world that own billions of dollars of real estate, have

00:33:44.000 | all kinds of diverse interests, incredibly safe investment. If we measure safety by actual

00:33:51.200 | value. Now, there'll be volatility. But the way you answer that, you already answered

00:33:54.280 | that in terms of your phase of life. You're saving a lot of money. You have savings. So

00:33:57.520 | the volatility, who cares? So let me answer the question of how and when should I put

00:34:01.480 | it in? Should I put it in all at once and just stroke a check to Vanguard for $100,000

00:34:06.240 | tonight or should I put it in over time? The academic answer is clear. You should put it

00:34:11.140 | in all at once because it is impossible to know what's going to happen. And the statistical

00:34:16.300 | likelihood is a decade from now, however high the stock market is today, a decade from now,

00:34:22.600 | statistically, it'll be much higher. So whether or not there's a dump two or three years from

00:34:27.120 | now, statistically, a decade from now, it'll be higher. That's the academic answer. The

00:34:31.120 | real answer is nobody does that because nobody can stomach the regret that they would face

00:34:37.480 | of doing that in two or three years. And so given that, I would say start slow. What I

00:34:42.600 | would do in your situation is I would say I'm going to invest 2000 bucks a month and

00:34:48.200 | make it set up a $2000 a month transfer from my savings account into this index fund. And

00:34:53.760 | I would do that for the next six months, next three months, next six months, and just watch

00:34:57.600 | it. And then if you continue to be happy with it, watch the market. If you continue to be

00:35:02.040 | happy with it, then maybe bump it up to 3000 a month. But at 2000 a month in four years,

00:35:07.680 | you can put in $100,000 and you bump it up to three years and now you're at your time

00:35:12.720 | to put in $100,000 in three years. I think that's entirely reasonable to manage the significant

00:35:18.620 | risk of the stock market at a very high and your personal regret if the stock market goes

00:35:23.480 | down. And then you watch it. And then if a year from now we're deep in the throes of

00:35:27.600 | a recession and the Dow has dumped off 20% and the S&P 500 has dumped off 20%, then you

00:35:33.400 | might go ahead and start putting in more. But the academic answer is you should put

00:35:37.920 | it all in today. But the realistic answer is nobody's going to do that. It's too much

00:35:42.260 | of a risk. So I would say set up an auto draft for $2000 a month right now and then six months

00:35:47.420 | from now reassess and either increase it or just keep it steady and then watch for decline.

00:35:53.900 | And when you see decline, then go ahead and stroke a big check.

00:35:58.840 | Very cool. What are your thoughts, if I may, around the robo investment options to take

00:36:04.960 | a little bit of a different angle on it?

00:36:08.200 | Don't see any compelling benefits, but there's nothing wrong with it.

00:36:12.520 | Okay. But the automatic rebalancing and things like this?

00:36:17.400 | But what I understood was you were going to kind of pursue the Jim Collins approach of

00:36:23.180 | just owning a total stock market index fund, right?

00:36:26.380 | Yeah, that's where I'm leaning.

00:36:28.880 | So in that case, rebalancing really is immaterial. You're just going to buy the stock market

00:36:34.180 | fund and in that context, you're buying a massively diversified, very balanced portfolio

00:36:40.500 | that's reflective of a huge range of industries. So I don't see any problem with that. If that

00:36:45.460 | is what has attracted you, I see no problem with it.

00:36:49.160 | The problem, I know it sounds like a wishy-washy answer. I don't have a strong opinion on it.

00:36:53.700 | It's like arguing, should you buy a Honda Accord or a Toyota Corolla? Ask a car guy

00:36:59.860 | and maybe there's some feature that an Accord has that a Corolla doesn't have, or maybe

00:37:04.960 | somebody just likes Toyota, but I don't have any strong opinion on it because I'm unconvinced

00:37:10.560 | that it's this incredible buy that you should absolutely invest with a robo-advisor, but

00:37:17.000 | there's nothing wrong with it. It works fine. So that's why I'm so ambivalent about it.

00:37:21.600 | Well, it makes sense. Josh, I appreciate it.

00:37:24.360 | Hey, my pleasure. Thank you for calling in. We go now to Samir in Chicago. Samir, welcome

00:37:29.200 | to the show. How can I serve you today?

00:37:31.120 | Hi, Josh. My question is, what would you recommend I or someone in my situation does to protect

00:37:38.520 | my future wife, relationships, things of that sort from the assets that I have currently

00:37:44.920 | and the assets that I'll accumulate before that marriage occurs? So assets, income, investments

00:37:51.480 | and such.

00:37:53.120 | Are you concerned about the financial risk of divorce? Meaning if you were to marry and

00:37:59.600 | then you were to divorce and your wife were to take half of your assets, is that your

00:38:03.600 | specific concern?

00:38:06.000 | So the concern is kind of the exact opposite where I'm concerned that my current financial

00:38:12.320 | situation would affect my future relationship in a way that I don't want it to affect.

00:38:18.400 | Are you poor or are you rich?

00:38:22.400 | I'm neither, but I'm working towards, I think I'm pretty well off for my age and well off

00:38:28.720 | financially.

00:38:29.720 | And is there a woman in the picture right now or is this more of a future potential?

00:38:36.920 | There's no one in the picture right now. This is more of if I get married in five years,

00:38:42.400 | what's going to happen at that time.

00:38:46.120 | So here's some suggestions for you and hopefully this will hit on what you're asking. So first,

00:38:50.560 | I think in general finances and marriage are not particularly related. And what I mean

00:38:59.840 | by that, I would encourage you to be financially prudent so that you are prepared for marriage,

00:39:08.080 | but you're already doing that. And I'm convinced, and many people will talk about things like,

00:39:13.880 | well, I've got to wait until I can afford to get married. It's all nonsense. Either

00:39:18.480 | you're committed to marriage and you're pursuing the path of marriage or you're not. And you

00:39:25.280 | can be rich and not pursue marriage, or you can be rich and pursue marriage, or you can

00:39:29.040 | be poor and pursue. I don't see any connection between finances and marriage. Marriage very

00:39:35.320 | much is going to come down to a philosophy and a worldview and a plan for your life in

00:39:41.620 | terms of what you prioritize and what values you hold to be important.

00:39:46.680 | Now, it sounds like from what you're saying that you consider yourself to be the marriageable

00:39:51.440 | type. Marriage is important to you. You don't consider this to be a death trap. You consider

00:39:57.320 | it to be something worth planning for. I agree with you and I think that's worth considering.

00:40:02.280 | So the bulk of what I would encourage you to do is to spend your time thinking about

00:40:07.960 | who would be the appropriate person to marry. What is the appropriate ideology that you're

00:40:13.240 | looking for in a wife? What is the type of woman that you are looking for? Because if

00:40:17.720 | you are in today's world, in today's marriage environment, if you are just going into marriage

00:40:25.000 | thinking that, "I believe in love and I love you," you're in for a rude surprise. Love

00:40:29.800 | doesn't matter. It's not something that'll make a difference. Love is something that

00:40:35.040 | has to be built on a strong foundation of commitment and of ideological alignment and

00:40:45.640 | common goals and common vision and mutual respect of you and your potential mate.

00:40:52.480 | So what I would encourage you to do is spend a lot of time thinking about marriage and

00:40:56.000 | get clear on the type of woman that you are looking to marry and then get busy going and

00:41:01.560 | finding her because your odds of finding a great wife are now. Now, unfortunately, I

00:41:08.320 | don't know how old you are, but it's always better to go now than to wait for later because

00:41:13.080 | the pool of eligible candidates starts to change and especially... How old are you,

00:41:18.120 | Samir?

00:41:19.120 | I'm 23.

00:41:20.120 | Okay. So at 23, if you survey the potential marketplace of potential spouses, you will

00:41:27.000 | find an interesting dichotomy. If you are looking for a girl and looking for a girl

00:41:33.920 | that's interested in marriage, in your current age bracket, you will be able to find that

00:41:38.960 | kind of girl. But if you wait a few years, what will happen is all of the girls that

00:41:44.600 | say, "No, I don't need to be married. I'm not that interested in it. I'm just going

00:41:48.240 | to wait around and I'm going to have my fun." What will happen is they will continue to

00:41:52.560 | do that and pursue that course of action until they're in their 30s. And so the marketplace

00:41:58.240 | of potential mates will start to dry up in your late 20s. And those types of girls don't

00:42:03.760 | turn around and start considering marriage again until they're in their 30s. But at that

00:42:07.360 | point in time, I'm not sure you necessarily want to be married to them, at least many

00:42:11.920 | of them. So I would encourage you to look seriously now, make it a priority now, but

00:42:16.680 | I don't see any relation to that with your finances other than personal prudence. That's

00:42:21.000 | very much kind of an ideological discussion. That's very much a discussion of what you're

00:42:26.200 | looking for. And that's much more of your being willing to be serious and to seriously

00:42:32.760 | pursue and to find a wife. And I think it's absolutely doable. But that one decision,

00:42:39.180 | all of those things will make a bigger difference in your money and in your life than almost

00:42:43.280 | anything else. If you marry poorly, if you marry a wife who is not prudent, if you marry

00:42:49.160 | a wife who is not frugal, if you marry a wife who is not committed to you, then of course,

00:42:56.600 | all of those types of things have incredible impacts on your finances, but you can't really

00:43:01.560 | solve them with finances. Now, financially, I would encourage you just go ahead and work

00:43:06.760 | on building your fortune and building your life. And if you'll do that and you'll be

00:43:11.080 | prudent, you will have done the majority of what you need to do in order to be financially

00:43:17.720 | successful in marriage. I don't see any reason to put off any of your decisions with the

00:43:23.280 | idea of a potential of getting married in the future. You don't know whether that's

00:43:27.160 | going to be six months from now or six years from now. And I think that's too uncertain

00:43:31.160 | to try to make any financial decisions based upon what may or may not happen, especially

00:43:35.320 | if you're not currently interested in and pursuing a woman. So I think your best bet

00:43:39.440 | is just focus on building your fortune, work on your plans, and think carefully about the

00:43:44.720 | kind of girl that you would want to be married to so that you will recognize her when you

00:43:49.400 | meet her and then make a priority of meeting her. Don't approach it haphazardly. I've watched

00:43:55.600 | a lot of my friends and I'm in the phase, I'm in my early to going on going to my mid

00:44:01.920 | thirties. And what's interesting is I'm in the phase right now where most of my friends

00:44:07.320 | who did not prioritize marriage have now decided that, "Okay, I'm ready to look around and

00:44:12.080 | I'm ready to get married." And many of them, both male and female, are deeply frustrated

00:44:17.200 | by it. So that's my personal opinion. Take it for what it is. But I would just say build

00:44:22.680 | your fortune, build your business, build your career, save money, invest money effectively,

00:44:28.400 | but don't worry about that until or unless you find a suitable candidate. Make sense?

00:44:34.040 | Yep. It makes a lot of sense. Appreciate it. My pleasure. Any follow-up questions or is

00:44:39.480 | that enough for now? That's good for now. I appreciate it. Well, I would say keep up

00:44:43.760 | doing the good work and be, well, keep doing what you're doing. And my encouragement to

00:44:49.360 | you is make it very clear that you are interested in marrying, but be very careful and very

00:44:56.000 | discriminating in your selection process. I was talking with my wife last week and I

00:45:04.000 | was reading the article, I shouldn't even say, I was reading an article in New York

00:45:08.080 | Times opinion piece. And I was just reflecting on how hopelessly naive I was when I was in

00:45:17.760 | my early twenties. And I was far more of a curmudgeon than most people my age, but I

00:45:23.440 | was still hopelessly naive. And the entire world has shifted in terms of the sexual marketplace,

00:45:31.400 | the dating marketplace, the marriage marketplace. And I would encourage you do your research

00:45:36.480 | and be very careful because of one wrong decision can completely change your life, but one right

00:45:41.580 | decision can completely bless your life. I'll go to Ben in South Dakota. Ben, welcome to

00:45:45.640 | the show. How can I serve you today, sir? Hey, Josh, thanks so much. Really appreciate

00:45:50.560 | you taking the time to answer my call. Hey, my question runs along the line of contentment

00:45:57.000 | in comparison. To give you a little background story, I'm 29 years old, 24 years old, me

00:46:04.680 | and my wife are a hundred thousand dollars in debt. Since then, we went through the Dave

00:46:09.200 | Ramsey route, paid off all our debt and are now able to save and invest 20% of our income.

00:46:16.640 | And just reflecting over the last five years, I thought I was going to be at a point where

00:46:20.960 | I was just going to be extremely happy with that. And though I am very excited about that,

00:46:28.120 | I still come from a sales background where I can always be doing more and I could be

00:46:33.040 | more efficient here and more efficient there. And so I'm struggling to figure out, you know,

00:46:38.000 | the grass field is the same way to me as it did five years ago. And so I didn't know if

00:46:43.360 | you had any thoughts on how to be satisfied with what we're doing on a daily basis. Do

00:46:51.920 | you feel like you should be making more money? Do you feel like you should be saving more

00:46:55.440 | money? Can you give any more texture to that discontentedness that you feel? Yeah. So,

00:47:01.960 | I mean, we're making more money than I ever thought we would. So it doesn't have anything

00:47:08.200 | to do with that. It more has to do with just feeling like we're still some sort of like

00:47:14.840 | a rat in a wheel and the fact that we have $200,000 saved for retirement and I'm 29 years

00:47:22.120 | old and I feel like, you know, there's just, there's not a number where I'm going to be

00:47:28.560 | content with. I remember listening to one of your podcasts and you mentioned, you know,

00:47:33.160 | this guy that said, you know, there's a little bit more is all I need. And so I'm having

00:47:37.620 | a hard time balancing and figuring out what do I need versus what do I want, if that makes

00:47:43.240 | sense. Tell me about your career and about your satisfaction with your career and what

00:47:51.360 | you're doing every day for work. Yeah. So I'm a regional sales manager and I'm cold

00:48:00.680 | calling bringing on new vendors and at the end of the day when I bring in those new vendors,

00:48:06.480 | there's a healthy commission for me. So work is something that I, you know, I foresee me

00:48:15.720 | doing for the foreseeable future, but it's something that, you know, I would like to

00:48:21.480 | change when I feel like I have enough. When you have enough what? If that makes sense.

00:48:28.760 | Well when I feel like I've hit that number of having enough money. You have at least

00:48:34.520 | $200,000. Is that not enough money for you to change careers? Well, I don't think so

00:48:41.760 | because I feel like I need to keep putting in money, keep putting in money, keep putting

00:48:49.460 | in money so that, you know, 10 years from now I can do something else. I don't know.

00:48:56.040 | I struggle with the fact that, you know, I apologize that I'm not as clear and as concise

00:49:00.480 | as I wanted to be on my question, but, you know, I just really struggle with, I can always

00:49:06.920 | be putting in more and 10 years from now I'll have the same mindset of you can always be

00:49:12.440 | putting in more. Right, right. Yeah. In my opinion, and I was trying to ask you an inflammatory

00:49:19.480 | question to try to kind of trigger an emotional response in you, but I hope you'll consider

00:49:23.620 | about the question. And I would just say, dude, first of all, how much money do you

00:49:28.880 | have including retirement? Because you've got six months, if you're doing Dave Ramsey,

00:49:32.160 | you've got a six month emergency fund. How much money do you have? What's your net worth?

00:49:35.600 | Yeah. So we have a $20,000 savings account, 200,000 in 401ks and IRAs, and I'm still driving

00:49:45.240 | a $2,500 car. Yeah. So I guess what I would say is, dude, you got enough money. You've

00:49:50.840 | got, you've got almost $250,000, which is incredible because you can change from anything

00:49:58.760 | you're doing now. You can change anything in your life. You could change jobs. You could

00:50:04.800 | change companies. You could change careers. You could change houses. You could change

00:50:09.240 | cities. You could change states. You have today plenty of money to make any decision

00:50:17.000 | in the world that you want. You already have enough money. You don't have enough money

00:50:24.520 | to quit working and sit back on your heels for the rest of your life, but you have enough

00:50:28.600 | money to change anything in your life that you want to change. And so if you can embrace

00:50:35.440 | that, hang on one second. I'm going to find my financial calculator. I left it in the

00:50:39.360 | drawer. Hold on. I have to go to the backup financial planner, backup calculator. What

00:50:43.760 | kind of, sorry, financial planner doesn't have their calculator on their desk when they're

00:50:48.640 | recording a live Q and A show. You said you are 29 years old right now. Is that right?

00:50:54.040 | Okay. So let's put this in here and let's just, let's just talk about how much money

00:50:57.640 | you will have for retirement. And then we'll come back to how much money you have today.

00:51:02.320 | So you've got $200,000 for our present value. 29 to 59 would be 30. So let's go 35 years

00:51:10.960 | to age 64. Let's say you earn what? 8% on your investments and you stop putting money

00:51:17.380 | in there. Okay. If you quit today with $200,000 in your retirement accounts and you don't

00:51:23.480 | put any more money into those accounts, but they continue to grow. If they grew at 8%,

00:51:29.800 | it would be $2,957,000 at age 64. Now from Dave Ramsey, I should use 12% and see what

00:51:39.560 | this number is. Let's see here. So 12% you would have, oh no, $10,559,000. So the point

00:51:49.680 | is that you're already, if you quit today and you did nothing but spend every dollar

00:51:58.320 | that you earn today, you're already very likely to be a multimillionaire. You're already there

00:52:07.280 | and you have enough money that you can change anything in your life. So you have already

00:52:13.300 | achieved financial freedom. It's done. You don't have to change anything else. And if

00:52:20.000 | you just continue on the track that you are right now, you stay committed to not borrowing

00:52:25.480 | money and you maintain prudence with your finances of saving some of your income, you

00:52:32.320 | will be incredibly wealthy for the rest of your life. Now it doesn't feel like that today

00:52:38.000 | for a couple of reasons. Number one, all of your money, most of your money, with the exception

00:52:41.960 | of your emergency fund is locked away in your 401k. And because it's locked away in your

00:52:46.400 | 401k, you perceive that you can't use it. Number two, you have not yet reached the point

00:52:53.640 | in the compound interest curve where your wealth is growing because of itself. You're

00:53:00.920 | still putting more money into your 401k than it is growing every year. But a decade or

00:53:05.480 | two from now, that will change. But you've already laid the foundation. So my answer

00:53:10.560 | to your question is to reassess your life and to do your very best to ignore money.

00:53:18.120 | And you are asking the question that was one of the things that drove me out of the formal

00:53:22.040 | financial planning industry. Because if you had been sitting down with me in my office

00:53:27.560 | when I worked as a professional financial planner, I would have told you, you need $27

00:53:32.320 | million to retire because we would figure out how much we would run all the math. And

00:53:37.360 | you would have left my office feeling stressed because you've got to save more money. And

00:53:43.440 | over a period of years, I looked at it and I said, this is stupid. Why does our entire

00:53:47.080 | system keep people from living the life that they want to live when you've already done

00:53:51.880 | the things you need to do? So my answers today are very different than they once were. I

00:53:56.480 | want you to keep saving and investing tons of money, but I want you to build the life

00:54:00.440 | of your dreams now. And so what I would encourage you to do is a few things. Number one, I would

00:54:07.160 | encourage you to carefully assess your career. The two questions that I think are worth answering

00:54:13.120 | on paper carefully are these, and many others as well, but worth answering carefully on

00:54:18.000 | paper are these. Number one, what would I do if I knew I could never retire? Because

00:54:24.720 | you probably, I don't know, but I don't know if you would do what you're doing now if you

00:54:28.600 | knew you could never do anything else. So start by saying, I'm never going to be able

00:54:33.600 | to retire, which means I've got to build a job or a business or a work life that I'm

00:54:38.960 | excited about going to every day because I'm never going to be able to retire. And I don't

00:54:43.760 | want to live in drudgery for the rest of my life. So start with that. Then on a different

00:54:49.680 | day, ask yourself the question, what would I do if I were already retired? What would

00:54:54.880 | I do if, you know, great aunt Jane died and left me $10 million tax free? What would I

00:55:00.200 | do? And kind of brainstorm that and try to see if there's a connection between those

00:55:04.240 | two things. But I personally find financial goals very unfulfilling. So here's my personal

00:55:12.200 | philosophy. Well, first build a business and a work life that you're really excited about

00:55:18.480 | for reasons that are important to you. Number two, live in a place that you're excited about

00:55:23.760 | for reasons that are important to you. Number three, build a family that you're excited

00:55:28.080 | about for reasons that are important to you. Those are areas where you can make big impact

00:55:34.760 | and it doesn't cost a lot of money. When it comes to earning, I think you should always

00:55:40.720 | change your numbers of earning into a sense of impact or a sense of contribution. I believe

00:55:48.080 | personally that the basic foundation of earning is service. And so making more money is a

00:55:55.560 | major goal because making more money equates to my serving more effectively. The people

00:56:02.880 | who get the richest are the ones who serve the most effectively and serve the most people.

00:56:08.040 | Dave Ramsey is probably the richest financial pundit out there. I don't know if, my guess

00:56:15.560 | would be that he is, but he's also served the most people out there the most effectively.

00:56:20.940 | And so a guy, his career, he can look at that and feel satisfied that the more effectively

00:56:26.780 | he serves, the more money he makes. And you and I should be doing exactly the same thing.

00:56:31.480 | So focus on your contribution and your service. You can safely afford to ignore your salary

00:56:37.500 | at this point in life because you're rich. You are in the top few percent of US Americans.

00:56:42.240 | You can safely afford to ignore your salary and focus on your service and your contribution

00:56:47.400 | to others. And then that salary increase will follow in time. On the consumption level,

00:56:54.960 | I think you can look at your consumption and you can set a number or set a lifestyle that's

00:57:00.440 | appropriate to you. You and your wife can sit down and you can decide what lifestyle

00:57:05.360 | is appropriate for us. And there's no reason to expand it beyond that. If you can do your

00:57:11.240 | job and be effective in a $2,500 car, it would be a stupid waste of money for you to take

00:57:17.080 | $25,000 and go and buy another car when you could invest that $25,000 much more effectively

00:57:23.800 | into something else. Whether that something else is an area of need that you see in the

00:57:29.400 | community, a financial opportunity that you see, it'd be stupid to spend $25,000 on a

00:57:34.440 | car if that's not something that you personally need.

00:57:38.880 | Now on the other hand, if you say, "I want to spend $25,000 on a car because it's really

00:57:42.720 | important to me," fine. Some people live their life and they're so embarrassed about the

00:57:46.120 | car they drive that they never park in the parking lot. If that matters to you, go buy

00:57:50.240 | a decent car. But minimize your expenses and set your consumption at a level that is appropriate

00:57:57.960 | for you and your family, and then save everything beyond that and invest it into something that

00:58:04.000 | can grow.

00:58:06.160 | What I would encourage you is start to build your satisfaction. And the key to building

00:58:13.040 | wealth is to build your personal satisfaction around your financial productivity, your skill

00:58:17.760 | with growing assets, your skill with investing wisely, your skill with making an impact,

00:58:23.800 | and less upon your consumption. Then from now on, you can always have your consumption

00:58:27.560 | and your income completely disconnected, and you can feel a sense of satisfaction there.

00:58:32.340 | So those are my answers to it. I don't think there is a financial answer. If you don't

00:58:36.840 | solve these things of career impact, family impact, living where and how we want to live,

00:58:44.320 | if you don't solve and get a sense of clarity about the service that you provide in your

00:58:49.520 | work, 10 years from now, you could have $2 million in the bank and you would still feel

00:58:54.760 | like you didn't have enough money to change. So if you had a thousand bucks to your name,

00:58:59.680 | I would say save 10, but dude, you're rich, so act like it. Enough for now, Ben?

00:59:06.120 | Perfect, Josh. I really appreciate your time.

00:59:08.680 | Thank you for calling in, sir. We go to Bart in Florida. Bart, welcome to the show. How

00:59:12.320 | can I serve you?

00:59:13.320 | Hey, Josh. Thank you very much. I'll get right down to it. I'm 52 years old. I retired last

00:59:20.720 | year, a 31-year career in public service. Started my own business, trying to do exactly

00:59:27.800 | what you just told your listeners to do, and that is try to serve others and make a contribution.

00:59:34.040 | So I'm doing training consulting right now, which I enjoy. Trying to get that off the

00:59:38.560 | ground, but it's not something that's really paying the bills. I have a pension because

00:59:42.560 | I worked in public service for so long. I have a monthly pension that I have. I just

00:59:49.000 | sold in the last month, we just sold our home in South Florida where we have lived for 19

00:59:53.800 | years. So we had a good deal of equity in it. And we've moved 300 miles up the coast

00:59:59.680 | to Northeast Florida and we're renting right now a pretty inexpensive apartment.

01:00:06.600 | I am looking to purchase a home within the next year. And because I have this sizable

01:00:12.400 | chunk of money from the equity in the sale of my home in South Florida, I'm wrestling

01:00:18.160 | with this idea about how much money to, do I just buy a home outright? Do I take the

01:00:24.920 | Dave Ramsey approach, which I've done Financial Peace University. I know his philosophy on

01:00:29.640 | that and, or, do I take out a mortgage and maybe go the Rick Edelman way, take out a

01:00:37.880 | big mortgage and do it that way. And maybe take the difference in the money from the

01:00:45.440 | equity that I have and invest it. And of course I'm not super risky, but at the same time,

01:00:54.960 | I am retired. So I would probably look to invest the sizable portion of this equity

01:01:01.960 | in an index fund and a total stock market index fund like you talked about earlier.

01:01:10.720 | And yet also, maybe think about doing some CD laddering on this home. So I can get the

01:01:21.000 | most return on this money that I'm not putting into the house. I mean, like putting as far

01:01:29.120 | as a down payment on the home. And maybe do like a take out a year and put it in a long,

01:01:37.280 | or excuse me, put it in the highest interest rate savings or checking account that's out

01:01:42.600 | there. And then maybe do like a five year laddering of CD. So allowing for market corrections

01:01:49.880 | and things like that. And then the remainder of that money would be in the total stock

01:01:55.760 | market index fund. I'd just like to know your thoughts and opinions about it. Maybe if you

01:02:00.400 | were in my situation.

01:02:03.080 | Do you have children?

01:02:04.080 | I, well, I do. I have two older sons right now who are in college. They're pretty much,

01:02:12.800 | they're fine. They're good. And then I have a son who just started high school.

01:02:21.380 | How much is your monthly pension?

01:02:23.280 | $5,000 a month.

01:02:26.360 | And can you live with your household budget? Can you live on under $5,000 per month?

01:02:33.240 | I could, but I mean, like right now I'm doing it, of course, but I would kind of like to

01:02:39.800 | maintain the same standard of living that we had when we were in South Florida. So I'm

01:02:44.280 | looking to purchase a home that's probably equivalent in value. And I don't, looking

01:02:49.840 | at the numbers, I can't, I can't, I really can't pay that, you know, that mortgage. I

01:02:55.880 | don't think I could pay. I mean, I'd be strapped. I don't want to be cash strapped, you know,

01:03:01.960 | you know, on my mortgage here. And where I don't really have money to be able to do things

01:03:08.320 | with the family and stuff like that. So I would really need that money in the equity

01:03:17.000 | to help kind of offset some of those payments on the home.

01:03:22.520 | How much of a, what price range of a house are you considering?

01:03:27.040 | Probably $400,000 to $500,000.

01:03:31.520 | And how much did you sell your house in South Florida for?

01:03:37.000 | I sold it for over $500,000.

01:03:40.480 | Absent, in addition to this equity and in addition to your pension, do you have other

01:03:46.000 | significant assets or other significant investments at this point?

01:03:50.720 | I do. I do. I have, because I was in government for a period of time in Florida, I'm sure

01:03:55.520 | you're familiar with the deferred retirement option plan or the drop. I have a sizable

01:04:00.440 | chunk of change in there. And of course I did deferred compensation for almost the entire

01:04:06.160 | time of my career. So I have a nice chunk of change in deferred comp.

01:04:10.040 | Well played, well played. With your, with your pension, is that guaranteed for your

01:04:17.480 | entire life at the same level?

01:04:19.280 | Yes. Yes. Yes. It's not going to change. I mean, I could get a COLA, you know, I'm not

01:04:25.480 | counting on COLA's. I mean, I'm not an FRS. I know you're familiar with that. I was a

01:04:30.120 | local municipal plan, but it was not FRS.

01:04:33.160 | Do you have any interest, you mentioned putting the money in the stock market. Do you have

01:04:39.200 | any interest in owning other real estate other than the house that you live in?

01:04:44.000 | Actually I've considered that. In fact, kind of one of the things that I thought about

01:04:47.680 | or considered is maybe doing rental properties. And, you know, while we're right here in Northeast

01:04:54.560 | Florida right now and I'm enjoying it, I'm liking it. I don't know if I'm going to be,

01:04:59.320 | if this is my forever place to stay. I mean, it's possible, you know, in five to 10 years

01:05:05.000 | we might want to uproot and go somewhere else. So, you know, maybe think about possibly,

01:05:11.800 | you know, this home, this next home that we might buy might, might later, I might later

01:05:15.840 | consider that as a possible rental opportunity.

01:05:19.680 | So that's-

01:05:20.680 | But yeah, I would consider, I would consider rentals apart from that too. I mean, if it's

01:05:24.080 | the right deal and I've listened to you enough to know when people call about like, you know,

01:05:29.880 | trying to pay extra towards their mortgage and things, I've heard you tell them, listen,

01:05:34.120 | save that money, try to invest it. And then, and then once you, once you feel like you

01:05:38.520 | have enough, you can pay it off, then pay off your mortgage. But don't just make those

01:05:42.760 | payments to make those payments, you know, to cut your mortgage down and things like

01:05:45.920 | that because it's hard once you, once you've done that, you know, it's hard to get that

01:05:49.480 | money out of your house. Then you got to take out a HELOC or whatever. And I really don't

01:05:53.120 | want to do that. I want to try to avoid, you know, you know, taking money out of my home

01:05:57.480 | like that if possible. I'd rather, I really, if I see a good opportunity, I mean, if having

01:06:04.400 | this money in a long-term equity index fund, excuse me, an index fund, you know, gives

01:06:11.360 | me the opportunity to, that if I do see a good investment opportunity, you know, I can

01:06:17.240 | jump on it and I can seize it.

01:06:20.520 | So here would be a few suggestions for you. First, with regard to your business, your

01:06:25.680 | investments and your household budget, I think you should challenge yourself to live on your

01:06:31.720 | income and not to spend your capital. So if you had to spend your capital, obviously you

01:06:37.680 | could, you could take money from what you've saved here and spend it. But why do that?

01:06:43.320 | Go ahead and embrace the idea of living on your income and set yourself a personal challenge

01:06:48.640 | of generating enough income to provide for your lifestyle and especially with your consulting

01:06:54.160 | and training business. Use, keep, keep, even though you're rich and even though you're

01:06:58.680 | financially independent, keep your, keep the pressure on yourself to make sure that you're

01:07:04.480 | not just goofing off, to make sure that you're dedicated to what you're doing and figure

01:07:08.880 | out how to use that financial pressure to keep you working and productive. And so figure

01:07:14.240 | out how to live on your income. With regard to a mortgage, there's no, I don't see any

01:07:19.680 | reason for you to not get a mortgage on your personal residence. And the reason I say that

01:07:26.520 | is because you have a, you have a guaranteed income. And so there is virtually no risk.

01:07:35.080 | There's virtually no reason why you would not be able to pay a mortgage payment because

01:07:41.440 | you have a guaranteed income that is not connected to your work. The biggest benefit of debt-free

01:07:46.680 | houses, especially for young people, is the risk reduction. The fact that if they, if

01:07:52.400 | you get sick or hurt or laid off, et cetera, that you can, that you don't have a mortgage

01:07:56.800 | and that dramatically lowers your risk. But for a retiree, especially one who has a guaranteed

01:08:02.960 | fixed pension, what's the benefit? Unless it's just very important to you to be debt-free,

01:08:10.800 | ultimately you could pay a mortgage. What I would do if I were in your shoes is I would

01:08:16.080 | buy a rental house. I would pay cash for it, or probably a couple of rental houses because

01:08:21.080 | buying $500,000 rental houses is probably not a great rental market, but I would buy

01:08:26.320 | a couple of $250,000 rental houses, pay cash for them, and then I would put a maximum mortgage

01:08:32.520 | on my primary residence and I would use the cash flow from the rental houses to pay for

01:08:37.040 | my primary mortgage so that I'm not actually dipping into my capital. I'm maintaining

01:08:47.160 | my asset base and I'm not spending capital on consumption. Rather, I'm turning capital

01:08:52.160 | into income and then I'm spending income on consumption. So that's what I would do. Now,

01:08:56.600 | if you don't want to buy rental houses, then fine, put it in an index fund or whatever

01:09:00.720 | it is that you want to invest it in, but maintain your capital and I don't see any reason for

01:09:04.720 | you not to get a mortgage. Now, the only thing that would be difficult is if you get a mortgage

01:09:09.340 | payment of $3,500 a month and you have a pension of $5,000 a month, that would be somewhat

01:09:15.680 | uncomfortable, especially if you're committed to not spending your capital. And so, of course,

01:09:19.840 | you could defray that by putting more money down on a property, which is kind of what

01:09:24.240 | you laid out. You're going to buy a $500,000 house, but you're going to put $250,000 down

01:09:29.240 | and that drops your mortgage down to a reasonable monthly amount that is comfortable given your

01:09:36.040 | pension situation, which you can do. That would work conceptually, but I like the idea,

01:09:42.800 | the personal challenge of saying, "I'm not going to spend capital. I want to get richer

01:09:46.760 | and richer every single day. I want to be richer tomorrow than I am today, which means

01:09:51.640 | I can't spend capital. I can only spend income." And I like the personal challenge of forcing

01:09:56.680 | myself to be productive because if I'm going to get richer every day, that means I've got

01:10:00.200 | to figure out how to grow the capital.

01:10:02.200 | The final thing for you to consider, you are in a phase of life at which everything's going

01:10:05.440 | to change. Your son is in high school, which means he's still there. Your older sons are

01:10:13.400 | a little bit older, but your high school son would still enjoy and appreciate some of the

01:10:18.760 | benefits of a big house on the water and things like that. But very quickly, he'll be gone.

01:10:24.640 | And so I would caution you to be very careful before all of a sudden you sign up and buy

01:10:29.480 | a six bedroom house on the water because if it's just you and your wife, there's a good

01:10:34.760 | chance that you're going to not need that some months from now or a couple of years

01:10:40.040 | from now when your other son is out of the house.

01:10:43.200 | So I would just say, think carefully and move slow because it'd be silly to buy a $500,000

01:10:49.520 | house today when you can rent that $500,000 house for a few thousand dollars a month for

01:10:54.360 | the next couple of years. And then when Florida real estate market prices drop in a few years,

01:10:59.960 | you could easily buy a much more modest, comfortable home as your empty nest home and be much happier

01:11:06.360 | with also having less money out of pocket.

01:11:08.600 | And you bring up an interesting point. I've actually considered that, Josh. And here's

01:11:14.800 | the dilemma that I'm kind of in, though. And you'll understand this being a Floridian,

01:11:20.160 | is that in Florida, you have two years from the time you sell your house to make that

01:11:24.280 | portability move, that portability rule, which helps also kind of keep your property tax

01:11:30.200 | from going, you know, getting too crazy, especially if you're going to buy up or similar to what

01:11:35.600 | you were in before.

01:11:38.120 | And so I wrestle with that idea of the portability rule here in Florida. And do I want to miss

01:11:46.880 | out? But at the same time, I mean, I could like, I'm renting this condo or this apartment.

01:11:54.040 | It's like $1,200 a month. It's half of what I was paying in my mortgage in South Florida.

01:12:00.080 | It's very doable. It's very comfortable. And then, like you said, just continue to let

01:12:06.840 | that capital work for me, live off the income that I'm receiving monthly.

01:12:13.160 | But again, at some point in time, I think I do want to buy a house. And that's not going

01:12:17.440 | to be a six bedroom. I mean, I think I would like to live a little bit closer to the beach.

01:12:21.440 | I'm not going to be on the beach, but I think I'd like to be a little bit closer to the

01:12:24.480 | beach. I'm talking about hurricanes, but I do like that. I do like that lifestyle.

01:12:33.440 | And so what are your thoughts about that? Is it worth foregoing the portability and

01:12:38.640 | just not even considering that?

01:12:42.280 | Well, calculate the numbers on what your personal tax portability would be. Calculate those

01:12:48.800 | numbers so that you know what they are. But I would guess just simply the phase of life

01:12:55.160 | that you're in. The house that you want to live in when you have children in the house

01:13:01.640 | is different than the house that you want to live in when you don't have children in

01:13:04.360 | the house. And the rents on luxury homes are often much more reasonable than buying those

01:13:14.840 | luxury homes. So if you want to rent a luxury home for the next few years, you could buy

01:13:20.520 | one. But the danger is, of course, you buy one and then the market changes and now you're

01:13:24.400 | the one holding it. So if I were in your shoes, I would give myself these goals.

01:13:30.440 | One, I'm not going to spend capital because I want to be richer tomorrow than I am today.

01:13:34.760 | Two, I want to build the perfect lifestyle or my most ideal lifestyle, reflecting the

01:13:41.880 | idea that I'm already financially independent. And I want to make sure that I'm living where

01:13:47.560 | I really want to live. If you tell me, Joshua, we want to live on the water, we want to dock

01:13:51.760 | for the 38-foot boat out back, that's important. We want a luxury home. That's fine. You can

01:13:56.760 | figure it out.

01:13:58.160 | Right.

01:13:59.160 | I mean, I've worked with a lot of people who've had big houses. I found that most people would

01:14:03.200 | rather, especially empty nesters, would rather have a smaller house in a beautiful townhouse,

01:14:09.400 | a beautiful condo, a beautiful apartment, a smaller house that has less work associated

01:14:15.960 | with it in a more luxury place with more amenities. And that's different than the house that you

01:14:21.480 | probably want right now when you still have children in the house. So those would be my

01:14:25.920 | suggestions.

01:14:26.920 | Right.

01:14:27.920 | I mean, I'm not in the position of-

01:14:28.920 | That was two. That was two. What was third? You said-

01:14:31.360 | On a mortgage?

01:14:32.360 | Not to spend the capital, build a life, and then a mortgage. Yeah.

01:14:35.840 | Yeah. And on the mortgage, I would just challenge myself to say, "How can I put this money to

01:14:40.880 | work? Let me take the $500,000 tax-free that you got from the sale of your home. Let me

01:14:46.400 | take that money and turn that into investment capital." And so, again, you buy a handful

01:14:52.440 | of $250,000 homes, pay cash for them. That'll generate for you $3,000 a month of income,

01:15:00.000 | and then use that $3,000 a month to pay your mortgage on your primary house rather than

01:15:05.240 | putting it all into consumption. That way, you're building your capital base. So that's

01:15:08.520 | what I would do.

01:15:09.520 | Got you. Okay. All right. Great.

01:15:11.400 | Bart, thanks for calling in. Keep me updated on what you do. I look forward to hearing

01:15:15.240 | from you. All right. We move now to Michigan. Welcome to the show. How can I serve you today?

01:15:21.080 | Got a Michigan phone number, 248-AREA-CODE. Welcome. Can you hear me? Michigan, are you

01:15:35.120 | there? All right. We move on to Washington. Welcome, 202. Tell me your name and how I

01:15:42.640 | can serve you today, please. Hold on a second. I guess I'm not sure, but I got some tech

01:15:53.200 | problem here. All right. That didn't work. So let's go to Isaiah in California. Welcome

01:15:57.640 | to the show. How can I serve you today, sir?

01:15:59.760 | Wow. Well, first of all, I just wanted to say thank you so much. And just all the things

01:16:05.000 | that you share, especially from your value perspective that you share with us, is really

01:16:10.200 | awesome and it's something we don't hear anywhere else. So I wanted to thank you for that, Josh.

01:16:14.280 | My pleasure. Thank you. Yeah. I don't have a question in particular,

01:16:20.520 | but I guess I just kind of wanted to give you, like I've been kind of just listening

01:16:25.360 | to the things you say and giving a little rough outline for my future. And so right

01:16:30.320 | now where I'm at is I have a pretty steady job and I've been able to save a good amount

01:16:35.660 | of free cash that I've just been investing in individual stocks, ETFs, and international

01:16:42.720 | markets. And so the things I've been saving up for are, well, first of all, marriage.

01:16:48.660 | So I've been saving up for a ring and then a house possibly. And I think overall, I was

01:16:56.280 | kind of going back to that lady from Canada. I think I'd like to get involved in the education,

01:17:02.840 | not with the state education system, but I was just kind of thinking of maybe starting

01:17:07.520 | a business that could help support a school that would be privately funded. And I think

01:17:16.120 | some of that would come from maybe buying and selling cars or maybe some type of like

01:17:24.000 | a farming system. But I just wanted to kind of get your input on that.

01:17:28.520 | Well, there are a lot of career opportunities and compelling business opportunities in the

01:17:35.920 | world of education. It's kind of funny, one of the years ago I read a manual on how to

01:17:45.680 | build a system of daycares. I think the author was Nick Kozell. It was published by Gary

01:17:50.240 | North. I think he was involved in it. But the manual was how to build a series of Christian

01:17:56.040 | daycares and to make a lot of money off of them. And I thought the arguments made in

01:18:02.120 | the manual were very strong. I thought the business opportunity was significant. And

01:18:06.520 | I thought it's filed away in the back of my head as one of those things that if I ever

01:18:12.080 | decided that I wanted to dedicate my time in that direction, that I could build a series

01:18:16.560 | of daycares. And I think especially this is an area of where we as men have a major advantage,

01:18:23.720 | especially if you are a well-educated man and competent, because there's a major benefit

01:18:30.200 | because so many of the people who are involved in that business are women, that it's one

01:18:35.480 | of the areas that I think you could go into as a man and really stand out. But education

01:18:39.680 | is also the same way, whether that's as a teacher, whether it's as a school administrator.

01:18:44.160 | I've talked to and listened to a number of people who run private schools, and you can

01:18:52.760 | do well and make a major impact on your students and also use it as a foundation for your financial

01:19:01.920 | growth. Now, you can do that within a more structured system, starting a local private

01:19:06.920 | school with buildings. I think there's a huge opportunity if you're interested in education

01:19:11.040 | right now. I think there's a tremendous opportunity for people to kind of blur the lines between

01:19:20.120 | an accredited school and, well, this is just one of my hunches. Now, I don't know if this

01:19:28.680 | is true. Somebody would have to test it. But if I were going to start a school, one of

01:19:33.320 | the things that I would personally try to pursue right now is I would have to investigate

01:19:37.960 | more about the system of accreditation, but I would ignore accreditation. And I would

01:19:42.880 | try to put together resources for parents to be involved in home education, but do it

01:19:49.800 | under the cover of somebody helping with some of the details of a place to go, a school

01:19:55.160 | building, helping with some administrative needs, helping them to have a place for children

01:19:59.600 | to be. Because there are a lot of people who are willing to take some measure of responsibility

01:20:04.440 | for their children's education, but they feel like they lack the facilities, they lack the

01:20:09.480 | competence to teach themselves, or perhaps what their work schedule is just doesn't work

01:20:13.800 | out. There are a lot of single parents who struggle to figure out how they could, to

01:20:18.080 | homeschool, etc. And so I think there's an opportunity to have a very low cost private

01:20:23.800 | school environment where the parents are actually the responsible parties in terms of the education

01:20:30.680 | quality, meaning you're not an accredited school, but you are providing a place for

01:20:38.160 | them to have teachers, to have enterprises, etc. So I think there are tons of things that

01:20:43.360 | can be done. I don't know if that idea would work. I've never researched the systems, but

01:20:47.600 | it's just one of those things in looking at it and talking to people. I know of almost

01:20:51.720 | no people, I know of very few people who, at least in my circle, who really want to

01:20:57.920 | send their children down to the government school. But there's a big difference between

01:21:03.080 | the ease of saying, "Okay, I don't want to do that," versus in my area, saying, "I'm

01:21:08.680 | going to spend $23,000 a year for one of the elite private schools." So I think that there

01:21:13.480 | is an opportunity for people to fill that few thousand dollar a year price tag, but

01:21:18.960 | to do it in some ways that take advantage of digital learning, do it in ways that take

01:21:22.760 | advantage of not having accredited teachers trying to do the teaching, but rather just

01:21:26.760 | having people who are facilitating the use of online instruction. And I think that's

01:21:33.520 | going to be significantly moved forward in the next few years. Time will tell if I'm

01:21:38.160 | right or not, but there are definitely opportunities that a young man could get involved in, and

01:21:42.080 | you can use it to build a business and also to make a significant impact in the lives

01:21:47.160 | of young men and women.

01:21:49.120 | Yeah, I think it's really interesting that you bring that up because through my high

01:21:56.800 | school years, or junior high and freshman year of high school, I was homeschooled. And

01:22:02.600 | there was a local program here for homeschoolers where you attend individual classes. It wasn't

01:22:09.760 | like a full class day, but individual classes that you would sign up for and attend those

01:22:14.480 | classes twice a week.

01:22:17.200 | Yeah, absolutely. And those things are growing more and more. And one of the things that

01:22:21.880 | has happened is even if you were using, for example, the state system, in Florida, we

01:22:28.040 | have an entire online virtual school. You can use the government's curriculum, you can

01:22:33.560 | use the government teachers, you can do all of that, but that still doesn't solve the

01:22:37.240 | problem for somebody who's struggling to figure out, "Well, who's going to supervise my child?"

01:22:42.160 | And they know they don't want to send their child into Parkland High School where they're

01:22:47.160 | going to get shot or they're going to get bullied or they're going to get drugged on

01:22:50.360 | a daily basis. They know they want to avoid that, but they're struggling to figure out,

01:22:54.240 | "How do I compensate for that?" And so, well, the market will have to prove it out, but

01:22:59.240 | I think there's probably a demand for that. And what we need is entrepreneurs to try it,

01:23:04.800 | put something together, put an offering to the market and see. And that's a good opportunity

01:23:08.680 | for young men to try those kinds of things. Because, for example, I have a friend of mine

01:23:12.720 | who is a college professor. And this college professor, I've talked about it, he's like,

01:23:17.560 | "Yeah, that's my idea." But he can't take the financial risk of walking away from his

01:23:23.040 | job in order to try it. But a young man can take that risk and you dedicate a year to

01:23:27.920 | it. If it doesn't work out, it doesn't work out. If it does, it does. So I'd encourage

01:23:31.480 | you, this is the time in your life, you sound like you're closer to the young end of the

01:23:36.280 | spectrum. This is a time to take those risks and grab an idea, try it and see what works.

01:23:40.240 | If it doesn't work, move on to the next one.

01:23:43.040 | Do you think that, because a lot of my heart goes towards fatherless children who maybe

01:23:51.240 | aren't able to pay for that private education, however much it is. Do you think it's viable

01:23:58.160 | at all to focus on a separate business to help support the school? Or do you think it

01:24:04.560 | would be better to go directly into the school and start it that way?

01:24:09.440 | I think there's a third way. I share your heart. I personally have a deep burden for

01:24:18.240 | young men, especially young men who don't have a father figure in their life. So I share

01:24:24.160 | that burden personally. But I don't think that school is necessarily the best solution

01:24:30.160 | for that. Young men who are academically skilled and gifted, they already have opportunities

01:24:37.280 | in school. If they are linguistically competent, if they're cognitively capable and they can

01:24:43.840 | do well in academics, then there are teachers who are already there who will come alongside

01:24:49.240 | and who will help them point them in another direction. The men who I see being laid aside

01:24:55.360 | by society are the men who don't have a high degree of cognitive ability. They're the men

01:25:02.080 | who don't do well in school. And one of the things that I have often wished for is I've

01:25:06.760 | wished for a business that was basic enough that I could hire young men in order to work

01:25:14.600 | with me where I could actually train them. Unfortunately, with my business, there's no

01:25:20.400 | way for me to use somebody who is unskilled. But I've worked with a number of entrepreneurs

01:25:25.760 | who do have that opportunity, and I'm jealous of them in terms of their ability. If I were

01:25:31.560 | you and if I had that kind of burden, I would seriously look to building some kind of business

01:25:39.400 | in the manual trades in some way. And what I would do is I would look at it as an opportunity

01:25:45.560 | to first of all, do very well financially. Because if you are... Here's what happens

01:25:52.240 | in kind of the sorting process that happens in the US American society. Smart people,

01:25:59.480 | people who have high cognitive ability and who do well academically, generally tend to

01:26:04.000 | sort themselves into careers that are more prestigious and that depend upon that significant

01:26:12.120 | cognitive ability. So if you're smart, you're going to be pointed in the direction of engineering

01:26:17.680 | or law or medicine, something like that. But if you take that same person, especially somebody

01:26:24.140 | with an entrepreneurial bent or a mind toward business, and you go into the trades, you

01:26:30.600 | have a significant advantage because of your intelligence, because of your cognitive ability.

01:26:38.120 | Many people who are in the trades started off as basic laborers and they grew their

01:26:42.980 | business more by accident than with intention. I've done some consulting for a number of

01:26:48.840 | people and I think of one person who in particular, he's a tile setter. And today he owns a tile

01:26:56.360 | business, but he's never been a competent businessman. Rather, it was a tile setter

01:27:01.960 | who recognized that he couldn't afford to work on his knees for the rest of his life

01:27:06.120 | and he started to build a business. Well, I could go into that business and I could

01:27:10.280 | partner with him with the specific knowledge and I could apply business systems and modern

01:27:14.880 | marketing methods and tools, and I could make a major impact to that business. But there

01:27:19.800 | are very few people who are intelligent, have high cognitive ability, who choose to go into

01:27:26.160 | those low prestige industries and apply themselves. But if you do, you can do well.

01:27:30.600 | One time I was sitting in a hot tub with some friends and I struck up a conversation with

01:27:33.840 | a guy. We were at a luxury condo here in South Florida and the guy owned a landscaping company.

01:27:40.440 | It was a multimillionaire from a landscaping company. So the point is, I would rather have

01:27:45.000 | a landscaping company where I could bring in a young man who is struggling and I could

01:27:50.640 | say, "Listen, you don't have to do anything except do what you're told." And I would use

01:27:55.120 | work as the basic foundation to help him acquire some job skills, some soft skills, earning

01:28:01.600 | ability, et cetera. And I think that if you have that type of business, then you can use

01:28:06.320 | the business as a form of charity and you can hire people that you wouldn't otherwise

01:28:10.520 | hire. And you can be a little bit more patient with people who you would otherwise not be

01:28:14.680 | patient with because as the entrepreneur, it's your right to do that. So that's the

01:28:19.720 | direction I would go. I don't think charitable enterprises should generally be able to earn

01:28:26.440 | their own way. And I do think there are things that need just money where you can give money.

01:28:31.600 | But if you give money, you generally will create a culture of an enterprise that will

01:28:37.360 | constantly be just sucking down money and doesn't do anything. Better to start a business

01:28:43.440 | or figure out how to earn an income from something and use that as the foundation so it can support

01:28:49.120 | itself. I love the story of the Trappist monks. And with this, I'll give you one more comment,

01:28:56.960 | Isaiah, and I'll move on to the next caller. But if you think about the monks, you have

01:28:59.880 | to figure out, they say, "Okay, we want to live this lifestyle where we're living in

01:29:03.160 | a monastery, but we've got to figure out how to support ourselves." They come up with ways

01:29:07.000 | to serve. And so you've got the Trappist monks that brew beer or the monks that do all these

01:29:10.560 | different things. They're much stronger as a monastery. They're much stronger as a religious

01:29:16.240 | order than those that continually are out soliciting donations because they actually

01:29:20.760 | bring something to the world. And so I don't want to start a business giving... I don't

01:29:25.320 | want to start a charity giving classes to young men. They don't need to sit in school.

01:29:31.640 | What they need is they need a job and they need a foreman and they need someone who will

01:29:35.640 | come alongside and pick them up in the morning and who'll make sure that they're there. I

01:29:39.800 | have a client of mine who does this very effectively as a roofing company. And he brings in people

01:29:45.060 | who you shouldn't really hire them. They're losers. They're failures at life, but he comes

01:29:50.000 | alongside and he calls them and he wakes them up and he goes gets them and he makes sure

01:29:53.520 | to feed them and whatnot. And he's a father to them. And they need that kind of input.

01:30:00.400 | So I'd encourage you, build something. And if you have a desire for that, just build

01:30:04.340 | a business where you don't have to hire people with college degrees. Build a business where

01:30:08.240 | you can hire somebody and give them an opportunity to develop themselves within the context of

01:30:12.840 | work.

01:30:13.840 | Thank you so much. Yeah, that gives me a lot to work with. My heart isn't really, you know,

01:30:22.800 | I've never really been focused on retiring, but I just, yeah, I just want to get involved

01:30:28.680 | and be a father to people. Especially young men. I just, yeah, I just see a need. So that

01:30:36.200 | gives me a lot to work with in terms of where to fit in.

01:30:39.200 | Absolutely. Well, we share that desire. So keep in touch. And as you find examples or

01:30:43.760 | people who are doing or you have ideas, send them to me and I'll try to give them a little

01:30:46.560 | bit of publicity. All right, Carla in Michigan, welcome to the show. How can I serve you today,

01:30:53.040 | please?

01:30:54.040 | I thank you very much for all the good information that you provide on your podcast. I am a regular

01:31:01.880 | listener, a fan of yours, and I also follow Dave Ramsey. The reason why I wanted to listen

01:31:14.320 | today, I didn't know I would be on, but I'm in a situation where I'm in a turning point

01:31:21.120 | in my life. My kids, my last son just went off to college. So I am officially an empty

01:31:29.240 | nester. I'm not married. I live in an apartment. And right now, financially, most of all of

01:31:41.360 | my money is in a 401k. And I have about $15,000 cash that I save, you know, just doing the

01:31:52.440 | Dave Ramsey baby steps, you know, making sure you have money set aside in case of emergency.

01:31:59.200 | So I'm doing that. And my... Being an empty nester, I wanted to start about starting,

01:32:08.320 | finally starting my own business. I work full time. So I thought about, you know, different

01:32:15.800 | businesses such as retailing, Amazon, that sort of thing. But my question was regarding

01:32:24.400 | real estate. I lost my home in 2008 during the down market, and I was debating on whether

01:32:32.880 | or not I should even buy another home. I've been in an apartment since that time, and

01:32:40.560 | I like the convenience. No tax write-off, obviously. But I really, really like the convenience

01:32:48.760 | of not owning a home. You know, the responsibility of a home. Fifteen years old, you know, I

01:33:05.160 | don't know.

01:33:06.160 | So do you feel like you are supposed to buy a house?

01:33:10.280 | I feel like I'm supposed to buy a house. I was taught to buy a house. You know, everyone

01:33:18.040 | in my family owns, you know, their home. My grandmother, God bless her, she's 90 years

01:33:24.800 | old. She owns her home. My mother owns her home. And, you know, and it's very... I see

01:33:32.600 | them being very secure, and I'm glad that they do have a home because obviously they're

01:33:37.040 | retired now, and they have a place of their own. But for me, I'm thinking that I may want

01:33:47.280 | to travel a little bit, and I don't... I just don't want the headache of it. You know, I

01:33:53.320 | don't know. And I'm thinking that if I had a business, that I can still reach some of

01:34:00.040 | the benefits tax-wise. You know, I may not have the mortgage interest and stuff like

01:34:06.000 | that, but I can still write off, you know, investment-wise as far as having a home. But

01:34:12.240 | I can offset that by having my own business and just stay as a renter. And I'm just wondering

01:34:20.880 | if you thought.

01:34:24.160 | So a little bit of background history on kind of the concept of home ownership. I would

01:34:32.240 | not defend either of the extreme cases around home ownership. I wouldn't defend the idea

01:34:39.200 | that owning a house is a significant security, but I also wouldn't defend the idea that nobody

01:34:46.140 | should own a house. The correct answer, which is frustrating, I think, is it depends. It

01:34:51.920 | depends on the circumstances. First, I think in the past, owning a house was a much more

01:34:59.600 | stable form of security for two reasons. One, you had a higher respect for property rights

01:35:08.560 | than I see today. And two, you had fewer security blankets in society than you have today. So

01:35:20.120 | the first of property rights, I think, is really important. In the past, it seems to

01:35:24.360 | me that you could defend the idea that because I own this house, I own it and nobody can

01:35:30.640 | tell me what to do with it. It's mine and nothing can happen to it. Unfortunately, I

01:35:36.680 | have entirely, basically entirely relinquished that notion. And on whatever level you want

01:35:43.200 | to argue it, whether you want to argue it on a level of taxation, because of the fact

01:35:48.080 | that today, if you don't pay your taxes, the government could kick you off of your land,

01:35:53.200 | that we don't have an allodial title system. If we want to open up that can of worms, like

01:35:58.560 | some people would like, you know, you basically, you can be kicked off of your land and you

01:36:04.080 | could be kicked out of your house by all kinds of people and for all kinds of reasons, which

01:36:09.360 | are is really, really frustrating. And so those, again, range from things like you don't

01:36:13.760 | pay your property taxes because if you don't rent your land from the government, then they'll

01:36:18.660 | take it. You get kicked out by a mortgage company. If you buy a house that is part of

01:36:24.280 | a homeowner's association and you don't pay your homeowner's dues, then the homeowner's

01:36:28.760 | association can foreclose on you. I had a situation with a house that I bought. I had

01:36:34.160 | chickens in my backyard and some anonymous person complained to the government that I

01:36:40.360 | had chickens in my backyard, even though I had a half acre lot. And the government comes

01:36:45.120 | by and they cited me for having chickens in my backyard. They cited me for having a hedge

01:36:50.180 | that was too high. They cited me for having a shed, which was 40 years old, but it was

01:36:54.640 | unpermitted. And if I didn't reckon, if I didn't reckon, improve these things, then

01:37:00.800 | they would build, they would start charging me a thousand dollars up to a thousand dollars

01:37:03.960 | a day penalty that would be held as a lien on my property. Well, that's kind of a hard

01:37:09.520 | thing to stomach, you know? And so I had to, I had to get rid of my chickens and I had

01:37:14.040 | to cut my hedge and then I had to tear down what was probably a $15,000 shed simply because

01:37:20.080 | somebody who built it back in the eighties didn't apply for the appropriate government

01:37:24.280 | permitting process. So I don't hold any illusions about the ownership of property anymore. And

01:37:31.880 | I think that's different because I bet your mother, your grandmother would probably believe

01:37:37.120 | that, well, if you own a house, it's yours and you can do what you want. Well, I'm sorry.

01:37:40.960 | No, you can't. You can't take out the front window and change the front window without

01:37:45.000 | applying for a government license. You can't add onto the kitchen. You can't, you can't

01:37:49.880 | do anything with your house without applying for permission. So who owns it? You don't

01:37:54.200 | own it. Now that's the, that's kind of an extreme case, but I think it's worth recognizing

01:37:58.780 | because I think there is an age gap and a generational difference that should be reckoned

01:38:04.080 | with. You know, my grandfather, when he owned a house, it was his house. He could do whatever

01:38:09.880 | he wanted with it. He didn't have to apply for a permit to swap out a hot water heater

01:38:15.160 | as in today. So that's changed. And unless you live in one of the very few places where

01:38:20.320 | you can still avoid some of the government interference, that is changed. Now, on the

01:38:25.960 | flip side, the other thing about a house is a house represented a significant form of

01:38:30.480 | shelter and protection. If you go back, you know, 75 years, just consider what it was

01:38:38.360 | like if you didn't have a house, a place to keep you warm at night or a place to keep

01:38:41.720 | you cool. But a house was much more basic. It was just, it was providing for those needs.

01:38:46.800 | Today, given the proliferation of safety systems, if you're hungry, you can get free food from

01:38:54.600 | the government. If you don't have a place to stay, you can get all kinds of free places

01:38:58.080 | to stay. If you can get free rent paid with Section 8 housing, if you don't have medical

01:39:04.880 | care, you can get free medical care. So the safety net that was once represented by the

01:39:09.240 | house has, I think, largely minimized itself in terms of its actual value. So, because

01:39:18.280 | there are other government programs that are providing that same safety net. So that's

01:39:24.400 | kind of my analysis of it first, in terms of saying it can be fine to own a house. You

01:39:29.920 | do get some more freedom. You do get some more liberties that you may not get in an

01:39:33.840 | apartment, but you also do get a significant amount of responsibility. The other thing

01:39:40.560 | that has changed is the fact that people used to think that a house was a guaranteed gold

01:39:45.760 | mine of money. And that was because up until 2008, for the 20 or 30 years prior to 2008,

01:39:54.040 | the single best asset that most people owned that made them more money was their house.

01:39:58.880 | Well, that bubble burst in 2008, as you personally experienced. And I think today nobody really

01:40:05.760 | believes that. And I would say there's no way that it can be, because housing cannot

01:40:09.500 | outstrip real wages on the long term. It really can't, because people are, at the end of the

01:40:14.680 | day, are going to say, "I'm not going to live here." So should you buy a house? You shouldn't

01:40:19.240 | buy a house if you don't want to. I think you need security. I think that's helpful,

01:40:24.240 | especially for you as a single woman. You need to build for yourself that security blanket.

01:40:30.600 | But you can build that in many ways. You can build that with a house, but in some ways

01:40:36.360 | a house is actually insecure, because if your job disappears, but you have a house, you

01:40:41.160 | can't freely move. Whereas if you live in an apartment, you can freely move across the

01:40:44.400 | country to where there's work. You can build that security with having money, having savings.

01:40:50.120 | That builds a significant security blanket around you. You can build that security blanket

01:40:55.240 | in many ways. And I don't think you should buy a house unless you want to buy a house.

01:40:59.700 | And I would agree with you that a house is a significant responsibility. And it's probably

01:41:06.540 | not one that you would want at this phase of your life, unless you really do for some

01:41:12.520 | reason. But rather, build your security blanket in other ways, and then choose whatever housing

01:41:18.240 | decision works for you.

01:41:21.880 | I appreciate you. That's what I'm going to do. I'm going to build my security blanket

01:41:29.320 | in other ways, and not in the single thought that a house will be it. Because obviously

01:41:39.560 | I survived without it. And I haven't won, and that's exactly what happened in 2008.

01:41:47.040 | You lose your job, you lose your house. And that's exactly what happened. So I lost my

01:41:52.200 | job and my house obviously wasn't paid for. So I lost it. So yes, I need to build my security

01:42:05.320 | in other ways. So thank you for your sound advice. I think that's your gift to us.

01:42:14.640 | Thank you.

01:42:15.640 | And I think the gift of looking at both sides and helping us make a good sound decision

01:42:24.160 | when sometimes we can get kind of cloudy and get down in the minutiae a little bit. And

01:42:35.240 | so I really appreciate you doing this for us. Thank you very much.

01:42:38.400 | It's my pleasure. And let me just make a couple of recommendations to you from what you've

01:42:42.560 | shared first. The most effective security blanket will be found in your local community.

01:42:50.420 | So that community can be as close as your family. That community can be with your friends,

01:42:58.600 | if you're part of a church or some other community organization. But that's going to be the most

01:43:03.440 | effective security that you can have for yourself. And so I would recommend that you just think

01:43:08.900 | about that and continue to prioritize building that. So continue to build into the lives

01:43:13.760 | of your children. Just because they're out of your house doesn't mean they're out of

01:43:17.080 | your life. And I think that continuing to sow into them, if you will respect the change

01:43:24.880 | that they're making in life, where now they are independent adults, not dependent children.

01:43:29.860 | But if you continue to build into them, that can continue to flourish. And depending on

01:43:38.600 | how stable your children are and what you can do to help them be stable, that will always

01:43:43.320 | be your security blanket. One of the things that really bothers me is that many people

01:43:50.760 | in your generation look forward and ignore the value of being with family. And I'm concerned

01:43:58.960 | because it seems that's a very lonely path through life. To believe that you have to

01:44:05.680 | do it all and that you have to do it all independently because you're the mother will rob you of

01:44:12.440 | the joy of being able to be with your children and with your family. And it's really concerning.

01:44:19.360 | And the data is actually pretty clear on that. People who are in the second half of life

01:44:25.520 | usually often experience significant mental loneliness, significant sense of isolation.

01:44:35.260 | And it shouldn't be that way. Our society is sick in the way that we treat old people

01:44:39.520 | and young people because you shouldn't have this idea that, okay, I'm going to reach this

01:44:44.600 | certain age and I'm going to be off by myself and I got to figure it out. One of the things

01:44:49.880 | that we should be looking forward to and we should be cultivating is we should be cultivating

01:44:54.920 | as a culture an appreciation for the wisdom that comes with age. And it's hard to know

01:45:03.720 | how to apply this generally, of course, when people from different backgrounds and different

01:45:07.240 | situations. But I get so frustrated at how in our culture, we only just look at youth

01:45:15.320 | and beauty and we don't appreciate age and wisdom. And that is wrong. We should appreciate

01:45:21.040 | age and wisdom and you should look forward to the next half of your life and you should

01:45:26.860 | look forward to being sought upon as a valuable source of wisdom, as a valuable source of

01:45:32.680 | insight. Your life experience up till now has given you the ability to see situations

01:45:39.800 | in a different light. And it's to our shame as US Americans that we despise the wisdom

01:45:45.920 | of the elderly and we praise the beauty of the young and usually foolish. So that should

01:45:52.560 | change. So continue to sow into the lives of your children because they will look for

01:45:57.560 | that. Now, depending on their age, usually they need to get into their thirties before

01:46:00.900 | they start to appreciate mom a little bit more. But that's a significant source of security,

01:46:06.520 | right? You sounded like you want to be youngest is just out of the house. Usually it takes

01:46:09.800 | a little bit of time. But I think if you make it clear, if you make it clear that you want

01:46:16.520 | to continue to be involved in the lives of your children, then they can continue to be

01:46:20.280 | involved. And that will be something that will be beneficial. And the other thing is

01:46:24.040 | in terms of the community, focus on building for yourself a community that will support

01:46:30.640 | you, that will love you, that will care for you, because that's where most of the security

01:46:34.720 | of life comes from. If you have that community behind you, whether it's through a close family,

01:46:40.760 | through an extended family, through a church family, through a community organization that

01:46:44.800 | you're involved in, then that community will support you if you're ever in need and that

01:46:51.600 | community will stand behind you. And those are the things that are really valuable. And

01:46:56.480 | then along the way, continue to be prudent with your money, save money, stockpile the

01:47:01.400 | things that you need, make sure that you never become in a situation where you're financially

01:47:05.400 | vulnerable, and then you'll figure out the path forward. But a house does not automatically

01:47:10.360 | mean safety. It just is a house. So I think you're on the right track. Those are my thoughts.

01:47:16.400 | And thank you for your kind words, Carla. I appreciate you calling in.

01:47:18.440 | Carla Enns Thank you.

01:47:20.440 | We go now, let's see, Washington, DC for our final caller. Are you there? Tell me your

01:47:26.720 | name, please, and how I can serve you today.

01:47:28.720 | Dan Fletcher Hi, Joshua. Can you hear me okay?

01:47:31.480 | Yes, now I can hear you. Tell me your name, please.

01:47:33.480 | Dan Fletcher My name is Dan. We've spoken before on a consult

01:47:39.040 | call, and I think it was about a similar topic that I have a question about tonight about

01:47:44.760 | life insurance. I am just starting school again, going back to graduate school. I'm

01:47:53.240 | 30 years old, and I'm married to a woman who has a consulting job, and I'll be a dependent

01:48:01.560 | on her benefits, because I'm also working part time, but going off of benefits because

01:48:09.720 | of that. So I do have a whole life policy that I inherited it from my parents. I think

01:48:22.600 | it's either a $50,000 or $100,000 whole life policy. I've been paying it since I moved

01:48:32.640 | out because they said it was a good deal. I think it's around like $400 or $500 a year

01:48:39.240 | that I'm paying. So basically, I'm wondering if I need to sign up for my, you know, via

01:48:47.640 | my wife's benefit as a dependent, if I need to sign up for life insurance, in addition

01:48:53.520 | to what I'm already paying. I understand that, you know, that's a difficult question, you

01:49:01.920 | know, not knowing more about my life situation, but it's really just the two of us. We're

01:49:06.360 | probably going to have kids in a couple years. I will get back on benefits and have the opportunity

01:49:15.600 | to purchase life insurance through them again, I'm sure in the next couple years after I'm

01:49:20.920 | done with med school. I mean, essentially, it boils down to is the $50,000 or $100,000

01:49:30.040 | I currently have in life insurance enough and am I paying too much for it?

01:49:36.120 | Tom: Short answer, probably it's not enough money and probably you're not paying too much

01:49:42.680 | for it. But let me ask a couple of questions to make sure of your situation and then I'll

01:49:47.440 | defend those quick answers just a little bit. How much money is your wife earning currently?

01:49:53.920 | She makes about, I think it's about $100,000 a year.

01:50:00.720 | Okay. So with her earning $100,000, you guys are not financially destitute and these decisions

01:50:08.080 | are not going to be significant. They're not going to be material in your day-to-day cash

01:50:15.120 | flow. That would be different than if your wife is earning $30,000 per year and you guys

01:50:21.080 | are scrimping and saving to live in a tiny little apartment while you go back to grad

01:50:24.600 | school. Those would be different. But given her level of income, everything we're going

01:50:29.840 | to talk about in the coming minutes is going to be, with regard to the impact to your lifestyle,

01:50:36.040 | financially insignificant. So let's talk about do you need life insurance or not? There'll

01:50:41.720 | be two answers to the question and depends on how you approach the analysis of do you

01:50:46.520 | need life insurance. Many people look at life insurance and they say, "Well, if I die, what

01:50:56.600 | do I need to, what's the bare minimum that I've got to cover?" And by that analysis,

01:51:04.080 | you probably don't need life insurance. You don't have children. I'm going to guess, correct

01:51:09.880 | me if I'm wrong, but I'm going to guess that your financial situation is stable. You're

01:51:13.400 | not deeply in debt. You're not getting for bankruptcy. Your wife has an excellent income.

01:51:19.200 | She is well-qualified in the career world. And if you died, she would continue to be

01:51:24.400 | financially stable. So you would not be drop, shirking your responsibility. You wouldn't

01:51:31.800 | leave her destitute. You're going to be okay. That's fine. And that's a reasonable way to

01:51:36.720 | approach it. And so many people would say, "I don't need life insurance, so I shouldn't

01:51:40.280 | own any." Now, another way to look at it would be to say, "Are we investing into my career

01:51:46.840 | and into my income? And would it be very unfortunate if I died, especially while I'm in college?"

01:51:54.120 | And by that metric, I think you can make a compelling case that it would be in your wife's

01:51:58.840 | best interest for her to own a life insurance policy on your life. And it would be in your

01:52:05.880 | best interest for you to own a life insurance policy on her life. Think about it. She is,

01:52:12.320 | right now, carrying the financial load for the earning of your family while you are in

01:52:17.600 | school. And not only does that mean that you are not contributing financially an income

01:52:23.900 | to the family right now, but you're costing money in expenses and you're investing into

01:52:29.560 | the tuition for your graduate school. And so by that metric, if you died, although your

01:52:35.760 | wife would not be kicked out of the house, she wouldn't be destitute on the streets,

01:52:40.640 | she would be losing a significant amount of money on her investment. Now, if you died

01:52:45.360 | and you have a $500,000 life insurance policy, that would go a long way towards helping her

01:52:53.080 | to recoup her investment in you with the time, the labor, and the money that, in effect,

01:52:58.720 | she's spending on you in her marriage. That would go a long way towards making her financially

01:53:03.640 | whole and it would certainly help her to be able to grieve for you and to feel like she

01:53:09.000 | has enough money to be able to figure out what's next for her while she figures out

01:53:13.080 | how to put her life together. Now, the great thing is, because life insurance is so stinking

01:53:18.080 | cheap, especially for, you said you were 30, I think you said, right? 30? Okay. 30, non-smoker?

01:53:24.840 | Yeah. Okay. So you could buy a half a million dollar term life insurance policy for $300,000,

01:53:31.960 | $400 a year, under $500 a year, depending on what type of policy you buy. So in a household

01:53:38.600 | income of $100,000, where your wife is investing into your expenses, into your tuition, et

01:53:46.640 | cetera, with her earning, does it make sense to spend $300 for a $200,000 life insurance

01:53:53.400 | policy, $500 a year for a half a million dollar policy? I think there's a really compelling

01:53:58.420 | case there. And so if I were sitting with her, I would say, "Listen, just go ahead and

01:54:04.720 | buy it. I think it'd be worth it." And this is the same advice I give to parents who have

01:54:09.800 | an 18 year old child and they're putting their child through school. It's like, just go ahead

01:54:13.320 | and buy a $250,000 term life insurance policy on your 18 year old. Once a child turns 18,

01:54:19.160 | you can buy term life insurance. Like you're putting, you're investing money into your

01:54:24.800 | child, into their education, into their support. There's no reason in the world for you not

01:54:30.500 | to go ahead and have a life insurance policy on them. And it's so cheap to do that, okay,

01:54:36.000 | so you spent a few hundred dollars on it and you decided, and thankfully your child is

01:54:40.480 | alive or your spouse is alive, that's fine. But there's no reason not to. Make sense?

01:54:44.880 | That makes total sense. And that's a different way than I had thought about it before. So

01:54:50.000 | I really appreciate that. Would you say convert it, like, can I convert my whole life into

01:54:55.840 | term or how does that work? Like with the policy that I currently have, it's not through,

01:55:03.120 | you know, it's independent of any corporate benefit package.

01:55:08.120 | Right. What company is your whole life insurance policy with?

01:55:11.280 | I think it's New York Life.

01:55:14.480 | So the short answer to your question, can you convert it into term insurance? No, you

01:55:21.080 | can never convert a whole life insurance policy into a term life insurance policy and keep

01:55:28.360 | the whole life insurance policy in force. Let me explain actually how you could convert

01:55:31.600 | it. But first let me explain why. Whole life insurance is expensive when measuring the

01:55:38.760 | premium dollars. And the reason it's expensive is because it's in force for your whole life

01:55:45.920 | until you die. Your policy is probably, what's the word for the people who do all the calculations,

01:55:56.200 | the actuary, it's actuarily planned out to age 120 probably. So it's in force for your

01:56:02.080 | whole life. So that makes the premium very high as compared to the death benefit. Now,

01:56:07.160 | if you found out that you were going to get cancer, you had cancer, and then you would

01:56:12.000 | have a very much an incentive just to switch it to term life insurance and say, well, I

01:56:15.640 | got cancer, I'm going to die. And that would result in an adverse selection problem for

01:56:21.680 | the insurance company. So you can never convert a whole life insurance policy to a term life

01:56:27.040 | insurance policy just as a way of automatic conversion. Now, you do have one option where

01:56:34.000 | it is possible if you didn't want the policy anymore, you could convert the cash value

01:56:39.600 | in the policy to what's called extended term protection. So one of your non forfeiture

01:56:45.760 | benefits that you have in a whole life insurance policy, if you don't want the policy anymore,

01:56:51.440 | you have a certain amount of cash value. Do you know how much cash value your policy has

01:56:54.660 | in it right now?

01:56:55.660 | >>ANDREW: I do not.

01:56:56.660 | >>STEVE: Okay. Let's pretend it has $3,000 of cash value in the policy. So if you're

01:57:03.980 | policy has $3,000 of cash value, you could say to the insurance company, listen, I don't

01:57:09.240 | want the policy anymore. I don't want it. But what I will do is I'll take the $3,000

01:57:16.220 | and I want you to give me the extended term insurance as part of the non forfeiture benefits

01:57:22.440 | for the policy. And so what the insurance company would do, they would calculate how

01:57:28.200 | many months or years of insurance the $3,000 would buy for a 30 year old male. And they

01:57:35.400 | would give you that number of years of insurance. So maybe that would buy you 13 years of insurance

01:57:41.440 | coverage at the $50,000 level of the policy currently is. So you can do that. You could

01:57:47.600 | convert the cash value into the extended term insurance and they would just give you 13

01:57:53.520 | years of coverage. And if you die in the next 13 years, they would pay your wife $50,000.

01:57:58.400 | If you don't die in the next 13 years, then they wouldn't. And it would just be just like

01:58:02.400 | any other term insurance policy. Now that doesn't work in your situation because it

01:58:07.960 | didn't approach the numbers of insurance that we were talking about. Notice when I was talking

01:58:13.520 | about, Hey, your wife should have insurance. I moved right on past your 25 or $50,000 policy

01:58:19.080 | and I jumped right up to two, three, four, $500,000 of insurance. So it doesn't really

01:58:24.960 | solve anything to have the $50,000 of insurance. So I wouldn't recommend that you pursue it.

01:58:29.120 | Do you know how old you were when your parents bought this policy for you?

01:58:37.960 | I know it's been, I would guess college age. So let's say 10 years and you're at 500 bucks

01:58:44.960 | a year.

01:58:45.960 | Okay.

01:58:46.960 | So with 10 years-

01:58:47.960 | 500 bucks.

01:58:48.960 | Yeah. With 10 years at 500 bucks a year, my guess would be that your policy, and do you

01:58:53.920 | know whether it was $25,000 or $50,000 that was issued at?

01:58:58.640 | I think it's 50.

01:58:59.640 | Okay. So your $50,000 policy, you probably have maybe $4,000 of cash value would be my

01:59:05.800 | guess somewhere in the fours on a policy like that with a company like New York Life. So

01:59:10.840 | here's what you need to do. Call your New York Life agent if you know who that is, or

01:59:17.720 | your parents' agent, and/or just call the local New York Life office and tell them,

01:59:23.400 | "I need an agent," and order what's called an in-force illustration for your policy.

01:59:29.560 | An in-force illustration is a financial ledger that will show what's actually happening in

01:59:34.040 | the policy. And my guess would be that at this point in the maturity of your policy,

01:59:40.080 | any money that you put into the premiums is paying the policy, it's keeping the policy

01:59:46.080 | in force of the death benefit, but you're probably at the point where just about all

01:59:50.120 | the money that you're putting in in premiums is going directly into the cash values. Depending

01:59:56.400 | on how the policy was structured, I can't answer all this stuff for sure, but it would

02:00:00.640 | probably be at this point where when you send in $500, your cash value is probably increased

02:00:04.880 | by 500 and something dollars, which means that your analysis here is partly on the basis

02:00:10.680 | of life insurance and is partly on the basis of the cash values. And in short, if you'll

02:00:16.680 | order the in-force illustration, you'll call a life insurance agent and you'll review it

02:00:21.940 | with that life insurance agent, have them explain to you the policy, explain how it

02:00:26.280 | works, et cetera. Probably where you'll wind up is you'll just say, "It's a good policy.

02:00:31.480 | I'll keep it. That way I've always got some amount of whole life insurance." And then

02:00:36.220 | you just go ahead and supplement it. If you want some more insurance, go ahead and supplement

02:00:39.560 | it with some term insurance. That can be through your work or that can just be a cheap term

02:00:43.800 | policy that you buy from the same agent. The same agent can sell you a cheap term policy.

02:00:48.600 | But it's a good policy to have. Whole life insurance policies really stink if they're

02:00:55.160 | only kept for a short amount of time. And the reason is because all the expenses are

02:00:59.080 | front loaded. So if your parents had bought the policy, kept it for three years, and then

02:01:04.360 | canceled it, they would have lost all their money. But they didn't. They bought it and

02:01:07.600 | then they transferred it to you when you came of age. And so once you reach the point in

02:01:11.560 | a policy like this, where it's 10 years old or so, it's a mature policy. It can be a very

02:01:15.960 | flexible financial asset. And you can own it. You can use it. You can have access to

02:01:22.080 | the cash if you needed it. Doesn't sound like you need it. At this point in time, I would

02:01:26.320 | probably just keep paying the premiums. But you'll need to understand how it works. You

02:01:29.960 | need to understand when it would become paid up. You need to understand what the premium

02:01:33.280 | schedule is. You need to understand what's happening with the cash value. And those questions

02:01:36.880 | can only be answered by an in-force illustration from that company.

02:01:40.560 | Beautiful. Yeah, that's another question that I had had about it was, you know, whether

02:01:46.440 | it's like a fungible asset that I can take cash from if I wanted to.

02:01:50.960 | Yeah, it is. It is. So what I...

02:01:54.680 | In a situation like yours, what I'm most like about things like, or the use of a whole life

02:02:00.840 | insurance policy, this policy is too small to be really meaningful for you at this point

02:02:06.320 | in time. I mean, your household income is significant, and this asset is relatively

02:02:11.600 | insignificant in regards to the cash value. But as it grows, I think cash value, cash

02:02:18.240 | values are best viewed as a component of your emergency fund at this stage of your life.

02:02:24.240 | And the reason is the money is very, very stable. New York Life, especially, it's a

02:02:29.480 | great company. They do a good job with their investment portfolio. They do a good job with

02:02:33.640 | their dividend rates. And so the money will only ever go up. So you have an account that

02:02:38.840 | has money in it that will only ever go up. That's helpful because it means that you can

02:02:43.200 | count on the stability of that cash account. Now, the rate at which it'll go up will vary,

02:02:49.560 | obviously, depending on what the dividend rate is, depending on the investment portfolio,

02:02:53.080 | etc. But it's guaranteed to go up and it's very stable. So you can count on it as you

02:02:58.360 | can count on things like savings accounts. But given the fact that in the life insurance

02:03:03.680 | policy, you have the benefits of it being sheltered from taxes, the inside buildup of

02:03:08.680 | cash values in a life insurance policy are not taxed year by year. So it's sheltered

02:03:13.440 | from from taxes. You also have the benefit of it being protected from the claims of creditors.

02:03:20.440 | Life insurance cash values are generally protected from the claims of creditors. You have the

02:03:24.760 | benefit of it being a fairly private asset. It's not reported in the same way that other

02:03:29.660 | investment accounts and other savings accounts are. And you have the ability to access the

02:03:34.080 | money fairly quickly if you need it. So you could call New York Life and they could wire

02:03:38.760 | you money in 24 hours you could have up to you can borrow out of a cash value policy

02:03:43.480 | like that you can borrow up to about 90% of the cash value. So what I like to look at

02:03:47.760 | policies like that at your phase of life is as a component of your emergency fund. If

02:03:53.160 | you had an emergency, you can start to use savings that you should also keep on hand

02:03:58.560 | liquid savings, but then you can use credit cards, and you can use credit cards to pay

02:04:02.940 | whatever you need to pay. And then if you need to access and pay those credit cards

02:04:06.560 | off, you can just take the money from the credit from the cash and put it into the credit

02:04:10.680 | cards. And what I think works really well is if you use that as a an asset that can

02:04:15.960 | be filled and replenished and then used, and then use it to sometimes you borrow from it,

02:04:21.800 | sometimes you borrow from other sources. So let's say that you had a financial emergency

02:04:25.960 | and you ran out of money. If you have $30,000 sitting in a cash value life insurance policy,

02:04:32.000 | you could use that. But what I would do is I would keep that asset as collateral and

02:04:36.240 | I would take out a 0% credit card offer. And I would borrow the money on a credit card

02:04:40.600 | at 0% knowing that I can always pay that off with my cash values if I want to surrender

02:04:44.600 | the asset. And then if I run into a situation where all of a sudden my utilization ratio

02:04:49.360 | gets too high on my credit management system, I would take the money out of the cash value

02:04:55.280 | life insurance policy, pay down the credit card, wait for my credit score to come up

02:05:00.520 | because my credit utilization ratio goes down. Then I would apply for another 0% credit card

02:05:05.320 | and I would go ahead and use that one. And then I would replenish the money back into

02:05:08.240 | the cash value policy. So when you have a stable asset like that, and if you're very

02:05:12.520 | disciplined about your money, it can actually be really useful because it gives you a lot

02:05:17.360 | of options to access other forms of financing. Now, if those other forms of financing aren't

02:05:21.360 | available, you can't take out a credit card, you can't get a loan, you don't have any other

02:05:24.680 | savings, you can always just either borrow the money, keep the policy in force, or you

02:05:28.520 | just cash it out and use the money. But it's it's really useful from that perspective.

02:05:34.080 | So the challenge is just it's too small, probably at this point to be a big deal. But if I woke

02:05:38.600 | up in your shoes, I would keep the policy most likely order the enforce illustration,

02:05:43.080 | make sure it's a healthy policy, do that analysis with an agent. But I would keep the policy

02:05:46.960 | and I would buy some additional cheap term life insurance.

02:05:49.920 | Awesome. And keeping the policy just is paying the premium each year, right?

02:05:57.760 | Right. And ask the agent like if you don't have the money, let's say paying that $500

02:06:02.560 | premium is actually a hardship for you. Because you're in your concern, ask the agent. If

02:06:08.600 | you can quick pay the policy, or ask the agent if you can adjust the dividend option, see

02:06:13.400 | if the policy you know what the dividends are on the policy. If you can't pay it, you

02:06:17.720 | can always use the money in the cash values to pay the premium for a few years. So your

02:06:22.280 | policy will have an option on it called an automatic premium loan. So if you just chose

02:06:26.480 | not to pay it for the next three years while you're in graduate school, it will take the

02:06:30.960 | annual premiums from the cash value and pay itself. So you can keep it in force without

02:06:36.240 | paying it. And then three years from now, you could decide to pick up the premiums and

02:06:41.080 | go ahead and pay off that loan if you want to. Another option that you'll have is you

02:06:45.080 | could use the dividends. Let's say the dividends on it are $200 by now, and the premium is

02:06:49.760 | $500. Well, you can use the dividends to reduce the payment, the premium that you owe, and

02:06:54.880 | you would just pay $300. Or if you don't want to pay any premiums in the future, the agent

02:07:02.200 | can go over your non-forfeiture options. You could take the policy paid up. So maybe by

02:07:06.160 | now the paid up option would be $15,000. So you could just say, "I don't want to take

02:07:14.120 | the cash out. I don't need the money, but I want to take the policy paid up." So they

02:07:18.480 | would just issue you a policy of $15,000. They could give you the cash value back if

02:07:23.840 | you needed it. That's probably your worst option. Or again, you could take the extended

02:07:27.600 | term insurance option for your non-forfeiture benefit. But those are all questions that

02:07:31.720 | the insurance agent will answer for you.

02:07:33.840 | >>Toby: Awesome. Thank you so much, Joshua. You are invaluable, and I'm sure I will call

02:07:40.480 | you on a consult again.

02:07:41.480 | >>Joshua: I'm so glad you did. It was super fun. I love doing these questions. They stimulate

02:07:45.680 | my creativity, and I enjoy doing them. Thank you all so much for listening to today's show.

02:07:50.440 | I hope you've enjoyed the Q&A show. Keep an eye on your feed. Today's show was a feed

02:07:55.640 | that was available to any listener. But keep an eye, and I'll do these more and more from

02:08:01.920 | time to time. I'm doing my best to stay consistent with my Q&A schedule. Just the challenge is

02:08:07.680 | whether I have a stable internet schedule and can do it, but this worked out for me

02:08:10.920 | to do it. So thank you so much for listening, and I'll be back with you very soon.

RPF0583-Mega_Friday_QA