RPF0623-Friday

00:00:00.000 | When you're in winter's favorite town,

00:00:04.000 | the snow-covered mountains surround you,

00:00:08.000 | a historic main street charms you,

00:00:12.000 | and every day brings a new adventure.

00:00:16.000 | Welcome to Park City, Utah. Naturally, winter's favorite town.

00:00:24.000 | [sigh]

00:00:28.000 | Today on Radical Personal Finance, it's live Q&A.

00:00:32.000 | [music]

00:00:36.000 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:52.000 | skills, insight, and encouragement you need to live a rich and meaningful life now,

00:00:56.000 | and making a plan for financial freedom in 10 years or less. My name is Joshua, I am your host,

00:01:00.000 | and it is Friday, which means today, live Q&A.

00:01:04.000 | These calls are open to patrons at the show, if you'd like to become a patron.

00:01:08.000 | I was going to say go to radicalpersonalfinance.com/patron, but that link doesn't work.

00:01:12.000 | Go to Patreon, look up Radical Personal Finance, you'll find me.

00:01:16.000 | [music]

00:01:20.000 | In the next couple of days, there are a lot of links that aren't working,

00:01:24.000 | so I'll have to arrange a complete and total reorganization of the website. There's more coming on that in the future.

00:01:28.000 | But I guess what I should rather say is these shows are usually reserved for patrons,

00:01:32.000 | but I am actually going to be hosting a couple of public shows this next week.

00:01:36.000 | So if you're listening to this show and you would like to join me, please join me

00:01:40.000 | this coming week for a Q&A call recording on Monday,

00:01:44.000 | February 4, 2019.

00:01:48.000 | Monday, February 4, 2019. Tuesday, February 5, 2019.

00:01:52.000 | And Wednesday, February 6, 2019.

00:01:56.000 | At 1 o'clock p.m. Eastern Time for a call.

00:02:00.000 | If you would like to join a call like this, and the way that you join is on the phone at

00:02:04.000 | 561-440-7462.

00:02:08.000 | Again, that number is 561-440-7362.

00:02:12.000 | Look at the written notes on your phone.

00:02:16.000 | 561-440-7362 if you'd like to join for one of those calls.

00:02:20.000 | I'm recording again another series here of live Q&A calls. I would love to speak with you.

00:02:24.000 | Today, though, we first go to Taylor in South Carolina.

00:02:28.000 | Taylor, welcome to the show. How can I serve you today, sir?

00:02:32.000 | Hey, Joshua. Thanks for doing these calls.

00:02:36.000 | I'm listening to all your Life Insurance podcasts. I kind of want to give you a summary

00:02:40.000 | of where I'm at now and see if you have any recommended next steps to take.

00:02:44.000 | I'm recently married.

00:02:48.000 | Probably this next year, we're going to try to get pregnant.

00:02:52.000 | The plan is I will be a stay-at-home dad.

00:02:56.000 | I'd like to be at home as much as I can, but I'm a chief physician

00:03:00.000 | and want to get back into that work. I want to see

00:03:04.000 | what life insurance you might have to recommend.

00:03:08.000 | I've listened to all your shows, and I know a lot of different things. I probably want to start out with

00:03:12.000 | a term, but I want to see if you have any recommendations.

00:03:16.000 | How old are you and how old is your wife?

00:03:20.000 | We're both 29.

00:03:24.000 | The place to start is always fairly simple. With life insurance, the rule is this.

00:03:28.000 | You always solve death benefit need first with term life insurance.

00:03:32.000 | You calculate how much life insurance you need,

00:03:36.000 | and then you make sure that you purchase that amount of life insurance with term life insurance.

00:03:40.000 | That's the simplest place to start.

00:03:44.000 | Term life insurance is going to be your cheapest way to own lots of death benefit.

00:03:48.000 | In your initial stages of life insurance planning, you are concerned with death benefit.

00:03:52.000 | How do we protect one another in case we die?

00:03:56.000 | You solve death benefit need that's temporary with term life insurance.

00:04:00.000 | Once you have term life insurance and you have it locked in,

00:04:04.000 | then you can go on and try to figure out, do we want anything else? Do we need anything else?

00:04:08.000 | Figure out if some variation of a permanent life insurance product

00:04:12.000 | is helpful to you at all. But you always start with term life insurance because that gives you

00:04:16.000 | the maximum bang for the buck.

00:04:20.000 | Okay. Yeah, that's what I'm going to start with.

00:04:24.000 | I guess maybe I'm feeling a little financial.

00:04:28.000 | About 500 grand net worth right now. I'm pretty heavy in cash right now.

00:04:32.000 | I've heard a little bit about this infinite banking, bank on yourself.

00:04:36.000 | That sounds interesting. It's a little confusing to me,

00:04:40.000 | but I know I'll just start with term life, but I'm curious to see

00:04:44.000 | where I might investigate next.

00:04:48.000 | If you are interested in a concept like the infinite banking concept,

00:04:52.000 | which basically involves the use of large overfunded cash value life insurance policies

00:04:56.000 | to provide you with a safe place to store money

00:05:00.000 | and a source of personal financing for the expenses of your life,

00:05:04.000 | then what you'll do in your strategic planning is you will make sure

00:05:08.000 | that strategically you purchase your life insurance policies, your term life insurance

00:05:12.000 | with a company that will have the type of permanent life insurance product

00:05:16.000 | that will fit your personal infinite banking goals.

00:05:20.000 | That's where you start.

00:05:24.000 | If you're going to use company XYZ, and that's the company that your infinite banking consultant

00:05:28.000 | is going to recommend for you, then you just simply make sure

00:05:32.000 | you purchase your term life insurance in that scenario with that same company.

00:05:36.000 | What I would recommend, what I always recommend to young people, and by young people

00:05:40.000 | I mean anybody under the age of about 45,

00:05:44.000 | excuse me, anyone under the age of 40s, especially people who are in your

00:05:48.000 | phase of life where you are looking forward to the arrival of children, but you

00:05:52.000 | don't currently have those children,

00:05:56.000 | you want to have the most flexible term life insurance that you can. That flexibility is going to

00:06:00.000 | come by purchasing a type of term life insurance that's called annual renewable

00:06:04.000 | term life insurance versus level term life insurance.

00:06:08.000 | Most people recommend level term life insurance, which has its place

00:06:12.000 | and it's especially fine for people who are a little bit down the life cycle, but in

00:06:16.000 | your case, with just purchasing life insurance, you would want to start with

00:06:20.000 | annual renewable term, because that will give you a very long period

00:06:24.000 | of convertibility where you can convert your term life insurance to permanent life insurance

00:06:28.000 | products.

00:06:32.000 | Any other questions? Do you want to go further with anything or is that enough

00:06:36.000 | to get you started? I think that's enough for now. Thank you.

00:06:40.000 | Okay, very good. We go on now to

00:06:44.000 | Justin in Colorado. Justin, welcome to Radical Personal Finance. How can I serve you today, sir?

00:06:48.000 | Hey, Joshua. Thanks for taking my call.

00:06:52.000 | I had two questions. I think they'll both be relatively quick.

00:06:56.000 | The first one is I was interested in your perspective. I think it's

00:07:00.000 | technically possible, but I wanted to kick the tires on it with you.

00:07:04.000 | I have a certain amount of money in a traditional IRA.

00:07:08.000 | I would like to make a backdoor Roth contribution

00:07:12.000 | this year as well, and I'd like to do so without

00:07:16.000 | being subject to the pro rata rule and having to pay

00:07:20.000 | income on some portion of that. My question is, if I roll that IRA into

00:07:24.000 | my 401(k) and then subsequently

00:07:28.000 | do a backdoor Roth conversion, does that seem like a reasonable way to

00:07:32.000 | avoid the pro rata rule? Do you have any wrinkles with that?

00:07:36.000 | I can't, off the top of my head,

00:07:40.000 | without having the details on the pro rata rule, I can't summon

00:07:44.000 | that data up. Explain to me the rule and explain to me how your plan

00:07:48.000 | avoids that, please.

00:07:52.000 | My understanding of this is probably somewhat tenuous.

00:07:56.000 | My understanding is if I make a contribution into my traditional IRA

00:08:00.000 | with the intent of rolling that into a Roth IRA

00:08:04.000 | afterwards, say I have $5,000 in my traditional IRA

00:08:08.000 | currently, and then I make another $5,000 contribution, and then I roll that

00:08:12.000 | $5,000 into the Roth, my understanding is I'd have to pay income on 50%

00:08:16.000 | of that, I'd basically pay a fee or income on

00:08:20.000 | 50% of that. I'd have to essentially realize $5,000

00:08:24.000 | as income in order to do that conversion. So my question is

00:08:28.000 | if I, previous to making that contribution, if I roll the entire contents of my

00:08:32.000 | traditional IRA into my 401k, and then

00:08:36.000 | at that point I would have a zero balance in my traditional IRA, and then at that point I could

00:08:40.000 | do a backdoor conversion and there would be no balance to contend with the pro rata rule.

00:08:44.000 | I don't know if that approach made sense to you.

00:08:48.000 | Short answer is I'm not entirely sure.

00:08:52.000 | I would need to sit down, chart this out on paper

00:08:56.000 | and study through the rules, and I am not current

00:09:00.000 | on those rules in order to answer that off the cuff like this.

00:09:04.000 | But I can tell you how to approach it. If you

00:09:08.000 | look at the rules and you can arrange your accounts in such a way that your

00:09:12.000 | accounts are not in violation of the rules, then yes, your plan will

00:09:16.000 | work. And so what I would just simply do is if you've read through

00:09:20.000 | the rules and said, "Okay, if I put all of this account here, so therefore

00:09:24.000 | I don't have the other account outstanding, then that means I only have this

00:09:28.000 | one account," yeah, go for it. Realistically,

00:09:32.000 | as long as you can check that box based upon your reading of those

00:09:36.000 | rules and you have found your workaround through

00:09:40.000 | reading those rules, check the box, move on with it, and

00:09:44.000 | you'll be fine. Good chance as long as you can make sure that the custodians

00:09:48.000 | who are involved in the recharacterizations of money aren't

00:09:52.000 | reporting something that would cause you to be subject to those pro rata

00:09:56.000 | rules. Chances of you facing a problem, as long as

00:10:00.000 | things aren't reported, chances of you facing an IRS audit or a problem there are very, very low.

00:10:04.000 | If you can satisfy the letter of the law in

00:10:08.000 | the maneuvers that you've accomplished there, then

00:10:12.000 | legally you're in good shape. And so I don't see any problem with

00:10:16.000 | it. As long as the plan that you've described follows the rules, then

00:10:20.000 | you'll be in good shape. And hey, if you're not, then maybe we can name a new rule

00:10:24.000 | and a new tax case after you. It could be the Justin

00:10:28.000 | modification of pro rata rules for backdoor Roth IRAs.

00:10:32.000 | That's certainly something I'd prefer to avoid, all

00:10:36.000 | things being equal. Agreed. Go with your second question, please. I'm sorry, I didn't know

00:10:40.000 | the answer specifically to that one. No, no, no, that's fine. It's kind of a complicated

00:10:44.000 | deal. So just a kind of a quick follow up. Do you know

00:10:48.000 | off the top kind of where you would go to view those rules? I'm not a tax

00:10:52.000 | expert. It just seemed to me like a workaround. So start with a web search, obviously.

00:10:56.000 | I would go to DuckDuckGo and search for pro rata rule

00:11:00.000 | and backdoor Roth IRAs. Read through the analysis. That's what I did while

00:11:04.000 | you were talking here. And I found a half a dozen articles here.

00:11:08.000 | The key is read those articles where somebody is trying to answer the question.

00:11:12.000 | And then just look for the source. Go and search the IRS website,

00:11:16.000 | irs.gov, and search their website for pro rata rule and see what you

00:11:20.000 | find. Usually what you will find is you'll find the data on the IRS website, which

00:11:24.000 | will explain what you need to answer your question. Sometimes it will

00:11:28.000 | be buried in a specific publication, a tax publication,

00:11:32.000 | or sometimes it'll be listed as an FAQ or some article on the

00:11:36.000 | IRS website. But I would read the popular market articles first

00:11:40.000 | and then go directly to irs.gov and search it out there. If you don't

00:11:44.000 | have an answer there, then you should call a tax attorney and

00:11:48.000 | ask a tax attorney to solicit their legal opinion on the subject. If it's something that you've

00:11:52.000 | researched and the web is not answering your question, just go and pay a tax attorney

00:11:56.000 | a couple hundred bucks for their answer to the question

00:12:00.000 | and get specific legal advice for that specific

00:12:04.000 | maneuver that you're planning.

00:12:08.000 | Yeah, okay. Sounds good. I appreciate it.

00:12:12.000 | The other question is more general and it's kind of asset protection themed, but it's

00:12:16.000 | both me and my spouse are sitting on

00:12:20.000 | a reasonable amount of money in taxable brokerage accounts, which are, I don't know,

00:12:24.000 | in my understanding, relatively vulnerable to the claims of would-be creditors. I was

00:12:28.000 | going to see if you had any kind of general rule of thumb

00:12:32.000 | if we wanted to gain some kind of asset protection benefits on

00:12:36.000 | brokerage accounts, what your strategy is.

00:12:40.000 | How much money is currently in those brokerage accounts?

00:12:44.000 | Something like $200,000. And outside of that $200,000,

00:12:48.000 | are the balance of your assets in other exempt or protected accounts?

00:12:52.000 | Yeah, I mean, essentially

00:12:56.000 | everything else is in 401(k)s, IRAs, and our home. And about how much

00:13:00.000 | is the balance of those 401(k)s and your home?

00:13:04.000 | About the same, about $200,000.

00:13:08.000 | Okay. So what do you plan to do with the money that's in those

00:13:12.000 | brokerage accounts?

00:13:16.000 | It's essentially our retirement savings.

00:13:20.000 | I'm somewhat attracted to the

00:13:24.000 | kind of early retirement financial independence

00:13:28.000 | movement. Absolutely. And do you face any unique

00:13:32.000 | liability exposure?

00:13:36.000 | I run a company

00:13:40.000 | and I don't think anything in particular is interesting.

00:13:44.000 | I'm not doing anything particularly risky or anything like that. But is the company public in terms of

00:13:48.000 | your involvement with it? Somebody knows that you own a company, you run a company, you are

00:13:52.000 | perceived to be a highly compensated person? Yes.

00:13:56.000 | So that's a significant risk. Well, there are a number of different approaches that you can

00:14:00.000 | do. So the first thing is, you always think about, "What am I going to do with the money?" So if you're

00:14:04.000 | let's say you have the money here in a temporary taxable account and you're

00:14:08.000 | investing it into those mutual funds and they're just sitting there, but you're

00:14:12.000 | going to use it in two years, then obviously you want to be very careful about putting additional

00:14:16.000 | making additional moves that are going to encumber the assets

00:14:20.000 | in some way. You wouldn't want to put it into an annuity, for example.

00:14:24.000 | You would gain some protection in

00:14:28.000 | putting it into an annuity, but

00:14:32.000 | well, hold on, you're a Colorado resident, right?

00:14:36.000 | No, I'm not a VPN. Okay, great.

00:14:40.000 | I applaud you. What state would the IRS think

00:14:44.000 | or what state would a creditor be suing you in that they think you're a resident?

00:14:48.000 | New Mexico. Okay. So New Mexico, we'll have to

00:14:52.000 | look at the New Mexico laws in here in just a second. The point is, you wouldn't want to

00:14:56.000 | encumber $200,000 in your

00:15:00.000 | you wouldn't want to encumber $200,000 in an annuity if

00:15:04.000 | you were going to take the money out in one or two years and then go on

00:15:08.000 | and spend it. So that would be a problem. So what are your options? Well,

00:15:12.000 | option number one is to move the asset into some

00:15:16.000 | kind of exempt account that would help you. So let's check.

00:15:20.000 | I have a chart. It's not perfect, but in New Mexico

00:15:24.000 | you have a, if you're a resident of New Mexico, you have a $60,000

00:15:28.000 | homestead exemption. So from an asset protection perspective

00:15:32.000 | you would want to maintain about $60,000 of

00:15:36.000 | equity in your homestead. New Mexico doesn't allow

00:15:40.000 | tenancy by the entirety, so that's out as a strategy.

00:15:44.000 | New Mexico does protect IRAs and Roth IRAs, so we've already talked

00:15:48.000 | about the fact that you're maximizing those accounts. Let's assume that you can't put any more money into

00:15:52.000 | those. Life insurance cash values in New Mexico are protected from the claims

00:15:56.000 | of creditors, as are life insurance proceeds

00:16:00.000 | and annuity values. So 529

00:16:04.000 | plans are not protected in the state of New Mexico. So that's your easy checklist

00:16:08.000 | of exempt assets in New Mexico. You would say

00:16:12.000 | well, do I want to put the money into a homestead up to about

00:16:16.000 | $60,000? Can I get the money into a qualified plan like my 401k

00:16:20.000 | or an IRA or a Roth IRA? Do I want to put the money into

00:16:24.000 | a life insurance policy and/or an annuity? And that

00:16:28.000 | may or may not serve your interests. For example,

00:16:32.000 | the annuity, especially if you're interested in early retirement, the annuity is an interesting

00:16:36.000 | option. You could find potentially an annuity that would allow you to

00:16:40.000 | invest similar to the way that you're investing those funds now, depending on your investment strategy.

00:16:44.000 | You could find an annuity with relatively low costs and you could just slide that $200,000

00:16:48.000 | into an annuity contract. When you want to spend the money in

00:16:52.000 | retirement, you would just make that particular annuity contract the foundation

00:16:56.000 | of your long-term retirement distribution plans.

00:17:00.000 | Now you would face a minor tax problem there if you retire early because annuity

00:17:04.000 | taxation will subject you to the same rules as IRAs and Roth IRAs.

00:17:08.000 | Prior to age 59.5, you'll pay a 10% penalty on any profits that are

00:17:12.000 | taken out. But you could, anyway, there are ways that you could

00:17:16.000 | work with that. So that would be a simple solution.

00:17:20.000 | About one of the few other options then is, do I want to put

00:17:24.000 | this into some other private investment? If you just simply want to

00:17:28.000 | keep the money as mutual funds, then you will have to move it into a legal structure

00:17:32.000 | wherein those assets are protected. And so there you'll

00:17:36.000 | sit down with an asset protection attorney or you'll draw up a trust.

00:17:40.000 | You'll have to decide about what kind of trust to do. But that's your only other

00:17:44.000 | option as far as protecting the assets if you want to keep it just simply

00:17:48.000 | in mutual fund shares.

00:17:52.000 | Okay, excellent. And then I know that in terms of

00:17:56.000 | asset protection, it's important to have some kind of a legitimate non-asset

00:18:00.000 | protection reason for doing things. And so the version of that would be

00:18:04.000 | estate planning if we were to work with a trust or that kind of thing.

00:18:08.000 | Yeah, absolutely. I think you're probably a little bit, your fees

00:18:12.000 | with $200,000 of assets, your fees are going to be

00:18:16.000 | challenging because

00:18:20.000 | with that relatively small amount of assets compared to

00:18:24.000 | the costs of maintaining many trusts, you'll have to

00:18:28.000 | assess the cost of forming an appropriate

00:18:32.000 | trust, citing it, putting it in the

00:18:36.000 | proper location, etc. I wouldn't jump

00:18:40.000 | immediately to doing that. But I would say that if the numbers

00:18:44.000 | start to grow beyond that, it's going to go beyond. So what I would be doing right now is I would

00:18:48.000 | interview, I would be educating myself, I would be interviewing some experts

00:18:52.000 | and then go from there. But yes, to answer your specific question, yes, estate planning is always

00:18:56.000 | a perfectly relevant thing to do.

00:19:00.000 | And there is nothing wrong with, even if you're moving money into an offshore

00:19:04.000 | asset protection trust, there's nothing wrong with doing that.

00:19:08.000 | And the business purpose will be, your attorney will walk you through the business purpose and part

00:19:12.000 | of it can be, part of it will be reflected in estate planning. Yes.

00:19:16.000 | Awesome, well thank you so much.

00:19:20.000 | So I feel like I'm not giving you a very good answer and the reason

00:19:24.000 | I'm not giving you a very good answer is because the question is fairly general.

00:19:28.000 | It all is going to come down to what do you want to spend the money on and

00:19:32.000 | what will you do with the money. In short, if your plan

00:19:36.000 | is to keep working at your company, earning an income, and this money

00:19:40.000 | and additional money is going to be invested into mutual funds

00:19:44.000 | and you don't want to purchase an insurance contract, then

00:19:48.000 | your natural answer to that question is to establish

00:19:52.000 | an entity, a trust, an asset protection trust to hold those

00:19:56.000 | assets in it. Because there's not a lot you can do if you want to invest

00:20:00.000 | using mutual funds. Now, what I would look at, for example,

00:20:04.000 | and the reason that's a general answer is the first thing

00:20:08.000 | I would look at would be to say, are there any other asset classes that you might want

00:20:12.000 | to own other than mutual funds. If you want to own gold,

00:20:16.000 | then this is the money that I would use to buy gold. Or if you want

00:20:20.000 | to purchase real estate, then this is the money that I would use to purchase real estate. Or if you want to start

00:20:24.000 | a business, then this is the money that I would use to start a business. And so

00:20:28.000 | if you are keeping your investment plan extremely simple, and

00:20:32.000 | you're saying, I'm going to work my job, build my company, do my work there, and

00:20:36.000 | I'm going to make sure that I, and all my investing

00:20:40.000 | is just going to be mutual funds, there's absolutely nothing wrong with that plan.

00:20:44.000 | It's a great plan. But what it means is your options for protecting this money

00:20:48.000 | are simpler. And I would be remiss also in saying, just make sure that

00:20:52.000 | you minimize liability and that you protect yourself with proper

00:20:56.000 | amounts of insurance. But if you want to protect the assets,

00:21:00.000 | you have to move them into an exempt class

00:21:04.000 | or you have to put some new covering around them. That's the rule.

00:21:08.000 | Excellent. I always appreciate

00:21:12.000 | your perspective. Thanks so much for unpacking that for me.

00:21:14.000 | My pleasure. Thank you for calling in. And I'm proud of you for calling in with, and masking

00:21:18.000 | your location. Good for you. We're going out to John in Bermuda. John,

00:21:22.000 | welcome to the show. How can I serve you today, sir?

00:21:25.000 | Hi, Joshua. Long time, well, short time listener, but big fan.

00:21:29.000 | My question is pretty general. I feel like I've got

00:21:33.000 | a lot of these sorts of things, the boxes checked and maxing out

00:21:37.000 | my 401(k), saving a pretty high

00:21:41.000 | percentage of my income, increasing my income. But I'm trying to figure out

00:21:45.000 | if I'm missing anything. Oh, yeah, and we have a young son and I have

00:21:49.000 | a pretty substantial life insurance policy to cover him in the

00:21:53.000 | event of anything bad happening. So I'm trying to think of any other

00:21:57.000 | basic or maybe even not so basic things that maybe I should be considering or thinking of

00:22:01.000 | on either the asset protection or taxation,

00:22:05.000 | something like that. What are your thoughts there? I know it's pretty general. What do you think you're missing?

00:22:09.000 | I don't know.

00:22:13.000 | I mean, I'm investing for, you know,

00:22:17.000 | on the investment side and the saving side, I feel like I'm doing pretty well. I don't know if maybe

00:22:21.000 | there's, I'm exposing myself to liability that, you know, there's

00:22:25.000 | a way I could protect myself better. That's kind of my thought.

00:22:29.000 | Are you worried about something specific?

00:22:33.000 | I mean, I guess getting

00:22:37.000 | sued or, in Bermuda, the legal

00:22:41.000 | liability theories aren't so bad. But at some point, my family and I

00:22:45.000 | plan on returning to the United States. So I'm just trying to think if there's

00:22:49.000 | ways to kind of set money aside and be protected for, you know, my son or

00:22:53.000 | my wife or myself, you know, just when we return.

00:22:57.000 | Because I know you had mentioned in some of your podcasts setting up some of these structures

00:23:01.000 | well in advance might be a good idea. Right. So

00:23:05.000 | how much money do you have? About a million.

00:23:09.000 | Okay. Well, it's

00:23:13.000 | so it's hard to answer the question

00:23:17.000 | being a general question. So let me talk through

00:23:21.000 | our five part framework and ask you a couple of additional questions. Because short answer is

00:23:25.000 | I don't know if there's anything that you're missing.

00:23:29.000 | We could go through the extremes. You know, do you have, do you own long term

00:23:33.000 | care or insurance? Well, you have to say do I need it or do I not? Do you have health

00:23:37.000 | insurance? Do you have liability insurance? Do you have life insurance? Do you have disability insurance?

00:23:41.000 | Are, those would be good questions.

00:23:45.000 | We can go through your full complement of insurance portfolios on your investments. You look at it

00:23:49.000 | and you have to look at it and say am I on track with my own personal goals for

00:23:53.000 | investing? How's my overall investment portfolio? And then you can go

00:23:57.000 | from beginning to extreme with that. Do I own

00:24:01.000 | mutual funds? Do I have low expenses? Am I getting good financial planning

00:24:05.000 | advice? Do I have a good tax plan? Am I paying minimal

00:24:09.000 | costs? Do I have a bank

00:24:13.000 | account with gold coins and second passports for me and the kids on the other

00:24:17.000 | side of the world in case I gotta run away? Do I, yeah, I live on an island. So do I have a boat to get

00:24:21.000 | away or have I, have a private airplane to get me away in case we face a hurricane?

00:24:25.000 | Is my house hurricane proof? I mean there are about a gazillion

00:24:29.000 | ways that you could take the question and those are up

00:24:33.000 | to you based upon your interests and based upon the things that you think about and that you

00:24:37.000 | are concerned about. What I would go through is let's talk about optimizing

00:24:41.000 | lifestyle. Let's start with your income. Are you satisfied with your

00:24:45.000 | income, your career, your job, your business?

00:24:49.000 | Yeah, pretty much. I mean, you know, you can always do better but so far it seems

00:24:53.000 | to be on a solid upward trajectory.

00:24:57.000 | So analyze your career in terms of optimization and say,

00:25:01.000 | am I doing what I want to be doing?

00:25:05.000 | Am I getting joy, satisfaction, meaning out of my daily activities?

00:25:09.000 | Am I earning appropriately? That's one entire area of

00:25:13.000 | income optimization that really needs to be thought through. What about on

00:25:17.000 | your expenses? Are you and your family living where you want to live? Are you satisfied with

00:25:21.000 | how you're living, the amount of money that you're spending?

00:25:25.000 | Yeah, yeah, I mean, I think Bermuda's a wonderful place to raise a family and

00:25:29.000 | has some nice tax advantages but less so for US citizens

00:25:33.000 | so that helps. Yeah, I'm happy here. So you are a US citizen

00:25:37.000 | and you are living in Bermuda. Do you work for a US based corporation or a foreign

00:25:41.000 | company? A Bermuda based company.

00:25:45.000 | So are you

00:25:49.000 | and how much is your income? How much is your salary?

00:25:53.000 | Roughly half a million a year but that's relatively recent.

00:25:57.000 | So working at, being an employee of

00:26:01.000 | a Bermuda based company, do you qualify for the foreign earned income exemption?

00:26:05.000 | I do. And the foreign housing

00:26:09.000 | exemption? Yep, yeah, that's true.

00:26:13.000 | And you're also exempt from social security

00:26:17.000 | contributions, right? That's correct.

00:26:21.000 | So in your case, you basically then have the problem

00:26:25.000 | of I'm paying a lot of income tax on my income from a hundred to

00:26:29.000 | five hundred thousand dollars, is that right?

00:26:33.000 | Yeah, that's an issue. Now, you said that you, do you

00:26:37.000 | intend to return to the United States? Have you thought about expatriating fully and renouncing your

00:26:41.000 | citizenship at some point? I have.

00:26:45.000 | The problem is we don't have a second passport and

00:26:49.000 | all of our family lives in the US so we're probably, that's probably

00:26:53.000 | not an option for us unfortunately. Have you explored the paths

00:26:57.000 | of obtaining a second passport?

00:27:01.000 | I know there are places where you can buy them.

00:27:05.000 | I think St. Kitts I've heard, but. So let me walk you through.

00:27:09.000 | I mean we're both. Go ahead. Sorry, go ahead. No, no, finish please.

00:27:13.000 | I mean we're both, my wife and I are both

00:27:17.000 | I'm probably seventh generation American, she's fourth

00:27:21.000 | so I don't know how, we don't really have a ton of birthright options. Okay.

00:27:25.000 | Or, you know, historical legacy options. How old are your children?

00:27:29.000 | I have a son who's

00:27:33.000 | a little bit under a year. And did you register him?

00:27:37.000 | Is he a US citizen? He is.

00:27:41.000 | Bermuda doesn't allow birthright citizenship. Okay.

00:27:45.000 | So with passports, so let's talk that through because it's certainly an interesting

00:27:49.000 | area of optimization. Do you think that your income is going to continue at the

00:27:53.000 | half a million dollar per year number and above going forward?

00:27:57.000 | Yeah, most likely. And your estimated

00:28:01.000 | federal, US federal income tax bill on that income is about how much?

00:28:05.000 | I think like 50, 50,000

00:28:09.000 | if I'm right. I might be wrong on that. Seems a little bit light to me.

00:28:13.000 | Is this going to be your first year earning half a million?

00:28:17.000 | Yeah, that's fair. Yeah, this will be this year. Basically everything

00:28:21.000 | kind of got, happened in January. So I'm thinking about last year's

00:28:25.000 | last year's tax numbers. Right, right. So remember this about the

00:28:29.000 | foreign earned income exemption. Your first about $100,000, I think

00:28:33.000 | it's about $104,000 something. Let's just say $100,000. Your first $100,000 of

00:28:37.000 | income is exempt from US federal income tax.

00:28:41.000 | But my understanding of the tax code is your next $100,000 of income

00:28:45.000 | is taxed as though it were, it's not taxed as

00:28:49.000 | though it's your first $100,000. It's taxed as though it's your second $100,000.

00:28:53.000 | So you can avoid all of the tax on the first about $100,000

00:28:57.000 | of income. But from $200,000 to $500,000 you're going

00:29:01.000 | to be paying US federal income tax at that bracket

00:29:05.000 | at those higher marginal brackets. And so certainly when you get up

00:29:09.000 | there to $500,000 your highest tax dollars are going to be

00:29:13.000 | sorry, that top $100,000 of $400,000 to $500,000

00:29:17.000 | is going to be taxed at pretty close to 40%.

00:29:21.000 | So depending on any extenuating circumstances

00:29:25.000 | you know, it's your accountant's job. The point is you are in the highest

00:29:29.000 | you're going to be in those very high brackets. And so

00:29:33.000 | $50,000 doesn't sound in any way accurate

00:29:37.000 | to me. But I would encourage you to sit down with your accountant or sit down

00:29:41.000 | with an accountant and talk it through with them. Now I'm not

00:29:45.000 | sure that you should expatriate fully and renounce your

00:29:49.000 | citizenship just to save on taxes. But I do think that you should carefully

00:29:53.000 | count the cost and you should consider what the best move is

00:29:57.000 | with the money. First, do you qualify for

00:30:01.000 | citizenship by naturalization in Bermuda or are you

00:30:05.000 | on track to qualify for citizenship by naturalization? Do they offer that in Bermuda?

00:30:09.000 | They did but

00:30:13.000 | that had closed. They always

00:30:17.000 | kind of every 10 years consider reopening it but then they typically shut it

00:30:21.000 | down. So there are four basic ways of

00:30:25.000 | qualifying for a second nationality, a second citizenship.

00:30:29.000 | Those four basic ways are number one, just the

00:30:33.000 | special way. So the government says, "Hey, this person is uniquely

00:30:37.000 | interesting to us and we want to confer upon them citizenship."

00:30:41.000 | Usually this happens if you are a celebrity or if you're a highly ranked business

00:30:45.000 | person or you're some kind of well-known entertainer, things like that.

00:30:49.000 | Peter Thiel was granted New Zealand citizenship famously a few years ago

00:30:53.000 | after I think having spent something like nine days in the country. Why did that happen?

00:30:57.000 | The government of New Zealand said, "Hey, we like Peter Thiel. We'd be happy to grant this citizenship on him."

00:31:01.000 | So sometimes countries do that for somebody who's an outstanding

00:31:05.000 | entertainer or a famous singer or somebody who they want to

00:31:09.000 | somebody who would be perhaps a, what's it called when there's somebody who's

00:31:13.000 | fleeing, an asylum seeker of some kind. And they just by an act of the president

00:31:17.000 | of the parliament or the legislative body, they confer this citizenship upon

00:31:21.000 | somebody. That's the least useful way for most of us who are mere mortals.

00:31:25.000 | So let's ignore that, but that is the first way.

00:31:29.000 | Beyond that, there are three basic ways that you can qualify for and earn

00:31:33.000 | a second citizenship. You can live somewhere

00:31:37.000 | for a long time and qualify for citizenship by naturalization.

00:31:41.000 | And that time period can range from really as short as one or two years

00:31:45.000 | in some places. Three years is very frequent. Up to some countries

00:31:49.000 | 25 or 30 years is the process it takes. But citizenship by naturalization.

00:31:53.000 | The second way is citizenship by

00:31:57.000 | history, by family history. You have some kind of family history

00:32:01.000 | from a nation that will grant citizenship based upon

00:32:05.000 | that family history, that family tree. And then the third way is economic citizenship

00:32:09.000 | where you simply purchase the citizenship and you

00:32:13.000 | pay for it. And there are a bunch of options there.

00:32:17.000 | Some of these are fast. Some of them are easy. Some of them are cheap. There's kind of that

00:32:21.000 | tri-effect, which is like you go to your mechanic and they say you can have this fast,

00:32:25.000 | cheap, or good. In citizenship you basically have this realm of

00:32:29.000 | fast, easy, or cheap. So you mentioned about your ethnic history.

00:32:33.000 | You don't have on all of

00:32:37.000 | your wife's lineage basically you're US Americans for many generations.

00:32:41.000 | Is that right? Yeah, that's right.

00:32:45.000 | So let's ignore that. Many people do have, if you sort through your family

00:32:49.000 | tree and you think about my grandparents or my great-grandparents, many people do

00:32:53.000 | have some kind of ethnicity where they can apply for citizenship

00:32:57.000 | based upon their family tree. And that

00:33:01.000 | I think most people should if they qualify for that. Then the next thing would

00:33:05.000 | be citizenship by naturalization. You're currently

00:33:09.000 | living in Bermuda and you're not sure of the Bermuda laws. But what I would

00:33:13.000 | say is you should carefully look at the laws and speak to

00:33:17.000 | somebody knowledgeable and see if you can become a citizen of Bermuda

00:33:21.000 | while you are living there. Most countries in the world, with just a few

00:33:25.000 | exceptions, most countries in the world have a path to citizenship

00:33:29.000 | for those who live in that country for an extended period of time. How long have you lived in

00:33:33.000 | Bermuda? About seven years.

00:33:37.000 | So I don't know, I'm not familiar with the laws of Bermuda, but I would

00:33:41.000 | encourage you to investigate that. And it's hard for me to think that there wouldn't be

00:33:45.000 | by the time you have

00:33:49.000 | there wouldn't be a way for you to start, be on that process towards citizenship

00:33:53.000 | in Bermuda. Your fastest options then would be, but you

00:33:57.000 | can, just because you're living in Bermuda doesn't mean that you can't also start the process

00:34:01.000 | of doing citizenship by naturalization in another place. Do

00:34:05.000 | you think that you'll be, you plan to keep working in Bermuda at this current job?

00:34:09.000 | Yeah, at this job or a similar

00:34:13.000 | one, yeah. And is this company global? Is there any way for you to move to another place?

00:34:17.000 | They mainly have operations in the United

00:34:21.000 | States. They might have, they may get something in the UK though. Okay.

00:34:25.000 | So for, just the reason I pointed out is there may be ways if you wanted to

00:34:29.000 | if you wanted to pull up the details and look

00:34:33.000 | for different places. There are other countries that you can go live in, but there are a number of

00:34:37.000 | countries where you can start the process of a citizenship by naturalization

00:34:41.000 | without being there full time. Now these rules have changed.

00:34:45.000 | There are a number of countries in the world that are well known for the fact that you can go

00:34:49.000 | there, you can apply to be a resident of that country, you can get a resident visa

00:34:53.000 | and you can start the clock ticking towards a status of citizenship.

00:34:57.000 | There are only a couple of those out there and I would refer you to your own research to know the specific ones.

00:35:01.000 | But they're not always guaranteed. You can, for example, I'll just go with

00:35:05.000 | one of the more popular ones. A country like Panama, Panama has something they call the friendly nations

00:35:09.000 | visa, where if you want to become a resident of Panama, you can go to Panama

00:35:13.000 | you can deposit I think it's about 5,000 bucks in a Panamanian bank account

00:35:17.000 | and then apply for a friendly nations visa and they'll give you a resident

00:35:21.000 | visa for Panama. Now if you have that resident

00:35:25.000 | visa, the idea is once you've had that visa for I think it's five years

00:35:29.000 | then once you've had that visa, you're in a situation where you can apply

00:35:33.000 | for citizenship. Now there's no guarantee of getting this and there are other countries

00:35:37.000 | you can do this as well. There are a couple of countries in South America, etc.

00:35:41.000 | There's no guarantee that you can get this and it's not easy, especially

00:35:45.000 | if you're not going to actually spend time in the country. For any residency by naturalization

00:35:49.000 | process to work, even if the letter of the law doesn't say a specific

00:35:53.000 | amount of time that you can be

00:35:57.000 | a resident in that situation, you still need to

00:36:01.000 | sorry I'm getting tongue tied, even if the law doesn't

00:36:05.000 | say you have to be there, you need to be there for most of the time, but you could pursue something

00:36:09.000 | like that. The third option, so that's a qualification

00:36:13.000 | for citizenship by

00:36:17.000 | naturalization with some of those countries. The third option is economic citizenship

00:36:21.000 | and your fastest way to get a passport if you need one is just to simply go

00:36:25.000 | and buy one. And so there are a number of countries that sell citizenships. They range

00:36:29.000 | from inexpensive, they're in the Caribbean where you are

00:36:33.000 | you've got St. Kitts and Nevis has one, I think Granada has one,

00:36:37.000 | Dominica has one. The prices for those range from about, I think

00:36:41.000 | there's one that's $50,000, most of them are about $100,000 for a citizenship

00:36:45.000 | for one person and then some of them have different family connections as well.

00:36:49.000 | There are also higher end citizenships.

00:36:53.000 | The cream of the crop is Malta. It costs you, I think it's about a million and a half bucks

00:36:57.000 | if you want to pursue citizenship with the island of Malta

00:37:01.000 | but there you get an EU passport, access to the Schengen area, Europe, etc.

00:37:05.000 | So there are at least a dozen around the world places where you can simply

00:37:09.000 | go and buy economic citizenship. If you're not already

00:37:13.000 | doing that, I would consider it because if you're happy living outside the United States

00:37:17.000 | and you continue on this current earnings trajectory, it's kind of

00:37:21.000 | frustrating to live in a country like Bermuda which has no income tax

00:37:25.000 | and still be sending hundreds of thousands of dollars per year

00:37:29.000 | back to the United States. Now you may not want to

00:37:33.000 | renounce your citizenship right away but you should at least

00:37:37.000 | know what's necessary to do it and you should at least be on that path.

00:37:41.000 | By the way, I looked up

00:37:45.000 | with Bermuda, the rules for Bermuda and here's what they say. You can apply for

00:37:49.000 | Bermudian status, I assume that means citizenship, if you possess a qualifying

00:37:53.000 | Bermudian connection, so you have to have some kind of qualifying connection

00:37:57.000 | and/or, and then it goes on, and if you've been a resident

00:38:01.000 | in Bermuda for 10 continuous years prior to the date of application.

00:38:05.000 | So they have a couple other things as well but if you should research that and see if you can work that out

00:38:09.000 | since you've been there 7 years, if you're going to be there 10 years, work hard to see if you can

00:38:13.000 | stay there in Bermuda. What I would do, do you and your wife

00:38:17.000 | what I would recommend, do you and your wife plan to have any more children?

00:38:21.000 | Yeah, we do. Okay, so what I would do is

00:38:25.000 | when you are pregnant with your next baby, I would consider birth tourism

00:38:29.000 | if I were you. I would encourage you to consider birth tourism. Consider having the baby

00:38:33.000 | in a country that grants citizenship

00:38:37.000 | birthright citizenship to that baby and also consider doing it

00:38:41.000 | in a country where that birthright citizenship for the baby

00:38:45.000 | will provide certain benefits for you and your wife.

00:38:49.000 | So birthright citizenship, there are about 30 countries in the world that offer birthright citizenship

00:38:53.000 | where any baby born in the physical territory of that country will

00:38:57.000 | provide, will confer upon you citizenship. Most of them are in the

00:39:01.000 | Americas and the Caribbean. So all throughout the Americas, Canada,

00:39:05.000 | the United States, Mexico, Guatemala, Honduras,

00:39:09.000 | Costa Rica, Panama, down through South America, Colombia, Brazil,

00:39:13.000 | Uruguay, Paraguay, Chile, basically almost

00:39:17.000 | all of the Americas with a few exceptions and then several of the islands in the

00:39:21.000 | Caribbean. So for example, islands such as Dominica. Dominica offers birthright

00:39:25.000 | citizenship in addition to selling citizenship. And so if you

00:39:29.000 | go and have a child in one of those countries, your child will

00:39:33.000 | automatically be a dual citizen. A citizen of that country

00:39:37.000 | as well as a citizen of the United States if you register

00:39:41.000 | them with the US State Department for a US passport.

00:39:45.000 | But one of the benefits though is as the parents of those children

00:39:49.000 | you'll automatically qualify for permanent residency with

00:39:53.000 | you'll automatically qualify for permanent residency with

00:39:57.000 | being the parent. So countries like Costa Rica or Panama

00:40:01.000 | or Colombia, I think Colombia, Mexico. If you're the parent of a Mexican baby

00:40:05.000 | or you're the parent of a Costa Rican baby, you can automatically go and be in that country.

00:40:09.000 | One of the fastest ones is Brazil. Brazil has a program where

00:40:13.000 | if you have a baby in Brazil, your baby automatically is a citizen of

00:40:17.000 | Brazil. And then if you are the parent or the

00:40:21.000 | minor sibling of a Brazilian baby, you automatically

00:40:25.000 | qualify for a permanent resident visa. So you can live, work in Brazil

00:40:29.000 | permanently. And then Brazil actually has the fastest program in the world that I'm aware of

00:40:33.000 | where if you are a permanent resident of Brazil in as little as one year

00:40:37.000 | of living there as a permanent resident, if you are the parent of a Brazilian baby

00:40:41.000 | in as little as one year, you can apply to the Brazilian government for citizenship by naturalization.

00:40:45.000 | Now of course in Brazil there's no guarantee that you're going to have it in a

00:40:49.000 | year, but you can apply. So the point is, if I were you, you have the money

00:40:53.000 | you should search out some of the people who consult in that business. You should seriously

00:40:57.000 | consider that plan. Because if you do the math, let's say you're going to pay a hundred

00:41:01.000 | I mean, you're going to pay a hundred and fifty thousand dollars of tax

00:41:05.000 | unnecessarily each year for the next decade. Is that

00:41:09.000 | a conservative assumption? That sounds about

00:41:13.000 | right. When you say it like that, it's pretty painful to hear, but yeah, that sounds about

00:41:17.000 | right. So you're going to pay 1.5 million dollars in the next decade

00:41:21.000 | on tax. That's unnecessary because you're living and working in Bermuda.

00:41:25.000 | Now in that situation, that's a lot

00:41:29.000 | of money. Now think, how old are you now?

00:41:33.000 | Mid-thirties. Okay, so let's just say you invested a million and a half

00:41:37.000 | dollars at the age of 45, and let's say

00:41:41.000 | that you're doing that for your children. I mean, you're a financial guy

00:41:45.000 | obviously if you're living in Bermuda. So, you know, present value

00:41:49.000 | let's invest for 40 years at 8% interest, no payments. That

00:41:53.000 | million and a half dollars could potentially be 32 million dollars of

00:41:57.000 | legacy that if you invested at 8% lump sum, if you

00:42:01.000 | legacy of what you could leave behind for children or whomever

00:42:05.000 | based upon your citizenship. So your US citizenship

00:42:09.000 | is costing you potentially 32 million dollars if

00:42:13.000 | you followed that route that I went. So if it were me,

00:42:17.000 | if I were in your shoes, I would certainly be very willing to

00:42:21.000 | go and purchase an economic citizenship, you know, go

00:42:25.000 | and get one of the decent ones, but they're perfectly adequate of Caribbean

00:42:29.000 | citizenship. Don't necessarily renounce your US citizenship right off the

00:42:33.000 | bat, but get an economic citizenship so you have

00:42:37.000 | something right away. Consider the birthright tourism so you can put yourself on

00:42:41.000 | track for a second citizenship by naturalization process

00:42:45.000 | and then think carefully and see what if you

00:42:49.000 | need anything else. Sorry, see if you still need that US passport

00:42:53.000 | because that US passport is going to wind up costing you multiple six

00:42:57.000 | figures per year going forward over the coming decade. Now obviously if your

00:43:01.000 | whole family is based in the United States, obviously that's going to be tough to

00:43:05.000 | figure out how do I, you know, there's going to be a lot of connections, a lot of emotion

00:43:09.000 | to it, but if I were you, you should go and search out, I would say go and search out

00:43:13.000 | some good advice to help you solve that problem. That would be what I would say.

00:43:17.000 | Go to my

00:43:21.000 | recommendation. A long, long time ago I interviewed

00:43:25.000 | Andrew Henderson from Nomad Capitalist here on the podcast.

00:43:29.000 | Go and look at, consult with him, tell him I sent you, but go and

00:43:33.000 | consult with Andrew. He is the expert at this stuff and he

00:43:37.000 | knows far more than I do and he would be able to help you put together

00:43:41.000 | a plan that could work if you wanted it to because there's certainly in your case

00:43:45.000 | you have a compelling financial interest to at least investigate it.

00:43:49.000 | That's a great point.

00:43:53.000 | No, when you really laid it out like that,

00:43:57.000 | that's the thing that I'm missing.

00:44:01.000 | Good. You could send me a fee on your 30 million bucks we just saved

00:44:05.000 | your family. I mean, in all seriousness, the biggest

00:44:09.000 | thing that US persons face, US persons don't generally want to do

00:44:13.000 | what I'm describing to you. Usually because they're living in the US,

00:44:17.000 | they're constantly in the US and that's what they do, they're living

00:44:21.000 | in the US. But there's no reason, since you're already living outside

00:44:25.000 | of the US, then you've

00:44:29.000 | already crossed that hurdle. So, I want to just

00:44:33.000 | it's hard for me because what you have to be careful of is

00:44:37.000 | you're in the income bracket where you can't get rid of US tax without

00:44:41.000 | renouncing citizenship and the risk you face if you ultimately go

00:44:45.000 | all the way to renouncing citizenship, and by the way, one warning for you,

00:44:49.000 | renouncing citizenship, is your net worth

00:44:53.000 | currently in excess of 2 million dollars?

00:44:57.000 | Actually, no. Okay. So, there is, in the renunciation process,

00:45:01.000 | so if you want to renounce citizenship, there's a whole process to it, I'll skip most

00:45:05.000 | of the details. The important thing for you to know is the 2 million dollar number. If your net worth

00:45:09.000 | is more than 2 million dollars, then not only do you have to pay the

00:45:13.000 | US fees for renouncing citizenship, which I think are 2,000 or 2,600

00:45:17.000 | dollars, something like that, about 2 grand, but in addition to paying those fees,

00:45:21.000 | you actually have to pay an exit tax on your wealth over 2 million

00:45:25.000 | dollars. If you have a net worth of under 2 million dollars, you don't have to pay

00:45:29.000 | an exit tax, and the requirements of the past where you had to pay

00:45:33.000 | kind of that, what do they call it, I don't know, the ghost tax or whatever, like 10 or 12 years of

00:45:37.000 | tax payments, that's all gone and in the past now, but the point is, once

00:45:41.000 | your net worth starts to approach that number, it's going to become continually expensive

00:45:45.000 | for you to renounce if you wind up going in that direction. Now,

00:45:49.000 | back on track with what I was saying. The risk you're always concerned is, "All my family's in the US, I'm multi

00:45:53.000 | generations in the US, etc. What should I do?" Well,

00:45:57.000 | if you, you've got to be careful

00:46:01.000 | because if you really need access to the US, then you're going to need to make sure

00:46:05.000 | that you have a passport that will give you access to the US relatively

00:46:09.000 | simply, and your solution there is going to be,

00:46:13.000 | there are only a handful of countries that have visa-free access to the United

00:46:17.000 | States. Beyond that, you have to apply for a visa to get into the United

00:46:21.000 | States if you ultimately renounce citizenship. So I would be very careful, given your

00:46:25.000 | long-standing ties with the US, etc., I would be very careful if I were you. Again, you need somebody

00:46:29.000 | far more knowledgeable than I am on this particular topic, and you need to

00:46:33.000 | give it a lot of time, do a lot of serious thinking, do some calculations, really

00:46:37.000 | think about it. But you have an advantage in the fact that you've already been abroad,

00:46:41.000 | you're already used to living in Bermuda, you've already put that in place,

00:46:45.000 | and so there's a heavy price tag every single year, especially with these new

00:46:49.000 | and growth increases in income. You're going to be stroking multi-six-figure checks

00:46:53.000 | each year for reasons that are probably

00:46:57.000 | largely emotional. So it might take you some time to work it through, but you should at least

00:47:01.000 | seriously consider it. And even if you're not ready to renounce, start the

00:47:05.000 | wheels turning on getting new citizenships so that if

00:47:09.000 | you ultimately do renounce, you're ready to go. Because it's

00:47:13.000 | going to take years, unless you're ready to go and buy an economic citizenship and renounce

00:47:17.000 | on that one single citizenship, it's going to take you years to

00:47:21.000 | get all the wheels turning to get full citizenships done. The economic ones are

00:47:25.000 | fast, you can have those in a few months. Or they can

00:47:29.000 | be fast. Otherwise, it's going to take you a lot of time to really

00:47:33.000 | have those citizenships in hand, and you'll probably want a portfolio of citizenships

00:47:37.000 | instead of just a single one. It's going to take you some time, take you some work, but that gives you time to think

00:47:41.000 | about it and decide if you really want to ultimately renounce or not.

00:47:45.000 | That's the best optimization I got for you today.

00:47:49.000 | That's a good one. Thanks a lot, Joshua. My pleasure, sir.

00:47:53.000 | Alright, next, got a couple questions that listeners,

00:47:57.000 | patrons of the show wrote in because they couldn't call in.

00:48:01.000 | A couple of patrons here and a couple non-patrons. Mike writes in and says, "Joshua, I've got a question

00:48:05.000 | that might help you sleep by tomorrow, given the fact that I live in the People's Republic of China." Don't feel bad

00:48:09.000 | if you don't answer this. I'm sure real callers are better off for your show. "I've been working here

00:48:13.000 | in saving, and I'm in the process of sending $10,000 back to the United States

00:48:17.000 | and will be moving back to join a program which works with low-income students in Catholic

00:48:21.000 | schools. I have a small stock portfolio, a small

00:48:25.000 | Fundrise account, and a small 401k, altogether, totally, around $9,000

00:48:29.000 | US. I also have an emergency fund of around $5,000

00:48:33.000 | and student debt of around $20,000. I've been doing well on returns

00:48:37.000 | over the past two years. Everyone has. My question is, what should I do with this

00:48:41.000 | money? Housing is provided by the program, so I'm not concerned about that or about

00:48:45.000 | transportation. Thank you for reading this and thank you for your time. God bless." Well, Mike,

00:48:49.000 | it's a good question, and what I would say is you need to think about your lifestyle,

00:48:53.000 | what you would like to have happen with your lifestyle going forward.

00:48:57.000 | Now, the great news is the only debt that you have is your student loan debt.

00:49:01.000 | So my first question is, are you planning to pay that off yourself

00:49:05.000 | or are you trying to pursue some program of

00:49:09.000 | income-based repayment and/or debt forgiveness? Sometimes with

00:49:13.000 | teachers, and it sounds like you're going to be doing some teaching, sometimes with teachers,

00:49:17.000 | teachers are seeking to participate in a program where there will be student debt cancellation.

00:49:21.000 | If you're pursuing one of those programs, you will have to work

00:49:25.000 | that through yourself. If you're not pursuing one of those programs, what I would encourage

00:49:29.000 | you to do is keep your emergency fund. I would

00:49:33.000 | say maybe keep about $10,000 and then work as quickly as you can to pay off

00:49:37.000 | those student loans. Now, the question we always face is

00:49:41.000 | should you pay off debt or invest based upon interest rates?

00:49:45.000 | There's a good chance your student loan debt is at a modest interest rate.

00:49:49.000 | But given the circumstances you're in, about

00:49:53.000 | traveling around the world, living in China, now coming back to the United States, I think

00:49:57.000 | you probably would get more benefit from the lifestyle considerations

00:50:01.000 | of being completely debt free and of having all of your future completely open

00:50:05.000 | to you without having to make any mandatory payments of any kind,

00:50:09.000 | such as student loan payments. So, given what you've said, if you're not

00:50:13.000 | pursuing one of those student debt cancellation programs, especially consider

00:50:17.000 | you plan to go back and work in Catholic schools. I don't know if those would qualify.

00:50:21.000 | But if you're not pursuing a student loan cancellation program,

00:50:25.000 | then what I would encourage you to do, maybe amp up your emergency fund around $10,000.

00:50:29.000 | That way you have a little bit more flexibility. You can do a few

00:50:33.000 | more things if you want to change things around and then just simply pay off the

00:50:37.000 | student loans. And then from there, keep saving money and work out

00:50:41.000 | your longer term plans. See if there's a longer term thing that you'd like to

00:50:45.000 | pursue. I just think your biggest benefits are going to come from not having any

00:50:49.000 | payments because that'll ultimately free you up mentally and it'll

00:50:53.000 | free you up in reality for any future, any change of life course

00:50:57.000 | that comes in the future. Joseph writes in, says, "Josh, I won't be able to get away from work

00:51:01.000 | to get on today's call. I thought I'd email my question instead. Background. My wife and I are

00:51:05.000 | 24 years old. We have a four-month-old daughter. I made $63,000 per

00:51:09.000 | year and my wife is a commission-based cosmetologist and makes between $30,000

00:51:13.000 | and $35,000 working three days a week. We own our house

00:51:17.000 | valued at $80,000 and we owe $50,000 left on the mortgage,

00:51:21.000 | about $500 a month payment. We have around $9,000 in retirement

00:51:25.000 | accounts, $2,000 in an emergency fund, about $1,500

00:51:29.000 | of extra disposable income monthly. You were my first

00:51:33.000 | financial podcast and then I soon found Dave Ramsey. Don't agree with everything he says, but I've taken

00:51:37.000 | a few bits of his advice. We owe $9,000 on one car, nothing on our

00:51:41.000 | second. We have $10,000 on a 0% credit card. We also have

00:51:45.000 | $43,780 in student loan debt. I've completed

00:51:49.000 | my degree and am working in my field of study. We would like one day to own

00:51:53.000 | land and live off of it as much as possible within reason. We're planning on a minimum

00:51:57.000 | of 20 acres. We also want to own rental property. Rich Dad, Poor Dad, Bigger Pocket,

00:52:01.000 | Stacking Benjamins, Afford Anything, Fire Drill, and a few more have all helped me decide that real estate

00:52:05.000 | is meant for me. In your opinion, should we pay the minimum on everything

00:52:09.000 | and stack cash until we can afford the down payment on the property we

00:52:13.000 | want and then save for the building of our dream home on it? Or should we

00:52:17.000 | pay off all of our debt with gazelle intensity? Or should we start with the rental property?

00:52:21.000 | I know it's a lot, maybe there's some things I've forgotten, but any advice would be greatly appreciated.

00:52:25.000 | Best regards, Joseph. So in summary, Joseph and his wife

00:52:29.000 | together make about just under $100,000. They own a

00:52:33.000 | house with an $80,000 value, $30,000 of equity, the loans

00:52:37.000 | of $50,000 on it. Have some money in retirement accounts, some debt,

00:52:41.000 | etc. So Joseph, here's what I would say. First,

00:52:45.000 | it's important that you differentiate between consumption

00:52:49.000 | and investments. There is a

00:52:53.000 | huge difference between planning to buy a minimum of 20 acres

00:52:57.000 | and build a dream home versus buying rental properties.

00:53:01.000 | The purchase of 20 acres and a dream home,

00:53:05.000 | you can spend your money on that, but it will suck up

00:53:09.000 | everything you've got and it will probably mean that you won't be very wealthy.

00:53:13.000 | Now if you're going to pursue rental property, then the 20 acres

00:53:17.000 | and the dream home is nothing but an impediment for you, given

00:53:21.000 | your plans of building a real estate portfolio.

00:53:25.000 | If your needs are met in your current

00:53:29.000 | house, I would encourage you not to pursue the

00:53:33.000 | dream home at this stage of life. You're only 24 years old,

00:53:37.000 | you have one new baby, this is not the time to go out and start spending

00:53:41.000 | money on a dream home. You're not yet rich. You're richer than most people,

00:53:45.000 | but you're not yet rich. You're not yet financially independent.

00:53:49.000 | And so the first thing you have to do is get rich,

00:53:53.000 | then go and buy a dream home. Now, what's your plan

00:53:57.000 | to get rich? Depends on how serious you are with your investment activities

00:54:01.000 | and it depends on what your opportunities are for your career.

00:54:05.000 | You're currently making $63,000 a year, your wife is working making $30,000 to

00:54:09.000 | $35,000, so you've got a good healthy income. So with that,

00:54:13.000 | the question is, do you have the biggest opportunities in your career

00:54:17.000 | or do you have the biggest opportunities in your investments?

00:54:21.000 | Let me foil two different examples.

00:54:25.000 | You might be making $63,000 a year

00:54:29.000 | driving trucks, making deliveries in your local area, you don't

00:54:33.000 | say what you do for work. That's fine, it's an adequate income.

00:54:37.000 | Perfectly fine. But there's no opportunity for advancement

00:54:41.000 | and there's no possibility that your career is going to take off.

00:54:45.000 | Earning $63,000 a year doesn't mean, at driving trucks, there's no

00:54:49.000 | chance that 10 years from now you're going to be driving trucks and making $630,000 a year.

00:54:53.000 | Now, compare that to somebody who's making

00:54:57.000 | $63,000 a year and they are selling

00:55:01.000 | life insurance. You could be making $63,000 a year

00:55:05.000 | selling life insurance and there's no reason in the world why 10 years from now

00:55:09.000 | you shouldn't be making $630,000 per year selling life insurance.

00:55:13.000 | So the first thing to analyze is your career. Have you

00:55:17.000 | chosen or developed a career that has a massive growth potential

00:55:21.000 | or have you chosen or developed a career that pays your bills?

00:55:25.000 | If you've chosen a career that pays your bills, then you need to focus on your investment plan.

00:55:29.000 | If you've chosen a career that has massive career potential, you need

00:55:33.000 | to focus on investing in your career. If I were selling

00:55:37.000 | life insurance, making $63,000 a year, I would not

00:55:41.000 | whatsoever be messing around with real estate.

00:55:45.000 | The reason is you have too much upside in life insurance and the real estate takes too long

00:55:49.000 | and it's too much of a hassle and it's too expensive for you to go and learn that business.

00:55:53.000 | So if you're making $63,000 a year selling life insurance, don't worry about real estate.

00:55:57.000 | Focus on your life insurance business. Grow that $63,000 income to

00:56:01.000 | a $263,000 income to a $630,000 income

00:56:05.000 | and along the way, pay off all your debt, save

00:56:09.000 | lots of money, and just simply invest slowly. There'd be no

00:56:13.000 | problem at all if you're making $630,000 a year for you to own that 20 acres

00:56:17.000 | and a dream house and for it to be an expensive house, but you're not

00:56:21.000 | investing in real estate to do that. Now if you're a truck driver or

00:56:25.000 | an equivalent in terms of your career potential, then in your case what you

00:56:29.000 | need to do is you need to massively increase your investment returns and

00:56:33.000 | your income. And that's only going to happen through focused investment.

00:56:37.000 | And so if you're in that situation,

00:56:41.000 | what I would do is I would focus first on real estate investing. Because

00:56:45.000 | if you've decided that real estate investing is going to be your ticket to more income, you've got to make

00:56:49.000 | more than $63,000. If you've decided real estate investing is your most

00:56:53.000 | practical way to do that, you've got some work to do.

00:56:57.000 | If that's the path that you're pursuing, then your best solution is stack

00:57:01.000 | aside as much cash as possible, and then you'll want to make sure

00:57:05.000 | that you have every bit of liquid cash available, find good deals,

00:57:09.000 | learn how to invest in real estate, be very, very careful as you go,

00:57:13.000 | but make sure the real estate portfolio grows, that it cash

00:57:17.000 | flows, whatever your particular real estate strategy is, it can take you a while to figure that out,

00:57:21.000 | but in that situation you want to stack cash. And so if I

00:57:25.000 | wanted to pursue real estate, would I pay off debt as quickly as

00:57:29.000 | possible? Not if I were sure that that was my aggressive plan.

00:57:33.000 | I would keep as much money around as possible, and I wouldn't

00:57:37.000 | pay debts that were high interest rates.

00:57:41.000 | So I wouldn't, you know, if I'm paying 0% on a credit card,

00:57:45.000 | I would just keep that at 0%, stack up some more money.

00:57:49.000 | If the student loan debt is relatively low, I'd be careful with that, but the $9,000

00:57:53.000 | on the car, I would probably just pay minimum payments and stack up as much money as possible

00:57:57.000 | to pursue real estate. Now,

00:58:01.000 | how do I answer that? I don't know how to give you any more than that. It's not that paying off the debt

00:58:05.000 | wouldn't be good, but if real estate is what you're going to do, then

00:58:09.000 | get busy, but you need the cash more than you need to be out of debt right now.

00:58:13.000 | So, basically the major

00:58:17.000 | concept I want to leave you with is, what's going to be your economic engine? You need an

00:58:21.000 | economic engine to get rich. And so that economic engine, what's it

00:58:25.000 | going to be? Is it going to be your job, or is it going to be real estate?

00:58:29.000 | Whatever your choice is, you need to make sure that

00:58:33.000 | you first, whatever your choice is,

00:58:37.000 | you need to make sure that you're focusing on building that economic engine first.

00:58:41.000 | That's my point. Now, back to your dream property. Walk away

00:58:45.000 | from anything that sounds like a dream home

00:58:49.000 | until you're rich. The biggest problem, especially

00:58:53.000 | that US Americans have with their finances, is they buy things like dream homes

00:58:57.000 | when they're not rich. And this is very alluring.

00:59:01.000 | This world is very seductive. You start going out, looking at houses,

00:59:05.000 | you're looking around, you're seeing opportunities and options

00:59:09.000 | that come your way, and you look at it and you say, "Ah, we

00:59:13.000 | would be so happy here." Look at the view. Look at the space.

00:59:17.000 | Listen to the quiet. And if you start looking at that stuff when you're not rich,

00:59:21.000 | you will convince yourself to buy it, and you'll figure out how to convince yourself a way to

00:59:25.000 | pay for it. And you will be stuck, because you cannot get rich

00:59:29.000 | if you're consuming all your income. And that's what dream homes do.

00:59:33.000 | They consume your income. And you don't have enough of a financial

00:59:37.000 | base or enough of an income yet to be thinking about buying dream homes.

00:59:41.000 | But, is there a way that you could get

00:59:45.000 | this better? Don't be scared to think

00:59:49.000 | creatively. Now, I don't know what's available to you where you are.

00:59:53.000 | But if I were sure that I wanted to own a lot of

00:59:57.000 | land, I'll tell you what I would do in your situation. I don't know what

01:00:01.000 | your job is, etc. But I would think, "Is there a way that I can move to the land

01:00:05.000 | and my wife and I earn some of our income

01:00:09.000 | from the land while also maintaining our job

01:00:13.000 | while also setting ourselves up in a place for

01:00:17.000 | purchasing real estate?" So, the first thing to do is, I would look around and say,

01:00:21.000 | "How much does land cost where you are, and could you find a deal?"

01:00:25.000 | If you could find a deal on your own land, and you didn't want to help somebody else with their

01:00:29.000 | land, what I would consider doing is I would take the

01:00:33.000 | house that I'm living in, I would rent it out, hopefully at a profit,

01:00:37.000 | I would buy 20 acres, hopefully that 20 acres has

01:00:41.000 | an old barn on it. You got one kid, and you and your wife are young,

01:00:45.000 | you shouldn't have a lot of stuff yet, get an old fifth wheel, a nice big comfortable

01:00:49.000 | one, get an old fifth wheel, park it inside the barn, and make that where you live.

01:00:53.000 | That cuts your expenses down,

01:00:57.000 | puts more income coming in, you should be able to do that and still work and

01:01:01.000 | earn an income. You don't have enough children where you can't fit in a fifth wheel. And then

01:01:05.000 | buy the land and live there while you're building your real estate

01:01:09.000 | portfolio. Enjoy being on the land, but walk away from the $400,000

01:01:13.000 | house at this point in time. Enjoy the land and build your

01:01:17.000 | empire. If you can't do that, look around and see, is there somebody who

01:01:21.000 | has 20 acres of land that would allow me to work out something with them? Does somebody

01:01:25.000 | need a caretaker? Is there a farmer who needs help and a farm hand?

01:01:29.000 | Is there a wealthy property owner who would love to have a young

01:01:33.000 | reliable couple living on their property with them?

01:01:37.000 | You know, you've got to put a single wide mobile home on the property on the backside and you watch

01:01:41.000 | the property for them. You may be able to find an option like that if you look around.

01:01:45.000 | And that's the kind of thing that at this phase of your life you should

01:01:49.000 | be doing. The goal should be, how can I keep my living expenses

01:01:53.000 | at the bare minimum so that I can maximize

01:01:57.000 | my choices in life and so that I can maximize my

01:02:01.000 | investment dollars? And so, yes, it's great that your house isn't expensive,

01:02:05.000 | but if you can swap out that $500 a month payment in exchange

01:02:09.000 | for an $800 a month rental income payment and

01:02:13.000 | then go and find a place and buy, again, a fifth wheel for

01:02:17.000 | $4,000 and have it hauled to the property or buy a single wide mobile home somewhere,

01:02:21.000 | have it put on somebody's 20 acres and you're the property caretaker,

01:02:25.000 | you can make a profound change and free up a couple thousand dollars a month net

01:02:29.000 | by the time you make those changes to be able to now have extra money

01:02:33.000 | to invest in your real estate empire. So,

01:02:37.000 | think about that. And then finally, back to your income. If you're serious about real estate, you're going

01:02:41.000 | to need to do a couple of things. Number one, if you're going to borrow money,

01:02:45.000 | you're going to need to either learn how to borrow it from the people that you're doing business with,

01:02:49.000 | not from a bank. If you're going to borrow money from a bank, you're going to need to keep an income

01:02:53.000 | visible on paper with a good W-2 income would be your easiest way to get traditional

01:02:57.000 | financing. You're also going to need some flexibility

01:03:01.000 | in your schedule. You're going to need time to go and look at properties. You're going to need to plan.

01:03:05.000 | So, invest in your education. Read the books. If I were you,

01:03:09.000 | I'd encourage you to start with John Reed's books, johntreed.com.

01:03:13.000 | Buy all his real estate books. He's one of the best no-nonsense guys

01:03:17.000 | out there and you will find a much better return on investment

01:03:21.000 | buying those books and reading them than going to real estate seminars at this phase of your

01:03:25.000 | knowledge. So, start with that.

01:03:29.000 | Those are my thoughts.

01:03:33.000 | Hope that sends you in the right direction. I'm going to take one more question here on today's show because the

01:03:37.000 | second part of it is certainly timely in terms of the national conversation. The first part is financial.

01:03:41.000 | The second part is, it is financial, but it's

01:03:45.000 | one of those more tangential ones. Chloe writes in and says, "Hi, Josh.

01:03:49.000 | I really enjoy your podcasts and have been listening for a few years now. I have a lot of respect for you and

01:03:53.000 | your advice. Thank you for providing this resource." My pleasure, Chloe. "I have a 15-month-old

01:03:57.000 | daughter and I can't seem to find a helpful list of ways to invest for her

01:04:01.000 | other than the generic advice of a 529 plan. I have a whole life

01:04:05.000 | insurance policy in her name through Northwestern Mutual and of course term as well, but

01:04:09.000 | it seems the biggest recommendation is the 529 plans. I'm not convinced

01:04:13.000 | this is for us because I don't know what learning institutions will be like in 18 years

01:04:17.000 | and I don't want the money to be hindered. I've heard you mention on a recent

01:04:21.000 | podcast that an option could be for a grandparent to open a Roth IRA with the child

01:04:25.000 | as a beneficiary and then convert it to a stretch IRA. That seems to be a good route

01:04:29.000 | to me, but I was wondering why it needs to be a grandparent rather than me."

01:04:33.000 | Chloe, she goes on with this part too, which I'll get to in a moment. Chloe, it's a

01:04:37.000 | good question and I need to write that course. I need to.

01:04:41.000 | I've been working so hard to fix all the problems in the infrastructure of my business

01:04:45.000 | so I can write that course for you. And so hopefully I'll get that one done soon.

01:04:49.000 | But let me just give you a short answer to it first with regard to your specific

01:04:53.000 | question of Roth IRA and why can't you do it. You can do it

01:04:57.000 | and you should do it. But in general, the reason I talked about a grandparent

01:05:01.000 | specifically the idea that I alluded to was you're giving

01:05:05.000 | money to a grandparent for the grandparent to fund an IRA

01:05:09.000 | or Roth IRA in the grandparent's name with the

01:05:13.000 | child as a beneficiary of that so that the child

01:05:17.000 | could inherit it as a stretch IRA. That particular idea

01:05:21.000 | was simply the circumstances were the facts that I assumed

01:05:25.000 | in giving that idea was number one, the parent is already funding

01:05:29.000 | an IRA whereas the grandparent is not funding

01:05:33.000 | a Roth IRA. Excuse me, Roth IRA all throughout. So I'm assuming the parent

01:05:37.000 | is already funding a Roth IRA or is prohibited from funding a Roth IRA

01:05:41.000 | due to income restrictions and the grandparent is able to contribute to

01:05:45.000 | a Roth IRA but is not currently doing it because of not having the income.

01:05:49.000 | It doesn't have to be a grandparent. It can be an uncle. It could be your brother.

01:05:53.000 | It could be any person who has earned income.

01:05:57.000 | Any person who has earned income, you can fund a Roth IRA for them. The idea is

01:06:01.000 | simply it's a shame to waste a person's earned income

01:06:05.000 | if they have earned income and aren't making a Roth IRA contribution.

01:06:09.000 | It's a shame to waste that contribution and not have it go for the

01:06:13.000 | benefit of somebody. The problem is in what I described, that's an informal

01:06:17.000 | relationship that doesn't protect you legally. So if your brother

01:06:21.000 | has earned income, so he qualifies for a Roth IRA

01:06:25.000 | but he's not contributing to a Roth IRA

01:06:29.000 | you could go and give him $6,000 and say, "Hey, put this in a

01:06:33.000 | Roth IRA and make my daughter as the beneficiary." The problem is once you give

01:06:37.000 | him that money, you can't force him to put it into the Roth IRA nor do you

01:06:41.000 | have any legal control over the money whatsoever. He could take it

01:06:45.000 | and run and he would be entirely within his legal right to do

01:06:49.000 | so. Now it would obviously spoil Thanksgiving Day dinner, but he would be

01:06:53.000 | within his legal right to do so. And so the reason I suggested a grandparent was

01:06:57.000 | simply most grandparents are not going to steal money from their grandchildren. They're not.

01:07:01.000 | And if you suspect that they will, don't give it to them. But yes, you could do

01:07:05.000 | it yourself, but the better thing is just you invest in a Roth IRA for your own benefit

01:07:09.000 | and then plan to leave that behind as a beneficiary. Your daughter is a

01:07:13.000 | beneficiary anyway. The point is if you have extra money that you can't fit into your Roth IRA

01:07:17.000 | what do you do with that? So let me answer that question. Don't think

01:07:21.000 | that you have to invest in a certain type of account

01:07:25.000 | to invest effectively.

01:07:29.000 | It's perfectly fine

01:07:33.000 | if your daughter is receiving birthday money for her one year birthday or two year birthday

01:07:37.000 | it's perfectly fine to put those dollar bills in an envelope and stick

01:07:41.000 | them under the mattress.

01:07:45.000 | It's also perfectly fine for you to simply open a bank account and put it in for her.

01:07:49.000 | Not everything has to be done in an account.

01:07:53.000 | And you are right to be suspicious of 529 accounts.

01:07:57.000 | Now there's nothing wrong with 529 accounts. They can be very useful.

01:08:01.000 | They might save you a little bit of money. There are many situations

01:08:05.000 | in which I would recommend them, but they're not a panacea. And what

01:08:09.000 | I share your annoyance with the fact that if you go to

01:08:13.000 | a web search, you go to DuckDuckGo.com and you type in

01:08:17.000 | how to invest in your children's for your children, the only answer you're going to get

01:08:21.000 | is basically a 529 account. And that's because financial advisors sell 529

01:08:25.000 | accounts. So the majority of the US American

01:08:29.000 | financial advice industry is oriented around products that can be

01:08:33.000 | sold. That's just the way the business works.

01:08:37.000 | Nobody says, "Well, just go put the money in a bank account." Because how does a

01:08:41.000 | financial advisor earn commissions on money that you put in a bank account? We earn commissions on 529

01:08:45.000 | accounts. Not much, because people don't put much money in them. But I think I would rather most people

01:08:49.000 | who save $1,000 here and $1,000 there and put the money

01:08:53.000 | for a 529 account, I'd much rather they just spend it on the kid.

01:08:57.000 | Spend it on the kid with extracurricular activities. Spend it on tutoring to help the child

01:09:01.000 | do better in school. Spend it on books. Spend it on hobby material.

01:09:05.000 | Spend it on tools for the child to develop their skills and their interests.

01:09:09.000 | Spend it on a car for the child. Or spend it on sending the child to Spain for the

01:09:13.000 | summer to practice Spanish. I think I would rather, in almost every

01:09:17.000 | circumstance, I would rather the people who are only saving $1,000 or $2,000 here and there

01:09:21.000 | just spend it on the child. Because your return on investment will be

01:09:25.000 | far higher if you spend it on the education of the child.

01:09:29.000 | And I'm completely serious with that recommendation. I think it will

01:09:33.000 | do your daughter much more good for you and she

01:09:37.000 | when she's 13 years old to go to buy plane tickets

01:09:41.000 | to South America and spend 6 months or 3 months

01:09:45.000 | or whatever you can do to get away. I would rather you spend $6,000

01:09:49.000 | on 3 months traveling around South America together, riding the

01:09:53.000 | buses, staying in the hostel, taking some Spanish lessons, surfing at the beach,

01:09:57.000 | climbing the volcanoes. That to me seems like a much better

01:10:01.000 | use for $6,000 than spending it and putting it in some

01:10:05.000 | 529 account to go to some overpriced educational institution that doesn't

01:10:09.000 | need the money and... I'll try not to rant. The point is

01:10:13.000 | spend it on your child. If you'll adjust

01:10:17.000 | your brain to spending the money on your child

01:10:21.000 | and recognize that that's a perfectly legitimate

01:10:25.000 | investment, I think you'll start to see more options.

01:10:29.000 | Now, if you've got $50,000 and you're trying to figure out what to do

01:10:33.000 | with it, a 529 account is perfectly fine for some of that money. It's hard to spend

01:10:37.000 | $50,000 on a 15 month old. But if you're spending a couple hundred dollars

01:10:41.000 | here and there, spend it. Spend it now. I think you'll

01:10:45.000 | get a better bang for your buck. Next, even if you are going to

01:10:49.000 | invest the money, don't think that you have to invest it through some

01:10:53.000 | plan that brings problems or brings certain options.

01:10:57.000 | If you want to invest the money in stocks, fine. Recognize though that you don't have to

01:11:01.000 | invest the money in stocks. You could go buy a rental house

01:11:05.000 | and mentally note, "This is my daughter's rental house. Buy one rental house for each

01:11:09.000 | of your children. Have a plan to pay it off by the time they're adults

01:11:13.000 | and then give it to them." I'll talk about how to do that effectively

01:11:17.000 | another time. So you could do that if that was what you wanted to do. But what most people

01:11:21.000 | want to do is just buy some stocks. Recognize this. You can just simply go

01:11:25.000 | and buy a mutual fund. You can go to Vanguard and

01:11:29.000 | buy an index fund and put the money into that index fund.

01:11:33.000 | It can be an account in your name or it can be a custodial account for

01:11:37.000 | your child. And there's no problem with it.

01:11:41.000 | There's no problem whatsoever. What would you give up if you just

01:11:45.000 | simply went to Vanguard, bought an index fund for your daughter? Well, you would

01:11:49.000 | incur a little bit of taxation. The risk is if you start to get into kitty tax

01:11:53.000 | if she earns more than a couple thousand dollars a year on unearned income, interest payments

01:11:57.000 | then she's going to pay kitty tax. But the first couple thousand dollars, about $1800 a year

01:12:01.000 | there's no tax due on that. But even if she is subject

01:12:05.000 | to kitty tax, there's not much taxation on a stable index

01:12:09.000 | fund. It's not traded much. It's a capital gains. Most of it is going to be capital gains

01:12:13.000 | taxes. There's just not much taxation on an index fund. It's not that

01:12:17.000 | big of a problem. You can put any amount of money into it and then when you're ready to spend it

01:12:21.000 | you can take it out and spend it on anything. So what benefit do you get from a 529 plan?

01:12:25.000 | You don't get a tax deduction for the 529 plan now. The only

01:12:29.000 | thing you get from a 529 plan is tax-deferred

01:12:33.000 | growth and you don't pay tax

01:12:37.000 | on the growth if you use the money for qualified educational expenses.

01:12:41.000 | Most people are not going to put much money in a 529 plan

01:12:45.000 | where it becomes worth it. So, free yourself

01:12:49.000 | from those constraints. Look at your daughter

01:12:53.000 | and just think, "What do I think would be in the best

01:12:57.000 | interest of my daughter? Based upon our

01:13:01.000 | situation, what would be the best way for me to invest in my

01:13:05.000 | daughter? How can

01:13:09.000 | I do that? How can I invest it in her now?"

01:13:13.000 | My guess would be, based upon your writing me this email,

01:13:17.000 | you're investing in her by being with her. That's the thing that

01:13:21.000 | I would dearly love to see every mom in the world do, is be with your babies.

01:13:25.000 | Because you could have all the money in the world

01:13:29.000 | but if you're not with your baby for those first few years, she

01:13:33.000 | will forever be behind. No matter how much money you save for college,

01:13:37.000 | be with your baby in those first few years. The first

01:13:41.000 | five years are so formative in her life. If it costs you money, if you can't

01:13:45.000 | put money in a Roth IRA because you're with your baby, fine. You're investing

01:13:49.000 | in your daughter. Now, if that doesn't work, hire a grandma, hire a family

01:13:53.000 | member, a trusted family member, so that she can be in that family environment

01:13:57.000 | instead of in an institutional environment. That'll pay

01:14:01.000 | off much bigger dividends than being institutionalized

01:14:05.000 | at an early age. Go down the list. Meet her educational

01:14:09.000 | needs. Hired, again, I don't need to repeat.

01:14:13.000 | At some point I'll get that course done. But those are some thoughts to cover.

01:14:17.000 | I'm going to answer part two of Chloe's question.

01:14:21.000 | This will be a part where this is not strictly going to be financial

01:14:25.000 | although I'm going to cover finances a little bit in my answer. But those of you who get annoyed

01:14:29.000 | when I dig into non-financial topics, this

01:14:33.000 | is a time for you to tune out. Chloe continues her question. It says this, "I also have a spiritual

01:14:37.000 | question, but I'm not sure if you take questions like that. It seems you're a Christian and possibly a pastor.

01:14:41.000 | Your take on things reminds me a lot of my father, and he passed away from cancer 10 years ago.

01:14:45.000 | I'd really like some guidance on this particular topic. I've been extremely hurt

01:14:49.000 | by the abortion laws and the expansion and acceptance of abortions by women in the

01:14:53.000 | United States. I can't even think about the new law in New York without crying

01:14:57.000 | and the utter disbelief that I live in a country where it is allowed.

01:15:01.000 | I never ever thought we as a society would allow such a thing.

01:15:05.000 | I'm so disappointed in women's hearts that we have fought for this

01:15:09.000 | right. There has been a heart change in young women in our country that I can't

01:15:13.000 | understand. I'm 34, and almost every woman I know is in favor of

01:15:17.000 | abortions. What puts me over the edge is when my husband overheard two young women

01:15:21.000 | talking in a cafe, and one said to the other, "Ugh, I hooked up with this

01:15:25.000 | guy and now I'm pregnant. I have to get an abortion ASAP." The casual

01:15:29.000 | approach just blows me away. I just don't know how to deal with this.

01:15:33.000 | I'm so hurt about it and can't understand why God allows this to go on.

01:15:37.000 | I was just interested in your point of view and advice. Thanks Joshua. Best to you and your family.

01:15:41.000 | Chloe. Chloe, it is certainly

01:15:45.000 | an extremely challenging question

01:15:49.000 | and a challenging time. I'm going to just discuss it briefly for

01:15:53.000 | a moment in a non-financial context and in a

01:15:57.000 | financial context. I share

01:16:01.000 | your sadness over

01:16:05.000 | the recent changes in legislation in New York.

01:16:09.000 | When you watch the video of the New York legislators

01:16:13.000 | standing and clapping, and you see the

01:16:17.000 | Freedom Tower lit up in pink

01:16:21.000 | celebrating abortion, it makes me cry.

01:16:25.000 | It really does. And I share your frustration at that

01:16:29.000 | being the state of the country of which I'm a citizen.

01:16:33.000 | It's funny, I was talking with the caller earlier about

01:16:37.000 | talking about other citizenship options.

01:16:41.000 | I have no, very little pride these days in

01:16:45.000 | carrying a US American passport. So I share

01:16:49.000 | your emotions on the subject.

01:16:53.000 | But a couple of things for you to

01:16:57.000 | consider that I hope will be encouraging. I personally

01:17:01.000 | am optimistic that someday in the United States of America

01:17:05.000 | abortion can be fully abolished. I am an abolitionist.

01:17:09.000 | I seek the abolition of human

01:17:13.000 | abortion. There's an interesting philosophical

01:17:17.000 | debate there. You can search out the arguments between the pro-lifers and the abolitionists.

01:17:21.000 | But I'm happy to identify as an abolitionist. I wish

01:17:25.000 | to see human abortion fully and completely abolished. And I

01:17:29.000 | think that it is possible. It's not something that you should

01:17:33.000 | give up hope. The reason I think it's possible is what I see happening

01:17:37.000 | is a clarifying of the issues. Now where

01:17:41.000 | the United States eventually goes is unknown. The United States of America

01:17:45.000 | has the most radical, the most liberal abortion laws of any country on

01:17:49.000 | the planet. They are far more radical and far more liberal than

01:17:53.000 | European laws in various European countries and most other places.

01:17:57.000 | And it comes with a cost.

01:18:01.000 | But I don't think that the argument is

01:18:05.000 | not unwinnable. For example, I come from a religious perspective

01:18:09.000 | as I would guess you at least do some from your perspective. But I don't

01:18:13.000 | think that the issue of abortion only has to be solved

01:18:17.000 | religiously. I used to argue about abortion online

01:18:21.000 | and it was interesting on Facebook. I used to debate with people

01:18:25.000 | and go through the various issues. And I would usually use non-religious language.

01:18:29.000 | I usually would use non-religious arguments, more philosophical arguments. And I was

01:18:33.000 | very gratified one time I had two of my friends on Facebook who

01:18:37.000 | separately, privately, they never interacted with me in the arguments, but privately

01:18:41.000 | two of my friends on Facebook wrote to me separately

01:18:45.000 | and both of them are libertarian atheists. And

01:18:49.000 | they both privately said, "I don't share your religious

01:18:53.000 | presuppositions." But they both privately said to me

01:18:57.000 | "I've come to see what you're talking about philosophically

01:19:01.000 | and philosophically I believe that you are right

01:19:05.000 | and I've changed my position to defend the lives of the

01:19:09.000 | pre-born, the most innocent among us." And I was really encouraged by that because

01:19:13.000 | I see that happening. I don't think that

01:19:17.000 | there's no ability for people to come together or there's no

01:19:21.000 | ability for people to adopt all the same worldview on this particular

01:19:25.000 | issue. And I think that the difference, if you were to go back to 1970

01:19:29.000 | '73 right? Roe v. Wade, the difference between then and now is

01:19:33.000 | a difference of clarification. Where back in

01:19:37.000 | 1970, you could say "We don't know much what happens in the womb."

01:19:41.000 | Or "We don't know much about a baby until it comes out." No one can say that today. And so

01:19:45.000 | whether you look at it from a scientific perspective or from a philosophical perspective

01:19:49.000 | the issues are being clarified. Even the latest kerfuffle

01:19:53.000 | with the debate over the Governor of Virginia's

01:19:57.000 | comments. The issues are being clarified.

01:20:01.000 | It's been very rare that infanticide has come into play

01:20:05.000 | in the modern debate. The debate was always "Oh, abortion."

01:20:09.000 | Something magical happens when the baby comes through the birth canal. And it's been

01:20:13.000 | remarkable to me this week to see how even the question

01:20:17.000 | of infanticide has come up into the debate.

01:20:21.000 | Now, I don't yet see people publicly debating whether or not we should engage

01:20:25.000 | in infanticide, but I do think that's the debate that's going to

01:20:29.000 | be necessary. The best philosopher on this subject is the philosopher

01:20:33.000 | Peter Singer, who is a secular philosopher

01:20:37.000 | and a professor at... I can't remember where he's a professor

01:20:41.000 | now, I think Northwestern University or something like that. But he's a professor.

01:20:45.000 | And he's a prominent secular ethicist. And basically

01:20:49.000 | he wrote a great book, a well-known book on

01:20:53.000 | animal rights, which is very influential in the

01:20:57.000 | animal rights advocacy space. And on the subject of abortion

01:21:01.000 | his secular approach to the question is

01:21:05.000 | that it should be perfectly, it's morally permissible to kill

01:21:09.000 | babies because babies lack human agency. They lack personhood.

01:21:13.000 | And so that was his argument. And I think ultimately it comes

01:21:17.000 | down to understanding the ethics. Of course, the Christian,

01:21:21.000 | the Jewish, the Islamic understanding generally,

01:21:25.000 | debate of course among certain sectors of those Abrahamic

01:21:29.000 | religions. But usually... I'm getting

01:21:33.000 | too deep into the weeds. The point is that even the debate I think is helpful

01:21:37.000 | because it's clarifying to certain people. Now, just because a debate is

01:21:41.000 | clear, just because something seems morally clear to you doesn't mean that you can change another person's

01:21:45.000 | heart. Years ago I was down in Central America and I was

01:21:49.000 | at one of the, I guess it was the Aztec temples,

01:21:53.000 | one of the Indian tribes down there where they would practice

01:21:57.000 | human sacrifice. And I was sitting there just

01:22:01.000 | clear as day, sitting there on the shrine,

01:22:05.000 | the thing that they built where they would do the sacrifices.

01:22:09.000 | I looked at all the...

01:22:13.000 | looked at all of the signs

01:22:17.000 | showing the history of the culture and all of that. And I was just sitting

01:22:21.000 | there thinking, like, how can a people do that?

01:22:25.000 | How can a people engage in human sacrifice?

01:22:29.000 | And it was mystifying to me because I couldn't get myself there

01:22:33.000 | emotionally. Today I can understand. And I would just

01:22:37.000 | say, look around you. When people will put

01:22:41.000 | their...it's not hard. We have millions

01:22:45.000 | of examples in human history where people will put their

01:22:49.000 | ideology, their

01:22:53.000 | money, their career

01:22:57.000 | in the modern world of mothers who abort their babies,

01:23:01.000 | put their

01:23:05.000 | crops or whatever over the lives of their children and the Aztecs. It's just not hard to see.

01:23:09.000 | And what I would encourage you is read your Bible. If you want to see the evil and the

01:23:13.000 | sin of mankind, go read your Bible. And when I started reading the New Testament

01:23:17.000 | more, sorry, the Old Testament more, I started to see, you can just

01:23:21.000 | see how through the course of human history you have a

01:23:25.000 | reliable collection of historical work that spans thousands of years

01:23:29.000 | and talks with absolute candor about the changes

01:23:33.000 | in people. And you can just see how it gets there. Now, what do you do about it?

01:23:37.000 | Here are my recommendations. There is a lot that you can do.

01:23:41.000 | You don't have to just get upset about it.

01:23:45.000 | You don't have to just get that. I think it's valuable to do that. But first

01:23:49.000 | is you can reach out to people. And you can reach out to people

01:23:53.000 | that you know. One of the things that I've tried to do is I've tried to

01:23:57.000 | talk to people, to young couples. I haven't done it much, but just

01:24:01.000 | when I could see there was a place, if there was somebody that I thought would possibly

01:24:05.000 | abort their baby, if it were conceived, I'd try to say, "Hey, listen,

01:24:09.000 | if you ever need somebody to adopt your child, I just want to let you know that

01:24:13.000 | my wife and I are here." And I feel like that's something

01:24:17.000 | that a lot of us could do a much better job of. I even say it publicly.

01:24:21.000 | If you're listening to my voice right now and you are faced with

01:24:25.000 | you're considering aborting your child, murdering

01:24:29.000 | your baby. Because for whatever reason that you think,

01:24:33.000 | if that's the choice, call me. Find a way to get in touch with me.

01:24:37.000 | Because there are millions of people just like me

01:24:41.000 | who, if we were given the chance,

01:24:45.000 | we would absolutely far rather

01:24:49.000 | dedicate our lives to caring for your baby than to see that baby killed.

01:24:53.000 | And so I think that's one thing that you can do. I don't know many people

01:24:57.000 | that do that, but I think you should do it. If you're interacting with people, if you have a personal

01:25:01.000 | relationship with somebody, you should let somebody know, "Listen,

01:25:05.000 | husband and I, we want you to know, not prying,

01:25:09.000 | but if you ever need us to, just know that we would be happy to adopt your baby."

01:25:13.000 | Now, is that a financial cost for you?

01:25:17.000 | You bet it is. Is that the best thing you could spend

01:25:21.000 | your money on? Absolutely. Drain your Roth IRA

01:25:25.000 | and take care of the baby. It's a better

01:25:29.000 | investment than anything else. So I

01:25:33.000 | think that's one step that you could take. And is there a cost to it? Yes.

01:25:37.000 | But just think of how gratifying that would be to be able to save a life

01:25:41.000 | if you have the chance. Number two,

01:25:45.000 | you can advocate for the pre-born with

01:25:49.000 | people that you know who are... Sorry, you can advocate for

01:25:53.000 | the lives of the pre-born, even if

01:25:57.000 | you're not doing it in person. I've come across, in my

01:26:01.000 | research on the subject, I've come across a number of moms who work together, and

01:26:05.000 | they primarily work together

01:26:09.000 | using social media. And what they do is they're

01:26:13.000 | coordinated together, they go to Facebook groups

01:26:17.000 | where women are talking about their forthcoming abortion, and they

01:26:21.000 | start reaching out to the women. And they don't hold back, which I really appreciate.

01:26:25.000 | I think that people have, especially

01:26:29.000 | well-meaning pro-life ministries, have taken the tack

01:26:33.000 | that somehow if you're just nice we can stop somebody from killing their child. Not going to

01:26:37.000 | happen if you're just nice about it. But the reality is

01:26:41.000 | not everybody's conscience is seared. Not every mother is

01:26:45.000 | as cavalier. And even the mother that your husband heard, "I just

01:26:49.000 | hooked up with this guy, now I'm pregnant, I have to get an abortion ASAP." Even her conscience,

01:26:53.000 | she's probably braver in word than she is in reality.

01:26:57.000 | It might just...

01:27:01.000 | It's very hard, it would be very hard

01:27:05.000 | for a young woman today to publicly be against abortion.

01:27:09.000 | And so most people feel the peer pressure to say, "Well, you know, no abortion,

01:27:13.000 | no big thing, just a clump of cells, nobody cares." But you're a mother, Chloe, you know

01:27:17.000 | that that's not the case. You know, it's not

01:27:21.000 | possible. It's not possible to be a mother

01:27:25.000 | and not recognize just the life

01:27:29.000 | within you. If it is possible, it's somebody who has completely

01:27:33.000 | seared their conscience. So the point is, I've found mothers who are very

01:27:37.000 | diligent. They find mothers, they interact with them, they reach out to them, they call them,

01:27:41.000 | they help them if they need resources, if they're poor, if they don't have money,

01:27:45.000 | they work with them, but they don't hold back and they confront the mothers

01:27:49.000 | directly. They don't always save the babies, but they have saved dozens

01:27:53.000 | and dozens and dozens and dozens of babies.

01:27:57.000 | So there's something that you could do. Look for that. I think that's really effective.

01:28:01.000 | If you're able, I think there's a place for you to go and advocate

01:28:05.000 | with mothers in person.

01:28:09.000 | There's a man in Orlando, John somebody or other, but I searched out his story

01:28:13.000 | and I wanted to go and interview him and find out. He's an older man, I think he's a retired

01:28:17.000 | pastor. And for the last, forgive me if I'm botching the details,

01:28:21.000 | basically for more than a decade, he goes to one of the abortion mills in Orlando every day.

01:28:25.000 | And he intercedes with the mothers who are coming there,

01:28:29.000 | the mothers and the fathers who are going there for abortions. And all day,

01:28:33.000 | every day, of course, people walk past him. And he reaches out to them, he preaches at them,

01:28:37.000 | he encourages them, he confronts them. Just all day, every day

01:28:41.000 | he's there. And usually he's alone. And that's the thing,

01:28:45.000 | is that people who are diligent in this work, there aren't many.

01:28:49.000 | For all of the millions of people around the United States who are supposedly

01:28:53.000 | pro-life, there are very few of us who are ready to go out and actually get involved.

01:28:57.000 | And yet, I think it's John Barrios or something is his name, you know,

01:29:01.000 | John has saved dozens of lives over the years.

01:29:05.000 | Dozens of lives. I think that

01:29:09.000 | kind of work is appropriate. I would love to see

01:29:13.000 | retirees, especially Christian retirees, stop this

01:29:17.000 | pursuit of constant hedonism and

01:29:21.000 | pleasure and use those retirement years for something that builds. It's not like you've

01:29:25.000 | got to go into work all the time, but there's so much need in the world, so many

01:29:29.000 | areas to serve. And that service can be done

01:29:33.000 | effectively by somebody who doesn't have so many financial pressures.

01:29:37.000 | It's tough for a young mother, a young father with young children

01:29:41.000 | to say, "Well, my work is I'm going to go down and I'm going to go down and spend

01:29:45.000 | 15 hours a week standing in front of the abortion mill preaching."

01:29:49.000 | But with all the millions of

01:29:53.000 | retired Christians all throughout the United States of America, you're telling me

01:29:57.000 | that we're letting, you know, the one by me, how many

01:30:01.000 | I looked at the statistics, but dozens per day. It's

01:30:05.000 | incredible. And yet, you know, a couple times a year

01:30:09.000 | at my local abortion mill, a couple times a year, some of the Catholic

01:30:13.000 | groups come out and stage a silent protest and that's about it.

01:30:17.000 | So there can be no solution legislatively

01:30:21.000 | until there's a change in the hearts of the people. There's no possibility

01:30:25.000 | for legislative change until there's a change in the hearts of the people.

01:30:29.000 | And that's the work, what I would say at this stage. I think abolition

01:30:33.000 | can be accomplished. I hope it happens in my lifetime

01:30:37.000 | but there's a whole lot of work that has to happen before

01:30:41.000 | legislation matters. Next to legislation though, the problem

01:30:45.000 | with legislation, the legislators aren't serious about it.

01:30:49.000 | Pro-lifism and being pro-life is a flag

01:30:53.000 | that Republican politicians wave because it gets them votes.

01:30:57.000 | They don't mean it. The biggest opposition to abolition, I'm

01:31:01.000 | increasingly convinced is in pro-lifers. While we were traveling around the country

01:31:05.000 | we were in another state and I met with a guy who was a former state representative

01:31:09.000 | in his state and had run for governor of his state

01:31:13.000 | in a very pro-life state. And while I was

01:31:17.000 | talking to him, I had a chance just privately off the record, I'd always

01:31:21.000 | run, questioned this. I'd always said, "No, it can't be

01:31:25.000 | that the pro-life people and the pro-life organizations and the politicians, they can't be the

01:31:29.000 | problem." And I just had a hard time believing that. How can

01:31:33.000 | it be? How can it be that these politicians are the problem?

01:31:37.000 | And one of the things that was so frustrating is you watch

01:31:41.000 | what would the Republicans say? "Oh, we need to cancel abortion."

01:31:45.000 | "Well, we need a Republican..." It's always one more thing. "Oh, we need a Republican president." "We need a Republican

01:31:49.000 | House of Representatives." "We need a Republican Senate."

01:31:53.000 | Well, what do you do? In 2016, the

01:31:57.000 | voters go to the polls and they deliver a Republican House, a Republican

01:32:01.000 | Senate, and a Republican president. What promises

01:32:05.000 | did the Republicans actually fulfill? They didn't repeal

01:32:09.000 | Obamacare. They didn't

01:32:13.000 | defund Planned Parenthood, at the very least, not let alone talking about abolishing

01:32:17.000 | abortion. They didn't defund Planned Parenthood. They don't do anything. They're either cowards

01:32:21.000 | or they're liars, the vast majority of them. I think

01:32:25.000 | it's good to recognize that to be the case. They're either cowards or they're liars. Because they don't

01:32:29.000 | do anything. Even now, what was the vote today or yesterday?

01:32:33.000 | They won't withdraw the United States out of the Middle East.

01:32:37.000 | You've got to keep endless wars to keep all the money flowing

01:32:41.000 | right into the pockets of the people who own the companies, the big war companies.

01:32:45.000 | I mean, it's absurd. I guess I just say all that to say this. Don't worry about the

01:32:49.000 | politics of it. You can't change the politics. What you can do is you can reach

01:32:53.000 | out to your neighbor. You can go to those young women. And if your husband has a chance

01:32:57.000 | next time, maybe just say, "Listen, you don't have

01:33:01.000 | to kill your baby. You don't have to live your life with that on your conscience."

01:33:05.000 | It will help. Beyond that,

01:33:09.000 | I don't know. I guess there are many other things that could be done.

01:33:13.000 | Obviously, I would encourage you to think about

01:33:17.000 | adopting some of the unwanted babies. I think one of the great shame that

01:33:21.000 | U.S. Americans should feel in general and specifically

01:33:25.000 | U.S. Americans that identify as Christians should feel is there are tens

01:33:29.000 | of thousands of children

01:33:33.000 | stuck in orphanages, stuck in the foster care system

01:33:37.000 | without anybody ready to adopt them. And I think

01:33:41.000 | that should be to our shame. With all the millions and millions of us who

01:33:45.000 | identify as Christians, who are

01:33:49.000 | supposed to love the unlovable, and yet our orphanages

01:33:53.000 | are not cleared out, I think that should be to our shame.

01:33:57.000 | We could not handle. If abortion were abolished today, and all of the babies that

01:34:01.000 | are currently aborted with chemical abortion, with surgical abortion,

01:34:05.000 | if abortion were abolished today,

01:34:09.000 | it would just be absolutely

01:34:13.000 | there would be babies everywhere in the system. And that would be the worst thing that could

01:34:17.000 | happen. But that would be a huge problem. Remember, go back and

01:34:21.000 | if you're not familiar with it, go back and study the history

01:34:25.000 | of the early Christians and understand where

01:34:29.000 | things happened from. Why has abortion been opposed throughout the Western world when child

01:34:33.000 | sacrifice was a central hallmark

01:34:37.000 | of the world previously. Child sacrifice, what eradicated

01:34:41.000 | child sacrifice? A lot of it is

01:34:45.000 | Christianity is responsible for a lot of it. But that started with the Roman

01:34:49.000 | Empire. You had the

01:34:53.000 | temple prostitutes. The local religious temples where the

01:34:57.000 | act of worship was to have sexual relations with a temple prostitute.

01:35:01.000 | That was the pagan religions of those days. And so of course, if

01:35:05.000 | a temple prostitute is having sexual relationships with men for her job

01:35:09.000 | there were lots and lots of babies conceived in an era before birth control. Lots and lots

01:35:13.000 | of babies conceived. And those babies were unwanted. They were taken out to the trash pile and they were left

01:35:17.000 | to die. And then in the night the Christians would sneak in, they would find

01:35:21.000 | the babies, they would take them home and they would care for them. That's our heritage.

01:35:25.000 | And yet today, most of us are more concerned about

01:35:29.000 | the boat payment and how we're going to make the boat payment than about the children

01:35:33.000 | who are being left on the trash bin of history.

01:35:37.000 | We should be ashamed of ourselves. And we should work to change it.

01:35:41.000 | But it can't start with legislation. It can't happen with legislation.

01:35:45.000 | First, voting for current politicians is worthless. All they

01:35:49.000 | want to do is change the terms a little bit.

01:35:53.000 | I'm not aware of a single mainstream Republican politician

01:35:57.000 | who is willing to open their mouth and stand up and say, "I want to

01:36:01.000 | see abortion abolished." And the reason why the state of New York made that change?

01:36:05.000 | Because they're worried about Roe v. Wade being overturned.

01:36:09.000 | That was why the state of New York made that legislative change. If Roe v. Wade were

01:36:13.000 | overturned at the federal level by the Supreme Court, they said, "We want to make sure

01:36:17.000 | that we have the strongest abortion law so that when things go back to states' rights, then we can

01:36:21.000 | do it." It's not about... Don't pay attention.

01:36:25.000 | It's too much. But anyway,

01:36:29.000 | I just want you to say, "Chloe, you're not alone. There are millions of people who work just like you."

01:36:33.000 | What I would just say is this. Ask the Lord for one specific place

01:36:37.000 | that you can labor. One specific mother that you can

01:36:41.000 | encourage. One specific mother that you can confront.

01:36:45.000 | One religious leader who's not speaking out clearly for the

01:36:49.000 | abolition of abortion. One politician that you can influence. Just one.

01:36:53.000 | And then be faithful with that.

01:36:57.000 | But to close, by answering your question, you say, "I don't know. I can't

01:37:01.000 | understand why God allows this to go on." A couple answers for that.

01:37:05.000 | There's the philosophical answer, but skip that. The answer is because

01:37:09.000 | God is patient. He's kind. He's

01:37:13.000 | merciful. He doesn't want anyone to perish.

01:37:17.000 | He's also an orderly God who set up an orderly world that

01:37:21.000 | functions according to orderly laws. And we will

01:37:25.000 | in the future bear the consequences of the great

01:37:29.000 | public sin. Think back to the stain of

01:37:33.000 | slavery on the US American system. Black chattel slavery.

01:37:37.000 | Today, we are still experiencing

01:37:41.000 | the consequences of

01:37:45.000 | that great sin. In the book of Numbers,

01:37:49.000 | the Bible says, "The Lord is slow to anger and abundant

01:37:53.000 | in loving kindness, forgiving iniquity and transgression.

01:37:57.000 | But he will by no means clear the guilty, visiting the iniquity

01:38:01.000 | of the fathers on the children to the third and the fourth generations."

01:38:05.000 | So, on a national basis, the United States of America will continue to reap

01:38:09.000 | that. The Bible says the wages of sin is death.

01:38:13.000 | And as you see it work out, what you see is you see death spreading all throughout

01:38:17.000 | our culture. Death at the beginning of life, death in the middle of

01:38:21.000 | life, death at the end of life. Why are life spans across the United States

01:38:25.000 | shortening up? Death. Why are suicide rates

01:38:29.000 | launching up? It's death. Why are so many families...

01:38:33.000 | I could go on. You're not alone, Chloe.

01:38:37.000 | There are many of us who feel the same way.

01:38:41.000 | Time will tell how things

01:38:45.000 | work out. The good thing is this. You can trust God. He has all things in control.

01:38:49.000 | There's nothing that's a surprise to God. He controls all things.

01:38:53.000 | And why he allows evil to continue in the world, the only possible solution

01:38:57.000 | to that is it serves his purposes. And you and I

01:39:01.000 | may not be able to see it at this point. Usually we can't. We look at the disaster,

01:39:05.000 | we look at the suffering, we look at the death, and we say, "God, how can

01:39:09.000 | you let this go? If you're good and you're all-powerful, how can you let this go?"

01:39:13.000 | We don't always get an answer to that question. Sometimes we do.

01:39:17.000 | Sometimes, as time goes by, you can see some of those answers.

01:39:21.000 | Some of those answers will be veiled until eternity.

01:39:25.000 | But love God. Love your husband. Love your children.

01:39:29.000 | Love your neighbor. If God gives you a platform to preach from,

01:39:33.000 | preach from that and be faithful where you are. And don't think it

01:39:37.000 | doesn't matter. Tell you this, the thing I'm most happy about?

01:39:41.000 | Your love in your little baby girl. And the thing

01:39:45.000 | that confronts death is life.

01:39:49.000 | One of the things that weighs on aborted mothers' consciences very

01:39:53.000 | heavily is that they see another mother with all of her children

01:39:57.000 | intact. They see a mother with three, four, five children.

01:40:01.000 | They think about the ones that they've aborted.

01:40:05.000 | It's heart-wrenching for them.

01:40:09.000 | It's heart-wrenching for them. Now, thank God He can provide forgiveness

01:40:13.000 | for them. And I pray that you would have the chance to do that. Unfortunately, I don't

01:40:17.000 | often have a chance to be there. As a woman, you'll much more

01:40:21.000 | likely be opened up to about it than I will ever be opened up to. But be

01:40:25.000 | faithful in those things there. Love your children. Love your husband.

01:40:29.000 | Use whatever opportunity God gives you to reach out to others, to

01:40:33.000 | confront others, and trust Him with the results.

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01:40:49.000 | And every day brings a new

01:40:53.000 | adventure.

01:40:57.000 | Welcome to Park City, Utah. Naturally, winter's favorite town.

01:41:01.000 | Join the experience at

01:41:05.000 | Visit ParkCity.com.

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