RPF0624-The_5_Possible_Future_Scenarios_from_Fantastic_to_Catastrophic_and_How_to_Plan_for_Them
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00:00:30.560 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,
00:00:33.700 | skills, insight, and encouragement you need to live a rich and meaningful life now,
00:00:38.100 | while building a plan for financial freedom in 10 years or less.
00:00:41.340 | My name is Joshua. I am your host. And although I am your host,
00:00:44.980 | today, the outline of today's show does not come from my own head.
00:00:48.720 | Rather, it comes from a client of mine, who sent it on to me and said,
00:00:51.680 | "Joshua, I think you should do a show on my five possible scenarios of the future."
00:00:56.020 | [laughs] And so, of course, I worked with him. He'd shared with me the five shows before.
00:01:01.160 | But I had him send them over to me, and I said, "Yes, this is a useful concept."
00:01:04.900 | Now, this client is an experienced and effective businessman.
00:01:10.060 | Wealthy. Has built his businesses, starting with nothing, but basically nothing.
00:01:16.440 | Self-made man. Saved his money. Built his business. Has done well.
00:01:20.040 | And he shared with me that this is the way that he categorizes information.
00:01:23.480 | This is the way that he categorizes the potential scenarios of the future.
00:01:27.480 | And I think it's really useful, because as humans, we need to categorize things.
00:01:31.080 | You can't face everything and assign the same importance to all things.
00:01:34.560 | And there's a major problem when people do this.
00:01:37.220 | You can't assign the same probability to all things. I'll explain in a moment.
00:01:40.900 | First, let's go through the five possible scenarios.
00:01:43.600 | If you're thinking about the future, you can plan and predict that the future will fall into
00:01:49.580 | one of these five possible scenarios.
00:01:51.640 | Number one, the future will be about the same as the present, or maybe a little better.
00:01:59.020 | Again, scenario number one. The future will be about the same as the present, or maybe a little bit better.
00:02:07.220 | Number two, the future will be similar to a recession.
00:02:13.100 | Again, similar to a recession.
00:02:15.500 | Number three, similar to a depression. The future will be similar to a depression.
00:02:21.000 | Number four, the future's going to be about like Mad Max.
00:02:26.640 | Go watch the movie if you are uninitiated.
00:02:30.380 | Actually, I'll tell you a little secret. I've never been able to get through Mad Max.
00:02:32.880 | I'm aware of the allusion to Mad Max, but that's just not my deal, not my interest.
00:02:38.220 | I've never actually watched Mad Max, so maybe you can skip it too.
00:02:41.700 | But just know that Mad Max means really bad people doing crazy stuff, driving around, crazy survivalist world.
00:02:48.040 | So number four, the future will be similar to Mad Max.
00:02:50.640 | Or number five, the future will be void of humans due to an asteroid hitting the earth
00:02:55.240 | or some other similar wipeout calamity.
00:02:59.180 | I repeat, five possible scenarios.
00:03:01.380 | Things in the future will be about like they are now or better.
00:03:04.520 | Number one. Number two, similar to a recession.
00:03:06.220 | Number three, depression.
00:03:07.520 | Four, Mad Max, or five, void of humans.
00:03:10.560 | Now let's talk about these because all of these are absolutely reasonable scenarios.
00:03:18.520 | It is possible that the future will be about the same as things are now or better.
00:03:24.260 | It's also possible to be recessions, depressions.
00:03:26.740 | Mad Max is possible.
00:03:29.340 | And it's possible that the asteroid will hit the earth.
00:03:33.400 | The long term, in the long, long term, the future of the earth, it ain't good.
00:03:38.240 | So this earth will be wiped out in the future.
00:03:42.440 | Now, will it be your lifetime, my lifetime?
00:03:44.280 | Who knows?
00:03:45.280 | But the point is all of these are perfectly possible scenarios.
00:03:49.020 | And what's more, all of these have been experienced at some point in the history of the earth.
00:03:57.760 | So what do you do?
00:03:58.760 | Well, first, I think it's good to look at probabilities and recognize that some of these scenarios are more probable
00:04:07.700 | than others.
00:04:10.600 | For example, is it very probable that things in the future will be about the same as they
00:04:16.400 | are now or perhaps a little better?
00:04:20.480 | I would say so.
00:04:22.400 | It's very probable that the future will be at least about how it is now, maybe better.
00:04:28.040 | That's the most probable of these five scenarios.
00:04:33.000 | Is it also very probable that in the future we'll face something like a recession?
00:04:39.760 | Absolutely.
00:04:42.240 | I would be happy to guarantee it if my money were on the line.
00:04:46.100 | I would guarantee the future contains a recession.
00:04:50.260 | It's very probable that the future will have a recession in it.
00:04:56.180 | What about a depression?
00:04:57.180 | Well, a depression is less probable than a recession, just like a recession is less probable
00:05:02.720 | than the future being about like things are now or better.
00:05:05.840 | But it's very still probable.
00:05:08.720 | It's still very probable that at some point in your life we'll go through depression.
00:05:14.580 | What about Mad Max?
00:05:17.040 | Less probable.
00:05:19.580 | But throughout the history of the world, even, sorry, throughout the history of the last
00:05:24.100 | few decades, the last half century, we could point to again and again and again situations
00:05:30.000 | in which things are Mad Max.
00:05:36.560 | Even if you're in the United States or Australia or the United Kingdom, you can find circumstances
00:05:42.860 | in the last 50 years that have been Mad Max.
00:05:46.360 | Hurricane Katrina was Mad Max.
00:05:51.080 | Pretty hardcore stuff.
00:05:54.280 | Even if you start to go, you know, Bosnia, Syria today, all kinds of places, you can
00:06:01.040 | go all kinds of places around the world and find today Mad Max.
00:06:05.080 | Now it's less probable for those of us who live in fairly stable countries, but it's
00:06:10.200 | not impossible.
00:06:11.200 | And then number five, void of humans due to asteroid hitting the earth.
00:06:18.920 | Fairly probable in the long run.
00:06:21.380 | We just all hope and trust and believe that it's going to be the very long run.
00:06:26.240 | Now think first on scale of probability.
00:06:28.460 | Think next on scale of preparability.
00:06:34.020 | Is it preparable for you?
00:06:39.500 | Can you prepare for a future that's about the same as now or better?
00:06:43.660 | And should you?
00:06:44.660 | My answer is yes.
00:06:47.260 | You should spend the majority of your time, based upon the probabilities of the future,
00:06:52.540 | you should spend the majority of your time preparing for a future that is about like
00:06:57.220 | things are now or better.
00:07:01.300 | You should not spend the majority of your time preparing for a future that looks like
00:07:05.300 | Mad Max.
00:07:06.820 | You should spend the majority of your time preparing for a future that looks about the
00:07:12.700 | same as things are now or better.
00:07:16.260 | And make sure that you're prepared and positioned to thrive.
00:07:20.020 | You should spend some time, some significant time, preparing for a future that has a recession.
00:07:28.200 | Because it's fairly certain that the future will have a recession.
00:07:33.500 | But don't spend so much time preparing for a recession that you don't prepare for something
00:07:38.060 | that's better.
00:07:39.060 | Let me give you an example.
00:07:40.360 | You have a job offer.
00:07:42.060 | You're excited about the job offer.
00:07:44.180 | It's a change into something new and exciting, but you don't have any money.
00:07:49.900 | Should you sit around worrying about a recession, about the fact that you don't have enough
00:07:53.180 | money to break your lease and go take the new job?
00:07:56.020 | No!
00:07:57.020 | Prepare for things to be about the same or better and go get after it.
00:08:00.500 | Go get after the future being better.
00:08:03.180 | But think about the recession.
00:08:05.420 | So think about the probabilities and go with them.
00:08:09.740 | But prepare for a recession because it's very likely that you will face a coming recession.
00:08:16.020 | What about depression?
00:08:19.080 | Depression is still pretty probable.
00:08:22.000 | Very probable.
00:08:23.300 | You should spend less time preparing for a depression than preparing for a future that's
00:08:28.500 | like now or better.
00:08:30.340 | But you should still prepare for a depression.
00:08:35.100 | Mad Max?
00:08:36.900 | Mad Max is possible, if not probable, over a long period of time.
00:08:44.660 | The challenge we face is figuring out what that appropriate timeline is.
00:08:49.580 | The toughest thing that I face?
00:08:51.980 | Given my age bracket, things have always been pretty good in my life.
00:08:58.300 | I can ask my parents and grandparents about World War II and what things were like.
00:09:02.980 | I can ask them about Vietnam.
00:09:05.700 | I can ask them about the 1970s.
00:09:09.460 | But I wasn't there for those things.
00:09:11.620 | So it's just all history.
00:09:14.940 | You might be similar, have many young listeners, or you might not be.
00:09:18.580 | But the point is, think about it, but don't spend all your time preparing for Mad Max.
00:09:22.820 | Mad Max is not certain.
00:09:24.380 | Possible?
00:09:25.380 | Yes.
00:09:26.380 | Probable?
00:09:27.380 | Maybe.
00:09:28.380 | Depending on how we use the word probability.
00:09:30.300 | But not certain.
00:09:31.980 | Don't spend all your time preparing for Mad Max.
00:09:35.300 | Thus missing out on preparing for a great future.
00:09:38.940 | Think about Mad Max.
00:09:40.700 | Prepare for Mad Max.
00:09:44.260 | But don't dwell on Mad Max.
00:09:47.700 | Number five.
00:09:49.740 | Scenario five where the Earth is void of humans due to an asteroid hitting the Earth.
00:09:55.740 | You can't prepare for that with storing food and water.
00:10:01.940 | Your only preparedness in that situation is spiritual preparedness.
00:10:05.460 | That's it.
00:10:06.460 | That's all you can do.
00:10:07.460 | If there's an asteroid coming in on top of you, ask the Lord to see you through.
00:10:13.020 | That's all you can do.
00:10:14.660 | So don't spend any time thinking about asteroids hitting the Earth.
00:10:20.480 | You can't do anything about it.
00:10:23.100 | Now, when looking at these scenarios, categorize the advice that you're getting and the actions
00:10:31.860 | that you're getting.
00:10:33.220 | Make sure you're not ignoring any of them, but make sure you're not giving equal weight
00:10:37.820 | to all of them.
00:10:41.060 | Recognize the probability varies.
00:10:44.060 | I beg of you, if you're sitting in a cabin in the middle of the woods waiting for the
00:10:52.620 | zombie apocalypse and ignoring the goals and the dreams that you have in your life because
00:10:58.380 | you're scared of the zombie apocalypse, leave now while you still have a chance of living
00:11:06.940 | your life.
00:11:08.820 | Keep the cabin, but don't live there if the only reason for living there is a zombie apocalypse,
00:11:14.540 | because a zombie apocalypse, Mad Max, is not very likely.
00:11:20.220 | I think it's wise to prepare, but it's not likely.
00:11:23.700 | So please assign an accurate probability to the different scenarios that you face in your
00:11:29.500 | life.
00:11:32.620 | Try it out.
00:11:33.620 | See if it works for you.
00:11:34.620 | It's worked for my client.
00:11:35.620 | I like this particular framework to think through.
00:11:38.020 | The future will be one of the following.
00:11:39.340 | Number one, same as now or better.
00:11:42.060 | Number two, similar to a recession.
00:11:44.580 | Number three, similar to depression.
00:11:46.780 | Four, similar to Mad Max.
00:11:49.420 | Or five, void of humans.
00:11:52.620 | Think about the scenario and plan rationally.
00:11:56.940 | Don't react emotionally.
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