RPF0669-Friday

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00:00:29.960 | It's Friday and today that means live Q&A.

00:00:52.960 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:55.800 | skills, insight and encouragement you need to live a rich and meaningful life now while

00:01:00.160 | building a plan for financial freedom in 10 years or less.

00:01:02.880 | My name is Joshua.

00:01:03.880 | I am your host.

00:01:04.880 | I am your guide.

00:01:05.880 | I am your advisor.

00:01:07.120 | I am your fellow journeyer on this pathway of financial freedom.

00:01:11.760 | And today, as we do any day that I can arrange the technology, we have live Q&A.

00:01:24.640 | As we begin this show, we've got three callers waiting on the line and I've got two written

00:01:28.040 | in questions from patrons of the show.

00:01:30.320 | So we're going to be doing with those.

00:01:31.680 | Before I begin the live calls, just one quick thing, a little bit different.

00:01:35.320 | I would love to get your feedback on a few things.

00:01:37.840 | I've got a lot of big plans for the next months.

00:01:39.440 | I feel like I'm always saying I've got a lot of big plans, but I do have a lot of big plans

00:01:43.120 | and I'm making progress on many things.

00:01:44.800 | You know, the constant travel and new children and what has been really challenging for the

00:01:48.440 | last year and a half.

00:01:49.920 | But I am making really good progress and expanding the business and doing a lot.

00:01:54.720 | So I've got a lot of things that I'm going to be announcing to you.

00:01:56.600 | I'm working on the infrastructure for a new membership site, which will be launching in

00:01:59.560 | January, which will help me to fulfill the mission that I lead every show with.

00:02:04.520 | You've noticed that the podcasts have been more consistent every Monday, Wednesday, and

00:02:07.960 | Friday is the current podcasting schedule.

00:02:10.160 | I've been reengaging with social media.

00:02:12.980 | So if you haven't been there, come on by Facebook and it's facebook.com/groups/radicalpersonalfinance.

00:02:18.800 | Join our Radical Personal Finance Facebook group.

00:02:21.160 | I was out of that group for about a year and a half, but I am back now interacting there.

00:02:25.880 | Also make sure to like the page at radicalpersonalfinance.com, whatever the page is.

00:02:29.360 | Search for Radical Personal Finance.

00:02:30.360 | You'll find me on Facebook.

00:02:31.360 | I'm doing a lot more video there on Facebook as well.

00:02:34.440 | Find me on Twitter, doing a lot more work on Twitter, twitter.com/joshuasheats.

00:02:37.600 | If you want to just get quick interaction with me, see some of the things that I'm thinking

00:02:40.800 | about, you can do that on Twitter.

00:02:42.720 | But those are all preamble to simply this.

00:02:45.160 | I would like to host a live event at some point and I'll either do it this coming spring

00:02:50.960 | or January, February, kind of the new year, or possibly wait till next year.

00:02:56.880 | But what I'm working on is one of the things that I really believe is the future for most

00:03:00.960 | of us in most of what we're doing is to bring together a better mix of the online world

00:03:06.640 | and the offline world.

00:03:08.360 | I think that is the ideal.

00:03:10.300 | As so much of our lives have gone digital, we've gained a lot of really great benefits

00:03:15.160 | and advantages from that work.

00:03:17.760 | For example, I'm speaking to you right now, right on your phone, right on your computer.

00:03:21.520 | And that's great.

00:03:22.520 | It allows us to have a relationship that previously was not possible.

00:03:25.640 | I have listeners, tens of thousands of listeners all around the world, which is such a blessing.

00:03:30.600 | I'm doing this call-in show and there's people, looks like all the numbers on my screen right

00:03:34.800 | now are US-American numbers, but you can call into this show from no matter where you are.

00:03:40.000 | So it brings us tremendous opportunities.

00:03:42.600 | But what's hard is to keep the same strength of interpersonal relationships when all the

00:03:47.280 | communication is digital.

00:03:48.960 | And I've noticed this over the years as I've gone to conferences and I've interacted with

00:03:52.200 | more and more people who are remote virtual workers, is I've come to be really convinced

00:03:56.200 | that the best thing is to do a lot of interaction digitally, but there has to be in-person interaction.

00:04:01.880 | And I think so many people gain from that.

00:04:04.040 | I've just gotten back from FinCon in Washington, DC a couple of weeks ago.

00:04:09.120 | And the FinCon community is financial bloggers and people like me, podcasters and YouTube

00:04:14.440 | people and financial advisors who love to come together.

00:04:17.640 | And those relationships are so strengthened there in person.

00:04:21.800 | And one of the things I've done, I've done a couple of big public meetups in Toronto

00:04:25.420 | and in Washington, DC in the last few weeks.

00:04:27.760 | And I had such a great turnout for those.

00:04:29.680 | I so thoroughly enjoyed meeting the listeners, talking, hearing the great stories, et cetera.

00:04:34.600 | And so what I'd like to do is I'd like to, or I'm thinking about doing, let me say, I

00:04:38.120 | would like to, yes, and I'm thinking about it.

00:04:39.920 | I'm thinking about organizing an event of my own.

00:04:44.680 | And what I'm imagining doing is I think that the best way for me to serve people who are

00:04:48.760 | just getting started is through this type of digital content, through the free podcast,

00:04:53.120 | through the new membership site that I'll be launching in January, which will have everything

00:04:57.560 | organized in a way that this podcast has never been able to accomplish, of all the things

00:05:01.960 | that you need to do to actually accomplish reaching that goal of financial freedom in

00:05:05.200 | 10 years or less.

00:05:06.960 | But I'd still like to do something in person.

00:05:10.040 | I'd like to arrange some kind of in-person event.

00:05:12.480 | Now I've got a number of different ideas of some ways that I'd like to do it.

00:05:16.360 | I could just do it as meetups, right?

00:05:19.000 | That's always an opportunity.

00:05:20.080 | And we had a lot of people come out to the meetups, but the problem with a meetup is,

00:05:23.600 | you know, the last one I showed up in Washington, DC and now it's my own fault.

00:05:27.600 | I was late to the meetup because I got detained at the airport and detained with the airlines

00:05:31.400 | and detained with customs.

00:05:33.520 | Anyway, so I was late, but still there were probably, I would say, 40 people there at

00:05:38.200 | the meetup and I had, you know, 10 minutes max with each person.

00:05:42.600 | So I'd like to do something that's multi-day and I can structure it as, so I'm thinking

00:05:46.720 | about something like a three-day event.

00:05:48.840 | And then what I'd like to do is I can structure it in the form of lectures, possibly, or doing

00:05:53.920 | all the lecturing myself on a number of topics in kind of an organized way.

00:05:58.140 | We can go into some topics that I don't cover on the show very much.

00:06:00.800 | That would depend, for example, on the financial profile of the attendees.

00:06:04.760 | I try to keep the show largely at kind of entry level to intermediate content, but we

00:06:09.400 | could go deep into some advanced stuff in an in-person seminar.

00:06:13.440 | I could also bring other lecturers.

00:06:14.800 | There are other people in this space or other professional people that I could bring together.

00:06:18.480 | And most importantly, I'd love to just spend several days with you and then arrange an

00:06:22.720 | opportunity for you to meet some other listeners and to spend several days with those other

00:06:28.280 | listeners.

00:06:30.440 | And so my vision right now is something like a three-day event at a location that would

00:06:35.880 | arrange where you just simply go there and it's a perfect location to simply be together.

00:06:40.440 | Now right now I could do it in the United States, but I think it's more interesting

00:06:45.920 | to do things outside of the United States and I don't love spending a ton of time in

00:06:49.640 | the United States myself.

00:06:51.280 | If you guys really, really want something in the United States, I'm willing to do that

00:06:54.560 | because I'm going to go wherever you are and serve you however I can.

00:06:57.760 | But also at the moment I've thought about doing something either in Colombia, Costa

00:07:03.040 | Rica, Mexico, or Nicaragua.

00:07:06.360 | And there are advantages and disadvantages to each of those.

00:07:08.880 | Colombia, I've thought about trying to figure out if there's some way that I could host

00:07:11.640 | an event in one of the border cities where we could do some work and help in some of

00:07:16.240 | the refugee camps with the Venezuelan refugees.

00:07:19.920 | That's really hard for me to figure out the solution right now, but that's the reason

00:07:23.000 | why I like the idea of having something in Colombia.

00:07:25.440 | Colombia is just a wonderful country.

00:07:27.840 | It's absolutely on the upswing.

00:07:29.200 | There are tremendous opportunities left and right in Colombia right now.

00:07:31.600 | So if you've never been to Colombia, it's a really good time to go.

00:07:34.680 | I love Colombia.

00:07:35.960 | Costa Rica is a really good option.

00:07:37.800 | People like to go to Costa Rica.

00:07:38.880 | Costa Rica has the benefit of being really easy to get to.

00:07:41.280 | It's cheap to get to from all over the United States.

00:07:43.920 | It has tremendous tourist infrastructure, so we can do a really good integration of

00:07:48.240 | fun stuff and great tourist stuff.

00:07:51.760 | Anyway, Costa Rica has a lot to go for.

00:07:56.440 | Mexico I think has a lot of good things to go for.

00:07:59.040 | There are lots of resorts and things in Mexico.

00:08:01.080 | It's cheap to fly to.

00:08:02.160 | It's easy to get into.

00:08:03.840 | Some people may drive to that if you're in the southern United States.

00:08:06.720 | That can be helpful.

00:08:07.920 | And then there's opportunities in Nicaragua.

00:08:09.960 | If I do it in Nicaragua, what I would do is I would do it at Mark Ford at his resort that

00:08:15.200 | he developed with some of his friends.

00:08:17.720 | They're on the Pacific Coast in Nicaragua, which is a wonderful place.

00:08:21.640 | Frankly, it's the perfect place.

00:08:25.240 | It's probably my number one spot right now.

00:08:28.040 | It's got tremendous places to stay.

00:08:29.760 | It's got a perfect conference room that can handle up to 60 people or so, which I'd like

00:08:33.360 | to keep the total number of people 50 to 60, something like that.

00:08:37.300 | It's all inclusive.

00:08:38.400 | Everything is there.

00:08:39.400 | It's really high end.

00:08:40.400 | And it's in Nicaragua.

00:08:41.400 | And Nicaragua is an interesting place because Nicaragua is really having a lot of challenges

00:08:46.440 | over the last year and a half.

00:08:48.000 | A bunch of people, I'll just skip those challenges.

00:08:50.680 | If you don't know about them, you can research them, but had a lot of challenges, but it's

00:08:54.000 | totally fine for the kind of thing that I'm talking about.

00:08:57.760 | And it's also a lot of opportunities.

00:08:59.440 | It's behind Costa Rica in terms of development.

00:09:02.600 | But there are a lot of opportunities in a place like Nicaragua.

00:09:05.160 | So anyway, those are kind of my four options.

00:09:08.760 | And I think that it would be fun for those of you who are in the snowy north, we do something

00:09:11.940 | in probably February.

00:09:13.680 | It would be a good option to do that.

00:09:15.040 | So here's what I would like.

00:09:16.240 | That's just what I'm thinking about.

00:09:17.240 | I haven't booked any place.

00:09:18.560 | I haven't made any commitments.

00:09:19.880 | I've worked through some basic budgets.

00:09:22.080 | What I'm guessing at right now is to, what I'm guessing at is a fee, a tuition, not tuition,

00:09:30.320 | charge, cost, whatever, of something like $3,000 for the, and that would include everything,

00:09:37.360 | include lodging, include activities, include food, basically just show up in a certain

00:09:43.640 | city and everything is taken care of from there.

00:09:46.140 | So I'd like to keep it a high end event.

00:09:48.520 | And so that's basically what I'm thinking.

00:09:51.120 | So here's what I would like to know from you.

00:09:53.560 | Is that the kind of thing that you'd be interested in?

00:09:54.920 | If so, email me, joshua@radicalpersonalfinance.com.

00:09:58.160 | Send me an email, let me know your thoughts and see if that might be something that you

00:10:02.360 | would enjoy.

00:10:04.880 | Multiple benefits, again, the lecturing, the fun, you could bring your family and get out

00:10:07.800 | of the wintry north.

00:10:10.280 | You can arrange this so it can be part of your business expenses is always a good idea.

00:10:15.160 | And then the interaction with other people who are in a similar, who are part of the

00:10:20.140 | radical personal finance community.

00:10:21.500 | I have just so enjoyed the meetups and things that I've done recently, and I'd like to do

00:10:25.300 | more of that.

00:10:26.300 | So I'm not 100% sure whether it'll be early 2020 or whether we'll pick that up in early

00:10:30.260 | 2021.

00:10:31.420 | That would depend on the response.

00:10:33.100 | So if that interests you, send me an email and let me know.

00:10:36.820 | Let's go first to the phones.

00:10:37.820 | We go to Anne in Maryland.

00:10:38.820 | Anne, welcome to the show.

00:10:39.820 | How can I serve you today?

00:10:40.820 | Hi, Joshua.

00:10:41.820 | Thank you so much for taking my call.

00:10:47.980 | I have a question about healthcare and getting healthcare.

00:10:55.620 | And I am conflicted because I am concerned about the healthcare in the United States

00:11:01.980 | and for two major reasons.

00:11:04.980 | So first of all, of course, financial toxicity that it can bring unexpectedly.

00:11:10.220 | And then also I personally do not, cannot tell the quality of care.

00:11:16.780 | And I don't know how to tell the quality of care because it's so kind of a black box sometimes.

00:11:23.340 | And so I was thinking, what can I do to make the best decision?

00:11:27.860 | And I wanted to hear your practical advice.

00:11:31.820 | And just to give you kind of dimensions across which I'm thinking.

00:11:37.860 | So first one is the quality of care and safety.

00:11:42.740 | I was thinking there are reviews online, but I don't particularly trust patients' reviews

00:11:48.420 | because I don't believe they know what they're talking about.

00:11:51.740 | What I would ideally want to see is a survey of, let's say, nurses who work at the institution

00:11:57.380 | and ask them, would you want to have your own healthcare problem solved in that institution

00:12:04.660 | or not?

00:12:05.740 | But this information is obviously not available.

00:12:08.940 | Then things like I would want to know if that, which institutions are notorious for suing

00:12:16.020 | patients, which I consider in the majority of cases immoral.

00:12:20.380 | And so I would want to know how toxic that is.

00:12:23.660 | And of course, I want to know the prices.

00:12:25.460 | Like everyone wants to know whether they're competitive, where they're going to be transparent.

00:12:31.580 | If I pay cash, can I do it?

00:12:33.780 | Will they, will that be enticing?

00:12:38.540 | So those different aspects that I'm thinking about, and I want to know if you've ever wrestled

00:12:44.060 | with any of this and what solutions you found for yourself and for your friends and for

00:12:50.780 | your family.

00:12:51.780 | Are you currently facing some kind of ongoing chronic medical condition that you're concerned

00:12:56.940 | about?

00:12:57.940 | Or is this a hypothetical, if in the future I need more healthcare?

00:13:03.660 | What would be the best way to do it?

00:13:07.820 | It's hypothetical and I'm thinking it's exactly the time when I need to do this because I'm

00:13:13.620 | imagining if any emergency strikes, I will have to just to take what comes my way.

00:13:19.460 | And now I feel I'm wasting my time if I'm not using this time when I'm not facing anything

00:13:25.260 | like this.

00:13:26.260 | Do you have health insurance now?

00:13:28.420 | Yes, I do.

00:13:30.780 | So you're not concerned about the financial components of healthcare.

00:13:35.260 | You're more thinking about how can I get quality care, is that right?

00:13:40.580 | That's true, but I actually personally want to get quality of care for the, with the right

00:13:48.820 | price.

00:13:49.820 | So let's say, yes, I do have insurance and it's quite comprehensive, but I don't believe

00:13:55.060 | it's morally right to go and do a procedure or go to a healthcare institution which charges

00:14:04.180 | huge prices to my insurance because that trickles back to everyone else's premiums and I just

00:14:11.100 | want to be a contributor to that toxic system.

00:14:14.780 | So even though I am okay, but I want to do the right thing.

00:14:20.100 | Okay, I understand.

00:14:22.420 | Well here would be, so I, so you asked a lot of good questions about how to get reviews

00:14:28.100 | on physicians and things like that.

00:14:30.300 | I'm not competent to answer that.

00:14:32.420 | I would assume that some people out there are trying to work on a system like that.

00:14:37.340 | If not, maybe there's a way that you or any, some other listener can develop a system where

00:14:42.740 | somehow you screen the opinions of people on certain medical providers and try to figure

00:14:49.220 | out how to get the nurses to leave the reviews.

00:14:52.100 | But I have no information on that, so I'm not competent to answer that question.

00:14:56.060 | I'm also not competent to judge the quality of care in any kind of way outside of personal

00:15:02.380 | subjective experience.

00:15:04.060 | I think one thing that we can and should do is to just simply recognize how each of us

00:15:10.500 | feels, how each of us feels about the quality of care.

00:15:13.660 | I think we still have, and especially if we continue to hone our abilities, we still have

00:15:17.460 | the ability to recognize when we're getting treated well and when we're not getting treated

00:15:22.300 | well.

00:15:23.300 | And I'm a big fan of the fact that now there are so many groups and public resources available

00:15:29.740 | for people who are experiencing certain medical conditions because those groups and online

00:15:34.500 | resources, et cetera, allow people to check out their doctor's opinions.

00:15:39.380 | And I know some doctors don't like that.

00:15:41.580 | Many doctors don't like that because there's been a loss of respect.

00:15:44.860 | But I personally think it's a good thing, and I come from a world of being a financial

00:15:47.620 | advisor.

00:15:48.620 | And financial advisors, probably many of us would have liked to go back to the world where

00:15:53.940 | there weren't so many online resources and reviews and everything.

00:15:57.500 | But the reality is it's good.

00:15:59.100 | It's good for us to be held to account.

00:16:01.140 | It's good for us to face that market competition.

00:16:03.500 | And so I'm happy for it.

00:16:04.500 | I like the market.

00:16:05.840 | So I would say the first thing is probably the only practical thing I could offer would

00:16:10.180 | be to make sure that you become the best student of whatever health condition that you have.

00:16:15.460 | I have observed so many people, and I've observed that there seem to be kind of two different

00:16:21.220 | kinds of people.

00:16:22.440 | People who just simply take what they're told and then don't fight, or other people who

00:16:26.940 | say I'm going to become the expert at this certain thing.

00:16:30.500 | And there's the old joke that what do you do if your doctor comes to you and tells you

00:16:34.900 | that your disease is incurable?

00:16:36.620 | You fire him and go find another doctor.

00:16:39.060 | So you find somebody who will tell you, yeah, here's what you can try.

00:16:42.500 | And I think what I see serving that is all the support groups for different kinds of

00:16:46.340 | illnesses, different kinds of conditions, and then the dissemination of information

00:16:50.980 | through YouTube, through Facebook, through blogs, et cetera.

00:16:54.820 | Now obviously we have problems because most of us don't have the expertise in a certain

00:16:58.860 | issue to know what's true and what's not.

00:17:01.100 | And that's really challenging.

00:17:02.940 | But it's better than just everything being hidden behind a wall.

00:17:06.980 | Financially, to your specific question about insurance, I don't know that there's a great

00:17:11.380 | answer to it.

00:17:13.020 | Because the prices that you are paying are the prices the insurance company is going

00:17:16.980 | to pay.

00:17:18.020 | And it's not necessarily your responsibility to adjust those prices.

00:17:22.460 | It's the insurance company's responsibility to negotiate those prices.

00:17:26.460 | The medical system in the United States is broken, and probably irreparably broken.

00:17:33.060 | I don't know of—I had some optimism a number of years ago when high deductible health insurance

00:17:39.060 | policies first came out and were being promoted.

00:17:43.500 | And I thought, well, maybe this could help.

00:17:45.300 | Maybe this would help individuals to start negotiating with doctors.

00:17:48.300 | But I haven't seen any evidence presented to me that shows how somehow that's made a

00:17:53.140 | big difference.

00:17:54.820 | You have a major political conflict right now.

00:17:58.420 | You have the failure of the Republicans to repeal the Affordable Care Act.

00:18:04.700 | You have a major press by the Democrats to move past the Affordable Care Act to move

00:18:08.940 | into a single-payer health care system of some kind.

00:18:12.740 | In many ways—I was talking with a friend of mine—in many ways that kind of thing

00:18:15.700 | seems almost inevitable.

00:18:17.200 | Because very few people are happy with the way things are right now.

00:18:22.060 | And I don't know the solution.

00:18:23.540 | I don't have the solution for that.

00:18:25.260 | So I don't know that it's necessarily your responsibility to do that.

00:18:28.260 | But if you do want to do it, here are a few things you can do.

00:18:30.300 | Number one, if you simply adjust your insurance policy to have a very high deductible, then

00:18:36.760 | you would be the one to benefit from your cost shopping, from your negotiations, from

00:18:41.340 | paying cash, etc.

00:18:43.180 | Because then you're just simply saving the insurance company money, and you're actually

00:18:47.540 | saving yourself money because you have the high deductible, and you're wanting to make

00:18:51.260 | sure that you don't trigger that deductible.

00:18:53.940 | So that would be the first thing.

00:18:55.140 | The best thing is, if you wanted to or if it were appropriate, to move to one of the

00:18:58.700 | health care sharing organizations.

00:19:00.340 | Now, I wouldn't go there unless you had other reasons to do it, but that is one of the benefits

00:19:05.220 | of the health care sharing organizations.

00:19:06.980 | I always feel like I'm with my team, I'm with my people, and so when I negotiate a discount

00:19:12.420 | or if I get something cheaper, then I have that option.

00:19:16.260 | I'm benefiting all of us, and I'm keeping all of our rates down.

00:19:19.740 | That's one thing I like about using Samaritan Ministries, which is what I use with the health

00:19:23.020 | care sharing operations.

00:19:25.100 | Beyond that, how do you get prices?

00:19:27.260 | Well, I think there are some...

00:19:28.900 | How do you get prices made in advance?

00:19:30.620 | I think there are some good market solutions that are starting to come out.

00:19:33.980 | Walmart recently launched Walmart Health, and they're launching this at some of their

00:19:37.500 | big super centers, where you go into Walmart Health and you can get clearly priced vision

00:19:43.380 | care, clearly priced medical care, nutrition, weight loss consulting, etc.

00:19:48.180 | And all the pricing is up front, it's all flat pricing.

00:19:50.660 | I think that's really good.

00:19:52.100 | The urgent care marketplace has really made a major impact.

00:19:55.820 | Most people, I myself am included in this, but most people would just choose, rather

00:20:02.180 | than going to the emergency room where they don't know if they're going to be there for

00:20:04.460 | eight hours and walk out the door with a $20,000 bill, they go to an urgent care facility and

00:20:09.260 | get care there where prices are much more reasonable and discounted in advance.

00:20:14.780 | There is a growing...

00:20:15.900 | I don't know that it's having a big impact yet, but there's a growing movement for concierge

00:20:19.580 | medicine where you just simply have your doctor and you pay a fee and they don't take insurance,

00:20:25.660 | it's just simply done with cash.

00:20:27.700 | Those things don't really help you because you do have insurance.

00:20:31.180 | So my answer is I probably wouldn't worry about it since you do have insurance.

00:20:34.020 | If you were thinking about dropping insurance, then some of these other things come into

00:20:37.980 | play.

00:20:39.860 | You could also investigate medical tourism.

00:20:43.180 | I think that's one of the growth areas that'll be in the future.

00:20:47.740 | There's a listener of the show, he blogs at a blog called Be Unconstrained, but he just

00:20:53.660 | shared the story of how he went to Mexico for major shoulder surgery and had a great

00:21:00.700 | result.

00:21:01.700 | I can't remember the exact numbers, but he was quoted tens of thousands of dollars for

00:21:05.260 | his shoulder surgery in the United States, but he got it done in Guadalajara for something

00:21:09.700 | like six or eight thousand dollars.

00:21:11.580 | I think many of those options are there, are going to grow in the future.

00:21:15.660 | So I can't necessarily solve the ethical problem.

00:21:18.020 | I would say it's probably not necessarily your responsibility to worry about saving

00:21:22.580 | the insurance company money.

00:21:23.900 | That's their responsibility and I appreciate the sentiment.

00:21:27.860 | I think that's very noble of you, but I would just focus on making sure that you are getting

00:21:32.580 | the care that you need and that your finances are adjusted so that care that you get isn't

00:21:37.900 | going to bankrupt you.

00:21:39.900 | These are great ideas.

00:21:45.020 | I actually don't know about Walmart and I kind of never paid attention to urgent care

00:21:51.140 | facilities and whether they're different from other things.

00:21:55.380 | So I'm just going to Google those things around me.

00:21:58.500 | I have a question.

00:22:02.020 | Whether you ever paid cash up front or right after an appointment for any medical non-dental

00:22:09.460 | work and how did it work for you?

00:22:14.140 | If you ever done it.

00:22:16.140 | I've had minimal interaction with the medical system and part of that is by design.

00:22:21.140 | I'm scared of doctors and hospitals because people die in hospitals.

00:22:25.940 | One of the major leading causes of death in the United States after a few of the big ones

00:22:32.300 | like cancer and heart disease.

00:22:33.980 | I think it's number four or something is medical errors.

00:22:36.780 | So I think being in a hospital is an extremely dangerous place to be.

00:22:41.500 | And so if I actually have an acute life-threatening disease, I've actually been in a car accident

00:22:48.580 | and my pelvis is broken in 27 places, then I want to be in a hospital.

00:22:54.860 | I think the US medical system is fantastic at that dire surgical intervention to save

00:23:02.100 | people's lives.

00:23:03.860 | I think that's wonderful.

00:23:05.060 | But in terms of, but I've personally never been in a situation, whether that's by any

00:23:10.100 | influence of mine or just simply the circumstances that they've been ordained for me.

00:23:14.420 | I don't know.

00:23:15.420 | I always try to be careful.

00:23:16.420 | I try to think ahead.

00:23:18.500 | I try to make sure that I drive safely and I wear protective gear at all times and things

00:23:23.020 | like that to minimize any risks of having personal injury.

00:23:28.660 | But I've always been, I've been fortunate and blessed never to need acute care.

00:23:32.260 | I have a very low opinion of the US medical system's ability to actually make people healthy.

00:23:39.620 | It seems as though we are not good at helping people be healthy.

00:23:44.320 | We have a population that is sicker than ever, is fatter than ever, and is dumber than ever.

00:23:48.900 | And I don't know why that is.

00:23:50.180 | I have opinions, but I don't know why it is, but I don't have much confidence in talking

00:23:54.900 | to most physicians, unless there's a physician who's really tackled that subject head on.

00:24:00.420 | So I personally try to minimize interaction with the medical system.

00:24:05.580 | That said, I'm acknowledging that all of that was just simply to say that I'm not an expert

00:24:11.340 | in this.

00:24:12.500 | I try to minimize my exposure for the reasons stated.

00:24:17.020 | But that said, I've always paid cash for everything.

00:24:21.780 | I've never had a $500,000 hospital bill, which of course would be handled through the normal

00:24:27.540 | circumstances.

00:24:28.740 | But when I go and get something, I pay cash.

00:24:31.020 | And especially as I've tried to, I pay cash.

00:24:34.600 | That's very simple.

00:24:35.600 | And it's not hard to do.

00:24:36.600 | You just pull out money and you pay them.

00:24:37.900 | And then you use the fact that you're standing there with money in your hand to negotiate

00:24:40.680 | a discount.

00:24:41.900 | And usually if you'll do things in advance and you'll negotiate it in advance, you'll

00:24:48.060 | get discounts in and of itself.

00:24:50.120 | So to me it's easy.

00:24:52.020 | I don't have anything to add.

00:24:53.380 | It's simple to do.

00:24:54.380 | Use the power of cash.

00:24:55.820 | Ask the price in advance.

00:24:57.200 | One of the best things that you can always do is just simply be the person who asks for

00:25:00.380 | prices in advance.

00:25:02.220 | Very few patients do that.

00:25:04.380 | And so as a result, you're often surprised.

00:25:07.220 | But you would be surprised if you just simply ask people, "How much is this going to cost?

00:25:11.460 | Is this really necessary?"

00:25:14.740 | Then go from there.

00:25:15.740 | So that's my answer.

00:25:16.740 | Anything else, Anne?

00:25:17.740 | I've got a bunch of callers.

00:25:18.740 | I'll move on unless you've got another final question.

00:25:19.740 | Thank you very much.

00:25:20.740 | My pleasure.

00:25:21.740 | Thank you for calling in.

00:25:22.740 | We go now to Nam in New Jersey.

00:25:23.740 | Nam, welcome to the show.

00:25:24.740 | How can I serve you today?

00:25:25.740 | Hi.

00:25:26.740 | Good afternoon, Joshua.

00:25:27.740 | I'm glad that you're back on social media.

00:25:36.700 | I've recently seen that you put up some new content on Facebook.

00:25:41.820 | Nam, I'm sacrificing all my principles for you because I care about you.

00:25:47.620 | So I'm glad that you're appreciating it.

00:25:49.780 | Go ahead.

00:25:50.780 | Thank you.

00:25:51.780 | Thank you.

00:25:52.780 | All right.

00:25:53.780 | So I've been fortunate, just came with the news that I am exempt from a property tax.

00:26:06.540 | And throughout some research that the real estate tax, I'll be exempt on my property

00:26:13.940 | if I were to live in Pennsylvania or New Jersey.

00:26:18.580 | Currently me and my wife, we own our first home for about a year now in Pennsylvania.

00:26:25.940 | And with this news coming in, now that we will be exempt as of next year, we were thinking

00:26:34.660 | of moving to also to New Jersey.

00:26:40.460 | Now one episode I've listened to you that you stressed about also was about state income

00:26:45.700 | tax.

00:26:46.700 | Moving to New Jersey, there will be about a 2.2% increase in state income tax because

00:26:55.780 | at of earning as a household, we fell at about 5.2% state income tax where in Pennsylvania

00:27:09.540 | currently we are only doing, we only pay 3.07 where they only have a flat fixed rate

00:27:19.700 | on state income tax.

00:27:23.260 | So besides running the numbers, and we are planning to have a first born within the next

00:27:34.260 | two years, I just want some sort of school of thoughts or guidance besides me just running

00:27:44.020 | the state income numbers because that's probably something else I'm not taking into

00:27:51.580 | consideration.

00:27:52.580 | I try to run the numbers just to see if it makes sense or not for us to relocate to New

00:28:00.420 | Jersey.

00:28:01.420 | Tell me about other considerations such as your work, can you live equally and earn the

00:28:05.820 | same in both locations?

00:28:08.260 | Yes, commute wise it would still be about the same expense.

00:28:17.780 | Moving to New Jersey it will increase, besides the state income tax of course, but with commute

00:28:24.980 | there will be another $2,000 increase due to the tolls that we have.

00:28:32.020 | Why is it that you would be exempt from property tax living in New Jersey?

00:28:35.940 | As a veteran, I just got this news that I'll be exempt from, and there's only a few

00:28:45.820 | taxes, I mean a few states, not every state, you know, are doing this.

00:28:53.020 | However in Pennsylvania there are income limits where New Jersey there is not.

00:28:59.580 | And you're over the income limits in Pennsylvania?

00:29:04.860 | In three years, yes, due to promotions, locality, maybe go to state law will change, it will

00:29:12.860 | adjust based on the cost of living, but at the rate that I'm going and I'm earning,

00:29:22.340 | we're both still somewhat a junior level in our career.

00:29:29.580 | We're seeing about 25 more years of employment in our lifetime, we're only in our late 20s.

00:29:38.940 | You mentioned that you and your wife are hoping to have a baby in the next two years, would

00:29:41.980 | she have any inclination towards staying home with the baby, and would that drop your income

00:29:46.740 | in two years?

00:29:49.740 | Yes, she did talk that she will like to take some time off to take care of that.

00:30:00.660 | As far as child care goes, the only close relative that we have would be her father

00:30:11.540 | who's no longer working, and he's already taking Social Security, and he's not doing

00:30:21.500 | it, so mostly he will be helping with child care.

00:30:26.500 | But yes, she did say she would like to take off at least half a year to help to take care

00:30:34.220 | of the baby.

00:30:35.220 | So you can consider that, if your income is below Pennsylvania numbers right now, but

00:30:41.140 | in two years you might have a baby and then her income would go down, then that might

00:30:44.180 | be something that would factor into your planning.

00:30:47.020 | So you're obviously a detail-oriented person with regard to the finances.

00:30:51.340 | You've calculated an additional $2,000 worth of tolls.

00:30:54.860 | So let's talk first about the, we'll talk first about things that are more important

00:30:58.900 | in my opinion than finances, and then we'll come back to finances.

00:31:03.180 | Recognize that in general, finances are not the key driving factor that's going to affect

00:31:08.860 | your lifestyle or your happiness in any one location.

00:31:12.380 | Usually it's going to be things like your family and your friends.

00:31:15.340 | Now you said, sounds like minimal family interaction, but that for most of us is the single driving

00:31:20.740 | factor that makes a difference in our quality of life.

00:31:23.380 | Are we close to the people that we love?

00:31:25.540 | Are we close to the people that we enjoy spending time with?

00:31:28.260 | Are we in a compatible culture, some place that's culturally comfortable for us?

00:31:33.420 | Now if we assume that your situation is the same either way, that New Jersey or Pennsylvania

00:31:38.740 | both have the same exposure to family and friends, then we can move on.

00:31:42.300 | The second big thing to consider would be career and career opportunities.

00:31:46.460 | Now it sounds like you're going to be working the same job either way.

00:31:48.580 | It's just you come in from the east or from the west.

00:31:50.620 | Well that's up to you.

00:31:52.100 | But if there's a difference in terms of your networking opportunities, for example, if

00:31:56.220 | you live, I don't know this to be the fact, but let's just make it up.

00:31:59.100 | Let's say if you live in the boonies of Pennsylvania and then you just go to the same job, but

00:32:03.900 | that doesn't give you the opportunity to go down and be part of the local Rotary Club

00:32:07.180 | or to be part of the Toastmasters group or to be part of the networking organization

00:32:10.940 | for your industry.

00:32:12.360 | But if you moved to New Jersey and you lived in the suburbs or in the city where you could

00:32:16.220 | do those things easily, that would be worth considering.

00:32:19.580 | Think about which would be better for your career.

00:32:22.260 | In general, taxes matter a lot, but you can always earn more money to pay for taxes.

00:32:27.020 | So if you're in a career that you like, then think about how that impacts your career,

00:32:31.900 | educational options.

00:32:33.020 | Think about the growing economy in a place.

00:32:35.300 | If you live in a certain place and think about how that's going to affect your housing values.

00:32:40.840 | Now if we get to the numbers and we say, what are the costs?

00:32:44.820 | You first would compare any cost that you can calculate.

00:32:47.820 | So obvious thing that you can calculate is property taxes.

00:32:50.380 | Do I have a $10,000 per year property bill or a $0 property bill?

00:32:54.300 | That's a big, big deal.

00:32:55.780 | Then you want to then go and say, but what else would change?

00:32:58.940 | Are there, is the actual house acquisition cost higher or lower?

00:33:03.880 | Are the utilities higher or lower?

00:33:05.620 | Are groceries higher or lower?

00:33:07.900 | Is there a change in sales taxes that's higher or lower from one place to another?

00:33:12.140 | Would there be additional transportation expenses that are higher or lower?

00:33:16.580 | One thing to think about is what costs are deductible and what costs are not.

00:33:20.920 | So the cost of property taxes generally would be deductible, as is the cost generally of

00:33:27.140 | mortgage interest if you itemize on your taxes.

00:33:30.100 | Whereas the costs of commuting are not deductible.

00:33:33.080 | So if you're going to incur an extra $2,000 per year of commuting expenses that's not

00:33:38.100 | deductible, calculate and see if it might be better for you to have property taxes and

00:33:41.840 | interest expense that is deductible.

00:33:44.820 | Now if you're struggling this much with the decision, if the savings on mortgage taxes,

00:33:51.220 | sorry, the savings on property taxes are zero, you go from whatever the bill is to zero and

00:33:57.660 | you're still struggling with the decision, there's probably no clear financial solution

00:34:01.420 | to that.

00:34:02.540 | And you've probably already made the spreadsheets to try to compare it.

00:34:05.140 | So I would just say pick where you want to live.

00:34:07.420 | Pick which place you're more excited about.

00:34:09.820 | And then think finally about culture.

00:34:11.560 | I would not live in New Jersey because of the political environment and the cultural

00:34:16.940 | environment.

00:34:17.940 | For me it would feel like living in a prison, for me to live in New Jersey.

00:34:21.420 | Now I don't know that Pennsylvania is a lot better, I've never lived in Pennsylvania,

00:34:24.460 | but if I had to choose just knowing what I know about the states, I would choose Pennsylvania

00:34:27.540 | in a heartbeat to not live under the New Jersey government.

00:34:30.740 | But I'm a wacko and that stuff matters.

00:34:33.140 | So you just think about, I would say do the financial calculations but then go back and

00:34:37.900 | say what are you more interested in?

00:34:39.420 | What really, where do you think would be a better place for your children to grow up

00:34:43.340 | and where are more career options?

00:34:44.580 | That would be my answer.

00:34:46.300 | >>Joseph: Okay.

00:34:48.700 | Now when it comes to relocation, if we're just owning a house, you know, less than five

00:34:57.620 | years, can you talk a little bit about the 1031 exchange and how does that work?

00:35:03.220 | >>Tavis: You can't use a 1031 exchange for a house that you're personally living in.

00:35:06.660 | You can only use a 1031 exchange for rental property.

00:35:10.260 | So the best thing to do is if you've lived in the house that you're living in for a couple

00:35:13.480 | of years, the best thing to do is simply sell it, take the profit, hopefully you have profit,

00:35:18.060 | take the capital gains profit, and you'll be eligible, if you're eligible, you've lived

00:35:22.620 | in it for the last five years, you'll be eligible for up to $500,000 of tax-free capital gains

00:35:27.900 | which was split between you and your wife.

00:35:31.020 | But you can't use a 1031 exchange on your personal residence.

00:35:35.340 | >>Joseph: All right, and that's $500,000?

00:35:38.980 | >>Tavis: $250,000 per person, so for a married couple filing jointly, it's $500,000 of gain

00:35:44.380 | that's exempt from income tax.

00:35:46.420 | >>Joseph: Got it.

00:35:48.420 | All right, Joshua, thank you so much for your time.

00:35:51.420 | Thank you for calling in.

00:35:52.540 | We go on and stay in New Jersey.

00:35:55.660 | Welcome to Radical Personal Finance.

00:35:57.300 | Tell me your name, please, and share your question.

00:36:01.260 | >>Lucas: Coming from New Jersey.

00:36:05.860 | >>Joseph: Yes, tell me, I'm sorry, I missed your name.

00:36:08.380 | Say it again, please.

00:36:09.380 | >>Lucas: It's Lucas.

00:36:10.380 | >>Joseph: Lucas, go ahead, sir.

00:36:11.380 | >>Lucas: Hey, so first of all, I just want to say your listeners who are both financial

00:36:18.500 | geeks and surfers got very excited when you started talking about Nicaragua and Costa

00:36:22.420 | Rica, so we are all in favor of that.

00:36:25.940 | >>Joseph: You know what?

00:36:26.940 | So, of course, Costa Rica has tremendous surf all up and down the Pacific Coast, and then

00:36:34.260 | Nicaragua also has good surf up and down the Pacific Coast.

00:36:39.580 | Of those two, I would probably rather do, Costa Rica's fine, and Costa Rica's probably

00:36:43.380 | more comfortable for most people, but I like Nicaragua, and I think it'd be more interesting

00:36:47.940 | for many people, but the place that I would do it if I were in Nicaragua is right next

00:36:52.100 | to Playa Colorado, which is well known as a surf beach, and there are two communities

00:36:58.960 | right next to each other.

00:37:00.340 | There's one in Playa Colorado, and then there's the other, the Tarancho Santana, and both

00:37:03.900 | of them have great surf breaks, come from all over.

00:37:06.980 | And then you've got San Juan del Sur, and a number of other places as well.

00:37:10.100 | So yeah, I will take that into consideration.

00:37:12.980 | >>Lucas: Very cool, very cool, thank you.

00:37:16.140 | So I'm calling in today to talk about a situation I thought some of your other listeners might

00:37:22.060 | be in, and it has to do with my parents.

00:37:27.180 | They are wonderful people, we have a great relationship.

00:37:32.020 | They gave my siblings and I a lot in the way of love and values and the importance of education.

00:37:40.420 | However, there's pretty glaring lack of their own self-education in terms of savings, particularly

00:37:48.300 | for retirement, but really just financial planning in general.

00:37:53.260 | And they're both getting into their mid to late 60s now, and where the end would normally

00:37:59.460 | be in sight for a lot of people who are in their age group, it doesn't seem like they

00:38:04.520 | have much of an ability to plan for a retirement at this point.

00:38:11.380 | Very minimal financial assets, I'm talking to the tune of what would normally make up

00:38:16.860 | an emergency fund for an early 20-year-old.

00:38:21.700 | They have a house that is not paid off, still over $100,000 in a mortgage, and not a whole

00:38:30.860 | lot of opportunity to increase income.

00:38:33.920 | My dad is a self-employed artist, he doesn't have a whole lot of ceiling, or I'm sorry,

00:38:41.100 | he has a ceiling when it comes to how much he can bring in.

00:38:44.420 | My mom does a little bit better, but their total income is below $60,000 on a pre-tax

00:38:55.500 | basis.

00:38:56.500 | So, once again, I got great parents, they set us up very well to do well for ourselves,

00:39:04.780 | and we want to be able to give back, mostly in the way of trying to help them stabilize

00:39:10.500 | themselves so they can have something that looks like a retirement at all.

00:39:14.540 | Of course, we would never let them go to the poor house, we would never let them become

00:39:20.540 | destitute, but we also want to respect their desire for independence.

00:39:24.940 | So, my sister and I have put together what we thought was a very comprehensive financial

00:39:31.940 | plan.

00:39:33.200 | What it does hinge on is one piece of information about their property.

00:39:40.620 | They have, for our neighborhood, they have a double, functionally a double-wide property,

00:39:46.340 | but with some variance, they might be able to subdivide, keep the house on one of the

00:39:54.060 | lots and sell off the other lot, basically for a profit, and use that profit as a nest

00:40:01.140 | egg to start investing and building some kind of retirement portfolio.

00:40:06.580 | Where I get uncomfortable is that is subject to a lot of people's decisions who don't have

00:40:11.740 | my parents' best interest in mind, the municipal planning board, zoning board.

00:40:16.860 | We're in the process of getting a site plan together with an engineering firm, we're in

00:40:21.660 | the process of working with a lawyer who will represent us before the board when we go through.

00:40:27.780 | But everyone I've talked to has said there's kind of a 50/50 shot of if this is going to

00:40:33.860 | go through or not, and if it doesn't, I don't really have too many ideas.

00:40:38.420 | So I'm wondering, is there anything that I'm missing, anything else that I can be doing

00:40:44.060 | in terms of trying to set my parents up so they can have something that looks like a

00:40:46.820 | retirement?

00:40:47.820 | Are they open to these conversations, they're sharing information freely, and they're open

00:40:51.800 | to your input and soliciting your advice?

00:40:54.100 | Yes, yeah, very open.

00:40:57.220 | Probably I guess several months ago at this point, my sister and I laid out things very

00:41:01.660 | clearly, we set up scenarios, we did a pretty comprehensive financial sheet.

00:41:06.540 | Neither of us are in the financial or accounting industry, but we're both engineers, we have

00:41:11.340 | pretty good data analytic and mathematical competencies.

00:41:15.340 | So we laid it out for them and they were receptive, but it's just a matter of kind of kick-starting

00:41:23.020 | things and how do we get it through.

00:41:24.940 | And the first step is really this property subdivision, seeing if we can get that to

00:41:28.260 | work.

00:41:33.980 | What do your parents want to do for the next 20-30 years of their life?

00:41:37.580 | What's their ideal vision?

00:41:39.180 | Well, I figured we would get here.

00:41:44.260 | My dad wants to keep working, he loves the work he's doing, he wants to keep doing it

00:41:49.620 | forever, but he does not have a planning bone in his body.

00:41:53.100 | And my mom wants something that looks more traditional like a retirement, be able to

00:41:57.300 | visit her eventual grandkids, not have to think about working in a restricted setting,

00:42:07.500 | 9-5, 50 weeks a year, that kind of thing.

00:42:11.580 | At the moment, other than their home mortgage, do they have any other significant debt?

00:42:18.460 | At this time, no.

00:42:20.280 | And how much equity is in the property if they sold everything?

00:42:25.180 | How much equity do you estimate do they have in their house?

00:42:29.020 | I would guess somewhere in the range of $80,000 to $90,000.

00:42:34.740 | So I think the first thing is, you're probably going to fail at trying to turn your parents

00:42:42.260 | into investors at this point.

00:42:44.740 | That doesn't seem realistic to me.

00:42:46.220 | If somebody has lived 60 years and they've not become a wealth accumulator, they're probably

00:42:52.160 | not going to become a wealth accumulator unless they have some major thing that, major reason

00:42:57.860 | why it becomes important to them.

00:43:00.460 | So they're probably not going to magically just change and start saying, "No, you know

00:43:04.380 | what, son, what we really want to do is we really want to save and invest money."

00:43:08.100 | It's never been important to them.

00:43:09.780 | Now maybe they decide at this point it is important to them and they do change.

00:43:13.420 | I'm not denying that people can change no matter what age, just saying that it's probably

00:43:18.060 | not going to happen.

00:43:20.180 | If history is any guide, it's not that important to them.

00:43:22.800 | They're probably not going to change.

00:43:24.980 | So where do we go from here?

00:43:27.160 | I think the first thing to do is to try to help your parents develop a vision of what

00:43:32.720 | they're hoping to do over the next 20 or 30 years.

00:43:36.800 | What's fascinating is that this is what the AARP does now.

00:43:40.040 | The AARP used to promote and push this idea of, "We're helping you so that you and your

00:43:46.720 | spouse can walk arm in arm down the beach with your khaki pants rolled up and the silver

00:43:51.160 | hairs on your head, enjoying your new beach house."

00:43:53.720 | They used to push that old idea of retirement.

00:43:56.160 | But it's not happening.

00:43:57.860 | That's not what most people are doing.

00:43:59.440 | So the AARP has kind of readjusted many of their things to be all about the next phase,

00:44:07.400 | the real possibilities, I think is their slogan now.

00:44:10.600 | They don't really call themselves the American Association of Retired Persons.

00:44:14.040 | They're all about, "What's this phase of your life?"

00:44:16.080 | To me, that's the right thing.

00:44:17.560 | You've I'm sure heard me talk about retirement, but I don't think that the basic concept of

00:44:21.640 | retirement as quitting from life is healthy for people.

00:44:25.120 | It's not good for their bodies, not good for their brains, not good for that.

00:44:28.560 | But what they can do though is they can adjust to say, "What is a lifestyle that we would

00:44:32.720 | be really excited about?" and build that.

00:44:36.320 | And then once that lifestyle is crystallized, then we can start to figure out how do we

00:44:40.800 | fund that lifestyle?

00:44:42.560 | You mentioned that your dad's an artist.

00:44:43.820 | What kind of art does he do?

00:44:46.400 | Stained glass.

00:44:47.400 | So he needs a workshop then.

00:44:49.320 | He needs a...

00:44:50.320 | Yeah.

00:44:51.320 | Okay.

00:44:52.320 | Right.

00:44:53.320 | So once they get a clear idea of what they'd like to do, then I think they can adjust their

00:45:02.600 | living in some way to fit that.

00:45:07.800 | So the first thing I like to do is to say, let's try to make...

00:45:13.180 | I'm trying to think of the order to go through this.

00:45:16.140 | So if your parents have wanted a lifestyle, let's say that your parents say, "What we

00:45:21.940 | really want to do is travel."

00:45:23.100 | Let's use that.

00:45:24.100 | Do they talk about travel?

00:45:25.100 | Do they have any interest in travel?

00:45:26.100 | Yeah.

00:45:27.100 | Okay.

00:45:28.100 | Yeah.

00:45:29.100 | More now than ever.

00:45:30.100 | Okay.

00:45:31.100 | And if they were going to travel, what would be their ideal way to travel?

00:45:36.420 | They're not really cruise ship people, but definitely going places, walking around, not

00:45:43.820 | hostile level, but not the Ritz-Carlton either.

00:45:46.740 | Do you think they're RV type people?

00:45:51.100 | I think they could be.

00:45:52.540 | Yeah.

00:45:53.540 | So just as an example, let's say that your parents said, "We want to travel."

00:45:56.700 | And you say, "Well, Mom and Dad, I want to help you travel, but you don't have hundreds

00:45:59.980 | of thousands of dollars."

00:46:00.980 | Well, there are lots and lots of couples in their 60s who make their living traveling

00:46:07.740 | in an RV, doing a combination of different things, one of which would be work camping,

00:46:13.780 | staying at campgrounds where they basically serve as a host for the campground and they

00:46:20.340 | check people in, et cetera.

00:46:21.660 | And for that, they get discounted accommodation.

00:46:24.780 | They get free accommodation.

00:46:26.820 | And with that free accommodation, that allows them to live in their RV and to be happy.

00:46:33.700 | So what I would do is I would try to probe them and I would say, "Is there something

00:46:36.500 | like this that appeals to you?"

00:46:38.160 | Because what could happen is if that did appeal to them, depending on how much money your

00:46:42.900 | dad makes on the stained glass and things like that, then let's say that they said,

00:46:47.820 | "We're going to work.

00:46:48.820 | We're going to keep on being active.

00:46:50.340 | We like to travel.

00:46:51.980 | We know we don't have a ton of money.

00:46:53.820 | So what we're going to do is we're going to buy an RV.

00:46:56.180 | We're going to do work camping and we're going to keep doing, we're going to set up a little

00:46:59.980 | trailer or buy a bunk house or whatever your dad needs for a shop that he can use for his

00:47:04.140 | stained glass projects.

00:47:06.060 | And we're going to live in the RV and we're going to go north in the summer and south

00:47:09.220 | in the winter.

00:47:10.340 | And then what we'll do is we will subdivide the house, sell off the lot.

00:47:14.340 | We'll rent out our primary house for a rental income so that we keep that house in case

00:47:18.940 | we want to move back to it and we'll rent that one out.

00:47:21.500 | And then we'll use the money for a second house as a down payment on another rental

00:47:25.660 | house.

00:47:26.660 | And we'll try to get to the point where we have one or two rental houses and then our

00:47:29.460 | work camping provides for most of our living expenses and we make it up with the additional

00:47:34.900 | stained glass income as well.

00:47:37.100 | A couple who's living on the road frugally can live on the road really at any budget.

00:47:42.960 | People can do it on less than a thousand dollars a month, but many times people will do it

00:47:47.020 | on a few thousand dollars a month.

00:47:49.020 | That's very reasonable, a couple to three thousand dollars a month.

00:47:51.900 | So maybe something like that would be a lifestyle they would really be excited about.

00:47:55.900 | And then in terms of the finances, the most important thing is that your parents not take

00:48:00.200 | Social Security until 70.

00:48:02.200 | They want to stretch out their Social Security as much as possible so that Social Security

00:48:05.800 | benefit is as high as possible, which means they've got to have a transition plan right

00:48:10.060 | now for the next 10 years.

00:48:11.780 | And they've got to have a transition plan that doesn't make them feel like, "Well, we're

00:48:14.420 | just hating life and we're suffering."

00:48:16.180 | So that's where I come to say, "What would you like to do?"

00:48:19.460 | And so if you can make the transition plan with a lifestyle that they would be encouraged

00:48:23.580 | by with seasonal employment such as work camping, etc.

00:48:28.340 | And again, even your dad with the stained glass, maybe what they do is they set up a

00:48:32.180 | place in the wintertime when it's harder to get work camping jobs and he does stained

00:48:36.040 | glass in the wintertime.

00:48:37.320 | But then all summer they head north and they go to their different work camping locations

00:48:41.140 | up in the north.

00:48:42.860 | And then if you use the house, rent it out, and see if they can work towards another rental

00:48:48.060 | house as well, that would be the kind of thing which would provide them with income for themselves.

00:48:56.000 | One use if you fail to subdivide the property, one use of the property might be to actually

00:49:00.880 | use it.

00:49:01.880 | Well, it may not be possible with HOA regulations or something.

00:49:04.820 | Obviously, you're having problems with the local municipal people.

00:49:07.940 | But if you can use it as a place for them to park their RV.

00:49:10.980 | Maybe they buy something like whatever kind of RV, something small so it's easy for them

00:49:15.700 | to handle and fuel efficient and good cost.

00:49:18.260 | But if they have a fifth wheel or some place they can park their RV, build a shed on the

00:49:22.700 | second lot, put a nice place where they can have full hookups for an RV, then when they

00:49:27.460 | come back during the wintertime, they can come back to their own house.

00:49:32.500 | But they have a tenant in the house and they just live on the second property in their

00:49:35.780 | RV.

00:49:36.780 | Something like that could work for as well.

00:49:40.820 | You know, as many times as I've heard you talk about RVing, that never occurred to me

00:49:44.260 | and that's a really good idea.

00:49:45.460 | It's fantastic.

00:49:46.460 | First of all, I love RVing.

00:49:49.220 | I have a wanderlust bone in my body.

00:49:51.860 | Every bone in my body has a wanderlust.

00:49:53.660 | But I love RVing.

00:49:54.660 | And if you go and you talk to work campers, for people in this phase of life, it is one

00:50:01.160 | of the best situations for them.

00:50:02.820 | Nobody gets rich doing it.

00:50:04.080 | They're not going to get rich.

00:50:05.380 | But what they can do is they can defray their living expenses.

00:50:07.860 | They've got to have some money and some income, which I think is where a rental house would

00:50:10.820 | be helpful.

00:50:11.820 | And then having some savings.

00:50:12.820 | They've got to have savings as well.

00:50:14.720 | Because they've got to buy a rig.

00:50:15.980 | They've got to take care of it.

00:50:17.480 | But the work campers, they'll often work something like a week on, week off.

00:50:21.060 | But the work is right outside the door of their RV.

00:50:23.540 | Depending on where they go, if they're a big campground, they could be very busy.

00:50:27.620 | If it's a remote campground, they don't actually have that much work to do.

00:50:31.040 | And the lifestyle of it, there are lots and lots of older people RVing.

00:50:35.060 | And so they're constantly meeting people.

00:50:36.500 | You always see them.

00:50:37.500 | They're there at eight o'clock at night, sipping wine out by their fire.

00:50:41.100 | Life is good.

00:50:42.100 | And every now and then they go up and check somebody in.

00:50:44.220 | But I've known a lot of work campers who really love it.

00:50:46.820 | And for an ability to defray expenses so that you can generate more capital for the next

00:50:53.480 | phase is really a good solution.

00:50:55.900 | And if they're healthy and active, it could be the kind of thing where your mom doesn't

00:50:59.860 | have to do the nine to five.

00:51:01.060 | She does the primary customer service work.

00:51:03.860 | Oftentimes couples will be working together.

00:51:05.620 | You'll very frequently see that where they're in the office together.

00:51:08.940 | I've been in many campgrounds and you go up at eight o'clock at night and the husband

00:51:13.100 | and wife, the work campers in charge are up in the guard shack.

00:51:15.860 | But they've got the TV on, they've got a little lamp, they're sitting in a comfortable chair.

00:51:19.860 | And if somebody comes in and does a late check-in, they're there to serve them.

00:51:22.980 | But they're spending their evenings together.

00:51:24.380 | They just happen to be getting paid in terms of a free place to park, free utilities, or

00:51:29.780 | sometimes a small stipend as well.

00:51:31.740 | So, I think if you'll help your parents develop ideas about what they would really like to

00:51:37.420 | do, what they'd really like the future to look like, then I think you've got a positive

00:51:41.940 | direction to go in.

00:51:42.940 | And then you can just try to help adjust the finances on the back end.

00:51:46.620 | And that may just simply mean a different job for your mom.

00:51:49.560 | If your dad likes his stained glass work and he might say, "I can't take my workshop on

00:51:54.020 | the road.

00:51:55.020 | Are you kidding me?

00:51:56.020 | And I don't want to just do it in the wintertime.

00:51:57.020 | I want to do it all year round."

00:51:58.020 | Then the solution might be to say, "Mom, how can we adjust your career into something that's

00:52:02.300 | not draining for you?

00:52:03.460 | Do you want to be a receptionist at the local Puppy Pound to work with animals?

00:52:08.140 | Or do you want to work with kindergartners because you love children?

00:52:12.100 | Is there a way that we can make it exciting for you to go to work?"

00:52:15.840 | Going to work 40 hours a week is not a draining bad thing unless you're in a bad fit for you

00:52:21.060 | as a job.

00:52:22.220 | And so, for every person in that situation, there is an opportunity that they would really

00:52:27.020 | enjoy.

00:52:28.020 | It might be taking care of horses.

00:52:29.980 | It might be trimming dogs' hair.

00:52:32.180 | It might be blacksmithing.

00:52:33.780 | I don't know.

00:52:34.980 | But there are so many things that we can do now that we can earn a great wage, can keep

00:52:40.500 | our life, keep things going, and really enjoy our time at work.

00:52:46.100 | The final thing I would say is for people like that, I think you should be very careful

00:52:49.980 | with their investment options.

00:52:51.720 | And I think that you should probably think carefully about real estate.

00:52:55.460 | Real estate is intuitive for people in a way that mutual funds are not.

00:52:59.500 | So think about, is there a way that we can rent out their house, have it paid down?

00:53:04.760 | Can they wind up with a couple of rental trailers or a couple of rental houses?

00:53:09.240 | That way they know, "Mom and Dad, you don't spend this capital.

00:53:12.760 | This money, you just spend the income."

00:53:15.000 | Because that's intuitive for people in a way that mutual funds are not.

00:53:17.800 | And then if you make sure they go out to 70 with their working, that'll solve it.

00:53:22.560 | If they can work till 70 in some form or another, they could probably live on their Social Security

00:53:27.420 | income.

00:53:28.420 | Check those numbers as well in your spreadsheets.

00:53:30.000 | So those are my thoughts, Lucas.

00:53:31.000 | Good for you for getting involved with your parents' money.

00:53:32.960 | I'm glad it's going well.

00:53:34.440 | >>Lucas: Thanks so much, Joshua.

00:53:36.560 | I appreciate it.

00:53:37.560 | >>Steve: My pleasure.

00:53:38.560 | We go now to Texas.

00:53:40.480 | Daniel in Texas, welcome to the show.

00:53:41.800 | How can I serve you today, Daniel?

00:53:47.960 | Daniel in Texas.

00:53:48.960 | >>Daniel: Hold on.

00:53:49.960 | Sorry.

00:53:50.960 | >>Steve: There we go.

00:53:51.960 | >>Daniel: How can I serve you?

00:53:52.960 | >>Steve: So question.

00:53:53.960 | We've previously talked about my business some, but I am now...

00:54:00.480 | I guess the base question is how do you use creating content to build a product business?

00:54:09.840 | So I am selling a gluten and grain-free brownie mix off tiltedbrownies.com, if anyone wants

00:54:16.320 | to look it up.

00:54:17.320 | >>Daniel: Hold on.

00:54:18.320 | Hold on.

00:54:19.320 | Hold on.

00:54:20.320 | Hold on one second.

00:54:21.320 | >>Steve: I'm sorry.

00:54:22.320 | >>Daniel: Hold on.

00:54:23.320 | >>Steve: Off tiltedbrownies.com.

00:54:24.320 | Off tiltedbrownies.com, your central source for gluten-free brownies.

00:54:28.720 | Did I get that right?

00:54:29.720 | >>Daniel: There you go.

00:54:30.720 | Yeah.

00:54:31.720 | They're so good, they'll knock your tilt off.

00:54:32.720 | >>Steve: Nice.

00:54:33.720 | >>Daniel: There you go.

00:54:34.720 | Yeah.

00:54:35.720 | Yeah.

00:54:36.720 | So I am putting up blog content Monday through Friday on our website, recipes, gluten-free

00:54:43.360 | living, stuff that interests me.

00:54:47.720 | So I guess a lot of it is I'm doing it to help people and to make their lives better.

00:54:55.280 | Part of it's a gross thing for me as well, but ultimately all aspects of what we do with

00:55:01.520 | our business we hope helps grow the business and make more money off of it.

00:55:06.000 | So do you have any thoughts?

00:55:08.120 | Obviously your business is primarily content, and even the content you sell as a product

00:55:12.480 | is content.

00:55:13.480 | Do you have any thoughts on how to maybe use that more to help grow the business?

00:55:19.240 | >>Steve: Do you work exclusively locally or do you work nationally?

00:55:23.720 | >>Daniel: I am selling online nationally.

00:55:27.920 | >>Steve: Okay.

00:55:29.280 | So in that case, then the web serves you very well.

00:55:32.960 | And of course the web can serve you locally as well, but it's just very different if you

00:55:37.680 | have a national presence.

00:55:39.760 | Tell me about your social media strategy.

00:55:42.120 | >>Daniel: It's probably lacking, let's be honest.

00:55:51.240 | So my brother handles the social media stuff.

00:55:56.160 | We're trying to post a couple times a week on Facebook.

00:56:01.960 | We're posting a couple times a week on Instagram, trying to get into Pinterest and such as well,

00:56:10.880 | but primarily Facebook and Instagram.

00:56:15.760 | Partially I would say our primary outlet is we sell at a farmer's market on Saturday morning.

00:56:20.320 | So there's definitely stuff related to the farmer's market.

00:56:22.800 | There's a Saturday morning post that goes out on both Instagram and Facebook, "Hey,

00:56:26.920 | come check us out," blah, blah, blah.

00:56:30.440 | My brother is as well trying to kind of taking, I don't know how familiar you are with Gary

00:56:36.400 | V., but trying to take his kind of Instagram 180 strategy, basically going high engagement

00:56:46.200 | on other people's content on Instagram.

00:56:49.600 | My brother's doing that some, not to the level that Gary V. thinks you should, but to a fairly

00:56:56.920 | high level, basically trying to do meaningful interaction with at least 20 pieces of other

00:57:02.720 | people's content on Instagram every day.

00:57:07.880 | And then I am, I'm posting on Facebook.

00:57:11.640 | I'm posting when I put the blog post out, I'll post on, I'm also on Mimi, but on, do

00:57:20.160 | a Facebook thing with our meta description and a link to the blog post.

00:57:24.360 | I've also started just for the heck of it, putting it on LinkedIn to see if anything

00:57:27.840 | happens there.

00:57:28.840 | I don't know if it will, but.

00:57:29.960 | - It's hard to imagine how LinkedIn is going to serve you or Twitter.

00:57:33.720 | So I think the biggest thing is what's your strategy?

00:57:36.280 | Well, your strategy is to provide something great that people really love, but you've

00:57:41.960 | got to get discovered.

00:57:42.960 | So how do you get discovered?

00:57:43.960 | Well, in my opinion, social media is going to be your obvious solution here because the

00:57:48.680 | discoverability on social media, especially Instagram with the right communities, the

00:57:53.920 | right gluten-free communities and the right recipe sites, et cetera, is going to be your

00:58:01.280 | best option, your biggest seller.

00:58:04.480 | So if you think about what is somebody who's gluten-free, what are they looking for?

00:58:08.880 | What I would do is try to profile the things that somebody who's gluten-free is looking

00:58:13.000 | for and all of it.

00:58:15.280 | Part of that of course is brownies, but then everything else.

00:58:18.320 | And so if you look at the communities, there are so many big pages and so many big brands

00:58:24.800 | and groups and organized communities of people who specialize in gluten-free that you simply

00:58:33.800 | need to focus on being findable there.

00:58:37.020 | I don't know how to do it specifically.

00:58:38.960 | I would say Gary Vee's course is the great place to go.

00:58:42.120 | And absolutely one of the most important things is to be active in promoting other people's

00:58:46.760 | things.

00:58:47.760 | And so what I would do is I would hardly ever post an Instagram, maybe once a week is fine.

00:58:53.800 | But if you're making first two Instagram posts per week is insufficient.

00:58:58.320 | But if you're making 20 posts per week, you say four of them are going to be about what

00:59:02.880 | I'm doing and 16 of them are going to be about what everyone else is doing.

00:59:07.440 | And so let's just not just focus on brownies, let's show what other people are doing.

00:59:12.680 | And in so doing, you start to build friends for yourself in that community to show people,

00:59:18.320 | "Hey, look, we're committed and we're part of this community.

00:59:22.280 | We offer this niche product that you would like."

00:59:24.800 | I would imagine also that if you do a little searching for education, that there's a lot

00:59:29.080 | of education out there for how you can really spread your physical product with other people

00:59:35.720 | in the influencer space.

00:59:37.760 | So whether that means going to Gluten Free Con or Keto Con or whatever it is, whatever

00:59:43.840 | conference it is, and buying a booth there, what you've got to do is you've got to get

00:59:48.040 | your brand known by the people who are already in this space.

00:59:54.140 | Do you have an affiliate program on your website that other influencers can sign up for?

00:59:59.480 | I do not.

01:00:01.920 | So that would be an easy thing to do is if you have a great product, set up an affiliate

01:00:06.720 | program with your shopping cart so that influencers can sign up for your affiliate code and then

01:00:13.560 | start to see if you can market that affiliate program to other influencers in the Gluten

01:00:18.120 | Free community.

01:00:19.760 | Because people who are in the Gluten Free community, a well-known, could be a blogger,

01:00:24.160 | could be a YouTuber, I mean, the platform is immaterial.

01:00:27.760 | It doesn't matter what platform.

01:00:30.440 | People who are serving the Gluten Free community need a way to make money off of what they're

01:00:34.440 | doing.

01:00:35.440 | So their monetization options are a few things.

01:00:37.720 | They can develop things for themselves.

01:00:39.160 | They can sell their own products, whether it's a cookbook or a t-shirt or a course,

01:00:43.880 | etc.

01:00:44.880 | But one of the most powerful forms of revenue creation for an influencer is affiliate marketing,

01:00:50.960 | is getting an influencer to market your product as part of their overall system.

01:00:57.240 | So you've got to have an affiliate program and then use that affiliate program also for

01:01:02.020 | people who are other kinds of people.

01:01:07.560 | One of the other things I would do is I would look and research.

01:01:10.760 | There's got to be a half a dozen companies doing monthly box memberships of Gluten Free

01:01:15.240 | content, of Gluten Free recipes, Gluten Free stuff.

01:01:18.800 | There's got to be at least a half a dozen of those out there.

01:01:21.000 | So I would find the people who are doing that and I would place your product in that.

01:01:25.800 | A long time ago in the archives of Radical Personal Finance, I did an interview with

01:01:29.200 | somebody, I can't place the name right now, but who specialized in this kind of product

01:01:34.200 | placement.

01:01:35.200 | So I would work with some of the consultants.

01:01:36.560 | I would take their classes, their courses.

01:01:38.800 | Somebody's created a course on it and I would just focus on product placement and then making

01:01:42.960 | it easy for people to buy.

01:01:44.600 | I think one of the...

01:01:46.120 | Are you also selling through something like Amazon FBA in addition to your own website?

01:01:52.680 | I have not figured it out for Amazon yet, no.

01:01:56.880 | It is on my radar, but it seems rather tricky.

01:02:01.080 | So that would be high on my priority list if I were you as well because one of the challenges

01:02:07.760 | of buying from somebody is oftentimes it's hard for people to set up a buying relationship

01:02:12.260 | with a new mail order vendor.

01:02:15.480 | And so it's a hassle.

01:02:16.480 | I got to go to their website, I got to put in my address, I got to put in my credit card,

01:02:20.880 | etc.

01:02:21.880 | And so if you can profitably distribute, I don't know if there's any downside of distributing

01:02:26.140 | with Amazon FBA, but if you can profitably distribute through the platforms that many

01:02:30.460 | people are already using where they just simply pull out their Amazon app, they click buy

01:02:35.480 | and there's two-day shipping and boom, it's at their house, that can also be a way of

01:02:40.760 | expanding things.

01:02:42.400 | And then I would think a lot about how do you feature your customers?

01:02:46.320 | So tell me a little bit at this point about what you're doing to feature your customers

01:02:50.600 | and to get them posting online about what you're doing.

01:02:57.840 | Not much.

01:02:58.840 | We've tried to push some for if people will give us an online review that will show it

01:03:08.680 | to us, whatever, that we will give them 10% off.

01:03:13.960 | To be quite frank, I've been pushing getting signups on our email list more than doing

01:03:18.400 | that.

01:03:19.400 | I feel like there's only so many things you can yell at someone in person.

01:03:25.160 | No question.

01:03:26.160 | Sharing information.

01:03:27.160 | What I would do is...

01:03:28.160 | So probably nothing basically.

01:03:30.560 | So the idea is try to figure out how to profile your customers, especially in the Instagram

01:03:36.240 | world when everybody loves to show what they're doing, what they're cooking, etc., especially

01:03:45.200 | in the gluten-free world.

01:03:46.640 | So figure out how to run contests and customer appreciation things on Instagram, all the

01:03:52.720 | contests for free bags of brownies, etc.

01:03:56.040 | There are worlds out there.

01:03:57.440 | It's not my thing, so I haven't studied it in detail, but I just watch and I can see

01:04:02.080 | what's working by what people are doing.

01:04:04.100 | So go and figure out how to do that to engage the people there.

01:04:07.680 | And then, I mean, those are a lot of tactical solutions.

01:04:12.840 | I love the fact that you're doubling down on your brand.

01:04:15.840 | I'm looking at your page here.

01:04:17.600 | You guys are in kilts and that's fun.

01:04:20.820 | So entertaining things as well.

01:04:23.880 | If you look at some of the brands that have built a big following, usually you wind up

01:04:31.720 | creating a cult of some kind.

01:04:33.920 | The goal is to create a cult and a cult has to have personality.

01:04:37.560 | It has to have something that's differentiating about it.

01:04:41.160 | So have you studied the...

01:04:45.000 | I guess the last thing is, have you gone out and searched for the big products that are

01:04:49.800 | out there and kind of studied their marketing, the people who are doing really well?

01:04:53.600 | Somewhat.

01:04:54.600 | I could probably do more of it.

01:04:58.360 | I've been trying to figure out the balance of trying to find the, I guess, independents

01:05:06.120 | who are being successful on a large scale versus the large companies who've just kind

01:05:12.160 | of jumped into the space and using their Betty Crocker.

01:05:15.840 | And he just says, "Well, I'm Betty Crocker and now we offer a gluten-free thing."

01:05:20.600 | Well, I think I'm about out of...

01:05:23.800 | I guess I just want to close this particular question out because it's a little bit out

01:05:26.720 | of the realm of personal finance, just simply by saying that the better that you can articulate

01:05:31.520 | why you guys are different and the better you can just simply focus on showing your

01:05:36.000 | customers how special what they're doing is.

01:05:39.960 | If you're making these things in your kitchen, I would be making that very clear.

01:05:43.600 | Show pictures of you making the things in your kitchen so that when somebody buys the

01:05:46.120 | brownie mix, they're happy.

01:05:47.120 | They're not buying from Betty Crocker.

01:05:48.800 | They're buying from Off-Kilter Brownies.

01:05:52.280 | But I would focus on how the big brands are promoting their things.

01:05:58.000 | One of your most important areas of promotion is going to be setting up a proper affiliate

01:06:03.120 | code and figuring out how to get influencers to like your product, to try your product,

01:06:09.920 | to like your product, and then to rep your product towards their audience.

01:06:14.160 | Yes, you need to build your brand.

01:06:16.840 | You need to build your profiles.

01:06:20.160 | But at the end of the day, if you can go to that gluten-free, I don't know, Jane's Gluten-Free

01:06:26.160 | Resource where she just does nothing except gluten-free products and gluten-free baking,

01:06:33.360 | and she can profile you on her YouTube channel that has 300,000 subscribers, and she says,

01:06:38.320 | "By the way, go and get these Off-Kilter Brownies.

01:06:40.520 | Use my special link.

01:06:41.840 | Get 20% off."

01:06:43.080 | And Jane also gets her commission for promoting that.

01:06:45.800 | That's the type of thing that will quickly get you from selling a few dozen packages

01:06:50.440 | to many thousands of packages.

01:06:52.920 | You're going to have to leverage that.

01:06:54.640 | So as far as I'm concerned, that would be one of the first areas I'd focus on.

01:06:58.680 | Hope that helps.

01:06:59.680 | I just say I'm not the right solution for this beyond that, but there are people out

01:07:02.280 | there who are teaching this, and so you've got to find them and find their advice, because

01:07:05.840 | they're going to know how to do it better than me.

01:07:09.080 | That works.

01:07:10.080 | Thank you.

01:07:11.080 | Great.

01:07:12.080 | Thanks for calling in, Daniel.

01:07:13.080 | All right, we go now to Massachusetts.

01:07:14.080 | Andrew in Massachusetts.

01:07:15.680 | Welcome to the show.

01:07:16.680 | How can I serve you today, sir?

01:07:19.680 | Hi, Joshua.

01:07:21.280 | I believe that you've covered in previous shows the permanent portfolio as a way to

01:07:29.840 | sort of set up a passive investing strategy.

01:07:34.560 | And also, you've talked on some episodes a bit about using whole life insurance policies

01:07:45.200 | similar to, I guess it goes by different names, the infinite banking concept, where you sort

01:07:51.800 | of utilize the cash value in your policy where it makes sense.

01:07:58.680 | And I'm wondering if there might be, for someone who's interested in the permanent portfolio

01:08:05.880 | and also interested in perhaps getting some life insurance, if using, because one of the

01:08:11.840 | components of the permanent portfolio, of course, is the cash portion that some strategies,

01:08:20.600 | some people who implement strategy say to invest that in short-term treasuries, like

01:08:26.760 | one to three-year treasuries.

01:08:29.400 | But I'm wondering if, now, obviously, it's not as liquid, but I'm wondering if it might

01:08:35.400 | make sense to actually, for the cash portion of one's permanent portfolio, if they're pursuing

01:08:41.360 | that methodology, actually look at trying to fit that into a whole life insurance policy

01:08:48.640 | that sort of serves as the cash portion.

01:08:50.320 | I was wondering what you thought about that, if there are any pros and cons to that or

01:08:54.040 | what.

01:08:55.040 | Interesting.

01:08:56.040 | Let me give 90 seconds of background for other listeners while I consider your question.

01:09:06.780 | The permanent portfolio was basically originally developed by Harry Brown, who was an investment

01:09:13.580 | advisor.

01:09:14.660 | And he was trying to figure out what is a simple investment strategy that could work

01:09:19.220 | no matter the economic conditions.

01:09:22.620 | And originally, he started out by recommending a strategy that included stocks, bonds, cash,

01:09:28.180 | gold, silver, Swiss francs, natural resources, et cetera.

01:09:31.660 | But over time, it became simplified to simply say, you keep 25% of your money in stocks,

01:09:36.740 | you keep 25% of your money in bonds, you keep 25% of your money in cash, and you keep 25%

01:09:42.260 | of your money in gold.

01:09:44.860 | And by doing that and then rebalancing basically once per year, you have assets that can perform

01:09:51.900 | in every economic condition.

01:09:54.460 | And the brilliance of the strategy is that it focuses on protecting yourself from different

01:10:03.320 | economic movements.

01:10:05.020 | So at some points, stocks do well, you profit some from stocks.

01:10:09.180 | Some points, bonds do well.

01:10:10.420 | Some points, cash moves does well.

01:10:13.060 | Sometimes gold does well.

01:10:14.980 | But you're hedged against the different macroeconomic movements of an economy, the movements of

01:10:21.220 | the Federal Reserve, et cetera.

01:10:23.800 | And most people would acknowledge that it's probably never going to be the superior performing

01:10:30.380 | investment strategy, but it's also going to generally always be a good performing investment

01:10:35.860 | strategy.

01:10:36.900 | The best book on it that I would recommend to start with is go back and read the book

01:10:42.060 | by Craig Rowland and J.M. Lawson called The Permanent Portfolio, where they dug into it

01:10:46.420 | in depth.

01:10:47.420 | And the great thing about that book is they talked a lot about the practical applications

01:10:51.980 | of it, different specifics that you can use, different companies, different ways that you

01:10:56.700 | can do it.

01:10:57.700 | What should you hold your gold, for example?

01:10:58.820 | Should you buy gold ETFs or should you have physical gold in your gun safe or should you

01:11:04.020 | store gold in your private vault in Austria?

01:11:06.460 | It's different.

01:11:08.540 | What do you hold for your stock portfolio, index funds, other things, et cetera?

01:11:13.420 | So now I've given 90 seconds of background, I still don't have a good answer to your question.

01:11:20.100 | On the one hand, I don't see a basic problem with that because in many ways, the portfolio

01:11:27.320 | values that are in life insurance can often be viewed and logged as a cash asset.

01:11:34.180 | For all intents and purposes, they are functionally equivalent to a cash asset because in a traditional

01:11:40.660 | whole life insurance policy, the policy values are guaranteed to increase by the insurance

01:11:46.300 | company.

01:11:47.380 | Now we always want to be a little bit careful of actually booking them as a cash asset because

01:11:53.100 | in many insurance policies, the insurance company has the right to delay a distribution

01:12:00.100 | or a loan request for a certain period of time.

01:12:05.400 | Sometimes that can be months.

01:12:06.400 | I don't remember exactly, but maybe six months with some insurance companies and some policies.

01:12:11.260 | But as a matter of practice, I have never in my career heard of a company actually exercising

01:12:17.800 | that policy right.

01:12:18.880 | As a matter of practice, you can get a wire transfer out of your whole life insurance

01:12:23.380 | policy in 24 hours.

01:12:25.340 | So I view my life insurance cash values, I view them as a cash asset.

01:12:31.160 | I book them as cash.

01:12:35.540 | But what are those assets invested in?

01:12:37.660 | Well, a lot of the assets inside of a life insurance policy are invested in bonds.

01:12:44.980 | Depending on the company, they're heavy into a bond portfolio.

01:12:49.180 | So is it better to calculate a life insurance portfolio as a bond portfolio or as part of

01:12:56.280 | your bond allocation or your cash allocation?

01:12:59.820 | I don't know.

01:13:02.940 | In many ways, it's not your problem how the insurance company is investing.

01:13:07.780 | You just care about the end contract.

01:13:09.380 | You don't care if this insurance company has 80% in fixed income, 10% in stocks, and 10%

01:13:15.380 | in real estate, or if they have 50% in fixed income and 30% in real estate and 20% in stocks.

01:13:20.340 | You don't care because to you, your cash values are guaranteed to grow up.

01:13:24.500 | So to you, it's functionally equivalent to cash.

01:13:31.180 | What I'm struggling with, and I can't do live here without maybe giving it some more thought.

01:13:36.920 | What I'm struggling with is...

01:13:48.940 | The biggest problem would be how does this fit in terms of your accumulation strategy

01:13:53.740 | and how do you time it?

01:13:55.540 | That's always the challenge with life insurance is because you have to put premiums in, and

01:14:00.140 | because you have to put premiums in based upon an appropriate comparison with the premium

01:14:06.420 | versus the cash value, you simply don't have the same flexibility as just putting money

01:14:10.940 | in a cash account.

01:14:12.620 | And then when it comes to an investment portfolio, you're going to have a lot of practical trouble

01:14:17.740 | actually maintaining the exact cash amount in the life insurance policy that you wouldn't

01:14:23.260 | have just simply keeping money in cash.

01:14:26.100 | A life insurance policy is a really useful tool for all the reasons discussed, but it

01:14:32.580 | has the constraint of needing to be funded with a series of ongoing payments and then

01:14:39.260 | having certain constraints on the amount of money that you have in it and the amount of

01:14:44.580 | money that you don't have in it to keep the policy healthy, especially if you're doing

01:14:47.580 | loans, if you're not doing a distribution strategy.

01:14:49.900 | You've got to keep enough money in the policy to pay the interest on the loan and to keep

01:14:54.660 | the policy in force until your death.

01:14:57.420 | So I guess my answer to you with, as you can hear, I'm kind of fumbling a little bit for

01:15:03.500 | clarity on the different points involved.

01:15:06.060 | My answer to you would be it's probably fine to calculate in your whole life insurance

01:15:12.660 | cash values as a component of your overall cash allocation.

01:15:21.260 | Let's say you have a hundred thousand or a million dollars in your portfolio and you're

01:15:25.540 | going to then allocate $250,000 of that to cash.

01:15:28.660 | Well, I'm fine if you've got a hundred or $150,000 in a life insurance policy, but then

01:15:33.500 | just do your rebalancing and such with the other money that's outside of the life insurance

01:15:37.380 | policy because it'll be more flexible than the life insurance policy.

01:15:42.460 | I guess in theory you could get to a place where you say we've got a universal life insurance

01:15:47.140 | contract that gives us more flexibility.

01:15:49.340 | I just personally get nervous about those because they don't have the same benefits

01:15:52.740 | of a traditional whole life contract.

01:15:54.900 | I don't think those strategies are mutually, I think they can go together.

01:16:00.340 | I think they can be friends.

01:16:02.420 | I don't see why bank on yourself and, or infinite banking to use the less hyped version.

01:16:08.580 | I don't think that infinite banking and the permanent portfolio have to be enemies, but

01:16:12.740 | I haven't thought it through enough to be clear on exactly how to promote them together.

01:16:18.340 | So that's the best I got for you.

01:16:19.660 | Good question though.

01:16:20.660 | Interesting.

01:16:21.660 | Yeah, thank you.

01:16:22.660 | Yeah, that was kind of what was my thinking as well is that if you, you know, obviously

01:16:28.020 | there's going to be some difficulty in modifying once you have the insurance contract set up

01:16:34.980 | and you're funding it, but that aside, if you can kind of, if it's an acceptable size

01:16:40.620 | for your, what you are doing with your permanent portfolio, maybe it can work out, you know,

01:16:46.860 | okay.

01:16:47.860 | Yeah.

01:16:48.860 | I mean, I don't know that anybody, I'd have to call Jake to Silas.

01:16:56.580 | He came on the show and talked about permanent portfolio.

01:16:58.760 | He would be a good guy.

01:16:59.760 | Call that question into his podcast.

01:17:01.020 | He runs the voluntary life podcast.

01:17:02.020 | Yeah, I actually did talk to him about that.

01:17:04.020 | What did he say?

01:17:05.020 | What was his answer?

01:17:06.020 | Well, you know, I think part of the problem with these two strategies is that you have

01:17:11.180 | people who are very pro permanent portfolio and you have others who are very much a proponent

01:17:17.740 | of this type of, you know, bank on yourself.

01:17:20.940 | And I have had a hard time finding anyone who sort of first understands both strategies.

01:17:27.820 | So you were an obvious thought in my mind since you've covered both topics.

01:17:32.460 | But yeah, I don't think you really, well, I may have not done a very good job explaining.

01:17:39.180 | You certainly hadn't heard of the bank on yourself type of strategy before I brought

01:17:45.780 | it up to him.

01:17:46.780 | So I think, you know, maybe I didn't do a great job explaining it, but I don't think

01:17:50.460 | you really saw the value in it.

01:17:54.220 | The biggest problem with infinite banking slash bank on yourself and just for context

01:17:58.140 | for listeners, those are basically two different marketing names.

01:18:02.340 | Infinite banking was Nelson Nash and then bank on yourself is Pamela Yellen wrote the

01:18:07.940 | books on it.

01:18:08.940 | My problem is always how do we, and this is the thing that's even constrained me personally,

01:18:14.340 | is you have, because of the constraints in the United States tax code on life insurance

01:18:19.620 | policies, you have to, you can't fund them as perfectly as, they're not infinitely flexible.

01:18:26.620 | Usually for the best results, we're going to use a traditional whole life insurance

01:18:31.100 | contract as compared to, although you can use universal life contract and some of the

01:18:36.660 | infinite banking people use a few different contracts, but they use some weird companies.

01:18:41.540 | I've never been sold on some of the companies that some of them represent.

01:18:44.780 | My opinion, if you're going to buy this kind of life insurance, your options are exclusively

01:18:49.040 | the big mutual companies, New York life, mass mutual, Northwestern mutual.

01:18:53.300 | That's it.

01:18:54.300 | And generally.

01:18:55.300 | Is Penn Mutual in that grouping?

01:18:59.140 | Maybe so.

01:19:00.140 | I haven't paid much attention to them.

01:19:01.700 | You just mean companies like that.

01:19:03.020 | Yeah.

01:19:04.020 | I mean a mutual company, a company with good history, et cetera, because you're ultimately

01:19:07.460 | banking on the power of the insurance company.

01:19:11.520 | You're not actually a bank.

01:19:12.620 | You don't actually have the money.

01:19:14.100 | You're trusting the insurance company to do a good job.

01:19:17.100 | And so you need to have a mutual insurance company, not a stock company.

01:19:20.260 | And you need to have a company that's well run, that's stable, that's going to take care

01:19:23.100 | of your money.

01:19:24.360 | It's a big, big deal because you don't have FDIC insurance.

01:19:28.220 | You, yes, you do have the Guarantee Corporation that backs up life insurance contracts, but

01:19:33.700 | you don't, you're not, you're guaranteed, if you're banking on the guaranteed values

01:19:38.380 | inside of a life insurance contract, the whole concept falls apart.

01:19:41.780 | What you're actually trusting is that the company will do a good job paying its dividends,

01:19:45.900 | the company will be well managed so that you'll get the dividend rate that you're hoping to

01:19:49.500 | get, the projected dividend rate, not the basic guarantees within the contract.

01:19:53.820 | So you need a good company.

01:19:55.260 | And then you need a flexible company because when you're, depending on how you're going

01:19:58.860 | to be using it, putting lots of money in, lots of money out, it's not, you know, you

01:20:06.180 | need the company, the contract to be the right way.

01:20:09.340 | Then you have to look at the argument that they make about how dividends or how loans

01:20:13.060 | are captured in the policies.

01:20:15.640 | And frankly, I just need to read some more about it from some of the people who are really

01:20:19.200 | active in the space.

01:20:20.580 | I set a project for myself a few years ago.

01:20:22.980 | I bought about, I searched the market, I bought all 15 books I could find on it.

01:20:27.160 | And I was going to do a big research project, maybe create a product or something that I

01:20:30.100 | could sell.

01:20:31.100 | And I got busy with other things and I just never got back to it.

01:20:33.460 | So at some point I may do it, is read all the 15 books, do a bunch of interviews with

01:20:37.980 | the people, and then try to be that guy who I know insurance and find the problems, find

01:20:42.460 | the solutions and answer it.

01:20:44.380 | But to go back to my biggest problem with an insurance policy is I usually would want

01:20:49.060 | a good traditional whole life insurance policy.

01:20:51.980 | We're probably going to want a quick pay policy.

01:20:53.820 | So we're going to want a policy that you put premiums in for 7, 8, 9, 10, 12, 15 years.

01:20:59.960 | But those premiums have to be appropriately adjusted to the size of the insurance policy

01:21:04.720 | and to your income.

01:21:07.200 | And so the challenge is often, do I have the structure of life that has the income where

01:21:14.360 | this is going to make sense?

01:21:16.160 | And the thing I learned when I used to sell life insurance was I couldn't sell, I made

01:21:20.240 | the mistake at some point of selling policies that were too big.

01:21:23.000 | And what happens is it's all fine and well for the person to sign up for a $100,000 a

01:21:27.240 | year premium when their business is doing well, but what happens in the next recession?

01:21:31.480 | And all of a sudden then you start backing it off and you try to help them adjust the

01:21:35.040 | premium, but now it goes from $100 to $50, and even then sometimes the $50,000 premiums

01:21:39.320 | fall off.

01:21:40.520 | And so what I came to be frustrated with is that if you do that, a lot of the benefits

01:21:45.360 | of the whole life policy simply fall away.

01:21:48.600 | And I learned not to be so aggressive.

01:21:51.440 | I had too many policies that I had to readjust and that fell off the books.

01:21:55.920 | And then when you do that, the policy owner gets sunk in the transaction because all the

01:22:01.400 | costs came out, the commission came out, et cetera.

01:22:03.560 | But if the policy doesn't stay on the books for a decade, two decades, three decades,

01:22:08.040 | then it turns into a bad idea for the policy owner.

01:22:11.320 | And so where I came back to was that the point of safety was always to back off the amount

01:22:16.680 | of premiums.

01:22:18.420 | And so if they were really comfortable with $100,000 a year or really comfortable with

01:22:22.360 | $20,000 a year or whatever the appropriate thing was, then I would say, "Let's back this

01:22:28.520 | off and let's do 70% of it.

01:22:31.120 | And let's make sure that we have that."

01:22:32.320 | And then make sure that policy is just stacked with additional premiums so that if necessary

01:22:36.800 | we can back it off for a couple of years if we go through a recession, et cetera.

01:22:40.680 | Because a lot of times the people who are in this space, who are doing this, might have

01:22:45.080 | significant fluctuations in their income.

01:22:47.880 | It's unusual for somebody making $70,000 a year to all of a sudden have massive fluctuations

01:22:53.200 | in their income because they're doing that in a job.

01:22:55.160 | But it's also generally not the best idea for somebody making $70,000 a year to be investing

01:22:59.800 | primarily through whole life insurance.

01:23:02.320 | Better for them to be using 401ks, Roth IRAs, et cetera, because they get more bang for

01:23:07.200 | the buck.

01:23:08.200 | So once we move into this space with whole life insurance contracts, we're generally

01:23:12.120 | going to move into the up markets where people have a lot more income, a lot higher tax burden,

01:23:17.080 | where now it's a much more attractive product and they've already maxed out their other

01:23:20.480 | areas of investments.

01:23:23.400 | So I never quite solved that problem, but I just have never figured out how infinite

01:23:27.420 | banking works to do it as everything.

01:23:31.040 | You need, yes, the policies work for some things, but you need additional assets for

01:23:35.680 | yourself.

01:23:36.680 | The thing that I, the way that I have always looked at whole life insurance contracts is

01:23:41.800 | they're a great place to accumulate some money.

01:23:44.640 | The life insurance benefits are really important to me.

01:23:47.320 | They're really wonderful.

01:23:48.320 | I love the fact that they're there, but often there's probably other sources of financing

01:23:54.320 | that are preferable to life insurance contract.

01:23:57.500 | So if car financing is easy, I wouldn't take the money out of a life insurance policy so

01:24:02.080 | I could pay myself back.

01:24:03.080 | I'd take a 0% car loan if I borrowed money on cars.

01:24:06.920 | If I were doing something else, I would do it on credit cards.

01:24:11.280 | And then the life insurance policy is simply there if those other financing mechanisms

01:24:14.940 | are not available or they're expensive.

01:24:17.320 | That's when you can leverage it and that's when you, where you can really leverage it

01:24:22.960 | effectively to cut your costs of borrowing in other places.

01:24:26.400 | So I teach this in my credit card course.

01:24:27.880 | Let's say, let's say you have $200,000 or $100,000 in your whole life insurance contract,

01:24:32.160 | but you've got credit card debt that you've accumulated for some reason.

01:24:35.440 | And I'm assuming here that we're not just, you know, but whatever, whether we're paying

01:24:38.920 | it down, you have money in a life insurance contract.

01:24:40.600 | This is what bugs me so much when people who are teaching people to pay off debt and they

01:24:44.320 | always say cash in the life insurance contract.

01:24:46.080 | Don't cash in the life insurance contract.

01:24:47.480 | That's dumb.

01:24:48.480 | What you do is you take a loan against the life insurance contract, use that loan to

01:24:52.360 | pay down your credit cards, drop your utilization ratio from whatever it is down to a much better

01:24:57.560 | factor.

01:24:59.800 | Let that, let your, let that filter through to your credit reports, bumps up your credit

01:25:04.440 | score, then apply for new 0% credit cards.

01:25:08.400 | Take those new 0% credit cards, borrow on the new ones, either through purchases or

01:25:11.920 | balance transfers, and then transfer the money back and pay off the loan in your life insurance

01:25:16.560 | contract.

01:25:17.760 | That's the best way to use a life insurance contract to pay off your credit card debt

01:25:21.080 | is to drop your interest rates.

01:25:22.440 | But you don't want to take that, that money from a safe, you know, protected creditor

01:25:26.840 | protected situation, stable, et cetera, and use it to pay off a credit card when you can

01:25:31.680 | just simply borrow against it, then put it back in a couple of months and keep paying

01:25:34.800 | off the credit card at 0% interest.

01:25:37.160 | So that's the best I got.

01:25:41.600 | That's where I'm at.

01:25:42.600 | Yeah, no, that's helpful.

01:25:43.600 | That was kind of what I was thinking is it's a nice tool to have if you can, you know,

01:25:47.800 | if you have some extra money that you're looking to invest and, you know, give you some different

01:25:54.080 | options depending on the economic environment.

01:25:57.240 | But yeah, I mean, obviously there are restrictions to it and you can, obviously you're committing

01:26:02.960 | to some amount of premiums over some period of time.

01:26:05.880 | It's got to work.

01:26:07.140 | When you talk to him, Jake is still doing permanent portfolio, right?

01:26:10.120 | Is he still?

01:26:11.120 | Is that still his?

01:26:12.120 | Okay, good.

01:26:13.120 | I believe yes.

01:26:14.120 | That's right.

01:26:15.120 | Yeah, I think he's one of the best defenders of it currently because the guys who wrote

01:26:19.320 | the book, they used to speak publicly, but they eventually shut their website down.

01:26:22.680 | They did the book and the book is still good.

01:26:24.360 | I'm not aware of anything that has to be changed.

01:26:27.240 | But Jake is, you know, he's financially independent.

01:26:29.000 | He's living on the portfolio.

01:26:32.000 | Yeah, I believe you're right about the authors of the book.

01:26:35.000 | They're kind of doing other things now, but the other guy that I was kind of talking to

01:26:39.680 | about these topics was the guy who runs the portfolio charts website.

01:26:44.720 | I don't know if you've checked that out, but it's kind of interesting.

01:26:48.640 | He looks at maybe a dozen or so different index type portfolios that are sort of, yeah,

01:26:59.200 | the lazy man style, including, you know, Timothy Robbins, all weather portfolio and some others

01:27:08.160 | there.

01:27:09.160 | And he actually developed his own just because he's been tinkering with the numbers so much

01:27:14.160 | that I'm kind of leaning towards, which is a derivative of the permanent portfolio that

01:27:18.880 | is tilted a little more towards stocks, which historically has performed a little bit better

01:27:24.400 | than some of these other portfolios, but with a little more volatility that is.

01:27:29.840 | The key seems to me, as far as I'm looking at it, if we start with the big important

01:27:34.560 | rocks first, right, that's what I always want to do.

01:27:36.600 | Why does something work?

01:27:39.160 | I think the reason why the permanent portfolio can work and why it's very good is because

01:27:46.640 | first it's grounded in good analysis, right?

01:27:50.060 | It's grounded in this idea of having asset classes that perform differently in all market

01:27:56.240 | conditions.

01:27:57.520 | And then it's simple enough that the investor who reads it and understands it and believes

01:28:03.360 | it will stick with it.

01:28:06.080 | Because it seems to me that if we take the amount of time out large enough, almost any

01:28:12.320 | thoughtfully created portfolio will work, right?

01:28:16.240 | A hundred percent stock portfolio has worked very, very well.

01:28:21.440 | It's just had a lot of fluctuations.

01:28:23.360 | A hundred percent real estate portfolio has worked.

01:28:27.280 | I don't know of anyone who would say a hundred percent gold portfolio has worked as well

01:28:31.520 | as you would like.

01:28:34.200 | That gold just does not perform that way.

01:28:36.920 | But when you own productive assets that generate dividends or generate increases or generate

01:28:42.880 | interest, some intelligently put together portfolio is going to work.

01:28:48.600 | The key is, does the person stick with it when things are going hot and when things

01:28:53.960 | are going cold?

01:28:55.520 | And then do they rebalance over time?

01:28:57.640 | And what I love about the permanent portfolio is it seems to me that it solves, especially

01:29:02.440 | with the heavy allocation towards gold and cash, it solves my fears, right?

01:29:11.440 | If I know that I've got $250,000 in gold in my vault in Austria and I can go pick this

01:29:17.640 | up whenever I want, I just go to Austria and they start giving me gold and I can turn that

01:29:22.520 | into euros and go and spend it or take it and put it in the bank and have that bank

01:29:27.000 | account pay my credit card, that makes me feel nice in a way that makes me willing to

01:29:32.720 | put up with other things in a different way.

01:29:34.840 | And then when I look at cash and I say, "Hey, I can hold some of this cash digitally.

01:29:38.760 | I can hold some of this cash physically and I can distribute my cash around the world

01:29:42.800 | using a basket of currencies," that makes me feel really happy.

01:29:47.040 | And then I just, because I don't have to worry about my investing, I can just go on and focus

01:29:51.240 | on keeping on making money.

01:29:53.000 | And so I'm not saying, I think almost any of the portfolios can work if you understand

01:29:58.960 | them and you believe in them and they click for you.

01:30:02.580 | And so in general, most people are going to have something that they read about and they

01:30:06.480 | say, "You know what?

01:30:07.480 | That works for me."

01:30:08.480 | It's not a Wallens, it's VTSAX, right?

01:30:11.080 | That's it.

01:30:12.080 | It works for him and he'll stick with it no matter what and it'll work for him.

01:30:16.360 | For other people who have other concerns, Harry Brown wasn't convinced that all stocks

01:30:20.960 | was the way to go and all American companies is the way to go.

01:30:23.360 | I'm not convinced of that.

01:30:26.200 | So you develop something else.

01:30:28.560 | But when you have a portfolio that you understand, the strategy that you get and that you stick

01:30:32.640 | to, in time it should work.

01:30:36.240 | Great, appreciate it.

01:30:39.840 | Thank you, Joshua.

01:30:40.840 | Great question, Andrew.

01:30:41.840 | I appreciate your calling it in.

01:30:44.120 | I'm now going to take two written questions from patrons of the show, patrons who weren't

01:30:49.880 | able to call in live, one on life insurance and the other on the intersection of minimalism,

01:30:56.080 | travel and prepping.

01:30:58.520 | So I'm going to begin with life insurance question.

01:31:00.200 | The question was written in a slightly of a confusing way, but I'll do my best with

01:31:03.440 | it.

01:31:04.440 | So, "Hi, Joshua.

01:31:05.440 | I won't be able to attend the call today, but I have a question that I've asked several

01:31:08.280 | advisors and Googled, but I haven't been able to find the answer to.

01:31:11.880 | The question is this.

01:31:12.880 | Why wouldn't I want to title a life insurance policy to a trust, either for my wife or my

01:31:18.800 | child from another marriage?

01:31:20.840 | Each party is separate."

01:31:23.160 | The question is a little bit hard for me to understand what the specific problem is.

01:31:26.420 | So what I'll do is to answer Kevin's question, just very simply give you a quick snapshot

01:31:32.040 | of life insurance titling, of the way that it works and the way to set a policy up properly

01:31:37.400 | for yourself.

01:31:38.460 | Always remember with life insurance contract, there are four parties that are involved in

01:31:42.800 | the contract.

01:31:43.940 | The parties that are involved are number one, the owner of the contract.

01:31:47.840 | The owner of a contract is the individual that has all of the rights of the contract.

01:31:53.740 | The second party involved is the insured.

01:31:56.740 | This is the person on whose life the contract is dependent for its functioning.

01:32:02.740 | The third party is the payer of the contract.

01:32:06.740 | Usually this would be the owner, but it doesn't have to be.

01:32:09.320 | And then the fourth party is the beneficiary of the contract.

01:32:13.560 | And so who is it that receives the money when the insured dies?

01:32:18.860 | Those are the four parties in a life insurance contract.

01:32:21.560 | Now all those four parties can be the same person.

01:32:26.100 | So I can own a life insurance, be the owner of the policy.

01:32:30.460 | I can own a life insurance policy on my life, I'm the insured.

01:32:35.100 | I can also pay the premiums for that policy, I'm the payer.

01:32:40.100 | And I can have myself or more properly my estate be the beneficiary of that policy.

01:32:49.260 | However, additionally, I can change those four things to be anyone else.

01:32:54.100 | So I can own a policy on my life that I can pay the premiums for,

01:32:59.100 | but I can make my wife the beneficiary of the policy.

01:33:04.100 | Or my wife can own a policy on my life that she pays for,

01:33:09.100 | that she is the beneficiary of that policy.

01:33:12.100 | It's also important to remember that you don't have to have a natural person

01:33:16.100 | be these individuals involved in a life insurance contract.

01:33:20.100 | So I can establish, or the estate is a good example.

01:33:25.100 | My estate is not a natural person.

01:33:27.100 | My estate is an entity, it's kind of like a trust, it's an estate, it's kind of like a trust.

01:33:32.100 | I can set up a life insurance trust that owns my policy,

01:33:36.100 | and that life insurance trust can pay for that policy on my life.

01:33:41.100 | And then a trust that I've established, that same life insurance trust or a different trust,

01:33:46.100 | can be the beneficiary of the policy.

01:33:50.100 | A company can own a life insurance policy, can pay the premiums on that policy,

01:33:56.100 | and can be the beneficiary of a policy, just like a natural person.

01:34:00.100 | The only person that's always going to be a natural person in a life insurance contract

01:34:04.100 | is going to be the insured.

01:34:06.100 | Now there are limitations as to what entities can take out a life insurance policy on a person.

01:34:11.100 | There has to be what an insurance company would call insurable interest.

01:34:15.100 | So you, as my listener that I don't know, I can't go to an insurance company and say,

01:34:20.100 | "Hey, listen, insurance company, I want to take out a policy on Joe Smith's life,

01:34:25.100 | and I'll pay for it, and I want to be the beneficiary of it."

01:34:28.100 | The insurance company says, "Well, what insurable interest is there?

01:34:32.100 | How are you harmed if Joe Smith dies?"

01:34:34.100 | I say, "Well, you're just a listener."

01:34:36.100 | "Well, you're not harmed."

01:34:38.100 | Now if, on the other hand, you were an investor in my company,

01:34:41.100 | and you put a lot of money into my company,

01:34:43.100 | I could now go to the insurance company and say,

01:34:45.100 | "I want to take out a life insurance policy on Joe's life because he's my number one investor,

01:34:49.100 | and if Joe dies, I'm really going to be hurt because we're going to run out of investment funds."

01:34:53.100 | Now I could probably get an insurance policy on your life.

01:34:56.100 | So that's a quick background on who's involved.

01:34:59.100 | So what's the best way to own a life insurance contract?

01:35:03.100 | Well, it depends on the situation.

01:35:05.100 | So first of all, who needs to have the policy rights?

01:35:08.100 | In general, most of us will find that it's easiest if we own our own policies on our own life.

01:35:16.100 | That's not necessarily the best, but it is the easiest.

01:35:20.100 | So if I take out a policy on my life, I can do that for any reason at any time.

01:35:25.100 | If I want to take out a policy on my wife's life, now, of course, I need her consent.

01:35:31.100 | She has to consent to my taking it out.

01:35:33.100 | And now I'm in a situation where I'm going to own the policy,

01:35:36.100 | thus I can sell the policy, I can borrow against the policy, I can cancel the policy,

01:35:41.100 | I can do anything I want with the policy, I can transfer the policy,

01:35:44.100 | but she doesn't have any rights in that contract anymore because she's simply the insured.

01:35:49.100 | So why would different people own a policy?

01:35:52.100 | Well, the first thing you can think about is protection.

01:35:54.100 | Let's say, for example, that I own a policy on my life for a million dollars,

01:36:01.100 | and now my wife is the beneficiary, right?

01:36:04.100 | That's why I bought the policy.

01:36:06.100 | But pretend that my wife and I divorce.

01:36:09.100 | Well, my wife doesn't own a policy on my life,

01:36:12.100 | and it may be that the divorce court requires me to pay her payments of some kind for her support

01:36:18.100 | or for child support, et cetera,

01:36:21.100 | but she's not going to have that insurance policy that guarantees that.

01:36:25.100 | Now, often as part of a decree, a divorce decree,

01:36:29.100 | the judge will require somebody to get a life insurance policy,

01:36:33.100 | but it would protect my wife more if, instead of me owning the million-dollar policy on my life,

01:36:39.100 | it would protect her more if she owned the million-dollar policy on my life,

01:36:44.100 | because if she owns a million-dollar policy on my life and then we divorce,

01:36:48.100 | I can't force her to do anything with that contract.

01:36:51.100 | She still owns it, so she can still be the beneficiary of that contract no matter what happens.

01:36:56.100 | And so that's safer for her because once the policy is hers, it's hers.

01:37:01.100 | She can't change it. Now, she's got to pay it, but I can't force her to cancel the contract.

01:37:06.100 | The only thing I can do as the insurer to the contract is simply to either live or die. That's it.

01:37:11.100 | And if she can prove that I'm alive or dead, the policy will work as it exists.

01:37:16.100 | So in general, from a safety perspective, it's often best for people to own a policy on the other person's life.

01:37:22.100 | So I've often recommended to husbands and wives that each of them own the policy on the other person's life to protect them.

01:37:30.100 | Depending on the state, you can go a little bit farther with this in terms of the source of funds

01:37:36.100 | and should it be a joint bank account or an individual bank account.

01:37:39.100 | Generally, that stuff is not so important in terms of practice,

01:37:44.100 | but it is theoretically important in some situations.

01:37:48.100 | Now, remember, this also needs to be considered in terms of asset protection,

01:37:52.100 | because one of the things we do want to do is if we're going to get a life insurance policy,

01:37:56.100 | especially if it's got any kind of cash value in it, we want to make sure that it has in it,

01:38:02.100 | that those assets inside the policy are protected.

01:38:05.100 | So that's important as well.

01:38:08.100 | Now, back to the trust that's involved.

01:38:11.100 | Is it a good idea for you to have a life insurance trust on a policy?

01:38:17.100 | It can be. There's not really any reason not to do it, except the expense of establishing the trust.

01:38:24.100 | Why does somebody set up a life insurance trust?

01:38:27.100 | Well, generally, the normal reason for establishing a life insurance trust is for estate tax planning.

01:38:34.100 | In the United States, when you die, the face amount of all of the life insurance policies that you own

01:38:43.100 | is included in your gross estate.

01:38:46.100 | Pretend that I have $10 million of assets, plus I own $10 million of life insurance policies on my life.

01:38:56.100 | When I die, my wife would -- let's use someone other than my wife so we can ignore the spousal exclusion.

01:39:03.100 | My father would inherit, when I die, he's the beneficiary of my policies,

01:39:07.100 | he would get $10 million income tax free, because the proceeds from a life insurance policy are received income tax free.

01:39:15.100 | But my estate would include the $10 million of life insurance that I owned,

01:39:23.100 | in addition to the $10 million of other assets that I own.

01:39:27.100 | And in the United States, with the current $11.5 million estate tax exemption amounts,

01:39:34.100 | that means that, assuming I'm not married and I'm not using the spousal exemption amounts together,

01:39:40.100 | that would mean that now about $9 million of my estate is going to be subject to estate taxes, which are very expensive.

01:39:48.100 | Well, that could have been avoided very simply if I had not owned that life insurance policy at the date of my death.

01:39:55.100 | If I had simply established an irrevocable life insurance trust,

01:40:00.100 | and then I had transferred money into that trust for that trust to buy a life insurance policy on my life,

01:40:08.100 | now when I die, the only asset that I own is my $10 million of assets.

01:40:13.100 | I don't own the life insurance policy.

01:40:15.100 | And what would happen is the trust owns the life insurance policy,

01:40:19.100 | the trust then simply takes, when I die, the policy is exercised,

01:40:24.100 | and the policy premiums go to the beneficiary of the policy,

01:40:28.100 | which is just paid out according to the trust documents, or goes directly to my dad.

01:40:32.100 | And so my dad receives the money income tax free.

01:40:35.100 | Now, the reason why trusts are really great thing,

01:40:38.100 | life insurance policies are really great things for trusts to own,

01:40:42.100 | is that the inside buildup of cash values inside of a life insurance policy are not taxed.

01:40:48.100 | So thus they are not subject in the United States,

01:40:51.100 | there are not subject to the heavy trust income tax rates for a trust such that would generally hold another asset.

01:40:59.100 | So the trust holds an asset that's creating income,

01:41:01.100 | the trust now has to pay income tax rates at the highest marginal brackets.

01:41:05.100 | Whereas if the trust owns life insurance policy,

01:41:08.100 | any income that's growing in that, or any cash values that are growing in that policy,

01:41:11.100 | are not subject to income tax.

01:41:13.100 | And then when the policy is exercised,

01:41:16.100 | because the proceeds of a life insurance policy are not subject to income tax,

01:41:19.100 | then still the trust is avoiding the insurance taxes,

01:41:23.100 | sorry, the income taxes on that death benefit.

01:41:27.100 | So this is why trusts are really good things to hold a life insurance contract.

01:41:31.100 | So if that's what you're talking about in this question,

01:41:33.100 | is there any reason not for my trust not to own a life insurance policy?

01:41:37.100 | Well, no, the only problem is do you need it, right?

01:41:39.100 | Most people don't have $20 million estates,

01:41:42.100 | most people are not, especially now that we've got $11.5 million estate tax exemption,

01:41:46.100 | most people are not in that situation.

01:41:48.100 | Now, 15, 20 years ago when the estate taxes were at $750,000 and above,

01:41:53.100 | then almost any millionaire needed a life insurance trust owning a life insurance policy.

01:41:57.100 | But at the moment, very few people do.

01:41:59.100 | It's only a very small number of estates that will be subject to estate taxes.

01:42:03.100 | So that would be one thing.

01:42:05.100 | Now, should you want, the question is,

01:42:08.100 | why wouldn't I want to title a life insurance policy to a trust for my wife or child from another marriage?

01:42:13.100 | I don't think in this situation that you necessarily have to have a trust.

01:42:18.100 | So when people have blended families,

01:42:20.100 | and they have children from one marriage,

01:42:23.100 | and then they're remarried,

01:42:24.100 | usually the biggest financial planning problem here is how do we make sure that certain assets go to certain people?

01:42:32.100 | And so frequently if you have a husband and a wife who have children from a first marriage,

01:42:38.100 | then they've divorced and they've married again,

01:42:40.100 | usually the husband will want to make sure that his assets go to the children from his first marriage.

01:42:45.100 | The wife will often want to make sure that her assets go to the children from her first marriage, etc.

01:42:50.100 | And a lot of times it would be frustrating and really problematic for the children who are in a, you know,

01:43:00.100 | if people are being disinherited basically.

01:43:03.100 | This becomes difficult, especially when you have assets that are not necessarily liquid.

01:43:07.100 | Let's say that husband and wife in their second marriage have a great big house,

01:43:13.100 | and that great big house is going to be passed along to one person that needs it.

01:43:17.100 | What about the other children?

01:43:19.100 | So life insurance is one of the great functions that life insurance can form is as an estate equalization tool.

01:43:27.100 | Let's assume I have two children.

01:43:28.100 | I have a half a million dollar house and no other meaningful assets except a life insurance policy.

01:43:33.100 | Well, one of my children wants the house.

01:43:35.100 | They want the lake house.

01:43:36.100 | So I can just simply leave the lake house to that child number one,

01:43:40.100 | and then I have a $500,000 life insurance policy that goes to child number two.

01:43:44.100 | Now everyone's happy.

01:43:45.100 | Child number one inherits a $500,000 house.

01:43:47.100 | The house gets a step up in tax basis at the date of my death, so they get a house tax free.

01:43:51.100 | They can live in it.

01:43:52.100 | It's got a $500,000 tax basis starting with them.

01:43:55.100 | Second child gets $500,000 of cash.

01:43:57.100 | They're happy.

01:43:58.100 | They have no taxes due on it.

01:43:59.100 | They just simply now I've equalized my estate.

01:44:02.100 | Life insurance really works really well at performing that function.

01:44:06.100 | Life insurance also has the benefit of flowing according to beneficiary status.

01:44:12.100 | So life insurances are not ordered by your will.

01:44:16.100 | Your will can deal with other assets that you may own, but a life insurance policy is independent of that.

01:44:22.100 | So if parents just simply want to make sure that their children from a first marriage get a certain amount of money,

01:44:28.100 | yeah, you can just simply take out a life insurance policy,

01:44:31.100 | establish the child as the beneficiary of that policy, and then when you die, it goes to them.

01:44:36.100 | It's one of the simplest tools.

01:44:38.100 | The only problem with life insurance is that you've got to pay premiums,

01:44:41.100 | and that when you're doing this kind of planning,

01:44:43.100 | it's going to have to be some form of permanent life insurance policy that is guaranteed to be around at the date of your death.

01:44:50.100 | And so generally your premiums are thousands or tens of thousands of dollars,

01:44:54.100 | not hundreds or a few thousand dollars as they are with term life insurance policies,

01:44:58.100 | which are just for temporary life insurance protection.

01:45:01.100 | So is there any reason not to title a life insurance policy to a trust?

01:45:07.100 | There's no reason that I can see other than simply the costs of establishing the trust,

01:45:12.100 | the hassle of funding it, the hassle of making sure the trustee sends out the crummy notices every year, etc.,

01:45:19.100 | so that you can properly have that life insurance trust function properly.

01:45:24.100 | And I just don't think it's probably not necessary.

01:45:26.100 | If you want to buy a life insurance policy on your life,

01:45:29.100 | and you want to make your child from your first marriage a beneficiary of that, you can do that.

01:45:36.100 | Your wife can't stop you from doing that.

01:45:38.100 | Your wife can't change the beneficiary.

01:45:40.100 | Your wife has no control over the policy unless she's the owner of the policy.

01:45:44.100 | If you want to have one policy that your wife owns on your life that she's the beneficiary of that you just pay,

01:45:49.100 | and that protects her, and then you want to have a second policy that you own, that you pay for,

01:45:54.100 | that goes for your child, you can do that.

01:45:57.100 | And so you probably don't need a trust.

01:46:00.100 | I guess the only thing I can think of that the additional benefit sometimes of a life insurance trust would be creditor protection,

01:46:06.100 | asset protection.

01:46:07.100 | With that kind of irrevocable life insurance trust, you don't own it.

01:46:11.100 | So thus it's an asset that can never be attached by your creditors.

01:46:14.100 | It's an irrevocable trust that simply owns a life insurance policy.

01:46:17.100 | Now, you may be making annual contributions to the trust every year,

01:46:21.100 | so therefore you are putting money into it.

01:46:23.100 | But if you can't put the money in it sometimes because your money is being seized,

01:46:27.100 | then in general that's the trustee who will have to figure out how to adjust the policy.

01:46:32.100 | They may have to take a reduced policy paid up with a reduced amount of insurance, something like that.

01:46:37.100 | But they can figure that out with the policy that's in the trust.

01:46:40.100 | So if you were thinking about this from an asset protection standpoint,

01:46:43.100 | and you absolutely wanted a guarantee no matter what that you have a life insurance policy that goes to your child,

01:46:50.100 | then I think maybe the life insurance trust adds a little bit of additional protection.

01:46:54.100 | You buy a $5 million policy in the trust, you make your transfers to it of $15,000, $20,000 per year for your premiums,

01:47:01.100 | up to $15,000 per year under the gift tax exclusion amounts.

01:47:06.100 | It works pretty well. It works pretty simply.

01:47:07.100 | And once the money is in the trust, once the crummy notices are sent,

01:47:10.100 | so that the child has the right of withdrawal from the trust, the money stays in there.

01:47:14.100 | When you die, that trust will pay out the life insurance proceeds to your child.

01:47:19.100 | And in fact, you of course should set up a spendthrift trust to be the beneficiary of it

01:47:22.100 | so that your child gets the additional savings as well.

01:47:26.100 | So that all that money is protected from their potential creditors or their potential divorces, etc.

01:47:32.100 | So reasons why you wouldn't want to do it? No, it's great.

01:47:34.100 | It's complex. It's a hassle. You got to hire an attorney to set it up.

01:47:37.100 | There's costs to it.

01:47:39.100 | But in terms of financial planning reasons, not a bad idea at all.

01:47:43.100 | Final question of the day. I will balance today out with finish it up with kind of a light and fun one.

01:47:49.100 | Andy writes in and says, "Joshua, I won't be able to call in today,

01:47:52.100 | but I was wondering your thoughts on balancing minimalism versus prepping.

01:47:57.100 | You teach storing food and water and equipment,

01:48:00.100 | but I figure that RVing and going international have given you good opportunity

01:48:04.100 | to practice pairing down to the minimum, and I'd like to hear your experiences.

01:48:08.100 | My wife tends more towards minimalism, and I tend more toward prepping.

01:48:12.100 | So that leads us into a bit of disagreement when I want to store crates of food, water, and backup gear,

01:48:18.100 | and she doesn't. Thanks, Andy." Andy, you are right.

01:48:21.100 | I moved my family, four children, two dogs, etc.

01:48:25.100 | I moved around the world with fewer than a dozen suitcases.

01:48:28.100 | So I can teach you all you want about water storage, but I guarantee you this.

01:48:32.100 | I did not move with stored water.

01:48:35.100 | So first of all, let's talk about the philosophy of minimalism.

01:48:40.100 | There are different people who have different approaches to minimalism,

01:48:43.100 | and here's how I analyze it.

01:48:45.100 | In a way, I consider myself a minimalist, but not in the way that it's often presented.

01:48:50.100 | The way that a minimalist will often present their case is that happiness or nirvana

01:48:55.100 | or something is found in having the smallest number of possessions.

01:49:00.100 | I don't know if this is still popular, but a number of years ago,

01:49:03.100 | it was very popular for someone to say, "I only own 100 things."

01:49:07.100 | And there were people who travel in a carry-on suitcase,

01:49:10.100 | and everything they own fits in their suitcase.

01:49:13.100 | I respect that, right? I admire that. That's cool.

01:49:16.100 | I can fully see how that makes you very mobile to not have much stuff.

01:49:20.100 | And I like not having much stuff in that situation.

01:49:25.100 | There's another kind of expression of minimalism, which perhaps a word might be

01:49:30.100 | just kind of a non-cluttered aesthetic.

01:49:35.100 | You walk into a house, and the house just has a few things in it.

01:49:38.100 | It's not cluttered with knick-knacks and tchotchkes and random stuff strewn about

01:49:42.100 | and shot glasses from Cancun and pewter spoons and things like that.

01:49:47.100 | There's an aesthetic of bare walls and a few pieces of artwork

01:49:53.100 | and a few pieces of furniture, etc.

01:49:55.100 | But here, we're not just trying to work towards some arbitrary tiny number.

01:50:00.100 | I admire that, and frankly, my wife and I both have that bent.

01:50:04.100 | Neither of us likes clutter.

01:50:05.100 | For example, I like my kitchen counters to be totally clear.

01:50:07.100 | I don't want anything on the kitchen counter.

01:50:08.100 | I don't want a coffee maker. I don't want a toaster.

01:50:10.100 | I want to get to the end of doing the dishes and see the counters clear.

01:50:14.100 | I don't always do it.

01:50:15.100 | Sometimes I have the coffee maker out and the water to tea kettle for a little while,

01:50:19.100 | but I don't like--growing up, my mom loved gadgets,

01:50:22.100 | and so her kitchen is just packed full of gadgets.

01:50:25.100 | I don't like it. My wife doesn't like it either,

01:50:26.100 | so thankfully, we try to keep our counters clear.

01:50:29.100 | Now, in a way, that's kind of minimalism.

01:50:31.100 | And if you go through and you khanmar your drawers

01:50:34.100 | and you just have the things that you really need or the things that spark joy,

01:50:39.100 | you can do that as well.

01:50:40.100 | I don't like to have a bunch of stuff stuffed in a drawer as well.

01:50:43.100 | So in that degree, I also consider myself a minimalist.

01:50:47.100 | Where I think the difference is, though,

01:50:49.100 | is having things that are not useful to you or that you don't love.

01:50:54.100 | That's one thing.

01:50:55.100 | And then the second thing is having things that are poorly organized.

01:50:59.100 | There's a big difference between having things that you need

01:51:03.100 | or that might be useful to you and having things that are poorly organized.

01:51:07.100 | Now, I've been at both extremes, and I don't think there's one right answer,

01:51:11.100 | but I believe there's value in having things that you need or that you might need.

01:51:16.100 | And in fact, there's financial value in it as well.

01:51:19.100 | There is a tradeoff.

01:51:20.100 | You could have so many things that you can't move easily.

01:51:23.100 | For example, preppers.

01:51:24.100 | Preppers are often known for stockpiling tons and tons of gear.

01:51:28.100 | And I read stories about hardcore preppers moving,

01:51:30.100 | and some of them have to have a semi-truck.

01:51:32.100 | And that's true.

01:51:34.100 | If you've got 50,000 rounds of 5.56, and you've got boxes and boxes of toilet paper

01:51:41.100 | and long-term storage food and buckets everywhere,

01:51:44.100 | you've got to rent a semi-truck, certainly.

01:51:46.100 | So it's harder for you to move than just simply getting in the car and going.

01:51:50.100 | And I think there's a lot of benefit in keeping things light.

01:51:54.100 | I have a good friend of mine listening to the show who seems to have established the habit of moving across the country regularly,

01:52:01.100 | but he practices what he calls the low-drag lifestyle.

01:52:04.100 | When he moves across the country, he doesn't get a U-Haul truck.

01:52:07.100 | He gets rid of all the stuff except what fits in a small or a mid-sized sedan,

01:52:12.100 | and then he and his wife get in the sedan and they drive.

01:52:15.100 | And then when they get to their new location, they go ahead and buy the new things they need and live very lightly.

01:52:20.100 | And I did the calculations, the math on that, and I'm convinced that it's not necessarily stupid.

01:52:25.100 | It allows you to move into any apartment. It allows you to move into any house.

01:52:29.100 | You just don't have a lot of stuff. You buy fresh the stuff that you need.

01:52:32.100 | And they're fairly minimalist. They don't stock the house full of tons of stuff.

01:52:35.100 | They just keep the basic things.

01:52:38.100 | But if you see value in having reserves, you kind of got to put those reserves somewhere.

01:52:45.100 | So, you know, I have four children.

01:52:50.100 | If my children have no clean water, we're forced to go and drink out of a dirty municipal supply,

01:52:57.100 | they're going to develop dysentery or have diarrhea, and they're going to die.

01:53:03.100 | One of the major causes of death all around the world is contaminated water that causes people to become sick.

01:53:08.100 | And this happens after a disaster zone.

01:53:10.100 | So what kind of father am I if there's an earthquake at my house or a hurricane at my house,

01:53:15.100 | and now I don't have any water to feed my children, and so I give them contaminated water,

01:53:20.100 | and they die from dehydration and dysentery?

01:53:23.100 | That's unacceptable.

01:53:25.100 | That is absolutely unacceptable for me as a father to, when something is so easily solved

01:53:32.100 | and so easily provided for, it's unacceptable for me to take that kind of risk.

01:53:37.100 | Now, I understand if a father is in the middle of, you know, he lives in Port-au-Prince and makes a dollar a day,

01:53:43.100 | then he may not have the ability to do that, but that's not me.

01:53:45.100 | I don't live in Port-au-Prince, and I don't make a dollar a day.

01:53:48.100 | So when I have little people who are dependent upon me for their life,

01:53:53.100 | and I know that they need clean water, I better make sure that they have clean water.

01:53:57.100 | Now, when clean water is so simple to have, you know, some flats of water bottles,

01:54:05.100 | some buckets of water, some barrels of water, a water filter, depending on how much space I have,

01:54:11.100 | then it will be unto me if I don't take care of something that's so simple.

01:54:15.100 | Same thing with food.

01:54:18.100 | How could I, as a father, how could I be so irresponsible to make sure that when we live in a world of abundant food,

01:54:25.100 | and I have abundant money to buy food, that I don't make sure that I take care of my children with their food?

01:54:32.100 | That's simply irresponsible to not do that.

01:54:36.100 | Now, does that mean that I have to have massive, massive amounts of supplies?

01:54:42.100 | Probably not, not necessarily.

01:54:45.100 | But is it a bad thing to have supplies?

01:54:47.100 | Here's my theory on stuff.

01:54:49.100 | Stuff is a drain if it's poorly organized and you don't know what you have.

01:54:54.100 | But stuff in and of itself is not necessarily a problem.

01:54:58.100 | So, to give you an example, the way that I like to store things, I try to keep everything in modules.

01:55:02.100 | That works for me.

01:55:04.100 | So, whenever I have something that's a module, whether if I buy a, you know, I have my podcasting module, right?

01:55:10.100 | I've got my equipment.

01:55:12.100 | And all of my podcasting equipment goes in one bag, and that bag has all of my gear.

01:55:17.100 | It's got my cables, it's got my microphones, it's got my recorders, it's got my extra stuff, it's got my batteries, my battery chargers.

01:55:25.100 | Everything's in one bag.

01:55:27.100 | I know that bag has all my podcasting equipment.

01:55:30.100 | It's a complete kit.

01:55:32.100 | It's not burdensome to me to have one bag of stuff that's all fitting together, that's sitting on a shelf, that says, and it's clearly labeled, "Podcasting Kit."

01:55:44.100 | When I travel, I grab the kit, I put it in.

01:55:46.100 | When I make a podcast, I take everything out, I put it on the table, and I put it away.

01:55:50.100 | Everything is in a kit.

01:55:52.100 | So, that thing is basically one item.

01:55:55.100 | It's not multiple items.

01:55:57.100 | So, it's not--I'm not conflicting with minimalism.

01:56:01.100 | And to me, the same thing applies to really everything else.

01:56:04.100 | If I have a phone, I'm going to have the accessories for my phone.

01:56:07.100 | So, it all goes in one bag.

01:56:09.100 | I've got the chargers, which is what I do with my phones.

01:56:11.100 | I've got a wall charger.

01:56:13.100 | I've got a car charger.

01:56:15.100 | I've got a Faraday bag.

01:56:16.100 | I've got the little clippy thing that I use when I'm filming videos.

01:56:19.100 | I've got the selfie stick or whatever it is that I'm going to use.

01:56:22.100 | I've got the headphones.

01:56:23.100 | Everything's in one bag.

01:56:24.100 | That's cell phone accessories.

01:56:25.100 | It all stays there.

01:56:26.100 | Extra batteries, extra cables, whatever it is.

01:56:28.100 | It's a kit.

01:56:29.100 | So, that way, I don't have junk everywhere just sitting in a drawer.

01:56:32.100 | I've got a kit.

01:56:33.100 | And then when you go up beyond there, I like to use Rubbermaid bins.

01:56:37.100 | And so, what I've always done is I've had multiple shelving units, and I put the shelving unit somewhere.

01:56:42.100 | I have a Rubbermaid bin.

01:56:43.100 | This Rubbermaid bin has sports equipment.

01:56:46.100 | So, I pull it out.

01:56:47.100 | There's the sports equipment, and everything is segmented into little modules and kits.

01:56:51.100 | I don't find that somehow I'm emotionally drained because I'm not a minimalist anymore.

01:56:56.100 | I've got sports equipment.

01:56:57.100 | If I like playing sports, then I'm going to have sports equipment.

01:57:00.100 | The key is to have it organized so that it's not overwhelming to you and it's not overflowing everywhere.

01:57:06.100 | And so, by that standard, I don't think there's any point to minimalism.

01:57:11.100 | Like, having less stuff doesn't help you.

01:57:14.100 | I'll give you this just with children.

01:57:16.100 | I had for years, I always had this idea.

01:57:19.100 | I want my children to be the kind of children that can be happy with nothing,

01:57:23.100 | that can be happy playing no matter where they are with whatever they've got.

01:57:26.100 | And then we went RVing, and they just had one little box of toys each.

01:57:30.100 | And so, they only had a little bit, and I achieved my goal.

01:57:34.100 | My children learned how to play in the dirt with a rock and a stick.

01:57:37.100 | I was happy with that.

01:57:38.100 | But here's what I learned.

01:57:40.100 | I learned that I didn't know what I was talking about before I had children.

01:57:43.100 | Yes, my children could play with a rock and a stick, but they also came back to me every five minutes

01:57:48.100 | and asked, "Daddy, this, this, let's do this, this, this, this."

01:57:50.100 | And I couldn't get anything done because they're showing up every five minutes

01:57:53.100 | because they didn't have enough toys.

01:57:55.100 | Well, then, once I could, I got them more toys,

01:57:58.100 | so we're not as minimalist in the number of toys as we once had.

01:58:01.100 | But now, they don't come back every five minutes saying, "Daddy, Daddy, do this, this, this."

01:58:04.100 | So, I needed more toys, needed more books, and needed the stuff.

01:58:09.100 | So, there's nothing ideal about having less stuff.

01:58:12.100 | You just want to have the appropriate amount of stuff,

01:58:15.100 | the ideal amount of stuff for what you need.

01:58:18.100 | So, yes, I have learned to pare down to a minimum.

01:58:21.100 | I moved with, again, under a dozen suitcases, less than that.

01:58:25.100 | I can't remember the exact number, but I moved the country with a dozen suitcases.

01:58:29.100 | So, I didn't bring a whole bunch of prepping gear.

01:58:32.100 | But once I got established in a new house, okay, what are the needs of my family going to be?

01:58:37.100 | How do I make sure that I have backups and reserves?

01:58:40.100 | The power is still going to go out.

01:58:41.100 | The water is still going to go out.

01:58:42.100 | I might run out of food.

01:58:44.100 | It's not that hard to have a few reserves.

01:58:46.100 | So, you look around in your local area, and it's as simple as saying,

01:58:49.100 | "Hey, let's get a little bit of extra rice and beans," right?

01:58:52.100 | Or, "Let's go ahead and buy a little bit more canned chicken."

01:58:55.100 | "Let's go ahead and make sure I have a water filter."

01:58:58.100 | You can get a water filter in any place in the world.

01:59:00.100 | "Let's go ahead and make sure that I have some buckets of water."

01:59:02.100 | "Well, here's some water containers. I'll get this water container. I'll get that water container."

01:59:05.100 | "I'm going to make sure I have that."

01:59:07.100 | "Let me make sure that I put aside a couple of cans of gasoline."

01:59:10.100 | I'm not a doomsday prepper. I don't have an 18-wheeler.

01:59:14.100 | I don't do that. I keep all that stuff in my bunker.

01:59:16.100 | Kidding.

01:59:18.100 | I want you to think I'm kidding anyway.

01:59:20.100 | So, the point is that you expand to it.

01:59:24.100 | But if it annoys your wife to have the stuff,

01:59:26.100 | then make sure it's well organized, and then consider dispersing it in another place.

01:59:30.100 | So, one of the big mistakes that a lot of people have is they have the stuff that overwhelms their house.

01:59:35.100 | But is it really?

01:59:37.100 | Your wife's a minimalist.

01:59:39.100 | Is it really going to bother her psychologically if you have cases of water bottles under the bed in the spare bedroom instead of empty space?

01:59:48.100 | If so, find another place for the water bottles.

01:59:51.100 | But there's a balance here.

01:59:53.100 | The problem with the guy who lives with a hundred things, right?

01:59:55.100 | Colin. I used to read a blog by Colin someone or other who would do this thing.

02:00:00.100 | The problem with that is he can take care of himself.

02:00:06.100 | And certainly he can be in situations where he may or may not have what he needs.

02:00:10.100 | He's probably going to be okay.

02:00:11.100 | But if he had children, that's just irresponsible.

02:00:15.100 | You can't do it. You've got to have food.

02:00:17.100 | They start screaming if you don't feed them.

02:00:19.100 | So, there's a right balance.

02:00:23.100 | Many preppers do go to the extreme.

02:00:26.100 | I'm not trying to advocate for people to live for ten years on their own through the zombie apocalypse.

02:00:31.100 | I think it's cool if you want to do it.

02:00:33.100 | I enjoy the intellectual exercise.

02:00:35.100 | But that's probably unnecessary.

02:00:37.100 | It's hard to imagine the need to be able to be self-sufficient for ten years.

02:00:41.100 | But three months?

02:00:44.100 | So, if it's bothering your wife, I say keep it somewhere else.

02:00:47.100 | One of the simplest things I would recommend is having a trailer.

02:00:51.100 | Having a cargo trailer and storing some of your things in the cargo trailer.

02:00:56.100 | So, that way it's out of your house.

02:00:57.100 | But it's mobile if you need it.

02:00:58.100 | So, you can do that with a camper.

02:00:59.100 | You may do that with a storage unit.

02:01:01.100 | Another thing is make sure that when you are having things that you're careful and you're thoughtful.

02:01:06.100 | One of the things that I don't get is so many preppers especially,

02:01:10.100 | they wind up having things that don't complement one another.

02:01:13.100 | There's one guy that I like his stuff, but he's addicted to flashlights.

02:01:17.100 | He's got dozens and dozens of flashlights.

02:01:19.100 | I don't see the point of having a dozen flashlights.

02:01:22.100 | I see the point of having a headlamp, a flashlight, and a lantern.

02:01:28.100 | Because they're all three different sources of light that are redundant.

02:01:32.100 | So, you have backups, but they complement one another.

02:01:35.100 | I'd rather have a headlamp, a flashlight, and a lantern than three flashlights.

02:01:40.100 | Three flashlights starts to feel like a bunch of junk,

02:01:42.100 | but a headlight, a flashlight, and a lantern don't.

02:01:45.100 | And so, with everything, that's always been my approach.

02:01:48.100 | How do I have redundancy, complementary redundancy that's thoughtful and intelligent

02:01:53.100 | and then make sure it's streamlined.

02:01:55.100 | I do think preppers tend to go through a phase where in the beginning,

02:02:02.100 | it's got a few things and it's all about the stuff.

02:02:05.100 | And then over time, people recognize, you know what, I don't need this much stuff.

02:02:09.100 | Give me an example. Let's say toilet paper.

02:02:12.100 | The thing that most of us don't appreciate until it's gone.

02:02:17.100 | Well, toilet paper is something that can take up a lot of space.

02:02:21.100 | So, if you're trying to have two years worth of toilet paper, that might annoy your wife.

02:02:26.100 | But if you look at it and say, all right, maybe I have a little bit of extra toilet paper,

02:02:30.100 | but instead what I'll do is because I don't want to have too much stuff,

02:02:33.100 | what I'll do is recognize that I'm probably never going to need two years worth of toilet paper.

02:02:37.100 | So, let me have some toilet paper.

02:02:39.100 | Let me pack and store some baby wipes.

02:02:42.100 | And then let me have some cloths that we can use for cloth toilet paper,

02:02:45.100 | which is reusable and can be washable if we ever needed it.

02:02:48.100 | It's going to be much more effective and much more cost and much more space efficient.

02:02:53.100 | So, that's my answer is store the crates of food,

02:02:56.100 | store the water in a place where it's not particularly frustrating and annoying.

02:03:00.100 | Don't put them in the living room.

02:03:02.100 | Put them in a shed out back. Put them in a cargo trailer in the backyard.

02:03:04.100 | Put them in a storage unit nearby.

02:03:07.100 | But make sure that you have the stuff that you need.

02:03:09.100 | And in time, you'll start to get better and better.

02:03:14.100 | There may ultimately be some trade-off.

02:03:17.100 | For example, if you have too much junk, too many prepping supplies, etc.,

02:03:22.100 | you may not be able to live in a small apartment.

02:03:24.100 | And some people buy big houses and big farms just to store their stuff.

02:03:28.100 | Calculate the cost. Calculate the benefits yourself.

02:03:31.100 | But it's probably not necessary to go to that extreme.

02:03:34.100 | And so, keep the benefits of your minimal flexible lifestyle.

02:03:38.100 | But as you become more skilled,

02:03:40.100 | you'll recognize that you can probably get by with less stuff and still perform all of the same functions.

02:03:45.100 | Those are my thoughts. Thank you for calling in for a Friday Q&A show.

02:03:48.100 | Today was mammoth, 2 hours and 4 minutes.

02:03:50.100 | Thank you for listening. I hope you've enjoyed these questions.

02:03:53.100 | I just remind you, give me your thoughts.

02:03:55.100 | Send me an email, joshua@radicalpersonalfinance.com.

02:03:57.100 | I'd love to know your thoughts on hosting an in-person group.

02:04:01.100 | Again, something like a 3-day seminar, maybe something around February 2020,

02:04:06.100 | is basically the idea and price point of basically, I would guess, a few thousand dollars,

02:04:12.100 | $200,000 to $3,000 all inclusive for a 3-day seminar, networking, and maximum,

02:04:17.100 | like small event, 50 to 60 people maximum.

02:04:20.100 | Send me an email, joshua@radicalpersonalfinance.com.

02:04:22.100 | Have a great weekend, and I will be with you very soon.

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