RPF0700-Seven_Rings_of_Liberty-Financial

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00:00:30.000 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

00:00:40.000 | Today on the show, we're going to finish out our 7 Rings of Freedom series by talking about financial liberty.

00:00:47.000 | I'm using that word financial liberty just because it fits my theme of liberty, liberty, liberty, liberty or freedom, financial freedom.

00:00:53.000 | But here in Ring #7, we're going to talk about being financially independent.

00:00:59.000 | And the definition here that I'm going to use for financial independence is the ability to live your desired lifestyle based purely on the income from your investments.

00:01:10.000 | The ability to live your desired lifestyle based purely on the income from your investments.

00:01:17.000 | This is a definition that I would use to classify somebody as genuinely, truly wealthy.

00:01:24.000 | When you can live on your investment portfolio, you don't need to work for wages or for income.

00:01:31.000 | Any point in the rest of your life, I would classify you as genuinely wealthy in that circumstance.

00:01:37.000 | And in fact, I think this is one of the only, this is where the word passive income, this is one of the only places where the word passive income comes in and is relevant with regard to financial freedom and financial planning.

00:01:49.000 | People talk about passive income and maybe you can make passive income from an online business or passive income from a real estate portfolio.

00:01:56.000 | As far as I'm concerned, I think the only thing that truly qualifies as passive income would be something like dividends from a publicly traded company.

00:02:06.000 | I'm even nervous about dividends or income from a private company just simply because generally there's going to be some amount of work needed for you in a private company, much of the time.

00:02:14.000 | There's no rule why it has to be that way, but it just seems like generally that's the case.

00:02:18.000 | But if you can sit back and you can own shares of Coca-Cola Corporation and the dividends that you get from Coca-Cola Corporation are sufficient for you to pay your lifestyle for the rest of your life, well, you're genuinely wealthy.

00:02:30.000 | You've got passive income.

00:02:32.000 | You don't have to do anything.

00:02:33.000 | It just comes in for you.

00:02:35.000 | And that's what we're going to talk about today.

00:02:37.000 | Now, I see this as step seven and I want to do a few minutes of review of the first six steps because my intention in creating this show for you was to give you things that you can do to enjoy more freedom and liberty on your way to this level of financial liberty.

00:02:54.000 | So by way of review, step number one, or ring number one in this Seven Rings of Freedom shows was spiritual liberty.

00:03:02.000 | I shared with you the basic idea that if you are spiritually free, no matter how difficult your outward circumstances are, you can enjoy a life of freedom.

00:03:12.000 | You really can.

00:03:14.000 | And you've seen that in many cultures, many civilizations, all throughout history that if you are spiritually free, you can build a quality and satisfying life even in the midst of the most outwardly constricting circumstances.

00:03:26.000 | But on the converse, if you are a spiritual slave, if you're in bondage to something in your life, you're in bondage to sin, you're in bondage to behaviors that you don't want to be a part of, if you're spiritually not free, then no matter how great your outward life is, no matter how much money you have, no matter how much apparent freedom you have, you can live in a hell of your own making.

00:03:49.000 | And so the first thing is to find spiritual freedom.

00:03:52.000 | I then talked about some things that have been important in my life that I underestimated how—things I underestimated how impactful they would wind up being.

00:04:00.000 | Ring number two is I talked about spousal liberty.

00:04:03.000 | I talked about the great blessing it's been for me and for my family to have a stay-at-home wife and how that's increased our freedom in our own family.

00:04:11.000 | And then that exaggerated or made even greater by ring number three where I talked about family liberty, the ability to just simply raise your family as you like with a special emphasis on home education.

00:04:24.000 | And that those two things are not commonly thought about with regard to financial planning, but I shared how they've dramatically increased the freedom that we've enjoyed as a family.

00:04:34.000 | So now we're on step four is where we turn to financial matters.

00:04:38.000 | And I talked about two aspects. I talked about the value of being debt-free, specifically how if you are debt-free, you can pivot, you can change, you can move in almost any direction, which is the basic freedom that I think most of us want.

00:04:53.000 | The freedom to not be chained to the decisions of our past, but to follow the path that at present seems most attractive to us.

00:05:01.000 | And so when you make a commitment to become and to stay debt-free, you always have that freedom to change and to pursue the thing that seems appropriate for you to do next.

00:05:10.000 | I also talked in the context of spending liberty there in ring number four. I talked about developing some savings.

00:05:16.000 | And I shared with you why, in my opinion, smaller amounts of savings make a massive difference in a way that many people underappreciate.

00:05:24.000 | I talked about the value of saving $1,000 and that freeing you from day-to-day emergencies, moving you from the bottom half of the population to the top half of the population in terms of just access to money.

00:05:35.000 | Then I talked about how $10,000, $10,000 saved opens up the vast majority of decisions that you would want to make.

00:05:42.000 | And then I said $100,000 really opens up the vast, vast majority of decisions you would want to make.

00:05:48.000 | The only things, lifestyle changes that you can't make with $100,000 would be huge businesses that you want to buy or huge investments that you want to make.

00:05:58.000 | And those are the kinds of things where you can often find capital.

00:06:01.000 | And so I said in my opinion, from experience and from thinking about it, I think that $100,000 is a really good kind of break-free number to shoot for.

00:06:10.000 | $100,000 does not render you financially independent. It doesn't do what today's definition does of allowing you to live your desired lifestyle based upon your investment income.

00:06:19.000 | You can't do it on $100,000.

00:06:21.000 | But $100,000 allows you to do anything.

00:06:24.000 | And I shared with you that famous quote by Warren Buffett where he says he wants to leave his children enough money to do anything but not enough money to do nothing.

00:06:32.000 | And I said in my opinion, something like $100,000 hits that number.

00:06:36.000 | It's enough money to do anything but not enough money to do nothing.

00:06:39.000 | And so it's a very useful metric for freedom to work towards and to enjoy.

00:06:44.000 | And it can be achieved.

00:06:45.000 | $100,000 of savings can be achieved by almost anybody, almost any family, almost any circumstance within a few years at maximum.

00:06:54.000 | And then yet that opens you up with freedom.

00:06:56.000 | Now, it's different if you're making $400,000 a year.

00:06:59.000 | You can do it, of course, much faster than if you're making $40,000 a year.

00:07:02.000 | But if you'll adjust your income, your expenses, your lifestyle, et cetera, in some way, you can hit that breakout number very quickly.

00:07:09.000 | Ring 5, I talked about entrepreneurship.

00:07:11.000 | And I explained how entrepreneurship gives you many of the liberties of life that ultimate financial liberty gives you as well.

00:07:19.000 | Control over your time, control over your location, freedom of association, control over your income, the ability to leverage your activities for a much higher income.

00:07:28.000 | And I shared how entrepreneurship is a real key, in my opinion, towards freedom.

00:07:32.000 | Not all businesses are perfect.

00:07:33.000 | Not all businesses enhance your liberty.

00:07:35.000 | Some businesses restrain your liberty.

00:07:37.000 | But if you're thoughtful about the kind of business that you begin or that you get involved in, entrepreneurship in and of itself can give you a very free lifestyle while you're building your wealth.

00:07:47.000 | Then, ring number 6, I talked about state liberty, how to be free from government intervention.

00:07:52.000 | I shared with you some ideas on how to do this in your career so that you can have a less frustrating career by not working in areas where you're so tightly governed and where everything you say and do is subject to myriad laws.

00:08:05.000 | I also talked about it in terms of your personal life.

00:08:07.000 | I shared with you a little bit about a PT theory, your flag theory, which is the best that I've come up with for people who are pretty hardcore and really want to live free from state control.

00:08:15.000 | Basically, I shared with you how PT theory is, in my opinion, probably the best way that currently exists to do it.

00:08:22.000 | It's not perfect.

00:08:23.000 | It comes with downsides.

00:08:24.000 | But it's the best way to live at a maximally free level, free way, if you're willing to put in place the constraints of that type of lifestyle, if you're willing to live with those constraints.

00:08:38.000 | And they're not insignificant, but they are surmountable.

00:08:41.000 | And so it's the best I've come up with to enjoy freedom from state control.

00:08:45.000 | Now, at this point in time, you've developed, if you've done these things, and they're not in perfect order.

00:08:51.000 | You can pick and choose which order you want to do them.

00:08:54.000 | But I think that if you've done these various things in your life, you've achieved a lifestyle of incredible freedom.

00:09:01.000 | And this is where I'm at so far.

00:09:04.000 | I've accomplished these first six steps.

00:09:07.000 | I've not yet accomplished the seventh ring.

00:09:09.000 | I've not yet achieved financial liberty, the ability to live on the income from my investments.

00:09:15.000 | But as I put myself in the mindset and I try to figure out, well, what would be different about my life if I were able to live exclusively on the income from my investments?

00:09:24.000 | I honestly don't know very many answers to that question.

00:09:27.000 | There are a few things.

00:09:28.000 | For example, I sometimes wonder, well, would I really want to be doing this work right now if I had all that money coming in, if I didn't have to?

00:09:35.000 | Would I really want to be on a microphone speaking to you right now?

00:09:39.000 | And my answer is I think so, but I can't be certain.

00:09:42.000 | I think so, but I can't be certain.

00:09:44.000 | The thing that I think would change for me is I probably would put a little bit less pressure on myself.

00:09:52.000 | For example, this is a rerecord of this episode.

00:09:56.000 | I recorded this episode on Tuesday or Wednesday, and now I'm rerecording it on Friday.

00:10:01.000 | But my schedule was absolutely slammed this week, and I didn't think I did a very good job with it on Tuesday or Wednesday.

00:10:07.000 | I can't remember when I recorded it, which day specifically, but I didn't think I did a great job with it, so I decided to scrap it and try again because this message is important to me and I want to do it properly.

00:10:16.000 | And yet the things that I had going on this week with travel and with some business obligations and working with some clients and whatnot, I wasn't able to get to it, to the podcast.

00:10:27.000 | And I don't like that.

00:10:28.000 | I don't like to ever miss a week for certain.

00:10:31.000 | I don't think I've missed a week.

00:10:33.000 | If I've missed a week, it's only been a handful of times since the show started, and I prefer to keep the podcast flow at two to three episodes per week.

00:10:41.000 | That's my current target.

00:10:42.000 | Well, if I were financially independent, maybe I would do that a little bit less.

00:10:46.000 | Maybe I wouldn't publish so much, or maybe I would only publish the stuff that I think is really good rather than feeling the press of production.

00:10:53.000 | But I'm not sure.

00:10:54.000 | I mean, that's a relatively minor thing.

00:10:56.000 | The reality is I wanted to release this episode on Tuesday, and it didn't go because I didn't like it, and so here we are on Friday.

00:11:02.000 | Is there anybody that's emailed me and said, "Joshua, you've just got to be here"?

00:11:05.000 | No, it's just all in my head.

00:11:07.000 | I know that I want to do this very well.

00:11:09.000 | I want to serve effectively.

00:11:10.000 | And so if I were financially independent, maybe I would go ahead and give myself more freedom.

00:11:15.000 | But I use that example just to show you that that's just a mental game.

00:11:18.000 | It's something that's in the head.

00:11:20.000 | There's not any actual pressure.

00:11:22.000 | There's not any actual difference in the freedom except a difference in the mindset.

00:11:26.000 | And so what I've observed is that different people can embrace those things at different levels.

00:11:30.000 | Once you get free of kind of the day-to-day struggle of finances, the day-to-day struggle of how am I going to make the bills this week, then things are very different, and most of the game is in your head.

00:11:43.000 | Now, that's not true for somebody who's still struggling.

00:11:46.000 | I've done multiple, some consulting work with people who are in just truly desperate financial situations this week, and it's really tough, really, really tough when people are in desperate financial situations.

00:11:57.000 | That's not just a mental game.

00:11:59.000 | But once you get to this level in our process where you've got a business providing you income, you've got savings, et cetera, it's all largely mental.

00:12:10.000 | It's almost a game that's mental.

00:12:13.000 | So I don't know a lot of what would change from the previous six versus the seventh.

00:12:19.000 | I'll keep you in the loop as I achieve the seventh ring here.

00:12:23.000 | But in my observation, I've interviewed a lot of people about this.

00:12:26.000 | I've looked for a lot of stories.

00:12:28.000 | I've read a lot of people.

00:12:29.000 | And I would say that there's only a modest change if there is a change.

00:12:34.000 | And that modest change can often be reflected as simply a mental game.

00:12:38.000 | The fact that now I embrace this work more because I know I'm doing it because I really want to.

00:12:43.000 | I know I don't have to.

00:12:44.000 | And I have the freedom that comes from being able to tell my haters, "I don't care what you think," or I have the freedom that comes from being able to ignore what all those people say.

00:12:53.000 | And that's kind of a common thing that wealthy people often reflect on.

00:12:57.000 | But let's talk about what this lifestyle can actually be.

00:13:02.000 | And then I'll give you some ideas on how to do it.

00:13:04.000 | That's one of the things that's been my goal is to talk to you about the value of achieving this certain goal and then how to do it.

00:13:11.000 | So the first thing that I would say that is my number one driving ambition is to achieve financial liberty.

00:13:19.000 | That's not true.

00:13:21.000 | Let me start with what my actual number one driver of financial liberty is.

00:13:26.000 | My number one driver towards financial liberty is to prove to myself that I've accomplished the necessary change to be financially independent.

00:13:37.000 | In some ways, I just simply view it as almost any other challenge.

00:13:42.000 | Let's say that you decide, "I'm going to fight an Ironman race."

00:13:46.000 | And so let's say that you are fat, you're out of shape, and you say, "I'm going to complete an Ironman triathlon," as one of those big difficult things it can do.

00:13:58.000 | It does with the marathon, it does any kind of extreme scenario.

00:14:01.000 | Well, unless you're trying to build some kind of career related to Ironmanning, which is very uncommon, the basic reason why you set a goal like that is because of the transformation that it would require from you.

00:14:17.000 | And I like to set goals like this.

00:14:20.000 | I like to set a goal of external validation, not because I need the external validation, but because it gives me something to measure my progress towards.

00:14:28.000 | I'm studying for an advanced level language exam in a foreign language right now.

00:14:33.000 | And the reason I'm doing it is not because I need the exam.

00:14:36.000 | I'm taking the exam because I want to have a benchmark to measure my productivity by, to measure my progress, and because it gives me an objective standard to work towards.

00:14:46.000 | And so for me, I think of financial liberty as, in essence, the same thing.

00:14:50.000 | The reason to work towards financial liberty is to become the kind of person who is financially free.

00:14:58.000 | Putting it using other words, the reason to become a millionaire is to become a millionaire.

00:15:05.000 | It's a set of habits, it's a set of behaviors that you have to model.

00:15:11.000 | It's a set of virtues that you have to develop.

00:15:13.000 | And it's a comprehensive set of behaviors.

00:15:15.000 | In the same way that a foreign language exam, a really top level, let's say you're going to go for a C2, maybe you're going to take the French exam, and you're going to get a C2 using the European method of languages from Allianz Francaise with the language exam, or a C2 level in Spanish with the daily exam, or with an English exam, whatever you're worked towards.

00:15:37.000 | In order for you to pass that kind of exam, you can't just, you can't bluff it.

00:15:42.000 | The way those language exams work is there's usually sections that are based upon reading, there's sections that are on writing, there's sections on speaking, and then all of those sections have the, you're forced to be able to absorb nuance and really master a language.

00:15:58.000 | And so if you have a C2 certification of language ability, that designates that you genuinely, truly have mastered a language.

00:16:06.000 | You can't go into those exams and fake them based upon the way that they're actually structured.

00:16:11.000 | You have to master the language, and you can't cheat at it.

00:16:14.000 | You can't just say, "Well, I can figure out that by context," or "I figure out this, you know, I can read that, but I can't do it," or a lot of people say, "Well, I can understand the language. I can understand Spanish, but I can't speak it."

00:16:25.000 | No.

00:16:26.000 | If you're going to get that level of certification, you've got to master all of the different pieces.

00:16:30.000 | And that's how I see financial liberty, financial independence.

00:16:33.000 | If you're going to become financially independent, you've got to master all of the pieces.

00:16:38.000 | You've got to master generating income.

00:16:40.000 | You've got to master controlling expenses and keeping expenses low.

00:16:44.000 | You've got to master your investments.

00:16:46.000 | And you've got to master avoiding catastrophe and optimizing lifestyle.

00:16:50.000 | You've got to master those different levels.

00:16:52.000 | And so what that phi moment, that financial independent moment means, it means that you've mastered all these different pieces.

00:17:00.000 | And that's something that's worthwhile, but it's not the money that makes it worthwhile.

00:17:04.000 | It's what the money represents.

00:17:06.000 | It's who you've had to become.

00:17:08.000 | You've had to become a forward-thinking person.

00:17:10.000 | You've had to become a hard and productive worker.

00:17:13.000 | You've had to become frugal and diligent in managing your expenses.

00:17:16.000 | You've had to become a competent investor.

00:17:19.000 | Because if you haven't become those things and you say, "Well, look, I'm financially independent," very quickly you will not be financially independent anymore.

00:17:26.000 | And so the reason to pursue financial independence, my number one reason to pursue it, is because it's an objective measurement of my mastery of all of the skills that are needed to become financially independent.

00:17:38.000 | And the great thing about mastering those skills, first, of course, it's a great challenge with yourself.

00:17:43.000 | It requires you to develop virtues, self-discipline, work ethic, etc.

00:17:46.000 | But the great thing is that if you go to somebody who's financially independent and they've mastered those skills and you took away every dollar they had, give them a few years, maybe 10, and they'd be financially independent again.

00:18:00.000 | Because once you've become that thing, you can repeat the results again and again.

00:18:06.000 | And that's, to me, why financial independence is so key.

00:18:12.000 | It's a good marker of the comprehensive skill set development.

00:18:17.000 | So that's my opinion.

00:18:20.000 | Now, what are the things that you might think more likely of as far as lifestyle decisions?

00:18:25.000 | Because you've got to have motivation to pursue something.

00:18:30.000 | And I find motivation under the rubric of self-actualization, just doing something hard and proving that I can develop these skills and change and stop being controlled by my desires, etc.

00:18:42.000 | I find that motivating.

00:18:44.000 | But there is a whole lot of fun juice at the end of the squeeze.

00:18:49.000 | Mixing too many metaphors here.

00:18:52.000 | But I'll tell you what some of the things that I think are exciting about.

00:18:56.000 | Number one, total freedom over time.

00:18:59.000 | If you're financially independent, you have income coming in from your investments, truly passive income.

00:19:04.000 | You can live purely on the income from your investments.

00:19:06.000 | You pretty much have total freedom over time.

00:19:10.000 | If you want to sit at home, play video games all day long, you can do that.

00:19:14.000 | If you want to go and stand in the stream and fly fish all day long, you can do that.

00:19:18.000 | If you want to ski every month of the year, chasing the slopes all around the world, you can do that.

00:19:23.000 | If you want to go to the beach every month of the year, you can do that.

00:19:26.000 | You have total freedom over your time.

00:19:29.000 | And to me, that's probably the biggest of the kind of the juicy hedonistic goals is to have total freedom over time.

00:19:38.000 | Because what is life made of except time?

00:19:41.000 | That's the thing that's limited.

00:19:43.000 | Money is not limited.

00:19:44.000 | There's an unlimited amount of money available in the world ready for anybody who can go out and create value and sell that value to others.

00:19:51.000 | Unlimited amount of money.

00:19:53.000 | The only thing that's truly limited is your physical presence in time because we live in a space-time world.

00:20:01.000 | And so time is the great limited factor.

00:20:04.000 | And so the ability to use your days as you see fit to me is the ultimate luxury.

00:20:10.000 | What else would you -- what other freedoms would you have by working towards financial independence and achieving true financial independence of true financial liberty?

00:20:19.000 | You would have freedom of consumption.

00:20:22.000 | The ability to consume and to spend as you like.

00:20:26.000 | And I think that there's real value to this.

00:20:28.000 | I've often wondered what a financial plan would look like if we took somebody at a young age and said save, save, save, invest, invest, invest.

00:20:38.000 | But as soon as you hit enough money that it could be generally reliably predicted to grow to be a sufficient level of wealth at a later age, I said spend all your money.

00:20:47.000 | I bet you if I came to you right now and you've been a disciplined saver and a disciplined investor and I said you now no longer have to save and invest but you can spend all your money.

00:21:00.000 | It'd probably be scary.

00:21:01.000 | You probably wouldn't do it.

00:21:03.000 | But it would -- there'd be a sense of freedom in that.

00:21:06.000 | After years of being thoughtful and careful about how much money you spent, if I just said spend all your money, there'd be some freedom in that.

00:21:14.000 | And there might be some consumption things that you would really engage with, some things you would buy, some experiences you would buy, some ways you would spend money that would be pretty cool.

00:21:24.000 | And so I think total freedom of consumption is really worth thinking about.

00:21:29.000 | There are some things in life where once you try those certain luxuries you say I'm going to keep doing that.

00:21:35.000 | And so I think it's worth being excited about freedom of consumption.

00:21:38.000 | The ability to do fun, expensive things for yourself, for your family, for others, it's pretty cool to be able to consume at a high level.

00:21:45.000 | What about association?

00:21:47.000 | To me, one of the biggest freedoms is freedom of association.

00:21:50.000 | When you listen to people whine, complain about their problems, frequently their problems have a common source, other people.

00:21:59.000 | And sometimes those problems are worth working through.

00:22:03.000 | But sometimes you just say walk away.

00:22:06.000 | Well, why don't people walk away?

00:22:08.000 | Why don't people walk away from toxic people?

00:22:11.000 | Why do people not walk away from bad relationships?

00:22:14.000 | Why do people not walk away?

00:22:16.000 | It's usually not because they're there to serve.

00:22:19.000 | I wish it were.

00:22:20.000 | And what I always say is get in there to serve.

00:22:23.000 | If you're in a bad relationship, make it better.

00:22:26.000 | If you see someone that's toxic, get in there and get involved.

00:22:29.000 | But that's not the common thing that most people say.

00:22:31.000 | And so if you're not going to do that, at least if you're not going to impact the situation in a positive way, at least walk away.

00:22:37.000 | And so if you can live on your income from investments, you have the right to associate with almost anyone you want, which means you have complete and total freedom of association.

00:22:47.000 | You don't have to stay in a bad business partnership because you want to.

00:22:50.000 | You can walk away.

00:22:51.000 | You don't have to stay friends with that person because it can advance your cause.

00:22:55.000 | You can walk away.

00:22:56.000 | And so that freedom of association is pretty cool.

00:22:59.000 | And that freedom of association ties in with the next freedom, which is freedom of location.

00:23:04.000 | If you're financially independent, able to live on your investments, there's a good chance you could do that anywhere in the world, which means that you can change your location.

00:23:12.000 | You can move from one side of town to the other without worrying about how long the commute is.

00:23:16.000 | You can move from one state to another without worrying about the economic opportunities.

00:23:20.000 | You can move from one country to another without worrying about the need to get a work permit.

00:23:25.000 | All of those little normal needs, the need to live close to work, the need to work where there's a good economy, the need to even have legal papers to work, all of those things can be rather wearing and trying.

00:23:36.000 | But if you're able to live on your income, you have total freedom of location.

00:23:39.000 | Now, I'll tell you, it's a double-edged sword.

00:23:42.000 | It's really nice.

00:23:44.000 | It's simultaneously really overwhelming.

00:23:47.000 | Most people don't look at the world with the idea that I can live anywhere.

00:23:52.000 | Usually, we choose the place we live because that's where we were born and where we grew up or that's where we have friends or family or that's where we have a job.

00:24:01.000 | Only a small percentage of people go out and intentionally choose the place that they live.

00:24:06.000 | Now, those who do will generally choose something within their state or within their country.

00:24:12.000 | When the whole world is open to you, it becomes pretty-- it's overwhelming.

00:24:17.000 | It's overwhelming, especially if you're one who's prone to overanalysis like me.

00:24:21.000 | It's hard.

00:24:22.000 | It's hard because there's no perfect place.

00:24:24.000 | But it is a real value, that freedom of location.

00:24:27.000 | And I would say another big freedom that for me is very meaningful is simply freedom of purpose.

00:24:32.000 | You can do what you want to do.

00:24:34.000 | You can give yourself to a purpose.

00:24:37.000 | You know, the classic guy who was a lawyer and was litigating stuff that he didn't really care about, became financially independent, and went and became a lawyer litigating stuff that he did care about, taking cases based upon the principle of justice that was most important to him.

00:24:51.000 | Or the businessman who closed down his business and went and started a nonprofit to save the whales or the wallabies or something like that.

00:25:00.000 | I mean these are the kinds of things that are really exciting because you can have a freedom of purpose.

00:25:04.000 | And you can say, "No, I don't want to do that thing over there that doesn't seem meaningful.

00:25:08.000 | What I want to do is I want to go over here and do this other thing that's more meaningful."

00:25:12.000 | And so there is a huge amount of freedom that's associated with this.

00:25:16.000 | Now, this freedom is not perfect.

00:25:18.000 | That's where I've tried to say why I think the other things are really impactful.

00:25:21.000 | For example, let's say that you've achieved financial freedom, but all of your money is in one country.

00:25:30.000 | All of your affairs are in one country.

00:25:33.000 | You're pretty well tied to the fortunes of that country, if nothing else, mentally and possibly even physically.

00:25:39.000 | Let's say you're in the United States, and you have millions of dollars in the United States, but all your money is in the United States.

00:25:45.000 | And then somebody goofs up somewhere, and all of a sudden the IRS says, "You owe us a bunch of tax."

00:25:49.000 | And you don't actually owe them the tax.

00:25:52.000 | You don't owe them the tax.

00:25:54.000 | You've done everything properly, but there's an error, and it's going to take you some time to worry about, to work out.

00:26:00.000 | And all of a sudden they freeze your passport, and you can't even leave the United States.

00:26:03.000 | That's why things like PT theory and state liberty and developing a freedom plan, developing a backup plan at the very least,

00:26:11.000 | so you're not tied to one country is such a key thing.

00:26:14.000 | What if your country puts you in a situation where that country is just in a troublesome scenario?

00:26:20.000 | You grow up in a place like Iran, beautiful country, just beautiful country.

00:26:25.000 | You grow up in Iran, and all of a sudden, fast forward, you made a fortune, but then you're frozen,

00:26:30.000 | and you're a persona non grata all around the world because you're Iranian, and you don't have any other options.

00:26:35.000 | That's why I put state liberty before financial liberty.

00:26:40.000 | And you could go back down the list all the way through, back to the very beginning.

00:26:43.000 | You have all the money in the world, but you're addicted to drugs, or you can't--you're living a destructive lifestyle

00:26:52.000 | and destroying yourself and the people around you.

00:26:54.000 | You have no spiritual liberty.

00:26:56.000 | Well, in a situation like that, the money can be quickly destroyed, and you'd be back into it,

00:27:01.000 | even with what seems like a relatively minor vice, a compulsive spending addiction.

00:27:07.000 | One of these athletes, you're like one of these athletes that you just hate to hear the stories

00:27:11.000 | where they make tens of millions of dollars and then quickly lose it all, and they're stuck.

00:27:17.000 | So there is a real freedom to this, but it should be the capstone of these other freedoms, in my opinion.

00:27:27.000 | So I think you really do get a lot of freedom from this, and I think working towards financial liberty is pretty cool,

00:27:34.000 | and it's one of the ultimate freedoms.

00:27:35.000 | That's why it's the step seven, or ring seven, kind of the ultimate capstone freedom.

00:27:40.000 | But don't think that it solves everything.

00:27:42.000 | It solves some things, but not everything.

00:27:46.000 | So I'm going to give you some practical ideas as to how to achieve this personal and financial liberty.

00:27:54.000 | There are two directions I can go with this point.

00:27:56.000 | I can give you some ideas of how to achieve it, and I can talk about what it's going to be like after you've achieved it.

00:28:01.000 | And what I've decided to do is to split that out into another show.

00:28:05.000 | And so what we're going to talk about in the next show, or the next show in this series,

00:28:09.000 | is going to be what do you do when you've achieved total freedom,

00:28:12.000 | so that no matter where you are, you can begin with the end in mind.

00:28:16.000 | And this is something that's deeply important to me,

00:28:18.000 | but the balance of this show is going to be just dedicated to some simple ideas,

00:28:22.000 | very simple ideas that you can use to build freedom for yourself and achieve this financial liberty.

00:28:29.000 | Now I'm going to give you these ideas.

00:28:30.000 | There are four of them, and they come -- I'm putting them in order of fastest to slowest.

00:28:37.000 | But the reality is you can mix and mingle these ideas.

00:28:39.000 | But for the sake of conversation, to discuss them clearly, I'm dividing them into four things.

00:28:44.000 | Number one, I believe that the fastest opportunity for you,

00:28:48.000 | the fastest way that you can achieve true financial liberty, total financial freedom,

00:28:54.000 | build a huge amount of wealth in a short period of time,

00:28:57.000 | is to build a business that you then sell,

00:29:02.000 | or to build a business that you then take public, which is another way of selling, etc.

00:29:08.000 | If you look at the wealthiest people in the world,

00:29:12.000 | almost invariably, they've all become wealthy by building a business.

00:29:18.000 | If you look at the not wealthiest people in the world,

00:29:21.000 | but the wealthiest people in your community,

00:29:23.000 | almost invariably, they've become wealthy by building a business.

00:29:28.000 | And that business can be in all kinds of diverse industries.

00:29:33.000 | It doesn't have to be in tech.

00:29:35.000 | It doesn't have to be in the most mundane, seemingly mundane industry that exists.

00:29:39.000 | And in fact, there are a lot of advantages to working in mundane, boring businesses.

00:29:44.000 | But there is something fundamental to the nature of the business that allows it to grow quickly.

00:29:49.000 | And that fundamental thing that's different is leverage.

00:29:56.000 | See, a business that you build to sell is a business that's not constrained by you

00:30:03.000 | time or your effort.

00:30:08.000 | Rather, a business that you build to sell is a self-maintaining entity.

00:30:15.000 | And so, if you set out with a goal to build a business,

00:30:19.000 | and your goal is to sell that business,

00:30:22.000 | you approach your business in a very different way.

00:30:25.000 | And that basic difference in mindset and approach

00:30:28.000 | allows you to build the kind of business that you could sell fairly quickly

00:30:32.000 | and for a lot of money.

00:30:34.000 | And because it's not constrained by your time or by your personal work effort,

00:30:40.000 | you have the ability, when you build a business,

00:30:43.000 | you have the ability to make the numbers grow very quickly.

00:30:49.000 | Now, there are some businesses that have the ability to grow faster.

00:30:55.000 | For example, let's say something like a tech business.

00:30:58.000 | There's a YouTube channel that I have enjoyed for a few months now

00:31:03.000 | called Bucket List Family.

00:31:05.000 | And it's a husband and his wife, and they now have three children

00:31:10.000 | who've been traveling the world basically full-time for about three years.

00:31:13.000 | Over the last year, they've set up a home base in Hawaii.

00:31:16.000 | And I finally, a few months ago, I finally found an origin story

00:31:19.000 | where he was telling what happened.

00:31:22.000 | And what I found out was that the father, the husband,

00:31:25.000 | I forget his name at the moment, of the Bucket List Family,

00:31:28.000 | he built a business.

00:31:29.000 | He built a tech company, an app of some kind, did it during college,

00:31:33.000 | and then sold it, I think, to WhatsApp.

00:31:36.000 | And something like $15 million, made $15 million.

00:31:40.000 | And so that's kind of the classic story right now in the technological world.

00:31:46.000 | A few years ago, I read a book called You Only Have to Be Right Once,

00:31:48.000 | and there was a heavy exposure to tech people in there,

00:31:51.000 | which was if you can build the right app, the right platform,

00:31:54.000 | it can scale very quickly, and there can be very large payouts

00:31:59.000 | on the backside of it.

00:32:00.000 | In this case, it provided this particular family.

00:32:04.000 | They had, I think, one small child.

00:32:09.000 | I should take that English advanced language test, shouldn't I?

00:32:12.000 | They had one small child when they started traveling,

00:32:15.000 | then they became pregnant, had a second one.

00:32:17.000 | But they've traveled around the world in luxury at a very young age

00:32:20.000 | because of that business success.

00:32:23.000 | Now, businesses like tech businesses have huge benefits, scalability, leverage.

00:32:29.000 | The fact that they're entirely unconstrained from physical equipment

00:32:33.000 | other than servers allows them to grow massively

00:32:37.000 | if they build the right opportunity.

00:32:39.000 | They also have a series of downsides, though,

00:32:41.000 | and those downsides are they work in markets that are very open,

00:32:44.000 | and so you have tremendous competition.

00:32:47.000 | Anybody in the world can develop an application.

00:32:49.000 | Anybody in the world can work on a tech solution for something,

00:32:52.000 | and so you have a huge marketplace of competitors,

00:32:55.000 | and breaking through that marketplace can become very, very difficult.

00:32:58.000 | But that's the kind of thing that can lead to wealth very, very quickly,

00:33:02.000 | and I've seen this work on a number of occasions.

00:33:05.000 | One of the most interesting clients I had back when I was a professional financial advisor,

00:33:10.000 | when I was working with this client, all we did was buy term life insurance

00:33:13.000 | because he was in the middle of trying to figure out how to get a startup business,

00:33:17.000 | a tech startup, off the ground, and he was deep in credit card debt.

00:33:21.000 | It was a tough situation.

00:33:23.000 | We just bought tons of term life insurance, but he pushed through,

00:33:27.000 | he pressed through, kept on iterating the business,

00:33:30.000 | finding out how to make it profitable,

00:33:32.000 | and he sold out a couple of years ago for a handsome sum,

00:33:35.000 | and at a very young age is financially independent,

00:33:38.000 | and this happens again and again.

00:33:40.000 | One of the nice things is you don't even necessarily have to be first.

00:33:43.000 | You don't even necessarily have to be the founder.

00:33:46.000 | If you're early on, on a team where you have equity in a business,

00:33:51.000 | and that business can grow and can scale and then can sell,

00:33:54.000 | you can have a very nice payday.

00:33:56.000 | And so there are opportunities in things like tech businesses.

00:34:00.000 | Now, I've become more interested, though, in the opportunities that aren't in tech businesses,

00:34:05.000 | and I think that if you're looking for an opportunity,

00:34:07.000 | you really should look outside something like tech.

00:34:11.000 | If tech is your thing, go for it, obviously, but for me, tech's not my thing.

00:34:15.000 | And so if I went bankrupt today, I would not start a tech business because it's not my thing.

00:34:22.000 | I would go to any number of businesses right next door to you, right around in your town,

00:34:28.000 | and I would go into those businesses and run them like a business with a goal to sell.

00:34:33.000 | And I've worked with a number of entrepreneurs.

00:34:34.000 | I have a number of consulting clients that I work with on an ongoing basis

00:34:37.000 | who have very simple businesses, but by running them well,

00:34:41.000 | they have tremendous leverage opportunities, tremendous leverage opportunities.

00:34:46.000 | So don't dismiss a business just because it's boring.

00:34:50.000 | Don't dismiss a business just because you don't see it.

00:34:52.000 | There are so many businesses available that you can build and develop

00:34:56.000 | that are mundane businesses, and you can bring a little bit of good business skill to it

00:35:02.000 | and build it effectively.

00:35:04.000 | And if you want a quick path to wealth, if you want to get rich quick,

00:35:08.000 | I believe that the most reliable way for you to do that is to build a business to sell.

00:35:16.000 | Don't have to be the startup.

00:35:18.000 | You can buy a business.

00:35:19.000 | It's nice if you can start it.

00:35:21.000 | Sometimes you don't have any money, so you start the business, just bootstrap it.

00:35:25.000 | But building a business to sell is your highest probability way to get very wealthy very quickly.

00:35:34.000 | Now a couple of things to think about.

00:35:36.000 | Recognize that this lines up well with a lot of other freedoms.

00:35:40.000 | And so this is my favorite plan because of all these other freedoms that are inherent in it.

00:35:47.000 | Spiritual liberty doesn't count here.

00:35:49.000 | That kind of stands on its own.

00:35:51.000 | Spousal liberty, family liberty.

00:35:54.000 | One of the lovely things about having a business is you can involve your family.

00:35:58.000 | And so maybe you're looking at it and saying, "Well, we're trying to create a family business,

00:36:04.000 | and we don't want one person in the family to earn all the money.

00:36:07.000 | We want to work together."

00:36:09.000 | I love that.

00:36:10.000 | I think that's the way to do it is to build family businesses.

00:36:12.000 | But it's a lot easier when it's your own business where you can control.

00:36:15.000 | Then everybody can work in the family.

00:36:16.000 | The children can work in the family.

00:36:18.000 | If you move to financial planning, there are thousands, tens of thousands,

00:36:21.000 | even hundreds of thousands of dollars of benefits and savings and tax savings, etc.,

00:36:26.000 | that can be realized by working in a family business.

00:36:29.000 | It is so powerful.

00:36:30.000 | And so I think everybody should have at least one family business for that reason alone.

00:36:33.000 | But when you're talking about building wealth and you're on the same page

00:36:37.000 | and you're working together with the whole family, it creates a really neat lifestyle.

00:36:41.000 | Spending liberty and entrepreneurship, all those freedoms come with having a business to sell,

00:36:47.000 | having your own business.

00:36:49.000 | And so it almost lines up with the perfect lifestyle freedoms all along the way,

00:36:54.000 | and it has the potential of getting you the fastest to financial liberty.

00:36:59.000 | Now, it's not in any way a sure thing.

00:37:01.000 | And that's the real challenge of business is you can work in businesses and a lot of them fail.

00:37:07.000 | Now, you can learn your way through them, but you've got to always recognize

00:37:10.000 | there's a good chance that this business might fail.

00:37:12.000 | And so you shouldn't rely solely on a business.

00:37:16.000 | But if you want to get rich quick, if you want to build financial independence quickly,

00:37:20.000 | I'm convinced the best path for that is to build a business.

00:37:26.000 | Consider it.

00:37:27.000 | That's plan number one.

00:37:29.000 | Now, plan number two is build a real estate portfolio.

00:37:33.000 | I think this has the second fastest potential to lead to financial independence.

00:37:40.000 | Building a real estate portfolio is the second fastest way to lead to financial independence.

00:37:45.000 | Now, the speed at which you can do this will vary depending on the specific strategy that you choose.

00:37:51.000 | But I want to keep this very, very simple.

00:37:53.000 | The reason that real estate can be such a fast path to wealth is two things.

00:38:00.000 | Number one, it's simple.

00:38:04.000 | Real estate is simple.

00:38:07.000 | Number two, especially in the United States, real estate is leverageable,

00:38:13.000 | financially leverageable in a very safe way.

00:38:15.000 | And this leads to some real benefits.

00:38:18.000 | Let's talk about the simplicity.

00:38:20.000 | Many people have a hard time grasping complex financial plans.

00:38:24.000 | Since Joshua Sheets is king of the complex, I've learned this the hard way.

00:38:29.000 | And I'll create some beautiful thing and I'll look and it's like, "Just give me something that's simple."

00:38:34.000 | And there's nothing simpler than real estate.

00:38:36.000 | Here is your simple path to being able to be financially independent.

00:38:41.000 | You sit down, you look at your budget or your desired budget,

00:38:44.000 | and you calculate how much money you would like to have

00:38:47.000 | and how much money you would like to spend every month at your ideal lifestyle.

00:38:50.000 | Let's say that your number is $6,000 a month, okay?

00:38:56.000 | About 150% of median wages.

00:38:58.000 | $6,000 per month gives you enough money to live very comfortably anywhere in the United States,

00:39:05.000 | frankly, anywhere in the world.

00:39:06.000 | You could live semi-comfortably except maybe someplace like Singapore or Hong Kong.

00:39:10.000 | But $6,000 a month gives you the ability to live pretty comfortably almost anywhere in the world.

00:39:16.000 | Not lavish, but it's comfortable.

00:39:20.000 | We're also right about that number, that $70,000-something number that the researchers say leads to maximum happiness of earnings and things like that.

00:39:27.000 | So $6,000 I think is a good number.

00:39:29.000 | It's low enough that you can see how it could be achieved fairly quickly.

00:39:33.000 | It's different.

00:39:34.000 | Some people say, "I want $60,000 a month," but they don't have a dime to rub together, two dimes to rub together.

00:39:38.000 | Well, let's start with six and then move to 60.

00:39:41.000 | So let's go with six.

00:39:43.000 | Number two, you look around in your area and you look at single-family houses, single-family, three-two houses,

00:39:48.000 | and you say, "What does a single-family house in my area rent for?"

00:39:52.000 | And let's just assume that your area that they rent for $1,500 a month.

00:39:57.000 | This makes my math easy so I make fewer math mistakes.

00:40:00.000 | $1,500 a month.

00:40:01.000 | Well, you take $6,000 and you divide it by 1,500 and you get an answer of four.

00:40:06.000 | And you say, "Well, if I had six houses, sorry, four houses, and they were all rented, paid for debt-free at $1,500 a month,

00:40:13.000 | then I would have $6,000 a month.

00:40:16.000 | But we've got to account for expenses so let's add an extra house.

00:40:19.000 | So let's make it five.

00:40:20.000 | Five times 1,500 is $7,500.

00:40:23.000 | Let's assume we're going to own it debt-free.

00:40:25.000 | Let's assume that we've got $1,500 a month of property taxes and insurance, et cetera,

00:40:29.000 | and our goal is to clear $6,000."

00:40:32.000 | Well, now your financial plan is simple.

00:40:34.000 | Your goal is to buy five houses and pay them off.

00:40:39.000 | Because if you had five paid-for single-family houses,

00:40:42.000 | you would have $7,500 a month of gross income and $6,000 a month of spendable income under that math.

00:40:48.000 | And so the nice thing about this is you can go and buy five houses.

00:40:52.000 | If you can buy one house, you can buy two.

00:40:54.000 | If you can buy two, you can buy three.

00:40:55.000 | If you can buy three, you can buy four, and eventually you can get to five.

00:40:58.000 | And so it's just a matter of going out and buying some houses.

00:41:01.000 | Which brings us to number two.

00:41:04.000 | It's leverageable very safely, especially in the United States.

00:41:08.000 | Doable in some other markets as well, but not every market,

00:41:10.000 | but especially in the United States, people will throw money at you if you buy real estate.

00:41:15.000 | You're going to have to have a little money to start with, generally,

00:41:17.000 | but people will throw money at you if you buy real estate.

00:41:21.000 | They do it with very safe terms, stable fixed interest rates, long repayment schedules, et cetera,

00:41:27.000 | and so you can borrow money very safely.

00:41:30.000 | And so in essence, what you do is you go and, over time, buy five houses,

00:41:36.000 | all with mortgages on them.

00:41:38.000 | You put tenants in those houses, one by one,

00:41:40.000 | and then you just sit back and wait while your tenants pay off your mortgages.

00:41:45.000 | And then when the tenants paid off the mortgages, you declare yourself financially independent.

00:41:50.000 | And this can be as simple as one house per year.

00:41:54.000 | I have again and again and again recommended to, especially young people,

00:41:57.000 | but really anybody, just simply go buy a house, move into it, live in it for a year.

00:42:04.000 | Then rent it out, get a tenant for it, and go and buy another house.

00:42:09.000 | Make sure that your tenant's rental income is higher than your mortgage,

00:42:13.000 | and make sure you have some money saved to cover you during months where you don't have tenants

00:42:17.000 | or if you have a big expense.

00:42:18.000 | But if you do that, once per year for the next five years, you'll own five houses at the end of it.

00:42:23.000 | Then you go and go ahead and move into your house that you're going to stay in now,

00:42:26.000 | and then just pay off the mortgages.

00:42:27.000 | Let the tenants pay them off every year.

00:42:29.000 | And then take any money that you have from your other income sources, pay extra on the mortgages,

00:42:33.000 | and once those houses are owned debt-free, you'll be financially independent.

00:42:38.000 | That is one of the fastest ways to achieve financial independence.

00:42:42.000 | Now you can create some additional texture to it.

00:42:45.000 | Many people will have a couple of flips in there somewhere.

00:42:47.000 | Some people will want to rehab.

00:42:48.000 | Some people will not.

00:42:49.000 | You could create.

00:42:50.000 | There's endless creativity that you can apply to a real estate portfolio.

00:42:54.000 | You can go at the low end of the market where your yields might be higher.

00:42:57.000 | You can go at the higher end of the market where benefits, advantages, disadvantages,

00:43:01.000 | there's all kinds of things that could be talked about.

00:43:03.000 | But put simply, one of the simplest paths to financial independence is figure out how much money you want to spend,

00:43:10.000 | figure out how many houses you need to provide you with that, go buy those houses using the bank's money,

00:43:15.000 | and then have your tenants pay off your mortgages for you.

00:43:18.000 | Simple, relatively safe, not perfect, relatively safe, and effective and reliable.

00:43:25.000 | I have seen a number of people achieve financial independence in less than a decade with that plan.

00:43:32.000 | Now, your specific skills, your specific area, your specific investment markets will all matter.

00:43:37.000 | But if you can create some version of that simple plan that you think will work where you live,

00:43:42.000 | you can achieve financial independence fairly quickly.

00:43:46.000 | As fast as a business? Maybe, maybe not.

00:43:49.000 | Depends on the business, depends on the portfolio, but probably not as fast as a business.

00:43:52.000 | But a little bit more reliably than a business.

00:43:55.000 | A little bit less of a crapshoot in real estate as compared to business.

00:44:00.000 | So, consider that.

00:44:02.000 | Plan number three.

00:44:04.000 | How can you build financial independence fairly quickly?

00:44:07.000 | Save a high percentage of your income.

00:44:10.000 | If you will practice extreme savings, some form of extreme savings, and save a very high percentage of your income,

00:44:17.000 | you can become financially independent fairly quickly, even with investing in mainstream things like the stock market.

00:44:24.000 | Now, this one is simple to understand, but a little bit more complex in terms of how to educate,

00:44:32.000 | depending on the specifics of your situation.

00:44:35.000 | So, put simply, go back and listen to the show that I did on the math of financial freedom.

00:44:45.000 | I remember so vividly when I read Jacob Lundfisker's book, Early Retirement Extreme,

00:44:49.000 | I was a financial planner at the time, and when I came across his explanation of how savings rates impacted

00:44:56.000 | how quickly you could become wealthy, I felt like such a fool, that I had never sat down and done the math.

00:45:03.000 | If you'll save 10% of your income, it'll take you about 40 years to become financially independent,

00:45:08.000 | if we assume normal investment returns.

00:45:11.000 | If you save 50% of your income, it takes you under 20 years.

00:45:14.000 | If you save 75% of your income, it takes you less than 10.

00:45:20.000 | So dramatically simple, and yet effective.

00:45:24.000 | And so, let's say you say, "I don't want to have a business. I don't really want to have a real estate portfolio.

00:45:29.000 | I just want to save." Great.

00:45:31.000 | Now, the reason why it's simple to talk about the math, but a little bit harder to execute, is twofold.

00:45:37.000 | Number one, one of the prerequisites is going to be having a relatively high income.

00:45:43.000 | It's very difficult for somebody who's making $30,000 a year to save 75% of their income.

00:45:50.000 | That's really tough.

00:45:54.000 | The percentage of people that could do it is tiny.

00:45:57.000 | Are there people who are so committed? Yeah.

00:46:00.000 | But you're living a lifestyle that the majority of people are not going to want to live.

00:46:04.000 | And so, if you're in a situation like that, the first thing you want to do is increase your income.

00:46:08.000 | It's a lot easier to save 75% of your income if you're making $100,000 a year, but it's still tough.

00:46:14.000 | Even if you're making $100,000 a year, living on, say, $25,000 a year is still tough.

00:46:20.000 | And so, one of the prerequisites is you need to be making a good amount of income for that to work.

00:46:26.000 | The second thing that complicates this plan is the lifestyle decisions that you make.

00:46:33.000 | Do you choose to marry? Do you choose to have children? How do you choose to raise those children?

00:46:39.000 | Where are you in your life stage?

00:46:42.000 | And this is one of the reasons why, when you look at people who pursue extreme savings,

00:46:46.000 | I can't prove it, but there's often a very high percentage of people who have a high income.

00:46:53.000 | That's a prerequisite. But there's a high percentage of people that don't have children.

00:46:59.000 | And so, because of that, they can make those really hardcore lifestyle decisions

00:47:06.000 | and make them a little bit more easily than those of us who have children.

00:47:12.000 | I've done some pretty hardcore stuff with children.

00:47:14.000 | I'm not going to use children as a reason as to why I can't do it.

00:47:18.000 | But there is a difference between how much somebody enjoys a larger house

00:47:23.000 | when you have a house filled with children versus not.

00:47:26.000 | And so, all these things make an impact.

00:47:28.000 | And so, what I would say to you is, if you're looking at savings,

00:47:32.000 | just recognize that and you say, "Well, I can't save 90% of my income."

00:47:36.000 | Don't worry about it.

00:47:37.000 | Number one, focus on increasing your income.

00:47:40.000 | If you're earning income, you can increase it.

00:47:42.000 | So, increase your income.

00:47:44.000 | Number two, recognize that your effectiveness will change throughout your life.

00:47:48.000 | There's almost a kind of a delta of effectiveness.

00:47:51.000 | If you think about the normal life stages, when you're young, when you're single,

00:47:55.000 | you can do all kinds of radical things pretty easily.

00:47:58.000 | You can live in all kinds of weird ways pretty easily.

00:48:01.000 | When you get married, now your decisions are constrained by another person's needs and preferences.

00:48:07.000 | And so, you might make some radical decisions together,

00:48:10.000 | but there might be some radical decisions that you don't make

00:48:12.000 | because of your preference and you're preferring another person

00:48:16.000 | and their goals, their desires, and their preferences.

00:48:19.000 | Then, as you have children, you start to ramp up all these needs that really make life great.

00:48:25.000 | And there are a lot of things that you can spend money on that are really rewarding.

00:48:28.000 | And so, you look at them and say, "Well, I could save the money, but this is really rewarding.

00:48:31.000 | And I really like being able to do this."

00:48:34.000 | But recognize that's still only a stage.

00:48:36.000 | And so, I wish for more families to feel freedom and recognize that it's a stage.

00:48:46.000 | And so, there's often a time where you can't save as much money

00:48:50.000 | or you choose not to save as much money because you prioritize other things.

00:48:53.000 | That's okay. Those things don't exist forever.

00:48:56.000 | And so, in the future, there will be increased effectiveness.

00:49:00.000 | One of the big reasons why I have not put financial independence until this last thing,

00:49:08.000 | as I talk about when I talk about what do you do when you're financially independent,

00:49:11.000 | at the end of the day, you're going to be spending money on things that are important to you.

00:49:15.000 | And so, if you've got these other liberties, you've got a hugely free and rewarding lifestyle.

00:49:22.000 | And so, it's less important for you to save quite so much so you can hit financial independence faster.

00:49:28.000 | So, you've got to have a high income and you've got to keep your expenses low.

00:49:33.000 | And you might make personal decisions that make those things a little bit more complex.

00:49:38.000 | You might choose to live in a place where it's harder to live on a low income

00:49:42.000 | for some other reason that's not financial.

00:49:45.000 | Many good reasons for that, but can be extremely effective.

00:49:50.000 | Saving a high percentage of your income and then investing it wisely

00:49:53.000 | is a proven path to financial independence and it should be part of your toolbox.

00:50:00.000 | Path number four to financial independence.

00:50:03.000 | You can build or buy a pension.

00:50:06.000 | You can build or buy a pension.

00:50:09.000 | I think this is probably under-discussed in today's world.

00:50:13.000 | And I'm guilty of under-discussing it.

00:50:16.000 | Because I'm so pessimistic about the financial solubility of many pensions,

00:50:21.000 | just due to the general nature of politicians who make big promises to get elected

00:50:26.000 | while knowing that those promises can't be paid for.

00:50:29.000 | But that's not going to be their problem.

00:50:30.000 | It's going to be someone down the road, their problem to fix.

00:50:33.000 | I'm kind of skeptical of pensions.

00:50:34.000 | And also, for me, personality-wise, pensions have really never--

00:50:39.000 | the jobs that have pensions have never fit me very well.

00:50:42.000 | It's just never been something attractive to me.

00:50:44.000 | I didn't want to do it and it wouldn't be something that I would personally pursue.

00:50:49.000 | But I've, from time to time, done some financial planning for people with pensions.

00:50:53.000 | And it is powerful when you've got a pension.

00:50:56.000 | And there are a number of careers where you can build a pension from an early age.

00:51:01.000 | And that pension can put a stable income under you for a very long period of time.

00:51:07.000 | Especially if you do things like not go to college but just start right in at a career.

00:51:11.000 | Whether it's starting for a 20-year pension but you start at 18, just do the math.

00:51:17.000 | You can get out of-- let's say you have a 20-year pension arrangement.

00:51:19.000 | Something like the military used to be the 20 years in and you get your pension.

00:51:23.000 | You start at 18, you get out at 38, and you've got a pension for the rest of your life.

00:51:27.000 | That's powerful.

00:51:29.000 | It can be a lot of money from then on.

00:51:32.000 | Firefighters' pensions, teachers' pensions, things like that.

00:51:36.000 | Some place where you have the ability to get a job that comes with a retirement income

00:51:42.000 | and you get in and get started early

00:51:44.000 | and have that knowledge that I'm going to have that income coming in can really be powerful for you.

00:51:50.000 | It doesn't have to be done at a young age.

00:51:52.000 | It can be done at an older age.

00:51:54.000 | But it can be really powerful.

00:51:56.000 | And I think that one of the nice things about some of those kinds of jobs,

00:51:59.000 | they're jobs that have other benefits as well.

00:52:02.000 | For example, I think that if anybody would ever hire me,

00:52:05.000 | I think I could very happily be a classroom teacher.

00:52:07.000 | I don't think I could ever be hired as one.

00:52:10.000 | But I could enjoy the work.

00:52:12.000 | I would really enjoy that.

00:52:13.000 | And when we get to kind of the meaning of work,

00:52:17.000 | when I think about teaching classes in high school

00:52:21.000 | and just the opportunity to have that face-to-face, everyday interaction with high school students,

00:52:26.000 | that would be to me so meaningful, such a dream job.

00:52:31.000 | And you can do that, and that's the teaching.

00:52:33.000 | It comes with all these benefits.

00:52:34.000 | You've got this wonderful time off, this great schedule.

00:52:37.000 | You've got the opportunity to inspire young people, to change lives,

00:52:42.000 | to come alongside people who are unloved and who have rough households, et cetera,

00:52:48.000 | and to be a salt and light in their world and to encourage them

00:52:53.000 | and be a source of motivation and encouragement for them.

00:52:56.000 | I've always loved it, anytime I've been in that classroom.

00:52:59.000 | I used to teach junior achievement, and I loved being in the classroom.

00:53:02.000 | And so when you think about something like being a teacher,

00:53:05.000 | and it comes with a pension, it's fantastic.

00:53:09.000 | When I was a financial advisor, I had a client.

00:53:11.000 | He wasn't a wealthy guy, but he had his own business, had a modest landscaping business.

00:53:16.000 | When he was in his late 40s, he went back to school, finished up a college degree,

00:53:22.000 | got a teaching certificate, and then he closed his landscaping business

00:53:25.000 | and became a high school history teacher.

00:53:28.000 | And he and his wife were both teachers.

00:53:31.000 | She had done the same thing.

00:53:32.000 | I forget if she had previously been working as a teacher.

00:53:34.000 | But they both transitioned to be high school teachers.

00:53:38.000 | And they got a job at the same school so they could ride together.

00:53:41.000 | And their plan was elegantly simple.

00:53:46.000 | Number one, as teachers, they were getting into a career that they really wanted to do.

00:53:53.000 | They both really enjoyed teaching.

00:53:55.000 | He was passionate about history.

00:53:57.000 | He loved it.

00:53:58.000 | So he went to school at night until he got his degree.

00:54:00.000 | Then he went into the classroom, and he really wanted to teach history.

00:54:03.000 | He didn't want to be a historian.

00:54:04.000 | He wanted to teach history and challenge young people.

00:54:08.000 | Because of their schedule and the fact that they were both on the same academic schedule,

00:54:12.000 | they were building a life where they were going to enjoy traveling during the summer.

00:54:16.000 | They were going to be going and doing foreign service and missionary work

00:54:20.000 | and relief work in different places during the summertime.

00:54:23.000 | They had structured their lifestyle in a way that they could live comfortably on their income.

00:54:28.000 | They had a modest house that was--I forget.

00:54:30.000 | It was near the school, but they had a modest house.

00:54:32.000 | They were going to simplify their expenses so that they had one car,

00:54:36.000 | they could ride to work together, et cetera, a very agreeable lifestyle for them.

00:54:40.000 | They had some savings, but they weren't wealthy.

00:54:45.000 | But they were going to have their house paid off,

00:54:47.000 | and then they were going to have their--both of them have a teacher's pension

00:54:50.000 | and then a health care package from the school.

00:54:54.000 | And so their financial plan was to basically spend all of their income

00:54:58.000 | during these working years while they were finishing raising their children

00:55:01.000 | and to possibly start saving down the road.

00:55:04.000 | And it was the kind of financial plan that at the time I had never considered,

00:55:08.000 | but I had to sit back and say, "You know, this is a really effective plan.

00:55:12.000 | This is a really good plan. Is it risk-free? No.

00:55:15.000 | There are problems, but it's effective, and it's a really great lifestyle."

00:55:20.000 | And if you ask Joshua, you go be a classroom teacher,

00:55:23.000 | you can live in a comfortable house on a teacher's salary,

00:55:27.000 | at a dual income, you can live very comfortably on a dual-income teacher's salary,

00:55:31.000 | have this great schedule of guaranteed holidays, guaranteed breaks, et cetera.

00:55:37.000 | You start early in the morning, but you're off at 3.30, 4 o'clock every day.

00:55:41.000 | I thought, "That's a really good thing."

00:55:43.000 | Other people--I've worked with firefighters and military personnel, et cetera.

00:55:47.000 | There are other ways to do it.

00:55:49.000 | But if you're in a job where you can build a pension,

00:55:52.000 | it's a really smooth path to potential early retirement,

00:55:56.000 | potential financial independence.

00:55:59.000 | Always remember that you can buy a pension.

00:56:01.000 | If you can save enough money, you can always buy a pension.

00:56:03.000 | You can always buy an annuity that's guaranteed to pay you money for the rest of your life.

00:56:07.000 | Lots of ways to do that.

00:56:09.000 | But these are four simple plans that anybody can do.

00:56:12.000 | What I would tell you is I think probably the best solution is a combination of the four.

00:56:19.000 | Depending on your particular interests, the markets that are available to you,

00:56:23.000 | anybody can build a business.

00:56:25.000 | It can be a full-time business, it can be a part-time business, it can be a family business,

00:56:29.000 | but anybody can build a business if you want to.

00:56:31.000 | Anybody can invest in real estate.

00:56:33.000 | You don't have to be a business owner to invest in real estate.

00:56:35.000 | You don't have to be an employee to invest in real estate.

00:56:37.000 | A lot of times it's a little bit easier to get financing if you have W-2 wages.

00:56:41.000 | That's the challenge that a lot of business owners face is their W-2 wages are not as big

00:56:45.000 | and banks don't like to lend them as much money.

00:56:48.000 | But there are flip sides as well.

00:56:50.000 | That's not the only way to finance property.

00:56:52.000 | You can build a real estate portfolio.

00:56:55.000 | No matter how much you're making along the way, you can save a high percentage of your income.

00:56:59.000 | If you're an employee, work to be highly paid and save a high percentage of your income.

00:57:03.000 | If you are a business owner, try to make your business really profitable

00:57:06.000 | and save a high percentage of your income.

00:57:08.000 | Then you can build a pension for yourself.

00:57:10.000 | You can put a pension plan in your own company.

00:57:12.000 | You can have a million dollars and go and buy a pension.

00:57:15.000 | You can do that.

00:57:16.000 | You can build a structure that's going to provide for you using some of these tools.

00:57:20.000 | These are not an exhaustive list, but these are four basic ways that anybody can implement

00:57:25.000 | to build financial independence.

00:57:27.000 | I think that they're all reasonable.

00:57:29.000 | They're all accessible, not to everybody, but to most people.

00:57:33.000 | I think you should consider these types of plans as you try to build financial independence for yourself.

00:57:40.000 | As I conclude this episode, I want to make one brief comment,

00:57:43.000 | and I may expand on this more in the next show.

00:57:47.000 | Freedom is a responsibility.

00:57:50.000 | To whom much is given, much is required.

00:57:54.000 | Freedom is a tremendous responsibility.

00:57:57.000 | One of the most important things to keep in mind as you work towards these goals is

00:58:03.000 | you will have to, in order to properly manage freedom,

00:58:07.000 | you will have to build the concomitant character, the connected character,

00:58:15.000 | the associated character and virtue.

00:58:18.000 | You'll have to build that in order to properly handle the freedom,

00:58:24.000 | because if you don't, the freedom can destroy you.

00:58:28.000 | Think of it with your children.

00:58:32.000 | Do you give your children total freedom to just go and do anything they want,

00:58:36.000 | to have total control over their day?

00:58:37.000 | They can come and go.

00:58:38.000 | They can wake or sleep.

00:58:40.000 | They can eat anything they want.

00:58:42.000 | You don't do that.

00:58:43.000 | You would destroy your children if you gave them that kind of freedom.

00:58:46.000 | What you do for your children, if you're a good parent,

00:58:50.000 | is you give them structure.

00:58:52.000 | You give them controls.

00:58:54.000 | You give them restraints.

00:58:56.000 | You give them rules.

00:58:58.000 | And then as they develop the character and the capacity and the knowledge

00:59:01.000 | and the wisdom within that structure, those restraints, those controls,

00:59:07.000 | then you give them additional freedom.

00:59:10.000 | And then you watch to see how they handle it.

00:59:12.000 | And as they handle that freedom well, you give them more freedom.

00:59:15.000 | And as they handle that freedom well, you give them more freedom, more freedom,

00:59:19.000 | until ultimately your goal as a parent is, by the time your children are at the age of adulthood,

00:59:24.000 | they have almost total freedom because they have formed the character needed

00:59:30.000 | to handle that freedom.

00:59:33.000 | Without character, that freedom can destroy them.

00:59:36.000 | But with character, that freedom can be a blessing.

00:59:40.000 | Well, if it's that way with our children, should it be any different with you or with me?

00:59:46.000 | We might be adults and able to look and see what's happening,

00:59:50.000 | but we've got to be careful because with freedom comes responsibility.

00:59:55.000 | Much is given, much is required.

00:59:57.000 | And so be very careful and be very thoughtful as you give yourself more freedom

01:00:01.000 | and make sure that you're developing the competent character,

01:00:05.000 | the connected character to handle that freedom.

01:00:10.000 | That's why inheriting money can be such a curse.

01:00:15.000 | Somebody who wins a lottery or who inherits money,

01:00:19.000 | if that person's not a millionaire and they become a millionaire on paper

01:00:23.000 | because of having the money, very quickly they won't be a millionaire anymore

01:00:27.000 | because they didn't become a millionaire before inheriting the million dollars.

01:00:31.000 | But if that person is working and they're developing and they've been responsible

01:00:36.000 | and then they've saved $100,000 or $500,000 and then they get a million dollars,

01:00:41.000 | well, they were on their way to becoming a millionaire,

01:00:43.000 | so they're going to have some challenges.

01:00:45.000 | They can probably keep the million dollars, and it's the same for you.

01:00:49.000 | And so as you develop freedom, be very careful to make sure that you're handling that freedom well.

01:00:56.000 | It's one thing for your parents to come and to say to you,

01:00:59.000 | "You've got to get up at this time. You've got to go and do this thing.

01:01:01.000 | You've got to be productive with your day."

01:01:05.000 | But if all of a sudden those constraints aren't there

01:01:07.000 | and you find yourself sitting around doing nothing with your day, being unproductive,

01:01:11.000 | it's a very dangerous sign.

01:01:14.000 | So make sure that you're focusing on developing the virtues

01:01:17.000 | that are going to lead to total freedom along the way.

01:01:21.000 | That applies at almost every level of what we've talked about.

01:01:24.000 | Let's say we talk about PT theory and liberty and freedom from state control.

01:01:29.000 | Well, it's easy to do if you're not a criminal.

01:01:34.000 | And so what that means is you've got to be the kind of person that is controlled by a higher law.

01:01:44.000 | The only way that you can successfully enjoy that freedom of state control

01:01:48.000 | is going to be if you are already under self-control, under God's control,

01:01:56.000 | controlled by a higher law, committed to a higher standard of moral and righteous living.

01:02:03.000 | In that context, you can easily kind of flow among different states, etc.

01:02:09.000 | But if you don't have that self-discipline, if you don't have that self-control,

01:02:13.000 | then that apparent liberty can become a curse for you.

01:02:18.000 | It goes on down the road.

01:02:20.000 | So build the character in every one of these stages so that by the time you become financially independent,

01:02:26.000 | you'll have the character to use it as a stepping stone to something bigger and more important

01:02:32.000 | rather than it becoming something that destroys your life.

01:02:36.000 | There are tremendous levels of depression, of apathy,

01:02:41.000 | tremendous levels of sickness among people who retire.

01:02:44.000 | And it doesn't have to be that way.

01:02:46.000 | Becoming financially independent and retiring doesn't have to be a death sentence.

01:02:50.000 | But it is for many people who haven't put in the work to develop and bring themselves to a place of self-control,

01:02:57.000 | who haven't disciplined themselves so that they can use their retirement as a stepping stone to something bigger,

01:03:04.000 | something better, something more important, something more productive.

01:03:07.000 | Don't let that be you.

01:03:09.000 | While you're working and developing these liberties,

01:03:13.000 | make sure that you're handling them, building the self-discipline, the self-control, etc. that you need.

01:03:19.000 | Now in the next episode, we're going to talk about what do you do after financial independence.

01:03:25.000 | And I hope you'll stay tuned for that episode.

01:03:28.000 | As I close today's show, I'd like to ask you for your support in three specific things.

01:03:33.000 | If you would consider three specific things.

01:03:37.000 | If you appreciate and value the work that I do, and you'd like to show your support for the show,

01:03:42.000 | one thing that would be very helpful is if you would leave a review for the show,

01:03:46.000 | a rating and a review for the show on iTunes.

01:03:48.000 | Or if you listen to me on some other platform, leave a review or rating on that platform if it provides for you.

01:03:54.000 | It's extremely helpful to the rankings of the show, helps more people to find the show when a show is highly rated and reviewed.

01:04:00.000 | And so it doesn't have to be long, doesn't have to be in depth.

01:04:04.000 | But if you would do me a favor, when you stop driving or wherever you are,

01:04:08.000 | and leave a quick rating and review for the show on whatever platform you use, if they have that,

01:04:12.000 | if not, do it on iTunes. That would be so helpful to the show.

01:04:16.000 | Number two is I would appreciate your support on Patreon.

01:04:20.000 | You can go to patreon.com/radicalpersonalfinance.

01:04:23.000 | I've had a difficult relationship with Patreon over the last few years,

01:04:27.000 | and I'll explain that probably at some point.

01:04:31.000 | But it still does provide an ongoing level of income, which is nice every month.

01:04:35.000 | And it just gives you a way to pay for the show.

01:04:37.000 | I've tried to keep the show fairly free of advertising.

01:04:40.000 | I advertise my own products and services, but I've tried to not do a lot of other advertising.

01:04:44.000 | But it's always a question because I walk away from multiple six figures a year just from advertising.

01:04:49.000 | And so Patreon has never even come close to making that amount of money.

01:04:54.000 | And I claim the responsibility for that.

01:04:58.000 | I've not advertised a lot. I've not asked a lot.

01:05:00.000 | But if you would like to support the show, go to patreon.com/radicalpersonalfinance

01:05:04.000 | and support the show there.

01:05:06.000 | Maybe we'll talk about that in a future episode.

01:05:08.000 | One thing you could do is if there's something that I could do for you,

01:05:11.000 | one of the reasons I've never really been known how to build a Patreon really a lot

01:05:17.000 | is because I've not known what bonuses to add to help you or to give you what you need.

01:05:23.000 | And it's just been difficult because I try to give everything away on the show,

01:05:27.000 | and then it's hard for me to know how to hold something back and give extra bonuses.

01:05:30.000 | So the best thing has always just been access to the Friday Q&A calls.

01:05:33.000 | I've offered tons of discounts over the years.

01:05:35.000 | I've got to imagine that almost every patron of the show has received more back

01:05:41.000 | in discounts from my other products and whatnot than they've paid.

01:05:45.000 | And so the point is that I would appreciate your support at Patreon, patreon.com/radicalpersonalfinance.

01:05:51.000 | The third thing is I'm in the middle of teaching a class on family preparedness,

01:05:57.000 | and I started that a couple of weeks ago.

01:06:00.000 | It's a live series.

01:06:02.000 | And when I started it, I did it because I'm concerned about the coronavirus flu pandemic.

01:06:10.000 | I talked about that on the show and decided I was just going to go ahead and do it.

01:06:13.000 | I was planning to teach a course on getting out of debt this month,

01:06:16.000 | and I supplanted that one with a course on preparedness.

01:06:19.000 | But on Monday night, I'm going to be doing the next episode in that.

01:06:22.000 | I didn't shut the registration of that.

01:06:24.000 | You can still join for that and join for the live classes.

01:06:27.000 | So far, we've covered a philosophy of preparedness.

01:06:29.000 | We've covered water preparedness.

01:06:31.000 | And I mean I did an hour and 45 minutes on water preparedness, and it's not wasted time.

01:06:38.000 | It's not rambling.

01:06:39.000 | It's just talking about ideas and things that you can do.

01:06:42.000 | And then on Monday night, we're going to be talking about food preparedness.

01:06:44.000 | And so I would love it if you would come and do that.

01:06:46.000 | If you're concerned about coronavirus or anything else, an earthquake, a hurricane, a tornado, whatever,

01:06:52.000 | basically over the years I've always been interested in emergency preparedness,

01:06:56.000 | and I've been frustrated that there weren't more kind of here's how you do it,

01:06:59.000 | here's how you do it on a level where you could start at this.

01:07:03.000 | It gives you most of the results.

01:07:04.000 | It's cheap. It's fast. It's easy. It's not weird.

01:07:07.000 | And then it gives you the next thing as well.

01:07:08.000 | So the registration is still open for that course.

01:07:11.000 | If you go to Radical Family Preparedness,

01:07:13.000 | there's just a URL that's easy for you to remember,

01:07:16.000 | and it'll just point you through to my site, RadicalPersonalFinance.com,

01:07:19.000 | but that's the only way you'll find the buy page.

01:07:21.000 | Go to RadicalFamilyPreparedness.com and sign up for that course there and join us on Monday night.

01:07:26.000 | You'll have access to the two classes I've already taught.

01:07:29.000 | There are videos, MP3 audio files that you can download and listen to,

01:07:33.000 | full transcripts and outlines of the notes so you can get up to speed very quickly.

01:07:39.000 | So if you're interested and you're concerned about how do you prepare your family for a flu pandemic or something like that,

01:07:45.000 | go to RadicalFamilyPreparedness.com and sign up for the course, RadicalFamilyPreparedness.com.

01:07:50.000 | Thank you for your support, and I'll be back with you soon.

01:07:53.000 | Your tough Tacoma is here.

01:07:57.000 | Your powerful 4Runner.

01:07:59.000 | Your stylish Camry.

01:08:02.000 | Your versatile RAV4.

01:08:04.000 | Even your fully electric VZ4X.

01:08:08.000 | Your new Toyota car, truck or SUV is available now.

01:08:14.000 | So see your Toyota dealer today.

01:08:18.000 | We make it easy.

01:08:20.000 | Toyota. Let's go places.

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