RPF0706-Friday_QA-Rentals_Down_Payments_Refinancing_Career_Transition_Quitting_Job_Right_Now_Tax_Loss_Harvesting_EU_Citizenship_401k_Loans_Nomad_Living_Prepping_and_Keto_Diets

00:00:00.000 | Today on Radical Personal Finance, live Q&A.

00:00:03.560 | Interesting time to be doing a live Q&A.

00:00:05.040 | Let's go.

00:00:06.040 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,

00:00:25.000 | skills, insight, and encouragement you need to live a rich and meaningful life now while

00:00:28.900 | building a plan for financial freedom in 10 years or less.

00:00:33.920 | Today is Friday, March 13, 2020, and today we do live Q&A.

00:00:38.080 | These are live call-in shows, just like live talk radio.

00:00:41.040 | You get to hear them about an hour after I record them.

00:00:43.800 | So today should be fun.

00:00:44.800 | Lots of things to talk about on today's show.

00:00:46.520 | Let's get started.

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00:02:25.000 | with is money.

00:02:26.620 | Obviously, if you knew that you were going to be purchasing your rental house in a few

00:02:30.700 | years, you would begin by planning for the money and that includes saving money.

00:02:38.120 | That especially includes attention to your credit score, making sure that that's as high

00:02:42.460 | as possible, making sure that everything is squared away for the financing of the enterprise.

00:02:48.520 | You want to think carefully through your financing strategy and then when you think through your

00:02:54.520 | financing strategy, you want to consider what is necessary at a certain time.

00:02:59.240 | For example, as we record this on Friday, March 13, 2020, mortgage rates have recently

00:03:04.640 | gone down and they're going down a good bit.

00:03:08.920 | Who knows how low they will go?

00:03:10.920 | We live in very interesting times at the moment.

00:03:14.280 | But that's the kind of thing that I would be watching very, very carefully.

00:03:17.000 | When it comes to my two-year time horizon, I would be watching the different things that

00:03:21.440 | are involved with those mortgage rates to make sure that I have the ability to lock

00:03:25.560 | in a mortgage at the best rates.

00:03:28.000 | Two years is close enough to start paying attention to all those details.

00:03:32.680 | Saving money, getting out of debt, two years is enough time to get out of debt if you have

00:03:35.560 | any debt, two years is enough time to make major improvements in your credit score.

00:03:39.560 | But obviously, squaring away the financing is thing number one.

00:03:45.680 | You can't go wrong with having extra money.

00:03:48.200 | When you move on from there, when you talk about living overseas but being willing to

00:03:53.640 | invest anywhere in the United States, that brings out an even more interesting option.

00:03:57.520 | That's not the kind of thing that many people think about.

00:04:00.820 | Most people approach a rental market just simply because that's where they live.

00:04:06.400 | And then it becomes fairly simple.

00:04:07.800 | And I think that's a sensible way to do it.

00:04:09.200 | You say, "Here's where I live.

00:04:10.400 | I want to manage the properties locally."

00:04:12.540 | In your case, I would want to start digging into some of the different markets around

00:04:17.540 | the United States.

00:04:18.540 | There are some markets in which you really can do very well as a landlord.

00:04:24.000 | And there are some markets in which it's not so easy to do well as a landlord.

00:04:28.320 | If you've got the whole country available to you, you have some very interesting options.

00:04:33.920 | So some things that I would start to think about.

00:04:37.600 | Is yield more interesting to you and more helpful?

00:04:42.440 | Or is appreciation more interesting and more helpful?

00:04:46.660 | Your answer to that question will depend on whether you need more money now and you're

00:04:50.320 | looking for yield or whether you are just looking for long-term capital gains.

00:04:55.680 | And so that will start to drive you in one direction of the market versus another.

00:05:00.260 | That might yield, it will usually drive you down market because you'll often get higher

00:05:05.840 | yields on lower cost properties.

00:05:10.220 | Appreciation will probably drive you up market a little bit.

00:05:12.360 | If you're not so worried about the current yield and you want more long-term appreciation,

00:05:17.680 | then again you probably won't be at the bottom end of the market.

00:05:21.800 | So I would think carefully through my strategy on yield versus appreciation.

00:05:26.400 | If you're going for yield, then you've got to think through what's the most intelligent

00:05:30.720 | way for you to get that yield.

00:05:32.800 | If you're overseas, you're going to face some challenges of managing with management costs.

00:05:37.560 | Who's going to manage it for you?

00:05:39.160 | How good of a job are they going to do?

00:05:41.160 | And so whereas you might get, if you're local and let's say you've got $200,000 to invest,

00:05:46.480 | a lot of times you'll get more yield on that $200,000 if you buy four different $50,000

00:05:51.360 | properties.

00:05:52.360 | But that's also going to be a much more intense management scenario.

00:05:55.560 | You're generally going to have harder to manage tenants at the lower end of the market.

00:06:00.380 | You're generally going to have more turnover.

00:06:02.320 | You're generally going to have more involvement in the property at that end of the market.

00:06:07.080 | If you're going to be overseas, you very well could be able to buy a property that you could

00:06:12.080 | manage yourself by going up market.

00:06:14.960 | Perhaps a standard suburban home, a $200,000 home would be the kind of house where you

00:06:20.560 | could easily bring in a professional couple with children who would be low maintenance

00:06:24.960 | tenants.

00:06:25.960 | You could create a low hassle landlording scenario where you incentivize them to take care of

00:06:31.040 | all the smaller problems in the property in exchange for a discount on the rent.

00:06:37.340 | You could screen for higher quality candidates and that would possibly be more interesting

00:06:45.320 | to you and more helpful to you to get just a steady paycheck.

00:06:49.500 | Even just things like managing the logistics.

00:06:51.240 | If you're at the lower end of the market, yeah you might have more yield but now you've

00:06:54.160 | got people paying you money in cash which for you being overseas might be very inconvenient.

00:06:58.340 | If you go up market, you probably can get somebody who you can arrange an electronic

00:07:02.540 | payment system and that will lower your hassle and your frustration.

00:07:07.100 | Now once you get an idea of the type of property that you're looking for based on your investment

00:07:11.840 | objectives, once you get an idea of the amount of money that you have, then in two years

00:07:17.620 | I would be going to some discussion boards online.

00:07:20.980 | I'd be talking to real estate agents and I'd be talking and researching which markets in

00:07:26.460 | the country would be the most interesting for your investment goals.

00:07:30.820 | There's a big difference between San Francisco versus Kansas City versus Youngstown, Ohio

00:07:36.300 | versus Miami, Florida.

00:07:40.220 | These markets are so dramatically different and what I would try to do is I would try

00:07:46.040 | to find some investment stories that make sense to me based upon what I want and what

00:07:54.860 | I think local markets are going to do.

00:07:57.140 | So probably you would want to choose a city in a growing region.

00:08:01.980 | The trend is generally from smaller towns and from rural areas into the cities and so

00:08:07.660 | I'd probably want to be looking at a city.

00:08:09.860 | I'd want to look at a city that has good long-term prospects, a good economic base and a city

00:08:14.740 | which is fairly valued.

00:08:16.100 | Now I don't know exactly where that city is.

00:08:19.820 | I could throw out some cities but I think that that would be, I don't want to do that

00:08:23.300 | here in this context but I would be talking to some people online, talking to local investors,

00:08:29.380 | finding, leveraging the internet to join local real estate investment groups, etc. and trying

00:08:34.100 | to get a sense from local investors what the markets are.

00:08:39.140 | Just giving an example, in South Florida it's very hard right now to make properties cash

00:08:43.180 | flow.

00:08:44.460 | The prices are high, rents are high but it's hard to make them cash flow.

00:08:48.240 | That's not the same in other markets and so you got to find those markets where the cash

00:08:52.260 | flow is available.

00:08:54.620 | And so once you lay out your investment objectives then I would go to the internet and I'd start

00:08:58.220 | looking around to find the good markets that have the good fundamentals that will fit your

00:09:03.740 | investment objective.

00:09:05.060 | And then over the course of the next two years what I would do is I would get myself on a

00:09:08.900 | bunch of lists.

00:09:09.900 | I would start watching properties, start doing my best to get a good idea of what's available

00:09:15.860 | in those markets so that when you get to the point where you're ready to buy you're pretty

00:09:20.860 | comfortable with what's been happening.

00:09:22.780 | Now I'm going to go out on a ledge here and do some prognostication which of course could

00:09:27.180 | turn out to be wrong but I think right now is a wonderful time for you to be doing that

00:09:31.820 | legwork.

00:09:34.260 | At the moment I don't see how the United States avoids recession at the moment.

00:09:40.140 | At the moment, although I'd love to wait a little bit more time before being super confident

00:09:43.740 | in these opinions, at the moment I don't see how the United States doesn't avoid recession.

00:09:47.700 | I don't see how we don't have a serious increase in unemployment and widespread financial problems

00:09:53.740 | coming up in the coming months and probably years.

00:09:58.220 | And I think on the backside of it there should be some real estate deals available.

00:10:02.780 | So I think your two-year timeline if you've got cash right now your two-year timeline

00:10:06.260 | is an excellent time for you to be looking around and be watching for properties.

00:10:11.500 | And so I would be investing my time heavily right now into creating my strategy, starting

00:10:16.620 | to watch markets and waiting to see if once we start to get into recession and towards

00:10:22.060 | the back end of recession waiting for those real estate deals to start to emerge.

00:10:26.060 | They're not there yet.

00:10:28.000 | Everything is completely in disarray at the moment but I expect them to be there in a

00:10:32.180 | year or so.

00:10:33.180 | So we'll see.

00:10:34.180 | We'll come back in a year and we'll see how good my prognostication is but that's my opinion

00:10:38.660 | at the moment.

00:10:39.660 | Go ahead, Mark.

00:10:40.660 | Excellent.

00:10:41.660 | Thank you.

00:10:42.660 | That's super helpful.

00:10:43.700 | So in terms of money preparing that, one question I want to ask is how to think through whether

00:10:50.100 | or not I should be contributing to retirement savings while saving that down payment.

00:10:55.420 | So quick background, I make about $4,000 a month.

00:10:59.460 | Currently I'm saving about 15% of that for retirement and saving around $500 a month.

00:11:04.660 | So I don't know the percentage but saving around $500 a month for a down payment.

00:11:09.500 | Now that doesn't get super far and so unfortunately we've chosen for my wife and I a career that

00:11:18.220 | has we think high social impact but unlikely to change dramatically financially.

00:11:24.940 | And so I'm trying to think through the best way to be able to save up down payment.

00:11:30.960 | So a couple specific questions on that.

00:11:32.760 | So first, how to think through whether or not I should be contributing to retirement

00:11:37.060 | savings Roth IRAs, that kind of thing.

00:11:41.180 | What percentage if at all versus saving up for a down payment?

00:11:46.020 | If I were in your shoes, I believe that there is more potential benefit financially, just

00:11:54.020 | speaking generally.

00:11:55.900 | There's more potential benefit for you to invest in rental real estate early in your

00:12:02.780 | life rather than investing in mutual funds inside of a retirement plan.

00:12:09.020 | Now I need to for the sake of academic clarity, I need to point out that you could invest

00:12:15.100 | in rental real estate inside of a retirement plan.

00:12:18.860 | That's doable, it's a little bit more complex and if you have not yet accumulated a lot

00:12:23.240 | of money, it's just going to be more complex.

00:12:26.580 | So I think that's a better fit for somebody who has accumulated significant assets in

00:12:30.900 | a retirement plan.

00:12:32.620 | But I don't get the sense that you're there yet as far as really significant assets.

00:12:36.980 | And so what I would say is if I were in your shoes, I would stop investing into retirement

00:12:43.580 | accounts until I accumulated the down payment.

00:12:47.220 | I would do the transaction, buy the property and then I would come back and start investing

00:12:53.500 | in the retirement plan again.

00:12:55.420 | But if you have a plan, I would say if I had to wait five years on investing into retirement

00:13:04.540 | accounts, but I in the meantime bought five properties, the leveraging, the safe leverage

00:13:11.100 | that can be accomplished in those real estate properties, especially if they're well chosen,

00:13:16.220 | etc., is in my opinion generally going to be superior to what you can get inside of

00:13:20.420 | a retirement account.

00:13:22.420 | That's excellent advice.

00:13:23.420 | Thank you.

00:13:24.420 | Thank you.

00:13:25.420 | That's helpful.

00:13:26.420 | Related to that, we've got about 58,000 currently fully invested in stocks within

00:13:34.340 | our Roths.

00:13:36.480 | Part of our thinking was that we could potentially pull that to pay for a down payment.

00:13:42.460 | So there's two specific questions related to that.

00:13:45.260 | First, is it possible to pull from a Roth for a rental house down payment, not your

00:13:50.320 | own primary residence down payment?

00:13:53.300 | And then secondly, would you continue just putting the down payment funds in a Roth IRA

00:14:03.820 | so you have options, you can maybe build up some, it'd be a small amount of growth,

00:14:08.980 | but you pull out the contributions and the growth remains.

00:14:13.540 | Would you use that as a vehicle for a down payment at all?

00:14:16.660 | Is that something worth doing or just leave it in a money market account?

00:14:21.280 | There is no possible – so when you are contributing in IRAs, there are a number of reasons why

00:14:28.840 | you can take the money out of an IRA prior to age 59 and a half without incurring the

00:14:35.080 | tax penalty.

00:14:36.960 | None of those involve your taking out money to purchase a rental house.

00:14:41.000 | So the answer to your first question is no.

00:14:43.480 | You cannot take money out of the Roth IRA as a qualified exception in order to purchase

00:14:47.880 | a rental house.

00:14:49.600 | What you can always do is you can always remove the contributions from the Roth IRA.

00:14:57.040 | If your current account balance is $58,000 but over the years you've made a total of

00:15:03.000 | $45,000 of contributions, that means that if you could take out $45,000 with no tax

00:15:09.880 | penalties leaving $13,000 in the account, there would be no taxes due, there are no

00:15:15.040 | tax consequences, and you could use that $45,000 for your down payment.

00:15:21.440 | So in light of that, the answer to your second question is obviously yes.

00:15:26.400 | There's no reason for you – if you're limited on the amount of money that you can put aside,

00:15:31.280 | there's no reason for you not to accumulate the money in your Roth IRA knowing that you

00:15:36.640 | can take it out in two years.

00:15:38.580 | You just obviously wouldn't want to invest it into stocks or into anything volatile.

00:15:41.800 | You'd want to keep it in a cash account or cash equivalent so it was stable for you to

00:15:45.880 | use for a rental property.

00:15:48.240 | So what I would do is I would split the difference.

00:15:50.880 | I would put the money into the Roth IRA knowing that I could use it as a down payment.

00:15:56.640 | But then what I would do is work really hard over the next few years to save other money

00:16:00.920 | outside of it and/or to find another source of financing for the down payment, negotiate

00:16:06.680 | that in some other way so that I could do both, so I could buy the rental property while

00:16:11.360 | simultaneously leaving the money in the Roth IRA along the way.

00:16:15.600 | So that's how I would handle it.

00:16:16.800 | All right, last question, Mark.

00:16:17.800 | Got a bunch of other callers, so go with your final question.

00:16:19.560 | Mark Miller That's fine.

00:16:20.560 | Let me look at this real quick.

00:16:23.880 | So I'll put it this way.

00:16:26.180 | What books would you recommend or podcasts to listen to?

00:16:29.080 | I have John Reed's Getting Started in Real Estate Investing, The Building Wealth One

00:16:34.680 | House at a Time you recommended, as well as John Shaw's Landlording Course.

00:16:38.960 | The BiggerPockets podcast are also on my radar screen.

00:16:42.800 | Any other specific resources you'd recommend?

00:16:44.600 | Tavish I don't have any other resources other than

00:16:47.320 | those.

00:16:48.320 | Those are my favorite go-to sources would be John Shaw, John Reed, and then the BiggerPockets

00:16:53.240 | community is great.

00:16:55.120 | There's nothing there.

00:16:56.120 | I would say probably to round that out, the best thing is going to be to find locals in

00:17:03.720 | the market and to find people who are going to mentor you.

00:17:06.360 | To round out your reading, I would recommend, was it Cliff Atkinson's?

00:17:10.080 | No, it's a different guy.

00:17:12.400 | The guy who wrote the book Asset Protection for Real Estate Investors.

00:17:17.600 | He's an attorney, but he has a book.

00:17:20.120 | It's called Asset Protection for Real Estate Investors and I like that book.

00:17:23.800 | I think that would be a good thing to do because when you start, go ahead and read about your

00:17:28.080 | thoughts on how you would actually go around investing, how you go around setting up your

00:17:33.600 | asset protection plan from the beginning because it's easier to do it right from the beginning.

00:17:37.400 | It's a little complex because you're managing obviously your investments, you're managing

00:17:45.200 | how you're going to do the financing.

00:17:47.640 | It's a little bit complex, but that's one thing that you could do easily is engage in

00:17:51.280 | your reading.

00:17:52.280 | All right.

00:17:53.280 | Thanks for calling in, Mark.

00:17:54.280 | Call back next week with more questions and we'll go on to Shiv.

00:17:56.600 | Shiv, welcome to the show.

00:17:57.600 | How can I serve you today, sir?

00:17:58.600 | Hey, Josh.

00:17:59.600 | Firstly, thanks for making this platform available.

00:18:03.920 | I'm considering refinancing my mortgage to benefit from the lower rates.

00:18:10.040 | So far I have paid down mortgage aggressively.

00:18:12.040 | So this refinance, if I go ahead with it, it will free up good cash flow to the tune

00:18:16.680 | of like $1,000.

00:18:18.880 | But I don't want to just go ahead and refi without good plans at hand to use that money.

00:18:25.240 | And that's where I want to pick your brain on like in current scenario, what do you feel

00:18:29.840 | are the best ways to utilize extra cash flow?

00:18:32.760 | So you're thinking about keeping the balance of the mortgage where it is now and just simply

00:18:38.120 | lowering your payments by refinancing at a lower rate and stretching them out?

00:18:42.360 | Or you're thinking about doing a cash out refinance where you take equity from the home

00:18:46.320 | and put it into a bank account?

00:18:47.760 | No, not the first one.

00:18:50.600 | Okay.

00:18:51.600 | So what do you, what are you currently investing in and what do you think you should invest

00:18:55.480 | in?

00:18:57.160 | So I have 401k and other.

00:19:03.400 | So right now I'm pretty stretched between mortgage and 401k.

00:19:07.160 | I invest about 15% of my income towards 401k and rest all towards mortgage.

00:19:14.040 | I don't have any room other than that.

00:19:17.280 | Are you maxing out your 401k?

00:19:19.440 | Yes, I am.

00:19:20.840 | So if you're maxing out your 401k, that's done.

00:19:24.260 | Now you could think about maxing other accounts.

00:19:26.640 | If you qualify for a Roth IRA, you could max that out.

00:19:30.240 | If you have, if you qualify for a health savings account, an HSA, that would be a wise account

00:19:36.360 | to fund.

00:19:37.360 | I'm happy with your funding those three accounts.

00:19:39.840 | And I think that if you max out those three accounts, either a traditional 401k or a traditional

00:19:47.400 | 401k, a Roth IRA if you qualify based on income, if you don't qualify a backdoor Roth IRA is

00:19:52.720 | fine and then a health savings account.

00:19:54.760 | I like all three of those accounts and I think if you max those out, those are good uses

00:19:58.640 | of the money.

00:19:59.640 | They're all flexible in different ways and as long as you're thoughtful with your investments,

00:20:04.800 | that gives you some options.

00:20:06.320 | Now from there, then I should clarify first, do you have cash savings, a substantial amount

00:20:13.640 | of cash savings?

00:20:14.640 | Yes, I do.

00:20:15.640 | Okay.

00:20:16.640 | So you want to make sure you have a substantial amount of cash savings and then from there,

00:20:22.000 | I would go to other investment classes.

00:20:24.840 | I don't see any reason why somebody of a normal age needs more money in stocks than what they

00:20:31.200 | can accumulate inside of their 401k, their IRA, etc.

00:20:36.240 | As I was just talking about the previous caller, if you don't own rental real estate, I don't

00:20:40.960 | know this for a fact, my opinion is just the same as anyone else's, but I think there are

00:20:44.600 | probably going to be some buying opportunities in rental real estate in the next couple of

00:20:47.880 | years.

00:20:48.880 | So if I woke up in your shoes, if I were at all interested in owning real estate or investing

00:20:53.400 | in real estate, I would be stockpiling as much cash as I could with preparation for

00:20:58.600 | buying in the next year or two.

00:21:02.280 | Now we don't know if that will happen or not, but that would be one thing that I would be

00:21:06.520 | doing is just stockpiling cash ready to buy rental real estate.

00:21:10.900 | Do you own any hard assets?

00:21:12.320 | Do you own any gold?

00:21:13.320 | Do you own any other alternative investments like that?

00:21:16.360 | No.

00:21:17.360 | So with some of the money, I would purchase some hard assets.

00:21:21.200 | I think everybody should have in their portfolio some modest amount of hard assets, something

00:21:27.600 | in the range of 5 to 10% of your net worth I think is reasonable.

00:21:33.200 | So I would put some money towards that and just start steadily moving in that direction.

00:21:38.680 | That'll help you.

00:21:39.680 | And then from there, basically the world is up to you.

00:21:42.840 | There are only three basic asset classes that you can invest in and they are an active business,

00:21:48.120 | real property, and paper assets.

00:21:50.880 | But within those three classes, there are huge variations that you can do.

00:21:56.160 | If you are interested in entrepreneurship or have any idea of an active business that

00:22:01.360 | you're interested in, I'm convinced that's going to be your highest financial possibility.

00:22:06.200 | So what I would do, given that I'm interested in entrepreneurship and I like the lifestyle

00:22:10.120 | components, I would use the freed up cash flow to allow me to pursue any business opportunity

00:22:16.360 | that I were interested in.

00:22:17.960 | If I looked around and saw that I can drop my mortgage payment from $2,000 a month to

00:22:23.840 | $1,000 a month by refinancing, I would just stockpile cash until I found a business that

00:22:29.640 | I wanted to be involved in.

00:22:31.460 | That business can be as mundane as a pizza franchise or it can be as exotic as a horse

00:22:39.440 | farm in the country.

00:22:41.520 | It can be anything that you want, but your biggest profit opportunities are going to

00:22:46.680 | come from business.

00:22:48.240 | And so I'm always going to make sure I have enough money to start businesses and/or to

00:22:51.720 | invest in businesses when I find an opportunity that appeals to me.

00:22:56.800 | With regard to real property, there's an unlimited number of types of investments that you could

00:23:02.480 | make and this will come down to your skill and your interest.

00:23:05.800 | Most people with real property, and I'm blurring the use of that, usually real property is

00:23:09.920 | simply defined as land and things that are connected to land.

00:23:13.440 | That's fine.

00:23:14.440 | So you can invest in land.

00:23:15.720 | You can invest in houses and that can be anywhere in the world.

00:23:19.360 | It can be any kind of investment.

00:23:21.600 | But when I think about real property, I don't use it in the strict sense.

00:23:26.080 | I just think about it in terms of physical investments.

00:23:29.440 | So you could buy RVs that you rent out to private clients on the weekend who want to

00:23:34.760 | rent those RVs from you.

00:23:36.080 | That can be very productive.

00:23:38.120 | You can buy used cars and flip used cars.

00:23:40.760 | You can buy guns and flip guns or you can build guns.

00:23:44.520 | You can go and buy AR-15 lowers and assemble AR-15s and sell them.

00:23:50.000 | You can buy gold coins.

00:23:51.640 | You can invest in a diamond mine.

00:23:54.360 | It's any kind of real asset that you are interested in investing in.

00:23:58.960 | Stamps, baseball cards, computers.

00:24:02.480 | There's classic automobiles.

00:24:04.760 | Anything that you're interested in or anything that you want to develop an interest in is

00:24:11.880 | worth pursuing.

00:24:13.200 | So that would be real property.

00:24:14.840 | Then with regard to paper assets, the standard approach to paper assets is clearly stocks

00:24:20.540 | and bonds and mutual funds and things that are inside your 401(k).

00:24:24.020 | But recognize that there's no limit to the kind of paper assets that you can do.

00:24:27.680 | You can trade derivatives contracts.

00:24:30.000 | You can learn how to trade options.

00:24:31.540 | You can play in the Forex markets if you want to develop an interest in that.

00:24:35.060 | You can invest in dividend paying stocks.

00:24:39.160 | The world of options is there's no limit to it.

00:24:42.900 | And so what I'd recommend is if you don't have specific things that you're interested

00:24:48.520 | in.

00:24:49.520 | I have specific areas of investments that I'm interested in.

00:24:52.300 | If you don't have that, then the first thing you should do with the freed up cash flow

00:24:56.600 | is start visiting bookstores and start browsing bookstores, both digital and local, and just

00:25:01.160 | start sampling books.

00:25:02.600 | And if you bought a hundred books on investing and browsed through them and got exposed to

00:25:07.580 | all the different ideas, then you would start to be drawn in one direction or another.

00:25:12.300 | So I'll give you just for me.

00:25:13.720 | I'm not interested in options.

00:25:16.040 | I thought I was.

00:25:17.480 | When I was younger, I was interested in options.

00:25:19.520 | Somebody wrote me an email this morning and said, "Can I hire you to consult with me on

00:25:22.720 | options?"

00:25:23.720 | And I wrote him back and said, "No, I'm not interested.

00:25:26.080 | I don't have any expertise.

00:25:27.960 | It's not of interest to me."

00:25:29.520 | But there are people who really love the idea of trading options contracts.

00:25:33.860 | And so you can make plenty of money in that if you become an expert and you learn what

00:25:37.960 | you're doing.

00:25:39.080 | But you'll find that you resonate with certain things where you don't resonate with those

00:25:43.200 | other things.

00:25:44.320 | And so that's the important thing for you to look around and find those things that

00:25:48.040 | you resonate with.

00:25:49.680 | In the meantime, don't be scared just to save cash.

00:25:52.320 | There's no reason not to save cash.

00:25:53.800 | And what will happen is when you start to pile up cash, even if it's hundreds of thousands

00:25:57.440 | of dollars, that's fine.

00:25:59.480 | But start to see opportunities available to you because you're now in a place where you

00:26:04.880 | have plenty of cash on the sidelines and then you can wait patiently for a really good deal.

00:26:09.560 | >> It makes sense.

00:26:11.120 | Thank you so much.

00:26:12.760 | >> My pleasure.

00:26:13.760 | All right, move on to looks like Jordan.

00:26:15.480 | Jordan, welcome to the show.

00:26:16.480 | How can I serve you today?

00:26:17.480 | >> Hey, thanks for taking my call.

00:26:20.480 | I have a question about transitioning from a main career over to side hustles.

00:26:27.560 | So right now I have a very lucrative main career, but I also have two side hustles of

00:26:33.680 | teaching at a college as well as a YouTube channel.

00:26:36.960 | And while those are far from being full-fledged careers, I'm trying to look forward in the

00:26:42.480 | next year or two and decide when it is responsible to kind of commit more time to those, specifically

00:26:51.440 | my YouTube channel, to make that a more long-term source of income, if that makes sense.

00:26:59.520 | >> Yes.

00:27:00.520 | Do you think that your two alternative careers of teaching and YouTube channel, do you think

00:27:06.480 | that they have a higher income potential than your current lucrative career?

00:27:14.280 | >> Teaching by itself, probably not.

00:27:17.440 | And YouTube, maybe together they could equal what I'm doing now.

00:27:21.600 | The answer is no, it would definitely be more of a lifestyle and passion element making

00:27:27.240 | up for that difference.

00:27:28.720 | >> And how much are you earning in your current, how much is lucrative?

00:27:32.100 | What does that mean to you?

00:27:33.200 | >> Right now I'm making about $130 a year.

00:27:37.440 | >> Great, congratulations.

00:27:38.480 | So my first question, or my first area of analysis would come down to what is the financial

00:27:44.420 | potential of these opportunities?

00:27:49.280 | That will help you to understand where they will fall into your decision making.

00:27:57.280 | Now I don't think that you always have to pursue the most lucrative thing that's available

00:28:03.080 | to you.

00:28:04.080 | In fact, I think that'd be very unwise.

00:28:05.640 | So if you said, I'm making $130,000 now, but I have this other thing that I want to do

00:28:14.780 | that I'm really interested and keen on doing, but it has a maximum income potential of $60,000,

00:28:23.060 | I'm not saying don't do it.

00:28:25.380 | But by being aware of that, it will help you make a strategic decision.

00:28:30.780 | That will be a very different decision making process than if your side hustle has an income

00:28:36.740 | potential of $260,000.

00:28:40.700 | And that will make a bigger difference as to how long, how you pursue it.

00:28:46.000 | So think first carefully and try to get an estimate of what you think the income potential

00:28:50.880 | is.

00:28:52.120 | Now with YouTube, if you are, so teaching is interesting because teaching can be extremely

00:28:58.340 | lucrative.

00:28:59.340 | I'm a teacher.

00:29:00.340 | I consider myself a teacher.

00:29:01.340 | If I am asked what my job is, I say I'm a teacher.

00:29:03.780 | That's what I do.

00:29:04.780 | And I love to teach.

00:29:06.460 | I can happily teach in any context.

00:29:09.880 | If everything crumbled today and I went and got a job teaching high school, I would love

00:29:15.900 | that.

00:29:16.900 | It would be a lifestyle for me that would be, I would be thrilled with it.

00:29:19.940 | And I have a half a dozen subjects that I would just enjoy teaching.

00:29:23.380 | But teaching isn't in and of itself a commitment to poverty.

00:29:30.080 | You don't have to teach in a non-lucrative way.

00:29:33.820 | You can take that and teach in a few different ways.

00:29:36.940 | But of course teaching is more predictable as a career because it is so standardized

00:29:42.400 | in the marketplace.

00:29:43.400 | You can look and see how much a local community college pays you.

00:29:45.740 | You can see how much a university pays you.

00:29:47.100 | You can see how much a government high school pays you.

00:29:49.500 | You can see how much a private high school pays you.

00:29:51.260 | And you can get an idea of what they make.

00:29:53.740 | And there's not a lot of variability in those types of institutions.

00:29:57.340 | But you can also take a teaching career and you can amplify it.

00:30:01.140 | So you can get a job as a professor at a local university while simultaneously writing books,

00:30:06.380 | developing a global brand, selling huge amounts of product to other people, and you can use

00:30:12.340 | teaching as the foundation for doing it.

00:30:14.620 | Probably one of the most successful versions of that that I have seen in the past few years

00:30:18.540 | would be the Canadian professor Jordan Peterson, who was about five years ago or a little bit

00:30:24.620 | more, he was just a standard professor at the University of Toronto.

00:30:29.380 | Well fast forward, he went through a number of events that were politically poignant and

00:30:34.100 | he developed a large reputation.

00:30:36.220 | And he went from working as a standard professor at a Canadian university to developing a public

00:30:41.260 | education platform, speaking to tens of millions of people, and making tens of thousands of

00:30:46.740 | dollars per month.

00:30:47.740 | I forget, but prior, at the very minimum, no, not counting book sales, not counting

00:30:53.740 | anything else, but just simply at a minimum, when he was using the platform Patreon, I

00:30:58.580 | think he was earning $60,000 a month from his Patreon supporters.

00:31:03.100 | Now clearly that is not common.

00:31:06.040 | But I use that as an example to say teaching does not have to be a sentence to poverty.

00:31:12.020 | Teaching can serve as a foundation and it can buttress your expertise.

00:31:16.580 | And then if you're thoughtful and strategic about how you use that, it can be something

00:31:21.060 | that becomes very lucrative.

00:31:23.340 | Now YouTube is also interesting because generally YouTube is a sentence to poverty.

00:31:28.640 | The vast majority of YouTube creators will never make enough money on their work in order

00:31:33.380 | to support themselves, let alone grow well, become wealthy.

00:31:36.940 | But that doesn't mean that YouTube can't be leveraged effectively.

00:31:39.740 | And so if you've, if you have been successful in establishing a brand that is starting to

00:31:44.060 | achieve something, then you can think about how you could leverage it.

00:31:48.500 | And certainly with YouTube, similar to teaching, although YouTube in and of itself is a very

00:31:53.980 | poor money-making idea.

00:31:55.740 | For example, if your dream is to become a massive YouTube creator and make millions

00:32:01.020 | on YouTube AdSense revenue, that's extremely unlikely, very difficult, very unlikely.

00:32:06.520 | But even with a modest YouTube platform, you can leverage that platform as a marketing

00:32:11.980 | arm for other much more profitable products, services, et cetera, ways to serve your clients.

00:32:19.180 | And even a modest YouTube platform can be a very effective way to build a business.

00:32:25.740 | So both of those do have financial potential.

00:32:28.100 | And if you think about that, it will start to make your, it'll start to make your transition

00:32:32.500 | clearer.

00:32:33.500 | With my story, I was, I had a highly lucrative career.

00:32:38.500 | I knew when I left that highly lucrative career that I was going to take a serious pay cut,

00:32:44.100 | but I could design a business in my head that had such a much higher potential of lucrative,

00:32:55.420 | it was, had so much higher earning potential with a better lifestyle that I didn't mind

00:33:01.200 | taking the dip.

00:33:03.600 | So that's, it's just different if you're, and that's where you start your analysis.

00:33:07.500 | So that's the first one.

00:33:08.500 | Now, the second thing is this, do you need time that you don't currently have available

00:33:15.820 | because of your day job?

00:33:18.380 | Do you need time?

00:33:20.420 | Is time the limiting factor for you to develop your side hustles further?

00:33:26.940 | It certainly is limiting.

00:33:29.700 | So with YouTube, I completely agree that AdSense is not the way to get rich off that.

00:33:35.740 | And I am toying with a few business ideas around that since it is a very niche market

00:33:40.580 | and I do think there's potential there, but currently I have a seven month old day job

00:33:47.100 | and two side hustles.

00:33:48.100 | So yeah, I've got a little bit going on.

00:33:52.480 | So I can only produce about one quality video a week and understanding to like, to capitalize

00:34:00.900 | on the momentum I'm seeing right now, I really would like that to be up to two videos.

00:34:05.220 | Now it doesn't necessarily need to be that.

00:34:07.300 | It could grow more slowly and maybe if I just like cut out friends or family, I could make

00:34:12.100 | that happen.

00:34:13.100 | But that's part of what I'm warring with right now.

00:34:16.180 | If money were not an object, if I said to you, you have to do some kind of work and

00:34:21.380 | you're going to make the same money regardless, would you quickly leave your day job and move

00:34:26.620 | to building these side hustle businesses?

00:34:29.700 | In a second, yes.

00:34:30.700 | Okay.

00:34:31.700 | So that to me makes your decision clear.

00:34:33.400 | It's not a matter of if you're going to make the move, it's a matter of when it makes sense

00:34:38.180 | for you to make the move, which is clearly the question that you asked, but it does,

00:34:40.700 | it is important to clarify it.

00:34:42.460 | Now the reason I talk about time, there are some businesses that if you invest more hours,

00:34:47.940 | you can make them more productive.

00:34:50.260 | I caution you to really carefully analyze whether you actually need more time or whether

00:34:57.260 | you need to use your time more efficiently.

00:35:00.160 | What I've discovered is often I'm far more focused and far more productive when I don't

00:35:05.540 | have the time available because I just got to make it work than I am when I have all

00:35:12.060 | the time in the world.

00:35:13.260 | Even with my current business, I put a lot of time into it.

00:35:17.540 | But what I find is if I'm not stretched for time, I don't actually produce more, I produce

00:35:22.820 | less.

00:35:23.820 | It's much easier for me to sit around and waste time on the internet and justify it

00:35:27.580 | to myself while I'm doing research.

00:35:29.460 | But realistically, if I had an hour set aside, then I'd only had it, I would get the work

00:35:34.820 | done.

00:35:35.820 | And so what I found for me is being busy is actually more important and I'm more productive

00:35:40.980 | when I'm busy with multiple projects than if I'm productive with just one thing.

00:35:45.040 | And you might find the same thing to be true.

00:35:46.880 | If you lost your day job or left your day job, you would quickly move to working on

00:35:52.960 | your side hustles, but now you might be much more relaxed about those side hustles and

00:35:56.120 | that wouldn't be great.

00:35:57.680 | But if you do need more time to be productive, then I think it makes sense to start investing

00:36:02.120 | into that time and to putting yourself in a situation where you're actually going to

00:36:06.160 | be making use of it.

00:36:08.320 | So that's the time question.

00:36:10.720 | Now, next question.

00:36:12.120 | Do you need money from these side hustles in order to give you the permission to leave?

00:36:16.720 | >>Kate: Yeah, at this point, I'm primary earner in our family.

00:36:23.120 | My husband is also an engineer, so it's not like we're dealing with low income there.

00:36:27.640 | But as it sits right now, yes, there would need to be some financial component to these

00:36:34.440 | to just keep the household running.

00:36:37.040 | >>Dave: Could you guys live on his income?

00:36:42.200 | >>Kate: Not with...

00:36:46.280 | We have one in daycare now and then as we expand our family, it would be very unfeasible.

00:36:51.200 | >>Dave: Could you live on his income plus what you're already making with teaching and

00:36:55.240 | YouTube?

00:36:56.240 | >>Kate: Not this year, but potentially within the next year or two.

00:37:02.040 | That's a reasonable horizon, yeah.

00:37:03.520 | >>Dave: Do you have enough savings that you could live on savings and his income for a

00:37:07.680 | year or two until you could make enough income from the business to live on that?

00:37:12.400 | >>Kate: Close to it, yeah.

00:37:15.280 | >>Dave: Okay.

00:37:16.280 | Have you calculated what your actual expenses would change, for example, with taxes, payroll

00:37:21.680 | taxes, etc.?

00:37:22.680 | Have you calculated whether you could actually live on his income right now if you quit your

00:37:26.240 | job?

00:37:27.240 | >>Kate: I haven't taken taxes into account, but yes, I have looked at our expenses right

00:37:33.320 | now and what's left of his, but not taking into account taxes.

00:37:38.920 | >>Dave: Well, if you leave your current lucrative job, how easily could you reenter it in three

00:37:47.840 | years if you came to find out that it was a mistake for you to leave in the first place?

00:37:53.000 | >>Kate: That's one of the sticky points that maybe I should have brought to light earlier

00:37:59.040 | on in this conversation.

00:38:00.560 | It would be quite difficult.

00:38:03.080 | Part of the value in my position right now is that I deal with bleeding edge technology.

00:38:08.840 | I always say in about six months without investment in keeping up with trends and setting aside

00:38:16.120 | time to code and build out infrastructure, my value greatly diminishes.

00:38:20.400 | Now, not all the way, but I would definitely come back into the field probably at a much

00:38:26.960 | lower income.

00:38:27.960 | It would be disruptive.

00:38:28.960 | It wouldn't be disastrous.

00:38:30.360 | >>Dave: Even if you weren't fully employed in the field, could you design some kind of

00:38:34.520 | backup plan that allowed you to stay current without a job?

00:38:39.040 | Could you stay current in the field just through self-study?

00:38:41.840 | >>Kate: Yeah, that's possible.

00:38:46.440 | The teaching I'm doing at the college is related to my current main career field.

00:38:52.360 | In doing those courses, it would be natural to keep up with things, I suppose.

00:38:57.880 | >>Dave: You said you have one seven-month-old child and you're hoping to have more children

00:39:01.400 | in the future?

00:39:02.400 | >>Kate: Yeah, that's a whole different conversation.

00:39:05.080 | The reason we have so much money set aside is we adopted our first and we're undergoing

00:39:09.920 | fertility treatment.

00:39:10.920 | That's a lovely money suck if you've ever looked into that.

00:39:14.560 | >>Dave: Indeed it is.

00:39:17.800 | Well, the points of analysis that I've given to you, I think if you think through them,

00:39:25.200 | talk them through with your husband, you'll probably gain a little bit of clarity.

00:39:29.640 | But here is what I have observed in life.

00:39:33.320 | I need to record a stand-alone episode on this fairly soon.

00:39:38.880 | But I've come to believe that money is almost never the constraining factor and that time

00:39:45.320 | almost always is the constraining factor.

00:39:48.760 | Money is relatively easy to create.

00:39:50.960 | It's relatively easy to earn.

00:39:52.160 | It's relatively easy to create.

00:39:53.800 | You've already established yourself as being able to generate $130,000 per year.

00:40:00.620 | Because of that, you will never see yourself as the kind of person who's only capable of

00:40:04.500 | generating $30,000 per year.

00:40:06.680 | You'll always see yourself as the kind of person who's capable of generating at least

00:40:09.960 | $130,000 per year.

00:40:12.160 | So I'm confident that if you needed to go and get a job, I'm confident that you could

00:40:16.520 | go and get another one and make $100,000 a year just because that's become a part of

00:40:20.240 | your personal identity.

00:40:22.000 | You're not intimidated by that.

00:40:24.160 | It's just part of your identity.

00:40:25.680 | I also think that if you could keep current that you will have options open to you.

00:40:34.160 | Some careers don't lead themselves well to being able to be maintained as a backup plan

00:40:39.220 | and some do.

00:40:40.560 | But what I would do is in the transition I would say, "How can I keep current in my industry

00:40:46.800 | so that if I needed to come back and get this job I could?"

00:40:50.880 | So I would focus on a few things related to that.

00:40:55.000 | Number one, keeping my knowledge and skills current.

00:40:58.100 | If that's what you're teaching in then you have an obvious way to do that.

00:41:04.060 | But that would be the first thing is keeping your knowledge and your skills current.

00:41:07.560 | Number two would be relationships.

00:41:09.980 | How can you keep your relationships current?

00:41:12.380 | Now relationships can be managed with just a little bit of time.

00:41:15.840 | But I would make sure that I kept friendships with my boss.

00:41:19.020 | I would make sure that I kept friendships with my coworkers.

00:41:22.820 | And then I would create a very careful strategic plan with how to maintain professional relationships.

00:41:28.060 | I would make sure that I maintained relationships with all the other people that I know in my

00:41:31.700 | industry.

00:41:32.700 | It could be as simple as a quarterly lunch with your competitor across town.

00:41:37.020 | It could be making sure that you prioritize going to the industry conference or the classes

00:41:42.740 | or whatever is appropriate to your industry.

00:41:44.500 | Wherever the who's who gathers where you build those social connections.

00:41:48.660 | Make sure that that's part of your plan to be there.

00:41:51.420 | And especially if you're teaching I think that's a natural way for you to keep that

00:41:54.340 | current.

00:41:55.340 | And then number three is your reputation.

00:41:57.840 | One of the most important things is that you keep your reputation alive.

00:42:01.800 | What suffers is when people leave a career and they stop promoting their skills and their

00:42:07.260 | abilities in that career then they start to atrophy and all the reputation starts to die

00:42:12.740 | and then they're back trying to apply for jobs like a fresh college grad which is not

00:42:18.340 | where you should be.

00:42:19.780 | And so you have to think through what could you do to keep your reputation current.

00:42:24.300 | And so I would look at publishing and publishing is a number of different things.

00:42:29.840 | Publishing could be things as simple as staying current on relevant professional networks,

00:42:34.380 | LinkedIn, Facebook, wherever people in that career are.

00:42:38.300 | I would look at if you're a teacher and you're researching and involved in this at the cutting

00:42:42.620 | edge I would stay current on publishing in relevant professional journals.

00:42:48.060 | That would be a natural fit for you and it wouldn't take you that much time.

00:42:51.180 | Let's say you write an article every six months for a relevant professional journal.

00:42:55.340 | That keeps your name current in your field even if you don't have the day job and it

00:42:59.140 | gives you a specific area and that gives you the ability to demonstrate to your employer

00:43:03.280 | or to a different employer, "Look, I'm current in this."

00:43:06.140 | They don't have to know that that article only took you ten hours and you invested twenty

00:43:09.980 | hours into keeping current but you can keep a backup plan and you need to keep your reputation

00:43:14.340 | fresh and alive.

00:43:16.380 | I would consider carefully my web presence, my blog, my professional website.

00:43:22.020 | It doesn't take that much work to keep a professional website up to date in your field.

00:43:26.940 | A post every few weeks, a couple of articles, things like that.

00:43:30.640 | Just keeping your professional resume current would help you to be confident that you have

00:43:39.220 | options.

00:43:40.380 | Now that's all designed to give you a backup plan and I think that once you have a backup

00:43:45.660 | plan you can feel more confident going forward with what you perceive to be a risky endeavor.

00:43:50.600 | For me that's always been important.

00:43:51.780 | My backup plan is if I go broke I can always go back to financial planning and I can always

00:43:57.060 | go get a job because I have the qualifications and I'm staying current enough and I have

00:44:02.820 | a public reputation.

00:44:03.820 | If I made an announcement on Radical Personal Finance that I'm looking for a job in financial

00:44:07.100 | planning I'd get plenty of emails in a day of people offering me positions.

00:44:11.780 | A lot of them would be really interesting and I could have a job very quickly.

00:44:15.100 | So basically that's what you want to create for yourself as a backup plan.

00:44:18.940 | I could take the exams, I could be requalified in a month and I'd be ready to go.

00:44:22.460 | Now given that you have a backup plan my answer is if you need more time you don't need more

00:44:29.620 | money.

00:44:30.620 | We've established that with your husband's income and with your savings you could live

00:44:34.500 | on that until you could generate more income.

00:44:38.380 | So you don't actually need more money.

00:44:40.020 | The money is fine.

00:44:41.500 | What you need to make those businesses grow is more time.

00:44:44.620 | And so if this is the thing that's going to help you to get more time I say go for it.

00:44:48.540 | And what I would say is what most concerns me is the phase of life that you're in with

00:44:54.180 | a seven month old and potentially having more children.

00:44:57.020 | The earlier you make this transition the better because it's a lot easier to make a transition

00:45:01.780 | with a seven month old than it is with a four year old.

00:45:04.580 | And so the earlier you make the transition the better.

00:45:08.340 | And so long story short I would say go for it.

00:45:12.680 | Go for it quickly.

00:45:13.680 | Keep a backup plan.

00:45:15.580 | Make design a plan for income and then make sure that you have a method of accountability

00:45:22.600 | to yourself or to your peers or to somebody so that you don't just take the time and goof

00:45:27.440 | off with it but you take the additional time and you really make the business profitable.

00:45:31.380 | But I would move quickly in the direction of the new businesses.

00:45:33.980 | Awesome.

00:45:35.320 | That was a wonderful, wonderful answer to my question and gave me a lot to work with.

00:45:39.220 | I really appreciate it.

00:45:40.220 | Good.

00:45:41.220 | Thanks for calling in Jordan.

00:45:42.220 | I'm so glad you were here.

00:45:43.220 | We've got Chase in Missouri.

00:45:44.220 | Chase welcome.

00:45:45.220 | How can I serve you today?

00:45:46.220 | Hey Joshua.

00:45:47.220 | I have two separate questions for you if that's all right.

00:45:49.660 | Let's go.

00:45:50.660 | So for the last six-ish months my wife and I have been planning on her becoming a travel

00:45:56.040 | nurse and me a stay at home dad with our two young kids starting this July.

00:46:01.620 | My current work contract goes through June.

00:46:03.180 | I was planning on telling my boss this month that I would not be coming back.

00:46:09.780 | We were planning on doing the travel nurse for between one to three years.

00:46:13.780 | Our oldest child starts kindergarten not this coming school year but the following and we're

00:46:19.380 | okay doing homeschool for a couple years but not forever.

00:46:24.060 | With everything that's going on do we need to put a complete hold on that thought?

00:46:32.380 | When were you planning to submit your notice?

00:46:35.780 | This month?

00:46:39.740 | That could wait.

00:46:40.740 | Yeah.

00:46:41.740 | If you waited something like three months how would that hurt your family?

00:46:46.460 | It would not.

00:46:49.460 | If I could continue and I meant to say this to Jordan and she dropped off the line.

00:46:56.980 | I would if I were in that situation right now I would just wait a little bit to get

00:47:04.700 | more clarity on what's going to happen.

00:47:07.740 | We're right in a period with regard to all of the coronavirus stuff and everything right

00:47:12.220 | now for clear context.

00:47:14.580 | We're in a period where I think the evidence that we do have that is pretty solid indicates

00:47:22.740 | that we're going to have a massive impact from this global pandemic.

00:47:29.580 | I'm convinced it is genuinely, it has been for a while, but it's genuinely a global pandemic.

00:47:34.980 | I'm convinced there are tens and tens of thousands of cases already in the United States and

00:47:42.580 | they're just simply not tested and so that's going to have a big impact.

00:47:48.180 | Many countries in the world are past the point of containment.

00:47:51.060 | The British Prime Minister for example or the British Health Minister was just today

00:47:54.780 | talking about the fact that we're moving past stage one which is we're moving past any effort

00:47:59.500 | to contain the pandemic and now we're moving to mitigate it just to slow it so we can provide

00:48:04.140 | more of the necessary health support.

00:48:09.020 | I think that right now the next few weeks are going to be really, really key.

00:48:17.060 | What's going to happen is everyone's still wrestling with what does this mean.

00:48:19.940 | It's why the stock market is just massive swings.

00:48:23.300 | It's unclear because the data is unclear, but what's going to happen is in the next

00:48:26.780 | few weeks the data is going to become more and more clear.

00:48:29.940 | I think at the moment, and I've said this publicly, at the moment I don't see how if

00:48:35.940 | there's an argument to say that this is going to be anything less than economically devastating,

00:48:40.780 | I cannot find it.

00:48:42.220 | I cannot make the argument.

00:48:44.540 | If you tell me Joshua, make the best case, the very best case scenario that I can see

00:48:48.860 | and feel at all intellectually honest about is simply it's going to be devastating economically.

00:48:55.420 | Although it's going to take time because just like we have a lag with the number of people

00:48:59.460 | presenting with virus symptoms and economic lag, it's going to take time for that economic

00:49:04.180 | data to start to filter out.

00:49:05.820 | I think it's going to cause a significant recession in the United States, possibly worse.

00:49:14.540 | We don't know right at the moment what that is going to look like.

00:49:19.300 | What I would see for you is number one, a little bit of extra money is helpful right

00:49:23.500 | now.

00:49:24.500 | If it's not too big of a risk on your lifestyle, a little bit of extra money never makes anybody

00:49:28.900 | feel worse.

00:49:30.260 | Number two is if we get a few weeks further or a few months further and it looks like

00:49:37.540 | the fears of this being a long deep cut, maybe there's a miraculous treatment that's developed

00:49:44.220 | or maybe there's a miraculous vaccine development.

00:49:46.980 | Well, you're not hurt by that and so that would be great, right?

00:49:50.300 | If some kind of miraculous treatment were developed, that'd be wonderful.

00:49:54.660 | In which case it minimizes it, looks like the economy is going to then everything can

00:49:58.760 | be restarted, great.

00:50:01.940 | If it's bad, then what I would say is being more well employed is going to be fine.

00:50:07.980 | Now in your situation with your wife in nursing, obviously that's going to be in very high

00:50:11.820 | demand including travel nursing.

00:50:14.100 | So I'm not concerned there.

00:50:16.240 | My final point would be is just simply if you can figure out a way to get laid off instead

00:50:20.800 | of submitting a resignation, that would be more helpful for you.

00:50:24.460 | And so at the moment it seems premature right now to do that.

00:50:29.460 | But if I were you, I would follow the advice in Financial Samurai's book on how to get

00:50:34.460 | laid off and just simply try to see that if layoffs come to your company, to your business,

00:50:40.900 | that you're at the top of that list because that may allow you to make this transition

00:50:45.060 | that you're already making a little bit more effective.

00:50:48.460 | It may qualify you for severance pay, may qualify you for extra benefits, may qualify

00:50:53.360 | you for unemployment.

00:50:55.440 | Those kinds of benefits might be helpful to you as you make that transition.

00:50:59.220 | So I would, if I were what you described, I would wait and I think that a month from

00:51:04.620 | now is going to be very instructive.

00:51:07.140 | A few more months is going to be very instructive.

00:51:09.420 | At any point in time, you can go ahead and submit the notice of resignation, but I would

00:51:13.140 | wait with the hope of getting laid off.

00:51:15.500 | Okay.

00:51:16.500 | Makes a lot of sense.

00:51:18.740 | My next question is about tax loss harvesting.

00:51:22.620 | So if I have two index funds of equal amounts, one tracking the Dow Jones and one the P500,

00:51:29.260 | can I sell both of those for the tax loss and then rebuy the other one basically kind

00:51:34.180 | of switching those with that money or is that too muddied?

00:51:42.220 | I don't know.

00:51:43.220 | I would have to read.

00:51:44.220 | I had to go back and do some research on that.

00:51:46.940 | I don't know.

00:51:47.940 | I would have to research that and so I can't give you a good answer.

00:51:56.100 | I would say that in general, the first thing I would do is I would research it.

00:51:59.540 | I would try to connect.

00:52:01.140 | I would look at it and I need to go back and look at those rules and really understand

00:52:05.460 | it.

00:52:06.460 | And I don't have that document.

00:52:08.140 | I don't have the IRS regulations in front of me.

00:52:11.140 | But I'll tell you how it approaches.

00:52:12.780 | First I would read it and then if I felt that I had a clear kind of intent of the law case,

00:52:21.820 | meaning that I'm morally clear, that I believe that I'm following what the law says, I would

00:52:26.380 | just do it and take the loss because that's the kind of transaction that the first thing

00:52:32.620 | is you need to imagine yourself standing in front of a tax court judge and defending that

00:52:37.240 | decision or sitting in front of an auditor and defending the decision.

00:52:40.340 | And if based upon your reading of the rules you feel like that is a qualified event, then

00:52:45.820 | I have no problem doing it.

00:52:47.420 | And chances are realistically, the chances of you getting audited or the chances of it

00:52:52.100 | being questioned are infinitesimally low.

00:52:56.740 | And there's no real significant penalty for that kind of thing.

00:53:01.620 | So you've got – you're just playing the odds.

00:53:03.460 | It's like number one, I'm satisfied in my conscience that I'm obeying the law and I'm

00:53:07.140 | doing what is right and I could make this argument in public.

00:53:10.260 | That's the first standard.

00:53:11.820 | Now within that standard, there are no – the only repercussion is if you did get audited

00:53:19.660 | and then if you did lose the argument and then if you did have the transaction disallowed,

00:53:27.260 | then you would pay a penalty or this is the cost of the tax that you would have incurred

00:53:32.740 | otherwise or you would lose the benefit and the transaction would be undone.

00:53:36.240 | And that's just not a meaningful benefit.

00:53:38.660 | It's not a meaningful – it's not going to hurt you.

00:53:41.340 | And so I would do it.

00:53:42.620 | If I felt that upon my reading of the laws of the regulation as written on the IRS website

00:53:48.100 | said that this is good enough, that this is different enough, then I would do it.

00:53:53.740 | But I haven't read those regulations in enough time that I can answer on the spot for you.

00:53:56.940 | >>Josh: Okay.

00:53:57.940 | Sounds good.

00:53:58.940 | Thank you.

00:53:59.940 | >>Steve: My pleasure.

00:54:00.940 | All right.

00:54:01.940 | Move on to the great state of New York.

00:54:02.940 | Peter, welcome to the show.

00:54:03.940 | How can I serve you today?

00:54:04.940 | >>Peter: Hi, Josh.

00:54:06.380 | Two quick ones.

00:54:07.980 | Number one, my wife is a French and U.S. citizen.

00:54:13.580 | We don't have any children but are thinking about it.

00:54:17.260 | How hard would it be for me to become a citizen of the EU and is it worth it?

00:54:21.140 | And second question is how do you know it's time to buy a stock you've had on your shopping

00:54:26.380 | list for a long time these days?

00:54:28.500 | >>Steve: Good questions.

00:54:30.220 | So is the question for your citizenship or for your children?

00:54:33.980 | >>Peter: Since we don't have any kids yet.

00:54:37.780 | How about we go with me?

00:54:39.340 | >>Steve: Okay.

00:54:40.340 | So of what benefit would an EU citizenship be for you right now?

00:54:45.740 | >>Peter: I don't think any.

00:54:48.540 | >>Steve: Then it's probably not worth it.

00:54:51.860 | So you should, I would need to check the laws, but generally speaking if you're married to

00:54:58.700 | your wife who's an EU citizen, then you should be able to negotiate a residency permit for

00:55:05.220 | you.

00:55:06.220 | You may not be able to immediately become a U.S. citizen but you should qualify for

00:55:10.780 | a residency permit similar to the way that your wife should qualify for a residency permit

00:55:14.980 | in the United States if she weren't already a resident and/or a citizen.

00:55:20.480 | So that right of abode should be sufficient for you because if you became an EU resident

00:55:26.420 | then you would have the ability to live there, to partake in whatever the EU systems are

00:55:34.340 | that are of benefit for you and that would be good enough.

00:55:37.820 | And so my step one is I would research those requirements and see if there's a way of starting

00:55:43.840 | that residency process, see what it would take to maintain that residency permit, and

00:55:51.260 | I just don't know the answers to those things off the top of my head.

00:55:54.700 | This is where it's every country matters and you have to see what the time requirements

00:55:59.620 | are.

00:56:00.620 | In some countries it's relatively easy to maintain a residence permit with minimal time

00:56:05.100 | on the ground.

00:56:06.100 | With other countries it's not.

00:56:07.460 | You have to be there for a substantial amount of time.

00:56:10.900 | Next you have to count the cost and so one of the costs of an EU residence permit or

00:56:16.820 | a citizenship if you're actually on the ground, and that's how you would earn it.

00:56:21.580 | So let's say that you negotiate it, you think about it, and you decide, "You know what?

00:56:26.920 | We actually do want to go to France and we want to live there."

00:56:29.500 | That's generally what's going to be required for you to become a French citizen based upon

00:56:34.660 | being married to a French citizen.

00:56:37.180 | So the marriage qualifies you for a residence permit but you have to go and put a time in

00:56:41.100 | on the ground.

00:56:42.420 | That could be very expensive for you with regard to a lifestyle cost, leaving friends,

00:56:47.220 | family, things that are familiar, going abroad.

00:56:49.380 | It could be very expensive to you from a tax cost.

00:56:53.060 | France is not known for low taxes.

00:56:55.980 | It could just be very expensive.

00:56:57.460 | On the flip side, that could be something that you'd be thrilled to do.

00:57:00.740 | Instead of viewing it as a cost, you might be thrilled to go and live in France and you'd

00:57:03.940 | love the adventure of it and the chance to do it.

00:57:06.220 | And so you count the costs for that.

00:57:09.380 | If you don't have a pressing need for it though, and you can't imagine how your life would

00:57:14.580 | be very different because of it, then I wouldn't push it very hard because that's an option

00:57:20.920 | that should be available to you in the future as long as you stay married.

00:57:24.700 | You should, as long as you're married, be able to qualify for that residence permit

00:57:27.820 | in the future.

00:57:29.780 | And so unless you have some reason why it's a pressing need, why it's very important to

00:57:34.140 | you, and if the costs are high, then there's no reason to pay those costs right now.

00:57:41.060 | For your children, however, things could be different.

00:57:43.860 | And so what you need to do is if you did have children in the future, you need to make sure

00:57:48.100 | you understand very clearly what the citizenship rights are that they would be qualified for

00:57:53.700 | based upon your wife's French citizenship.

00:57:58.180 | I can't say those laws off the top of my head, but probably anywhere they're born, they would

00:58:07.420 | qualify for French citizenship because their mother is French.

00:58:11.060 | And probably anywhere they're born, they would qualify for US citizenship because you're

00:58:15.780 | a US citizen.

00:58:16.780 | Is your wife also a US citizen?

00:58:19.780 | Yes.

00:58:20.780 | Okay.

00:58:21.780 | So they would certainly be qualified for US citizenship.

00:58:24.500 | But in some countries, that may not be the case.

00:58:27.620 | And so the reason I'm saying this is probably not for France, but in some countries, give

00:58:32.100 | me an example, Canada.

00:58:34.980 | Let's say that if your wife were a Canadian citizen, but yet she was not born in Canada,

00:58:43.140 | she was born in the United States, but she became a Canadian citizenship by naturalization.

00:58:49.660 | If she then later had a child in the United States, that child, it's my understanding,

00:58:56.300 | that child would not be qualified for Canadian citizenship because the child's mother was

00:59:01.820 | not born in Canada.

00:59:03.580 | Now, if she had been a natural born citizen of Canada, then the child would be qualified

00:59:08.880 | for Canadian citizenship, even if the child were born outside of the United States, sorry,

00:59:13.500 | outside of Canada.

00:59:14.880 | But if the child's mother had naturalized as a Canadian citizen, but didn't give birth

00:59:21.220 | in Canada, the child would not be entitled to that citizenship.

00:59:24.700 | And so what you want to think through is you want to research the laws of France and see

00:59:27.820 | if there are similar laws.

00:59:29.340 | Now, since both you and she are US citizens and you've been living in the United States

00:59:33.460 | for a substantial time, no matter where your child is born, your child would be qualified

00:59:37.700 | for US citizenship.

00:59:39.300 | But if she found out that for some reason the child would not be qualified for French

00:59:43.500 | citizenship unless the child were born in France, then you would want to go and have

00:59:48.140 | the child in France.

00:59:49.860 | Chances are the child would be qualified for French citizenship no matter where the child

00:59:52.940 | is born, which means that if you did have a baby, and we're going way down the ifs range,

00:59:57.500 | but if you did have a baby and if you did feel like you were capable as a couple of

01:00:02.060 | doing birth tourism, you would be wiser to go to a third country and have the child in

01:00:07.340 | a third country instead.

01:00:08.800 | Could be as simple as Canada or Mexico or any number of other countries that also have

01:00:12.900 | benefits.

01:00:14.220 | And what I would do is I would research the places where the child could have interesting

01:00:18.380 | options based upon the French heritage.

01:00:20.060 | So I would look at the former French territories and colonies and things like that.

01:00:24.060 | And perhaps there would be an option where the child could get a really interesting third

01:00:28.740 | citizenship based upon being born in a country that was a former French colony.

01:00:33.620 | And so that would be a way that from birth your child would have three citizenships.

01:00:38.260 | But for you, back to your question, if the cost is high and the benefit is low, don't

01:00:45.260 | do it.

01:00:46.260 | If the cost is low, you'd really enjoy living in France, you're living on investments, not

01:00:50.540 | on earned income, thus you wouldn't generate high taxes, well then go live in France for

01:00:55.060 | a few years and go ahead and get your French citizenship.

01:00:57.540 | But that's my answer.

01:00:59.240 | Questions on that so far?

01:01:00.240 | >>Steve: Nope, makes sense.

01:01:03.020 | >>Steve: With regard to buying a stock, what is your method, personally, of assessing the

01:01:09.820 | value of a stock?

01:01:11.820 | >>Steve: So personally I tend to refer to a third party and the one that I trust the

01:01:19.020 | most is Morningstar.

01:01:20.580 | >>Steve: Okay, so you're then not talking about a stock, you're talking about a mutual

01:01:25.580 | fund.

01:01:26.580 | Are you talking about a mutual fund or a stock?

01:01:27.580 | >>Steve: A stock.

01:01:29.580 | I'll use their rating system or one of the other analysts to give me X many stars or

01:01:40.180 | it's a buy or a hold or whatever.

01:01:41.780 | I'm not doing my own intense analysis of the balance sheet or anything like that.

01:01:47.060 | >>Steve: Well, in that situation, if that's your method of analysis, then you buy when

01:01:52.180 | you have the money and when the Morningstar analysts recommend it as a buy.

01:01:57.580 | >>Steve: Seems pretty simple.

01:02:01.580 | >>Steve: Yeah, and I think that the answer, it is simple and I don't need to expound on

01:02:06.580 | it but the first question is always what do I believe makes this a good investment?

01:02:13.820 | On what basis am I going to judge this?

01:02:17.300 | And so then you follow that chain of logic through and if you trust the Morningstar analysts

01:02:24.020 | that they know what is going on and you believe that they are competent in doing that and

01:02:29.020 | then they make a buy recommendation for the stock, well then the answer is simple.

01:02:32.900 | You wait for them to make the buy recommendation, you wait for yourself, for you to have the

01:02:37.340 | money available and then you go ahead and make the purchase.

01:02:40.460 | All right, we go on now to looks like the state of Virginia.

01:02:43.180 | Welcome to the show.

01:02:44.180 | How can I serve you today?

01:02:45.180 | Got a caller from the state of Virginia.

01:02:50.700 | Go ahead please.

01:02:56.900 | Going once, 571 area code, your name is not on my screen.

01:02:59.500 | Go ahead please.

01:03:00.500 | All right, we will come back to you in a moment.

01:03:05.260 | Looks like now to New York City.

01:03:06.980 | New York, welcome to the call.

01:03:07.980 | How can I serve you today?

01:03:08.980 | >>Jaycee: Ashfaq, hey, thank you.

01:03:09.980 | This is Jaycee.

01:03:10.980 | So first, thank you for the opportunity.

01:03:11.980 | Hoping you and your family progress through this turbulent times healthy and unscathed.

01:03:21.980 | My question probably lost its time in terms of opportunity time, but I figured I would

01:03:26.540 | ask you anyway.

01:03:27.540 | Two weeks ago, I was pondering pulling out $50,000 out of my 401(k) via a loan to put

01:03:35.220 | aside for potential opportunities.

01:03:37.580 | So two weeks ago, I'm thinking, okay, something's going to happen.

01:03:40.700 | It's not really reacting towards what's going on globally.

01:03:43.860 | So unfortunately, something that soon was going to happen, happened.

01:03:47.580 | But I didn't do it.

01:03:48.740 | But I was wondering if I could get your opinion on that type of method of taking out money

01:03:53.780 | via a 401(k) loan for interest of the opportunities.

01:03:58.580 | That 50K would represent about 10% of my portfolio at that time, a lot more now.

01:04:04.060 | But my interests were either to have it liquid for any emergency use, or potentially multifamily

01:04:11.900 | investment.

01:04:12.900 | I already own two families.

01:04:14.500 | So I was thinking, depending long term or short term period, there'll be some opportunities.

01:04:21.140 | And the third one was actually to invest in a family dental practice, a new dental practice

01:04:26.700 | in Latin America.

01:04:28.340 | So those are the three opportunities that I was seeing for that need.

01:04:32.140 | I already have 20K in hand.

01:04:34.780 | So I have some emergency money.

01:04:36.100 | It was more about kind of taking it out before what ended up happening in the crash currently

01:04:41.300 | occurring.

01:04:42.300 | So I guess the real question for you is, is that type of methodology solid in the future?

01:04:49.340 | Since I think it's already too late for me to do so without losing Sabir with the fact

01:04:56.260 | that the market already crashed 20%.

01:04:59.780 | And if that's something that if there's something I'm missing in terms of taking out money to

01:05:03.700 | a 401k loan.

01:05:05.340 | I'm open to it.

01:05:06.900 | I'm not hardcore opposed to the idea.

01:05:09.580 | I used to be.

01:05:10.660 | I used to kind of follow the standard financial advisor advice to say, don't touch the money

01:05:16.740 | in your 401k, just like I used to follow the standard financial advisor.

01:05:19.940 | Don't take the money out of your 401k.

01:05:22.460 | And I think financial advisors who maintain those positions generally have good reasons

01:05:28.100 | for doing it.

01:05:29.500 | The experience that most of us financial advisors have is the vast majority of people that we

01:05:35.460 | observe who cash out a 401k or who take out a 401k loan, spend the money on consumption

01:05:42.220 | rather than on investment.

01:05:44.180 | And so when you see this again and again and again and again, it causes you to be fairly

01:05:49.820 | jaded and to basically assume that everybody is going to spend the money on consumption

01:05:55.580 | rather than investment.

01:05:57.260 | And so you learn that you've got to play the averages and so you generate these go-to opinions

01:06:05.540 | such as never cash money out of a 401k.

01:06:09.220 | Because you know if somebody leaves their job and they cash money out of their 401k

01:06:12.820 | and they take it, they take the distribution, you know it's going to be spent on frivolous

01:06:18.580 | consumption.

01:06:19.580 | That's just what 90% of the people that you watch do it.

01:06:22.540 | And so you generate these opinions.

01:06:25.220 | Or this is what happens when people do a home equity loan of credit or they refinance their

01:06:30.020 | credit cards into their house.

01:06:32.260 | When you watch again and again and again that somebody has credit card debt and then they

01:06:35.740 | take out, they refinance their house and they pay off their credit card debt using their

01:06:39.380 | HELOC, well you know that almost every single time they're going to go ahead and increase

01:06:45.180 | the credit card debt again and then now they don't have the money in their house because

01:06:50.700 | they used it on consumption.

01:06:53.020 | Thus they're not getting wealthier.

01:06:54.900 | So I used to follow that with regard to 401k loans and with just taking distributions from

01:07:03.740 | retirement accounts.

01:07:05.580 | I've since modified my opinion on that largely because I'm in a different space now.

01:07:12.380 | You know the average listener of radical personal finance is not a consumption driven person

01:07:17.180 | but rather an accumulation driven person.

01:07:19.400 | The average listener of radical personal finance is not an entry-level worker but rather a

01:07:23.500 | very high earning, highly educated person.

01:07:29.180 | So now these days I just take it much more tactically and say is this the best source

01:07:34.280 | of funds at this particular time because the mathematical answer to the question comes

01:07:40.260 | down to what's the alternative use of the dollar.

01:07:43.100 | Let's say that you were going to go to your 401k, you're going to sell stocks at a 20%

01:07:47.980 | discount or 30% discount, whatever the portfolio is down over the last couple of weeks and

01:07:53.500 | in order to take a 401k loan out you take $50,000 but you're able to take that $50,000

01:07:59.460 | loan and invest it into a dental practice in Latin America but that dental practice

01:08:07.940 | grows in the next five years where your equity stake in that dental practice grows to be

01:08:13.100 | worth $400,000.

01:08:15.820 | Well obviously under that scenario, obviously that was a better move than leaving the money

01:08:21.620 | sitting in mainstream US equities.

01:08:24.460 | And so if you are really confident in that kind of hardcore rate of return, really just

01:08:30.740 | this is a potential I'm convinced, maybe you're going to do medical tourism and you're going

01:08:37.260 | to do a medical tourism for dental practice in Costa Rica or Mexico or something like

01:08:41.460 | that and you're convinced that your family member if they just had $50,000 they'd be

01:08:46.620 | able to go from one dental office to a string of dental offices with thousands and thousands

01:08:52.020 | of Americans and Canadians coming down to get their dental work done in Costa Rica or

01:08:56.940 | Mexico.

01:08:57.940 | Well in that situation you should do it.

01:09:02.220 | But if you don't have a compelling use of the dollar then it all of a sudden doesn't

01:09:08.020 | seem so good.

01:09:10.820 | So my answer to you is what's the better investment?

01:09:15.740 | Because you should always go with the best investment that's at your fingertips and the

01:09:21.180 | factor of whether you take money out of the 401k or whether you take money out of a 401k

01:09:30.340 | or whatever it just comes down to that those are just technical details.

01:09:33.840 | You have to be convinced of what the better investment is.

01:09:36.780 | So to give you a direct answer first are you convinced of what the clear investment is

01:09:42.860 | or is it just an opportunity fund?

01:09:44.580 | Let's call it an opportunity fund.

01:09:48.020 | There is an opportunity for the dentist.

01:09:49.540 | There's a young cousin who's actually here, putting tables to make money to be able to

01:09:56.260 | start that practice and he's going to be going back soon.

01:09:59.220 | He's staying with me so we're very close.

01:10:01.620 | And I haven't gauged that opportunity to him but I see that as a potential market and I

01:10:07.340 | could definitely support him and trust him for that.

01:10:09.820 | And the other thing, the other investment was multi-family which is something I'm already

01:10:14.020 | learning and expecting to heavily get involved with in the next few years.

01:10:20.300 | So those are the two elements that I could navigate comfortably.

01:10:25.020 | Again, it was something I really wanted to pull out two weeks ago.

01:10:30.980 | Now I'm more hesitant on it.

01:10:32.500 | So I am more hesitant today than I was two weeks ago.

01:10:34.860 | Unfortunately, I just didn't take that.

01:10:36.620 | I didn't do it two weeks ago.

01:10:38.620 | So...

01:10:39.620 | You learned a lesson on that one.

01:10:40.620 | Yeah, yeah.

01:10:41.620 | I was, you know, I figured I'd still ask because in the future it might happen again.

01:10:46.740 | Of course, of course.

01:10:47.740 | Why not learn from it?

01:10:48.740 | Well, the lesson should be that if you are thinking about doing something like that,

01:10:52.540 | you need to honestly assess how serious you are about it.

01:10:55.360 | And then if investments are up and markets are good, just do it.

01:10:58.940 | Don't wait on it.

01:11:00.220 | Because if you have an alternative use of the dollar, don't wait.

01:11:03.600 | Do it that you think is better because it feels a lot, it doesn't feel so bad to sit

01:11:09.720 | back and miss out on a little bit of upside.

01:11:12.820 | It feels a lot worse to want to do something else but then to have to look at your portfolio

01:11:16.700 | and say, "Am I really going to sell these investments at a discount?"

01:11:20.100 | So here's my answer to you.

01:11:22.120 | From what, from a few minutes of what you're saying, I don't think, I wouldn't do, I wouldn't

01:11:26.820 | sell and take a loan on something that is just a maybe, maybe an opportunity fund.

01:11:32.740 | I would, because I think that again, the opportunities are probably going to be very affected.

01:11:38.240 | And that's one of the things about where we are right now.

01:11:39.800 | The reason the market is down in your US-based investments is the same reason why the market

01:11:46.060 | is down in your Mexican investments or is down in your Asian investments.

01:11:50.480 | The entire world is being affected right now, which is the huge risk of a viral infectious

01:11:59.340 | outbreak is, that's what I've talked about extensively on the show.

01:12:03.080 | It's such a huge risk because of its global nature, which means that not only do you have

01:12:09.140 | risks in the United States, but you have risks everywhere.

01:12:13.100 | So if the United States goes into recession, that in and of itself makes it a very difficult

01:12:18.540 | time to do things like start new businesses in Latin America.

01:12:22.940 | You know, there's the saying about when the United States sneezes, Latin America catches

01:12:26.220 | a cold.

01:12:27.220 | It's just the United States is such a huge powerhouse economy influencing the whole region

01:12:32.460 | that often the effects of what happens in the superpower expand to the region around.

01:12:38.740 | So here's my answer.

01:12:40.300 | I wouldn't sell money in my 401k.

01:12:42.160 | If I were going to do this deal, what I would do is I would just cut my expenses now, which

01:12:48.300 | I think everybody should be doing, is cutting expenses now to the significant discretionary

01:12:53.660 | expenses need to go away.

01:12:55.300 | I would be saving as much money as possible, making as much money as possible.

01:12:59.800 | And then if you haven't already done it, I would establish a credit card portfolio and

01:13:04.500 | set up the credit card portfolio with the intention of using some of that money for

01:13:09.460 | opportunities.

01:13:11.420 | Because in the situation like you're describing, you may come to a point, before I would cash

01:13:18.220 | money out of the 401k and take a 401k loan, I would just simply move the investments from

01:13:23.660 | mutual funds to cash, keep them inside the 401k, and I would finance the need with 0%

01:13:30.340 | interest rate credit cards.

01:13:31.920 | Then if necessary, if the investment fell apart or if I lost my job or something like

01:13:37.540 | that, then that's the point that I would go ahead and make the distribution from the 401k.

01:13:41.740 | But I think that's a safer move than just taking the money out.

01:13:45.940 | And it gives you more options to make up the difference with increased earnings, increased

01:13:49.700 | savings from your expenses.

01:13:51.100 | Now that's risky.

01:13:52.660 | You've got to be very good at your behavior, but that's what I would do from a financial

01:13:56.100 | engineering perspective.

01:13:57.100 | Well, thank you.

01:13:58.100 | I definitely will plug your credit card course.

01:14:01.700 | I have taken it and I do have a credit card portfolio in hand as needed.

01:14:06.500 | Very low usage right now, but it's there just in case.

01:14:09.740 | I also would plug the other two courses and I've gone through them.

01:14:12.580 | I'm going to the survival one right now.

01:14:14.580 | Preparing is in that as well.

01:14:16.540 | So really thank you for everything you've done.

01:14:18.100 | I really appreciate it.

01:14:19.100 | Good.

01:14:20.100 | I appreciate that plug.

01:14:21.100 | And of course, if any of the rest of you are motivated to go and take those courses, you

01:14:24.940 | can find those at radicalpersonalfinance.com/store.

01:14:28.060 | Radicalpersonalfinance.com/store.

01:14:29.060 | At the very least, anybody who has a credit card should go and take that course.

01:14:32.140 | All right, we go now to Atlanta.

01:14:33.620 | Welcome to the show.

01:14:34.620 | How can I serve you today?

01:14:35.620 | Hi, Josh.

01:14:36.620 | Can you hear me?

01:14:37.620 | Yes, go ahead.

01:14:38.620 | So let's make things interesting, shall we?

01:14:43.100 | I am in pursuit of freedom.

01:14:45.300 | Right now, financial freedom in terms of lowering taxes, which is everyone's biggest expense.

01:14:51.300 | I'm also seeking freedom from obligations that states place on me.

01:14:55.980 | And I run a single member LLC and I can live anywhere, though right now I'm stuck in the

01:15:00.620 | US for more than just the coronavirus.

01:15:03.860 | So with that in mind, I'm pursuing what the privacy guru, Michael Bazell, calls nomadship.

01:15:10.340 | So this involves taking up legal residence in South Dakota, getting a postal box that

01:15:14.700 | has a legal address, getting a driver's license, car registration.

01:15:18.980 | The reason South Dakota is good is because they're used to RV people coming and going

01:15:23.660 | and they don't make many claims on their residence.

01:15:26.220 | So in the end, you end up with a legitimate address and identification without having

01:15:30.140 | to set foot in South Dakota except to set this all up.

01:15:33.480 | From that point on, you can live wherever you want.

01:15:36.100 | And so South Dakota also has the benefit of being a no income tax state.

01:15:40.340 | And so my question is, if someone were to become a nomad in this way and just live all

01:15:46.380 | around, how would they make sure that the other states they live in during the year

01:15:50.620 | don't make any claims on them, tax or otherwise?

01:15:54.500 | Each state, and to be clear, do you need to be or desire to be in the United States or

01:16:01.700 | are you also willing to consider an international approach to this?

01:16:05.260 | Oh, I'm willing to consider it, but I suspect I will probably be in the US for the near

01:16:11.660 | future.

01:16:12.660 | All right.

01:16:13.660 | So let's start with the US based way to do it.

01:16:15.020 | The way that you establish, every state is different.

01:16:20.100 | And so if you're going to be, your business is digital, I get the impression your business

01:16:24.460 | is digital?

01:16:25.900 | Yes.

01:16:26.900 | Okay.

01:16:27.900 | Every state has different laws.

01:16:30.380 | And in the United States, this is a subject that's not nearly as talked about as it is

01:16:36.020 | internationally.

01:16:37.020 | Now, I've studied the laws of a bunch of states, I've worked with some clients on this and

01:16:40.820 | we've kind of worked it out.

01:16:42.740 | But there's a legal answer and there's a practical answer and you're going to have to navigate

01:16:48.260 | through it.

01:16:49.580 | The legal answer is each state has a different formula that they're going to use based upon

01:16:55.340 | to establish your being a tax resident of that state.

01:17:00.300 | And this is where it depends on what state you're going to spend most of your time in.

01:17:04.700 | If you establish your legal residency in South Dakota and then you spend a year in Texas

01:17:14.860 | living in an RV at a Texas RV park, the state of Texas is generally not really going to

01:17:21.700 | care whether you're actually physically in their state because the state of Texas doesn't

01:17:26.220 | impose state income taxes.

01:17:29.540 | That's a very different scenario than if you establish your legal residency in South Dakota

01:17:34.260 | and then you move to the state of New York and you rent a condo in the state of New York

01:17:40.100 | and you're physically inside New York for 365 days running your digital business.

01:17:44.980 | Now the state of New York is going to care because the state of New York wants their

01:17:49.060 | income taxes.

01:17:50.500 | So the reason that these states such as South Dakota, Florida, and Texas allow nomad residency

01:17:56.660 | status is that they're not extracting income tax revenue from you, from anybody, and so

01:18:05.380 | they don't mind if you're in their state and you register things.

01:18:08.620 | To the state of South Dakota, with you being an RVer, that's a benefit to the state because

01:18:13.420 | now they're generating tax revenue on the licensing of your vehicle, of your RV, of

01:18:20.340 | anything else, any other business that you do with the state.

01:18:23.380 | The local insurance agents are generating some revenue based upon selling you South

01:18:28.060 | Dakota qualified insurance and no other South Dakota residents are paying income tax anyway

01:18:32.980 | and so South Dakota is happy to have you.

01:18:35.460 | So if you spend your time in South Dakota, in Wyoming, in Texas, and in Florida, basically

01:18:40.840 | you could probably spend as much time as you wanted in those states and not have any problem.

01:18:46.020 | One thing you want to think about is not only tax but also the concept of domicile.

01:18:51.620 | If you have significant assets, domicile can be important with regard to your estate, how

01:18:57.620 | your estate is settled.

01:18:58.860 | If you are a resident of South Dakota but you have a house in Florida and then you die,

01:19:03.860 | how is your estate settled?

01:19:06.140 | Let's skip that because it's a little bit complex and let's just focus on income tax.

01:19:09.980 | Now beyond that, you research the laws of the state that you want to check out.

01:19:14.620 | So let's say that you did like the state of New York.

01:19:16.580 | Well you look up the state of New York income tax residency and you see what the state of

01:19:20.100 | New York has and most states have a combination of factors that they discuss.

01:19:26.900 | One factor is the amount of time that you physically spend in the state.

01:19:32.300 | If you're in a state 11 months per year in the state of New York and you're in the state

01:19:37.140 | of South Dakota one month per year, it's a little hard to argue that South Dakota is

01:19:40.300 | actually your state.

01:19:42.500 | So time is a factor.

01:19:44.420 | In general, if you are going to be a nomad physically moving around, well it's, you know,

01:19:49.860 | if you spent four months here, four months there, four months in the other place or five

01:19:53.060 | months here, five months there, five months in the other place, you're going to be fine.

01:19:56.220 | The second factor that is usually going to be considered would be basically the concept

01:20:01.060 | of nexus.

01:20:02.220 | How connected are you to the state?

01:20:05.180 | Again New York, you have a house, you have a business, you have a New York LLC, you spend

01:20:11.220 | 10 months a year in another state but your house, your vote in New York, all the stuff

01:20:17.460 | is in New York.

01:20:18.460 | Well now New York is going to say, "No, look, you're really connected here."

01:20:21.300 | And so when I'm teaching somebody and consulting on how to move out of one of these aggressive

01:20:27.020 | states, the two most aggressive states being New York and California, one of the most important

01:20:32.180 | things is to move your nexus, your life to another place.

01:20:37.460 | And generally if you're not really wealthy, not generating a huge amount of income, you're

01:20:42.020 | not, it's not a big deal but New York and California are extremely aggressive in chasing

01:20:47.340 | down people who claim former residency.

01:20:49.180 | There was a court case a number of years ago about a guy who moved to Texas but he would

01:20:53.220 | commute back and forth to New York City and I think the distinguishing factor came down

01:20:57.180 | to where his dog was located.

01:20:59.780 | And if my memory is right, he won the case with the state of New York because his dog

01:21:03.500 | was physically located in Texas.

01:21:05.660 | And they came down and said, "Listen, yeah, I know he goes back and forth but he's a Texas

01:21:09.500 | resident.

01:21:10.500 | That's where his dog is.

01:21:11.500 | So if you got a dog, make sure your dog is in Texas and not in New York."

01:21:16.700 | So these are all kind of the legal questions and legal considerations.

01:21:20.740 | If you make a lot of money or you have a lot of money, there's a much bigger target on

01:21:23.900 | your back than if you're just living on whatever income you generate from your business and

01:21:27.340 | you don't have a lot of money.

01:21:28.740 | But you still want to go ahead and set up your status in a way that follows the law.

01:21:36.180 | That's the legal consideration.

01:21:38.180 | Now let's talk practicality.

01:21:40.060 | Practically every state is different but practically because there aren't border controls at the

01:21:45.940 | states between various US states, there's a decent chance that you just kind of filter

01:21:52.420 | through without being found.

01:21:58.620 | Now this is harder than it once was.

01:22:01.380 | And so an example would be the state of California.

01:22:05.300 | In the state of California, all of the roads are monitored by automatic license plate reading

01:22:11.780 | systems.

01:22:12.980 | And so let's say that you are a nomad resident of South Dakota but you drive your South Dakota

01:22:19.420 | plated car in California and the California license plate reading systems identify the

01:22:27.300 | fact that you're basically there all the time.

01:22:30.340 | Well after a while, I don't know what that time is, I don't have any clear data on that,

01:22:34.340 | but after a while you're going to get a letter from the state of California saying you're

01:22:38.260 | a California resident, you need to plate your car and become a resident of California because

01:22:43.360 | your South Dakota plated car is in the state of California.

01:22:47.020 | That's probably, that's very different than maybe the state of West Virginia.

01:22:51.860 | The state of West Virginia is not nearly as committed to the license plate reading system

01:22:56.300 | as is California and they're not nearly as aggressive with tax collection as is the state

01:23:00.340 | of California.

01:23:01.960 | So practically speaking, you could probably spend significant amounts of time in a state

01:23:07.860 | and generally slide under the radar.

01:23:11.100 | This would be where some of Bazell's other techniques that he would teach would come

01:23:14.360 | into play as well.

01:23:16.120 | It would be useful for you if you're going to spend significant amounts of time in a

01:23:19.460 | state, it'd be useful for you to have a car that's plated in that state to lower your

01:23:24.220 | profile and you could do that without necessarily establishing tax residence.

01:23:28.580 | I'm not comfortable trying to go to the point of trying to say to somebody, "You're going

01:23:34.420 | to be, you're going to register in South Dakota, but you're going to live full time in North

01:23:38.060 | Carolina."

01:23:39.060 | I don't think that works.

01:23:40.380 | Number one, it's not legal and I want to encourage people to follow the law and I think that

01:23:48.540 | in time, in the fullness of time, it's going to come back to hurt you.

01:23:52.660 | If you were hardcore and by hardcore I mean if your last name was Bazell, then I think

01:24:00.860 | you could probably get away with it, but you're going to need to be hardcore and not using

01:24:07.060 | cash, not having a significant record of your vehicle located in those places, generally

01:24:13.580 | just maintaining an extremely low profile.

01:24:16.660 | I think that that is possible.

01:24:17.660 | Let me give you a scenario that would be practical.

01:24:20.780 | If I were a California resident who was seeking to leave California and move to Nevada, the

01:24:27.540 | first thing I would do is I would follow the law and I would very clearly and firmly establish

01:24:32.620 | my Nevada residency.

01:24:34.220 | I would sell my house.

01:24:35.980 | Selling house is different.

01:24:38.260 | You could still own a house in California, but it's a whole body of evidence.

01:24:42.020 | I would create this whole body of evidence that I had moved from California to Las Vegas

01:24:47.140 | and I would make sure that I moved my addresses, I moved my driver's license, I moved my doctors,

01:24:55.140 | I changed from being a part of the California local physician's board to being a part of

01:25:00.860 | the Nevada local physician's board.

01:25:02.260 | I registered to vote.

01:25:03.620 | I joined a church in Nevada.

01:25:06.060 | I would create this whole body of evidence for me to be in Nevada.

01:25:09.340 | And then from then on, I would keep my footprint in California very, very light.

01:25:13.540 | I wouldn't use a credit card in California.

01:25:15.180 | I would use cash in California.

01:25:18.260 | I would minimize flying into California.

01:25:20.620 | I would consider driving into California instead of flying into California.

01:25:24.700 | I would just basically practice all the good privacy techniques to make my presence in

01:25:29.140 | California very, very light.

01:25:31.380 | On a situation like that, I think you could legally spend several months per year cumulatively

01:25:35.980 | in California and I think practically you could spend months a year in California without

01:25:41.300 | becoming a California tax resident.

01:25:44.900 | But I wouldn't go all the way to saying, "Yeah, I've just made everything in Nevada, but I'm

01:25:48.620 | going to try to be in California the whole time."

01:25:50.660 | Is it theoretically possible?

01:25:51.660 | I bet you Bazelle could do it.

01:25:53.100 | You could probably do it.

01:25:54.100 | But it's not legal and I think it burns you more than anything else and so I recommend

01:25:59.340 | against that.

01:26:00.340 | I think the better strategy is just simply to choose the state of your residency and

01:26:04.420 | then establish a couple of places in the United States that you like to be and then in the

01:26:08.820 | same way that when I teach this internationally, just do that within the United States and

01:26:12.880 | that solves your problem.

01:26:14.860 | Yeah, that's great.

01:26:16.860 | And I said I'm pursuing freedom, so New York and California aren't even in my vocabulary

01:26:21.800 | at this point in my life.

01:26:23.800 | I agree with you and I'm happy to hear that.

01:26:26.140 | Those states are important because they are aggressive and they are, especially as more

01:26:32.480 | and more people are leaving those states, the government in those states is paying very

01:26:38.800 | careful attention to people who are leaving those states and they are suing people for

01:26:44.360 | tax revenue and they're going after them.

01:26:46.680 | And so I have a huge listenership in California and New York.

01:26:50.000 | It's very important that if you're going to do it, you got to do it legitimately.

01:26:54.020 | You can leave California.

01:26:55.860 | You can leave New York.

01:26:57.180 | You can.

01:26:58.180 | They can't keep you forever.

01:27:01.000 | Hotel California was a song.

01:27:02.360 | It wasn't the real thing, but it can feel like it if you're just trying to do this on

01:27:05.560 | paper and you can't be sloppy about it.

01:27:08.080 | You can't just say, oh, I'm going to go and move my driver's license to South Dakota and

01:27:13.160 | that's good.

01:27:14.160 | No, if you're going to leave New York, you've got to genuinely leave New York and you've

01:27:17.400 | got to amass the whole body of evidence that indicates that you have moved from New York.

01:27:23.040 | And then later, I would say if you want to go back and visit family and things like that,

01:27:27.320 | fine, you can do that later, but you can't just do it on paper.

01:27:30.920 | It's got to be done legitimately.

01:27:33.360 | Sounds like a plan.

01:27:36.800 | Okay.

01:27:37.800 | I would say to you, obviously, if you like being in the United States for lifestyle reasons,

01:27:41.960 | as millions of people do.

01:27:43.640 | I don't.

01:27:44.640 | I'm prepared to leave, actually.

01:27:46.760 | I'm actually thinking about starting up my next company outside of the US.

01:27:53.640 | I know that that doesn't solve tax obligations, but so that if I decided to leave in the future,

01:27:58.440 | it would be easier to do so.

01:28:01.720 | So this is a lot simpler than you probably understand right now, though.

01:28:05.480 | The United States is a bear when it comes to tax obligations.

01:28:10.040 | And frustratingly, because of citizenship-based taxation, the frustrating thing about that

01:28:15.960 | is you can never get out fully of the US tax net unless you formally renounce your US citizenship,

01:28:23.120 | which is a very significant step that the vast majority of those of us who are US citizens

01:28:28.920 | will just simply never do.

01:28:31.080 | But in some ways, you can make a very strong argument that it's a lot easier for US citizens

01:28:38.080 | who want to save taxes by moving abroad to do so on a modest amount of income than it

01:28:44.560 | is for other people.

01:28:46.280 | So let's use Canada and the United States as an example.

01:28:48.960 | If you were a Canadian who was interested in leaving Canada and becoming a tax resident

01:28:55.160 | somewhere else, you could do that.

01:28:57.420 | And if you made a million dollars per year in Canada from your online business, you could

01:29:02.560 | move to the Cayman Islands and you could establish residency in the Cayman Islands where there's

01:29:07.880 | no income tax, and you can stop paying any tax obligations to the Canadian government.

01:29:14.360 | That's the benefit of being a Canadian.

01:29:16.800 | But in order for you to accomplish that, you have to basically sever all ties with the

01:29:22.200 | country of Canada.

01:29:24.000 | That would include...

01:29:25.000 | And now, you don't have to do all of these.

01:29:26.520 | Again, it's a body of evidence.

01:29:27.680 | You're basically creating a case that you could present if you ever had to.

01:29:31.640 | But the safest way to do that is to basically terminate all of your connections with the

01:29:36.720 | country of Canada.

01:29:38.220 | You sell any real estate that you own.

01:29:40.480 | You close investment accounts or move them elsewhere.

01:29:43.640 | You cancel any credit cards that you have issued in the country of Canada.

01:29:48.240 | You move bank accounts out of the country of Canada.

01:29:50.520 | You basically disconnect all of your association and your ties with the nation of Canada, except

01:29:57.760 | for the fact of your Canadian citizenship and passport.

01:30:00.840 | Now, the great thing about that as a Canadian is you can move to the Cayman Islands.

01:30:04.820 | You can earn a million dollars a year and pay zero dollars of income taxes.

01:30:08.480 | It's 100% legal.

01:30:10.120 | It'll save you hundreds of thousands of dollars to do that.

01:30:14.860 | And at any point in time, you can maintain your Canadian citizenship, which means you

01:30:18.720 | could still go back to Canada in the future and live there at any point in time and reset

01:30:22.520 | up that whole system.

01:30:25.080 | And that's a major superior scenario over the United States.

01:30:29.000 | It's also a much more moral system of income tax collection than the United States system,

01:30:34.000 | which charges you income tax even though you're not a resident and not receiving any benefit

01:30:37.840 | from US services.

01:30:39.960 | So that's the case against the US system.

01:30:42.760 | But here's the counter argument.

01:30:45.360 | As a US American, your rules for your tax obligations are much clearer than they are

01:30:51.320 | in Canada.

01:30:52.640 | And so if you want to save money on your US taxes, all you need to do is be physically

01:31:00.600 | present outside of the United States at least 330 days per year.

01:31:06.240 | And if you do that, you will qualify for the foreign earned income exclusion, which will

01:31:11.680 | save you money on the first about $105,000 of your income.

01:31:16.200 | And it's just very simple.

01:31:18.280 | It's a number.

01:31:19.280 | How many days are you physically present in the United States?

01:31:21.800 | Now without going into all the details, there are other ways of qualifying as well, which

01:31:24.560 | could allow you to spend up to a few months in the United States if you are a bona fide

01:31:28.200 | resident abroad.

01:31:29.560 | But in your situation, you're a genuine nomad.

01:31:31.800 | It can be as simple as this.

01:31:33.720 | You move your legal residency to the state of South Dakota.

01:31:37.760 | Then you get in your RV, you drive to Canada, and you spend six months in Canada in your

01:31:44.160 | RV.

01:31:45.160 | And then you quickly drive through the state of the country of the United States and you

01:31:49.080 | spend six months in Mexico or five months and 29 days or whatever.

01:31:53.760 | And you can get six month visas for both of those countries.

01:31:56.600 | Fairly simple.

01:31:57.600 | You can do that without becoming a tax resident of Canada.

01:32:00.240 | You're not a tax resident.

01:32:01.240 | You're a tourist.

01:32:02.240 | You can do that without becoming a tax resident of Mexico.

01:32:04.120 | You're not a tax resident.

01:32:05.120 | You're a tourist.

01:32:06.320 | And because you're physically present outside of the United States for at least 330 days,

01:32:09.480 | you qualify for the foreign earned income exclusion.

01:32:12.600 | You can do that while keeping all of your infrastructure in the United States.

01:32:16.200 | All your bank accounts stay the same.

01:32:17.880 | All of your investments can stay in the United States.

01:32:24.380 | Everything stays very simple.

01:32:25.600 | You're a tax resident of the United States.

01:32:27.400 | You just qualify for the foreign earned income exclusion, which allows you to not incur federal

01:32:32.040 | income tax on your first $105,000.

01:32:34.760 | Now the last piece of that is with the good tax planning, if you're willing and if your

01:32:38.560 | business qualifies, if you'll establish your business where you actually are not an employee

01:32:44.840 | of a US based company, although you can still maintain your US single member LLC, if you'll

01:32:48.920 | simply establish an offshore IBC, a company offshore, and then sell your or transfer your

01:32:57.520 | US based LLC to that offshore company, then what can happen is that that will also allow

01:33:02.580 | you to eliminate your employment taxes.

01:33:05.480 | At $105,000, your employment taxes as a self-employed individual are going to be a bigger deal than

01:33:11.420 | your federal income taxes.

01:33:14.620 | That can save you, basically on $105,000 of income, if you eliminate both of those, it'll

01:33:18.160 | save you about $30,000 a year on taxes if you're a single individual.

01:33:22.400 | It doesn't cost too much and it's not too complicated.

01:33:24.280 | You can keep everything in the United States and do that.

01:33:26.760 | >>Trevor: Yes, that makes sense.

01:33:29.600 | I should have clarified the business that I have in mind.

01:33:33.400 | I think it can very much take off.

01:33:36.040 | And so if it's a small amount of money that you're making, it doesn't make sense to have

01:33:40.560 | the company outside of the US.

01:33:42.120 | But if you have plans for a sort of seven figure business like I do, I guess that's

01:33:47.960 | why I think it would make sense to have it outside the US so that if it does take off,

01:33:52.680 | I can either leave for the year and take advantage of the foreign income exclusion or make the

01:34:00.280 | tough decision to renounce the US citizenship and have a business that's outside of the

01:34:05.880 | US and then also be outside of the US with presumably at that point a different passport.

01:34:10.400 | >>Steve: I think you misunderstand the laws.

01:34:14.440 | If you are physically living in the United States, it's very inconvenient for you to

01:34:19.200 | have an offshore company and in fact will increase your taxes.

01:34:23.480 | So you've got to first establish where are you going to be.

01:34:28.040 | Where are you actually going to be?

01:34:29.720 | And if you're actually going to be in the United States, you don't generally want to

01:34:33.280 | have an offshore corporation without understanding.

01:34:37.440 | Obviously there are places for it, but it's complex and you incur significant amounts

01:34:42.200 | of taxation.

01:34:46.160 | Now it's a controlled foreign corporation.

01:34:49.320 | When you have a controlled foreign corporation, there's a special tax for it and it adds complexity

01:34:53.920 | to your tax returns.

01:34:55.920 | If you are physically outside of the United States and qualify for the foreign earned

01:35:01.160 | income exclusion, then it's very simple for you to have a foreign corporation and that

01:35:09.120 | can be helpful for you, but it's probably unnecessarily complex.

01:35:14.880 | There's not really any reason not to use your current US based LLC as the front company

01:35:20.720 | for that work.

01:35:22.360 | There's no reason unless you're ready to go all the way offshore and you're saying my

01:35:28.560 | plan is as quickly as possible.

01:35:30.840 | I'm going to get out of the United States and this business takes off.

01:35:34.520 | I'm renouncing my citizenship.

01:35:35.920 | Well, that's a situation that makes sense to go all the way to going hardcore offshore,

01:35:41.280 | but the best system for most US Americans is going to be to keep your US infrastructure,

01:35:47.200 | which is useful.

01:35:48.200 | Keep your bank accounts, keep your US LLC and just establish a foreign corporation as

01:35:52.720 | the owner of your pass through single member LLC.

01:35:56.280 | Because what happens is that keeps your tax, that allows you to take benefit of working

01:36:02.460 | for a foreign corporation under the IRS rules, but from a practical perspective, it allows

01:36:07.680 | you to keep everything US based.

01:36:09.840 | So you're not going to try to, you've got some, I don't know, pick your jurisdiction,

01:36:15.160 | some Belize company that you are trying to get a merchant processor for or you're trying

01:36:21.480 | to, it's very complex.

01:36:24.480 | And so it's simpler for you to keep your US based LLC, but just simply establish it as

01:36:30.800 | a single member LLC, wholly owned by a foreign corporation.

01:36:34.400 | So from your personal tax perspective, you are working for a foreign corporation that

01:36:39.920 | eliminates your employment taxes, but from a business operation standpoint, everything

01:36:46.160 | is inside the United States.

01:36:47.980 | So you can do that, then you can go abroad, start working on a replacement citizenship

01:36:52.000 | if you don't have one already.

01:36:54.080 | And then while you're doing that, once you're in a place where you see if the business took

01:36:59.560 | off, then you're in a situation where, "Hey, I'm ready to go ahead and renounce citizenship."

01:37:06.080 | Now in years past, that foreign corporation was more important because prior to the Trump,

01:37:11.760 | the Tax Cut and Jobs Act of 2017, the Trump tax reform, you could retain earnings in your

01:37:17.840 | foreign corporation and not pay taxes on those.

01:37:21.160 | So the way it would work prior to the Tax Cut and Jobs Act is if you made a million

01:37:24.760 | dollars in your business, you could pay yourself a salary of $100,000.

01:37:30.300 | That salary could come to you income tax free because subject to the foreign earned income

01:37:40.120 | exclusion.

01:37:41.440 | And then you could accumulate $900,000 in your offshore corporation as long as that

01:37:46.320 | money stayed in the offshore corporation and did not get distributed to you, then you would

01:37:55.880 | not incur any tax, any current tax on it.

01:37:58.560 | It could just stay in the foreign corporation.

01:38:01.880 | Well after the Trump tax reform, that is no longer the case.

01:38:05.520 | The Trump tax reform brought in a new system called the GILTI tax.

01:38:10.400 | The I can't remember these stupid acronyms.

01:38:12.960 | Anyway, it's called the GILTI tax where basically if you have retained earnings in an offshore

01:38:18.200 | corporation, then you pay a tax rate on those.

01:38:21.000 | And so the simplest thing, so it all depends.

01:38:24.440 | There's different, $100,000 of income is different, $300,000 of income is different, and at $3

01:38:28.880 | million of income it's different.

01:38:30.120 | Because what you can do is if your income comes even higher, then what you do is you

01:38:34.000 | go ahead and establish one more piece to it and you bring in a C-Corp in the United States,

01:38:38.800 | own the offshore corporation, and the offshore corporation owns your operational LLC when

01:38:44.120 | you get higher because that will cut your overall tax rate.

01:38:47.000 | But long story short, let me keep it simple.

01:38:50.080 | Move to South Dakota, that's simple.

01:38:52.800 | Then physically remove yourself from the United States for at least 330 days per year.

01:38:57.480 | You don't have to have a residency anywhere else under those obligations.

01:39:01.460 | You don't have to become a tax resident anywhere else.

01:39:03.480 | If you want to be a nomad, you just find the places in the world that you want to be a

01:39:06.800 | nomad.

01:39:07.800 | That's three months in Mexico City, three months in Bogota, three months in Sao Paulo,

01:39:13.680 | and three months in, you know, two months in Toronto, and one month in the United States

01:39:17.520 | to visit family, wherever you want.

01:39:19.060 | Any country in the world is fine, and you can do that without establishing any kind

01:39:23.140 | of residency visas.

01:39:24.200 | You can move around.

01:39:25.200 | You won't become a tax resident in those other places.

01:39:27.280 | You'll just spend time in them, and then you'll be qualified for the foreign earned income

01:39:32.840 | exclusion.

01:39:34.260 | If you have a business that's online, set up a single member LLC in the United States

01:39:38.700 | and set up an offshore corporation from a tax-free jurisdiction, it doesn't really matter

01:39:43.640 | what jurisdiction you use.

01:39:45.200 | Pick one that's cheap and that doesn't have any tax obligation.

01:39:47.960 | The reason it doesn't matter is because you do all the business through your US LLC.

01:39:52.320 | So your bank accounts and things are already in the name of your US LLC.

01:39:56.240 | If you already have a single member US LLC, keep everything you have because one of the

01:40:00.720 | things that's so frustrating, ask me how I know.

01:40:03.580 | One of the things that is so frustrating in the United States is it is brutally difficult

01:40:07.540 | with all of the to get bank accounts.

01:40:09.760 | I was denied for three different bank accounts in the United States because of my not typical

01:40:19.060 | string of patterns and information.

01:40:21.840 | And the know your customer laws have become so onerous in the United States that it's

01:40:27.720 | brutal.

01:40:28.720 | It's absolutely brutal.

01:40:30.460 | It cost me huge amounts of money to get functional bank accounts and was extremely difficult.

01:40:35.580 | So and I would say to you actually before you move to South Dakota, get all of your

01:40:40.840 | infrastructure established now.

01:40:43.200 | So make sure you have all the bank accounts, all the credit cards, everything already established

01:40:51.980 | now, including for your business.

01:40:54.280 | Then when you go offshore, then you go ahead, do your move after everything's established

01:40:58.980 | and you've got multiple backups, everything is good.

01:41:02.360 | Credit cards, bank accounts, have backup bank accounts, have normal profiles on everything,

01:41:09.380 | just have everything ready to go.

01:41:11.060 | Have all that stuff.

01:41:12.460 | Then do two things.

01:41:13.860 | Move to South Dakota and then establish your offshore corporation and all you need to do

01:41:19.340 | is just simply establish a what's it called in your LLC?

01:41:30.300 | Resolution.

01:41:31.300 | Just establish a resolution in your LLC to transfer your single member LLC out of your

01:41:35.220 | name into a foreign IBC that you own.

01:41:41.680 | And so if you'll just simply do that one thing and you'll transfer your single member LLC

01:41:45.540 | in the US to a foreign IBC, from the IRS perspective, a single member LLC is a disregarded entity.

01:41:52.380 | And so what happens is because your single member LLC is a disregarded entity, you now

01:41:57.220 | file as an employee of a foreign IBC, which allows you to eliminate your self-employment

01:42:04.620 | tax.

01:42:08.180 | But the banks and everything else, as long as you have all the infrastructure done in

01:42:11.140 | advance, you, I shouldn't say that because there probably is some kind of regulation

01:42:15.820 | that you're supposed to notify them if there's a change of ownership.

01:42:23.020 | Nobody but the IRS has to know that you have an offshore corporation is basically the same

01:42:27.580 | scenario and that will make your life a lot simpler and a lot easier.

01:42:31.400 | So those are my answers to you.

01:42:35.500 | Publicly speaking also, I have done all of Bazell's solutions and once you start, as

01:42:42.580 | far as I've tested all of his recommendations, but what I'll tell you is that from an international

01:42:48.180 | perspective, it's very difficult to maintain some of those things when you go abroad.

01:42:54.140 | So when I went abroad, I had this whole extravagant, intricate communication system set up.

01:43:03.660 | It utterly failed when I went abroad.

01:43:07.500 | And so what I'll tell you is if I were going to go back and, I mean, I don't necessarily

01:43:11.860 | want to do all this live on the show, but if you get with me privately and book a consulting

01:43:16.180 | call or something, I'll go through all the details of what works going abroad and what

01:43:19.320 | doesn't work and I'll save you a huge amount of hassle.

01:43:23.140 | Because some of that, all of his stuff works awesome in the United States and you can use

01:43:27.540 | some of it when traveling.

01:43:29.620 | I'm not saying that you can't use it when traveling.

01:43:32.100 | You can, but it gets, it's stuff gets messed up and so you need some more mainstream solutions

01:43:39.740 | that work better when traveling.

01:43:40.820 | We'll leave it there publicly for now.

01:43:42.420 | Understood.

01:43:43.420 | Sounds good.

01:43:44.420 | That helpful?

01:43:45.420 | Did I answer your question?

01:43:46.420 | It does.

01:43:47.420 | Yeah, I think we're on the same page here and, you know, hey, go where you're treated

01:43:50.580 | best.

01:43:51.580 | I agree.

01:43:52.580 | And I'll tell you, it's from a freedom perspective, as a freedom lover, this will be offensive

01:43:59.520 | to many Americans and I hate that it is, but I feel generally far freer outside of the

01:44:06.620 | United States than I do inside the United States.

01:44:10.340 | And as I've talked about when I've done shows on, you know, PT theory, et cetera, I feel

01:44:15.500 | much freer outside the United States than I do in the United States.

01:44:18.940 | And it's nice to have options.

01:44:20.540 | One of the things that has happened as I built an offshore structure, as I built options,

01:44:26.460 | as I built other places to live and paths to residency and citizenship, et cetera, it's

01:44:32.540 | not easy.

01:44:33.540 | It's not cheap.

01:44:34.540 | It's expensive and hard and time consuming, but it has allowed me to feel much more relaxed

01:44:40.300 | about all the stuff in the United States.

01:44:43.780 | I feel much more disconnected from it because I'm not, I don't feel like I'm a slave to

01:44:48.660 | it anymore.

01:44:49.660 | You know, I feel much more relaxed about, you know, whoever is elected president and

01:44:54.900 | all this stuff and I still care deeply about that stuff.

01:44:57.900 | I care because, I care because number one, I'm sad for what the United States of America

01:45:05.500 | used to be, what it could be, kind of the bones of the country that I see as really

01:45:09.820 | awesome.

01:45:11.620 | I'm sad for what it could be and I feel a deep connection to my fellow compatriots,

01:45:18.380 | to my fellow citizens, to, I feel a deep connection to American citizens.

01:45:24.980 | But in terms of the practicality of it, if I ever renounced my citizenship, I would still

01:45:29.460 | feel that same sense of care and connection to American citizens.

01:45:33.540 | But it would be, it just doesn't make sense to rely on one jurisdiction, on one country

01:45:40.380 | to try to, you know, do all that stuff for you.

01:45:43.260 | It doesn't make sense.

01:45:44.860 | And if you have the ability to do it without it harming your lifestyle, I highly recommend

01:45:49.860 | it.

01:45:50.860 | I agree.

01:45:51.860 | The most patriotic thing you can do with an out-of-control government that craps all over

01:45:55.700 | the Constitution is to boycott it.

01:45:57.540 | Yeah, I agree.

01:45:58.540 | And it's also the most peaceful thing, you know.

01:46:00.020 | I'm not, if I were a state, I think that, you know, places like New York, right, I think

01:46:05.580 | that they're paying attention finally to people leaving the country, sorry, to people leaving

01:46:09.780 | the state.

01:46:10.780 | I think that the state of California, I don't know, that was too, maybe that's a step too

01:46:14.380 | far.

01:46:15.380 | I think that New York and New Jersey are paying attention to it.

01:46:18.180 | And when I look at, you know, how do I make my voice known about my displeasure about

01:46:23.300 | this thing, I don't know, I'm not going to fight, I'm not going to pick up a gun, I'm

01:46:28.140 | not going to engage in violence.

01:46:29.660 | So I can speak up, I can exercise my freedom of speech and do that.

01:46:34.000 | But at the end of the day, it's not effective, right.

01:46:39.140 | And there's so many people that speak, I mean, in the election season, everyone's like, "Well,

01:46:42.900 | so and so is elected president, I'm moving to Canada."

01:46:45.060 | They don't ever do it.

01:46:46.820 | It's stupid.

01:46:47.820 | Everyone knows it because they don't do it.

01:46:49.300 | And so the most effective thing that you can do is genuinely to go.

01:46:54.820 | And then, and I don't expect to make much of a difference, but if you do leave, it does

01:46:59.900 | establish, it does speak clearly.

01:47:02.940 | And I think it's the peaceful way to handle, the peaceful and moral way to handle significant

01:47:10.000 | differences of agreement.

01:47:13.460 | Well said.

01:47:14.460 | Thanks, Josh.

01:47:15.460 | Thank you for being here.

01:47:16.460 | All right.

01:47:17.460 | For our last call today, we go down to the state of Illinois.

01:47:19.580 | Welcome to the show.

01:47:20.580 | How can I serve you today?

01:47:21.580 | Yeah, can you hear me?

01:47:22.940 | Go ahead.

01:47:23.940 | All right.

01:47:24.940 | Hey, hopefully you didn't cover this.

01:47:26.580 | I doubt it.

01:47:27.580 | I just got on.

01:47:29.620 | Through a number of different encouragers, especially you, or at least including you,

01:47:33.580 | I started a keto type diet recently and have had a lot of success.

01:47:38.180 | But I've also started sort of emergency prepping recently.

01:47:42.300 | And I found that those two things are kind of difficult to do because a lot of the stuff

01:47:47.140 | that's easy to store isn't very compatible with what I've been eating.

01:47:50.660 | I just didn't know if you thought about that.

01:47:52.300 | I know you kind of are in both worlds.

01:47:53.980 | I kind of wanted to see if you had any input for me.

01:47:55.900 | I've thought extensively about it.

01:47:57.820 | If I were starving or if I were going to face, if I were, if I were starving or if I were

01:48:03.580 | going to face severe risk of infection by leaving my house, I would very happily eat

01:48:11.060 | rice.

01:48:12.060 | I would very happily eat bread.

01:48:13.220 | I would very happily eat all those things and I would have to serve those to my children.

01:48:17.540 | It is a historical blessing to be in a situation where we can be so picky with what we eat.

01:48:26.420 | Throughout the vast majority of human civilization and throughout the vast majority of the world,

01:48:30.500 | you ate the food that was available to you and you were thankful to have it.

01:48:34.100 | And so I feel like a stuck up snob with my food opinions based upon the way that much

01:48:39.580 | of the world eats, even with regard to the amount of money that I spend on food.

01:48:43.860 | And so I think that the vast majority of, the vast majority of long-term storage food

01:48:52.140 | is a total blessing to have and can keep me and my family alive and happy and our tummies

01:48:57.140 | full if we needed it and it can keep our neighbors alive.

01:49:01.700 | And I think it's cheap and it's a miracle of the modern world that I can stock up on

01:49:05.660 | that kind of stuff at pennies on the dollar.

01:49:07.420 | And I think it's irresponsible not to have huge amounts of that kind of food set aside

01:49:11.940 | and stored for hard times.

01:49:13.880 | So that's point one.

01:49:16.380 | Point two, and in an emergency, I'm not going to worry about how fat I am.

01:49:22.620 | I'm going to worry about how much, how many calories I have.

01:49:26.440 | Does long-term health matter?

01:49:27.660 | Yeah, of course it matters.

01:49:29.420 | So maybe the keto diet is more healthy or less healthy, who knows?

01:49:32.460 | Maybe it's more healthy, but in a short-term emergency, I'm more worried about staying

01:49:37.260 | alive and staying fed than I am worried about the long-term impact of a diet.

01:49:41.860 | So that's thing one.

01:49:43.220 | Thing two, you can store lots of keto-friendly foods if you have the right storage mechanisms.

01:49:51.940 | And so the key is it's a little bit harder to store for most people, but it is possible.

01:49:59.220 | And so your friend, if you are having a meat-heavy, low-carbohydrate, high-fat diet, your friend

01:50:06.220 | is a freezer, a deep freezer.

01:50:08.700 | And so right now, if you were to go to my house and open my freezer, you would find

01:50:12.700 | that the entire freezer is full of meat.

01:50:15.900 | And we cannot put anything in the freezer because it is completely full of meat.

01:50:20.480 | And it's all stocked up for hard times.

01:50:24.340 | It's all stocked up for a corona quarantine, but I can eat steak and beef and pork and

01:50:30.220 | chicken and I can eat that stuff for months based upon what is stored in my freezer.

01:50:35.300 | And that's the primary foundation, which is interesting because if you go to a more carnivore

01:50:38.900 | style, low-carbohydrate, it's hard to do.

01:50:42.660 | You can't actually do keto high-fat on carnivore really very well.

01:50:46.680 | But if you go to like a carnivore style of eating, it makes things profoundly simple.

01:50:51.460 | If all you eat is meat, all you have to store is meat and you can store meat basically indefinitely

01:50:55.500 | in a freezer.

01:50:56.500 | And so what I do is I buy meat and I go ahead and because I have experience getting some

01:51:02.040 | freezer burn in the past, I make sure that I package the food for no freezer burn.

01:51:06.540 | What I do, and this is easier in some places if you can purchase it from a butcher and

01:51:10.700 | it all comes in butcher paper, etc.

01:51:12.420 | But what I usually do is I repackage all the meat in vacuum seal bags and I package it

01:51:19.820 | ready to go into sous vide cooker.

01:51:22.460 | And so it makes things really simple.

01:51:24.100 | I buy a big chunk of meat, I cut it into steaks, I put the number of steaks that my family

01:51:28.940 | eats into a freezer bag, I season them, then I vacuum seal it and put it in the freezer.

01:51:34.180 | And then if I want to make steak for dinner, all I need to do is sometime in the afternoon,

01:51:37.700 | one o'clock, two o'clock, three o'clock, doesn't really matter, I just go ahead and grab a

01:51:41.300 | frozen bag of steak out of the freezer and then plop it in the sous vide cooker and cook

01:51:46.980 | it for a couple hours or whatever until dinner time, sear it and serve it.

01:51:50.740 | And so that makes things really simple.

01:51:52.200 | So the answer is a freezer.

01:51:55.060 | Freezer also works well with vegetables.

01:51:57.380 | So you can store huge amounts of vegetables in a freezer.

01:52:01.420 | You can buy bags of pre-made freezer, bags of pre-made frozen vegetables from Costco

01:52:10.260 | and such.

01:52:11.260 | It's not necessarily the most cost-effective, but of course it's normal food and if you

01:52:13.860 | have a deep freezer you can do that.

01:52:15.820 | The fat is where things can be more difficult, but then you can easily store fat, whether

01:52:20.100 | it's in the form of oil, whether it's in the form of butter.

01:52:23.460 | Butter freezes beautifully.

01:52:25.420 | You could also buy canned butter or ghee, and so you can get your fats through some

01:52:29.540 | of those.

01:52:30.540 | Some of the nuts also store well, just in standard long-term food, and so those are

01:52:35.100 | good solutions.

01:52:36.220 | And then the nice thing about kind of a keto, non-keto, primal, paleo type of eating is

01:52:42.740 | that it actually works really well with food production.

01:52:45.740 | So if you have a source of meat, you can store all your meat alive and then when you need

01:52:50.060 | it you kill it and eat it.

01:52:51.860 | And that can be done on a small property with small animals.

01:52:55.880 | So if you're going to be a hardcore prepper and you want to eat healthy, well the answer

01:52:59.500 | is obviously animals.

01:53:01.420 | So small animals are extremely convenient because they're in perfect serving sizes.

01:53:05.740 | If that's rabbits, if that's chickens, if that's quail, if it's guinea pigs, any kind

01:53:10.820 | of small animal like that is really convenient to store alive until you need it.

01:53:14.860 | And so if you're going to be really, if you're worried about a grid down scenario, you don't

01:53:19.460 | have a freezer, etc., the simplest way to store your meat is alive, and then just take

01:53:25.220 | it in small portions when you need it.

01:53:27.180 | This is also where the benefit goes to smaller animals versus larger animals.

01:53:31.380 | You know a small goat will serve you for a reasonable number of meals.

01:53:35.100 | It's a lot harder to preserve a large cow.

01:53:37.780 | So you need the freezing and so if you're going to, you either need to freeze or to

01:53:43.260 | can or to jerk or to dry or to salt, some other way of preserving large animals.

01:53:50.260 | But it works really well, kind of a keto style diet works really well with animal production

01:53:54.800 | on a property or around you, and it works really well with vegetable production, vegetable

01:53:59.820 | and fruit production, because those are things that you can store your keto food in the form

01:54:04.340 | of seeds and grow it little by little as you need it.

01:54:07.740 | Obviously more work associated, but those are my answers to you.

01:54:10.980 | And then there are other technologies.

01:54:12.460 | You can can vegetables, you can can meat.

01:54:14.660 | One of the things that I've done in the past when I was working on this, I wanted to can

01:54:17.900 | meat.

01:54:18.900 | So I went and I bought big 40 pound boxes of chicken from the restaurant supply store,

01:54:24.420 | and I just went ahead and canned it myself.

01:54:26.020 | It's hard to find, if you want to go and buy commercially pre-canned, pre-tinned, you know

01:54:30.660 | canned stuff, you can generally find that with obviously tuna fish and canned chicken.

01:54:36.260 | It's hard to find canned beef, but you can go ahead and can, or I don't know why they

01:54:40.860 | call it can, it should be called jar.

01:54:42.700 | You can go ahead and jar beef yourself if you want to store it at shelf stable in a

01:54:45.860 | shelf stable way, and I've done that.

01:54:47.580 | It just requires a lot of work.

01:54:50.660 | And then finally, then if you're willing to spend the money on freeze-dried food, then

01:54:54.820 | the freeze-dried food can certainly solve that problem as well.

01:54:58.200 | You can buy every kind of meat, freeze-dried meat, and/or you can buy dehydrated or freeze-dried

01:55:03.620 | vegetables and you can store the food very effectively for decades in that form.

01:55:08.040 | So those are your answers.

01:55:09.040 | >>Steve: Good, appreciate it.

01:55:10.040 | Hey, did you make it home?

01:55:11.720 | >>Aaron: Not yet.

01:55:12.720 | I'm sitting in a hotel room wondering if I'm, as soon as I hang up, I moved my flight up,

01:55:17.560 | and so I'm just hoping that I don't turn on the internet and see more travel restrictions,

01:55:22.720 | otherwise I got problems and I'll have an adventure getting home.

01:55:25.440 | So if Joshua's not on the air next week, you know that he's swimming across the ocean trying

01:55:30.480 | to get home.

01:55:31.480 | >>Steve: All right, we're praying for you, man.

01:55:33.640 | >>Aaron: Thank you very much.

01:55:35.500 | And with that, I think we have an appropriate way to close out today's show.

01:55:38.700 | Thank you all so much for listening.

01:55:39.700 | I hope that you've enjoyed today's Q&A.

01:55:45.040 | One of the nice things, I'll be here for you.

01:55:46.640 | If I'm locked in my house, I'm going to be doing a lot more, so I'm here to work with

01:55:51.280 | you in the coming days.

01:55:53.980 | Looking forward to, well, we got difficult times ahead, but I'm looking forward to being

01:55:58.960 | here with you day after day.

01:56:00.640 | If you have found value in today's show, I'd ask you for a few things.

01:56:03.560 | Number one, please go and take a moment and rate and review the show on whatever platform

01:56:07.060 | you're listening to me.

01:56:08.320 | That's super helpful when you do that.

01:56:09.940 | That's free, doesn't cost you a thing.

01:56:11.860 | Number two is I would love it if you would join me on Patreon at patreon.com/radicalpersonalfinance.

01:56:17.880 | So helpful when you join me there, and that also will give you access to these Q&A calls,

01:56:21.240 | which I thank you for that.

01:56:22.560 | And then number three, a couple of the listeners have talked about some of the courses that

01:56:26.000 | I have available.

01:56:27.000 | You can find out all of those courses at radicalpersonalfinance.com/store.

01:56:30.680 | I have three courses there at the moment.

01:56:32.880 | Let me tell you about them.

01:56:33.880 | Don't skip forward too fast.

01:56:34.880 | Just give me a moment, because what you'll see is how useful they are in this particular

01:56:40.160 | event that we're facing.

01:56:42.080 | The first course that I released that's still on the store there is called How to Borrow

01:56:45.000 | Money Safely and Never Pay Interest Using Credit Cards.

01:56:48.280 | And in that course I will teach you how to establish a large credit card portfolio, which

01:56:53.720 | gives you large amounts of access to credit, while also teaching you how to do it at a

01:56:58.880 | very low cost so you don't wind up paying stupid interest rates.

01:57:01.960 | You borrow the money at 0% or a maximum of something like 3% in some cases.

01:57:07.760 | The key is you've got to do that long before you need it.

01:57:10.140 | And so as you heard with the listener who was talking about a 401(k), he's already taken

01:57:15.920 | action on that, and so he has other sources of money.

01:57:18.680 | And so it's safer for him to keep his money in the 401(k), move it to a cash account so

01:57:24.320 | it's stable, and then if he needs financing, just go ahead and use credit cards for financing.

01:57:29.160 | And the point is that if he needs money all of a sudden, and he can always take the money

01:57:34.480 | from the 401(k) and distribute it later, but by not doing it while he's working, he puts

01:57:38.940 | himself in a better tax situation where he's not making distributions out while he's working.

01:57:43.940 | Let's say that he takes a, in his case he was doing a loan, which I acknowledge that.

01:57:49.400 | But it's much better for him to have the credit card portfolio, and then if he gets laid off

01:57:52.920 | or something like that, then when his income is down, then he goes ahead and takes the

01:57:55.800 | distribution from the 401(k).

01:57:58.320 | That course was developed about two years ago.

01:58:00.840 | Everything in it is still relevant today, and it's been a good one.

01:58:04.280 | And we'll make options for you.

01:58:06.460 | And especially as we go into what I think will be recession in the coming months, you

01:58:10.680 | want to make sure that you have large amounts of credit available to you.

01:58:14.080 | Do not use your credit for consumption.

01:58:17.080 | If you do that, you wind up in a bind.

01:58:20.160 | But you can use your credit to live on if you have an emergency situation, or possibly

01:58:24.900 | to take advantage of an opportunity to start a business, etc.

01:58:28.840 | And one of the things that I teach in that course is simply how to do cash management

01:58:32.000 | and how to manage cash as compared to credit.

01:58:34.840 | I don't want anybody to wind up deeply in debt.

01:58:37.240 | I'm opposed to that.

01:58:38.800 | But there are many situations in which you can simultaneously say, "I don't want to be

01:58:42.440 | in debt," while also having credit cards.

01:58:46.800 | In addition, if you have credit card debt right now, you need to get that cleared right

01:58:51.160 | now in preparation for recession.

01:58:53.840 | And that course is all about how to help you do that cheaper, faster, and safer along the

01:58:58.120 | way.

01:58:59.120 | I know it sounds like these things are in opposition.

01:59:01.640 | And I agree that in some cases they can be in opposition, but they don't have to be.

01:59:04.960 | So check that course out at RadicalPersonalFinance.com/store.

01:59:08.080 | The second course that is available is the Radical Personal Finance Guide to Career and

01:59:13.440 | Income Planning.

01:59:14.600 | And that is all about how to build a job that's going to pay you a lot of money that you don't

01:59:18.280 | want to retire from.

01:59:19.880 | And the number one priority that you have in a recession is not to lose your job, which

01:59:24.600 | is where that course comes in.

01:59:27.280 | Now I've done public shows on that as well, but if you are in a situation where you're

01:59:30.860 | worried about your job, you better get involved in building your income so that you can maintain

01:59:35.680 | it.

01:59:36.680 | You better have a plan for transitioning to a new job.

01:59:39.760 | In the call that was talked about, "Should I go to these side businesses?"

01:59:43.680 | You can see how valuable it is if you know how to maintain your presence and maintain

01:59:47.780 | a business while you're transitioning to other things.

01:59:50.620 | And so we talk about those subjects in the Guide to Career and Income Planning.

01:59:54.380 | Number three is how to survive and thrive during the coming economic crisis.

01:59:58.880 | And that show I released last year, and it was all about how to survive and thrive during

02:00:02.440 | the coming economic crisis.

02:00:04.320 | And in that show, I laid out all of the strategies that you need, or in that course, I laid out

02:00:08.640 | all the strategies that you need to survive during an economic crisis.

02:00:12.320 | Now I used a sensationalistic title to try to sell more of it so that I can make more

02:00:16.520 | money, but it's a very practical course.

02:00:19.880 | We are going into economic crisis.

02:00:22.920 | It might be short and shallow.

02:00:25.040 | I don't think it'll be short and shallow, but it might be.

02:00:28.100 | It might be hard and deep and long.

02:00:30.600 | I expect it to be hard and deep and long.

02:00:33.320 | But it is not too late to prepare for economic crisis.

02:00:37.760 | It is time to prepare for economic crisis if you have not previously prepared.

02:00:42.000 | The best time to prepare was two years ago.

02:00:44.040 | Best time to prepare was a year ago.

02:00:45.600 | But it's still time to prepare because I don't see how this does not become a national and

02:00:51.120 | international economic crisis.

02:00:53.840 | Now hopefully it will be light and short and shallow, you know, little upturn in unemployment.

02:01:00.840 | Hopefully there'll be some medical solutions quickly.

02:01:03.080 | I hope that's the case.

02:01:04.680 | I don't think it will be.

02:01:06.200 | And so I need you to be prepared for that and there's still time.

02:01:09.920 | What you need to be looking at is recognizing how while there's plenty of toilet paper on

02:01:15.120 | the shelves, sorry, while there's no toilet paper on the shelves because people are panicking

02:01:19.600 | hysterically about toilet paper, there's plenty of other things.

02:01:23.360 | And so if you're not stocked up, if you're worried about things and you don't have things

02:01:26.560 | stockpiled, please, I'm not teaching fear.

02:01:29.640 | I'm not trying to get you to spend money stupidly.

02:01:33.320 | But there are a lot of things that you can do to prepare your family for hard times and

02:01:38.880 | you should be doing those things.

02:01:41.240 | Put simply, in addition to that, you need an internationalization plan.

02:01:47.200 | As you heard with the caller where we talked about going abroad, you need an internationalization

02:01:52.320 | plan.

02:01:53.320 | Let's say that, remember the caller earlier today, I think it was Jordan, where she was

02:01:56.240 | talking about what would happen if she's got these businesses.

02:01:59.000 | Jordan has the ability to do that business from anywhere in the world.

02:02:02.280 | So use this as an example.

02:02:03.760 | Let's say that Jordan makes the move to their new businesses and then her husband loses

02:02:07.840 | their safe and secure job.

02:02:09.760 | What's she going to do in that situation?

02:02:11.640 | Well they might decide that it's best for her to go back and get her $130,000 a year

02:02:17.260 | job back.

02:02:18.280 | But maybe she's making $40,000 or $30,000 on the side with her side businesses.

02:02:23.240 | If Jordan and her husband have a good internationalization plan, then they can just simply move out of

02:02:27.600 | their house, rent it out, and they can go to a lower cost of living area.

02:02:31.120 | This might be difficult with coronavirus because lower cost of living areas might be more dangerous

02:02:34.800 | in a global flu pandemic.

02:02:37.320 | But Jordan may be able to just simply go to Mexico City, go to Chiang Mai, Thailand, famously

02:02:46.120 | Chiang Mai, Thailand.

02:02:47.560 | If the coronavirus is everywhere, then they might go to Chiang Mai, Thailand where they

02:02:51.480 | can live on $1,500 a month very comfortably and be able to live and work there while she's

02:02:58.200 | just simply living off of their income.

02:02:59.480 | And they can come back from that with new businesses growing, etc.

02:03:02.960 | And so internationalization gives you plans for backup plans in bad economies.

02:03:08.800 | Internationalization gives you plans for backup sources of income.

02:03:11.200 | Maybe the economy in the United States totally implodes, but the economy in maybe South Korea

02:03:17.760 | does a much better job of handling the coronavirus than the United States does.

02:03:24.000 | And so South Korea recovers more quickly.

02:03:26.320 | Well, if you have the ability and the skills to live and work in South Korea, most people

02:03:30.600 | don't, but if you did have that, then that provides a good situation for you to be able

02:03:34.560 | to go and live and work there.

02:03:35.960 | Or the caller who was talking about the French passport, if you have set up where you have

02:03:40.000 | an EU passport and maybe your college funds implode in the United States or the healthcare

02:03:45.800 | system is overwhelmed in the United States, but you have an EU passport, you can take

02:03:49.160 | your kids to school in the EU, you have options.

02:03:51.240 | And so that's one of the things I teach is a lot of internationalization in that course.

02:03:54.960 | It's a really good course.

02:03:56.880 | I think I've only—I don't remember—I think I probably had one refund on it and I've had

02:04:01.360 | a lot of students in that course.

02:04:03.600 | All of them have been satisfied.

02:04:05.080 | So please give it a shot at radicalpersonalfinance.com/store.

02:04:08.400 | And then finally, I am still in the middle of teaching this class on family preparedness.

02:04:14.600 | And that was a cheap course on just basic preparedness, so things like food storage,

02:04:20.400 | etc.

02:04:21.400 | And I've been delayed this week on getting new courses out, but there are new courses

02:04:24.360 | still coming.

02:04:25.360 | You can still register for that.

02:04:26.360 | Go to radicalpreparedness.com.

02:04:28.120 | And in those live courses, if you're saying, "Hey, Joshua, I can't find toilet paper.

02:04:32.480 | What do I do?"

02:04:33.480 | I'll teach you what to do.

02:04:34.480 | Or if you say, "I can't find food because the shelves are bare.

02:04:36.760 | Teach you what to do."

02:04:38.120 | If you look out the digital window today, you can see how important some of these things

02:04:43.520 | are.

02:04:44.520 | So there's a time and a place.

02:04:45.520 | I'm going to be doing courses and whatnot in the future on life insurance, etc.

02:04:49.440 | But I started with these because I have been concerned for the last few years about preparing

02:04:53.680 | you for what you see right now.

02:04:56.120 | Now, I desperately hope I'm wrong.

02:04:58.160 | I desperately hope I'm wrong.

02:05:00.560 | I don't think I am.

02:05:01.680 | And so I have been concerned about this for the last few years, which is why you can see

02:05:04.960 | the theme in all of these courses fit together because I've wanted you to be prepared.

02:05:10.400 | Because if you are prepared, you can go into a crisis and you can weather it in comfort

02:05:17.400 | and you can use it as an opportunity to move you to more and more wealth.

02:05:25.480 | Go to RadicalPersonalFinance.com/store.

02:05:27.840 | Give them a try.

02:05:28.840 | A 30-day money-back guarantee on all of them.

02:05:30.560 | So hey, if you're cheap and a little bit unethical, but hey, you'll be following the rules.

02:05:36.440 | Just buy the course, get the information, and then I don't know, I guess I'll get a

02:05:39.200 | refund.

02:05:40.200 | I hope you don't do that.

02:05:41.200 | I hope you like it enough and you say, "I can see I can make tons of money on this."

02:05:43.400 | But go to RadicalPersonalFinance.com/store.

02:05:45.760 | Sign up for those courses there.

02:05:46.760 | If you'd like to ask me a question on next week's Q&A call, go to Patreon.com/RadicalPersonalFinance.

02:05:51.440 | Sign up there.

02:05:52.440 | Thank you for listening.

02:05:53.440 | Be back with you soon.

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