Today on Radical Personal Finance, it's live Q&A. Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less. My name is Joshua, I am your host.

Today is not Friday, today is Monday, July 20, 2020, but we are recording a live Q&A show. I wasn't able to get in front of the computer last week to do it on Friday, so I'm doing it this morning. Welcome to a new week. Each week that I'm able to arrange the technology with my travel schedule and with the internet and the computer and all of that, I record a live Q&A show, works just like live radio call-in show.

My listeners get a phone number, they call in and we chat. I'm happy to talk about any questions, listen to any feedback, have any commentary, discuss anything you want, open lines. So if you'd like to join next week for a live Q&A show, go to patreon.com/radicalpersonalfinance, sign up to support the show on Patreon at patreon.com/radicalpersonalfinance, and that will give you access to the weekly live Q&A call.

We'd love to have more of you there at patreon.com/radicalpersonalfinance. We begin with Mark. Mark, welcome to Radical Personal Finance. How can I serve you today, sir? Thanks, Joshua. I'm calling about my friend. He's in the unfortunate position that his wife divorced him. Your friend, uh-huh, yes. Sorry. I was making a joke and all of a sudden I made the joke over top and it wasn't very funny because you talked about a very serious situation.

So I hereby retract the joke. I'm sorry for interrupting you. Oh, no, that's fine. That's fine. And so they're kind of getting down to the final details of the divorce and they're stuck over what to do with the house. She would like to keep it, but they want to divide the equity.

And so I was wondering if you had advice or suggestions on how to equity strip that so that he can get half the equity of the house, but she could retain ownership. Why does she want to keep the house? You know, I haven't had that conversation with them. I believe she's just comfortable with it and likes it.

And that's as far as that's my guess. I don't know the exact reason. Okay. Well, there can be good reasons to keep the house. So I want to begin. I'm not saying, you know, don't do it. Some people really love a certain house. They really want to have that house.

It's just, you know, maybe it's the family home. Maybe it's a brick, you know, a brick straw roofed family cottage that they've lived in since the 1600s, you know, or something like that. But very rarely is that the case. Usually a house is just a house. Now if we were asking her, do they have children?

They do not. Okay. So another thing is when couples have children, a lot of times they say, "Well, we want to keep the children. We want to stay in this house for the stability of the children." After all, these are their rooms and we're going through a traumatic experience and these are their rooms in the house or they're in this particular school because of the school district and we want them to stay in that school so their lives are as, you know, maintain as much continuity as possible.

Those are some reasons that people want to keep a house. But in general, I think it's a bad idea to try to keep the house. And I'll give you a few reasons why to think about that, to present to them before we try to actually solve the problem. The first thing is when keeping the house, it's often financially messy and it's often messy when working through divorce court documents, working through refinancing, etc.

If they have followed the normal path when couples buy houses, they own the house jointly and they have a jointly held mortgage on the house. It's simpler if the house were in her name and she held the mortgage, but that's not the common path. The common path is that they own the house jointly and that they have a joint mortgage.

So a lot of times couples will try to settle this in a divorce decree. They'll say, "Okay, well, he's going to—she's going to keep the house, but he's going to move out. She's going to get the house in the divorce decree, but she's going to pay the mortgage." The problem is can she actually refinance that?

And so, for example, if she's going to stay in the house, but they're going to keep the mortgage as a joint mortgage, that puts him in a tremendously dangerous position because he's legally liable to the mortgage company to pay the mortgage if she doesn't pay. No matter what the divorce document says, what matters is the mortgage that he signed.

And so if I were giving him advice, I would make sure, I would say never ever maintain yourself on the mortgage. It's just simply too big of a risk for you to be basically a cosigner on a debt that you're not in charge of anymore. And if she gets behind, she gets sick, she becomes unemployed or something like that and she can't make those mortgage payments, it's a tremendous risk for him.

Now how could that be solved? Well, it could be solved if she bought the house, if she bought him out of the house and she refinanced it. Why is that usually difficult? Well, it's usually difficult because most couples buy a house based upon a dual income household. Most couples, especially most couples who don't have children, do their financial planning based upon a dual income household.

And so if those incomes are split apart, the house is probably more than she could comfortably afford on a single income. And if there are no children involved, I don't know if they've worked out any kind of alimony payments or not, but usually her income would be lower. And it's even worse if it's just a single income because then she has no source of income until she goes out and reestablishes herself in a job and in a career.

And the house that a couple would buy, especially a couple that's planning for marriage, planning for children, is probably a very different house than an individual single person would buy. And so it's probably not a great fit because there were different ideas in mind. And then the final component is what about if there's a profit, if there's profit in the house?

So it gets complex with the tax planning, for example. If they own the house jointly and they sell the house, then if there's a profit on the house, a gain, then they can just split the profit. They may qualify for the Section 121 exclusion of capital gains from the sale of a personal residence.

Are they living in the United States? I didn't ask that. They are living in the United States. And if this is relevant, when they got the house, she was a paralegal and has now passed the bar. And so her income, I believe, would have jumped sufficiently enough that she could sustain the current mortgage payments.

I don't know all the details, but that would be my guess is that she's at that level where she could sustain it. Perfect. So we'll get to that. That is very important because that will make all the difference in the world. Let me just finish kind of the general advice and then we'll go to the specific solutions there.

So the tax situation is complex because what do you do? How do we qualify that? If he sells the house to her, does he receive the exclusion on the gain in the property? What do we actually – how do we qualify for this? Now is it possible to do?

Yes. You can do it. You can separate the property. But the basic point that I'm driving at is you don't want to continue on in a business relationship after the fact. If you look at people who get divorced, divorce stinks all around the world. But why does divorce stink?

Well, basically it turns into a really bad, nasty business partnership in almost every circumstance, even in the best of divorces where everyone's talking to each other, etc. Because you've got a financial life gathered together with somebody who was a romantic partner, a life partner and is now a business partner but the business partner has gone wrong or the business partnership has gone wrong.

So unwinding all of that is really hard and the best thing to do is to unwind it as quickly as possible so that you can go on with your life. So you want to work towards complete and total financial separation. You don't want to continue with, "Okay, I'm going to be on the mortgage for a while," etc.

So that's my goal is complete and total financial separation and do it as quickly as possible to minimize years of pain, minimize frustration going on. Complete and total financial separation. That's usually best achieved by simply selling the house. And if you sell the house, sell all the property, the only assets you usually don't want to just sell completely are business assets.

That's harder than a house. But houses are a dime a dozen. There's a house on every street corner. A house is a house is a house basically in almost every circumstance. So it's best usually just sell it, split it, pay off all the debts and part ways and not have anything going forward.

Now, if on the other hand she has the money and she can put herself in a situation where she can comfortably afford the house, she says, "I want to live in this house. This is where I want to live," for her own reasons, then the answer is simple. Have her refinance the house, have her get a new mortgage, get him off the mortgage and have him sell or deed his ownership interest to her.

That's the answer. But it just depends on her borrowing capacity if she can do that. Okay. That's good to know. In doing that, I assume that turns out technically as a sale. Is that correct how that would be treated for tax purposes? Sort of. So in a divorce settlement, you have some unique tax transfer rules that are available to you.

And so in divorce tax planning, there are three – let's talk about the section 120. What I'm assuming you're asking about is how does the 120 – first of all, do they have a gain on the property? Does this matter at all? Do you know if they have a gain?

I'm assuming so. I'm assuming so. They've had the house about six years. Okay. So if there's a transfer by one spouse to the other of their interest in the home so that one spouse owns the whole home and there's a – then in that situation, the acquiring spouse would just pay the other spouse and the spouse that is selling should qualify for the exclusion on capital gains.

So it's a fairly clear thing. Now they can make various changes to it but yeah, that would be the simplest thing. Just have her buy him out on his share of the property. He'll get the section 121 exclusion on the gain and she can have the property and the debt that goes with it.

Okay. And then he would also qualify then for the 1031 exchange? No. You can't do a 1031 exchange on a privately held residence. So this is – I'm just talking about the – the 1031 exchange is where you have capital gain property that's business or investment property that you transfer for other business or investment property of a like kind and you avoid triggering capital gains tax on the sale.

But in this situation, we're talking about the $250,000 exclusion for a single person or $500,000 exclusion for a married couple on the sale of their personal residence that they have lived in for two out of the last five years. Got it. Got it. That makes sense. Well, awesome. Yeah.

In the divorce, there is – it's called section 1041 of the tax code. In the divorce, then property transfers between spouses don't generally recognize gains or losses and so they can transfer the property around. So back to your equity stripping question, if there's a way that they can sit down and adjust the assets based upon their individual balance sheet, yeah, they can do that.

The court will generally ignore embedded tax obligations. They consider that to be basically hypothetical and so most judges and courts will ignore embedded tax obligations. But what they should do is not ignore them. They should look at them. And I think that the general – again, the general goal is part ways, have everything finished, sell the property, incur the taxes if necessary and just part ways.

I would – even though it may work out financially and again, she's a smart girl. She says, "I want to live in this house." Fine. I don't think that's a bad idea even just for her. I think it's just a better idea. Sell the house, start fresh, especially even if she has a much higher income, start – rent a little condo, rent a little apartment, start fresh.

Get a clean start, have a clean break, start a new life and make fresh decisions so that that chapter of your life is gone. Okay. Thank you for that. I appreciate it. I've got a couple of other questions but I'll go ahead and let you move on and if no one else pops in, would there be time?

Yeah, go ahead. We've got one other caller on the line right now so go ahead. We've got time for you. Oh, awesome. Okay. So like you, I'm looking to invest in real estate and like you, I live overseas. So I was wondering just what your plan was for finding a deal for closing it, for managing renters from overseas.

Are you looking family, management companies? Have you built up a team in place? And alongside that, I know margins are tight. So if you're paying all those people to manage a property while you're overseas, what are you thinking in terms of margins? I think it depends on the market and I am not – I don't know.

I have not purchased any property overseas yet. I'm still kind of stuck in this back and forth situation of am I going to go back to the United States or am I going to stay outside of the United States and I'm sitting and watching and waiting. So I can't answer from personal experience because I haven't developed a large property portfolio outside of the United States.

I have some plans. I have some specific markets that I'm looking at but I can't speak from a place of experience. That said, I think the answer is as with any real estate option is move slowly and contact local experts and get local expertise. The most important – in my opinion, one of the very important differences between working in the United States and working in some other markets is going to be access to local resources, local people.

One of the great benefits of investing in the United States is you have a largely commoditized market. For example, you have the MLS that every real estate agent has access to. There's a very commoditized market. The marketplace in the United States works well from hands off or arm's length transactions.

You don't have to get involved and know somebody. But in other markets around the world, that is very different where you have to get involved and know somebody. Now, there's a big difference between Cambodia and Portugal. There's a big difference between Panama and Kuala Lumpur. There's a big difference between buying a Singapore apartment versus buying teak land in Nicaragua or something like that.

So every investment is going to come with its unique things. But I think number one, you need local people because some markets, especially some of the more profitable markets, you need insiders. You need inside people in the market. Number two, I think you need to be really careful and thoughtful about being slow to get into it.

The thing that bothers me most about a lot of overseas investments is that many markets are much less liquid. So in the United States, what we're accustomed to in the real estate market, we're accustomed to a very liquid market. You can go into a deal and you can know, "All right, if I put the property on the market at this price, then it'll sell in one week at this price.

This is my fire sale price." There are many markets around the world that just simply do not work like that. They don't have a fire sale price. The markets are not based upon the ability to sell quickly. I have a lot of friends who own a decent amount of real estate throughout Latin America.

It's one of the interesting vagaries of the Latin American marketplace is that a lot of times you don't need the right price, you need the right buyer. And so it's not so much that you're price sensitive, you're buyer sensitive. And so there can be an extremely long lead time on those scenarios.

I would say it's complex. And so you can, and if you're going to get the highest margins, you're going to have to choose an area, you're going to have to develop a local team, and largely you're probably going to have some kind of local business come with you. Now, many people who buy property, they just buy, "Hey, I want to buy a beach condo in Costa Rica." So they buy some retail beach condo in Costa Rica.

That's not exactly what we're talking about here. I think if you're going to do income property, then you need to choose a market, develop a local team, and answer some of those questions. But I couldn't answer them on a global basis. They're too localized in nature. I'm sorry, it was probably unclear.

I live outside the US, but I'm looking to buy inside the United States. I don't know if that gives a little more focus in terms of finding renters, managing property, etc. I'm sorry, I didn't say that before. Yeah, totally different. I mean, well, actually not totally different. I mean, the answer is if you're not going to be in the United States, then you're going to have to find someone that's going to work with you.

So either you have a house – I would say that in the US market, my number one focus would be to try to find low-maintenance tenants. And so I think you find low-maintenance tenants by having a certain quality of house and a certain kind of market. I would look for that middle-income market.

There are places in the South Florida market where just standard developments where you can buy a big three-bedroom, four-bedroom house and the kind of tenant that you put in there at $2,000 a month or $2,200 a month, at $2,400 a month, that kind of tenant is going to be generally a low-maintenance tenant.

You can get a very high – someone's got a high credit score, they're a working professional. It's a very different scenario than if you're managing a trailer park in Central Florida. The trailer park in Central Florida will have higher yields, but it's going to be very management-intensive. So I would focus – if I'm going to be outside the United States and buying property in the United States, I would focus on low-management properties.

So I would try to find upper-class, middle-class and upper-middle-class tenants. And then you're going to need somebody local to help you and then just hire professionals for the various maintenance tasks that are needed. Is it probably even also just worth thinking about – I don't love condo investing generally.

I think it's less advisable, but there may be plimes and places where you just go ahead and invest in condos because then your maintenance tasks are handled by your homeowner's fees. So run the numbers on that. Or you might just walk away from the rental properties completely and invest in some kind of property fund.

There are wonderful property funds available. There are lots of investors who would be happy to do the management for you. And I think for an absentee landlord, that should be seriously considered. Excellent. Thank you for that input. I appreciate it. Cool. I'm going to go on, Mark. Do you have one more question?

I'm going to go on to the next caller, but I can come back at the end if you've got another question. I do have several more, but I will gladly wait until the end. I'll swing back to you at the end. All right. Speaking of overseas, we go to Al in Tbilisi, Georgia.

Al, welcome to the show. How can I serve you today, sir? Josh, first off, I very much appreciate what you do. And I want to thank you for that. Truly, it's great. My pleasure. So I'm a relatively new listener, but I do believe that I've gone back and listened to most if not all of your episodes that touch upon whole life.

But I wanted to call personally and get your thoughts on this because I've got my annual review with my insurance agent coming up. And bottom line, I kind of want to go into this call better armed with a plan, some information than I have generally in the past. And normally these calls, my agent will say, "Well, how much more money can you put in the policy?" And that's a hard question for me to answer.

It could be a lot, it could be a little. I don't know where these policies sit in my priorities. So I'm trying to understand, should I have a goal? Should it be like a certain death benefit, a certain amount? Or should the premiums be a certain percentage of our income or the premiums are a certain percentage of our investment allotments?

I'm trying to understand how these policies fit into our broader framework. And I can give you detailed numbers if that will help. But the last piece of background is that I'm looking at taking a one to two year sabbatical and probably six to eight years roughly. When I look across my expenses, it's really the only one to me that seems I have no control over that as far as drastically reduced.

That makes sense. That is a major disadvantage of whole life insurance. Now it can be pitched either as an advantage or as a disadvantage. So the advantage is it's a forced savings program. That's the way that it's often positioned. So for somebody who has poor self-control, who needs to be forced to make a premium payment, being forced to make a premium payment into a whole life insurance policy can be an advantage.

On the other hand, for somebody who wants to keep maximum flexibility of their expenses, take a sabbatical, do an early retirement, have total flexibility, it's a major disadvantage to whole life insurance. And you should be very cautious there with the numbers. To begin with, tell me just broadly about your financial situation, your income, your assets, your investment component, your investment portfolio, etc.

Yeah. So roughly about 125 annual. I am in the military, so a good portion of that is non-taxed. That's why I'm overseas. We've got probably another 150, 175 in various IRAs or TSP combos between myself and my wife. We are continuing to probably save probably 12, maybe 12% of our income into those accounts.

Then we have these policies, which are about maybe 450 in whole life and then another a million in term, term till 80 with some conversion options there. We own two rental properties and I think that's kind of where we're at. How old are your life insurance policies? First one was in 2013 and I've converted a few years, 14, 2018, 2019.

Sure. And total annual premiums into whole life insurance right now? About 680 a month. 680 a month. So 680 a month would come out to be about 8,000 a year, which on an income of 125,000. Does your wife have additional income on top of your 125? She does, but it's almost completely separate because we don't count on that income.

So that's kind of just getting socked away. So we're saving about probably 15 to 20,000 a year that's going into investments, taxable events, investments, vendors. If you took a sabbatical in six to eight years, a one to two year sabbatical in six to eight years, what would be your guess, not including your $8,000 of life insurance premiums, what would you guess would be your living expenses at that time?

I think we could safely probably get down to maybe 2,000. We could get into one of our rentals that's paid off. We have some flexibility there. And how old are you and your wife? I'm 36, she's 34. Do you guys hope to have children in the future? We have a nine month old and hope to have more.

So the answer to the question is there is no precise answer. Now I'll give you a couple of rules of thumb, but the rules of thumb that you hear will vary based upon somebody's commissions that they're going to earn based upon the sale of life insurance. For example, somebody who sells whole life insurance will generally recommend a higher amount of whole life insurance than somebody who sells stocks.

So you got to filter the advice that you hear through that. So if we start with the assumption that we appreciate the benefits of a whole life insurance policy, a well-built policy with a good company, we appreciate the features and attributes that it gives us. It's got some unique wrinkles that make it disadvantageous in some circumstances, but on the whole we're comfortable with it.

The most important thing is to get clear about what our plan is for it. Now what you've heard me say in the past is I'm comfortable with whole life insurance being a component of an overall financial plan where we keep some of our longer term safer dollars. That's the positioning that's always made sense to me.

I don't want to prioritize whole life insurance over a Roth IRA. That would be a mistake because a Roth IRA is superior to a whole life insurance policy as long as it's filled with good investments. I don't want to prioritize a whole life insurance policy frankly over any kind of tax advantaged account including TSPs, 401ks.

Although I don't have that as a hard and fast rule, maybe if somebody's – let's say somebody's earning $100,000 a year and they're putting $2,000 a year in a whole life insurance policy and they're putting $12,000 into a 401k, I'm not going to freak out, right? But I do like to see Roth IRAs funded and I like to see tax qualified accounts funded first.

Those accounts are generally superior to whole life insurance as long as the investments work out. They're better from a tax perspective and they're better – and they have the potential for longer term growth, for higher longer term growth. On the whole, stocks and equities should outperform whole life insurance because life insurance is more of a fixed income perspective.

And so if we flip the question and you just simply said, "What percentage of my investments or my income should I invest into fixed income investments?" Then we start to get closer to the answer. Now I don't like that analogy perfectly because it still has some trouble. For example, I wouldn't recommend to a 36-year-old that you have very much money in fixed income investments unless it's part of your chosen investment strategy.

So for example, I'm a fan of the permanent portfolio and you say, "I'm going to put 25% into bonds because that works during this particular economic situation." Great. No problem with that because that's a plan. But in general, as far as the mainstream financial planning, should you have a 60/40 portfolio?

No. I think that equities in the long run will outperform fixed income and as long as you don't need the income in the short term or need the money in the short term so you can deal with the volatility, you're more concerned about outdoing inflation than you are with temporary short term volatility.

But life insurance is unique though because unlike some other fixed income portfolios or especially unlike a fixed income portfolio in your retirement accounts, you have the ability to access the money temporarily. So if you've got a hundred grand in there and you need 50 grand for a down payment on another rental, boom, you grab 50 grand, do the down payment, refinance the property and then go ahead and pay it back.

So it's a really useful asset that doesn't fit well into the mainstream planning solutions and that's where it's so hard to find the advice. You have the anti-whole life crowd that says don't ever have any kind of whole life insurance, only buy term insurance, don't have any more. I think that's – although that plan can work fine, I don't think that that's a thoughtful approach that appreciates the benefits of whole life insurance.

Then you've got the totally 100% whole life insurance crowd, the bank on yourself, put all the money in life insurance, don't buy stocks, don't buy anything else. I think that's really – I'm uncomfortable with that and so we're stuck in this frustrating middle. So here are some things that I think make sense.

Number one, if you have hard numbers to your situation, so you specifically have a plan to take a sabbatical, you need to look at what your expected income would be during that period of time. Now maybe you look at your rental properties and it sounds like you have one rental paid off and that pays you a thousand a month or how much is your income on that?

That rental will be paid off by the time the sabbatical will come around and yeah, it would be like 800 a month. So you could look at that rental and you could say, "You know what? This rental, what this rental is going to do is during the sabbatical, this rental is going to pay my life insurance.

Now I'm going to have other money of course that I need to pay for living expenses but this rental is going to pay for life insurance." You need to be really careful if you're going to take time off, okay, that life insurance policies are properly structured. So you've got six to eight years of runway between here and your sabbatical.

That's enough time to get a policy working pretty well. That's enough time where the policies that you bought last year or the year before. If you for example make a plan that I'm going to pay these for six to eight years but then at that point in time I'm going to have dividends reduce the premium instead of having dividends by paid up additions, I'm going to turn the dividends to reduce the premium and my net premium outflow instead of being $8,000 a year, my net premium outflow is going to be $2,500 a year.

That's okay but I don't want you to keep buying more life insurance every single year for the next six years to where you got $15,000 of annual premiums and the policies are too new to cover it. So that's a big concern. You've got to make sure that you plan for that.

Now if you've got plenty of cash in the bank, you could cover it for a year, it's no problem. I've always liked the 5% number. I've always felt like and depending on someone's – there's no science to this number but when you sit down and you say what feels right, to me someone to say I'm going to put 5% of my income into something that's conservative, that's safe, etc.

that feels pretty good to me. It doesn't feel like extreme. Just like I said the same thing, it's almost like if somebody says the same thing with gold and silver. I get really nervous when somebody says I'm going to put 100% of my investments into gold and silver. I get nervous when somebody says I'm going to put 50% of my investments in gold and silver but if someone says I'm going to put 5% or 10% of my investments or 5% or 10% of my net worth into gold and silver, okay that doesn't seem extreme.

So I feel the same way with life insurance. 5% of your income feels about right because it's not going to control your life. You have the ability to reduce your income, etc. So that's often been my number. If it starts to get higher than that and right now you're at 7%, I feel like that's a little excessive and it doesn't give you enough flexibility.

So two answers to your question. Number one, model the specific numbers. What I would ask my insurance agent to do, I would ask him to do a projection and I would say listen, take all my policies together. If all your policies are with the same company, I would say take all my policies together, aggregate them under one sheet.

Illustrate that I pay the premiums for the next six years with the dividends going to paid up additions and then in six years illustrate what my premiums would be if I then use my dividends to reduce my premiums. So now you would know if your total annual premiums are going to go from $8,000 to $4,000.

And then if in your mind you simply say $8,000, I'm going to have $4,000 of expense, I've got this rental property over here that's going to produce $9,000 or $10,000 of net rental income, that's going to pay my life insurance premiums for me, then I'm okay with that. But that's the projection that your insurance agent needs to do.

I'm uncomfortable if you get much more than 5%. I feel like that's too heavy. I made the mistake when I was a new insurance agent, I made the mistake of selling people too much whole life insurance. And it felt good in the short term because I'm like, yeah, this is great, you know, I set them up with a good well-built policy, etc.

But what I learned was that they would change, right? They would leave a job, they would just decide I'm going to quit and something would happen. And then what happened is that then they started canceling the policies. And when you cancel a policy two years in, three years in, it stinks.

You lose all your money. It's a terrible thing. And so I learned, even as an insurance agent who had the bias of getting paid commissions, I learned that I would rather pull back and sell less, but have it enforced over the long term. And that in order to do that, I needed to make sure that my clients always had tons of flexibility in their cash flow.

Yeah, that makes a lot of sense. I really appreciate that. I've heard in the past you talk about having additional premiums. Or is that, am I too late for that? Because that would have had to been written into the policy when I purchased it. Not necessarily too late. And so it depends on if you're willing to do additional underwriting.

So that would be a good option. If you've got a little bit of extra cash right now, talk to the insurance agent and tell the insurance agent, listen, I've got some extra money right now that I could put in, but I don't want to convert any more insurance. What I'd like to do is see if I can go ahead and add some additional premiums to any of my previous policies.

And what the insurance agent can do is they can calculate how much additional premiums your policies can absorb without turning them into a modified endowment contract, a MEC, which you don't want to do at this stage of your life. So they'll calculate how much additional premiums your policies can absorb.

Now anytime you go up with a whole life insurance policy, anytime you go up in amount, face amount, anytime you go up in premium, the insurance company has the right to request additional underwriting. So there's no guarantee that you can add additional premiums to the policies now. But they may allow it with additional underwriting.

That underwriting can be simple. It might be as simple as a health questionnaire. It might be a review of your medical records or it might be a fresh new physical. But if you feel like, you know what, I'd like to go ahead and increase a little bit, but I don't want to sign up for new policies, then that would be one good way for you to go ahead and for you to go ahead and for you to go ahead and add the premiums.

The other option you could take, as long as you're at that eight year time horizon for your sabbatical, if you want to convert more insurance, then this time instead of converting a traditional whole life insurance contract, build a contract with an eight year premium target. So in US tax rules, you need to pay premiums on a life insurance policy for at least seven years.

Otherwise, the policy becomes a modified endowment contract. And the reason you don't want the policy to become a modified endowment contract is that instead of having tax free access to the cash values in the form of a loan, or instead of being able to have tax free distributions of premiums first from the contract, what happens is the money becomes instantly taxable when it comes out as ordinary income.

You lose those benefits if the policy becomes a modified endowment contract. And a policy becomes a modified endowment contract if it is either paid in fewer than seven years. So for example, a single premium whole life policy is automatically a MEC from day one. So either if it's paid for fewer than seven years or if it breaks the seven pay test, which is a test that has to do with how much premium versus how much face amount.

But you can design a contract that won't trigger the MEC rules, but that is designed to be paid up in seven or eight years. So if you've got a six to eight year time horizon, that could work well. So what you would do is have the, instead of buying a traditional whole life contract, you know, a life paid up at 90 or 100 or life paid up at 65, have them design an aggressive contract with a short term quick pay option with lots and lots of additional premiums and have them target eight years to have the premium paid up in eight years and have the policy and have no additional premiums go in after seven years.

And they can design that for you. And so that way you'll know if you buy that contract and you go ahead and convert, you know, a $50,000 policy from your term to your whole life, that contract will be scheduled to be paid up in, again, in seven years. Now you may be able to quick pay some of your other contracts.

So again, if the insurance company will allow you to do it based upon underwriting, and each contract is different, it has to do with what they'll allow, but the insurance company may allow you to go ahead and start quick paying and putting additional premiums into your other contracts, which would accomplish the same thing.

You should do that first before you buy a new policy. Your most efficient contracts to work with are always your older contracts. So if the older contracts will allow additional premiums into them and you want to quick pay them, then you should do that before you buy a new policy.

Do you understand that, that the older contracts are more efficient because you bought them when you were younger, they have fewer commissions, et cetera, associated with them? Okay. Now the only reason why you would change that would be what would you project your cash flow to be after you are, after your sabbatical?

So if I were your insurance agent and you're sitting here and let's say you come in and say, "I just heard this guy on a podcast that told me I could put additional premiums on all my contracts and quick pay them all in seven years," I would say, "Yes, maybe," right, depending on the specific language of the contract, if the insurance company will let you do that subject to additional underwriting, but then what are you going to do nine years from now after your sabbatical?

Do you not want to be able to put more insurance into the contract? Sorry, put more money into the contract at that point in time? If you didn't want to do that, then quick paying them in seven years would be fine, but that's the reason why that not every contract is a seven-pay contract because you want to be able to get more money into it.

So if you put all the money in front loaded over the life of the contract, you'll be able to get less money in over the life of the contract. And then you don't want to necessarily be buying more insurance when you're 43 years old and buying new contracts then and starting the process all over would have been better for you to get those, keep those policies that you bought at 33, but where you plan to pay them longer.

I know this is confusing when it's over audio, but there's a balance because when you design a whole life contract, you have the death benefit and the cash value. And so there's a ratio between these. Sometimes as an insurance agent, you design a contract that has a minimal premium for the maximum death benefit because the client says, "I need a lot of death benefit." The obvious example there is when you're doing estate planning.

You need a policy that's enforced forever, so it's got to be a whole life policy. Term doesn't work in that situation. We're not talking about protecting my children while I got young children. That's what term insurance is for. We're talking about I want a policy that's enforced for the duration of my life and I want a lot of death benefit.

Well, you can design a very lean policy that has low premiums, but that will keep the death benefit enforced. But the cash value in it is very modest. If you were doing a rate of return analysis, it would be a very, very low rate of return. On the other hand, you can have a policy that's designed for minimal death benefit and maximum cash value.

Why do you want to do that? Well, because the death benefit costs money, whereas the cash value doesn't really cost money. You've got to follow the rules and have an adequate death benefit, but you can cut the death benefit down. You can ramp up the premium as maximum possible, and those policies will perform at the highest possible margin.

So a quick pay, a seven-pay life insurance policy where you design it with seven years of premiums and then no premiums for then on, will have your highest – with lots of additional premiums inside the policy – will have your highest cash value rate of return of cash on cash.

So if somebody wants a very rich policy and they say, "Eh, the death benefit, yeah, I mean it's nice to have, but my primary goal is cash accumulation," then you shorten up the policy. But then that creates the problem of you're limited as to how much cash you can get into it.

So that's where you often stretch it out and you say, "Okay, well, if you're going to put $10,000 a year in and you only do this for seven years, you can only get $70,000 of cash into it. But if you're going to put $10,000 a year in for 25 years, you can get $250,000 of cash into it." When you project forward 20, 25, 30 years, there's going to be a huge difference in the value of those policies based upon the amount of cash that's in them.

But you've got to build them in the early years. And the earlier you start, it's going to be better for you in the long run if you buy the policy when you're 30 years old with $10,000 a year into it, planning to go into it for 35 years because you start the contract at 30 years old under the mortality table of a 30-year-old who's very unlikely to die rather than doing a seven-pay at 30 and then doing another seven-pay at 37 and then doing another seven-pay at 43 because those mortality tables make a big difference in the overall cash value of the contract.

So that's why every insurance agent doesn't recommend a seven-pay life from the beginning. Man, we got deep into the weeds here. The point for your situation is those are your options. If you feel like, "I've got excess money that I don't have other profitable investments for. I don't want to put more money in my TSP.

I don't want to put more money into real estate. I don't want to put more money into something else," which I want to be clear, at 7% of your income, I feel like that's enough in life insurance. That's enough. It doesn't need to be more. Okay. When your income goes up, I don't think you need much more life insurance.

So my first goal, my first recommendation is focus on more aggressive investments, investments with a higher rate of return. Can you get rich with life insurance? Maybe but it's going to take a really long time. You can get a lot richer a lot quicker by investing the money in much higher returning activities.

So I don't think you need more life insurance. If at 7% of your income, unless there's some other factor, I'm unconvinced you need more. Number two, second option, if you have excess cash flow that you'd like to put into life insurance policies, investigate the option of adding additional premiums onto some of the policies that you have now.

If the insurance company will allow that, subject to almost assuredly additional underwriting. If you can qualify based upon the additional underwriting, fine. And there's no reason not to try that if they'll allow you to. They can't, based upon additional underwriting, they can't cancel what you've got. They'll just allow you to do that.

Now the insurance agent won't make as much as he will on a new commission for a new policy. So the insurance agent might not be really anxious to do that, but that if the company will allow it, that's your most efficient way to increase your coverage. Number three, on the sabbatical, model the income that you expect during the sabbatical, the amount of savings that you expect to have to cover your living expenses on the sabbatical, and consider if there's a cash flowing asset that will simply pay for your policies.

Ask the insurance agent to model for you what the totality of your life insurance portfolio would look like six years from now, seven years from now, if you then put all the dividends to reducing the premium, and how much your net premium requirement would be. And it would probably drop your premiums from $8,000 to maybe $4,000 or $3,500 in the year.

That solves your cash flow problem. Number four, if you do decide to buy more life insurance and you're going to do the sabbatical, consider adding a quick pay policy to your portfolio and keeping the rest of them at the standard table. So add a seven-pay or an eight-pay life policy to your portfolio, and that's a policy that you can just have now, that you can pay extra into for the next seven or eight years.

And then the rest of the policies will just continue over the long term. But you don't want to sign up to where you've got always increasing premiums. You want your life insurance premiums to slope off as your income goes down. That's why the classic 65 life is such a great policy.

The classic 65 life policy is a great balance between these things, where it's front-loaded, but it's also lined – meaning that it produces more cash value internally than a 90 life or an ordinary life paid up at 120 under the current mortality tables. The 65 life is an aggressive policy, but the premiums are scheduled to stop at 65.

So it works really well where when you go into retirement, it eliminates the need to budget for life insurance. I like that idea a whole lot more than I like the idea of you having to budget for life insurance off of a volatile equity portfolio, for example. This has absolutely been great.

I definitely will have to probably re-listen a few times to fully digest, but I feel confident now going into this review. And thanks for that advice. I was thinking that I was getting a little too heavy, and you absolutely confirmed that with a lot more knowledge than I had going into this.

You're balancing two things. If you put all your money into some aggressive investment, what's the benefit of that? Well, the benefit of that is that you might make a million, right? You put all your money to some super aggressive business venture or some super aggressive speculative investment opportunity, you might come out like a king.

Fortunes are minted very quickly doing that. On the other hand, you might lose it all, and fortunes are lost very quickly doing that. And so if we're talking about an aggressive investment opportunity, we want to balance it. We want to say it's useful, but we've got to be careful.

Now on the flip side, the exact same analysis applies for a very conservative investment or savings vehicle like a life insurance policy. On the one hand, if everything is super conservative, it could work out, and that's what life insurance does well. It's guaranteed to go up, and that is awesome in times of great volatility.

But the problem is it's never going to go up very much, and so you're never going to get rich quick. And so I'm nervous about somebody taking 100% of their wealth and putting it all into an aggressive investment. I think that's foolish. But I still say have the aggressive investment, and by the same method of analysis, I'm nervous about somebody getting too heavy into a conservative investment.

Somebody who doesn't have any conservative stable income, I think that's a mistake. But – sorry, stable investments. I think that's a mistake. I think there are a lot of people right now sweating bullets who all their money is in an S&P 500 index fund, and they've got three months of living expenses.

All of a sudden when there's a global pandemic on hand, and you're looking at three months and saying, "If I lose my job today, how on earth am I going to get employed again in three months, I'm going to be doing door dash deliveries trying to make my bills," now all of a sudden it seems foolish when you have such massive market volatility to have all the money in the market and have a three-month emergency fund.

And so that's always where my opinion on life insurance has come in really nicely, that if you've got a couple hundred thousand dollars sitting in a life insurance policy, you have a huge amount of cash which buys you the ability to keep investing aggressively, to keep going for those home run opportunities, but to do it with a vehicle that's far superior to keeping a couple hundred thousand dollars in a savings account in your local bank.

And so after years of doing it, that's where I've come to with life insurance. I gave you a lot of lingo. I talked about quick pay. I talked about additional premiums. The insurance agent will know all those terms. That's just a bunch of insurance lingo that usually agents don't use with customers because it makes their eyes glaze over, but the insurance agent will know those terms.

And so if you'll give them those instructions and have them model those things for you, you'll be able to get the right answer. Mike: Awesome. Thanks, Josh. I appreciate it. Josh: Thanks, Al. All right. Our other caller dropped off, so we'll pivot back to Mark. Mark, go ahead with your next question.

You probably got 22 of them, but go ahead with your next one. Mark: Well, I keep a list, so I'll try not to overwhelm you. Josh: I like it. All right. The question I have next is, I heard you mention in some call-in show about affirmations, and you spoke of it in the context of what you do to encourage yourself when you're down and things like that.

And I just wanted to hear you talk a little bit more about those because I've heard self-help gurus speak of it, self-hypnosis, affirmations, things like that, and it just seemed like a lot of psycho mumbo jumbo to me. You're intelligent, and you're doing some kind of affirmation. And so I was just wondering if you could share a little bit more why, what influence you've seen in your life, how you've done it, what purpose they're serving, and how do you deal with the already-not-yet aspect of your character that this is who you want to be, and yet it is also often not who you actually are.

It's hard to imagine anybody who's consumed anything out there with regard to self-help or anything who hasn't come across affirmations. Usually, I've never seen the movie The Secret. It made the big notes, but from what I heard about it, I assumed, I may have assumed wrongly, but I assumed like, "This is not for me.

I have no interest in the silliness of just sit and visualize checks flowing into your mailbox," which is how it was caricatured. Sit and visualize checks flowing into your mailbox, and then it'll just happen. I think that's silly. Now, again, I never saw it, so I've never said a negative thing about The Secret because I've never seen it, and I don't say negative things about things I haven't seen other than, I guess, maybe I just did.

But I'm unattracted to most of that stuff. I find it very non-attractive because it's just psychological mumbo-jumbo, and a lot of it doesn't work. On the other hand, if we take a more nuanced view of things, can we say that affirmations don't work? Well, I think that the way we speak to ourself is really, really important.

For example, I like to use this with my children. If I come across my children and if I hear my child saying, "I'm so stupid," I immediately correct them. I say, "Don't ever call yourself stupid. You're not stupid," or, "I'm worthless." I stop them. I say, "Don't ever say things about yourself that aren't true." Now, I want to always be honest, so if there's an honest outward expression of, "This is the way that I actually am," then fine.

But I'm not going to allow one of my children to say that they're stupid because they're not stupid. They may have made a foolish mistake. They may have failed. They may have gotten something wrong. They may have been careless. Those are all fine. I want to affirm the truth, but the truth is that we're not stupid.

It's like one of the things that my wife is super hardcore about, and I am too, but she's hardcore about it. She never calls the dogs bad dogs. We never say to the dogs, "You're a bad dog," because they're not bad dogs. They're good dogs, but they're dogs. They make a mistake.

This behavior is unacceptable. This digging or this boisterousness of something is unacceptable, but I'm not going to do that, and I'm not going to say things about myself that tear myself down because the reality is that I am a child of the King. That's where I start my affirmations.

I am a child of the King, right? And so for me as a Christian, when I believe that I am a child of God Most High, the God who spoke heaven and earth into existence, and that God loves me, and that God died for me, and that God forgives me, and that God doesn't hold my past against me, then how on earth can I slap Him in the face and say, "Well, I'm worthless.

I'm no good. I'm worth nothing." Nonsense. That's an absolute lie. And so I start every single…every time I do an affirmation, I begin with, "I am a child of the King," right? I am a child of the King, of God Most High, and there's a reality that flows from that that flows into everything else.

Now, I want to always be honest, and so here's where I think we draw the line. What can we say honestly about ourselves? Well, if I'm not achieving something, then I'm going to honestly acknowledge I'm not achieving this because I'm doing something this way, but I'm not going to say to my brain something that is not true.

For example, I am not stupid, okay? We use these crass, disgusting, like harsh words. I am not stupid. I may behave foolishly, and I will always acknowledge I made a foolish mistake. I may behave insensitively, right? I may acknowledge I was insensitive. I spoke harshly to you. Will you please forgive me?

I may make a mistake. I may be ignorant. I may not be knowledgeable in a certain area, but I am not stupid, and I will never say that I'm stupid, and I will never allow anybody else to say that I'm stupid because I'm not stupid. And in every aspect of life, to me, that's the proper thing.

Let's say that I'm broke, okay? I think it's fine to acknowledge I'm broke, right? I'm broke. Don't—and that's where—why lie to yourself? Don't say I'm rich. Say I'm broke, but acknowledge that I don't have to be this way and focus on it. Now, to your brain, I think there's very good evidence to believe that what you feed your brain makes all the difference in the world.

So I feed my brain the fact that I am a child of the king, a child of God Most High. That transforms my psychology. It's one of the most empowering things in the world. You know, it's funny. I obviously—I think a lot about Christian theology. I think a lot about theology of other religions.

I think a lot about the current debates with secularism in the United States that are very, very strong. And I often think—I've had this thought. I've never formalized it in an essay, but I've often had this thought that one of the healthiest things about believing in the existence of God, especially the Christian God, is that you create this guaranteed-for-success mindset.

So I believe that God is conspiring and supernaturally ordering all of the circumstances of the universe for my own good. That's my belief. That's my hardcore conviction. I believe that the God of the universe who controls the affairs of the world is conspiring for me, is conspiring to divinely arrange every circumstance in my life for my own good.

And so when something comes in that I look and I see that this is a blessing, it seems like a stroke of luck, right? I'm talking—I'm trying to conjure in your mind the positive things, the ideas that there's a—you know, something happens to you, right? You get a lot of money or you get somebody—you win, price is right, or something like that.

Then I believe that God is divinely ordering that for my good. And then when I face a challenge, when I face a circumstance that doesn't seem pleasant from the outside, I believe that God is divinely ordering that for my good, because I don't believe that only the things that feel like blessings are actually blessings.

I believe that the hard times are blessings. I believe that the difficult circumstances are blessings. I believe that God disciplines those he loves. So if I'm under the discipline of God, I know that God loves me. And what this creates is it creates this fabulously robust psychology where you basically go through life being convinced that the world is conspiring for your good.

Now if I compare that to the psychology of some of my friends who are—my friends who don't believe in God, right? They don't believe that God exists. They have to contend—and so I begin with God foreknew me. Before he created the world, God foreknew me. He knew that he was going to create Joshua sheets with these unique characteristics and attributes.

And then God foreknew that he was going to divinely order Joshua's life in the perfect way for Joshua's good, so that Joshua's life on earth could be richly meaningful and satisfactory and fulfilling, and so that Joshua's eternal life can be filled with joy in the presence of God. Now compare that to my friends who, by virtue of their worldview, are forced to believe that their existence is an accident of time, that their existence is pure happenstance of biological chemical properties over which they have no control.

And in fact, the very essence of their life, their very ability to make decisions, is actually something that's out of their control, because they're subject to random mutations of cells, random chemical processes, and that creates the stuff of life. Well, you could imagine why it's difficult for people with that worldview to stay away from abject nihilism, right?

It's hard. Now there are people who do it, but they usually ignore the natural consequences of their worldview. And so when I think about affirmations, I want to affirm what is true, and so I have no problem affirming what is true, that God loves me. I'm a child of the King.

He divinely foreknew me. Before he knit me in my mother's womb, he knew who I was going to be. And every circumstance in my life is providentially provided for my good. And so if that circumstance is joyful, if that circumstance feels really fun, if I'm rich, if I'm well-liked, et cetera, praise the Lord.

If that circumstance seems like a trial, if I'm poor, if I'm abused, if I'm discriminated against, praise the Lord. This is something that God has provided for me. So I didn't mean to get so theological, but to me, that's an empowering, a powerful psychology. And again, I've often thought that—now, I think we should be honest, right?

Honesty is important. If someone just doesn't believe that God exists, you're not. If someone's on the fence, I often thought, like, "Dude, you ought to just embrace a theistic worldview because it'll radically transform your experience of life." When you believe that the world is conspiring against you for your good and that everything that comes into your life is providentially arranged for your benefit, it totally transforms your experience of life.

Now, back to affirmation. You could take a softer view of affirmations, and you could say that affirmations activate—I call it the reticular activating system. I've never looked it up and seen if that's actually true, but all the self-help people say it. And so the example that's always used is the red sports car.

You think about buying a red sports car, or your brother buys a red sports car, and all of a sudden you see red sports cars everywhere. To me, I think that's absolutely, unequivocally, without question true, that what you focus on is what you see. And so think about this, right?

In the current scenario, if you focus on racism and you spend all your days talking about racism, thinking about racism, reading about racism, worrying about racism, railing against racism, basically all you see in your life is racism. Now, on the other hand, if you look around and you say, "I'm going to look for—" and you focus on non-racism, or anti-racism, or racial reconciliation, and you look around and all you think about is racial reconciliation and cooperation, and all you talk about is racial reconciliation and cooperation, and all you read about is racial reconciliation and cooperation, what happens is basically all you see is racial reconciliation and cooperation.

Now that doesn't require you to ignore what is. It's fine to acknowledge what racism is. Okay, this bad exists. I think it's foolish to be ignorant and say that this bad exists. But what you focus on is where your attention goes, and where your attention goes is where you wind up spending most of your time.

And so to the extent that I spend my time focused on opportunity for myself, I see nothing but opportunity. To the extent that I focus on the good things happening in the world, right? In the last decade, millions of people have come out of poverty, and to me, that's exciting.

And so because I spend all my time focusing on that, then I see it. Now every time I let myself go away from that, if I start thinking about catastrophe, or economic crisis, or all this stuff, what happens is it just builds, and you see this again and again.

Somebody starts worrying about, "Well, there's going to be an economic crisis," and then it just gets a hold of them, and they focus, and they focus, and they focus, and they focus, and it almost becomes this self-fulfilling prophecy. So I try to handle it with honesty. I try to acknowledge economic catastrophe could come.

Racism could happen. But I'm not going to spend time there. I'm going to focus on what's good. And so what affirmations do is they always focus your mind, and they focus your attention. Now the final thing that's been helpful for me, what I have always sought to do is be honest in affirmations, and to use things that are areas where I'm convinced they're skills.

So the person who made this click for me, the motivational person, was Zig Ziglar. And Zig Ziglar made a statement. I used to drive to work every day, and I have binders of Zig Ziglar CDs, and I would listen to Zig. And I liked his personality. I liked his kind of charming, down-home, southern accent and everything.

And I would listen to Zig, and Zig made the point, and he talked about almost all of the attributes that we admire are not things that are put into you, but they are skills. And when he used that word "skill" and hammered that into my head, it radically transformed the way that I think about things.

And it's even radically transformed my parenting. Like with my children, I don't talk about attributes. I don't talk about things that are there. I believe there are immutable attributes. I can't change my height. I can't change my skin color. I can't change my eye color or my hair color without the obvious cosmetic solutions.

What I can change, though, are my skills. And when I realized that the vast majority of the things that matter in life are skills that can be learned and practiced and developed, it allowed me to make affirmations in a really positive and without fear of error. So the self-taught card that I memorized when I was younger was Zig's self-taught card.

And I still have this. What I have done—I'll share my geeky secrets—what I do is I go to YouTube and I put on movie soundtracks. And so they have these movie soundtracks, you know, Pirates of the Caribbean or Lord of the Rings. These are these rich, uplifting music. And I play the music as a music bed.

And then I record my own voice saying my affirmation and I keep that on my phone. So anytime I want to, I can just hit play and I can hear myself actually doing my affirmations. And you know, hold on a second, Mark. I hate this. It makes me feel weird, but I'll play it.

Just a moment. Hold on a moment. Mark, you're not going to be able to hear this because it's not going to come through, but you'll be able to listen to this later. But I'll just play this for a minute for the audience. And this is my morning affirmation. This is Geeky Joshua.

So a good payoff for those who are an hour and five minutes into a podcast. Here we go. I am a child of the king. I live each and every day in the will of God. I listen for the voice of the Holy Spirit in every moment of every day.

And I am sensitive to his leading in all things. I pray without ceasing, asking God to give me the wisdom, discernment, and strength that I need in every moment. I can do all things through Christ who gives me strength. I claim the following attributes because I have the mind of Christ, the power of the indwelling Holy Spirit, and I am a son of the most high God, maker of heaven and earth.

Although I am weak in some of these qualities, I am specifically commanded to let the weak say that I am strong. Thus, I am strong. By God's grace, I am strong. Through Christ who gives me strength, I am strong. By claiming and developing these biblical qualities, I will become the person God created me to be.

I will glorify God in all things and my life will benefit mankind. I am an honest, intelligent, organized, responsible, committed, and teachable person who is sober, loyal, and who clearly understands that regardless of who signs my paycheck, I am self-employed. I am an optimistic, punctual, enthusiastic, goal-setting, smart-working self-starter who is a disciplined, focused, dependable, persistent positive thinker.

I have tremendous self-control and I am an energetic and diligent team player. I'm a hard worker who appreciates the opportunity that my business and the free enterprise system offer me. I am thrifty with all of my resources and I apply common sense to my daily tasks. I take honest pride in my competence, appearance, and manners.

I am motivated to be and do my best so that my healthy self-image will remain on solid ground. These are the qualities which enable me to manage myself and give me the stable character that I need to succeed in all things to which I put my hand. I am a compassionate, respectful, encourager of others who is a considerate, generous, gentle, patient, caring, sensitive, personable, attentive, and fun-loving person.

I am supportive of others in their needs and goals. I am a giving person, quick to forgive all people for all things, clean, kind, unselfish, affectionate, loving, family-oriented human being, and I am a sincere and open-minded good listener and good finder. I am trustworthy. These are the qualities which enable me to build good relationships with my associates, neighbors, spouse, and family.

I am a man of integrity with the faith and wisdom to know what I should do and the courage and convictions to follow through. I have the vision to manage myself and to lead others. I am authoritative, confident, and humbly grateful for the opportunity life offers me. I am fair, flexible, resourceful, creative, knowledgeable, decisive, and an extra miler with a servant's attitude who communicates well with others.

I am a consistent, pragmatic teacher with character, and I have a finely tuned sense of humor. I am an honorable man and am balanced in my personal, family, and business life. I have a passion for being, doing, and learning more today so I can be, do, and have more tomorrow.

These are the qualities of the winner I was born to be, and today I will develop these qualities to achieve my worthy objectives. Today is a brand new day, and it's mine to use in a marvelously productive way. Thank you, Lord, for allowing me to be awake and alive today.

May I know your strength, power, and wisdom in every moment of this day. So, it's probably a little embarrassing to acknowledge that stuff, but for me, the nice thing is it's a five-minute audio file that I can just simply play easily for myself. It sits on my phone. It's a five-minute audio file, and the nice thing about it at five minutes is that five minutes is exactly the amount of time that I need to do a French press, to wait for my French press coffee to go down in the morning.

And so, when you begin a day with that, and everything that I said in that, and I've never planned for that to be played, but everything that I said in that is absolutely unequivocally true. I'm an optimistic person, and so whenever I hear and say that every day, "I'm optimistic," then it reminds me, "I'm optimistic." And what happens is when you declare things that are true, you notice the ways that you're slipping.

You notice where things are starting to go, but all of those things are skills. All of those things are things that can be developed, and so that was the thing that brought me the fresh understanding of my willingness to use an affirmation. Now, there are other things as well.

I do this weird, again, I'm not going to play this one, but I do this weird thing as well where I put the movie soundtrack on, and I often record my goals, and I have my list of goals, and I can do that, because a lot of times, I don't feel like sitting and standing in front of the mirror and staring at myself.

I don't like to make my goals obvious, but I like to listen to them, and so it makes me happy to listen to my goals, and I got a good soundtrack underneath, and I record myself, and I listen to myself sketching those out, because as those pictures in my head affirm, then what happens is they become clearer.

And to the extent that those character qualities, those affirmations, if I say that I am confident, if I say again and again, "I am authoritative, confident, and humbly grateful for the opportunity life offers me," then it allows me to recognize, "You know what? I'm not behaving confidently at the moment.

I'm not doing this right now." And almost every day, when you listen to that list of attributes and that list of characteristics, you think about one thing that you can change, and then that progress just creates a self-fulfilling prophecy where you change one thing day after day after day, and then you become more and more and you embody these character qualities.

So I think that's why affirmations matter, is you have to model for yourself. You have to clearly sketch out exactly what you're going for, exactly what you're building, exactly the kind of person that you want to be, and then hold that clearly in your head. And the way that your brain gets input is through your eyes, through your ears, and through your other senses.

And so, you know, people who put things on their wall, I used to do that. I used to, you know, create a vision board, but at this point I've found that most of those things, they're not particularly visualizable, although I still do have that. I keep them on my iPad.

And so you can be simple as you create an album on your phone that has pictures of things that inspire you, but most of the things that inspire me are non-physical, they're non-tangible. And so I find the audio description of them really powerful. So that's my lengthy answer to your question about affirmations, is that I only affirm things that are true, because I'm not—one of my most important affirmations is that I'm honest, right?

I am an honest man, and honesty starts with myself, and so I've never been able to lie to—I've never been willing to lie to myself and then claim honesty to other people. And so—but all of those things that I said in that, they're true. They are absolutely true. Now, they might be true in small quantities, which is totally fine, right?

I'm happy to acknowledge that these are things that I have in modest qualities, but I'm getting better, right? Today's a good day. I have this, and I'm getting better. And that's what I teach my children, is that life is a function of skills. And so you have this. I never use "you are" language unless it's something that you actually are.

So I'm happy to say to my children, "You are a child of the king." But I'm not willing to say to my child, "You are lazy." I'll say, "You're behaving in a lazy way. You're practicing laziness. You need to change your behavior," because those things are behavior. You're not lazy.

"You are diligent, and you're proving that to yourself by behaving diligently." So hopefully that's a balance of between kind of the mystical world. Some people like it. I just feel like there's so many lies in that world that it causes—it can be a real danger. Everybody is so focused on only saying things that are positive, only being optimistic.

There are times in life when you need to run, run away, and you don't just sit there and if somebody's coming and attacking you, don't just close your eyes and say, "I live a peaceful life." No, you turn around and run away, or you go and fight. And so a lot of the namby-pamby world of self-development, I feel like it's just simply not honest.

But there's also a point in which you find freedom when you're honest, but you find freedom when you continually focus on the things that are positive. So Mark, I know you couldn't hear the five-minute audio file that I played. You can come back and listen to it later, but did that get close to some of your concerns and give you some thoughts from my perspective?

That was awesome. That was exactly what I was looking for. Thank you for sharing that and for the vulnerability of—or maybe not—but the vulnerability of sharing your affirmations. I look forward to listening to that. Cool. All right, man, I got one more caller who popped on after the other one left.

So I'll call back in next week with your other questions, and I thank you for the questions. We'll finish up in the great state of Indiana. Welcome to the show. How can I serve you today? Hey, Joshua. This is Andy. This fits in with the theme you've had so far, but a question about sort of in this particular time, developing the home strategy that you've talked about for troubled times versus a place to go.

I have a piece of property. We have some acreage, but we're fairly new to it, and it's not super self-sufficient yet. I'd like for it to be someday, and I'm just sort of wondering how you would go about thinking of continuing to develop that right now today with the money that I have and more in the near future versus something more along the lines of taking a vacation somewhere we want to move potentially if we needed to leave the area that we're in and just sort of not necessarily setting down roots there, but getting that idea of could we live here, do we like it, is it as safe as it looks online, that sort of thing versus putting in solar panels or buying animals or whatever to make our current place more sustainable?

I need to do an update show with kind of what I see happening with the current pandemic, the current coronavirus pandemic, but I do not see at the moment, I do not see any kind of precipitous event in the United States. I have been – so first, one of the surprising things that I have learned from this current pandemic is how excruciatingly slow it is, and I had thought that intellectually.

If you go back and listen to the shows I did on the pandemic at the end of January, I said that one of the reasons a pandemic is really bad is because it's really, really slow to come on, and it's really slow to hang around, and it's really slow to go away, and the slowness is frustrating and furious because you never know if you're making the right decision.

If your house is on fire, literally, then you know I've got to move now, and you immediately spring into action and you respond. If there's an earthquake, then you know that, yes, I should go and use my stores of water, right, because there's been an earthquake, but a pandemic is not like that.

It's so slow. You never know, am I preparing appropriately? Am I overpreparing? Am I underpreparing, et cetera? It's just maddening, and even through this current scenario, we're living in a disaster, but on the whole, it's not the end of the world as we know it. The internet still works.

The power still works. There's still been food on the shelves. There were some real concerns about food shortages some months ago. I was concerned about those things, but thankfully, most of them, although there were shortages in the United States, and there are shortages around the world right now, most of those shortages were not as severe as feared, and so that's great.

Now, on the other hand, we're stuck in this maddening middle of the ground world, so right now nonpayment of rent, massive increase. They're going to start to be – we're starting to head into foreclosure season. We're coming up on the end of the excess unemployment compensation that the US government authorized.

The pandemic is just really in many countries of the world kicking off, and where it's got an exponential curve in many places, and it's growing and growing and growing. You still see borders closed. You still see – the risk has not gone away. Meanwhile, in the United States, what is really frustrating is it's not been an isolated medical problem.

In some places, it is more treated and has been more treated as an isolated medical debate, but in the United States, all of the political strife and all of the tension in the society has exacerbated the decision about – the arguments about the medical stuff, and so it's almost impossible right now to separate most people's opinions about the medical stuff from their political views, and that's really frustrating because it makes it for kind of a more volatile situation.

But that said, I don't see why the pandemic should cause a precipitous, immediate calamity. I think that the economic effects have been less severe than I worried about, and I think that we should be grateful that they're less severe due to our ability to be connected by knowledge work done through the Internet.

If we were to go back to the early 20th century and we were to relive this pandemic in that situation, just imagine how devastating it would be when you can only work face-to-face with people, and yet businesses are shut down and people are not able to – no one's able to interact.

But in today's world, the majority of the most productive people, the highest earning people, the most productive people who keep most companies going, most of that is knowledge work, and they've been able to keep going because they're just entering into a new situation of working from home, doing knowledge work.

So I don't see a precipitous, calamitous scenario in the current environment. I think that even – like, what's concerning? Well, I think the election is going to be really concerning in November, because no matter who wins, I think that there's going to be a whole lot of people who are angry and frustrated about that.

It's hard for me to see a scenario in which we don't come out the other side with a whole bunch of people angry and ready to be the resistance, no matter the outcome. But at the end of the day, that's fairly isolated, even though, yes, there are riots in lots of cities.

That's a big city problem. So if you're living in downtown New York, I would be saying, "Don't put a solar panel on your roof. Go and get your extended – your property out in the country." If you're living in downtown Chicago, no, you need a place to go, and so that should go up.

But for you, living on some acreage in Indiana, I don't see any reason why that wouldn't be a perfectly viable place to be. And so I would just do more of the same, and I would focus on more on the long, slow decline, and how do I do well in the midst of it, building local community, et cetera, rather than worrying about running to the other side of the country.

One of the things that has been remarkable is how travel freedom has basically imploded. As a US passport holder, there's not many places in the world you can go. And for all of the strengths of my conversation and advice about the value of being able to translate from one place to another, the pandemic, the global pandemic, certainly shows that it does not work in the global pandemic, at least not with just one – not with one passport.

When I first released my "How to Survive and Thrive During the Coming Economic Crisis" course, I focused a lot in that course on how my students could gain multiple passports, multiple citizenships, how they could establish residency permits in other countries, et cetera. Then after about six months of even doing all the stuff that I recommended in that course, I came to the other side and I released an update to my students.

And I said, "One of the things that I've changed my opinion on is that a lot of this stuff is no longer necessary." I said, "If you've got a passport from a strong country, a US passport, a Canadian passport, a British passport, a German passport, whatever, like a good strong passport, not a Pakistani passport, not a Syrian passport, but a strong passport with significant levels of travel freedom, my answer was, you probably don't need residence permits.

You probably don't need passports, second passports, et cetera. Just having one is good to go." Seeing the pandemic though, I've changed my mind again and I've been willing to raise the importance of some of those things. Right now, if a US passport holder had a simple, you know, Dominica passport or a St.

Lucia passport or a Granada passport or a St. Kitts passport, a Caribbean citizenship by investment passport that they paid $100,000 to $150,000 for depending on the family structure, that person has untold travel freedom that US passport holders simply don't have on a global basis right now. And how long will this continue?

I don't know. But I'm not – I got off track there, Andy. I'm not worried about a precipitous thing at the moment. I think it's always good to be familiar with the precipitous thing, but I'm not freaking out. I think that this is much more likely to be a long, hard recession and not as long or hard as I feared several months ago, but a long, hard recession of more ordinary quality rather than any kind of Mad Max, end of the world as we know it, shooting our neighbors in the street kind of scenario.

>>Andrew: Okay, thanks. So you'd say, I guess I wasn't necessarily speaking about the current pandemic situation so much as just if I – you wouldn't see a problem with continuing to the next year or two to pretty well pour all of my excess money into a fixed location and improving that while having very undeveloped other places to go.

>>Steve: I wouldn't. Do you have a car or a pickup truck or a trailer? >>Andrew: Yeah. >>Steve: So you've got more than a lot of people. And at the end of the day, maybe you pick up a $1,000 travel trailer somewhere, an old kind of junky travel trailer that you can have beds in and have your children in.

But I think that having some simple plans like that is sufficient. If you've got a pickup truck and a couple thousand dollar travel trailer, then you've got the ability to go somewhere. And what I've always done is just have camping gear and I could roll up in a national park two states away and if I've got – you don't have to have the travel trailer, right?

A tent is fine or a van or a trailer. A cargo trailer with some cots inside can be very, very comfortable. But if I can roll up on a national park, I can set up a propane stove and I got a couple bottles of propane. That doesn't cost much.

I've got cookware. I've got food including shelf stable and storage food that's easy to toss in the trailer and take with me. I've got cots that are comfortable to sleep in so we're not going to be sleeping on the ground like millions of people around the world are doing right now.

I've got a battery or a generator and some stored fuel. I've got the ability to have electric lights and that makes all the difference in the world. If I've got the ability to get some water so that we can keep clean, I can live very comfortably and I guess to me, yes, that should be done.

But your total cost in that is probably – I mean you probably have all that stuff already. It's just a matter of thinking through what would I take and where. And so in the United States, right now I've been continuing to be involved in relief work in Venezuela and one of the things that's happening right now is that many Venezuelans left Venezuela.

They went to other places, Colombia to try to find work. But what's happening is due to the nightmare of coronavirus, the economy in Colombia has collapsed. And so now all the refugees are going back the other way. And there's one church that we support that's involved at the border and they provide food for refugees and they provide supplement for nursing mothers in a place where they can breastfeed their babies and clean water sources for the travelers, etc.

In the last three months, they've quadrupled in the number of people that they're serving in the last three months. But it's primarily now people going back the other way of people fleeing from Venezuelans, leaving Colombia, heading back into Venezuela simply because it's bad in both situations, but they're provided – but at least it's familiar in Venezuela.

And so – but what it is though is those people – and I don't publish this stuff online, but those people are sleeping on dirt, right? They have a sheet that they carry and they spread out a sheet on an empty soccer field that has a dirt floor, not even grass, and they spread out the sheet and that's where they sleep and they got nothing or one little blanket to put over them.

And so when you come to the context that you live in as an American, to have a little cargo trailer that you can hook up to your pickup truck and have some cots in that so you can be out of the rain, have a tent that you can set up to store your stuff in if you're sleeping in the cargo trailer, have a propane stove that you can cook on, have some food, have some water, I think that's sufficient.

I think that to go beyond that is not necessary for the vast majority of people. If you got 10 million bucks, get the missile – build the bunker in the missile silo, no question. But for ordinary circumstances, I don't think you need anything more than that. >>Steve: Great, thank you.

>>Adam: My pleasure. Thank you all for listening to today's Q&A show. I appreciate your being here. If you'd like to join us next week on the Q&A show, as you can see, you can talk to me about anything. Sometimes when you get me on a Q&A show, I'm willing to share things honestly.

I never would put out a recording of my morning affirmation thing in a normal show. I would just never expose myself like that. It's too humbling to do that. But a lot of times you catch me in a Q&A show, sometimes you get that out of me. So I invite you to go to patreon.com/radicalpersonalfinance, sign up for the show on Patreon, patreon.com/radicalpersonalfinance, and join me on next week's Q&A show.

Have a great week, everybody.