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Bring the holidays together in a new Chevy. Click to learn more. Chevrolet. Together, let's drive. For J.D. Power 2023 U.S. Initial Quality Study Award information, visit JDPower.com/awards. It's Friday. And today, as most weeks, that means live Q&A here on Radical Personal Finance. Thank you for being here. My name is Joshua Sheets, and welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

On Fridays here at Radical Personal Finance, we do a live Q&A. It works just like talk radio. You go to the phone lines and open them up and chat with you about anything that you want to talk about. And today, we don't know what's coming, but I'll tell you what.

If you want personal, actionable feedback, if you want to talk about your particular plan, I can think of no better way and certainly no cheaper way to do that than to get a hold of me by joining the Patreon page. Go to patreon.com/radicalpersonalfinance, patreon.com/radicalpersonalfinance. Sign up to support the show there on Patreon, and you will gain access to these Friday Q&A shows.

We begin with Donovan of Michigan. Donovan, welcome to the show. How can I serve you today, sir? Hey, Josh. Can you hear me all right? Sounds good. Go ahead. All right. So I'm a college student. I just got married and moved into an apartment. And I've been looking around for jobs, but it seems like mostly what's available or mostly what I've found is low-paying jobs, $10, $12 an hour, that don't utilize a lot of the skills I've developed from work history and from school.

And I was wondering what your advice would be to someone in my position. You are currently actively in class, taking classes? Correct. And you're recently married. Does your wife generate income for your household as well? She does. What kind of work does she do? She's in just a simple retail job.

Okay. Does she have long-term career ambitions herself, more than basic entry-level type of work? Yep. She's pursuing a master's degree in speech pathology. Got it. And how much do you need to live on for your monthly living expenses? We're currently figuring that out. I'm estimating it's going to be around $1,200, $1,300 a month.

What are you studying? What are your career ambitions, and how do those relate to your studies? I'm in aviation operations and management. I'm also in an ROTC program, so I'm looking to go into the aviation branch for Army. Okay. So you'll enlist to active duty? Commission, yes. Okay. Got it.

Active duty. So when you look around in your field of aviation, do you find opportunities in your chosen field? No. Currently, from what I know, there's a lot of opportunity in the aviation market, just not to full-time students. Why not to full-time students? Just because, from what I know, those markets are going to be for people who have their degrees and who have work experience in the field.

Okay. Are you currently employed? Not yet. Okay. Well, you have a couple of different ideas, a couple of different ways that you can go through this. So if you've chosen a career, and your career of choice is aviation operations and management, and that's what you want to go into, and your ambition is to be commissioned as an officer into the Army, then that can be, and probably should be, your primary area of focus.

And so what you do at this point in your time and in your career probably should be just simply making enough to get by while you get done as quickly as possible and move into your career. So, you know, there's so many things that you could do to make money, but if you have a specific career that you've chosen that's going to be your primary form of making money, then you just need to make money enough to support yourself while you are going in that direction.

How are you paying for school currently? Currently, I'm on scholarship. Okay. And do you and your wife have any debt, personal debt? Only student debt. How much student debt? I think around $15,000 currently, collectively. And on your current plan, is it likely that that amount of student debt will increase in the coming years?

No. How much longer until you will graduate with your degree? I will graduate in two years, and she'll have three years left before she's done with school. Is there any way for either of you to speed that process up by taking more classes? I cannot. The ROTC program is strict about timing.

She has potential to, although she's already in an accelerated course. So, the ROTC program wants you to be in it for a certain number of years before moving into full-time active duty. Is that right? That's correct. Okay. Got it. Well, and then, so over the next two years, how many classes do you need to take per semester to be on track to graduate on the expected timeline?

About 17 credits per semester remaining. Okay. So, it's not a light load. It's a full-time load. Yes. Okay. Well, so, here's, as I see it, there are a couple of paths that you can take when you're trying to figure out, "Okay, how am I going to solve my income needs?" The first question that you need to ask yourself is, "Do I need income?" Because a lot of times, needing income can be a hindrance to you.

When I was in college, I was working my way through, and I needed to work. And at one time, I had three different jobs all at the same time. I had a kind of a dead end on campus, sit at this desk, and I can't remember what I was doing.

I guess sell M&Ms or whatever to the people. I was just kind of a facilities guy. I can't even remember what I was being paid at that, but it was basically worthless. I did that during the week. Then, on Thursday night, Friday night, and Saturday nights, I rode a bicycle taxi around the downtown area and used that to generate income.

Then, on Saturdays, I had a friend who hired me to help him with a construction project there at his place. That was a time where I was busy. I was taking classes, and I had these three different jobs. I was basically either in class or working. I did that because I needed to generate income.

What I didn't understand was that people would talk about doing things like taking unpaid internships. For me, because I needed to generate income, I didn't understand how they could do that. How do you go and work for free? I needed to make money. I got to pay my bills.

In hindsight, what I realized is how much different my experience could have been, I'll say would have been, and should have been. I don't like to use that word, but should have been if I had taken advantage of more opportunities to work for free. I think you want to squarely think about the fact, "Do I need income?" Because when you're just getting started, one of the most important things that you need is not so much income, but you need exposure.

You and your wife can live inexpensively. It's not particularly a hardship when you're younger to live inexpensively. There are two of you. Most of your friends are living inexpensively. It's very easy for you to have inexpensive forms of entertainment with your friends, whereas when you get older, it starts to become a little bit more difficult.

It's harder to maintain those frugal ways when your crowd changes. But if you are living inexpensively, yes, you need to make enough money to provide for your living expenses, but you don't need to make much money more than that. What's possibly more helpful to you is generally to get involved in something that's directly related to your career.

Now, in your situation, I think it's a little bit complicated because your ambition is to enlist in active duty in the Army. And so I don't know to what extent personal experience in that field is going to be worth, but I would still pursue it myself because who knows?

You might change. The next couple of years is a long time. You might change and decide you don't want to enlist in the Army after all due to some circumstance that you don't currently foresee. So I would look at how can I earn the amount of money that I need to earn, but how can I gain exposure into the fields that I want to gain exposure to?

Now, if you're not getting job offers in the field that you want to gain exposure to, there are probably a few fundamental reasons why. The first fundamental reason might be the fact that you're just a no good worker, right? You're lazy. You're worthless. Maybe you smell bad. Maybe you're ugly.

Maybe you have poor people skills. These kinds of things matter. And so if that's the case and you're not getting job offers because of it, you've got to fix that. I doubt that that's the case in your situation. Most likely the reason you're not getting job offers is due to lack of exposure, due to lack of contacts, due to lack of a network.

And this should be your primary focus in the early stages of your career should be building a personal network in your desired field. Because if you can build a personal network, then the jobs, when they become available, you'll be on the short list. And so I don't know all that much about what aviation's operations and management means, but if I were in your shoes, I would be hanging out at the airport constantly.

I would be just simply making myself a known quantity everywhere around anybody doing anything related to aviation. I would physically be present there. I would physically be known. I would physically be meeting people. I would go and hang out. I would go and buy lunch at the – I forget what it's called on the airport – you know, the little restaurants that they have at the – what's it called when you come in on a private airplane and there's the little hangar where they receive you basically?

Anyway, I would be there constantly making friends. I would wander around to the extent possible. I would get to know mechanics. I would wander around. I would do operations and management. I would wander around with the people in charge, and I would ask people for work. I would build relationships, but I would ask them for a job, and I would say, "Listen, I'm studying aviation's operations and management, but I'd like to gain exposure.

Do you have an internship? Do you have a job? If you can't pay me, can I shadow you or can I come down once a week and spend a day here and just be an errand boy for you?" Something like that. But anything that you can do to increase your exposure to the kind of people who are involved in your industry is without question a very productive use of your time.

And so if you're doing that, you may – depending on what kind of job you can get, you may or may not be able to earn a living at that. So you might need to do something on the side or you might need to – or you might not.

Now, if they offer you a $12-an-hour job, a $12-an-hour job working at the airport is worth a whole lot more than a $14-an-hour job working at a local retail thing or something not related to your career. So you would take that job and you would see, "Can I make enough money on this job in order to cover my expenses?" Ignoring taxes for the sake of simple math, if you have $1,200 a month and you have 12 hours, that's 100 hours a month.

That means that over the course of a four-week month, that's about 25 hours a week. That's doable, right? So if they give you a $12-an-hour job at the airport or around airport property, I would take that. And I would take almost any job that got me around the kind of people that I'm going to be associated with because that allows me to build relationships.

That allows people to see me work. That allows me to build friendships. And that allows me to be very vigorous in saying, "Hey, I'm studying aviation operations and management. Do you know of any openings? Do you know of anybody who's hiring?" And I would make it well-known what I'm doing.

So I think in that context, a $12-an-hour job would be very useful. Now, let's assume that you can't get a paid job. You can get a free internship. What do you need? Well, I think you need something on the side that's going to allow you to make money, enough money to support your family, but it needs to come with some degree of flexibility, if at all possible.

And so here, I would look for the highest-paid gig work I could find or the highest-paid kind of like odd jobs or side work that I could find. And so generally, there are a few ways that you increase your sideline income. The first thing is you look for work that is hard, that is physically hard.

So, you know, if your wife is working at retail, you can calculate how much they'll pay someone working in retail. But you can go and speak to your local movers, and I'm sure they'll pay you more. They have to pay more. Maybe that's not the best example, but generally, the harder the work, the more you can get paid.

So if you go and apply for a job that's physically harder, then you can make more money. You can also look for work that is highly paid due to some, you know, side benefits. So maybe you have some resource. Maybe you have a bicycle and you can deliver food for one of the food delivery companies.

Maybe you have a car and you can try driving for Uber on the side, et cetera. Those kinds of things are not generally high profit. They don't pay very much, but because of their flexibility, they may be enough on the side to allow you to get through. And so maybe you've got a job at the airport, you know, in the afternoons, and you can work that out with your class schedule.

But if you drive really hard on Friday, Saturday, and Sunday night and stay up all night, then you can make enough doing that. That's worth considering. Then I would look for can I exercise my -- can I get some contracts here and there? So, you know, if I have a pickup truck, can I advertise myself on Facebook as, you know, moving stuff for people?

Or can I put an ad on Craigslist as I have a pickup truck, if you need something moved, I'll do it. People make a full-time living moving stuff for other people. Or can I grab a couple buddies of mine at college and can we just go ahead and create our own moving company?

You don't need anything to do that other than simply putting some ads out there and put up a simple web page explaining who you are and what you do, and put some ads in the appropriate places, and try to get some friends to spread the word for you. And now you can negotiate a contract.

Instead of getting paid $15 an hour to be a mover, you can get paid $500 for a day's move and then share that among your buddies and keep the profit. Things like that, in my experience, are usually, if you have the mind for it and are willing to do it, pay a lot more than those other kinds of gigs.

And so, if necessary, that's what I would do to make enough money on the side. Look at other things that you're skilled at. For example, things like tutoring. If you're skilled in certain things, you can make significant side money tutoring high school students or elementary school students with some of your personal skills.

Anything like that that puts together some gigs that allows you to work in the primary area of your career but make enough money on the side to cover your expenses, that's where I would focus. But I think it comes down to the fact that you've got a career, so stay focused on your primary career.

Same thing for your wife. Have her stay focused on her primary career. Have her see if she can, instead of doing retail, can she volunteer with someone who's doing speech pathology? Is there a way that she can be an office worker? Better for her to be an office worker for a speech pathologist than to be a retail worker if she wants to go into speech pathology.

So, that's how I would approach it. Awesome. Thanks for the help. My pleasure. All right. We move on now. We got full, full phone lines. That's great. We go to Andy in Illinois. Andy, welcome to the show. How can I serve you today, sir? Hey, Joshua. Thanks for taking my call.

My pleasure. I have a question about privacy. I actually think I have some really pertinent advice I could give on the last call if you would like me to. Please. Go ahead. Please do. So, I also married young, married at 20. My wife was also 20 in college. And first of all, I would 100% agree with your advice that getting career experience, even if you don't get paid, if you do not need to get paid, is really valuable.

I did not do that, and I kind of wish I had. That said, if you do need money, the two advantages that a married college student has is, one, financial aid is usually based on your parents' income, unless you're over 26 or married. So, if your parents make lots of money, you're not eligible for Pell Grants and such like, unless you get married, and then it's based on your income, which as a student is usually pretty low.

So, you're much more able to get free money from the government and other sources if you keep your income low. Second, your two largest expenses are your housing and your tuition, which can often be funneled through, or you can get compensated through universities for free, and it's an in-kind trade, so that has no tax impact.

So, I worked as a resident assistant. They paid all of my tuition, like $10,000 a year, paid my $750 a month university housing fees, and gave me a couple thousand dollar a year stipend. So, a lot of that was taxable income, and it also allowed my wife and I to have large amounts of free financial aid based on low income, because our reported taxable income was like $8,000 a year or something.

So, I would, if you need income, highly recommend looking at being a resident assistant or a teaching assistant or some other university position that would have some of those benefits. Yeah, I wholeheartedly agree, and I think that the nice thing about some of those kinds of jobs is, while they're not easy, they do require a significant amount of work.

They're somewhat flexible, and so they can work in around the edges of your other obligations that allow you to keep your focus on your primary career opportunity and do your work around the edges. So, I love it. Good ideas, Andy. Yeah, absolutely. A $20,000 a year part-time job, it's hard to imagine any job that would be more willing to say, "Oh, you have a class this day.

You don't have to work," than working for the university. Definitely. Okay, so my question for you was about privacy as becoming, getting out there with doing blogs, having an online presence. You've mentioned in the past that you kind of wish you had done radical personal finance under a pseudonym and been able to kind of protect your identity that way.

I am working on getting started in having an online presence and trying to decide if I want to use my real name or if I want to use some form of a pseudonym, and if I do, whether I want that to be Bob Smith, a fake name that people would think is my real name, or like Mr.

Money Mustache, a moniker that's obviously not my real name. And just if you want to kind of say your thought on that, or I can tell you why I think the pros and cons are and why I'm trying to consider it or however you want to answer that. Why do you think Joshua Sheets is not my real name or is my real name, Andy?

Come on. It's possible it's not. I think I heard you say once you wish you had done that, but we'll see. So it's a good question. And so basically I think there are a few questions to answer as you're deciding it. The first thing is in your online activities, are you doing something that is directly related to your day job and that you're hoping will help your day job?

In my situation, the reason I use the name Joshua Sheets is because that's the name that all of my credentials were under. That was the name that the Certified Financial Planner Association and the Chartered Life Underwriter, blah, blah, blah. That was what all my licenses were under. And so I thought, well, I'll use this because that way if somebody looks me up online, they'll see that this is the name that I'm using.

And yes, I come up on the CFP as a legit person. At this point, I don't care. I actually think that there's glitches in the systems where some of my credentials aren't even listed. I don't care enough to go and fix it. But it did matter to me at one point in time.

And if I had been able to keep a financial planning firm going, then it absolutely would have been in my best interest to use my name, my name that I do financial planning under, that my business is under, and everything is related to that. On the other hand, if I'm going to start a political blog and I'm an insurance agent, I don't see any benefit that accrues to me whatsoever by me starting a political blog and then having it under the same name that my insurance license is.

What's the benefit of that whatsoever? So I think that it's important for almost all of us to have some significant form of robust online presence that's related to our career, and that needs to be in our name, that needs to be in the name that we're known as, which doesn't necessarily have to be the name that's legally given on your passport or your driver's license or your birth certificate, but it does need to be the name that you're known as.

And so in an ideal world, what I would say is the best solution for most people, if somebody's totally start or totally fresh, they don't have anything done, I would say the ideal solution is simply to do business in the first place under a name that's not your legally given name, or under a name that is partially, you know, that's just a riff off of your legal name.

So for example, if your legally given name is Jonathan, but you go by Jack, that's a really easy thing to do because, you know, Jack is often a form of John, and John can be spelled three ways in the modern, in America, in the United States, it could be J-O-H-N, J-O-N, or it could be Jonathan.

And so if somebody says, "Oh, you're going by the name of Jack Smith, it's just your name, but you're known as Jack, and there's not any clear connection to that." And so nobody, if somebody sees your birth certificate and says, "Oh, your name is Jonathan, I didn't know that," number one, it's not strange because you just go by Jack, but it gives you a tremendous degree of privacy.

It's even better, for example, if you use a riff off of your middle name, or use your first and your middle name. So perhaps your real name is Thomas Jonathan Smith, and you go by Jack Smith, well, then everything's good. And just simply make the habit of always introducing yourself as Jack, and you're just known as Jack, or JJ, or TJ, or something like that.

It works out much, much better in those circumstances. So those are some simple things that you could do is establish a certain name. And this is something I think that you can do for your children if you care about privacy for your children is help them to have a couple of nicknames that they're known under, and that'll help them to protect them.

I have a friend of mine who goes by some initials, so, you know, just two-letter initials. Well, that friend got a DUI and was arrested a couple of times for a couple different things, but it's had a very modest impact on his life because almost nobody knows what the initials mean.

And certainly with his police records, with his arrest records, and his mugshots, you can find them if you know his legally given name. But since almost nobody knows his legally given name just because he goes by initials, then everything is much simpler in his life. Where those arrest records don't haunt him the way that they haunt some other people, you know, with coming up as their first result on their name.

So that's one thing. The second thing is, so that's a really easy way of doing it because if you use that strategy, you're known in your normal life as TJ Smith, and you go by Jack sometimes or TJ, but it's actually Thomas Jonathan Smith, then now you can just simply do business in both things with that name, and it's not directly connected to your personal location, to your personal identity.

So now somebody knows you as TJ Smith, you know, the insurance agent, they're not going to just be able to go to the local property appraiser's website and look up TJ Smith and find you because that's not the name that's going to be listed in the property appraisers. That would be the first thing.

Second thing I would say is if you have benefits, so analyze do you have benefits by going under your name. For most people there's not really any benefit, again, with the exception that it's directly related to your career, your online platform is directly related to your career. What's the benefit of going under your name?

That you get your friends and you can advertise on your personal Facebook that your friends are going to watch your thing. That's important to some people. For me, when I was getting started online, I was too embarrassed about what I was doing to tell anybody. I never told anybody, never posted on Facebook because I was just embarrassed about the quality, I wasn't sure I was doing a good job, and I wanted to be good at something before I told everyone.

So I think it's best just to go ahead and set things up under a pseudonym, and that way you have the benefits of privacy. The benefits of privacy I think are very, very well worth having. They allow you to speak more freely, they allow you to, they don't quite get in the way.

If your words get distorted or quoted out of context or whatnot, it's nice to have a little bit of a range between that. It's nice to be able to go up to, you know, at the airport where you're dealing with a customs officer and they're not sure if they're going to let you in the country or not.

Well, let me just Google your name, right? And then all of a sudden the first thing that comes up is you're involved in these highly charged political conversations or something like that. I guess the point is I see so many benefits of operating under a pseudonym that I think that anybody should think very, very carefully before they ever do anything in their real name.

The problem is that many of our activities, even if they are totally, I'm not talking about anything illegal, anything immoral, just our opinions. In our current highly charged world, even just sharing your opinions on a lot of subjects causes people to defriend you. And I'm not just talking about the virtual defriending or unfriending, but genuinely to think less of you.

I think less of many of my friends because of their crazy political rants online. And I'm sure that, and I have had people say the same thing about me. And so I don't see any benefit to that kind of communication going under your real name. It's not that hard to operate under a pseudonym.

And so to your other question of what kind of pseudonym, I don't know that it matters all that much. I think that TJ Smith is just as good as Mr. Money Mustache. I don't see anything, I don't see any benefit that has come to Mr. Money Mustache since he stopped operating under a pseudonym.

I've never tried all that hard to keep it private, but I don't see any benefits that's come to him from allowing his legally given name to be out there and publicized. I don't see any reason why he should have done that. And so if it makes you feel better to operate under a moniker of some kind, go for it.

If it doesn't, I don't think it matters one way or the other on that subject. Okay, I think, yeah, that's kind of the thought process I have gone through my, I guess my hesitations. One, so my interest is doing some like basic entry level stuff on privacy and on digital security for people and then also probably doing like a farm website for our homestead.

And so my, my two hesitations, I guess, is one, I do have some social capital in areas where that would be beneficial in my real name. So like I have an interview scheduled on another podcast to talk about digital security here in a few weeks, you know, and I'm sure if I say to him, hey, I want to obfuscate my real name, please call me this instead.

He would do that. But like, he knows who I am, which is a big deal, probably not. But like, it just that complicates things if I want to take advantage of that social capital I have. And then also, especially with homestead stuff with my family, like, I feel that I've done plenty of privacy things in the past as I think you have that add complexity to my life.

And so is it worth trying to remember, oh, I can't say my real name here, I have to say this other name, but my friends know me as my real name to keep people from knowing that I, you know, blog about these things or whatever. And I totally get that if I want to have some like super off the wall, political thing that might get people wanting to firebomb my house, but I don't, I don't think I'm necessarily going to be doing that sort of thing.

Privacy is a giant hassle. I like to test things and I have taken things to extreme and I came to the point of just simply saying, this is a giant hassle. It's a giant hassle. And since I have no really compelling reason to engage in the extremist forms of it, then why do that to myself?

It's a giant hassle. So I think that the first thing, as with any good plan, is you say, what are the risks that I'm concerned about? And, you know, what are the risks of you operating a farmstead under your legally given name and publishing a website about it? I think very modest.

Now, maybe you put a picture of a video of you online butchering chickens and now PETA comes after you and you have PETA activists. I guess in theory that's possible, but it's unlikely. And so I think that's very modest. On the other hand, the privacy business, you probably, then it doesn't matter, right?

Everyone in privacy expects you to have that and it enhances your brand to do that. So I guess my answer would be, if something is easy to do and it gives you a little bit of cover, why not? Does it really matter if you use the name Andy Smith or if you use the name Andy on your YouTube channel?

Just use Andy, right? It can be the same thing. It doesn't matter. And so I think the biggest thing is mostly in your head. Nobody really cares. I would never care if you give me your legal name or not. I don't care. I'll answer to any name that you give me.

It's just a matter of you saying this is the name I'm going to choose. And I think that you're always going to have people who can pierce the veil, right? That's always going to be the case. And it's not a big deal because in general, about the only risk that we're talking about here is the frustrating risk of getting attacked by online people who know nothing about you and who are anywhere in the world just sending nasty stuff to you.

That's my primary concern. I don't really care if somebody actually knows my name. I don't care if someone knows where I live. What I care about is if I do something that goes viral on the internet and then all of a sudden 10,000 people on 4chan or 10,000 people on whatever other weird corner of the internet decide today we're going to make Joshua's life really unpleasant.

I'm not worried. No one's going to show up at my gate. I'm not talking about physical security. But I don't want to have pornography shipped to my house. I don't want to be put on every single mailing list. I don't want that. And so it's not the end of the world if it happens, but that's easily avoidable by simply choosing your name and just going with it.

But it's mostly in your head. It's not so much in the actual, in real life. It's in your head. So introduce yourself as whatever you want to introduce yourself as and people will respond to you accordingly. We're going out to Kyle in Georgia. Kyle, welcome to the show. How can I serve you today, sir?

I was calling because I kind of had, I guess, what you would call a practical or mechanical question in terms of, I guess, investment income and retirement income. So what I mean is you kind of learn, even whether it's normal retirement or fire or whatever, you kind of come up with your target number.

And then you say, oh, I can live off X percent of my income or of my retirement savings. Right. But what does that actually look like in practice? So let's say your number is 2 million, whatever it might be. Right. You hit your number and you say, I could live off X percent.

Are you calculating that number on your own? You say, okay, let me sell some stock. Or what does that actually look like, practically speaking? I'll give you a few examples. And first, are you at that number where this is directly applicable to you right now? Or are you just thinking through what this will look like in the future for you?

I'm just thinking through what it will look like in the future. So I haven't hit that number yet. But investing in a lot of things like real estate and other stuff that I do, you kind of have to plan your entry based on your exit. And I don't know how much apart from taxes, if there's anything else to think about when it comes to investing on how you pull your money out and all that type of stuff.

So it's just more practical for the future to kind of have that knowledge. Okay. So I'll give you three examples. But we need to begin, the prologue is simple. It depends on who you are, on the details of your situation, and on what assets you actually own. When somebody actually retires, their retirement income picture can look dramatically different depending on the details of their situation.

I've worked with retirees who sold a business. They sold a business, they got a big down payment, and then they're getting a payout over 10 years. Well, when you're getting a payout over 10 years from a business, there's no point in you going and selling your stocks to spend when you're getting a guaranteed payout from the sale of your business of $300,000 a year.

That's a very different scenario than the person who's working a job and is putting money into their 401k and that's all they have, right? They have money in their 401k invested in mutual funds. If that same person has a piece of real estate, then now everything changes dramatically because now we have real estate income.

And then everything varies depending on what the person's lifestyle actually looks like. For one person, retiring means I'm going to stay in my house and I'm going to sit here and just live in my normal life. For another person though, they say, "We're going to take a couple years and we're going to go travel, so we're going to keep our house, but we're going to go ahead and rent it out.

And during this period of time, we'll work some side jobs and I'll do a little bit of consulting work on the side and make a little bit of money from that." And so there's no way to answer this question specifically without the actual details of where someone is. Because whether someone's willing to do some part-time work, whether somebody wants to do some part-time work versus not, big difference.

Whether somebody has real estate, whether somebody has business interests, whether somebody has investment income, it just makes a big, big difference all the way through. So you want to be very, very thoughtful as you develop it and it's got to be personalized. But I'll give you three basic examples here that you can consider conceptually just to kind of sketch things out.

So first, let's go with a traditional retiree. There are several major schools in formal financial planning of how a traditional retiree would adjust their lifestyle. By traditional, I mean someone age 65, worked a job, built money in their 401(k), etc. So what I have often liked to do is encourage a traditional retiree to set out two budgets.

A minimum budget that they're not willing to ever go below and an ideal budget. And then you figure out what those two numbers are. And for the sake of argument, I'm going to say that for one person, the minimum budget is $3,000 a month and the ideal budget is $6,000 a month.

I'm going to assume that the person has no debt and they're just saying, "Hey, I want to make sure that I always have $3,000 a month to look at." Well, the first thing that you do is you look at how much money they actually have coming in from guaranteed sources.

So maybe this household has a social security income of $2,000 a month. Well, if you have social security of $2,000 a month and you're trying to figure out how to supplement that another $1,000, it's very simple. So you say, "Okay, I've got $2,000 a month coming in from social security and then I want another $1,000 a month." And so for somebody in this scenario, I would encourage them, "Why don't you consider purchasing another $1,000 worth of an annuity payment?" And so if they had $1,000 a month of an annuity payment plus their $2,000 of social security, they would know that no matter what, I've always got $3,000 of monthly income.

And they can rest on that totally guaranteed. They can be totally sure that they're going to be squared away no matter what. And that's going to make them sleep well at night. Now, with the other $3,000 a month that they'd like to have, you can just simply take distributions from their 401(k).

And it doesn't really matter whether you take dividends or whether you take stock sales. Usually what you do is you just simply say, "What makes the most sense for us?" And you look around at the assets. You go through all the assets they have and you think about the taxation, etc.

But you just go ahead and sell assets. And again, it can be dividends or it can be the sale of assets. And then for that person, you go ahead and encourage them to set up a significant contingency fund. I like about two years worth of living expenses in the bank.

And so that might look like $70,000 to $100,000 in the bank. So now, they've got $70,000 to $100,000 in the bank. And then you simply set up a schedule. It doesn't really matter. I've never come across any academic data indicating that one schedule is better than another. But on January 1st of every year, they can sell enough stocks in order to take their $36,000 per year of income.

So on January 1st of every year, they sell $36,000 worth of stocks. Now, if you get to January 1st and you discover, "Hey, you know what? We're in a situation where all of a sudden the market just dumped off by 30%." Well, you just don't sell stocks. You time it.

You look around and say, "Does the market feel up or does the market feel down?" And you can time it a little bit advantageously when you're making sales. That would be one example. Another--that kind of scenario doesn't work so well for an early retiree. It can work, but usually it doesn't work so well for an early retiree because I used an annuity and because I used Social Security.

So what is somebody who doesn't have Social Security and who's too young for an annuity doesn't really make all that much sense, right? Just the typical--what's considered to be kind of a normal early retiree. Somebody worked a high-paying tech job. They're a software engineer. They've made $250,000 a year.

They lived on $35,000 a year, and they saved all the rest of the money. Well, you look at what you have, and let's assume that they only have stocks, only have mutual funds. Well, in that situation, when somebody is retiring at 35 years old, they have enough money or it's right on the edge.

The backup plan, if the whole stock thing falls apart, is they would do some kind of part-time work on the side or build some kind of part-time project. So there, you just go ahead and sell assets, and you figure out what assets make the most sense tax-wise to sell.

If somebody has taxable accounts, you might sell those first. If they have long-term capital gains property, you might sell those first. Let the money that's in the other accounts accumulate over time, but you just start selling assets. If the assets get low, basically, you're going to have a multi-year timeline where the person can change their course.

So it's as simple as selling assets. Hey, by the way, we anticipated that we were going to withdraw at about a 3% rate, but we've had three bad years in the market. You're overdrawing a little bit. Why don't you figure out if you can reduce your expenses temporarily is what I would say so we can draw less out, sell fewer assets at depressed prices, or increase your income?

And so that might be the time at which that early retiree says, "I'm going to go travel for two years, and instead of spending $4,000 a month living in my more expensive lifestyle, I'm going to go and move somewhere cheaper for a couple of years and live a cheaper lifestyle," or "I'm going to get a part-time job," or "I'm going to do a little sideline investment project on the side to generate some income for a couple of years until the stock market comes back." That would be another example.

The third example I would give would be maybe somebody like you if you're investing in real estate. Well, you look at your real estate portfolio. You get an idea of what the targets are. You model the portfolio out, and you say, "What are those budgets that we want again?" And you figure out, "Do I want to accumulate more properties?

Do I want to have the properties paid off? What amount do I want to pull from stocks versus from real estate?" Real estate generally is going to create rental income, and so that makes your budgeting process easier. So you say, "I want to live on $5,000 a month. I've got five houses, and in these five houses, I'm going to have $5,000 a month net of taxes and insurance when the mortgages are paid off." And so your goal is just simply to time out your cash flow needs based upon what's coming in from your portfolio, and then you look at your other assets and you figure out what comes from them.

So those are just three examples to show it is all going to depend on are you willing to work at some point or are you not willing to work? For the 65-year-old, I've never done planning for a 65-year-old who said, "Well, when I'm 77 years old, if I need a little bit more money, I'll just go back to work." They don't say that, but the 35-year-old firee was likely to say that.

"Oh, if I run out of money, if I'm starting to get low at 48, I'll just get a job." And so what age are you? Are you willing to go back to work? Do you have some kind of sideline hobby that you could use to generate occasional income? What investment assets do you have?

What's the cash flow from those assets? And then you look at all those streams of income and those investment assets and you design a plan based upon that. It's not something you can predict in advance. Gotcha. Yeah, and I was just trying to understand, I guess, the mechanical working.

So, like you said, whether you're using dividend income or you're actually selling assets, that's really the basis of it. But when you sit down or when somebody sits down, let's say, like you said, January 1st, and they're saying, "Hey, I'm going to sell $36,000 worth of whatever it is they need for the year." How often would somebody sit down and do that?

Or I guess there's not a schedule, but I guess what I'm getting at is it just sort of depends on how complicated their situation is, whether or not they would need to sit down with somebody or how do you calculate that basis? So, if you say, "Hey, I need 3%," is that I'm looking at the portfolio as of X date or what does that look like, practically speaking?

I know it's a lot of different scenarios, but just is it something that somebody... So, the 3% number is a number that you would calculate when you're thinking about stopping your income. And there's no perfect answer to it. What you should be aware of when you are actually calculating it is you want to be aware of where are we in a market cycle.

If the stock market has just dumped off 40% and you can say, "I'm at 3% under a 40% dump off," you've got a good margin of safety. If the stock market just reached a brand new high and now you're saying, "I'm going to do it," and you're looking around and saying, "This is overvalued," then things are possibly more questionable.

And so, you want to be thoughtful about that. However, what is true on this situation is that even if you said, "I'm at 3%," and you're pulling money off the portfolio and the market's at a record high and then you retire because I just hit my magic number and you retire immediately, that is going to mean that you have many, many years of leeway.

So, if three years in you realize that you timed it totally wrong, you're still going to have years to make up your plan and to figure out and stop withdrawing so much and to figure out a plan B. What people, I think, underappreciate is how long of a range that you actually have in your planning.

So, let's use some numbers. Okay. So, let's say that you are living a lifestyle of $60,000 per year. And so, you want a 3% withdrawal rate, and so you've got $2 million. You have $2 million in the stock market, so therefore 3% equals $60,000 a year that you should be able to spend.

But all of a sudden now, your stock market investments drop from $2 million to $1.4 million. So now, you're way over in that year. You're way over your withdrawal rate. Well, that sounds scary, and it is a concern. Now, ideally, you would have managed that by having cash in the bank to cover you for some period of time.

So, if I were coaching you in this situation, I would say, "Try to keep at least two years worth of living expenses in the bank so you can just not withdraw for two years and wait and see." And two years is a massive amount of time in the stock market history where things can very easily come back pretty impressively, usually speaking, over the course of about two years.

But maybe they haven't come back. Maybe you've still got $1.4 million. Well, let's put that into context. Let's ignore the 3% rule and just say, "How long can the $60,000 last if we have $1.4 million?" That's 23.33 years of income sitting there, even if you earned nothing. And so you've got time in that situation to say, "We're overdrawing.

We're overdrawing. We're too high. For some reason, we got this totally wrong. Starks aren't going back, so what can we do? Can you go and get a part-time job? Can you start a business? Can you do some consulting? Can you do something that's going to bring in $20,000 or $30,000 a year so we can drop our withdrawal rate?" We're going to do something to adjust because even if you had a catastrophic dump off in values from $2 million to $1.4 million, you've still got 23.33 years of income.

So you've got time to work this out. That's my basic point. You've got time. So you'll readjust and evaluate every year as time goes forward. And there's no exact science to it. It's basically just a gut call of, "Hey, it's January 1st. Where are we? Are values high? Are values low?" And you'll adjust as time goes on.

Gotcha. Okay. Thank you. That was very helpful. Good. My pleasure. All right. We go now to 1, 2, 3, 4, 5. I'm going to have to go fast. All right. We go to AJ in California. AJ, welcome to the show. How can I serve you today, sir? Yes. Hello, Joshua.

Thank you for taking my question. My pleasure. I would like a recommendation for a country in Central America or the Caribbean to establish a bona fide residence for those purposes. My wife and I live in California today. We'd like to relocate in the next several months. And one of our motivations for relocating is reducing our expenses.

So we're also considering living outside the U.S. Have you traveled in Central America? Yes. And do you like it? Mostly Mexico. I do. Yes. Okay. How old are you and your wife? I am 44 and she is 42. And you are both U.S. citizens. Do any of you hold a second citizenship?

She is a permanent resident. I'm a U.S. citizenship. And where is her citizenship? Canada. Okay. And are you employed? Are you retired? What is your income status? Yes. I am employed today, but if I move out of California, I have the option of becoming a contractor. She is self-employed, hoping to build a business related to photography.

So the basic idea is we want to leave California. We don't see much reason to go to Nevada or Texas or Arizona. We might as well go a little bit south instead of just a little bit east or north and lower our cost of living, change our lifestyle, and possibly save some money on taxes along the way.

Is that accurate? That's accurate. We are considering other states, such as Texas, but if we're doing that, why not go a little bit farther, as you said? And in the future, when we are financially independent, we do foresee ourselves traveling the world extensively, so why not dip a toe in there and get started on that in some way?

Okay. And as you imagine your ideal lifestyle, do you imagine being in one place with one home where you are for the majority of the time with some visits back to the United States, or do you imagine moving around a little bit or traveling in other places around the world after you've set up your residence?

I would say the latter. So I think we foresee ourselves being in, let's say, one place for four months, maybe a second place, and probably being in Canada for maybe two to four months out of the year as well, visiting our family. Okay. And when you said set up a residence, you mentioned bona fide residence, and so what I understand by that is you want to set up a place that you live.

This is your bona fide residence. You have a residence permit. You have a home there, et cetera, which allows you to return to the United States with a little bit more freedom to take advantage of the earned -- of the tax -- what's it called? I'm blanking on the most important tax credit.

Thank you. Thank you. Take advantage of the foreign earned income tax credit to lower your taxes on your wages and to reduce or eliminate your self-employment taxes, but still gives you some flexibility to be in the United States for more than 30 days. Is that right? Correct. Okay. Got it.

So with these details, let's talk about some of your options. So the first thing to clarify is that you -- so you use the term bona fide residence, but for the sake of the audience, I want to clarify why we needed to clarify that question that you're asking me.

As a U.S. citizen and with your wife as a permanent resident, if you simply leave the United States and you go outside the United States and you spend all of your time except for 35 days, if you're outside of the United States for 330 days, you don't need to establish any kind of residence and you will qualify for the relevant tax credits for the United States.

You'll qualify for the foreign earned income tax credit. You could, with the use of a foreign corporation for your wife's company and for your company, save on your self-employment taxes or your employment taxes by simply qualifying for the foreign earned income tax credit. But -- and so you wouldn't actually need any particular -- to set up a residence.

In that situation, you could go to Mexico as a tourist. Mexico will give you a 180-day tourist visa fairly easily. And you could even just spend the rest of your time in Canada or anywhere in the world. You don't have any need to set up any kind of residence permit in that scenario.

Now because you use the term bona fide residence, what I understand is that you would like the freedom and flexibility to spend more than 35 days in the United States. And so you can do that if you genuinely live outside of the United States. Now the IRS doesn't give us a specific clear-cut line in the sand as to what that means.

It's rather a set of factors that you need to set up. And so there are a couple of factors that you want to set up. The first thing is you want to actually move your home outside of the United States. And so some of the features of moving your home outside of the United States involve you moving your stuff, moving your dog, moving where you spend most of your time.

You would also obviously need a residence permit in the country where you're moving your home to because you can't argue that you live in Mexico if you're a tourist in Mexico and you don't have any kind of residence permit there. So the goal is to move your home abroad, which means you're going to need a residence permit.

Now there are – you mentioned Central America so that lowers us to about what, seven or eight options, which all have different advantages and disadvantages. The first thing that I would encourage you is you want to focus on setting up a life and a lifestyle in a place that you actually want to be.

And so there are massive differences in lifestyle between Mexico City and the coast, Puerto Vallarta. There's a massive difference between Mexico and Belize and Guatemala. All these countries are very, very different and there are dramatically different lifestyles associated with them. You might love surfing and because you love surfing, you would be thrilled to live in San Juan del Sur, Nicaragua.

And you could get yourself a great little place in San Juan del Sur. But if you don't like surfing, it's unlikely that San Juan del Sur is exactly where you want to be. And so you want to think carefully about it. You can travel a lot and look around, but you want to think carefully because that needs to be your driving factor.

If you get your location wrong, it doesn't matter that you got the paperwork right if you don't actually want to be there because what you'll find is that tax savings are not worth it to live a life that you don't love. You got to start with what's the lifestyle that I want to live and then if there are some tax savings to be had, let's have them.

Now do you and your wife have significant assets, at least six figures worth of savings? Yes. Okay. So in that situation, you can negotiate a residency permit in the majority of the countries of Central America. The first thing I would encourage you to look at is possibly Mexico. Mexico is a little bit complex because Mexico is not known as being a tax haven.

Mexico has very high taxes. But if you have some savings, you could very fairly easily qualify for a residence permit in Mexico. And that's a residence permit that you can apply as a temporary resident. You can then later become a permanent resident and it can eventually lead to citizenship.

And the lifestyle in Mexico is really, really nice, especially for Americans. It's hard to, first of all, overstate how nice it is to be able to drive back and forth. And driving back and forth to your place in Mexico is a significant lifestyle advantage. It opens up for you the opportunity to get your stuff there more easily.

It just makes it easier and more comfortable for you to travel back and forth. You're not always on an airplane. And so I think Mexico is a really, really wonderful option. Depending on where your business interests are in California, if you choose something near the border, for example, if you live in Tijuana near the border, you can build a really nice lifestyle that also gives you easy access to San Diego if you have interests there.

There are lots of people who live in Tijuana who have a lovely condo on the beach and just simply go across the border for the day to go to meetings in San Diego. And so if you need proximity to San Diego, if that's a value to you, then that can accomplish a lot of what you're trying to accomplish right there.

So Mexico is really great. Also some really wonderful cities in Mexico, really good return on lifestyle investment in terms of the cost of property, the cost of things. I think Mexico -- I'm very, very bullish myself on Mexico. I think Mexico has a lot of benefits coming in the years to come.

Now, Mexico is not known as a tax haven. But what you could do is if you were willing to move, you could use Mexico as your primary base but not spend enough time there or not get so involved in Mexico to necessarily become a tax resident. So you could get a residency permit in Mexico that allows you to go there.

And you could spend -- I need to be very careful about what I say publicly because you'll want to get good local tax advice. But if you look up the rules on tax residency in Mexico, you could spend a significant percentage of your time there, not the majority, but you could spend a significant percentage of your time there and not necessarily become liable to the Mexican government for your Mexican taxes.

In addition, there's a practical reality that gringo expats in Mexico are not necessarily targeted for taxation on an ongoing basis. So depending on what you want your life to be like, I think Mexico has a lot to offer and should be at the top of your list to consider.

Now, of other countries, we next go, of course, to Panama. Panama has the reputation of being one of the primary solutions for what you're talking about. Panama has the friendly nations visa that both you and your wife would easily qualify for. And that friendly nations visa can make your paperwork process very, very simple.

I assume you've looked into it a little bit, but basically what you'll need to do is you'll need to contract with a lawyer. You'll apply for the visa. You'll need to physically go to Panama at least once. You can do it a couple of times with the lawyer. It's going to cost you something on the range of, depending on what lawyer, I would guess somewhere around $7,000 to $12,000, depending on the lawyer, for you guys to do it.

You'll put some money in a Panamanian bank. They'll give you the residency card, and you can go ahead. You can become a legal resident of Panama. You can become a -- you can get your driver's license and get everything set up in Panama. Panama has a lot to offer from a lifestyle benefit, and so I think it should go very high on your list of possible solutions.

There are a few big places that people like. So first, Panama City is probably, outside of Mexico City, is certainly the biggest city and kind of the most up-and-coming city in Central America. And so if you like the idea of a big city with lots of skyscrapers and a pretty high standard of living, Panama City is a good solution.

It won't be as cheap as some other places, but it'll be a good solution for you. You can get a great condo overlooking the Pacific there in Panama City. It's easy to get back and forth from Panama City just about anywhere in the United States. It's on the East Coast time zone, so it's very, very convenient for you.

And so I think Panama has a lot to offer, and Panama City has a lot to offer. There are a number of other cities in Panama that are useful. Of course, there are beaches and whatnot. You can go very far out. You can get very remote in Panama. I think the big downside of Panama is the weather.

It's purely tropical weather, very, very hot, very, very humid. About the only place that you can get out of the weather in Panama is to go to Boquete. Boquete, just north of David, but near the Costa Rican border, is at a higher elevation. And so if you want better weather, Boquete has a lot of retirees, and it's not that difficult.

It adds another flight to your life. So you'd fly to Panama City, then fly to Boquete. It's what, seven hours-ish, I think, to drive from Boquete to -- five hours, something like that, to drive from Boquete to Panama City. So that would be a solution if you want a little bit better weather.

But Panama will have the benefit of making things simple for you. And Panama now puts you in a situation where it is a genuine tax-friendly place, due to it being a territorial tax jurisdiction, where you could live there and you could spend all your year there. And if you structure your and your wife's business interests appropriately, you wouldn't have to pay any income taxes to the nation of Panama.

So I think Panama is a really good solution. The paperwork is simple. There are two other territorial tax countries in Central America. Those are Costa Rica and Nicaragua. And they both offer very different lifestyles. Costa Rica is, of course, highly renowned for its biodiversity, one of the most biodiverse countries in the world, due to its climate -- due to it being put between two oceans and having a very mountainous climate.

And Costa Rica has a lot to offer. If you like -- if weather is an important thing to you, if you're coming from a part of California and you say, "I really want great weather," it's hard to find better weather in the world than what you can find in the Central Valley in Costa Rica.

You have a high mountain valley, which gives you kind of a -- it's tropical in the sense that there's not any variation of spring to fall to winter to summer. You can figure out the order of those seasons that I messed up. But what it -- it's just simply you have a rainy season and a dry season.

But in that high Central Valley there in Costa Rica, you have just really lovely cool weather all year round. And it's very, very stable. And during the dry season, it's very sunny. During the rainy season, it rains every afternoon. So that's an option. The city of San Jose is not a particularly bustling, up-and-coming city.

It's kind of a nasty city in many ways compared to -- especially when you compare it to something like Panama City. But it does have great weather. And you can find on the outskirts, on the mountainsides all around Costa Rica, you could find a place that you really liked and that's very physically beautiful and gives you great weather.

Then, of course, Costa Rica has tons and tons of beaches. And so if you're into beaches, there's tons of places all along the country to set up a beach house. Costa Rica will offer you a very high -- will offer you easy access to the United States. It's easy to fly back and forth from San Jose to many different places.

And the plane tickets are fairly cheap because of it being a tourist destination. Costa Rica is not particularly difficult to set up residency, but it is a time-consuming process. It's nothing as fast as Panama is. And if you go to Costa Rica, you will be required -- if you get a residency permit in Costa Rica, you will be required to contribute to the nationalized health insurance system that they have in Costa Rica.

And that will add to your expenses. And they'll do it based upon your income. So you'll have -- so that will cover you where you would have access to, of course, the government-run hospitals. If you're anything like most gringos who retire there, you would probably not wish to go to them.

So it'll just be an extra cost that you would have to offset against any tax savings that you cover. I don't know how long Costa Rica is going to continue to be a tax-friendly place for Americans to go. The country is extremely socialist. I have a left-wing president and very kind of left-wing.

And they're totally broke, just like many other places. But Costa Rica is totally broke right now. Their economy has totally collapsed after the coronavirus and everything like that. So they're trying to get bailouts from the International Monetary Fund, et cetera. Most of that won't affect you, but it may affect the tax laws.

Your next option is Nicaragua. Nicaragua is a bit of a challenge to figure out what to say and what to do. On the one hand, you can live a very nice lifestyle in Nicaragua if you are somebody who is wealthy. The deals are not as inexpensive as far as land, et cetera, as they once were, but you can live a very, very nice lifestyle.

The challenge is that Nicaragua is a very poor country, and the wealth disparity is massive. And so if you are wealthy, yes, you can have a really nice house. You can get very inexpensive domestic labor and whatnot in your home, but it's very difficult. It's hard. For people who haven't done that, it's difficult to be in that situation.

And then you have to think about where am I actually going to live. And so in my experience, in some countries, you know, in the United States, you can live well in a lot of places. You can live very well. You can be totally safe in a poor neighborhood.

In a place like Nicaragua, it's not the case. You're going to need and to want to live around people who are wealthy, and that's going to add certain expenses to your life just simply because of the fact that you're living around people who are wealthy. So Nicaragua is a very beautiful place.

There are lots of places that you can go. You can live in Managua. Most people would go to the beach. Most people would not stay in the central city unless you needed to be there for business reasons. There are plenty of nice developments that are being developed all along the Pacific Coast.

The Atlantic Coast, the Caribbean Coast is a little bit different. But there are lots of places in Nicaragua. I would just say that you need to be comfortable being in Nicaragua. The country is run by a dictator, so you don't want to open your mouth at all about politics or get involved in any politics, but you can set up a residency visa and do that.

Technically, legally, a Nicaraguan residency visa does require a significant amount of physical presence to maintain. The Panama residency visa requires you to return once every two years. Costa Rica, in order to maintain your residency visa, wants you to be there once a year. Nicaragua wants you to be there, I think it's six months per year.

So that would be something you want to pay attention to. I've gone too long. Those, I think, are your primary ones. El Salvador, I like some things about El Salvador, but El Salvador is known for being fairly high crime rate, and that puts a lot of people off. And so you want to be thoughtful and careful.

Guatemala, I think, has a lot to offer. Guatemala City has one of the best climates in the world for the same reasons that I mentioned, the Central Valley and Costa Rica. But, again, that's a city, and it won't have the same solution that other people have. If you don't want to deal with Spanish, Belize is obviously a solution that a lot of people look at.

And if you want to live in the tropics in an English-speaking country, Belize has a lot to offer. I don't love Belize, but a lot of people do. And so of those options, what I would say is probably, if you don't mind the heat, Panama City will give you your most interesting lifestyle.

You get a great -- and especially if you want to travel, you get a great international airport, and you have the ability -- I mean, it's a very, very well-connected city. It's a very big, modern city. All of your Western stuff is there. If you live in the canal zone, depending on how comfortable you are with Latin culture versus American culture, if you live in the canal zone, you will feel like you're living in the United States in the 1950s.

It's a remarkable feeling to recognize that you are in -- you feel like you're living in the United States in the 1950s. It's pretty cool. It's a pretty cool place. And you can get along well without Spanish in Panama City, very easily and very well. So that's my overview for you.

Any other questions or comments on any of that? Any quick thoughts on the Bahamas? Bahamas is -- do you like to fish? Do you like the water lifestyle? I love the beaches. Okay. Well, in that situation, then, yeah, the Bahamas would be a good solution. The nice thing about the Bahamas is it's very accessible from Florida, easy to fly back and forth, and so a lot of people will live in the Bahamas and just take a 40-minute flight back and forth to Miami to go shopping.

Bahamas is not that hard to get a residency permit. It won't lead to citizenship for anybody, but you can get a residency permit there. If you like the water lifestyle and the beaches, you'll have it. I think you need to consider can you deal with being on an island and do you really want to be on an island.

Property is expensive, especially nice property is expensive, and stuff is really expensive because of the high -- they don't have any income taxes, and so they have extremely high duties and import taxes on all of the stuff that comes in. So the nice thing is you'll find lots of people, lots of -- there's lots of people that just take a -- keep a vacation home there and go back and forth from Florida, and there are a lot of options in the Bahamas.

So I think it's -- yeah, it's a good option if you like the lifestyle. I'm not so much -- from a -- from the perspective of islands, islands don't -- I kind of get a little stir crazy on islands. So you can go from there. Excellent points. Thank you very much for the insights.

My pleasure. What I would point out to you is that if your wife's business is very successful, then you actually do have a significant tax planning scenario where if she at some point in time chose to revoke her permanent residency card through -- for the United States, you could set up the business under her name, and even though you retain your citizenship, you could use some of those situations to make a lot of money under a business that she runs and to do it very tax efficiently.

So you have a good blessing there of having a wife who's not a U.S. citizen, and so that can factor into your plans as well. Very good. Well, thank you. All right, sir. Good luck to you. All right, we've got to go fast. We go now to -- let's go to Brittany in -- what was that?

It looked like Wisconsin. Brittany, welcome to the show. How can I serve you today? Hey, Joshua. Hey, Brittany, go ahead. So I have two questions. I'm not sure if we can get to both. One, we're moving to South Florida, and I know you've covered some hurricane prep before. I was trying to find those resources you put out.

So I don't have that well identified, but it's not that big of a deal. I can give you a quick overview if you want, but hurricane prep is not that big of a deal. And once you've been through one or two hurricane seasons -- what state are you moving from?

We are moving from Illinois. So you probably are very well suited to preparing for snowstorms, whereas I, on the other hand, have almost no experience with snowstorms, and so it's very intimidating for me. That's what hurricane is going to be like for you, that at the beginning it will seem like it's a big deal, but then once you're there for a little bit, it's just not that big of a deal.

So I'll do this in four minutes. I'll give you a four-minute -- let me start my timer. I'll give you a four-minute overview of what you need to do. The first thing that you do is you have a plan to leave. If you do nothing else, you just simply have a plan to leave, which means that -- you're moving to South Florida, to Miami, Fort Lauderdale.

Where are you moving to? Miami suburb. We'll be inland a little bit. Okay. So in Miami, you're fairly exposed because storms can come from the east, from the west, or from the south up across Cuba. So what you need to have a plan for if Miami is you need to have a plan to go north.

And so you would just simply say, "Where would we go if we needed to go north?" And the thing about hurricanes is that if you're right on the coast, that's where the effects are most significant. But if you're not on the coast, generally they peter out pretty quickly. The first thing you would have is an evacuation plan.

What do you need for an evacuation plan? You need to put some stuff in the car and go, and that's about it. It's not that big of a deal. What you want to do is you want to leave early enough. If you decide to evacuate, you want to leave early enough to where you're not stuck in traffic, because Miami is a difficult place because there's really not much of an escape route.

And if you're in -- especially in south Miami, you can't really go west across Alligator Alley. You can, but that usually doesn't solve many problems. Alligator Alley is what the road is called between Miami and going over in the direction of Cape Coral and the west side of the state, Naples, et cetera, all that.

But that doesn't buy you much, and it doesn't protect you all that much. So usually you'll be going north. And so you go up the I-95 corridor, you have three giant cities that are packed with people. You have Miami, Fort Lauderdale, and Palm Beach County. So all three of those cities, if they're dumping out, they can dump a lot of people on the roads.

If you're going to leave, you generally want to leave earlier or you want to leave later and just be careful of the traffic. That said, Florida is very good at running those roads, and it's not that big a deal. All of the -- across the United States, the public officials have gotten pretty good at evacuating people if they need to.

In general, a lower-ranked storm is worth paying attention to, but it's not that severe if you're moving into a well-built house. Everything comes down to are you living in a well-built house. If you're living in a trailer, you've got major problems. If you're living in a well-built house, then you probably don't.

And so ever since Hurricane Andrew in the early '90s, any house that's been built since then has been built to much higher hurricane codes. And so I wouldn't leave -- if I were living in a modern house, I wouldn't leave for a Category 1 or a Category 2. If you have a Category 5 that's coming right for your house, I would leave, generally speaking.

If you're significantly inland and you're in the Miami suburbs inland, it's probably not a big of a deal. If you're on the coast, much bigger deal. So your biggest thing that you want to watch out for is do I have a plan to cover my windows? Your house probably will come with shutters.

If not, that's the first thing that you want to think about. And so ideally, if you're just moving to the house right away, then sometime when it's not hurricane season, go ahead and get plywood and figure out how to cut the plywood and label it so you can put plywood up.

That can help. If not, go ahead and get proper hurricane shutters installed. But your house probably comes with shutters at this point in time. And so if you're leaving, you put up the shutters and you drive. If you're going to stay, you put up the shutters. And the biggest thing that you just simply want to be prepared for is you want to be prepared for several days without electricity.

Now, this has gotten a lot better in recent years. They're much better. But still, you can expect several days without electricity if you have a hurricane. And so you want to think through having some food, having some water, having some flashlights. That's basically it, having a way to charge your cell phone.

You'll be more comfortable if you have a battery with an inverter that you can run a fan through the night or a generator where you can run a fan for yourself or run a window air conditioning. The biggest frustration of hurricanes is that when the power goes out, it always happens during the summer when it's brutally hot and it's muggy as anything and it's just uncomfortable because you can't sleep.

And so what I would say is that when you get settled, you get a window AC that you can stick in one of the windows of your rooms. Then you get a small efficient generator and you store enough gas for the generator to run it for a few weeks.

And if you do that, then at least you can sleep well at night in a nice air conditioned room and then you can deal with getting your life back together. So it's not that big of a deal because chances are you'll go many years without a storm. There'll be storm warnings, but you'll go many, many years without a storm.

That's Joshua's four minute and 13 second overview for you. Very helpful. Thank you. Do you have time for a bit more of a theoretical financing question? Go ahead. I've been trying to think about how to think about currency exposures. Right now our life is dollarized and our income is dollarized.

So I have concerns over where the US is headed, but that said, it is the dollars world reserve currency. So I don't see a better currency necessarily. So I'm thinking about diversification other than hard assets and trying to think about any frameworks you might have for how to consider that.

Do you have any business affairs or family outside of the United States where there's any practical impact of the currencies? Do you go to Canada every summer where you would spend Canadian dollars or do you do anything outside the United States? No, I'd be thinking about more of a hedge.

So in this situation, I think first I'm glad that you said what you said about the US dollar because while in my opinion any thoughtful person would look and say, "But the US dollar, like any currency, could have trouble," it's I think important and valuable to recognize that the US dollar is very, very strong and that the US empire has all of the features required to keep the US dollar as a strong and fairly stable currency.

And while I think it's worth thinking about disaster scenarios and worst case scenarios, I think it's important to keep in mind that these are unlikely, not impossible, but unlikely. And the practical impact of currency fluctuations can actually be quite significant for you. If you took your life savings and you moved it out of the US dollar and you put it into the Canadian dollar, and then the Canadian dollar decreased in value against the US dollar, and then all of a sudden you wanted to spend your life savings, you could have significant problems by that.

And most of us are not in a situation where we're equipped or ready to handle foreign exchange risk. And foreign exchange risk is really significant, can be very significant. Now that's less of a problem if somebody has interests in another place. So maybe I have family in Canada and I go every summer to Canada, well I'll just keep my account with Canadian dollars, and when I'm in Canada I'll spend Canadian dollars, and when I'm in the US I'll spend US dollars.

Or if you have a retiree who's a cross-border retiree, well it's not a big deal because you can minimize your foreign exchange risk because you're not converting back. But when you get into a situation where you're trying to create a play where I'm going to convert to a foreign currency, then convert back into my home currency, you run into problems or potential problems with foreign exchange risk, which is very, very significant.

So I think the first thing that you can do is you can establish a pipeline out of US dollars into a foreign currency without committing to it. So this is something that I've taught, I teach my clients, that you have a pipeline out of US dollars if you needed it.

I have a bank account in Canada, and so I think Canada is a good starting place for people, for Americans to look at. So I have a bank account in Canada, and I keep in my Canadian bank accounts, I keep a small amount of Canadian dollars. But what I have now is because I have the bank accounts, if for some reason I start to be concerned about something happening in the US dollar currency, I have a pipeline out where I can pick up the phone and I can do a wire transfer of all of my US dollar reserves into my Canadian bank account.

I have a US dollar account in my Canadian bank account, and so I can keep my money in US dollars, and I can just simply move it all to my Canadian bank account but keep it in US dollars. So what I've done now is I've eliminated, I've gotten the money across the border, and I've positioned it to where now I haven't taken any foreign exchange risk because I'm still in US dollars, but I can convert it from US dollars to Canadian dollars with the touch of a button.

So right on the website, I can move the money from my US dollar account to my Canadian dollar account, which means that if all of a sudden, I don't expect this, I don't think it's realistic, but if all of a sudden I open up the Wall Street Journal and find out that the US dollar is on track to inflate at 1000% this month, then I can click a button and I can move my money out of US dollars into Canadian dollars.

So my first suggestion for you is that you set up the pipeline, and you don't need to move the majority of your savings, but you set up a pipeline to where you could. And so you can choose your banking jurisdiction. You can do it in Canada. You can do it in many countries, but you choose your banking jurisdiction that you're going to work with, and then you set up the electronic transfer.

So if you needed to move your money, you could move your money. Now, beyond that, you want to look at your financial situation and say, "How important to me is this?" If I had $50,000 in the United States, I would not worry about foreign exchange risk, especially if my whole life is in the United States.

I live in the United States. I work in the United States. I earn in dollars. I spend in dollars. I think that that's too small of a number to be bothering with the hassles and the expense and the risks of saying, "How do I get out of dollars?" You don't need it.

The best way to get out of dollars in that situation is by physical assets, tools, or whatever things that you use in your normal life if you had to. If you've got $5 million, on the other hand, yeah, I think it's definitely worth protecting that. And so that's kind of a quick overview.

I think what anybody can do is set up the pipeline, and that way, if the problem starts to emerge, you have the ability to get the money out on fairly short notice. As always, thanks so much. My pleasure, Brittany. All right. We're down to-- let's go to-- we've got three more callers here.

Let's go to Josh in California. Josh, welcome to the show. How can I serve you today, sir? Are you going to me? I'm going to you, sir. Go ahead. Perfect. This is a follow-up. I called you a few weeks ago about the golden handcuffs in California, trying to break free.

Yes. My wife and I finally had an epiphany and a tentative job offer to head to Texas. My question/idea for you is, do you ever plan on putting together a moving guide/checklist? I think I'll be the third person on today's call talking about moving. And I was just curious if you'd ever considered putting together a do this, then that situation, because now we're running into the bottleneck of should we move a 401(k)s?

Should we keep everything together? Should we roll it into IRAs? That was my question for you specifically today is, should we take all of our various 401(k)s, 403(b)s, and such, and then move them into future 401(k)s at the new company? Or should we move those out, put them into either liquid assets to use for the move and to establish ourselves and basically cash those out, or should we move those into an IRA?

Good questions. Interesting questions. All right. So let's begin conceptually with moving costs and moving expenses. Assuming that you and your wife are employed now and/or you're going to be employed in Texas, you're going to have income, short answer is don't take anything out of the accounts in order to cover moving expenses.

If you are a person of first use cash savings and if necessary use credit cards to cover moving expenses, I would do that before I would ever take money out of retirement accounts. There's no benefit. I don't see any reason to take money out of retirement accounts to cover expenses.

I'd rather put it on a credit card and then pay it off in six months. I think that's a lower cost, and if you have good credit and you can cover that, that would be the simplest solution. If you haven't taken my zero percent credit card course, you want to take that one.

Available at radicalpersonfinance.com/store. So that's simple. Second question with regard to moving accounts. Generally speaking, the arguments are in favor of moving accounts to an IRA. The reason is that when you move accounts from a 401(k) to an IRA, you have the ability to choose from any custodian in the world or in the country that you want for your funds.

When you have money in a 401(k), you have one company to choose from, and that is the company that your employer has negotiated with for them to be the custodian of your 401(k), and you're limited to whatever menu of funds that they have negotiated to offer for you. In some cases, those are excellent.

In some cases, they're not. But when you leave a company and you take your money from the 401(k) and you move it into an IRA, then you gain the access to the whole market. So, if you want to go and take your money to Vanguard because you get the lowest possible expenses with a Vanguard ETF inside your funds, you can do it.

You can take it to a Vanguard IRA. If you want to go and you take your money to a self-directed IRA that allows you to buy gold coins or buy real estate or show horses in it, you can do that. So, you can move your money to any custodian that you want, and that's well worth it.

The one reason that I think is always important to think about why you wouldn't want to move your money from a 401(k) into an IRA has to do with creditor protection. Because in federal bankruptcy laws, money that is in a 401(k) is protected from the claims of creditors, and it's as close to ironclad as anything that we have.

And so, in California, as a California resident, money that's in your 401(k) will not be subject to the claims of creditors. But that same guarantee does not apply to IRAs. And so, if you move the money from a 401(k) into an IRA, and then you wind up in a dispute with your creditors, you wind up in bankruptcy court, you potentially have a significant problem.

And if you have a million dollars in the 401(k) and you put it in the IRA, that could be a million dollar decision. So, if you were staying in California, I would say to you, don't move the money into an IRA for that reason. Because I want to make sure that money is protected.

And it should be easy enough to find good enough investments in your 401(k) that there's not that big of a benefit for you of moving to an IRA. On the other hand, Texas, Texas law does, in theory, protect IRAs the same as it protects 401(k)s. And so, in Texas, you can go to an IRA.

And there's not, if you're a Texas resident, you can go to an IRA, and it's not a big, it's not going to cost you anything with regard to the protection. And every state is different. Now, what I would say is that I have a chart that I keep on my computer that gives me the quick yes and no with regard to each state, which is what I'm looking at right now.

And it says, Texas, yes, yes. However, meaning IRAs are protected from creditors, and Roth IRAs are protected from creditors. What I don't know is to what degree are they protected. Because I am not a Texas attorney, I don't know to what degree they're protected. So, if you are in a financially unstable position, or if there are storm clouds on the horizon, and for some reason you thought you needed to access that creditor protection of a 401(k) account, I wouldn't take the risk.

I would keep it in the 401(k) because that's the most robust place for it. Even though, in theory, my little checklist, my little chart here says that Texas protects IRAs and Roth IRAs. So, assuming that, but as long as you have no reason to think that you're going to be sitting in court in the next few years, then I don't think that's a big deal.

I would just move it to an IRA. That's kind of my overview discussion. And I think that with regard to your investing strategy, the first thing that you do when you move to the new place is you figure out how to get established in the new place. Have you chosen, I guess if you've got a job, you've kind of chosen a city.

Have you chosen a house or anything like that yet? >>JASON: We haven't yet. We just, this all happened within the last two weeks. It's one of those providential door opening situations. So, we are looking in the Austin area, kind of in the burbs outside of the shenanigans going on.

And we are looking at probably buying. So, I still would like to get in and have my own hobby farm. But we may have to rent for a year just to kind of get a feel for the ground because, again, it's three states away from us. So, we're considering renting for the first year or so and then jumping into buying.

And we'll clear about a hundred tax free once we sell this place and head out there. >>COREY: Do you and your wife have children? >>JASON: Yes, we have two. >>COREY: Okay. So, I think that that's a good plan. The needs of children and caring for them complicates things a little bit with regard to moving because it makes you pay more attention to details that you don't have to pay attention to when you don't have children.

But what I think about moving is that moving gives you the basic opportunity to, in some ways, start fresh. And I've come to the point where, for a lot of people, I recommend ... I had a friend of mine who moved frequently and he never used a moving truck.

He and his wife had a mid-sized sedan and they would always move just with their sedan. And he would sell all of his stuff, get rid of it all. He would keep his small, valuable possessions, clothes, and whatever like that. He would pack it in the car and he would go.

And I talked about it with him a number of times and I became convinced that that's a pretty good strategy for a move, especially right now with the cost of movers and moving trucks going out of California. You want to be very thoughtful about what you move. And moving is a great opportunity to start fresh where you get rid of the stuff that you don't like and then you can go ahead and buy stuff that you do like.

And a lot of times, with the things that we spend a lot of time and money to move, it's cheaper just to sell them on Craigslist and then get new ones at your destination. In addition, if you can move in a way where you don't have a lot of stuff, you just have the basics, then moving in that way allows you to be totally flexible with the place that you go into.

So normally speaking, you wouldn't choose a small apartment to live in. You'd choose a nice big house on a hobby farm. But if you don't have a lot of stuff, you might be able to get away with temporarily renting a small apartment or temporarily doing something where you're very flexible.

And so consider that. I've moved across the world with eight suitcases or so and it just brings you a tremendous amount of flexibility. In addition, depending on the local market, one thing that I think more people should consider is instead of signing up for a lease, I think that you should consider doing long term rentals on Airbnb.

And you can do that through the platform or you can try to negotiate something off platform or through another platform. And depending on the details of what you're doing, again, if you don't have a lot of stuff, you can just simply rent an Airbnb part time and go into it for a couple of months, stay in and you can try different parts of the city out in a very flexible way and you can get a sense of what's going on in a much more efficient way.

So, my basic point is try to minimize the amount of stuff that you have to move so that you're lighter in your move until you figure out where you want to be. And so doing, you have a lot of flexibility and it can be a really good move even financially.

Very cool. When we moved here, we had three moving trucks worth of stuff and we've since pared it down to we might rent a trailer the end when we leave. Nice. So that's definitely the direction that we're going. And Airbnb is a great idea. That didn't even cross my mind.

It's a little hard in the high demand cities because they are more expensive. But if you'll play around on the Airbnb app, you can do a long term rental on Airbnb and depending on the renter, that'll drop the rates very, very substantially. And if you get a 40% or 50% discount on rates because of doing a multi-month rental or a month-long rental, that can drop it to where the benefits of that flexibility are worth the extra few hundred dollars a month because you could do away, let me explain, you do away with the requirement to do first, last and security which frees up your extant cash, you know, the money in your bank account for a down payment.

It frees it up for whatever other expenses that you have. You can even put Airbnbs on a credit card which again, I'm not advocating credit card debt but that could be something that strategically you would do to keep cash available for you to be able to close a deal more easily depending on your financial situation.

And so, especially again, if you're using the strategies I teach in my credit card course, I'm very comfortable with that of putting expenses on a credit card. It eliminates any sense of responsibility that you have for the property where you can live in the property and everything is easy because you can come and go.

The Airbnb long-term rental contract basically requires you to give 30 days notice and you can leave in less than 30 days, you're just going to pay for 30 days. And so, if you have the flexibility, if you don't have a lot of stuff, you know, what I would consider is I would buy a trailer instead of renting one.

I don't know what trailer prices in California are like but I would drive to Nevada and get a decent one but a big trailer is not that expensive to buy, a couple thousand bucks. And if you have a big trailer then you can just simply park that trailer at a storage unit with your stuff in it and you and your family can live in an Airbnb for a few months while you're figuring out what part of the city you want to be in, figuring out the transportation system, figuring out can we get a deal closed on a place to buy and that eliminates a lot of the stress of signing leases and all the rest of it.

Does it come with a slightly higher price? Probably. And so, you need to carefully calculate the numbers and see what it's worth. But as I'm getting older, I'm becoming more willing to pay more to get more flexibility because that flexibility is something that I can capitalize on in other ways.

So, just worth thinking about. That is genius. That's never even crossed my mind. So, I definitely will be following down that rabbit hole pretty hard. If you have time for one other really quick question, it's about the sale of our house. Go ahead. I have two friends that are local that are interested in our house and to avoid having to do the showings and putting it on the market and stuff, to sell the house to them at I think market value right now is $415 or so for my house.

If we were to sell it to them free and clear at $400, everybody's happy and we would be very happy with that amount for our current home. Would that just have to go straight to a title company at the end or would we have to have another intermediary in there?

No, I don't see why you would. I think you just go to a, I guess a title company would be the place to do it. I'm not the world's best real estate expert. So, I would ask a friend of yours who's a real estate agent. But yeah, I think that sounds like a great deal and maybe you simply use a real estate attorney would probably be what they would recommend because they need to still protect themselves, do a proper title search, etc.

But if you just used a real estate attorney to close the transaction for you, and I guess you could just do it with a title company as well, that should be fairly simple as long as they can finance it well. And I think that would be great because it allows you to get out of there quickly and avoid the hassle of everything else.

Gives them a good deal, gives you a good deal. I like it. Very cool. That's all I have for you today. Thank you so much. Cool. Good man. All right. We go now to, let's do Ryan in Florida and then we'll go back to California for our final call.

Ryan, welcome to the show. How can I serve you today, sir? Hey, Joshua. Thanks for taking my call. Can you hear me okay? Sounds good. Okay, great. So my question is mostly about asset protection. I live in Florida, as you said, and I'm about to take a pretty big risk given the current COVID environment by investing in a medical practice that I'm purchasing from the current owner.

He's retiring on buying his practice and his building. And the type of medicine is, you know, if there was another shutdown, which our governor said there won't be, but you never know. I'm thinking, you know, worst case right now, if there was another shutdown, it would be very difficult to pay the note from the bank on a million dollars.

And I'm just in a worst case scenario, I'm thinking, how would I protect my personal assets, like my bank account, my home, retirement accounts, if for some reason I had to default on this loan, what steps can I take to protect myself in that scenario where, you know, COVID shuts me down for three, four months and I just, I can't get my head above water.

I just wondered if you had any thoughts on that. Yeah, definitely. So the first thing that you need to think about is the financing of the deal. So you want to make sure that you can do the deal no matter what, which means focus on that first and focus, meaning some of the steps that I'm about to tell you might not work if you do the deal.

And so you want to focus on making sure that the deal can close. For example, in a moment I'll talk to you about paying down your mortgage with some of the money that's in your checking account. Well, if that means that you have less money to show the bank where they say, well, wait a second, now we're not going to finance you because you don't have enough money, don't do it.

Make sure you do the deal. That's number one, do the deal. Number two is make the deal successful. You want to make sure that anything you do doesn't harm your chances of making the deal successful. It's fine to be aware of asset protection planning along the way, but you've got to make sure that you reserve for yourself what you need to make the deal successful.

So if you've got $100,000 and you're going to buy the thing for a million bucks and you need to immediately put $100,000 into it to do something that's going to make it successful, don't sit back and worry about what the Florida governor does or doesn't do. Focus on making the deal successful and fight like crazy just to make sure that it's going to work because you want to make the deal successful.

That's really important. So do the deal. And number two, make the deal successful. Now in that context, as you're thinking about asset protection, it's fine to protect yourself. So let's talk about the big ones. The big ones have to do with the contract. As you're doing the deal, look at the contract and try to understand and negotiate the best possible terms that you can.

So what are you looking for if you're borrowing money? The first thing that you're looking for is you're looking to segment the money borrowed to the assets being purchased if at all possible. So you understand that if they're going to give you a mortgage on the property, that's fine, but you want to try to make sure that that mortgage is only on that property.

You want to avoid, if possible, a recourse mortgage. You want them – if you default on the mortgage, you want them to be able to take that building. That's proper. That's just. But you don't want them to be able to come and sue you for the difference. And so if possible, you want to avoid a recourse mortgage.

With any personal debt, if possible, you want to avoid guaranteeing the debt personally. I don't know, but my gut says it's probably not possible. And so I'm not saying you can do these things. I'm just saying conceptually, here's what you want to work for. What you want to work for is no personal guarantees.

And the best situation you can be in from a creditor protection standpoint is if the business gets shut down by the governor and you can't make the payments, then you want the financing company to be able to come in. They can repossess the business and they can foreclose on the mortgage and they can take those assets, but they can't come after you and sue you for any additional money.

That's ideal. Is it possible? Probably not. My gut is probably not. They'll ask you to sign a personal guarantee, but negotiate the best you can to avoid that personal guarantee. Now, as you're thinking about the financing, if you can go and look, I won't go too deep into financing, but if you have another source of financing that covers you more safely, but possibly at a slightly higher rate, then go with that.

If you can find another lender who will give you it and you have to pay an extra 2% on interest rate, but they will do it without a personal guarantee, then that might be well worth considering for you. So that would be number three is negotiate the contract. Now, number four, look at your balance sheet and try to figure out what assets are exposed and what assets are not.

In Florida, it's fairly simple. Money that's in your 401k or other retirement accounts is not exposed to the claims of your creditors. Money that is inside your home is not exposed to the claims of your creditors. Money that's inside of a life insurance policy or an annuity is not exposed to the claims of your creditors.

What leaves you most likely was simply the money that's in your bank account and in other savings. So what you do with the money that's in your bank account and other savings probably is first make sure you can do the deal and make the deal successful. So you want to make sure that you invest whatever money that you need to invest into it.

But the money that's in your bank account, do you have a mortgage on your house? Can you pay down your mortgage? Yes. How much is your mortgage worth? There's not too much. Well, the house is probably worth somewhere around in the 400s and I owe about 175. And how much money is currently in your bank accounts, not in retirement accounts, just currently in savings or bank accounts?

Probably 150 or so. Perfect. Okay. So what I would do is, again, you need to segment the amount of money that you need for the deal. So if you need savings for that, but I'd pay down my mortgage. I'd pay down my mortgage and then I would take out a home equity line of credit on the house to give me access to working capital if I need it.

And that should protect the 175. So I was actually going to ask that question. Is that something you would do like prophylactically in advance? Or would you do that if you saw something going on in the market to where you started to get worried? Would it be sufficient? I mean, is there some type of look back that they would be able to come after you?

So they would say, "Hey, you dumped all this money into your house just to protect yourself. We're going to come get it." I mean, is that an option or? Right. That is an excellent question for a bankruptcy attorney in Florida. And I don't know the answer for certain. I'm not an attorney and I'm not a bankruptcy attorney in Florida.

I've read a lot about the subject though, and I'll give you my understanding based upon reading about it. So in Florida, the homestead protection laws in Florida are as strong as anything you can get. The Florida government and the Florida courts have stood again and again behind homestead protection laws in the state of Florida.

And even to the point where the Florida Supreme Court has protected the homestead exemption even in the case of fraud, which is very, very difficult to find that level of protection in the bankruptcy laws. Whenever you're dealing with fraud or something that smells like fraud, you basically lose all protection of your assets.

That's why there's so many requirements under the fraudulent transfer rules of creditor protection. There's so many requirements that things have to be done in a certain way. And so in Florida, even if you last minute you move to Florida, you commit fraud and you buy a house with the money that your creditors were going to come after, the Florida courts have protected that.

So it's a very, very high level. Now, I would never want to push that because at the end of the day, whenever you're dealing with a judge in a court, you want to make sure that you're dealing with somebody who has power over you. And this is the delicate dance with creditor protection, is that you have to imagine you're standing in front of a judge.

And here's what happens. Laws get passed that protect certain assets from the claims of creditors, but judges do not like protecting debtors. And so there's an interest in upholding the law, but judges do not like protecting people. Judges and people don't like it when people don't pay their debts.

And so this is why big fancy creditor protection structures often eventually fail, because the judge wants the person to be paid and society wants the person to be paid. You cannot do anything that looks like pushing the envelope. You don't ever want to be pushing the envelope. It's fine to know what the laws are and arrange your affairs to take it in an appropriate, advantageous way, but you don't want to commit fraud and you don't want to be pushing the envelope.

And so you want your story that is going to be put in front of the judge in black and white to be as far away from the edge as possible. You want it to be the most clear, that conservative thing possible. Now in that situation, there are of course laws, and so that's why I mentioned the laws first.

So does it really matter? Well, I think if you needed the money, like if you looked and said, "I've got $175,000 here and I need the money and I'm going to need it," then yeah, I wouldn't pay it down. I'd keep it available. And if at the last minute it looked like everything was going to go bad, I would keep it aside to pay off the mortgage.

But if you looked like you didn't need the money, if you weren't going to need $150,000 to renovate the practice or something like that, then I would say I would rather be conservative. I'd go ahead and pay down the mortgage for now to protect the money and then just simply establish the home equity line of credit to access it if I needed it for cash flow.

So it's very much a matter of judgment. And what you have to realize at the end of the day, in anything you do, here's where everything stops with a bankruptcy judge or a creditor when you're in a creditor dispute. If you're physically present in Florida or in the United States, then that judge has authority over your body.

And that means that what the judge will do is the judge will – if the judge thinks that you're committing fraud and you're hiding money in an offshore account with some kind of offshore trust, the judge will throw you in prison and say, "You will stay in prison until we let you out." And so that's the end result.

And so in your situation, we're not dealing with any kind of offshore thing. We're not dealing with offshore trust. We're not dealing with a mega super creditor. We're just dealing with a simple straightforward business deal. I don't think you need to worry about that. But in your back of your mind, you want to always be thinking about what is the story that's going to be put in front of the judge about my assets.

And so if I woke up and I were in a situation like you're describing and I looked down and I said, "All right, I've got a house here. I'm living in Florida. I'm stable. I'm going to buy this business." If I go ahead and start making some extra mortgage payments, maybe $10,000 a month extra over the next 10 months, and then that results in me moving $100,000 from my checking account into my home equity, I'm very content with that story.

I think that's a very reasonable story to put in front of a judge. Okay. Yeah, that makes good sense. Does anything change in terms of a spouse and having her on or off various bank accounts or the deed to the house? Does anything change just knowing I'm married? She should be on the deed to the house.

In Florida, Florida allows tenancy by the entireties. And so as long as you... That's the standard filing mechanism. So in Florida, you want your house to be tenancy by the entireties because that's how you want to own it because it gives you even better protection with the tenancy by the entireties.

Now, jointly owned bank accounts are problematic. And so you don't want to have massive amounts of money in jointly owned bank accounts. And so the best place, if you're dealing with a scenario where you say this could go sideways, is you definitely want to move the money. You definitely want to...

You want to make sure that your wife has her money and you have your money. And you want to segment that for this purpose because your wife does not automatically become liable for your debts if she has money in separate accounts. So her separate accounts don't magically become liable for your debts.

And so, yeah, I would segment the money and I would put her money in her accounts and I would drain my accounts lower in that situation to minimize what I had and I would make sure that she's not personally liable for the payment of the debts on the business debt.

Okay. Sorry, I just wasn't sure if they could reach across just because I happen to be married. They could reach across. Your creditor could reach across for... They cannot reach across automatically because you happen to be married. What they can do is if you have a jointly owned account, then that is all available to your creditors.

They can't reach across automatically, but if you have a jointly owned account, then that is exposed potentially. Okay. All right. May the deal go well and may none of this planning be necessary. And hopefully it's a smashing success story. And work hard. And that's why I tried to start with do the deal and then make the deal successful because at the end of the day, don't let creditor protection or asset protection stymie you because it's far better for you to make it successful, make another few million dollars on it, than it is for you to sit back worrying about protecting a couple hundred thousand dollars and let that wind up making the deal go bad.

All right. For our last call of the day, we go back to California. California, welcome to the show. How can I serve you today? Hey, Joshua. First of all, thank you for taking this. Man, you've had a marathon of a call on Friday. It has been, for sure. Hopefully I have a quick softball for you.

So I am currently in the house and I was looking to refinance it. And I started looking at my finances and was basically just wondering if I should pay it off. I currently have around $240,000 in the bank cash, which I feel a little bit foolish just because it's obviously not growing any interest, but it's a nice safety net.

Currently no debts. And we owe $130,000 on the house. I make currently $150,000 in a normal W-2 job. And then I have side business income ranging around anywhere from $40,000 to $60,000 a year. And the last piece of this is that we are planning to move or hoping to move when things start to die down and buy a probably more expensive property somewhere in California on an acre or so.

But that remains to be seen. How old are you and do you have children? Yes, I have one on the way due in two months. I have a two-year-old and I'm 30 years old. No, I'm 31 and my wife is 30. Okay. Well, if you hadn't said you were planning to move, I would have said, "Yeah, pay off the house." And my reason is not- Yeah, and that's my sticking point.

Yeah. So the reason is not that necessarily the mortgage is going to sink you or anything like that. It's just that it's nice, especially being young, young family, having a paid-for house eliminates virtually all risk from your life and will bring you ample cash flow, will bring you tremendous peace and joy.

And I think it's well worth doing when you're young. And in the situation there, you can pay off the house and still have $100,000 left plus you'll have extra income that you can save. I would have paid it off. The fact that you're planning to move though, then it's just in my mind a very clear no, that no, I wouldn't see any reason to pay it off.

The house, we'll just pay off the mortgage when the house sells. And I would rather have the $240,000 available for me to use with whatever I'm going into. Maybe it's a down payment. Maybe it's a fixer-upper fund. Maybe it's a, you know, it could be anything that you're going to use it for, but I'd rather just have all of my cash available.

The amount of money, if this move is in the short term, meaning anything less than a couple of years is what I would say. If you're planning to move in less than a couple of years, two years, then I see zero benefit that accrues to you from paying off the house and potentially a lot of frustration and hassle.

Because if you have the money available to move to the next property, that'll smooth your transition process. You may wind up simultaneously owning two houses while you're waiting on the first one to sell. Obviously, that's a risk, but it may be a risk that, it's probably a risk that you can do and just having the money is going to smooth everything out.

And so, it may be the case that you find a great property that you just really are going to love, but, and I don't know what your price range is, but you can negotiate financing on the property, but the property is going to need $100,000 of renovations. And if you do the $100,000 of renovations, it's going to increase the property values by $300,000.

I'm just, you know, being a little extravagant with my numbers for the sake of the point. But it's going to increase the property value by $300,000 and it's going to be the perfect house that you and your wife are going to love and this is going to be our forever home that we're going to be in for the next 40 decades, you know, 40 decades, four decades.

So in that situation, you know, I would want, I'm going to use a hundred, I'm going to use a hundred thousand for the down payment. I'm going to finance it. I'm going to put the $100,000 of cash into renovating the house and then restore my savings when the old one, when the old one pays off.

If you took the money from your savings account and used it to pay off the $130,000 mortgage that's existing, that might mean you couldn't renovate the property and you, you know, before you move into it. Then you're into something where you move into this junky house that really wants to be renovated and you got a new baby and you're telling your wife, you got to live around boxes and the house is full of dirt and we're waiting for the old one to sell so we can free up our money.

No, I'm not going there. If you're going to move and if you're planning to move at some point within a couple of years and there's no science to that number, I'm just saying that, that the mortgage interest that you're paying on $130,000 mortgages is irrelevant if you're moving in a year or two.

So I would keep the money and then just simply sell the house and pay off the mortgage then. Awesome. I have one quick follow-up. We were planning on keeping our current house as, you know, the one that we're in right now when we move and potentially keeping it as a rental.

Does that change anything? Yeah, I think it does. I think it does but I still think keep the money in that situation because if you're going to move to the new house, you don't know what money you're going to need for the new house. Yeah, exactly. And I just rather have the money in my pocket because then I have total, then I'm not constrained by money when I'm making the decisions for my family.

I'm figuring out what's going to be the best decision for my family. And if you found that, you know, extravagant example I gave of this is a great house, it just needs $100,000 of work, I'd rather you buy the house and put $100,000 of renovations into it and then just simply be more calm on the old mortgage because of the lifestyle benefits.

Clearly, you're earning well. Clearly, you're saving well. That means your expenses are low. And I'm not saying go and spend tons of money you don't have but you may as well, you might just invest the money into something that's a lifestyle benefit for you. And so I want you to have that as an option rather than to have limited your choices.

So, I'd rather just keep the money in cash, negotiate the new deal and maybe you buy the house, you put the $100,000 into it, then you refinance it with a much higher appraisal value and then go ahead and pay off the mortgage on the old one which is now a rental.

I want you to be debt free. I just don't want you, your family situations to be stuck due to this, due to poor management of the cash. As long as you can make the decisions that are in the best interest of your family without the money being the constraining factor, I'm happy.

And so, I would just simply focus on getting the next place and then at that point in time, reassess the value of paying off the house. Okay. And then, would you see any benefit in refinancing currently? I mean, our current interest rate is 4.25 and you know, if I refinance, I'm going to get a lower one.

But, I didn't know, you know, that's initially what started the conversation. I just didn't know if there's any value in pursuing that. I would. I would. What would be the price range of the house that you would think about moving into? Probably $400,000. If you refinance this house, it would put a lot of money in your bank account and make you a cash buyer on the next house, right?

I believe so. It would put us pretty close, especially with a couple more years to save up more. That's pretty compelling as an option. Yeah. It's honestly just one of these, like I keep, you know, kind of wavering back and forth. And really, maybe the heart of it is I feel a little foolish just sitting on as much cash as I have and not, you know, I mean, it's obviously separate from our 401k and like college savings and all that stuff, you know, for the kids.

But it just, you know, I know that you mentioned a number of times that, you know, when you have opportunity like that, that something will present itself. I just, you know, just kind of look at it from the, you know, my father's a financial planner and he's just like, what are you doing getting on this much, just plain cash and not putting it in somewhere.

That's kind of my, that's kind of where I'm coming from, I guess, when I'm thinking about some of these things. I think it's a fair concern, I think overblown, generally speaking, but it all comes down to how long are you dealing with the cash? How long have you had this much money sitting in your bank accounts?

Probably about, you know, two years. Okay. So as long as this money gets invested at some point in the next couple of years-ish, and again, I have no scientific, you know, reason for that, then I'm okay. I don't want this amount of money sitting there for 10 years. But look at the way, why am I not nervous about the money sitting there right now?

Well, number one, I think it can be useful for you, but I think if you look and say, what benefit am I getting from it? So let's say that you take $130,000 and you pay off the mortgage. Well, if that's at a 4.25%, I'm just going to use simple interest.

So let's say you're getting a return of 4.25% on the money. Well, that gives you $5,525. Is an extra $5,525 meaningful in your life? No, not especially. Yeah, it's the kind of thing where not especially, right? And so it's not that big of a deal one way or the other.

And so if having this money allows you to do something that you want to do, to get another house and to, you know, have a paid-off rental house or however you decide to negotiate it, I think it's worth the cost. It's worth the opportunity cost, but not for 10 years, right?

If you're losing $5,000 every year and it's compounding, then 10 years is too long. 15 years is too long. And so I'm on board with the fact that you need to have the money invested. For me, it just comes down to how much time are we talking about it?

If you have a bunch of money in cash for a few years while you're negotiating some big changes, I think that's wise because it gives you more options. If you have a bunch of money in cash for 10 years because you're scared to invest money, I think that's foolish because you can't afford it when your money is being inflated away.

And so to me, it all comes down to the timing. You have to calculate what am I giving up and then for what amount of time am I giving this up? I think what I would do if I were in a situation like you're in, what are you waiting for to buy another house?

Are you waiting for the market or are you waiting for something in your personal situation? Nothing in the personal situation. We continually look, but the market just seems crazy hot right now, especially where I'm in California. My house has basically doubled in value at this point. And me and my wife just think that everything is just way too crazy high.

We keep looking, but we're going under the assumption that something is going to cool down in the next year or so. And so that's kind of what we're looking at. Yeah. And that may be true. The thing about California, and I'm facing the same problem in the Florida marketplace myself, I thought that things were going to slow down in the Florida marketplace.

I was convinced six months ago that things were going to slow down quickly in the Florida marketplace. In Florida, you can't keep a house on the market. Things are selling at asking price and above in no time at all. And what's frustrating about it is it's hard to figure out from the data and it's hard to figure out from real life if that's a sustainable trend or if it's some form of a bubble.

Because I think what's happening in Florida, there's a number of reasons for it, but there's so many people moving down from the Northeast to Florida, especially due to remote working changes, etc. There's everything from hedge funds and companies moving out of New Jersey and New York and whatnot moving to Florida.

It's like the South Florida marketplace is just going gangbusters. But a number of years ago, I was convinced that it was going to be a bubble and I was convinced that it was going to change. At this point in time, I'm no longer convinced of that because it's just a wacky market.

And so sometimes, just because the prices are high, it's hard to say that it's actually going to change. And I think that California is similar, right? You've had so many years of high demand and are people going to start moving out of California? I don't know. How do you figure that out?

I completely agree with you. I don't know if this is the same trend, if it's a bubble. I'm obviously hoping it's a bubble because that would be advantageous for me. The reason that I put the two to three year timeline on that is because currently we have one on the way in the next couple of months and our house can basically sustain two kids and my wife.

And then we built a 10 by 12 shed in the backyard where I work remotely out of. And so that basically our house can sustain us, no problem currently. But I suspect that if we have another in the next couple of years, and then especially as our children get older, that we will start to feel the crush of space toys and all that stuff.

So that's kind of our line in the sand in terms of, okay, we would love to find something before that. However, that's kind of our timeline of what we believe will be the point where we'll need to get a house with an additional bedroom. Of course, you could convince me of any one of these plans, which I think is obviously why you're talking about it.

Because none of these are stupid and they all have their advantages and drawbacks. So you could convince me to refinance, you could convince me to do a number of different things. But I think based upon what you're saying, I think my instinct is just keep everything as it is.

You have enough money saved that you could probably close any deal if you find a fair deal. Is it worth refinancing the house at a possibly lower rate but paying new closing costs? I would say depends on the closing costs. So that I would calculate it. If the closing costs are a few thousand dollars, I probably would.

If it's a lot, I wouldn't. And to sit there, you know, if you find yourself sitting there with four or five hundred thousand dollars in the bank, your father might now really start to hammer on you. And it might put too much pressure on you to go and find the other house when it's not a great deal.

And so I guess for right now, since there's no clear winner and no clear solution, I would probably just sit tight. I probably wouldn't refinance. I have enough money to close a deal. I would sit tight and I would watch the market. I would keep saving. And to me, that's what seems to be correct.

But I'm not saying that you're wrong if you do another course of action. All right. That's pretty much what I thought. I just wondered if you have any more anything else that I hadn't thought of. That was my biggest concern. So I appreciate your time and appreciate you taking two hours out of your day today.

Absolutely. My pleasure. It gives me something for people to enjoy as well. So well, good stuff. Thank you for listening to today's Friday Q&A show. That wraps up our call. If you would like to join me on next week's show, I would love that. You can do that by going to patreon.com/radicalpersonalfinance.

Sign up to support the show there at patreon.com/radicalpersonalfinance and you'll gain access to next week's call. Have a great weekend, everybody.