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Because you never really know what an adventure will throw at you. For a limited time, use the code READY20 for an extra 20% off your favorite gear. Shop now at GerberGear.com It's Friday. Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

Today is Friday, October 9, 2020, and today we have a live Q&A show. Works just like Call-In Talk Radio, where I invite listeners to call in, ask any question that you want to talk about, discuss any theme that you would like to discuss. If you'd like to join me for next week's Q&A show, you can do that by going to patreon.com/radicalpersonalfinance.

I'll slow down just a little bit. Sign up to support the show there on Patreon at patreon.com/radicalpersonalfinance and you'll gain access to next week's call. We begin with Lou in Vancouver. Lou, welcome to the show. How can I serve you today? Hi, thanks for having me. My pleasure. So I'm 25 and I'm about to graduate in six months into a nursing career.

I have 50 grand in the bank right now. Three grand is in a robo-advisor and 30 of that is a loan that I have to start paying off in one year from now. But due to just scholarships and working and stuff, I haven't had to use any of that money.

So I'm just wondering what your advice is on what I should do. Okay. So if you were to count paying off the loan with the $30,000, that would leave you with about $20,000 in your savings account. Is that right? Yeah. So I could just pay it off right away, but I might be able to get $20,000 forgiven if I work rurally, which is a really strong possibility that I'd kind of like to hold on to.

Okay. And outside of that $30,000 loan, do you have any other debt? No. Okay, great. The nursing degree, this is a basic kind of getting started nursing degree or is this some kind of specialty that you've done? Just RN. Okay. And do you have an idea on where you might like to work or where you might like to live?

Probably rural British Columbia. Because you want the debt forgiven or because you like the lifestyle? Lifestyle. Okay. And where does your family have roots? Is it near you in Vancouver or some other place in the world? In Calgary. Okay. Do you have any particular relationships, romantic relationships otherwise, that would affect where you choose to live?

Yeah, my partner would kind of have some influence. We're probably going to do some kind of farming or something rural for what he's interested in, which might be rural Alberta, rural BC. So that's kind of a factor. Okay. Is he set on any particular place or is he okay with the idea that you get a job and after you get a job, then he would look in that area and choose some appropriate land to work with there in that area?

Yes, but it'll probably work the other way because my job will be pretty flexible. That we might find somewhere that we like, maybe a town with a good culture or land with a good, I don't know, land that's good. And I'll be able to find a job near there.

I think is probably the way it will work. Understood. Do you and he see yourselves together for the long term? Is this relationship moving towards marriage? What are your thoughts? Probably. Okay. Yes. Okay. Well, put you on the spot there within listening, right? Sorry about that. I could have asked and acquired some of those details for you.

The first thing that I would say, so in the beginning, you have a really good start here, right? You've got a lot of cash saved up. You don't have any significant debt. Yes, you got the $30,000. You can either pay it off or not pay it off, do a forgiveness if you go to a rural area.

Sounds like that might be a great fit for you. But all things considered, you're graduating with a very highly valuable degree in a market that allows you to work really anywhere. And that's one of the wonderful things about a nursing degree because nurses are in high demand all around the world.

With a nursing degree, you can design your lifestyle first based upon where you want to be. And then you can be fairly confident that you'll be able to have the job that you need as long as there's some kind of hospital or medical facility nearby there. So that's wonderful.

My standard kind of thinking is that when people are young, they should solve three big questions as quickly as possible. Because if you can solve these three questions as quickly as possible, they will make up for you the bulk of your lifestyle. And then you move after these three questions, then you move to the appropriate financial steps that come next.

So question number one that I think makes the biggest difference is who are you with? If you're with somebody that you love, if you're with your family, if you're with friends, it can be a romantic partner, it can be I want to live in town with my parents, or I want to live on the opposite side of the world from my parents.

Whatever you decide. But you want to think about the people in your life. Because if you're with people that you care about and that you love, then everything else, even if everything else is bad, everything else can be survived. You'll see this again and again and again when people share with you and they say, "You know, I really don't like living in New Jersey.

I really want to move, but this is where my people are. This is where my family is. And so because of that, this is where I'm going to be anchored." And so you want to solve who you're with first and foremost, and that should be very, very important. So if you need to choose to say, "Hey, here's this person that I care very deeply about.

I'm going to choose to move to be close to this person so that we can enjoy and develop a relationship," I think that's a very rational decision to make. I think a lot of times people feel a little bit embarrassed about that, like, "Oh, I'm chasing somebody across the world." I think that's silly.

I think it's rational to want to be with people that you care about. If it's important to you to live within two hours of your parents, that's rational. If it's important to you to live with a certain type of person, you want your neighbors to reflect a certain lifestyle, a certain opinion.

Some people are very drawn to a progressive inner-city core of people, and so for them, they should choose and prioritize living near that progressive inner-city core. Other people are very interested in being around conservative, rural type of people, and those people should prioritize that because the people that you're around, your neighbors and your loved ones, will drive those really important human connections.

And so that's number one is who are you with. Number two, in my opinion, is going to be what you do because the basic function of what you do on a daily basis is going to structure your time more than almost anything else. And so you want to be thoughtful about choosing a job, choosing a career that's a good fit for you.

And if that job or career requires an investment of time, an investment of money, an investment of energy, I believe you should do that and make that investment to move into the career that you want to move into. Now, in this case, it sounds like you've done that, but that's always going to be the thing that drives your day, and so you want to make sure that you focus on that.

And if there's a certain career that can only be done in a certain area, for example, maybe there's some things that can only be done in a rural area, well, then you want to make sure that you're making lifestyle decisions that are going to put you into that because that's going to reflect what your time looks like.

And then number three is going to be where do you live? And I mean that in the largest possible sense, both country-wise, do I like living in Canada? Would I rather live in some other place? Where do you live in terms of within a particular country? There's a very different lifestyle in downtown Vancouver than there is in rural BC.

There's a very different lifestyle in the northern territories than there is by the southern border. It's just different. But yet where you choose to live is going to drive, again, structurally, so much of your life. If you live near the mountains, you have access to mountainy stuff. If you live in the plains, you have access to plains type of things.

And so think about those things. And then to the extent that you're able to say, "Here's what I really want," which is a high bar to hurdle because you don't always know what you want. But to the extent that you're able to know, "Here's what I really want," then I think you should pursue it.

And then once you've pursued it, you go back to financial planning. So you spend any money that you need to in order to set life up. Maybe you decide, "Here's this lovely little town in rural British Columbia. It's got exactly what my boyfriend would love to have. It's got a great job for me.

It's an appropriate distance from the things that I care about. It's got this tremendous lifestyle that we're really excited about." Well, then what you do, in my opinion, is you stop all financial decisions other than getting yourself there and getting yourself set up. So once you've chosen the spot, then you say, "What do I need?

Do I need a house? Do I need to rent an apartment? What makes sense based upon the infrastructure that's available? Maybe I need to buy a car." And so you might need to sell—maybe you don't own a car and you need a four-wheel drive, or you get rid of the car that you have now and you buy a more suitable car for those particular conditions, and you direct your money towards setting up that lifestyle.

Then, once that lifestyle's set up, then you come back to the financial planning drawing board and you say, "All right, now what's next?" Because what's next may very well be determined by what you've already done. What's next might be, "You know what? I've got this awesome house that I can rent long-term for several years.

So what's next is I'm going to go ahead and put money in the RRSP and save money with the retirement plan that's associated with this local rural hospital." But on the other hand, what's next might mean, "No, you know what? We want to save up for a piece of land, and there's a piece of land here, and so our goal is to save $150,000 so that we can buy our own piece of land and build our own homestead from scratch on the land." And so if you had those goals, then that would direct all of your money decisions in that direction.

But those goals will present themselves once you've decided who you want to be with, what you want to do on a daily basis, and where you want to live. Okay. So you always talk about time being such a huge factor on investment, but that comes kind of secondary. Should I not be putting a little bit, kind of trying to get time on my side with a little bit of this money financially, or lifestyle is more important?

So you should invest the money if it doesn't hurt you in some other way. So let's talk about the timing question. Let's pretend the classic bit of instruction that is given to a young person, which is absolutely true, is simply that the earlier you start investing, the better. So let's pretend that you have an income that allows you to invest $3,000 per year.

Do you have an income where you could invest $3,000 per year into mutual funds or something like that? Yes. Okay. So let's use this number. Okay. So let's assume that starting at the age of 25, and we'll go from 25 to 65, that you use, I'm going to pretend you start with nothing, even though you already have a little bit saved.

I'm just going to start with nothing. I'm going to do this for 40 years, and I'm going to assume a $3,000 contribution each year. And let's assume that you're going to earn, I'll say 7% per year on your growth on your investments. So in this stage, at the end of 40 years, if you invested $3,000 per year, at the end of 40 years, you could expect to have, at 7% per year, $640,828 saved in that example.

Make sense? Yeah. Okay. Now, I'm going to drop from, instead of 40 years, I'm going to say that it takes you two years to set up your lifestyle. So it takes you two years to move, maybe you buy a house or whatever you need to do. And so it takes you two years.

So instead of investing for 40 years, at that point in time, you can only invest for 38 years. So if that's the only thing that we change, we change 38 years, then now at the end of 38 years, you would have a total of $553,920. So the difference between those, between $553,920 and $640,828 is, oops, did it wrong.

So I'm just going to do $640,000 minus $553,920. We'll round it out for a little easier radio math. We wind up with an $87,000 difference, which is a very large difference. Agreed? Yeah. Okay. So this is the argument that goes in favor of your investing now, right? Investing something now.

Because every additional year, when you're looking at the difference between 40 years and 38 years, every additional year is a big number. Now, you put a grand total of $6,000 less, but because you had two extra years there of investments, you gave up on $87,000, which is a lot of money.

The question is, what would you have done with the money instead of that? So what a lot of people would do is they would say, "Well, I'm going to go and I'm going to get a nursing degree." Well, what you have to realize is that when you chose to go and get a nursing degree, you chose not to invest money.

When you were 18 years old, what you could have done is you could have gone and gotten a job. You could have gone and gotten a job with, let's just say a basic retail job earning a basic wage, and you could have invested $3,000 a year every year since the time that you were 18 years old.

Which if we went from 18 to 65, let's just do it, 65 minus 18 would be 47. So if we put 47 years in as our example, we would now be up to $1,056,000 would be what we would have if you had started at age 18 and we were going from 18 to 65.

So by that math, we would say you did something foolish by going to school instead of going and getting a retail job at 18. Do you agree? Yeah. So you should say, "No, I don't agree." Because what you've gotten with your retail job – sorry, with your nursing degree is you have the ability now to invest far more than $3,000.

If you hadn't gone and gotten a nursing degree, yes, you could have started investing at 18, but now you have a much bigger income, which can provide you with a much better lifestyle and more money to invest, and very, very quickly, once you're established, very, very quickly you can save a lot of money.

So to say I've got to start now is on the one hand very true, but it's on the other hand not true because I may not be ready to start now until I get myself established. So what I would say is if you say I have six more months until I graduate, I don't think you should be investing anything significant.

If you said I want to put $3,000, fine, but I'm focused on the fact that you've got the $20,000, which to me is more important because you might need the $20,000 for something more important than a little bit of money in growth this year. Let's go back to the $3,000.

I started with the biggest numbers, which were the 40-year numbers, but let's say that I had $3,000. What is the gain if you invest it this year versus not next year? So let's add 7% to $3,000. Do you know how much money you would have if you grew $3,000 by 7% in one year?

I could do it, but I think you just… $3,210. Sure, I shouldn't ask questions like that when I'm the one with the calculator. The answer is $3,210. Now does that seem like a big deal to you? Does that seem like a lot of growth in the money? No. No, it's not because in the beginning, the money grows very, very slowly.

So although it's true mathematically that the longer time period you have to invest, the better, it's also true that if you do things right in the beginning and you set things up properly, then you can quickly come back. If you wait a year, but that allows you next year to come in and invest $7,000, then now you're better off ahead.

So my answer is simple. My answer is if you're coming up on a big lifestyle change, like graduating from college, possibly like getting married, those kinds of things, those are the kinds of things in which you just pause on investing until you get your life stable. And so this is my standard answer to any big life change.

If you're going to move, if you're going to quit a job, if you're going to go get another job, if you're going to graduate from college, if you're going to get married, if you're going to get divorced, if you're going to have a baby, if somebody has recently died, just pause investing until your life is stabilized again because sometimes you need to make a big life change in that circumstance.

And if that happens, you can always quickly go back to investing. So if – my answer is if you came and said, "Hey, Joshua, I put another $3,000 in my RRSP," I'm not sad about it. And I think that possibly could be fine for some of your money because once the year goes on, you lose that ability.

I'm not sad about it. But if that $3,000 causes you to not be able to do something that you want to do, such as buy a house, such as get another car or get a car, those kinds of things, then it's more important to establish your lifestyle first and then start investing next year than it is to labor under this burden of I've got to invest this year and then not have the money that you need to move to the place that you want to move.

There are so many people that I've interacted with, young people, who are sitting in a city they don't like, working a job that they're not well-suited for, surrounded by people that they don't like, and they're diligently putting all their money in their 401(k) for what? My answer is stop putting money in your 401(k) for four or five or six months, whatever's necessary, save the money, get rid of your stuff, sell your car, move to the other side of the country or move to the other side of the world, establish yourself in a place you want to be with people that you want to be around doing something you want to do, and then start investing again.

So it's not a clear one way or the other, but if you can do both things, do both. All right. Thank you so much. That's really great advice. And thanks so much for your channel. I really get a lot out of it. Have a great day, sir. Thanks, man.

Thanks for having me. And I think it's important to say that I'm a big fan of the stock market. And I haven't ever done any investing in the stock market outside of my retirement fund because I've just been saving to buy real estate. That's sort of my long-term goal.

But I just see it. I could've, you know, 1.5x in a matter of a few months. At the time I thought, you know, there's no way the market's going to come back this fast. So I don't think I made the wrong decision then. But I just wanted to hear you maybe talk more broadly about if you believe in trying to time the market for short-term gains.

We'll say like, you know, if you don't intend to invest more than a year or something, if the market's obviously undervalued, is that something that you would do with savings that you earmarked for some larger purchase later? The only way I know how to really address that would be for you to start by thinking about what the cost would be to you if you lost the money.

And I don't know any other way you could do it. Because what you're talking about is basically an informed gamble. I think it's important to put the word – when we talk about speculation, which is what you're describing, there's a big difference between speculation and investing. But what you're describing is speculation.

And so speculation is a form of gambling. Now, is gambling always wrong? Well, I'd say certainly not. I'm pretty sure it's true. But I think the example that I heard – maybe it's not true, but I read it in reliable sources, I'm pretty sure. But the guy who started FedEx was at the point where he was totally broke.

And one time he took his money to Las Vegas and he gambled. And he was able to make enough on his money in order for it to grow quickly for him to basically save the company. Now, maybe that's not true, but I'm pretty sure it is, at least to some degree.

Whether that was legal, I'm not so sure. But it kind of gives the idea that you've seen. And there's people who have made a gamble at a certain point in their lifetime where it paid off handsomely and they were able to save a business. They were able to level up financially in a way that really, really made a big, big difference to them.

I'm not opposed to speculating and I'm not opposed to gambling. I think that as long as we're realizing that it's speculation or that it's a gamble, that it puts us in the right frame of mind. At the end of the day, it's your money and you get to choose, "Do I want to take a risk?" And you can lay out what the risks are.

And as long as you understand what those risks are, it's your choice on how you choose to deploy the money. Even if you came to me and said, "Joshua, I'm going to gamble my money. I'm going to go to Vegas. I'm going to play poker." Well, I would say, "How good of a poker player are you?

Do you have a system, a strategy?" You can win very handsomely on poker. You can make an entire lifestyle on poker and make a living playing poker. You can do it on all kinds of games. But you have to recognize that this is a gamble and gambles do sometimes pay off.

Playing the lottery sometimes plays off. I recently read a magazine article, I think it was in The Atlantic, but it was about this older couple who for years played the lottery and he'd figured out that the odds of the lottery were not against you as badly in certain circumstances as they were in others.

And when he realized that, it gave him a system where he and his wife started playing the lottery whenever it reached a bonus territory. And so they would go and they would buy thousands and thousands of lottery tickets from a number of different local stores and they won. They won millions and millions and millions of dollars very predictably.

They put together a club of people to invest the money with them into buying lottery tickets and it paid off handsomely for them. So everything they did was totally legal. It was just a matter of understanding that the math of the lottery game was not as – the chances were not as small as in those certain circumstances it was in others.

So you can gamble and I think that certain gambles are certainly fine. But what's the risk of a gamble? The risk of a gamble is that you understand that things could go dramatically against you for no fault of – through no fault of your own. And so what's your get out plan?

What's your escape plan? Now, that's where the stock market certainly is very different than playing – betting on a horse race. It certainly has different features. But at the end of the day, you're still choosing and you're saying, "I think this is going to happen in a certain period of time." The question is what?

What do you think is going to happen in a certain period of time? So let's reflect back to March-ish when the market was plummeting off massive percentages. Why was that happening? Well, to the extent that we can know the answer to that question, right, which is a big question because what you're dealing with in a situation like that, you're dealing with millions and millions and millions of individual people making individual decisions.

You're dealing with a hedge fund manager who says, "We think that coronavirus is going to be really bad, so sell off millions and millions of shares." You've also got your next door neighbor who is getting paid on Friday and they have an automatic allocation sent to their 401(k) and so they're just automatically buying stocks no matter what the prices are.

And so the stock market prices simply reflect the current trading between buyers and sellers. And you have so many millions of buyers and sellers that you can't ever actually know the market did this because of such and such. There's no such thing. You can have some ideas, which is what's reported on the financial news every night, well, because of tensions over this or concerns over that.

You can have certain ideas, but those ideas may or may not turn out to be true. So what was happening in March at that time when you were going to make that speculation? Well, at the time, the market was dumping off because the world was very possibly headed towards not only a major sanitary crisis, a major health crisis, but a major, major depression.

And there was very good reason to believe in March that the worst-case scenarios were extremely realistic. For context, remember that you had predictions of millions and millions of people in every country in the world dying due to coronavirus. Remember that the prediction in the United States was that without any intervention, four and a half million people would die of coronavirus.

With significant intervention, then you would have a couple million people die of coronavirus. But with a hardcore economic lockdown, you could drop that number from a couple million people to perhaps a few hundred thousand people. So that was why the US economy basically across the majority of the country was shut down, because politicians are looking at that and they're saying, "I can't take the risk of millions of people dying on my watch, and so we're going to institute these heavy, heavy lockdowns and closures that are going to basically bring everything screaming to a halt." Now, think about the economic impacts of that.

That drop in productivity was absolutely stunningly massive. I don't know if there's any precedent before that—I can't think of any historical precedent that was so extreme, where you shut down every restaurant, every bar, every retail establishment. Now, in hindsight, neither of those things has turned out to be as bad as previously feared.

So in hindsight, most of those projections seem to be overblown, and the virus, thankfully, is not as bad as it was thought to be at the time. The models were not as serious. And economically, I think due to the increased—one of the biggest surprises to me is due to the increased ability that we have to telecommute and to telework, we had a much less severe downturn in economic productivity than we've ever had before.

And I think what's amazing to me is that it wasn't as bad, but there were very good reasons to believe that things were going to be very, very bad and that there was going to be a lot of bankruptcies galore. Now, that story is not yet told. If you are trying to compare the stock market today and the stock market values to what is actually the case in the economy, there seems, in my opinion, to be a significant disconnect.

And so now you have to decide, how do I trade that? What do I believe? Do I believe that that disconnect, if there is such a thing, can continue for the long term? Or do I believe that stocks always go up and the Fed is always going to prop stocks up?

What's your belief? So you make your belief and you go with it. So the point is that for you to be prudent in March was not an unwise decision. There was every reason to believe that a worst-case scenario, a multi-year depression, was a very realistic scenario that could happen.

Thankfully, it didn't happen. But just look at the world around you. Look at the fervor over 200,000 deaths in the United States and imagine what it would be if that death toll were 4 million instead of 200,000. So in March it was unknown. Now, in hindsight, it seems easy.

But the reason I spent so much time to talk to you about the reality is that at that time, it was the news was all bad and stock prices reflected that. So now things changed. Now, did something actually change with the situation? I think so. We had more information, better understanding of what happened, etc.

And so things have changed and things are better, but then the market prices came up quickly. So how do you decide this as an individual? I think you have a few basic things that you can say. Number one, always remember you have multiple trading strategies. So if you had wanted to play that game, one of the best ways, probably one of the most profitable ways for you to do it would have been to play an options move.

And you take your particular, instead of just taking your $160,000 and putting it into an index fund, then what I would have said is that if you want to bet on the direction of the market, bet on it with buying some options. And you can set out an options play where I think the market is going to come back by this amount, and then you at least would know what your downside is and what your upside is.

Now, that may not be perfect, but that's the kind of gamble, that's the kind of wager that I think would allow you to take advantage of your hunch and what your opinion is in a way that allows you to potentially increase your money but doesn't put it all at risk.

So maybe you would have taken $15,000 and you would have bought $15,000 worth of options. Remember that there's always multiple ways to trade it, and you can trade any market in any direction with a myriad of trading tools. You don't just have to buy in. The second thing I would say is you would have to say what is the risk to me if I can't do it.

So if I put in my $160,000 and the market had continued to fall, and so now your $160,000 was down to $120,000, and what would that have cost you? Would it have been something where it's not a big deal? Well, the answer is it depends on your cash flow.

So if you have a lot of cash flow, then you can easily take wagers like that, which is why I'm such a fan of cash flow. When you have a very highly profitable business or form of steady cash flow, maybe you have a high earned income, maybe you have businesses that are cash businesses, then you can afford to take bigger gambles with your investment dollars than you can if you're just living on your investments.

And so that would have been a really good scenario. If you had a high cash flow, then sure, you could take the gamble and it's not a big deal. So you may have to defer your investments a few months to make up the difference. No big deal if you have the cash flow.

So remember that you have to have the cash flow in order to take gambles like that. Now, if you didn't have the cash flow, if you're sitting there and you have no income, and that $160,000 represents to you not only something to live on for a period of months, maybe you're spending $3,000 of it a month to cover your living expenses while waiting to buy a commercial property, then you can't take the risk because you've already decided in advance, "My plan is to invest in a commercial property." You did that outside of a period of a time of fervor.

You did that outside of emotion. You did that outside of that scenario. And so I think you go forward with the plan. The last thing I would say is that at the end of the day, though, if you have a conviction and you say, "I'm sure this is the case.

I'm sure that this is going to happen in the market," I think there really is a time when you just ignore sometimes what's prudent and you follow your conviction. I've read enough biographies of people who were very successful financially, and it seems like a lot of times they had to come to a point in time where they simply said, "This is what I'm convinced is going to happen." And when I reflect on my own life, most of those times when I've said, "This is what I think is going to happen," I put my money behind it, it's paid off for me.

And so if you came and you said, "You know what? I understand the risks, but this is still the conviction that I am convinced this is what's going to happen," then my answer is go for it if you can afford the risk. But that's how I would think it through.

Yeah, I totally agree with what you laid out there, and it makes a lot of sense to me. I did not have a conviction that that was a good time to buy in March or April of this year. I have had that feeling before and didn't do anything, and in hindsight, it would have paid.

This time, I definitely felt the unease of not knowing how bad the virus was going to be yet, so I don't regret not making that play at that point. I'm just trying to decide if it's something I'm willing to do in the future, so I appreciate you framing that for me.

Here's how I think you can set yourself up. Number one, I think it comes down to prudent financial management. If you're sitting out in Texas and you've got a paid-for house—I hear the birds in the background, it sounds beautiful—but you've got a paid-for house, you've got a herd of your cows grazing out there that's part of your investment strategy, your family is debt-free, you've got very little financial risk, and you've got a business or a couple of businesses that are bringing in cash flow, then I think you can easily afford to take those kinds of risks and make some bets on something that you want to grow so that you can potentially grow your wealth much more quickly.

But on the other hand, if you were highly leveraged and you didn't have any wiggle room and you don't even have any scrawny cows, you've got no cows, you've got no food, you've got nothing, and you know that this is my family's life savings, and if I bet my family's life savings, we're going to be put out on the street, well, no, you can't do it.

Because it puts too much risk in your lifestyle. And I think this is one of the reasons why, in normal situations, the rich get richer and the poor get poorer, because the rich can afford to take a bet without it affecting their core scenario. So I like a lot the idea of simply me saying, "I've got my core, right?

I've got myself and those that I'm responsible for. But then I've got my play money, and over here in the play money, I know that that's the money that I can do it, and I'm going to be aggressive with that play money." I think that's a sensible strategy. Now, it doesn't matter – it all depends on where you're at, right?

If you came to me – I had a client of mine one time who was working a couple of highly profitable jobs, living in his car, and he was planning to start a company. And he was living in his car to save money, had saved a ton of money.

He had nobody that he was responsible for – no wife, no children. It was just him, and he was already living in his car as a lifestyle move. I encouraged him, "Go ahead." In that situation, what risk do you have? You don't have any risk, but that risk factor does change depending on our responsibilities that we take on through life.

So in my opinion, you protect your house against the stuff that you can't afford to lose. I'm not going to let something come and affect my marriage. I'm not going to let my kids go hungry. I'm not going to take a risk with our last dime if it causes stress in my household, etc.

But if I can establish that kind of stuff, and if I've got a good backup plan, I've got good employability, or I've got a good cash flow business, then financial risk – I'm not scared of it. Sure. Yeah, that makes a lot of sense. We've got two careers – my wife and I, relatively good income for the area that we live in, and pretty low expenses.

So we do have pretty strong cash flow. I guess this virus has been a pretty good indication that our jobs are fairly safe, because neither of us, thankfully, ever had any compensation cut or furloughs or anything. So I'll take to heart what you said, and I'll come up with a plan to be more aggressive if and when I feel that conviction.

Good. It definitely can pay off. And a couple of good wins in your life and your investment portfolio really can pay off and make a big, big difference. All right. Mauricio, welcome to Radical Personal Finance. How can I help you today, sir? Mauricio, you're up. Yes, Joshua. Can you hear me?

Sounds good. Go ahead. Okay. All right. So my questions are also related to real estate. I'm not very real estate savvy. I'm barely starting. I'm calling myself a real estate – a newbie real estate investor. My wife and I own three properties in California. Two of them are rentals, and one is our primary residence.

So I've learned about this strategy where you purchase a property every couple of years and kind of keep the previous ones as rentals. So that's kind of the intent, the strategy my wife and I have kind of negotiated among ourselves. Probably we'll consider doing that for the future. But I guess where my question goes by is as I'm acquiring more properties with the two that I currently have, I kind of feel safe, I guess, or okay with doing the whole management myself.

But the risk is going to go higher and higher and higher. So I'm curious. I've been told by my CPA that I should consider an LLC for this reason. But other people are telling me, "Make sure that you have enough insurance to cover – even consider an umbrella insurance for that.

And then you may consider an LLC." So my question is to LLC or not LLC? What would you say? So I'll answer that question, but I want to clarify one thing that you said. You said that I'm managing the properties myself, but I'm concerned that my risk is going higher.

Management is very – the risk of management is very different than the risk of ownership. So are you thinking about changing and hiring a property management company, or are you primarily thinking about your ownership? I probably will continue doing the management myself, but certainly I'll do the coordination of having a handyman go out there and do all that sort of stuff.

I guess the risk, what I say, is don't want to over-leverage. Kind of what you were also saying, the other listener. I don't want to over-leverage. So the risk to me is why it's increasing, basically, if I'm not managing things well. Okay. So now there's three things now that have come in, is the question of leverage.

So let's pull these out. Let's start with management. Number one, from a management perspective, I can't see how your managing the properties yourself measurably increases your risk. It's possible in a theoretical sense, but at the moment I don't see how managing the properties yourself increases your risk. And in fact, I would say that assuming you're a good manager, a good argument can make that it be made that it decreases your risk.

There is a number of properties that you can get beyond where you say, "This is just simply too many properties and now I don't want to manage my investments myself." But that number is certainly more than three or four. You know, John Schaub has no problem managing several dozen properties himself without a problem, and he's done it for many years.

But the management hassles will depend on whether or not, with the type of property that you buy. If you're buying single-family homes and you're renting to, you know, well, to good families, professional families, then your management work is going to be fairly low. It's not going to be particularly time-intensive.

You can set up professional payment systems. Everything can be fairly simple. On the other hand, if you have properties on the rough side of town where you've got to go and collect the rent on a weekly basis and you've got a shotgun underneath the front seat, that's a little bit more intensive from a management perspective.

And so the type of property that you have will make a big difference in terms of your overall management structure. But one of the most important things you can do to eliminate risk and to minimize risk in your real estate strategy is to manage your properties well, make sure that everything is properly done.

When litigation comes up, the litigation is generally going to need to be based upon some major fault. So if you're sued, it's going to need to be done because of some basic fault. Now, there are true stories where the thief breaks through, he's robbing the warehouse and he falls through the skylight while he's committing a crime.

He falls down and he then sues the owner of the warehouse because he fell through the skylight while committing a crime. It's a true story. And it's hard to understand sometimes why in those cases the thief actually has a case. It is true, but most of the things that you would face in litigation are much more genuine faults than that.

And so if you are a good landlord and you are properly managing your properties and they're safe, the wiring is up to code, so the fire danger is low, you've provided what your state's code requires you to provide, whether it's fire extinguishers or hurricane shutters or whatever it is.

If you've made sure that the properties are in good repair, if you've made sure that there aren't any significant dangers, there's not an old well sitting in the back corner that a child can fall into, those kinds of things, then you're going to be in good shape in terms of just simply reducing your liability.

Because you're reducing your liability because of good management. So you want to make sure that you do good management because that in and of itself will reduce your liability. That's separate from a conversation about an LLC and that's separate from a conversation about insurance. So let's move on now.

Without question, insurance is a good idea. And so that's a very personalized discussion that you'll have to have with the local insurance agent, but an insurance policy, especially an umbrella liability insurance policy, is always a good idea. When I was studying for my CFPA exam, my instructor said, "If you ever see a choice on your certified financial planner exam for umbrella liability insurance policy, always click that choice because an umbrella liability insurance policy is always a good idea." So I've never found a reason to avoid that.

In general, it's very, very true. And insurance is a fundamental part of any good asset protection plan. Now, what about an LLC? Is an LLC a good idea? Well, it's clearly a good idea. There's no question about that. But where it becomes difficult for a guy like me to give advice on it is it's a good idea but at what cost?

Asset protection planning is very difficult for me to talk about because the best plans are often not particularly livable. And so you have to always run the balance between livability and excellence of plan. If you wanted the best asset protection plan you could possibly take, you would take all of your money, you would set up a foreign trust, and you would leave the United States, you would move all your money to the Cook Islands to a bulletproof, multi-thousand dollar foreign trust.

You would leave the United States and you would go and you would live very safe and secure in another country where there wasn't the same litigation risk and have your money safely protected in your offshore trust. That financial plan, that asset protection plan really is pretty stinking bulletproof as far as I can tell from my reading.

As long as you're not in danger of being physically located in a place where a judge can put you in prison and say cough up the money that's in the foreign trust, that plan really is pretty much legit. It works. The problem is that the vast majority of people who want an asset protection plan don't want that asset protection plan.

Once you come off of that asset protection plan, you have to come back to where you are today and say, "What am I going to give up?" The first thing you might give up is to say, "I don't have $100 million to put in an offshore asset protection trust." What I'm trying to do is I'm trying to invest my money into these houses and make money.

That's why I'm doing it. I'm trying to become wealthy so I can worry about my assets to protect. The reason I use that example is now you look at the houses and you say, "Do I have a lot of money in them?" If you've got three houses and you have a net of $1.5 million of equity across those three houses, well, yes, it's a big deal.

But on the other hand, to protect that $1.5 million, but if you've got three houses and two of them are over leveraged and the other one you have barely $50,000 of equity, it's probably not worth it for you to go and start setting up LLCs and whatnot at this point because you don't have a lot of money to protect.

You first look and say, "How much money do I have to protect?" Then you look at the risks that you face. What are the risks that I face? Can an LLC protect me against those risks? Example, if you have an LLC, let's say you have rental property number one on Maple Street or I guess California would be what, Gold Street, Prospector Street, rental property number one on Prospector Street.

Now, rental property number one on Prospector Street has $200,000 worth of equity. Well, if you put that money, if you put that property into an LLC, what does that do? It may protect that property from claims that arise outside of the LLC. It may protect you from a guy that hits you on the street or you hit a guy on the street and he said, "I'm going to sue you," and he can't sue you because the property is sitting in an LLC and the $200,000 of equity is still sitting there.

But it won't protect you from claims that arise within that property. So if you have that property and it's in an LLC and you have $200,000 of equity in there and your tenant flips on the light switch in the kitchen and all of a sudden the kitchen burns down and destroys his stuff and maybe his dog dies or God forbid a person dies in a fire and you're found to be negligent because you hired some bird brain contractor, electrical guy who came by at night and didn't do the job right.

Well, now you're going to have a lawsuit against you and the $200,000 goes to him. So it's not as simple as saying an LLC protects you. Well, from what? What does the LLC protect you from? An LLC is a good idea because it segments the risk and so you can put each of your houses in an LLC systematically and that basically works like a watertight compartment on a ship or a fireproof door in a building where it blocks the risk from bleeding over one to another.

But you still need to look from a bigger perspective and try to understand how does this fit into the totality of my risk. The third thing you talked about is leverage. And so the leverage question is a whole separate risk. An LLC, if you're highly leveraged and you get yourself in a situation where you're going to lose the properties because you can't pay the mortgages, the LLC doesn't do anything for you.

And if the cost of establishing the LLC and maintaining the LLC is the – it could be the cost that puts you into not being able to pay your properties, your mortgages, especially in California where the cost of maintaining any business entity is through the roof. So that's how you have to think about it.

You have to think about it holistically. I know – I wish I could give you a better answer, but my answer is you have to think about it holistically and say, "Where are my risks? Where is my money? Do I need this or not?" And I don't know – at the end of the day, I don't know the actual answer of do I need this or not.

I think it's a value – it's a subject that each person will have to look at and say, "Do I feel like my risk is significant enough for me to need this? And what's the cost for me to do these strategies?" What I would recommend is I think that Clint Coon's book called Asset Protection for Real Estate Investors is probably a good starting point on this.

I also like Jay Atkinson's book on asset protection. Clint Coon's book is short, it's light, and it's more or less an informative infomercial for his firm. But if you want a good discussion of asset protection that's more comprehensive than I think Jay Atkinson's book called Asset Protection, Concepts and Strategies for Protecting Your Wealth is a good solution.

The ABA Consumer Guide to Asset Protection is also a good kind of intro by Jeffrey Mattson. And it gives you an idea to these strategies. So if you read those two or three books, you would probably be better equipped for a good meeting with a local attorney to see what you need in your situation.

But you're going to have to look at it holistically and you're going to have to balance the cost of setting up the LLC, setting up a land trust, the cost of setting up those things and maintaining them with the actual benefit of having them and how wieldable they are.

You'll also need to look, if you're doing the Nomad Investing Strategy, which is the name for what you're doing, of buying a house, living in it, moving, which is a strategy I love. I'm a huge fan of that. I would recommend every listener, if you haven't read it, go and get, what's his name, James Orr from Colorado, his free book that he publishes on the Nomad Investing Strategy.

I think it's a wonderful strategy to do. But you'll also need to be careful because in that strategy, you're financing those strategies with personal mortgages. And so you'll need to read those mortgages and see if there are any limitations or stipulations for you that would limit the types of entities that you could put the property into.

But that's my answer, Mauricio. Thank you. Thank you. That's a pretty great answer. I guess based on the information that you provided me, I'm kind of leaning towards stepping away from the LLC. Certainly, the umbrella policy, as you said, it's one of those answers or checkboxes that you should always check.

So I've been given that suggestion and I've talked with my insurance agent already and they provided me quotes for that. So that's probably something where I'm going to lean towards more. And you gave me good, good books to read or at least maybe to listen. I do listen to a lot of books on Audible, so most likely I'm going to be looking out for these books.

Can I ask you another question somewhat related to maybe real estate or mortgage related? Yeah, quickly. Let me make one comment before you do. Well, first, you're probably not going to find those on Audible. That's not the kind of book that Audible produces in an audio form. But what I would say is the third thing, in addition to those two things you just said, which are true, there's no reason not to have the umbrella policy, etc.

But the third thing is at this stage of your investment career, I would be equity stripping the properties. So I wouldn't keep a lot of equity in any of the rental properties until I've built the full size of the portfolio. And then I would think about the most effective way to protect the equity going forward.

So one of the safest things that you can do is just keep your – as long as you can keep them – keep the mortgages paid, right? You got to be careful with what you sign up for. But I would keep the properties stripped of all their equity, keep the equity available for the down payments on the new properties, and also so that you can protect the equity.

And even to the point where the best thing that you can do is protect the equity in your 401(k) to the extent that you can, because that's going to be your lowest hanging asset protection fruit, is make sure that you're funding your 401(k)s each year, because that will be the safest money that you can have from an asset protection standpoint.

Okay, and that's kind of where my next question is going towards, the equity section. So the question real quick is basically, I've considered the velocity banking strategy. I've done it before. I had to close it because I actually did a – changed that strategy for some reason to a actual home equity loan to basically fund our current primary residence.

So I stripped off equity from our previous home, made it a rental, and then bought this new home. Now I'm kind of going back to that strategy, velocity banking, using a HELOC for that. But instead of just going with the second lien position HELOC or loan, I'm looking for the first lien position HELOC.

And the option I'm looking out there right now is something that is called the all-in-one loan option. And I've heard pretty good things about those from the point that I can use the equity at any time. I can actually pay off my mortgage much sooner. And I'm kind of undecisive if I go that route and if I should do it for my rental or should I do it for my current residence.

I don't have enough insight from not having read the loan documents to give any useful commentary on that question. I would simply say read the loan documents. And when you read the loan documents, think about what benefits does this get me and then what are the risks. So what are the risks in this particular scenario?

The biggest risks to be aware of with a home equity strategy, a HELOC strategy, is that the amount of borrowable money is generally not guaranteed. And so read through the document very carefully and then read it with a highlighter and a red pen saying what can go wrong. Imagine the very worst situation that you could possibly be in financially and then think about the leverage that that mortgage lender would have over you with that course of action as compared to other courses of action.

And lay it out on paper and then you'll be able to make the best decision. Okay. Okay. Sounds good. Thank you much for the information Joshua. My pleasure. Thank you for calling in. All right. I had one more question here from a listener who was actually a couple of questions, but I'll just pick one of them here that I'll talk about today.

And he asked it two weeks in a row and so I want to get to it. Or he asks, he says, can you discuss concealed carry insurance and your general thoughts related to it? So concealed carry insurance and your general thoughts related to it. Yes, I'll give some general thoughts.

And so by way of background, if you are unfamiliar with concealed carry insurance, the basic idea, this is sold by a number of different organizations, primarily in the United States. And the basic concept of this type of product is if you are involved in a shooting, right, you carry a gun on a daily basis.

You wind up finding yourself in a situation where you're involved in a shooting, then the concealed carry insurance policies will give you some benefits, a number of different benefits to help you in the course of your defense in court in that particular scenario. And there are a number of different companies that offer these and they're going to have different benefits across the board of competitive benefits.

So let's begin with a basic discussion of insurance. I like insurance. Insurance makes me feel good. And it seems to me that there are some people who are psychologically or philosophically opposed to insurance and some people that are psychologically and philosophically in favor of insurance. I've often said that I don't like paying insurance, kind of like anybody else, but sometimes I overstate that.

Where really there have been many times where I just feel better having the insurance. I love having life insurance. It makes me feel really good when I go to sleep at night or when I'm on an airplane or when I'm in a situation where I'm facing some kind of physical danger.

It makes me feel really good knowing that if I die and I can't complete all of my personal financial goals for the well-being of my family, that those things are automatically completed for me. And so I love that. I think it's wonderful. And insurance is a wonderful solution. If you go back and you think about how many people's lives have been saved by something as simple as life insurance, it's awesome.

Many other kinds of insurance as well. I remember when I bought my wife's engagement ring and I had a custom ring made for her and it was expensive. And we were going to go on our honeymoon to some places where you really shouldn't take fancy jewelry. We went to the Dominican Republic and to Haiti on our honeymoon.

And so I bought insurance on the ring and I could insure it. And so I bought insurance on the ring. And basically it was a fairly simple premium for me to buy this insurance policy and say, "Hey, I'm in this situation where if we get robbed and this ring disappears on our honeymoon, I'd like to not be smarting from the way too much money that I just spent on this custom made engagement and wedding ring." And throughout life there have been many times like that.

I've been grateful many times for insurance policies. And one of the benefits that I see of insurance policies is even in times when they're not strictly necessary, they feel really, really good. A couple weeks ago I shared with you the story. I'll give you the bare details. But I had a truck stolen last year, a week before I was planning to leave on my family's year and a half – it was going to be a long-term full-time RV trip.

And so I'd had this truck. I'd gotten it all fixed up. But when I was sitting down looking at the premium cost on it, I had plenty of cash. I could replace the truck if anything happened to it. But I chose not to just get the liability coverage only because I thought that the cost for comprehensive and collision was very, very reasonable.

Well, down the road it wound up working out tremendously in my favor. And when the truck got stolen, I was much more relaxed about the truck getting stolen because I knew I had full coverage on it. I knew I was covered for theft of the truck. So even though I was in this very difficult situation, one week before leaving on a trip and my tow vehicle gets stolen, I felt better.

And it allowed me to be much more relaxed about the whole scenario. I could take the money from savings instead of sitting around and worrying about it and having to buy two trucks. I could just take the money that I had in savings. I went and bought another truck.

And then I knew in time I would get the insurance payment. And it all worked out fine. And so I think with insurance, a lot of times we're too harsh on insurance. And we're often harsh on it because we say, "Oh, the insurance agent is selling the insurance," and "The insurance agent is working too hard." But insurance, even insurance that's not strictly necessary from a professional financial planner's perspective, has been a big blessing to a lot of people.

I'll give you another example. When I was a financial advisor, I would be the kind of guy who would recommend against short-term disability insurance policies, the kind of thing where if you're out of work for three weeks, it pays you money. And the reason is that the premiums for those are fairly high.

And as a financial advisor, I would say, "It should be easy for you to save an emergency fund. And with an emergency fund, you can easily cover a couple of months' worth of work." Now, that's technically true, right? That's technically true. But in reality, there are a lot of people who never save an emergency fund.

There are a lot of people who save an emergency fund, and then they have an emergency, and then they have another emergency. And so even insurance products that I wouldn't generally be drawn to, like a short-term disability insurance policy, make a big, big difference. And so I would put this particular type of insurance into that realm of discussion.

I guess another example would be something like pet insurance, right? Is pet insurance necessary? Well, used to be I would have poo-pooed pet insurance, and I would have said, "Well, if you can't afford to cover the pet, you can't afford to have the pet." And is that true? I think that's probably true.

But then I had a dog that had all kinds of crazy medical expenses, and I spent so much money on it. And I never in my life imagined that I would spend all the money on it. I always imagined that if I had a dog that had medical expenses that were that big, that I would simply no longer have that dog, right?

I would put that dog to sleep, and I would say, "Honey, we're going to get a different dog." But then I wound up in the actual situation, and I was sitting there saying, "We love this dog. I have the money. It's not like I'm broke. I can do this." And unfortunately, the medical expenses came trickling along.

So it was $700 here and $1,100 there. It was never one big bill of, "Okay, it's going to be 10 grand." I wouldn't have spent 10 grand or 5 grand if it was just a one-time bill, but it quickly got up to 5 grand, and here I am with this dog.

And I'm thinking, "Was I a dumb-dumb for not buying pet insurance?" And it made me just have the experience of saying, "Maybe I was wrong. Maybe I should have bought pet insurance, even though I technically didn't need it," so to speak. So I put this kind of insurance in that factor.

I can't imagine anybody that I would say to where I would say, "You have to have it. You need this insurance." I can, however, imagine a whole lot of people that I would say, "This is going to make you feel better to have this insurance. You can afford it.

It's not going to cause you to not be able to accomplish any other financial goals. It doesn't cost that much. In the unlikely event that you need it, it could be very, very valuable to you." And so I think this is one of those scenarios where concealed carry insurance, which covers medical bills – sorry, legal bills and gives you access to legal defense at a reduced scenario, I think can really make a big difference to a lot of people.

The next thing I would say is as with any insurance policy, what we want to start with is we want to start by thinking, "What can we do to minimize the risk regardless of what happens with the insurance?" You might have car insurance, but you might realize that it's prudent to be a careful driver, and you don't just become a reckless driver just because you have car insurance.

That's silly. You might have fire insurance, but you realize it's prudent to have a fire safety plan and to make sure that your home is fire safe. You don't just bank on the fact that I've got fire insurance. And so that's very, very important. I think that any gun owner needs to think very, very carefully about this and make sure that they understand what they're dealing with.

So part of that would be, number one, knowing what the laws are, understanding what the laws in your scenario are. For example, let's say that you've got a crowd of protesters that has decided to pass through your private neighborhood and put yourself in a situation – and tramp through your front door – front yard shouting slogans while you are – while you're there in the house.

That kind of scenario, obviously, extremely unlikely, but it does happen. That kind of scenario stinks, right? You live in a private neighborhood with a gate in it because you want to be protected from that. And I think that you have every right to walk outside your house with any rifle that you want and any handgun that you want.

You have every right to do that. But I think that's stupid. I think that's unnecessary and stupid. And so if I'm in a situation where there's crowds of protesters coming through my neighborhood and I'm concerned about them, I'm going to be inside my house. Every light is going to be off.

I'm going to be behind cover of some kind. I'm going to create some kind of cover, right? I'm going to be behind a bookcase and looking down through a window, and I'm going to try to just be very quiet, making sure that people go by. And I'm going to do that for many reasons.

Number one, I want to live. Number two, if I'm actually in a scenario where there is physical danger, I want every possible tactical advantage on my side. I don't want to be standing out on the front porch totally exposed to the – without no body armor or anything. I want to be inside my house.

I want to be wearing body armor. I want to be wearing ear protection. I want to be completely – I want to have my doors locked. I want the alarm armed. And I want to be behind cover. I want, again, a bookcase full of books or anything thick and heavy between me so that if something happens, that I'm going to be safe and my family is going to be safe.

That's just the basic kind of 101 approach. And then in addition to that, that's going to make a big, big difference to my legal case to the extent that I have one ever in the future. I can deal with broken windows. I can deal with trampled flowers. I can deal with messed up grass.

But I'm not going to put myself in a situation where I'm exposed and even have legal risk because – legal and physical risk by being out front of my house, standing on my porch, running the risk of being shot. That's a crazy thing to do, to confront a crowd of people when any one of those people on any side could easily be armed and could easily shoot you.

It's just – it's an insane risk. And I use that example because I think it brings into light that there are risks that are true, physical risks. And then there are risks in court. And your biggest risks are generally going to be the risks in court. And so from the very instant that you strap on a gun, the very instant that you put a gun in your house, you need to understand what those risks are, understand what the law is, and make sure you have in place everything that you're going to need to succeed in court in the future if you wind up in that situation.

I think this kind of thinking is especially important in places where the laws are very unfriendly towards your rights of self-protection. You may have a state that protects the castle doctrine, which I think every state and every country should. That helps you a little bit. But even still, you still want to make sure that there's no mistake made.

You want to make sure that you thought through because, God forbid, you wind up shooting somebody, an innocent person, which means – we'll get to some of the details in a moment. But if you live in a place that is far less friendly to the – your right to defend yourself and protect your family, then I say plan accordingly.

A few years ago, I read a book by a Canadian guy. It was talking about home invasion. He was writing from a Canadian perspective about how to protect yourself from home invasion. What was fascinating to me most about that particular book was his thinking about the legal case that you needed to make.

So a number of things that he encouraged people to do, especially from a Canadian perspective, was he had people – you would have your external shell of your house properly blocked, bolted, alarmed, et cetera. But he had every – he wanted all of his clients to put – to install into their home an internal security door, probably a metal door, meaning a graded metal wrought iron security door.

And the idea behind that was with a metal wrought iron security door, you would have an additional place to retreat to within your home, which would give you even more proof in court that if somebody – that if you shot somebody, that you were genuinely dealing with somebody who was intent upon taking your life, that it wasn't just an accidental misunderstanding.

But this person has broken through basically two different barriers. They broke into front door, and then you had retreated into your bedroom. You had closed your security door. You had a nonlethal, if possible. You had pepper spray or you had a smoke bomb or something like that to deter them.

You had called 911. You told them, "Stay away. I have a gun." And yet they still broke through your secondary security door. And that way, if you're standing in court, you're demonstrating very, very clear intent to kill, which is what you needed to do in that situation. And I thought it was very, very good because if you're standing in court, you want to be able to demonstrate the prudence of your actions, even just to yourself, right?

If I ever have to kill somebody, I don't ever want to have any question in my mind, "Was this actually necessary? Could it have been avoided?" To have that on your conscience is a heavy, heavy thing. And so for your own benefit, think it through and put a plan in place that protects yourself from those extreme scenarios.

Think through and educate yourself on the legal risks. And I think when you do that, you'll very, very quickly come to the point where you realize it's within your best interest to simply avoid anything that can happen. I don't want to live in an unsafe neighborhood where I'm genuinely worried about a home invasion and then have insurance that would protect me if I wind up shooting someone.

I want to just simply move to a safe neighborhood where I'm not genuinely worried about a home invasion. I'll still have a gun, certainly, no question about that. I'll still protect it because it's possible. But if you wind up thinking that you might need this stuff, then that's probably a bigger problem.

Similar things with out and about. I've carried a gun for years. I've never in my life been in a situation where I was actually concerned and where I actually felt like I needed it. And if I ever found myself in a situation where I actually felt like I need this concealed firearm that I have on my person, then that's a good sign to me that that's a place I shouldn't be.

And I'm going to ask myself, "How did I end up here? Why am I here at this moment?" Because if I am in a place where I think I need one, then that's a good sign to me that I better get out and get somewhere else. Better to stand up and leave the table and go to somewhere else or go to a different neighborhood, whatever your concern is specifically, rather than to actually face the difficulty, the potential loss of life, either of your family or somebody else in that scenario.

So do all that stuff before you wind up buying insurance. Make sure you've educated yourself. If you haven't read Masad Ayyub's book, I think that would be a good thing to do. Any gun owner should read Masad Ayyub's book. Gabe Suarez gave a course, I don't think he gives it anymore, called Killing Within the Law.

Those kinds of things are important to be aware of. Do all the little stuff that you know of. For example, if I'm going to have a carry gun or a gun in my home that's going to be used for self-defense, then I think very carefully about what would that gun look like in evidence in front of a jury.

For years I carried a .38 revolver because it's just such a... And one of the tips I liked that I read in the Arrest Proof Yourself guy's book was carrying a black .38 revolver, meaning just instead of a shiny silver one. Because a .38 revolver looks like an old-fashioned gun.

In the vast majority of circumstances, it's hard to imagine needing more than five shots of .38. But I would carry it with just standard self-defense loads. No hand loads. You want to avoid anything like hand loads that would wind up with a jury. A standard gun, the reason for a black gun was that if you pull your gun at night and you pull it accidentally, you pull it without need, you wind up...

Then there's a lot fewer people that can threaten you with having brandished a gun. It'll fit in better at night. Things like that make sense to me. And so that limits your risk. With the shotgun that I keep in my home, I don't personally use a tactical shotgun with all kinds of stuff mounted on it.

I have a Woodstock Remington 870 that looks like just a standard hunting gun. And my reason for it is I'm not actually worried about it, but if I shoot somebody with it, I want it to look like a bird hunting rifle, not like some cool tactical thing that Josh got a chip on his shoulder and he was out to get someone that night.

So think through that stuff and position yourself in the very best way possible to protect yourself. And then think through how to even protect yourself against the worst case. So for example, if you're going to have a gun in your home, make sure of course that you have a flashlight next to it.

Do you have hearing protection next to it? Do you have a protocol? So many people have been shot accidentally. You've got to make sure you plan that stuff. So educate yourself, think it through, protect yourself, and be thoughtful about the legal case because the legal case can sink you.

Now, if all that stuff is done and you want insurance, go for it. I don't see any downside to it. If you can afford it and you feel like, "You know what? This makes sense. It's going to cost me $15 a month. They're going to give me $500,000 of coverage for civil defense, $50,000 of coverage for criminal defense, $5,000 for a bail amount, lost wages compensation," just looking at some of the policies that are here.

"Oh, this one's $11. There's no limit for civil defense, no limit for criminal defense, etc." Okay, great. I think it works fine to go ahead and have it if that fits in your scenario. But make sure you do all the other stuff first and then add the insurance on top.

I guess I would repeat in closing what I said earlier. Don't do things that are going to bring risk to yourself or notoriety to yourself. Don't go to protests. Don't open carry at protests. If you are in a scenario where you're in fear of your life, which is the only reason you have to actually shoot somebody, it's the only moral reason.

You cannot shoot somebody simply over fears of property. It's only in fear of your life. If you are in a situation where you're in fear of your life, make sure that you are in a tactically superior situation and don't take any risks. You don't want to be out in the middle of a street somewhere or in your lawn.

You don't want to be in one of those stupid places with no body armor, totally exposed, nobody around you, and a crowd of enraged people with the adrenaline of crowd dynamics thinking they can get you. Avoid that. That is a stupid place to ever be. Don't ever be in one of those situations.

If you need to protect your life, if your life or your family, you want to be in a secure situation. You want them to be in a safe room in the back of your house. You want to be in your house with the lights off. You want to be behind cover.

You want to be properly protected. You want to have your perimeter alarms on. You want to have the most tactically superior situation you can possibly be in. And that will protect you legally, but more importantly, it will protect you, your actual life. And life is too precious to risk on some foolish exposure, foolish place to be.

Don't do that. That is not a good move by any means. We live in a world in what is morally right and what is legally right only sometimes overlap. And maybe this is my age talking, right? There's a reason they say they send young boys and old men to fight wars, and I'm neither of those things.

But your family needs you. And if the entire goal is to protect your family, right, and to protect yourself, if you fail that battle legally, you fail the whole thing. What good do you do to your family if you're alive and they're alive, but you're locked up in prison somewhere?

You don't do any good. And so surviving physically and surviving legally has to be a major part of your thinking and has to be the core part of what you're doing. So don't be stupid and don't bring exposure to yourself or to those that you love. Thank you for listening to today's Friday show.

That's it for today's show. If you'd like to join me next week, I would love for you to do that. Go to patreon.com/radicalpersonalfinance. Sign up to support the show there and you'll gain access to these calls and you can call me up to talk about anything you want. Thank you for listening.

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