Struggling with your electric bill? Get an energy assist from SDG&E and save. You may qualify for an 18% discount. Visit sdge.com/fera to find out more. Today on Radical Personal Finance live Q&A. (upbeat music) (upbeat music) 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.

My name is Joshua Sheets. Welcome to Radical Personal Finance, a live Q&A show. These are the shows that work like live call-in talk radio, you call in, we chat. And of course I release it to the podcast feed in usually about 30 minutes or so. So it's not quite live for you, but mostly.

(upbeat music) These are my personal favorite shows of the week because I don't have to choose the topics. I don't have to think in advance. I just show up to a phone line and you get to call in and talk about anything you wanna talk about. Ask any question you want to, bring up any topic you wanna talk to, and we can chat about anything that's on your mind.

I do my best. If I can't help you, I try to point you in the right direction, and you can judge for yourself the results. If you would like to join access to these Friday Q&A shows, you can do so by joining us on Patreon. Go to Patreon and search for Radical Personal Finance.

Sign up to support the show there on Patreon, and I will be happy to talk to you on next week's Q&A. Just helps me to meter the access a little bit. If I open it up to the public without screening it with Patreon, then I would have probably 30, 40, 50 callers every show.

That's usually how it's been whenever I've done something public. So by metering it behind Patreon, it allows me to have a manageable number of callers. At the moment, we've got five sitting in line. We'll see who else joins here in the next few minutes. To begin with today, let's see.

We will go to Andrew in Texas. Andrew, welcome to the show. How can I serve you today, sir? Andrew in Texas. - Thank you. Thank you for taking my call. A question about home equity line of credit. And I got some of the answer in your recent podcast on ratios, and really found that valuable.

But yeah, I'm finding that with real estate values that have kind of climbed over the last year or two a lot, I've got suddenly a lot of home equity, and I've been getting bolder through your podcast and different things about the idea of taking risk with that money, putting that capital or putting that equity to use in a better way.

And so I got an email from my credit union, says, "Hey, look how big it is "to take out a home equity line of credit." And so I've been approved for $240,000 in that. And so I'm looking to take a start, not with all of it, but maybe 100,000 and put that to work, probably with the guys who are managing my retirement accounts, basically in the stock market, they've been having very productive results.

And so just looking for any kind of reassurance or further advice on any mistakes that might come up on that. The reason I like that kind of thing is, I don't really have in my income budget, the money to make new payments from that loan. But if I take out 110,000 and put 10,000 in savings and just make payments from that for a while, I give some time for the 100,000 to get up and going.

And I believe the income and the growth from that will eventually pay for those payments. - How much do you earn per year from your job? - You might have 120. - And currently, without having taken out any home equity loan, what is the current mortgage balance on the house?

- 295. - 295, and if you sold the house, about how much would it sell for? - 650,000. - And other than this, do you have any other debt? - No. - Okay, and how old are you? - 55. - 55, so right now, you're thinking, if I go ahead and take out a home equity line of credit on the house, and let's say I take $100,000 out of the equity in my house, and I put that money invested in the stock market with my investment management guys, then I could probably make a higher return in the stock market than I can on my home equity line of credit.

Is that what you're thinking? - Absolutely, yeah. - Okay. Well, I'm not-- - And I'm also open to other, I'm also open to a business, or I like having that capital available for any other kind of investment opportunity that comes along. - Yeah, how much money do you have currently in savings?

Is this not in retirement accounts? - No, 15,000. - And how much money do you have in retirement accounts? - 180. - Okay, so why do you own such an expensive house, unless you have other investment assets that you haven't told me about, but only have about $180,000 in retirement accounts?

- Well, it's grown in value. I was able to get into it fairly cheaply. - How much did you pay for it? - 12 years ago, 392. - Great, nice. And do you have, are you married? Do you have children? - Yes, yeah, I have college-age children, and I'm married.

- Could you, have you and your wife talked about changing houses at this point in time? If you have college-age children, have you talked about changing, selling this house and going somewhere else? - A little bit, a little bit, but we're pretty connected to family and community. So, we could move to a smaller house in the neighborhood still, but we love our house.

And like I say, it's grown in value considerably over the last five years. - Okay, well, obviously, I don't think that what you're talking about here, you're thinking about some conservative moves, you're not trying to get every dollar out of it, you're trying to figure out what to do here.

But let's talk through some of the options. The first thing is, to me, it seems like you've got an expensive house compared to your income. And just to clarify, your income is 120, is your household income higher than that? - A little bit. My wife works some, she has her own business, but that income's very uneven, and not a lot when it is on.

- So, it just feels like kind of an expensive house for you to have with $120,000 income and with a little under $200,000 in retirement assets. I think that ratio is a little bit out of whack. It might be, and it might have been, the best solution. There are some times, especially with children, with young children, where we make a decision that's a lifestyle decision, even if it's not the optimal financial decision.

I think it makes a lot of sense for parents to spend and have a nicer house, a bigger house, when their children are younger, because they'll use the house. And so, in a situation like mine, I work from home, my wife works from home, where children are at home, we homeschool, and so I would be happy to give advice to someone like me and say, you should have a nicer house than maybe somebody who doesn't spend much time in their house.

But, at the end of the day, the house is still not primarily a moneymaker. It's primarily a consumption item. And so, you want your ratios to be better to where the amount of money that you spend on house is not so much compared to the amount of money that's in investments.

Now, that's what you're trying to do by considering taking out a home equity line of credit. And I'm not 100% opposed to it, but I wanna point out that you could do it in a couple ways. So, you should first consider the actual lifestyle of what you need where you live there in Texas right now.

In most parts of Texas, a $650,000 house is a very nice house. And that may have been a perfect situation when you had teenagers in the home, when you could really use the house as a social center. For me, this is important. I want my house to be a house that with my children's friends is used.

I want our house to be a social hub. I want it to have the game room and the pool and the things that make it an attractive place for my children's friends to hang out so that I can be involved in that part of their life. I don't want them going away to the fancy house three miles over all the time instead of us, because they're ashamed that we live in some shack where they don't have room to entertain their friends.

But if your children are college age, that might be changing. Not saying do anything drastic, but reconsider it. Because a couple things line up here to make my instinct go that the first idea might be to sell the house. Number one, you got a lot of gain. Let's say you bought it for 400 and it's worth 650.

If you could sell it for 650, I'm ignoring here sales expenses, you could clear $250,000 tax-free, assuming that you qualify for the exclusion of capital gain for a personal residence. That would be great. Because if you could sell it and get some tax-free gain, now you could go ahead and invest that money into the market or any other investment that you wanted to invest it into, and you're not paying any kind of interest payment on it.

You would clear it tax-free, you can go and invest the money, go ahead and put that $250,000 into other investment assets. Could be fine if it's in stocks, could be fine if it's in your own business, could be fine if it's in a rental house, something like that. You could also possibly just go ahead and streamline your house.

You probably a little bit young to really be looking for that, but I know that when watching my parents, when my parents sold their big house at a big five bedroom house, I think six bedrooms, something like that, big old house that they built for us to live in.

But then once their parents died and once my siblings and I generally all moved out, then moving into a condo for them was a wonderful solution. It really brought a better lifestyle to them. And so talk about those lifestyle considerations with your wife and see, because it can work out financially in your best interest as well.

You could do this same thing and do it more efficiently if you did that. So if you sold the house, and let's say you bought something for 300,000, put down a minimal down payment, 10 or 20% down payment, just fine instead of the traditional mortgage, then you could go ahead and invest the money and have a safer position all the way through.

So my instinct is that if you and your wife were willing to move, that that would probably be a better financial move. I'm not-- - I think-- - Go ahead. - I think our expenses related to the house are really more like a $400,000 house. And so mortgage and that kind of stuff, except for account of property taxes, but that's a fairly minor piece of it.

So I get it, doing it without debt, and I'm not crazy about the debt, but you've opened up a new world for me to consider that type of thing as far as kind of a equity stripping kind of thing to have investment capital. And so I'd like to hear kind of more on the investment side.

- Okay. So let me pivot there, but before I do, I wanna talk about equity stripping for a moment. The key thing here that stands out to me is that you live in the state of Texas. So I'm a lot less enthusiastic about equity stripping for somebody who lives in Texas or who lives in Florida, where you have good homestead exemption laws as compared to equity stripping for somebody who lives in Georgia.

I don't think, and again, there's always value in having a paid off house, especially at a younger phase of life, but I don't get real excited about a guy in Georgia having a $650,000 paid off house. But in Texas, you have to bring into that, the fact that, hey, this equity that's in my house is protected by favorable creditor laws.

And so for a Texas resident or a Florida resident or another state that has favorable homestead exemption laws, I'm more excited now about having the home equity, which doesn't make it an immediate slam dunk for me to say, strip all the equity out and do something else with it.

But if you did wanna do it, I would say what you need is you need a very compelling story of how you're going to invest the money more effectively. I'm not, depending on the interest rate of, depending on the interest rate of the house and depending on what you're invested in, I think in theory, it can work for people to invest in stocks versus paying, putting down a mortgage.

So the argument goes like this. If a financial advisor is giving advice to somebody who says, I have an extra $2,000 per month, should I put the money into the stock market or should I pay extra on a mortgage? The numerically correct answer, given our past experience over the last 80 years or whatever is going to be that you'll come out ahead by putting the money into the stock market versus paying off the mortgage early.

So that's generally the best answer. Mathematically, whatever returns a higher investment is mathematically superior. So if you're borrowing money on a mortgage at 3%, and you're investing it at say, 7% net of taxes and fees and expenses on an investment, you're going to come out ahead by investing the money.

And that applies whether you have extra money and you are trying to, should I pay extra on the mortgage or should I put money in the stock market? It applies there. And mathematically, it's no different if you're trying to say about, should I borrow the money out of my house and go ahead and put the money into the stock market?

Mathematically, it's the same. Now psychologically, it can be a little bit different. You always hear, Dave Ramsey, for example, if somebody calls into his show and says, Dave, should I borrow money? Should I put my extra money in the stock market and put money in the mortgage? He'll always flip it, which I think is a valuable question.

He'll say, if you had a paid off house, would you borrow money on it to put it in the market? And often, the answer to his question is often no, because we sense some kind of psychological certainty of having a paid off house. And I think that's valid and we should consider that.

I personally would be slow to do what you're proposing. I would be slow to put this into a mainstream investment, stock investment, especially one, I would be slow to do that. I would be quick to do it into real estate where I had a higher potential rate of return for my involvement, and I would be quick to do it into a business, but I would be slow to do it into stocks.

But I think that-- - I can tell you about the stocks. A normal kind of index fund or something, I would absolutely agree with you. But I've had my money with some guys for the last nine months or so, and I've tracked their results and stuff for a lot longer than that, who are much more actively managing things than that, and have been getting 30, 40% annual returns for the last couple of years.

- Last couple of years or last nine months? - Well, they've certainly had it in the last nine months, and they beat the market before that, and avoided most of the big down bear markets. So I feel like that opportunity is largely what's motivating this, because otherwise I wouldn't know exactly where to put the money right now.

- Are they with a local financial advisory firm there in your area? - Yes. - What are their minimums for you to bring money to them? - 50,000. - Okay. I'm very skeptical. And what I'll tell you is that I can't answer, this is a question I think where you need to sit down with someone, either privately and go through more details, and kind of really look hard at this.

And I think that this would be good probably to engage somebody in your area locally, who can help you with your scrutiny and with your due diligence. So let me just kind of see what I say, and I'll point out some of the red flags, and then you can consider what's best to do.

So to reiterate, I'm not opposed to taking money from a home equity and investing it into something that has a higher chance of return. I don't love the idea of adding more debt on like this, and I think that you own too much house. If you want to build wealth, I don't think that you should start by putting on more debt onto the house.

I think you should start by saying, could we buy another house in the neighborhood, you know, one that's $400,000 instead of 650, and go ahead and take our tax-free gain. Now, that's obviously a personal decision that you and your wife would need to think about, whether that fits your lifestyle.

And I'm not saying you have to, right? You're not broke, you don't have to do it. But I think that that would be my preferred solution to go ahead, harvest some of that tax-free gain, downsize the house, buy a smaller house, perhaps one that you can force some more appreciation into, and live, kind of go ahead and downsize to a simpler one, and free up the cash.

I think you have too much house if you really want to build wealth compared to your income and your assets at this stage of life. Now, if you proceed forward with this plan, I don't think it's completely wrong. I'm skeptical of these guys. Nine months is not impressive to me.

Almost every year, lots of people beat the market every single year. A local firm is not particularly impressive to me. I believe personally, I am not a strong, efficient market hypothesis aficionado. I believe that there are people who beat the market consistently over time. The problem is that most, I've never found someone who's gonna be open to somebody with a $50,000 investment to do that.

Is it possible that they're out there? Is it a new firm where they have a really smart financial advisor and they are able to do it? It's possible, right? I don't like it when people make blanket statements. It's possible that these are some smart guys who've got a good strategy and they're just getting started, et cetera, and you may be able to get in today with $50,000, whereas their minimums, three years from now are gonna be a million bucks.

I'm deeply skeptical though, because almost anybody can beat a market over nine months. The stock market has been up for the last nine months. How much they beat it by, I don't know, right? Every strategy works cyclically. So I've spent too much of my career sitting down and showing people charts about why a diversified portfolio is the solution because it, a diversified portfolio is a solution because look, this wins this year, this market, this segment wins this year, et cetera.

And so I'm not impressed with nine months, no matter what the returns are, and I'm not impressed with guys that have a $50,000 minimum, and yet you're convinced that they're gonna beat the market. So what I'd say is go slow, and I think you need to engage somebody local who can go through all the numbers and take some more time to think about kind of the full situation before you make this particular decision.

Fair enough? - Yep. - All right, cool. Keep me in the loop though as things develop. I'd love to hear more from you. All right, we'll move on to, looks like it's gonna be Chris in California. Chris, welcome to the show. How can I serve you today, sir? - Hi, Joshua, thank you so much for taking my call.

So kind of in the spirit of your show, I have two questions about, I guess, sort of getting my data right. The first one is, so based on a personal experience, I'm starting a dental facilitator service for a holistic dental group in Costa Rica, and I was just curious if you had any thoughts, maybe sort of starting that, if there's any, I don't know, tax sort of snags that I'm not, maybe should be aware of going into it, or just wanted to get your general thought on the idea.

- You're living in the United States? - I am. - And you are seeking to establish, basically, a marketing operation to encourage dental tourism to Costa Rica, is that right? - Yes. - So you've worked out, you found some local dentists in Costa Rica that you think you can refer business to, you'll market it to US Americans primarily, and you'll say, look, if you'll get on an airplane and fly to Costa Rica, you'll be able to get your dental services, very high quality at a third of the price, plus a vacation to Costa Rica to boot, is that right?

- You got it, yeah, and it's with this one particular dental group that I actually went and experienced personally, I had a, yeah. - Great, great, okay, so from a tax perspective, if you are living in the United States, there is no way for you to reduce your taxes on this type of operation.

For the extent that you are living in the United States yourself, you won't be able to do this in a tax-efficient way. You're going to be taxed just like any other business, and the fact that you have a referral relationship to send people to Costa Rica isn't going to help.

Now, if you are willing to move from the United States, and possibly even move to Costa Rica, then yes, you can do this business in a more tax-favorable way, but that's gonna be a lifestyle decision as to whether you're willing to move or not. - Okay, got it. Okay, I do think it's a good idea.

Costa Rica is, it's a disaster of a country economically, with the exception of it's a great place for tourists to go, they got a great tourist infrastructure, and it is a good place for medical tourism, and so I think that in the coming years, you'll see more and more medical tourism.

Costa Rica basically destroyed the medical tourist marketplace for six months, they totally closed their borders for, I don't know, months, almost six months in the pandemic. But I think that their borders are open now, they don't require COVID tests for people to come in, I've been thinking about setting up an event there in Costa Rica in the coming weeks myself, because of that, although now the United States requires people to come back in.

Prices are good, and I think it can work out really well. There are lots of dentists, lots of very trained dentists, and I think it's a good solution for that. I also think you should, and since you have personal relationships there, I think that's good. I think you should also look at Mexico as well.

I think that Costa Rica can work well for certain types of medical tourism, for example, dental tourism, I think there's also a good argument to be made in favor of things like laser vision correction surgery to Costa Rica, there are a number of hospitals there that do that. I think that can be a feature.

But on the whole, I don't think it has quite the depth that a market like Mexico has. And so, one of the business ideas that I've personally toyed with is setting up a medical tourism company into Mexico, because I think that Mexico is easier for people to get to in the United States.

I think they have a much deeper bench of physicians and whatnot, and so I think it's also a good option for you to consider. I have known people who have done medical tourism companies, and I think it can be very profitable, so I think it's a great thing for you to pursue.

And a referral relationship, where you act as a go-between and you charge a commission, can be a very low cost and high profit business, so I'm totally in favor of it. Just tell you that you're not gonna save any money on tax, doing it from the United States. And I wouldn't necessarily move to Costa Rica, because you won't save anything in tax if you move to Costa Rica.

So you could run it tax efficiently if you were willing to move, but not to Costa Rica in this particular context. - Okay, cool, that makes a lot of sense. Thank you so much. One more quick question. So listening to your show the other day, it was like I had a moment of going, oh no, am I making the right choice?

I'm about halfway through, I'm about 70% through my coursework for the CFP, and I was hoping that this is not a dying industry. I guess my question is, do you still feel that the CFP is a worthy pursuit? - You know, I've struggled with that question so much over the years.

I have a CFP designation, I maintain it, I let it lapse for about a year and a half, 'cause I didn't keep up my CE, but last year I went back and caught up my CE credits, my continuing education credits, and reinstated my CFP. I don't know, I honestly don't know.

The financial, so the financial, let's talk, I'll walk it through with you. So first of all, the financial advisory business is a business that has been under significant pressure. As I think about the history, going back over time, we have had, so if you go back to, let's say, the '80s, right?

When you said financial advisor, people thought stockbroker. Well, what happened to stockbrokers? Basically, stockbrokers largely disappeared. You had people come in, and instead of being a stockbroker, you had the low-commission trades and no-commission trades come in. Then you had the move towards mutual funds. You had a massive growth in the mutual fund industry.

So financial advisors made a lot of money selling mutual funds. When I started in 2004, I didn't sell a lot, but I still sold some commissionable mutual funds, Class A mutual fund shares. And there are people out there who do sell that, and I'm not current on all the industry figures, but I would say for the most part, selling commissioned mutual funds has basically disappeared in favor of no-load funds.

You had the incredible transformation of the industry with Jack Bogle and Vanguard, where everything moved from, if you look at the asset flows that used to flow into active management that now goes into passive management, it's absolutely turned upside down. Vanguard has completely won the day to the point where now it's basically considered, it's almost a form of dogma, financial planning dogma, that if you suggest anything other than passive index fund investing, you just don't do it.

You look at some of the vocal commentators, you look at Dave Ramsey and his influence on term insurance versus whole life insurance, very, very effective. Al Williams and his story and everyone else. So there's been a massive move towards term life insurance and passive index fund investing. So what have financial advisors done in response to this?

Well, I would say they've adjusted in a few different ways. So most of the wire houses and whatnot, they move towards saying, okay, we're gonna charge management fees, that way we can still get our money and we can go ahead and yet still engage in whatever our investment strategy is.

You've seen some bifurcation with the investment marketplaces. There are still people who market themselves as investment experts, but it seems like a lot of those people have moved into the hedge fund space and to work with accredited investors instead of with retail investors. So for example, the previous caller, that kind of situation is pretty rare.

I very rarely hear of someone who says, look, we can beat the market and look, here's our results and test us and we'll take a $50,000 account. I mean, I very rarely hear about that kind of thing. Meanwhile, in the financial advisory space, there are still people who have, there's still people who work with insurance companies.

There are the New York Life, the Northwestern Mutuals, the Guardian, the Mass Mutual, et cetera, and have an insurance practice and some cases an investment practice. You still have plenty of people that work with the large firms, doing charging fees on investment management. But then you have this bifurcation into the financial planning world for a fee.

So you've got kind of the Garrett Planning Network guys, who charge us an hourly fee for financial planning. You've got the XYPN Network, right? More only targeting younger advisors and younger clients who they try to go with monthly retainer fees, primarily or flat fees. But I think the fee pressure is down, down all over the board in financial planning.

So I'll tell you from my perspective, I like what I do because it gives me a one to many business. I would not choose myself to go into financial planning for an hourly fee. I think it's a very low paid profession. And even if your hourly fees are, my hourly fee right now for consulting is 400 bucks an hour, I'm gonna raise it to 500 before the end of the year.

But even still, it's so much even there, and I don't even provide a lot of deliverables with that, it's just straight phone consulting. But the amount of, and to some people it sounds high, right? But the amount of work you have to go through to get enough clients to fill your schedule, doing hourly fees, it's just, it's not a business that excites me.

So I wouldn't pursue that option in the financial planning business right now. I would personally go back into the insurance side of the business. I really like insurance. And I think that when done properly, insurance solves so many problems that it makes it really, really a good solution. But there continues to be a very significant kind of undercurrent of people who don't do insurance.

Very rarely would I talk to a group of CFP students at the University of Texas or whatever, where they're getting a degree in financial planning, and many of them are just not that excited about going into the insurance business. And I understand that, right? When I went into the insurance business at 23, all I could think about was how quickly I could get out of it.

Well today at 35, I would go into insurance, and I could happily just work in insurance the rest of my life and feel happy about it because the business model works. If you go and work as a fee-only planner, you walk away from insurance commissions, which I think is a business mistake, a major business mistake.

So I guess for me, if I were to go back into it, there are three options that I personally would pursue. Number one is I could go back and have a hybrid model of insurance and investment management. I personally think that's the sweet spot as long as you can get a good enough solution where you can provide good solutions in both of those areas.

But I think that insurance and investment fit together so perfectly that it's just a mistake to do only one of the two. The second place is I would go and work in a single-family office or a multifamily office, and just go straight to the high end of the market.

That's where I would personally enjoy working because if you have the credentials and the skills, then you can walk away from the pressure of the things that annoy you of working with low-end clients. That's kind of the second thing. And then the third thing is I do think there are options in the financial education space, but I would focus less on the CFP stuff and more on the making money space.

The CFP curriculum has become basically a technical consultancy. And it's becoming more of kind of the accountant advice industry versus the make money industry. And I appreciate good accounting advice, right? That's fine. But as an accountant, you're never going to make a fortune as an accountant unless you build a large firm.

There's nothing wrong with working as an accountant. It can be a perfectly reasonable career. You can make a fair income and you can make a fair income. You can serve your clients and it's a very agreeable type of work, better than many other kinds of work. I could do accounting, but I wouldn't go after it with a sense of this is an aggressive growth model because the numbers aren't there.

And I think that kind of the financial planner world has largely gone in that direction. The CFP world is largely that. It's a technical specialty. You need to understand a generalized knowledge of insurance, estate, tax, investments, et cetera, but it's extremely generalized and commoditized. And so in that world of generalized commoditized work, it's hard to stand out.

So I would say that being a certified financial planner as a step one would be analogous to being a family medicine doctor. Is it a good career? Of course it's a good career. Can you make money? Yeah, you can be highly paid. But being a family medicine doctor, your income is going to be very, very different than if you're a pediatric anesthesiologist.

There's a 4X return of being a pediatric anesthesiologist. And so for me, that would be what I would say is that just getting a CFP designation and working as a generalized financial planner can be a very agreeable, perfectly adequate professional compensation where you can make a good living in a very agreeable way.

But it's not a specialty that's going to make you really rich in a really short period of time. - Great, that's great. And thank you so much. And sort of last thought is, I'm working, I would be a career changer. I work as a creative director right now. So this is really helpful.

I really appreciate all your wisdom on that. Thank you. - My pleasure. I think you just gotta find a spot that you're comfortable with and that you feel fits you. And if you can find that spot that it fits you, then I think it's a great career. I like it and it's a really good way, again, to serve people and to help people.

My only frustration, I'll share my biggest frustration with you for you to consider, is just simply this. I thought when I got into financial planning, I thought that I was gonna help people get rich. And what I discovered is that I couldn't really do it very well. And I realized that as a financial planner, what I was doing was giving some technically proficient answers that would help people optimize a few things.

And so for me, my desire has always been to help people get rich. And so today, if I were making that same choice again, and I'm actually moving in this direction just to my own attention, I care much more about teaching people how to 10x their income than I care about teaching them how to remove 10 basis points from their portfolio expenses.

I find the portfolio expense and the tiny tax optimization, I find that stuff extraordinarily boring and non-meaningful. Whereas I find the 10x stuff, right? Here's how you 10x your income with entrepreneurship. Here's how you 10x your lifestyle with a remote business. Here's how you cut your taxes to zero by going offshore.

To me, those big wins make me so excited about seeing people how they can get progress fast, that that's where I wanna spend my time. So I would rather, if I were making a career change right now, again, if I needed money fast and I wanted to make $150,000, $200,000, $250,000 a year, and I needed to do that for five years to stabilize my family, I would go be a financial planner.

Now, I have the experience, so I know I could do it quickly. You might take you some more time to retrain for that. But if I wanted to make an impact, I would much rather go work for Russell Brunson than I would go and be a financial planner because I believe that a guy like him, at the end of his life, he's gonna be, I mean, the amount of money that he's gonna help people make is gonna be absolutely staggering.

Tai Lopez is gonna have a much bigger credential at the end of his life with the amount of money, the amount of people that he's helped to build wealth, become wealthy than any financial planner I've ever met. So is it a good career? Yeah, I've known a lot of guys who made a fortune as an estate planner, et cetera.

But for me, the excitement is always on the big wins, not on the minor optimization. And I just see that as the, that's one of the big downfalls of many of the modern financial planners, including the CFP curriculum. It's just, it's mostly focused on minor things. I've never heard a CFP, here's my final comment.

I've never heard an accountant or a CFP talk to their client about leaving a high-tax jurisdiction and moving to a low-tax jurisdiction. And yet that in and of itself could be the single most valuable idea that you ever give somebody. I'm doing a show, I meant to do it yesterday, I'll do it, it'll probably be out on Monday.

But the next show I'm gonna do is talk about the magic of the doubling penny, right? You can start with a doubling penny, and you can say, and you can, if you start with one cent and you double it every day for 31 days, you wind up with $10.3 million, I think, at the end of 31 days.

If you cut that doubling with a 30% tax rate, then you all of a sudden put yourself in a situation where that, I can't remember the number, I did it with like 35% tax rate, 30%, it comes down to a few thousands of dollars, and in some cases, literally $25 with tax rates that we pay.

Now, that's just pointing out the power of tax. And so for me, wanting to help people get those big wins, before I would go back and be a financial planner, I would go set up an offshore firm and teach people how to leave high tax jurisdictions like California or like the United States or like Germany, because in today's world, that's where the exciting stuff is.

Or I would go to where they can 10X their returns and help people make money with better marketing, et cetera, because to me, that's the stuff that's exciting enough to keep me going. So best of luck to you. John in Florida, welcome to the show. How can I serve you today, sir?

John in Florida, you're up. I gotcha, yep. I wanted to talk cryptocurrency. I need a sanity check. I've been in the space for a long time, and I've got a fairly well-rounded portfolio of many different currencies. The total currently of that portfolio is about 600,000 in US dollars. I've ridden multiple run-ups.

So I was actually in on that very first run-up to $1,000 back, and then I rode it all the way down to 200. And then I rode it up again to 20. And I was shocked and amazed that I had, my portfolio had grown to $200,000 at the top of that 20,000 run, but I didn't do anything.

And then I watched it run all the way down to about 50. And now I'm at the position where it feels like a similar type of feeling as that. Like, whoa, at the high, my portfolio was pushing 800K just earlier this month. And it's come back down to 600, right?

So I don't wanna sell, 'cause I don't, I mean, I don't need the money. And I don't have a plan for it per se. Like, if I turn this into cash, it's just gonna sit in the bank and decrease in value with the flood of new printing. So I don't know, I just wanted to hear your perspective on, I know it's not a crystal ball or whatever, going to a million a coin or 10 million a coin, whatever.

But is there something that you can say about taking money out along the way? Like, I would estimate my total investment in US dollars that I'd put in probably over the whole time is somewhere around 100,000. Just in purchases. - I understand the question. Let's talk it through. So we're gonna talk it through on two levels.

I'm gonna begin with what's most impactful, and then we'll talk about crypto. The most impactful is always personal financial planning. In my opinion, what I fall back on is always personal financial planning. And I'll elaborate what I mean by that so that you understand. Because to me, this is the one thing that I can control.

I have no idea what the price of Bitcoin is 12 months or 12 years from now, and neither do you. We have our hunches, we have our ideas, you have your beliefs, you have your perspectives. But at the end of the day, we have no idea. 12 years ago, Bitcoin didn't exist.

12 years from now, will Bitcoin exist? Well, to the extent that something digital and intangible exists, yes. But what will be the impact on society? We don't know. So we have some ideas, we'll talk about those in a moment. But what can you know? You can go back to your life, and you can always say, well, what should I do right now in my life?

And with regard to the risk factor, you can put in place the things that make you feel good. And so what I do is I go back to financial planning. I say, where am I right now? So first, how old are you? Are you married? Do you have children?

- Yeah, I'll be turning 40 this year, married with four children under 11. - Okay. If your $600,000 disappeared today, all of your cryptocurrency disappeared today, pretend that the United Nations came out and all 193 member nations of the United States, sorry, out of the United Nations says, not only are we banning Bitcoin, but we're banning any cryptocurrency, and you can never convert your cryptocurrency into a local fiat currency period whatsoever.

That would of course impact massively the value of all crypto assets that are intending to be used as some form of currency. So your $600,000 could disappear overnight. Let's say that happened, unlikely, but let's say that happened. In that situation, would your family be destitute? Would your children be on the street?

Would your wife and children go hungry? Would your wife divorce you? How bad would that be for your situation? - It wouldn't affect my situation at all. - Okay. So to me, this is my answer, is if it wouldn't affect my situation at all, that means I've done good financial planning.

I've put myself in the best solution possible. I've protected myself on the downside. And so what I can do, what I can control is, are my children gonna be put out on the street? Are we gonna run out of food? Do we have some other assets? So if I were a young, if I were a single guy, for example, and it were just me, and let's say that I had an income where I could work and earn $100,000 a year at a job, I would be willing to take a risk on having 100% of my assets in cryptocurrency.

Why? Well, because if my cryptocurrency disappears, I still have income and I'm gonna be okay. If I were a married guy with children and I had a good, robust home life, and I had a good source of income, and I had some other assets, then I would be willing to take a big risk on a hunch, right, on cryptocurrency.

What I would not do myself is I would never put myself in a situation where if my cryptocurrency disappears in value, my children go hungry. Or if my cryptocurrency disappears in value, my wife divorces me. Or if my cryptocurrency disappears in value, I'm left destitute living under a bridge.

Like, to me, that's unacceptable. So as long as you're thinking about your downside, then we're in a good shape. And you can make your hunch on what you think is the best for you. Now, I do think it makes sense to diversify. And so when you have a winning hand, I believe it makes sense to take some of those winnings and put them into something else because it protects you on the downside.

The example that I usually use is with entrepreneurs. And I've been saying this for years. I must repeat it. I mean, I've been on the show dozens of times. I don't know. But I always give this talk to entrepreneurs, okay? And these days, I work with a lot of entrepreneurs.

When I was a financial advisor, I always worked with entrepreneurs because that's where the money is, right? Entrepreneurs know how to make money. They know how to literally make money. They take something that doesn't exist. They call it into existence with their vision, their words, and their actions. And then they literally create a money printing machine.

It's the most incredible thing in the world. And it's all legal. That's entrepreneurship, okay? So you'll be with an entrepreneur. And let's say that you have an entrepreneur that has a wonderful, smooth business model. And they're looking at their business model. And they're saying, you know what I can do?

Is I can take this business, and for every dollar that I put into this business, it will print me $10 out. And so you might be sitting there with them, talking to them about buying stocks in someone else's business, or buying gold coins, or buying cryptocurrency, or buying a life insurance policy.

And they always look at it, and in the back of their mind, they're saying, but if I put a dollar into my business, I get 10 out. I put a dollar into my business, I get 10 out. I put a dollar in my business, I get 10 out. Why would I ever do anything different?

And so the example I use is gambling, right? So let's say, John, you and I, we get on a cruise ship, you know, we're with our families, we take a cruise, and we decide tonight, you know what? We're gonna go down to the casino. And, you know, we get babysitters for the children.

We dress up in our fancy suits, and our wives put on their slinky dresses. And we say, all right, how much are we gonna gamble tonight? Let's say it's, I don't know if you're a big gambler, but a thousand bucks, right? So you take a thousand bucks out in cash, you leave all your cards, and you say, here's a thousand bucks in cash.

We're gonna go, and we're gonna gamble tonight with a thousand bucks. Lose a thousand bucks, big deal. It's the price I paid for an evening's entertainment. And so we go down, and we're playing, and we're playing, and we're doing well, and our thousand grows to a thousand, to 1,200, to 1,500, to 1,800.

All of a sudden, we're up to two grand, okay? Now, what does a smart man do when he's out gambling, and he's doubled his money from a thousand to 2,000 bucks? - He will take cash out and walk away. - Cash out and walk away, right? But wait a second.

Maybe it's only 9.15 at night, we're having a great time, we already paid the babysitter for six hours, and you know how hard it is to get a babysitter for four children. So you're like, okay, what do we do? Well, at least at that point in time, maybe you say, okay, I wanna keep playing, we're having a good time, we're enjoying ourselves, but you might at least take the original thousand and slide it in the back pocket.

That way you're playing with your winnings, and if you lose it all, at least you walk away whole, or you might double it up. So the problem is that that's what you and I would do as non-addictive gamblers. We may or may not walk away, but we would at least take some off the table and tuck it aside, knowing that we're playing a dangerous game.

So what happens is oftentimes business owners and other types of investors sometimes don't do that. They play the thousand, and it's up to 1500, and up to 1800, up to two grand. Then they look at it and say, man, we're doing awesome. So they play the two grand and they double it to four.

Then they play the four and they double it to eight. Then they play the eight and they double it to 16. It's 10.45 at night, we're parents, we go to bed early, and we're looking at it saying, okay, just one more good roll. And all of a sudden they play the 16, but instead of this time doubling to 32, it declines to something significantly less due to perhaps unforeseen activities.

So my answer is head your bets, right? Okay, you got the thousand, play it, take 500 off the table when you're up to 2000. Take 500 off the table, put it in something else. Grow it up, you know, take another thousand off the table. Just take some off the table and diversify it.

And diversify it into something that you think is a good investment, but that's not subject to the same forces. So what would I do if I had built a $100,000 portfolio into $600,000? And by the way, before I tell you what I'd do, for me this is very personal because I've known so many people who've made money in good markets.

In 2000, I knew somebody, young guy, who made a fortune. He went from nothing to a couple million dollars overnight with a dot-com business. Bought a Porsche, had millions of dollars and was doing awesome. And then everything fell out and he lost it all. Lost his Porsche, lost everything.

And I thought to myself, that was stupid. Then in 2000, you know, in the mid-2000s, I had friends who were making fortunes in real estate. And then they lost it all, went through bankruptcy, bankrupted out of $2 million worth of property. And I thought to myself, that was stupid.

Why can these people not see that when you've gone from nothing to multi-millions in a short span, it might be worth it to take something aside. And it's because you get that gambler's greed where you say, this is working, this is working, this is working. So if I built 100 into 600,000, I would look down and I would say, well, this portfolio very well could keep going.

But I need to make sure that if this thing wipes out, that I'm not ruined. And so I need to make sure that I do something. Maybe I take $100,000 and I buy gold in a vault in Austria. Maybe I take $200,000 and I go buy a rental property.

Maybe I take some money and I put it in the stock market where somebody else is managing it. Doesn't really matter. The point is that it's not all on one thing. So that if this disappears, then something, that I still have something covered. Because I've never seen a market in anything where it couldn't all be misdisrupted overnight, right?

Hello, US government or your state government comes in and says, hey, you've got a rental property, but you can't evict your tenants. What did that do for the value of your real estate? What did that do for your rental flows? Or they come in, I mean, there's just any market can crash.

So if $600,000, the loss of it, wouldn't affect the rest of your life that badly, then I would say, keep playing, right? Keep investing in what you think is gonna happen. But if it would, you wanna make sure that you're levering up over time. And so you need to look at the rest of your portfolio and consider how does the 600 relate to the overall portfolio.

So that's my first answer is look at it in a financial planning perspective. What would it be like if I lost it all? What would the harm be? How big of an asset does this represent and go on? And I just, I would say, look at it like this, right?

Do you remember the Snapchat story from the last five years? - I know of several stories, but I'm not sure which one you're talking about. - Here, I'm just thinking about the owner of Snapchat. Now, I don't have all the data current in my mind, okay? But there was a time a number of years ago when Snapchat was the next hot thing.

It was very, very valuable. Mark Zuckerberg came to the owner of Snapchat and offered him something like two or $3 billion for the purchase of Snapchat. He said, no. He said, no, I'm gonna keep Snapchat to myself and I'm gonna keep on building it. Mark Zuckerberg then, a month or two or whatever later, rolls out all of the identical features of Snapchat across the board to Facebook and Instagram, his services that he owned.

And at that point in time, it was rather obvious to me that Snapchat basically imploded. There was a time where basically everyone I followed had their yellow profile picture, follow me on Snapchat. I haven't seen one of those in a long time. I personally could never figure out how to use the app.

Maybe I was stupid, but I could just, it never made sense to me. And here was this guy who had offered-- - You and me both. - Yeah, two or $3 billion to sell to Facebook and he chose to say no. Now, was it the right decision or not?

We would only know that if we could talk to him and say, well, what do you value more? As I understood it, he valued his independence. And Snapchat is still in some sense a going concern. I don't hear about it much anymore, but every now and then someone says, oh, Snapchat's gonna come back.

I'm sure he still has as much money as he needs and he's gonna be fine. But I think about that and I say, put yourself in those situations and ask yourself, would you wanna have cashed out? Me personally, if someone offered me two or $3 billion for a company, I would cash out.

I would cash out because I don't need to be the guy who's got $50 billion. Two or $3 billion is pretty substantial. That's pretty good. And you don't get, a lot of times you only get one of those opportunities in life. So you've gotta consider it in the context of your personal financial planning and then think about the maximum upside, the maximum downside and see how that affects you.

That said, I remain very bullish on crypto, my personal opinion. I remain very bullish on the importance of cryptocurrencies, on the use case for them. And while I believe that the fundamental value of a Bitcoin is a magical number made up exclusively from supply and demand, that's the world we live in with everything else in life.

The value of a US dollar is a number that's exclusively made up based upon the value of supply and demand. And so it's made up, it's fantasy, just like everything else in our life. But I think that the arguments are going forward that cryptocurrencies can be a very, very useful part of what we're doing.

Now, will the long-term winner be Bitcoin? Will the long-term winner be Ethereum? Will the long-term winner be some other minor, useful coin that's been developed? I don't know. So those things are opaque to me, but I think that my personal opinion is that we are still in the very early stages of a transformation in the world, and that more and more people are going to start to use these tools.

I need cryptocurrency personally to succeed in order to minimize the hassle of dealing with the banking system. And I don't see why it can't succeed. And to me, every marker is on the way. The biggest marker right now is gonna be regulation, right? You had new regulation in India recently.

The United States government is passing all kinds of new regulation on cryptocurrency. Could the whole premise still fail? Well, I think any one currency could fail, but in terms of the premise, to me, this seems to be in line with the direction the world is going. And so as long as I'm not gonna be wiped out, I would personally continue to be involved in the marketplace.

- Okay, yeah, that's kind of my same general feeling. When I was looking at the number and I was like, wow, that's a good amount of money. And then I was like, how many years would that last if I were to cash it out? And would that be like 10 years of income after taxes?

And that right now, and that kind of got my head thinking like, well, maybe I should do something rather than nothing. And then I went to start adding up numbers of how much I'd put into it, 'cause I'd never actually done that until I got to thinking. And I was like, I was pretty flabbergasted that I had put that much in without even knowing about, knowing the total over five years that I didn't keep that information in.

It just got the ball rolling. Like maybe I should do something about this differently than any time before. But that being said, I'm also bullish. I think they've got, there's places to go further than where we are. So yeah, I appreciate your thoughts. I think I'm just gonna let it ride because it could be that Snapchat story.

- To try to put it succinctly, my answer is very simple. When you have something better to do with the money than what it's invested in right now, do that thing that's better. So when you have a better use of the money than your cryptocurrency portfolio, do that thing that's better.

What could be some examples? Maybe you look down and you say, if we paid off our house, our life would be better because of this reason. Well, then if you're convinced of that and you make that decision, you'll do it and you'll feel happy with it even if Bitcoin went to the moon because that was the decision that was right for you at the time.

I wouldn't, just to be clear, I wouldn't hasten to do that, but it's an option. If you thought, you know what, my daughter is dying of cancer. And if I take this $600,000 and invest it into her medical treatment, I may be able to save her life. You would do that because it's a better option.

If you come across another investment opportunity, a business, a house, a stock, a different coin, whenever you find something better, then do what's better. But don't just retreat from what you think is the best thing because you're somehow scared of it. Think it through and always question your assumptions, but only change when you have something better to do.

All right, we go to John in Pennsylvania. John, welcome to the show. How can I serve you today, sir? - Hey, Joshua, thanks for taking the call. That's a good voice for that last caller. I'm gonna be sending this show to a friend of mine who has basically the same situation, but you just add a zero to the totals.

He's been fluctuating between the millions and really struggling with the psychology of it. Actually, he seems pretty stable. I'm struggling with being his friend. - Right. (laughs) - Not knowing what to do with those scales of money. I don't know how to-- - I'll tell you what's worse than that is the people who are struggling with the fact of how many Bitcoin they bought and then they lost in a wallet that became inaccessible to them.

I had a client of mine one time that a year or so ago, he had $2 million. What was at that point in time worth $2 million sitting in a hard drive that he couldn't get into because he couldn't, in a password he couldn't remember. And then just watching the prices increase where now, I don't know, but I'm guessing that what was $2 million is now $5 or $6 million is just a major gut check.

And so I've been thinking about that a lot because it's a matter of how well do I have my systems worked out? How well do I have my backup plans? Just even for simple things like my computer and my phone and whatnot. Sometimes we play a risky game and don't cover ourselves properly.

And those are the people that I think about and pray for that they'll still be alive a year from now rather than having punched themselves in the face so many times that they just can't do it anymore. So go ahead, John. - Yeah, no, that's absolutely brutal. And I know my own problems with memory and devices and everything.

Yeah, that would probably be me, to be honest. I only have like 100 something in Bitcoin or cryptos and I'm more interested in it as a currency that's usable rather than a speculation thing. But at the same time, I can't deny what my friends I've been able to build with it.

Although I couldn't have taken the swings. He's gotten from whatever it's 40,000, he's turned it into five and then he watched it go back to 500 and then up to recently to nine and then back to seven in the millions. And I just, I don't think I would ever be able to take the swings.

Just, I couldn't do what he did even though I watched him doing it. You know, I know that I wouldn't be in the same situation 'cause I couldn't have done it in those ways. But yeah, I'll be sending this to him. Anyways, my question is, I caught it a couple of weeks ago.

I've been laid off and trying to, well, I am enjoying some time off, a sabbatical. I'm still interviewing a bit half-heartedly kind of questioning whether I'm burning bridges by taking interviews but not preparing 100% for them. But in my time off here, I'm trying to focus a little bit more on walking and health and different things.

And one thing I've found in my walks and listening to certain things and exposing myself to different ideas and trying to get fresh ideas in my head is I'm pretty good at delving deep into things, getting into one or two topics and just spending all my time going deeper and deeper into them.

And of course, the mechanisms we have with Instagram and YouTube makes that deep dive real easy. And other algorithms kind of favor that type of a feed. And it's been fun. But I remember, I'm sure you did a long time ago about exposing yourself to lots of different ideas and books being a primary way to do that.

So I'm trying to read more. I used to read nonfiction. I'm trying to read a little bit more fiction. I'm just wondering if you have any ideas on trying to expose myself to a broader range of ideas both for future occupations, maybe business ideas, and not necessarily just money-making things, just hobbies even.

And yeah, just sort of looking for some thoughts around that. I mean, I find myself going to the library and just picking out literally random books off the bookshelf to see if it starts a curiosity down one avenue or another. Should I be more direct or more intentional about it when kind of all the world's a possibility?

- I don't know how to be more intentional about it in what we're talking about. I think that the secret is always, as I've said in previous shows that you've heard, you read or you learn in the direction of your goals. So when you have a goal, something that you've said, this is something that I would do, I would want to do, you identify the goal, and then you start learning or reading or exposing yourself to things in the direction of that goal.

And that to me is what has made things, that's where things are so easy now. If we can get people to write down a goal, and the writing it down is important, but the most important thing is just to notice a goal. And it can be simple, like I want to be healthier, but just to notice that and not say, oh, okay, I'm just gonna pass it by, but say I want to be healthier and write it down so then they can recognize this is something that I want, now I can start doing something towards it.

So my coaching in that situation would be, I want to be healthier. And then I would ask the person to say, what are some things that I could do that might move me in the direction of being healthier? I could schedule an appointment with a doctor, I could go and read a book on health, I could figure out what aspect of my health I want to improve, et cetera.

So the key is just to notice it. So when you can notice something that you'd like to do, then it guides your web walking. If you notice and you say, I'd like to live a more adventurous life and travel around the country with my children in an RV, well, now you have something that guides your Instagram channels you follow, your YouTube channels you search out, the blogs that you read, the books that you find in the library or on Amazon, et cetera or the people that you talk to.

Oh, hey, look, there's a meetup of travelers in my area, I'm gonna go get together with them. When you don't have that though, then I don't know of any way to direct that other than through what you've said. So what I would do, what I encourage people to do is if you are unemployed, you find yourself with significant amounts of time, expose yourself to things where ideas will come into your mind.

So I like the library because I can go to the library and I can just bumble around. I can go through sections and see if anything attracts me to a certain section. And then if something attracts me to it, I just grab a book off the shelf and sit and read all day or take home 20 or 30 books and browse through them for a day or two and then take them back, it doesn't matter.

Browse through the magazine racks. So this is where a Barnes and Noble or something with a big magazine rack or the library magazine rack is so interesting because these are things that other people are interested in and if other people are interested in, I might be interested in it too.

And then along the way, just ask yourself the questions of why are you interested in this certain thing? What is it that you're looking for? Is there some theme to it? Beyond that, I don't know. I think that thinking about it is probably enough to develop the skills of introspection to understand what's important to you and why you like it.

But as far as how to expose yourself, it is I think somewhat random and there are too many options in the world. There's too many careers, there's too many choices, there's too many hobbies. There's just far too many to think that you could ever do some kind of comprehensive analysis.

Rather, I think it's just a matter of training yourself to be observant to what you're interested in and why. - I appreciate that. I think the very start of your advice there gave me what I needed, which is, I actually have one or two things that I'm getting pretty deep into it and I guess I had a little bit of uneasiness or guilt about, I already had, not necessarily specific goals, I can put goals around those, but I was delving deep into these things without thinking, maybe I haven't gone wide enough first, but I already had an innate interest from multiple angles on these hobbies.

And so I think just what you said, maybe building a goal around that so I have more intentionality about what I've already in my head chosen these handful of things I'm working on is really what will solidify that feeling or take away that feeling that maybe I didn't explore widely enough before I delved into these things.

If it's in my head and I'm interested in it, I should probably just be okay with dedicating my time to pursuing it. - Dedicate your time to it and then just be okay with it sliding away. If it's not of interest anymore, just let it go. I mean, it sounds very woo-woo, but I think that to me, it's fine to say, hey, I was into that, but now I'm not into that so much.

And I don't know of any magic formula to this other than just to be easy on yourself. I think that at the end of the day, being present in today is important and then just being observing what you like to do, what you don't like to do, what enhances your experience of today, what enhances your experience in the future.

And those are uniquely individual things. So I don't see this as the area of where there's any objective reality. There's no right or wrong. This is just a matter of, hey, here's what I'm into right now, and here's why I'm into it. And those reasons can be completely your own reasons.

And if what you're doing is morally right, you're not harming other people, then these are areas where it's just a free personal choice that can change along the way. - Yeah, that's great. And I think that's another good thing I need to do is I've already done in my head, but maybe just writing down all those.

There's multiple benefits of this hobby and things I can do with my kids with it. So just solidifying on that and just being okay with it, I think is what I need to do. So I appreciate that, thank you. - My pleasure, thanks for calling in, John. All right, we've got four callers left.

We're gonna move faster here. Houston, Texas, go. That was gonna be this big-- - I'm not sure-- - There we go, there we go. I had it all lined up for you. It was gonna be a dramatic, perfect, like boom, boom, boom. Go ahead. (laughs) - All right, yeah, I listened to your two episodes with Jonathan Harris and we love it that children, they're developing process and our role as parents is a topic that you cover in your podcast.

And as new parents, I just have a couple of questions that I'll just ask first, and if we don't have time, it's fine. - Go ahead. - It is important for us to stay close to our extended family and for them to be a big part of our children's life.

And we currently envision keeping our children in a traditional school system, but also try not to fall into the traps of a mindless, busy family life. And what would be your advice on how we should create a framework for this from a young age, just based on your own experience with your children and other knowledge that you have?

Basically, if you can stick to it, that's all I had for today. - How old is your child or how old are your children? - Oh, she, we just have our first kid and she's like five and a half months old. - Great. - Yeah. - I think the most important advice that I would give and that I think that anyone else would give in this situation is focus on your child, not on someone else's child, but on your child, and then seek to do what you believe is in the best interest of your child, based upon your vision as a parent and based upon their unique personality.

For example, I personally am pretty strong, I'm strongly opposed to enrolling my child in a government school. And I have clear reasons for that. But that's not an absolute statement. I'm opposed to it in my mentality, and I've got what I think are good arguments against it as to why for me, for my children, for my family, it's probably not a good idea, but that's not an absolute statement.

I need to look carefully at my child and I need to think about what's in my child's best interest and there may be times where you completely change everything. So even if Jonathan Harris were sitting here talking to you, I think that would be the first thing he would say is look at your children and think about who they are as individuals and what your vision is.

And what I'll tell you is that right now, there's no need to worry at five and a half months, there's no need to worry about any of these decisions because you won't know who your child is until more time comes. And so you need to be aware of your particular child.

And so let me give you just a couple of practical examples. Your daughter might be incredibly smart and you might find that she's so smart, you have a hard time keeping her challenged. And so what you need to do is you go and you find the best, most challenging school.

And yes, you're a fan of the traditional school environment, but you go and you try the local government school and they just don't give her enough challenge. Then you go and you find the best, most elite private school in your area and they don't give her enough challenge. And so basically you and your wife, you throw up your hands and you say, "We have to homeschool, right?

"Because we can't keep her challenged in this situation "because she's just too smart." And so now all of a sudden, she's so smart that you are doing something that you never dreamed you would do. Now let's do the opposite example. You might then find out you're working with your daughter and you're trying to challenge her, but she's lonely all the time.

And she doesn't have enough friends and she was thriving on the social interaction. But you can't find a solution. So what do you do? You go start a school, right? I've known people who've started a school for their children because they couldn't find what they wanted and the school became a fabulous, thriving business.

But you can't predict anything like that. It's unknown. Or the exact opposite could be, right? Maybe your daughter, instead of being smart, is not smart and has tons and tons, she's slow, she's behind all her peers. Well, in that situation, you're gonna look at her and you're gonna say, "What's the best thing for me to do with her?" And if I had a child that was slow and behind his or her peers, I would not want them to face bullying, to be made fun of, or to be made to feel inferior.

And so I would homeschool them in that situation. But when you homeschool, like for example, one of my children, I question whether my child is responding properly to other authority figures. And so one of the problems is that my child has been responsive to my wife and me as authority figures, but continues to be somewhat non, to have trouble with other authority figures.

And so I keep watching every day, thinking about what do I do? How do I adjust this? And so for now, I've intentionally hired other teachers that come into our home, but there have been times where I have thought, "Maybe I need to go ahead and enroll my child into school." Right?

Because maybe that school environment and facing the discipline of the school environment, it would be good for humility and whatnot. And so you're going to watch your child and you're going to constantly think, "What's best for my child right now?" And so in terms of a theory or a grand framework, et cetera, that's it.

It's a matter of looking at my child along the way. Now there's more to it. You'll listen to other people's stories. You'll think about it, but that's what parenting goes. You'll try something. You'll see, are we getting results with this? What should I do? And you have to, I think, remain open to really any decision along the way if you believe that that's what's best for your particular daughter.

That's my overwhelming advice. Along the way, listen to other people, find out what they like, what they do, be open to them, and then think about their stories, but don't think that there is one particular thing that's a magical solution. Every child is different, and it's your responsibility as a parent to coach your child and to help your child to do what's best for her.

- Perfect, thank you so much. - My pleasure, congratulations. And I would just say, I guess the other thing I would say to the father of a five and a half month old, breathe, relax, and enjoy it. There is no pressure. I'm convinced there are some societies in which we put a lot of pressure on our children, and this happens a lot in the United States.

It's not the worst in the United States, but it's bad in the United States, and it's very bad in some areas. And I do think that it's important to give children time to be children, and to have free play, to have unstructured play, to have unstructured time. So don't get too involved in the academics too early.

I got pretty involved in the academics early, and even though we were doing it at home, we weren't putting a lot of pressure, et cetera, but we just learned, with four children now and going through the years, I've learned that each child is different. It's important to do what the child is ready for at the right time, but not to try to fit into some standard mode or model that has everything done at a certain time.

So that's my recommendation to you. And with that, we go to what will be our final caller here in California. The other two callers dropped off, and so you're gonna round us out today. Welcome to the show. How can I serve you today? - Oh, beautiful. Thank you, Joshua.

How you doing? - Very well. How are you? - I'm doing very well. All right, let me get into this. So I've been at a company for about five years now, and two years of that, two or three years, I was full-time. Since then, I've been part-time. The owner of the business wants me to come back full-time.

He wants me to do the grunt work, help him build the business up. And then in Promise, he said he wants me to eventually move into an operations role within the company, the corporate company. And he wants to give me equity within the company. And so my question to you is, I trust him from the five years I've been with him, but from my standpoint, what should I ask for in terms of writing?

'Cause this is just a future Promise. This is probably two more years of work. In terms of writing to get the equity, and in terms of writing to get the role that will eventually be an operational standpoint role. Is there anything that you can tell me that will make this an operational standpoint role?

Is there anything that I can do to make this a legit Promise? - What kind of company is this? And tell me a little bit about the numbers of what you're making right now, what he wants you to make if you come back full-time, et cetera. - So in the veterinarian field, and I would be a technician.

And numbers-wise, we get paid by, we clean teeth, we get paid by the animal. And I'd probably make around 100K a worker for the first year that I'm back. Once I get on full-time and become a salaried employee with him, I'd be making upwards of 100, 200, something like that, depending on how far the business can go.

- And you are excited about this opportunity? You think this would be a good fit for you, and you trust your boss from working with him for five years? - Yes, sir. - Okay. Well, (sighs) you could, so first, you can put in place some paperwork. The question generally with paperwork is whether it helps you or hurts you.

In the US American culture, at this point in time, we are very paperwork-intensive. The challenge is that just because you have paperwork, doesn't necessarily mean that the paperwork is performed on. Perhaps, I lent somebody money recently. I try to never lend people money. I try to give 'em money or say no, but I've lent people money.

And when I did it, I made sure to write it down, exactly what was needed. But I wouldn't actually try to enforce what was written down in a contract in a court of law, because how am I gonna, am I gonna do that to this person? Am I gonna actually go there?

And so, there are times when people do go there, when they go ahead and bring litigation to try to force a performance of a contract. And that's what contracts are for, and I think that's what courts are for. I think that is one of the most important functions of government, is the judicial branch to bring a court system where you can have a judge, and in some cases a jury, hear a case, and then force the performance on a contract of some kind.

That's important. So the contract is important. However, a lot of times, if you go into a contract, I kind of say, well, there's the contract, and then there's what's reality. And so, a lawyer would probably say, get this contract perfectly right. But sometimes I personally, from my perspective, I think, why am I writing out this contract?

So, why would you first put something down on paper? I think regardless, you need to have something written down on paper. The first thing you need to do is you need to have expectations. People, even smart people, often forget what they said. I do. We all do. And so, writing something down forces us to communicate clearly.

So, I will, my advice to somebody who's starting a business is you talk about what, you know, your Ds, what happens in the case of the death of one of the business partners, or the disability of one of the business partners, or the divorce of one of the business partners, and the dissolution of the business, or, you know, what do you do if the business fails and goes bankrupt?

And so, you wanna write down a contract, and you wanna write it through to make sure there's clear communication. And you always do that communication in writing, so you have a piece of paper to say, this is what we're agreeing on now, and then if you need to, you point back and say, this is what we agreed to.

So, that's the first goal. So, you could, at the very least, you should talk to him, and you should say, I wanna make sure that I understand what we're agreeing to, I wanna make sure that this is the expectation, and you write those things down. And you, and then sometimes you sign them as an actual contract, you know, you indicate somehow that we're both present.

Sometimes you just file a memo. So, if somebody, you know, says to you certain, certain things, what you'll often do is you'll sit down and you'll file a memo with them. You'll send them an email. As we discussed yesterday, here's what you agreed to do, ba, ba, ba, ba, ba, here's what I agreed to do, ba, ba, ba, ba, ba, here's what's gonna be done if we don't do what we agreed on, ba, ba, ba, ba, ba, et cetera.

Just wanted to make sure that my notes from yesterday's meeting were clean and agreed, et cetera. So, that's kind of the standard point. So, I'd say the most important thing, why you need to write things down with him is to clarify exactly what he expects of you, exactly what performance looks like for you, and then to get an idea of what he's talking about, what numbers he's looking for.

You could go to something more formal, right? So, he could write out a contract for you and say, if you'll do this amount of work, these two years of work, and if we hit these certain benchmarks, then here is what we'll have. The only reason I'm not saying start with that is sometimes that's hard to do, right?

I work with business owners and they have highly valued employees that they try to compensate, but it's, first of all, can be very expensive to go ahead and draw up a formal document, a formal contract, and so often they're slow to do it 'cause the legal fees, et cetera, and then things can change very, very quickly.

And so, if you trust him, and if this is a good fit for you, and if he's paying you enough money to make things work, then I think it would make sense to do that. You're gonna have to lean on him, though, in terms of what he's willing to do to make things attractive for you.

So, you can write things down, you can send him a memo after your meeting, you can say, "I just wanna make sure we're clear. "Is this what you're agreeing to?" But in terms of him actually getting a lawyer and writing up a formal employment contract and formally saying, "If you perform these certain duties "and here's how we know you performed them, "then I'm going to gift you 15% of the company," et cetera, on this date, then you're gonna have to depend on his willingness to actually do that.

- Gotcha. Gotcha, okay. Thank you, sir. Yeah, that makes total sense, okay. And I think it would be more of an agreement anyways. - A formal agreement or an informal agreement? - Informal. Just because of the fact that this is all based on the business growing. And so, how can you really say, "Okay, if a business grows past this, "then you get this position." It's kind of like, "Well, I'm gonna have to "and it's kind of like what hearsay." But yeah, I understand what you're saying.

- Right. So that's why I tried to just say is that one of the simplest things you should do is as you're having these conversations, you should document them. And you need to feel out the relationship to figure out what's the right way to document them. I wouldn't try to force him to sign a contract necessarily.

And I think that that's where if you trust him, you're gonna have to trust him. At the end of the day, we all trust one another and I'm not opposed to trusting people. But I would try to document things to make sure that our understanding is clear. I believe that that helps.

That helps in any relationship to make sure that we have a clear understanding. Here's what you're willing to commit to, here's what I'm willing to commit to. So at the very least, you might do that in a form of a memo, an email, and just have things written down so that your communication is clear.

And I think that that's often a good test for whether or not this will be a good working relationship in the future. If I think about the times when I've gotten involved in dumb businesses, when I've been scammed and cheated out of money, when I've been employed by people who were untrustworthy and yet I swallowed everything, some of the time, I mean, none of the time did I have written documentation.

A couple of those guys I think would have agreed to anything because they were just swindlers and I got hoodwinked by them. But I think it doesn't hurt you to write things down and at least helps you to know I'm not being crazy if they're not performing. So definitely write it down, get agreement, and at the very least, in the form of an email, the memo to him stating, do you agree, is this what you've said to me, is this what you're communicating to me as far as your offer, so that you have that record.

- Perfect, yeah, and in the meantime, I mean, it's not like I've been screwed out of a deal, I'm still making money. - Right, and that's important. And one thing you should expect is you should generally expect you're never going to have control of this company. And so that's one thing you should think about is yes, you're making money, but you need to make money now, but you're never gonna control this company.

So let's say he makes you a very generous offer and he says, hey, if we do these certain things, I'll give you 40% of the company. That would probably be more than I would expect based upon what you're describing this, but okay, 40% of the company. You're never going to be in control of the company.

You might be a trusted leader, you might be a manager, et cetera, but at the end of the day, you can always be fired and you're never gonna control the company, which is fine. We all take jobs that pay us a good amount of money and we don't control the company, we just do our job.

But don't think that just because you have a little bit of equity in the company that you're going to be in control of the company. I think one of the things that disappoints some people is they're building their way up in their career, they find somebody who says, who recognizes their value and that person comes to them and says, listen, I think you should come and work with me and not only will I pay you a salary, but I'll give you equity in the company.

That's great. It can give you extra compensation, it can allow you to have a performance incentive for being involved in it, et cetera. But if you recognize yourself as the kind of person who just needs to be in charge, who wants to be in charge, who wants to have the control over your destiny, and if you think that that's important to you, don't think that just because you have equity in the company that that's going to do it for you.

I warn you about that simply because that's been something for me. Like years ago when I was younger, I would have thought, man, if somebody just give me equity, then it'd be fine. But what I've since learned about myself is that I like to be in charge, I like to be in control.

Not because I'm a control freak or an authoritarian or something, but I like to have the opportunity that comes with control and I like to be free in my decisions. And so I've often thought, there was a guy, when I started Radical Personal Finance, there was a guy who already had a very established brand in the personal finance space.

He made me an offer, he saw my potential, he saw what I brought to the table. I would probably have made more money, a lot more money working with him than doing what I have done. But I would never have been happy doing what I did, sorry, going and working with him, even though I would have made more money, because I would have felt like I wasn't doing what I wanted to do and it would have put me behind in my career.

Because I would have worked with him and the longer I worked with him, those golden handcuffs would have gotten heavier and heavier and heavier and yet I still would have been stuck, feeling like I have to hide behind his brand, I have to do what I believe he wants me to do because he owns the company.

And he never would have given me, he never would have sold the company to me, never would have given me control of the company, because he started it. And we would have always been two, in that sense, two alphas, fighting with each other. And so taking that offer would have been a mistake, even if it made me more money.

So it doesn't sound like that's the case for you. It sounds like this is gonna be a great fit for you. But if you think that that might be the case, if you think that, you know what, I need to do this, then just be careful because you get in deep sometimes and those golden handcuffs become very heavy and you get accustomed to the money, you get accustomed to the life and then it's harder to break free.

And so if you think that five years from now you're gonna break free, then you might take this deal and you might do it for a few years or you might just say no to it and do something yourself because if that's the kind of personality you have, you need to pay attention to that.

Otherwise, this can be a great way to make a lot of money and be involved in a business with very little risk and can be an awesome solution for you. - Perfect, thank you, sir. I appreciate your input. - My pleasure and I wish you a very wonderful day.

Our other callers hung up, so that means that our call, our show is shorter for today. So as a wrap up here, what do I want to say to you? I don't think I have anything to say. We've had an interesting show, some technical financial options, some interesting business ideas, and some interesting discussions.

So I hope that you'll take these ideas. I guess the only thoughtful thing that I would add in conclusion would just be simply learn from other people's stories and you'll be able to make better decisions for yourself. And if you'll do that consistently over time, things will be better.

I would love to talk to you next week. If you would like to do that, go to patreon.com/radicalpersonalfinance, just search for Radical Personal Finance on Patreon and find the show, join me there, and then I'll be able to speak with you next week. Until then, have a great weekend.

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