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It's more than just a ticket. It's Friday and today, of course, thankfully, that means live Q&A. On the 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. I am your host. Today is Friday. And as with every other Friday, at least in which I can arrange the appropriate technology, we do live Q&A. You call in, we talk about whatever you want. Love doing these Friday Q&A shows and plan to be doing quite a few of them over the next few weeks.

I'm sitting in rural France right now, in rural southern France for the next month. So really enjoying our time here. I always get questions about, "Joshua, what are those birds in the background?" So today's birds are the French ones. I assume that you'll hear by their accent that they are appropriately French.

These Friday Q&A shows work just like any other call-in talk radio show works. Basically, it's a live show where you can call in, talk about anything you want to do, want to. Any questions, any comments, anything that you want to chat about with me for the benefit of the audience.

To gain access to these shows, you need to become a patron of Radical Personal Finance. Go to patreon.com/radicalpersonalfinance. Find me there on Patreon and sign up to support the show there. And that will give you access to one of these Friday Q&A calls. I would love to have you there supporting the show on Patreon.

That just helps me keep the call volume down to, you know, go for four, five, six, seven callers, something like that. Otherwise, it winds up being 30, 40, 50 callers and I can't do that in a reasonable amount of time. We begin today, however, with Trey in Texas. Trey, welcome to the show.

How can I serve you today, sir? Hey, thanks, Joshua. We just had our first child and I wanted to ask your opinion on how to save for his future education. I mean, I still think college is a pretty good deal right now. I think it's making some kind of ominous sounds though and I'd like to maybe not have it tied up to where it has to be used on a traditional university, although that's probably where he'll end up going, I would guess.

But, you know, 18 years is a long time. So, I just wanted to ask how you would recommend we save for him to either attend a university or do some kind of other further education after high school. So common question, we'll give it the rapid treatment here, although I certainly expect this to be a 15-20 minute conversation because there's a lot of things to do.

But let's begin with the basic concept of I don't see much point in saving for a child's education if that means that you're going to sacrifice some other goal that is more important. So, a couple of baseline points. Most of us who are parents want to make sure that our children have the best life that we can offer them.

However, financially speaking, college should be one of the lower financial priorities. The classic comparison that I have stated many probably thousands of times, at least hundreds, maybe not a thousand, is simply this. You can borrow for kids college, you can't borrow for retirement. So, if saving for your child's education in the future is costing you some other goal that is more important, you shouldn't do it.

I don't think it makes any sense for you to shortchange your retirement savings in order to save for your child's education. But more importantly, that's common advice, more importantly, I would say, I don't think it makes any sense for you to shortchange your personal freedom goals in order to save for your child's education.

I don't think it makes sense for you to shortchange your business building goals in order for you to save for your child's education. I think it's one goal among many and so you should order your goals and pursue whatever you think is going to be the most important aspect to it.

Now that said, many people like to have clear goals related to finance and I think that's a really good idea, right? I have them, you have them, we all have them. We have this idea of segmenting our money and it helps us to make thoughtful decisions. So, I don't see anything wrong with saving for your child's education.

The second argument that I like to make is I believe that saving for college, if saving for college is causing you to shortchange something today, I believe that saving for college is the wrong move. I believe that every dollar invested into early childhood education is going to pay off far more than a dollar down the road, right?

The time to invest in a child's education is in the early years because college is such a simple thing for somebody who is either talented with some marketable skills such as athletics or somebody who is cognitively, has a high IQ, high cognitive capability. College is very simple to pay for whereas other things are more difficult.

And so, if I had to choose between enrolling my child into a better quality school, a private school versus a lower quality school, I would pay for the private school. If I had to choose between hiring a personal tutor to come into my home and homeschool my children to the cost of whatever that costs, knowing that I'm not going to be able to save for college, I'm going to do that.

If I had to choose between taking my children world schooling and traveling around the world with them, I'm going to do that instead of saving for college education. If I had to choose between enrolling my children into career-oriented, interest-oriented, passion-oriented summer camps, I'm going to do that before I'm going to save for my child's college education because I believe those are a better bang for the buck.

They make more sense. And again, college is easy to solve financially. And so, what I don't like is the fact that many parents prioritize this ephemeral idea of college savings if it's hurting something today. And in my experience, most parents are not in tune with the things that they can do today that are far more likely to impact the course of their child's life than the things that you can do down the road in college.

And so, if I have to choose between those things, I am going to choose those early childhood opportunities. I'm going to choose that expensive summer camp if that's the one that really fits my child's needs. I'm going to do homeschooling and I'm going to give up a family income so that we can homeschool instead if we're into that.

I'm going to go and enroll in the private school. I'm going to do those things early. And so, thus, most of this conversation really goes out the window if you buy those arguments. Now, I don't say them lightly, but consider those first two things so that you can understand what might be the best before you get to what type of account or what type of investment asset should I use.

Because I believe that those points are really valuable and really important. Now, the third thing that we don't know is we don't know what the cost of college is going to be. And so, for people who are just saying, "Well, I'm concerned that college education is getting expensive and I just want to have a little bit of money," I usually say, "It's probably not that big a deal." Right now, today, in 2021, in the United States of America, you can get a fully accredited college degree with no scholarships, just straight out the door tuition for $10,000 total.

Get a bachelor's degree. So, anybody can simply pay for that. And so, there are lots of options. And I think that in the future, those options are going to be far more numerous. So, when someone says, "Well, I'm saving for tuition at a local, just run-of-the-mill college," I often say, "Well, don't bother so much." The people who I really think should prioritize college savings accounts are those who have a family culture and a personal culture where they're deeply committed to formal education and they're saving for big-dollar colleges.

You're saving for a big-dollar Ivy League college. You know there's going to be a $200,000 tuition bill or whatever number. Then that makes a lot of sense to save for. But if you're just saving a few thousand dollars, it doesn't make a lot of sense other than to make you feel good about, "Hey, I'm investing in my child's future." The next point that I like to make is a lot of times you need to understand that the so-called college savings accounts are only modestly effective at actually funding college.

Why? Well, the first point I point out is the savings. And here I'm talking about things like 529 programs, educational savings accounts. Those are the two most popular. Although you can still do educational savings bonds, but nobody does that. Those types of accounts are limited in impact with regard to actual tax savings.

So a lot of times someone might come along and say, "I've got a 10-year-old child and I want to set aside money for my 10-year-old child's education. And so I'm going to put aside $100 a month." Well, if you run the math on what you might expect with $100 a month going into a stable account of some kind, you're not really saving anything.

And what most of those college accounts do is they don't actually save. They only allow you to avoid paying income taxes on the increase in the account value to the extent that there is an increase if used for education, which all told, in most of the time, that's not a very big tax bill.

And so most college accounts have limited effectiveness. They make you feel good and the numbers don't make that big of a difference. So you might pass some of those barriers. And so some of the things that I look for when someone says, "I want to save for my child's college." First thing, I look for a young child.

You have a baby, so this is perfect. The second thing that I really like to see is can that account be front-loaded? So instead of $100 a month, can you just put in 10 grand? Because now you might start to get enough gain. If you put in 10 grand or 50 grand or whatever you're trying to put aside for a child's education and you do it up front, as front-loaded as possible, then you now have much more opportunity for the accounts to grow so that college accounts can actually be really powerful and really useful from a tax savings perspective.

I also look for someone who wants to save substantial money. And if those things are there, then yeah, I think college accounts are a good fit for that. Now, you didn't ask just about college accounts, so let me give a number of alternative ideas that I think make a lot of sense to consider.

The first idea that I think makes a lot of sense to consider is simply acknowledge the fact that we don't know where you're going to be at that point in time and we don't know what college is going to be like. And so if you buy the idea that it makes sense for me to square away my financial life first, then set up your financial life in such a way that it gives you personal flexibility in order for you to be able to have cash flow college.

What most wealthy parents do when the time comes for college is they simply pay for it. They simply pay for it, right, out of cash flow. And so think about if you're taking out a mortgage, right, maybe you have a 30-year mortgage but you got a brand new baby.

So to make out an amortization schedule and say, "We think we're going to be here. I'm going to pay this mortgage on an 18-year schedule so that I have no mortgage payment when my child is in college." If you are thinking about buying a new car and taking out a car payment and you want to pay for your child's education because, "Hey, my son is going to college at 18 years old," well, then just make sure that your car payment is not going to exist during that time so that you can simply cash flow the college payment.

These are useful ideas. Now, what can you invest in? Well, if you want to invest in a college account such as a 529 account or an educational savings account, you're going to be limited to mainstream mutual funds or to a private college's growth and investment in prepaid tuition type of program.

Ignoring prepaid tuition, because I think that's kind of a silly program for most people to be involved in, ignoring prepaid tuition, basically those accounts work really well if you want to participate in mainstream investments. Now, you don't technically have to do this. For example, if you're proficient with investing, you've got some really high return investment, you can do a self-directed educational savings account.

You can put an LLC into that educational savings account and you can use that LLC to invest in higher returning investments. You could buy tax lien certificates and put them in your ESA. You can actually set up a checkbook LLC through which you self-direct your 401k, your IRA, and your ESA.

And so if that's of interest to you, then you can do that. Most people aren't going to do that because most people aren't interested in that kind of investment. So the people who I would try to steer towards 529s, ESAs, things like that, those people are generally people that I would say are just going to be mainstream investors, are looking for passive investments.

They don't have to be involved. They're not going to be out on the weekends painting shutters and mowing grass, etc. And they're just looking for simple, smooth, and done for you. And in that case, if you have relatively small dollar amounts, an ESA is a good solution. If you're looking to put more money aside, a 529 is a good solution.

And these are fine with the caveats that I have said. What I would say you look for is choose your state carefully. You can invest into any state's 529 account. I think that Clark Howard does a really good job of listing various 529 accounts and their fees. So I've always sent people to him.

He and his staff update that regularly. So go and find Clark Howard's 529 account guide and follow his advice if you're looking for that kind of ordinary mutual fund type of approach. The things that have often been more exciting to me, though, are more unusual ideas, things that look differently.

So I'll just give you maybe a few, I'll just pick a few of them. One approach is to make sure that your child doesn't need college and that your child is able to support himself by the time he actually gets to college. I think that this is a good plan.

I think that it can be done with academics. I have had so many friends who have been academically capable and their scores were good, their grades were great, and they got paid to go to school. And so, again, back to my philosophy of early childhood rather than saving, I think that makes a lot of sense, is focus on that versus the finances.

I would love to see someone invest into a business that helps their children. I think one of the best things you can do is teach your children how to support themselves at an early age. How you do this, I think it's up to you. Maybe you go to ifixit.com and you buy a set of electronic device tools and you teach your child how to set up a phone screen replacement, a battery replacement, basically an electronic fix-it business.

And he can make money fixing things. Maybe your daughter is very gifted with a certain art and so you teach her how to use that in a commercial capacity. And so I love to see some kind of business created that's kind of sidelined, but I really believe you can invest into it.

I think this, if you took the average family, and I know you're not average and I'm kind of intentionally avoiding asking you a lot of questions because I'm just trying to give you ideas. You have a newborn, right? You can go in any direction. But let's say you took the average person that's spending $150 a month on a 529 account.

What I would do is I would say, "Why don't we spend $150 a month instead on your personal education budget for book purchases and online course purchases?" Here's a credit card. What I would do is set up a privacy.com debit card with $150 limit per month. And I would say, "Here, any course you want to buy on Gumroad, you can do it." I would rather my child spend $150 a month on courses on Gumroad rather than set it aside in a mutual fund so that he can learn how to trade crypto, he can learn how to play in NFT space, he can learn how to make money from an automated Twitter account, he can learn how to make money with his pickup truck.

There's so many things you can do. And to me, that seems like a better return on investment than anything in this strictly financial space could be. And so I really believe that education is more powerful. And if you do the education well, then you minimize a lot of the need for the expensive college tuition.

And then your child can choose, with your guidance and coaching, whether or not college is a good fit at that future time. I just believe that the world is going to be fundamentally different 18 years from now. A second way I think that you can approach this, and by the way, I don't think that the monopoly on education is going to be held as strongly as it is today.

Today, going by the data, I have to continue to argue that college education seems like a really good investment. It helps your child to have more options, opens doors all around the world, etc. But I don't think that we're going in that direction. That's the old model. And most of the old things that college provided, a sorting and filtering mechanism for society, helping your children to have an appropriate dating pool for an appropriate mate, giving basic technical qualifications, many of these things are being replaced with different mechanisms.

The sorting capability of a well-run Twitter account is far more powerful than the sorting capability of being in the right class at the Harvard School of Business. And what you see is that colleges are generally not keeping up with the rapid pace of change necessary for reacting to a changing marketplace.

And so a lot of the markers of things that people really wanted historically are different. So I'm not throwing it out. I'm not an extremist totally opposed to it, but I think it's different and thus requires more flexible thinking. Other things you can do. I think that if you're interested or have the capability, I think it makes a lot of sense to say, "I'm going to invest into a specific asset that's going to be for the benefit of my child." And so one of my desires, which has been stymied by my global wanderings, if I weren't so involved in constant perambulations, then I would have more opportunity to do it.

But one of my ideas has been, I want to invest into a house and I want each of my children to have his or her own house to start them off in life properly so that they have an asset that it can be a hands-on business lesson for them.

And so maybe you look at it and say, "You know what we'll do is we'll go ahead and I did have $10,000 or $20,000 set aside that I was going to use and put into a 529 account. But what I want to do instead is I want to go ahead and use that $20,000 as a down payment on a rental house.

I want to rent a house out and the goal is, can I get the tenants to pay this thing down over the course of the next 18 years so that my new baby is going to have a house?" And so maybe he lives in it, maybe he rents it out and the tenant income pays for his school.

But now we have something that is number one, a business so he can get involved with actual business and start building those business skills. He has an opportunity for work so we can spend time together working on the house, fixing it, etc. He has a house and we have an opportunity for a genuine family business with all kinds of side tax benefits and planning benefits, etc.

To me that's the kind of goal that for me is just more exciting than a 529 account and is vastly better from a tax planning perspective, potentially better from a return perspective if the property is well chosen. But even if you just said the house we're going to get no benefit from appreciation, we're going to get no benefit from tax sheltering, we're just going to focus on mortgage pay down, it's a pretty good move if you could do that compared to the flip side of the 529 account.

I like the idea of my children having collections of things. So maybe your goal is I'm going to buy a silver American Eagle or maybe a monster box of, that's too much, a tube of silver American Eagles for every year of my child's life. This is something I like to do, right, where you make sure that, hey, you know what, you were born in 2021 and here's a cool coin collection of silver or gold, you could do it with gold too, here's a gold coin for every year.

Now I'm not arguing that those, I'm not arguing that a, let's say you buy a gold American Eagle, an ounce of gold every year instead of putting the money into a 529 account. I'm not arguing that the gold will outstrip the return of say a mutual fund. Is it possible?

Yeah, but it's unlikely. But there are other benefits to it, right? Now we have real physical assets that are interesting, the child can touch, can hold, assets that aren't recorded in the same way in terms of financial assets held at financial reporting institutions. And so there is a little bit of fuzziness there when it comes to reporting who owns what.

You have a choice of when you actually gift the asset. And so I'm not arguing you should break the law, just one of the benefits of things like gold coins. So there are lots of things you can do and I would love to see, I guess to lay my cards out clearly on the table, I believe that if you will focus on your child as an individual and consciously choose to spend money actively on the interests, just the interests that your child has, then I think that you can do better with those investments than you can with just putting the money aside in a 529 account.

So I guess one final point would be this, right? The other thing that I think you should seriously consider is I expect by the time 18 years comes by, I expect college to be free in the same way that today education is free of cost for anybody who wants it, just like it's always been, right?

With a library card, now we just have way better resources with what's available for free online. I expect schooling itself to be free. And so the way I look at it is this, I think that government schooling at the college level will be "free" by the time my children are at college age.

I expect it to be as worthless as anything that is free actually is. And so I still expect there to be very high dollar educational institutions available, but I'm not willing to save, especially in college accounts, for those high dollar institutions. If at some point in time my child decides, "You know what?

I want to go to an elite Ivy League university," then either I'm going to be wealthy enough that I can simply pay for it and I'm going to choose that yes, this actually is appropriate because we're going to move you into an upper class or we're going to provide the things that come with that, or let them pay him to come, or let her figure it out.

But I'm not going to set aside these accounts for something that is completely unknowable, especially when the benefits of the college accounts, for example, are not there. So what I do, what have I done? I don't have college accounts for my kids. It doesn't make any sense for me to do that.

I'm not opposed to it, as I've tried to state very clearly, I don't think you're wrong to do it, I'm just not going to do it. What do I do? Well, I invest in my children, I try to buy them all kinds of things that are going to stimulate their creativity, I try to buy them cool stuff that's going to help them, I'll spend money on fancy gear.

Like right now with the travels, I've bought my children kind of mediocre cameras, but right now I'm thinking, okay, I should go ahead and what I need to do is go ahead and buy my almost eight-year-old a brand new GoPro with a Media Mod kit so that he can be doing high quality video and high quality camera shots and start learning a skill of videography.

And to me I view that as an investment. That's a bet and a probably a better investment than money in an account. And so whether it's, I want to be committed to my children's education and I'm finding lots and lots of ways to spend money on that now, and as far as I can see, we're only getting started.

And so I'm going to spend a lot of money on my children's education and I'm going to do it in the very best way that I can. And if the time comes when college comes, I've got a couple backup options, right? I'm going to teach my children and they can always go to a country where college is already free.

Any US American or anyone from anywhere can right now today apply and go to a German university without being German, without speaking German and go completely tuition free. Has to cover his own room and board. Any person can go to college working part time. I put myself through a private school, pretty expensive, did it part time.

Anybody can apply and work my way through, graduated debt free. Any person can go and simply go to a less expensive school and go through slowly, etc. So I think I've said my point. If you want details way back in the beginning of the show, I did a whole series of shows, I think I did like six hours or something on every college account and how to use it and educational savings bonds.

I'm focusing on these ideas because that stuff is easy and obvious. If you decide that what's best for us is to go ahead and set aside a college savings account and we want to do it and we don't want to be messing around with buying houses or gold coins or anything like that, go and open a 529, go to Clark Howard's guide, use one of those 529s, you'll be done in 15 minutes and move on your way.

It'll work fine. But I think that by doing that you're missing out on the really high return activities which are all these other things that I've mentioned. >> Steven All right, yeah. I think you kind of convinced me. I was kind of leaning that way anyway. So yeah, I don't think I'm going to do a 529.

just set aside money and if it does help you feel better to have an account for your new child, what I would say is choose your budget and set up an account for your new child. Set up a bank account and if you were gonna put $200 a month in a 529 account, just put $200 a month into the bank account and then start to see what adds up.

And then in the coming years, it's hard to spend, the only way I've come up with to spend money effectively on the education of my zero-year-old, one-year-old, two-year-old, three-year-old, four-year-old, et cetera, is to have my wife as a full-time mother. That's it. And that's a major cost. It's a financial cost to our family, it's a cost to her, and someday our children will appreciate it.

That's the only way I know to invest in a two-year-old. But when your child starts to get to six, seven, eight, all of a sudden, it opens up the world that I'm talking about in a really powerful way. And so set the money aside in an account and then think about it, that way it's allocated and separated and you feel like you're being a responsible father.

And then, hey, if two years from now you decide, you know what, I really think a 529 account is a good deal, then go ahead and just make a lump sum contribution, put your five or 10,000 bucks in it and move on from there. I said 15 minutes, it turned into be 26 minutes.

Let's go to Thomas. Thomas, welcome to the show. How can I serve you today, sir? Thomas, you're up. - Hey, Joshua, can you hear me? - I can hear you now, go ahead, sir. - Hello? - Go ahead, please. Got you loud and clear, Thomas, go ahead. - Hey, Joshua, thanks for the call and all that you do.

Yeah, I just wanna say I do appreciate the last question. I have a newborn as well and I look forward to any updates that you have on your process over time and if you're willing to share on how you end up introducing activities or especially business aspects to your children in the future.

I did wanna just say for Trey, one plan that I had actually was, I actually set up a 529 account and just let family and friends know that, hey, instead of clothes or toys, that they can contribute to that on my child's behalf and that can get some funding that way.

- I think that's a great idea, absolutely. And people like it. There's no question that people like those accounts. - Yeah. I personally had a question about crypto interest and lending platform accounts like BlockFi, Celsius, Nexo, Cake, et cetera. I'm specifically using some of them to park funds for passive income and/or while waiting for other opportunities.

Just kind of wondering what your thoughts were about any of those accounts, if you had any, if you've met anyone that maybe at conferences you've been to that has anything to say about them. The current stable coin yields are between like seven and 10% right now, so it seems kind of attractive.

A lot of them seem to be venture capital backed, so it seems like there's a little bit less risk there and the liquidity is great. So just wondering what your thoughts were. - I have nothing bad to say about any of those ideas or platforms. My only thought, I'm totally in favor of doing it and I applaud you for being involved.

My only comment is simply, while I appreciate the long-term potential of some of these ideas and while I am wholeheartedly in favor of building and developing and participating in a fundamental reorganization of the global financial markets, I'm not scared of that. I think this still does have to be viewed as speculation rather than as investment.

And so I am very much in favor of speculation, but I try to label clearly what is speculation and what is investments. And so in these marketplaces, because the technology and the platforms are so new and because they are relatively untested, there will be problems and hijinks and just things that occur.

And so whether it's a marketplace being hacked and completely losing, having some fundamental flaw that's shown, whether it's legislative risk, I talk, debate with people about things like, well, is the US American government gonna ban Bitcoin? I always say, listen, you're dealing with the same government that for 40 years banned you owning a gold coin.

So it took 40 something years. For 40 years, you couldn't even own a gold coin. And before that, that was every one he used, legally speaking. And so, I mean, don't say nothing's impossible. And so my only point would be label your activities here very clearly as speculation and then assess your overall financial position to make sure that this speculation makes sense in your life based upon your needs, your goals and your personal risks.

As long as it's labeled speculation, I'm fully on board. - Do you still consider it speculation because the platforms are new, even though the asset itself is a stable coin, which there are certain stable coins that are audited and fully backed and rarely have any sort of fluctuation? - I can't, from personal experience and personal knowledge, I can't speak effectively enough to every single detail.

And so I can't say, I don't have a BlockFi account at the moment. I don't know how to do that. And so I can't say from that perspective, from personal experience. I have read some about it to get an exposure to it, but I can't say it from personal experience.

And so my only comment would be that even the whole concept of a stable coin to me, unless I'm wrong and feel free to tell me why I'm wrong, the concept of a stable coin is a fundamentally new concept that while it's related to an external asset and the idea is, hey, let's tokenize the external asset, that to me still feels very much like a new and a brand new and exciting market, not as a tested and tried and true approach.

Am I wrong? - No, it's still definitely a new asset, even though it's linked to another one to link its value. But yes, it definitely, I could see a future where, I don't know, the US government wanting their own US dollar coin tries to, I don't know, have some sort of law against stable coins or other ones that they don't control.

So no, there's definitely that potential. - Yeah. - I can acknowledge that. - I would like, I have been working very hard to upgrade my education and make sure that I'm competent, but I still have not renamed this podcast as the DeFi podcast, right? It's not, I'm not there yet.

And so I can't speak to it effectively enough to say here's how it all works. My only point would be that you can have, I guess the best example that most of us could relate to would be the mortgage-backed securities crisis of the late 2000s, that you have an asset that is fundamentally always considered a very safe, very conservative asset, and then that asset was tokenized, or more properly, of course, turned, derivativized, turned into a derivative.

And then at the end of the day, that derivative was shown to be far less safe than previously understood. And so when you had those mortgage-backed securities created the original creations of that, the original creations were excellent. They had the same basic value that they always had. But then as the securities were traded and sliced more finely and layered up, et cetera, the market got a whack underneath it.

And so then one day everyone woke up and realized what we thought was a grade A asset is actually a piece of trash. And so everything collapsed. Now, I can't tell you, and I'm not arguing to say that's, I'm not saying that what you've described is that. All I'm saying is whenever something new is created, there are inherent risks that are not yet known.

Mortgage-backed securities were a new creation and it took time for the new risks to be known. And so this is a new market. And while the underlying concepts may prove to be sound, and I hope they are, caution is warranted to say we don't know what we don't know.

It's no different than anything, right? A new medical treatment, a new way of building a house, anything takes time to be tested. So I say be involved and understand the risks. No doubt you could articulate it better than I can, but be aware that this is speculation. This is not a time-proven strategy that has been tested through various markets, through various conditions, that has proven itself through various attacks.

For all of its benefits and glory, Bitcoin is not in any way proven. It is a concept that is being proven, but even the whole concept of whether it's a stablecoin or Bitcoin or anything, this is new. That's not bad, I just say, from a personal finance perspective, label it speculation.

So that's my thought, and I look forward to perhaps in the future talking more about it and learning more myself about the strategies that you're using. John in Pennsylvania, welcome to the show. How can I serve you today, sir? - Yeah, that's kind of a weird question, I guess, but things could change, but there's a really good chance coming up in 2022, our family will just have a very low-income year, and we have enough liquid savings that we'll get through 2022 and probably beyond without any compromises or issues to our lifestyle.

So, you know, take a vacation or two or whatever, but I'm trying to think ahead as to anything that I could do or potentially not do to cause a problem, to take advantage of a year like that that has very low income. Kind of just not being very creative, the only things I could think of is if I wanted to use that low-income, W-2 income to transition any money from certain accounts to other accounts for looking ahead, things like Roth conversions or whatever, but I'm thinking more outside the box on things I have never heard of or just things from a personal finance standpoint that could be an advantageous year for.

Does anything come to your mind about that, or is it just sort of just take care of the basics and keep on with good general personal finance? - Yes, there are a few things, but I don't know that they're as brilliant as I wish they were. I think the obvious solution is take advantage of as many free money programs as you can.

So whether this is Medicaid health insurance, whether this is, if your income is zero, food stamps, right? Or WIC, I guess it's called. Sorry, SNAPs, Nutritional Assistance Program. You can go into government programs if you wanna get involved in that. I think that's a double-edged sword. I don't think it's worth most of that, getting involved with most of that stuff, but a lot of people could do that.

I think the obvious solution is IRA conversions, converting traditional IRA assets to Roth IRAs. Sometimes maybe there's some kind of low-income program that you could take advantage of, a scholarship fund or something like that, a disaster relief fund, et cetera. To me, the only obvious solution that I have is simply the IRA conversions, because that's an income-based scenario.

You can fill the income buckets with your conversions. - Right, and that's kind of where I was going. I was just trying to think, is there anything I've never heard of or thought of that that kind of year would be advantageous to do that kind of thing. So if there's nothing really that I'm missing, then that's probably a good thing that I haven't been ignorant of some major side of things.

- I think you would consider college tuition. This is the classic, if you have it, back to the first call that we began with today. If you have college tuition, and if you can arrange to be unemployed in the year before your child is going to college so that you can fill out your FAFSA with $0 of income, that can help you a lot on your numbers.

The only hesitation I have is I think you can go through and you can be involved in a lot of those kinds of things. I just question if that's healthy for the psyche. I believe that welfare damages people, and I don't want to be damaged. And so getting on the free money train, I think, has the risk of damaging me.

And so I want to be super careful about that stuff. Also, I would say that if you're the kind of person who can comfortably take a year off, then most of those things are just not at the scale where it makes any sense. And so it just, what's the point of having $250 a month of SNAP probably for food that you wouldn't eat?

So it's like, there's no reason. It's kind of how I feel about, a lot of times about credit cards and things like that. I've been doing quite a lot of mileage hacking. I've been testing a bunch of strategies and whatnot. And the more I do it, the more I recognize that if somebody doesn't have a higher returning activity, then this can be a worthwhile use of time.

But there are so many other worthwhile activities and worthwhile uses of time that I kind of just feel like a lot of it is a distraction. And that's how I feel about anything of government programs or rebates or any of that stuff that you can qualify for when you're low income.

It's like, hey, if somebody doesn't have something better, it's really good. The guy who's making just a little bit of money, for him to get SNAP is a big deal and it makes a big difference in his monthly budget. But that's not you. And so it's like, it's the opportunity cost of going and spending time doing that.

And it brings down your perspective. You wonder about the ethics of it. Then you start seeing yourself as the kind of person who needs an extra $3,000 a year of free money. And it's just, that's not healthy. And so my only answer is that I know of is IRA conversions, but beyond that, who knows, maybe the audience has good ideas.

- Oh yeah, I agree. And I think the, what you mentioned about the credit card hacking, that's true too. I mean, I find I do it very sporadically and only when it's very convenient or very easy and low thinking. Unless you're someone that really enjoys it, I think it almost is a wash on how valuable it is.

Just because it takes so much to coordinate all the different transactions and stuff like that. So yeah, I appreciate it. No, that's good. I'm glad I'm not missing anything major. One other maybe quick question. - Go ahead, sure. - I don't know how many followers you have online. - Go ahead.

- The other thing I kind of was focusing on in the next few months, especially, but also in the next year, I'm really trying to build up a lot of just basic general preparation items for me and my family. And this is something where I kind of bump up against frugality a little bit too much and certain things that are really critical, tourniquets and first aid things and things I know that are on my list are high priority items, but I just keep thinking, oh, I'll get around to it or I'll purchase those things later.

And a lot of people will do some fear mongering and talk about how things are gonna be in short supply in the future. How do you, I guess, listening to you sometimes really helps me out 'cause when you're traveling and things are so difficult to get in other countries, I feel like you're really gonna put a good spin on it, how it's like, well, it's just available in America, so just go get it and don't worry about it.

But when you're thinking about things like that, when you're living less of a nomad lifestyle, do you just kind of buy all those things and just put them aside and say, okay, this is a one big time purchase, or do you kind of buy slowly on preparation items until you kind of have a good stockpile?

What do you do with that? I'm thinking about that. - It's a fair question because there are some things that are fun to spend money on when it comes to prepping, and there are some things that is not fun to spend money on, right? I like spending money on guns.

I like guns, it's fun. I can make a good argument that guns hold and increase their value, they're portable, they're just wonderful, and so it's always fun to go and buy a new gun. My least favorite category to spend money on is medical supplies, especially in abundance, right? Because medical supplies expire, and so it's like, well, how hardcore am I gonna be?

It's one thing to say, I should have a first aid kit, in fact, I'm gonna have a first aid kit. It's another thing to say, I'm gonna be prepared for the end of the world as we know it, and I'm gonna stack bandages, I'm gonna have two Rubbermaid totes full of extra bandages in case someday I'm fighting off the golden hordes in the street and I come home gut shot, and my wife has to do stomach surgery on my kitchen table, right?

That's a little hard for me to get excited about actually going out and spending tons of money on bandages in a scenario like that, 'cause that's just a little hard for me to believe. So here is the best approach that I have come up with. First of all, to ask yourself the question and say, how significant is this event?

I was talking to a friend of mine recently, we were talking about medical preparedness, and I feel like I'm probably a pretty good prepper, because I have continually gone from stationary to mobile, and stationary to mobile, and stationary to mobile, and so you understand pretty quickly, what are the things that I need to have, and what are the things that I don't need to have?

And you recognize, okay, these are the certain things that are important, so we're talking about medical preparation. And he made the point to me, he said, there are two things that can kill you fast before you can get to a doctor, and there are two things, and those two things are rapid blood loss and/or anaphylactic shock.

And so we talked about tourniquets, but I've had a tourniquet for a long time, but he said, what you don't have is an EpiPen. And he said, you should have an EpiPen for, and none of my children, thankfully, we're an allergy-free family, to my knowledge, none of my children are allergic to anything, we've never had any allergic responses that are a problem at all, but he said, you should travel with an EpiPen.

And so a few days ago, I was in Spain, and I went to the local pharmacy, and I paid five euros, and I bought an EpiPen. And, 'cause it just made all the sense in the world to me, it's like, if these are the two things that can cause, if these are the two things, if they happen to my child, that I can jump in the car.

And in fact, a few weeks ago, my son, my youngest son, was straddling a fence, fell down, bashed his head on the pavement, and gashed his forehead open. Wife calls me, says, you know, my son has just fallen down, cut his head, come home now, he's at the store.

So I went home quickly, and it was one of those things where, hey, here's a medical emergency, I didn't know how bad it was, she didn't say, just said he's gonna need stitches, and I had to go home and deal with it, and took him to a local clinic, 'cause it was on his forehead, I wanted to make sure it was professionally closed.

Thankfully, they just glued it closed. So it wound up being not a big deal, but it's kind of put me in that image, right? Here I am speeding home to try to pick up my wounded child in a foreign country, and now I'm gonna race off and find a hospital.

How do I find a hospital? Do I have what I need to be able to get to a hospital? Well, if you know that the two things that are going to, if you know the two things that could potentially, that you could die from in about 20 minutes or less, right, die in 30 minutes or so, that it might take you to get to the hospital, or flag down help of some kind, are rapid blood loss and/or anaphylactic shock, then it makes all the sense in the world to go in and buy a bunch of tourniquets.

And so in the past, I was like, I don't wanna buy a bunch of tourniquets, right? You're gonna spend this money and you're never use this thing but now, like, I get it, right? A fresh, it sounds expensive to spend $30 on a nice cat tourniquet, but then, you know what?

I'm gonna put a tourniquet in every one of my cars, I'm gonna put a tourniquet anywhere and several places in my house, like, I'm gonna do it because that's cheap insurance versus the flip side. So the first thing is looking at what's gonna happen and how immediate is it?

It doesn't make any sense in the world for me, if that's true, for the rest of my life, not to always have EpiPens around and tourniquets around 'cause potentially that could save a life. Now, am I gonna stack things deep in order to deal with my being gut shot on my kitchen table?

I don't really, I can't see that scenario being so much and so when I look at it, as I say, can I have a balanced approach? And so with something like food storage, for example, I think it's probably a little excessive for most people to start with a goal of saying, I'm gonna save three years worth of food.

And so I look at it and say, well, let's start with a little bit. What's a month of food? And so for a month of food, that's easy to do and you probably just have more of what you have than a few months. And then by the time you start to get into six months or so of food, then most of that stuff is pretty cheap.

And so I, again, look at it and say, okay, if I'm gonna buy buckets of corn, wheat, rice and beans, that stuff's super cheap. You put it outside, it should last for 30 years. It's not that big of deal for me to spend 500 bucks on it and this stuff is last for decades.

So my model is start by saying, a short term, three months, six months, and kind of build out. And then finally, to try to be well balanced. So what I think is often missing is people aren't well balanced. And a lot of the things that you can do to be well balanced, they don't cost a lot of money, it just costs a matter of thinking and hassle.

So if you're gonna be unemployed, then this is the time just to make a list, make your lists and then just spend your time cruising Facebook marketplace every day or so and just moseying around and seeing what's there instead of spending a lot of money because the vast majority of so-called prepping items are actually really cheap.

And if you have time, just wait for a deal. So something that's important to me is a generator. And so if you don't have a generator, I think you start with a good one, right? Go and buy a good generator. But it doesn't have to be a lot of money, but just go and buy a good generator.

But then maybe at some point, you might wanna have a backup. Well, then just wait for a deal to come along. And so if you have something, if I have a couple of months worth of preparedness, if I have a water filter, if I have a deep pantry with some spaghetti and spaghetti sauce, and I've got some of the basics, then no, I'm not gonna be in a big hurry to go and spend lots of money.

Most of that stuff, just sit and wait and find some deals along the way. - That sounds great. Yeah, and that's exactly where I'm at. There's a lot of things where I say I'm well beyond the basics, mostly due to your course. But yeah, it's these things where I feel like I am waiting for deals and I'm getting things slowly, sometimes even free.

And sometimes I just think, oh, it might be too cheap by waiting for certain things. And maybe in some categories I am, like the medical things where you said, blood loss or anaphylactic shock. So I should probably prioritize that. That's what it really sounds like I need to do is look at my list while I have time and essentially prioritize it and then just work through that systematically.

A lot of things also are just time-based, making lists of places to go in every direction or whatever and having names and directions and numbers for hotels and things like that. I started those lists and then I don't finish them and I abandon them. So really it's just the things I need to sit down and spend some time on, I think.

- Even if they're 20% done, you're far ahead with 20% done. - Right, right. - So just having thought through, and this is what I said in the course, I don't have every single list laid out. I would love to be so organized that I had it all laid out.

Right now I'm traveling full-time, so I have nothing. Everything is something. But what I will say, just thinking through stuff is what makes the difference, really. That's 80% of it is just thinking it through. So that you said, oh, if I were in this situation, what are some ideas?

That gets you 80% of the way, and the last 20% you finish up. I think the only thing I would say is that you wanna be thoughtful when it comes to spending money. You wanna be thoughtful and make sure that you have an exit strategy that you're happy with.

I think the great danger with preparedness is often that it's so emotional for people. People often get scared about the end of the Mayan calendar or the Hammurabi blah, blah, blah, or the nuke attack or something like that. And so they respond in a place of emotional fear, and then they start just spending money wantonly.

And then they wind up with the classic pallets of MREs in the garage after Y2K that they just never did anything with. And so I have always wanted to avoid that, and I've always wanted people to avoid that. So the first thing is don't do anything out of fear.

If you're acting from a place of emotional fear, there's just no reason. Now, be prepared to act against that, to be prepared against that. And so I think most of that is financial preparedness. I'll give a point. So two years ago, sorry, a year and a half ago, when it was March of 2020, and I was looking at the, I started warning about the coronavirus pandemic, I was watching the coronavirus pandemic, et cetera, I was feeling the fear of here is what I consider to be the worst case scenario, a pandemic.

And so I went to the store, I had money, I had a credit card, I went to the store, to the local warehouse store, and I bought carts and carts of stuff. And I spent a few thousand dollars. My exit plan was I'll probably eat most of the stuff up and/or give it away.

And so my point is always have an exit plan. So I had other stuff, I bought some medical equipment that I thought might help, I bought some extra medications, I bought stuff to treat, if one of my family members came down with the virus and they needed to have fluid, so I stocked up on extra medical stuff that seemed appropriate, oxygen, and did the best that I could with the limited information that I had at that time.

At that time, we were seeing pictures of people dropping over in the street in China, we had no idea what was actually the case. And so I went and I spent money. And so I think that your lists are the valuable thing to do because then you know how to spend money when it's time to spend money.

And I felt like I was executing that kind of last minute strategy effectively. I had some basic preparations at the time, but I saw the risks mounting very quickly. I was looking at the pandemic and saying, this is potentially very, very bad. And because this is very, very bad, potentially very, very bad, this is a good move for me to go ahead and spend money.

And so that was a point where there was an acute risk and I was spending money fast. Now, thankfully, while the pandemic has been significant in its impact on all of our lives, it's more been on the order of run of the mill, like big significant, as long as you didn't suffer death because of actually being infected.

For most of us though, it hasn't had the widespread shortages that I thought were possible. It hasn't been a dramatic economic collapse that I thought was possible. So far, although we're seeing increasing rates of inflation, so far it hasn't been a massive catastrophe, financial, you know, it's not a hyperinflation.

And so, so far we've done pretty well and it's not been as bad as I feared. So when I left where I was living, by that time I made, when we decided to leave, I had several months and for basically several months, we bought some fresh vegetables, but we ate a lot of storage food.

So I ate down several months worth of food. And then I donated the rest of the food to a local food shelter, food pantry, that was systematically, had been throughout the pandemic, systematically giving away food to people who were in need of it. And so I felt like it was no, it was a win-win.

I was just happy to donate a couple thousand dollars worth of bulk foodstuffs to people who needed it more than I did. And it was a simple and effective exit strategy. So when you're looking at money, ask yourself, what's my exit strategy? And this is where there's a big difference between hard tangibles, some that are easily sold, something like, I don't know, a new gun or ammunition, versus something that's a little bit more difficult, like medical bandages.

The medical bandages are important, but what I would be inclined to do would be to have some medical bandages and then go cheap, like buy lots of, you know, sack, linen cloths or something like that, that, yeah, it's not as good as proper medical gauze, but it allows me to feel like I've not been careless just because it was expensive.

But when it comes to something like, I don't know, a new gun, if you need one, very few of us need another one, but a new gun, it's like, okay, if I go and I buy a brand new gun today, that gun just simply won't lose value. If I put a lot of rounds through it, it might lose 10% or 20% of its value, which I might make up if I sell it private party in the future.

Yes, if I take it back to the dealer, I'll take a 20% loss on it, but so you know your downside. So if you know your numbers and you know what you're dealing with, you're good to go. Same thing with my generator example. If you go on Facebook and I did this, right?

I bought a generator and I had it there, used it sometimes, and then I just store my stuff on Craigslist or Facebook. This point, store my stuff on Facebook, just sell it again and put it in money and then turn the money into the next piece of gear in the next place.

And so in the used market, very rarely, if you're at least thoughtful about shopping and you're shopping in the used market, very rarely can you not get out of your stuff for maybe just a 10% hit. And so the numbers are actually not as big as you otherwise think.

What is often the case is that you're unaccustomed to thinking about tangibles as being financially valuable. And this is definitely something that did take, has taken me time to change. We're so financialized in our thinking that we exclusively look to our net worth statements and the digits that are written on our spreadsheets as reflecting our value.

And if those digits are not changing, then we feel like we're not making progress. But that's simply not true, right? If you buy a generator and you spend $500 on that generator, you can sell that generator at any point for $400 in 24 or 48 hours. And so that is a real asset.

And while it's harder to account for on a balance sheet, when you're spending money on durable tangibles, it's actually something that does have value. You're not spending money, you're just saving it in a different form. And so that would, I guess, be the last thing, John, is simply that a lot of the purchases that you make for prepping are not actual expenditures.

They're either, they're savings just in physical tangible forms, or they're insurance, right? The EpiPen, or I just did a post this morning on my social media about my GPS transponder that I travel with, right? It's insurance, right? I feel good knowing that I have an SOS button that I can push literally anywhere on the planet and help will get there.

It makes me feel good. So it's insurance. And so either view it and say, this is an insurance payment, or this is just a transfer from fiat money to tangible, and it's not the same as just going and spending money wantonly. - Yeah, no, I agree, and I appreciate the perspective.

That's a very good way to frame it. And yeah, I can say that's true. Every little incremental preparation I do, it does bring more peace of mind, and I think it's more peace of mind than the expense that it was. So it's good advice, thank you. - Good, my pleasure.

All right, we go on to Houston, Texas. Welcome to the show. How can I serve you today, sir? - Hey Josh, this is John. Can you hear me? - John, I can hear you well, go ahead. - Great, hey, thanks for taking my call. Love the show. I'm in my first year of a potential early retirement.

I don't own any property. I'd be a first-time home buyer. I'm looking to just buy something once and own it for a long time. Potentially buying a piece of land and building the house myself on it. Just wanted to talk about financing options. I have the funds to hold in sort of liquid investments, such as like equities spread across a few different accounts, taxable, traditional and Roth accounts.

But I was wondering, with interest rates as low as they are, banks pretty much just throwing money at people, I was thinking, man, that's hard to kind of pass up. Trying to do some kind of financing rather than just paying it in cash. So I've looked at a couple options.

I guess one of the things I saw also was some of these brokerages will lend you money against your securities. So you don't have to-- - It's nine o'clock. - Sell them and realize the capital gains and you can kind of use that. I was wondering if you had any thoughts or just pay it in cash and forget about it.

- Will the banks lend to you without an income? - Yeah, I think that's gonna be the biggest hurdle. You know, I'll have a W-2 this year, but that's just from the last of the income I was making from my previous job. And then next year you won't have a W-2.

So I've read about no income type loans, but I'm willing to bet that the interest rates on those if they're even still offered, but it would probably make them not make sense for me. - And are you single? Do you have other family members that are also involved in this decision?

- Just me. - Okay. I think if I were in your shoes, I would build it myself and I would just pay cash for it. And I can give you some ways to potentially make that more appealing. It's certainly you wonder sometimes, and am I being stupid for turning down cheap money?

And I'm not opposed to financing, I'm not opposed to your financing it. It's one of those difficult things. But when I look at it, if it's just you, then, and if you're going into early retirement, you're gonna need something to do. And if you're thinking about building the house, I think that you would enjoy the project more, building the house that you wanna live in, doing it yourself, and making it part of your just overall plan to do it to a level that's appropriate for you, but do it frugally.

And you'll probably spend less money if you just simply pay cash yourself. And you'll be done with the risks of financing. Because although I don't think it would be risky for a financially independent person to borrow money for a mortgage, it's not risky in that scenario. Right, if your mutual funds fall apart at the stock market, just goes bananas forever.

Like we got big problems and as we see a lot of times, mortgage companies don't foreclose, right? Sometimes they put, they're legally prohibited from foreclosing in some situations. And so I'm not someone who says it's just a necessarily risky scenario. But at the end of the day, it is still really nice not to have that hanging over your head.

And what I would say is the simplicity of it could also be helpful. So here would be some things that I would do to probably sell myself on a mortgage. On building the property myself and just using my own savings rather than financing it. Number one, I would say I could probably get better deals and I'll be motivated to get better deals if I just pay cash for it.

One prior point that I should have started with, I should have done it in this way. If you're gonna build a property on land that you own or have bought, then you gotta deal with the difficulties of a construction loan, which is gonna be more difficult. And you're gonna, if you do that also, you'll have constraints on the construction loan put on you by your lender as far as the certain designs that they're willing to deal with, et cetera.

And so it sounds to me like you're the kind of guy who would probably be well suited to say, this is the house I wanna live in. I'm gonna build the kind of house that I wanna live in for the rest of my life. I've worked hard to do this.

I'm gonna just make my house. Now, you'll think about saleability. It'd be foolish not to. You'll think about code. Obviously, you'll have to, in fact, here in Houston, you have no building, or sorry, you don't have zoning. You have building codes, but not zoning laws. So you'll have your own, but you can build your own house without thinking about, well, what is the finance officer gonna say about my plans, et cetera.

And so the construction loan and building your own house is even more of a reason to just use your own money. And then if you wanna loan later, then consider putting into place a traditional loan. Second thing I would say is that if you do it yourself, you'll be motivated because you're actually spending cash rather than debt.

You'll be motivated to get better deals along the way. And so you'll negotiate a little bit more. You'll be willing to use more used recycled materials, which would be great, both from just a good stewardship perspective of using good things rather than always buying new stuff, and also from a cost savings perspective.

And then I think one other benefit, you could build a house and do it in such a way that you can skip insurance. If you get a mortgage, you're gonna be required to keep insurance. I don't know what insurance rates are for you, but if I had a debt-free house and I were living and that house was a modest representation of my net worth, at least being from Florida where insurance rates are high, I would use the opportunity to skip having homeowner's insurance.

And then you could even talk about things like privacy. I care a lot about personal privacy. You have an opportunity, if you're at all interested, you have an opportunity to have personal privacy because you can buy the land, own it in an entity, disconnected from your name. And that's relatively easy to do, first of all, when you're paying cash, and it's even easier to do when you're building a property, except possibly with a DIY builder, but you have more privacy than if you do financing.

And so those are some reasons I would look at, and I think my guess is I would go with just simply pay cash for it. Be done with the stress, you're getting out of the work life, be out of the financial space, own your house, have your cheap property tax bill per year, have your investment portfolio, and move on with your life rather than staying in the having monthly bills space.

- Right, yeah, that sounds good. I have seen that being a cash buyer, you can get into certain areas and get better deals, people in different situations wanting to have a quick sale. So that resonates with me, that second point you made. Just, I guess, a follow-up on that, putting the house and the property in an entity, is that something that I'd really have to get set up before I purchased it?

Or, I mean, would I lose the privacy if I purchased it in my own name? 'Cause I don't have an entity set up right now, and if I had to move on something quick, and then I guess I'd probably have to transfer the deed from my own name to an entity, would that kind of negate the benefits of it?

- Go and read Michael Bozell's book on this topic. I forget the name of it, I can look it up. But go and find his book where he talks about setting it up, and then investigate the details in your state of setting up a land trust in your state, and see what's possible with that.

You do need to, it would be best for you to do a little bit, if that's interesting to you, it's best for you to do two things. Number one, it's best for you to do the research now, and number two, it's best for you to do some practice now.

My experience with privacy techniques is, first of all, you can think about how hardcore you would want to be with regard to privacy, and why. And being as hardcore as possible, just because it's cool, in my opinion, is not the right answer. You have to have a reason why you care about privacy, and enough motivation to actually do it, because it is generally inconvenient to do.

Now, someone like me, right, making my living on the internet, being well familiar with what happens when public personalities get doxed, I have a higher motivation than most people to protect my family from the dangers of the internet world, in which you go viral in a day, and all of a sudden, for some scandalous thing that you said or some scandalous thing that you thought, and all of a sudden, the world comes crashing down upon you.

I sleep well at night knowing that I'm hard to find on the internet. And so you may not have that same risk profile, and it's totally fine for you to say it's not a big deal to me. But the reason I said practice is that what I have done is I have, over the years, I have practiced a lot of the techniques, and I've decided for myself which ones I'm actually willing to do now and which ones I'm actually willing not to do now.

And so I've backed off a lot on some of the privacy techniques that I've put into place in the past because they were simply too inconvenient. And if you want hardcore privacy, then you, if you want hardcore privacy, you need to be skilled with the techniques of privacy in order to actually maintain it.

It may not be necessary for you, right? Maybe your threat profile is simply, you know what, I live in Texas, I'd like my house to be homesteaded and asset protected for me. I would just like to make it a little bit more complicated to look up on the internet.

Well, maybe there, something as simple as a living trust might give you what you're looking for. You can still be on the record with all the utilities companies, you don't have to use a pseudonym with all the utility companies, you don't have to have necessarily all your personal mail go to another space, and you're good enough with a living trust.

And so I would say the first thing is just think about what you would want, how interested you are in personal privacy and how willing you are to actually put it in place. - Okay, that would be the main advantage would be the privacy aspect and I guess asset protection potentially as well.

The house actually wouldn't be in Texas, which has really good asset protection laws around houses being out of state, but would those be the two primary advantages or any sort of financial or tax advantages to some of these entities? - No, there's no financial or tax advantages. All they're gonna do is add cost.

The costs are modest, but they're gonna add cost. So the cheapest thing you can do is just buy the house in your name, register it, be a normal person. Have all your mail go there, have your car registered there, that's the cheapest thing you can do. Privacy adds cost and complexity and inconvenience to your life.

So if you want the benefits of it, there are some really good things. And I think that for a lot of people, and again, you may have really no threat profile where it's just at all important to you. But for a lot of people, I don't have a tiering system perfectly worked out, but just think of it as like lower tier, it's not lower tier, it's middle tier privacy.

If many people did a few basic things and here are the few basic things and you have an opportunity when you're moving to a place to do this. Number one is, first of all, don't ever send all your mail to the house. If you're willing to simply use a post office box nearby, send your mail to the post office box instead.

Because that's the simplest thing, is you get on every list and it just floods in when it's at your own address and then you never get the stuff off the internet. Anytime anybody Googles your name for the rest of your life, that address is going to be there because you signed up for everything.

And so kind of 101 is have a post office box. If you want to have a private home, you can do it. And you register the home in an entity, you can do it with a blind entity where it's not looked through to you. The complexities come from financing and insurance.

So again, back to your threat profile. If you want to have insurance on the property, the insurance company is going to know who has the insurance policy. And the same thing with financing company. That's fine for many people because what many people worried about is I'm on the front page of Reddit today and all of a sudden the crazies start sending porno magazines to my house.

I don't want that. And so it's fine if the insurance company has my name, the financing company has my name. The opportunity is because you could set up a situation where you don't need insurance and you don't need financing, then it's relatively easy for you to avoid those risks.

And so you can just simply buy a piece of land and with the exception of the complexity of building, where is the contractor going to do it? If you're going to do it yourself, then there's going to be a lot of your footprint from a privacy perspective on that property as an owner builder.

If you have a contractor build a house for you, then you're good to go. And again, you have to ask how worthwhile is this? And then you just simply register your car in an LLC and register those things to a different address. And you've got really high quality privacy.

And then final thing is put all your utilities into a different name. And so what you would do is simply set up one identity for your house. And so it's John Jones who lives at the house. The utilities are in John Jones's name. That's easy to do in today's world.

All the magazines come to John Jones at that house. And whatever your name is just simply resides over here at a different place a few miles away. So it's a really phenomenal system. It's really nice to lay your head at night knowing that you're harder to find, that your friends know where you live, but you're not as easily findable.

You'll lose a few things, right? You won't be able to legally register to vote in that scenario. You won't be able to, because you've got to be registered to your house if you're going to legally vote. And so I don't know anybody who cares about privacy who's registered to vote.

And there are some other things, but it's really nice. And if you're going to be in a place for a long time, it can be one of those things that is easy to set up in the beginning and is really hard to fix down the road. So that's why I raise it for you to consider.

- Yeah, great. Appreciate the insight. Could you just repeat the name of that author again? Michael... - Michael Bazell, B-A-Z-Z-E-L-L. I think he's still doing it. It's Intel Techniques. Let's see if that's still his website. Should be, I don't know why he would have changed. So his website is inteltechniques.com.

He has 232 episodes of a podcast. And oh, look at that. He's got a new book that I have not read. I read all his other ones, but he has a new book called "Extreme Privacy 3rd Edition" that I have not read. And so his previous one was the one that I was recommending, but I would definitely, I will order that as soon as I finish recording the show so I can read that book as well.

And I would recommend get his stuff. If you're new to privacy, don't start with his stuff because he's hardcore. Start with J.J. Luna's book. Have you ever read J.J. Luna's book called, let's see, my library, "How to Be Invisible." Have you ever read that? - I have not. - Okay, so pick up a copy of J.J.

Luna's book called "How to Be Invisible." It's an older book. The most recent edition was published in 2012. And so it's a little bit out of date with regard to some of the current best practices in the privacy community. But what Luna does that the others don't do as well is Luna is motivational and really good at storytelling.

And so Luna's book may put it within you a desire to be private. And then if you have that desire to be private, then go ahead and look at Bazelle's stuff. The last thing I would suggest for you, hang on one second, stand by. The title, I found the title, what I wanna recommend is actually a listener of the show and a client of mine who I've done some work with.

He just wrote a new book called "The Watchman Guide to Privacy." Reclaim your digital, financial, and lifestyle freedom. And I think that this is actually probably a better second step for you versus Michael Bazelle's stuff 'cause Bazelle is super intense, super hardcore. And I think a lot of people read his stuff and just walk away saying, yeah, I'm not gonna do that.

But Luna's stuff is getting a little bit dated. And so the book I would say is "The Watchman Guide to Privacy," "Reclaim your digital, financial, and lifestyle freedom." 10 bucks on Kindle. So go with that or 18 bucks on Amazon and a really good opportunity for you there. I just blanked on the name of the book for a moment.

So those are my recommendations. Start with those books, grab Luna's book and "Watchman Guide to Privacy." If it interests you, then you can learn a lot in Bazelle's stuff as well. Make sense? - Yep, great, thanks Joshua. - My pleasure, thank you for calling in. All right, we go next.

Two more callers here. We go to California. Welcome to the show. How can I serve you today? - Hey there, can you hear me okay? - Sounds great. - Great. Okay, well, Southern California is relevant to this. I'm young and super interested in house hacking and Nomad. And I'm just getting into it.

I went to, I think his name is James Orr. James Orr, his website. Is that the dude? - Yes. - Okay, I went to his website and watched through some of his two hour classes on YouTube and stuff. And I'm super interested in it. And he's talking about Northern Colorado and the markets there and going super deep into those local markets.

And I'm curious, I mean, it seems like a very difficult and hard thing to get into real estate in Southern California. And I don't have any illusions about that. But at the same time, some of, you know, house hacking and Nomad in particular seem like they could be options for me and my wife.

We have no kids. And we're saving a lot right now. So I'm also open to just trying to figure out what to do with, you know, some of that cash for midterm, longterm, whatever. We're currently renting our primary residence house for all five years of our marriage. And that's felt like a little bit of a non-optimized use of money for where we're at.

And so that's what's got me looking into it. But at the same time, living in Southern California, we're not like filthy rich or anything. So I can't like, you know, get million dollar properties or anything like that. And just hearing Mr. Orr talk about some of the particularities and some of the reports he's bringing up, some of the data he just has on what kind of single families are available, what they typically go for, what typical rents are, just that sort of thing.

I was like, wow, that's such good info to have. That would be probably invaluable in helping do more research and try to make some sort of a decision about whether we want to get into that. We're kind of also looking at just buying our first home anyway. So it may happen, even if we don't go the nomad route, we may just be looking for a house anyway.

So that's kind of all the facts of the situation. But my question is, where would you go if you were me to just start trying to learn more about making a better educated decision that's maybe even numbers driven based on market statistics and stuff like that? Like I wish I knew everything that he does about Northern Colorado about Southern California.

Does that make sense? - It does. I would call a real estate agent and I would go on Reddit and see what I could find in those two places. First of all, a real estate agent will give you a sense of what is possible. Many real estate agents will not be all that clued in to the technical details, but at least that would be good to talk with a couple of people who are involved in it and get an idea of what the numbers are, et cetera.

And then I would bet that with a little bit of digging on Reddit, you could find some active conversations on it or I would go to a couple of the big real estate forums. I would imagine BiggerPockets would be a great place. I haven't spent much time in many of the early retirement forums in years now, but I would go into some of the big early retirement forums and just try to start a thread and ask the people there and get a sense of, try to find some of the people who would have the data and have the experience in your area.

Good thing about Southern California is there are a lot of people there and you should be able to find them hanging out somewhere on the internet with some insight into you, into the situation. What stands out to me, and that would probably be better for you, by the way, than necessarily the realtor, 'cause most real estate agents are not gonna be ready to go with all that data.

What I would say though is probably it's unnecessary for you to get that deep into the data. And one of the things that I believe has caused a lot of people excessive, just held people back, and this includes me, is over-analysis. And I think this is especially true with real estate.

You come across a good idea and you think, hey, this could be a good idea, and then you say, well, I'm gonna research it and I'm gonna try to find the best deal. And a lot of times people who spend time trying to find the best deal never make a deal.

And if in something like real estate, in order for you to actually make money, and in order for you to actually use the strategy, you just gotta do it. So the great thing about real estate is it's pretty easy to get into in most situations, and it's pretty easy to get out of.

And I remember before I did my first real estate purchase, it just made me, I was so scared. And then after I got in, got out, then all that fear went away. I was like, this is simple, right? People buy and sell houses all the time. And so the way to look at it is basically, what's my downside?

And what I would say is, in your market, I don't think, well, I think that California has headwinds. I don't expect your market to plummet. It's not gonna fall apart. I think you've had, what, something like 2% growth in San Francisco this year, but many, many home values in California have increased by double digits across the state.

California, a lot of people love it. It's a very strong market, and I think it's a strong market 'cause there's a lot of wealthy people, and wealthy people are less susceptible to financial ups and downs than a lot of other people. And so I'm not scared of the market if the numbers can work.

And so what I'd say is, I would just go house shopping, look at some stuff, and just go look and physically tour some houses. And you should have some sense of the rental market because you have been in the rental market. Tour some houses that you think might work and get a sense of what's available for you, and then talk to some financing agents and talk to some mortgage brokers and see what options are available for you with financing in different scenarios.

And if you're gonna spend a few weeks doing that, you'll have a very good sense of whether those strategies will work in your area or not. And so I've given you my answer for where to find the data, but I'll tell you that I think the data is interesting, but not that big of a deal for a scenario like you're describing.

If you have dual income, no kids, saving plenty of money, you can probably finagle the financing. If you get into it and you can put your tenants in place to help you do it, you're probably good to go. And you should have enough wiggle room in your budget that if you have vacancies or unexpected expenses, you can just cash flow them.

That's the advantage that high income, or that's the advantage that at least moderate income people have in the real estate space, is that you don't have to make everything from it. And if you'll get in and start, if you'll get in and be an owner and a buyer, then you'll position yourself in a sense where things are actually gonna, you'll position yourself to where you can actually take advantage of what's happening.

And even if you only got mortgage pay down, that's still benefit. You don't have to make the best deal out there. And again, telling you from hard won experience that I used to think I've gotta make the best deal because I went to real estate seminars and people said, "Oh, you make your money when you buy "and I gotta get the best deal." And so I thought, I gotta get the best deal, I gotta get the best deal.

And getting the best deal is exhausting sometimes. And so I've since changed my opinion. I've since said, you just gotta get a deal. And then in time, you'll get better deals. And there's no question that you wanna get the best deal that you can, but sometimes the best deal that you can get might be just pay retail.

And in the strategy that you're describing, even paying retail is not bad. It's not the best, but it's not bad. So go and shop and focus on taking action. And if you get into it and you decide, "Hey, this doesn't work for me, we don't like this," then sell the house and move on.

- Killer, thanks so much for that. Appreciate it, that's all I have. - Cool, thanks man. - All right, Thomas, you said you had another question. We'll do it. We'll wrap it up with your second question. Go ahead, sir. - Hey, Joshua, thanks for taking the second question. Actually kind of relates to the last one.

I was, wanted to ask, I remember you talking about wanting to build a real estate portfolio in the past, and I just kind of wanted to know if that was still your plan and what type, what I guess area of real estate were you looking at doing? - My plans personally have been stymied by my sense of frustration with the United States of America and my wondering whether I want to divorce myself from that particular country or just go to counseling and go back into it.

And so I left the United States basically almost three years ago. And when I left the United States, I set out a plan to establish myself so that I didn't have to be connected to the future of the United States. I was very concerned about the, I was very concerned about the long-term future of the country.

I was very concerned about legal changes that would affect me, that would cause me moral troubles, just personal sense of my conscience and my own ethical ability to live with myself if I were involved with that country. And just a concern about the fact that I hadn't really taken the measure of the world in a way that I should have, that I basically, like most of us who grow up in the United States, that I was born and raised there and just seemed like the best place, and after all, we're the best country in the world.

And so I left with a goal of putting in place a plan B, the ability to not have to depend upon the United States. And so over the last few years, I have systematically executed on that. So at this point in time, I could never go back to the United States the rest of my life.

I could divorce myself from the country. I could renounce my citizenship, and I could live in several places around the world and have a very bright future without that. So what has been interesting to me along that journey is that I now, since I don't have to be in a relationship with the United States, I now feel much more peaceful and much more detached, and I can appreciate more objectively and dispassionately some of the good things about living in the United States in a way that I was blinded to previously by my frustrations with the country.

And so right now, I'm in the process of basically trying to decide, for let's say the next five years or so, five to 10 years, do I want to be involved with the United States or not? So along the way, I put most of my investment strategies on hold, especially with things like real estate.

I don't own any real estate in the United States. And what I have been questioning is, well, do I want to be involved in business in the United States? And by the way, I primarily want to be involved in investing in business, not in real estate. I think that real estate is great for a lot of people, but I would personally like to be involved in business.

I want to fix and flip businesses. And so that's something that I have interest in. That's something that I believe I can build the skills to do and that's my primary plan, is not to be not real estate necessarily, but business. But to answer your question is that I decided that these personal decisions were of a higher priority for me than buying houses and buying rental houses and things like that.

So I made the conscious choice to sit out and ignore the last few years of real estate. So where I'm at right now is at the moment, I am traveling around the world and I am systematically trying to figure out, are some of the international options interesting to me enough for me to commit myself to not being in the United States?

Or are the lifestyle considerations of everything being easy and simple and cheap and I know how it works enough to convince me to move back to the United States? So from a real estate perspective, I'd really like to go to Southeast Asia before I buy a house in the United States.

I'd really like to go and put boots on the ground and tour around Thailand and Malaysia and Cambodia and Vietnam and Taiwan and South Korea and look for opportunities and ask myself, are there opportunities here? Because I think there are a lot of opportunities. I've spent a lot of time in Latin America.

I understand the markets there. I see opportunities in some of those places, but I also don't see necessarily the same growing economies as Southeast Asia. And so I'm trying to get myself to Southeast Asia to spend some time there. Unfortunately, COVID has derailed my plans. So just kind of an honest, long-winded way of saying that my issue right now is, do I want to have anything to do with the United States?

At the moment, if you were to ask me a year ago, I think my answer would have been, I don't wanna go back. I don't want anything to do with them. I don't want them in my life. I don't wanna go back. Today, I think I'm softened on that.

And I talk, I think, almost every day, and I talk with my wife almost every other day, and I try to figure out, well, what do I want? And the biggest challenge here for me is simply my children. I've had a lot of freedom to kind of wander around because my children have been quite young, but my children are not as young as they were.

And so in order for me to have the kind of family life that I envision, I need to make some of these bigger decisions. And so I'm right in the middle of deciding that. So if I go back to the United States, then I will put in place a certain set of strategies.

If I stay out of the United States, I will pursue alternative strategies. And basically, in my head, although I have no firm deadline, I'm really trying to come to some clarity on that personal question over, say, the next six months or so. And that's the basic reason why I'm wandering around the world right now.

So obviously, it's not do or die. You can change anything, right? That's one of the things that I have come to appreciate is I could move back to the United States and I could leave a year later, just like I could decide I don't wanna leave and I could be gone and I could change my mind a year from now.

But I don't think for the wellbeing of my family, I think it's more important for me to make a clearer, give clearer direction where there's more consistency versus changing my mind all the time. And so since I have completed my comprehensive plan B, then I feel a lot better now.

And so right now, over the next six months, I'm personally trying to decide the answer to that question. And then that will drive what I personally do with regard to future real estate and business activities. That make sense? - Definitely. Thanks for sharing, yeah. Yeah, if you're willing to share, look forward to seeing what you find.

I mean, I haven't been to all the Southeast Asian countries, but there are definitely some that, other ones that I wanna go to still. Yeah, experiences thus far have been good. - Yeah, it's obviously a totally different world. But I mean, the numbers don't lie, right? If you wanna know where the economic growth is, the numbers are very obvious.

The economic growth is not in the West, right? The population growth is not in the West at the moment. The population growth is in the South. The global South is where the population growth is. The global South is where the economic growth the next couple of decades is going to be.

And so that's where the opportunities are. If I were 21 years old and single, I would be living in Ethiopia or in Bangkok or something like that. Because that's where the action is going to be for the next few decades. I'm not 21 years old and I'm not single.

And so it's more complex for me to answer some of those other questions of where is the best place for my family to live? And that's a harder question. It goes pretty deep to try to figure that out 'cause there's no rubric. There's no manual for it. In fact, I find it really overwhelming to try to think through, right?

The reason most of us live where we live is because that's where we're from, that's where our family is, and/or that's where we have a job. And in my situation, I'm not currently living where I'm from, I'm not currently living where my family is, and my job can be done anywhere.

And so I thought that I wanted that freedom, right? It took me 15 years to build that freedom. Well, then I got it, and now I just find myself totally overwhelmed 'cause I don't know whether I should live in Addis Ababa or Riyadh or Rio or anywhere, and it's too much.

And so I've tried to approach it, but right now I'm trying to see it. And I just wish I'd seen more of the world when it was easier. 'Cause right now, because we have four young children, and I don't regret it, and I'm not complaining, but I cannot leave my wife at home with four young children and go bounce around the globe, say, "Oh, I'm gonna go bounce around the globe." That's just, it's not appropriate.

And so I'm bringing my wife and my children with me, but it just makes a different kind of travel experience and travel arrangement than the other opportunities. And so at the moment, again, I got plans and opportunities, I think there's opportunity all over, but that's my answer is I don't know.

And so I'm mostly focused on trying to answer the question of where do I want to live, because I'm at a phase in my family life where that's the best thing I can do for the well-being of my family, which is the reason that I care about making money.

And then once I've decided that, then the constraints will be obvious and the proper personal investment plan into business and real estate and everything else will be obvious once I've made that decision. And so I've given myself basically maybe six more months, and then I'll be somewhere and decided something.

I just don't know the answer to that yet. - Great, thank you for the response. And may God bless you with the wisdom and discernment to do what's right with you and your family. - I appreciate that more than you know, because it is a very significant issue, right?

You feel the responsibility significantly, and I find it difficult to, again, there's no rule book, right? Most people don't think the way that I think, and it's fine, it's no big deal. But most people don't look at the world the way that I look at it. There's some who do, but it just leads to, it's kind of a, there are not a lot of people that you can ask for advice on it.

There are not a lot of people who've done anywhere near the things that I've done. And so it's hard to find those people that can be the trusted confidants who actually understand enough to give good advice, but we're working on it. That's it for today's show. Thank you all so much for listening and for calling in.

It's been a great pleasure to have this conversation with you, I'd love to talk to you next week. Remember, if you go to patreon.com/radicalpersonalfinance, then you can sign up to support the show on Patreon, and you can gain access to next week's live Q&A. Patreon.com/radicalpersonalfinance, bye.