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You can have it all too. Visit cmhserviceindustry.com to learn more. It's Friday and today that means live Q&A. Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

My name is Joshua Sheets. Today is Friday, January 14, 2022. And today, as we do every Friday, we do live Q&A. Friday podcasts, whenever I can arrange an appropriate internet signal and all the technology and have a microphone hooked up, etc. Friday podcasts are always Q&A shows. They are live, open-line Fridays.

You can call in, talk about anything you want, ask me any questions you want. It can be related to something that's in your personal life. You can talk about a question you have, a particular point of financial planning or life planning that you'd like to talk about. You can also discuss anything related to the show.

Questions, comments, you have feedbacks, things that you agreed with and you have an example of, things that you disagreed with and you want to take me to task. All of that is welcome here on a Friday Q&A show. To gain access to one of these Friday Q&A shows, all you need to do is join us on Patreon, patreon.com/radicalpersonalfinance.

Search for on Patreon for Radical Personal Finance. You'll find the show there. And if you sign up to support the show there on Patreon, then you will gain access to one of these Friday Q&A shows and I would love to have you. Today we begin with Vinny. Vinny in Brooklyn.

Welcome, sir. How can I serve you today? Thank you so much for taking my call. My question is regarding DIY projects. I'm wondering if you have an objective or a formula to determine whether or not you should do a project yourself or whether you should pay someone to do it.

Long story short, I own a house. It's about two years. It's a little bit of a fixer upper and I live in a high cost of living area. And right now there's unfortunately a little bit of tension with me and my wife because we're just trying to figure out how to get this stuff done here.

And of course, contractors come to the house, everything's very expensive. They don't necessarily do the best job. But on the other hand, I don't have time really to do the work. I guess it comes at the expense of relaxation. So my question to you is, obviously I know it's more of a case by case basis question, but is there an objective formula that we can start at whether or not to determine if we should do DIY projects ourselves?

Thank you. So the objective formula from a financial perspective is going to be your personal hourly rate versus the hourly rate that you're paying for the work that you're commissioning. So if your personal hourly rate is $20 per hour and the contractor is going to charge you $50 per hour, then objectively speaking, it's going to be much better for you to go ahead and do the work yourself because if you can do something close to the rate that the contractor can do it at, then you're going to be earning a higher hourly rate.

On the other hand, if your personal hourly rate is $500 per hour and the contractor will work for $50 per hour, then you're far better off going ahead and hiring the contractor to get those things done. So that's the objective scenario. You want to look at the opportunity costs and ask yourself, what am I giving up in order to do this work?

Now here's where things get tricky. You have to ask yourself, what am I actually giving up? So for example, if you have a job where you work 40 hours a week, Monday through Friday, and your personal rate is $50, and let's drop it down. Your personal rate is $30.

No, let's do 50. Your personal rate is $50 and you're going to pay someone else $50, but you could otherwise do it on a Saturday morning, then all of a sudden the financial considerations go out the window, right? Because if you were just going to sit around and do nothing on Saturday morning, or you're going to do something productive with your Saturday morning, it doesn't matter that your personal rate is the same as the contractor's.

It matters what is your alternative use of the time. What would you be doing otherwise? So I think here you would want to do an analysis and say, do I really enjoy the work? Is the work something that I enjoy, that I want to do? Is it something that inspires me, or is it something that I just want to get as far away from as I possibly can?

Some people come to DIY projects and they find them relaxing. It's something that they enjoy doing. They enjoy working with their hands. They find it relaxing. Many times this includes people who are knowledge workers. I personally often get frustrated that most of my work is not tangible, and so it's nice to do a project and build a deck on your house, and all of a sudden, look, I did that.

I built that. It feels good to get some of those things done. On the other hand, some people find them very draining. You ask an entrepreneur who gets turned on by his business, and you say, "Now you're going to go home and work on a bathroom," a lot of times, for some people, that can be very draining.

So I would analyze not only the financial ramifications, but I would analyze and say, how would I rank this activity? Is this something that I enjoy? Is this something that I want to do? I personally don't enjoy DIY projects. I used to want to. I did a lot of it when I was younger.

I'm more capable than many people, but I don't enjoy doing it. And so I've learned that I would rather spend my time doing something that is a better fit for me and then simply pay someone to do my DIY projects for me because the time that I spend on the DIY project is quite draining for me personally.

I don't find it rejuvenating. I don't find it very rewarding. I find it really frustrating a lot of times, and then that frustration kind of seeps over, and it costs me my time and my mental energy in other aspects of my work. I think another lens that you would look on is a lens with regard to safety and to, is this actually a good idea?

Is this something that I can actually do? For example, if you are someone who earns, let's say you use your body and you're an athlete, right, or you're a surgeon, something like this, it would be crazy for you to spend a lot of time doing things around equipment and machinery and roofs and eaves and ladders and nail guns and chainsaws and such, right?

Because if your body is injured in some way, then that has a much higher cost for you than it does to somebody whose body is not so highly paid. And so you want to consider that as well. I think finally, the big question is, what could you do with your energy and with your time?

If all of the projects were done around the house and your wife weren't as upset about how long things were taking, would that give you more mental space to be more productive? Some of us have very large opportunities for productivity. We have high potential with our earnings, and if we could just put an extra 30 or 50 or 100 hours into a project, it could be an extra five, six, or seven figures to our income.

And so that's a big, it's a big cost if doing a DIY project to save a few pennies keeps us from that very productive side. On the other hand, some people don't have such financial potential. Their earning ability is more modest. They don't have side work or they don't have projects that have exponential kind of financially explosive power.

And for those people, I think the return on investment of time and money on DIY projects is a good return. But the absolute financial aspect is, how much would you be earning with the time that you don't put into a DIY project? How much is the DIY project going to cost you?

And is it a better use of your time to make money, pay taxes, deal with expenses associated with that and then pay for it? Or is it better for you to simply do it yourself? Great, thank you. The only minor complication, which obviously it's not a financial question, is that the people around here, you get people, you pay people to do a job and unfortunately, it just really cut corners.

It seems that people don't really want to do a good job anymore. But again, that's not a financial concern. But anyway, I really, really appreciate your time and thank you for answering that. It really helps me. I think that's a very valid reason why you might want to spend time doing something yourself.

If you get shoddy work and it's going to annoy you to have crooked tile joints and poor trim work and that's going to annoy you, then either you pony up and hire a very productive, highly qualified craftsman or you go ahead and just make it a side project as well.

John of Pennsylvania, welcome to the show. How can I serve you today, sir? Hey Joshua. Good analysis for the last person. I fully agree on all those. One way I've become better, if it helps the other guy, Vinny, one way I've felt better about paying contractors in the past or more recently, it's come to me, if I hire them and they show up with say three or four people to do a big job and they say it takes them three full days, I'll calculate all those man hours off and then I'll double it because my skill level probably isn't as good as theirs and I'll just calculate how many weeks that would have taken me to do something and then I see the true value in it.

Sometimes it's hard to see it when you're just looking at a number on a contract but shoddy quality is definitely something that makes you feel bad about paying contractors for sure. I think that's a good point and I think that happens to a lot of us. You look at a project and you say, "You know what?

This project should be simple." And all of a sudden you get into it and you need new tools and all of a sudden the project isn't simple and it takes you two or three times as long as it should have because of lack of experience. And so I think the key is to recognize that we should all be grateful I think to live in an economy that runs based upon specialization of labor.

And that's the underlying aspect of what makes us so wealthy in the modern world is highly specialized economies and high specialization of labor. As much as we appreciate I think sometimes the idea of a pastoral lifestyle and we think about how wonderful it would be to have a homestead in the country, if we didn't have a specialized workforce where we all worked with each other and collaborated based upon some personal unique area of labor, we would live in absolute poverty.

The poorest places in the world and the poorest lifestyles are always the people who try to do it all themselves. You go out in the country, you go up to Alaska and find a homesteader who's really committed to doing all his work himself. The guy lives like a pauper.

It's just not a wealthy lifestyle. And so if we reject that and we say, "I'm going to do it all myself," there's a good chance we're going to wind up poorer. And so I don't think that most of us when we look at a DIY project really want to go and say, "I'm going to be an off-the-grid homesteader doing everything myself." We just say, "I'm going to go ahead and redo my bathroom." And that's where I say there are elements of enjoyment and satisfaction, making yourself into a person of diverse skill sets, building up your...

trying different things in the comfort of your own home where there's not a lot of pressure to see, "Hey, do I like this? Maybe I enjoy this. Maybe this is an expression of my artistry and it brings me satisfaction to make my personal abode something that reflects my individual taste." Those are all good, valid reasons.

But generally speaking, we want to work in our areas of specialty where we are the most productive, where we are the most appreciated, and then we want to let other people work in their areas of specialty and of genius because that's where we have the wealthiest lifestyle. >>Trevor: Yeah.

Yeah, I agree. I'm certainly guilty of romanticizing the off-grid homesteading lifestyle myself, but I know in the smarter part of my brain that's no way to live for me and I kind of shy away from it. >>Trevor: The romantic... The very best off-grid lifestyle comes when you have some form of work that you really enjoy, be it doing scientific experiments or creating YouTube videos or writing the next greatest American novel, and you have a few hundred thousand dollars a year coming in.

That way you can buy all your toys, you can have your tractors, you can have all the people, and then you can give yourself the satisfaction of looking out over your flocks and your herds that other people take care of, and your beautifully painted stables, et cetera, but it's all based upon that side income that comes from where you actually earn a lot of money.

That's the best lifestyle to have. >>Joseph: Absolutely. Yep, absolutely. And one kind of argument, there is one good reason to do it yourself on a lot of jobs is to know for sure you never want to do them again. I refinished floors once and I was more than happy to pay for floor installation the next time rather than refinishing them because it almost killed me.

>>Trevor: Every time I talk about how I don't love DIY projects, I feel like I'm betraying my father a little bit, because one of the things that my dad worked hard when I was younger was, in addition to education, he worked hard to give us opportunities to do work and to do manual labor a lot.

So I spent a summer when I was in middle school, I spent a summer working for a tile setter as a helper on tile jobs. I've spent time working on farms. I've spent time doing construction work, various kinds of carpentry and all kinds of different stuff. I've done some electrical work here and there.

And so what I have learned from those things, every one of them is what I do not want to do and where I'm not good. And in hindsight, I appreciate that I'm actually pretty capable. I remember when I was a senior in high school, we got together to build our senior class float on a trailer to bring along behind.

And I was surprised, because I didn't think I was much of a carpenter, I was surprised that I was one of just a handful of guys who had a concept of basic construction techniques and how to drive a toenail into a piece of two by four and how to put something that's not going to fall off, put together some random float that's going to actually hold together.

But I actually consider it a very good part of my experience that I've done enough of those kinds of jobs to know that I do not want to do those things for the rest of my life. And so it motivated me to not spend my time there, because I just found it so physically draining and mentally boring.

And that was a useful skill for me. So I hope to impart the same lessons to my children to either give them the chance to say, "Hey, my children are good at working with their hands and they find great satisfaction in it and they're good at it," or to learn the same lessons that I personally have learned.

Go ahead with your comment of the day, John. Yeah, for sure. Yeah, we'll do it. I just run my kids a little house in the prairie and I felt very humbled by how much stuff the father could do and build the house and everything and all the different skills he had, for sure.

But yeah, my question is kind of just a boring one about real estate. But I think I know the proper answer. I figured I'd run it by you. My in-laws have a house that they bought from another family member about nine or 10 years ago. It wasn't bought because they intended to keep it for an investment.

It was just kind of a circumstance in the family that they ended up buying this house. It's very close to where they live, right across the street, in fact. It's appreciated quite a bit. And now they're getting to the point where they don't... I don't think they ever really wanted to have a rental home, but it's appreciated quite a bit.

And some of the other factors, like having a person in the family to do all the repairs, he's getting a bit older and not as nimble as he used to be to be able to get over and do all those repairs. So some things that made it attractive to be an unintended landlord are kind of falling away.

And I simply told them, "It's probably just time to sell it." Some of the kids are talking about what they're missing out on there. And the way I could describe it to them, I think I'm correct in saying that, well, they're going to miss out rather than their parents keeping it until they die and passing it on to the children to get the step-up value, which right now I think it has gained somewhere in the 350,000 mark.

That is significant and they could save a lot of taxes on that, but that's really the only thing I can see as a benefit. And if you're talking about 15% capital gains tax, somewhere in the order of $50,000, I said, "Is that really worth it for your parents to keep a house that they really don't necessarily want to or need to keep?" And I think no, but obviously it's their decision to make.

So I don't know if there's any other thoughts I need to bring to the table there to give them a full breadth of the conversation or if I'm thinking about that correctly. What do you think would happen to the money if the house were sold? What do you think would happen with the money, the profits?

It would go to help the parents have a probably more secure retirement, although they're very good savers. I don't think they're in any jeopardy of having a bad retirement. They're just getting to retirement age, by the way. And I think one of them is still working part-time just to have something to do.

The other one's in her first year of retirement and who knows if she'll go back to work or whatever. But I think they're fairly good financially, so it might just go to a net thing. Maybe it would go to some less desirable trades. Maybe they'd gamble away. I don't know.

But I don't think it's necessary for their financial security if that's the case. Well, here are the things that go through my mind. Taxes are a question, but I think you're right to demote that to a relatively low importance because you're talking about long-term capital gains, taxes. Depending on how good their records are, yes, they may have some gain, but it's not going to be that big of a deal.

My first question is what happens to the money? The beautiful thing about real estate is, especially for normal people who aren't engaged in just every couple of years borrowing every last penny of equity out of their property, real estate allows people to have an asset that produces an income where they don't spend the principal.

That's a uniquely beneficial thing for many people. That's also beneficial with children. You mentioned the children, which is why I wondered what the ownership here is. It's really nice if you have an asset that can't be sold, especially when you're thinking about multi-generational planning. It's nice if you have an asset that is worth a lot of money but can't really be sold and won't be sold because it has some kind of value to the family.

That allows the family to maintain wealth but not to fritter it away. Cash is wonderful, but cash spends really easily. Real estate doesn't spend very easily. So I ask myself, is this the kind of property that should be sold or is this because we don't need it anymore and it was a good move but it's not useful now?

Or is this the kind of property that shouldn't be sold because it would be useful to have in the family and to have as a piece of wealth that could continue to produce dividends down through the ages? This next question I ask myself is, could this real estate fill a unique role in the retirement and financial planning of the parents who own it?

The nice thing, related to what I just said, the nice thing about real estate is in an ideal scenario, if I could have every retirement planning client that I encounter have a handful of houses and the bulk of their assets in mutual funds, stocks, etc., I would be tickled pink because what happens is those houses balance people's concerns in a way that the paper assets, which are non-tangible and feel risky to people, those houses are more familiar to them.

And so when markets are down, as a financial planner, and you're talking to someone and you're saying, "Listen, markets are down 30%, markets are down 40%, there's fear everywhere, don't sell, don't sell," it's nice to say, "Look, you guys over here, you've got $4,000 coming in from your rental real estate portfolio, you're fine, right?

You don't need to have all this. Just ignore the statements for the next year. Let's let this market clear, let's just relax." And so the fact that the houses are usually uncorrelated, and I don't want to misstate that, let's just say less correlated to things like large equity markets, etc., and then also the fact that they're tangible, that people understand them in a way that nobody understands stocks and mutual funds, then I like that from a diversification perspective.

And so I think it's valuable to have, and for the reasons stated, that it's nice to have that income that comes in, it's nice to know there's a bunch of gains sitting there, it's nice to know we have a paid-off house that we could access if we needed it.

That said, I think people often find themselves to either be real estate people or not to be real estate people. And it sounds like these people might not be real estate people. Like, "Okay, well we bought it because it showed up and it's actually turned out to be a good move, but we don't really want to be real estate people in the future." In my experience, many people, once they buy a house, they quickly learn, meaning a rental house, and they go through it for a couple of years, they quickly find out either, "Yeah, I can handle this, I can learn these skills, and I'm good at it, I'm a real estate guy," or "I'm not, I don't want to deal with it." In that case, I say sell the house, put the money in mutual funds, and go on.

Because if they're looking for productive assets that don't require the difficulty, don't require the time, don't require the trips to Home Depot, etc., then I think certainly there's no question that mutual funds are superior, vastly superior, to that piece of real estate. But those are the additional questions that I would ask.

Is this going to be a useful part of their portfolio, etc.? I think that, as a financial planner, you recognize that people who just have one or two houses often don't, they often significantly underperform capital markets, but I still feel like it brings a good amount of mental security to people to know, "I have this house here that's available for me that's creating rental income." So I can't give you a clear yes or no, but that is what I think about.

No, that's a good way to think about it. It's a good thing to consider the realness of it. While they're good savers, I wouldn't say they're financially savvy as far as anything regarding markets. It's all a big mystery to them. So having something real could help them mentally in the future.

It's a good aspect of what I'll bring up. Super dangerous for people to say it's all a mystery to me. It's really dangerous, right? Because what happens is they can take advantage of it really easily, and they can do dumb things because, "Oh, it's all a mystery to me." And so this is one of the reasons why I think that real estate has been so productive at helping people build wealth.

It has such big dollar signs behind it. People understand it intuitively because they've always lived in houses. They understand the value that a house has. They know a market. They understand what's necessary. Houses are big dollar figure things, so they're hard to sell. They're expensive to sell. People don't just freak out when the market goes down 5%.

They don't get marked to the market every day. You don't get a statement every day on your iPhone telling you, "Here's what your house is worth." And so because of that benign neglect, real estate generally works out for people. Whereas with stocks and mutual funds, for the unsophisticated, they often wind up making these errors when they could be avoided if they would just apply that same principle of benign neglect.

Jim Collins: Sure. Yeah, no, good talk, man. I appreciate all that. Thank you. Peter T. Leeson, Jr.: Well, thank you for helping them to think it through clearly and helping them to come to a good decision. We go to 703. Welcome to the show. How can I serve you today?

Jim Collins, Jr.: Hi, Joshua. My name is Jim, and I have a, I hope, quick question for you. The synopsis is my dad is trying to convert his SEP IRA to Roth, do a Roth conversion on it, a little bit of an amount per year. The little background on him, 70-year-old single, only on Social Security, so he doesn't have to file a tax return now.

Obviously, will when he has to start taking RMDs or he starts converting. He's got a SEP IRA, all taxable, approximately a million dollars. For him, RMDs will start at 72 instead of 70.5. He's looking at doing the Roth conversion, and let's see, he's aware the Roth conversion is going to count as income, and he's going to have to file tax returns.

Wants to stay in the no higher than 24% bracket, which is about 170 for a single person, because when he takes his regular RMDs, which is going to be about $40,000 to $50,000 a year, that's automatically going to put him in the 22% bracket. He figures that the 24% bracket is marginal cost to get the benefits of a Roth.

The real question for you is, do you see, what downsides are there to this? Before I answer that, what upside is he hoping to get? Why does he think that he's served well by a Roth conversion? My brothers and I are the beneficiaries of it. He does not pull money out of it.

I cannot convince him to take a dollar out of it, and he's basically looking to pass it on to us. All three of us are going to be in the 22% or higher bracket, and he figures if it can grow tax free over the next, he's estimating 10 years, he just thinks that he's a very anti-tax guy, and he just thinks that this is going to be a better option for him to give to us, so we don't have to pay taxes on it later.

He hopes to start converting it now at about $150,000 a year, and then he can get it all converted to Roth, it'll grow a bit, and then everything's tax free after that. So I think that that answer that you gave is the answer that makes this a good move.

Meaning what he's trying to do is he's trying to pay taxes at a predictable rate that he can control now based upon the amount of money that he converts, and he's trying to move it into a Roth IRA where he won't have to take required minimum distributions with the goal that he lives a long and healthy life for his entire lifetime.

He gets to enjoy that money being tax free, and then at his death, then you would be the beneficiaries of the Roth IRA, and you would be able to maintain that tax free nature for a significant amount of time depending on what the actual rules are at the time of his death based upon the inheritance of a Roth IRA.

I say that because this is one of those areas where there's certain to be change, right? Traditionally we would say, "Well, you could put it into a stretch IRA and take it out," and then in the recent round of tax legislation, there were some new rules imposed, and so we don't know what those rules are going to be 30 years from now.

All we know is that if he keeps it in the SEP IRA and then he dies, then you as the beneficiaries will have to pay full income taxes on it as you take it out. Of course, you can still do some stretch IRA calculations, et cetera, and also we know that if he keeps it in the SEP IRA, he'll have to start doing required minimum distribution.

I think that here this is a good reason to do a distribution. So now the question you asked me is what are the downsides? I'd say number one downside would just be that you're going ahead and locking in the taxes now, and is it possible that instead of taxes going up in the future, that taxes go down in the future or that there's some other wrinkle that comes out?

That's unknowable, and so you always hate to pay taxes. If there's ever a time when you can defer taxes to the future, you always try to do that. So in this case, this is one of those questions where maybe something changes in the future, but of course, I think it's unlikely.

So that's not really a downside. Go ahead. He and I have spoken about that, the future risk, and he and I are both, as I think you've said in the past time or two, that overall tax rates may go up and down and so on and so forth. But in general, they generally don't fluctuate a dramatic amount to make a huge difference.

There's a time or two in history that it has, but over the last 20, 25 years, our tax bracket has stayed fairly stable within reason for up to $150,000 to $200,000 a year. Typically on those that make more, it fluctuates more, but for the middle class, it seems to be fairly stable over the last 20, 25 years.

Exactly. I concur with that. That is my personal analysis as well, that any changes have generally shown themselves to be fairly small. There are changes at the margin, and it seems to me that the taxing authorities feel like they've pretty well dialed in their Laffer curve, that they're at the optimal amount to get the most tax revenue out of the population with the least amount of noise.

And so taxes are a political tool that politicians press on, that we're going to raise taxes on the rich, we're going to lower taxes on business people and on the middle class, et cetera. And so when they actually have the opportunity to pass legislation, generally it seems like they're unpersuaded to make any significant changes.

And so the changes are relatively small, and I think it's simply because they've honed in on the fact that we've got a precisely very efficient tax code. I think it's, I say from personal experience, that this is true. I find the United States kind of maddening, because the taxes are not so low that you just feel like, you know what, it's wonderful, I'm in the best place in the world because I'm in tax haven.

On the other hand, they're not so high that they're so uncomfortable that they push you out. There's some people, some people, not all, most people just live where they live because they like being there. But some people will leave Sweden or leave Holland to go somewhere else, leave the Netherlands to go somewhere else.

But very rarely does anybody leave the United States for tax planning. And so they've kind of got this sweet middle zone success story where we're not too high, we're not too low, and we get a lot of tax revenue out. So I think that they've dialed in that they're happy with where things are at.

I don't see many downsides. I think that this is an appropriate situation to do the conversion. I think that your father's intention for you to inherit the money in the best way possible is excellent. The only thing that tickles at the back of my head is I would look to see if he's charitably minded and ask myself, does he have any personal charitable goals that he would like to use this SEP IRA to fund in addition to an inheritance for his children?

Because if he set up a charitable organization, even if that was his own fund or made some kind of charitable transfer with a direct transfer of the SEP IRA, I think that would be a superior move from a tax perspective. But beyond that, I think your analysis is good, and I think this is a good situation for a Roth conversion.

Great. Thank you. I've got one more question in relation to this. At $1 million a year, he's 70. He's got two years before he has to take RMD. So assuming he does this at $150,000 a year over the next two years, that's going to reduce the IRA without any growth or anything down to $700,000.

Now, from my understanding, if you can confirm this, I'd appreciate it. After he's 72, he's going to take his RMD of about $28,000 to $30,000 a year based on the $700,000. And he can still do, above that, he can still do Roth conversions after he has started his RMD.

Am I thinking that's correct? Yeah, absolutely. You can do Roth conversions any time that you want. Absolutely. There's no problem there at all. But your RMD cannot count as part of that Roth conversion, is my understanding. That's my understanding as well. Yeah, the RMDs have to go into a taxable account.

And if he doesn't have earned income, then those RMDs would have to go into the taxable account. So correct, that's my understanding. And along those same lines, say in two years at $700,000, he starts his RMD, which is going to be about $30,000 a year, fall apart. If he then does an extra $100,000 a year, will his RMDs from 72 to say 77, will his RMDs go down because that's recalculated every year?

Yes. Because the balance is much lower? Exactly. Yes. Awesome. Great. Josh, thank you so much. You've answered all my questions. And I just wanted to, it's a big financial move for my dad. He's worked in the oil field forever and he just had, he was looking for some maybe confirmation bias, if you will.

But if nothing else, he was just looking to bounce some ideas and I figured I'd give you a call. And I want to say thank you for doing this for your Patreon people. It's a very valuable thing. And I think that the Patreon cost is well worth, well underpaid for what the information I received today.

So thank you. I'm going to go. I tell people and sometimes it seems like they don't understand. The cheapest way to talk to me, as long as you don't mind someone hearing the sound of your voice and airing out and my choosing how long it is, the cheapest way to talk to me is to jump on one of these Friday Q&A calls.

And with that we go to Kristen. Kristen, welcome to the show. How can I serve you today? Hi, Joshua. Thank you so much for taking my call. This is very exciting for me. I'm a brand new Patreon. So my question is, I am thinking of buying a vacation home abroad somewhere in Central America and my interest is peaked in El Salvador because my husband and I are Bitcoiners and we love the idea of maybe a plan B residence over there.

The housing is affordable at this time and we might want to possibly retire there. But most of all, it would just be a vacation home and hopefully something that we could rent out. So we basically saved up $100,000 to put toward it so far, which is not enough, I think, to pay a full cash value.

So my question is, should we keep saving up and just wait for the right time or should we take some financing? What's an appropriate amount of money to spend on something like this? It does seem very luxurious purchase that we're not used to buying, but we are debt free.

We're actually homesteaders in the country. Great. Which is kind of funny. After my homesteader bashing. Oh yeah, and we love it, but my husband does have a day job and we do hire people. I just wrote a big fat check today for a fencer. But anyway, just kind of wanting to get some advice from someone who's not trying to sell us a home abroad and maybe a little pep talk about how to make this purchase appropriately in a way that's not going to stress me out, in a way that's not going to make me regret that I did this.

And another thing, because we are homesteaders, it's not really possible to spend a huge amount of time out there at the moment. We could probably get away for a couple weeks a year. So I don't know if that affects your answer. Do you like going to El Salvador? I've never been.

That's step one. I like going to Costa Rica. That's step one, because you want to make sure, if you're going to buy a vacation home, you want to make sure that you buy somewhere that you like and that you're actually going to go and do it, especially when you're thinking about doing it abroad.

Where in the United States is your primary homestead? What region? We're in southeastern Arizona. So just trying to think of flights in and out of Central America. You would always have to connect through either LA or Texas or Florida from Arizona. I doubt there are any direct flights. Is that right?

Yeah. Okay. So here are some of the questions that I would raise. And I would be cautious and slow to do it. And I'll give you some arguments as to why for you to consider. The second question, do you speak Spanish or does your husband speak Spanish? No, but I'm trying to learn.

Good. Third question, if you did buy a property, not having yet gone there, describe to me what your dream property would look like. I'm actually looking at a development. So my dream property would be turnkey. That included a property manager, because I don't want to be a hands-on landlord.

It would be like a tiny house or a little surf cottage by the beach. Okay. So something not in a condominium, not a big building, but some kind of freestanding structure. And you want a freestanding house, but in a development that somebody is developing as a centrally planned community?

Yes, exactly. I have my eye on one that's in development right now. And it's a series of tiny homes. How much are they asking for those? Anywhere between $125 to $175. So what you're considering is not wrong. I would caution you and I would say that you want to be very clear on what you're actually paying for, and I'll give you some insight into the Central American marketplace.

So to begin with, if you're going to choose a vacation home, you need to choose a place that you actually like. And I would really want you to spend several significant vacations in this place before you actually committed to a house. And make sure that you actually like going there.

And that liking going there needs to be everything associated with liking going there. Meaning, that's why I asked about airline connections, right? Do you want to connect through? It's kind of a hassle if you have to fly from Tucson to Houston and all of the connections are stink, right?

Or you fly from Tucson to Miami, there is probably a two and a half hour flight. And then you sit in Miami for four hours, and then it's another two and a half hours from Miami back west to El Salvador, and now to get back and forth is a whole day's travel and it's really annoying to you.

On the other hand, if you could find something that's a direct two hour shot, then that's a much lower and a much easier thing to do. One of the things that you need to be very aware of when dealing with Central America specifically, and this is true in many places outside the United States, not all, but it is definitely true in Central America.

Property does not move fast like you're accustomed to in the United States. The values thus are very hard to say. In the United States, especially right now, you can sell a property and you can know a good idea of what the price is. You can sell a property in a couple of weeks.

I don't know of anywhere in the United States that has a slow real estate market. You can sell a property and the market is extremely efficient, so you know what the price that you're getting in as and you know what the price that you can get out is. And so that allows you to plan.

You go and you say, "Hey, I bought this property. It's $125,000 and now I can sell it and I can get out of it." And so you know your exit plan. That is not true in any way, shape, or form in any place in Central America. If it is true, the only place it would be true would be a place like Panama City with downtown apartments in well-established high-rise apartment buildings.

There's nowhere else or Mexico City in very desirable neighborhoods and very established places. That's where you could sell a property quickly. Everywhere else in Central America, you would expect that if you wanted to sell a property, minimum you should plan on a couple of years because there's no efficient marketing of a property.

There's no central database. There's no central system and there's not a lot of demand, especially the kinds of properties that you are interested in. There's not a lot of local demand for those properties. The reason I say there's not a lot of local demand, let me explain to you how Central America works.

It's very different than the United States. In Central America, you have a much greater wealth disparity than you have in the United States. In the United States, there is a massive middle class where you have many, many people who have the means to afford middle class lifestyle. The United States has the strongest middle class of any country in the world.

It's wonderful. But in Central America, you don't have that. In Central America, you have a very, very small middle class. You rather have a small upper class and a very large lower class. The upper class is exceedingly wealthy. You have many, many very, very wealthy people all throughout Central America.

They live like wealthy people, which means they have nice houses, they have nice plantations, they have nice apartments, they have nice cars, they have large estates with multiple employees working for them on their estates, etc. They're not interested in a beach shack somewhere. They're not interested in a tiny house.

They're not interested in some dinky little apartment. They're interested in top level properties that are created for wealthy people and they have the means to afford it. On the other hand, you have a huge lower class. That lower class is not interested in buying any kind of property that you would actually live in.

Why? Because the lower class can build for itself an appropriate home. Unlike in the United States where no poor person can build his own home, you can't afford it because you can't afford to comply with code enforcement, you can't afford to do it all at once, you can't afford to get your plans through city hall.

Poor people in the United States can't build their own houses, but in Central America you can. You can go out and you can get some wood from the local rough cut lumber from the local saw mill and you can save up and you can get a few pieces of tin and you can build a shack and you can live in the shack.

Everywhere that you will go in El Salvador where somebody is building a community, there are plenty of people who are already living there, but they built their house for $2,000, $3,000, $1,000, etc. So the kind of property that you're looking at is not the kind of property that you will be able to sell very quickly.

So you need to know that going in and be thoughtful and recognize, "Hey, if I buy this property, I'm going to own this property for a very long time and/or I'm going to have to sell it to another foreigner." So now let's talk about the foreign property market. So the development that you're looking at is almost certainly, if it has a website and if it's something that has crossed your computer screen, that development is almost certainly a development that has been created for expats, for foreigners, be it for vacationing foreigners or just expats living in El Salvador, which is great.

There's nothing wrong with that. And in fact, you might find it to be a wonderful community. You might really enjoy it. There'll be a really fun international flair. There's lots of other expats that you would be able to speak with in English. You can enjoy your time together. It's not bad to live in an expat bubble in El Salvador.

You might really enjoy it. And the kinds of people who would also be interested in a tiny house or a surf shack on the beach might just be your perfect people that you really want to enjoy being with. But you are paying a very significant financial premium for that property because you are compensating the developer who had the vision and the foresight and took the financial risks to put the land together to get the appropriate zoning permits, to get it all titled and marked out and surveyed and to go ahead and build the structures, etc.

And that developer probably has a significant inventory. And so let's say that you buy the property and five years from now you want to sell it, the developer is still going to probably have a sales office where he's still building other properties and selling those other properties. And so why would somebody come and buy your five-year-old lived-in property and not simply go and buy one of the brand new ones from the developer?

There could be good reasons why. You might develop the place and it's beautiful. You might have really mature fruit trees. And for me, if I could go in and buy a five-year-old house, but that five-year-old house is surrounded by a food forest, whereas the brand new one has been, the ground has been raised and it's just denuded earth and I've got to do it all, man, I'll take the five-year-old house with the food forest any day of the week.

But you need to think about this going in. So those should be some big warning flags to say to you that if you go into this type of property, you want to make sure that you actually like it and that you like being there and you're going to get good use out of it, that you're going to fly down and spend significant amounts of time there, that your family is going to want to come and be with you there or that you're going to actually use it.

Whereas the property markets in all of Central America are simply wildly different than everything that you are accustomed to in the United States. So can buying a property be a great thing? Absolutely. If you buy a property that you love and that you love going to and that you're going to want to continue to go to for many years, then I say go for it.

If you can afford it, go for it. Buy it, make use of it because you'll enjoy it. If your family enjoys it, maybe it's got a wonderful surf break and you just love going down there, your children love it or your friends love it, go for it. Is there a good chance that these properties that are purchased today will be worth more a couple decades from now?

Almost certainly. All of the economies in Central America are growing with the exception perhaps of Nicaragua. The business climate has improved. El Salvador just elected a young forward-thinking president. Many of these countries have made tremendous progress in reducing corruption, increasing business friendliness, etc. There's every reason to think that there's good potential for growth in the future.

I don't expect Central America to be the war-torn, violent place that it was during the 1980s. I don't personally expect that to happen again, again with the big exception of Nicaragua right now. But still, that's a long-term perspective. If you're looking at it from a financial perspective, I think you would find many, many markets that seem much more attractive in terms of their growth potential than most places in Central America.

That would be my caution to say, don't buy a property because it looks good in the pictures. First thing you do is go there, spend some time there, find some other Bitcoiners who are also doing that, check out where they're going. I think there is a good reason to think that El Salvador may indeed have some growth due to the Bitcoin economy.

There are many people who are overnight Bitcoin millionaires who are going there and seeking to encourage them for their forward-thinking stance on making Bitcoin a required currency to be accepted. But having spent a good amount of time in Central America, I would caution you that go and live it, spend several good vacations there before you actually go and pull the trigger on a property.

One more piece of advice and then I'll await your response. Before you go and you buy in a planned community, make sure that that planned community is going to offer you something significant that is not available in the open market. Here is where, since you don't speak fluent Spanish and you are a foreigner, I would strongly urge you to find a local person, develop some local contacts.

Those can begin with simply social contacts. You might meet some people who live there, meet some expats, you might meet a missionary or meet someone who retired down there, etc. And then you probably want to find some professional contacts, right? Find a local lawyer. Probably a local lawyer is one of the best information brokers.

Hire the lawyer to be your representative and to look for some other properties. Because if you're looking to spend your money well, for $100,000 without question, if you could work with an appropriate local, you could get far more land and probably more opportunity for a house than what the developer is offering you.

And go and see the development with your eyes and say, "Is this a place that I actually want to live in?" Let me give you an example. First, all throughout Central America are all kinds of developments where somebody came in and said, "Hey, you know what? I'm going to make a buck developing property and selling it to rich Americans." And they come in and they just never finish the development.

And you'll find that there's this big elaborate gate and then the road is just destroyed in front and you've got no recourse, right? You're left with something that is totally, it's not worthless, but it's pretty much worthless. Because you have no recourse. There's no legal recourse. You won't get anywhere in the courts.

And if the developer just takes the money and disappears, then everyone who actually bought property in that development is left without recourse. And many times, the development doesn't get finished. And so you need to be very thoughtful and get good legal advice to make sure that you're getting in at a phase in which it's appropriate.

There are some developments that are really special. My favorite development in Central America is Rancho Santana, which is one that Mark Ford was involved in developing in Nicaragua, San Juan del Sur, Nicaragua. And it is just, it's stunning, right? It's amazing. But it's amazing because Mark and his co-investors, they sank, it was a passion project for them, right?

They sank Rancho Santana, Rancho San Juan, and they decided to develop it. And it's luxury. And they have committed themselves to maintaining that standard of luxury. And it's the kind of standard that there is a big market for because it's a luxury market. Another good example would be in Costa Rica, right?

You've got Los Sueños, the development in Jaco. It's a luxury development. And it's going to always have that luxury appeal because it's convenient, right? You can fly into Costa Rica. In an hour, you can be at your door in Jaco, hour and a half, hour to hour and a half from the airport.

You can, you have the Marriott Hotel there, which is an attraction for many tourists. You have the Yacht Club. You've got kind of this high-end stuff and it's a luxury development that's very proven. And so I think these are the kinds of developments and they're all over Central America.

You can find them, but they're not at the low end, the low end side. They're luxury developments. And I think there's a good, if you're looking for a luxury vacation home, there's a good argument for them. But I would be nervous myself, especially without having spent significant amount of time there vacationing or without having a personal acquaintance.

There are expats developing all kinds of properties all throughout Central America. And they're often labors of love, right? Little eco-villages, little things like that. And so if you can find a labor of love where there's somebody who's building something because they're committed to it and they're living there, then yes, go all in.

Just make sure that this one that you're involved in does have that expression. That's my overview. Awesome. Thank you. I think I was feeling like I needed to get in while prices were kind of still low in the region before things blow up because of Bitcoin. And I think I was kind of spiraling into an impulse buy, perhaps.

And I think I just need to chill out and I need to go there. And I mean, if prices rise in the next few years, so be it. I'll just keep on saving. You need to go there and you need to make sure. I do not expect, I think that Bitcoin may have some influence on El Salvador.

But El Salvador is starting from a very position significantly at the rear. El Salvador is known for having the highest murder rate in Central America. I think the fear that people have of that is overblown. Generally, virtually all of the violence that happens in Mexico, in anywhere in Central America, virtually all of the violence is related to drugs.

Meaning people that are buying drugs, going and literally buying drugs on the beach in Mexico and get targeted, or who are involved in the drug trade and the gang wars that are associated with them. But El Salvador has had its reputation significantly tarnished by that. And it's one of those things where the reputation of El Salvador is the worst, in my opinion, of any country in Central America.

I don't need to qualify it. I would say I think their reputation is the worst. And so again, I think oftentimes it's overblown. But most people who don't have some confidence from traveling in the region are going to be dissuaded from that. And so you just want to be recognized that it's starting from a backwards position.

And it's going to take some time to work those things out. So I say, yeah, get in early, but make sure that you go slow. Because this is the kind of market where there's no clear and obvious wins. I think that if you're looking from an investment perspective, there are many other places in the world that are much more exciting from an investment perspective.

The reason you would go to El Salvador would be, hey, I've got some Bitcoin in this wallet on the side here. I want to do a direct Bitcoin transaction. El Salvador, I can do that in El Salvador. And I like going there. I enjoy spending time there. We got this little corner where some other Bitcoiners are also setting up shop, where we're all going ahead and establishing our homes together.

And we like each other. Then I think that there's a good reason for you to do it. But I wouldn't just jump in out of a fear that you're going to miss out. I don't think you're going to miss out. All right. Three, one, two, four. It doesn't matter.

Five colors left. Peter, welcome to the show. How can I serve you today? Hi, Joshua. I want to talk about European inheritance taxes. I'll do my best. Let me just say that. I don't promise anything. I'll do my best. I keep trying to stump you. I think you may have.

I could do US inheritance taxes all day long, but I'm not good enough to do European. But let's try. Go ahead. Yeah. I don't know if the exact specifics are really what I'm looking for. I think I'm looking for more for just the general strategies to try to reduce them.

And obviously, there will be country-specific stuff. But I've got friends who have family property in France. And they're trying to figure out whether going through some maneuvers to try to equity strip the property with a mortgage on it to reduce the value of the property for the tax basis purpose is worth it versus just going ahead and paying the taxes.

But I was just sort of curious about just kind of what some of the strategies you can have other than just straight out paying it in terms of trying to potentially reduce the tax. Right. So, again, we're outside of my area of expertise. I want to clarify that up front.

This is definitely a question where you would want to retain a proper French financial planner who understands the ins and outs of French taxation. That's the key. What I would point out is that there are a couple of options, things that are worth paying attention to. Thing number one, it's important to note, especially when we're dealing with the difference between Europe and the United States and especially France, that...

And let me just clarify, this is not you that you're working on this problem. This is some friends of yours. And you're just kind of meditating on their question, wondering if there are any options for theirs. Is that right? That's correct. Okay. And these friends, are they born and bred, raised native French or are they expats who have French connections?

No, they're French. Their parents are French. They're actually dual US French citizens, but they are straight up French. Okay. So the dual citizenship thing is actually complex, but let's just give you a quick overview and I won't be able to give you many details. Let's give a quick overview.

Number one, it's important to recognize that the attitude and the practice around taxation and tax paying is exceedingly different between France and the United States. In the United States, first of all, the United States has the highest rate of tax compliance of any country in the world. Regularly, when the surveys are done of people paying their taxes, people in the United States pay their taxes as they are calculated and owed at a higher rate than any other country in the world.

Whereas other countries that rank very highly, such as Germany, still the United States comes out with a higher payment rate of people actually paying their taxes as they are assessed and as they're owed. This is often surprising to people because as US Americans, we like to gripe a lot about our taxes.

We argue about them. We gripe about them. We have lots of loud people who, these loud, crazy libertarians who believe that taxation is theft and they get all grumpy when they think that they should pay any taxes. But the truth is that there is a deep seated belief in the US American system that you should pay your taxes.

And thus, we have a system that's somewhat straightforward and people comply. That is not the same in the French context. The French context is much more of a matter of a battle, an argument, and there's going to be some negotiations involved between the tax authorities and the individual taxpayers.

You don't just, in the United States, if you get a bill from the IRS and they say, "You owe us X amount of dollars," you pull out your checkbook and you write it. It's not the same in the French culture. If you get a bill from the tax authorities in France, you start working on it and you think, "Well, okay, how are we going to do it?" Now, I wouldn't presume to go beyond that.

I know that that much is true and I wouldn't go beyond that in my personal analysis. But I would say that here's where the local knowledge is so important. That it's not like in the United States where there's a set of techniques and we can look through the book, et cetera.

We need to actually go and say, "Who are the local taxing authorities? Who's going to be doing the assessment? What are the opportunities for negotiation? How does the system work?" et cetera. So that would be the first thing. Second thing is that unlike the United States, which has global taxation, the tax bill that a French citizen can legally owe is based upon the behavior of that French citizen.

So as a US American, if you've got $150 million, you're going to have to go through the relevant calculations for your inheritance taxes. The actual taxes themselves are somewhat optional. There is an abundant repertoire of techniques that can be applied to the reduction of those tax rates. But the whole estate itself is going to be taxed under the US system.

And this is where, for your French friends, they're going to have, if their wealth rises to the level of where they're going to owe inheritance taxes, estate taxes, then they will have to deal with the US system itself separate from the French system. However, a French citizen always has the ability to move his affairs outside of France.

And so this is where, to some degree, some form of equity stripping or looking at the estate and figuring out where are the assets and what the assets are, and could we move some of those assets to a tax haven, that can be a very effective strategy. It is not an effective strategy for US citizens.

Because you could take, let's say you've got $150 million in the US, and you say, "Oh, I'm just going to move my $150 million from the US, I'm going to move myself outside of the United States. I'm going to go down to my little beachfront resort in El Salvador that I bought with my Bitcoin, and I'm going to move my $150 million just simply outside the United States and put it in a tax haven." That's not going to save you anything from an estate tax perspective.

You can do some sophisticated planning, and you can start to move some of the money, some of the assets into irrevocable trusts, and you can freeze the assets. You can bring it together under your gift tax exemptions, your estate tax exemptions. There are techniques that you can do, but the whole offshore thing is not such a direct scenario.

However, for a French citizen, those things are possible. The same French citizen could move to El Salvador or to some other place that's more tax-friendly, could keep his property in France, but could escape over time the French taxation system, even up to and including not owing inheritance taxes on the bulk of his estate.

Real estate is always going to be taxed by a local government, because that's what a government has control of. A government can control your real estate because they, using their martial power, they control a set of land. That's our current definition of what a nation state is. It's a military force that controls, by use of force, a specific area of land.

Because of that, the tax authorities, the tax agents of that government have massive power to control your affairs over the land. They own the land. They don't own everything else. They can't keep your business from moving. They can't keep your intellectual property from moving. They can't keep yourself from moving, but they can control your land.

There is potentially a whole world of techniques that are available to your friends that are not available to US citizens, where your friends can move themselves to a tax haven. They can keep their property in France. They may move some of the equity out of that property. They may have some negotiations with the local taxing authorities.

They may move the property into trust in some way. I can't articulate the specific techniques beyond what I've done, but they do have a lot of options. What they definitely would want to do is they would want to consult a proper professional who is familiar with French law and custom and who could work in that area.

I guarantee those planners are out there. Then do a personalized assessment to figure out what needs to be done with their affairs. >>Steve: All right, good show. Thank you. >>Trevor: My pleasure. It's a fun question though. I have spent a lot of money on tax planning materials for Europeans.

So I have a lot of the data. I've gone through a good bit of it. I just can't summon it to mind quickly enough to answer it specifically. Lucas, welcome to the show. How can I serve you today? >>Lucas: Hey. How's it going, Joshua? Having a good day? Excellent.

So interested in the subject of what I'm going to call baby prep hacking. So I've been listening extensively to your series of podcasts about what to do with young children and homeschooling and babies and diapers and everything and sharing it with my wife. We're starting to talk about, okay, what can you do?

What strategically can you put in place financially ahead of or shortly after the birth of your child? Things like 529 plans or whole life insurance policies for children. I was wondering, is there anything new, anything that you haven't talked about yet that are just kind of little niche fund strategies for giving yourself a financial advantage by having a baby or giving them a financial advantage?

>>Trevor: Absolutely. I encourage, so to be clear, are you currently expecting a baby or is this hypothetical at this point? >>Lucas: This is hypothetical at this point, but I don't think it will be too far off. >>Trevor: Okay, great. So I do like to always insert here the topic of birth tourism.

I think one of the biggest opportunities that you can give your child at the time of birth is access, and I mean this financially speaking, is access to a country or a region or a set of resources. There is a reason why there is a thriving birth tourism industry in the United States, in Canada, etc., because for people who are not from these countries, they can achieve for their children a whole new set of opportunities, a whole new set of advantages by virtue of their child being born a citizen of that particular nation.

So Americans don't think a lot about this because we tend to not look outside of our borders for opportunities. We know that we live in the land of opportunity, and so we're not accustomed to thinking I should go and look somewhere else for opportunity. But this is something that is well worth considering.

And so let me give you an example. You could, I'm assuming you sound American, are you living in the United States and you and your wife are both Americans? >>Lucas: Yeah. >>Trevor: Okay. So right now you could go, and let's say you were having a child, you could go and you could have the child in Canada.

And if you had your child born in Canada, your child would be from birth a Canadian citizen. You can go to Canada, you can rent a nice house or find a nice hospital or birth center, whatever you wind up doing when it comes time to dealing with the medical details of the birth, and your child will be a Canadian citizen by virtue of being born on the soil of Canada, which is a just solely country that offers citizenship to anybody born on its soil.

That won't do anything for you or for your wife, but what it would do for your child would be, number one, give your child the right to be a Canadian citizen, which means your child would always have the right to live in Canada. Your child has the right to work in Canada.

Your child would have the right to be educated without cost to your child in Canada at every level of education. Your child would have the right to the Canadian government healthcare system by virtue of being a Canadian citizen. And so those four things right there from a financial perspective could be very significant for your child's future.

You could put money in a 529 account and save money for your child's education, or you could just simply have your child be a Canadian citizen and have the plan be that your child goes to Canada and simply goes to college in Canada, which is much more progressive than the United States with regard to college funding, government healthcare programs, etc.

This is, I think, a wonderful backup plan. And so it's a significantly difficult thing to do, and I think that very few first-time parents are going to be motivated enough to do it. It's difficult. It's difficult for a first-time mother on top of all of the complications of having a baby, the fears, the learning style, etc.

It's difficult to imagine going to another country, but that is an opportunity. So if you're looking for kind of benefits, government benefits, then that's a very, very simple thing to do. And totally legal, you can do it. No problem at all. You could also look at this in terms of where is an opportunity zone, right?

Where is there an opportunity for significant financial growth? Where would I want my child to be able to go and work and live, and where would there be investment options, etc.? So you could say, where are the places in the world where there's the highest rates of growth? Now this is hard for birth tourism because most countries don't offer birthright citizenship, but there are some that do.

So an example would be South America, right? If you had a child born in Brazil, as quite commonly talked about, then your child would have the legal right to live and work virtually in all of South America as part of MERCOSUR, which is an alliance of South American nations working together.

If you look forward over the next several decades, it's hard for me personally to believe that Brazil, a nation of a couple hundred million people, plus Argentina, plus Chile, plus Colombia, plus Venezuela, when it comes out of its nightmare, all these countries, it's hard for me to believe that there's not more opportunities for a faster growth prospect than there is in, say, the United States, which is a more mature and advanced economy.

So that would be another way of looking at it. I won't go on more about birth tourism other than to say that you can look at the world and there are options that you can achieve. Let's say that you had an interest in Europe, right? Many people have an affinity and an attraction to Europe.

Europe is hard. It's hard to have a European citizen, but since you're not currently expecting a baby, it could be possible for you to establish a residency, a legal residency for you and your wife in Europe, and then have your child born in Europe. And then your child, Portugal would be a good country to look at there, and see if you could arrange for your child to be a Portuguese citizen from birth by virtue of you and your wife having Portuguese residence permits.

That could be something worth considering. Now moving past- Yeah, I love the idea. I tend to think that she would be somewhat hesitant with a first child to do that, just wanting some of the comforts and closeness of home and being around family for it. But the idea is awesome, and I'm definitely attracted to it.

I think that virtually almost no US American first mother, first time mother would ever do birth tourism. And it's hard for me to imagine her saying yes. My wife and I did it with our third child, and what I would say is- Sorry, our fourth child, and what I would say is that it's doable.

We've done it. Having done it, it's much harder than most people think, and most people are not going to actually do it for all the reasons that you stated. But I can't myself help but appreciate the elegance of it as a solution. And there are, and I say that for my international audience, that there is a big difference between you and your wife's situation versus our Afghani friends who are listening, or our Pakistani friends who are listening, or our Iraqi friends, or our Haitian friends who are listening.

Because all of a sudden, you and I, you have no concept of how difficult it is to live in the world as a citizen of Afghanistan only. And so if there is a kind of a middle class or upper middle class Afghani couple who is thinking about having a baby, the very best, most important thing that they could do with their money, if they could in any way work it out, is to fix their paperwork problems.

And I'm using these words very carefully. There are paperwork problems that Afghanis and Pakistanis and Iraqis face. And so it's a big deal, and it would without question be the best $20,000, $30,000, $40,000 spent for those people, for that they could invest into their children in order to solve their children's paperwork problems.

It's a big, big deal. Now let's go back to your situation personally. When you have a new child, I would say the first thing is I always buy a whole life insurance policy for all of my children. I don't buy generally big ones, but if your financial situation allows you to, I think it's appropriate.

I always buy at least a small one. And these are always whole life policies. And then what I do is I make sure that those policies have two things that are very important to me. So number one, I buy a small whole life policy, and I make sure that it has an additional purchase benefit on it that allows the, where the policy has a guaranteed right to purchase more life insurance in the future at a certain age.

And so generally, I think with the policies I own for my children, starting at the age of 20, then I as the policy owner can purchase additional life insurance for them every three years. And I usually start with either $25,000 or $50,000 policies, and I can put an additional purchase benefit on the policy of $50,000 or $100,000 or $150,000.

What that means is, let's say I start with a $50,000 policy, and I have usually, I think it's seven opportunities between 20 and 40 to add $150,000. I can buy a $50,000 whole life policy when my child is 10 days old. And I can't remember, I think the child does have to be at least five days old, seven days old, 10 days old, something like that.

But I can buy a policy within the first month of my child's life when the child has no medical underwriting, no anything. My children aren't scuba diving, they're not learning to fly airplanes, they're not doing anything dangerous at zero years old. And then with that additional purchase benefit, I can increase it in the future without any medical underwriting.

I can increase it without any hobby or avocation underwriting. There's no lifestyle questions. And so I have those options to increase it in the future for them. Now most of the time, this is unnecessary, right? Most of the time you're not going to need it. You're just going to keep the policy and maybe you just gift it to your child when your child is 40, something like that.

But if you need it, right? If you have a child that takes up a major interest in racing cars, if you have a child who takes up an interest in becoming an underwater welder or to get a pilot's license, or you have a child that faces medical problems, heart defect, leukemia, is a drug addict, very depressed, suicidal, like these are the kinds of things that can make a big, big difference for you.

The fact that you can buy life insurance for your children in the future is a very nice thing. You've got to be careful because these policies are not term insurance policies. And so to add on $150,000, you're buying $150,000 whole life policy for your children at every time. But to know that I could turn my $50,000 policy into an excess of a million dollar policy for each of my children, I really appreciate that.

And I think that's useful. These policies are terrible for cash accumulation. The cost of the additional purchase benefit, and I also put a waiver of premium benefit on there, where if the child is ever disabled, then the premiums get waived on the policy. But on all my children's ones, there's a clause where I can still exercise the additional purchase benefit and the premiums are included.

The cost of those benefits, while very modest on a monthly basis, I'm not sure, I don't even remember how much these policies cost. I think they're like $30 a month, $50 a month, something like that, I can't remember. But it's very modest on a monthly basis. But most of the cost goes straight to insurance and to these additional purchase benefits, et cetera.

And so the cash value in the policy is quite anemic. It is there. They do grow and they do build cash value, but they're not great investments. That's the first thing. The next thing, 529 accounts, can a 529 account be a good idea? Sure. If it's important to you to have money set aside for college funding, then the best time to do that is when your child is one day old.

And the best way to do it is to make massive transfers into your child's 529 account up front. And so if you're wealthy enough to do it, you can put up to five years of your annual exclusion gifting amount into a 529 account on day one. And then you can do that for a husband, you can do that for a wife, your parents can do it, your grandparents can do it, et cetera.

And so you can put in excess of six figures easily into a 529 account. And the benefit of this is this immediately puts money aside that can grow for your children's college. If it doesn't get used for college, you can get the money out either with a couple of the escape options that we've talked about in the past.

More importantly, this is one of the very few assets that moves money out of your estate but allows you to control the asset still. So generally, just like we're talking about estate planning under US estate law, if you move an asset out of your estate, it has to go into an irrevocable trust that you get no interest in, you get no control of, et cetera.

But a 529 account allows you to move the money into the 529 account and you can still get still control it. You can change the beneficiary, you control the money, but it's out of your estate. It's also frequently an asset that's protected from the claims of creditors in many states.

It's also an asset that can be frequently protected in bankruptcy. And so it's a very useful way that you could set aside a lot of money for your child's future for his or her education and yet do it in a good way. And then when you put a lot of money into those accounts up front and you have a long time for them to grow with good investments, that's where from a tax perspective they really do work out very well.

I'll pause for a moment. Any questions, comments, anything so far? No, that's all great so far. Definitely a little better clarification than I had on the 529 and really how to maximize value there by making a large upfront payment. We've done some of the more niche stuff, just the kind of people we are.

I think we probably see eye to eye on several things. We already bought used cloth diapers in bulk from a friend who was selling them. Anything else like that that you haven't mentioned on the podcast before? I think my wife would be willing to listen to an entire podcast of your wife talking about ways to save money on babies.

Yeah, absolutely. So used cloth diapers are wonderful because, so first of all, people who aren't familiar with cloth diapering, they're like, "I don't do cloth diapering." What's funny is that we've used cloth diapers with all of our children, but we use disposable diapers when we travel because we don't have the facility to wash the diapers.

And it's not such a big deal to me. My wife can't stand disposable diapers because they always blow out. They don't hold the things that they're supposed to hold, whereas cloth diapers, properly done, don't ever blow out. And if you buy them early and if you get them in bulk, if you get them used from a friend, etc., then they're fantastic because they're super expensive to buy.

Especially if you go and buy them new, they're really expensive to buy. And so that's a good purchase. That's a good area where doing a bulk buy on the secondhand market is really, really good. The other thing that you just want to be careful of is it takes a little time to figure out what you like.

So an example, with our first baby, we thought, I forget the brands now, but we thought we really liked this brand that you put the... It was a fancy brand. I've forgotten all the brand names. But then, it's funny, a midwife said, "Just covers and inserts, covers and inserts." And this brand, I think it may have been Fuzzy Buns or something, where you have to insert the insert into the actual diaper.

It becomes super annoying over time because you always are doing this extra work. And so we've switched over the years. My wife really likes the Buttons brand. That's her favorite, which is just a cover with inserts, but she likes the Buttons brand. So that's what she would say if she were giving her cloth diaper spiel.

But it's really great and it's definitely the way to go. It's better. I hate throwing away diapers. I hate creating all that garbage. Putting all the plastic into a landfill drives me nuts for something that can be so easily solved. You'll also want to think ahead about your washing machine.

If you're going to do cloth diapers, you want to have, if possible, you don't want to have a high efficiency washing machine. You want to have an upright washing machine with a center agitator. So that's your best one. You also want to be careful on the soap that you use and make sure that you have an appropriate soap.

The big thing you can do is you can stockpile clothing pretty easily. So what my wife did when we had children was whenever people said, "Hey, do you want baby clothes?" She would say, "Yes." And so most people have one or two children and then they're looking to, they don't want to have any more children and they need to free up their space and they need to get rid of the baby clothes.

And most people that have one or two children who are upwardly mobile, et cetera, they have lots of nice clothes and the clothes barely ever get worn. And so we just practiced saying, "Yes." Anytime someone says, "Oh, do you want this certain thing?" "Yeah, absolutely. We'll take it." And the clothes are the most valuable.

And what she would do is she would go through, organize them, sort them, take the ones that she liked, make her outfits, et cetera, and then just line them up according to size. She would clean them, get some of the spots off, et cetera. But I set her up these shelves.

I got some of just those standard shelving units at a home improvement store and I set her up with these Tupperware bins. And for the first, she had I think 12 Tupperware bins of free clothes that she got or had them all organized according to size, all organized in advance.

And basically for the first years of our three children life, she bought like three outfits and it was three outfits because she just thought they were really cute and she'd never bought any of our children outfits. And so I was like, "Buy them. Come on, spend some money." And so the clothes are a great way.

And it's really a relief also for the parents who are just a little bit ahead of you. They have a child that's a few years older because now once they have a repository for their used clothing, then that solves their problem. They feel good. They give it to you.

You take it. You pass along what you don't like. You use it. And then when you're done, you pass it along to others, et cetera. So the clothing is the big one. Beyond that, with children, there's really not a lot of costs. Children don't cost much. If you wipe out your diaper cost, depending on whether you're able to successfully breastfeed or not, buying formula can be a cost.

But if you take that out, there are very few costs for babies. And so my biggest encouragement is invest into your child as much as possible. And so the big investments that I think pay off in spades is, if at all possible, make sure that your child can have a full-time mother, most importantly, at least for the first three to five years of his or her life.

And I say organize your finances in such a way that that is doable and affordable for your family. If you can make sure that your child has a full-time mother for at least those establishing years, that can make such a difference for the rest of your child's life. And the data on that is very, very clear.

If you can avoid institutionalizing your children when they're very young, then that can pay off in spades. And then you can work on their intelligence. And mom can have all times. There are several good books on how to improve your baby's intelligence. Some of that is innate, of course, genetic.

But there are a lot of things that you can do of stimulating your baby in different ways. It's as simple as reading to your children, making sure your children get sunshine, and all the stuff. But I think that your best investments are not financial in that case. Just a matter of how can I invest into my children to make sure that my children have maximum opportunities.

You can deal with some of the stuff that I've talked about with multiple languages. You can bring in tutors or nannies to help support you in that. You can look at early child education. I think that it's interesting to look at, but some of it can be overwhelming. A lot of it can just be simplified down to take time and spend time with your baby.

But yet those things can pay off in spades and largely obviate the need for all of the financial stuff. To me, it's obvious that if you're thoughtful about what you do in the first few years of life and you make sure that your children have a good, solid emotional grounding where they're not traumatized in some way, and you work hard at those early years of education, early years of vocabulary, early years of school, homeschooling is great for many families, then you basically eliminate all of the things that are going to cost you money down the way.

People will throw money at your children for college. People will throw opportunities at them, and all the stuff kind of takes care of itself. And so the least efficient way to handle those things is through all of the financial stuff. That's an industry that has been developed that allows we financial advisors to sell stuff.

But it's much more efficient for you if you handle it in the old way, and then the whole system again will throw money at your children for the rest of their life if you get those early years as best as you can. So there's my little spiel. Yeah, really, really compelling stuff.

I think summarized, I think you said in the last Q&A call, it's quantity of time at work and quality of time—I'm sorry, the reverse—quality of time at work and quantity of time at home. So that'll be my guiding star when that time comes. Yeah, exactly. So think about it in terms of not having payments, not having big bills.

If you can pay off a house, great. Or if you can't pay off a house, don't have a car payment. Think about it in terms of, well, maybe you and your wife both have to work. You both need jobs, but is grandma available? Could we go ahead and move into a bigger house where grandma could be in the house?

So something like that. Just think about it in terms of the infrastructure of your life because it pays off. I'm convinced it pays off big time. So keep me in the loop and then, hey, call back in the future and we'll see what happens. All right, I had several callers drop off, but here we go.

Welcome to Radical Personal Finance. How can I serve you today? Last caller. Is it just me? Yeah, go ahead. Tell me your name, please. Okay. Frank. Frank, welcome to the show. Hi. Thank you. So I have a main question and then a quicker second question if we have time, but I'll start with the first question.

So I'm 25 years old. I have a career as an IT specialist with a government defense contractor, and I'm considering joining the reserves or the Air National Guard on a part-time basis. And I was wondering what your thoughts were on whether you think the benefits of part-time military service outweigh the downsides.

Thinking about it, like in my mind, the pros would be the potential to gain more experience and different kinds of opportunities in my field, the education and healthcare benefits, eligibility for VA home loans, eligibility to use commissaries and future retirement benefits. But some of my concerns are the increasingly authoritarian kinds of rules being imposed on military members and federal employees, like the vaccine mandates, as well as just more limits on my freedom and free time, especially if I were to have a family in the next five years.

Adding another layer of bureaucracy to my life, like another person telling me where I have to be and when I have to work or train, as well as it being more difficult to transfer or move to a different state or part of the country if another opportunity came up, like with my civilian contractor job.

I will answer your question, and I will be as clear as I can. This will be an extremely offensive answer to some of my listeners, and I don't enjoy offending people. I especially don't enjoy offending people who have dedicated their lives to public service, service to country, etc. because generally those are the kinds of people that I like.

But I believe in being honest, and so I'll give you my honest opinion, as if you were my younger brother. I come from a family of people who served in the military. My grandfather was in the army in World War II. He was on the beaches of Normandy two days after D-Day.

It was D-Day plus two, something like that. My father was a lieutenant commander in the Navy and served in a submarine for many years. So I come from a family of people who were in the military. My father was in the reserves for many years, even after he left active service.

I cannot understand today why any intelligent, capable man or woman would ever join the U.S. military. I cannot see an argument in which it makes any kind of sense. The things that we honor, the arguments that we most honor are usually protecting freedom or standing up a sense of patriotism, a love of country, etc.

Those are things that we rightly honor. I believe that we should honor patriotism. We should honor people who want to defend their neighbors, etc. But for people who have the most noble of ambitions to serve and to protect, etc., I do not see how those noble ambitions can be achieved by serving in the U.S.

military in any capacity, especially even including the reserves. The entire framework of the modern military system is utterly corrupt. You cannot be honest and succeed in that system. The only way that you succeed in the military system is by being dishonest. I think the writer, who I would encourage you to read what he has written, who is the best at articulating that from experience.

I have no experience. I've never served in the military, and I was strongly discouraged by my father from ever even considering serving in the military. I grew up reading books, reading Tom Clancy books and other thrillers that imbued me with this sense of patriotism. I wanted to go in the military.

My brothers wanted to go in the military. My father refused to the extent possible. Of course, we were legally adults. We could have disobeyed him and gone. But he strongly discouraged and sought very, very vigorously to dissuade us from going into the military. I am today exceedingly grateful that he did, because I would have joined some form of the military, some branch of the military out of a desire to have a sense of adventure, out of a desire to have that sense of camaraderie, kind of that being with the boys, doing something that matters and protecting freedom, etc.

I could have literally lost my life for no good reason at all. I could have had my entire life disrupted. I'm grateful that I listened to him and his discouragement of going in the military and didn't join myself. Back to my point, I don't see... Go and read. First of all, read what John T.

Reid writes on the subject. John is known mostly in financial circles for being a real estate pundit, but he went to West Point and he spent a good number of years in the military academy. One of the things that I appreciate about him is he writes honestly on military issues.

For example, I find his article that he wrote years ago on military draft to be exceedingly persuasive as to why he believes that all military members should be drafted, that having an all-drafty army is actually one of the best ways that you could get a potentially moral and upright army of anything else.

So I don't support a draft, but I find his arguments very, very persuasive. Read some of his arguments about joining the military from the perspective of someone who has been inside the military. From my perspective, I would say that virtually everything that you want to get out of the military you can get better in another circumstance.

So when I get a college education. The fact that you have paid me money to go and be on this Q&A call today tells me that you're smarter than the person who needs the military for a college degree. The training that you need, the specialization, even a sense of adventure, all of those things can be accomplished better and more effectively than in the military.

The problem is if you join the military, you will face a significant series of ethical conflicts combined with a set of very difficult personal conflicts in your own life. Let's begin with the ethical conflicts. The US government and the vast majority of military actions that the US government engages in are immoral because they are not involved in defensive warfare.

I personally, this is kind of a joke that in today's world, I oppose a standing army. The United States should not have a standing army. There should not be an army that has military bases in a hundred and probably thirty or a hundred and fifty countries in the world.

It is an insane policy. All of those bases should be sold and all of the troops should be returned back home. There should be no standing army. Or if there is a standing army, it should be a very, very small standing army. But that is not the path that we have taken as a nation.

So if you get involved with the US military, you're not involved in serving and protecting. You're involved in being in promoting military power around the world for the protection and the advancement of military, of American business interests. That's why the American military exists. It's my dad who taught me that.

He was in Vietnam in a submarine spying through the periscope on Russia and other places. And his commander told him, "Dave, listen, you need to understand the US military exists for one reason and that is to protect American economic interests. And so when you sign up for that, you are going into a moral conflict and you're putting yourself in a situation in which you will be court-martialed if you follow your conscience.

And most of the time, people that come out of the military, they have to work very hard to justify to themselves many of their actions. But go and look in your lifetime. At 25 years, you were born in 1997, I guess. So you go back and in my lifetime, the US military has been involved in undeclared war after undeclared war after undeclared war.

And every single one of them has been a failure. The US military has not won a war since World War II. They've not won a war since World War II. There was one spectacular victory in Desert Storm, which then of course resulted in Enduring Freedom Operation to depose Saddam Hussein and then the quagmire that was Iraq.

And if you go and you look at the death toll of even just these recent conflicts, the war in Afghanistan, the war in Iraq, and the military actions in Pakistan have cost the lives of perhaps somewhere between 2 and 4 million people. For what? For what moral purpose? So you have to recognize that when you're joining an organization that exists to kill people, that you are going to be in a situation in which you are going to be asked to kill people.

And that is something that should not be taken lightly. That's something that if you kill someone, whether you kill someone straightforward at the muzzle of your gun, or if you kill someone by you're sitting in a trailer and driving a drone and dropping a bomb on someone, or whether you just simply do it in a supporting role cooking for your mates on the ship, you are involved in an organization that exists to kill people.

And virtually all of that killing in the modern context is absolutely immoral. The only, only circumstance in which taking another man's life is morally justified is in the direct defense of human life. That is the only context in which it is morally justified. And so you can create these elaborate theories that somehow the United States of America is safer because we have military bases in a hundred and whatever fifty countries around the world, and we have all this stuff, and somehow that's a defensive warfare and we're going to go into Afghanistan and we're going to get those nasty terrorists before they get us and somehow that's moral.

I don't buy it. I don't buy it a bit. And so I think that you run the risk of putting yourself into a moral conundrum. And it's very difficult, again I gave my trigger warning up front, that this is very difficult for most people because once you get into it, if you enlist, you are going to quickly start to talk yourself into the moral appropriateness of your actions.

Because you'll see information and you will be conditioned into believing that what you do is morally right. The reason why militaries all around the world enlist you at seventeen and eighteen and nineteen and twenty and frankly twenty-five years old is because you are gullible. You are gullible at twenty-five years old.

You're gullible at twenty years old. We all are. I was. I remember vividly my driving in my car, listening to right-wing talk radio talk about "we've got to go ahead and we've got to go in and get those people who attacked us on 9/11 and we've got to go in and it's Operation, I forget, it was Enduring Freedom." And I was so gullible that I was just enthusiastic about it.

Well now in my mid-thirties I'm less gullible than I was. And so if you talk to young men, young men think that war is exciting. Old men know that war is absolute hell. And the only time at which you voluntarily walk into hell is when the people are literally at your door and they're going to kill your children and rape your wife and steal your goods.

In that sense, yes, you walk into hell and you defend your home. But you don't do it voluntarily for any beyond that. So it's almost, I would say impossible, although I haven't been in the military and I've known a number of friends, people that I admired. I've had clients, I've had people I've served on boards, I've had good friends who've served in the military.

Okay, I think they're good people. Right? But I don't think you can walk in integrity in the military. And I believe that you run the risk of signing yourself up for a great moral harm when you put yourself in a situation where you are making a voluntary choice to go and enlist in an organization that exists to kill people.

And that organization has proven itself to be lawless and the people that direct it, right? A commander in chief who basically uses the organization with minimal to no congressional oversight, no formal declaration of war, and just pops people into Kosovo, pops bombs, sends missiles into Kosovo and sends troops in here and troops in there.

I don't buy it. Now, if you got into it, you would see enough situations where you felt like you did good that that's what those people, like I said, I like military guys, I always have. But that's the first thing. The next thing, you are giving over control of your life.

It's the exact opposite of freedom. You are giving over control of your life. And even if you do something seemingly as benign as joining the reserves, and they say, listen, come out and spend a few weeks a year training with us and we'll give you some cool gear, we'll let you drive some cool gadgets, we'll let you learn a little bit about your specialty, etc.

You very well could be signing yourself up for a death sentence. And I don't say that lightly. We've had too many people, I have a friend of mine recently who she lost her, not recently, it was a number of years ago, but she lost her husband in Iraq, right?

How many people go and join the reserves and then all of a sudden they find themselves sitting in Iraq for two years? Why? What was the point of it? And what's the point? How do you look, if I'm at your funeral and I'm talking to your widow, what do I say was the point?

What do I say was the point? What was the point of Iraq and Afghanistan? A few years ago, I spent some time with a guy who had flown, who was a marine helicopter pilot in Afghanistan. And again, the key is, as was the case with me as a financial planner.

A financial planner who is actively making his living as a financial planner has a very hard time being honest with himself, honest enough with himself to speak honestly about his industry. You have a very hard time convincing a man of something when his salary depends upon his believing otherwise.

And so I found it very difficult for years to separate myself from even the job of being a financial planner to the point where I could look at it dispassionately and see the good things, see the bad things and have some sense of personal honesty. And the same thing in my experience with people in the military.

So anyway, I just remember a few years ago I met this marine helicopter pilot and we were in Utah at Zion National Park in Utah. And we spent time and he was camping with his family and we just talked about it. And he of course didn't share much about his actual experiences on the battlefield, but I just said like, "What was it worth?" And he's like, "I can't say that there was any point in being there." And I think about a guy like that after the US withdrawal from Afghanistan last year.

And your heart breaks. Here you were at the front end of the spear inflicting bodily harm and death on other people and what was it for? What do you tell your children that you were fighting for? It's difficult enough to defend things like World War II. Very difficult to defend ethically things like World War II.

But you can always point to the Holocaust. You can always point and say, "Look, we liberated the camps or we fought Hitler." And so you think, "Okay, well there was some justification." But it's harder to defend anything else. So let me continue my list. Sorry, I got a little detracted.

So number one, you're dealing with not an employer. You're dealing with, I'm going to use this term, it's not quite the right term, but it evokes the right emotion. You're dealing with a slave master, meaning someone who controls your body and your time and every aspect of it. You're voluntarily committing yourself to obey with virtually no questioning the orders of unknown men and women who literally will use you as cannon fodder.

And they do that with your life. So what can it cost you? Number one, it can cost you your life. Number two, let's say that you survive your time in the military and you're sent off in the reserves, you're sent off to war somewhere, but you survive. You come back.

And how many veterans commit suicide every day? It's stunning. It destroys men's souls. It destroys their brains. It puts them through incredible trauma. And because most of it is not morally defensible, the trauma just sticks with them. And it literally drives men to put a gun in their mouth every single day and pull the trigger.

It's evil. It's an evil system. And that's what you're potentially signing yourself up for. So you say, "Well, Joshua, that's unlikely, right? We're kind of tired of war. We learned our lessons in Iraq and Afghanistan. So what is it good for?" "Well, I'll go and I'll get some advanced training." I don't buy that you can't get that better.

And here I would refer you to my best anecdote. I remember years ago, I heard Joel Salatin talk about this. Joel Salatin was invited by a local set of legislators. And I forget all the details. It was where he lives in Virginia. And he was supposed to serve on some kind of board or whatever.

He tells a story. You can go and find it. But he goes into this board and he was talking about something about farmers. And he's like, "We need to do blah, blah, blah with farmers, blah, blah, blah, blah." And a legislator said out loud what we all know is true.

But he says, "We need farmers because we need people to serve in the military." And the basic idea was that instead of allowing farmers to actually build wealth, he was—I wish I could do the anecdote more justice. But instead of—it was a shocking statement to come out of his local legislator's mouth.

But basically, you need to understand that government representatives view that they need stupid poor people to sign up and serve in the military because they need bodies and they need people who believe in the sense of patriotism. They need people who believe in the sense of duty to country.

And the people who do this are poor people, they're country people, and they're farmers. And so they waive things like they're people from poor backgrounds, inner city, and they waive things like, "Oh, get a college education." They waive all this stuff at them, "Get a VA loan," et cetera, because they're getting poor people.

You will never find in the modern world, you will never find a wealthy family, a sophisticated, connected family that would send their child into the military. It's all people who have no options, no opportunities, no intelligence, meaning that—what I mean is they don't see the other options, they don't have enough mentors around them to show them the better path.

And so then they go and they sign up for the military. And so many of them wind up destroyed by the experience. And so even if you come out the other side and you just went to reserve training and you never got deployed and, "Yeah, I got a VA loan now," what is that really worth as compared to the risk?

A VA loan is not going to change your life. Access to TRICARE is not going to change your life. Access to the college funding, the GI Bill, is not going to change your life. So if you got those things, they can be useful tools in the hands of a financial planner, right?

I've known multiple people, many veterans, they get their medical care from the VA, fine. They get a VA loan, great, go for it. They got TRICARE, they got a disability benefit, go for it. But the problem is that the risks are so high of it going another way that I think that getting a VA loan, getting a GI Bill, et cetera, is very, very poor compensation for the risk on the other side.

And if you're smart enough to ask the question of, "Should I do this?" And if you're smart enough to already be working in that industry, I believe that joining the military would be one of the most, at the very least, one of the most inefficient ways for you to accomplish your goals.

And in the worst case scenario, potentially cost you your life, potentially cost your soul, potentially cost you your sense of peace, et cetera. And so I think that just in conclusion, a cold look at the pay, the benefits, et cetera, as compared to what you can get without that, a cold look at that would say that there's very little benefit for a person who has income, for someone who's not penniless.

I always want to be careful because there's no question that many people have had their lives improved by the military. There are many stories of people who grew up in poverty, I didn't have a dad, and I went into the military and I found my buddies and I found my father, my father figure in Sergeant So-and-so who straightened me out.

I went on the straight and narrow and I went in and I did my four years and I got out and I was a totally different man. There are those stories, but that same guy who did have that good experience is offset by the guys every single day who are putting a gun in their mouth because they can't deal with what they did.

They can't deal with what they saw. They can't deal with what happened to them. From a practical perspective, I can't see why the military is a good move. And then from a sense of honor and duty, this desire to love neighbors, protect and serve, freedom, make sure that we live in a free world, most of those things just cannot be borne out by the military.

I wrestle with this every Veterans Day and Fourth of July. It's like, well, what do I tell my children about things like protecting freedom? What freedom has the US military ever protected for Americans? There's no question, okay, we liberated the camps of Jews that were going to be murdered.

Fine, but what freedom has the US military ever protected for Americans? My entire lifetime and my entire reading of history has shown that we've gone from the highest levels of freedom in the world in, say, 1750, to significantly lower levels of freedom in, say, 1780. And since then, the decline of freedom has been inexorable, and I can't find a military conflict that has actually resulted in increased levels of freedom.

Rather, I find that almost every military conflict has resulted in decreased levels of freedom. And so most of the whole freedom thing is pablum, as best I can tell. So if you want to defend freedom, I think your best solution is go become a lawyer and fight in the courts.

If you want to defend your freedom and your neighbors, go and encourage people and teach firearms training in your local community, encourage people to own weapons. That's the best way to encourage freedom in the local area, et cetera. So I went on a little bit long, but it's obviously a difficult thing and an emotionally laden thing.

But if you were my younger brother, that's the speech I would give you to say, I can't see how or why anybody would want to join the military, especially in the modern world. Consider after Afghanistan. Consider who your commanders in chief are, meaning who your commander in chief is and/or who your commander in chief would be.

Do you respect that man or that woman to the point where you would sign up to take the pledge to obey them? And do you want to be used as a political tool for influence in the modern world? I can't see it. So forgive me if that was a little bit strong, but that is my honest answer to your question.

And I give you the floor. No, no, I really appreciate your insight. I mean, I agree with you on all those points. So I appreciate it. I think that-- I would-- Go ahead. Go ahead. I talked for a long time. Go ahead. Oh, no. I was just going to bring up a second question that's unrelated.

Well, then let me just say one more comment. Here's what I would say. You take every single one of the benefits, the reasons why you wanted to join the military or want to join the military or are thinking about joining the military. And then just call me back once a week, and we'll take one of them at a time.

How do I enhance my career? And I'll give you a 20-minute speech on things you can do with your career. And going to reserve training is never going to be on that list. So again, it all comes down to opportunity cost. For the-- that's why I try to be thoughtful.

I want to be honest, but I don't want to be hyperbolic. There's no question that there have been many people whose lives have been improved by the military. These were generally people with no network, no parents, no opportunities, nobody who reached out and helped them. And so for them, the opportunity cost was, well, I'm going to be stuck in poverty, or I'm going to be-- I'm going to have no friends or no opportunities.

OK, great. The military was a better move for them if they survive it. But for you, that's certainly not the case. And so you can replace with the military with better strategies that don't have so many downsides and potential downsides. And before you say your second question, I just want to say this.

I understand that this is an extremely inflammatory opinion. I hope that those of you who are in my audience who are in the military and who are doing it with the noblest of intentions, I hope that you understand that I respect your desires and I respect your intentions. My assessment is what I have said.

I don't see how it can be otherwise. And I've asked enough people and talked to enough people that I think that many of my listeners who would agree with me ideologically and psychologically or who would share some of the things that I care about would often agree with me.

But I don't intend to, I'm not saying that you as an individual have done wrong. There's many people who think they can change it. There's many people who serve for many reasons. I think it's a lost cause at this point in time. And I think that it's a lost cause and that one of the best things you can do if you're in the military is get out as quickly and as reasonably as you can for the reasons stated.

So go ahead with your second question and we'll wrap up on hopefully a less potentially inflammatory question. >>Adam: Yeah, sure. So what is your opinion on using, like investing in treasury inflation protected securities or inflation adjusted treasury bonds or whatever they're called, like for short term savings such as to save for a down payment on a house?

I was looking at one of the Vanguard mutual funds, I think it's Vips, and it paid about like 10% in interest, which depending on your inflation calculations, might have kind of tracked the long inflation for the past year and is definitely way better than any bank account while at the same time being far less risky than equities or any kind of like DeFi arrangement.

But I don't really hear anybody recommending this avenue for short term savings. I'm kind of missing or wondering if I'm missing anything there. >>Tavis: I would never think of this avenue for short term savings, but I don't have a clear argument as to why I wouldn't. So do me a favor, send me a link, either whatever brochure, whatever you're looking at, send it to me at joshuatradicalpersonalfinance.com.

Let me look at it because this is not something that I have on my mental menu of options, but now I'm wondering why I don't. I don't think that tips are the greatest option of all time for retirees and protecting your money against inflation. And I have some arguments there, but I need to think and consider from a short term perspective and see is there some cost that I'm missing?

Is there something? Why isn't that on my menu? So send it to me, joshuatradicalpersonalfinance.com. I will review and then we'll go from there. Fair enough? >>Joshua: Okay. Yes. >>Tavis: Wonderful. >>Joshua: Thank you. >>Tavis: And with that, looks like my other two callers dropped off, which is probably good given we're already at two hours here.

Thank you all so much for listening to today's show. Thank you for being here. I enjoyed the questions. Quite stimulating and quite diverse and I love doing these shows. It's hard for me to give answers that I know are offensive to people from whatever perspective, but I do try to – I made myself a promise years ago.

I will be honest. So thank you for listening. If you'd like to join me on next week's Q&A show, go to patreon.com/radicalpersonalfinance, patreon.com/radicalpersonalfinance, sign up to support the show there on Patreon and I would love to welcome you next week. Remember that if you'd like to talk to me in private, I am currently accepting consulting clients booked up through January but available at the end of January.

Go to radicalpersonalfinance.com/consult, radicalpersonalfinance.com/consult if you would like to schedule an hour of consulting time with me and I'll be back with you very soon. (upbeat music) - Bring more together this holiday in a new Chevy. Take on more adventure in the strong and capable Chevy Silverado. More confidence in the Chevy Equinox.

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