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We never seen this before. Max, the one to watch for a good scream with Cricket. Yeah! Phone plan, streams, and standard definition. Programming subject to change. Fees, terms, and restrictions apply. See cricketwireless.com for details. Today on Radical Personal Finance, it's 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 Josh Rasheed. I am your host. Happy Friday, everyone. Today is Friday, January 21, 2022. And today, we do live Friday Q&A, open call-in show, any topic you want. Every Friday here at Radical Personal Finance, when I can arrange to be in front of the appropriate technology, we record a live Q&A show.

Works just like a live call-in radio show. You get to call in, talk to me, talk about anything that you want. We record it as a call, and then after about 10 minutes after we're done recording, I hit publish. And that's exactly what we have to do today. We've got one, two, three, four, five callers on the line.

If you would like to join me for one of these Friday Q&A shows, I would love to have you. You could talk with me about anything you want, any question, any comment, any topic, totally open up to you. I don't screen the calls in any way, shape, or form, except that you have to pass through and first become a Patreon of the show at patreon.com/radicalpersonalfinance.

Patreon.com/radicalpersonalfinance. If you'd sign up to support the show there on Patreon, that gains you access to one of these Friday Q&A shows. We begin with Nick. Nick, welcome to the show. How can I serve you today? Thank you for taking my call, Joshua. I have a question regarding cashing out refinance for the purpose of investing in the stock market.

So about a year and a half ago, because of the low rates, I refinanced my home and my goal was to lower my monthly payment, which I did by a couple of hundred dollars. Recently, I realized that perhaps I did the wrong thing because I live in an area of the country that where home prices increased in value.

So let's say I was sitting in about a 20% higher value of the house than when I bought it. So what I'm wondering is, should I effectively have done a re-evaluation of the house to get that larger price, then do a cash out refinance, then dump that money in one go in the stock market, and then perhaps take the small amount of money, a few hundred dollars that I'm DCing right now every month into the stock market to potentially service the larger monthly payment of that new loan.

So because I understand from other calls that you have had and callers that, for example, for 529s, it makes sense to try to put as much money in early so that they can compound. So I'm wondering if the same would hold true for a cash out refinance for your house.

It does hold true if you can control the timing of the different investments. So let me share with you a couple of truths first, and then we'll get to the specific answer. Truth number one, you should always invest at the highest rate of return possible. Is that correct? Sure.

Correct. Now, question. Do you think that you will get a higher return on your money by investing in the stock market than in your home? With the current rates, I do. Okay. Truth number two, the amount of the mortgage balance on your house does not make a difference to how much your house increases or decreases in value.

Is that true? Did I lose you or are you thinking? Looks like I lost the connection. Stand by. Okay, you're back now. Go ahead, Nick. True or true? You agree? Can you hear me? Yes, it's true. Okay, so if it's true that, and we know that you should always invest the highest rate of return, if we believe that you should invest, if we believe that the stock market is going to return a higher rate of return than your house is, and if we believe, if we know that the amount of the mortgage balance doesn't actually affect the value of the house at all, then it would seem like you should always take your money out of your house and put it in the stock market.

And so there's got to be some kind of catch. Why doesn't everybody do it? Well, it's not so much a catch as it is a sense of uncertainty. Right. We simply don't know where and when the stock market will go up. We do believe generally that in the fullness of time, over long periods of time, the stock market values will be positive.

We just don't know if they're going to be positive this month or next month. We always expect maybe a 15 percent swing up and down every year. We always expect a 30 plus percent swing every three years. Every 10 years, we expect a 50 percent swing. Right. We expect our money to have by 50 percent every 10 years.

We expect some kind of radical swings. Those are the normal fluctuations in the stock market. So to the extent that those fluctuations in your account value mean that you would have trouble paying your mortgage or put you in a difficult financial situation, then it would be unwise for you to take money out of your house and put it in the stock market.

But to the extent that you can keep paying your mortgage payment and you're protected against those fluctuations, then it may work out. So most people, most people get nervous about this. This question right here would be the way that if you called Dave Ramsey and asked him this question, here is what he would say to you.

He would say, Nick, if you had a paid off house, would you borrow money against it to invest in the stock market? If Dave asked you that question, what would you say to him? Yeah, I know that I know the answer that you would want me to give. What would you what would you say to him?

What would you say to him? I think probably I would agree with him because I didn't have a loan in place. Somehow it feels different to go out of your way to get a loan on something that's fully paid versus restructuring a current loan or a current mortgage. Right.

And I think maybe it's fair. Right. But if you would if you would keep the house debt free, then you should seriously consider not doing what you're proposing to do. Because my answer to Dave would be, well, Dave, I have no problem borrowing money against my house. If there's something that's a better investment.

If I really believe that the stock market is a better investment in my house, then if I had a paid off house, I would go and borrow the money out of the house and go and put it in the stock market. If I really believe that opening a business or investing in something else, some kind of speculation is a better investment, then I don't I'm not going to be emotionally involved with the house.

So why wouldn't I do it? Well, the reason is that we traditionally associate the fact that we could get wiped out in our investment. And we can we think that that would be much worse if we got wiped out in our house. Whether it is actually worse or not, I think that's up for debate.

But you want to be careful that you don't set up a situation in which you get wiped out. If you if you if you if you can't if something goes wrong in your in your investment, I think that always going with the traditional, hey, I'm not going to borrow money, anything.

I'm going to pay cash for everything. I think that leads to subpar results. I think that if you could have an asset and you can leverage the asset and use the asset to help you and invest the money into something that creates cash flow, creates more growth for you, et cetera, then I think that's fine.

But you want to be very careful about everything collapsing. If something goes wrong in your investment plan, we know that the stock market is generally a volatile place to invest your money. Prior to the what we now understand to be very volatile of Bitcoin, cryptocurrency investments, et cetera. Generally speaking, we would generally say that the stock market is the most volatile place to invest your money.

We would also, especially again, prior to the shocking returns of Bitcoin over the last decade, we would generally look and say the stock market is a place for the highest returns. So if you have a plan in place to deal with the volatility, then you can invest your money in the stock market.

And in fact, that's what most people suggest. So most people, most financial advisors would say you should put money into stocks. You should fund your 401k before you make extra payments on your mortgage. Well, an extension of that is simply what you're saying to do is borrow money against the house, do a cash out refi and invest in the stock market.

It's just simply I need to point out that if something happens and you have a higher mortgage payment because you did a cash out refi, if something happens, then it might not work. Also, if something happens, it might not work out so much as you as you hope, because it may turn out that the returns in the stock market in the coming years aren't nearly as good as they have been in the past years.

And so it all could just fall apart. But you could make that bet. And I don't think it's a stupid bet to make. It's just not a normal part of financial advice because it can lead people to a higher risk, a risk profile. And it can lead to them not building equity in the place that most people build equity.

I'm not worried about it as long as you got a plan in place. I would ask you, is your income good enough that you can easily cover your mortgage payment? You're not going to risk losing your house. Do you have good investments? Do you have a good balance? You know, as long as you're thoughtful about it and you understand the risks, then it's your money.

You can do what you want with it. I don't think it's stupid to do what you're saying. I think it's what most people naturally do. They just don't do it in a direct way the way that you're talking about. They do it by happenstance rather than by design. I see.

Yeah, I mean, the way that I understand what you're describing, the pretty much the only risk that I guess I could envision was that, let's say you would be pressured to sell the house because of, let's say, job loss at the wrong time. And then maybe you're upside down because, you know, the housing market is down in the year where you need to sell.

So, but of course, these are sort of, you know, a lot of ifs chained together that seem unlikely. Right. Stuff happens, right? People get wiped out. I just, and I think that you should be very thoughtful about it. I think that as your assets grow, as your wealth grows, what people naturally do is these little forms of financial engineering become less important to them.

Question, if you did a cash out refinance on your house, how much cash would you be freeing up to go invest in the stock market? I think it would be about a hundred K and I'm currently DCAing a thousand. So I feel like if my new payment would be less than a thousand per month, I could effectively redirect that money from the monthly DCAing into the loan and then just have the, let's say, the hundred K to just compound much faster than my thousand dollars per month would compound.

Right, right. So if this move, if investing this lump sum of a hundred thousand dollars is going to make a significant difference in your finances because of the level that you're at, and it sounds like it is, then you want to exploit all of the ways that you can do that to improve your finances.

And so this can be significant. What happens in truly wealthy people is they often just reach a point in time at which more money isn't that big of a difference as compared to greater sense of safety or a greater sense of peace of mind. And that's where you get into the peace of mind that comes with having my house totally paid off.

Why wouldn't somebody go and take their house that was paid off and go and borrow money against it in order to invest in the stock market or invest into something that they thought was a higher rate of investment? Well, if you had a $300,000 house that was totally paid for and you had no other money, then I would beg you to go and borrow money against the house and go and invest it into something that could grow at a greater rate than the house because you would be house poor in that situation.

You have too much money in a house and you don't have enough money in other circumstances. But if you've got three million dollars in an investment account and a house worth $300,000, then I say just pay off the house because of greater peace of mind. The extra, maybe tiny little bit of fractional interest that you can get of going ahead and having the extra investment money is not worth it in that scenario.

So it's a judgment call on your part. Just know going in what your risks are. With a mortgage, it's generally a relatively low risk way of borrowing. You're borrowing on fixed interest rates. You know what your payments are. As long as those payments are affordable for you based upon your income, based upon having some cushion, some emergency funds, etc., it can work.

And as long as you are committed to your investment strategy, that if the market dumps off 50% this year, right, it seems really great in January, but then all of a sudden in June you wake up and the market's halved, then as long as you're still committed to the quality of your investment plan, then it's not a bad thing to do.

And I think it can be a useful form of engineering. So just know your risk and I think that you'll be prepared to make the right decision. We go to Artem. Artem, welcome to the show. How can I serve you today, sir? Hi, Joshua. My parents are 60 and 61 years old.

They live in eastern Ukraine, which is now facing high likelihood of being attacked by Russia. So looking at the risks that come with war, I'm considering to petition for them to become green card holders in the US. They already have a 10 year travel visa. So if there's an attack on their area that they live in, they just can come to the US and stay with me, provided they can safely get out and get to some airports in western Ukraine or south Ukraine.

But they don't want to jump the ship too soon if there is no large scale military action impacting their immediate area. As currently they visit for one month to several months a year and go back and they have a good community there. They like it there. So there's no immediate.

If it wasn't for war, there's no immediate desire to just come live in the US full time. However, I think there's no harm in starting the process for them to become green card holders in US now, given the circumstances, the process, it looks like takes about 13 months for parents to get the petition approved and have them apply for the green card, which they can do in Ukraine or here in the US if they come during this time on a travel visa.

So the only thing that concerns me from financial planning perspective, if I were to support them, is US health care medical planning. What are your thoughts on planning this area for parents who may not be eligible for public benefits until they become US citizens or have 10 years of work, which is unlikely?

And do you have any plans to support them in the US? Sorry about the technical issue. I was on the backup network, primary internet network and went down. So I'm on the backup network, but now I'm going to the third backup because I think the secondary backup wasn't working quite so well.

So that's why we have primary alternate contingency and emergency connections. So sorry about that, Artem. So first, I'll come back to the health care question because obviously that's the core of your question. I just want to make a comment, though, on the green card issue and to clarify, is it the case that they do not need to be physically present in the Ukraine in order to make their green card petition?

They could do it if in the United States on a tourist visa or from another location. Is that correct? I'm not catching on the question. Yeah, I think what you're saying is, can they apply from Ukraine or from the US? Correct. Yeah, they can do either. So they can be here on travel visa.

They can just come and we apply then to. I petitioned for them to establish that they're my parents and that is approved. They can adjust the status within the US, just go to a local USCIS office, or if they're in Ukraine, they can go to the embassy or consulate to do that.

OK, so if that's the case, then I would strongly encourage you have them come for a visit now. Now, you guys are much more tuned into what's happening on the ground there, but have them come for a visit now. And even if they weren't planning on a visit in January, February and March, this is the time for a visit.

There's no reason for them to be in the Ukraine right now. When there are war clouds or things like that on the horizon, it always pays to be days, weeks, months and even years too early versus one day too late. And so since they have come before, since they have their tourist visas done, ready to go, book them a flight and get them for a visit now and give a little time for the situation to clarify.

And if you want, you find out that, hey, you know what, we jumped the gun. There was nothing. There was no reason to to be worried about anything. Let's just go back. Then they can go back in February. They can go back in March. But if it turns out that something does happen, they will be much happier that they left a few weeks early.

And the situation is quite volatile right now. In the next few weeks, you're going to tell a lot of difference. I just don't I don't see a lot of downside. If they're older, if they're retired, I don't see a lot of downside to them coming now. Just have someone take care of the house, take care of the pets and have them come for a visit.

You'll be happier to be wrong, to be early and wrong than you will to be late and right. Yeah, we actually planned a three month trip in April, but now my wife and urging me to have them come earlier rather than later, especially since in the past Russia has done this attack on other countries during the Olympics ceremony.

So that the world's attention is on the Olympics and the leadership is traveling. You know that they cannot expediently make different decisions to support or not support or from the other country's perspective. Exactly. So and that's typically what I think it's February. So I am thinking to invite them and have them come February.

But we'll see. The thing is, they also like they're not fearful people, so they're not quite in a rush. It's a little tricky because they, you know, they they're comfortable there and have a good community and they think they can figure out, figure out everything as it comes their way.

I'm sure that they could figure it out. It's probably not. Listen, President Putin is not interested in killing the people of Ukraine. It's a political maneuver. But the key is that whenever there is a hint of potential violence, catastrophe, collapse, war, famine, strife, etc. The very best place for you to be while observing those horrible situations is in a safe, comfortable part of the world, watching it on a big screen television, being thankful that you're not there.

Just promise yourself that if I know that something is happening, I'm not going to be there. And you avoid the worst case scenarios because history is filled with times where people thought, oh, it's probably not going to be so bad. I'm probably not going to. It's probably not a problem.

And they stick it out and they wait and they wait. And all of a sudden something happens and something happens through some variety of things. It's not it's not always intentional. Right. Sometimes it's a freak accident. Sometimes it's you know, you can't predict it. The point is that when there's dangers like that that are unpredictable, get out.

Now, if somebody can't get out, meaning that they don't have any money or they have to show up to work or if they leave, their entire business collapses and the future of their family falls apart. Well, those reasons are very compelling and those are compelling reasons to stay and to kind of wait and see.

Right. If your dad is running a business and he has to be there in order to run the business and if he doesn't run the business, then the business collapses. His family goes into economic distress and the families of his 55 employees all go into economic distress. Well, then he's going to make the decision that I need to stay and wait and I don't want to jump too early.

So but in that situation, he should send your mom to be with you. Right. He would send you know, all of us would do that with our children. Right. That's why we send our wives and our children to somewhere that is safer. And we wait and see and we make sure that we have a plan to get out.

But it might be a plan to get out a little bit closer to the things happening. But if your parents are retired and they have you to count on, they're not running a business, they're already planning on a visit. They don't have to keep a job of some kind.

If the costs of leaving earlier are relatively modest, then get out. There's no reason to play around with it. Get out. Let the situation settle for a while and then they can just go back. If they like their friends, they'll still like their friends in March when they go back and nothing happened just as much as they will in January.

It's just it's foolish for people to. Why do people always stay too long when there's a disaster coming? It's not that there's never there are very few disasters for which there are no. Foretaste, there's no warnings, even like the most recent thing of that spectacular volcanic eruption near the nation of Tonga, it was erupting for weeks.

No, I haven't dug deeply enough into note how serious those eruptions were, but there were signs. There were signs that, hey, this thing is a big thing and it's it's it's it's stuff happening. And if you look at almost all events, there's always warning bells. There's warning bells that, hey, things are things are coming.

And right now there's warning bells of the relationship between Russia and Ukraine. There's warning bells of the relationship between China and Taiwan. There's warning bells all over the world. And so if you're in the way of those warning bells, then it it's better for you to be in a safe place with people that you love watching those things on TV rather than for you to be in the middle of them.

And again, we understand why people don't. If somebody has to keep a job, they have to keep a business. If somebody doesn't have any place to go, if somebody doesn't have any paperwork of a place to go, then these are all really valid reasons why they wait longer. But your parents can come to see you.

They can stay with you. They have family. They have the paperwork. They have their visas ready to go. They can make the application for the green card from inside the United States. And so I don't see any reason to wait around or to play games with that stuff. Even if it's not the most serious thing, I still, I just, why play games?

Why take the risk? To your question though on health care, I don't, no good idea comes to mind at the moment. There's not a system that exists. Well, that's not true. There is a system that exists. So what's the normal scenario? Normally when people travel from anywhere in the world, be it a French citizen traveling from France to the United States or a Ukrainian citizen traveling from the Ukraine to Canada, we just, we don't worry too much about the need for health care while we are away from our home.

And generally speaking, our insurance policies don't often provide much care for those things unless we are at home. In the United States, if somebody is covered by Medicare, they receive Medicare only when they are at home. And so you can purchase small travel insurance policies and you can, those are available, but most people don't get them.

And you just kind of assume that nothing's going to happen. Now, what is available? The first thing is they're not going to be able to get Medicare, as you said, until or unless they have the appropriate credits. And so I would think the only solutions are to purchase a private insurance policy.

With there being from outside of the United States, they could pick up one of the international policies that are available for travelers. I've researched these extensively. I have used them at different times. The trick is that usually these policies for international travelers, permanent tourists, travelers, people who expats, etc., they usually come with a tier basis and they have basically all the countries except, say, the United States and Australia and Canada.

Or you can buy them where they include the United States and Australia and Canada and some of the others. And so when you buy them, when they include the United States, they're not inexpensive. And so I would, you're just going to have to decide, is it worth it for them to have insurance?

If they don't have any money, they probably don't need much insurance. If they do have a lot of money, then they can afford to get an international policy that will cover them while they're in the United States and look for something in the private market in the United States.

But that to me is the solution, is just to shop for one of those international insurance, health insurance policies. Can they buy affordable care in the marketplace? No, no, no. No, let me think. I don't have my notes at my fingertips. If you just search international health insurance for expats online, you'll find some articles and whatnot.

There are several organizations that recommend these. Some of them are intended for people who are living nomadically, digital nomads, expats, etc. And you'll find reviews and such on them. I can't remember the places to cite you to right now, but that is what you will have. And you'll find them, and they will give you coverage in the United States.

And so you can quote them, figure out what you would need, and then quote them. That's how you find them. Okay. I have another question. Do you want to circle back to me? Go ahead. I want to ask, what is the applicability of setting up trust to avoid probate on small business accounts?

So sitting down, we do trust and documents and will and guardianship documents. And thinking of the business, I'm thinking I have small business S-Corp accounts. There are no tangible assets to speak of. There are just revenues that come in some days, so many days out. So if I pass away for some reason, what is the best way for these accounts to move on to my wife or my children or whoever?

Well, the simplest thing would be if you're going to move it on to your wife, then add your wife as a co-signee on the account as a representative of the business. So if you have a legit business with a legit business account, then that bank account value is not something that is going to be probated.

Rather, it's an asset of the business. You don't own that bank account. You are a representative of the business with signature authorization on the account to control the money flows, but you don't own that account. And so at your death, that account itself will not be subject to probate.

The business assets will pass based either on your will or based upon those business assets having some pre-existing agreement, like a buyout agreement of some kind, or whether those business assets themselves are held by a trust. So I wouldn't worry too much about it, though. The simpler way to do it, especially if these are negligible accounts, is just make sure that your wife is an authorized representative of the business.

She is a signee on the business accounts. Or she would go ahead and inherit the shares of the business. She would get the relevant paperwork showing that she is a representative of the business and then be able to have exercise over the accounts. So transition to my wife would be just through co-signee.

And you're saying if it was like both of us wiped away, then transition to children is the will direction? The transition of the business account, if you and your wife were to die together, would be to the representative of the business that is appointed by the court. So if you die and your wife dies, then the court would appoint, the court would review the will.

The will would say, "Hey, this guy owns a million shares of XYZ Corporation. So then we're going to appoint someone to dispose of the assets of XYZ Corporation. Oh look, here's a bank account that has $1,500. XYZ Corporation is going to take that money. They're closing down the affairs and then that money would then, I guess then it would go back to your estate.

Because it would pivot back to your estate and be distributed according to your will at that point in time. So I would just say with relatively small accounts, it is valuable to ask the questions. It's just probably not worth dealing with the planning. For most people, you have a few big assets.

You have a life insurance policy. You have some big accounts. You have big investment accounts, etc. In a perfect world, yes, you do want all of those little things buttoned up. But if you just have some day-to-day accounts where you have $1,000 here, $1,500 there, the chances statistically of your dying, I think, early are small enough that it's not worth going through a lot of extensive planning for those small assets.

Just because it's very unlikely that you're going to die and your wife's going to die together young. Well, those accounts may not be small. Within a couple of months, different invoices get paid and then it all gets stuck in those accounts. Right. So if the accounts are a significant portion of your overall net worth, and if the accounts then they do merit more careful planning.

But most of the time, a young couple with young children, most of the time they're going to have a lot of life insurance and they're usually going to have most of their money in investment accounts. And/or it can be some kind of stock value for a private company, but most of the time it's going to be life insurance and then investment accounts.

That's where most of the money is. So if you die and you don't have every dot and tittle figured out for those small accounts, then you have enough assets from your life insurance policy and from your other accounts where your executors can settle things. And so all I'm saying is that if these are modest accounts, if these are small numbers, the chances of you and your wife dying together at a time when you have large account values is pretty small.

So if the damage, if the likelihood of that happening is pretty small, and if the cost of it happening is not that big of a deal, then I would just ignore those details knowing that that's what your executor is paid to go through and square away and wrap up all those accounts.

Now if all of a sudden you turn around and you've got a million dollars in the account, and it's a big deal, and it's going to be a million dollars for the coming months, then yes, definitely go ahead and pay more careful attention to that planning. But the chances of a husband--it does happen-- but the chances of a husband and a wife dying together at a young age are very small.

Thank you. My pleasure. All right, we move on to John. John, welcome to the show. How can I serve you today, sir? Hey, Jeff. Thanks for taking my call. I had a question. I'm not interested in this purely for the financial aspects of it, but I'm kind of sneaking the question into a financial show because you've based a lot of your advice off of this in the past.

But I was wondering what advice you might have for someone that's trying to approach reading the Bible and has had a few false starts and going at it again. And I know there's other resources and different approaches and different ways to go at it, whether it's just straight through or starting with, say, the New Testament and going back--going in different orders.

Do you have any advice related to that? Yeah, absolutely. And this is Open Line Friday. I always hate to steal Rush Limbaugh's Open Line Friday, but really I don't know what else to call it. Open Line Friday, you can ask me whatever you want. It doesn't have to be financially related.

I love the subject, and being both a frustrated and a successful Bible reader, I'll give you some insight into where to start. I think the first thing--and depending on your exposure to Christianity, you may or may not know this, but I always have to start with this as background knowledge because most people don't really recognize it.

When we say "the Bible," in our minds we think of "the Bible" as a book because generally the individual books of the Bible are gathered together into one book. And there will be basically three different versions of that in terms of what books are collected. You have a difference between the Protestant Church around the world, the Catholic Church, and the Orthodox Church.

Each of those generally respects a slightly different collection of books to be the words of Scripture, Holy Scriptures, etc. So I'm a Protestant, and so I generally refer to the Bible as the 66 books that are gathered together in the Protestant Bible, collected and organized by the Old Testament and the New Testament.

But what's important is notice that these are books. So the Bible is basically a library of books. It's 66 different books if we use the Protestant canon. 66 different books. And these books are written over about 4,000 years of history by how many authors? Something like 40-something authors? I don't remember the exact number of authors.

And they're written with all kinds of different purposes. And so what happens is often people sit down to read the Bible, and they say, "Well, if I'm reading the Bible, I should start at the beginning. I'll start at Genesis." And that makes a lot of sense, and Genesis is a very interesting book.

You have a couple of chapters about creation. Then you have the chapters about Abraham and his descendants. And then all of a sudden you skip and you're in Joseph. And then right at the end of the book of Genesis, Joseph dies, and then you move into the Exodus. But people often don't realize what happens.

So for example, there's a 400-year time span, a gap, where there's nothing written. There's no history recorded between Genesis and Exodus. But then you go into Exodus, and you read this very interesting story of the children of Israel coming out of slavery in Egypt. And then all of a sudden you get to Leviticus, and where most people's Bible-reading ambitions fail is when they get to Leviticus, because Leviticus is a book of laws.

It's a legal book surrounding all the laws for the conduct of the priesthood, the conduct of the Israelite nation, etc. And so if you wade your way through Leviticus, then all of a sudden you get to Numbers. And Numbers is a book of--it's a census, basically. It's a book of accounting of who was here, and so you wade through chapter after chapter after chapter, and then usually by then many people give up and say, "Ah, I'm not going to read the Bible." And so if you understand what these books are, then you--if you understand what the books are, then you'll have a better chance to be able to know how to approach them.

Now, the other thing that gets people--that's hard for people when reading the Bible--also involves the way that the books are actually organized. So if you look in the front of your Bible, then there's a standard way that the books are organized. So you have Genesis, Exodus, Leviticus, Numbers, Deuteronomy.

This is called the Pentateuch. These are the first five books. Then you get into Joshua, Judges, Ruth, 1 and 2 Samuel, 1 and 2 Kings, 1 and 2 Chronicles. And so you go through--and these are basically the prophets. The Jews call them the prophets. You have the law, the prophets, and the writings.

But as you go through, what happens is it's hard to keep track on everything that's happening, and there are all these parallel books of the Bible. So you'll have 1 Chronicles and 1 Samuel. They cover the same events. Or you look through and you see Isaiah and Jeremiah. Like, why are Isaiah and Jeremiah writing, but what's going on?

And so it's hard, without a little bit of background knowledge, to actually fully grasp and absorb what's happening in the actual account in the Old Testament. The New Testament is--and so one more comment on the Old Testament. What's funny is that when you get to the section called the prophets-- Isaiah, Jeremiah, Lamentations, Ezekiel, Daniel, Hosea, Joel, Amos, Obadiah, Jonah, Micah, Nahum, Habakkuk, Zephaniah, Haggai, Zechariah, Malachi-- what they did was they organized the books in terms of big, long ones to little ones, little short ones.

And so when you look at the book of Malachi, they call it a minor prophet. It's just stuck where it is because it's a short little book, I think three or four chapters. But it's not unimportant; it's just a short little book. And so this is where, without having some sort of guide or some sort of background knowledge, it becomes difficult to just wade your way through from front to back.

Now, you can do it. Millions of people throughout history have done that, and their lives have been transformed. But if you're wondering why you've tried in the past and not been successfully able to read the Bible, this is one of the reasons why, because of the way that the books are organized.

Now, when you move to the New Testament, starting with the book of Matthew, it's often less hard. Number one, the books are so much shorter that you can just breeze through them. But you still have, right at the front of the New Testament, you have the four books of the Gospels.

And so when you look at these, these books are all contemporaneous. They sell the same events, but sometimes they're written by different authors. They look at things from a different perspective. Sometimes the order of the events is slightly different from book to book. The vantage point is different. And so that also can be confusing to know what to actually do.

And then you get to the letters, largely written by the Apostle Paul. Not all, but you get to the letters, and you need a little bit of background. If he's writing to the Ephesians, what's going on here? Who are the Thessalonians and the Ephesians, and who is Titus? And so those letters are much shorter, but it just helps to have a little bit of background knowledge.

So where do I usually recommend that people start? Here are my--here are kind of my things that when people ask me this question, the advice that I give. So to begin with, if somebody is interested in Christianity and trying to understand what is Christianity generally, then we look at who are the actual books of the Bible written to.

And usually, rather than starting with Abraham and Isaac and Jacob, usually we start with Jesus, because Jesus is the pivotal figure. Christians, by definition, are disciples of Jesus Christ, and so it's his story that I think is usually the most important one to start with. I usually recommend that if people just want to read a single gospel, one story about Jesus, that they either read the book of Mark or they read the book of Luke.

Either one is fine. Mark is shorter and very direct and very fast, and Luke is longer and has more history in it, more careful history in it. But either are fine. Why do I say that? Well, each of the books of the Bible was written for a specific reason in a specific time to a specific person.

So for example, the book of Matthew. The book of Matthew is a book that was written to Jews. It was basically a Jewish defense of who Jesus Christ is, so it's extremely Jewish. For a Jew, if I'm talking to a Jew who's interested in Christianity, of course I'll tell them to read Matthew.

But for someone who's not exposed to Jewish culture, it's often a more difficult gospel to read. Mark and Luke are both written to non-believers. Why don't I recommend John? John is written to believers, and even the words of John are, for most people, they require quite a little bit of time.

So John, for example, one of the most famous passages of Scripture. "In the beginning was the Word, and the Word was with God, and the Word was God. He was in the beginning with God. All things were made through him, and without him was not anything made that was made.

In him was life, and the life was the light of men. The light shines in the darkness, and the darkness has not overcome it." So this is a powerful section of Scripture, but it's very, very theological. And so John is writing a gospel to believers, to people who know who Jesus is, who knows what the stories are.

Now the stories are all--some of them are in there, but it's usually pretty inaccessible for non-believers to start with. So Mark, again, is short. It's fast. It's really quick. Mark was basically, we believe, written by the Apostle Peter. So if you want to know who was kind of the origin of the book of Mark, basically we think it was the Apostle Peter, and Mark was the man who wrote it down for him.

But it's fast. It's to the point, and it tells the story of Jesus very, very quickly. Luke and Acts, if someone is a little bit more interested, and they're interested in who Jesus is in the early church, I recommend that they read Luke and Acts together. They're not one after each other in the Bible, which makes people confused, right?

The New Testament is ordered Matthew, Mark, Luke, John, Acts. But Luke and Acts are basically, in my opinion, volume one and volume two of the same book. They're written by the same author. The author is a man named Luke. Luke was not a Jew. He was from Syria. But he was converted to Christianity.

And Luke was a historian. He's one of the Bible authors who never knew Jesus, never met Jesus, never saw Jesus. He came along later, and he researched the story of Jesus. And so one of the things that's interesting is you'll see in the book of Luke, you'll see all these historical things that don't exist anyplace else in Scripture.

So, for example, all of the stories that we get related to the Christmas story, the stories related to Mary, the mother of Jesus, the conception of Jesus, their flight to Egypt, all of these things exist really exclusively in the book of Luke. There's some in Matthew, but most of it exists in the book of Luke.

And I personally think the reason for that is simply because Luke went and he spoke to Mary, and he researched what actually happened with the circumstances, and that's why it's recorded. Luke was a very highly educated doctor. And so as a doctor, he was careful to write down a lot of the details, and he is very, very precise.

And he went out and he talked to lots of witnesses and gathered these stories about Jesus and then collected them into a book that we call the Gospel of Luke. The reason I say Acts is that basically the Gospel of Luke tells the story of Jesus. Then the book of Acts tells the story of the early Christian church.

And then it has a most important emphasis on the person of the apostle Paul. And so there are various theories on why this was written. What I personally think is the most compelling--and people may differ with this, you don't have to believe this--but what I think is the most compelling is I personally think that there's a good chance that Luke and Acts are being written almost as a legal brief for the apostle Paul.

If you look in the book of Acts, it's written to a man named Theophilus. Paul says, "Oh, most excellent Theophilus, it made sense to me to collect this together for you." And Theophilus is a word that literally means "God-lover," right? Theo, God, Philos, lover, lover of God. And so there's different--Christians have argued and kind of tried to figure out what exactly this means, who was Theophilus.

It's possible that Theophilus was simply a construct, kind of a dear, most honored reader, that kind of thing, like someone that he's created to be speaking to. But I think it's also very--I think there's a good chance that Theophilus was someone like Paul's defense attorney. The theory that makes the most sense to me, Paul--remember that Paul was being charged several times in the Church.

Paul was being charged by the Roman government for some of his actions, and he went to trial several times to give a defense of what was actually happening. And so in order for him to have a proper defense, there needed to be written down a story of who were the Christians.

Who was Jesus, first of all, and then who were the Christians? And so I think it makes sense that Paul wrote--excuse me, Luke--I'm kidding, my name is mixed up-- that Luke wrote the book of Luke as a story of who was Jesus, and then also he wrote the book of Acts as who was the story of the early Church, and then Paul specifically.

And so it makes sense that it kind of brings together some of the things in a way that makes a lot of sense to me. So it is possible that Theophilus is just a fictional figure, or it's some literary device to say, "Hey, to Mr. God-friendly." But what you're left with is actually a remarkable story, that if you want to know the story of Jesus, and you want to know the story of the early Church, you would read Luke and Acts.

And I think that this theory also makes the most sense to me of the details of the book of Acts, why it focuses so much on the Apostle Paul, because two-thirds of the book is focused on this one particular dude, and then the book ends with Paul waiting for trial.

And so to me, if you want to know about that, start your Bible reading with Luke and Acts, and you'll get a good overview of the Church. So now, if you want to read the Bible more completely, and you say, "Okay, well, that's all nice, Joshua, but I'm more interested in the Bible as far as the whole story," then what I love to see people do is I love to see them read a chronological Bible.

There's one that's available that is in a translation called the New Living Translation, and a quick comment on translations. When you look at different Bible translations, there are different ways, different theories that people have on how and why they should translate the Bible. So there is a theory that says we should translate the Bible in a way that is very true to the original text, and we should translate it exactly as it says, even if it's awkward and difficult to read.

Then there's another theory that says let's take the meaning, the basic ideas behind the words, and let's bring them into a more modern sense so that they're more easily understood. I think there are powerful benefits to both of these approaches, but if people are looking for a translation to read, there is one that is very readable that I enjoy reading called the New Living Translation, and there is a Bible published that's a chronological Bible where what the authors do is they take all the different Bible passages, and they cut them apart, and instead of ordering them simply in the order that they are in the canon, they order them according to the chronology.

So they split up all the parallel passages, they fit them all together, and you're left with the complete words of Scripture, or you're left with all of the words, all the verses are in Scripture, but their order is changed so that you can understand the chronology. So I think this is a really good way to do it.

When I was a young man and I decided to start reading the Bible, it was reading the chronological Bible that finally made stuff kind of click, where I understood how it was laid out, I understood the timeline in a way that made sense. Right now this year, I'm reading through the chronological Bible with my children.

I actually use the audiobook version, and every morning at breakfast I call them. Before we're ready for breakfast, I call them to the table for 10 minutes or so early, and I play on Audible. They have the whole chronological Bible available. 72 hours of reading, it's the New Living Translation, it's chronological, the reader does a good job, it comes out to about 12 minutes of reading a day to read the Bible in a year.

So I play them that as part of our family's normal practice as well. So I encourage that as a good way of getting the scope of the whole Bible. Then, if you want to go deeper, I think the Bible is best understood in the context of books of the Bible.

One of the things that to me is a great problem is that in the modern era, many people have become accustomed to citing chapter and verse, and absorbing their biblical reading even in very, very small quantities, rather than in the context of the book. In all of the original texts, chapters did not exist, verses did not exist, they were written as books.

And the chapters and verses of the Bible were inserted with good motives, but I think what it's caused people to do is to focus too much on individual small sections, which I don't think is the way that we do it. If I create a podcast, that podcast may be an hour long.

I don't intend for my podcast to be understood by somebody taking a 30-second excerpt from it, or a two-minute excerpt from it. It's not that an excerpt can't have application. There might be something I said particularly powerfully, and it makes a lot of sense, and it's really nice to just hear those few minutes.

There might be something I said that when taken out of context sounds absolutely terrible, but when we put it into the proper context of the full episode, then it makes sense. Same thing if I sent you a letter, if I sat down and I wrote a letter and I said, "John, I want to share some things with you that are important," I don't want you to go immediately and just skip pages 1, 2, 3, 4, and 5, and go straight to page 6, halfway down the page, and zoom in on one sentence there.

So I think it's a great weakness when we spend a lot of time just reading chapters and verses of the Bible rather than books. And so I recommend reading the Bible as a collection of books, meaning a book at a time. And if you take it a book at a time, then everything starts to fall into place in a more powerful way.

One tool that can help with this significantly is a little bit of background on the book. And some Bibles will have little things of, "Hey, this book was written by so-and-so," or, "We don't know who this book was written by, but this is what it says," etc. The best resource I recommend on this is a series by a preacher named David Pawson, P-A-W-S-O-N.

He has a series of videos, and there's also a book as well, called "Unlocking the Bible." You can find them free on YouTube. They're old, and so they're kind of funny. They've got this awful orange curtain background, etc. But they're really powerful because of the way that they were created.

And the way that they were created was basically, Pawson was this preacher, remarkable preacher. I really admire him and have benefited greatly from a lot of his preaching and his insights on many things. But he was invited by a friend of his who was a pastor, and he said, "Hey, listen, the people in my church are not really reading the Bible very much.

Is there something that you can do about it?" He said, "Yes, I'll come one time per month, one day per month, and I'll give a presentation specifically about the book of the Bible. And what I want the congregation to do is, before I come, read through that book of the Bible, then come to my talk, and then when I'm done, read through that book of the Bible." And then, of course, the preacher would preach on that book of the Bible, etc.

And so he created these series of talks. And of course, 66 books happened over the course of almost six years of him doing these talks. But what they do is, each talk is simply an overview of the book. Some of the historical background of the book, who wrote it, who was it written to, why was it written, what does the book contain, some of the major themes, a little bit about the structure, the flow, etc.

But I have found that every time I've gotten someone to watch one of these videos and then go and read the book of the Bible, they have gotten so much more value from it. And I don't ever want to take away or say that the clear text of Scripture cannot speak on its own.

I don't believe that. I believe that it can. It can speak powerfully. But I have found that a greater understanding of the historical context, the greater understanding of what was happening at the time that this book was written, if here's Isaiah preaching, what's actually happening, why is Isaiah preaching, has helped me immensely to appreciate the books more.

So if after someone has done a chronological reading of the Bible over the course of a year or something like that, then I think it really works well to go and say, "Let me just grab a book at a time, watch the Unlocking the Bible video on that particular book, then read that book and consider what the actual book says itself, and then go through them one at a time." Because in doing this, you gain just tremendous insight into the various books that you don't get otherwise.

So those are my recommendations. Don't start by just picking it up, going straight through. If you're interested in who Jesus was and the early Church, read, as I've said, if you're interested in the whole thing, consider starting with a chronological Bible so that you can kind of grasp the whole scope, and then otherwise take it a book at a time, and before you open the book, go ahead and get a little bit of background on the book so you understand a little bit about what's happening when you read.

I think that'll really help you to gain more from your Bible reading experience. Thank you very much. That is exactly what I was hoping to... exactly the kind of information I was hoping to get, and you touched on pretty much all the pain points I had. Exactly. One follow-up question about the chronological Bible.

How do they deal with all of what must be a massive amount of parallel... I'm not sure how to say it. There's so many things that do get repeated across various books, and they're literally stacked one right after the other, and there's some kind of grouping there, I imagine, to explain that this is the same thing said three or four different ways.

They put them all side by side. So I think there are a couple places where this is the most obvious. Again, Chronicles and Samuel. Here, is it Kings? I'm blanking. Is it Kings and Chronicles that go... So you'll read a passage, and it'll be basically the same thing. So for example, anywhere there's a genealogy, there'll be a genealogy, and you're reading through Genesis, and it's telling through who the children of Cuth are, right?

And then it'll go ahead, and they grab the paragraph from Chronicles, where there's also that same genealogy put there, and they line it up. And then when you get to the Gospels, where I think it's also there, you have three different accounts of Jesus feeding the 5,000. They just line them up, and so you can see them.

And it's really interesting to do this, because you can see the things that are the same in them, and then you can see the things that are different in them. And it's really fascinating to start to see, well, why is it that Luke says such and such, and Matthew says such and such about this particular event?

And so there's no way to know for sure if the chronology is perfect. Of course not. The ancient mind did not function the same way that we did. They did not write the same way that we do. And so it's important. You get into all these textual criticism arguments and whatnot.

But what you see is you see the--I don't need to go more. To answer your question, they line it up, they put it there, and so some days it's very repetitive. "I don't want to read this again. I just read this." But other days, like, "Wow, let me take some time and look and see how these passages compare and contrast with one another." It's really interesting to do that.

I appreciate that. Thank you. And it sounds like it will help because that's one of the frustrations I'm having going through it. Sometimes I'm reading a passage and I'm just like, "Why is that important? Why on earth would that even be necessary to spell out?" But obviously it's been not just spelled out, but retained and repeated and rewritten from the list.

And the context, the bigger context of these books--I am interested in each individual book, but I think the context as to why it was written and, as you said, who it was written for is what I miss a lot of the time. So maybe using, for example, the crutch of going through chronologically first might be a good way to kind of help get me through it.

Yeah, I think it will. What I would say is the essence of what you need from the Bible is extremely small and clear. The essence is there. But of course to go deeper is a lifetime's work. And what I find, at least for me and I think for most people, you find different things that you do at different points in time.

So there have been times in my life where I have read the Bible a ton. There's times in the Bible where I've read very little--sorry, in my life where I have read very little. I believe it's an important and useful practice to consistently read Scripture, and it helps you to see the world in a different place.

And I could give you a list. I could give you many things that since I started reading the Bible a lot in my 20s, many things where I have fundamentally changed my perspective, fundamentally changed my worldview, based simply upon reading the Bible. But you do different things at different times based upon what works for you.

For example, one thing that I have enjoyed after I've read the chronological-- when I was in my 20s I read the chronological Bible several times, got a good idea of the chronology, went through books many times. And by the way, one suggestion is make your Bible yours. I enjoy--I use a wide-margin Bible.

I get some of the nice--they're fine-tip pens and highlighters that don't bleed through. And I mark everything. I mark all kinds of stuff that I'm interested in. And you come up with your own system of marginalia that works for you. But I have things that I pay attention to.

And usually if there's a question, right, if there's a certain question that I'm thinking about, I may have a theological question, and I'll just keep it in the back of my mind and ponder it. And as I make my way through the Bible again and again and again, I mark the different passages that relate to the things that I'm thinking about.

And I find this to be really useful because what happens is that reading shapes my perspective rather than me just going and doing a topical study looking at a concordance. It's just that, hey, I'm wondering about this question, and so let me think about what this passage is saying about that.

So mark up your Bible. But you'll try different things at different times and see. One of the things I've enjoyed—I haven't done this for a while— but I came across the reading structure of Professor Grant Horner, I think it was his name. And this guy came up with this scheme of reading.

You read 10 chapters a day, and what you do is you read from each of the different genres of the biblical canon. And it's really, really interesting because what will happen is you're reading through Psalms, Proverbs, Genesis. And in one day you read 10 different chapters from 10 different genres of Scripture.

And he came up with a system that you read through the Book of Acts once a month, but then because you're reading a passage from Acts every single day, so you're reading through the Book of Acts once a month, but then you're reading through the Prophets on an average of once every year and a half, something like that, I forget exactly.

I have the charts in the front of my Bible. And what you see is that as time goes on, you start to see things you didn't see before. And so I've often wondered--I don't know that this is the best apologetic argument, but I've often wondered, "Is there a book that has had more written about it than the Scripture itself?" Because you could take any verse of the Bible, and you could find dozens and dozens and dozens of pages of commentary of people seeing new light in it and new things in it, etc.

So I find it exciting when I--rather than reading commentaries, just to read the words of Scripture itself, and then to find over time that it--number one, it changes me, changes how I see, and then I see my own applications of it, find my own questions, find my own answers, etc.

So I wish you all the best as you continue on that journey, and I hope that those resources are useful to you. We've got a boogie. We go to--was this James? James, is that you? Welcome to the show. How can I serve you today? 619 area code, go ahead, please.

619 area code, going once, going--hold up, let me unmute you again. Go ahead, you're up. Hi Joshua, this is Adriana, can you hear me? Yes, I can. Is it Adria? Adriana. Adriana, welcome, I'm glad you're here. How can I serve you today, Adriana? Yes, thank you so much. I just had a question.

I purchased a house last year. I'm in Northwest Wyoming. I bought the house with the intention of getting it fixed up and selling it to a friend of mine. She saw the house because of the way the market was going. It was going to be an all cash offer only.

She wouldn't be able to get a mortgage for it right away. I had the cash. I went ahead and purchased it. We're doing work to get it fixed up. She's living in it now and at some point over the next couple of months we'll put a new roof on it.

And then she's going to get a mortgage and buy it from me. So I was just wondering what are some considerations for structuring this sale, this transaction? She doesn't have any money? She has some, yes. She just started collecting on her retirement. And with that plus her job, she'll be able to take out a mortgage maybe June, July this summer.

Let me go back a second and make sure I have my facts straight. You bought the house, you own the house, and you paid cash for the house? Correct. So you own a house. The house does not have a mortgage in it. You are fixing it up for your friend.

And you're paying the money to fix up the house for your friend who is living in the property paying you rent. Is that right? Yes. Okay. Then the goal is she wants to buy the house and you and she think that she's going to be able to afford to buy the house if she gets a mortgage from a bank at some point.

Is that right? Correct. Okay. Do you need the money from the house? Do you need her to buy you out with a full mortgage? Not necessarily. I was thinking about whether the lump sum would be better or the continued cash flow. Although since I bought that house, I bought another property about three weeks ago that's going to need a lot more work.

So it would be nice to have that lump sum to be able to put into this new rental property. Based upon the amount of money that she has, if she paid you that amount of money as a down payment and then you simply wrote her a mortgage for the rest of the money, would her down payment give you enough money that you need to fix up the other house that you bought?

Probably not. I don't think she has a significant amount of money free to be able to make any sort of significant payment. I would say you have two options. Option number one, and they don't have to be exclusive. You could do both of them. But option number one, let me back up, three options I would say.

Option number one is you could just keep the house and rent her the house. And depending on the terms that you wanted to have, that she wanted to have, that could be fine. If she has income from retirement, she may want to own the house. But if she can't afford it, just rent the house to her.

Find a fair rent that's good for both of you and rent the house. That's a smooth, simple thing. And that would provide you with a stream of income and allow you to own the house. Option number two is you could sell her the house and you could hold the note.

So you could say, "All right, give me a down payment." You put a price on the down payment of something that's necessary so that she's got skin in the game. And then you write her a mortgage for the balance. And that could be a great option because it saves her having to go through the mortgage approval process.

It keeps you with the property rights to foreclose on the property if she doesn't pay. And you can write that under good terms, meaning that you could charge her an above average rate of interest, if you could do it without harming the relationship, which is always tricky. But you could charge her an above average rate of interest, which could help your return, because now you're a private money lender, and get a stream of payments.

And that's a very safe thing. As long as you collect enough of an upfront down payment so that she doesn't trash the property or something, that's a very safe thing to do. And I think that would be a wonderful solution. The only problem with that is it may not give you enough money for you to go and do the rehab on the second house.

And so if you need the cash out, then she's got no choice but, number three, to go ahead and get a mortgage. So the cleanest way to do that would be just go ahead and have her get the mortgage, even and buy the house from you. She can be renting the house.

She can approach a mortgage company. You can set up a sales contract between you. She could take the sales contract to the mortgage marketplace, shop the mortgage, see if she's capable of getting it. And if she's capable of getting it, she just simply has an arrangement with a mortgage lender, and she buys the house from you based upon the contract the two of you set up together.

And that gives you your amount of money. If she can't qualify for the lending, then that could be more difficult. And that's where you would want to be careful about even lending her the money yourself, and you might want to just stick with the rental. But either one of those could work.

It would just be a matter of whether the house is in the current shape, where the mortgage company would be willing to pass inspection, et cetera, or whether you need the money versus not. Were you able to get enough of that to make it useful, Adriana? Yes. Sorry. In rural Wyoming, the cell service isn't always the best.

Understood. Yeah, and I was thinking about the option of having her get the mortgage. I'm sorry, Adriana. You're going to have to call back when you're not driving through rural Wyoming, but hopefully you'll be able to listen to, listen through that, and see if there's enough information there. And I'd love to talk to you next week when you have a more stable connection to be able to talk.

All right. We go to 714, 714 Area Code. Welcome to the show. How can I serve you today? Hi, Joshua. This is Thomas. Hey, Thomas. Welcome. Hi. So my wife and I started our family, and we both work part-time because we both enjoy our work. And we have a good baseline of income that provides our expenses and still allows us to save.

And we have other opportunities for different investments. I was just wondering, what would you prioritize, you know, growth, income or training? Try to strike a balance between the two while we're starting and growing our family? I don't know that there's any particular uniqueness. So when you say starting our family, you mean having babies, right?

Yes. Yeah. We have a six-month-old. All right. Great. So good. Congratulations. So I don't see that there's that much of a difference between having a baby and having a family. I don't see that there's that much of a difference. I would just talk, meaning there are a few things that are unique about having babies in the early years from a financial planning perspective.

And let me just run through them in a list for you. The first thing is if your wife is pregnant and you are expecting a baby, because there is medical uncertainty related to that event, then usually during a time of pregnancy, to the extent possible, it's good to kind of hit pause on a lot of things.

So it's good to hit pause and have money in the bank. It's good to hit pause and say on most big aggressive things. And you just wait because you don't know exactly how things are going to go medically. Once there's a smooth, successful delivery, mom is doing well, baby is doing well, you don't foresee at the moment any significant needs, any special medical conditions or things like that, that could suck your bank account dry and really put a pressure on your time, then I think you just simply pause and you go back to the plan and keep working it through.

The other thing that when you do have babies, the big thing that comes in is they fundamentally alter your lifestyle. Your lifestyle today with a six-month-old in terms of what your weeks look like, what your evenings look like, etc., is very different than your lifestyle was a year ago when your wife was somewhat pregnant and you were a young couple with no children.

And so that kind of change, those alterations have certain phases. And there are phases of babies, there's baby phases, then there's little child phases, then there's young child phases, then there's old child phases, then there's young adults. And so I like to think about those as best I can and then get clarity on them.

I keep on my goals, right? If I open my goals spreadsheet here, I look and I know on every year going forward, I have my goal planning for the next years and I have this charted out in terms of years at the moment until my youngest child turns 18 because I want to get a sense of what I can do at certain times.

When you've got a one-year-old, a three-year-old, you know, and your wife is pregnant, there are certain things that maybe you could do them. I try very hard to not let my children control my life. They're just not so much fun. I'm not going to go buy a sailboat and go sailing when I've got a one-year-old and a three-year-old and a pregnant wife.

That doesn't sound like fun at all to me. But there are things that I want to be ready to when my children are, say, 15 and 13 and 11, there are other things that I want to do at that time. So think about these phases and to the degree that you have particular goals or ambitions for them, make sure you write those down because those will affect your lifestyle.

And what I encourage people to do is to prioritize goals that can only be achieved at certain times of life more than goals that can be achieved at any time in life. So I care a lot about certain years of my children's lives because there are certain things that once they pass a certain age, I can't repeat.

I can't do again with them. And so I don't want to miss that because, well, I want to buy a bigger house. I can buy a bigger house anytime or I want to start a business. I can start a business at various times, but there are certain things that I can only do at certain times when my children are a certain age.

And so I want to make sure that I've identified those things and I'm really focused on making sure that my life decisions meet that. So what are some of those things that would affect kind of your situation? We go back now and think about your goal planning. My big three questions I started last week on the first one, but who are you with?

Your application of who are you with, who do you live with, is obviously you live with your wife. Your application of that is gonna be how many babies do we want to have. And there are going to be lifestyle decisions that are affected by whether you have one baby, two babies, five babies.

That just affects your life. Number two is going to be where do you live, right? Where do you believe is the best place for your family to be? What country do you live in, what state do you live in, what city do you live in, what house do you live in?

So the house that's appropriate for you today with a six month old baby may not be appropriate for you six years from now with a six year old and a four year old and a two year old. You need different things. And so be aware of those things because you'll want to be thinking ahead.

I mean, for my family, having a great yard is life changing. And I don't use that word loosely. Like it's life changing. It's a big, big deal for me to have a great yard. To be able to tell the children go outside and don't come in is absolutely life changing and a really, really important scenario.

So if you're living in a small, modest place right now and you're working part time because you don't want to work more and you have just enough to support the little place, recognize that four years from now, six years from now, you're really going to want to have a nice yard, a big yard.

It's going to make a big difference for you. Or you're going to want to have a house that opens up onto a community park or some way to solve the outdoor space scenario. So think about where you want to live. And then in terms of what do you want to do, right?

This is the third question. What do you want to do every day? And what I'll tell you is from a business building perspective, if you have ambition to start a business, the time to do it is now when you got a baby because your baby doesn't need you very much.

Baby needs mama a lot, but in the first few years, baby's going to be minimally interacting with you. And so if you need to put in a couple years of hard work or if you need to do a career change, you need to get a college degree or you need to do something, or you need to go on a job hunt, or you need to take a job that involves lots of travel, right, this is the time to do it.

When they all of a sudden get to the point where you got a five-year-old or a six-year-old or a four-year-old, all of a sudden that daddy time becomes way more valuable than it was with a four-month-old or a six-month-old. And so if there's something on your list of chores, a list of goals that's going to be time consuming, then think about where you want to do that.

I don't want to set super ambitious goals of starting the world's next great massive company when I've got an eight-year-old if I can avoid it, right? That's golden time where I want to be as available as possible for my children. I want to soak up those years every bit.

With an 18-year-old, bring it on. I'm going to go ahead and start that world-changing company or take the international job or whatever it is. So consider the ages of your children and to the best degree that you're capable of by observing yourself, talking to others, talking to the parents, observing other children.

Think about the things that you want to do now, the things you want to do later, and then factor those into your life planning decisions. - That's great. Thanks, Joshua. My wife and I had started on coming up with all those plans and we've already made adjustments in preparation.

But yeah, kind of thinking through and how you just have a spreadsheet you kind of thought out all the way through 18 is something you definitely haven't done. But yeah, I know it makes sense to start looking forward and really trying to vision what all those years are going to look like.

So that was great. Thank you. - Don't get too overwhelmed by it. It can be a little too overwhelming. But it is useful. I think it's important to think about because if you look at life, I really believe this. In so many coaching calls that I do with people, I find this comes up again and again and again.

Pay attention to the time because time is going to press forward day by day, year by year by year. And then choose thoughtfully when you want to do certain things. And I don't need to give too many examples, but if I wanted to hike the Appalachian Trail and that was a goal that I had, I wouldn't go today.

I would consciously choose that this is not the year. Why? Well, my children can't hike with me. But if I wait five years, I'll have a family of great hikers. And now all of a sudden, hiking the Appalachian Trail can be a key part of the things I want to do with them.

And so just think about whatever those goals are, those visions, those lifestyle things. Think about where they fit in. Be aware of the different changes. I think there are a couple of changes that are really important. So first you have a baby. And right now having a baby is probably pretty hard for you and your wife.

My wife says, she's like, "I don't want to leave the house until six months. "She just doesn't want to go anywhere." And I remember how hard it was with one baby where like to leave, to go anywhere, you got all the stuff, et cetera. Over time you get better with it, right?

But after a while, I'm sure if you look back over the last six months, you guys are way better now and more skilled as parents. But up until say two years old, well, up until one year old, you have a child that doesn't crawl, doesn't move. And so things like traveling, not that hard.

Once the child is medically stable, strong, et cetera, because the child doesn't move much, not crawling, not walking, or might be barely crawling, but not moving around a lot, it's pretty easy to travel. Once you reach that, just after a year to about two and a half years, that's a hard time to be on airplanes because child wants to move, wants to walk, et cetera, but can't really be entertained by things and distracted.

So I'm not gonna go through the whole list right now. Just pay attention to those ages and then look at the things that you want to do, the things that you want to have in your life and ask yourself what makes the most sense in what order does it make the most sense for me to do these things?

All right, got three callers left. We go to, I think this is James. James, welcome to the show. How can I serve you today? - Yeah, thank you, Joshua. I'm a about four year old WT employee and I got a wife and two young children under five. As the income has grown, I've been able to accomplish most of the major recommendations, such as establish the emergency funds, maxing out 401ks and moving to like a health savings account.

I plan to continue these, but there's about five to 10,000 excess per year. And I'm trying to understand as that number grows after hitting these major milestones, what are some good opportunities for them? I've thought some about converting some of the investments in the 401k to a Roth 401k and using the extra funds to pay the tax and sort of split with how that account is set up.

Also thought about keeping it into just a taxable brokerage account to have it be more accessible. And then also there's the idea of building cash reserves for real estate or other business ventures. But overall, you know, we seem pretty mundane. And so I thought I would call the radical financial expert and see that as you advise people like myself, if there's anything that you've put forward in the past, in the past that has served them well, and that I should be considering and just looking to get your thoughts.

- How much money did you spend in 2021 on you? And let me give you some categories of you. Your personal knowledge, your personal education, your personal growth, your personal health. How much money did you spend on books, classes, seminars, conferences, consultants, coaches, nutritionists, doctors, et cetera? How much money did you spend on you in 2021?

Ballpark. - Safe to say it's well under $1,000. - So probably take that money, that extra five, $10,000, and commit to spending it on you. And wherever you think the best place is for that money. Because I think this is the single most neglected aspect of investments. And yet it is the single most productive and important aspect of investing.

The constraint on your finances at this point in time is not the stock market. The constraint on your finances is your income. And if you could triple your income over the next three years, that would radically alter the course of your financial life. Everything else would just look way better, agreed?

- Agreed. - Okay, so how do you do that? Well, you've got to invest in you, right? You're the one who's creating it. You're an employee. You've got to work on becoming a more valuable employee. And so without belaboring the point too long, I would sit down and I would say, what are the natural and obvious ways that I can spend money on myself in a very productive way?

And let me give you kind of my starting points. This is not an exclusive list. These are simply things that I think are kind of foundational places to begin with. Number one, you need to do an analysis of your career. Are you willing to share with me what you do for a living, just the type of job that you do?

- I work in a corporate office. - Okay, so you need to sit down and identify for yourself what you're paid to do. What results do you deliver and what makes you valuable? And then you have to ask yourself, what is it specifically that's going to make me better at that job?

And so I would commend to you that you sit down and identify that, right? Think about your key performance indicators and look at those. Pull out your review performance reports that you're gonna be judged by. Analyze your job and ask yourself, how could I do this better? What do I need to know?

What do I need to do in order to do this better? And maybe it probably begins with reading. For most people, the simplest, fastest way for you to gain additional knowledge is to begin by reading. And so you may have a series of books that you know you should get around to reading that you haven't.

Well, it's hard to spend $5,000 on books, but you start there. And so let me tell you how I would source the books. To begin with, I would go to my boss and if possible to my boss's boss. And I would explain to my boss and my boss's boss or any other people that are in my company, I would say, listen, I'm really working hard and in 2022, I've put in place some ambitious career goals.

And I'm trying to figure out what I need to learn, what I need to know, what I need to do. And sit down and say, what are the skills that I need to be working on to be able to develop to move up three levels in this company or to move up in this career several levels?

What's missing? Where are my strengths that I need to focus on? And then along the way, ask, are there any books that you recommend that I need to read? Are there any classes that you think that I should be taking? And listen to their advice, their input on what you should be doing.

You might consider reading your way through the personal MBA books or reading the personal MBA book itself. If you're in business and in a corporate environment, then an MBA is a useful thing, but you probably don't need the MBA after your name as much as you need the thoughtful thinking.

So check out Josh Kaufman's project, personalmba.com. Check out his book called "The Personal MBA" and then start applying the things to your life. I think that every businessman should have a copy of "The Personal MBA" sitting beside his toilet, right? And every day, pick it up and read a little section and then think about your business and say, well, how could I apply this to my personal business today?

How could I take this idea, this structure, like this thing, how could I apply this to my business today? How could I apply this to my team, et cetera? So then look at classes, ask yourself, are there certifications that I need? Maybe we're involved in, I don't know, maybe if I got a certification in quality control or if I got a certification in green building or if I got a certification in blah, blah, blah, this thing here that would help me, get some certifications.

Certifications are good ways to accumulate knowledge, but they also just make you a safer employee. They make you more likely to get passed up in the company because you're a lower risk employee. The more certifications and the more credentials that you can acquire, the easier it is for someone to promote you because they know that if you suck at your job, they're not gonna be called out for promoting the wrong guy.

And so this is why, especially in a corporate environment where people don't tend to be so courageous as entrepreneurs do, then this is why credentials and certifications are important. Consider getting a master's degree, consider getting the MBA. It might, maybe there is an executive MBA program that you need to do.

And if you did that over the course of the next couple of years, spent 10 grand on it, it would burnish your credentials in an appropriate way. Go to conferences, figure out what are the conferences that are the most applicable for my field. Look at the industry conferences, look and figure out where are the guys that are two, three, four levels above me?

Where are they going? What are they doing? And then get yourself there. And if you pay for it out of your pocket and you take your vacation days, that's the right move because the people that you will meet will massively enhance your network and the things that you will do.

And so I easily burn an excess of 10 grand a year going to conferences. Some of them I talk about here, a lot of them I don't. I just go. And so, and you buy a plane ticket, you pay for a conference fee, you pay for a hotel room and you go.

But the people that you meet and the relationships you gain and the knowledge you acquire is cutting edge stuff and can be tremendously valuable for you. And then you wanna think about coaching. Think about coaching, whether it's executive coaching, think about if there's something that, something that where you think your biggest weakness is.

It could be an image consultant who helps you with your wardrobe. It could be a speech consultant who helps you with learning to present yourself better. Maybe it's an executive coach who works with you on how well you do with managing the people under you. Maybe it's just a personal goals coach, right?

A growth coach of some kind. Maybe it's in the gym, right? Maybe you're fat and if you would not be fat anymore, it would make a big difference for you. We'll spend the money on a personal trainer and prepared foods that you can go and pick up and et cetera.

Maybe what's holding you back is the fact that your ears are crooked. We'll get plastic surgery, right? Or bite your teeth. I mean, I'm being a little silly for levity, but in all seriousness, look at yourself and invest into yourself. And I think that at the very least, if you spent five grand doing that, you would be very much on the right track.

I always think about this, right? Allegedly, LeBron James spends a million dollars a year on himself in the sense that on his body, right? You think about heroes like Tom Brady, right? The amount of money that these guys invest into themselves. You've got one body, you've got one mind, you've got one, you are one person and yet it's you and it's your performance that drives your success in every other area of life.

And so you deserve and you should invest first and foremost into yourself, in my opinion, in whatever you think is the most intelligent way. - That's wonderful advice. May I just ask one follow up question? - Sure, go ahead. - Similar to your previous caller, there is an element that I am looking for related to work-life balance.

I have two young kids, they'll be getting into those awesome sort of hiking years that you're describing fairly soon. And one way to spend the advice you just gave was to spend a lot of personal time investing in the ability for greater income, which in my career would involve actually more travel and things away from home.

So definitely I agree with investing in itself, but if there's any sort of change that's maybe the primary goal is to not triple the income, but instead to, let's see, to keep things more stable or become just more efficient or anything like that, does that change any of the advice about the money that you should invest since you're not going to get a specific ROI in terms of income?

- In a perfect world, and it's hard 'cause we don't live in a perfect world, but in a perfect world, I believe in looking at it and saying, what is it that you want? And what is it that you want if you didn't think from a constrained perspective? What I mean is so often we say, well, I'm a corporate employee and so I'm gonna do it.

And hear me clearly, I'm not saying you should change your job. But if I woke up in a corporate job and I wanted to have time off to be with my children, et cetera, then I would ask myself, how am I gonna do it? The fastest and easiest way to do it is be to change careers and not be a corporate employee because then I, and get into something that I have control over my time.

I did that personally at 23 years old 'cause I couldn't imagine not having control over my time. That's not perfect for everyone. I don't think everyone should do that, but if that is your goal personally, then I would invest the money into figuring out what career I would wanna change into.

Something that would build the life for me that's going to allow me the freedom and flexibility to do what it is that I wanna do. Might be a side hustle, might be a side business, might be something else. There may be a financial component to it, right? So a financial component might be, well, I've got a three-year-old, but coming up in six years or eight years, I'm gonna have a child that's older.

I've got this job, but what we really need to do is figure out how I can be done with this job six or eight years from now. And so maybe it's not becoming an entrepreneur. Maybe it's not becoming something else. Maybe it's doubling down on my financial plan, but really investing heavily into something that's gonna provide me enough income to quit my job in eight years.

So maybe that's real estate, right? That's the classic idea is that I'm gonna go ahead and I'm going to invest heavily and build a portfolio of houses. 'Cause if I can get my houses, enough houses with my name on them and enough rents coming in, then we could quit our job, rent out a primary house, buy an RV and go hike the country for two years straight based upon the rental houses.

So now the $5,000 that you have on an annual basis, some of it gets diverted into education, knowledge, and then doing your own deals, right? And now we go into something that's much more aggressive. And so that's where you pivot into doing it from a financial perspective. I don't know the specifics and not gonna dig into them here, but this is what I recommend is clarify what you want and then try to figure out a plan that's gonna get you there.

And if you don't have a plan that's gonna get you there today, then keep focused on what you want and then work on it in February, work on it in March, work on it in April, work on it in May, work on it in June and keep working on it until you get there.

Because at the end of the day, you get one life, right? We all do, we got one life, we got one chance. And so I wanna make sure that to every degree possible that you're able to fulfill all of your personal vision for yourself. I don't want to encourage discontentment, that's not the goal.

But you wanna make sure that you have a plan where you feel like I can fully achieve all of my goals with this current plan. And when you have extra resources, you sit down and you look and you say, "Where can I invest those resources "so that they'll enhance my plan?" So it doesn't change it, it just means that there may be an additional constraint.

We do a good, careful career analysis, is this the right career for me? Is this the career that I would do if I had 10 million bucks in the bank? Is this the career that I don't wanna retire from? Is this the career that provides me with the opportunities that I need?

And it may or may not. Maybe the $5,000 just gets saved because five years from now, you're gonna quit your job and take two years off or a year off on sabbatical and you're just gonna spend from savings or invested with that goal. That would be another totally reasonable way to reach your goals.

You say, "I'm gonna put this $5,000 over here "into this account on the side. "This is gonna be the sabbatical every 10 year fund. "My children are gonna be at a certain age, "we're gonna go hike the Appalachian Trail. "This is the money that we're gonna use "to help us do that and that's what I'm doing." That's fine.

But I've said everything I can say on that. So start with that and then come back in a couple weeks and we'll talk about it more. - Thank you so much. - My pleasure. All right, we go to 619 Area Code. Welcome to the show. How can I serve you today?

- Hi, Joshua, this is Adrienne again. I got myself up to Billings, Montana where we have 5G, if you can believe it. - Wow. (laughing) Welcome back, go ahead. - Okay, so the big question that I guess, if she's gonna go ahead and get the mortgage, how should I be thinking about an appropriate profit level for the sale of a house is one part.

And then the other part is, let's say we agree on the sales price, let's say $250,000, but the house appraises for 275. Would it be, I guess, what is it possible to then say, okay, I will sell you the house for the full appraised value of 275, I only want the 250 to make me whole, and I end up giving her back the 25,000, so she basically has just taken out an equity, like automatically gotten the equity in the house and that she now has that cash available to her?

- Yeah, I think so. So to begin with, how would you figure out the price? I would get an appraisal. And I would think about, first, you need an appraisal by an independent expert to, or an independent professional, just to get a good sense of where you guys are in the deal.

For her to buy the house, she needs an appraisal to know what she's gonna pay for it. For example, if you don't get an appraisal and you charge her $200,000 for the house, she might be living in the la-la land of 2018, thinking, oh, this house, she's ripping me off for, this is a $100,000 house.

Meanwhile, it's a $275,000 house. So the appraisal is a good way to solve that and to have an actual number. The second thing is, as you said, she's gonna need the house to appraise based upon financing. And so her borrowing ability is gonna be driven by her income, her credit, and the house appraising at a certain level.

And so if you wanted to give a discount, I would also give a discount based upon the appraisal number. So let's say that you said, hey, I bought the house and this is great and I wanna bless you as my friend. I want you to get a great deal.

What I'm gonna do is we're gonna get an appraisal and then I'm gonna sell you the house for 10% under the appraised value and just do it on a percentage basis. Or that would be one way to approach it so that you, if you wanted to give her a deal, that would be one way to do it.

To your other question, I think, yeah, you can. I'm wondering if there's, I don't think you would be breaking any law there. Remember, you could set up a sales contract with her that says, we're gonna buy the house under these certain terms at this certain price and then this is subject to financing.

And then she goes and makes an application with a mortgage company. She comes back with a financing offer. Depending on what the deals are or the financing offer, you can adjust the contract between the two of you. And if you wanna sell a house to a friend for $275,000 and the mortgage company sends her $275,000 to buy the house, it's your right to give your friend a check later in the year for whatever you wanna give your friend a check for, subject to the relevant gift tax exclusion amounts, et cetera.

But I don't think there's a problem. I'm not aware of any laws that you're breaking. I think that would work. It would just be a matter of what does the house appraise for? Can she afford the financing? Can she do the down payment, et cetera? - Okay, excellent. And then as far as the profit, if we're just looking at a percent profit, is there any rule of thumb for either flipping a house or just reselling a house?

What people, what is it, I guess an acceptable or adequate profit margin that I could be looking at or should be looking for, I should say? - I wouldn't do it based upon the profit margin. If you bought the house really cheap, then I don't know that you owe it to her.

I mean, to do anything. I would say, get an appraisal first, even just for you, right, even if you just get an appraisal so you have an idea. The appraisal could be a formal appraisal or it could just simply be get a real estate agent to do some comps and give you an appraisal based upon comps.

So it's an estimate of the current value of the house as in the current market. And then instead of worrying about the profit, just if you wanted to give her a discount, just give her a discount off of the appraised value. To me, that seems fair and it allows, and if that number, let's say that you've got, you put 150 into it, the house appraises for 250, you give her a 10% discount on the sales price, which means that it'd be 225, well, you've got $75,000 of profit, that's fine, but you've also given her a deal by selling her a property 10% under market.

So to me, I would just focus not on your percentage of profit, but take the current market value and then apply a discount if you wanna give her a discount so that she knows she has some immediate equity in the property, she's getting the property under market because of your friendly helpfulness.

- Okay, excellent, yeah, that's helpful. I was thinking about being able to get a real estate agent in there to do a informal appraisal based on comps. That's a really good idea that I'll keep in mind when we're ready to start the transaction moving. - And I think you've got, from her perspective, she's in a dream situation here because you can get the house fixed up and then she can go and you can sign a sales contract subject to financing, and then she can shop with several mortgage companies at her leisure, knowing that depending on what information she gets back from the mortgage companies, then you and she can renegotiate the deal.

So this is a dream scenario for her. And I'm sure that she, I hope that she appreciates your helping her in this way, that you're a great friend to her. - Yeah, she actually does, and it makes me feel odd because obviously I'm not doing this out of the goodness of my heart.

I'm going to make a profit, but yes, she has the ability now to help make the decisions for the house, so she's basically getting to finish the house in her case. So yeah, I think it's a good deal for both of us and I'm happy to be able to do this for her and for myself.

- Good, good. Well, enjoy Billings today. So many of us love that out there. I'm jealous of you today. (both laughing) - Yeah, thanks so much, Josh, I appreciate it. - My pleasure. And we wrap up with Peter, I appreciate your patience. Welcome to the show, how can I serve you today?

- Hey, Josh, I had a quick whole life insurance question for you. I know I will not stump you this week, so. (Josh laughing) I'm trying to figure out, is there any way you can figure out what a policy return is without a current enforced illustration? - Yeah, you can just simply create, do a calculation, grab a financial calculator, build a spreadsheet, take the total amount of premiums, put those in as premium payments, and then get the current cash value and then solve for the internal rate of return.

So if you have five years of premium payments of $5,000 and your current cash value is, will be more than that, 'cause it would probably be barely breaking even at five years, but let's say you've got 10 years of premium payments at $5,000, then just in a financial calculator, put in a series of payments of $5,000 or put it in a spreadsheet, then put your current cash surrender value, the amount of money that you would get if you cashed the policy out, put that in as your present value, put in zero as your starting value, and then just simply solve for the internal rate of return and that will give you the internal rate of return, the actual internal rate of return.

- Got it. And then I remember the other day you did mention getting the whole life insurance on young children. Can you go into a little more detail about the particular benefits of doing that? I mean, the policy that I have was acquired from me by my father when I was five years old, it's almost 40 years old now.

But I'm just sort of curious about what the different things you can do with it and what the purposes are, assuming you have other assets you could potentially give to a kid, how does whole life sort of factor into what you would do, or how is it beneficial to a child, I should say?

- Right. So how I look at it is with the first policy, my primary goal with the first policy is ensuring insurability, because children, especially very young children, assuming that there are no adverse medical indications, they're very easy to underwrite. They haven't gotten fat, they haven't gotten sick, they haven't gotten cancer, they don't have diabetes, they don't ride motorcycles and race motorcycles on the weekends, they don't do drugs, they don't fail urine tests, they don't have heart palpitations.

Family history can be something that needs to be figured out, but they don't fly airplanes, they don't scuba dive, they're not a professional NASCAR driver, et cetera. And so it's a pretty easy way to lock in a little bit of insurance for the child when the child is a brand new baby.

So this is, I'm sure, more important to me, formerly having been an insurance agent, but I've seen too many people fail insurance exams just to write it off. This is often considered a tactic of the insurance industry, it's considered a sales tactic by non-insurance agents. They say, well, the insurance agent is just saying, oh, you've gotta have the policy in place because you're gonna lose your insurability, but after all, who does that?

You're just as insurable at 25 as whatever. Maybe, probably, but in some cases, no. And so I like knowing that there's some amount of insurance in force. In this capacity, I look at the death benefit as simply the kind of death benefit that you always want to have in force.

I personally think that everyone should have some, at least a small amount of whole life insurance on their life. It might be $50,000, it might be $25,000, it might be $100,000, but some amount. And this money is useful for burial expenses, end of life death expenses, et cetera. This is another thing I changed my mind on as an insurance agent.

I can still remember the specific client that convinced me to change my mind. But when I was, before I was an insurance agent, I thought that you should just be self-insured. I thought, well, come on, listen, if you do what you're supposed to do and you build your investment values, you're always going to have money.

You're going to have money in a 401k, you're going to have money in investments, et cetera. And so you quickly become self-insured and there's no need to have insurance. I was very convinced of the power of becoming self-insured, buy term insurance for when you need it and then get rid of it.

But I had this client in Florida who I've serviced the policy, it was his rep had left the business, I think, and I serviced the policy for him and his wife had died. And I had met with him right before his wife died, kind of doing a review of the policies and then she was sick and then he came in and I paid the death benefit for him or helped him with the death benefit process to put more accurately.

And this was a guy who was a wealthy guy. He had a paid off house. They had a significant amount of money and a trust and it was a wealthy guy. But I saw him as this like 80 year old guy wanting to, he wanted to have a big funeral for his wife.

And he was like, where am I gonna get the money? I don't have $30,000 in my checking account to pay for this nice funeral that he wanted to pay for for his wife. But I had an insurance policy and so we were able to get him a checkbook within a couple of days and the way that it worked with the company I was with is that the insurance company sends you a checkbook and the amount of the death benefit is the amount of the money that you have in the account.

And so it just, it pays out fast. And so he's got a checkbook now and that insurance policy, which was not much, I don't remember the exact numbers, but it was several tens of thousands of dollars. That insurance policy provided him with the comfort of knowing that he could just simply have the kind of funeral that he felt that his wife deserved and what he wanted to do for her.

And I looked at it, I was like, here's a guy who's a millionaire, why is he worrying about a few tens of thousands of dollars? But I learned that, you know what, you might be a millionaire, but all of a sudden your money is illiquid and you wanna have that.

And this guy, they had income, but he didn't have the money handy when he needed it and the life insurance solved the problem. And it opened my eyes to actually think that there is value in having a life insurance policy that's always in force. So that's the first thing.

And so then you think about, well, what about children? I've had clients lose their children. I've, you know, my sister died when she was a teenager. I've seen it happen. People often discount the value of having life insurance for children. They say, ah, it's no big deal, after all, you're gonna have other money.

Having been there and seen that, I no longer say that. I say, if my child died, I'm not getting up and going to work the same way the next day. I'm not gonna, everything's gonna be different. And so having an insurance policy on the child's life helps to protect me if my child dies tragically at a young age.

And so that's also a useful thing. It allows me to have a nice funeral. It allows me to set up a fund, a scholarship fund in memory of my child or whatever the scenario is. It just, it's more valuable than I thought it was when I was younger, just the insurance benefits.

Those, as far as I'm concerned, are the primary benefits. The insuring, insurability, and as I explained when I mentioned it last week, putting an additional, excuse me, an additional death benefit op rider on there where you can increase the death benefit can be very, very helpful. I've worked with enough, you know, 50 year old fathers who have 30 year old children that, you know, this one guy I'm thinking of, he had a 30 year old daughter.

And he's like, you know, she's got a couple of kids. I don't think she can get insurance cause she does drugs, but I'm gonna go ahead and I'm gonna exercise this additional purchase benefit, this additional death benefit to protect her kids. And so he went ahead and started exercising those options for her so that she would have insurance.

And so those are the primary things. Now you can move on to the world of, well, is this a good investment? Having an insurance policy that your parents take out for you can be a good investment, but it needs to be weighed in context with all of the other available options as well.

And I believe that there's value there, but you need to be a little bit, you need to be thoughtful and careful with it. And what I explained is that often the internal rate of return, which is what you're talking about on life insurance policies that are taken out at a young age, if the policy is not constructed for cash accumulation, and what I described is not like what I own on my children are not policies constructed for cash accumulation.

They got so many riders and benefits on them. I think there's cash values there, but I don't pay any attention to them. They'll break even and they'll quick pay by the time they're in their 20s, but still I don't pay any attention to the cash value on those policies.

You can construct a policy for cash accumulation, and that's when you can look and say, should I do this? Or should I open a Roth IRA for my child? Or should I buy gold coins or Bitcoin or whatever? And that's a more careful conversation from an investment perspective. - Helpful.

The policy that your dad bought for you, which is reflecting on it without actually having calculated the internal rate of return. Do you think it was a good thing he did, a smart move? - Well, it's interesting. So he took a loan out on it to help pay for me to go to college.

And then it was funny when my brother and I both got what we colloquially call the $30,000 surprise from our father when the return on the policy wasn't really covering the payments on the loan. By the time he and I were both young working professionals, he said, "Hey, I got this on you and helped paid some of your tuition.

It's a little pricey for me now to bring it up. You need to pay 30 grand to get this thing back in force," which both of us did. And then I actually took a loan out of it to help put a down payment on our house and it's current.

And I'm sort of trying to figure out if I've got some other bills coming up, would I rate it again and let it lapse or not? But I mean, truth be told, the confusing thing now is that the original in-force illustration made this policy look, by the time I'm 65, like a humongous annuity.

Like it would have a six or $7,000 a month of payout. The way it's currently going, it's way less than that because it wasn't paid up and the dividends weren't buying more insurance for like 15 years or whatever it was. But the short answer is, I think it's been helpful given that it's been used for those two things.

And I don't know where a comparable amount of money set aside each month would have ended up, 'cause it was a disciplined way to kind of put money almost, it's not a savings account obviously, but it's a disciplined way for the money to be sequestered for specific usage, I guess.

And so in that regard, I think it's been beneficial actually. - Yeah, it's a forced savings. And just telling as a former life insurance agent, I'm not licensed now, I haven't sold a life insurance policy since 2013. Although it's funny, I actually still have dreams about selling life insurance sometimes.

(both laughing) So I haven't sold a life insurance policy since 2013. So I'm coming up on almost 10 years sober here. But the, I went back, when I sold them, people would use the forced savings language. I didn't use that. But today, when I think about my life insurance policies, it has been effective.

Like those things just get paid every single time. And I've used my IRA money, I pay my IRA money, I make sure that I don't lose those, et cetera. But there's something about just kind of it being a bill, I forget that there's money there. And in fact, I don't know how much money I have right now in the whole life insurance, 'cause I've kind of forgotten about it the last couple of years, it's just not been a big deal.

And because it's kind of a hassle to get out, you gotta call the insurance company, you gotta go and request a check or request a bank transfer and whatnot. It does just kind of sit there. And so I find myself continually in the middle ground on these things, where on the one hand, there are a bunch of benefits, on the other hand, there are disadvantages.

And I think that they're great things. And what I found when I was an insurance agent, I didn't ever meet an old guy or gal who had an old policy who said it was a bad thing. You just saw that as the life course moved through, you found people said, this is the best thing I did, right?

This is the best thing I did. Because what happens is we all think we're gonna do the smart things, and then we wind up doing dumb things. At least I've done a lot of dumb things. And so the old, boring, safe, conservative, long-term, whole life insurance policy kind of just works.

It's nothing fancy about it. In your situation, you need to get an in-force illustration. And it's not surprising that the current performance may not be what it was when it was taken out. Because, although yours, how old is your policy? You said it was 30-something years old? - Oh, it was created in 1983.

- All right, so 1983 is, if you go back and you look at what the interest rates were, this would have just been coming off of the '70s, you had high interest rates. And so this is the thing with an illustration. Remember what a life insurance illustration is. Life insurance illustration is a printed illustration.

They're illustrating, they're showing you, if everything stays exactly the same as it is today, here's what this policy would look like in the coming years. Then that illustration is immediately obsolete, because nothing stays the same. And what happened through the '80s and the '90s is that these things were illustrated with 12% annual returns and 14% annual returns and whatnot, because you're coming off of a high inflationary period where you had high fixed income returns across the board.

And then all through the '90s, they were high, and then it was down, down, down, down, down, down, down, down, down, down, down. And so the policy, it's not surprising at all that it's massively underperformed. The other thing is there were many liberalities taken back in the '80s with illustrations, depending on what company is, and I don't wanna know, but some companies were not scrupulous with illustrations.

Some policies performed poorly. So the only thing you can do now, or what you should do now, is you contact the company and ask for an in-force illustration. And then with that in-force illustration, you can sit down and you can calculate, and you can say, what should I do with it?

Here is what you will find out when you do that. Once you have gotten past the first years of a life insurance policy, certainly the first decade, but in many cases, basically the first five years, because of the fact that the expenses are a sunk cost, they're gone, once those expenses are gone, then it's usually hard to beat the policy, right?

So if you'll get that current in-force illustration, and if it has a loan on it now, you look at it and you say, oh, let me just pay this thing back. And then you look and you say, all right, if I could put my premiums this year, 1,000 bucks, that 1,000 bucks, very likely, assuming it's a decent company, decent policy, that 1,000 bucks will probably quadruple, all right, in cash value, maybe quintuple.

And so you're looking at it saying, man, I wish I could put 10 grand into this. And that's kind of the classic conundrum of life insurance, is that for you to actually do the proper internal rate of return, you gotta eat up those expenses, and that harms your rate of return in the actual calculation.

But since those things are done, since it's a sunk cost, it's gone, it's done, now you get to enjoy the high returns. And so you'll wanna pay the loan back, you'll wanna keep it, you won't wanna borrow off of it, just keep the paying dividends, and just keep it as part of your own personal insurance portfolio, in my opinion.

- Sounds good. - All right, Peter, thank you for calling. And with that, we wrap up our mammoth show today. Hope you guys have enjoyed the calls. I love doing these, these are fun. I tell you what, I have thought to myself many times, I could be happy as a clam doing a live show every single day, because it gives me a chance to talk about things I love talking about, and you guys come up with the most interesting topics and interesting questions, I really enjoy it.

So if you've got an interesting topic and an interesting question, you could be like Peter and stump me like he did recently, or just come up with an interesting topic, join us at patreon.com/radicalpersonalfinance, join us at patreon.com/radicalpersonalfinance, sign up for the sports show there, and feel free to call in there.

Remember, I am beginning this next week, actually. I have openings for Monday, I'm starting to do, I'm doing consultations again. I don't know how long I'm gonna be doing them, but I'm doing them in January and February. So if you would like to speak to me personally, privately, if you'd like to send me documents, for example, if you have a life insurance policy and you wanna review that with me, just send me, you can sign up for a consultation, I'll review the policy, I'll help you with the calculations.

We can work on all kinds of projects like that. You can sign up at radicalpersonalfinance.com/consult, radicalpersonalfinance.com/consult to reach me personally and privately, and I look forward to speaking to you again very, very soon. (upbeat music) - Are you ready to make your next pro basketball, football, hockey, concert, or live event unforgettable?

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