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It's more than just a ticket. It's Friday, and of course today that means live Q&A. Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

My name is Joshua Sheets. Today is Friday, May 13, 2022. And today, got the microphones all hooked up, we do live Q&A. Here at Radical Personal Finance, each and every Friday when I can arrange the technology to be in front of an internet connection and have a microphone and all of those useful things, we do a live Q&A show.

Works just like Call-In Talk Radio works, listeners call in. You can talk about anything that you want. It's an open line Friday show. Ask any question you want, make any comment you want, broach any topic that you want, I am at your service. To join one of these Friday Q&A shows, to gain access to the codes and the times and everything, you simply need to become a patron of the show.

You can do that by going to patreon.com/radicalpersonalfinance. Just search Patreon for Radical Personal Finance, you'll find the page. Join as a patron of the show and then you will gain access to these Friday Q&A shows. That simply allows me to meter the number of callers so that usually we have somewhere between four to eight callers instead of 40 to 80, which is obviously unsustainable.

And today we begin with, I forgot his name, was it Luke? Luke: Yeah. Luke, you're up. Welcome to the show. Luke: Hey Joshua, thanks for taking my call. So my question involves an article that I saw in January that Morningstar posted about Vanguard Lifecycle Fund. I had just seen that a couple of people were, I think they were actually filing a class action lawsuit against Vanguard.

They got an unexpected tax bill for some capital gains tax. I guess Vanguard had quite a bit of redemptions and so they had to sell some of the assets in this lifecycle fund and some people that held that lifecycle fund in a non-tax advantaged account ended up with a significant tax bill at the end of the year from some capital gains.

So I was just curious your thoughts on holding a lifecycle fund like that in a non-tax advantaged account. Is that a good idea or a bad idea or maybe some better option? So let's just, the article here, I see a Wall Street Journal article from January 1, sorry, January 21, 2022 headlined the huge tax bills that came out of nowhere at Vanguard.

A change that benefited big clients left little ones holding the bag. Let's read a couple paragraphs and make sure that we're on track here. It's easy for a small investor to make big mistakes. It would be even easier for giant investment firms to help prevent them. But sadly, the asset management industry seems to have other priorities.

Just look at what happened last month to some investors in Vanguard's target retirement funds. They got whacked with huge capital gains distributions. Those payouts triggered painful tax bills they could easily have avoided if Vanguard had simply warned them not to hold these funds outside of a tax advantaged retirement account.

Like many investment firms, Vanguard offers target date funds, bundles of stocks, bonds, and cash that automatically become more conservative as investors approach their retirement date. These funds are tailored for investors in 401ks or other retirement plans where taxes are deferred. So target funds aren't managed to minimize dividends or capital gains.

Hold them in a taxable account instead of a retirement plan, and you will owe taxes on those payouts, sometimes much more than you would in other types of funds. That shows the importance of what financial advisors call asset location. The choice of whether to put particular investments in a taxable or non-taxable account.

Most of the money in Vanguard's target funds comes from corporate and individual retirement plans where funds gains and income aren't currently taxable. However, some investors do not put non-retirement money into target date funds, and in December they got a nasty surprise. Vanguard's target retirement 2035 and 2040 funds, for example, distributed approximately 15% of their total assets as capital gains, which are taxable outside of retirement accounts.

Fury erupted on bogleheads.org, a website popular among Vanguard investors. One investor posted there, "I think I'm screwed by Vanguard resulting in an enormous tax bill. I feel that Vanguard guided me down this path, which is frustrating." In the Bogleheads area on Reddit, another online forum, an investor posting as SittingHawk said he received about $550,000 in distributions in Vanguard's target retirement 2035 fund, so he owes 23.8% in federal tax and 4.95% in Illinois state tax.

All told, more than $150,000. How, he asked in capital letters, could Vanguard let this happen? So, here, it happened, a few paragraphs down, it happened because big clients left little ones holding the bag. Vanguard's target funds come in more than one format. Smaller clients get the standard version. Big customers like corporate retirement plans get an institutional version with identical holdings at a lower fee.

At the end of 2020, Vanguard reduced the minimum investment in its institutional target retirement funds to $5 million from $100 million. That set off an elephant stampede as multi-million dollar corporate retirement plans got out of the standard target funds and into the institutional equivalents. Clients have to sell out of one format to buy the other.

Last year, assets at Vanguard's 2035 target funds shrank to $38 billion from $46 billion at year-end 2020. The 2040 fund shriveled to $29 billion from $36 billion. As big clients left, their sales caused the funds to offload some holdings, triggering capital gains which could be distributed only to the dwindling group of investors who stuck around.

Some had made the mistake of owning these funds in taxable accounts. Vanguard didn't have anything to say about how it infuriated the individual investors who have taxable money in these funds. Spokeswoman Carolyn Wegman said that because the target retirement approach seeks to reduce risk over time by automatically trimming stock positions, these funds are best served in a tax-deferred account.

It goes on and says that it doesn't sell investors that the funds aren't ideal for their taxable accounts, etc. So there's the background of it, of what happened. It sounds to me like this was probably not really anticipated by anyone from just reading that journal article. Is that your impression of it as well, Luke?

Yeah, that's the impression that I got. I've heard from multiple different financial advisors in a few different places that a life cycle fund is a good place to put money, even if it's not in a tax-advantaged account. So it seemed like I was not the only one that had been given that advice, according to this article.

Yeah. Well, generally speaking, life cycle funds do have a fairly high reputation, meaning that people like them because they're simple. It's hard to screw them up. What life cycle funds are designed to do is to follow the traditional advice of increasing your allocation from stocks to bonds as you get older.

In a world where there are so many wacky things you can do and invest in that can bite investors, then we like, financial advisors and others, like to give simple solutions that work. It's hard to screw up a life cycle fund here. It would seem to me that this was more of simply an unintended consequence from vanguards changing their institutional account to allow smaller investors, instead of a $100 million minimum have a $5 million minimum.

So I would guess that this is just one of those risks that is not really seen, not really understood in the beginning. Vanguard probably wasn't paying much attention and I'm not sure what they could have done about it. So I'm not an expert on it. Generally, yes, a life cycle fund is less tax-efficient than other forms of standard index funds because they're continually selling stocks to move to bonds.

And the bond allocation inside of those funds can be relatively high, which can create current income and dividends, etc. And so they're not as tax-efficient. That's why they're usually held in a retirement account. I don't think this is a big problem one way or the other. This particular event, just from reading the one article that I've just quoted from, to me sounds like more of a one-off event and something to be aware of rather than any kind of malicious intent or any kind of scandal of any kind.

That's the flavor that I get from this one article. So would you have a recommendation for maybe a better way to... I'll give you a little background. So my wife and I both have Roth IRAs. We both contribute to... it's their savings fund. It's basically the government 401(k). And then on the side, we put a significant amount of our money into just a taxable investment account that we're using to save up for when we can move back to our home state and hopefully buy some land and a house.

Do you have any advice on the best... So I had asked... I talked to some people and they suggested for that, for our homestead fund, we just put it into a life cycle fund. And put it in, not touch it, and then have access to it when we decide to move back.

Do you have a better suggestion? Is that a good idea? I just had read these articles and it made me a little bit nervous after I had seen that. How long... what's your time frame as to when you anticipate moving to the homestead? On the short end, 10 years, probably more likely 15 to 20.

How do you tell somebody whether they should paint their house beige or cream? That's the problem here. There's nothing wrong with the advice. I can't say... I don't have an argument as to argue why one is better than the other. For that type of application, a life cycle fund can work.

If you're trying to buy some kind of balanced fund that's going to automatically move money from stocks to bonds, then that can be fine. And the tax inefficiency of it would be something that you would need to pull up the prospectus, get a sense of what your actual tax bill could be, and adjust it yourself.

And make that calculation yourself. That advice that you've been given, I don't think it's wrong. I don't have an alternative that I could argue is better. Basically, it's an argument between should you... again, should you paint your house a cream color or an eggshell color? Or it's like, well, it kind of gets you a similar result.

All I can say is I have never myself invested into a life cycle fund, nor have I ever recommended one. And my reasons for that is I think that if you invest a little bit more time into becoming a more knowledgeable investor, and you take more control of your money, that that will probably result in a better outcome because you're more involved.

And you can make the choice to say, I'm going to go ahead and move from stocks to bonds with this amount of my portfolio myself. But the life cycle fund is not wrong, it's just flavors of preference. And my preference is to say... my preference generally is to say that I try to get people to be more aggressive with their portfolios and own more stocks than bonds.

And I seek to do that by encouraging people to substitute the word volatility for the word risk. Because at its core, it's the volatility of stocks that people need to be aware of, not necessarily the risk of stocks. Stock investing is risky because stocks tend to be more volatile, as we see right now, with a significantly volatile down market in the stock market.

But at its core, I am persuaded myself that there is a fundamental truth that owners make more money than lenders over time. And so I want to be an owner of companies, not a lender to companies. And as such, I want to own shares of the company, not lend money to companies.

I believe that owners make more money than lenders, even if there's more volatility. I also believe myself, I am convinced that volatility is only one risk of investing. And the more significant risk of investing, especially in the traditional retirement space, is the risk of running short of money, the risk of underperforming inflation.

That that risk is a bigger risk for many people than is the risk of volatility. My third argument is that we can handle volatility very effectively if we pay attention to timeline. And so we can handle volatility with personal financial planning, having cash reserves, having a stable financial condition that allows us to have reduced need for income at certain times.

That allows us to wait out times of volatility in the market. It allows us to not need to panic when things are down. And thus, we don't need the same consistency that a bond portfolio provides, or at least we don't need as much money in a bond portfolio. I'm not opposed to a balanced portfolio where that includes bonds.

I am opposed to have, I am opposed for most people to the idea of having 60% of your money in bonds just because you happen to be 60 years old. And so for those reasons, I'm biased against target date retirement funds because in my opinion, these are a bigger risk for many retirement investors because they cause people to be too conservative in their portfolio allocation, thus increasing the risk that they'll run out of money.

Those are my basic reasons why I'm opposed generally to target date retirement funds. While not saying that they're wrong or that there's anything wrong or dangerous about them, they have those risks that I've pointed out. Now in your situation, could it work? It could work fine. But if you've got a time horizon of 20 years for a goal that is not a pressing goal, then I'm going to have the same personal bias.

I can't tell you the portfolio that you should choose to it, choose for that. But if I've got a 10 to 20 year timeline, then to me, I want to be an owner of companies. And then I want to watch that carefully and watch my timing and try to time the market as far as when I make those jumps out of being an owner of a company to a holder of cash to meet my specific goals.

And so my instinct is that if you've got a 10 to 20 year timeline, that you're going to be better off if you own more companies during that period. And then again, I'm using this terminology clearly. And then you seek to time the market as to when your ownership of those companies gets into a high profit swing or a high cycle in the stock market value, that that's the time at which you say, "Oh look, I've got $500,000 over here in my equities portfolio and I can buy the piece of land that I want for $500,000." Click sell on the stocks, buy the land, boom.

But since you have a high degree of flexibility in that, I would be inclined myself to take more volatility and focus more on owning companies rather than lending to companies. That's why I'm biased against target rate date retirement funds myself. They're not wrong, but that's why I'm biased against them.

Great. Yeah, that's perfect. That's just good to think about. I have heard similar things from people just in terms of you don't have any control over how much of your portfolio is allocated to bonds. I was kind of leaning that way. That's good confirmation. Thank you. Yeah, my pleasure.

These are really hard questions to answer because for one person, the best, safest solution may very well be a target date retirement fund because it's so simple and it makes them feel confident and secure. That's great. And so it's very much a matter of preference, taste, and nuance in this area.

There's no clear and obvious answer at least that I can give. All right, we go to 484 Area Code. Welcome to the show. How can I serve you today? Hello. Greetings. Welcome. Hi. Nice to talk to you, Joshua. My wife and I were chatting about the summer coming up and our children and how we might, I was just thinking, what would Joshua Sheets would do to make an epic summer for his children and make sure that they're having a really productive summer, learning new skills, things like that.

And I just didn't know if you had great ideas because you already do a lot of the homeschooling. I could see my kids playing outside, playing video games, doing some reading here and there, and doing a lot of family adventures. And at the end of the summer, maybe they didn't become better educated or have some new skills.

And I just wondered if I think language would be a great thing. And I think my son, who really does like video games a lot, he's very, very intelligent. I'd rather see him coding video games by the end of the summer because otherwise he'd spend time on Roblox if we let him.

How old are your children? Twelve is the son and ten is the daughter. Okay. So I love the question and I'll do my best to give you some of my ideas with the caveat that my children are younger and I'm still testing a lot of the ideas. And I think that in this area, not a lot of this is, it's not right or wrong.

It's just shades of application as a parent. As a parent, you need to trust yourself to respond to what's working and what's not working with regard to your children. So if you place a certain book in front of your children or a certain class and it doesn't work, you have to judge whether you want to pursue it and say, "No, you have to do it or not." And what are your children, what kind of school do your children do during the school year?

They're in public school. Okay. So just the standard government school. Okay, great. So here are a few thoughts that I have. Number one, in an ideal world, I don't see much of a reason, this does not apply to you, it's just a background as to why my answer is a little bit different.

I don't see much of a reason to take summer breaks in the same way that we are conditioned to by what's around. It's my understanding that the concept of the summer break does actually have some roots in the need for children to be available to work, at least in the US, the need for children to be available for summer labor on their farms at home.

And then it just became kind of this cultural norm. And I think that the summer break, the way that it's often done, is often not great. And I think if you talk to teachers, you hear this a lot as well, that a teacher finds that the last couple of weeks of the school year are often not so productive, and the first couple of weeks of the school year are often not so productive.

You have to get the child caught back up from the summer lull. This is debated a bit, right? I'm part of the homeschool world, and so we debate this. Some people in the homeschool world talk very intensively about the value of having that summer break, some people don't. At the moment, in our family, we're not actively pursuing any kind of formalized summer break.

Basically, we'd stick to our fairly standard school schedule unless we have a reason to do something else. And so the reason to do something else is when we travel or when we have some special events, visitors, or we're visiting someone, or some special holidays that we're remembering. And I think that's effective because it keeps the consistency going, and it's better for learning outcomes.

So I think that in a perfect world, I don't want my children to forget or to lose track of what they're doing. So I want, for example, the things that are languages, and by that I don't just mean English reading, I mean the things that are just part of life, things like mathematics.

I view mathematics as a language. Or things like foreign language, etc. Those things, I want them to continue year-round. And so if you feel like you can have a, if you feel like it wouldn't be counterproductive to your children, then I think that it's not wrong, especially if you have a two and a half or three month break, it's not wrong to require of your children that they do some amount of academics.

Doing math year-round is a really good idea. Having some kind of break or having it broken up is, I think, a good idea. But requiring academics of your children during the summer, I think, is overall in their best interest. That may not be a battle worth fighting if it is indeed a battle.

So you, I'm not saying that's a must, but at its core, I think you can stave off a lot of the summer decline by just doing some basic progression. I think that this also can help with students who are not in the elite of academics. One of the challenges of your children being in kind of a standard cohort in the local government school is that the pace of the classes is not customized to the pace of the child.

And so if you work with your child on an individual level, which is an opportunity that you have in the summertime, then you have the chance to make sure the child is really mastering things. The biggest mistake, the biggest regret that I have, and this has affected what I do with my own children as far as their formal studies, is that when I was with a cohort, a lot of times I didn't do enough work to be really confident.

I think here especially of math. I was an okay math student, but I wasn't a great math student. I got A's and B's, but I never mastered the material. I got a two on my AP calculus exam because I never mastered the material. Now when I look back, what I realize is if my parents had simply figured out that I wasn't doing enough practice problems and they had required more practice problems of me in the time when I had more time, then I would have been a better student by simply doing more practice problems.

Now again, would I have resisted? Probably. Should they have pushed through that resistance? Today I would thank them if they had pushed through that resistance. When I think back on the battles that I fought with my parents, I regret the times that I won by getting them to capitulate and keep me from doing something.

I wish that they had been a little bit tougher on me and required more of me. That's my own perspective. So what does that mean? Well, if you assess where your child is doing well and where your child is not doing well, and use the summertime to shore up some of the academics where your child is not doing so well.

Summer school exists for a reason. While you might not want your child to go to summer school, you can make sure that your child has some schooling during the summer even at home. That may be too hard for you to do since you're kind of on the standard school schedule, but it's worth considering.

The next thing is, I think at 12 years old, you're starting to make the pivot to thinking about high school stuff. And so I think a good look at your outline for academics as far as what's your plan for academics, what subjects is your child going to take, what scholarships is your child going to take, what types of input do you need.

That would be a really smart idea. You're slightly young, but the reason I'm mentioning this is I think one of the most productive activities for say a ninth grader to do or a tenth grader to do in summer is to do things like make scholarship applications. And I believe that a child's part-time summer job, the most productive part-time summer job is to do scholarship applications.

And so you should be keeping that in mind and thinking about where are we going to be a couple years from now in terms of this particular child's interests. Now, back to kind of more of the nature of what you asked me. I think summer is a really wonderful opportunity for exploration of different things.

And I believe that learning in and of itself is its own reward. And I believe that in their natural state, children love to learn. And so what you have the freedom and flexibility to do in the summertime environment is not to rub it in your face, but to rub it in your face is what we homeschooling parents have the freedom and flexibility to do all the time is to say, what do I think is good for my child to learn?

And how can I find ways to engage my child with this? And so if you think that it's good for your child to learn coding, then you have the opportunity to say, hey, this summer we're going to practice coding. And then you make it as a project that you do and with a 12 year old with in together with your student and say, what are some of the activities that we can start to do that will help you with coding?

Coding is fairly straightforward. There, your two best kind of starting points would be the Khan Academy resources on coding, which are coordinated by code.org. And they have a great number of projects. There are a number of, what's that coding language? I think it's called basic or anyway, the first coding language that your 12 and 10 year old should learn should be Python.

And so you want to start them on coding Python projects and you want to try to find resources that will help them with that process. And so I think code.org is a great place to start and the Khan Academy classes to give them a little bit of the background on computer science.

And then you'll want to try to see what other resources you can find to support that. So I'd take a big trip to the library and get a bunch of books on coding. I'd look around and see, are there any coding clubs? Are there any coding camps that we would like to enroll the children in?

What is available? And then lay out basically your expectations of what the child can do during that summer education. I think to continue on, I think that it's not, I think it's, the goal is not to have your child be studying and doing academics all year and all summer.

I think that's a wrong approach as well. And so while I've mentioned a couple of academically oriented things, I would say don't underestimate the value of simply having free time. One of the things that is often difficult for our children in our modern context is their lives are very, very stuffed full of schedules and they are very, they're over-scheduled and over-filled.

And this would be different perhaps than when you were a child. When you were a child, you probably had some times on your summer vacations where you felt bored. Was that your experience? Yeah. I think my parents kicked me out the door and I went into the woods. We don't live in that environment right now.

So that's the challenge. And so I think that there's actually great value in creating that for your children if there's some way, that same sensation that you had of being bored. Not that the boredom is the goal, but meaning creating some differentiation. And so if your child is simply at home and now your child doesn't have classes to go to, but he's non-stop playing games, non-stop in communication with his friends, et cetera, you don't have that same experience.

So I think one of the best ways to handle it in the modern world, depending on your family's capability, is change the environment. So you might live in a city, but you might make sure that you go and take an extended trip to the country, an extended camping trip with your children.

You might send them to a relative's house for a couple of weeks. You might enroll them in a summer camp or something like that where they have a diverse experience. I think that those things are a really useful part of life. And that in the summertime, you should look and say, "Where are some things that I could fill out my child's deficiencies?" by exposing him to an environment where he can do things that he doesn't otherwise do.

So maybe if you live a very cidified lifestyle, then maybe signing up for an outdoor adventure camp is perfect, right? Because you get to learn woodcraft skills, you get to learn to row a canoe, you get to learn to do archery, you get to learn to shoot a gun, you get to do whatever those things are that use the summertime as a time of offsetting your normal life and filling in those areas.

Camps are obviously a really useful tool, but camps can be more expensive than you want to actually engage in. And so you can take the concept of a camp and start to bring it in to your home and say, "Here are the subjects, here are the things that we want to work on." So what I have done myself is I have a giant mind map that I created of all of the subjects and skills that I want my children to excel in.

And so those include academic subjects, and then they include physical skills, etc. And then what I'll do is I look at each of those skills and I say, "How am I doing with this?" And some of them are easy, right? Math is easy, right? We have a math curriculum, we do math every day.

Some of them are harder, right? I have... I have... Pick one here, right? I have canoeing and boating, or I have vehicle driving as one of the things there. And so that may be hard for me, but I take that and I'm using that as inspiration to say, "I want my child to be skilled with..." Here are several that are related.

Canoeing and boating, lifeguard training, and swimming, right? So those are kind of three related things. And so I can take those ideas and I can design a one-week summer camp for my children, or... meaning I do it myself. I can design a weekend trip around those skills. And I can say, "What I want to put in is I want my children to have some skill with canoeing and boating, I want them to be skilled swimmers, and I want them to have some lifeguard training.

So let's find... let's prepare a four-day vacation at a lake house where there's a canoe, where we're going to do lots and lots of swimming. In preparation for that, let me find a book on lifeguard training or a digital class on lifeguard training that we're going to go through together, that's going to go through kind of more advanced than just swimming.

And then let's go out to the lake house that we've rented. We're going to plan to spend a lot of time playing out on the water, and then I'm going to run them through a bunch of drills like dumping the canoe upside down and here, I'm drowning, save me, or whatever the version of it.

Mine are too young, we're not to that point yet, so I'm just ideating with you. So you make your list of the things that you want them to do, and then think in the context of what your children like and what your children don't like, and your financial resources, your time resources, etc., what would work really well for them.

And I think that if you embrace using the summer for that, then most of your academic subjects are probably well enough served by your local school. And then you just simply build the environment around them where you can shore up some of those things that they are weak in.

I have a few more ideas, but I'll pause. Is this helpful as far as your question? >> I think it, yeah, I do think it is. And I guess I was specifically also thinking about the foreign language aspect of that. And if I go back in shows, there might be something there where you talk about how you taught your children that already, right?

>> I can do this all day. I don't suffer from things. I'll talk about foreign languages now. All right. >> You didn't mention that in your- >> I haven't mentioned it yet. This is a subject I spend hours and hours every week thinking about this particular topic. It's a huge passion of mine.

And so you're scratching the surface of an inexhaustible store of ideas. You just point me in the direction you want me to talk about. Let's talk about foreign languages. >> Yeah, well, because one of the disappointing things that I found with the change in the school curriculum was the post pandemic is the language for my son, it was just put into like the first semester.

So he had the semester of German and now he hasn't had anything since then. So I think exactly what you said at the beginning of the conversation where I should be peppering that throughout. I should have already been doing that, but I can't do anything about that now. >> That's okay.

>> But in preparation for the next semester when I'll pick that back up. >> Okay. So let's talk about foreign language. I am in the process of teaching my children German. So we'll just use German as an example. And I'll tell you what my plans are with their needs for how to help them.

So let me explain what I do right now, literally this morning with my children with German. So first, this does come, I am an intermediate advanced language learner, meaning I'm not a clueless parent who doesn't know how to do it. I have studied intensively the topic of language acquisition.

I've tried to understand the various things that are out there. And I have tried to incorporate that into what I think will work for my children. So the very short review of this is that the way that you learn a language is by being exposed to the language. That's the way you learn a language is by being exposed to it.

And what you need is you need comprehensible input. If you have a student who is very self-motivated, then you can just simply provide your student with good skills. My students are not particularly motivated to learn languages. It's not that, it's not a big thing to them. They don't resist it, but it's just not something that they're asking for.

And so what I am doing is I'm creating the environment around them where they don't really have, where they don't really have the choice. And so I do that without going to the environment. Is it true that if you could take your children to Germany for four months every single summer and put them exclusively in a German-speaking summer camp and exclusively German-speaking environment, that they would probably make a lot of progress in German?

I think it is true. Is that something that you have the capacity in terms of your time freedom and your money freedom to do right now? Probably not this summer, but I guess I could do that in the future. Maybe in the future. I really did it. Right. So what I do is I try to figure out how can I get language resources into my children and for exposure.

So the very first step, I'll literally play you right now on my computer. I'll literally play you. I make these audio files. I'll play about one minute. These are the audio files that my children are going through together. This is something that I create and I create them with these little stories that I then narrate over to help them.

And I play these. These files end up being about less than 10 minutes. And I play them basically three times a day at the breakfast table, lunch table and dinner table for them. So here's an example of what I create for my children. German mini stories, story one with English translation.

Ich erzähle euch jetzt eine kurze Geschichte über Markus. I'm going to tell you a short story about Markus. Markus steht jeden Tag um sechs Uhr auf. Markus gets up every day at six o'clock. Er macht Frühstück und trinkt einen Kaffee. He makes breakfast and drinks a coffee. So I'll stop there.

What these are is these are the story, the mini stories from LingQ. I've taken those and then for my own use, I take the audio from them and I overlay it with the English translation because while I love that particular software application, my children won't use it. They don't like it.

They don't want to use it. And so I create an audio version and I play this for them. Then I'm in the process of, I've commissioned a German speaking friend of mine to record a number of, since I don't speak German, to record a number of Spanish books. And what I'm doing is I'm trading Spanish language stories with German stories.

So I'll give you an example here. I'll play an example of one of the Spanish stories that I have made for my friend. And this is the way that I taught my children Spanish and French and I'm basically commissioning it in German now for them. So here's an example of what I send to my friend because my friend is trying to speak, teach Spanish and I've commissioned my friend to make German stories for me like this.

Los Hollister in Suiza. The Hollisters in Switzerland. Por Jerry West. By Jerry West. A bilingual recording in Spanish and in English. Capitulo uno. Chapter one. Un tropezón en la nieve. A stumble in the snow. Un gran copo de nieve fría, a large cold snowflake, fue a aterrizar en la punta de la naricilla, landed on the tip of the little nose, de la pequeña Sue Hollister.

Of the little Sue Hollister. El copo se derritió antes de que los ojos oscuros de Sue, the snowflake melted before the dark eyes of Sue. So that's enough. It gives you an idea. I do these bilingual children's stories and I find that this is a really effective way of getting them started in the language.

And I require my children to listen to them. I don't have to force it because it's kind of interesting. I work really hard to make sure it's interesting. But I do just simply require them to listen to the stories. And that provides the basis. And then the goal is to get them quickly to where they can consume audio books and written books in the native language without translation.

I have already purchased a bunch of audio books and a bunch of written books and as soon as we can get to those I've got those ready. And they require them to have a significant amount of reading exposure and listening exposure to the language. Then after they have read and listened extensively to the language, then I will schedule a significant activation trip to Germany or to a German speaking environment to help them to activate the language.

And so with lots of input they'll be aware of the language. I won't require any output but then we'll go and I've still been looking. So I have a folder on my computer. I've been looking at German summer camps, all kinds of family camps, things like that. And researching them trying to find something that would be exclusively German speaking authentic local material.

And it's in my plans probably not for this summer but maybe for this fall that we'll go to Germany. We'll spend a month in Germany and I'll help them to activate the language. Maybe this fall, maybe next summer, something like that. So that's my overall plan and now you could take that and you could say what can I do more of.

Probably it's more input. And so require your child to get more input. Try to find input that works for him so that he can understand more of it, etc. And I could give you, I may have a list if you go to my Twitter profile, I'm profiling some things but I have a list of YouTube channels that I'm using to get comprehensible input.

You could do Khan Academy in German. That's been successful. I've had my 8 year old go through, he's going through the Kindergarten Khan Academy in German to help with the language acquisition, etc. There's just tons of stuff available. And so if that's important to you then you can surround him with input and then figure out some way either with rewards or requirements, etc.

to help him be exposed to it. So you can set that up. That's what I'm doing right now and you can find some version of that that will work for your students. >> Steven: Okay, that sounds great. And his best friend, his mother is German so that certainly is a great thing.

We're not far from Pennsylvania, Dutch territory too. So we can probably find a little bit of that as well. Great idea. Thank you. >> Tom: If you could find somebody, what kinds of books does your son like to read? Does he like to read? >> Steven: Yeah, definitely. We put different things in front of him.

He's certainly read all sorts of fantasy and Harry Potter type things but he's recently read Freakonomics. He'll read a lot of different things. >> Tom: So just starting with something like Harry Potter for example. Harry Potter is a wonderful language learning tool because it's available in virtually all languages.

It's a little hard to translate well, which they've done, but it's available in all the languages. But if you can get him to the point where either he can read Harry Potter himself in German and he liked it in English, then that's a good idea. Or if you can commission for yourself his best friend's mom to sit down and to read to him and do a bilingual translation like I just modeled for you or to make some kind of recording that he can listen to.

It's not easy to do. It does take time and it doesn't really exist publicly because of copyright requirements. But it's possible or you can do it. One of the things that I also have done is I make the files myself and I'll go through and I'll take a book that I don't know and I'll translate it sentence by sentence to create the audio.

But if you can do that, that will help him immensely as well. >> Steven: Okay. Good stuff. I figured that you might light up on this topic. >> Tom: Yeah. And so a couple more. There's so much that could be said. I think at its core if I were to try to make the overall statement, decide for yourself as a father you need to look at your children and say where do I want my children to make progress.

And again, probably most of the academic needs are well covered by their schooling. So what may not be well covered is the non-academics. And so everything from dancing lessons. I think that one of the goals that I have for my children is I want my children to be good dancers.

Because knowing how to dance well is a major boon, especially in the social life of a high school student, of a college student, etc. And so maybe you say let's take some Latin dance lessons. Let's do some whatever. You can go and get a course for them on break dancing and practice break dancing.

Maybe it's physical fitness. We need to really improve our physical fitness. And I think that you as a father, what I think we should be doing as fathers is studying our children. And again, they're not yet capable of understanding how to improve their scenarios, excuse me, their skills of where they are.

But we as parents, that's our job. And so if we identify that hey, social skills are weak. Well now you have a whole summer where you don't have to deal with homework, you don't have to deal with the teacher's requirements. You need to help your children develop better social skills.

If you identify the fact that self-confidence is low. Don't allow your teenager to have low self-confidence. So figure out how can I do it, right? Let's get to the gym. Let's join a boxing club. And this summer, son, you and I, we're going to go boxing four days a week.

These are the kinds of things that will make a big, big difference in your son and your daughter's experiences of high school. And if you will be proactive about saying here's where they need to be, then ensuring them up right now you can require, and you can make it fun of course, but you can require certain things that will make a big, big difference in your students' teenage years.

So don't just think about academics. Academics are a big part of it. Don't just think about coding, but also think about again, physical strength, physical confidence, physical coordination, the skills that will be useful, social skills, dancing skills, whatever they happen to be, whatever area you want to shore up, you have an opportunity in the summer to shore those things up.

And then of course, lots of free time, lots of library books, lots of voluntary free reading, lots of sunshine, lots of playing at the lake, lots of fun, et cetera. Those are all important. The only topic I didn't cover yet, because you have 12 year old and a 10 year old is summer jobs.

I think that summer jobs are a very, very valuable thing to facilitate for your children as well. And at 12 years old, I think that that is your responsibility as a father to make it happen. And this is one thing I'm very grateful that my father did for me was he worked really hard to help me get lots of summer jobs starting about the time I was 12 or 13.

I don't remember specifically the year, but I would say about seventh grade. I don't know how old seventh graders are, but I remember that every single summer from seventh grade on, I had some form of a summer job that helped me immensely. Yes, it put a little bit of money in my pocket, but it helped me immensely to learn how to interact in an adult environment.

Usually you have to be the one to arrange this. It needs to be a family friend, somebody from church, a business colleague, something like that. Because while your 12 year old can be useful, certainly your 12 year old is not the first hire that your friend would make. You want to make sure of course it's an appropriate, safe environment.

But having that variety of summer jobs did wonders for my confidence, did wonders for my exposure, did wonders for so many aspects of my personal growth. And I think that it's really good if you can help your students to have jobs. The two cautions I would give on that subject is, number one, I think while any job can be helpful, I think I see limited benefits of the so-called standard summer jobs.

What I mean is, what are the standard jobs? Well, I can be a waiter in a restaurant, or more properly for someone very young, I can be an attendant at an ice cream shop, or I can do some kind of retail job, etc. That may be fine for an experience, but those jobs are extremely limited in terms of the skills that they impart and the path that they open up.

They can be a good first step, because at least I think that any kind of work that's honest work can be very helpful. But it's better to have a summer job where there's some kind of skill acquisition beyond simply, you know, flipping burgers or scooping ice cream out, something like that.

Those are fine for a start, but that should be a two months of experience and then move on. The other thing that I think you should pay attention to is making sure that there is a real variety of jobs, so that especially in an environment that can lead to some greater lessons.

So, if you imagine yourself to be a very wealthy person, right? What skills do you want your child to have as the father of a child, a very wealthy father? It's not just, again, saying "Can I flip your burgers?" although that's helpful, but what you're trying to do is you're trying to expose your children to a diverse set of experiences, so that they can learn things that they're good at, things that they're not good at.

So, I learned from my manual labor jobs that I don't want to do this. I learned from my easy jobs that they weren't intellectually satisfying. I learned from my intellectual jobs that, hey, that's good, but I have other desires as well. And so, you can go to your, look around your friends, look around your peer group, your neighbors, etc., and try to find opportunities for your child to work.

However, I think that those shouldn't get in the way. The goal is not to have your 13-year-old earning his own way. They shouldn't get in the way of cool opportunities. A friend says, "Hey, come with us to the mountains for the weekend." Right? A 13-year-old should be able to go to the mountains and have that kind of set of experiences, or, "Hey, come to Europe with us," or whatever your context is.

And it shouldn't get in the way of academics. So, clearly, academics for an academically inclined student, academics are more important than earning money. And so, having a summer job where it's not all summer, you can still go to camp, you could still go on vacation with family, etc., but yet where there is some summer job, I think is the best mixture, if you can figure that out.

Not easy in today's world, but that's the best, in my opinion. >> Okay. Well, that definitely gives me, as I hoped, some just ideas that I never thought of, which happens almost every time I listen to your podcast. >> Well, thank you for calling in and asking a thought-provoking question.

So, I hope that you guys have a great summer, and then call in the fall to a live show and tell me what worked, what didn't work, and then we'll see if we can refine this into better and better frameworks for other parents in the future. All right. I got a bazillion callers on the line, so I thought that was a fruitful conversation and worth working on, but we'll go ahead and make some progress on the phone lines here.

Charlie, welcome to the show. How can I serve you today, sir? >> Hi, Joshua. I'd appreciate your insight on our situation. So, we're a family of five. We've been happily renting for a few years while saving up for a house down payment and deciding where we want to plant our flag geographically before buying a house.

But we've been given notice that our current rental situation is going to come to an end in August as our landlord plans to sell the house, understandably so. So, as I see it, we have a few options. We could buy a house right now, despite the rising interest rates and currently high prices.

Alternatively, we could buy this house that we've been living in. We may be able to get a good deal on it, but we don't really see it being a perfect long-term situation. Or we could theoretically find another rental and wait a little bit to see what the market does.

But in the last two or three years while we've been here, the rental market has gone up a lot and we would probably be going down in quality a lot or up in price a lot for rental. So, I was wondering if you had any advice on predicting the future and deciding what the best housing arrangement might be at this time.

>> How old are your children? >> They're young, one, three, and five. Your biggest factor is going to be the age of your children, meaning it's relatively easy to rent, even if it's not a great rental house when you have babies and when there aren't many of them. But as you have more children and as they get older, they get more and more active and this is the driving reason why you want a more and more comfortable house.

And so, the time is short for you to get your family into a place that fits your family's needs. And it should be a high priority for you. Do you have any clarity on where you want to be geographically in the coming years? >> Yeah, we do want to stay put where we are now geographically.

We settled on that in the last year or so. >> And do you have the money that you could afford to either buy this house or to go and afford to buy another house? >> We could definitely afford the one we're in. We could probably afford another one as well, but with rates high and prices still pretty high, it's not quite as much as we would hope to have long-term in a house.

>> I think that you should buy a house. Financially, it almost always pays to buy a house. If you're going to be somewhere for a while, it really just almost always pays. And especially at the phase of life that you're in, it pays to have control over your house, have stability, and it pays to give your family some sense of settledness.

Even if it's a five-year house, living it and saying, "Okay, this is our house for the next five years," having done it both ways, I think it really is more attractive for your family to know where you're going to be. The benefit of going after the house that you're in is you know everything that's right with it and everything that's wrong with it.

And that's so powerful. The biggest risk of purchasing something from another person is generally, "What are they not telling me?" And so you've lived in the house, you know what's right with it, you know what's wrong with it, you know what works for your family and what would need to be adjusted and what would need to be fixed.

You would save potentially quite a bit of money by going ahead and doing a deal privately with the landlord. Number one, the landlord, depending on the landlord's normal way of selling the house, will probably save a good amount in selling expenses. Realtor expenses, fewer costs of marketing the property, dealing with anything.

You probably could talk the landlord down a little bit on price and arrive at a very fair bargain by agreeing to take the house as is. I would assume the landlord would have in his mind a budget that, "Okay, my renters are going to leave, then I'm going to spend X amount of money on fixing the house up, shining it up, putting it on the marketplace and getting it ready to go." You may be able to get the house with that budget out, which could be a great buy, especially that you know what needs to be fixed and what doesn't need to be fixed.

If there's something that needs to be fixed, then of course you can negotiate that with them and say, "Hey, either give us an allowance in the purchase price for these defects of the property or go ahead and fix these things for us before we buy the property." Depending on the landlord's cash needs, you may even be able to do a scenario where the landlord holds the financing, which could be great.

That's worth exploring. I think all those savings are significant. In addition, you save on moving costs, which while not usually that much, they are real moving costs, both in money and in time and in effort. You save on furnishing costs. You don't have to go and redo the furniture because it doesn't fit, etc.

You know what those things are. If the house is suitable to you, if you like it, even if it's not perfect long term, if it could be suitable for the coming years, then I think it's in your best interest to pursue this house. That would be my primary goal.

The reasons not to buy the house would be if you said it's clearly not suitable, there's something that just doesn't work, we don't want it, we've been waiting to move, in which case I would say go and shop for a house. I think the great thing generally about rising rates is that rising rates should result in changes in price.

Most American homebuyers purchase houses based upon the monthly payment. The monthly payment is driven by the purchase price of the house and the interest rates. While there's not an immediate one-to-one change that happens in one month, over the coming months I don't think you should be scared to buy a house just because rates are high.

Rates being high will affect housing prices and they are what they are. As long as your finances are in order and you can afford the payment, then get the house. If rates rise more, you'll be glad to have the house. If rates decrease, you refinance. Rates are what they are.

That sounds good. Thank you for your time. If we had our perfect scenario, we'd be keep renting for a little bit longer in our current situation and then try to buy something that's more perfect, but we don't have unlimited time in this case. Thank you for your insight. I do think that buying the one we're in has been creeping up as a more attractive looking idea over the last few weeks as we've seen the market around us.

We'll keep our eyes open for ideas, but that might be the best one right now. I don't know that you're going to get a steal because your landlord knows that housing prices are high, but you certainly can get a discount by saving the landlord marketing costs, hassle, etc. You should be able to get a discount and do the best deal that you can.

Look around, see what's available, but I would try hard to buy the house that I'm in at the moment knowing that in a perfect world, you live in it for five years, then you keep it as a rental and you move out and you buy a house that is more suitable for your family then.

So I hope it works out for you. Andrew, welcome to the show. How can I serve you today? Andrew, you're up. Andrew, we'll come back to you in a few minutes and we'll go on to 205 Area Code. How can I serve you today? Hey, good afternoon. I was calling to give your opinion on cashing out a commercial property versus a 1031 and I'm looking at it through the lens of having a pretty measurable capital gains and today's favorable capital gains rate versus what I suspect is going to be higher in the coming future.

I was hoping you could just give me your two cents on that. Why are you selling the property? It's oversized for the business and it's not needed so we're scaling down. Okay. So your business is in it now and you're selling the property that your business has been operating out of.

Are you buying another property for the business? I would like to wait until I feel like it's a commercial rates in our area at near all-time highs and I'd like to wait until I feel like I could get a better deal on a multi-tenant property in the future. Got it.

So do you want to continue to own commercial real estate? I really have enjoyed the passive income side of it. There's a part of me that feels like in the world of finances, I've built columns of stocks, business, real estate, et cetera. And I feel like if I'm erasing items from one column that I should try to replace it with another item just to maintain that pillar of wealth.

However, that's the primary motivation. Currently I'm looking at beachfront rentals and trying to establish whether or not that's something I can get excited about. The rate of returns are fairly low for what I'm accustomed to with the primary care there being property appreciation versus annual income. And that's just due to the fact that the property values are at all-time highs at beachfront as well.

Right. Well, your question put in its simplest form is, should I sell this property and roll the money immediately into real estate and thus not paying taxes, or should I sell the property, pay taxes, and wait? That's your question, right? More or less. And it is kind of that simple because the flip side of it is obviously if you pay the taxes, and if I decide to pay the taxes, the property that I buy years from now is 20% higher.

Basically I'm going to have 20% tax savings on a 1031 swap now versus paying, buying the same property later. I don't expect property values to fall 20% in this beachfront value. I can't get excited about the returns I'm getting. And so I also as a small business owner, I'm a little fatigued.

So the whole idea of just paying off a laundry list of personal debt obligations is pretty appealing even if it comes at having to pay the capital gains associated with this property sale. Right. To try to identify the factors that you have to decide, I would say the first question is, do I want to own more real estate right now?

Because if you're going to do a 1031 exchange, you have to buy another piece of real estate and roll the money immediately into it. And you should not let the taxes be the reason you make a bad investment decision. If your money is better served paying off personal debt or personal expenses or buying a fun vacation, whatever it is, if your money is better spent doing that, then you just suck up the taxes and go for it.

If on the other hand you do want to continue to own real estate, then there's no reason, generally speaking, there's no reason not to do a 1031 exchange unless you can't find the properties. And so the question is, do I want to own real estate right now and can I find something that I want to own enough for me to buy it quickly?

Otherwise, paying taxes is not the end of the world, but it's as simple as that. Do I want to own the real estate right now or do I have another use for it? And to disconnect it, depending on the money, you could buy the other property, refinance it and pay off your personal debt.

That might be a good move. I'm sure you've thought about that. And from a tax efficiency perspective, that's a good move. But if you can't find another property that you're excited about, then it's just not there. So you can move your business out of the current property that you own and then just keep it, right?

Why not simply move your business out and rent out the whole space and keep the property that you own and defer your decision? I feel like financially we're at a, I feel like the market for us is running about 20% higher than it normally is as far as cashing out of the property.

And in a way, I think I'm answering your question is that maybe it just feels like it's time to exit more than it does. I don't want to own it any longer. That's probably the best answer is why. The monthly cash flow would be there, but it would be nice just to collect a paycheck on it.

Then sell the building, pay the tax and then wait until you find a deal in the future. And the good news about that is that when you actually get into the property, yes, you've paid the tax, but when you get into the new property, you'll go ahead and have your stepped up basis.

A 1031 exchange only defers the tax. It doesn't eliminate the tax. So that can be something that you remind yourself of to feel happier about your decision. Yes, some people argue that you can use 1031 for permanent deferral, right? You can always buy new properties. You can borrow against those properties for your cash needs, and then you can hold the properties until death and your heirs can get the step up and tax basis at death, thus eliminating the tax cost.

That can work, but most of us probably aren't going to do that so aggressively. And so in this case, yes, you may go ahead and pay the tax today, but at least once the tax is paid, when you get back into another property, you have now a higher tax basis and you don't have that embedded tax liability lying over you.

But it sounds like you're done with the real estate for now and you have other uses of the money. It sounds like from a lifestyle perspective, cleaning up personal debt and being in a better cash position might just be a better win for you. So take the win and pay the tax man.

All right. I appreciate it. Thank you so much. My pleasure. We go on to John. John, welcome to the show. How can I serve you today? Hey, Joshua. Thanks for taking the call. I have a question about my mom and some advice she's getting from her advisor. He's not pushing her into it, but he had mentioned her maybe getting into a trust or looking into getting a trust set up.

She had had some health problems this year. Looks like she's over them, but she's also pretty elderly. He had been talking to her about the five year look back rule and things like that for setting up a trust to protect some of her money if she was to go into long term care.

But not just the expense of getting the trust set up, but also giving up all control, even if it is to me, and having very, very little in liquid assets allowed. She's really trying to protect that one particular contingency of needing to get assistance with long term care. It just didn't quite seem right to us.

I was just curious about your thoughts on that or anything else that you might suggest to kind of pull it off as the final decade or two of the life. So just to make it a little bit more precise, you're considering whether your mom moving assets into a trust could be helpful because of her advancing age and declining health.

And the specific benefits that you're hoping to get from a trust for her is that if she needed ongoing long term care, then she could potentially qualify for Medicaid long term care benefits without necessarily having to spend down all of her assets as is normally the requirement because she's transferred those assets out of her control.

And that transfer has occurred five years prior or more than five years prior to the actual event needing long term care. Is that a good summary of what you've said? Yeah, I think that was the original approach to why they brought it up and also the fact that people in that trust, the amount of assets, could people be extremely strong, much less than too comfortable having a liquid, to have a requirement liquid.

So the reason I needed to specify the terms is that if someone says, "Should I put my money in a trust or not?" the answer is always, "Well, what do you want a trust to do for you?" There are many flavors of trusts that have different goals. And in general, one of the best ways to handle your assets, to make administration of those assets smooth, simple, effective, etc.

is through the use of a trust. And so a very common trust, a living trust, a revocable living trust where I just have the Joshua Sheets trust and I put all my money in that, that's a very effective estate planning tool because then when Joshua Sheets dies, then Joshua's trust continues on and they're just a new trustee that's assigned to it or a new beneficiary that's assigned to the trust.

But that doesn't do anything from Medicaid, doesn't do anything from Asset Protection Plan, doesn't do anything for that. And so if you want a trust that's going to allow her to exempt these assets from Medicaid, that's a different road to go down. And so that's why I needed to make it clear and precise.

How much money or how many assets does your mom have currently, not in a trust? She has a house, probably in the range of $250,000, I'm guessing maybe close to the $200,000, not a fancy house or anything. She has probably, I'm guessing close to a million or yeah, probably just around a million dollars in assets that are in her investment.

Some pretty basic things that are appropriate for someone her age. Nothing complicated, business files or anything like that. So pretty simple. Okay. John, you may be speaking to me on a headset. It sounds pretty terrible and I can barely make out the words. Is there any way while I respond to you, see if you can do anything to get me a better audio connection, please.

So if your mom has a $250,000 house and a million dollars of assets, then that's a significant amount of money and it's worth adjusting. It's worth paying attention to, to try to hold on to it. The first thing I want to clarify is what does it mean to do Medicaid planning?

What it means to do Medicaid planning is basically this, let me get rid of all my money so that I'm broke so that I can go on government provided healthcare in the future when I need it. That's basically what it means is let me get rid of all my money so that I'm broke so that I can go on government paid healthcare in the future.

My first reason I point that out is that's probably not your mom's goal for her life nor your goal for your mother. Would you agree? That's correct. Yeah. Yeah. That would not be the goal. That's not the goal. So your mom's goal for her life is to use her money to provide her with the best possible quality of life and the best possible care if she ever needed it so that she can enjoy and be well cared for and well provided for her, well provided for throughout her entire lifetime.

And your goal for your mother is that she has the very best quality of life and the best quality of care that she can have during her entire lifetime. And then it would be nice for both of you, hey if there's money left over, of course we'd like to have the money.

If there's some kind of benefit that we can get that helps us, we'd like to have some kind of benefit, that would be nice. But those are secondary concerns versus the primary concerns which is the money paying for the best quality of life. Agreed? Agreed. Yeah. So I'm not going to answer your question today any more precisely than that because I can't.

You need to speak with the Medicaid planning attorney, you need to understand the laws of your state, you need to understand what would be involved in creating the trust, what your mom's resources would be in the trust, what your benefits would be, what you can and can't do. This is not something that you're going to hide.

This is something where you're going to follow the law to systematically try to put something in place. And if you can get Medicaid benefits, and if those Medicaid benefits are helpful, and you can keep some more money by doing it, yeah I think it's a good idea. But you want to make sure that the cost is not more than you can bear.

Meaning that her cost of giving up the money to control the trust, making sure that she gets high quality care and not just Medicaid care, because that may not be high quality care, especially when she needs care. Those are the things that you need to really look into with the attorney.

There's no reason that it's not wrong to do it, you just need to make sure that you understand the legalities of it and what it would open up and make sure that that's the right decision for you. And recognize that the reason she has money is to provide for her the best quality lifestyle.

Medicaid planning is a little bit complicated because Medicaid technically can provide care in a Medicaid nursing home. Technically there are provisions for Medicaid to even provide in-home care. But this varies greatly. For example, there have been many people who've had Medicaid care in a nursing home and they're like, "I would never put my mom into that nursing home.

Never. That one is just horrible." But then there are people who have had Medicaid care in a nursing home that have been very nice. There have been provisions for some kind of in-home care for Medicaid, but most of those provisions legally are not really encouraged, although that has had some changes over the years.

The reason has simply been there's been a lot of fraud and whatnot of in-home Medicaid care. And so there was a time when, hey, you can only go to a nursing home. And so the language I used to use with clients was, "You don't want to go to a nursing home.

I never met anyone who wants to go to a nursing home. So why are you planning on going to a Medicaid nursing home when you can stay in your own home?" That can change and it has changed some, especially as they've investigated different models. But right now with Medicaid, there are plenty of people who even qualify for Medicaid coverage.

A couple of years ago, I did a story on the story from Maine, where there are people who qualify for Medicaid coverage. They have full government approval for getting the benefits, but they can't find nurses. They can't find people who will actually come and provide the care, especially at the Medicaid rates.

There's just a massive labor shortage. So it's not an easy question to answer. And Medicaid, I think, is a last resort. It's not a primary plan. So make the primary plan for your mother and then keep Medicaid planning as a component of your things that you consider, but in a secondary position.

And then get your attorney's advice on the costs of doing that and see whether you and she are willing to bear those costs. Yeah, I think that helps a lot and put it in perspective. None of it felt very appropriate for her level of what she's saved up for.

And knowing nursing homes in general, just even good ones, aren't really a place I really want her to be. And we have the ability that we live close up through that. I mean, my primary plan is to have her move in with us if she really needs that level of care.

And we have the flexibility in our schedule to be able to care for her. So yeah, I'm glad I wasn't missing any big other advantage to it. But maybe we'll still have a talk with the lawyer. But yeah, I think that's really put things in perspective as to what it's really trying to do.

And that's not really our goal. Right. If you can... I appreciate it. Yeah, my pleasure. If you can make it work, I think most likely the best solution for mom is see if you can have some kind of separate but close living arrangements in your house. That might mean remodeling a bedroom so that there's a separate bedroom and bathroom and kitchenette where she can have privacy, you can have separation, but yet she can be there very close.

It might mean building a little house in the backyard, something like that. And then if she needs care, then having the money that you can provide for a caregiver to help you is I think the best solution. Being a full-time caregiver for your mother is very, very taxing. So ideally, if she can be close physically, then you can provide with her with a lot of care.

And then if you can afford to hire a nurse or an assistant to help with some of the daily care, that can really help to protect your health and your wife's health and help you to have the best of the relationship without having all of the difficult work. And so I think with that amount of money, she should be able to afford to help contribute to any kind of renovations that would be needed to make a comfortable place for her, that would give her privacy and yet closeness.

And with that amount of money, I think she could comfortably afford to pay for care for the period of time that it would be necessary. All right, we go to unmute, unmute, unmute. So close. We're trying to go. There we go. We'll go to this one. Mauricio, welcome to the show.

How can I serve you today, sir? Hey, Joshua. Thank you for extending your call for us. So I'll try to be as specific as I could. So my question is, unless you get European, how valid would it be to get employed by my own online business that I'm running under an LLC, under an entity at Wyoming?

So to give you a little bit of background, I currently own and operate two separate online stores. They're basically doing drop shipping from a major hardware store. I don't hold any inventory. Basically, my participation in the business initially started as I'm funding purchases for these products using credit lines, mainly business credit lines.

Then I'm receiving these returns and I'm taking them typically to the closest hardware store where I live. But nowadays, I've tried to separate myself from that and I'm having a third party provider outside from where I live, which is outside from California, do this for me. So again, I live in California, started my business in California as a sole owner, but now I'm looking to move this under an LLC in Wyoming.

So I have been advised that since my business is an online business, I can operate the business from anywhere in the US, wherever I want. It doesn't necessarily need to be in California and I can avoid that $800 franchise fee for that LLC. And I basically can basically, I'm sorry, I can basically move my business outside, which I'm choosing Wyoming, and then have my business hire me as a contractor from where I currently live, which is California.

What is your opinion on that strategy? And to be clear, you're doing this so that you can save costs and taxes, is that right? Mainly for that, yes. And so that I can basically not have to be involved physically in or participate actively in the business doing returns. I can have delegated as much as possible from that business to somebody else and then just fund the business to grow.

These are separate things. So first let's deal with the California question. My answer is you will not save any money on taxes because if you are living in California, no matter where your business is located, no matter whether you're an employee of the business, you are going to owe California taxes most likely on all the profit from your business.

While there may be minor exceptions, there may be minor things that you can do to save money, none of these things apply to California. You are living in a state that is one of the two most aggressive states in the country for tax collection and is one of the two most aggressive states for basically saying you owe us California tax on everything that you do.

When it comes to business planning, you cannot just play shell games, meaning that you cannot just have things that have the appearance of being different, you have to actually have substance. And so substance is the name of the game when it comes to taxes. You have to make the substance of what you do different in order for you to save on taxes.

That's not to say that having your company based in Wyoming can't work, but generally speaking when businesses do business in California, they have to have a local California LLC. They have to have a local California pay the $800 franchise fee. And so it's very important that you follow that law and you're not dealing with people who are unsophisticated, you're not dealing with people who are not paying attention.

You are dealing with one of the most, first you're dealing with a massive economy that by all accounts, I forget this off, I can't tell you this off the top of my head, but if you go and you look and see what number in the world the California economy in and of itself would be, it's on the top ten list of global economies, bigger than many other major nations.

This state also has a very aggressive tax policy, very aggressive posture, and a very well-funded tax collection department. You're not playing with people that you can just say, "Oh, okay, I can play some games." No, you're dealing with very serious people. So I would not do any of those things being a California resident.

If you weren't a California resident and you were willing to change your residency, you certainly could have a different tax structure. And depending on what your lifestyle looks like, there may be some ways that you could structure your affairs in a way that allows you to spend decent amounts of time in California without actually being a California tax resident.

So of course, many people moved to Nevada and Nevada is relatively close to California. And there are plenty of ways that you can prove to the California tax collectors that I have genuinely, legitimately moved to Nevada and yet still travel to California somewhat frequently to see people. But when you say, "I live in California," then I think your simplest and best solution is simply to keep everything in California.

Keep your business in California and recognize that taxes are the cost of what I pay for being here. And don't play any games that are just shell games. They don't work. What you could do... Well, let me just pause there for a moment. Do you agree with me? Disagree with me?

Honestly, I just think, you know, so I'll probably have to read this information. But I agree with you that I have to be careful what I'm trying to do and recognize that California is very aggressive. Are you willing to consider moving outside of California at this time? Not at the moment.

Not at the moment. All right. So the answer to your question is very simple. If you're not willing to consider moving outside of California, which by the way is a totally fine decision, I'm not saying you should be, just trying to clarify it, then run everything in California, keep everything in California, and deal with the California tax bill and board as simply a cost of doing business.

If you see your business expanding in the future, then you can always ask yourself, is there a way that I can separate some of my affairs in some way? And so I think the most legitimate, it's probably difficult for many people, but the most legitimate tax savings that you can use is some form of transfer pricing arrangement.

Are you familiar with the concept of transfer pricing? No, I can't say I am. Okay. So the basic idea of transfer pricing is, let's say that you have a part of your company that performs a certain amount of work that can be moved to another place. You can take that company and you can move it to another country.

So you'd simply cut out maybe your entire accounting team or you cut out your entire creative team or you cut out your entire coding software development team and you move that team to another country and you set up a separate company in that jurisdiction that then bills your home company for those services.

And so this is one of the primary tax reduction techniques used by large and sophisticated companies, is they create offshore subsidiaries that then bill the head company for their work and then those offshore subsidiaries are owned offshore and their profits can stay offshore in some cases. This is more difficult than it once was, but it is possible to do that and it is possible to keep those profits stored offshore.

But from what you're describing, if you're not willing to move outside of California, then I think that most of your tax reduction ideas about using another state or even another country just simply don't work for a California residence. What does work is for you to make sure you keep good track of your expenses.

What does work is for you to follow the law and deduct the maximum amount of expenses. What does work is to fund retirement accounts. Those are the tax savings plans that work for a California resident. Got it. Okay. I guess where I was confused is the fact that it's an online business where I actually don't go to the store and buy the product myself, where I get receive an order through my online store and I basically just go on the backend to this major hardware store and purchase it from them through the internet.

I set up the address of this individual and I have it shipped to them. So again, everything is done from my computer. I don't necessarily need to have a place. It's still the business. But where do you live? It's occurring in California. Where do you live? I live in California.

Right. That's the problem. Who owns the company? Myself, yeah. You do and you live in California. And as a California resident, you owe California state income taxes on your worldwide income. So it doesn't matter. Everything you described is true, but it doesn't matter. You live in California. You own the company.

You're the one who gets the profits from it. Doesn't matter whether you have a company in Wyoming that all the business goes through and there's a bank account at the end of the year, you own the Wyoming company and thus you owe California tax on it. And so this is, again, we're dealing with California.

And so California, if you have any business, any operations in California, anybody who has a business outside of California, they still have to file a local, what's it called, a foreign business or whatever it's called and pay the $800 franchise tax board. So it just doesn't work with California.

The key data point is that you said, "I live in California." And to the extent that you live in California, you owe the California tax authorities, income tax on all of your income from anywhere in the world, no matter where it is, unless there is some applicable deduction. Now, if a point in time comes in the future where you decide that you want to move outside of California, then you can rework everything.

But to the extent that you live in California, you owe taxes on your worldwide income to the state of California. That's the law. Got it. Okay. Makes sense. Thank you. My pleasure. Just try to focus. If you don't mind. Yeah, go ahead real fast. Yeah, go ahead. I was just going to say, real quick, if you don't allow me, the gentleman that just talked about his commercial real estate, I was thinking maybe just throwing out the idea, maybe he already knows this, the subject to financing.

If he's looking to get rid of that property to get some extra income to be able to pay off his debts, he can probably find someone that is willing to finance, become the financer of the sale of his commercial property, receive a down payment from somebody that's willing to go into that kind of business with him, receive a lump sum of money initially, and then receive a monthly payment until maybe a 10-year finance for that subject to or seller finance deal.

And he can receive the extra income for a period of years, use that extra income initially to pay off his cards, and then eventually move on with the next property. I just wanted to throw that idea to him. Absolutely. That's a good story. I appreciate your adding the idea to the mix.

Absolutely. Thank you, Mauricio. Wish you all the best. We go now to 432 Area Code. Welcome. How can I serve you today? Hey, Joshua. Go ahead. Yes. I'd like to thank you very much for all of your input on everything. I hadn't been listening to you a long time, but when I signed up, I'd like to affirm your summer job statement to the first caller.

I worked as a summer job since I was 11, so it really helps your work ethic. So my wife and I have three kids, ages five, three, and six months. The oldest is getting to that school age, and he is very shy and very analytical. The middle sibling is a grade A certified buffalo, likes to destroy whatever he's doing.

And the youngest is happy when he's not hungry. For now. For now. For now. Yes. So we're looking to put the oldest in public school. Our local option, our school district is very large. My wife and I come from small districts, 1A, you know, Permian Basin of Texas. So our local school is 3,800 students.

It's way more than we feel like doing. We have four options in the area that are smaller schools, two are 250 students, more or less. Both of those are very close to where I went to school. One of them is about 800 students, and the other one's about 1,100 students, and they're both actually closer.

But I just wanted to ask you some opinions on things to think about over the summer. We're actually fixing to interview, we have interviews Tuesday and Thursday with two of the schools. The one that's actually the furthest and the most dangerous roads is actually one of our top picks, but we haven't seen the other schools.

So just wanted to ask your opinion on that. Do you have concerns? Is there some reason why you're not confident with this choice? Whatever choice is on top of your list? We're actually very confident with that choice. The only thing is, is it's a 25 mile trek on a two lane oil field infested highway that claims lives regularly.

So putting my entire family on the road, plus a day, since we would be transferring in, they don't provide any transportation. So it would be 100 miles a day traveling on that roadway. That's our only concern with that school. It's a little hard for me to discern the question that you are asking.

So let me give you a thought and then if you can clarify the specific concern that you have, I'd be happy to comment on it. What I would point out to you is you are at a stage of life with a five year old, three year old and a six month old where you should be very cautious about the precedent that you set.

The good news is that still, even if your children were eight, you can still change anything. As a father you can say, "I'm going to change everything." Whatever it is. So if you observe that something is not working well for your family, change it. Whatever it is. But right now you have not set any precedent and you need to be thoughtful about what precedents you are going to set because from here the price gets more expensive.

So for example, if you choose the school that's a 25 mile drive away, the day that you sign your son up for that and the day that you start that is the day that relationships start getting set. That's the day that he starts making friends. That's the day that you and your wife start meeting other parents.

You start building a social connection and a relationship. And yet you're signing up for a 25 mile trek every single day. As far as I'm concerned, that decision sucks because that lifestyle of having to face a 25 mile drive to take your child to school, that sucks. Especially with who's going to do that, right?

Are you going to do that? Is your wife going to do it? Is she going to do it with a three year old and a six month old every single day there and back? This fear in the back of your head about this being a dangerous road, I think that just stinks in terms of a lifestyle choice to sign up for that much time on the road, let alone the cost.

And I'm not just talking about financial costs, but just the lifestyle cost. And I know you live in Texas, I think you live in Texas, and yeah, of course, Texas you drive everywhere, but that stinks. And so I would look around and say, is there not some other option?

Is there not a school within three miles of my house? Is there not some place where I can do that? Because this decision that you make is also going to drive everything else, right? Let's say you enroll your child and the school is 25 miles away. Every birthday party invitation is going to be 25 miles away.

Every play date is going to be 25 miles away. Weekend activities, right? After school stuff, et cetera, it's all really far away. Now, I hope my intention is not to be hyperbolic. I'm sure there are mitigating factors. There are probably other people that are closer. Maybe some birthday parties are closer.

But that's a really big lifestyle decision that's going to affect your entire family. And I think it's worth being careful of it. The other thing that you said when you were talking about the structure of, or the personality of your children, you mentioned that your oldest is shy and analytical.

You need to really think carefully whether or not any government school, but most importantly, any large school is going to be helpful to the shy and analytical child. And I'll give you my... I won't. I'll save it. But I guess I would just say that right now you have total freedom.

And so think about these big macro impacts in your life of the decision you make and then weigh that into your decision making criteria. Is there not a little neighborhood school, a little private school, a small local neighborhood school that's close to your house? There is. So the school district that we are assigned to in Texas, quote unquote, the school is not very far from us.

And there are two private schools in the area. It's just that the one that's close to you is the huge one that you're uncomfortable with? Yes, correct. What difference does it make actually if the school itself is large to the child? Will the child's class be bigger? What's the difference in terms of actual daily life?

Like you said, him being so analytical in a large classroom setting... Is there a meaningful difference? Would there be a meaningful difference for his daily life between those two schools? I think so. Yeah. So I, of course, couldn't answer the question. My only goal is to give you things to think about.

As a father, right? You love your son and you want to do the best. I'll go ahead and give you the comment that I have on that I think is just worth thinking about, especially if you have a shy or analytical child, using your words. The most common objection that homeschoolers hear with regard to their children is the socialization objection.

And it goes something like this. Well, if you homeschool your children, how are they going to learn social skills? And while most homeschoolers have thought about that question and they've learned to just laugh at it, I think that it's the opposite, that actually doesn't get enough attention. And so the point is that the defense that most homeschoolers will make is, "Well, gosh, I'm not so sure, right?

Our children are in karate on Monday. On Tuesday, we have co-op. On Wednesday, we have church. On Thursday, where are they going to get their social skills?" The point is that homeschooled children get lots and lots of social exposure. And in fact, many of us would argue our children get vastly more social exposure because we don't waste eight hours a day doing schoolwork.

We get our schoolwork done in three or four hours, which leaves lots more time for actual social exposure. Now, I'm not trying to make the defense of it in and of itself right at the moment. My argument and the step B is when I talk about it, I say, "Listen, if you have awkward children, awkward children are actually, generally speaking, in my opinion, the result of awkward parents.

Parents who are awkward often have a tendency to create children who are awkward, regardless of the specific schooling decisions of their parents. Whereas adults who are socially competent often tend to produce children who are socially competent because the children model the behavior of the parents. Not all the time, but a lot of the time.

What I think is under-discussed is the opposite, meaning that I am convinced that most... I'm trying to be thoughtful and not unnecessarily inflammatory, but I am convinced myself that the structure of modern schooling, and this applies to government schools, it also applies to traditional private schools that are modeled on government schools, that structure is psychologically traumatic for a significant portion of students.

The entire structure is in and of itself socially traumatic. And so if I have a child who is socially awkward, the worst place in the world for that child to be is to be put into a school where now that child becomes the kicking post of the other children.

The environment of a bunch of children who are in an age band where the parents cannot get rid of the problem children, and the teachers and the principals cannot get rid of the problem children, that is a destructive environment for students who are awkward, or who are shy, or who are not.

The teachers work really hard to counteract it, but the environment in and of itself is really destructive. It's so destructive that as adults, if we were ever put into that environment, we would consider it to be abuse. If you and I as adults went into a company and there were 30 other people that were just simply randomly selected, not selected for skills or capability or for kindness or for competence or intelligence or anything else, but just 30 other people that were randomly selected that were our same age, and we were forced to go together in a room and try to figure out how to get along, and the principal couldn't kick us out unless one of us murdered somebody, and the teacher didn't have any effective means of control, there would be one or two of us in the group of 30 that are just social misfits, who are bullies, who are jerks, etc.

Now as adults, we would take that person on, we would beat the person up, we would kick him out, we wouldn't stand for it, but as children you can't do that, you're forced into the environment. And so what happens is that environment in and of itself is a socially toxic and traumatic environment that chews up sensitive children, awkward children, handicapped children, it chews them up and spits them out.

Now you can have in that environment, you can have the luck of the draw, you can have a wonderful teacher and you just happen to get a group of 20 other students that are actually really kind and a student can have a really good environment, but for every positive story there's a legion of negative stories, and when you start talking to people, especially people who are awkward, who are late bloomers, who are fat, who are skinny, who are stupid, who have bad teeth, who are whatever their thing is that gets to be picked on at this certain time, the school environment in and of itself creates trauma.

And so, forgive me if I'm passionate about it, but I look at it, and my wife and I were at a picnic recently and there was a friend of ours and we were talking about schooling and it came out that we homeschooled and somebody was like, "What about socialization?" And I sat up and I was lying on the grass with a hat over my face and I said, "Let me just share with you," and I kind of gave what I just said, and the point is that we don't talk enough.

Why do we have this traumatized generation? School is a major source of trauma. So, to the extent that you're concerned, will my shy and analytical student fit in, you need to do as you are doing, which is to say, where is the best environment? Where can I find the best teacher who's going to help and protect my student while he has time to flourish and gain these social confidence, et cetera?

Where are the best students who are trained and disciplined by their parents? But I myself don't have any hope of your being able to have any control of that in a government school, because about the best that you can do is pick among these four different options. And so, I'd encourage you, there's no rush.

Your child doesn't need to start academics until much later. Maybe you want to start now, but literally, right, seven is a perfectly fine age to start any kind of academics. If you're genuinely concerned about that, recognize that maybe it's the environment itself that is toxic and traumatic for children.

Maybe that's what actually creates it for the reasons that I identified. And maybe the best solution is to go to a local neighborhood school or organize something in your neighborhood. If you and your wife can't homeschool or don't want to homeschool, then maybe you find somebody who organized a little neighborhood school and give another year or two.

And then choose some social activities for your five-year-old where instead of putting him in school, maybe you join a local karate class. Maybe you start to give him that where you can be there looking on. You can help him. He's not forced into a bad environment and you can help to bring him out a little bit to where then he can flourish in the local school.

So I'm not accusing you of making a bad decision. I'm trying to simply highlight what I heard a hint of that I'm convinced that we spend not enough time talking about how that environment is traumatic to the weaker ones among us and that you can't change it. Because when you put a random cohort of 20 to 30 students that are age-banded, which is a deeply unhealthy thing, right?

In our modern world, we talk a lot about diversity. Diversity is a double-edged sword. In some situations, diversity is an asset. In some situations, diversity is a liability. In order to understand whether it's an asset or a liability, you have to ask yourself, what is actually diverse? With children having a non-diversity of age, in some cases can be useful.

But from a social perspective, it is generally a disadvantage because there's no sense of leadership by age. And so when you put a cohort of randomly selected children where you can't control the background of those parents, you can't control the training of those parents, and they're forced into a room, and the principal, because it's a government school, the principal can only kick out the very worst offenders, that is a recipe for social psychological trauma.

And that's why one of the reasons that contributes to why we see so much. So forgive me if it sounded like I was yelling at you, just trying to articulate why this is a big deal, especially if you have a shy or sensitive child. >>I actually appreciate your passion.

>>It's really tough. So those are the two points I'd make. Be careful about what you sign up for. 25 miles is a long time. That really stinks to spend that much time in a car. I know it's normal in Texas, but it does really stink to spend that much time in a car.

And just go back to the drawing board and see if maybe there's a third option that we haven't thought of that would be a better lifestyle for us and a better lifestyle for and a better solution for the needs of our particular children. >>Great. Awesome. Well, I appreciate your input.

>>My pleasure, sir. All right, got two callers left. We'll see if they are here. 619 Area Code, how can I serve you today? >>Thanks for taking my call, Joshua. It's been a long time listening. I've taken several courses of yours, so I just appreciate all you do. And I'm calling today for some career changer advice.

I know I'm unhappy where I'm at, but I'm very unsure of what I want to do next. But my current role is definitely my highest earning potential by far. And I'm not ready to move on from that without knowing what to do next. So I've kind of set post fire as a benchmark for myself to hopefully minimize the regret of possibly leaving too soon.

But I'm trying to figure out if you have any advice on figuring out a reasonably accurate post fire target number, because there's so many variables and so much time, precision feels pretty impossible. And I'm also wondering if that's really the right goal to have, or if a better goal would be to focus more on spending time exploring interest or what the possible next move might be.

>>So let's first define our terms. When you use the term "post fire," my understanding of that term is you're describing the concept that you have saved and invested enough money that at retirement you could support your needs. So therefore, if you choose to change something with your job or your work, you would just need to cover your lifestyle.

Is that the way you're using the term? >>Yes, that's correct. >>Okay. So the idea is you've saved aggressively. If you do a retirement calculation, okay, 65, I have enough money to live on. So now I'm going to perhaps pull back from this job that I don't really like, but I've maximized my earning capacity.

And I'm just going to try to find something that provides me with a better lifestyle that's enough to meet my expenses. That's the basic plan that you have for the coming years. >>Exactly. >>Okay. Now, please repeat your question so that I can answer it now that we've clarified our terms.

>>Sure. So I'm just trying to figure out if you have any advice on figuring out a reasonably accurate post fire number with the time horizon and all the variables. And I guess the variables I'm considering are expected returns, inflation, take withdrawal rate, and then expected expenses in retirement, given how young I am.

All those numbers feel very murky. So it just feels very hard to even come up with a remotely accurate forecast of when I've actually achieved that benchmark. >>How old are you now? >>31. >>And how much are you earning currently? >>$100,000 per year with bonus. >>And about how much do you have saved?

>>$150,000. >>And about how much are you spending? >>I save 50% of my pre-tax income or more between 50% and 70% depending on how I'm doing. >>So the answer to your question is we could do some calculations, right? But all of those calculations are estimates as you're pointing out. What number should we use for after tax, after inflation, real returns on our portfolio?

We could use the historic stock market number, but maybe that's not quite enough. What maybe the next 20 years are different than the last 20 years? Who knows, right? A lot of smart people think that they're going to be, but we don't know. I guess, frankly, what will be the safe withdrawal rate 34 years in the future?

Who knows? I'm not opposed to using any of the current numbers to get at it. I would just say, pick any retirement calculator you like. If you'd like, I'll grab my calculator and we can run some numbers. I guess I would look at it and say that I don't think that you're going to probably find any sense of solidity in those numbers because the forecast is so far away.

And I would say that at 31 years old, are you married? Do you have children? Or are you just responsible for yourself? No, we have one child. We have one on the way. Okay, great. I guess I think you should go and just ignore financial independence and focus on building a life that you don't want to retire from.

And if that means you cut your income temporarily, as you may know from my income course, I made this argument. I said this, I said, if you give me two people, the one person who is just earning as much money as possible, but doing something that's not a good fit for him, and the second person who's doing something that's a good fit for him, I am convinced that in the fullness of time, that the second person will go far, far farther financially.

And even if he doesn't, he'll have a better, more satisfied life. I think that the most precious thing that you have is time. And the way that you use that time is the most important thing. And you've proven yourself to be the kind of person who has a long time horizon.

If I'm spending time with you, I'm going to spend a lot of my time trying to say, listen, dude, you're 31 years old and you're rich, right? You're in the top, I need to look at the numbers, but what's probably six to 8% of the world population in terms of wealth, you're very rich.

So why don't you just start acting like someone who's rich and start building a plan for the next decade that excites you. And leave 65 alone for now until you make that plan. And I'm fine with, I think it's good to run the numbers and say, okay, here's my coast fire assumptions.

But the only goal of that is to give you a personal sense of mindset freedom where you're willing to go ahead and take the jump. But I think that there are a lot of people that I observe who are prisoners to this idea that I have to have money.

And I've been there. And every time I've taken the jump, I've never regretted it and I've realized that the bars were in my head. I didn't need to be as rich as I thought I needed to be to make this step. All I needed to do was just make the step.

And so if you recognize I need to convince myself I need to have more money to make the step, fine. But that's your own weakness. And so the idea that you have to be coast fire, check the box, I'm there, I think is a weakness. It's not something to be embraced.

It's a weakness. You're a rich guy. Just pick something else that you think has a better chance of putting you in a direction you might enjoy more and then go in that direction. And it doesn't have to be perfectly thought out. It doesn't have to be planned out. You don't even have to be sure that it's the right long-term solution.

You just have to have some idea that it's leading you in a direction that's better than where you want to go. Have you ever sailed across the ocean or do you watch any kind of sailing YouTube channels? No, but I certainly wish that I had sailed across the ocean.

Okay, well I can describe the concept simple enough. So the basic idea is if I use a GPS example on the road, then we're very accustomed to our GPS predictions now being quite accurate, especially in light of real-time traffic updating. And they are quite accurate. If I'm in Miami, Florida, and I put in my GPS and I say I want to drive to Seattle, Washington, there's a very good chance that I'll be there within a couple of hours of the time predicted.

Now I don't know for sure, but meaning the total travel time is pretty reliable and pretty predictable. But I'm fascinated myself when I watch sailing channels and I look at their GPSs and their GPS does the same calculations that our car GPSs do. The problem is there are a lot more variables, especially when they're sailing.

They're sailing and the best they can do is have a rough estimate of, "Hey, this trip across the ocean generally takes 21 days." And so we're expecting that it'll be 21 days. But it could be 19 days, it could be 25 days, and there's a whole lot of ocean between here and there.

And the variables are much more significant. We're dealing with wind variability, we're dealing with speed over ground, we're dealing with mechanical issues, we're dealing with do we use the engines, do we not use the engines, et cetera. So the GPS is useful, but it's not accurate enough to actually make predictions on.

And that's how I see what you're describing. I just say, "Listen, you know that you've saved a good amount of money. That should give you enough focus, but work on the next 10 years. Don't work on that 10 years, work on the next 10 years." Because if you can make from 31 to 41 really good, then you'll be in a totally different place where you can make 41 to 51 even better.

Then you can make 51 to 61 even better. And spending your time at 31 thinking about 65, anything beyond saying, "Hey, I save about half my income," is just, I think, overall a waste of time. So that's the best answer I could give you is I think it's a waste of time.

You know that you're doing the kinds of things that... Are you a healthy guy? Are you in good shape? Do you add a healthy body weight? Yes, I work out every day. All right. Can you guarantee that you're going to live to 92 years old and be in perfect health all along the way?

Unfortunately, no. No. But what you can do is you can know that as I continue these activities that I do now of eating healthful food, being physically active, making sure that I stay abreast of my current situation, that there's the best chance that I have of living a long, healthy and active life.

But there are things that can come against me. Right? That's the best that you got. Yes. And I'll say it certainly feels more exciting to think about 31 to 41 than it does to 65. I really like the way you frame that because I know when I'm excited about something as I've proven to myself, I'll work really hard at it.

Good. Good. So I think that perhaps that health metaphor is the best one I could give you about money. You cannot know with your money that you're going to have enough money at 65. You cannot know it. It's not possible. You can go to any calculator and you can use it.

But there are genuinely many events that go beyond the calculator. Right? How do we even know that the United States can continue growing into perpetuity? The last 200 years where we have 2% per annum economic growth is absolutely a miracle in the history of the world. But can it continue?

We don't even know that. All we can do is make guesses. So what I would say is you have good financial principles. The principles are I'm going to spend less than I earn. I'm going to save money and have that available. I'm going to save money and I'm going to invest money.

When I invest money, I'm going to invest it at the highest possible in the best quality investments that I can find at the highest possible long-term rate of return. I can't guarantee you or tell you what the number is that you're going to need to have a 65. But I can tell you that as you continue doing that, then you're going to wind up in a good situation.

Right? You're going to put yourself in the situation where you have the best chances of winning. So if we pull back to 31 to 41, if you can make – let's say that you could make a career change and you go from $100,000 a year to $70,000 a year.

Thus now instead of saving 50% of your income, you can only save 20% of your income or 15% of your income. I would beg of you if that transition leads you to a life you're more excited about, I would beg of you to do that because it's not necessary to save 50% of your income to be well squared away at 65.

You're way ahead with these coast fire plan. Now if you could just drop to 15% of your income, you're in great shape. And then that'll occur for a few years and then something will happen, something else will change, another opportunity will come your way, you'll adjust, you'll move, you'll change and you'll make those decisions.

And as long as you're earning more money than you're spending, you're investing your money at the best possible things that you can find, you're going to be fine at 65. So I would say the health metaphor is the best I got for you, but I really think it's true and I think that once you're excited about 31 to 41 genuinely, then you go back and say, "Can I sweeten the pot for 61?" But you may not make it and it would be a shame to spend the thing that you can never get back, which is the time of your life, it would be a shame to spend that in a way that is not in your best plans just to get the thing that is the most replaceable thing in the world, which is money.

>>Jerry Holkins Oh, you're 100% right. And I think I'm just trying to pursue more perceived safety when in reality I have a bigger margin of safety than most anyone could ever reasonably want. So thank you for your advice and thanks for everything you do. You've been a tremendous positive influence on myself and I'm sure many others.

>>Tavis Thank you for listening and for being a customer. I really appreciate it. All right, let's see if Andrew is there. Andrew, are you with us this time? >>Andrew Okay, thank you. So I have called in a few times over the past month or two, you may recognize my voice.

I kind of asked about mustachion level, FI. So kind of going off your last caller, I am rich today. I could be mustachioned by today, but I'm also 31 years old and probably don't need to stop working today. And so I'm trying to figure out how to build a life I don't want to retire to because I have a 40 mile commute that probably takes about 50 minutes each way.

And so I've been looking at other jobs and I have over the phone received a job offer for a similar role at a similar engineering industrial plant with a seven mile commute. So significantly better probably save about an hour and a half of driving every day. And one thing that I'm struggling with is that they over the last week, my company's corporate division has posted three fully remote engineering jobs that I reasonably qualify for.

So I'm going to apply for those as soon as possible Monday once I talk with my supervisor to kind of gain his blessing. However, I'm wondering, does it ever make sense to respectfully and tactfully give your employer an ultimatum? Because if I have to stay with my employer for my current job, then I'm going to quit and go with the shorter commute option.

However, I'm still showing up there at 6 a.m. Monday through Friday every day. And the lifestyle benefits of having a fully remote job, you know, I can't even put a price on that. So I'm trying to figure out like, hey, to be honest, Mr. Boss, I want these remote jobs.

And if you don't give them to me, realistically, I'm going to go to this other plant. But our HR process is probably not going to be complete to see if I'm a selected applicant for one to two to three months. So my answer to your question is, you asked, does it make sense?

Absolutely, it makes sense. And first, let me give you a framework and then just my thoughts on how to go about it. The framework is simply this. Remember that employers and employees do not compete with one another. Employers compete with other employers to attract the very best employees. And employees compete with other employees to gain the very best employment or get the very best job.

So you and your employer are not in competition with one another. Your employer is in competition with all of the other offers that you can get. So does it make sense to go to your boss and say, hey, I want this other job and if not, I'm going to leave?

Absolutely, it makes sense to do that. And that's what you should do. You should get, you should take for yourself the very best job that you have access to that you can successfully compete for right now. And jobs are not for life. If you have a contract associated then of course you fulfill your contract, but most jobs don't have a contract.

You just simply try to do the very best thing. And your employer must from time to time sweeten the pot, especially if that employer is not doing it actively or should I say proactively. So if you have a job offer and you're getting paid $100,000 here, but this guy across the street is offering you $120,000, then now your employer has a different competitive environment.

Your employer needs to go across and say, hey, I got to offer you $120,000. And you should routinely renegotiate with your employer. This is not game, and we'll get to the games in a second, but that's just the way of doing business. And a lot of employers get lazy because they get complacent.

And what will happen is if you quit, your employer has to sit down and say, oh, wait a second, I need to go and figure out how to attract another employee. I may have to pay more money. I may have to offer more benefits. I may have to do any number of things and change it.

Now, your employer wants to keep you. Why? Because hiring a new employee is one of the most expensive, disruptive things that your company does. It is a hassle. The employer has to pay headhunters often 50% of your first year salary. Recruiters may often get 50% of your first year salary.

So recognize that every day there are employers out there that will pay a headhunter 50% of your first year salary to bring them a candidate. So then in addition to that, they have to take care of training costs, costs to get someone up to speed, re-equipment costs, painting your office, getting a new PC, all of this stuff.

And when they do that, they still have no surety, no confidence that a new employee is going to fit with the team, is going to have the capacity because it's not a known quantity. So if you're a good worker, then yes you can and should frequently renew and renegotiate your contract.

And that's very much within your best interest. And if you're an asset to the employer, the employer will work on it. Now, how do you actually negotiate it? First thing is, I think that there's really no need for any games. I don't think that games work. I think that straightforward, honest negotiation and honest communication is one of the best things that you can do.

That said, don't deliver an ultimatum if you don't have to. So you may know that, "Hey, I've got plenty of money. I don't need this job and I've got other options." But you simply go to your employer and say, "This is what I would like. Would you be willing to consider this?" And then speak in terms of your employer's needs.

So you need to talk about what your employer wants, what your employer needs. Always speak with what the other person wants. And then just identify that, "These are the things that I need and I think that I can satisfy them if you can make these changes. If not, I might have to go and look for another job or find something that can satisfy that." And so that process is a fairly straightforward process and I see it as the winning process.

Recognizing that your employer needs you and you need your employer, but you also have other options. And so just lay those out and then it's up to your employer to decide what he wants to do with it. Yeah. And so I guess one clarification, are you recommending that I actually tell him I have another offer or don't?

Or just straight up ask? The problem is if I asked to get this new remote job, he'd probably say, "Yeah, apply for it." And I'm not going to know for two months if I get it. And your other offer expires. Other offer probably expires in a week. Right. So then I would go and I would tell him you have another offer.

What do you lose? The worst thing you lose is your job. So you're already willing to take that. You've already decided you're not going to do it. What do you lose? So I would simply go and communicate and say, "I really appreciate this job. I'm happy to have it.

It's been a good... These are the things that I like about it. I like the company. I can't make this commute every day again. I've gotten an offer from a company that has a seven mile commute instead of this commute. However, I also, I like this company and I noticed that you guys are offering remote jobs.

What do you think about what could we do to... I'd rather stay here than take my other offer, but I also need to make a response to them. What could we do that allows me to move into a remote job nine days out of 10?" Or something like that.

And even for you, what I would encourage you to do is make your remote job nine days out of 10 or some similar arrangement where it's not 100% remote, but it's also not making your crazy drive every day. The best job situation, in my opinion, is 80% remote, 20% in the office.

Something like that. >>Adam: Yeah, I would love it if I could just go into the mine every two or three days every other week. I mean, that's equivalent to being financially independent or retired to me. I could go visit my friends or family and take a week and go to a destination, still work, put in my time, and then walk out the door and one minute later I'm doing whatever I want.

>>Dave: Right. Right. I think that if you have another offer in hand and you need to give the other offer a response, then yes. The right thing to do is to go, communicate clearly, explain what you like about the job, and then explain what you would like to do, and then tell them, "I'd like to have an answer fairly quickly." Straightforward communication is always the winner.

Honest, straightforward communication. The response that you get is almost certainly going to be not based upon some kind of games, but rather based upon the quality of your work and your actual value to the company. They're going to consider it based upon how good you are at your job and your value to the company.

If you are a high-value employee, and if they can agree to your demands without sacrificing some other thing that's important to them, then they'll probably agree to them. If not, then you'll probably just go take the other offer. >>John: Yeah. Thank you. >>Dave: Yeah. My pleasure. I'm just glad you got another offer, and I think that you'll get untold benefits from having a shorter commute and/or having no commute, as you've identified.

After you've reached a good amount of financial capacity, then one of the best things that you could possibly do is just simply seek to expand your lifestyle, and for you, that's a big opportunity there. >>John: Yeah. I hope one of your previous episodes, you talked about your disappointment in going into new churches along your travels and not getting asked to go, "Hey, come over to my place for lunch," and "Welcome to the town," and I've often thought, "Man, you've inspired me and helped lead me in such life-changing directions that I hope to stumble into my church in Alabama, Montana, and I would like to invite you to buy a lunch." >>Dave: I would love to, but more importantly than that, what I would love you to do, and every listener to do, is to do what I have tried to do, is that when I'm in a church meeting on Sunday, if I see somebody, my goal is that no visitor comes through a church meeting that I don't invite for a meal, whether it be for a Sunday meal, in the way that I said, or sometime that week, because having been in that situation has made me just very sensitive to it.

And I think that this is one of the most important things that we can all do, is that at its core, the entire meaning of the church relates around fellowship. Fellowship among other people. And that fellowship should not be organized from the top down, that fellowship should be spontaneous from the bottom up.

And so, right, although it doesn't always happen because I have young children and they need naps and whatnot, I should generally, having a meal together after a church meeting or before a church meeting should be the most normal thing. And then it's my goal that always, if I see a visitor, I always at least extend the invitation.

And if you and I do that, and we encourage our friends to do that, and if you can learn anything from my story on that, then I think it can make a big, big difference, and it's really worth doing. And I would encourage to you, there's a really wonderful little booklet written by Alexander Strauch, it's called The Hospitality Commands.

The subtitle is "Building Loving Christian Community, Building Bridges to Friends and Neighbors." Again, the author is Alexander Strauch, S-T-R-A-U-C-H. That little booklet is so useful, and it lays out even the biblical foundation of it. But I think that one of the best things that we could do to make progress in our local Christian communities and expanding those Christian communities is to systematically practice more hospitality.

And I find that that hospitality crosses lines so well. I can invite people from any Christian nomination, I've had tons of atheists at my dinner table, Muslims, Hindus, every... hospitality is the easiest thing that's the least practiced among us where we can make progress. I hope to come through in Montana someday, but more importantly, I hope that when I come through, that you've had another 50 families in your house before me.

Love it. Thank you, Joshua. Have a wonderful day, sir. Bye. You too. Thank you for listening to today's Q&A show. I am grateful for your being here. I hope that you have enjoyed it. I know I went a little long, especially on the question about summer vacation. Remember, I always put timestamps into these shows, so if you want to switch ahead, you're not interested in the question, remember you can feel free to bounce around and listen to anything that you are interested in.

If you would like to join me on next week's Q&A show, remember go to Patreon to find Radical Personal Finance, sign up there, and I would love to speak to you next week. Thank you so much. Hey, Cricket customers, Max with Ads is included with your Cricket $60 unlimited plan at no additional cost.

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