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My name is Josh Rasheeds. Today is Friday, December 2, 2022. What a fun date. One, two, oh, two, two, two. And today we do live Q&A. ♪ I can do a round here each and every Friday when I can arrange the appropriate technology. We record a live Q&A show.

Works just like call and talk radio used to work. I publish the phone number and the phone call time. Listeners call in. You can call in and talk about anything that you want. Consider it open line Friday. You can call in. You can ask questions about your personal situation.

You can chat with me about things that you-- anything that you want. I don't screen the calls in any way, so if you agree with me, disagree with me, want to argue about something, want to discuss something, want to talk about something finance-related or off-topic, it's an open line show.

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I do that because it works really well to keep the content to a manageable amount. Usually it winds up being one to two hours, which is what I shoot for, and so I just use it as a simple screening mechanism. So I welcome you to do that. Go to patreon.com/radicalpersonalfinance, and then you'll be able to join me on one of these live Q&A shows.

We begin today with Nick in New York. Nick, welcome to the show. How can I serve you today, sir? - Thank you for taking my call, Joshua. My question is related to the order of investing. It seems that a lot of the big personal finance people, let's say like Dave Ramsey or the Money Guy show, that they propose these baby steps or financial rule of operations where you pretty much maximize first all the investments that you can do in tax-advantaged accounts, typically related to retirement, and only then, if there are funds left over, then you move it into non-tax-advantaged accounts.

I have trouble convincing myself past the 401(k) match and past the Roth. I've trouble convincing myself to go back and put more funds in a 401(k) until the maximum because I feel like I'm locking this money away for, in my case, 20 or 25 years in the future. So I haven't been doing that.

And I was wondering how you feel about this order and whether it's sort of always correct that one should maximize these tax-advantaged deferred accounts first or if there is a reasonable argument to be made about doing a lot of the tax advantage but also giving yourself some sort of freedom to be able to use funds before you retire.

- Yeah, it's a great and interesting question. So what I would say is, first, I guarantee that none of the other financial gurus actually believe that you should always prioritize tax-advantaged accounts. Now, I'll make this bet with you. We'll make a $20 gentleman's bet. If you call up Dave Ramsey and you pretend to be a, let's say, a 20-year-old guy who's making $40,000 a year who is planning to go to college next year and get an engineering degree, Dave Ramsey is not going to tell you to put money into a 401(k) or a Roth IRA.

He's going to tell you to save your money and pay for your engineering degree. And that's basically the same thing that all financial gurus will tell you. And so if you have something that you know you want to use the money for and you have a clear and specific plan of an expenditure or an investment of some kind that you know you're going to use the money for, and by putting the money into a 401(k) or an IRA, the money will be locked away, every financial guru and advisor will tell you, "No, go ahead and keep the money out." The trick is, you have to remember that most financial advice is created thinking of the generic middle, people who are not particularly clear on their money, people who are not particularly motivated financially, people who are not particularly productive.

And so much of the commonly accepted financial advice is basically just trying to get people to save money. And so you tell people to save for retirement because that's what they should do. And you can tell people, put it in an IRA so it'll be there for you when you're older.

And when you're giving advice, it's hard to go through every single specificity. But if you yourself know that you want to spend the money on something, then you should save that outside of the retirement account. Now let's talk through some of the pros, however, of a retirement account as to why those of us who open our mouth and tell people what they should do with our money feel so strongly that these are a great idea.

First pro of the financial, excuse me, the first pro of the retirement account is, I'm gonna combine a couple of things. Number one, it allows you to put the money aside, but the big secret, pre-tax, but the big secret of that in most cases is it allows you to put it aside before you touch it.

And from a behavioral finance perspective, this is so powerful. You'll find stories if you go reading in personal finance forums and chat boards and things like that, you'll find stories of some guy who signed up for his job and he took his benefits paperwork home to his dad and his dad said, "Here, let me see that." And he wrote down some marks on the paper and handed it back and he said, "Here, just go turn it in." Or dad filled out the whole paperwork for him.

And lo and behold, 15 years later, he finds out that his dad said, "I want 20% of the income to go directly into the 401k." And the kid never missed it and here he is a millionaire. And there's various versions of that kind of story. So contributing the money to a 401k or a 403b through some form of employer-sponsored plan is super powerful because it means the money never gets spent.

It just automatically gets invested. When you add to that the tax benefits, which are very substantial, the ability to defer the income tax, it's just much more beautiful. I'm particularly a fan of retirement accounts because of the asset protection benefits. I think that's the least discussed component or least discussed benefit of retirement plans.

The money in your 401k is some of the safest, most protected assets that you have. It's protected at every single state, which is unlike all of the other asset protection stuff we look for. Every single state protects your 401k dollars and they protect it from the claims of creditors.

If people sue you, they protect it from bankruptcy. It's protected. The only thing 401k dollars are not protected against are super creditors, such as the IRS, or such as a divorcing spouse. It's just a wonderful, wonderful asset. When you look at the easy investment options for those retirement accounts, they often are very high-returning investments.

Normally, we put those funds into mutual funds. It doesn't have to be that way. You can purchase real estate in your retirement accounts. You can invest in literally anything, except insurance contracts and closely held businesses that you're a part of, and real estate that you use, and maybe a couple of other exceptions.

But you can buy fine art, you can buy racehorses in a retirement account, you can put gold and silver. But the easy thing is stocks. Back to financial advisors advising that generic middle, if we can get people to buy stocks and to hold them for a long time, and to make automated investments into those assets using dollar cost averaging, we've got a really strong winning formula, especially if we can protect that money from creditors, etc.

And so this is why virtually everyone who's involved is a huge fan of these accounts. They work, they're really wonderful, and they really work. And then I would add one more thing to that. While there are penalties for taking the money out early, there are some ways you can get the money out without a penalty.

So for example, a Roth IRA, I always try to get people to contribute to a Roth IRA because you get all those benefits of the tax deferral. Of course, we're not getting a tax deduction up front, but we're getting tax deferral and tax-free growth. But with a Roth IRA, you can always take your contributions out if you need them, and there's no tax consequences.

And every single year that passes that you don't make a Roth contribution is a year that you will never be able to make a Roth contribution. So putting the money in is kind of always a smart idea. And then even when we get to 401(k)s and IRAs, while sometimes when you take them out, you pay a 10% penalty, and I don't think that's always wrong.

There are times where I have advised people to take money out of 401(k)s and IRAs. I myself have taken money out of old retirement plans when I had a better use for the money, and I view the 10% penalty as a cost of doing business. In some certain scenarios, you can get it out for useful purposes without the 10% penalty, and then sometimes the 10% penalty is actually cheaper than the tax you would have paid on the income anyway.

And so those are the reasons why so many of us are so strong, that there are a few limited exceptions, and those exceptions basically boil down to somebody needs the money now for a clear and defined purpose, and they can't save it if they put the money in the retirement account.

But every year that those retirement account contributions go unused is a year that they're lost forever, and that's why we try to get people to put the money in there. Right. Yes, I understand. I guess in my case, I don't necessarily have a very grand plan for my non-tax-advantaged accounts.

Maybe, let's say my spouse and I would want to upgrade a house in 10 years from today, maybe we want, right? Maybe we would buy a rental property, maybe we want. So that's my problem, that I don't have this specific I'm saving for college thing, that of course I'm the 529 for the kids.

So that's effectively what makes me doubt, am I doing a stupid thing by not reducing my taxes a little bit because of the increased 401(k) contributions and not enjoying these, let's say, tax-deferred growth. I wouldn't like to use the adjective stupid here because you're saving the money regardless. And so I don't think that adjective is appropriate here.

But what I would say is, if you don't have a specific and clear plan for the money, then I think you should put it into a retirement account. And because, again, one of the biggest ones that I'm, I trumpet all the time is the asset protection benefits. If I'm reviewing your financial situation, let's assume you have a healthy retirement account balance and you have a good financial situation, you have the proper insurances, etc.

So I'm not trying to do like scammy asset protection planning. I'm just approaching it with a good holistic viewpoint. If I look down and you've got $200,000 or $300,000 sitting in a brokerage account, then I look at that and I say, "How can we protect that money?" And could we put the money in some kind of company or some kind of trust?

All that stuff is expensive and a hassle and not ironclad. But if I could just get that money into the 401(k), I've protected it even from bankruptcy. And so even if you, and this is how I look at the 10% penalty, let's say that you fast forward eight or 10 years and you need to take $200,000 out of your 401(k) as an early distribution.

Well, if you were employed, I would tell you not to do that. I'd rather get it from your earnings. - Okay. - Because then it would be very expensive, right? If you had to make that contribution, you'd be paying a 10% penalty tax plus you'd add another $200,000 to your recognized income.

So the tax on that might be 20%. So we're up at 30, 35% depending on the numbers of your particular situation of a tax cost. And so I don't like that. But still, if you were unemployed, let's say you were unemployed, then I'll pay the 10% penalty all day long because it's cheaper than what you would have put the money into up front.

And we have, again, those asset protection benefits. And that's huge, right? Bankruptcy is no joke, but you can go through bankruptcy and walk out the other side with all of your retirement accounts. And so that's just such a valuable thing. So I think you should put the money in the retirement account.

And let me make one more comment. Unlike many people, I and many advisors who don't want to go to kind of the scary, conspiratorial side of the business, I myself have thought and do think carefully about even risks of retirement accounts, right? What do you give up? Well, you have zero privacy on the money.

The IRS and other government entities are fully informed about the money. There are significant risks that the tax law will change. I think it's almost certain that the tax laws will eventually change because that's what tax laws do. There are other things as well. So I don't necessarily want all of the money in retirement accounts.

I want you to have a few Benjamins stuck under your pillow, things like that. So it shouldn't all be in retirement accounts. But at the end of the day, when you stack these benefits of retirement accounts up, they're really, really strong. And so as long as you have some other things, some liquid money, some money in a bank account in another country, some gold coins in your safe, as long as you have some of that stuff attended to, it's just hard to argue against them because in any normal scenario, the tax laws are going to change slowly and Americans have come to expect that their 401(k)s and other IRAs are going to be tax advantaged.

And so any tax laws that change are going to be at the margin, at least for now, at least what I can predict for now. And those asset protection benefits are massive. So I think you should put most of the money into a retirement account. Okay. So effectively, in summary, your advice is that unless I have a very well-defined goal, then I should prioritize, in fact, the tax advantaged accounts.

That is my advice. Okay. I understand. All right. Thank you very much, Joshua. Thank you, Nick. Great call. Love it. We go to Mike in Washington. Mike, welcome to the show. How can I serve you today? Hey, Joshua. My wife's grandfather set up a UTMA account for my two kids when they were each born.

With his passing, I'm now managing those. He had them invested in some individual stocks like Meda that I'd like to get away from. As I understand it, if I sell those gains and over-- or if I sell those for a gain, then over $1,100 on tax at the kid's rate and then over $2,200 at my rate.

So also, I think I have to file tax returns for both of the kids as well. Do I have all that correct? And then if I want to move from individual stocks to low-cost ETFs, do I just have to slow sell these individual stocks over several years to avoid the capital gains?

And is the UTMA the best place for this money, assuming they want to access it before retirement? Three questions there. Short answer is, number one, yes, in the way that you've characterized the transactions. I would love to consult a chart or something to make sure because I haven't looked at the UTMA rules in years now.

But what you said sounds correct in the basic structure that's in my head. I couldn't identify any error in what you described there. So number one, yes, what you described is correct as far as I know and can remember, with that caveat that I wish I had a reference book in front of me.

Number two, with regard to moving the money from individual stocks into a low-cost ETF, yes, if you sell the stocks, you're going to incur the tax. If you sell the stocks to move it to an ETF, you're going to incur the tax. And so you need to be sure that that's the decision that you believe is in their best interest.

Nobody would fault you for that. That is a move that would stand up in court with no problem. So I'm not saying that you're not doing it in their best interest. But you should look at it. Now, as to whether you should do it in small chunks in order to avoid the capital gains tax or whether you should do it all at once, it depends on how urgent you believe the situation to be.

If you believed or had some kind of knowledge, not inside knowledge, but some kind of strong conviction that MetaStock was going to decline by 75% in the next week, then the wise thing for you to do would be to sell all of it now, incur the tax, and then go ahead and put it into the low-cost ETFs that you would like to invest in.

On the other hand, if you have just more of kind of a mild, generalized conviction that perhaps individual stocks are not the best choice for these children and perhaps a low-cost ETF would be a better choice, then it would make sense for you to slow walk the transfer in order to minimize the tax cost.

And I think the way that you would justify it, because I think that's where you are in your thinking, I think you're just saying, "Well, why do we have individual stocks? Isn't it safer and potentially better in ETFs?" And I think the way you would justify doing it slowly would simply be that this money was granddad's.

Granddad is the one who chose these individual stocks. If they were to go down, I haven't fundamentally violated his trust in any way or violated my stewardship. So I want to move these over, but I want to move them over slowly and regularly, paying careful attention to tax costs.

So I think that's how you would defend that decision. And I think it's a prudent decision. Meaning either way is fine. If you wanted to keep the individual stocks, depending on if there's any guidance or insight as to whether these are quality companies, then that's fine. If you want to move it to ETFs, that's fine.

And if you want to do it slowly in order to minimize tax costs, I think that's the justification I would use if I were stewarding that money. Then the third question of, "Is there anything else that you can do with it?" I would say, "No. The money is in the UTMA account.

You are simply the steward of the account. You have no legal rights to disburse." Let me be careful. I don't think you have much legal right. Again, I haven't read the law in a while, but basically as the steward of the UTMA account, that money has been transferred to the miners.

And it's simply being held in trust until they reach the age of majority. And then once they reach the age of majority, then the trust is going to disburse the money. So can you do anything else with it? No. The only thing you can do is manage the money within the trust.

That is your job. That is your responsibility. And that's where your authority ends. And so your grandfather made the transfer. He's using the uniform transfer to miners act type trust in order to effectuate that transfer. You are simply the current custodian charged to manage the money for the benefit of your children.

And then once they reach the age of majority, the trust will disburse the money to them and they'll go on about their life. Okay, great. Yeah, I guess I didn't really consider the stewardship responsibilities involved with UTMA. So I appreciate some clarity on that. And yet I would say a mild conviction of moving them eventually is kind of where I'm at.

So I think in the future, that's kind of where I'll go, but not rush it. You do have a legal stewardship. In fact, I can't cite these examples now because it was over 10 years ago. But when I was going through my certified financial planner prep courses, I took a prep course with noted CFP teacher Ken Zahn, amazing guy.

He'd been a financial planner for decades and he taught financial planning for decades. Just a super fun guy. And I went to his class in Tampa, Florida and worked with him through the class. And we spent quite a lot of time on UTMA accounts. And it was so interesting, the conversation with him, because the stories he had from the world of financial planning were so interesting.

And I came away from that class with a strong conviction that I would never ever recommend a UTMA account to any client. And to this day, I have never recommended a UTMA account or a UGMA account to any client. And the reason has to do with the fact that once the recipient or the beneficiary of the account reaches the age of majority, the custodian has no right to control the funds.

And this can put the custodian in a difficult situation. Let's say that you, even with your own boys or your own children, let's say that you observe one of your child engaging in an extraordinarily self-destructive pattern of behavior. You fill in whatever that would look like. And you think to yourself, "Grandfather set aside $200,000 in this trust." And you think to yourself, "Do I really want to give this kid $200,000 right now?" And you say, "It's just not in his best interest." The problem is, legally, that's what you're required to do.

And so you've got your back up against the wall. And we went through--Zahn told us about several cases showing how beneficiaries had sued the person, in some cases sued a parent who was custodian, and then in some cases sued the grantor of the trust for basically not telling about it.

And in some cases, it was even not disclosing it. And so the legislation is pretty clear, but you don't have the texture or the right to change things that you would have with a different trust structure that you've drawn up, a customized trust with an attorney. When you use the UTMA trust structure, the day you make the transfer, you've already decided what is going to happen down the road.

So I have never recommended an UTMA account or an UGMA account to anybody because of those features. It's not enough control. And when you look at what you get, what you gain from the account, to me, I haven't found the financial planning situation in which I've been willing to recommend it.

So you do have a legal duty to manage it as a trust for the beneficiaries. And while of course in the vast majority of normal situations, your children are never going to sue you, but you need to recognize that they do have rights that in some cases in the past, really horrific, awful children have exercised and sued their custodians.

Okay. Yeah, that's really valuable information. I'm going to obviously have to do some more research on this, but I appreciate your time and thanks for taking my call. My pleasure. All right. Let's move on to Tim in Pennsylvania. Tim, welcome to the show. How can I serve you today?

Hi, Joshua. You have made some comments in the past about… Oops, hold on one second. You muted yourself, Tim. I'm going to unmute you. There we go. All right. You accidentally muted yourself. You were saying, "I've made some comments in the past about…" Tim, I'll come back to you in just a second.

It looks like you're having an issue with your mute button. I'll come back to you in just a second. Alan, welcome to the show. How can I serve you today, sir? Hey, Joshua. Thanks for hosting the show today. I've got potentially probably a quick question, a technical question on a whole life.

I've got a whole life coverage, which is actually several whole life policies that were kind of opened up across several years. I've been tracking the data on them. I noticed that for 2022, the policy anniversaries of this year, all my older accounts showed no dividends. I asked my representative about that and why that was.

I got an answer. Before you put out this show, before I was able to ask them more questions on this, I thought I'd ask you because I know you really understand this and maybe you could help me understand it. The answer they gave me was pretty complicated. It seemed so to me.

They said that the reason the dividend dropped this year is due to the index protection benefit and the scheduled death benefit increase on the anniversary. And they gave the calculation for what the IPB increases were, which included CPI, consumer price index numbers. They said based on the changes in the CPI, the IPB increase for this policy in 2021 was lower than the IPB increase for the policy this year in 2022.

They said the IPB increased percentage this year is what is driving that drop in dividend for 2022. Does any of that make sense? I'm struggling. It does. I can understand it. To be clear, when you say the dividend dropped, do you mean that the rate that is credited to your policy, the dividend rate, dropped?

Do you mean that the dollar amount of dividend credited to your policy dropped? If so, by how much did it drop? The rate stayed the same. The published rate was the same as 2021. It was the dollar amount and actually went to zero. That's what was shocking to me.

And what was the previous dollar amount in the previous policy year? The largest one in 2021 was 670. Another one was 186 and another one was 97. And all three of those went to zero. Interesting. And these are traditional whole life policies? 65 life. I guess that's traditional. That just means a traditional whole life policy paid up at age 65 under the scheduled policy premium.

And how many policy years have these policies been in force? So there's a 2013, a 2014, and a 2018. And then I have a 2020 policy that did still pay a dividend this year. Okay. Interesting. So yes, it makes sense to me in terms of what those terms mean of the explanation that you received.

It's a little hard for me to know the exact numbers. And at the end of the day, you have no recourse because the insurance policy is calculating the numbers and their actuaries and the way that the internal policy design works is just, it is what it is. So we need to recognize that dividends on a whole life insurance policy are never guaranteed.

The issuance of dividends is never guaranteed. Now once a dividend has been credited to a whole life policy under a traditional whole life policy, then it becomes guaranteed. So all of the dividend amounts that have been credited to your whole life policies in previous years are now part of the guaranteed cash values.

But the payment of a dividend or the crediting of a dividend to a contract is never guaranteed. And the amount of the dividend goes up and down based upon policy performance. That policy performance is usually looked at on a generalized basis. And so the insurance company each year when it closes its books for the policy year sits down and looks at its overall investment performance on the positive side.

How well did our portfolio perform this year in terms of our investments in the general account of the company. Then they review their expenses for the company, all expenses, they view their lapse ratio, they see kind of what the policy expenses are that occurred on new lapses, and then across their portfolio of insurance policies outstanding, they then credit a dividend based upon that year's annual performance.

So that dividend is different for each policy and policy design. They usually talk about it in the form of a dividend crediting rate across basically the company's product line. But your dividend crediting rate, to state the obvious, is going to be different for your company's life insurance policies than it is for the disability insurance policies.

And it's going to be different across the board. So if you have a participating whole life insurance policy, participating means that you're participating in the dividends of the company, what they pay on their overall performance based upon those metrics I described, then that policy is going to receive a crediting rate.

But internal to the policy you still have the mathematical function of the contract. Now what are these benefits that you discussed? One is an indexed protection benefit. An indexed protection benefit is a predetermined increase in the life insurance face amount. And so on that policy, does it change on an annual basis every year?

The benefit? Yes. The benefit increases every year. Okay. That's something like a 2% or something like that? Yeah, it looks roughly, yeah, I want a 2%. Yeah, so an indexed protection benefit is basically an automatic ratcheting up of the policy face amount. And then you said the increase in the scheduled death benefit, was that just simply saying what the indexed protection benefit is or was that some separate rider that you have on the contract?

No, I think that was just saying what the IPB increased the death benefit. Right. That's how I read this. So basically what that means, when you have an indexed protection benefit, what you have is you've been paying premiums along the way for that rider that is increasing the amount of insurance.

And every year they're purchasing what in reality is basically a new small whole life insurance policy, an additional amount. And then those expenses to the contractor are credited internally to the contract. Now, all of that, that was just kind of the background of these terms. So I can understand why an increase in the policy size would lead to a reduction in the dividend credited.

But what I don't understand is why that happened this year and not last year, and I don't understand if it's going to happen next year. And so I don't know that you're going to understand because it's simply internal to how the contract is calculated and that particular rider is calculated.

But the questions that I would ask the agent or the representative from the company would be, why did this not happen? Why was it that last year I received a $670 dividend on the contract and that indexed protection benefit clicked up last year, but this year the indexed protection benefit clicked up and I'm not receiving this dividend?

And then, assuming that I keep the indexed protection benefit on the contract, what is the contract scheduled to do next year? And your agent or company representative can open the software for that company and can model the contract going forward. And so what you should do is request those in-force illustrations from the insurance company showing what they anticipate happening in the contract next year.

And then your decision would be, do I want to drop the IPB rider or keep it? And so if you value the additional insurance with those scheduled increases, then you'll keep the rider on the contract. But you need to make sure that you're aware of how the cost of that rider is going to influence the credited dividend and the changes in cash values and death benefit.

And then you'll always have the choice to drop the IPB. And so if you no longer want or need the IPB and what you want instead is the full dividend to be credited, then you can drop the IPB off the contract and just simply keep it going forward. Okay, so that's always an option and then that would lower my premium a little bit and then ideally kind of guarantee the dividend?

Exactly. Right. So the only thing that's unclear to me is why did we get a $670 dividend this last year and why did we get none this year? And so there are a couple of possible explanations. A likely explanation is you're misunderstanding something and not insulting you. There's just often whole life insurance policies are incredibly complex, right?

And so you may have thought you understood it clearly and what they were actually saying, you know, maybe you did receive a $670 dividend. It was just less than what was scheduled or something like that. Another alternative is that the company has changed something internally in the contracts or they've adjusted how a dividend crediting rate is done.

But it's hard to understand that because these at the time you take the contract out, all of these things are laid out in clear black and white in the contract. And so they're not the only thing they're changing is the dividend crediting rate. That's what they can change. The company always has the choice whether they choose to pay a dividend or not.

But in terms of how those numbers are applied, those are the same every single year. So I don't understand why you would have had a $670 dividend last year and a $0 dividend this year. And that's the question that your insurance agent needs to make very clear. Okay, perfect.

Okay. And then to reiterate, you do always have the option to drop your riders off of an insurance contract. And you always have the option to lower the amounts of the contract. And so there are many good reasons for you to do that. So for example, on all of my whole life policies, I pay a significant portion of the premium to have the additional purchase benefits on the contract.

Same with all my policies. So remember that those riders, an index protection benefit and an additional purchase benefit, those are kind of like if you're familiar with how a lease option works in real estate, where you have a lease payment and then you have an option payment. So you go to somebody and you say, "Listen, I'd like to do a lease option on a property." And you say, "I'll pay you $1,000 a month for the lease payment of the property.

And then I'd like to pay you an option payment of $200 a month in order for me to have the right at any time over the next three years to exercise an option to buy the property at a price of $100,000." And so what you're paying is an additional amount of monthly payment in order to have the option to buy the property.

If you exercise that option in the future, that's a valuable thing to pay. But what if you're one year in and you look down and you say, "You know what? I don't want this option anymore. I'm not going to exercise it." Well, if you stop paying the option payment, you're going to lose the option.

But if you've decided that you don't need the option, you're never going to exercise the option, that's fine. So on all of my contracts, because I'm relatively young and the contracts on my children and my wife, etc., I keep that additional purchase benefit on there. And that's an option payment that allows me to buy large amounts or whatever you call them, amounts.

I won't characterize them as large. It allows me to buy additional amounts of insurance in the future with no medical or occupational underwriting or financial underwriting. It's just a matter of new policies that I send them the premium check, they send me the policies. But that's pure option money.

That's money that if I don't exercise those options, that's money that will ultimately be wasted because it's an option payment. So every dollar, let's say I spend $10 a month or $200 a year on the additional purchase benefit, that $200 will not be credited to cash value. That $200 is not paying for current insurance.

That $200 is not something that's going to ultimately create a dividend. It's a pure cost on the contract. So if I reach a certain age where I look down and I say, you know what, I have plenty of insurance. I'm never going to exercise these options. Then I need to drop them off the contract in order to boost the efficiency of my total premium dollars going in.

And that's the same position you're in. If you want the index protection benefit on the contract, then that's a cost that you're paying for. And it's an option cost that's increasing the amount of insurance annually on a relatively automated basis. But the money that you pay for that is pure insurance money.

It's each year when it's paid, that's it. So if you want the policy to perform at maximum efficiency as defined by the lowest cost of premium for the maximum amount of death benefit and for the highest cash value accumulation, then strip those options off and that will increase the efficiency of the contract.

Yeah, so obviously it doesn't make any sense. You wouldn't be paying these riders all the way to 65, right? There's some point there where it would make sense to drop them. Yeah, so in many cases, it's been a while since I've reviewed an index protection benefit rider on a whole life policy with the actual contract.

But the point is that it will be modeled in the premium, modeled in the benefit. So the idea is if you want the contract value to go up each year with additional amounts of insurance, then you keep the rider on there. On the other hand, if you reach the point where you say, "I have enough insurance," or "I have enough insurance, especially if I use the dividends to buy paid up additions on the contract, which will also increase the value of the contract," then you're in good shape.

I, myself, generally speaking, this is just a general discussion, I, myself, don't usually want to see index protection benefit riders on a whole life contract. Because, generally speaking, if I buy a whole life contract, I usually have term insurance in force also. And the term insurance that's in force will cover the insurable need.

So let's say you buy $200,000 of whole life insurance and $800,000 of term life insurance. Why do we need an option on the contract that's going to go from $200,000 of whole life insurance this year up to $202,000? There's no point. I've already got the $800,000 term policy. And what will happen on a whole life contract, especially one that's on an aggressive payment schedule like a 65 life, what will happen is if you direct your dividends to buy paid up additions, then those dividends will automatically increase the death amount each year as they buy paid up addition.

What a paid up addition is, what it means is, let's say that your dividend that you received this year is $670. Now remember, you have four or five options with a dividend on a whole life policy. So option number one is you can receive the dividend in cash. They'll literally send you a check for $670.

Option number two is you can use the dividend to reduce the premium. And so if your premium is $2,000 and you get a $670 dividend, the premium will be reduced by $670. Option number three is to buy a paid up addition. And what a paid up addition is in a whole life policy, it's a single premium life policy with a premium amount of $670.

So in whole life insurance, at any point in time, you can purchase what's called a single premium life insurance policy. So you could go to the insurance company, you could say, "I'm a 40-year-old male. I'd like a $100,000 policy and I want to make a single premium payment. How much do I pay for that?" And they'll do the numbers and they'll say, "If you'll pay us $47,532," or whatever the number is, "we'll give you this single premium life policy of $100,000." And so that's what this paid up addition is.

The $670 goes back to the insurance company and the policy calculates how much insurance you can buy for a single premium payment of $670. And so that's why -- so then your face amount increases by the amount of that paid up addition. So let's assume that your $670 premium payment increases your face amount by $2,200 or $1,700 or whatever it is actuarially for that age.

So your face amount increases and that full $670 then becomes part of your guaranteed cash values because when you buy single premium life, you start off with basically immediate cash values. There's always -- if you actually went out and bought a standalone single premium life, there's always a slight reduction to account for the commissions and expenses paid at policy inception.

So if I were an insurance agent and you came to me and you said, "Joshua, here's $100,000. How much insurance can I get for that?" Then we would go to the company and the company would say, "We'll issue a $237,000 contract for you." But on day one of the contract, when you put your $100,000 in, you would have maybe $97,000 or $96,000 of cash values immediately.

The commission schedule on single premium life insurance is very, very low. But there are commissions that are paid with those kinds of contracts. So your first year of cash value, if you cash the policy out after one year, you would probably lose a few thousand dollars. After two years, you might lose $200.

And then year three and on, you've always got $100,000 of cash value in the contract and you've always then got $230,000 of death benefit. So that's what you can do with your contract is divert your dividends to buy paid-up additions. And then those paid-up additions will, over time, increase the cash values.

And with a good dividend-paying insurance company, that should be sufficient for any kind of needs for the death benefit on a whole life policy to increase. So I prefer to cover – I myself prefer to minimize riders when I can meet that need with a term insurance policy. Because if we understand that the rider is a pure cost of insurance, then why not go ahead and get term insurance so that at least if we die, we'll get the extra money instead of the opportunity for the whole life policy to go up.

Make sense? It does. It does. You're giving me a lot of two-minute noise. I thought you said we're going to have an easy question. Whole life insurance is never easy. It's complex. Thanks so much. Appreciate it. All right. We go back to Tim who got his connection working. Tim in Pennsylvania, welcome to the show.

How can I serve you today, sir? Can you hear me now? Sounds great. Yes. Great. Great. So you referenced a lot of the benefits of retirement accounts like 401(k)s and how you typically advise for younger investors to steer clear of the target date funds in favor of higher volatility.

So obviously there are tons of options within a 401(k) and where to put the money. And so when you say, oh, just balance it 90/10 or whatever, I want to say I know what that means. But where I'm at, I don't. So it's sort of a two-pronged question. Do you know any good resources for learning that sort of information?

And then also, given that that will take time, what would you do when looking for a good financial advisor to help you with that process? Those are two very different questions. So the first thing I would do quite simply is go to your local library and go to the personal finance section and grab about 10 books off the shelf.

All right. And take them home and just flip through and skim through all 10 of them. Spend about 30 minutes on each one of them just flipping through. And what you'll see in those books is a consistency and a sameness of the different features and the things that they're going to talk about.

So after you've skimmed through those books, then go back to whichever one you think was most interesting and then go ahead and read it cover to cover. And that'll take you, you know, most books, it's an investment of say, if you read at normal rate of speed, five hours, five to maximum 10 hours.

Usually those books will be three to seven hours. And that will in and of itself start to equip you with the answers to the questions that you're looking for. Then go on to the second book. And once you start to be familiar with the language of that book, excuse me, with the language of personal finance, you'll be able to go to the second book.

And instead of it taking you five hours, it'll take you four hours. And then by the time you get back to the fifth or sixth book, you'll see that basically they all say about the same thing and you'll understand the terms. So that's where you should start. Don't start with a financial advisor.

Start with, you know, 10 or 12 books picked up from the library. When it comes to stock investing or mutual fund investing, there is such a sameness across the industry at this point in time that it's very difficult for me to give you points of differentiation and feel like they really matter.

Because all of the data indicates that there's a few big decisions that drive most of your returns. And those decisions really have nothing to do with which funds you buy or the particular performance of any one particular company. The most important decisions that you make in mutual fund investing are these.

Number one, how much money do you contribute to the portfolio? That number is driven by how much money you earn and how much money you spend. So the single most important number to track at the outset of an investor's lifetime is how much money goes into the portfolio, not what the rate of return is, simply how much money goes in.

A guy who puts $20,000 into his 401(k) is going to be far ahead of the guy who puts $2,000 into his 401(k). But in order for you to put $20,000 into a 401(k), you need to be making substantially more than $20,000, which is why I spend a lot of time talking about income because it drives everything.

And then you need to control your expenses enough for you to have enough money available to make those contributions. So in the beginning, the single biggest decision that drives your results is how much money do you put into the portfolio. The second big decision that drives your results has to do with your asset allocation.

What percentage of your money goes into various funds? When we talk about 90/10, what we're referring to generally is the first asset allocation decision, which has to do with how much money goes into stock mutual funds and how much money goes into bond mutual funds. If you can put 90% of your money into stock mutual funds and only 10% into bond mutual funds, that portfolio, if the past is any indication of the future, that portfolio should over time significantly outperform the portfolio where you only put 10% of your money into stock mutual funds and 90% into bond mutual funds.

And the reason is quite simply, owners get richer than lenders. Lenders have more stability in their cash flow because they receive regular interest payments in return for their loans. But over time, owners generally get richer than lenders. And so the second most important decision is what percentage of your money goes to stock mutual funds versus what percentage of your money goes to bond mutual funds.

Now, after you make that big decision of stocks versus bonds, there are additional levels of diversification. So you could divide down into the percentage of money that goes into what are called large cap stock mutual funds or small cap stock mutual funds. You can divide the percentage of your money that goes into growth oriented mutual funds versus value oriented mutual funds.

And then from there, there's about a bazillion other ways that you can split the pie. The problem is those distinctions become very, very fine and their overall impact on a portfolio is really modest. And from there, you could pick virtually any recommended portfolio and then the next big decisions that are going to make the difference in your personal investing outcomes have not to do with your timing of the market, but have to do with your time in the market.

So you want to get as much money into the portfolio on the front end as possible. And then you want to leave it in the portfolio for as long as possible. And if you do that, you make regular contributions that activates what's called dollar cost averaging, which allows you to buy investments at over time, the lowest price that's available to you aggregated over time.

And you activate that stuff and then you just let the mutual fund portfolio alone. If the future is anything like the past, it should work out beautifully for you. So as far as putting a finer point on it to say what percentage goes in large cap value versus small cap growth, I don't care.

I literally don't care. You can go on any platform and you can say, give me a recommended portfolio. You can go online and do a web search and say recommended portfolio for 90/10 asset allocation and they'll give you something. I guess the only factor that I forgot to talk about would be the discussion of expenses.

So in investing, the other decision that can make a big difference on your portfolio outcomes has to do with the distinction between what are called passively managed mutual funds and actively managed mutual funds. Passively managed mutual funds are mutual funds that seek to reflect what's called an index and don't try to depend upon the selection of an investment manager for outperformance.

And the benefit that you get with this is you don't have to pay a bunch of expensive stock pickers. And so passively managed mutual funds will never beat the market, but they can give you the basic returns of the market. And because they have a lower expense ratio, you wind up with more money in your pocket.

If a passively managed mutual fund returns 7% but has a 10 basis point, you know, .10 expense ratio and an actively managed mutual fund returns the same 7% but has a 1.10% expense ratio, well you're going to wind up 1% ahead because you'll actually get 7 while the other guy will get 6.

Now the argument that the active managed mutual fund guy says will be that in exchange for this 1%, I can get you over time a higher annual rate. And so instead of getting 7%, I'll get 8.5%. And then even though you're paying me 1.1 on my expenses, you're going to come out ahead over the long run.

And so this is a frustrating and long running thing to debate because it changes on an annual basis, right? Some years managers do well, some years managers don't do well. More people flow into, you know, the market gets very, very efficient because lots of active managers are out looking for it, looking for ways to find great deals.

And so the market gets very, very efficient. Then there's no ability for the actively managed funds to outperform. And then everyone goes to passive index funds. And then maybe, this is just a maybe, but what I think we might have at some point if we haven't had it already is there's so much money in passive managed mutual funds that now active managers can find their, what's called alpha, which means outperformance, a little bit easier.

So this is an endless debate. I'm open to either, but generally the safe recommendation is to go with passively managed mutual funds because it lowers your expenses. And since expenses are guaranteed and outperformance is not, that's kind of the safe recommendation. So I'll steer people generally towards passively managed mutual funds.

But with that, within that, you really don't need much. And so you can find various permutations on this, right? You can go to, you know, you can pull up the Boglehead's Guide on Investing and they'll give you an asset allocation. You can find who's popular, the guy in the, Jim Collins, right?

My long ago friend, Jim Collins, who wrote the book, The Simple Retirement Solution, something like that, where he recommends basically you buy the Vanguard Total Stock Market Index Fund. And I really don't care and I never talk about it because we're down to such a fine kind of, after those big decisions of how much money do you make?

How much money do you spend? How much money goes into the portfolio? What percentage goes to stocks and bonds? Do you put the money in and leave it? What are your expense ratios, et cetera? The percentage of money that goes into the return of one particular market sector versus another, it changes every year.

And so you basically just want to find some way to hold it and virtually it kind of all works out. So any model portfolio is good enough. Whatever platform you're on will give you a model portfolio. They'll give you a recommended mutual funds. And if you follow those big rules, then the other is just, you know, small shades of impact.

And since there's no way to predict in advance what those shades of impact are, I just don't bother spending much time publicly on it. The only, the time when this would change, let me make one thing very clear. One of the reasons I'm quite cavalier about this is quite simply it doesn't matter during the early accumulation phase.

Remember that in an investor's life cycle, in the early years of accumulation, what matters is amount of assets put into the portfolio and time left to cook in the market. But as the portfolio grows, the rate of return matters much more. And so when you start to get a large portfolio, that's where you should intentionally consult experts.

You should intentionally look for better performance metrics on your portfolio. Quite simply, if you have $100,000 of investments, the difference between a 5% annual return and a 7% annual return is $2,000. That's not much when you can make another $2,000 pretty easily in most cases. If you've got a million dollars of investments, the difference between a 5% return and a 7% return is $20,000.

The difference between $50,000 and $70,000 in a year. It starts to matter a lot more when you have a $10 million portfolio than the difference between a 5% return and a 7% return is the difference between $500,000 and $700,000. So in the early years, it's not worth spending excessive amounts of time trying to figure out how to get a little difference.

Now, if there were an easy way to go from 5% to 7%, okay. But the reality is, what you're dealing with, especially in the world of stock market mutual fund investing, is often 20 basis points of outperformance. 50 basis points of outperformance. 0.20%, 0.50%. In some cases, 1% or 2%.

So the most important thing in the early years, make as much money as possible. Shovel as much money in. But then as your portfolio grows, you need to keep up your self-education habit to be better and understand these. And then start to consult knowledgeable investment advisors who can give you their opinions and then grill them to try to find somebody that you believe in.

And then start to follow their advice. And that's where they can apply mathematical precision and better models and apply those things to your portfolio and possibly get you the maximum efficiency and the maximum return possible for your money. But it's in that later accumulation phase where that stuff matters the most.

That last part was invaluable to hear coming from an over-analyzer. Yeah, that's the mathematical argument as to why I spend so much time saying make more money. And especially when we're talking about stock market mutual fund investing. Remember, there are vast amounts of money being spent to hire the smartest people in the finance sector from the smartest places in the world.

Immense amounts of computing power, etc. being put at this money space to try to find the tiniest bits of benefit. I mean, it's shocking how much attention is paid on it. So, finding that bit of outperformance, being able to tweak your portfolio just a little bit is so difficult in our current modern investing landscape.

But for the average person to go from making $100,000 a year to $200,000 a year just requires a few basic behavioral changes and a little bit more focus put on the career. So, that's why I spend my time on that stuff because I believe it matters so much more.

Did that help you? Very much so. Thank you. Good. Great question and I appreciate your calling in. Now for a limited time at Del Amo Motorsports. Get financing as low as 1.99% for 36 months on Select 2023 Can-Am Maverick X3. Considering the Mavericks taking home trophies everywhere from King of the Hammers to Uncle Ned's Backcountry Rally, you're not going to find a better deal on front row seats to a championship winner.

Don't lose out on your chance to get a Maverick X3. Visit Del Amo Motorsports in Redondo Beach and get yours. Offer in soon. See dealer for details. We go on to Twin Cities, Minnesota. Welcome to the show. How can I serve you today? Hi. Thanks for taking the call.

I've been talking to Northwest Mutual agents about getting a whole life policy for my six month old child. One of the ones that you've talked about before. How should I think about how much the benefit should be and what do you think about structuring it so it's paid up after 15 or 20 years?

The benefit, how much benefit you can get is going to be limited first of all by the underwriters of the company and how much they're willing to offer you. Those numbers will be based upon your financial ability. Let's pretend you're dead broke and you make $30,000 a year. They're not going to give you a $200,000 policy on your child.

On the other hand, you've got a couple million bucks, they'll give you a $200,000 policy. Minimum policy size for most companies is probably something like $25,000. The first thing is you're not going to get up to the big numbers until or unless you can defend those numbers and demonstrate why you have this much insurable interest in the life of your child.

The second thing is you're going to want to think about this in terms of your personal insurance portfolio. How much life insurance do you have and how much life insurance does your wife have? Two and a half million and one and a half million. Okay, so at two and a half million, one and a half million, you could probably get $25,000, $50,000, $100,000 on your child and those numbers when compared to your portfolio would not be out of sight.

The next question would just simply be what am I willing to pay for? This is a balance because remember that whole life insurance policies for children are not a great cash move in the beginning. They're life insurance and you have to balance this with all of your other competing financial goals.

How much money am I going to put aside in an insurance contract for my child for life insurance that might pay out in hopefully 110 years? Well, if I'm not doing anything else for my child, that number should be pretty low. If I'm not putting money in a college fund, if I want to pay for that.

If I'm not setting aside money to help with buying a house. If I'm not buying mutual funds and putting money in my child's Roth IRA, etc. That number should be pretty low. So, I oppose the use of whole life insurance policies for children as a primary wealth building tool.

If the future is anything like the past, then you would vastly outperform by doing something like buying a house for your child and owning that for many, many decades. You would vastly outperform by helping your child to generate earned income as a child and putting money into a Roth IRA, putting into mutual funds.

You would vastly outperform by purchasing mutual funds, just even in a taxable account or any other investments. You'll vastly outperform by putting money into your own retirement accounts and maxing those things out. So, I don't want to sacrifice those other things that have a higher expected return over the coming decades and decades than a whole life insurance policy.

I want to identify what whole life insurance is and remember it's life insurance and it's not generally the highest performing investment product. It can be good as a component of an overall portfolio. It can be wonderful to have an insurance contract for a child, but it's not a primary wealth building tool.

It's a supplemental add-on that over time will grow its cash values and will give you insurance coverage for now. So, now when you look at that, I think it puts things into proper perspective. That's the lens that I want to view. So, you look at your budget and you say, "What would make sense for me in terms of how much money I have available?" So, for most families, if you spent $500 a year on a contract or $1,000 a year on a contract, it's not going to cause your other investment goals to suffer.

It's not going to be the difference maker and it allows you to have this financial product that has the benefits of death benefit, has the benefits of additional purchase benefit, etc. It allows you to have this financial product and so you've got it. It's good. It's a component. It's there.

So, that sounds like a wishy-washy answer, but that's how I look at it. I can't come up with any particular formula that could be applied. We can't do a needs analysis on a child because the child is not generating income. So, we can't do a needs analysis. You could say, "Well, what would I want to do if my child died?" "Well, I want to pay for a funeral." $25,000 is way more than you would need to pay for a funeral, even a very, I guess I won't say even a very expensive one, but you could do that.

Or you could say, "If my child died, then I would want to have enough money to set up an institution or a foundation to honor the name of my child." That stuff makes sense, but there's no real formula that I can come up with that makes sense. It's not a needs analysis formula.

It's not a—there's just no mathematical model that really makes sense. So, I look at it, and I just shoot from the hip, pick a number that sounds good. This makes me feel good. Again, if you're making a good amount of money, what's the point of having a $25,000 policy?

You're going to want something bigger. If you make $250,000, what's the point of having a $400 annual premium? You're going to have a $1,500 annual premium, something like that. And so, it's kind of wishy-washy. I understand that, but I would just pick a number that seems appropriate to you and sounds good to you.

To your second question, as far as should you build a policy that is quick paying, or should you pay the premiums on a longer term? It doesn't really much matter. I have not had insurance software in my hands in over a decade now—excuse me, in almost a decade. And so, I don't have these.

So, this is a decade ago that I used to sit and do this stuff. And so, here is the challenge. I'll give you the clear, precise, mathematical answer. When you quick pay a contract, a life insurance contract, and for the uninitiated, quick pay means you bunch the premiums up into the front of the life insurance contract.

So, instead of stretching them out for the entire lifetime of the insured, you push them all to the front of the contract. That's one definition of quick pay. Another definition of quick pay is basically when the contract can become self-sustaining, when the dividends can pay the premiums for you.

So, when you compress those premium payments, generally speaking, that has a positive influence on the performance of the cash value returns in the contract. Whereas, when you stretch the premium payments out over a longer time, your cash value accumulation is slower. So, when you are building a life insurance contract for cash value accumulation and you want maximum efficiency from the contract, then you quick pay the contract.

So, when people are selling aggressive whole life insurance policies, and aggressive is not a, I'm not being pejorative, I'm just saying these are aggressively constructed for cash value accumulation. You'll often pop those premiums down to 10 years, 8 years, 7 years, etc. And the reason this is the case is simply the more time that those premiums are in the reserves of the company, the more interest they can pay on them and the lower the expenses that are charged to the contract over time.

Now, there is a limit in life insurance law that is called the 7 pay test. So, if you pay a contract in fewer than 7 years, then the contract becomes what's called a modified endowment contract, a MEC in insurance slang, a modified endowment contract. What happens when a policy becomes a modified endowment contract is that it loses your ability to take out cash values on a tax advantage basis of basis first.

So, many years ago, when life insurance, one of the basic benefits of life insurance is that the premiums, excuse me, the cash values in a life insurance policy, what's called the inside build up of cash values, are tax deferred until they come out. So, they're tax deferred, they grow tax deferred.

And in life insurance law, death benefits on a life insurance contract are always tax free under current law and under all historical precedents. It could change, but life insurance has always been tax free. So, I didn't mean that sound fear mongering. It's not fear mongering. Life insurance death benefit proceeds are income tax free to the beneficiary.

By the way, if you're wondering if I'm using too many words, I promise you I'm not. These words are precise and they have to be precise. Why did I correct myself? I said life insurance tax proceeds are tax free. Well, that's not true. Life insurance proceeds can often be subject to estate taxes, but life insurance death benefit proceeds are received income tax free by the beneficiary.

That is true. So, I have to be precise. Back to the modified endowment contracts. So, years ago, back a century or more ago, wealthy people would use life insurance contracts as a tax shelter. Congress didn't like it, so they changed the tax rules. And what they said is if you don't put money premiums into a contract for at least seven years, then we're going to take away the ability that you have to make distributions from the contract tax free that you have on other because you can take out basis first and loans against the policy, etc.

So, they created this new law. And then a component of the test, we call it the seven pay test, is that there is a ratio between premium payments to the contract as compared to the total death benefit of the contract. And you can't break this ratio. You can't put in more premium payments than will work with a certain ratio to the death benefit.

So, you have to buy a big enough insurance policy for this actually to be life insurance and not to be a tax shelter, basically. Because previously, there was a lot of business with these endowment contracts and you would buy a policy and it was just a tax shelter. So, those are now governed by the seven pay test.

So, when you are aggressively funding a life insurance contract, you have to have a balance as to the total amount of premiums that can go into it as compared to the death benefit. So, you have to have a big enough death benefit for you to be able to get your premiums into it and you have to do it over a significant amount of time.

So, let me pick up the pace. The point is what happens with these contracts is that if you want a policy for cash accumulation, you can put the money in faster. But you wind up with a total less capacity for the contract. So, your total premium dollars that you can put in over seven years are a lot lower than the total premium dollars that you can put in over a longer period of time.

So, for a cash-heavy contract, that's the smart move. But if you want to get total premium dollars in, then you put them in over a longer period of time because you can get more premium in. And so, this has to do with what are you designing the contract for.

So, if you want maximum death benefit and you want maximum long-term accumulation and you want to get as much money into the contract as possible, you need to stretch out the premium payments. On the other hand, if you want the highest efficiency, then you put the premium payments in quickly.

In reality, this only makes a big difference when you're dealing with something on a couple-decade timeline. So, if you've got a guy who wants to fund an insurance policy really aggressively and put premium payments in for 10 years, then he's going to let it sit for 25 years and then just start taking all his cash out.

Then, yeah, you want to quick pay that contract. But whole life insurance contracts are best seen as a very long-term affair where your focus is on the long-term death benefit for your beneficiaries. And then if you're going to take out the cash value through one of the mechanisms, you take it out towards the end.

It's the later dollars. It's not the early dollars. It's the later dollars. And so, if you extend your payment period and you look out on your timeline long enough, then it's fine. So, with children, this is especially important because – or this is – it's not really that big of a difference because on a child contract, the expenses often outweigh even the amount that goes to cash accumulation.

So, in the contracts that I own on my children, we've got waiver premium for disability. I've got additional purchase benefits. And then I've got the base contract premium. So, if I look at my total premium amount, only a little bit is actually going to the policy. So, the differences in the outcome are actually pretty small between, say, 65 life and a contract that's quick paid over 15 years or 20 years.

It's just a small difference. The final comment of why you quick pay a contract is that if you structure a contract to have larger amounts of additional premiums, you wind up paying – the insurance agent receives a lower commission rate than – on the additional premiums than on the base premium of the contract.

So, insurance agent does receive some commission on the additional premiums, but it's a very low number compared to the commission rate that's paid on the base premium. So, basically, when you write a contract with a lot of additional premiums and you quick pay it, then you wind up lowering the commissions to the insurance agent.

And so, that helps it to be slightly more efficient. All right. Forgive me. I know that was too long. What's the end result? The end result is I don't really care. It doesn't really matter because the changes are generally so small that it just doesn't really matter. And you have to look at it and say, "Am I trying to – what's going to be more important to me?

To be able to put premiums into this for 17 years and get the maximum return, say, at age 25? Or would I like to be able to put premiums into this thing for 40 years or longer?" And so, I have done it both ways on my children's contracts. I should pull them up and do in-force analysis and see what kind of what's ended up.

But I've kind of gone back and forth and I've come to the point where I've said it really doesn't matter. And in general, assuming that these contracts are 80-year contracts, 100-year contracts, I just assume to be able to make premium payments at least all the way to 65. And so, I do like what is technically a quicker paid contract, a 65 life or something like that.

I've done shorter-term contracts, but I've come to the conclusion that it just doesn't really matter. These are shades of distinction that are so modest, it doesn't really matter. So, what you should do is tell your insurance agent to model both of them. Model a contract that has an expected premium paying time of 17 years and then model a 65 life.

And if you look at the cash accumulation values, if you look at the death benefit, and you look at the total premium that you can get into the contract, then you can look at it and you can consider what might be best for you. Forgive me if that got a little bit too long, but that's the answer to your question.

Okay, thanks. So, my thing about, definitely I was sold on locking in, you know, you said in previous episodes, locking in insurability and having that, you know, that's the main reason to get it. So, if I'm not using it as a way to give my kid money, it's more just that insurability.

Does that change a little bit? Or do I rather leave flexibility out longer? It's kind of same, same. I mean, either decision is fine. It doesn't matter. And I can't imagine an insurance agent in the world that's jumping up and down on his horse saying, like, "This has to happen." When you're just buying a generalized life insurance contract and you're buying it for the longer term, and it's one of those things where you hope you never need it, hope you never want it, it's just going to be one of those assets in your portfolio.

These distinctions are very, very small. I can't say you should go in one way or the other. I like, one of the things I like about those old traditional life insurance contracts is quite simply, like, their guarantees are so good. They've been around for hundreds of years, basically. Like, they're unchanged.

They're just stable. They're rock solid. They're old, conservative. Nothing's going to change. They're all, like, they're all buttoned up. And they work. And it just, I don't, I don't, the short term stuff doesn't really care. I don't care. Now, to be clear, like, I don't like, I have never seen a life insurance contract that I thought was a good idea for college funding.

I've never, I've never run one where I said, "Yeah, the numbers on that really make sense as compared to other options," or any kind of short term stuff. There are good reasons to aggressively fund life insurance contracts. I just don't think they make a lot of sense for, for children.

And so, either way you go is fine. I can't, I can't tell you that one is wrong and the other is right. It's like buying a Toyota or a Honda. Like, which is better? Pick. Doesn't matter. Okay. Okay. Okay. Thank you. My pleasure. All right. We go on to Texas.

Welcome to the show. How can I serve you today? Hey, Joshua. This is Ruben in Texas. I wanted to applaud your reading capabilities on your story podcast here lately. The last one, I really enjoyed it. Thank you. And I wanted to ask you, wanted to talk about balance today.

Get some ideas from you. I work at a full time job in the energy industry and I'm very related in the ag industry. That's really where my forte is, but it's such a good job. I don't want to just let it go until I've got a good sounding board to jump off of.

But I'm trying to build up a consulting consulting bit, but I'm struggling with the last balance with the three kids, three young kids. And just sometimes I feel guilty, you know, running 60 hour weeks and then going home and, you know, just to get in my personal truck and go on service calls.

And I take the kids with me occasionally. We get the time together, but just trying to find some kind of a balance idea and kind of an end goal, end game. I know you seem to be very dedicated to what you're doing and it goes a long way. That's very influential on me and I want to thank you for it.

But just wanted to get some thoughts or insight from you. It's not easy and I've thought about it and I'll give you the models that I have, but it's hard to know. First of all, I don't think there's really ever a balance that can be achieved. I mean, we could beat this metaphor up, right?

In balance, you're technically always off balance. You're technically always correcting one way or the other. And so at every stage in life or at every kind of point in life, there's going to be an imbalance of some kind. If you're going to make big money and you've got a high job, you can't have that perfect balance with everything else in life.

If you're at a point where your family duties are intense, you're not going to be able to... it's not going to be the time to build a big business. So I think that balance is elusive because it really doesn't exist for anybody. Rather, I think a more useful consideration would be something like seasonality.

And this is a concept I have an entire podcast that I did on seasonality one time and the importance of the concept of seasonality. If we think about seasonality, my family comes from an agriculture background and we'll use the ag example. If you go around Texas at harvest time or you go to Nebraska and harvest time, there's not a farmer out there that has balance.

I mean, he's out there from as soon as it's dry enough for him to harvest until the dew sets in the middle of the night, right? So he doesn't have balance. He's got a time to harvest. And then it's the same in planting time. But if that farmer... when's a good time to sit down and visit with that farmer?

You get to about January and he's doing pretty good, right? Depending on the nature of his farming, he's ordered his seeds for the next season, he's got time. And so he's got a season of winter and a season of summer, a season of planting and a season of reaping, etc.

Now the challenge with our modern life is that as we have gotten away from the elements, we've gotten away from the seasonality of the year, we've gotten away from any kind of influence from weather patterns, we've gotten away from all that stuff, then we're basically expected to be always on.

I don't know if you remember, there was an old Garth Brooks song that... I forgot the name of it. Man, I haven't heard that in 20 years. There's an old Garth Brooks song about farmers out on the porch and damn this rain, damn this wasted day. And he goes back in and there's his wife standing in the kitchen with nothing but an apron on.

And all of a sudden he realizes I've had everything out of whack, right? And it's a great song because it kind of speaks to this like, oh, the weather's come along and erupted me and it's allowing me to focus on this thing that's actually important. And to me, so in the modern age, we've got to recognize that with electric light, we're expected to be able to work 24 hours a day.

With a cell phone on our hip, we're expected to be reachable 24 hours a day. With the constant capitalistic system around us, it's just more, more, more is always required. And so the only way that you can escape it is to put a guardrail up and say, this is what I will do.

And so I think the only answer to the balance question is to say, what season am I in right at this moment? And what am I willing to do and what am I not willing to do right now? And then you just simply make the work or make the other responsibilities fit that.

So with children, I look at this and I say, there's a season, for example, when a man is single, I think you ought to work like a maniac. If a man is married, I think you ought to focus on his marriage relationship. If he doesn't have children, though, that's a great time for starting businesses, etc.

If a man's got young children and they're not super into him right now, well, this is a time to be focusing on working more. I think if you've got a 12-year-old son or an 11-year-old daughter or something like that, those are such precious times that I would really love to be avoiding starting a business.

I'd really love to avoid working extra, etc. I need time. I need as much time with that creature as possible. And then when that creature goes off to college or is out of my house, then's the time to pour on the work. Unless you need to, right? So imagine I've got a 12-year-old and a 10-year-old and a 14-year-old.

They're all at a great age where I'd like to spend time with them. But if we're broke and I got to go to work to pay the bills, that's my responsibility. There's no question about it. So hopefully we can keep mama home or hopefully we can have another family member that's going to speak into the life, but I've got to feed this child.

And so my comment is just what season am I in? And there are seasons in which it makes sense to start businesses and seasons which it doesn't make sense. There are seasons in which you need more money. There are seasons in which you need less money. And the key is to prioritize and say, "What do I need to be doing right now?

Is what's best for my family to be making a lot of money right now or is it better for my family to put money down as a lower priority and to put time on a higher priority?" And the only right or wrong decision here is going to be based on your priorities.

And I think you should even be very subjective in this. How are my children doing? If I've got a child who seems to be doing well, I'm satisfied. He's in a good school. He's got great teachers. He's got great family around him. He's got good friends. He's doing well.

All right. I don't need to be spending 40 hours a week with this child. On the other hand, if my child is cutting himself and is surrounded by bad influences and is wondering whether he's going to be -- and I'm wondering if he's going to be on this earth a year from now, then cancel everything.

Quit the job. Pull him out of school. Put on some backpacks and get to the Appalachian Trail together and spend six months on the road. And I'll go into bankruptcy before I let that child kill himself. And so, like, taking an honest assessment between -- of where you are in terms of the family health and your health, et cetera, is the only solution.

And we could take that example to even your own health, right? I'm healthy. All right. I'll do 60 hours a week. I'm unhealthy. I've got to take care of this or stress on my marriage. It's not -- having a side business is not worth getting divorced if you've got enough money coming in.

So I look at it and I simply say you've got to make your priorities and you've got to say, you know, for this season, what's right for us this season based upon our family vision, our resources, et cetera. And you're never going to find balance, but you're going to go back and forth among those things that are most important to you.

Excellent. Thank you. Thank you very much. So I think I'm going to back off the work a little bit and get that time at home and try and get this business going. All the kids are young, 1, 3, and 5. They're really into mom. Let's say they enjoy my company.

Right. Of course, they enjoy your company and your wife enjoys your company. But I will say if you're going to get a business going, 1, 3, 5, this is the time because you can work for the next few years as long as she's got the support that she needs and the help that she's got.

You can work for the next few years. And that 5-year-old, when the 5-year-old turns 8 or 9, you'll appreciate having the freedom. If the business goes off, you'll appreciate the freedom a lot more. And so there's no perfect formula. I've often wondered what my life would be like if I had figured out kind of the FIRE movement when I was in my teens and I had been able to be a financially independent guy before I ever had children.

And I've often thought, right, I think most fathers probably have, you think to yourself, "Wouldn't it be wonderful if I just had all the money in the world and I was totally retired and I could be a full-time dad?" On the other hand, I'm not sure it would be the case.

And I'm stereotyping here. But in general, my observation is that most people who are super into FIRE either don't have any children or they get one or two. And so they're often, many of them, very devoted fathers, but they have a different approach to that subject. And so I look at it and I say, "It's fine." But I want my financial and my time flexibility the most when my children are in that range of 8 to 12.

And those aren't hard numbers, but I really want it during that time. Before 8, not so important for me as a father as it is at 8 and to 12. And then in those teenage years, they're going to be much more in charge of their own time. And so it's not just max time with dad that's the case.

It's more thoughtful time with dad. I guess one other comment. If you're in a season where you've decided you need to work, I think it's important to put things into historical understandings. Because we've gotten pretty soft in our modern age. The normal requirement of work of most peoples throughout history has been 7 days a week, sun up to sun down.

That's pretty much normal. If you are in a Christian culture where there's a Christian Sabbath or a Jewish culture where there's Sabbath or Friday for the Muslims or whatever, where there's a day off, then 6 days a week. But the normal work week for most people for a very long time has always been 10 to 12 hours a day, 6 days a week.

And so we in our modern age are blessed to often be able to do a little bit less than that. But I don't feel bad working 6 days a week. Now, you can make the counter argument to that to say there was a lot more of a communal aspect to raising children in other cultures.

A lot of times there weren't parents that invested in their children as much as possible. It was a very different parenting style, etc. But if for a season you need to put in those hours, go for it. If you feel like this is the right time to back off, go for it.

You don't get a prize for dying with the most money. And if you look back at the end of your life, the thing that you're going to... The crowning pride of parents, of most people who are older, is usually the success of their children. Watching your children succeed is a much more gratifying thing when you're 85 or 105 years old than is having the nursing homeroom that's 20 by 30 instead of 20 by 15 because you got an extra $300 a month.

Or having a little bit more money in your retirement account. So, over the long term, the money doesn't matter, but the pride you feel in your family matters. And so, I wouldn't do something that would cause you to think that you're getting bad results. Perfect. And that's kind of the end game.

Get it to where I can be there more in that young part of their life, when they're really opening into the world. So, I appreciate the input. My pleasure. I'm going to have to go look up that Garth Brooks song and see if I can... "Somewhere Other Than the Night." That's what it is.

"Somewhere Other Than the Night." She needs to know you care. "Somewhere Other Than the Night." She needs to know you're there. Something like that. Now for a limited time at Del Amo Motorsports. Get financing as low as 1.99% for 36 months on Select 2023 Can-Am Maverick X3. Considering the Mavericks taking home trophies everywhere from King of the Hammers to Uncle Ned's Backcountry Rally, you're not going to find a better deal on front row seats to a championship winner.

Don't lose out on your chance to get a Maverick X3. Visit Del Amo Motorsports in Redondo Beach and get yours. Offer in soon. See dealer for details. All right. We go to Orlando, Florida. Welcome to the show. How can I serve you today? Hey, Garth. So, the question is in regards to learning a second language.

I've appreciated all the content over the last couple of years you've shared about that. The successes of your children, especially your son, who's reading and everything. My question is, you know, in regards to that, but it's kind of nuanced. Basically, it's would you do anything different or do you have any specific suggestions for a situation in which your kids are not old enough to read yet?

I guess, I'll just five, you know, she's reading, you know, Jill likes to pet her cat, that type of stuff. But the other kids, other two kids are younger. And also, in a context, it would be Spanish, but I'm interested in teaching them. But I'm also interested in learning Spanish myself, you know, took three years of high school, one year of college.

So, I recognize a lot of words and stuff, but not fluent. I know when you originally started teaching your kids Spanish, you are fluent. I think your wife is too. But I'm not to that point, and my kids are not reading. So, I'm just kind of wondering if you had any specific suggestions around that or anything you would change versus the things you talked about previously?

Absolutely. And I have extensive experience with both of that. So, one of the things that was an interesting experiment with me and my kind of family, so for context, right, I have four children at the moment outside of the womb, right? I've got a nine-year-old, a seven-year-old, a five-year-old, and a three-year-old.

And my nine-year-old wasn't a fast reader, but he read at kind of a normal time. And I'm hemming and hawing here because I want to be cautious. In the modern age, we tend to assign labels of like fast and slow when those labels are unnecessary, right? If your child learns to walk at 10 months or if your child learns to walk at 12 months, your child learns to walk at 14 months, is it really fair to characterize that age at which the child learned to walk as slow or early or late, etc.?

None of that is late. This is just a normal variation of human development. Now, if your child learns to walk at six years old, yeah, that's late. And clearly, you're dealing with something that is outside of the norm, far outside of the norm. But whether your child learns to walk at eight months or 12 months or 16 months, I don't think the labels of early and late are really necessary.

And I feel the same way for reading. In general, we love it when our children—we think—well, we usually love it when our children can learn to read at an early age, but often that's just to make us feel good as parents. And that's not necessary. So, characterizing a child who learns to read at six or a child who learns to read at eight or a child who learns to read at 10 as kind of early or late is, I think, just not particularly useful.

And I think it's also important to note that the age at which a child learns to read has very little bearing on the long-term reading success or even academic success of the child. There's really no academic evidence saying that if my child learns to read at age five, that that child is a better reader at the age of 11 than a child who learns to read at seven.

So, I want to be careful with these. My nine-year-old learned to read—I wouldn't call it early, but I think something like seven, by seven, or six, about six—and progressed pretty quickly into advanced literature. The scale went from struggling reading lessons—there was a time my wife and I would just set it aside and just skip it for a while, come back in a year and start again—and then kind of read the beginning stuff, and then it just clicked.

It was the funniest thing. We were at a—the way we knew that the reading had worked, we were at a Bible study one time, and I think he was six, and the person who was leading the Bible study called for a volunteer to read something, and I had given him a Bible, and he just started reading it.

My wife and I looked at each other, reading it out loud to the group, and we said, "All right, well, we're there. Done. We'll move on to the next thing." So, he was an aggressive reader—I think maybe that's a better term—and so that result, that also transferred over to foreign languages.

However, my second child, my daughter, she seemed like a much slower reader. Of course, you have a sample set of one or two or three, and I'm not a professional teacher, and there were many times we worked on the reading lessons little by little. It wasn't clicking, wasn't clicking, so we set it aside, came back a few months later, tried again, wasn't working.

And there were times that my wife and I started researching dyslexia, wondered if she was dyslexic, etc., and finally I was like, "No, probably not." So, we just—anyway, didn't freak out. Recently, she's finally started reading, but her pace of advancement is very different than my eldest child's. So, we'll see with each of them kind of what their pace is.

So, I have a sample set where I had one reader who had spectacularly fast results, but I continued with the language acquisition for my other children. And what I've observed is that the reader's results are about twice as fast as the non-reader because of the efficiency of reading as a way of gaining input.

Let me explain this just for a moment, and then I'll get to the practical techniques for a non-reader. One of the reasons I talk about reading as an efficient form of language acquisition is, quite simply, it's the words per hour of exposure are higher than virtually anything else. And so, reading is the highest words per hour that you can be exposed to.

So, if you're learning vocabulary and you're learning grammar by words per hour, you'll get twice as many words per hour from an audiobook, as you will from a TV program or a movie. Because when you have a visual program, you have lots of dead time that is filled with on-screen stuff where there are no words.

So, it's much more efficient to read audiobooks. Then you get a reader, and once you get a reader reading at normal rates, you're probably reading at about twice the rate of the audiobook for a mature, experienced reader. So, your word per hour exposure is very, very high. Of course, it's slower with foreign languages because you're grappling with unknown vocabulary, perhaps an unknown script, etc., but it's a lot faster.

And I've observed that, that my eldest, who reads well, has basically twice as fast acquisition skills as my second child, who's very smart, but doesn't read as well. And so, I have not pushed her to read in foreign languages because we've really wanted to cement English first. But that doesn't mean that language acquisition can't be done with the same principles.

And so, I have effectively taught my other children, the three non-reading children, Spanish and French, through exposure. And I use the same methodology that I've talked about publicly of bilingual translation, just simply reading them stories. Read a sentence in Spanish, translate it to English. Read a sentence in Spanish, translate it to English.

And then, once I test, after some time of doing that, when I think they have enough comprehension, then I simply turn them on to listening to me read exclusively in the language, or just simply listening to audiobooks. And so, I have curated a lot of audiobooks, and I play them for the children.

And so, back to kind of stages. My seven-year-old has acquired languages probably twice as fast as my five-year-old because of larger amounts of listening time. So, once I got her to understanding, then I started requiring her to simply listen to audiobooks on a daily basis. And we just stick this in.

It's not super excessive. Usually, it's something like 30 minutes, 45 minutes, something like that. But I just put it in on a daily basis. And the way that we've handled this as parents is I have wanted my children to nap until the latest age possible. And every child is different, but we've pushed through to try to keep naps going for a fairly long time.

And that's usually turned out to be about the age of six. And I believe that one of the best things we can do for our children's overall health and development is C to high-quality sleep. So, abundant sleep in a very good sleep environment, abundant naps, and great sleep at night is one of the best things we can do for their health and for the development to produce strong, healthy children.

And especially with teenagers, I think one of the best things we can do with teens, although I haven't done this yet, but we need to make sure our teens get sleep. We're, as a society, allowing our teens to stay up late at night and then requiring them to get out of bed early in the morning to go to school.

And having this massive sleep deficit, this is really, really bad. And we're killing our teens' bodies and their chances for growth and maturity, etc., by not fixing that. So, then what I've done with my older couple of children is once they reach about six, and it's very natural, like they just stop taking naps.

Some children earlier, but with my others, it's been six with my older two so far. Then I switch them to, they're required to do quiet time during nap time so that my wife can get a break. And that quiet time winds up being one to two hours. And so, we listen to audiobooks in that period.

And so, I give a series of audiobooks. I choose books that she'll like, and I require her to listen for about 30 minutes in Spanish, about 30 minutes in French, and then we can switch to English from there. And that builds up over time to the point where she has excellent comprehension.

And then if when possible, you can bring in an activation point that's ideal, but it's not necessary in the early years. And so, just that technique of bilingual translation of stories and then adding in audiobooks is all that I've done, and it has worked very, very well. And I think it can work for you.

And then, I guess I'll add one other thing that I have done. About a year ago, we started watching movies. Up until then, we had done zero screen time. But I was concerned with the fact that my children had developed this idea that somehow we're better than other people because we don't have any screens.

And I was like, "Well, we're going to end this." So, we started watching movies. And it was nothing that my wife, you know how children are, it was nothing that my wife and I had ever said. But they'd had this idea that because we never watched a movie, we never did it, that somehow there was something bad about watching a movie.

So, we started with the old Aristocats from Disney. And so, what I have done is I have used movies as a way of trying to get more foreign language exposure as well. And so, Disney+ is really good with this because Disney+ has all the movies, especially the old ones, in a lot of languages.

And so, what I do now is we watch one movie a week, about three weeks of the month, right? Three out of the four weeks. And then what I'll do is we play the movie one time in English, then we play it the second time in Spanish, then we play it the third time in French, then we play it the fourth time in German.

And then we kind of just rotate through. And because I introduced this early enough, I haven't gotten any pushback. Like, they expect it. They think everyone does this. Someday they're going to discover that not everyone watches movies in all these languages. But using kind of old Disney cartoons on Disney+ with all the languages has been really good as well.

And so, that is a good way of kind of giving them a chance to use the language, to absorb the language in another context that is also useful. And that's been enough. And so, if you can arrange something like that, that's been enough. And I would say that if you had those semesters of Spanish in the past, you should have enough Spanish ability with a little preparation in some case to start reading to them.

And you'll pick it up very, very quickly and get better very, very quickly. That's helpful. The seven-year-old audiobooks that they listen to, that's purely in the foreign language, is that correct? Not purely. Not translated? Oh, correct, correct. It's all in the foreign language, not translated. Correct. So, you're reading to them yourself and translating and listening to audiobooks that are 100% in the foreign language.

Right, right, right. So, just to be very practical. So, I'll tell you specifically what I do. And the goal here is just to say practically what I do. So, I have a… Right now, my goal, my personal goal, although it's not generally met, my goal is to read to my children about two hours a day.

But I can't do that… Excuse me, let me use proper language. I don't do that all at one sitting. So, what we are currently in the habit of doing is that in the morning, we get up, we come to the breakfast table, I play… This year, we've been listening to an audio Bible.

So, I play that daily. We use a daily audio Bible reading. It winds up being about 10 to 15 minutes. I call them to the breakfast table about 10 minutes early while we're still setting the table, finishing up the food. We listen to about 10 or 15 minutes of Bible reading for our daily Bible reading.

Then we eat. I, of course, eat pretty quickly. So, then after we eat, I have a series of books that we read. We read… I have a catechism book that we work through with an older catechism. That's interesting. It takes about four or five minutes for me to do that with them.

We read poetry every day. So, we follow the Ambleside Online kind of poetry scenario. And so, this… we're reading Longfellow poems right now. So, I read a poem every day. And then I read in the morning. I read… Right now, we've been reading Magic Tree House in French for months and months.

And those… that's really nice because usually I'm in a hurry to get to work in the morning, but the chapters are about seven or eight minutes. So, total, that winds up being the total amount of reading between an audiobook, audio Bible book, and the other winds up being about 30 minutes in the morning.

Then I go home at lunchtime. And at lunchtime, we have lunch. And again, I read to them at lunchtime. And so, we'll usually read a chapter. I have a bunch of Spanish books where I usually read in Spanish at lunch. So, again, that winds up being about 15 minutes or so.

Then at dinnertime, I'll go home around five o'clock. And then the children are with me from five to six. I'll get their baths done and everything like that. And then I'll generally read to them. So, we read a lot in English at that time because they're just… we have an embarrassment of riches.

There's so many more better… so many more books and so many better books available in English for children than any other language in the world. And so, I've got such a long list. I'll read to them right now. We're reading Far Away… Gone Away Lake. Right now, we're reading the Elizabeth Estes books of… the name has escaped me.

And so, all these books. I'll read to them usually for about 30 minutes before dinner while my wife is making dinner. We'll sit down. We'll eat. And after we've spent time at the table, I read to them again at the table. So, after dinner as well. And so, we'll grab another book.

And right now, we're reading the Penderwick series in French to them after dinner. And then, that's usually it, although sometimes I'll read after dinner. So, if I put all that together, then it winds up usually being somewhere between one to two hours. But I sprinkle it throughout the day, and then I sprinkle a lot of the stories.

And so, we have about eight to ten books going at any one particular time. And then, we touch each book a couple times a week. And I didn't used to do that. But once we kind of started on the Charlotte Mason philosophy of homeschooling, one of the things that Charlotte Mason teaches in terms of her old philosophy is you want to choose really high-quality books and then stretch them out.

And so, instead of just burning through books as fast as possible, you want to stretch them out so the child can live with the story for a longer period of time. And so, we do that in their schooling. With their school books, we have anywhere from… I mean, it depends on the child, but we have a couple dozen books going at a time, but they're stretched out, and this allows the child to spend more time with them.

And so, I even do that just in simple pleasure reading. And it seems to work really well because instead of getting tired of one story or one series, just keep it all very mixed up, and it works well over time. So, I wind up reading for 20 minutes, 20 to 30 minutes in Spanish, 20 to 30 minutes in French.

We've been doing German. I got behind on creating audio for them, but I would poke in some German lessons here and there in that schedule as well. But by stretching it out through the day, and I'm fortunate that I can do that from working at home, that's practically how I do it and what I specifically do.

Very helpful. I appreciate that. I'm going to try to buy some books and start implementing that. And then I'll go back and buy another. Yeah. Maybe I'll have some extra cash for that. Do you have book lists or things that you're working from? I don't. I need to get some.

I know you mentioned some of the graded readers and stuff for Spanish. Yeah. I got to go back and listen to that or dig that out, unless you're going to tell me something now. But I got to get running. I just got home from work and I brought dinner, so I'm being beckoned in.

Absolutely. Go ahead, and I'll mute you out so you can hang out, and I'll just simply give two minutes of advice while you go. What you need to do is for your Spanish, go ahead and look for graded readers, because if you had some semesters in Spanish, then you can just simply start with graded readers and you'll be able to translate those with no problem.

And then there are so many wonderful book lists available for you in English. And then what I do is I take those book lists and I just try to see what has been translated into Spanish. Spanish is the most accessible language. French has a huge volume of literature as well.

German is huge. German is one of the highest literary cultures out there. If you get to other languages, it's much more difficult. If you're trying to find books in Urdu, it's much more challenging. But in those basic kind of European languages, it's really, really simple. So take the book list titles and then go to Amazon, search for the title of the book, or search for the author, and then insert the word, say, Spanish edition.

And that will help you to find out if that book is available in Spanish, and then you can order it in and go. So that's how I do it. In English, there are so many good book lists. There's "Honey for a Child's Heart." If you're looking for on good book lists, I love the book list from "Books that Build Character" by I think Fitzpatrick is the author of that.

There's great book lists in the "Read Aloud Handbook" by Jim Trulise. Just search book lists, and there's so many good ones that you can choose from. But read your children. It will pay off. We finish up today with Daniel in Texas. Daniel, how can I serve you today, sir?

I'm doing well, Joshua. Thanks for having me on. So I'll give you kind of a general approach, and then we can dive in as you want. So my general question is, how do I, based on my personality and inclinations, which is not super entrepreneurial, I'm somewhat drawn to it, but I don't just have to be an entrepreneur.

How do I kind of balance figuring out if I'm cut out to be an entrepreneur based on the things I'm drawn to about it, but I'm not? As I've done stuff, I haven't been driven to just work crazy hard to make it happen. Does that make sense? Yeah. Why do you think you should be an entrepreneur?

So I'm obviously drawn to the financial benefits of it. I'm drawn to the aspects of being able to bring in, especially young men, for what I'm looking at, and being able to kind of train them and give them potentially a career and help them grow into profitable members of society.

I'm also drawn to the aspects of building generational wealth and even building a generational business that I could hand to my kids or at least have them work in with and on, and being able to potentially do something cool that I'm interested in, right? Being able to get to do what I want.

So that's what draws me. But like I said, I also don't have the deep, just, I've never been the guy who was like, I just can't work for anybody else. I've got to do my own thing. Do you have a specific business idea that you're trying to get going?

Yes. So at this point, I am working on starting a decorative water feature business. So koi ponds, fountains, waterfalls, that kind of thing. And at what stage is the business? It is, I'm working on getting clients. I've already spent some money on training and marketing and such. But do you feel like you're struggling with your motivation to do the work necessary to make it succeed?

Yes, it's definitely a motivation thing that goes from, I'm super excited about it, and let's go to, I have zero motivation to do anything with it. Well, I don't know that I have a perfect answer, but I'll share with you a little bit of my experience. I think when I was younger, I used to beat myself up a lot more.

I think many, many of us do. Right. We say, well, I should do this and I should do that. And we expect a sense of perfection from ourselves. We expect ourselves to always be on, always be productive. And we expect a sense of perfection. I don't know where the line is between kind of letting ourselves off the hook and not living up to our potential versus being realistic.

I don't know quite know how to do it. There are times in which I think we're well served by picking ourselves up by the scruff of the neck and forcing ourselves to do it. In fact, I think that that should be a regular, regular thing that we do. For me and also for my children, we're just talking about children, like I don't want my children to be ruled by their feelings.

I intentionally want, I do intentionally insert into their lives things that they have to do that they don't want to do. And I call this like I need to do something every day that I don't want to do because it's important for me to learn how to discipline myself, dominate my feelings and do what I need to do or what I've decided to do or what I've committed to do, regardless of how I feel.

You know, forget the feelings. I don't, I'm not going to be ruled by my feelings. On the other hand, I believe that feelings, quote unquote, contain a lot of information that is very useful if we analyze it from an appropriate perspective. So procrastination, for example, you know, Dan Sullivan wrote a book that I really appreciate a number of years ago called Procrastination Priority.

And his basic point was we're all procrastinators and there's no point in going through your life thinking that someday I won't be a procrastinator. We all procrastinate. But in procrastination, there is important information. So if we learn how to not judge ourselves for being procrastinators, then we can absorb the information from that.

I think also sometimes we take the idea of forcing ourselves to do the things that we we need to do much too far. How many people are there out there who they have something that just flows for them, where they feel like when I do this, time disappears. And yet they're trying to force themselves to do something else, where if they would kind of home in on their genius, on that thing that they do, that just allows everything to flow and to work well.

What better results they would get? And so I think that motivation is something to pay attention to. And the reason I say is like, why do you want to be an entrepreneur? Is I have in my own entrepreneurial journey, I have come to recognize something I didn't want to recognize in years past, which is that most people probably aren't cut out to be entrepreneurs.

And it's just such a different, like you have to be able to force yourself to keep pressing forward and ignore kind of the difficulties. And so I think that most people aren't cut out to be entrepreneurs. And that's not, that doesn't mean that there's anything wrong with them. There's nothing superior about being an entrepreneur to somewhere to not being an entrepreneur.

There's no morally virtuousness about entrepreneurship. It's a, it's a, either a personality type or a motivation, like someone who has a clear motivation or an idea that somebody is so enthusiastic about, etc. And I, so I don't think anyone should force themselves to be an entrepreneur. I have certainly been very enthusiastic at many times about entrepreneurship because I genuinely believe it solves so many problems.

But I have, I have wondered if I've, if I'm overly enthusiastic about it. And there are days in which I've asked myself, Joshua, are you even one that's cut out to be an entrepreneur? And usually those days are few, they're not every day, but there are there. And I think that's the normal thing.

So I guess what I would say is, first of all, you may or may not want to be an entrepreneur. And if you continue, and let's say you're six months from now and you look down and you realize, you know, I don't want this, then be honest with yourself and recognize I don't want this.

On the other hand, there are many ways to be an entrepreneur. There are many ways to accomplish what you're trying to accomplish. And sometimes the, we, we get fixated on one approach and there's another approach just kind of sitting there waiting for us. And so I would urge you don't think that if you're looking at results and you recognize that maybe this particular way of doing this isn't working out, but if I did it a different way, it might be better than just pay attention to that.

Because maybe, maybe you are beautifully intended for entrepreneurship that is a perfect fit for you, but the particular application to which you are engaged is not right, or the particular expression of entrepreneurship is not right. And so don't be afraid to kind of keep looking and use the cues of your motivation and analyze them and ask yourself, why am I not feeling motivated right now?

Is it because this particular thing is not right for me or is it because of something else? And I guess the third and final point I would make is quite simply, as an entrepreneur, you're probably, a great entrepreneur probably doesn't like most things that you currently consider yourself to be, that you currently consider to be a fundamental part of the entrepreneurial journey.

And another thing back to Dan Sullivan again, right? Dan Sullivan is a great book called The Self-Managing Company. And in that book, and it's a concept that he teaches, he goes over in his first step that he teaches entrepreneurs. And for context, the reason why Sullivan is so important, I consider him kind of the world's premier entrepreneurs coach.

That's who he works with. And he's done it for very long and he's a genius at working with entrepreneurs. And so people go and they enter into his strategic coach program and he works with them. And when I went through the first, I mean, it was really eye-opening and he speaks the language of entrepreneurs.

And one of the things he does in The Self-Managing Company and also in his overall coaching program is he teaches you how to divide your tasks based upon their emotional impact to you. Not based upon how important they are, not based upon whether they should be done, but based upon their emotional impact to you.

And you divide your tasks into three emotional zones. Zone A is things that are irritating for you. So here are those tasks that this is just really irritating. I don't want to do this, accounting or bookkeeping or calling back customers that are unhappy or something like that. Those are your A zones.

Then your B zones are things that are just OK for you. It's OK for me to go out and do estimates. And then Zone C, your Zone C emotional zone, is things that are fascinating and motivating for you. So maybe you love selling designs or maybe you love mentoring young men who are on your cruise.

Your Zone C tasks are those that are fascinating and motivating for you. And then he teaches the pathway to entrepreneurial freedom is for your A zones, you eliminate all of the activities that irritate you. Get rid of them. Anything that irritates you, get rid of it. Just get rid of it completely.

For your B tasks, you delegate them or you automate them. You delegate or you automate all of the tasks that are just OK. And your goal is to spend 100% of your time on activities that are fascinating and motivating for you. 100% of your time, the goal is to spend 100% of your time on things that are fascinating and motivating for you.

And then as far as how you get there, there's a system for how you get there. But that's the goal. And so all entrepreneurs have businesses that are a bundle of things that put them in different emotional zones. So if you're irritated by the work that you're doing, thus you're not motivated.

That's just information. Don't judge it. It's just this is irritating to me. This is not me. On the other hand, there are other components of your work that are fascinating for you. And so the journey of entrepreneurship is to process, is to work your way down that pathway to where 100% of your time is spent on things that are fascinating and motivating for you.

And it's possible. Now, the trick is it's probably in most businesses and most startup phases, it's not possible in the very first year or in the first couple of years. So Dan Sullivan, although he coaches entrepreneurs, his minimum, like he won't allow anybody into his program who's not making at least $100,000 a year on their business.

And the reason for that, I think it's still $100,000. It was $100,000 when I was in it. But like you had to make at least $100,000 on your business. And his reason was that you basically, if you can't figure out how to pluck yourself up by the scruff of the neck and muscle your way through to at least $100,000 of profit, then you probably still have to learn those basic lessons.

And he can't take somebody or he doesn't try to take people who haven't gotten to that level and then go on to the next level. So in most entrepreneurs' journey is there's basically a period where you're scrambling around, running around, doing everything and kind of brute forcing your way to profitability and then to livability.

But then to go to the next level, that's where you start to work it through. So I don't know how to coach you on kind of those irritating and okay and fascinating and motivating things other than to say that as you figure out this stage, you can get to that next stage and you can adjust your business to where you spend either all or substantially all of your time on those things that are fascinating and motivating for you.

And that's why most of us start businesses because entrepreneurship gives us the freedom to enjoy increasing levels of freedom in all areas. And those increasing levels of freedom involve our financial freedom, but they also involve our freedom of relationship, our freedom of time and our freedom of purpose. And sometimes you're going to muscle your way through.

But once you figure out how to muscle your way through, that is waiting for you. The promised land is there. You just got to get through the desert to get there. Sure. Okay. Well, that's definitely helpful. Part of it is definitely like I've done the task of imagine your perfect day kind of thing.

And I've never really been able to put that together. And so I'm not a super like, like I said, a driven person or emotional person. So lots of things are fine to me so long as they're morally fine and pay the bills. Like there's a lot that I can just deal with.

But I also don't want to spend the next 40 years of my life feeling like, well, I did a bunch of okay stuff that was mostly to pay for the rest of my life. And that feels like a massive waste of 40 years. So kind of trying to figure that out more.

So here's what I would close it out with. I would say this. Try to analyze honestly where you are with this particular business and recognize that many entrepreneurs start and try and do multiple businesses before they find the business is the right fit for them. And only you, like you get to determine the meaning of the events in your life.

Meaning is all subjective. There is no objective meaning to what happens in your business. You are the one who gives those events or those facts, those happenings, the meaning that you assign to them. So if you and you're the only one who knows even what your experience of those things is in your business, as you look at it, ask yourself, do I like this?

I don't like this. Why do I is it? Would I be well served by just sucking it up and doing something because the basic weakness is a character weakness or I'm not acting with integrity towards myself and doing the things I need to do when I need to do them?

Or is this just feedback for me from the marketplace and opening a business, starting a business, working at it, and then realizing I don't want this business anymore. The right thing to do is not to just muscle it out for four more years. The right thing to do is close it and move on to the next thing and then and then learn the lessons from that business and say, OK, here's the thing.

Here are the things I really liked about that business. Here are the things I really didn't like. Let's just quickly iterate on to the next opportunity and and go and create a better opportunity. And this has to do with the big subject of failure that it's very difficult to in our modern world.

Most of us, especially who've been through, I'll blame the school system, but I want to be careful with that. But we were taught that failure is a bad thing when in reality, failure, quote unquote, is primarily just feedback. And if we rearticulate failure as feedback, it's a much healthier psychology.

And so study your business and ask yourself, do I want to keep doing this or not? If you don't want to keep doing this, just quit it and move on to the next thing. And if you don't want to keep doing this, just quit it and move on to the next thing.

And if you don't want to keep doing this, just quit it and move on to the next thing. And if you don't want to keep doing this, just quit it and move on to the next thing. And if you don't want to keep doing this, just quit it and move on to the next thing.

And if you don't want to keep doing this, just quit it and move on to the next thing. And if you don't want to keep doing this, just quit it and move on to the next thing. And if you don't want to keep doing this, just quit it and move on to the next thing.

And if you don't want to keep doing this, just quit it and move on to the next thing. And if you don't want to keep doing this, just quit it and move on to the next thing. And if you don't want to keep doing this, just quit it and move on to the next thing.

And with that, we come to the end of today's Q&A show. What an interesting diversity of questions. Y'all are the best. I love these shows. And so I would love it if you call in with another diverse set of questions next week.