We move on to Kansas. Kansas, welcome to the show. How can I serve you today? Thank you. Thank you, Josh, for taking my call. I have a quick question about how to, uh, I guess, accumulate a large sum of money, decent down payment on the house. Um, our income on a yearly basis is pretty good, but I'm just not seeing how we can both live comfortably now and save a good enough down payment without making a huge sacrifice, like moving in with family or a huge decrease in lifestyle.

So I was wondering if you could advise on how some people might get this done. So the question basically is how could we free up more money in our budget so that we could accumulate this big chunk of money, right? Yeah. Or, or even make more money. I mean, like my career, but I could, I could do better, I guess.

Household income is about how much? Uh, breaking up just a little bit, one Oh what? 108. Great. And your normal monthly living expenses in your current lifestyle are about how much? Uh, maybe we could modestly, we could, we could get by maybe about 5,500. And how old are you and your family?

Uh, 38. Wife is 38. You're married and both of you are 38. Do you have children? We do. Yes. How old are your children? Uh, one is out of the house. Uh, so three in the house, uh, 14, 12 and 11. Okay. Uh, of the $108,000 of income, how much do you earn and how much does your wife earn?

It's all me. She, she doesn't work. And you're currently renting a home? Yes. Where do you live? In a suburb of Dallas. Okay. How much do you have saved right now? Kind of embarrassed to say, uh, only a couple of thousand. Okay. And do you have investments say like 401k IRA, things like that?

No, no. We, uh, we, I had some years and years ago we cashed them out and just haven't, haven't contributed in anything since. Do you owe any money on anything? You have car payments, credit cards, anything like that? Student loans? Student loans. That's it. How much are the student loans?

Uh, I think between the two of us, somewhere around 80. Okay. And the monthly payment on those, how much? Um, right now maybe, maybe 150. I think it's another, it's 150 and something. It's very small. Okay. So you're not paying those off aggressively or anything like that. You're just paying them systematically and going to leave them on their normal schedules, right?

I mean, yeah, obviously I would love to do it sooner than that, but we're just, we've got that goal and we've got saving for a house and we're just like, how do we get traction in any direction with, with all the things that we want to do? How much money do you need to save for a house?

Uh, about, I'd say probably about 20. $20,000? Yeah. Okay. And what have you tried that has not worked up till now? Well, uh, the first thing was, uh, just trying to, uh, to just save a little bit here and there to put towards debt. So we paid off the credit cards, car loans.

We've, we've been doing that. So that's kind of where the extra has been going so far. But, um, with the larger amounts in the student loans were just like, if we just, keep going after debt, it might be a couple of years before we can get to start the saving.

Cause I was wondering if we should still just go that route or should we start, you know, just, I don't know. I'm kind of, we're stuck here. Okay. So the numbers of your situation are pretty respectable. So let me begin with what I would say is probably at the core of it.

And I'm going to do it by asking some questions. These weren't, these aren't original with me, but I believe they're really, really useful. So let me ask you a question. You right now, you have a 14 year old, a 12 year old and 11 year olds. You're 11 year old boy or girl girl.

Okay. And you love her. I would imagine, right? Yeah. Okay. So I want to play a game. I want you to imagine that your wife just calls you. She's just left the doctor's office where she's taken your 11 year old girl. And she tells you that she has some pretty bad news and she asks you to sit down.

She informs you that the doctor has just told her that after some very detailed tests with 100% certainty, your daughter has a very rare terminal disease. And this terminal disease exactly 12 months from today on December 22, 2024, it will kill her no matter what this disease has a 100% fatality rate.

There is zero chance of her survival beyond 365 days from today. Now there's good news and bad news. The bad news of course, is that she's going to die. The good news is that there is an antidote. There is a treatment that is available. The bad news of the treatment though, is that it's expensive.

It costs $20,000 and the guy who developed the treatment that has a 100% cure rated absolutely will save her life as long as it's administered sometime prior to December 22, 2024. This will save her life, but the guy who develops it hates government and he hates insurance and he hates charity and he hates debt.

So you have to pay for the treatment out of pocket and it costs $20,000. You cannot borrow money to pay for it. You cannot get government money to pay for it. You cannot ask for friends and family to pay for it and health insurance will not pay for it.

You have to pay the $20,000 out of your own savings from money that you earn and do not spend. So as a father, if you were presented with that scenario, do you think that it would be possible for you to, over the next 365 days, save and accumulate $20,000 in order to save the life of your 11 year old girl?

Yeah, yeah, I would. You absolutely would, right? There's not a man in the world who would not. Every single one of us would. So if that is true, then what it shows us is simply that this question is primarily a matter of, this question that you're asking me is largely a matter of importance and emotion rather than of something technical or financial, right?

It's a matter of if it matters to you enough, you will do it. You haven't saved this money for a down payment prior to now because it has not been important to you to do so. If it were important to you to accumulate $20,000 to buy a house, then you would do so.

And it's totally fine. There may be many good reasons why it hasn't been important to you up till now, but if you want to accomplish this goal, then what you need to do is you need to dial up the intensity of the emotion so that you really, really care because if you really, really care, you will find a way to make this happen.

So let's pretend that the emotion is super high, right? And there's this weird scenario and you really have to come up with the $20,000 to save the life of your daughter. What are some of the things that you would do over the next 365 days in order to accumulate this $20,000?

Okay. I think one would be look for ways to earn more. Even if it's, you know, overnights, weekends, whatever I got to do in addition to my full-time job. I guess even prior to that, I'd be combing through the budget with a fine tooth comb and cutting every Netflix and, you know, subscription and this and that, that I had kind of going to bare bones, you know, wherever we could.

Yeah, those are the two things that mind first cutting expenses and increasing, you know, what I bring in. Right. So those are your options. And so basically when we're dealing with something that's on a one year timeframe, so let's go back to the radical personal finance framework for wealth, right?

There are five things that you can do with money that will build your assets. The first thing that you can do is increase income. That's step one, increase income. Number two is decrease expenses. That's the second part of the framework. You can decrease expenses. Number three of the framework is invest wisely, invest wisely.

And we can go on for avoid catastrophe. Number five, optimize lifestyle. On a one year timeline. The only two things that matter are one and two. You can't invest on a one year timeline successfully for a goal like this and avoiding catastrophe and optimizing lifestyle is completely separate. You're trying to optimize your lifestyle by purchasing a home.

So you have two levers that you can push the lever of increasing your income and the lever of decreasing your expenses. And the question as to which of those levers you push has to do with what your opportunities are and how committed you are to the outcome. So you can be hardcore.

For example, you could increase your income by working more hours and $20,000 is absolutely a goal that you could accomplish by working more hours. Years ago, I forget the name of the guy's blog, but there was a guy who had accumulated a huge amount of student loan debt. He was living in Texas and he created this, he decided he was going to get out of debt, set himself a hardcore goal to get out of debt.

And he had a normal 40 hour a week job, but he wound up building this side hustle business on the weekends of basically installing, I think it was like installing, I had a caller last week that was talking about like water features, something like that. He was doing some kind of construction work and he started out just doing it for a friend as a day laborer.

And then he figured out that he could do it. And so he would spend his weekends installing things and he made thousands of extra dollars from doing just basically weekend handyman day labor work, but where he was actually making real money, installing landscaping or something like that. And so there's any number of side hustles that's available to you.

Some people will go out and they drive for Uber on the weekends, they deliver pizzas, they go and do landscape work, they pick up a night shift, they do all kinds of night and weekend work. And that is one way that you can save and accumulate more money. I don't usually recommend a lot of that stuff because the longterm return of those things is not often great.

And I prefer to have you focused on your career and say, how can you go from $108,000 to $158,000 over the next two or three years? That's generally where I spend most of my time. However, for a short term goal like this, if you can find some kind of side hustle on the weekends that works for you, then that can be a great winner.

A lot of times there are things like tutoring. There's any number of just basic ways to make money, extra money on the weekend with assets that you currently have, the car and the driveway, things like that, where you could, you could save and accumulate, you know, $20,000. And by the way, you may not even need to do the full $20,000.

If you made $500 a weekend and you simultaneously were able to cut $1,000 a month from your budget, then you would be there basically in the course of 12 months. And so there are ways that you could do that. That would be the first thing to increase income. There are other short term things that can be done.

So what could you sell? Do you have a bunch of junk in the house that you could sell? Do you have a do you have a car that you could sell, right? Maybe you have a car that you don't need and it's worth $30,000 and you could replace it with one that would be worth $10,000 that would do what you need, but you could get 20 grand.

Well there's 20 grand that you could free up for a down payment on a house. Look at other assets that you have in your home. So for example, is there a way that your wife could earn money? Does she really enjoy photography and you have a good camera? And if she just told her friends, Hey, I'll do, you know, baby pictures or things like that for you guys that she could go out and she could make three, four, $5,000.

Could she bake bread and sell it to all the neighbors? Could she, is there, could she do something with her skills? Does she have professional training? That if she worked for a little time here and there, there's some things that she could do. I often don't love to get stay at home moms to focus on that because there's so much more that they can often do from a cost savings perspective and a lifestyle perspective.

But if she's doing it for a year, that could be a great move. Also with the age of your children, your children are very rapidly approaching independence. And so unless you're homeschooling all the time, then she may have time and she's been a stay at home mom for a long time.

But now maybe there's some new, again, family business that she could start or some new enterprise that might bring in five or $10,000 this year and, and be a good longterm winner. So look around and see what do we have? Well, we have time, we have stuff, we have skills, et cetera.

Don't neglect focusing on your career. Go to your boss and ask and say, Hey, you know, I've got some unexpected expenses. I need to make more money. Um, you know, is there something that I could do if you haven't recently negotiated? By the way, this is so full stop on that thought.

Uh, is there something I could do? Is there a bonus that I could get? Is there a performance metric that I could hit? Is there some way that I could increase my income really substantially because I have a need to make more money? Now, full stop separate from that.

Then you, I ask you, have you recently negotiated your pay? Have you gone out and looked for jobs? A lot of times I have found that many of my clients, I'll get them just to go out and look for jobs, take a couple of interviews. They'll get an offer and someone like you, you might be making $108,000 right now.

They've got an offer from someone that was making say 142, uh, something that's related to them. They don't really want to switch, but now you can go back to your current boss and you can say, listen, I've got a job offer here for, for, from a competitor for $142,000.

You know, I don't really want to go there, but I really need to make more money for my family. And sometimes your current boss will go ahead and match the match the offer. Um, you have to remember that if you're a good worker and you're, and you, you're worth your money, that for him to replace you as much more expensive than it is for him to pay you another 15, $20,000 in a year.

And so that would be something that you should consider. So basically for short term thinking like this, for an aggressive one year goal, you really want to look and say, what are the big short term wins that I can make? Can I work extra hours? Can I do side work?

Is there something that I could do related to my career? Can I renegotiate my current income? Can I get another job offer and then come back to my current boss? Can I sell some stuff to raise the money? What can I do? That's, that's number one is increase income.

Number two is decrease expenses. And so decreasing expenses is, has kind of the modest version and then the extreme version. And you would choose based upon what's appropriate for where you are at this point in time. The modest version is what you said, okay, we're going to cut Netflix.

That's great. It'll save you $240 at the end of the year. I don't know if that's, that's not going to get you to $20,000. So you need to go through the budget really carefully and say, is there a way that we could cut expenses? Now the challenge that you will face in doing that is that the expenses that you probably have are things that are investments into your children.

So you've got sports clubs and team fees and, you know, jujitsu lessons or those kinds of things. And, and you have to balance the value of those as compared to what you're spending on it, but do go through your budget and reassess. What I love to do and try to get people to do is you go through all of your expenses for the year, order them from biggest to littlest and then tackle them in that order, because that's where you can often get the biggest wins.

I don't want you to start with the little skipping coffee stuff. That's good. And you can do that, but I want to look for any big wins. And so you talked about moving in with family because normally housing is one of your biggest expenses. You can calculate the price of that.

I don't know if that's something that you should do or shouldn't do, but it is true that ordinarily, if you're stuck where you are and you can't figure out a way to get ahead, you should work with family. And I'm a hundred percent in favor of, you know, the family unit, et cetera.

But there's a reason that immigrants who are willing to do unpopular things get ahead a lot faster than those of us who have grown more comfortable. And so it's very normal that multiple families get a house together. Everyone doesn't have much space and immigrants who have that like hardcore, we'll do whatever it takes mentality, get ahead very quickly.

So if there's a family member that you could go and stay with for six months, that might be all you need to make this happen. If you eliminated your rental payment for six months and simultaneously you eliminated your, you know, your, your internet bill, your water bill, all the, you know, all the stuff that could make a difference such that three or four or five, six months from now, you could be able to be in a position to where you could afford to buy a house.

Also, by the way, that can be something, excuse me, that's something that's really smart for you to consider because it could make it easier for you to actually make the transaction. And so let's say that you're coming up on the end of your lease at the end of February, and you could get out now, put your stuff in storage, et cetera, and you could go and stay with family and start house shopping while also saving money.

And you could just say, we're cutting everything down. That plus the stuff that I've already said, for example, selling a bunch of stuff, maybe you could raise $5,000 from garage sailing. You could raise $5,000 from extra income and you could save $10,000 in three months of, of, of staying at your parents or something like that.

That's not that hard of a choice. If it means that you're quickly at a goal, I would have no fear about doing some anything for three months. That's perfectly fine. Three years. Okay. That's hard to recommend, but three months could be perfectly fine. And then by already being out of a lease that then when you find a house, you're ready to move quickly and it's just a simpler process.

So I think that idea has a lot of merit as long as you could get there quick enough. And if you could find something that's appropriate in terms of somebody's ability to help you, by the way, one of the things that I like about this is this does allow family members to help you in a way that often they can't otherwise do when people don't accumulate money.

As most people don't, it's hard for them to give cash gifts, but they can give very valuable gifts often in doing things like saying, Hey, come and stay with us. We'll put some extra cots in the, in the, in the study for the children to stay on or they can have bedrolls on the floor and we have one extra bedroom.

And, you know, after all, they're at, they're at school all day anyway. So let's just get, make it happen. And oftentimes someone in that position would say, I'll, even if my electricity bill goes up a hundred dollars and my water bill goes up a hundred dollars, that's fine. I'll cover all of that because that's an easy way of contributing to the family or, and you just cover food or something like that.

And so doing something really radical like that could potentially give you quick action. Now then you just go down the list and you systematically renegotiate each of the things that are on your list. And so how can you defray options? It may be the other way around. It may be that you could bring in an extra border into your home right now.

Maybe that you could park, you know, somebody could pay you money to park in your backyard or something temporarily. Look and say, how can I use the house to make a little bit of money, but go through the expenses systematically and cut them to the bone. And then finally, I would just say that you mentioned, okay, I'm not saving much for retirement or anything like that, but I think it'd be perfectly reasonable for you to stop doing any investing for retirement on a short term basis to accumulate for this kind of goal as well.

So some variation of those couple dozen things is probably going to lead you to where you want to be. Now, whenever possible, my final kind of tip is this. If it's possible, uh, and, and whenever there's some kind of extreme lifestyle change, I do always look for a way to justify it to the best, you know, possibility.

So I always look for kind of a radical way to optimize it. So here's the example. Maybe it doesn't, maybe right now it's December, but are your children in just kind of a normal industrial school or are they homeschooled? They're in a normal public school. Perfect. So you have, maybe it's here we are in December and you have, you know, January, February, March, and April, but I don't know.

Maybe your wife is from, is your wife from Texas as well? Or is she from some exotic foreign country that I can use as my example? And no, she's from the U S bummer. All right. Well, next time, Mary, uh, Mary in Italian or an El Salvadorian or something like that.

And the point is that sometimes there may be ways that you could do it. And so you might do something like this summer vacation, maybe June, July, August. And what you do is you terminate your apartment or your current house in, um, in April, and you send the family to go and live on an organic farm in Mexico.

While you stay at your parents' house for three months and everyone's going to be homeless for three months, but it's only the summertime. They're down there in language school and working on the, on the woofing farm. While you're kind of working like mad going a hundred and 120 hours a week at three jobs.

And then at the end of the summer, then you're in a position to where now we can go ahead and move into, uh, into a house. And so what I'm looking for is a way to basically pull radical ideas, but then make them optimal. So it may not be super fun to say, let's go and all live in one bedroom at dad's house.

That may not be super fun, but if it's the summertime and maybe your eldest can go to grandma's house and then your wife and two younger children can go to grandpa's house and where they're going to be volunteering at a summer camp, uh, et cetera, something like that, then that may be the time that you can be homeless for a few months and it's, it's okay.

And as long as you have a backup plan, cause you may not be able to find a house or negotiate it. So as long as you have a backup plan for what happens in August when they're back in school or something like that, then that can work. So look, think strategically about where is my family?

What do we have? What can we get rid of? What can we, how can we adjust? What resources do we have, et cetera. But at the end of the day, recognize that it's going to be your emotion and how much you desire this goal that's going to drive your, your actual decisions.

And probably you don't have to do all of these things to the max. What I have found a lot of times is if you will set this as a clear intention and a clear goal, what will happen is you'll this month, you'll find $500 a month that you can cut out of your savings.

Sorry, a cut out of your cut out of your spending this month cause you're just being sloppy. We are, we're all sloppy. And so you can cut $500 a month out cause you care. Well, that's quickly got you on track for six grand at the end of the year.

You can go to your boss and you can say, boss, is there anything, are there any extra projects that I could pick up in exchange for a little bit higher compensation? Or is there something that you, that you, that you've been wishing to get done? Cause I need to work some overtime.

And I thought it'd be best for me to work for my company instead of going and getting a side job and your boss may pitch you a project that, you know, here, do this thing. And, and here's an extra eight grand. This is worth eight grand to me to get this thing done in the next three months.

And so there's your, there's your side hustle right there. And then your wife may have, again, do a couple of photo shoots with her camera now that she's got time and doesn't have a bunch of little baby children around and she can go in and make a few thousand dollars.

And then all of a sudden your father-in-law sees that, Hey, these guys are going crazy. They're, they're really working. They sold the second car and your father-in-law says, here's $10,000 to help you out. And boom, you're, you're done. And so that's the normal course. And so what matters is that you identify clearly what you want.

You figure out how to dial up the emotion, probably not with some weird tragic story like I described, but recognize that that what I described, you didn't hesitate. Nobody ever hesitates. We know if I, if it mattered enough to me, I would get it done no matter how, I don't know how, but I would get it done.

I would find a way to get it done. And so recognize that this is primarily an emotional problem, not a logical problem, and then start working your way through the logic. So that's how I'd approach it. Thank you. Thank you. That, that definitely helps. I think we were kind of struggling between priorities.

And I think that you, you kind of sharing this stuff really kind of put it in perspective. A year's time is not very long, but as long as it's enough time to get it done, we were just, I guess, trying to make too much, too much traction in too many different directions.

And we weren't really moving much at all with regards to, you know, do we eliminate all the debt and try to just pay all that off first? Or do we say like, how do we do this? But I think you're right. I appreciate that framework. Right. And what you should be doing right now is you should go and visit with a mortgage broker, a local mortgage broker, get pre-qualified with a local mortgage broker to find out what specifically your borrowing capacity is on a piece of real estate, how much of a down payment you need, and then look around at houses in your area so that you understand, is there a house that would be available to us?

I think that's a great thing to do because it'll nurture your desire, right? And in the same way, I really believe in creating a clear vision of what you want. And so as a man, it ought to make you angry to take your wife to a beautiful house and you walk through and you see your eyes light up and you think this would be a great place to raise my family.

And then you look yourself in the mirror and you get pissed off at what a bad provider you are, that you can't give your family what they deserve. It's a pretty good, useful emotion to stoke in yourself. And so go start looking at houses and build the desire and build the anger and holding those two things together as I find a really good, good rule for goal achievement.

If you have emotion, generally speaking, we work better if we just have one goal. And so if you want to be debt free, then make your goal to be debt free. But I don't think that you should, if your only debt is these student loans, I would go buy a house first, if you can make that, if you can get a short term plan there.

And then once you get the house done, then go back and get debt free. But the key is to just choose one thing that you really want to do and then go all into it. And the point is that if you can do that, we all of us can do almost anything for months at a time, possibly a couple of years.

We can't do anything for five years. You know, if you think about living a life of deprivation and frustration and working for jobs, you can't do that for five years and make it. Cause then you would be looking down and saying, well, I'm not going to miss my teens years right now.

Like this is, I'm not going to go work for jobs, but you can do anything for six months. You can do anything for a year and six months or a year where everyone's on the same team, everyone's focused. All expenses are cut. All available income is maximized. Everything that can be sold is sold.

That intensity of focus leads to incredible outcomes. And so nurture that. And then everyone knows, Hey, six months from now, we're going to be done with this. We'll be in the new house and then we can go ahead and lighten things up, et cetera. Okay. Okay. Sounds good. Thank you, Joshua.

I appreciate you. Call me back in a year and tell me about wrong, wrong mute button. Call me back in a year and tell me about the, uh, the awesome house. I would really love to, uh, love to hear about it and congratulations. Merry Christmas to you and yours.

And with that, we conclude, uh, just a very short Q and a show today, two callers, uh, happy, Merry Christmas to all of you guys. I look forward very much to continuing to work with you in the future. Thank you so much. If you'd like to join me on next week's Q and a show, you do that by going to patrion.com/radical personal finance, patrion.com/radical personal finance.

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