(upbeat music) Is your California dream feeling more and more distant? You've got countless apps and influencers telling you how to do it their way. And your expert aunt who might be giving a bit too much advice. Tips, hacks, and experts are everywhere these days. But when it comes to real estate, the question to ask is, who's your realtor?

Because a California realtor is the only person who can bring your dream home. Someone who gets that buying a home is one of the most complicated and stressful things you can do, but can still make it possible on your budget. A California realtor can read the constantly shifting market and they're out in front for all of the tough stuff.

So you can get to the good stuff. So who's your realtor? Because no one cares more about helping Californians live the California dream than California realtors. - Today on Radical Personal Finance is live Q&A. (upbeat music) Welcome to Radical Personal Finance, a show dedicated to providing you with knowledge, skills, insights, and encouragement that you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

My name is Joshua Sheets. I'm your host. Today is Friday, May 24, 2024. Always fun when we get those dates. And on this Friday, as we do on every Friday, in which I can arrange a microphone and a camera and all that good stuff, we do live Q&A. (upbeat music) Live Q&A works just like call and talk radio used to, or at least probably still does.

You call in talking about anything that you want. You can gain access to one of these Friday Q&A shows by going to patreon.com/radicalpersonalfinance. Sign up to support the show on Patreon at patreon.com/radicalpersonalfinance, and that will gain access for you to one of these Friday Q&A shows. This is probably your cheapest way to talk directly with me, as long as you don't mind my using your questions, your comments, your feedback, your controversies, whatever you have to talk about as content for the show, then that's fine.

You can do that, again, by becoming a patron. Remember right now, as I record this on May 24, the consulting calendar is open, and I'm running a sale on it. So if you would like to book a consulting call with me, do that by going to radicalpersonalfinance.com/consult, radicalpersonalfinance.com/consult. That will gain access to you to my consulting calendar.

Sign up now, as it'll be this next two weeks where those calls are available before I have some summertime travel. So I hope that you will sign up. We begin today with John in Florida. John, welcome to the show. How can I serve you today, sir? - Hey, Joshua, and happy Memorial Day weekend to you.

- And to you. - Thank you. So I have a good question here. I recently retired from the military, and now with my military pension and the new career that I have, my wife and I have found ourselves in a situation that we're unfamiliar with. We have a lot of extra margin in our budget, and I'm just trying to be smart with it.

We've been enjoying it for the last couple of months, catching up on spending that we'd held off. But now that we've done that and everything, how can I be smarter with this surplus versus just finding ways to spend it every month? - Sure. How old are you currently? - I am 40.

- 40 years old. And you said you started a new career in addition to your pension payment, is that right? - Correct, yes. - And how much are you earning at the new career? - The salary is just under 100K, like 97,000. - And then how much is your pension?

- 84,000, with the vast majority of it being tax-free. - Great. Does your wife also generate income? - She does. She's a real estate agent, so it's hit or miss, but we probably can plan on her bringing in an extra 20 to 40 a year, I would think. - And about how much do you guys usually spend prior to this time of recent increases to kind of make up for lost time?

About normally, what do you think your budget normally is? - We normally were spending between 7,000 and 8,000 a month. We now have like 15,000 a month available. - Do you have children? - Two young children, yes. - Okay. And about how much is your current net worth in terms of savings and investments?

- We're just under 600,000, like 570. - Okay. What are the options that you're considering choosing among in terms of what do you think you wanna spend the money on? - Well, I mean, we would like to purchase a new house and retain our current one as adding, we currently have a rental property.

We would like to make our current house a rental and get a new one. But with interest rates right now, that's becoming quite a challenge. So our short-term goal is pocketing some savings to add our down payment. - Okay. Do you think you ever wanna retire fully? - Fully, yeah.

I think that's probably a ways off, but yeah. - Why would you want to retire fully? - Well, I think with my pension, I would have the ability to, it at least would provide the flexibility and cover the life necessities. Anything above and beyond that would, I would need to earn something to cover non-necessity fund money.

But I don't think I wanna work behind a computer for the rest of my life. - Why not? - There's gotta be more to life than just in an office, but I don't know. I had a six month period between leaving the military and starting this career where I spent most of my time at home.

And I do think I maybe squandered it a little bit and didn't fully take advantage of it. But I did enjoy being home and having the extra time with my young children. - How old are your children currently? - Three and seven. - Okay. Do you tell me about your vision for the kind of father you'd like to be, the kind of family you'd like to raise your children in?

- I wanna be able to continue being a positive influence and role in their lives, showing up in their lives, influence and role in their lives, showing up to their major milestones, setting some core values. The values have been instilled in me to be successful. I feel like I'm successful.

And then my youngest is special needs. So her needs are still a little, we're gonna figure out as she gets older what her limitations will be. But just, I need to think about that some more, I think, being put on the spot a little bit. - Sure, sure. Well, I won't keep probing, although ordinarily I would.

I want you to think about some of these questions, and I'm gonna give you some more as we talk. But let me give you a few different layers to think about in terms of the money. First, in terms of your financial situation, you have a great net worth. You have more money coming in right now than you're spending.

And thankfully, a significant amount of your income is guaranteed for life. This is a wonderful combination because it gives you a strong stability underneath your financial situation. Having a military pension is fantastic. To be 40 years old, have a military pension of $84,000 a year is amazing because now if you got sick, if you got hurt, if you didn't wanna work, you could just retire on that for the rest of your life.

It would be less of a lifestyle than you're currently accustomed to, but you could do it, and that's an option for you. So it's a wonderful job that you've done to put yourself in this situation. Because of the military pension, there's a lot less pressure on other aspects of your finances.

It doesn't mean you won't still want to save money, but there's less pressure on other aspects of your finances. So you have a lot of choices. And so let's talk through some of those choices and think of some ways to consider what might work out for you. First, you can simply consume the money.

There is no one that I have ever met who in the fullness of time can't figure out ways to spend excess money just because it's there. Going from seven or $8,000 a month to $15,000 a month of expenses might seem like a lot today, but if you get used to it for the next three or four years instead of just three or four months, then pretty quickly that'll be your standard, and it'll be very easy to suck it up.

Some of these expenses will be related to your children. At three and at seven, there haven't been that many things that you really could or want to spend money on with regard to your children that would suck up all this extra money. But in the coming years, there'll be many, many things that you could spend the money on.

Children can be a bottomless pit for money. Everything from private school tuition that can easily suck up 20 or $30,000 per year for each of them, all kinds of extracurricular things, life enrichment things, personalized coaching, classes, all kinds of consumption. I mean, I could blow your entire budget just in consumption for your children.

And it'll all feel great because it's all investing in your kids. It'll make you feel good 'cause it's not just about us. Then you get to the whole layer of family experiences. And so there's a whole long list of things that you could buy, a new house, and a new truck, and a new ski boat, and a new RV.

And you can spend all this money just in terms of facilitating family experiences. And again, this is great stuff. This is all really useful things that would genuinely enhance your family experiences. Those are options. So there's plenty of ways to consume it even without seeming frivolous. It doesn't seem frivolous to enroll your child into an expensive school.

It seems like a good thing to do, and yet it will quickly suck up your money. And I would encourage you that those are all options for you. In addition, then of course, remember that you really should be spending money on any therapy or additional support that would help your younger child to flourish.

One of the things that often happens is people who have some form of handicap or a special need, however we label it, in many cases with a determined father who is going to war for that child and who has the money to spend on treatments, a lot of conditions can be fully changed just based upon the determination of a parent.

Not all, I'm not being foolish with what I say, and I don't know anything about the particular features of your child. Just simply saying that a lot of times things can be changed with determination and with money. And you probably have both of those things. So there are lots of things there.

What I would say is there are a few areas though that will probably feel better in the fullness of time than just purely wandering into it and consuming it, even if you can justify the consumption. Number one, you should consider having more children if you're able to or if you want to.

Having more children is something that frequently people don't do because they don't feel like they can afford it. Well, if you feel like you can afford it and you have a little extra money, I've never yet met, they're probably out there, but I haven't yet met anybody who has regretted having more children.

I have met many people who have regretted not having more children. And so since you have a little bit of financial wiggle room, it should be a relatively straightforward thing if you and your wife don't want to have more children to have more children. And then of course that comes with an associated increase in costs.

But having more children and trading some of the finances for more love in your life over the long term and a bigger opportunity to impact the world through the work with your children is probably going to pay off big time. Number two, you should consider very, very carefully and very deeply the kind of lifestyle that you want your children to have, the kinds of things that you want them to actually do.

If you have a vision that is different than the normal mainstream of what you're trying to accomplish in raising your children, you might find that really being focused on that, either with the extra money or with the flip side of earning just a little bit less money so that you earn what covers your income needs so that you can be free to invest into your children in whatever ways are appropriate, I doubt that's a decision that you'll regret.

That's one of the things that I have purpose to do is that I have purpose to say that I like to make money, making money is great, I want to make a lot of money. But I can make a lot of money at any point in my life. I'm firmly persuaded that high levels of involvement with my children and high levels of investment of time and also money in my children at a young age is probably when the money pays off the most.

And so you can invest into them with time and dedication and focus and it'll pay off enormously in the long run. As an example of this, and I see this a lot of times with military guys, there's this ex-military guy that I like. I don't think he publishes anymore, but he has this YouTube channel called Analytical Survival, something like that.

I found him years and years ago. And he has this super interesting survivalist prepping YouTube channel where he's super hardcore about all these hyper great organization with all of his projects. But then he started to turn his prepping channel into a homeschooling channel. And he has a son, as best I could figure out from years ago when I used to watch him.

He has a son and he brought the same intensity that he brought to all of his prepping endeavors and to his military organization into homeschooling his son. And he's clearly an amazingly dedicated homeschool dad. And his son is light years ahead. And if to the academics and experiences that you want your children to have, they don't usually require much money, but they require some time.

And it's not that difficult for you if you take an interest in it as a father to make certain that your children are two or three or four grade levels ahead of their peers, purely based upon the interest, purely based upon your being there. And the best time to do that stuff is when they're young in the elementary years.

I think there are very good reasons, very compelling reasons to have children enrolled in traditional mainstream structures of school as they reach their middle school years and their high school years. But there are very few reasons that I can find why that's a good decision in the elementary school years for those who have an alternative choice.

And if you do have time flexibility and you have financial flexibility, you can bring in all kinds of fascinating lifestyle choices. I'm not saying what's appropriate for you. I'm trying to lay out a menu of things that I find interesting and motivating. And so if you've got, let's say, three years from now, you've got a 10-year-old and a four-year-old or 11-year-old and a five-year-old, whatever winds up.

I get the split, 11 and six is perfect. And you load up in a pickup truck and a pickup truck camper and you spend a year or two wandering from Canada to Mexico with your children, you're going to have a closeness of relationship that is basically impossible to have in the modern mainstream American lifestyle.

And it can be facilitated based upon your work flexibility, the fact that you can, over the next four years, you can buy one or two more houses that are going to be rental houses. And then you plan and you work at your job right now over the next three or four years.

But then you plan a three or four year sabbatical and time off and really build that relationship with your children when they're at a wonderful age to benefit from travel, benefit from world schooling. And you've got the financial structure in place to facilitate your doing that. And you come back richer than when you left, but it's all built upon the vision of what you want to do mixed with the base that's provided by your pension and then being smart with the extra money.

If you have a short or medium term goal like that, then it will bring into focus what you should do with this extra money. So as I used in that example, if you know that I'm going to take three years off when my eldest is 10 years old or 11 years old, four years from now, then my plan is I'm going to take four years off and we may not use all of it world schooling, but we'll spend a year or two in the United States and North America.

Then we'll go to Europe for a year. Then we'll go to Asia for a year. Then we'll come back and we'll enroll the children in high school in the United States. That's a perfectly reasonable plan. But it would give you a focus then as to what you should invest in.

And so now you're going to get more serious and say, all right, I'm not going to buy the forever house because the children are still young and I'm going to set up and I'm going to buy the big house when we get back and enroll them in high school, but I'm going to go ahead and pick up a couple of more rental properties.

And that's going to be my focus. So over the next four years, my goal is to buy two more cash flowing rental properties. And what I'm going to do is I'm going to buy them as quickly as possible now that I have the excess money that can be spent on these mortgage payments so that I have this set aside.

So the goal brings into focus what I should do to achieve it. Now, the other pathway that we can go down, let's assume that nothing of what I've said so far is relevant. So then we just flip to long-term impact and long-term investing. There is absolutely nothing wrong with just taking this money and tossing it aside, all the extra money, tossing it aside every month in an index fund.

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We are Vegas. We are CCSD. Start your adventure at teach.ccsd.net. We are CCSD. Start your adventure at teach.ccsd.net. - And your net worth will grow so fast if you do that. And if you do that systematically, you'll have millions of extra dollars a few years from now, more than a few, I'm being a little bit excessive there.

In a decade from now, you'll have so much extra money that you're not currently planning on, and it'll move you to a totally different state. And again, your children are likely to form a significant part of your vision. So now you can be thinking about, I wanna get a couple of houses, one house for each child.

I'm gonna make sure that the children are really set aside so that they're financially taken care of so they can have freedom, they won't go into debt, I'll pay for their college, all those kinds of things. Or just general wealth building. And so there's nothing wrong with just saving the money, and your future self will be much more glad that you did it and that you eased into consumption more slowly and more strategically instead of just sucking up all the money.

Finally, what I would say is, you should be really focused on making certain that your career is optimized not only for financial production, but also for meaning and long-term impact in the world. One of the traps that people fall into mentally when they need money is they always chase the thing that provides them with the most short-term financial gain.

And that's a reasonable thing. If you've got bills, you've got children, you need the money, you want the money, and so you choose the job or the career that gives you the most direct path to money. When you get a little margin in your life and you don't need money quite so urgently, which is the situation that you're in, then you can think about it on multiple levels of analysis.

And you can look at your job and your career from the perspective of long-term impact or meaning in some personal way that's appropriate for you. This can be done in a financial perspective. So very frequently, I'll work with somebody who once you've gotten the wolf away from the door a little bit financially, you know, guy's piled up two or $3 million, and he's on track, everything is good, then he can pull back and he can say, "All right, I'm not chasing now any additive projects.

"I'm not gonna chase a project "to add another million or $2 million. "I'm gonna chase a genuine multiplier project. "So I'm gonna go for an opportunity, "build a business that's a longer shot, "but has a bigger long-term outcome. "I'm gonna try to go from $2 million of net worth "to $20 million of net worth for the next five or six years, "knowing that it might not work.

"I might still be stuck six years from now "with a $2 million net worth, "but that's more motivating than the idea "of just staying in the normal course "and just focusing on going from $2 to $3.5 million." And then the flip side is, it's not always measured in money, but sometimes it's measured in impact.

You analyze your life and you analyze the things that you're engaged in, that you care about, and you say, "If I could really make an impact, "imagine myself 10 years from now, "20 years from now, 30 years from now. "If I could really move the needle "for this cause that I care about, "this position that's really important to me, "this need in society that I really wanna change, "this problem that's staring us in the face, "if I could really move the needle in that direction "and I could invest the next 20 years of my life "into changing that, "even if I didn't make a lot of money at it, "it would really be satisfying to me "to know the difference that I made in the world "because of that." And so you pursue something that has an extraordinarily high potential return of impact or change in the world, even if it returns a little bit less money.

So there are, of course, many other pathways that we could go down, but that's kind of just a menu of ideas. And if you think about that menu of ideas and something resonates with you, or over the coming months you find a goal that resonates with you, then having a clear goal will bring into clarity what you should do with your money.

There aren't really any wrong things that you could choose to do with the money. You could consume it, you could invest it, you could do any number of things, and they're all fine based upon your goals. And so if you don't yet know what to do with the extra money, which is the question you called, what I would encourage you is just set the money aside for now.

Set a specific budget for your family that's something like what your current expenses are. You don't need to tighten the screws, do everything, but don't also allow in a bunch of inflationary spending. Just set the budget at a reasonable number for where it is right now, and set aside all the excess money into a savings account for now.

And then spend a lot of time getting as clear as possible on what your goals are. Spend time with your wife. What are her goals? You may be able to fund something that she's always dreamed of. She may not have always dreamed of being a real estate agent, but she may have always dreamed of impacting the world in some other way.

And so when your goals are clear, then the specific financial plan of what you should invest in will also be clear. - Wow. I like a little bit of all three scenarios you discussed there. I need to re-listen to this and sit down with my wife and go over some of it, because I definitely think that doing something that might not make a lot of money definitely falls in line to getting involved in doing something with my daughter.

And then I like the idea of taking a sabbatical. And you brought up some really good points, Joshua. Thank you. - Good, my pleasure. Yeah, spend time talking with her, spend time dreaming. And by the way, you can do all of these. Recognize, and this is probably difficult if you just got out of the military.

My experience working with guys in the military is, it's very difficult to know what you want to do, because you made a decision 20 years ago that you weren't gonna think about what you wanted to do, because you were gonna live your life under orders. And in a way, what you're experiencing, having retired recently from the service, what you're experiencing is kind of what a lot of high school and college students experience.

And I'm touching on this because I want people to hear it both from a high school and college perspective, as well as from your specific perspective. One of the things I think is a real harm in the way that we teach children is we prescribe their high school career to them, and in some cases, their college career.

But we prescribe their high school career so tightly that it's unusual for a high school student to have any time or bandwidth to explore what he himself is actually interested in. So then he gets to age 18, and people say, "What are you gonna do?" And he's at a loss because he's not accustomed to looking into the future.

He's not accustomed to looking into himself and looking at the world. He's not even aware, really, of the options that are out there. He's not thinking about what he could do, and it takes a long time for him to figure that out. And a lot of times, this explains some of the challenges that people go through of going to college and flunking out and then going back and changing majors five times.

If a high school student has not had any experience, and he hasn't had years of people asking him what he wants to do, and he hasn't exercised agency in actually pursuing the things that he wants to do, how is he supposed to have the skills to be able to say, "This is what I wanna do," and go after it?

So I think we need to take this into account in how we train teenagers so that teenagers have much more agency and autonomy from an early age so they build the skill, the muscle, the ability to actually know what they want and then have experience of going after it.

Now, if you joined the military when you were a very young man, you haven't asked, other than, "Do I wanna stay in or get out?" You haven't been asked, "What do you want to do for 40 years now?" And so your what-do-I-wanna-do skills and your muscles in that department are much weaker than someone else who was unschooled as a child and has decades of experience of just doing the things that he wants to do.

So part of the process of getting out of the military involves you spending time strengthening those muscles. That cannot be done in a week or a month or even a year. It's gonna be a multi-year process. But you can do all of those things. You could, and I would suggest to you that from knowing what I know about people and goal planning and the kinds of things that resonate with people, I would encourage you to take something like a three-year time horizon on your current job and not go beyond three years.

Because if you, for the next three years, work at this job, have all this extra money, you focus on using it to really enhance your financial situation. Maybe we'll have a real estate crash. Wouldn't that be great? In the next year or two. And you could buy a couple of more rentals or whatever works out.

And then at that point in time, your eldest would be 10. 10 is an amazing age to go traveling. If you go traveling now at seven and four, or seven and three, your children will not, your youngest will not remember any of it. But if you go traveling in a few years and you've got a 10-year-old, he or she will really engage with that.

And then as your children start to grow, you've got plenty of time. You know, imagine yourself with teens and your teens are in school every day and you've got money, you've got time. Well, you can go ahead and put in 20, 30, 40 years at a career that you're really engaged with, with outcomes.

You and your wife may build a business together. You may have a dream project of some kind. The world's totally available to you and you have built the good foundation to make this kind of planning easier than for most other people. So congratulations. Just recognize that there's a good chance that your here's what I want muscles are probably a lot more atrophied because of the career choice that you previously made.

And it's gonna take you a few years to whip those muscles into shape. - That was spot on, you know, everyone was asking when I was leaving the military, what I wanted to do. And, you know, my answer was when I was 18 year old, John wanted to join the Navy.

He never gave any thought at all to what 40 year old John would do after the Navy. - Exactly. - That was spot on and that's great advice to pass on to, you know, high schoolers that are considering the military as an option. - Yeah, great. I think it works well.

I think it's a good option. Meaning that it can pay off as it's paying off for you. It's just a different choice. So the financial rules for you to follow is number one, don't go into debt. So do not go into debt for anything. If you, and let me just describe.

You could buy a house. If you buy a house, make certain that the mortgage on it is a low enough amount that you could fire sale the house in a few weeks, pay off the mortgage and be free of it. Beyond that, don't pile up payments of any kind.

So do not go into debt. As long as you don't go into debt, then financially you can't really screw this up. So you just need to live on what you're making. And if you're making the higher amount with the job and your wife's income and the pension and all that, then awesome, you'll live on the higher amount.

If you can't, if you're gonna get rid of the higher amount by doing something different, arrange a lifestyle that exclusively lives on your pension. And if you do that, you won't have any financial regrets. You'll be fine financially. All of the options are available to you. Kyle in Washington, welcome to the show.

How can I serve you today, sir? - Hi, Joshua. I am kind of nervous today 'cause I'm gonna challenge you on something that you've stated. - Well, I'm the nervous one, come on. (laughing) - It's odd for me to try building frameworks for you to look at. So I show 1016.

You talked about the trades being boring to you. And you've talked about this a couple different times. And I would like to call in, I'm calling to challenge that viewpoint a little bit because I think that, not to demean the amount of time that you've spent in the trades, but I don't know if you have personally enough time.

I'm sure you've met plenty of people that have and have given you good advice about like, don't be a car mechanic. You're gonna hate being a car mechanic. But if I may, I'd like to just address that a little bit. - Please do, absolutely. The floor is yours. - Okay.

Thank you. So you said I've done some carpentry. I've done, I've worked for a tile setter. You don't wanna be, I think the Twitter poster said, you don't wanna be hanging sheet rock for 30 years. And that's all entirely true. Like if you're gonna be on a framing crew, you're probably gonna get bored in a few years.

If you're gonna be hanging sheet rock, you're gonna get bored in a few years. But I think that people don't see those trades. There are a lot of other trades out there besides these horrific, beat your body up. I'm a scaffolder and I'm only gonna do scaffolding until my body's used up.

And so I think, if you're gonna take and coach a young man down the road of the trades, you really need to look and see that it's really a much more, you can take a much more overarching approach. Yeah, you're gonna hang sheet rock for a few years until you graduate to being a finisher.

And then you're gonna finish for a few years in track homes until you get really good. And then you're gonna go finishing in hospitals. And then you're gonna go finishing in high-end homes. And then you're gonna be running a finishing crew. The same thing for the tile setter. You're not doing any interesting problem solving until you start laying out crooked rooms or laying out interesting tile designs or going into the stonemasons union and learning how to do structural stone work and brick work and things like that.

You're not gonna be doing interesting problem solving if you're framing the same house 10 times. But if you're building custom homes, maybe that is a lot more interesting problem solving. And so, yeah, certain trades can get boring. If you work at Grease Monkey, you're gonna get bored. But if you're taking apart an electric car that we're not allowed to fix on our own and learning how it works, you're a lab coat diagnostician.

You're not some tradey, you might have grease under your fingernails, but dude, you're learning all manner of different systems and computerization and taking apart other people's engineering. And yeah, you're not degreed and you're not working as a knowledge worker in the strictest sense of the word. But building that type of knowledge base, I think is really important before you can move on to the next step.

And not every trades person is gonna start a sheetrock company or start a framing company or a scaffold company or anything like that. But I think that it's something that really gets overlooked. And I did the same thing. I don't wanna be a car mechanic, so I'm just gonna quit being a car mechanic.

But there are ways that you can, if you wanna be a car mechanic, you can. And then you can start an automotive repair shop and all of a sudden you're a business owner and you're not just a trades person, you're learning business and you're learning community outreach and all these different things.

And I think it gets, I know that was a short show, but I think that the trades get minimized in that way. Like it's boring and it becomes uninteresting and it beats your body up. And certainly there are trades like that, but there are also trades that aren't. And that's why I'm calling.

- I think it's a fair apology for the trades. And what I probably should do is I should go ahead, I have intended to, it's one of the many things on my list, but I should go ahead and create a standalone podcast that is a standalone apology for the trades.

I used to, I've lost the spreadsheets, but years ago I created a bunch of spreadsheets and I was trying to figure out the payoff of a college degree that had a certain cost and yet that made a certain higher income as compared to somebody who went directly to work.

The basic idea that let's say that somebody starts at 18 years old and gets a job making $45,000 a year and earns 45,000 at 18 and 45,000 at 19, 45,000 at 20 and increasing with inflation of course, as compared to somebody who goes to college for four years and gets out and maybe starts at $55,000, which of course is not guaranteed in any way, but it starts at $55,000, but yet had to pay it back and the lost value of money.

And anyway, I used to have spreadsheets, but I lost them all. And so there is a good argument that you could be made from a financial perspective. In addition, I've known a lot of people who've built a lot of wealth in the trades and it's especially just with things like side work.

I was amazed when I watched how many electricians I knew who as very young guys, yeah, very young guys are making six figures because they had a day job working for an electrical company and all their side work was just never ending. And so I totally see what you have said.

I would add another argument, which also aligns with the line of thinking that you're going down. I've for years observed that many people who are very intelligent get funneled into a few automatic jobs. You often get funneled into medicine or they get funneled into law or they get funneled into banking or investing, Wall Street, something like that.

And for years, I have said, usually flippantly and offhand, that if you're the kind of guy who has the mental ability and the motivation and the grit and the determination to go and be a lawyer, you're probably better off to go and start a daycare company or a trades business or something, open a junkyard, some kind of scrap metal place, doing something where there are fewer wickedly smart people competing with you.

It's kind of like the classic thing about college selection. I heard a talk a number of years ago by a psychologist. I forget the name, so I can't cite him, but he was giving a talk at Google and he gave the presentation and his point, he said, if you have the ability to get into Harvard, you should certainly not go.

And his point was that if you are one of the smartest people and you've worked hard for years to build this amazing resume and you stand out and you have the ability to go to Harvard, the day you get to Harvard, you're gonna be, instead of being filled with confidence, you're gonna be beating yourself up as the dumbest, most dim-witted, underachiever in the entire school because you're surrounded by the cream of the crop that's all smarter and better than you.

And that is what's going to affect your self-image. He said. - We're raiders. - We're neighbors. - We're trailblazers. - We're at the top of our game. - And we're more than the strip. - We're beyond your wildest expectations. - We're head first into the currents of change. - We love a good challenge.

- A better cost of living and an incredible retirement plan as a teacher in Las Vegas for the Clark County School District. We are Vegas. We are CCSD. Start your adventure at teach.ccsd.net. We are CCSD. Start your adventure at teach.ccsd.net. - On the contrary, if you are good enough to get into Harvard and instead you go to the local state university, you're gonna be the big man on campus.

You're gonna be the top of your class and your self-image is gonna be amazing because you recognize I'm smart, I'm sophisticated. I have all these things going for me. And that psychological confidence is gonna flow with you for the rest of your life. And so what I'm saying as far as if someone is smart enough to be a doctor, then if that person who's really smart instead goes and opens an auto mechanic shop, then he's probably going up against people who are not so academically intelligent and yet they are, and so he'll be able to do better because the competition is less fierce than all of the physicians that he's surrounded with at medical school.

So I would add that as another argument in favor of choosing something like the trades. The problem that I tried to describe for me, and I wonder if there are different kinds of intelligence. So I'll describe just briefly why I am not attracted to the trades. And this is different from why someone else may or may not be attracted.

I think I myself have enough experience and enough components of the trades to know that for me, it's not a good fit. The reason it's not, I've got years of doing it in different things. I worked in a different trade all through high school, through college in variety. There are, I haven't done plumbing.

That's about the only thing I haven't done. I've done roofing, I've done carpentry, I've done electrical work, I've done tile, I've done cabinet, no, I've not done cabinets. So I mean, the point is that I've been around a lot of it, been around a lot of job sites. And what I always just discovered is that I feel incompetent with my hands.

And I have a good friend of mine that I grew up with, and it seemed to, always seemed to me like he had this magic skill that he could touch something and he could instantly understand how it works. Like the way that stuff fits together. He's an electrician today, he works at a nuclear power plant, makes great money, never went to college, made great money all the way through.

But he and I are night and day different. He's got this ability that I just, anytime I'm with him, I see, he's got this physical spatial awareness of how things work and how they go together. And he'll sit there and he'll build something and he'll work and he'll get it just right.

Me on the other hand, if it doesn't work and the angles don't fit, I'm just annoyed as anything. And if the bolt breaks off, then I got to deal with this other thing. Whereas for me, ideas just flip together like that. And so I can listen to a snippet of a conversation.

And in my mind, it's just like, boom, boom, boom, boom, boom. I understand, here's the argument, here's where it's coming from, here's how it fits, here's where it flows in, here's what the person thinks, here's what's likely to happen because the person believes this way. It just, it's very obvious to me that my brain works differently in that capacity.

What I don't know is if that's trainable or learnable, was it something that I grabbed that is just a natural reflection of my core genius or is it a natural reflection of just what I pursued over the years and I put the time in, I have no idea. But that's for me why I would choose something different because a lot of the day that I would spend in the trades, I would spend it frustrated by things not working the way that they're supposed to be.

And that I haven't built the skills to deal with it. Maybe it's just an undone skillset. So I think there are differences of people and my point in that Twitter thread, I don't know if I would have written it the same way, it was just someone else did. But my point is that there is rightly a pushback against the pathway of going to college because college has been so oversold for so long that a lot of people are very frustrated and hurt because of their decision to go to college instead of to go to be involved in the trades, something like that.

But the flip side of that is that in the coming years, I now hear constantly, when I first did shows against college years ago, I felt like I was one of the leaders. Today, I hear constantly everyone saying, don't go to college, don't go to college, go to the trades.

And so I fear that we're gonna make the opposite switch and we're gonna funnel people wrongly into the trades who shouldn't be in the trades. They should be in some kind of mental work that is work with your mind and creating things with your mind rather than creating things with your hand.

And so what I think, if I'm elected emperor of the world, what I'm going to do is I'm going to say, people should have experience in both things fully. So if I were elected emperor of the school system, I would immediately bring back shop class. I would immediately bring back home economics.

I would immediately bring back those things because one of the most valuable aspects of those types of classes are to expose people to things they otherwise wouldn't have been exposed to. And so I want to have the son of two lawyers, mom and dad are hotshot lawyers. I want him to be in shop class building a table and discover that he loves building a table.

And then simultaneously, I want to make certain that there's coding classes and that people are also exposed to knowledge work. I want the humanities, I want mathematics, I want science, I want the coding classes. I want the son of the carpenter to be taking coding classes and building something as a high school project because he may discover that this is really an engagement with him.

And then I want those things to be done over enough time, enough years, so that the young person gets a really good sense of, is this something that feels good to me or is this something that doesn't? And that by that exposure, people will properly self-select into the trades who should be in the trades and people who shouldn't be in something else.

That would be my vision. I think your points are totally valid. And it would be my vision that there should be enough experience that each person has in order to select properly. - Yeah, agreed. And that's another thing people forget is a lot of journeymen have four years of apprenticeship before they're journeymen.

I mean, you get a degree of sorts. A lot of times they'll give you an AA along with your journeyman card. And so, yeah, I don't disagree with you. And I think another point you made was, you run into a lot more intelligent people and you can get a lot more camaraderie and stuff like that in knowledge work.

And I don't disagree with that. I'm still having a tough time figuring out which one I like more, knowledge work or physical labor. And so I bounce back and forth between those two things. And not to say anything about those people in the trades, but they are fewer and farther between if you wanna be challenged on an intellectual level very often.

And so, yeah, I didn't think that you were speaking against for any specific reason. And I think that you can know yourself well enough to say, I just get too frustrated when I'm working on cars. It makes me angry. Even if I have all the right tools, I'm not gonna be a mechanic.

- Right. - Yeah, incredibly valid. I would also say that probably, we've kind of lost this in our current day, but our culture was built by farmer philosophers, by warrior poets, by philosophical craftsmen. It shouldn't be the case that it's either you do one thing or another thing. And in fact, many people over the years have drawn great solace from their physical work.

One of the things that I think is very satisfying about physical work is you can go and you can do the work. You can see the outcome, what you've created quickly. And when you're done with the work, you can leave the work there. It's taken me years to just grow comfortable with the constant low-level anxiety that comes from business that the work never finishes and it always is with you.

It always stays with you. And I often have thought how wonderful it would be to have a job where I went to work, I did the job, and then I went home. And how satisfying that would be to know that I'm done. I don't have to think about it anymore.

I'm genuinely free of this job because I went to work, I did the job, and now I've left. And that's something that a mechanic or any kind of tradesman gets the satisfaction of knowing that I never get that satisfaction because I've never done. It's never enough. There's always more that I could do and I just quit.

So there are many benefits. And also intellectual rumination frequently happens in concert with working with your hands. And so you'll find many great people throughout history who were great thinkers or great statesmen or great inventors that they didn't eschew physical work. They rather found that it was an important component of their life balance.

And I would say that there's probably people who've been funneled into college who would give that intellectual engagement if they were still in trades. One of the things that I made in a separate show recently, I made the point, is that the sorting mechanism of the United States college system over the last 100 years has basically enormously succeeded at grabbing anybody who's good at academic level work and shunting them into the college path.

Prior to standardized testing, there were lots of people who were academic intellectual geniuses who would go and work a job with their hands or run a factory or do some kind of job that didn't include college. And they would indulge their evening hobby of studying ancient philosophy or translating the Hebrew scriptures.

That was a very normal thing in the past. But now the mass testing system has succeeded at finding all those people and kind of automatically shunting them into the college space because, hey, listen, you've got a high IQ that is demonstrated by your success on these tests for mathematical and verbal reasoning.

So we've got to get you into college. And so they're just not in the trades like they once were because of that. And the trades suffer for that and the people suffer for that because sometimes genius is lost because somebody is working an unfulfilling middle-manager white-collar job when he'd be a lot better off swinging a hammer in the daytime and reading Greek philosophy at night.

- Absolutely. Yeah, you're speaking about a good family friend of mine. The guy I knew dabbled in languages. He knew seven languages and he worked in a drop forage plant and got sick of it and moved on to be a machinist 'cause you're working with an eighth of an inch instead of a thousandth of an inch.

We were at a garage sale one time, my family, and we bought this guy an unabridged dictionary. Best present I ever got. But you don't expect that guy at the drop forage plants to know seven languages. - No, no, no. - Yeah, you never do. Not anymore, like you say, yeah.

- Well, I appreciate the pushback. I think it's important points that you're making and I've gotten several bits of feedback on that podcast episode. I have a clarifying show that I've recorded 'cause I had a lady that asked me a bunch of questions based on what I said about men and women and I guess I'll go ahead and release it.

But it's interesting how that struck a chord with several listeners. I'm really glad that you called in and made your comments. Thank you very much, Kyle. - Thank you. - And with that, we move on to Ben in Florida. Ben, welcome to the show. How can I serve you today?

- Hi, Joshua, I have a tax planning question. Never too early in the year to start thinking about that. - That's the best time to be thinking about it 'cause you get to April 14th and you're done. There's nothing left anymore. - That's right. I need to realize about $100,000 worth of gain of appreciated stock this year and in the spirit of being a radical personal finance listener and listening to your show, I would like to start planning now to pay what I owe but also as little as I should.

I'm a W-2 employee. I maxed out my 401(k). I do not own any real estate or any side business. So I'm maxing out 401(k), maxing out HSA. What are my other options? I'm open to buying real estate if there is depreciation I could take this year. If I can buy some sort of business and then depreciate those assets this year, that would be a little harder to do to find a business and buy it and depreciate before the end of the year.

I'm trying to think of ideas so I can start researching further and maybe find a separate tax professional to help me execute strategies. - This stock that you have, how long have you owned it? - Long enough that it's long-term capital gains. - Okay. So just privately owned stock, a single stock?

- Yes. - Okay. - And I have done some charitable contributions. That's what I've done. On some of it, I have done the charitable contributions so I can not pay capital gains on those shares and also deduct that because it will be above the standard deduction. - Okay. - But there's more that I will need to pay that I want to, if this can get me into real estate or something else, some other strategies that I can think about.

- Do you have any losses, any long-term capital losses from another portion of your portfolio? - Not as much as I would need to offset the gains. - Okay. - I have some. - Well, that's, so that's your, so when you're dealing with capital assets that are not business assets, just purely capital assets, then what happens is you take all of your long-term capital gains and you net those against all of your long-term capital losses.

And that results in your figure. You take all your short-term capital gains, you net those against short-term capital losses as well. And that creates your figure. So if you have $100,000 of long-term capital gains, the first thing you should look for is, do I own other assets that are long-term capital assets that I don't want to hold anymore?

So I'm selling Coca-Cola stock and I don't wanna, I'm not gonna, I'm selling company A stock where I have $100,000 of gain, but years ago I bought company B stock and I've got $30,000 of losses of that stock. And I don't wanna own it anymore. So I'll go ahead and sell that.

And you wanna realize those capital losses and net them together. That's your first reliable strategy. 'Cause there's not, the short answer is there's not much you could do in what you're describing. So the first thing is look around in your portfolio for other long-term capital losses that have assets that you don't wanna hold anymore and sell those assets and net the assets against your gains.

Now you have the ability then, if you wanna have those assets, you have the ability to, let me think just for a moment, my brain is going fuzzy. Doing this live, I always get this fuzzy. So basically what we wanna avoid is the wash sale rule, but we can sell assets that are at a loss and we take the losses and then you can buy them back if you want to have them.

So that's what you're looking for. And so there shouldn't be any reason, there shouldn't be any reason you can't sell the other assets. And then if you want to own them, buy them back in the fullness of time. I need to go back and pull up, and I don't have it live on air, I need to go back and pull the wash sale rules up.

So that's what you wanna look at and make certain that you don't violate something there. And my brain just went fuzzy on this for a moment. So-- - The 30 days you can't purchase the same stock or significantly similar 30 days before or after to not violate the wash sale rule, is from what I understand.

- Right, so the point is that you have the ability to sell assets at a loss and net them against your gains. Beyond that, basically you're stuck with charitable donations or paying the tax. You can't depreciate real estate assets against stock sales. So beyond what I've just described, I'm not aware of any useful planning technique that is applicable here that you can do.

Let me just think for a moment as we're talking, but that's it. So you're gonna just sell the stock and pay the tax. Beyond that. - Okay, and while you talk, there was a couple of years ago where I did do the foreign earned income exclusion. That was great.

I'm not gonna qualify for that this year, and that's fine. - It won't make a difference. It's only on earned income. - Okay, okay. - Yep, foreign earned income exclusion is pointless because it only applies to earned income. This is not earned income. This is capital gains income. - Okay, great.

And then, so I can't depreciate real estate losses against stock capital gains. I was trying to think of a way this could get me into, instead of owning paper assets or stock, I could start getting real estate and also lower my taxes owed. But it sounds like there's not much else I can do to offset that large amount of capital gains in stocks.

- No, there's not. You can do like-kind exchanges on all kinds of property, but you can't like-kind exchange a stock into real estate 'cause they're not like-kind, and so you're not exchanging them. Like-kind exchanges are not just limited to real estate. They're not just 1031 exchanges, but they're not applicable to stock here.

So what I would say is, have you thought about borrowing against the stock instead of selling it? Could that be a solution for you? - No, the stock is getting acquired, so it's gonna be a for sale. So I cannot do anything. - No, there's nothing you can do.

I mean, that's it. So, and especially since you have earned income, you're not gonna have a loss on income. So basically, look around your portfolio, look to see any other capital, long-term capital losses, sell those assets, take the loss, recognize the loss on those other assets that you don't wanna own anymore.

You'll net those other long-term capital losses against these long-term capital gains that will reduce the total amount of capital gains reported, pay the tax, and move on. Be grateful that currently, capital gains taxes are still low. There's always these ridiculous tax proposals to tax capital gains, like ordinary income, and just be grateful that you're in that situation that, or it's not there, or we're not there today.

- Yeah, we're not there today, hopefully. Hopefully it stays that way, but time will tell. - Yeah. On the whole, long-term capital gains taxes are very reasonable. There is, I mean, I'm just going through my inventory of ideas. None of them are gonna apply to you. There are other ideas that can be used.

There are things when you have zero income, you may be in the zero long-term capital gains bracket. There's all kinds of other things, but if you're earning income, as you described, it's a forced sale, as you described, then I'm not aware of any other idea that could be used to offset the gains.

So just be grateful the capital gains tax rates are reasonable compared to how they are in many other places in the world. If you don't find them reasonable, then take steps to extricate yourself entirely from the U.S. tax system. Puerto Rico is a great option for long-term traders. You're not gonna move there, though.

That's not applicable, and it's just the price of being a U.S. citizen. - Okay, well, thank you. - My pleasure, anything else? - Nothing else. I asked about, I'm the one that asked about those info a couple weeks ago, so I'm glad to get a finance question in instead of that, so thanks for your broad knowledge across many topics.

- The problem with broad knowledge, it can be useful, but the problem with broad knowledge is just like my brain froze up in thinking about wash sale rules. This is the kind of thing that, when you talk about so many things all the time, all of a sudden you get into the nitty gritty, and I should have all those things able to summon instantly, but unfortunately sometimes I don't, so.

Thank you so much for calling. If you would like to join AXS, anyone else, if you'd like to join me on next week's Friday Q&A call, remember you can do that by becoming a patron of the show. Go to patreon.com/radicalpersonalfinance, patreon.com/radicalpersonalfinance, sign up to support the show on Patreon, and that will gain access for you to one of these Friday Q&A shows.

In addition to that, remember that consulting calls are open right now, and what I do is, when people do consultations with me, I always read the notes in advance, and if I know I've got something, I've got watch sale rules pulled up on my screen right there, ready to go so I'm not caught flat-footed.

So thank you for that. If you'd like to book a consulting call with me, go to radicalpersonalfinance.com/consult, radicalpersonalfinance.com/consult, and I'll be back with you very soon. (upbeat music) - Wear good, what does that even mean? At Tom's, wear good is a deep-rooted philosophy. It's timeless style and cloud-like comfort.

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