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♪ Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less. My name is Joshua. I am your host. Today on the show we do a live Q&A show.

Works just like Call & Talk Radio. You call in. We talk about any questions, comments that you have on your mind. These shows are open to patrons of the show. You can find out more at patreon.com/radicalpersonalfinance if you are interested in becoming a patron of the show. ♪ Frequently get questions from people saying, "Joshua, what's the best way to get a hold of you?" or "What's the best way to talk to you?" and whatnot.

I actually recently just started doing again. I'll mention it at the end of the show, but I started doing again a little bit of private consulting for the first time in about six months. But if you're interested in talking to me and probably having the best deal possible, frankly, these Patreon shows are the best shot that you're going to get.

I do them every week that I can arrange the technology. Every week I can arrange an internet connection to be able to record them. And sometimes we have 10, 15 callers. Sometimes we have two or three. At the moment we've got three on the line. So we'll see who else shows up in the coming minutes.

But we begin today. Let's go to Parker in Washington. Parker, welcome to Radical Personal Finance. How can I serve you today? - Hey, Josh. Can you hear me all right? - Sounds good. Go ahead, sir. - Can you hear me? There you go. Hey. Thanks for having me today.

Just had a couple, two questions about my parents, if you have the time for both of them. - Okay. - First, I'll give you a quick background. They're both 65 and they've owned a furniture business for about 15 years or so. They've been basically neutral for them as far as financial success goes.

They've just paid themselves about 60 grand annually and are planning on going out of business sale next year. - Okay. - So they have to use the proceeds of that sale to pay off some debt the store carries. And so they're just right about ready to retire. And the only thing that's been a saving grace for them is two inheritances.

So the first question is in regards to the most recent one. My grandma passed this year, my dad's mom. And so they inherited one property that she owned when she died. And then they also, she had another home that she gifted to them about seven years ago. So they netted about 26K each on the inherited one and 59K on the gifted property.

Just wondering what their tax implications are on these two situations. - The inherited property, assuming that your grandmother owned that at the date of her death, the inherited property will have a step up in tax basis, which means that if she paid $50,000 for it, when she died it was worth $150,000.

Your parents inherited the property with a tax basis of $150,000. So if they sell the property for $150,000, there will be no taxes due. If they sell the property for more than $150,000, they will inherit, they'll pay the taxes on whatever gain there may be from the valuation at the date of death versus at the date of sale.

So if they sell the property for $170,000, then they'll pay taxes on $20,000 of gain. Now the property that was gifted to them by their parents has an inherited tax basis in it. So whatever your grandparents' tax basis in the property was, that's what your parents will have as their tax basis.

'Cause when you gift property like that, it keeps the tax basis that it had originally. So if your grandparents had a tax basis of $50,000, they gave it to your parents when it was worth $100,000, your parents sell it for $150,000, they will pay taxes on $100,000 worth of gain.

The difference between your grandparents' tax basis and the current value at the date of sale. - Okay, so it's a little bit complicated in that one. And I kind of knew the first answer, but just wanted to clarify. So the second part, when the property was gifted to them, it was a brand new built cabin on some lake front that they had.

And the tax assessment went way up 'cause they just had this old junky cabin on it before. And now they built a cabin that the taxes were about a $400,000 property, but it was way overvalued. And they sold it for about 260. So with the loss, does that mean that they're gonna get out away from taxes on that?

- Depends not on what the assessed value is, but rather what the adjusted basis is of the original property owner. So what you would need to do is find out how much did my grandparents pay for the land? That would be the first bit. How much did they pay for any improvements to the property?

Capital improvements, such as building a new house on it. And then whatever those total costs are, that's called the adjusted basis. And that's the basis that your parents will have in the property. That's what they'll pay taxes on. - Okay, so they bought this whole lake back in the '40s for 4,800 bucks.

It's about a 50 acre lake with all the property around it. They sold it, my grandma and her two brothers sold it in about 2005 for about 4 million. And they each got to keep their parcel on the land with old beat up cabins that were probably worth next to nothing at the time.

So they each took their proceeds and built a new cabin. So it's a little bit muddy. I'm just trying to figure out that, is that giving you any other direction? - You will have to sit down and make something up that you can defend with a straight face in front of a tax auditor for some way.

Clearly, it's not going to be an easy thing, but the gift of this property is a major financial planning mistake. It should not have been gifted. It should have been kept in the estate until the death of your grandparents. So giving it was a major financial planning mistake from a tax perspective.

So at this point in time, what you have to do is you have to sit down and you have to do your very best to come up with what is the inherited basis of the property? What actually do we owe on the property because of what was its actual tax basis?

And there are rules that would be followed if you have the records, but it sounds like you're basically going to be sitting down and making something up that's plausible. And there's going to be a little bit of wiggle room there on what's plausible, but I'd recommend that you sit down first.

I mean, it's fairly straightforward if you're competent to do it, if you have the records, but you basically have to sit down and say, what was this property worth at the time? How much money did they have invested in it? Did they have any records on it? Et cetera.

If not, you'll have to make something up and you'll just want to make something up that is appropriate. So that if the return gets audited, that the auditor will at least be able to say, oh yes, I can see that what you were trying to do was to do the right thing.

You were trying to find the best solution and I can see how you got to that solution based upon the data that you had. So one thought, is this a livable property? Do you think it has, first of all, how much gain would you guess does this property have in it as far as what it's worth to sell versus what you would guess would be the adjusted basis?

- I think it's pretty close to a wash. I mean, it's a pretty, they probably put 250 into building the property and the brothers did all the work throughout the summers. - Okay, so if it's pretty close to a wash, then that's fine. Then you just want to demonstrate that and you won't have much of a tax bill due on it.

If they spent $250,000 on materials and building the property, then the property will have a basis of $250,000 if it was sold for 250. So I think that's all you need. All I was going to recommend is that in a situation like this the best out would be either for, would be two things.

The direct path would be for your parents to move into the property for two years to take advantage of the capital gain exclusion for the sale of a personal property. If the property were the kind of property where they could live in it for two years, then that might be an appropriate solution for them to get rid of the gain.

And of course this would apply to perhaps some other listener not in this particular situation because it doesn't sound like you have a tax problem here because of the low sale price compared to the adjusted basis. The second solution would be that your parents could convert the property into a rental property if it's not already.

And then as a rental property, they could list it on the marketplace and they could do a 1031 exchange for another rental property that they could use or another property that they would own. And then that would not eliminate the gain, that particular step wouldn't eliminate the gain, but it would defer the gain.

And so if they could defer the gain to another property, then that would buy them a little bit more time to solve the tax problem. And then potentially if they bought another property as a rental property that they later decided to move into after renting it out or after attempting to rent it out, if they later moved into that property, that rental property and lived there for two years, then they could potentially shelter that gain and again, take advantage of the exclusion on capital gains from the sale of a personal residence.

But in your situation, it sounds like those are unnecessary. I would just caution in the future, if anyone is ever giving appreciated property, any kind of appreciated long-term capital gains property, so this includes real estate, family home, vacation cabin on the lake, this includes stocks, this includes any kind of long-term capital gain property, appreciated long-term capital gain property is ideally held by the original owner until the date of death in order for the original owner, in order for there to be a step up in tax basis.

And even if you use other assets to make the gift instead, or you use other sources of financing, the person who's the receiver of the gift takes out a loan or something to cover a cash shortfall. If you have substantially appreciated long-term capital gains property, getting that step up in tax basis is a big deal from a tax perspective.

- Yeah, okay. You got time for one more quick one? - Yep, go ahead quickly. - It may not be quick. So I'm trying to set them up to have the safest possible retirement with their current situation. They haven't really accumulated any savings. They've got about 21,000 in IRAs, but because of the inheritances, they have 114,000 in savings.

Their house is paid for and their vehicles are paid for. The only debt they have is a $28,000 student loan that's at 8%. And their social security is gonna be about 2,800 a month with their expenses being 2,200 a month. Just trying to figure out, I'm assuming they should pay off the student loan at 8% and max out their IRAs for this year and next year.

And I'm not sure how many years they should do that or what the best use of their savings would be and any other ideas you might have to help give them safety. And real estate, I know that's something that my wife and I are into and we love listening to your talks about that, but they are just definitely not interested in doing anything with real estate.

- So the first piece of advice that I have is not a numbers advice, but it's very much a matter of what are you going to do with your life? And I know that's beyond the scope of this conversation, but it's the fundamentally most important thing that I can possibly think of to say.

Because if you take people who've been active, who've owned a family business, and they're 65 years old, or 66 years old, and they're in good health, and you all of a sudden substitute that basic structure of life that came with work that related to the meaning of going to work every day and contributing to your local community, and you substitute that with sitting around and doing nothing, that's what makes people get old and die very, very quickly, is the loss of meaning in life.

And it's a very difficult transition to make. And I think in general, a very unwise transition to make. To put it into a few memorable statements, I'm convinced that you should always retire to something if you're going to retire. The goal is not to be inactive. The goal is to retire to something, to something that you do.

Now, in many cases, I think that that's something that you do, should, and probably in many cases will, involve some form of work. That work might be paid, or it might be unpaid. That work can be going and helping in the furniture store, working as a salesman, after the store is sold to somebody else.

Or in this case, you said it was going out of business sale, but you get the idea. Going and working in a furniture store could be a great thing. It might be unpaid work. It might mean that your mom has always had a passion for helping young women. And so she goes and works in a crisis pregnancy center 50 hours a week.

Or your dad has always had a passion for saving raccoons. And so he volunteers his time out to go and trap raccoons and transport them to the forest. It can be anything, but it should be some things clear and specific. Some people will have goals of things that they're retiring to that involve hobbies.

For example, their hobby might be climbing all the 14,000 foot peaks in Colorado. Their hobby might be picking up antiques and shopping from coast to coast of the United States at little out of the way antique stores and putting them on eBay. Their hobby might be any number of things.

There's no limit to what they can do. But the most important thing that they need to do is to clarify what are they going to spend their time doing? And it must not involve the idea of sitting at home. It must not involve the idea of watching TV. It must not involve these things, because if they do that, they will get sick and die very, very quickly.

So once you know the answers to that, then the financial outcome will be more apparent. So if, for example, your dad gets a job as a furniture salesman for his buddy's furniture store across town, and he's making 2,500 bucks a month doing that, but basically he hangs out and drinks coffee with the guys and shows furniture to a salesman when interested, well, now all of a sudden they have no financial problem, and you have an extra 2,500 bucks more than what they're currently spending.

That's very different than if they say, "Okay, we're gonna live at home "and stay at home in our house, "and in that situation, we're only spending $2,200 a month. "We got a $600 surplus, "and your dad's gonna go and volunteer "with the local boys club or something like that "to help disadvantaged youth." That's very different than if they say, "Well, what we actually wanna do is we wanna go travel, "and so we wanna travel six months of the year "and set ourselves up for that." And so the answer to what they're going to do, in my opinion, is going to lead them in the direction of what they should do with their money.

If they're gonna earn income, then you can invest the money. If they don't wanna own real estate, I think it would be fine to invest it into mutual funds. Would be totally reasonable. Or they could invest it into real estate with you. If you have a track record of some kind where you can demonstrate that, "Hey, I could use the money, "and we can invest it profitably, "and I'll do the management work for you, "and I'll charge a management fee, "but this will be a property that you own," I think that's a reasonable thing to do.

If they don't need the money, then you have to ask yourselves, how much money do they need just in savings? $100,000 in, let's see, 115 minus 30 would be $75,000. In my opinion, $75,000 in savings is not an awful lot. I would feel very happy if they just kept the money in savings.

I don't see any need for them. I don't know what benefit they get necessarily for going and putting small amounts of money like that into most investments. I would feel comfortable with that just being the cash cushion that they have as their personal emergency savings. They don't need the income from investments because of their social security, and so that savings could be something that could be very useful for them.

And I would think that there may be some spending things that they might wanna do in the future where they would want that savings to be available for spending. So back to the traveling across the country thing, that's the kind of money that they would use for buying an RV or fixing up an RV or buying a truck camper or something like that.

Then I would probably think with that amount of money and the fact that they can live on their social security income, I would probably think the best thing is to keep it in savings and use it for emergency funds and big ticket items. - Okay, yeah, they've got a truck and a trailer, and that's basically their biggest ambition in retirement is seeing all the national parks and then also getting involved in raising the grandbabies as my wife and I start to build a family here.

So I think that that kinda makes sense to keep some cash around then. And do you think that they should definitely pay that student loan off at 8% with the savings they have? - Who is liable for the student loan? - They are, it's a parent loan that they got from me and my sister when we were in college.

- They're jointly liable? - Yeah. - Okay, yeah, I think they should pay off the student loan. 8% is a steep interest rate, a very nice guaranteed return for them on paying that off. The reason I asked about the liability was, well, if one of them is liable, could the student loan die with one of them if one of them were in poor health?

But if they're jointly liable and they're in good health, I don't think that's a good strategy. So yeah, I think paying off the student loan would work. And it doesn't sound like they've been financially irresponsible, but one of the things that I would do very strongly in that situation is I would have a serious talk about not going into debt.

Because you can live very well on social security income with a little bit of savings and have everything paid off. You can live very well in that situation. But you can't live very well in that situation if you start overspending by going into debt. And so I would strongly encourage them to absolutely refuse in any way, shape or form to go into debt so that they can always live well on their social security income.

- Okay, that sounds great. Yeah, that student loan, I'll give them an extra 300 a month too, so that'll give them more cushion. - Perfect, cool. Well, thanks for the question, Parker. We go now to John in Pennsylvania. John, welcome back, how can I serve you today, sir? - Hey Joshua, thanks for taking the call.

I've got a list of open-ended, more fun questions, but I gotta get this kind of technical, hopefully quick question out of the way 'cause it's been bugging me. I was talking to an insurance salesman and the topic of annuities had come up briefly. And there were some reasons from your old shows that I was considering some of them in the future, but the topic came up of doing a placeholder annuity strategy, meaning taking, I think they referenced something along the lines of about $10,000 and doing a placeholder to lock in mortality rates, and then being able to put more money into annuity later with those locked in rates.

Is there, I guess I really wasn't sure of when that's appropriate or what you would do that for and if it's worth it overall. I'm sure the answer is it depends, but I'm just curious to get your take on that. - Yeah, I would rate this particular comment as it's true, first of all, but it seems, it's true, it's true.

I think I have probably, when I sold annuities, I probably have referenced it. Because it's not factually incorrect, and I'll explain the facts in just a moment. It's not factually incorrect, but I'm not sure that it's particularly relevant to most situations. I think it's a very thin reason for, a thin reason for a buyer to buy an annuity exclusively for that.

Now, there can be other compelling reasons which when that one's added in to buy a placeholder annuity, but if that were the only reason to buy it, that's one of those things where it's not wrong, but it is a little bit thin. And so let me explain. Annuities are insurance contracts, and as such, they work based upon mortality tables.

The mortality tables used to be calculated to age 100, but a couple decades ago, insurance companies realized that people were living longer, and this was actually causing major problems in the insurance price because people's life insurance contracts were endowing at the age of 100. My grandmother is 106 years old.

If she had purchased a whole life insurance contract when she was young and still owned that life insurance contract, then six years ago, her life insurance contract would have paid her the face amount of the policy regardless of the fact that she was actually alive because that's how the contract language works.

It says this contract, it goes out to age 100, and so she would have received from her life insurance contract a big check on her 100th birthday. Now, that's not ideal. You think, "Oh, it's great. I outlived my life insurance." It's fun for a joke, but from a financial planning perspective, that's not ideal.

You don't want to do that because now the life insurance is not doing what it was supposed to do. It's not going until somebody's death. It messes up the taxation of it. It messes up the estate transfer. It messes up the reason for buying the life insurance, and so it's not ideal.

Now, is it the worst thing in the world? I don't want to overstate the problem, but it's not ideal. It's not why you're buying a life insurance contract. So a couple decades ago, the commissioner, they call him the CSO, the Commissioner Standard, oh, I'm forgetting the acronyms, the standard mortality tables that are used by all insurance companies were updated to go out to age 120.

So now in today's world, if you buy an ordinary whole life insurance contract, that ordinary whole life insurance contract is calculated from your current age up to age 120, and if you outlive it to 121, it will endow at 120. So annuity tables also use these particular, these tables to calculate their payouts.

So the argument as to why you should buy a placeholder annuity would go like this. Listen, if you buy this annuity today, its rates only go out to 120, which means a higher payout for you when you're young versus later. But it's possible that given increasing lifespans, it's possible that they'll recalculate these rates in the coming decades and go out to age 140.

And so in this situation, you could win because you, when you were 40 years old, you bought this $10,000 placeholder annuity, which was under these old rates, and now you have this old annuity that you can put $300,000 into and get a better deal on your payment than you will with one of the newer annuities that's based on going to age 140.

So do I rate it as true? I rate it as technically true. It is possible, but there's a lot of assumptions baked in there. Number one, that rates will get readjusted. I think there's a good chance that they might, but it's not likely in the coming years. Famously, just about two years ago, life expectancy has actually decreased for a couple of years, which changed a very significant trend.

And while I think that there are exciting things happening in human longevity and human aging space, some really exciting scientific stuff happening, I don't think that those expansions in life expectancy are likely to trade over to the population at large anytime soon. The population at large in most countries is so sick with degenerative diseases, mainly lifestyle diseases, that I wouldn't expect there to be a significant change in life expectancy across the population at large.

I do think wealthy people who are health nuts, who can afford all the best treatments and can take all of the latest treatments and medically advised things to extend lifespan, there's some compelling evidence that it can work. But this is mainly, at this point, a billionaire's play space where the wealthiest of the wealthy are engaging in this kind of work, but I don't think it's gonna translate over in the next decade or two to the population at large.

And then finally, if annuities make sense in somebody's plan, and I think that in many retirement plans, they do make sense, I think they'll make sense regardless of what the mortality tables are. And so I never went back and calculated what the payout would be on an annuity that was priced out to age 100 versus one that's priced out to age 120.

I never did that. So I can't say that I've done the analysis, but I think that it's unlikely that the basic usefulness of annuities would change all that much if the underlying mortality tables changed. And then finally, what I would say is, if you have an insurance policy with a company and that insurance agent hears threats about them changing the mortality tables, then that's when I would buy one.

And I think that this is one reason to have an insurance agent that you talk to and that speaks with. If I were an insurance agent and this were happening, I would sell 500 annuities in two weeks because that is a very compelling argument. I did this when long-term care insurance policies were changing.

I was an insurance agent and they were changing the long-term care insurance policies and they were eliminating the lifetime benefits of long-term care policies. It used to be you could buy a policy that was unlimited with the amount of money it would pay out for long-term care. But the insurance companies were overexposed to that risk.

And so what they did was they decided to discontinue that and cap all long-term care insurance contracts where instead of them being an open-ended commitment, they would be committed to a maximum cap of benefits based on the daily rate and the period of time. So we had like a three-week warning bell, something like that, that our company was going to be discontinuing the lifetime benefits.

I picked up the phone and I lived on the phone for the next two weeks and I called every single client of mine who had ever expressed an interest in long-term care insurance. And I sold, I don't wanna exaggerate, but I sold a lot. It was something like 60 to 70 long-term care insurance policies in a week and a half.

It may have been more, it was a lot. And because I picked up the phone and I said, listen, here's the facts. This policy is going away. If you're interested in this policy, you have to get something. And I was working from early morning to late at night and I sold them like crazy.

And so what I would say is just tell your insurance agent, listen, if you ever hear that they're actually changing the mortality tables, call me and then I'll buy the annuity, but I'm not gonna buy a $10,000 annuity today. - Yeah, no, that sounds reasonable. I'm actually more glad I asked that question.

I had assumed that locking in mortality rates had more to do with my current age versus an age when I might buy it, say 10 years from now, rather than the ending age. And that's what's in reference to the mortality table. So I'm really glad I got that clarification.

I don't think the source of the money matters, but the only other thing he mentioned was that he was thinking about it for my qualified IRA money to be used for that. But I don't think the source really matters that much. But thanks for that clarification. That's really good to know.

- Yeah, you can make some other thin arguments as a certain policy feature. That's the big one in the annuity marketplace. There have been some exotic annuities sold over the years that were substantially mispriced. And I think it's important to recognize that insurance companies don't always get it right.

And so there have been annuities over the years, especially in the fixed indexed annuity space, where the guarantees that the insurance company put into the contract were so rich that if you had bought one of those annuities, you made off like a bandit. I reviewed policies back when I was an insurance agent.

I reviewed policies that were sold in the 1990s. And the contractual minimums, people would get letters from the insurance company saying, dear client, we are hereby offering to buy out your annuity and substitute it for this other contract with a bonus. If you ever get a letter like that from your insurance company, no matter what, don't accept the offer.

Take it straight, run straight to the insurance agent and figure out why they wanna buy you out. Because they did this. They promised, they put guarantees in some of these contracts in the 90s that were so rich that there was no way that the investment returns were going to pay out.

And now what most insurance companies will do is in the situation, if they realize they've mispriced the product, number one, they stop selling the product. Number two, if the product is mispriced, they may go ahead and segregate those products over into a separate pool. And so they put all the risk and they say, hey, this is a really risky bunch of insurance contracts that we're gonna lose money on 'cause we didn't get the pricing scheme right.

And so they put them over into a pool where they can service them separately. And they try to de-risk that portfolio as they can by sending out letters and whatnot and offering to buy people out. So they try to de-risk that pool. Now, in most situations, the insurance company, a big insurance company that's financially healthy, they're gonna stand by their contracts.

They don't wanna be sued and they're not gonna be sued because they're gonna stand by the contracts. But they very much are hoping that people will drop the contracts. They very much are hoping that you'll look down and say, oh, I put $10,000 in this silly annuity and I'll take it out and I'll just spend the 10,000 bucks 'cause that helps them to de-risk and de-leverage the portfolio.

So there can be reasons like that to buy a contract. But in general, those are the same kinds of contracts that the personal finance space and the consumer finance space will say, oh, these contracts are terrible. And in many cases they are, I'm not denying that. But when you sit and read the contract, sometimes you look and you say, this contract is stinking amazing.

They're gonna guarantee me this? Well, man, if they're gonna guarantee me this, I'm gonna take it. And it may be that they were just caught up in a competitive environment and they over-promised. Now, with an annuity, you always have to recognize you're always dealing with an insurance company here and that insurance company has to stand good for the products, which means it's theoretically possible that the insurance company may default on its promise.

And if a product is so substantially mispriced that that could be the thing that drives the insurance company into bankruptcy, and then you get whatever the bankruptcy trustee decides you get through the court process. But it's very unusual for that to happen. But things like that can be good reasons to buy a certain product.

But if you're dealing with a traditional annuity, which is what most people say, stay away from the exotic stuff. Good advice, I think, generally speaking, but there may be exceptions for the sophisticated consumer. A traditional annuity, there's just not much reason. There aren't any contractual provisions that, man, if I just don't get this, then I'm not gonna get anything.

So think about that, but you're right in your point that the mortality tables have nothing to do with the age at which you buy the annuity. It has everything to do with the mortality table that's printed and whether it goes to age 120 or 130. - Gotcha, gotcha, understood.

I know you have another caller. I don't know if you wanna take that one. - We'll go with one quick one. Yep, just pick one. - Okay, let's see. So I've been listening to your back catalog or re-listening to it a lot and gone through a lot of the talking that you've done before about your kids at different ages and what you are hoping to instill in them as far as values and work ethic and how to handle money and doing meaningful work and all that stuff.

I'm just curious if you have any update on that now that your kids are a little bit older and what you're implementing to give them, even things around the house, chores, allowances, how they, I heard one of your things when you were saying about always keep an investment fund and tell them never to let that go down.

Just curious to get a little update on where you're at on that now that your kids are a little bit older 'cause I'm getting to the age where I'm starting to try to implement some of this stuff myself and I think our kids have similar age ranges. - Totally fair.

So I'll give some updates. In general, I haven't changed many of my previous opinions. So in general, the things that I've said previously about what I was doing and why I was doing it, I haven't yet changed many of those. The biggest change that I have made in the history of, over the course of radical personal finance is I have stopped being interested excessively in early child education.

I think that it is probably a good thing for those who can do it, but it's hard to do it with multiple children. And so while I think that it can pay off the Domen method and early reading and all of that stuff, I think it can pay off.

I'm not convinced that it's all a fraud. We just found that we were unable to stick with it effectively ourselves given our overall family dynamics and the number of children we have and their spacing, et cetera. And I don't think that we are particularly, I don't think that we're mistreating our children in that kind of situation.

I think that I've grown more confident in the fact that children, if given the right environment, can learn quickly. So I have changed my opinion on early childhood education. I've become convinced, increasingly convinced that unschooling and just a total child-directed education is not for me. I never really thought it was, but I think that the unschoolers make some compelling arguments.

But at the moment, I've become convinced that that's, I continue to believe that there's value in facing the discipline of generating academic structure and academic skills. And so that's something where I continue to, I haven't changed much on that. With regard to the financial side, I continue to give my children an allowance.

I teach them to divide the money into three categories. I teach them to have an investing bag. What has been very difficult though, and I've actually extended, I had planned that at seven, my previous plan was I was gonna give an allowance from three to seven. And then my previous number was, okay, around seven, I think there's enough productive work that a child can do that I'll stop doing the allowance system.

I don't want to continue welfare in my family. And so I figured, okay, I'll stop this with seven. Our travels have gotten in the way of that. So the constant movement, the travels, and then being in a foreign context has gotten in the way of that. My wife and I have been talking about moving back to the United States, and there are many good reasons to do that.

If we did move back to the United States, one of the things that I would be happy for, again, is to be back in a context where I know the dozens and dozens of things that my children can do to invest money. I can, the dozens of things that they can do to earn money and to help them in some of those situations.

Whereas right now, in an international context, it's much more, those things are much more difficult. So I continue to believe that teaching children to have savings, giving, saving money for spending, investing money for growth, and giving money really, really works. I have increased an appreciation of how important academics are, just for the long-term future of children.

My seven-year-old is quite precocious, and he's often asking me, he's like, "Dad, I could just get a job, "and if I could do this and that," and I continually find myself saying things that I would have been surprised a few years ago that I would have to say as much.

No, son, right now, I make plenty of money. You don't need you to get a job. What I need you to do is to focus on your schoolwork, because academic achievement is gonna pay off far more in the long run for you than is just getting a job and having money.

That's a short-sighted, to run out and get a job and not focus on your academic skills is a short-sighted approach to life, and so that would have surprised me a number of years ago how much I needed to encourage that. I continue to believe that, now, this is one that's gonna be tested in the coming years, but I continue to believe that I'm on the right track with the college planning and the way that I invest money in my children now, rather than focusing on college savings.

I'm open. One thing I have changed on is I'm open, I'm more open to my paying for my children's college education and their academics than I previously was. When I was in college, I was raised by parents who put themselves through college. Well, my dad did, I'm not sure if my mom did.

My dad put himself through high school and he put himself through college. I don't remember what the finances were for my mother's parents. They were better off than my father's parents were, so they may have paid for her school expense. In fact, I expect they probably did. But my father was an independent man and again, worked his way through high school, went basically to a boarding high school and worked his way supporting his physical, his own needs through starting in the age of high school.

And they raised me with that mindset of contributing to the family and providing for that. When I started to go to a private school in seventh grade, my father had me contribute $100 a month from my own earnings to the cost of that school. Now, I actually need to go back and ask him why he did that.

I don't think it was because he needed the money, although finances were tight at the time because he was paying for, I think, four private school tuitions simultaneously. But so maybe he needed the money. I don't think it was because he needed the money. I think it was more because he wanted me to have skin in the game.

'Cause I know he did the same thing with my siblings. He wanted me to have skin in the game. And I valued that. I couldn't make those payments all the way through because of some stupid ways that I handled my money when I was in high school. But I do value that I had skin in the game.

And then I put myself through college. What I have since come to realize is that there's a whole set of experiences that I never pursued when I was in college because I was so limited in needing to make money to pay for classes. And at the time, I used to depreciate the value of those experiences and draw pride from my own personal, like, "Hey, I take care of myself "and I provide for myself." But in hindsight, I'm not sure that was the best move.

In hindsight, I realized that if I had done more interesting internships, that could have led me in some very different directions in my career opportunities. I never could understand why anybody would work for free. I always needed to work and I needed to work for money. And how could I afford to dedicate time to working for free?

But at this point in time, I now see how those internships could have opened up to me very different experiences. I also now see how I didn't follow a lot of my personal interests in college that could have led to new and interesting career opportunities because I was so focused on earning money to pay for classes, pay for school, and pay for my living expenses.

And I now look at that and I wonder what it would have been like if I had had more free time. Now, I'm not convinced one way or the other because the reality is I squandered a lot of the free time that I did have. I remember very distinctly the difference between my freshman year and my sophomore year.

My freshman year, I worked three jobs, I took a full load of classes, and I didn't borrow any money. My sophomore year in college, I decided I was working too much, I stopped all my jobs, I took out a bunch of student loans, and I dropped my class load down to the bare minimum.

I did terribly in school, I got terrible grades, and I don't really know what happened to that year. I would imagine I had a lot of fun, but I don't actually know. And I wasn't a drinker, so it's not that I can't remember, I just can't remember. And so I look back at that and I was like, it could go both ways, right?

You can have somebody whose parents provide everything for them, and they appreciate the benefits of that, and they are driven to make use of that very special time in their lives. On the other hand, you can have somebody whose parents give them everything, and they're just totally entitled, and they waste their time.

And so I'm not convinced that it's strictly a matter of paying for the child's expenses versus not. I'm convinced that it's probably more a matter of character and the vision, et cetera. So I'm more open today than I was five years ago on the idea of paying for children's education, and I haven't, and for extracurricular activities and such, and I haven't yet figured out kind of how would you know, how would you be able to assess the character of your child and figure out if what you're doing is good for him or bad for him.

A couple other things that are changing for me as my children get older, I'm appreciating more things like safety. A number of years ago, I bought an old Toyota Corolla for $500, and I was super happy when I found it. I bought it from a little old lady that just wanted to sell it and buy something different.

It had a manual transmission, and I bought it immediately 'cause I just loved it. I was so excited about having this old car, because it was just dirt simple, and I figured I could always keep this around. That way I have an extra car if I ever need one.

I can lend it to people, et cetera. But then I was driving it down the highway one time, and I realized, wait a second, why am I driving this car? If I get in a wreck in this car, that's a problem. That's a major problem for me. And I find the older I get, the more I realize my own physical frailty.

I used to, I've put so many roofs on houses, but these days I would be hard-pressed to go and spend a ton of time up on the roof just out of the physical danger of it. It's like, it's not worth it to me. And so the same thing with the old car.

I kind of quit driving it and eventually sold it, 'cause I thought no matter what this old car has, it doesn't have any of the modern safety features that I find valuable. So I think that by the time my children are of driving age, every car will have significant safety features.

But I now realize what I didn't realize when I was younger, the importance of things like, if your child is gonna drive, them having a car that has modern safety features. And if I were putting a 16-year-old on the road today, five years ago I would have said, oh, give them a little bit of money and let them pay for whatever they can find.

Well, I've changed that. I think I didn't appreciate at the time how important things like safety are. And if I had to put up the money or match the money, however we decided to do it when the time comes, I want my child driving a car with excellent crash ratings, not a car that doesn't have any safety features.

So that would just be off the top of my head, some things that I have changed. So for the most part, not a lot of changes, but I'm very sensitive and I'm watching very carefully to see, okay, are my opinions right or wrong and what kind of feedback am I getting from my children, et cetera.

So I'll keep you in the loop as the years go by. - I appreciate that, thanks. Yeah, I think one of the more impactful things I've gotten from you over the years is just the idea of investing in the kids. I tend to be a frugal person, but the whole idea of being okay with swiping a check or spending all this money on education, but not paying for certain experiences or whatever along the way just seems ridiculous.

So I've appreciated that mindset and just to get an update on the other stuff as well, it's been really helpful. And we'll go to the back catalog, it's still a great resource, so I keep going through it. - Thank you, appreciate that. Yeah, it is, and that's definitely, I didn't do, when I was younger, I didn't do a lot of the summer camps and all those things that many other children did, and I think it was due to the fact that we weren't wealthy.

And I don't regret it, we all have our own gain. But now I look at it and I realize that how much of a benefit it can be for a child to be enrolled in a specific summer camp that's related to something that they're interested in, and for them to have a budget to explore the things that they're interested in.

And I see how that knowledge and those interests when they're cultivated at young ages, I'm convinced it's really powerful. So I think that most of us don't have to choose, most of us don't have to choose between doing one or the other. Most of us can do, we can do both.

But if you have to choose between one or the other, I'm convinced that the biggest payoff comes of investing in the children when they are young. We're going out to Anchorage, Alaska. Welcome to the show, I'm gonna serve you today. - Hey Joshua, this is Ben. - Ben, welcome.

- Thanks, I hope you and your family are well. The question I have is, I've been thinking about, from your discussions and others about starting businesses and so on, but mulling over different ideas and I haven't really settled on anything. But lately I've been thinking about the possibility of becoming a financial coach.

I was maybe wondering if your insights into that, it's not really officially a credentialed, there are some quasi credentials out there, mostly by people that are running courses on how to become one and start a business associated with it. There's no official licensing involved or whatever. You're just giving some generic advice to folks to help them get to the point where they could go to somebody that could help them, that would require licensing, like a financial advisor or so on.

So I kinda just wanted to get your general overview of what you think about financial coaching if you know much about it, and the process of starting a business and possibly a side business doing this. - Let's start with this. I work in some ways as a financial coach.

And the business that I have with Radical Personal Finance is in many ways an ideal coaching business. I have multiple lines of revenue. I don't maximize all of them, but I could sell advertising, right? I have patrons of the show, which I'm very grateful for. I have people that sign up and support the show voluntarily with patronage.

I've previously sold advertising. I sell digital courses that coach people on particular problems. I have a number of long-term clients that I've worked with, exclusively entrepreneurs, because I enjoy working with entrepreneurs because I can make them a lot of money. And I offer a little bit of hourly consulting.

I recently, this last week, I recently redid that. I haven't done any consulting in the last six months other than with my long-term clients, because it's a fairly low-profit margin business for me, compared to other things like selling courses and classes. But I've decided to go ahead and start doing that again.

And so I recently revamped the coaching system, and it's available, I think, on the website now, where anybody who wants to can just go and book a consulting call with me, and I can make a lot of money doing that. I charge $400 an hour for consulting, and it's not hard for me to fill my schedule at this point in time.

I do it one day a week. And so you can do the math. If I do consulting for, usually I do 10 hours a day, I do one day of 10 hours. So if I do $400 an hour for 10 hours, that's $4,000 of revenue in one day. If I do that 50 weeks a year, then there's $200,000 a year of revenue just simply from consulting.

And so you can run the math, that that is obviously a doable business. And what I do is exclusively consulting and coaching. By the way, I just double-checked, my assistant had done this, I just double-checked. The page is now up at radicalpersonalfinance.com/consult. So if you'd like a consultation with me, go to radicalpersonalfinance.com/consult.

You can purchase, you can book right there, you can pay right there, you can choose your times, et cetera. And so you can see from there that certainly, with that perspective, coaching can be a viable business. I can make exclusively from consulting, one day a week, I can do, I can make $200,000 of gross revenue, and it's basically, it's almost all profit based upon my business model.

And I'm a coach, I hold no licenses, I hold no, I don't have an insurance license, I don't have an investment license. I'm exclusively an outside person who exclusively makes a living based upon my knowledge. So on that, from that perspective, it's rather obvious that this is a business that can be done, that this is a very doable business, and you could make more, right?

If you can bill at $400 an hour, and you can approach people, and you can, if you wanna fill 20 hours a week, you can do the math, right? Now, what is often missing from that is, well, how long did that take? Right, as we record this, it's October 23, 2020.

I have been a financial advisor since 2008, so that's 12 years of finance. When I became a financial advisor, I had been interested in and thinking about personal finance and financial planning for a very long time. I read a huge amount on financial planning and the various theories and strategies and whatnot, and I have since I was a kid.

I have, what, eight or nine professional-level industry credentials. I'm a certified financial planner. I'm a chartered life underwriter, a chartered financial consultant. I'm a chartered advisor for senior living. I have a registered health underwriter, which is about health insurance, a registered employee benefits consultant, and I have a master's degree, a legit actual master's degree in financial planning.

In addition to that, I've recorded, what, coming on 800 episodes of Radical Personal Finance, and so those 800 episodes of Radical Personal Finance, that's a huge, a huge investment, and Radical Personal Finance is one of the largest personal finance podcasts in the marketplace. I don't know, it's certainly not the largest.

That would probably be Dave Ramsey, but there are many good ones and many big ones, but it's one of the largest, and in the top 1% of podcasts. Is that easy to create? It is not easy to create. I don't know if I could do it today. I'd like to think I could, but I don't know if I could do it today, and so, and when you build that catalog of content, you know, you just heard John saying that he's going back and listening through.

John's listened to every episode I've done. He's going back and listening through it again, and so when you build that back catalog of content, that's a really powerful thing to do, but it's not a get-rich-quick scheme, right? It's great to say, "Hey, I can make 4,000 bucks in a day," and it's awesome.

I love it. It's great, and I enjoy the work. It's so fun to me. I enjoy it, and it's a very valuable resource in the marketplace. There is, I know of no other financial advisor with the knowledge and credentials that I have who gives any kind of hourly planning option in the way that I do, where I don't sell anything, and that's a tremendous resource for people because it gives people the opportunity to say, "I wanna get a second opinion.

"You know, I'm gonna go meet with my financial advisor. "I'm paying him $15,000 a year to manage my portfolio, "but I wanna get a second opinion," and the things that I consult with people on are so wide-ranging that I frequently find myself saying, "Without any fear of error, "I think I'm the only person in the world "who actually can give you the answers "on this particular thing," and it covers the gamut.

It goes from how to maximize the profitability of a business to how to flee the country, and I'm not exaggerating with that, and so I don't know of anybody else in the business. Maybe they're out there. I know of many people who are better than I am with specific technical consultations.

For example, if it comes to estate planning, I just tell people, I'll give someone an overview to say, "Let's talk about the big picture," but I send 'em to an estate planning attorney because your average, everyday, run-of-the-mill estate planning attorney knows more about estate planning in your state than I do, but I'm fully qualified.

I don't have the credential, but I'm fully qualified for the accredited estate planner credential, and so the point is that it cannot be built. Without question, it can be built. Can I tell you that you can build it? I'm not so confident in that because I know what has gone into my being able to do this, and I'm not convinced that most other people want to do or could do what I do because it's the output of a very long time.

Now, if you say, "I've got a five-year plan "or a 10-year plan, and I wanna be knowledgeable in that," yes, absolutely, it can do that, but if you say, "I've got a six-month plan "or a one-year plan," I'm not so sure. You can become a world-class expert in anything in a year or two, right, a year or two of reading, but most people don't do it.

They're not willing to do that, and so it's hard, and then to make yourself stand out, and the media space is very full, to make yourself stand out, it's very difficult, so what I don't think works generally with financial coaching, I don't think that financial coaching works at the low end.

My average consulting client, I have a number of, I do have a number of clients who, I've consulted with some people who don't make six figures, and I applaud them, and I actually encourage them, and I work my tail off so that when they leave a consulting call with me, with 60 Minutes of Me, they've got way more than they could ever have dreamed of, because I feel a huge responsibility when people who don't earn six figures sit down and say, "I'm gonna invest money into myself in this particular way," but my average client makes several hundred thousand dollars per year, it's not uncommon for me to speak on the phone with, if I do a 10-hour day, it's not uncommon to me that at least five of the 10 will be multi-millionaires, because that's the audience that I have at Radical Personal Finance, and so that's a very different audience, that's a very different marketplace than the marketplace for somebody who says, "I'm gonna do budget coaching," or, "I'm gonna help you get out of debt," or something, which is what I think most people think of when they think of coaching, and the reason I'm specifying this is what has been frustrating to me over the years, is I have learned through hard-won experience that most people who are poor don't care very much about money.

Most people who are rich care a lot about money, and it's maddening to me, because I look at that and I say, "You're poor, you're broke, why do you not care about your money? Why are you not willing to do anything? Why are you not willing to read a book, go to a seminar, sit with a financial advisor?

Why, why, why, why are you so pig-headed to not realize that you're broke and poor because you're uninterested in money?" And yet I have, I don't wanna say without exception, but I have found it ineffably difficult to actually change somebody's mind and opinion around that. And when I was a baby-faced financial advisor, I remember so many times I'd wind up in this, I'd get referred to some guy who was a nice guy, and I'd wind up in this single wide trailer, or this little room somewhere, and I would take people with me, more experienced financial advisors and joint work people, and they would sit there and they would stare at me.

And I would sit there for an hour with somebody who was broke and poor, and my poor joint work people would come along and they would just sit there. And we would leave the appointment and they would say, "Joshua, why on earth did you not get up and leave after five minutes?" And I was like, "But they need me, they're broke, they're poor." And they would say, "They're broke and they're poor, they're obviously not gonna do anything, why did you waste an hour of your time?

Go and do something that you enjoy doing with." And I thought it was cold-hearted and wrong, and I used to think, "But I can do it, right? I can change somebody, I can make somebody want it, this person's living in a single wide trailer on the bad side of town, and I know that I can make a difference in their life." And speaking today, I couldn't give you a list of five people that I ever made a difference in their life that way, even though I wanted to and I tried to.

And so what I think a lot of people think of when they think of financial coaching is, I'm gonna help people do budget coaching, I'm gonna charge them 50 bucks an hour. And I don't think that business works. Maybe there's somebody out there who's doing it, but I just don't think it works, I couldn't make a living that way.

I think that maybe there's somebody out there who's doing coaching and they say, "Well, I'm gonna help people get out of debt." You're not gonna do it, right? They need Dave Ramsey's radio show and book, right? They don't need a coach in general. Now, I'm sure there are people out there who would say, "But I've done it." And I would encourage you to listen to their stories and see, but the most profitable thing that most financial coaches are gonna do is sell a course on how to become a financial coach.

That's the most profitable thing that most people do. And so I wanna give you though, a couple of business models that I do think work. Number one, if you can work at the high end, I think it's possible to do high end coaching. If you have the credentials and the knowledge and the skill, and you can figure out how to attract wealthy people, I think it's absolutely possible.

But that's gonna need some skill and some knowledge and some experience and some marketing savvy. What I think is very sellable, if radical personal finance collapsed, and I just needed to make money, and I needed to make money with my skillset, and I needed to make money in an area that I thought I could leverage the niche opportunity, I would build a social security consulting business.

And I would build people, I would become an expert on social security, and I would build people for an hourly rate or a package deal to tell them when and how they should take advantage of social security, and answer all their social security problems. And I use that as a model, whereas I would say that this is, I think, a good kind of model to pursue.

Why? What does it require? Well, first of all, social security planning requires specialized knowledge, but it's not that difficult to acquire. I think that three, four months, you could become a leading expert on social security. There are many good books written, you could read the legislation, you could read all of the social security administration documents, and in about three to four months, you could be an expert on social security planning.

But it's an area that's very dense to most people. And so that subject matter expertise is, I think, a really good way to differentiate yourself. Number two, the people that you're dealing with, you're dealing with people who have big financial assets. And here I'm talking about social security. Social security is a huge asset for an ordinary worker.

It's, for most people, the single most valuable asset they have. And teaching them how to optimize it and how to approach it is, in my opinion, one of the best things that you can do, because if they get it right, you can add tens of thousands of dollars to their life.

If you get it wrong, they could potentially be walking away from tens of thousands of dollars. And so you wanna deal with areas where you can make a big impact. If you're gonna charge big dollars, you need to be able to make a big impact, which is why helping somebody with budget coaching is not it.

If you help somebody with budget coaching, you say, "Listen, I'm gonna help you save money "on your cell phone bill by switching from Verizon wireless "to this MVNO over here." Does that help them? Yeah, but they're gonna save a little bit of money and they're gonna have a hard time justifying it.

But if you wanna go after big dollars for you, you need to be able to make big dollar changes in the lives of your clients, which is why for my long-term consulting clients, I only work with entrepreneurs, because I can't make that much of a difference in an employee's life.

I can make a little difference, but the changes generally come more slowly. And a lot of the changes are gonna be disruptive, right? The way that the average employee can make more money is go and get a better job. Well, that's disruptive. And a lot of people, that's not something they're doing.

But an entrepreneur, I can come into an entrepreneur's life and every year we can double the business. Every year we can triple the business. And so now my consulting fees, which are hefty, are always, I'm always painting them. And I'm saying, look, we added $600,000 of revenue to your business last year.

Do you feel so bad now about my fees, right? And you always need to parallel and foil and contrast your fees and the cost of your work as compared to the benefit and the upside. And you can't do that with budget coaching. You can't do that with get out of debt coaching.

You can do that with social security coaching. And then in addition to that, you're dealing when you're dealing with social security, you're more, and the kind of person who's likely to book a consultation, you're dealing at the upper end of the wealth market. You're serving the wealthy, not the poor.

The poor are not gonna come and buy a consultation on how they can maximize their social security. A number of years ago, I had a friend of mine who had never made more than just a little bit of money, very basic work, had spent years being unemployed, had declared bankruptcy and had gotten a job, but then had gotten laid off from his job.

He was in his early 60s and he just didn't know what to do. And so he decided he was gonna go and file for social security. And I begged with him, I pleaded with him. I said, "Listen, let me explain to you." And I showed him, I tried every way I could.

I said, "If you file for social security early "versus if you file at 70, "this is the single biggest thing that you can do "is work for the next seven years. "I cannot overemphasize how important it is "for you to wait until at least full retirement age, "if not 70, in order to file for social security." I tried, I tried, I tried.

I gave the guy $400 an hour advice for nothing. I broke all my rules about giving people financial advice for free, and I did it, and it did nothing. He filed for social security and I told him, I said, "You are going to be broke "because you've got this tiny social security payment "because you're taking it so early.

"And what's happening is you're doing it "in a time of stress. "You're doing it because you got laid off from a job "and you don't have the desire or the energy "or the wherewithal to go and get another job. "And so this is never gonna get better. "For the rest of your life, "you are going to be living like a miser "and completely stuck.

"Because if you think your self-confidence is bad now, "just wait four years." Well, fast forward about four or five years. That guy, my friend, and I want to be clear, he's still my friend, but that guy, he sits at home, he watches Netflix all day long, and to this day, he is completely stuck in his living situation.

He can't get another car, he's not willing to change anything, he's got everything is breaking down in his life, he's stuck in a place that he hates living 'cause it's the only place he can find that's cheap enough, and it's just a nightmare. He's got no opportunity, no future, and it's all because of social security.

He chose social security early and has no confidence enough to get a job, nothing that he knows that he could do, nothing that he's qualified to do, and at this point in time, after sitting and watching Netflix nonstop for years, he doesn't have the personal motivation to do anything.

So these kinds of things matter, but yet, my point in that little tangent was simply to say that poor people, they won't pay you for advice, and they won't take your advice when you give it to them. So you need to be working with people who are wealthy, and something like social security consultations, the people who are gonna buy that are gonna be people who are wealthy, who understand that, hey, if I just pay an expert, you know, 400 bucks or 250 bucks or whatever your price is that you wind up in, if I pay an expert for a couple hours of their time, they'll answer all my questions for me, and they'll help me maximize things, and then I'll sleep well at night knowing that I have maximized my social security contributions.

And then finally, the thing about something like a social security consultation business is that that's the kind of business that's easily marketable. It'll be attractive in marketing, right? If you put a newspaper ad for social security seminar, you'll get people to show up. If you put a newspaper ad for get out of debt seminar, if you get people to show up, they'll be the wrong people to show up, they won't have any money.

But if you advertise for social security seminar, they'll have the money and they'll show up. In addition to that, it's the kind of business that works really well as being compatible with other kinds of businesses. So how would I market it if I became a social security consultant? What would I do?

Well, I'll go to every financial advisor in town, and I would say, listen, let's put on a seminar for your clients or your prospective clients on social security planning. And I'll present to your clients and to your prospective clients, I'll present to them the latest and the greatest and the very best social security strategies as to how they can maximize their social security benefits.

And the advisors will pay you for it or they'll do it with them as a joint operation. They'll cover the costs of the seminar. Their clients will be happy to come, happy to bring their friends. The advisors will win because they'll have exposure to new prospective clients, and you'll win because you'll have exposure to new prospective clients.

And something like that, it's perfect because you can give away all of the latest and greatest and best cutting edge strategies. You can give them all away at the seminar without any fear of that limiting your exposure. Because will there be one in a hundred who's that guy who says, wow, okay, now I'm gonna go and read all the books that Ben told me I should read?

Yeah, there's one in a hundred. But the other 99 recognize that, ah, if there's this many great strategies that he's giving away for free, there must be even more better strategies that if he were looking at my situation, he could tell me what I qualify for. And they'll sign up and you'll fill your calendar with that.

So it's easily marketable. So something like that is the way to go, not with, okay, I'm a financial consultant and budget consulting, but rather something like, I am a social security consultant and then I'll make one last point. Given all of that, if I were starting over again and I were interested in finances, I don't think, I'm not sure that I would go with the consultant route, unless it offered you some specific things that you wanted.

So why do I like consulting? Well, number one, I don't like consulting. I like selling digital courses because they're infinitely scalable. I can create something one time and then I can sell it to thousands. And it doesn't matter whether there's thousands of people who buy it or one person that buys it, I have the same time invested.

So it's infinitely scalable. In addition, I love it because that kind of work has a high payoff. That kind of work, if I provide the right value, it's a very, very profitable business. That's one of the reasons why I don't like doing consulting because when I do consulting, I can make $400 an hour, which is wonderful.

I love it. I'm thrilled. It's great. I'm very blessed to be able to do that. But I can make $4,000 an hour with my other work. And so there's always this trade-off is that why should I do consulting when I can do this other work? And so consulting fundamentally, especially hourly consulting, fundamentally has the problem of it being a one-to-one sale of time.

And you're always stuck in this linear model. Now, that can give you certain benefits. So for example, if you want the ability to travel the world, well, consulting can offer that. If you want the ability to live anywhere you want, if you want the ability to work on your own time schedule, consulting can offer that.

If you want the ability to do all your work virtually, consulting can offer that. So there are a lot of benefits of building a consulting business. But a lot of benefits that you would get from building a consulting business, I think are better achieved in the traditional financial services model.

If I went broke today and I couldn't do radical personal finance, would I start the social security consulting business? Maybe if I had something else exciting as well. But if I were gonna live in one place, I would go get a life insurance license and I would sell life insurance.

I used to be embarrassed about selling life insurance. When I was a new life insurance agent, I was like, I wanna do financial planning. I wanna manage money. 'Cause I thought selling life insurance was unglamorous. Today, I could happily do nothing but sell life insurance. And I think I would make infinitely more money selling life insurance than I would doing social security consulting.

And the life insurance business model is in so many ways a superior business model. Because now you have much higher commission rates. You sell $1,000 a year life insurance policy to an average, not exactly a well, $1,000 a year term life insurance policy. That's $1,000 commission. In other words, $900, $1,100, depending on what company you're dealing with.

Right, it's a significant commission. Maybe some companies have lower first year commission rates, but you're dealing with $600 to $1,200 of first year commission for selling a $1,000 term life insurance policy. You could sell $1,000 term life insurance policies easily because they're just so necessary. They're so valuable. And there's so many people who don't have the proper term insurance that they need.

Disability insurance, health insurance, long-term care insurance. All of these create significant upfront commissions that you can sell to more people. And all of them create renewal income. And renewal income is one of the most valuable things you can possibly cultivate. Because in the social security seminar world or that world, you're always one-to-one, you're always selling your time for dollars, time for dollars, time for dollars.

And if you stop selling your time, the dollars stop. But if you do something like build an insurance portfolio of life insurance sold, then you can always know what your renewal commissions are. So you get into it a few years, and now you know I've got $50,000 of income coming in this year for my renewal commissions.

And I don't have to do much for that. And the business gets easier, because now you do repeat sales, and it expands out, and you add other lines of product, et cetera. And so I think that there's often this jump from people, I watched this happen last week in a personal finance group online, where somebody's looking at the, somebody's thinking about going into the financial services business.

And they say, "Well, should I go "into the financial services business?" And everybody says, "Well, no, you're gonna sell your soul, "and you're just doing it for commission, et cetera." There are major ethical questions that you have to deal with in financial services. No question. I think they're major ethical questions in any business.

And I think that if the majority of people who wanna be consultants would just simply go into the traditional financial services business, I think the opportunities there are much, much bigger, and the business model is proven. And as best I can see, there's not a lot that's changed or is changing in the model.

So can you sell seminars online? You can. But you can also sell a lot more life insurance than seminars, and it's just a much more stable business. Because people can get coaching anywhere, but if they're gonna get insurance, they gotta go to an insurance agent. And why shouldn't that insurance agent be you?

So long answer to your question, Ben, but that's how I would think through the problem, and those are my responses. Helpful thoughts, comments? - Yeah, no, I appreciate it. Certainly an in-depth look at things. And yeah, to me, initial thoughts about it are just to be a coach and maybe help local community stuff.

I don't need to do this as a career or a job. My current one is pretty good, and it's not gonna change, hopefully. It'd be maybe church stuff, help folks in church and so on. But you've certainly given me some more things to think about, and I appreciate your in-depth answer.

- Yeah, if I were gonna do that, I don't think I would charge for the time. If you're gonna give it away as a service, then I would just say give it away as a service. And I think that people, there's no question that people who are in need, people who are in a difficult situation can benefit from having somebody that comes along and that says, "Hey, will you help me?" And they sit down and help.

There's so many people who, in a church group where somebody says, "Listen, why don't you come over to my house "and I'll help you make a budget?" That's super, super valuable. And I don't wanna discount or depreciate the value of that work. That's what we should do is help people when they're asking for help.

Although there may be many poor people who won't do anything, there are lots of poor people, there are poor people who will say, "Hey, I wanna change my life "and I need some help." My comments are mostly in the line of how do you build a business on it?

And so if you wanna build a business on it, those are my comments. All right, we had four callers jump on here, so I guess I'm gonna have to go quick. If I'm gonna get everyone, I may not get everyone. So we go now to Kentucky. Welcome to Radical Personal Finance.

How can I serve you today? Kentucky. All right, we'll come back to Kentucky. We'll go to Denver, Colorado. Denver, welcome to the show. How can I serve you today? - Hi, Joshua. I'm actually in Texas now. - All right, welcome to Texas then. - Thank you. So my question touches the last one in some ways, but I'm kind of already headed down the path of traditional financial services.

So I really wanna know, and I appreciate your wisdom and your experience in that industry, but I really wanna try to get some guidance on what is the best next step for me. So I'm currently involved in a career transition. Been a paraplaner for a financial advisor for the last several months.

Prior to that, I was an engineer for 12 years. I wanna take the next step to be an advisor. Financial planning, I think that's the way that I wanna go into financial services. And I've been looking for opportunities that could get me closer to that. I've called a lot of RIAs.

I'm just looking for a junior advisor, service advisor type role. I get a few bites there. Those typically are the kind of role where I would be working under someone more experienced and then splitting fees and commissions with the RIA. I'm also in some early conversations with a very huge investment company who everybody knows because usually their 401(k) is with them.

And I see that as a potential option because great training there, a lot of volume, people just walk in the door. And so I could learn a lot fast. But my concern is that if I get to the point where I wanna have my own business, I'll have to leave and start all over when the time comes.

Do you have any thoughts for me there just as far as what the right path could be? - How old are you? - 33. - So at 33 years old, you should have more self-awareness than younger men about kind of what you like to do, what you don't like to do, where you would be good, where you wouldn't be good, et cetera.

And I think that's important to notice that because your perspective, I'm convinced that there is a place in the financial services industry for almost any kind of personality type, for almost any kind of person. But it often takes a little while to find it because different firms are structured in different directions.

And some firms work well with one personality type and some firms don't work well. And so the first thing I would encourage you is don't see it as a bad thing if you'd wind up bouncing around the business a little bit. Bouncing around a little bit is common. And I think it's common for this reason is you have to find what kind of scenario do I like.

If you're very technical and you enjoy the knowledge of financial planning, you enjoyed working as a paraplanner, you can find room for that. It's often, in my opinion, it's a much lower compensated skillset than the skillset of being a rainmaker, of being able to go out and find clients and bring them in.

But it's a very important skillset and it can work really, really well to buttress somebody's firm, but you've got to find the right solution. And I don't know how to tell you how to do that. Taking a job with a large firm where it's more of a salary type job, more of an employment type job can be wonderful.

And I think for many people, it's a much better fit than being out in the field making sales. It gives you the opportunity to earn more income in the beginning. It gives you an opportunity to not have to worry about chasing down leads, not have to worry about figuring out where am I gonna get new clients?

How am I gonna advertise my services? Do I have to talk to my friends about investments, et cetera? It's a good situation for the right personality type. I personally, there've been many days where I'm like, hey, that would be really good. Get to talk about money, get paid a salary for it.

But most days I would be frustrated because I would say I could be making quadruple the money if I would just build myself in a different skillset. And so I think it's important to look at that. Now, as I see it, there are a couple different things to look at.

There is, I used to divide this into basically three categories. I used to divide this into number one, the salesman, the guy who's going out, building relationships, prospecting, bringing people in to talk about money. The technical planner, usually a back office, maybe what you were doing before. Most firms at this point in time will try to hire somebody who's very technically competent and they'll keep that guy busy with a sales team of people out there bringing in clients.

And he's the guy who sits in the office. He comes to the client meetings, explains the details of the financial plan, but he's not the relationship guy. And then there's various administrative support functions as well. That's how I used to do it. I'm not sure if that still holds true.

There've been a lot of changes in the financial business since I left it in 2014. And so I wanna caution you to look around and talk to people. But I am convinced that if you're as young as you are, at 33, and if you really want to do it, you owe it to yourself to try to be a front end relationship builder, a front end salesman.

Because if you do that, and if you have that skill, and that's married with your technical financial planning knowledge, if you have that skill, that's where you're gonna make the most money and have the most freedom. And you can have control over yourself and over your life. To me, that's always been worth it.

Especially now, if I started today, when I started at 23, I was very insecure. I was nervous, I was nervous to pick up the phone. If I went back today into that business model, I could rebuild in two years what I did, what I previously, took me six years to build.

I could do it more in two years, just by being more mature and more confident in who I am, and in what I know, et cetera. And I think that that's the case for many people. Now, at the end of the day, you have to ask yourself, do I like, could I learn to pick up the phone?

Could I learn to go and be someone who's building relationships and bringing in prospective clients and doing their financial plans for them? I love the-- - I think so. - Yeah, so if so, then what I would say is that I would interview around with some firms where you're going to have an opportunity to be on a front-end scenario.

Now, I wanna be careful 'cause I try to keep the show fairly clean of companies and whatnot, 'cause I'm just not involved in that. But you owe it to yourself to interview around the business and look at some of the different models. There are benefits and drawbacks to almost any model.

You could start your own RIA today, right? You could file the paperwork, you could write your ADV. I've done it, you could do it, and you could start your firm. You could start your firm and ally with a certain model. Years ago, I had Alan Moore on the show and we talked about X, Y, P, and advisors.

That was right when Radical Personal Finance was when they were started. They've grown massively, kind of supporting young, primarily young, which you would still qualify, but young financial advisors who wanna set up their own independent fee-only financial planning firm. I think that's fine. I think that's fair. There are the big kind of traditional wire house names and you can get a start with many of them.

That will depend on your marketplace, right? If you start with one of the big wire house names, you're gonna have a certain number of AUM that you're expected to bring in. And if you don't hit it, you're gonna have trouble. But if you can bring in that AUM, then you're gonna be in good shape.

I'm still in favor of the model that I started with, which was insurance. If I might, if I shut down Radical Personal Finance today, that's just how I always think, what would I do? Well, I would be frustrated with the idea that I couldn't create media. I've seen the power of being able to create media.

And I would think very, very carefully about going ahead and starting my own independent RIA so that I could have control over media and I could take advantage of what I'm doing right now. And I would probably go in that direction because I'm good at creating media. But if I weren't 100% convinced that I was good in that direction, I would start a hybrid practice where I focused on selling insurance in the beginning and then investments and investment management on the backside and financial planning on the backside.

The reason is, here are the reasons why I would do that. Number one, there are far more people out there who need more insurance than there are who want you to manage their money. The vast majority of people are underinsured compared to what you would sit down as a planner and say that they should do.

And they need insurance. And you can make a very viable business doing nothing more than selling term life insurance. If you are a good financial planner and you're able to articulate the case for term life insurance, for disability insurance, and then a little bit of long-term care insurance here and there, that opens up a world to you where you can make plenty of money there with good insurance protection that's every bit iron tough, it just works.

If you add on whole life insurance or universal life insurance in the situations where it's appropriate, you can add a substantial amount of money to your annual commission revenue. And the nice thing about life insurance revenue is that it all comes in up front, right? You have your first year commissions that are paid many times while the case is still in underwriting.

If it's been conditionally approved. So you can make it in the beginning. There's no reason why you can't make with nothing, starting with no salary, with nothing, if you understand the business, no reason why you can't make $100,000 in your first year selling life insurance. Now, that'll be 30,000 in the first six months and 70,000 in the second six months, but you can do $100,000 in your first year selling life insurance.

It's really hard to do $100,000 of fees that are actually gonna be paid out to you across the grid with an RAA in the first year. They may pay you a salary. They may give you a $75,000 salary in the first year, but you can't get $100,000 across the grid in your first year with an RAA starting with no experience.

But you can do that in life insurance. And the thing that's so awesome about a life insurance business is, and when I say life insurance, I mean, again, life and health. So life, disability, long-term care, maybe health insurance, although in this marketplace, I wouldn't do that. But just life, disability, long-term care, the traditional life insurance, the products that life insurance companies sell.

You can build a broad base of clients. And the sales process of selling life insurance is no different than the sales process of selling managed accounts. But a lot more people will find it easier to say yes to life insurance than to say yes to moving a million dollars over to you.

Because it's just a simpler situation. They're contracted with the insurance company, not with you. If you disappear, if you go up and pull up at night, they're gonna be annoyed if you do that. And now they gotta figure out where they're gonna move their money. But if you've got that in the beginning with life insurance, then it's not that big of a deal if you disappear, if you go out of the business.

And so you wanna build, so it works really well. Now, the other thing that works really well being 33 years old is the life cycle. So if you were to go out to most 33-year-old friends, and like it or not, most of your clients will match your age within a range.

So most of your 33-year-old friends, if they're married, what do they need? They need life insurance, disability insurance. Do they need investments? Yeah, but what should they be doing? Put money in their 401(k), put money in their Roth IRA. Could you custodian their Roth IRA for them? Maybe, but it's really, it makes you no money.

It's not worth it, other than as just a relationship thing. And so in the 33 years old, the life stage that many of your prospective clients are in is an insurance-heavy stage. But what happens is as you build a broad client base, then those insurance clients naturally become investment clients.

So the insurance client who has four or five insurance policies with you naturally leaves one job and goes into another job. And they're saying, "Hey, listen, man, "what should I do with my 401(k)?" And you explain, "Well, what should you do?" "Well, if you want, you could bring it over to me." And that's a natural thing in the life cycle where somebody brings over $200,000, somebody brings over $400,000, et cetera.

And so you can build the investment business and the life insurance business simultaneously. And the thing that would frustrate me, I would not go into a fee-only model at this point in time. That's big in the marketing speak. Kitsis is a big fan of it, and he's like, "This has to be, "everyone's gotta be fee-only." I would not want to not sell life insurance and not earn commissions on life insurance.

Because I feel like with that as a tool, you can solve so many more people's problems. And so if you're a competent financial planner, if you're a good planner, and you understand tax, you understand estate, you understand insurance, you understand investments, then you can walk confidently into almost anybody's office knowing that 95% of the time, you'll be able to help them with something.

And most of the time, you'll be able to help them with something that also pays you. And so it's really, really valuable. So if you add to that the ability to do one-time financial plans or upfront financial plans for a package deal, if you add to that the ability to do hourly planning in some capacity as well, then you put this whole package together, in my opinion, that's a really compelling business model.

And when you go in that business model where you're willing to be the guy who's going out and prospecting for clients, you gain all the freedom in the world over your time, over your schedule, over when you work, over when you don't work. You gain massive levels of financial opportunity where it's not unreasonable for you to have a target of $300,000 five years in, not in any way unreasonable for that to be your goal.

You could surpass it. But if your targets are, hey, I'm gonna make 80,000 bucks my first year, 300,000 bucks my fifth year, 750 by my 10th year, a million plus by my 15th, you try to, you strap those numbers into your life, your age, and all of a sudden now, the upfront work that's required, the massive infusion of effort that's required to build that kind of business is worth it now as compared to, yeah, I could go and get a salary working with a big retirement plan company for 100 grand, but this has a lot more opportunity and gives me total freedom of lifestyle.

So I love the business. I think that it's a wonderful business. I think that it's, I like it. The only things I didn't like about it were, number one, I was stuck in one city, right? You gotta commit to a city. You can't be bouncing all over the place.

You just kill yourself. So you gotta like where you live and choose the market that you work in. The other thing that I didn't like was the repetitive nature of the conversations. I got annoyed by having the same conversation and explaining, hey, here's how the term life insurance policy works again and again and again.

Here's how a whole life insurance policy works. Here's why you need disability insurance. And so for me, with my personality type, I craved new markets and new things to work in. And you can do that, right? You can adjust your practice over time, and most people do. But those were really the things that I didn't like.

And then the final thing that I struggled with in the beginning that I wouldn't struggle with now is I struggled with the fact that I was working with too many kind of just getting started people. And it wasn't as exciting as working on big cases, big estates, big portfolios.

And so that was primarily a function of my age and the fact that I didn't really know how to circulate in wealthy circles. Today I would do better. But those were really the only things I didn't like about it. I think it's a wonderful business. - That's good, that really helps a lot.

One of the RIAs that I'm ongoing conversations with is they've introduced the same idea of be prepared to sell life insurance along with your financial planning work just as part of it and good supplemental income as well. I didn't mention, but I've been a listener of yours for a while.

We do have a good cash cushion. We have close to $200,000 in cash. For the reason, if we needed a runway to be able to survive while building a business. I just think that being so new to the industry that I would struggle doing my very own business from the start, which is why I've tried to partner with some of these other RIAs.

- Maybe you will struggle. The majority of people do. I don't know what any of the current statistics are, but when I used to be in the business, our numbers were that 80% of the people who started in the business wouldn't be there five years later. A lot of people struggle.

A lot of people struggle. So that struggle isn't necessarily a problem. I have a very good friend of mine who I recruited to the business. He was working in a sales job. He was a recruiter for a college and I recruited him to the financial services business. He came to my company.

He started at my company. He worked for a while. He was very hardworking, but English was not his first language and he didn't have a wealthy natural market and he worked and worked and worked and failed and eventually he couldn't pass his securities exams. He moved from my company to a wire house, worked there for six months, couldn't make it there.

Moved to, I think another, there was, I think, two companies in the interim. The fourth company went to another insurance company, joined there as just a starting guy. They saw his potential. They coached him through and he was eventually able to pass his securities exams and then after he passed his securities exams, he wound up becoming a managing partner in that particular company and then he got recruited away to another company and now he is a managing director of his own office with this other company and it's an inspiring story because what I saw in that scenario was I saw a guy who had talent and a great personality, wonderful, very honest, very, just a great people guy, et cetera.

I helped recruit him but he failed at all the details but he didn't stop and he kept on going and at this point in time, he is in, he's what, 38 now, 37, 38 now, I think, something like that, and at this point in time, he is a managing director with a very large company, has tremendous support, has a tremendous income potential where within the next couple of years, he should be making seven figures every year for the rest of his life and he fought through it.

Now, I've also watched so many people come in and just simply not fight. They don't, and they go out and sometimes they go out and they say, okay, this is just not for me and they wind up finding a situation where something else is. A lot of people go into the business thinking, well, the core of this business is technically doing financial plans.

It's not, right, it's just not. The financial planning that you do is very, very simple and so those people say, well, they wind up somewhere else, right? They wind up being an attorney and working in some advanced planning department or being a paraplanner supporting somebody, who is it? But if you've got the right expectations, it's a simple business and the thing I love about the business is that you don't have to maintain the products.

You can sell, you're selling insurance companies, right? Insurance policies at the beginning and so you'll be licensed with 15, 20, depending on 25 different insurance companies and so you've got all the insurance companies that are taking care of their business. All you gotta do is take care of the clients and all of the companies that you'll go with, as long as they're not just a one-man shop, which I'm not saying you should ignore that, right?

There are benefits of starting with a small, local, independent agency but they all have training, they all train you on it and so if you've got the cash cushion, the way I look at it is you would know a lot. In any company that you join, you'll know a lot in six months and so at 33 years old, with a cash cushion to fall back on if you need it, I would go out and the first thing I would do is I would interview widely as you're doing.

Talk to an RIA, talk to an independent insurance agency, talk to a property and casualty company, go meet with the local, independent, Jones Brothers insurance agency, then go meet with the Allstate, the state farm, meet with them, talk to their recruiters. Go and talk around the wire houses, meet with the wire houses, talk to the Edward Jones guy and find out, okay, if I built a practice with Edward Jones, what would that mean?

What would it mean if I joined Merrill Lynch or what would it mean? Talk to the insurance companies, right? Talk to Northwestern Mutual, New York Life, talk to the local life insurance guy, talk to the guy who does this and if you go around, they're all wanting to recruit you.

That's the benefit of the insurance business is that they're making their living on recruitment so they all wanna hear from you so go and interview with them and then find out what the opportunities are and then if one of them clicks with you, then try it for six months.

And in the financial business, trying something for six months won't, it's not such a black mark of being in the financial business. Rather, it actually gives you a tremendous amount of experience in the different options. So I think at 33, money behind you so that you can make it, I think it's a wonderful thing for you to consider and could be very, very profitable.

It's what I would do if I were in your shoes. - That's really good stuff. Thanks a lot, Joshua. - My pleasure. All right, we had several callers drop off so it looks like today we'll finish in Louisville, Kentucky. Welcome to the show. How can I serve you today?

- Hey, Joshua, my name is Adam. How are you? - I'm doing well, Adam. Thank you for being here. - Thank you. So my question is about what I call kind of the middle of financial planning, meaning we're doing pretty well with, we've been aggressive with saving for retirement since the early age.

And then secondly, we kind of were aggressive with keeping our expenses low and putting away some cash such that we have what we're comfortable with, with emergency funds. And then we both have jobs such that we can live off of one salary or the other. Now looking up at age 40 and 41 and seeing that it's possible that we could consider some sort of financial independence early retirement situation, maybe at, as early as 50, as late as 59 and a half.

So the two questions are, how do we approach health insurance if that were to be an option? And then the second question being, I sort of view each year of early retirement as a chunk of about $50,000 in today's dollars and trying to navigate whether the approach for that is funding a brokerage account with taxable income now or some sort of real estate or something like that.

Those are my kind of my two questions. How do you fund each year of early retirement and sort of target that? And then how do you plan around health insurance? - How old are you? And what would be your target year for retirement? - We're 40 and 41 now.

Our youngest is 10 years old. So in our minds, we sort of look at some point after he might be out of the college sphere. So it's probably the very earliest, 52, 53, maybe 55. - And at the moment, your assets are primarily structured in mutual funds? - That's correct.

Yes, 401ks, Roth IRAs, some brokerage accounts, 529s, and then the rest would be in cash and some equity in the house. - Okay. I answered this question on investment assets in detail on a recent Q&A show about two or three weeks back. So if you go back and look at the notes, you'll find that answer there when I had a similar caller who asked, how will I structure my income?

And what you'll hear me say in that answer is it depends. It's gonna depend on what you're doing and on what your interests are. And I laid out for him several different scenarios. And so what I would say is at the moment, you're too far away from retirement to be focused too much on that question.

There's a lot that could change in the next eight years. So while you're not so far away, I would go back and listen to the question. I'm not running from the details, but the details are in that previous Q&A. And I go through it in very great detail. But in short, it's gonna depend upon what your vision is of retirement.

The short answer is you could just simply live on your portfolio. What I think is the most likely answer for most people is you would generate some income from some of your activities, sideline consulting income, little bit of part-time work or something like that. And then also you have to be clear on your lifestyle before you figure out what kind of investments are appropriate for you.

So go and listen to that Q&A. And then if you have additional questions, call in next week and we'll cover it in detail for your situation. But I think that it's important for you to be thinking about, but I think that I wonder if, since you're already focusing heavily on mutual funds, then it's probably a little early for you to figure out, well, how do I deploy these mutual funds?

Let's talk about health insurance though. I think that, first of all, you're a US citizen living in the United States and planning to live in the United States, is that right? - That is correct. - Okay, so I think that it's more likely than not that eight years from now, there will be some kind of socialized single-payer health program available in the United States.

And that that is probably what you will roll into. I can't predict that, but I can't be sure of that, obviously, but I think that's probably the most likely outcome. There is substantial, I don't see at this point in time, when the Republican Congress was elected in 2016, there was a Republican Congress and the Republican Congress was elected with the mandate from voters to repeal the Affordable Care Act, to overturn the Affordable Care Act, Obamacare.

And when John McCain famously gave his thumbs down on the repeal of the Affordable Care Act, as far as I can tell, that was probably the death knell on any major return to a private party health insurance system in the United States. Now, the Affordable Care Act has been in many ways, a nightmare for many people.

Years ago, I thought that people would say, I had people say, man, this thing is not gonna work. This must just be designed to fail so that we can usher in, pass the Affordable Care Act, then it'll usher in a path to single-payer healthcare. And at the time I thought, that's crazy, that's a crazy conspiracy theory.

Right now, I'm not so sure. I'm not so sure it was a crazy conspiracy theory because that certainly seems to be what's happening, is that we had the Affordable Care Act and then here we are however many years later, and now, former Vice President Joe Biden, the Democratic presidential candidate is running based upon, well, look, we're gonna have the Biden healthcare plan.

I thought we already had that. I thought we had the Obama-Biden healthcare plan, but evidently things have changed. And so at this point in time, I don't see or sense any significant will on behalf of Republican voters to repeal the Affordable Care Act, but there is a very strong press towards more and more government intervention in healthcare.

And right now, I don't know if anyone is happy with the system. And so when you have an awful system where no one is happy, that means that some change is going to happen. And I think that change is going to be in the direction of more and more government-run healthcare.

The models have been worked out in other countries. That's the constant thing you hear is that, well, look, Canada has this and the United Kingdom has this, et cetera. And so it's not like it's unheard of. The United States is a little bit behind some of those countries in terms of social trends, but not very far behind.

And I don't think there's any philosophical argument against that kind of government-paid healthcare that is, I don't hear anybody making it. The principled argument would be government shouldn't be involved in health insurance, but nobody's making that. If they did make it, they would have to argue against Medicare. But since Medicare has been in place for many decades and no politician will touch Medicare, at this point in time, I think it's very likely that within eight years that there would be a form of government health insurance available to you.

So if I were in your shoes, I wouldn't worry about it. I would just watch it and I would say that that's probably what's gonna happen. And then again, there are other options. If you were two years away, I would give you a bunch of other options of things that could be discussed.

But since you're eight years away, I think that by then you can just simply enroll, you'll be able to simply enroll in some kind of government option and that will cover your health insurance needs without regard to your employment status. - Okay, that makes sense. I appreciate that. - Cool, my pleasure.

All right, anything else? I got one more caller, but listen to that Q&A. And then if you don't understand something about that, call in next week and we'll discuss more details of that. - Sounds good, take care. - Very good. All right, Mark in California. Mark, you made it back just in time.

I was about to finish up, but you snuck in. So welcome to the show, sir. - Thank you, Josh. Thank you for taking my call. I have a credit card question for you. My wife and I, this year, we both applied for the same credit card and we were both denied.

And our letters were pretty similar in that they said, essentially, I think we have too many bank cards or we also have, maybe they're underutilized, like they're not being used enough. So they're wondering why we need more credit. And so we're just wondering what's the best approach to deal with, I guess, being able to be approved in the future.

- Good question. Okay, so the first-- - Our credit scores are pretty good. - Okay. - Like 800. - The first thing that you need to do is search that specific credit card that you got denied for and search in the credit card forums online and find out if other people are being denied for similar reasons.

Now, depending on the card and depending on the issuer, there may be some clear and obvious reasons or there may not be, right? A number of years ago, people were getting declined all over the place for Chase cards. And then finally, Chase confirmed that they had their 5/24 rule, which is just a flat rule that they were applying that said, hey, if you've opened five or more credit cards within the past 24 months, we're not giving you a card.

And so it wasn't, and this made a big deal in the credit card space because many people would routinely open five or more in the last 24 months. Well, Chase decided they were gonna cap that. And so first thing is search that specific card and see if there is an actual, see if there's something specific to that card or to that company that may relate to your case.

The second thing is definitely utilization is important. And if you don't have proper utilization, then it's gonna matter. And so one of the things that is very important is you should have on all of your cards, you should have something going to that card every month if possible. Now this can be difficult and you can't always do this, but you could of course use the cards at a personal, use the cards at a personal expense, swipe it for gas or groceries or whatever you've got and use all the cards.

But if you have cards that you're not using regularly, you should have some kind of bill payment billed to that. Over the last couple of years, I've lost several credit cards because I didn't do that properly. And because I didn't use it, I didn't use the card, it was just sitting there as part of my portfolio.

The company sent me notices, I didn't get those notices because I was traveling and I didn't bother to check the mail. And so I go back and all of a sudden I try to use a card and find out, hey, this card is not active anymore. And I had I think three cards canceled over the last year and a half because I didn't have them all set up.

So going forward, my new plan is that every one of my credit cards needs some monthly payment, some monthly expense charged to it. So I take any kind of personal expense, a bill of some kind that's gonna be automatically billed and bill it to each of my cards. And then I still have the automatic payment system set up so that there is going to be properly a, so that it's gonna get paid off.

So that'll show some activity being reported on every card every month. And then if your letter led you to indicate that they wanna see you using more of your credit, then I think you need to use more of your credit and use it across the cards. So if your normal monthly spend is $3,000 a month, then don't just always do that on one card.

You obviously need to balance the card that you're putting your spending on for a bonus and a signup bonus or whatever you're doing, but you should move that spend around so that your credit card portfolio looks more active. And then if they, there's benefits to holding a balance from time to time.

So if you're gonna buy something big ticket, then put it on a 0% card so that your credit profile shows that you're holding a balance from time to time with a 0% card so you're not incurring a bunch of interest charges. But you gotta remember, the credit card company doesn't make any money if you don't hold any balances, if you don't use your cards and they just sit there.

So your 800 credit score isn't gonna say to them that this is a good customer for them if you don't hold any money. They're in the business of lending money, so they wanna see you borrowing money. So if that's what your letter indicates, then change the way that your credit profile looks so that it looks like you're an active user of the credit cards and an active borrower of money.

- Okay, thank you, appreciate that. - Yeah, my pleasure. And it's definitely something where you'll learn. Here's the thing, the credit card business is always changing. And so if you find that, hey, what I was doing before isn't working anymore, then you have to change what you're doing, and we're all in that space.

So don't be scared to just simply admit it and move on. All right, Marcus, you snuck in. I had already said it was gonna be the last call, but you snuck in, so let's go fast. What's your question, sir? Oh, Marcus disappeared right when I was needed. And with that, that brings us to the end of the show.

Thank you very much for being here. A couple of closing comments as we go. First of all, I hope you enjoy these Q&A shows. I always love recording them for you. And if you'd like to join me next week, go to patreon.com/radicalpersonalfinance. Patreon.com/radicalpersonalfinance or just search radical personal finance at Patreon, and you'll gain access to next week's call.

I mentioned this earlier, so I'll just quickly plug it that this last week, we went ahead and got set back up for more of a consulting business. So I'm able to offer to you individual consulting before. I haven't done any consulting work for the last six months, but here in the fourth quarter, I will be doing it.

I'm not sure how long I'm gonna do it. I'm not sure if I'm gonna do it in the 2021, but here in Q4, for the remainder of the year, you can go ahead and book it. So if you would like to book a consultation with me, no need to email me now, which was previously the old system.

Now, just go to radicalpersonalfinance.com/consult, radicalpersonalfinance.com/consult, and you can book a consulting call with me. I didn't put a disclaimer on there, but I actually need to go and update those notes. I have never had, I've had one call in all of the consulting calls that I've ever done where I told the guy, "Don't send me any money," and where the guy didn't wanna send me any money 'cause we got into a conflict.

Other than that, I have consulted with a lot of people, and I've never had somebody who said that they didn't get all the use of their money and from that call, and I stand behind what I do. I have had tremendous outcomes from individual consulting calls with many, many people.

And so what I would recommend to you is if you have ever thought about talking to a financial advisor, I can't think of a better way that you can do it. You can talk, of course, here on a Friday Q&A show. That's obviously an option, but if you'd like to talk about something private, then I don't know of any solution that would be better for you than to book a consulting call.

I don't sell anything. I don't have any products for sale. I don't have any, I don't sell insurance. I don't sell investments. I don't sell anything except my advice. And it's hard, trust me, it was hard to create that independence, but a lot of people do want that independence, and I think rightly so.

So if you wanna use me as a second opinion, that's great. And then I would say this is that it's probably not the thing that's most commonly advertised when you talk about consulting work and whatnot, but it does matter, is that I don't know of a more private financial advisor than me.

We've talked a lot about financial privacy, and I've talked about how when you talk to financial advisors, you're giving up access to your information. For the vast majority of situations, that's fine. But if you'd like to talk to probably the world's most private financial advisor, I'm your guy. You can register with any name that you want.

You can pay with any payment method that you want. I don't care. I don't need to see anything about what your legally given name is, and I don't care at all. That's number one. Number two is I don't keep any notes. I write on a light yellow legal pad.

I show up to a meeting with a financial calculate and a yellow legal pad. At the end of the day, my legal pages go into a shredder, and I don't keep any client notes. I don't keep any client files. It's just simply that. So if you'd like to talk to a financial advisor and get a second opinion about something that you're doing or thinking about doing or talk about something that you're doing, there's no limit to the things that we've talked about.

I talk about offshore planning. I talk about business creation. I talk about marketing. I talk about all the technical aspects of financial planning. You can do that at radicalpersonalfinance.com/consult, radicalpersonalfinance.com/consult if you would like to book a consulting call with me. Have a great weekend. I'll be back with you very soon.

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