♪ Gannon Zone, Auto Zone ♪ - Welcome to Auto Zone. What are you working on today? - I think my battery's dead. - With free battery testing and charging, we can help you get back on the road. ♪ Gannon Zone ♪ - So what if I need a new one?

- No problem. We have the right battery for your car, starting at only $89.99. ♪ Gannon Zone, Auto Zone ♪ - And what about my old battery? - We can recycle it right here at America's number one battery destination. ♪ Gannon Zone, Auto Zone ♪ - Restrictions apply. - Within the realm of financial planning, risk management generates lots of discussion.

You've got questions, and today's show has the answers. Is your cash stash big enough? I want you to pile that stuff up to the ceiling. When you travel in foreign parts, do you keep a credit card in your shoe? My guess does. Are you walking around uninsured or underinsured for a $4 million, $6 million, or $10 million asset you own?

Unless you thoroughly understand your disability income insurance, it's likely that you are. What about physical preparation? How did you fare through the great toilet paper crisis of 2020? It's a lighthearted question, and I ask it to highlight the importance of financial and physical preparedness. If you weren't financially prepared for 2020 in your lifestyle and career, this has been a tough year.

And if you weren't physically prepared, it's been a headache. Today's show focuses on what you can do to meet any exigency the world sends your way. It's how to wade through the manure and come up smelling like a rose. Hey, and welcome to the Life Meets Money podcast. I'm so glad you're here.

I'm Matt Miner, your money guide, and Life Meets Money exists to help you plan to fund the life you love. It's the show for MBAs, entrepreneurs, and other professionals who want their financial plan to work as hard as they do. Today's Money Guide Quick Tip is in two parts.

First, on disability insurance, and then on applying the lessons of COVID-19 pandemic to your financial plan. Disability insurance is a cornerstone of financial planning. In your life, make sure the disability insurance you carry, whether through your employer or privately, addresses your family's actual needs and goals. I'll go on the record right now, along with my guest, and say that I would do without any other type of insurance in order to have the disability income insurance my family needs.

I prefer to give a TED Talk in Spiderman underpants rather than be uninsured for disability. I don't sell the stuff, but if you or your family counts on your income to live, DI is incredibly important. Now, as you've lived through COVID-19 in 2020, what have you learned about your life or your money?

Where, for example, can you cut back your spending to increase your cash on hand? Alternately, what areas of your life cry out for increased spending? Do you need to make your home office more comfortable or professional? Would you enjoy converting your back deck to a screen porch so you can take some of your calls in the fresh air?

While COVID is still fresh in your mind, take stock of what you've learned and prepare some changes for the future. Today's show features an influential voice in my life as I made the switch from corporate work to financial planning. And as you radicals know, my guest's opinions generate strong feelings, and he's not bashful sharing ideas that push the boundaries of our thinking.

I know you'll enjoy listening in on our conversation addressing the broad topic of risk management, including emergency funds, insurance planning, and physical preparedness. Today's episode was recorded on September 24th, 2020, and released on the Life Meets Money podcast in two parts, October 8th and 15th, 2020. You can read more at lifemeetsmoney.com/joshuasheats.

(upbeat music) Joshua, I am absolutely delighted to be here with you today. I feel like this is a huge milestone on the show to have you on. Thank you so much for spending some time with the Life Meets Money listeners. - Thank you for having me. - So I always start by asking my guests to give us a little bit of background on their history, both personally and professionally, whatever you'd like to share on this show to introduce yourself to people who haven't met you before.

- Yeah, I have an interesting background in the sense that especially for a financial show, that I feel like I have a decent understanding of most parts of finance. And really, that really crosses the gamut. When I was younger, I was very interested in personal finance. I remember being a teenager and getting all the classic mainstream personal finance books from the library and from the bookstore.

I would read "The Automatic Millionaire." And I remember when I was in high school, I would go to tickets. I went to T. Harv Ecker's Millionaire Mind weekend event, and I was really interested in becoming wealthy. And so I studied most personal finance stuff from the perspective of a consumer.

After college, I went and joined a marketing and brand management consulting company, and I got laid off from that job in 2008, and I didn't know what I wanted to do. I knew I wanted to run my own business in some capacity. And my former boss suggested that I consider becoming a financial advisor, 'cause he knew about my interest in personal finance.

I was the nerd who I would hand out personal finance books at work. And I'm not making that up. I remember I gave him a copy of "My Total Money Makeover" by Dave Ramsey, had been very influential for me. It's like, "Here, you should read this." And so he read it, and we talked about it when he was done with it.

And so he said, "You should go be a financial advisor." And so I went and started interviewing around the financial advice industry, and I realized that I could probably build a lot of my personal lifestyle ambitions by becoming a professional financial advisor. So in 2008, I started that process.

I started with a life insurance company, primarily selling life insurance, disability insurance, long-term care insurance, little bit of health insurance on the side. And then I went on and started working my way through the process of becoming licensed with the securities, on the security side of the business, became a financial advisor, started managing portfolios, et cetera.

And along the way, I invested heavily in my professional education. I became a certified financial planner, a chartered life underwriter, a chartered financial consultant. I studied group benefits, I studied health insurance, I studied charitable planning. I wound up getting a master's degree in financial planning. And in that context, I learned a lot that in some ways enhanced what I had learned as a personal finance aficionado, but in some cases, contradicted it.

And along the way, I continued to consume mainstream personal finance stuff. I listened to Clark Howard, I listened to Dave Ramsey, I enjoyed that kind of content, but I would find myself shaking my fist at the radio saying, "Come on, Dave," or "Come on, Clark, "you don't understand this," or "You're not articulating that." And so in 2014, I decided to start a podcast and I launched a show called Radical Personal Finance.

My goal was to take some of my background and knowledge and bridge the gap between personal financial advice and professional financial advice. Because in my experience, that gap was very, very large. That professional financial advisors with a deep background in the technical forms of analysis, number one, they can't really talk to the public, legally speaking, about a lot of the intricate stuff.

Number two, when they do talk to the public, everybody just zones out because it's horribly uninteresting. But yet in the personal finance world, that's where the listeners are, that's where the education is, but a lot of times, the people speaking don't have the deep technical background. And a professional advisor wants to beat their head against the wall sometimes in listening to it.

And I thought, "Somebody with my background "should cross the divide." So I had to leave the financial planning advice industry in order to be able to do it effectively the way that I wanted to. So I closed my firm and I launched Radical Personal Finance in 2014. And so now, about six years later, I have a podcast, it's a primary outlet, a podcast of about 750 episodes where I teach financial planning in public.

And the tagline of the show is how to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less. What I try to do is I try to show how having a clear understanding of what you're working towards in personal finance is the foundation.

And then having a good understanding of the technical tools involved and how that understanding and that education will help you achieve those goals faster. So that's my personal story. - This is a fun and poignant interview for me because one of your key tenets, or at least one of the ones that I love most from your show, and I've been following along since about 2015, is the idea of doing work that you would do if you would never retire.

And that was a key kind of philosophical motivator to the big career switch that I made about two and a half years ago, following you into the financial advice profession where I plan to stay. But I found a way to do this media stuff on the side and in a compliant way and in a way that's helpful.

And I'm enjoying doing both right now. So thank you for all the service that you've rendered to me and my career and to my family along the way. - My pleasure. I think that's one of the ideas that I have sought to popularize because if you're working at work that you care about for reasons that are important to you and you don't want to retire, then in many cases, all of your financial planning becomes simpler and easier.

And it's dramatically easier to find and develop a job or a business that you love that provides you with a really excellent lifestyle than it is for many people to accumulate the millions of dollars that most of us need to never work again. And so I'm all about doing an 80/20 analysis on life and going with the few things that are gonna make the biggest difference.

And I'm convinced that that's a cornerstone idea. And I applaud you for being willing to engage in the training and the hard work necessary to make that career switch. - One of your go-to pieces and another one of the things that I enjoy from your show is your framework for the stages of financial independence.

And I'll save you mentioning that you cribbed this from Tony Robbins. And anyway, I like the way you say it better than the way he says it. And your advice is better than his too. So even if he owns more islands, I'm interested in your ideas. I wonder if you'd walk us through those stages.

- Yeah, this came from reading the money book that Tony Robbins wrote after many years of not writing books. He published a book called "Money, Master the Game." In that book, he was talking about the stages of financial independence. And I was inspired by what he said, but I disagreed with some of it.

And so I wrote my own. And the basic idea behind developing stages is to break down large goals into more meaningful steps. Because most of us understand that the way that you accomplish a big challenging goal is by understanding the basic steps and the levels to that goal. And in my experience working as a professional financial advisor, I learned that if I just told someone, "Oh, look, you need $4 million," and they had $30,000, they would often walk out of my office demotivated and lacking clarity on anything that they needed to do because the goal wasn't tangible.

It was far off. It wasn't meaningful to their life. And it was just a number, which is hard for the human brain to grasp. And so I developed these stages to try to give somebody an idea that when you're working towards personal financial independence, it comes at different levels.

It's not like you're either dependent or independent. Rather, we're dealing with ranges or percentages of independence. And so I began it with stage zero, which is financial dependence. We all begin our financial lives from a place of financial dependence. My children are totally dependent on me for their living, for their food, for everything.

They're totally dependent on me. And this can apply to adults as well. We might be a dependent adult. Perhaps we've suffered some kind of setback, lost a job, went through a health scare of some kind, and we find ourselves depending on other people to provide for us. That's where we begin.

So the first goal is to move from stage zero, which is financial dependence, to stage one, which is financial solvency. And I define financial solvency as simply the ability to pay for your living expenses and being current on your debts. One place of dependence that many people find themselves is they find themselves behind on debts, unable to make their required payments.

And so the first goal is to get current, get current on your debts, and to be able to cover your own living expenses. And that's solvency, stage one, financial solvency. Then from financial solvency, we wanna move on to financial stability, which is stage two. Financial stability simply means that you have some margin in your finances.

And this means you have some savings. This can be as simple as developing a beginning emergency fund. For a young person, perhaps you have an 18-year-old son who is leaving the house. Well, if he doesn't have any debts and he's able to get a job to pay his living expenses, he's solvent, he's no longer dependent on you.

And if that same son saves $1,000, he's now starting to accumulate some measure of financial stability. If he needs a new tire on his car, it's not gonna sink him. He's not gonna fall into debt for that. And so that's financial stability. For most of us who are adults, financial stability brings in some larger numbers.

But the basic idea is you wanna figure out how much of an emergency fund do I want to have? How much savings do I want to have? And start to accumulate that. I think there are a number of numbers that are useful. Might be $1,000, might be $10,000, might be three months of expenses or six months of expenses.

For some people, maybe a year's worth of expenses. But you want to develop some form of savings so that you are financially stable. That's stage two. Now, the next thing that I talk about, and I put it at stage three, although it may not go at stage three, is debt freedom.

The goal that many of us have of living a life free from the encumbrances of debt is a very worthy goal. Because if somebody is debt free, that means they have full control over their future. I'm not arguing that debt may not be a very useful tool at some points in life.

But any form of debt commits you to certain actions in the future. And so if you want freedom and independence in your life, being debt free should be on your list of priorities. And so I put it here as stage three, that the goal is to be debt free.

If somebody has enough money to pay their living expenses, if they're current on all their bills, if they have an emergency fund of, let's just say $10,000, and if they don't have any debt, or at least don't have any consumer debt, they may have a mortgage on their house, but they don't have car debt, credit card debt, et cetera, that person is very, very independent.

That person has the ability to change almost anything in their life. They can leave one career, retrain and start another career. They can move across the country. They can move from a house that doesn't suit them into a better house that does suit them. If their elderly mother gets sick and they want to go and nurse their elderly mother, they can submit their notice at their work and go and nurse their elderly mother.

They have independence. And so independence can be won fairly simply through those basic steps. Now there are four remaining stages, and the next three, stage four, five, and six, are basically variations on a theme. Most of my listeners and clients have a goal of being able to work because they want to, not because they have to.

Most of my listeners and clients have a goal of being able to live on the income from their investment portfolio. But there are wide ranges of income that they could live on. If you tell me, Joshua, how much money do you want to retire? I'm probably gonna give you a big number that involves extravagant international travel, lots of consumption items, lots of expensive experiences, et cetera.

But if you said, Joshua, what's the bare minimum that you would need to retire? Well, there's a big difference in those numbers. I might want to live in a beautiful home on the lake, but I could live in a small trailer in a modest trailer park in Central Florida.

I might want to take international vacations every year, but I could take a domestic hiking vacation if I wanted to. So what I did was I broke this into stage four, financial security, stage five, financial independence, and stage six, financial freedom. And I defined these in this way. Stage four, financial security means you have enough money coming in from your investment portfolio for you to cover your basic living expenses, for you to cover the rent on your apartment, the mortgage on your house, a food in the pantry, basic utilities, et cetera.

If you have enough income coming in from your investment portfolio that covers your basic living expenses, then you have a degree of financial security. If you were disabled and you could never work again the rest of your life, you would be okay. That's what I call stage four, financial security.

Stage five is financial independence. Financial independence means you can cover your current living expenses based upon the income from your portfolio. Maybe you could live on $3,000 a month if you had to, but you're currently spending $7,000 a month because you do a lot of things that you enjoy doing.

And so financial independence means covering your current living expenses. And I use that word independence because that's what most of us think of. I can live at my current lifestyle on the income from my portfolio. But I think there is another level that we wanna consider, and I call it stage six, financial freedom.

Although I could live at my current lifestyle forever, there may very well be some additional things I'd like to do or some additional things I'd like to own. Maybe I'd like to own the lake house and I'd like to go ahead and put a nice ski boat there and maybe a pontoon boat as well, so we have options.

Maybe we're currently going around and spending our summer vacations in a small travel trailer, but I'd like a luxurious motor home of some kind. And I know that that's gonna add another $10,000 a year of operating costs. And so what I define as stage six financial freedom is simply you lay out all of your personal spending ambitions, your personal lifestyle goals, and you cover those expenses from your portfolio.

And when you do that, you're totally financially free. You could spend more than what you have right now if you wanted to. You could spend more than what you're currently spending. And then stage seven is financial abundance, which I think is simply an expression that if you continue to live the way that you're living as an accumulator of wealth, in the fullness of time, you're gonna have more money than you need, you're gonna have more money than you want, and many people are gonna have more money than they could ever practically spend.

And that's what I call stage seven financial abundance, which means I have more money than I could ever spend than I want to spend, so now what do I do with it? Money is no longer a constraining factor, but now we move into the point where I have to say, I'm the steward of this wealth.

How do I make sure that this wealth flows to places where it's productive, where it's useful, where it does good in the world? Do I give it to people? What do I do with it? And that's what I term financial abundance, stage seven. - I really appreciate you walking us through those.

One of the things that I just noticed practically with clients, this is a simplification, but at retirement, there are two kinds of people in the world, and those are the kind of people that are trying with tears in their eyes and by the skin of their teeth to achieve financial security in their late 60s, and then there are those people who come in with financial freedom or financial abundance.

There's not usually, usually if you're trying to solve for some exact retirement number, that's just not the way it works out. Instead, people who are accumulators accumulate vastly more than they could ever use based on their own desires and goals, or they're just wondering how they're gonna be able to get by in retirement.

And so I appreciate you illustrating those stages, and I don't know if that was ever something that you ran into with clients as well, but I see that. - I think it is, certainly. In my experience, I experienced the same frustration when I worked with individual clients, because it seemed to me that the people who were the most desperate to retire, the people who very much wanted to retire, it was very difficult for me to figure out how they could retire.

And on the other hand, the people who could easily retire because they had loads and loads of money generally didn't have very much interest in retirement. Earlier we mentioned the concept of finding work that you like. That was one of the lessons that I learned from analyzing the problem.

I discovered that people who couldn't retire, but who very much wanted to, were often trying to retire so that they could get away from a life they didn't like. They were anxious to stop working at a job that they considered to be a soul-sucking job. They were anxious to be able to have more control over their life.

And yet, that kind of anxiety had often led them to building a lifestyle that sucked up most of their investable cash flow. Thus, they didn't accumulate enough wealth to be able to retire. Whereas people who started by building a life that they weren't desperate to retire from, they had a job that was a good fit for them, they built a business that they enjoyed running, for them, they accumulated wealth, but it wasn't connected to an extremely important goal that at age 63.5, I'm going to retire.

That's where I've developed the philosophy of starting people, not by trying to figure out how much money you need to retire, but by trying to help people imagine what a life that they wouldn't want to retire from would look like. What would it look like if you knew that you could never retire?

That's the question that I like to ask. I've found a lot of value in asking people, what would you do if your rich uncle died and left you $5 million tax-free? Well, that's a useful question for you to think about. But another useful question that I personally developed was simply, what would you do if you knew you could never retire?

What would you do if you knew you would never be able to retire? And I think that when people stop and really consider the answer to that question, generally, what they would do is focus on building a life that they love rather than building a life that they want to escape from.

And so a simple example, I often hear people say, when I retire, I wanna have more time to fish. Okay, fair enough. But did you know that if you like fishing, you can go now and build a life where you generate your income as a fishing guide? Or people say, when I retire, I wanna travel a lot.

Fair enough. You can go now and you can build a lifestyle where you make your living traveling. It's not easy, but there are many, many ways to do it. Everything from starting a tour company where you get paid to organize tours to going and being a work camper, living in an RV as many 60s and 70 year old people all across the United States do.

And so begin by building a life that you don't wanna retire from, and then bring that into your overall financial plan so that you're enjoying the process of life now while accumulating for the day in which you either choose not to work or in which you can't physically work.

- Good stuff. I think that that first question about the rich uncle lets you answer in your own life whether what you're doing right now is in alignment with who you are and what you value. Like how much your life would change if you got the rich uncle result, lets you know maybe how you should be looking to change your life right now.

And then that other question is a great way to sort of craft your vocation and figure out how to spend your time. Well, I brought you on the show for a couple of reasons. You have deep formal expertise in the insurance area, but you also founded a podcast called Radical Personal Finance because your views are not entirely conventional.

And so I am very interested to talk with you today about the big topic of risk management, including both the traditional insurance part as well as other ways that ordinary people should be thinking about that. So one of the things, because you've gone so far as to build an internet course about this that I wanna ask you about is if you'd share your views on how having money, particularly cash in the bank, currency on hand and credit cards is a big part of a risk management strategy within a financial plan.

- When you think about risk management planning, there are some common threads that go through all the different kinds of risks that you're facing. When you're trying to prepare for risks, you need to start by analyzing, is this a problem or is this a risk that can be solved by money?

Or is this not a risk or problem that can be solved by money? Many years ago, I heard somebody say that if your problems can be solved by money, they're not actually problems. Now, that's probably a little bit too far because certainly money problems have very real consequences in our lives, but there's an element of truth that makes us nod along with a statement like that.

We understand that if my son was just in a terrible accident then it's a very severe problem and I can't just necessarily throw money at the problem and fix it. Whereas if I just drove over some broken glass on the highway and I need new tires, okay, it's frustrating and it's an inconvenience, but I can solve it with money.

And so I like to analyze problems and say, is this a problem that can be solved by money or is this a problem that can't be solved by money? That helps us to understand where our solutions are. Now, money will be used to solve all of the problems related to money and it will influence many of the problems that are not directly caused by money.

You may have personal health problems. Well, you can't just simply buy a solution to those problems but your ability to have money will certainly probably contribute to the solutions. Money might allow you to take time off from your normal activities, your normal work, so you can spend more time focusing on your health.

Money might allow you to pay for better medical care. Money might allow you to get a second opinion. Money might allow you to transport yourself to the other side of the world where some novel treatment is being developed for your personal situation. And so we can see that even in situations that are not directly caused by lack of money, money is itself useful.

So if money is useful, we need to pay a high amount of attention to how to have it when we need it, which comes into the topic of savings. And so the basic formal approach to savings is to use an emergency fund. When I was becoming a certified financial planner, I was taught in my classes that you, as a financial planner, were to recommend to your clients that they generate an emergency fund of three to six months worth of expenses.

I believe that's good, right? That's a significant number. Most people don't have three to six months worth of expenses. And the way that you decide whether it should be three months versus six months is you analyze carefully how likely it is that your income would be affected. So if you have a household where there's a dual income household with low debt and generally good financial planning, then you say, well, three months of expenses is adequate because if one of you loses your job, the other one probably won't.

Whereas if you have a household with a single income or perhaps a household where somebody's engaged in a riskier occupation that's more likely to lose income, then you point the client towards six months of expenses. I think that's important. But in my experience, there's a little bit more texture that could really be added to that.

The first thing is many people keep all of their emergency funds exclusively in the bank. And I think that's a real mistake because there are times that you need money and what you need is physical money, physical currency, stacks of green papers with dead presidents on them if you're in the United States or multicolored papers in other countries.

But what you need is physical cash. And so there are a number of things that can happen where you need to gain access to cash. And if all the money is locked in the bank, then it's not available to you. So I'm well known for encouraging people to have significant portions of their emergency funds available to them in physical cash, assuming they have a place that is secure and private where they can keep the money.

You don't wanna be foolish. If you're talking to your 18 year old daughter and she has nosy roommates and lives in a college dorm with four other girls, then she should be very cautious about keeping significant amounts of physical cash in her dorm room. But that's not the situation that most of us are in.

So I encourage people to make a list of what are the kinds of things that you might need money for. Now, I come from hurricane country. That influences a lot of my personal thinking because when the hurricanes come through, everything is shut down. The banks are shut down, the ATMs are shut down.

When the power is out, you can't access money. And so I often think, well, how much money would I need to get myself through a couple of weeks without power? You see this when there are other kinds of blackouts. For example, the famous blackout in New York or over the last years, there've been significant blackouts across the United States.

Well, in a blackout, most of the payment systems that a store relies on don't work. The credit card machines don't work. They can't accept electronic payments. And so they can't take your money. And so it may be very important for you to be able to buy something in those times.

And so some spending money can be useful. There might also be expenses that are suddenly forced upon you that are unforeseen. I think of what do you do if somebody that you know or somebody in your family goes to prison unexpectedly and you've got to come up with cash bail?

Do you have the ability to go and pay bail so that you can spring them out of prison? That might sound like a funny example to use, but it's not. It's a very serious example. It's the kind of thing that happens to a lot of people and prisons are generally really nasty places.

And I don't want one of my family members to be stuck in prison a minute longer than is absolutely necessary. Other examples as to why cash might be useful. Where I find that I use cash the most is simply to take advantage of opportunities. You're driving down the road and you see in some beautiful backyard that a guy just put a for sale sign on this really beautiful ski boat.

And you've been thinking about getting a ski boat and you walk over and you say, "Hey man, tell me about the ski boat." And he says, "Yeah, this was my grandfather's. "He died and I'm just putting it out for him. "You know, we need to sell it quick "because I need to get, you know, I'm here in Illinois "and I need to get on an airplane "and fly back to Florida tomorrow.

"But I was figured I'd put it out here "and see if anyone's interested. "It's worth 20 grand, but if you give me 10 grand a day, "I'd be happy to sell it to you." I've done this. I didn't do it with a ski boat, I did it with a car.

Where it taught me was I went and I was like, "Okay, I need to go get money." But all my money was locked in the bank. And so I'm going to the ATM and I'm trying to take out money, but the ATMs are locked at a stupid 400 or $500 limit.

And then my bank has the money locked down and I'm going around to 10 different banks trying to get money out of the ATM. And I vowed, never again will I not have enough money to buy something that would be reasonable and get myself a deal on something like a ski boat or a car or whatever little toy or something that you need.

And so those are some reasons that are just practical examples as to why I encourage people to have physical currency as their savings. The second component of savings is you want to have substantial savings in the bank. There are different ways that you do that. And that's, I think, the most discussed part of personal finance, but you want to have the ability to get access to those savings.

What I would encourage people to think about is setting up in their banking infrastructure a bit of diversity. What you don't want to have is all of your money in one bank, in one bank account, and then all of a sudden you get flagged with one questionable transaction and the bank locks your funds down and says, we're not gonna let any more money pass whatsoever.

I travel a lot internationally. I have spoken to many travelers who made the mistake of going off on some long-term adventure. I've spoken to people who sail around the world for months or years at a time, or who travel or live outside the United States. And all of a sudden, something at their bank gets triggered by some automatic law, some automatic flag.

Now they have to literally fly back to the United States to talk to their bank, to get their bank to release their own money. And it's a catastrophic scenario in some cases. I've had this happen multiple times on my accounts where I get triggered, I can't get something out of the ATM, they block my debit card or something like that.

And then I can't get through to the bank because it's heavy, right? Activity is busy or something like that. So you wanna have multiple banks and you wanna think about having access to your money with the form of multiple debit cards would be another example. Then the third thing I would point out is the use of credit cards.

Credit cards are an interesting thing to talk about because they receive a lot of abuse. And I think rightly so. Credit cards for many people can facilitate overspending, which is catastrophic to a financial plan. There's good evidence to indicate that we spend more money when we swipe a credit card versus when we spend with physical currency or possibly even with a debit card.

We spend more money. It's very easy to make impulse purchases, which if those impulse purchases are for consumption items can often put us in debt. The terms of borrowing on credit cards are often difficult, come with significantly high interest rates, et cetera. We've all known a lot of people who've had a lot of trouble with credit cards.

On the other hand, credit cards can be an extraordinarily valuable tool if somebody understands their dangers and the risks. So when my debit card gets locked and I can't get physical currency out of the bank, if I've got a pocket full of credit cards, I have the ability still to spend.

So when I travel, I always travel with a pocket full of credit cards. And I put one credit card in my wallet, I put one credit card with my passport secured in another place. I put a credit card in my shoe. I put a credit card in my bag.

I put a credit card in my hotel room. I just have a half a dozen credit cards that I go with because I've had my stuff stolen. I've had my wallet stolen. I've had all those things stolen and it stinks, but it's a whole lot easier to handle if you have access to money.

And so credit cards give you very nice access to money. Credit cards also have some interesting benefits that many people don't understand. One of the biggest benefits of credit cards is that they are unsecured debt, which means that if you don't pay them, there's not an automatic process for somebody to come and repossess your property.

If you don't pay your mortgage, your mortgage lender can very quickly start the process of foreclosure. And within a period of months, you may wind up moving out of your house with the sheriff watching you, making sure that you're gone by the certain date. If you don't pay your car payment, you may have the unpleasant experience of coming out from your job and watching your car roll away on the back of a tow truck.

But if you buy something with a credit card, although in time you can be sued, there's no direct connection between the thing that you buy or the money that you spend and the credit card company's ability to repossess that. So if I go and I buy a piece of equipment, maybe I'm totally broke, and I go and I buy a piece of equipment that I'm using to generate money, then I'm using it and maybe I get hurt and I can't use it and now I'm three months behind, I can still own the piece of equipment until eventually the credit card company sues me, possibly gets a judgment against me in court.

That process is very, very long. So credit card debt can be very, very safe debt because it's unsecured debt. And that's a powerful thing to recognize when you do disaster planning. In addition, credit cards, for somebody with a high credit score and for somebody who understands how the game is played, credit cards can have extraordinarily low borrowing costs, far lower costs than almost any other form of debt.

Now notice I'm trying to be very clear. I'm not saying that they're always that way. Credit cards can very quickly put you at 19.99% interest or 23.99% interest, which is very, very high. But if you understand how the game is played, and here I'm simply talking about the 0% credit card offers that you get in the mail, and if you understand how to use that system, you can use that system to allow you to borrow money at a very low cost.

And I teach a whole course on this. It's called "How to Borrow Money Safely and Never Pay Interest Using Credit Cards." And I teach the details of it, because if you put these things together, what a credit card portfolio can allow you to do is it can allow you to keep your money in the bank during times when it's advantageous for it to be in the bank and to use credit cards, and then on the other hand, to withdraw your money from the bank when you need it.

And so for me, for example, the way that I handle my emergency fund is I have some money in physical currency. I have some money in the bank, but I keep the bulk of my large emergency funds not just in my checking account, not easily connected to my debit card.

My plan A, if I had a significant form of emergencies, would be to use credit cards. I would use 0% credit cards to cover my expenses for a period of time, but I have the money in the bank that I could pay off those credit cards if I needed to.

And so this allows me to keep my money invested a little bit more efficiently, getting slightly higher interest rates than just what the bank may be offering on a savings account, but to do it safely with the backup of credit cards. So that's a little bit of a renegade approach.

Most financial advisors aren't that comfortable with it, and I would point out that it can be extremely risky. In my course on the subject, I talk a lot about the risk, and you have to understand, is this a good risk for me or not? But having access to money when you need it can be an incredibly valuable asset, and those three different things that you want to think about, number one, physical currency when you need it, number two, access to savings due to proper planning, and number three, credit cards can be some of your best ways to actually solve your problem.

- You've talked elsewhere about how a well-designed financial plan fits with overall risk management goals, and in fact, a lot of those goals are accomplished in that plan. And as we sort of begin to broaden up this discussion on risk management, I'd like to ask how a financial plan fits with the overall topic of risk management.

- The first thing that a financial plan should cover is the positive side. The financial plan should cover, what are my goals, what am I working towards? As financial planners, we usually use the term in a fairly structured way. You know, we have financial planning software, we're doing projections on how long will your money last, and we're looking at investments, et cetera.

I do like to talk about it in a large frame, from the big perspective, because somebody's financial goals should influence their financial plan. If somebody has the goal of becoming a billionaire, their financial plan is going to look very different than somebody who has the goal of simply making sure that they're out of debt.

And so you wanna begin with the positive side, with the goals. Then, backing up from those things, you wanna look very carefully at the risk management side. So let me use an example like asset protection planning. If my aunt comes to me and she says, you know, Joshua, I have a little bit of money, I wanna make sure that I'm secure in my older age, and so how can I do that?

The plan is fairly simple. I'm gonna encourage her, well, you know, make sure you invest the money, let's talk about a good portfolio that's widely diversified, that should be safe, should give you the rate of return that you need. I'm not gonna get into any kind of exotic packages, any kind of exotic investments, any kind of exotic forms of wealth, et cetera.

On the other hand, if somebody comes to me and let's say I'm dealing with a very successful 35 year old business guy, who's just a total shark, and he says, I wanna be a billionaire. Well, in this situation now, I need to think really carefully about the risks that are gonna emerge from his business activities.

And we're gonna spend most of our time carefully segmenting risk. We're gonna make sure that his debt is carefully segmented onto assets that he's not personally liable for. We're gonna make sure that he has abundant resources, segmented where his creditors can't access it. We're gonna do a whole lot of asset protection planning in that situation, because we understand the game that he's playing is probably a lot riskier than my aunt's game, right?

My aunt may have a car accident and somebody may sue her. That's very different than my big shot shark of a business client, who's going out there and spending all of his time doing global international deals. And so the goal is always to say what risks does somebody face and then develop a plan that manages those risks appropriately and at an appropriate cost.

I don't see how you can get away from it, because one of the things that you realize is to do well financially, you don't necessarily have to have a home run. There are lots of people who become very wealthy without ever having a home run. If you have an abundant amount of time, you can work a job, a standard job that fits you well, that pays you a decent salary.

You can live well, but modestly. You can save and invest. You can purchase mainstream investments that are very good, very safe, et cetera. And you can do well. You don't have to have a home run. But what you can't have is you can't have a big loss or a few big losses.

So a good example would be something like disability insurance. If somebody is 35 years old and they're working a job, they're saying, "I wanna retire when I'm 65." That plan may work out really, really well, unless they get in a car accident when they're 38 and they can't work.

Then the whole plan falls apart. And so you've gotta look and say, "What are the big risks "that can cause this plan to fall apart "and how do we protect against them?" And that to me is what risk management planning is and it's fundamental. - Yeah. You got right into disability insurance and I feel like it's one of the most likely to be overlooked and something that I always talk to folks about.

I wanna ask, do you feel like it's wise to only own it through work or are there times when private disability insurance is also very necessary? - I'll give you Joshua's short lecture on insurance. If I could only own one kind of insurance, only one, that one kind of insurance that I would own would be disability income insurance.

I wouldn't own life insurance. I wouldn't own health insurance. I wouldn't own any kind of car insurance or other property insurance. I would own disability income insurance. And that's surprising because I think disability insurance is one of the least owned or if it fails that test due to the widespread use of group disability policies, it's one of the least understood or the least paid attention to.

But if you think about the things that could happen to you in life, becoming sick or hurt and unable to work is one of the most significant things that has the widest range of consequences. Most people go to life insurance. Well, I have four children. I love my wife dearly.

But if I die unexpectedly and I don't have life insurance, that would put them in a difficult position. But they could figure something out, right? I'm dead, I'm gone. My wife could go and could get a better job. She could move in with family and they could support her.

She might remarry. There are many number of situations that she could go into. And at least the fact that I'm dead and gone means that her personal situation is a little bit simpler than it would be if I were still here. But if I'm disabled, now things are more difficult because it's harder for her to go and get a job because she's gotta take care of me.

It's harder for her to move in with family because what if I need a specialized hospital bed for my medical condition? Everything becomes difficult. She can't remarry 'cause she's still married to me. And so everything becomes more difficult if I'm disabled. So if I'm disabled and we still have income coming in, we can make it through.

But if we don't have income coming in, we've got significant problems. Or I mentioned health insurance. Why do I think disability income insurance is more important than health insurance? Let's pretend that I got sick and hurt. I couldn't work, but now I've got to go to the hospital. I'm spending significant amounts of time in the hospital.

In most places, even if I don't have any money, I can be treated for my medical needs. My medical expenses can be covered. Even if I wind up owing the hospital hundreds of thousands of dollars, they'll still provide treatment for me. But if I'm in the hospital accumulating hundreds of thousands of dollars and I can't work, and my family's getting ejected from our home, my family has no food to eat, now I've got major, major problems.

If I have disability insurance, I have money coming in that can cover my living expenses at home, and then I can figure out how to pay off the hospital bills down the road. In a worst case scenario, I may declare bankruptcy and the bankruptcy court will remove my obligation to pay those hospital bills.

So the disability insurance is the cornerstone insurance policy, more important than almost anything else. What about car insurance? I have a car accident. I commit $40,000 worth of property damage and I owe $100,000 worth of bills. Well, if I'm still working, I can eventually pay that. I can sell some assets.

I may eventually bankrupt out of it. Bankruptcy is always an option. But if I'm not working, nobody's gonna come and pay me income if I'm not working because I got sick or hurt and can't work. So disability insurance is the cornerstone. Now in the United States, most disability insurance policies come through some form of a group disability insurance plan.

And I have asked hundreds and hundreds and hundreds and hundreds of people about their disability insurance plan at work. And those same hundreds and hundreds and hundreds and hundreds of people can tell me nothing about it because nobody understands it. They don't understand whether it's good, whether it's bad, what it covers, what it doesn't cover, what it costs, et cetera.

And so put simply, the answer is it depends. You have to analyze the policy. Many companies have disability insurance policies that they offer through work that are excellent. They're really, really good. And if the coverage is sufficient for the individual involved, then there's no need for any additional insurance.

Why pay money for insurance that you don't need? On the other hand, I have reviewed many group disability insurance policies that were truly terrible and they didn't have good coverages at all. In which case, the person thinks they're covered, but they're not. And the way that you do that is you have to ask some specific questions.

You have to either read the policy documents or ask some specific questions of the insurance agent or the human resources agent to find out what the policy covers. Now, if somebody has a disability insurance policy at work, they may be able to get a small supplemental policy. And if they need it, if it makes sense, then yes, it's a good idea.

The nice thing about supplemental policies is supplemental policies are not constrained to your work. If you get a disability insurance policy individually, that policy can go with you in any circumstance. I'll give you an example. I used to do a lot of work with lawyers and other professions as well.

What I'd try to do is I'd try to get them to get large individual disability insurance policies that they owned privately, not through their group benefits, but that they own privately. Because the nice thing about it is a lawyer is one of the safest, technically speaking, job classifications that you can have.

And so lawyers can get these awesome policies with amazing benefits at a very low cost. And once they have those benefits, they can go to any company, they can travel around, they can start their own firm, and they can still keep their coverage. One thing that's very difficult is when people are starting a new business, it's very difficult to get disability insurance coverage.

And yet that's one of the times when you really need it the most. And so once you have it, because you got your first job out of law school, you can take it with you even when you go out on your own and start your own practice. But in addition, one of the nice things about an individual disability insurance policy is it actually goes with you regardless of your job.

And so I would tell lawyers, and this sounds like an exaggeration, but technically it's not. Nobody does this, of course, but technically it's not an exaggeration. I would tell them, listen, if you get this policy now that underwrites you individually, this is a guaranteed renewable policy, which means that the insurance company can't take the policy away from you.

As long as you pay your premiums, they can't take the policy away from you. So I said, you've got this as a lawyer. You can go and you can start a roofing company. And maybe you decide that you can make all kinds of money as a roofer. You can go and start a roofing company and you still have this policy.

20 years from now, you fall off a roof. And if you're disabled from the job that you were doing at the time of disability, you're disabled from being a roofer because you fell off the roof, this policy will pay out because it's an individual policy. I don't know any lawyers who actually went and became roofers, but I sold a lot of policies with that language because it's technically true.

And it's really valuable to have the coverage individually. So should people have coverage more than what's at their work? It depends. Depends on the individual analysis, but they definitely, if you can't stop working today and be completely fine financially for the rest of your life, if you're not at least stage, what is it, four, financially independent or stage five, financially independent, if you're not at least there, you probably need some form of disability insurance coverage.

- So I knew what your answer was gonna be on this one. I always talk to clients about this. You mentioned sort of the positive reason to have private coverage of going out and starting your own thing. That's a great reason. One, besides becoming a professional chainsaw juggler, which I had never thought of as a possible career change or roofer for that matter.

The other one that I think about would be if you became disabled between jobs, if you were in a layoff situation is another good reason to have that coverage that's separate and apart from your employer. - I think people underestimate how important their income is. I used to use this very simple sales technique when I was selling disability insurance policies and I would draw a picture.

So just imagine in your mind, my legal pad and my pen, and I would draw a picture on the left-hand side that was your car. And I would say, how much is your car? And you would say, it's $42,000. And so I would write $42,000 and I would ask you how much you spend on car insurance.

And I would write that below. And you would say, I spend $140 a month on car insurance. Then I would talk about your house. How much is your house worth? You can say, $340,000. And I'd ask you how much you spend on homeowner's insurance. And then I would ask you, I knew how much money you make and how old you were.

So I'd take your income, let's say you're 35 years old and you make $100,000 a year. Well, 35 years old at $100,000 a year, 30 times 100,000 is $3 million. That's the value of your income. And that's not adjusted for inflation. If we give you decent raises for inflation, it's very likely to be 5 million, $6 million that you may earn over the course of the next 30 years.

And I would just simply say, how much money do you spend to protect this $3 to $6 million asset? And it's a very persuasive picture because if you've got $3 to $6 million coming in, you can easily pay for a car. If your car just becomes totally destroyed and you have to buy another one, you can easily do that.

If you destroy someone else's car and you have to buy them another one, if you got $3 to $6 million, you can do that. It's not a big deal. If your house burns down and you've got $3 to $6 million of income coming in, you can buy another $340,000 house.

But if that $3 to $6 million goes away, everything goes away. And it's so important. The final point I wanna make on it, 'cause you're pushing my buttons intentionally because it's a big deal to me, is people underestimate how much better life is when they're properly insured for disability.

I had a client of mine who was a, I think he may have been a cardiologist. He had been diagnosed with cancer. He was 51 years old. He'd been diagnosed with cancer. And he had a very nice disability insurance policy. He was disabled from his ability to work as a physician.

And so he was collecting disability benefits. I think his benefits were something like $15,000 a month. When I came along, he was doing fine with his life. He had $15,000 a month coming in. He was entirely focused on getting better. He was doing all these wacky health protocols. He was working with his oncologists.

The rest of the time, he was taking his children to work, to school every day. He was spending time working on some personal projects. He was playing, he was golfing. He was doing all this stuff that he'd wanted to do for a while because he had the money coming in.

And the cancer diagnosis, certainly it was a big medical problem, but the cancer diagnosis was not something that changed his lifestyle. He didn't have to, in the middle of this health scare, move his family out of their beautiful house. He didn't have to immediately pull his children out of their private schools.

Life was able to go on. Having worked with people in some really dire circumstances, just impressed upon me how, if you've got money coming in, when you're sick or hurt and can't work, everything is smoother. And it helps you, as we talked about earlier, it helps you to solve the health issue much more easily than if you didn't have it.

- Last thing on this from my side, and then we can stop banging this drum, is just that I've known some older people who died, maybe had whole life policies in place, managed to collect on those. I don't know a single person in my life, there may be, I take it back, I know one person who has ever collected on a term life insurance policy of all the hundreds of people that I know.

But I just was in another podcast conversation a week or two ago, and the person I was visiting with personally knew two people who had made disability insurance claims within the last year. And so it's just, it's a type of event that is statistically much more likely than some other types of insurance claims.

As we've talked a lot about insurance, I wonder whether you have any thoughts on percentage of income that is reasonable to go towards disability, health, life and property and casualty insurances. This is something that comes up with clients because you wanna have some insurance, but you also don't want to devote an unreasonable portion of your budget to insurance premium.

- Definitely. It's a difficult question because I don't know of any of us who like to pay insurance premiums. Insurance premiums generally feel like a total waste. And so we're usually working to get those insurance premiums as low as possible. Now, I think those of us who've lived for a little while understand that when insurance pays out, all of a sudden it's nice to have it.

But when we're dealing with something like disability insurance or life insurance as well, we probably have less exposure to people who've experienced the benefits of it. You and I are unusual in the fact that we talk to people who are experiencing these, but most people don't know that many people who have collected from a disability insurance policy.

And so it's difficult. And of these, I think disability insurance is the more difficult one to reconcile because the premiums are much bigger than life insurance, generally speaking. And so let me talk about kind of how I encourage people to think about it. The first question that you have to think about is do you need the insurance or do you not need the insurance?

That's question one. Do you need it or do you not need it? If I am 40 years old and I don't have any money in the bank and I've got four children, my wife is home with the children and everyone is depending on my income, I need the insurance.

And so it doesn't matter what it costs, I need it. On the other hand, if I'm 40 years old and I have $4 million in the bank and we spend $5,000 a month, I don't need the insurance. If I got disabled, we could live on the $4 million in the income that that's generating for us.

I don't need the insurance. So question number one is do I need the insurance? Question number two, do I want the insurance? Because just because I may not need it, I might still want it. A couple of years ago, I had an experience where I bought a truck and I was getting ready to go.

I bought the truck to pull a camper and I took my family and we lived in a camper full-time and traveled all around the country. I bought this truck and I didn't need to put comprehensive insurance on it. I only needed legally liability insurance. But I ran the numbers and I said, "Yeah, okay, I'll go ahead and put comprehensive and collision on it and cover it properly." It wasn't that much more.

I didn't need it. I could have easily afforded to go out and buy another truck if the truck were totaled. I had the liability covered, but I decided I want it. Well, in my situation, it actually turned out very much in my favor because my truck got stolen a week before my trip.

Literally a week before we were planning, my truck got stolen from the parking lot. I was having the tinting replaced. It got stolen from the tint. And the guys that stole it used it to bash into a race car trailer and they wound up totaling my truck. And then through some negotiations with the insurance company, I was able to get a very fair settlement for the truck, which allowed me to be more than whole financially when I was in that situation.

But the nice thing about it was because I knew that I had the comprehensive coverage, comprehensive in collision, I was able to just immediately go out and I bought another truck. I wasn't able to leave right on time, but I only left on my trip one week late because a week and a half later, I bought another truck and I knew that I was totally fine.

And so having that insurance coverage made me feel good. So I think similar things come into disability insurance. One of the reasons we buy insurance is because we want it. Now, I said a moment ago that most of us don't like paying for it, but I think genuinely if you get someone in the right frame of mind away from a pushy life insurance agent and you say, think, do you want this?

Most of us want what insurance has. Why do I have tons of life insurance? Because I want to know that if I'm dead, that all of my family's financial goals are still achieved, right? I don't want my wife sitting there staring at my casket to be thinking about, well, what am I gonna do for money?

Or what other rich guy do I go and marry to support all these children that Joshua and I have? I want her to know that I've got plenty of money and I can do what's right for me without regard to the money. And I'm happy to pay those insurance premiums because of that.

So number two, do I want it? Number three is what are the actual premiums and what do I actually need versus how do I actually want? Now, here's the thing about disability insurance. Disability insurance is priced more fairly than almost anything else, which means the price of the policy is very much driven by the risk.

And disability insurance is hard to teach about because it's so complex. With life insurance, especially term life insurance, people understand it. They understand that if I want a million dollars of insurance and I'm 45 years old and I don't smoke, it costs X number of dollars. And if I do smoke, it costs more.

But disability insurance has a lot of options that life insurance doesn't have. So the first thing is, what is your job? What occupation do you have? And this is the biggest factor in a policy. A lawyer is a 5A classification. So the lawyer is very unlikely to be disabled.

A lawyer who falls in a skiing accident, breaks his leg, is not disabled from being a lawyer. Whereas that same person, if the roofer falls and breaks his leg in a skiing accident, is disabled from being a roofer. So the lawyer has a lower risk. And so the cost of disability insurance for lawyers is much lower.

The next thing is, how much money do we cover? So a disability policy that gives you $15,000 a month is a very significant risk for the insurance company versus a policy that gives you $3,000 a month. You can choose how much money you need. And so that's a big thing that you can adjust.

The third thing that you can use to adjust a policy, you can adjust the policy based upon when the policy benefits start and how long they last. You can sometimes have a policy, I guess, usually this is not the realm we're talking about, but you can buy a short-term disability insurance policy that will pay you an insurance claim after as little as a week of being disabled.

So this would be the common thing, Aflac is a big brand name in this space. So this is common among blue collar workers where they say, "If I got sick or hurt "and I couldn't work for a week, I'd have a problem." You can buy an Aflac policy, a short-term disability insurance policy that pays you benefits after a week.

And those policies will usually pay you benefits up to three months or in some cases, six months. For most of white collar workers, that's not necessary because you can easily self-insure through two weeks of no pay. And for white collar people or wealthier people, generally, you don't even need coverage in that situation because your salary would continue, you have sick days, et cetera.

But for a blue collar worker, somebody who doesn't have money, that kind of policy is a real lifesaver for them if they get sick for a few weeks. It keeps their rent current, it keeps their mortgage current, it keeps their car payments current. It's very, very useful. Now, for somebody with more money, what you can do is you can stretch out the start date.

So I've sold policies that began after a year's worth of disability. And so that makes a big cut in the premiums because if you think about it, how likely are you to be disabled for more than a year? Not very for most of us. - You'll either be dead or better.

- Right, right. It's hard to be disabled for more than a year. If you have a skiing accident, you might be out of work for two months, but you're not gonna be out of work for a year. The kinds of things that disable you for more than a year are a very severe medical condition, very severe heart disease, very severe cancer, or very more frequently, some kind of psychological problem.

You can't deal with the stress of the job anymore. You go through some kind of personal mental trauma. You suffer some kind of breakdown. You experience early onset Parkinson's disease or something like that. Those are the kinds of risks that are more than a year. And so if you push the start date of a disability policy out to more than a year, then the premiums drop dramatically.

The next option that you can adjust is you can adjust how long the policy pays you benefits. So you might have a policy that starts after 90 days of disability and pays you benefits out for two years. Or you might have a policy that pays you for five years, a maximum of five years, or for a maximum of 10 years.

But there are policies that will pay you out up through age 65 or age 70. And so if you're young, of course, I'd like you to be covered for that up through age 70, but that's not strictly always necessary. And so if you wanna spend less money on disability insurance premiums, you could simply drop the coverage period.

And so maybe I'm working with somebody and they say, I've got money in the bank, I've got money in 401ks, I don't have enough to be self-insured, but what I'd like to do is I'd like to cut my disability insurance policy premiums. So what I'll do is I'll take a policy with a maximum benefit of five years.

There's a very small chance that I'll be disabled for more than five years, but five years would give me enough time to adjust. It would give me enough time for my wife to get a job. It would give me enough time for us to sell our fancy expensive house and move into a more modest apartment so that we could cut our expenses.

Right now we're living a lifestyle of $12,000 a month, but if we had to, we could live on $4,000 a month and five years would give me enough time to adjust our living expenses. And then what we would do is we have enough money in our 401k, in our savings, in our one rental property, we have enough money from those things that we could cover ourselves at $4,000 a month for the rest of our lives and be totally fine.

So I'll buy a five-year policy. So you can cut the benefit period. And then the final thing that you can adjust is you can adjust the definition of disability. So you can choose, and I'll use the generic terms rather than any company specific terms, but you can choose a policy that has an own occupation benefit or an any occupation benefit in it.

An example of an own occupation benefit would be the insurance company says, if you're disabled from your occupation, then you qualify as being disabled. So this is very important to the physician, to the attorney, to the white collar professional, because yes, I know that I could go and say, welcome to Walmart in theory.

I know I could do that in theory and make $1,500 a month, but give me a break. I'm making $15,000 a month as a financial planner or as an attorney or whatever. And so I want a policy that covers me from my attorney work back to my physician client.

His policy covered him. If he was disabled from being a physician, he was covered. He didn't have to sneak around and pretend that he couldn't do anything. He was golfing, but he couldn't go and be a physician because he couldn't put in the time and the stress associated with that.

On the other hand, you could always adjust down and you could take a policy that was a catastrophic policy that said, we'll cover you and we'll consider you disabled if you're ineligible to do any occupation or any occupation which is suitable for you based upon education, training, and experience.

And so those kinds of definitions are much broader and they give the insurance company the ability to say, okay, we understand that you can't be a physician, but could you go and be an accountant? Could you go and provide legal consulting services? So we're not gonna pay you. And those all cost of premiums.

So that's some insight into the world. What I would say is what an individual should do is they should answer those questions. Do I need it? Do I want it? And they should talk with their insurance agent or their financial advisor about how to adjust the policy to fit them.

And it's not right or wrong. It's a matter of what do you want and what level of premiums is comfortable for you. But I think that in general, you have to start with persuading somebody that yes, this genuinely is a very, very valuable asset for me and thus it's worth insuring properly.

- Great stuff. And I'll just note there that one of the things too that I've seen frequently with company provided insurance policies is any occupation definitions of disability within the employer provided coverage. Meaning that the employer is really looking to insure the worker in the event that they in some sense become totally disabled and not necessarily insuring their income in the event that they are unable to do the thing that they trained for or the thing that they like to do with their career.

(upbeat music) Today's show is so big, it needs three sponsors. First, it's brought to you by Radical Personal Finance where Joshua Sheets provides 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.

Second, big thanks to Josh Self and PLC Wealth Management for your support of the Life Meets Money show. And last but not least, today's episode is brought to you by Matt Miner, founder and host of the Life Meets Money podcast. Life Meets Money exists to help you plan to fund the life you love.

It's the show for MBAs, entrepreneurs and other professionals who want their financial plan to work as hard as they do. And with all the discussion of toilet paper, I also tried to contact David Taylor, CEO of Procter & Gamble on Twitter to get him to sponsor the episode on behalf of Charmin, but he wasn't interested.

Despite that disappointment, you can go to lifemeetsmoney.com/start to make sure your backside is covered whenever the next catastrophe happens along. Transitioning a little bit from the totally traditional topics to the more fun stuff, I wanted to ask you, physical preparedness is a key part of risk management. And sometimes people take this in kind of goofy directions, even neglecting things that they shouldn't neglect in order to do that, which is not my goal today.

But there are some basic physical preparedness items that should be addressed kind of with the same urgency as an emergency fund and basic insurance. And I wonder if you'd talk us through what those are from your perspective. - You got about four or five hours here that we can-- - I don't know, you're gonna run out of water to sip on here.

I've seen your cups, they're not as big as mine. So you're gonna have to meter your response to match your supply of beverages. - Exactly. So first, let me make the case for physical preparedness, because I think that this is underrepresented in the field of financial planning. I believe that money is generally the best form of preparedness.

I had a friend of mine who coined the term, money is an omni-tool. He said that money is that thing that can get you almost anything else. And that's true. Money can be converted into almost anything in the world. The definition I like of money is that money is the most marketable commodity in the world.

Money is the thing that everybody will accept. And so with money, you can buy almost anything out there that you need. You can convert money into anything in any circumstance in any corner of the world, unless the marketplace is so messed up that money is not working for now.

Now, usually that's a temporary condition. But if the marketplace is messed up, then money is not working for now. And so let me give a few examples as I answer your question. I think it's very fortunate that we're recording this podcast in the fall of 2020, because if we were recording this in the fall of 2019, people would have been looking at me saying, "Joshua, I don't really get it, but I like to refer to the great toilet paper crisis of 2020 and simply say that in the great toilet paper crisis of 2020, we see the perfect example of when money stops working." Now, this is an imperfect example because I don't think there's anybody out there who genuinely went without toilet paper just because the stores were wiped out.

If you had a $20 bill and you needed a roll of toilet paper for your household, you could walk up and down your block, knocking on your neighbor's doors and say, "I will trade you this $20 bill for a roll of toilet paper." And everybody found somebody who would make that trade with them.

However, it's illustrative because we know that the stores were wiped out of toilet paper. This very, very simple, basic thing that many people all around the world use on a daily basis, it's the simplest thing possible, and except it was unavailable for a significant period of time. And so what you'll see if you think about that is that this was the easiest crisis in the world to avoid through a simple strategy of stockpiling.

That any thoughtful person who sits down and confronts the problem and says, "You know what? Something could happen that could disrupt this market. Here's this product that we use every day in our household that is a very important, valuable part of life. I need to plan and place for if this product doesn't exist." That would lead somebody into a few basic, obvious steps.

The first obvious step is you set aside a couple extra cases of toilet paper. And if you just made a habit of not only buying one case at a time and then waiting till your case was depleted and then going back to Costco and getting another case, but simply maintaining a spot on your shelf where you put two extra cases of toilet paper, then you weren't freaking out during the great toilet paper crisis of 2020.

You knew, "I've got two cases of toilet paper. That's two months of toilet paper. They'll fix this within two months. The market will provide." And so you stockpiled the thing that you needed, and then you weren't worrying when the market was messed up temporarily. And so that's a very simple thing, but it was a genuine point of panic for people.

You could go into Costco during the toilet paper crisis, and you could see people pull up in a Mercedes Benz wearing a Rolex on their wrist, clearly well-heeled, and yet here they are basically tussling with people to try to get the last couple cases of toilet paper. That's pathetic if you think about it.

It's totally pathetic, but a little bit of thoughtful planning could say, "I should stockpile this thing that we use." Now, of course, your plan could be more robust, and if I were teaching this course, what I would say, this is a class, I would say, "Well, let's develop three different ways to meet this need." So you would say, "The first thing I could do is I could stockpile." And so we need toilet paper, so what we'll do is we'll stockpile extra cases of toilet paper, and I would teach someone how to say, "How much time worth of toilet paper do you need?

I want three months of toilet paper." You calculate what that is, and you stockpile three months of toilet paper. Then we would say, "Well, I wanna protect you, so you need a second way to provide for this need." And so maybe it would be something like washable cloths. So maybe instead of just buying toilet paper, you buy a large jumbo pack of washable cotton cloths that if necessary, this could be used as toilet paper and then washed afterwards.

And maybe the third thing is you install in your house a bidet, and whether that's a built-in appliance that you install or something that you would get out, they sell portable bidets, something like that, you have the ability now to manage this basic human need in three different ways if the market doesn't deliver for you.

That's good preparedness planning. That's robust preparedness planning. But the point is that all of those things are easy to do before the fact, but they're hard to do after the fact. And so life continues, and things can be much more dire. So let's give another example. The toilet paper crisis is funny, because it's a little bit of a difficult thing for us to talk about, because it's a little bit off color, but we lived through it, which is why I like to start with it.

But what about something like a building fire? Maybe you work downtown and you recognize that there could be a building fire. Recently, we've celebrated the 19th anniversary of the 9/11 attacks. So I want you to imagine you work in downtown New York City, and it is possible that there could be a terrorist attack, or it's possible that there could be rioters setting fires outside your office, or it's possible that the power could go down, and the elevators might not work.

So do you have a plan that you could get safely out of your building if the fire alarm goes off, or if you turn on the news and see that an airplane has flown into a tower? Well, I think this is an important area of discussion, and so it starts with the simple things.

Now, you've got all the money in the world, but do you have a pair of comfortable walking shoes at your desk? There are legions of office workers, male and female, who wear the most stunningly beautiful fashionable shoes to work every single day. And I like fashion. I like my nice leather dress shoes.

I don't wanna walk five miles out of downtown New York City in my nice dress shoes. I don't want my wife with her three-inch heels to try to walk five miles out of downtown New York City. And so preparedness planning is very simple. You say, here, I've got a pair of walking shoes, or tennis shoes, or sneakers, or whatever, that these are getting a little bit ratty.

I'm just gonna take these to work, and I'm gonna tuck them into the back corner of my drawer, in my desk, or down in the filing cabin, or in the break room, or something. And then, if there's a fire alarm, I'm gonna discipline myself to immediately stop, take off my high heels, or take off my dress shoes, and put on these walking shoes, so that I can walk down 35 flights of stairs and walk out of the building.

That's a very simple thing, but it can possibly save your life, as it allows you to quickly escape a building before the building collapses. And I'm not being at all flippant with this. This is real stuff. So you wanna think about these things that could happen. Your biggest priority, generally, is to get home.

And so you think about, what would I do? How would I collect my children if, all of a sudden, there were some major physical emergency declared in my town? Right, I've gotta figure out how to get out from work. I've gotta figure out how to get to my children's school.

How could I do that? What would we do? And you sit down, and you talk with your spouse, and you make a plan. Here's what we'll do. If there's an emergency, if there's a threat of some kind, it could be a snowstorm, or an ice storm, or any number of things, you're gonna go, and you're gonna get our son from that school.

I'm gonna go and get our daughter from this other school. And then we're gonna get home. Well, how are you gonna get home? So, again, I said I could teach a four or five hour class on it, but if you start thinking through these questions, what you find is you find some very consistent solutions.

And so let me just give an example here from the perspective of the office worker. If I worked in downtown New York City, but I lived in the suburbs, whether it's across the river or not, who knows, I lived in the suburbs, or if I commute to any downtown, New York's hard because so much is public transportation, I would think this through, and I would start by having a pair of comfortable walking shoes and a good pair of socks, so that if the electricity goes out and the subways aren't working because the electricity's out, I can walk.

More importantly, I would do something simple. Like, I might be personally, if I were commuting, I would keep a folding bicycle in the trunk of my car. So if I've got a folding bicycle and I need to get home and I need to go and collect my children, then I have the ability to simply go to the trunk of my car and maybe the roads are jammed or there's an earthquake, right, maybe you live in an earthquake zone, and I would have a bicycle.

Of course, the primary goal is the car. And so I always make sure that I keep my car with at least a third of a tank or a half of a tank or a quarter of a tank, so you pick some number. So you never wanna find yourself in a situation where you don't have gas in your car.

You wanna have a couple ways of getting yourself home. You have walking shoes, you have a bicycle, you have a car. You wanna know how to get there. So if you look at a map, and you don't have to necessarily go and walk it, but how would I get home if the bridge was blocked?

Right, I'm thinking about 9/11 because of all of the recent media stuff, but the bridges are blocked, the roads are closed down. Everything is stopped. How do I get there? I have to physically walk out of the city. So do I know where to go? And I would keep some basic provisions.

Back in the 1800s, there was this horrible ice storm that came in the Midwest that wound up killing hundreds of students because they went to school in the morning, it was very warm, and the temperature plummeted something like 60 or 80 degrees Fahrenheit within the course of an hour and a half or two hours.

And I'm not exaggerating. It was this catastrophic scenario. And so all of these children were walking home, and they died of exposure because of this catastrophic plummeting temperatures. So imagine you're at work. What would you need if you needed to hole up in your office for a day or two?

Maybe there's a catastrophic ice storm, and it's not safe for you to go home. Wouldn't you rather simply be able to call your, an ice storm is a good example. Many people die in accidents when they're driving home. Wouldn't you rather call your wife and say, "It's not safe to drive right now.

"I'm at the office. "We're totally fine here. "I'm just gonna stay here at the office until tomorrow "till they get the roads clear, "they get the roads salted or whatever happens, "and I'll see you tomorrow." And so I would keep in my office, I would keep a couple gallons of water, I would keep a little bit of food, some snacks, some basic things.

You could maybe stick a wool blanket somewhere. And now you've got an office emergency kit squared away. Other things like a first aid kit. Whenever I go hiking with my children, I always carry a first aid kit because I don't wanna be that father who is sitting there with a child that slipped and fell on a rock and now has a bloodied knee who doesn't have anything at all.

And so having a first aid kit with you when you go in the woods, having a first aid kit in the car with you. If you're gonna go deep in the woods, making sure that you have a way to get out. Your cell phone is great, but what if you're beyond cell phone distance?

So simple thing like having an emergency locator beacon is not difficult to have, costs a couple hundred bucks, but you read a story about a guy who was the guy that was out hiking and rocks fell and he had to cut his arm off because he got caught. That's awful, right?

And I'm glad he got out and he didn't die. Better to be alive, less one arm than to not be alive at all, but that's terrible. And so with those of us who have enough money, it's not hard to spend a couple hundred dollars and put an emergency locator beacon in your backpack.

So if a rock falls on you and you're stuck, you pull out your backpack, you pull out this flexible antenna, you point it at the sky and you press SOS and the emergency people show up two or three, four hours later and they rescue you. These are all just components of emergency and disaster planning.

There's plenty of good education out there available. And so I don't wanna go more than that, but it's important that we think about it because there are times in which money doesn't work. And in those times at which money doesn't work, your physical preparedness will make the difference, maybe not between you're surviving or not surviving.

That's rare, but it does happen, but it's rare. And I don't like to be so apocalyptic and say, you're gonna die. You might, right? And we wanna avoid that. But what I would say is your physical preparedness can make the difference between something being a perhaps dire and in most cases, very uncomfortable experience versus being a minor inconvenience, a minor nuisance.

It's not always life or death, but you can turn a very uncomfortable experience into a minor nuisance. And to me, that is worth it. That's worth it to pay attention to and to engage in good personal preparedness planning. - I have a couple of things I wanna share back by way of response.

The first actually relates to you again. I don't remember the exact day, but it was around February 24th or February 26th. You released a show on COVID and what you saw that was coming. And it was before, COVID was certainly in the news at that point. It's been in the news since January.

We didn't really know what the disease was gonna be like. And we can criticize all we want, the policy responses through the spring of 2020 in the United States. Around that time, I went to Costco. I did buy toilet paper extra, even though we had a case already and stocked up on some food.

And the result of that was that we didn't go to Costco for about four to five weeks in the first part of COVID 'cause we were all still grappling with what does it mean to live in these conditions and exactly how bad is this thing? Anyway, so I wanted to say nice shot on calling that one in time that our family was able to do something about it specifically because of that show, even if toilet paper was the only thing that we had plenty of.

And then the other thing was that like through these principles of lifestyle design that are so important to me and to you, we live where we want and we have the stuff that we want around us. And it was no great hardship for us to be here at the house and have our things and have each other.

We certainly missed social interaction and seeing the people that we love. But because we'd put some thought into the preparedness stuff and then also into designing the life that we want, it was really, we are thankful to say, much more of a non-event than so many people experienced. - Yeah, and I think that it's important to focus on that because as we record this in the fall of 2020, COVID is much clearer than it was in the spring of 2020.

It was not clear at the time what the actual circumstances were. It was not clear how bad the disease was going to be. It wasn't clear what the risk was. It simply was not clear. You had videos coming out of China of people dead on the street and you're thinking, are we dealing with a minor flu or are we dealing with Ebola, right?

There was just no way to know. And that's normal. That's a normal part of most disasters. It's unclear. And so to me, what I would encourage every one of your listeners to do is to learn the lessons from COVID because while COVID is definitely a significant pandemic, I'm personally persuaded at this point in time that we dodged the big one, right?

That COVID is not going to be the big one. That sounds a little bit harsh and uncaring when you're dealing with hundreds of thousands of people dead around the world as we speak. And this is going to continue for a long time. But it's a matter of fact that it could have been far worse.

If we look at these examples, it shows us what we need and what we don't need. When we analyze a subject like COVID, it gives us a good war game, right? A good test that we can look at. And now we're close enough to those early days that we can remember what happened, but we're far enough away that we can make plans for the next thing.

It's important to look at it and to recognize that although this one case didn't turn out to be dire for most of us, right? I want to be thoughtful and respectful in my language, especially towards those who have become sick by it and faced death from it. But speaking very broadly, although in many cases for many families, it's not the physical sickness, you didn't know that at the beginning.

And so you were able to be cautious at the beginning if you had good physical preparedness in place. So let me use another example. If you have food in your house so that you know that when the ice storm comes, you don't have to run to the grocery store to stock up on milk and eggs, it may very well keep you from being out in dangerous conditions that can result in a bad car accident or death.

If you have food in the house and your boss, or sorry, if you have money in the house and you're not living on the razor's edge financially, and your boss says, "You better get down here today "because I need you, but you know it's not safe "for you to drive." You say, "I'm sorry, boss.

"I want the job, but I can't come in safely today. "I'll come in another day." And you can do that. And so when you pull back from being at the very edge of risk, when you minimize your exposure because you don't have to go to Costco with the crowds in the early days of the pandemic when you're not sure how bad it is, and you can stay at home, you can make everything better.

And on almost every level of emergency that can happen, that improves things. So for example, you're better off getting COVID in September of 2020 than you were in March of 2020 because now the medical professionals have a much better understanding of the therapies that are gonna help you beat it than they did in March.

And so if you could sit home and minimize your exposure for that period of time, you maximize your probability of surviving the disease and of thriving during the disease because of that buffer. So I don't wanna go on with example after example. I just wanna emphasize that these things work harmoniously together, that physical preparedness and financial preparedness make otherwise catastrophic situations non-catastrophic, and they make difficult situations more comfortable.

And although we often feel a little bit of guilty to say what you said, Matt, I say the same thing that, hey, it hasn't been that bad. I think it's important to say it with appreciation for the benefits that we have, but it's also due to good planning. COVID has not been a hardship for me and my family because we have a lifestyle that is designed to be resilient.

It's been frustrating, it's been annoying, but it hasn't been a hardship. My marriage is not on the rocks because of constant fights and strains. My business is not in shambles, and our household is not filled with sickness, but it's because of taking the prior steps of planning that have made everything smoother and turned a difficult situation into more of an inconvenience rather than into a catastrophe.

- All right, well, I think that we have about plumbed the depths, at least relative to what we can handle in a single show, some of this risk management and expanded that beyond both traditional financial planning as well as products like insurance. I'd love to just take a minute and ask you where you're at with Radical Personal Finance these days and where you see it headed in the future.

In specific, I'm curious how you see it going in the next year or two, and what's a stretch goal for you that would represent you exceeding what you dreamed about there? - When I started Radical Personal Finance, I loved the format of a podcast. I feel that a podcast, meaning an audio podcast, is one of the most effective tools of communication and education that is available.

Audio is much more accessible for most people to create than is video. Audio is easier to consume than is video because you can do it while you're doing other things. And so I had this dream that I would be able to provide a world-class financial education in an audio podcast.

And I think I've done a pretty good job with that. The audience has appreciated what I have done. What I learned over time is a few things. Number one, while an audio podcast may be good, it doesn't get nearly as wide of an exposure to the marketplace as other forms.

And so from the exposure side of things, I'm trying to figure out how I, with the skills and abilities that I have, can provide excellent educational content in a format of audio, also in a format of video, and also provide more written content. That's number one. Number two is I've learned that while I can create a lot of valuable education in an audio podcast, it's often too unwieldy at answering people's questions.

And so what I need to do is I need to create more focused, specific courses that answer people's questions. And so in the beginning, I thought, oh, I'm gonna give it all away for free. Well, now what I understand is that there's no way for me to give it all away for free because the answers that people are looking for get mired and buried in the sheer volume of audio files to wade through.

And so I'm trying to do those, I'm working on doing those two things. Number one is I'm increasing my exposure with more formats to attract people. And number two is I'm building high quality courses that answer specific questions that people have so that the education is tailored to the specific need that they're in at the moment so that they can have answers.

So those are my projects for 2020 and 2021. - All right, good deal. I wanted to ask you, Joshua, what do you love about where you are today with life, work, and money? - Years ago, I had a dream. I do all these weird goal setting exercises. I would do this dream where I imagined my day, my perfect day.

I do this journaling exercise where I just think through my perfect day from beginning to end, exactly what I would do. You know, I imagine myself lying in my bed and I open my eyes and I look around and I see where am I and what do I do?

And I go through the whole day. And that perfect day for me had a number of important components. One of those components was for me to do work that I cared about. I love to educate, I love to teach, I love to engage with people. To be able to do it entirely free of any kind of scheduling encumbrances.

I spent many years as a financial advisor, you know, with 25 to 30 appointments scheduled every single week, major constraints on my time with, you know, scheduled weeks out. And I didn't want a high scheduled life and I wanted to be able to live anywhere in the world. I wanted to be able to run a business anywhere in the world.

And so I dreamed that a number of years ago and I have achieved that. And it genuinely is great. It's not perfect. I've come to realize some of the things that I miss about a more traditional looking lifestyle. Some things I miss about being in an office with coworkers.

There's things that I miss about being anchored to one place. But I've been able to build a lifestyle that is more free than anybody I know. Where I can come and go on a daily basis, how I like, when I like. I can come and go anywhere in the world.

I can do very well. I can do work that matters to me. It's just a total blessing. It's a real blessing. I believe that these are some of the opportunities that we have in the modern world because I'm not financially independent. I can't live on the income from my investments yet.

I'm not there yet. But I feel like I'm already living the lifestyle that I would live if I were financially independent. And to me, to have the ability to build that, I'm not in my mid-30s. To have the ability to have built that, 'cause I've been living that since I was 30 years old or a little bit earlier, is just a remarkable statement on the golden age that we're living in.

We're genuinely living in a golden age in human history. There is more opportunity for us now than there has ever been before. There's more financial opportunity than there is now than ever before. Global wealth is increasing at a rate that's never been seen before. We live better than ever before.

And so we're living in a golden age. And it's such a blessing to be able to have benefited from that and to be able to help other people benefit from this time that we're living in. - Good deal. So this is a show, it's all about learning from the experience of others.

And I wonder, how do you reflect on your decision to go all in on podcasting in summer of 2014, which was a big choice that you made at that time. And then of course we could say expanding more broadly into personal finance media, since that time. - When I decided to go all in on podcasting, it was a difficult decision for me.

It was a very expensive decision for me. I had to close a financial planning firm that I'd spent five years building. I had to walk away from my residuals. I had to leave clients that I cared deeply about. And I had to walk away from all of it. It was extraordinarily expensive.

But at the time I did it when I did it for two reasons. Number one, I feared having regrets. I saw the marketplace, I knew what was happening and I feared having regrets. I feared not acting and how I would kick myself for not acting years later versus acting.

The second thing was I saw what was happening in the marketplace and I saw the timing that was in the marketplace. And for me, this has always been something very difficult for me. I have always come from a fairly mainstream financial background, mainstream investing background. I'm a very conservative guy.

But I would read biographies of people who were very wealthy and I observed that what's necessary is that when you see something, you have to take a bet on it. That if you read the biographies of wealthy, successful people, they see an opportunity and they take the bet. You have to actually take the shot.

You know, we can of course recite the famous quote, you miss 100% of the shots you don't take, but it's true. And so when I was looking at podcasting, I said, this is a shot I need to take and I'm glad I did because I hit the timing right.

I rode an increasing wave at a certain point, technologically, socially, et cetera, and that laid the foundation for me. For me, having had the confidence in myself to do that was a formative thing in my own personal life because it caused me to come to trust myself more than I previously did.

When I started Radical Personal Finance, nobody agreed with me. Not that people were disagreeable, but most of my advisors didn't understand. They didn't know what I knew. They didn't understand the marketplace like I thought I understood it. And so I had to take the bet basically on my own, which as a man, I'm incredibly grateful that I did it.

And I've continued to take bets on my own, do things that other people didn't understand. And as every time I do that, I see the benefits and I see that it builds my confidence and allows me to trust my own judgment more. And so that's been incredibly valuable. Along the way though, I continue to see the benefits of good financial planning because while you have to take some risks in life, you can dramatically minimize the effects of those risks with good financial planning.

I'm not willing to take a wipe out risk. And so good financial planning allows me to feel confident that it's very unlikely, I won't say impossible, but it's very unlikely that I'll ever be wiped out because I don't take wipe out risks. And to me, that's a very useful and valuable lesson that I have learned early enough in life where I hope it'll continue to pay off throughout my entire lifetime.

- Awesome. It's a pretty different landscape now than it was in 2014. And I wonder how you think people like me in the financial media space should think forward from 2020 rather than looking back at the playbook from five years ago. - That's a complex question because it's covering multiple levels.

On the one hand, it's harder to break out in 2020. We live now in a world where independent media creation is normal. Almost all of your listeners have a media creation device in their pocket or in their hand at this moment. And that media creation device is single-handedly capable of making world-class audio, making world-class video.

It's capable of broadcasting to the entire world at a single moment. You can make a living, you can make a six-figure income with nothing more than a Twitter account. And I'm not exaggerating with that. If you have interesting things to say, and if you can generate value, people, you can generate six figures from any corner of the world with a Twitter account and a couple other ways to collect money from people.

But in that context, what I think it means, though, is there's more of a desire for high quality. And so the exposure is good because it builds the audience. The potential listener base for your podcast is far bigger today than the potential listener base for my podcast was in 2014.

But what it means, though, is that we have to create better stuff that attracts people. And we have to learn the new tools of the marketplace. And that's where it's difficult. I think that most of us probably wish sometimes to go back to a simpler life. I certainly do.

It seems it's so difficult to keep up in the modern world because the pace of change is so fast. The things that worked in 2014 do not work anymore. And the things that work in 2020 will not work in 2022, which means that all of us have to be on the top of our game.

None of us can sit. We get to choose our mindset, though. We can either regret that or we can embrace it. I think it's much more powerful to choose positivity and choose to embrace it than not. And so I don't have all the answers. Although I had an earlier start, I've not executed well on all the things that I need to execute on.

And so we're in the same position. What's remarkable, though, is that in 2020 is that when we do things right, when we do things effectively, the growth rates can be astronomical. And I think that it's important to be gentle with ourselves and to be important to be willing to try things, multiple things.

I've recently just simply recognized a number of people whose stories where they've had these major successes. But what I have found when I've researched is that the major success came after three other failures. And I've seen this with a number of media brands where they did this, didn't work.

They did that, didn't work. Did the other thing, didn't work. And then all of a sudden they tried something new and boom, it worked. And so I would point out that you don't need the home run to be successful, but by continuing to try and to put yourself in the position where you can take pitches, there's a better chance that you will be able to find the home run.

So that's a bit of a nonspecific answer to your question, but it's my answer for right now. - No, I think that's great. So Joshua, what's one piece of advice that you've benefited from in life or that you'd like to share today? - One great skill that I think all of us can develop is the skill of weighing alternative courses of action.

As human beings, we have a faculty that no other creature has, which is abstract thought, the ability to look to the future and to imagine different possibilities. And you can do all of this from your own mind. And in today's world, one major benefit that we have that past generations didn't have is you can, in a way, test drive things that you're interested in through being exposed to the experiences of others through good quality media.

A number of years ago, I took my family on a full-time RV trip. We sold our house, we sold all our stuff, we got rid of all our stuff, and we moved into a 30-foot travel trailer. I'm the wacky one in the family, and I was the one who had the idea.

My wife had never in her life sat down and thought, "Well, maybe I wanna go and live in a travel trailer." So what I did was I started talking to her about the idea, and then I started finding YouTube channels of people doing it. And I started having her watch YouTube videos of people doing it.

Over time, she started to realize, "You know, this isn't as crazy as it sounded at first glance. This is possible, this is doable." And eventually, we came to the point where we said, "Yeah, let's do it." And we did it, and we had a great time, and I'm glad we did it.

We'll do it again. I think we'll do it again. Our experience, though, was informed by the example of other people actually doing it. And the same thing occurs in life now. We have access to people's stories, and we have access to people who transform themselves from broke to multi-billionaires, and we have access to people who are broke and who stay broke, but who live these really interesting lives, you know, living in a van in the desert for free.

And you can access all of them through the palm of your hand, which is just stunning. And so what I encourage people to do is develop broad experience. Expose yourself to what other people are doing, and then imagine life in the way that you want it to be, because we have the choice in today's world to choose the way that we want to live, and that's awesome.

And so you can think carefully about the paths that you might want to pursue. You can think about where you might want to be, and in your head, as a human being, you can imagine, "If I do this, it will point me in that direction. If I do this other thing, it'll point me in another direction." Socrates famously said, "An unexamined life is not worth living." I don't know if he was right, but if he was right, we have the ability to examine our lives more now than we ever did before.

And so as I'm growing older, I'm growing more confident in my willingness to take advantage of these opportunities we have, my willingness to try things, and I see the joy that has come to me from that, and I want to encourage other people to do that, to live consciously, to think, to dream, and to dream without limitation, and then work back to today to where you start to put together a plan that moves you in the direction of your dream.

- All right, I look forward to continuing to watch your journey from afar as we continue our own. Joshua, is there anything else that we haven't covered today? We've had a big and far-ranging conversation that I've really enjoyed. - I think the key thing I'd like to say is as a plug for the work that financial advisors do.

I'm no longer a licensed financial advisor. I don't hold any insurance licenses, any investment licenses. I don't really even work with individuals anymore. There's this tremendous challenge that people have when it comes to how to engage with a financial advisor, and obviously that's the work that you're doing now that you've transitioned into when you weren't previously a financial advisor.

What I want to point out, though, is that a good financial advisor, a good counselor, can cut years and years off of the learning curve that we all have with life. And a good financial advisor who listens to you and who helps you to dream and who thinks about that and then applies that dreaming and that thinking to the money is an incredibly valuable resource.

Is it possible to do by yourself? Yes, but it's a whole lot faster and more effective to work with somebody else. And I've seen again and again when I was working as a financial advisor and I've seen again and again when working with people how an outside person doesn't have the same emotions that you have in the middle of your circumstances.

And the emotions get in our way. They cause us not to see solutions. And there've been so many times where I speak to somebody and I say, "Listen, if you just do this, you'll achieve your goals." And they look at me and say, "Why didn't I think of that?" So I just want to encourage you, Matt, and also to your listeners that the work that you do as a financial advisor is extraordinarily valuable.

The financial advisor is and should be that link between accomplishing your goals and where you are today. Because any lifestyle goal, any dream that you have set out for yourself is going to include money in some capacity 'cause money is how we fuel our lives. And so at its core, it's valuable to dream, it's valuable to think, it's valuable to imagine what life could be, but you've got to bring it back to today, to what you do today with your time and with your money.

And that's where a good financial advisor is an incredibly valuable resource. - I agree, and it's one of the things that keeps me getting up every morning and one of the reasons I love my work. So thanks for sharing that. Well, Joshua, how would you like people to follow up?

Where should people look for you today? And what are the things that you are most focused on promoting from Radical Personal Finance and the work that you're doing there? - Best thing to do is if you're listening to this as a podcast, just go subscribe to Radical Personal Finance.

There's 750 episodes of life-changing content, if I do say so myself, of spectacular insights and riveting stories and incredibly entertaining delivery all by me. And so go to find, just find Radical Personal Finance wherever you like to listen to podcasts and check it out. The library of titles is voluminous, but what I would say is just skip through and grab a couple of titles that sound interesting.

You may get hooked enough, as many of my listeners have reported to me, to just go back to episode one and listen your way through. In addition, I teach a number of courses, which can be found at radicalpersonalfinance.com on the store page there. In those courses, I have a course on credit cards called "How to Borrow Money Safely and Never Pay Interest Using Credit Cards," which if you have a credit card or if you ever will have a credit card, I consider it a mandatory form of education.

I have a course called "How to Survive and Thrive During the Coming Economic Crisis," which is all about how to put in place a plan that deals with the worst case scenario, but does it practically, and there are a number of other things there as well. So if you're interested in any of those topics, you can find them at radicalpersonalfinance.com/store.

- All right, terrific. Well, it has been my pleasure to have you on Life Meets Money today. I really have looked forward to this conversation, and you have definitely delivered the gold. So thank you for your time and just for your friendship and support and encouragement as I've been on this journey for the last few years.

Hope you have a great afternoon, Joshua. - Thank you for having me on, Matt. (upbeat music) - Well, here are the key takeaways from today's show. Whether you're Joshua Sheets or me, why publish online at all? Well, he and I are both looking to provide high quality web content that can help bridge the gap between personal finance and professional financial advice.

Next, Joshua took time to walk us through the stages of financial independence. First of all, stage zero, total financial dependence. Moving on from there, hopefully quickly, into a stage one, financial solvency. And in this stage, you're able to meet all of your current obligations. Progressing from there to financial stability, where you are able to not only meet today's obligations, but anticipate how you're going to meet all of your obligations in the future.

Then comes stage three, debt freedom. In this stage, your future is no longer mortgaged by your past. Your decisions are much freer when you kick debt out of your life. Then stage four, financial security. In this stage, your investments are sufficient to provide for your minimum living needs. Then in stage five, financial independence, your investments are sufficient to provide your current lifestyle.

Stage six, financial freedom. Your investments generate enough income for you that not only can you provide your current lifestyle, you can also provide for an expanded lifestyle, baking some of those dreams in the cake. And then finally, stage seven, financial abundance. You have so much that you just can't even imagine what to do with it all.

Your main problem is figuring out how to give it away. Insurance, which is a focus of Joshua and I's conversation, comes into your plan at the stage of financial stability. This is an item that needs to be added to your financial planning sooner rather than later. Now, as Joshua and I go on, we talk about other ways that you can create financial abundance in your life.

And sort of ask the question, what's easier than retiring with millions and millions of dollars? Well, it turns out it's an awful lot easier to cultivate work you care about for reasons that are important to you and to develop a job or a business you love that provides an excellent lifestyle.

This is a much more achievable solution than saving three to $6 million in order to stop working. In this episode, Joshua urges us to ask, what would life look like if we could never retire? This is a recurring theme on his show. And the answer to that question shows you what you are aiming for in your life.

He also asked the question, what would you do if your rich uncle left you $5 million? And answering this may highlight areas where you'd like to make changes in your life today. For example, here in North Carolina, a common answer from someone who inherited $5 million might be to buy a really nice beach house.

And I always like to challenge people on this one a little bit. I'll ask them, how many weeks have you ever spent at the beach? And they may say, well, there was one time we were able to spend two weeks at a stretch in the summer and we got to go back for Thanksgiving.

So about two and a half weeks. And I say, well, how long do you think that you might like to spend? And they say, well, maybe we would like to spend two weeks a couple times and then maybe the whole week at Thanksgiving and a week at Christmas. So about six weeks in a year.

And I love to point out in that instance that you can rent six weeks in a year at a beach house for probably 25 to $30,000 at a super nice house that will hold you and all of your close family members and go try that for six weeks, which is more than double the amount of time that you've ever spent at the beach before.

And for 25 to $30,000, you can test drive what you were thinking you would spend $2 million on. And the reason to point this out is just to say, many of the things that we think that we would do if we became independently wealthy are actually within our grasp today.

Going on from there, Joshua encourages us to define problems as those that can be solved with money versus those that need to be solved with something other than money. And our conversation takes in both kinds of problems. Now, for problems that can be solved with money, keeping a big emergency fund and maybe a pile of credit cards is helpful.

From there, I really agree with Joshua that disability income insurance is at the top of the heap in terms of what you need to own. Yet, despite that fact, it's one of the least owned, least understood, least paid attention to types of insurance because people underestimate the value of their income and underrate how much better life is when they're properly insured for disability.

As we wrap up our discussion of disability insurance, Joshua and I pivot to physical preparedness, which we both believe is underrepresented in the discipline of financial planning. So whether it's scatological jokes like toilet paper preparation or something much more serious, giving consideration to this aspect of your plan is part of providing for your family.

So what are the takeaways? First, learn what you can from COVID in 2020. Next, think about the primary, secondary and tertiary effects of disasters in your area. Here in the Southeast, for hurricane planning, for example, primary preparation means knowing where to shelter in my home during a bad storm.

Secondary preparation involves having batteries, gasoline, tools, and non-perishable food on hand to live through the cleanup. And tertiary planning involves knowing how I'll provide financially for my family due to a major disruption from the storm. Now, when it comes to podcasting, like Lin-Manuel Miranda in "Hamilton," Joshua Sheets did not throw away his shot.

Instead, he learned from his observation of successful people that when you see an opportunity, you've got to take it. Of course, this is no guarantee everything works out, but as Joshua and others note, you miss 100% of the shots you don't take, which Hamilton also discovered at the end of his life.

Now, alongside taking the good shots, do some planning. Take risks, but minimize the downside and avoid wipe-out risk. Joshua and I talked about independent media like this podcast and like "Radical Personal Finance." Joshua called independent media normal, not unusual, and I believe this is more true than ever in 2020.

Since in 2020, you're unlikely to win the internet, the kind of stuff you should be making is super high quality with a carefully curated niche. My niche is MBAs, entrepreneurs, and other high-income professionals who value planning and resonate with me personally. Leave me a review on iTunes if what I've been talking about seems to be working for you.

Lastly, Joshua discussed the role good advisors can have in your life, cutting years off the learning curve from almost any topic. And I was touched to hear him call financial advisors the link between your dreams and where you are today. It's that purpose that keeps me going in this business.

Thank you so much for being here. The last show in this risk management series on lifemeetsmoney.com is scheduled for Thursday, October 22nd, 2020. I take Joshua and I's wide-ranging risk management discussion as a case study and apply these principles within a hypothetical financial plan. I look forward to introducing you to my make-believe clients, Mike and Jennifer Murray.

Mike is a consulting engagement manager with a big four accounting firm, earning about $250,000 a year. His wife homeschools their three children, ages 10, eight, and six. They own a $600,000 home in a leafy Atlanta suburb, and we're going to make sure that they've taken the necessary steps to protect their family in the event something terrible happens.

Until then, this is Matt Miner, encouraging you to plan to fund the life you love. (upbeat music) Matt Miner is a fee-only fiduciary financial advisor employed by PLC Wealth Management, LLC, a North Carolina registered investment advisor where Matt provides personalized, unconflicted advice to clients for a fee. He's also my dad, so please be nice when you talk to him.

Matt holds a Series 65 securities license. Life Meets Money is Matt's financial media business where he talks about life and money. LifeMeetsMoney.com exists to share wisdom and provide general financial information. It is not financial, tax, or legal advice. You are an individual and probably need personal advice for your specific situation.

You should consider building relationships with helpful, caring, and competent professionals who understand your unique context and can provide advice that is tailored to your needs. - Don't just dream about paradise. Live it with Fiji Airways. Escape the ordinary with Fiji Airways' global Beat the Rush sale. Immerse yourself in white, sandy beaches or dive deep into coral reefs.

Fiji Airways has flights to Nadi starting at just $748 for light and just $798 for value. Discover your tropical dreams at FijiAirways.com. That's FijiAirways.com, from here to happy. Flying direct with Fiji Airways.