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Ralphs. Fresh for everyone. ♪ Friday Q&A today and I've got five questions lined up. We'll see how many we can get through based upon the time allotted. First question, John asks, "Okay, great Joshua. Heard your show on 'What if one spouse wants to stay home?' That's great, but what about the actual mechanics of that?

What actual financial planning steps do we need to take in preparation for that?" Michael asks a question, says, "Hey listen, I've got everything's paid for, I'm 50-something years old, and I'm thinking about taking out a mortgage on my house to invest in a different real estate investment. Is that a good idea?" Lance asks, "I've got a defined benefit pension plan.

How do I figure that into my asset allocation?" Adam says, "I'm getting divorced from my wife. How do I start my financial life over again?" And then Joe says, "I want to do a 401(k) or a Roth 401(k) or a Roth IRA. Help. How on earth do I decide?" ♪ Welcome to the Radical Personal Finance Podcast.

My name is Joshua Sheets and today is Monday, January 26, 2015. This is the show where I answer your questions. It's supposed to be on Fridays, but today's Monday. That's all right. We can still answer questions and hopefully the content will still be valuable to you and hopefully we'll all learn something together.

Here we go. ♪ Quick caveat, not because I have to, but because I just thought I'd like to. It's kind of interesting. I'll just share very quickly one of the learnings that I learned with the reason that this show is being done today on Monday instead of Friday. Fridays, I've kept open for interviews, and as I've been getting back caught up with having some interview shows stored up in the pipeline, shall we say.

And by the way, I've got some really great ones stored up that you all are really going to enjoy. I promise that. I've got three of them in the can and I've got to be done with this show in about an hour and a half to record a fourth one.

But I've got an interview coming for you this week with Nick O'Kelly. Nick is the co-author of the book, Live on the Margin. We talk a lot about lifestyle planning, how to trade, and how to integrate travel, long-term travel, into a financial plan. Nick is the co-author. We've already spoke with his co-author, Patrick Schulte, from the Bumfuzzle blog on the show previously.

So we did this great interview with Nick. I think you'll really enjoy that one. I've got a really great interview with a guest named Kirk Chisholm. Kirk is a financial advisor and he specializes in non-traditional investments in self-directed IRAs. You're really going to enjoy it. If you want to learn how to put the boring non-traditional stuff like gold coins or private businesses into an IRA or other qualified account, we can do that.

But if you want to talk about how to put horses or private equity shares or just about anything else that you can think of to invest in into an IRA, we're going to talk to you about how to do that. That is a world-class interview. I think it's packed with knowledge.

I think you'll enjoy that. Then I've also got an interview with Ryan Marquez. He is an accounting teacher. We talked about some basics of how do you set up a basic accounting and bookkeeping system for your business. I know many of you have small businesses and at the beginning of the year here, this is a very important area to make sure we get on track.

It's too late to do much about whether you did a good job in 2014 to prepare for tax season. But now is the time so that a year and two months from now, we want to make sure that you're April 2016. That is not so stressful for you. That can be accomplished with an improvement in your bookkeeping system.

I had two interviews scheduled on Friday. Usually what I do is I try to keep that Friday day open and offer my guests various days for their convenience. But what happens is I get – because I'm doing interviews, then the recording of the show for the Friday Q&A show usually gets pushed to the afternoon.

Quite simply, my family needed me on Friday afternoon. The whole reason I do this show is so that my work and my life can be more fully integrated so that I'm available to help my wife and help my family when I'm needed. So that was the deal. So the show didn't get done.

Forgive me, but we're getting it out today and I think it's going to be a good one. We're going to kick off the questions here with an email from John. By the way, if you would like to get your question answered on a show like this, I would love it if you'd call those in to the voicemail line.

Just pull up the website, RadicalPersonalFinance.com, on your phone or on your computer, either one of those. There's a button on the right-hand side that says "Leave us a voicemail." Just click that and you can record it right on your phone or on your computer. Alternatively, just feel free – what some listeners have done is use the voice memo function on your phone to record a voice memo with your question and then email that to Joshua@RadicalPersonalFinance.com.

That works fine. Try to keep those short. The voicemail is cut off, I think, at two or three minutes. So if you record one in a voice memo, try to keep it short. But I cleared most of those out so I got plenty of room for all of you.

Only one of our questions today is going to actually come from the voicemail line. The others are emails. So let's start with an email from John. John says, "Hi, Joshua. I liked your podcast with the answer to the guy who was asking about things to think about. If his wife is going to stop working – by the way, pet peeve of mine – if your wife stays home or if your husband stays home, he or she does not stop working." I know we use that in our language but that's a real pet peeve of mine.

My wife works far harder now that she is at home full time than she ever did in the employment world. And dads who stay at home as well, they work far harder than they do in the employment world. So their work is different but they don't stop working. Anyway, just a pet peeve of mine.

I just – I share that with you all. I know, John, I know you didn't intend that but let's go on. "I thought the show was very, very good. However, I was hoping to hear something about how someone in that situation would expect their health care costs to go up by X amount, etc., etc.

You went a completely different way and talked about the mental aspects and the mutual respect aspect. It was a great way to think about it. I think that we and I both have that social conditioning to value ourselves by our paycheck. And even after listening to that, we know we still have that bias.

It's something we both need to figure out as one or soon, hopefully, both of us gets ready to transition to staying at home someday. That being said, I'd be interested in hearing your take on the other type of answers to that question. You know, more on the side of expected increases or decreases in expenditures when transitioning to one or self-employed type of living, but I know that's variable person to person.

Sincerely, John." So, John, it's a good question and it's actually a difficult question for me to answer, which is kind of the reason I answered it the way I did. Not that there aren't valid scenarios, but to me, this seems so simple. But I recognize after thinking about it and after you're getting your question that it's not.

To me, this is probably the – this is the kind of question like why would anybody need to answer that? It's straightforward and I'll explain kind of how I think it's straightforward. And the other, what I talked about in the other answer, talking about the reasons and, again, kind of overcoming societal bias and those types of things, that seems the tough part.

Those are the things that go wrong. But it's a good question for me. The reason that I think this is a simple answer and it's almost as though like why does anyone have this question is simply if you start with tracking your expenses carefully, then you have data to look at.

And all you need to do is just simply look at your actual data and calculate how much that data is going to change. That's it. So, in essence, a good financial system, it's January 2015. A household that's operating properly on a good financial system, it should take just a few minutes of work to look back at 2014's expenditures and simply say, well, here is what they are.

They're all categorized neatly. We know exactly how much they were. We know how much money, for example, was spent on living expenses. We know how much was spent on our house. We know how much was spent on our utilities. We know how much was spent on our cars. We know how much was spent on our clothing, how much was spent on our lunches.

Our food is divided out as far as grocery expenses as compared to workday lunches, drinks after work, evening dinners. Things like that. And then we should be able to, in answering that question, go and drill down and we should be able to look at something such as evening dinners and there should be a note for each transaction in our financial management system that simply says, we were too tired so we stopped and picked up Boston Market on the way home.

And so, in my mind, this is a simple answer to give if you simply have data. Now, I recognize that we don't all have data. In fact, my accounting system for last year wasn't perfect and I've had to fix that. It was a time of real transition for me.

That was challenging because even my books fell behind and I've had to pick up the slack. But frankly, this is where we should all be within a reasonable amount of time. And clearly, I need to do some more on that. But we should all have a financial accounting system because this is how if you are the CEO of a company, then maybe you are the accounting manager which is when you put on a different hat or you have a team of accountants or your CFO.

You simply say, how much did we spend on this and how much is this going to cost if we make this change? And that's how our own financial lives should be run. And then it's simple. You can just simply go back and calculate the data. And now we know, okay, if this spouse stays home, then we know the answer to our question.

Now, in my family, I'll give you just kind of the story and this will maybe give an instructional. Maybe this will be helpful. But I really don't think that this is one of those things that you – I don't think that this is a decision that you make based upon the practicalities.

I really don't. Now, I think this is a decision that you simply make and then you make circumstances fit it. In my own family, we planned from the beginning that my wife would be at home and not be actively employed in the workplace when we had kids at least if not before then.

Now, the reality is I don't like personally this idea of husband and wife, which one is at home. I want to be at home as well. I think that's my vision is I want to be active and present and here in my home. But certainly that's more challenging. It takes a few more steps than for one spouse to be at home.

But we're making progress on that. I am presently as I record this, I am sitting here in my house and have been actively involved with my family throughout the day as I've been working. But we made that decision without any thought, care, or regard of any kind toward the practicalities of it.

It was just simply a lifestyle decision. We were not willing to sacrifice what was important to us to the altar of the job. And so from the beginning of our marriage, we simply never spent any of her income, period. Her paycheck was always diverted into a separate account and it was simply never spent and every other expense was covered out of my income.

And I recommend this, especially to young families. But I recommend it as a way of transition in many situations. So because we had never spent any of her money, then there was no impact in our financial life from a monthly basis or from a standard of living basis that was associated with it, with her stopping working.

We'd already switched to one car as an example and it wasn't – I'll save that story for another day. But even though she was very frugal, so there were all benefits. But those were not the reasons why we had decided that this was simply a non-negotiable decision. It was a lifestyle decision.

And it's a lifestyle decision that, again, without any reference to external practicalities. So now I was – we had the benefit that our wife is, again, very frugal. So there wasn't a lot of expense to her working. She always took her lunch. She had the work clothes she needed, so there wasn't a lot of cost.

So most of her income, there wasn't any cost associated with it. Maybe you need to help your expenses. Maybe if your spouse is working, maybe he or she needs to pay for their expenses out of that – their work expenses out of their paycheck. So commuting costs, things like that, if that helps you.

But we never even did that. I paid for all of the commuting costs out of the account that had my income in it. So we never even went to that degree. We simply made the decision and set her paycheck aside and never spent it, never got used to it.

So that can be a useful strategy. So, for example, let's say you mentioned that I think both you and your wife are both working outside the house. So therefore, if one of you is going to come home, well, then just stop spending that person's income and start spending your dividends or whatever you're going to live on or start spending the other person's income and put it in place and figure out what you've got to do to make it work.

Now, if – I'm belaboring this point because I think it's so important. I have seen couples and worked with couples at every part of the income spectrum who have made both decisions. And at this point, I'm convinced that with very few exceptions, the decision for one spouse to be at home or the decision for both spouses to work is almost never based on actual financial numbers and is always based upon a commitment.

So if you make the commitment, it's done. And then you figure out how to make it work. In the same way that I actually personally don't think that marriages are ever timed to actually make or should be even timed to work into finances like, "Well, we're going to do this." Yeah, you need to look at the actual situation.

But the reality is are you going to marry or not? Same thing, kids. I'm very out of step with most people in our culture with regard to why I don't think these things should necessarily – I think they're more important than the financial aspects of it. Now, if you are actually – but anyway, that's my thought.

So decide what you're doing, split up the funds, and account for the changes in advance. If you don't do that or you haven't done that, then you must go back and you must recreate your expenses and you must figure out what costs are going to go down and what costs are going to go up.

So in my family, the costs that go down is gasoline costs. For example, my wife and I, neither of us commute to an external employment. So therefore, our gasoline spending is negligible. But our electricity costs go up because now we're running the air conditioner higher – excuse me, during the day when previously it was off when we're both outside the house.

And we're also running it at a lower temperature, especially because I'm here working. And when I'm working, it's harder for me to employ some of the tactics that I could to stay cool if I were just sitting out in the shade under the tree. So – and I've got these computers that make all this heat and lights that make all this heat and things like that.

So that affects. So you've got to figure out how to calculate that. Figure out how to calculate your food. And this would be where little things like knowing of the money that you spend dining out, how much of it is pleasurable, planned and advanced pleasure expenses, i.e. we go on date night every week.

Well, that's not going to change, hopefully. Maybe if that's what you enjoy doing and you like to eat out as part of date night, great. Go for it. Now, on the flip side, if I eat out for lunch every day because I'm too busy to pack leftovers from home, well, in that case, then that expense will probably go away.

But it's not going to go away fully. So I don't really know much more than that. Health insurance is very simple to calculate. What's the cost that you have for one individual? Where is the health insurance going to pay from? On one person's paycheck or on another's? That's pretty straightforward.

That's probably the most straightforward expense. And so, yes, you do need to look through those. But that stuff seems fairly apparent to me, fairly straightforward. It's the best I got. That's why I answered the question the way I did because to me, it's either fairly simple and straightforward and/or it's just simply a lifestyle decision.

You don't make it based upon what's practical. You just make the decision and then you make the practical stuff fit it. It sounds weird, but I think that's probably how it is. Yes, there are exceptions. Maybe you're working to pay off a certain thing or pay off student loans.

And those are good points. But for me, make the decision and go for it. I really don't have much more than that right now. But I would say it's a good reason. If you are going to be transitioning, this is a big deal for – it sounds like people like you retiring or early retirees.

If you're not tracking your money, every dollar, that's a mistake. You need to know exactly what those numbers are because the accuracy of your projections are based entirely on the accuracy of your data. It's one thing if I'm working with a 30-year-old couple and we're saying, "Hey, retiring at 65, great." We just take a rough guess of what the expenditures are.

But if you're 63 and you're planning on retiring at 65, I want to know every dollar. And I want to see it proven because we can't make a mistake. A mistake of just missing $5,000 a year, well, if we're basing $5,000 in a $50,000 total budget, that's a massive disparity.

And many of many people routinely just simply lose $5,000 a year in forgotten expenses. "Oh, we went on the cruise. It was $5,000." Wait a second. Are you going to go on the cruise next year or not? So the accuracy of data is very important as you get close to those types of transitions.

Hope that helps. Next question comes from Michael, and it's about the idea of borrowing on a paid-off personal house to invest in real estate. The question itself is quite lengthy, but I'm going to read it and not pull it down, not subtract it, because I believe the question is instructive.

My actual comments are going to be fairly short, shorter than the question. But I think this is a good example of a good way to think through rationally on paper various scenarios. And so this would be how I would encourage anybody, any of you listening, to answer your own questions.

It would be write it down. Now, whether you write it down and send it to me, I'm sure I can't get all these on the air. But at least the process of writing it down should illustrate to yourself, "What do I do? What are my options?" So here we go.

Joshua, "Recently found a reference to your podcast on the Money Mustache blog, and after cherry-picking a few episodes, I was hooked, and I decided to start at the beginning and work my way up to the present. Currently at episode 58." I'm going to interrupt this. By the way, if any of you haven't done that, if you're listening, I am doing my best to make this show cumulative.

I'm trying very hard not to copy subjects that I have already covered, unless it's a point of clarification. I'll do that sometimes on these Friday shows. Unless it's a point of clarification or a needed correction, I am endeavoring not to repeat topics. So if you are a recent listener to the show, although you might have to bolt yourself down a little bit to get through the beginning episodes, you might want to go back and listen to the archives, because there's a lot of depth there.

It's not as well delivered as it is today, but there's a lot of depth there. Continuing, "One episode that really caught my attention was, 'Why Your House Is a Terrible Investment.' As I listened, I realized I had previously read James Collins' article, and Robert Kiyosaki also makes this point in his book, 'Rich Dad, Poor Dad.' As I pondered this, I began to have a somewhat radical idea.

I realize your podcast is intended for entertainment and education, and that you are not providing personalized financial advice. But maybe you can comment in general on a strategy. Let's consider a theoretical investor whose financial situation is as follows. Married, no kids, age 54, employment 30 plus years for a major aerospace company.

Family salary is $160,000 per year. We have an older--or this investor has an older three-bedroom, two-bath house, originally purchased for $165,000. There are two years remaining on a 30-year mortgage with a current value of over $400,000. Approximately $900,000 in a 401(k) account, and there is a conventional defined benefit pension with multiple withdrawal options, including a five-year certain option totaling approximately $1.5 million, eligible to retire at age 55.

About $60,000 of non-retirement investments and $25,000 of cash on hand, $0 of non-mortgage debt. The investment opportunity is a private investment dealing in multifamily real estate, projected to yield approximately 8% annual cash on cash paid monthly for five years, ending with return of principal and capital gains. The overall internal rate of return is projected to be greater than 15%.

Now for the radical idea. Our investor has a fantastic investment opportunity but very little cash on hand. The investor has over $300,000 in home equity that may appreciate but produces no cash flow. Suppose our investor refinances his home, paying off the existing mortgage and pulling $200,000 out to invest.

The pros. The previous mortgage is wiped out, and with current home interest rates below 4%, the cash flows from the new investment pretty much cover the new mortgage payment, and this monthly expense goes away. With only two years left on the current mortgage, payments are mostly non-deductible principal, but on a new mortgage the initial payments will be mostly deductible interest.

In five years, after the investment principal is returned, the new mortgage can be paid off and the investor can keep the capital gain. The current retirement investments are heavy in stocks. Multifamily real estate provides some diversification into a different investment class. Cons. There's a risk that the investment might fail to meet projected returns.

The monthly cash on cash payments might fall below the new mortgage payment. However, our investor is currently making an unsubsidized mortgage payment of approximately the same size as the new one. He has stable employment and can afford to make the new payments if needed. He will not lose his home.

The capital gains might fall below projections, so our investor doesn't make much of a profit on the endeavor. However, if at least it returns the invested principal, there isn't much of a loss. The whole investment could crash and burn. It's unlikely that it could be a total loss since the company has a good track record and it involves buying, upgrading, managing, and reselling real estate.

We are not currently in a real estate bubble, so severe losses of perhaps greater than 50% are highly improbable. Our investor has a total net worth of about $3 million, so a $100,000 loss represents about 3.3%. A total loss of the $200,000 investment would hurt, but it would still be less than 7% of total net worth.

So, would our theoretical investor be crazy to put his house on the line to chase an opportunity like this? Regards, Michael. Michael, this is an awesome question. And again, I commend it to any of you who are trying to think through a decision. Sit down and write me an email.

I don't know if Michael's done this or not. It was a while ago that he sent me the email. Just by sitting down and writing down the issues, you should be able to clarify your thinking. And Michael, probably in writing that down, I bet you you answered your own question and you've probably made a decision by now.

But I'll make some comments on it. This is one where it's very much dependent upon you as far as the answer. I'll give you my answer, but it's very much dependent on you. And it's very much going to be a weighing of various factors, potential losses, potential risks, potential gains, lifestyle decisions, things like that, for you to figure out what you should do.

Now, first I would say, at your stage in life, or at the investor's stage in life, whatever, at your stage in life, we'll stop the charade and you can tell this hypothetical person about the situation if you need to. At your stage in life, you're 54 years old. You didn't say that you're going to retire at 55, but you have the possibility of retiring at 55.

And based upon what you've described, I bet you could consider yourself to be financially independent. Unless you are spending a substantially high income, net worth of $3 million, split out nicely like you have it there. In my mind, that is an excellent, you're in great shape. But the first question I would ask is, "What does your spouse think?" Because you've already won with money.

You don't need to necessarily do anything else with money. You've already won. So I would say, "What does your spouse think?" And that would be probably the biggest consideration that I would make, if I were you. Now, for example, in my home, I would not do this deal. And the reason is because there's not a chance in the world that my wife would be comfortable with it.

So I simply wouldn't do it. There's no need to do it. You don't need the return. You don't need the excess return. It might be good for you, but my wife wouldn't be okay with it. So therefore, I simply wouldn't do it. And if you're in your household, it's the same way, ignore it.

Forget about it and go on. Now, if she is, and I'll give you the answer, I would be okay with this, me personally, if it were just me. But it's not just you. You have to count that in. This is like a relationship show. I never intended the radical personal finance to be like Marriage Hour, but that's pretty much what today's show is going to be.

And you'll see it's going to get there pretty hardcore when we get to Adam's question on what to do on a pending divorce. But again, this is the stuff that matters, the stuff that-- the rate of return doesn't matter. I don't care if it's a 15% rate of return or a 25% rate of return.

That's only going to make a marginal difference in your life at this stage. It really is. And by the way, I'll prove that to you. So you're talking about a five-year investment time horizon. So let's say we're starting with a present value of our investment of $200,000 in with a five-year time horizon, and we're going to put in a 15% rate of return, no payments in or out, just to make it simple.

Let's just see what our $200,000 would be after five years at 15%. It would be $402,000. Now let's say we put in--let's say $400,000 so we can remember the radio math. If we put in 25% rate of return after five years, what's our result? $610,000. Pull out the $400,000, and you have a total potential difference between 15% and 25% of $200,000 of extra profit.

Now you just told me in your question that if you lost the $200,000 total, it would hurt, but it would still be less than 7% of your total net worth. So does it matter? It's not that big a deal. Now granted, $200,000, that's spendable money. My point is that it's not going to make you rich or not make you rich, however this deal goes, and so I don't particularly care about the rate of return.

I care about the lifestyle questions. So I say, "What does your spouse say?" That's what I would start with. The next question that I would ask is, "Do you need the money?" and, "Is the benefit, the potential benefit, worth the potential loss?" So calculate the best-case scenario as you've done that you could calculate and ask yourself, "In this best-case scenario, compared to the worst-case scenario, total loss, assume that the potential business partners commit fraud, assume that the entire property is destroyed, there's improper insurance, there's a lawsuit associated with it, and you suffer a total loss.

Are you willing to go for the prospective possible potential gain or compared with the total loss?" Now I recognize, yes, the total loss is highly improbable, and you might not--I don't know, your decision might come out either way, but ask yourself, "Do you need the money? Is it worth it?

Are you okay with that downside risk?" And then if you do pursue it, how can you minimize the downside risk? And before I get to my final point, I'll mention that. On any of these deals, I think probably the biggest risk is not market risk, in this case. It's unlikely--you're not going to have a $100,000 loss in a market like yours.

It's unlikely to have that on a well-run property. The big risk is that the property is not well-run. So if you do go through with this, you need to be assured that it is professionally and well-run. You need to make sure that the financial statements are properly run, that they're audited, that you know the integrity of the company behind it.

You need to assure that the proper insurances are carried, the proper liability insurance, the proper property insurance. If a tenant, again, loses--a tenant starts a fire and the whole building burns down and several tenants are hurt, that's where you have a major problem. So the key, if you go through with it, is risk management and make sure you spend a lot of time figuring out how to minimize the downside risk.

Would I do this deal? If it were me--I've already said if it were me and my wife, and I have no reason to think I wouldn't--I wouldn't, simply because the additional amount of money is simply not worth the stress that it would put on her. I would move and we would live in a $100,000 paid-off house and then invest the equity.

That's what we would do. But if it were me, I would do the deal. And the reason is this. I see little downside. As long as those downside risks are protected, I would probably do it because I don't see the point of having a paid-off house either way in retirement.

And this is where I differ with a lot of people, and I recognize the value of having a paid-off house, but for retirees, frankly, most of the risks of having debt on your primary house, many of them are diminished. The risk for me, the major value for me at 30 years old having a paid-off house is that the uncertainty of income in the future, I've taken care of a massive amount of that by getting rid of the mortgage, and that's a major lifestyle improvement.

But in a situation like you described where you're going to have Social Security pretty soon, you're going to have a large defined benefit pension, you have a relatively stable job in a non-threatened industry as long as you know that industry is not threatened. It's likely that your job is hopefully going to be automated in the next five years, so you've got a pretty stable scenario there.

You're probably an expensive employee, so you have some employment risk there. If there's a round of layoffs, you're probably going to get cut. But you've got a defined benefit plan. You've got a healthy stock portfolio. You have income. So in retirement, it's all about income. I've recommended to several retirees that they have, especially if you're on the edge, it's far better to have a mortgage, a full mortgage, than it is to have a paid off house and no money.

So you've got plenty of money, and so there's little risk, especially if it's guaranteed risk. The mortgage payments on $200,000 of debt, in your situation, you could cover those with part of your Social Security income. All of your assets are creditor protected and judgment proof, so those are in retirement accounts.

Those are in retirement accounts, so those are well protected. And so you have little risk. And so I just don't see much the point of a retiree, especially a retiree who's probably going to move. Many people are not going to live in the same house that they've lived in for the rest of their life.

It just becomes unwieldy. And the pleasure of downsizing is usually quite intense, to have less stuff to care for. And so what's the point of having a big $400,000 house when you have to do all the work for it? So I hope that's clear. I don't want to repeat myself and go through it again.

But to somebody like me who is still in that working phase and somebody who might have some variability of income over time, the peace of mind that comes with not having a house payment, that can be intense. But to somebody like you who can set up where you've got, let's just say -- I mean it's hard to know, but you could easily have $10,000 to $15,000 of guaranteed income between your pension, Social Security.

Even if you bought an annuity with your 401(k) money, you could have massive amounts of guaranteed income. What's the point of being debt-free when you have guaranteed income from that perspective? Now, there are arguments, counter-arguments, but I just don't see it. So I would say ask yourself the risk, and if this is an exciting enough deal where it's worth it to you, go for it.

If it's not, don't do it. It's kind of a wash either way. I would be concerned if this were your first investment, and I would think about is there a way that you could just simply -- do you have a different lifestyle that would bring on less risk? But I don't see the problem if you really want to do it.

It seems like a small amount. You could probably handle the risk. I would probably do it if it were me. I wouldn't do it if my wife were against it, and she would be. She's very black and white on that stuff, which is fine. It's probably helpful to keep me in check.

I'm the risk taker, and she's not, so that's probably helpful for me. All right, next question comes from Lance about a teacher's pension. Hi, Josh. My name is Lance, and I am trying to figure out a proper asset allocation. I'm currently a high school science teacher, so I'm going to get a defined pension, so to speak, when I'm 63, and it will equal 2.3% times the number of years that I work.

I also have a Roth IRA account where I've been currently putting in 100% of those money into the stock market since I'm only 33 years old. In order to figure out the proper asset allocation, should I consider the money going in for my teacher pension as similar to a bond fund because I do essentially know the rate of return when I retire?

And would it be a good idea to lean more towards stocks in the future because of this? Thank you very much for your help and support. Good question, Lance, and this is one that many people face, and there are various answers on this, as with all financial discussions. I'll give you a couple of mine.

Yes, I would consider the pension account and mentally account for that as part of my bond fund if I could view my money in totality and not view my money with specific focus on that specific account. Let me expand on that. There are a couple of functions of proper asset allocation in running a portfolio.

One of the functions is to minimize the risk, and so risk is minimized in various ways. One way to minimize risk would be diversification. So there is a risk called company risk, or we could call it a security selection risk. And the idea here is if we invested all of our money in one company, whether that's BP Oil or whether that's Enron or WorldCom, if we invested all of our money in one company, it's possible that we could be completely wiped out from the perspective of this company has a major negative event.

Then you could say, "Well, we need to minimize that, so we're going to invest in multiple companies." Well, in this scenario, we might say, "Let's stick with energy as kind of an illustration. Let's buy multiple energy companies, so we're not just going to buy BP. We're also going to buy BP and ExxonMobil." Great.

So you might put together a basket of four energy companies, and that's going to be your portfolio. Well, now at this point, you are diversified from individual company risk or security selection risk, but now you have sector risk. So if the energy sector just takes a dump, as in gas prices are plummeted, well, that's going to dramatically affect your sector and the profitability of your energy companies.

So now you've got to diversify your portfolio out. So you might go ahead and say, "Well, let me go ahead and buy some packaged food companies." But now you're exposed to two sectors, and so you might need an automaker. You want some manufacturing and blah, blah, blah, blah, and you go on down through all the lists.

There's some magic number at which the number of securities, if you buy more, you're not necessarily increasingly diversified. When you buy less, you're less diversified. That number is actually pretty small. I don't remember it off the top of my head, but there are various studies. You can go look these up, and you can figure out.

I think it's a couple hundred. Any of you that are CFAs can correct me. I don't remember the studies, but let's just say it's 200. If you have your 200 individual companies, adding the 200 in first brings a very marginal amount of additional diversification to your portfolio. So you say, "Well, why don't I just have 200 companies?" Well, the problem is there are factors that can affect those entire 200 companies, and those factors are many.

Let's say, for example, that all of your companies are based in the United States. Well, now you've got things like currency risk. Now, you're spending in dollars, in this case, so the currency risk is minimized. But what if the dollar strengthens? What if the dollar weakens? Now you're subject to monetary policy.

So what if the Fed is increasing the monetary base, and that's propping up the asset prices of securities in the general market? Many claim that's what's happening right now. I don't have an opinion on it, but many claim that's what's happening. So now you say, "Well, how do I diversify out of this?" Well, now you diversify into other asset classes.

Or you could just simply say, "There are large risks that could face my entire portfolio, and I need to be able to diversify out of that." So what if we go into a recession? And perhaps it's not just a U.S. recession; it's a global recession. Well, I need some asset classes that will perform in this global recession.

Now, in formal portfolio management, risk is measured purely by standard deviation, which is the variability of returns. And so those returns over time will be up and down and up and down. And so the goal of a pension manager, the goal of a fund manager, the goal of a chartered financial analyst who's putting together a fund, is to gain the maximum needed return at minimum variability.

And the way that you do that is by bringing in multiple non-correlating asset classes. And famously, stocks and bonds. But then diversification within each of those asset classes. So in stocks, you have large-cap stocks and mid-cap stocks and small-cap stocks. You've got international stocks. You've got international developed markets, international emerging markets.

In bonds, you've got your corporate bonds. You've got your government bonds. You've got your high-yield, aka junk bonds. You bring in real estate. You bring in precious metals, commodities. You bring in other asset classes. And in total, what you're trying to do is you're trying to build this ultimate return, this ultimate portfolio that is returning for you the highest rate of return at the lowest risk, the lowest standard deviation, the lowest variability of returns.

That's the point. Now, when you actually take that over and apply it to personal finance, you need to take the concepts of that and apply them to finance. So if I have a guaranteed pension account, does that count as part of my -- should I count that as part of my asset allocation?

Yes. And if I look at what the purpose is of bonds, the purpose of bonds is to provide steady, guaranteed rates of return, it's actually more secure than bonds because the value of it is going to be less driven by prevailing interest rates. But it can perform similarly to a bond fund, as can any amount of safe, secure, non-core assets that aren't correlated to the stock market can perform.

So it can perform similarly. Now, the problem would be on the account level. This is where kind of an individual pension management versus individual investor management will come in. On a pension basis, as a total asset class basis, if I looked at your portfolio and your portfolio included your pension, yeah, I would count that as at least partially towards that bond portfolio.

But you probably aren't going to see that. And so if you as an individual investor, the only return, the statement you get is your 403(b) every month and that 403(b) is invested 100% in stocks. Well, all of a sudden, there's a 25 or 30 or 40% correction in the stock market.

Are you going to remember that this is a non-correlated asset and you still have your defined benefit pension? Or are you going to freak out because that statement is lower? Because they're going to come in on two different statements. That's your big risk. So the way I would answer it is know yourself.

Are you the type of investor who can sit there and placidly ignore the 30 or 40% decline in the value of your 403(b) because it's invested in 100% stocks? Remembering the fact that that's buttressed by the defined benefit pension plan? Or are you the type of person who when that account plummets 15%, 20%, you're going to pull up your computer and say, "Diversify, sell, sell, sell, sell, sell." If that's the case, then you need to make sure that that individual account is diversified in such a way that it's unlikely that that individual account will decline in value.

Or if it does temporarily decline in market price, then there are other asset classes that are buttressing it so that the account decline is less. That's why it's so difficult to look at personal finance because each person's asset allocation is going to be different, should be different. So we apply the principles of pension account management, which is what everything that you're taught and everything that your financial advisor talks about.

But you have to apply that in your own personal life and say, "What are my actual risks and what am I actually concerned about?" So that would be my thoughts. Yes, I would, with that caveat. Any other listeners that have comments, feel free to comment on today's notes and give Lance some additional help.

And if any of you CFAs out there can give me those studies that illustrate the additional – I can't remember. They're from the '60s – the additional number of securities needed to pull out individual security risk, I would love to have those. Thank you. Next question. Next question comes from Adam.

And the subject line of Adam's question was, "Can you do a case study episode on my life?" I think that's super fun. So I said, "Sure," and he responded back. And here is a synthesis of his couple emails to me. He said, "Josh, we love the show. We've listened to all the episodes and want to thank you for helping me understand and take action on a more secure financial future.

I've gone through many changes. My wife and I split up and we have moved into separate housing recently, and it feels like an opportunity to make some changes, especially with my finances. One of my favorite episodes that you did was episode 43, which was called "My Plan for How I Would Become a Millionaire with a Minimum Wage Job at Walmart." I'm writing to ask if you would be interested in using me and my specifics as a case study, not to advise me, but to help point out the many options that someone has that may be going through similar things.

I've started to decide on some goals, for example, retirement planning and real estate investing, that I want to work towards in the future and would enjoy hearing about ways to move in that direction. I'm 32 years old, and I have two boys under the age of 12. The company I work for offers no retirement options, and I have never saved towards retirement, unfortunately.

I make about $50,000 per year. My take-home is about $3,400 a month. I owe $11,500 in student loan debt, $143 a month payment, and about $3,700 to a collection company with $100 a month payment. I drive a 2003 Ford Expedition, not money mustache approved, living in Salt Lake City, Utah.

The four-wheel drive comes in handy, but only a few times a year. He would not, by the way, he would not approve. Go read his article on why four-wheel drive is a waste of time. Continuing on, this is not the money mustache show, but he certainly is a massive influence in the early retirement community, which I work to serve.

He's brilliant at articulating things and concepts that are helpful for people. Continuing, I've considered selling it. My commute is about 20 miles one way, so gas is pricey. My ex and I just separated, and we have moved out of a house we were renting. The boys will stay with her in a townhouse, and I will give her $500 a month to help pay the rent.

I've chosen to rent a one-bedroom apartment close by that will cost me $876 a month. So, essentially, I will be paying $1,376 a month in rent. Ouch. As far as my goals go, I'm planning to open a Roth IRA at the start of the year and plan to max it out, which is about $460 a month.

I'd like to save up and knock out my collection bill as soon as possible as well. After cleaning that up, I want to start investing in rental real estate. Sorry I'm all over the place with this. If there's anything else you need to know, let me know, and thank you for considering my question.

Adam, thank you for calling in the question. It's a very interesting question, and I will answer it directly. I do need to preface my response to this question, however, with a warning for the audience. This will be an unusual answer. I've never heard an answer like I'm about to give on any financial discussion, and so I would assume that many of you never have either.

I hold a minority of a minority of a minority view on this question, and the vast, vast majority of the listening audience, you will disagree with me. And disagree with my answer on this question at some point or another. And Adam, that probably includes you. And that's okay. I will explain my position to you.

But I just warn you in advance, be ready, you're probably not going to agree with it. This is also, but the position that I hold on this is the only position that I have ever been able to support intellectually or logically. And I would actually strongly prefer not to hold this viewpoint.

Because my life would be far easier if I didn't. But I can't find any other way to answer this question that makes sense. I also would just simply preface my response with a statement. This is a very difficult question for me to answer simply because of the, I guess, the feedback that I guarantee it will bring me.

I actually, believe it or not, I do not like being in the public eye. I'm kind of a private person. I would rather simply step back and I would rather just dodge a question like yours and hit delete and ignore it. Or respond back and say, "Sorry, I can't help you." Because my answer will be unique, as you'll hear in just a moment.

But I did promise myself when I started recording this show that I would never run from a question. And that I would always be open and frank and transparent and clear and direct. So, I don't ask you to agree with my answer. But I do ask you to listen to it carefully and at least consider my argument.

I am going to choose to answer this question with some logical reasoning. I'm not going to answer it debate style and try to rebut every one of my arguments. Feel free to rebut them. I'm aware of the many topics that people would rebut. But that would be a disaster for me to try to argue with myself and rebut everything back and forth.

So, feel free to do that. But I'm aware that this is an incomplete answer. We're going to have a strange kind of philosophical conversation in my answer. Which would include money, financial advice, marriage and morality. And I'm an amateur on all of these things. I'm an amateur on life.

I'm an amateur on philosophy, morality, theology, any of those. But I am an interested thinker. And like you, you are also equipped to think about these things. I'm equipped, even though I'm an amateur, to think about these things just as much as anyone else. So, I'm just going to share my answer with you.

And the last of my preamble caveats, and I apologize that maybe it's too many caveats. But you'll understand why in just a moment. Is that I'm going to discuss a spectrum of responses to your question. That includes primarily an aspect on the continuum of, specifically, a two-dimensional continuum between atheism and Christian theism as a worldview.

I recognize that many people, including many listeners, are outside of that continuum. Whether it's a different religion or a different perspective on either. I know that, but I'm just going to use this as illustrations. Simply because this is how my mind works. I don't argue much with Buddhism as compared to Christian theism or Buddhism as compared to atheism or anything like that.

So, I recognize. Okay, that preamble aside. Most people would answer this question with goal planning. And if I did that, then this question would be the same as any other financial planning scenario. There is absolutely nothing different in the answer to your question from what I described in the Walmart episode.

Except that you have some additional constraints. Your income is what it is. Your expenses are what they are. And you have a constraint in that you are paying a certain amount of child support. And you are living in a geographic area due to wanting to be close to your kids.

And that's just simply a constraint on the plan. But with regard to that, there's no difference. You want to work to get income up. You want to get work to get expenses down. And you want to invest the difference wisely. And so you go down that list and you say, "Is the wisest investment to put money in my Roth IRA or to pay off the account to collections or to invest in real estate?" And so there's nothing different about it from that perspective.

But I personally can't do a case study in that way. And the reason is because I believe that this is one of those questions that crosses into a discussion of money and moral conduct. And that's what I'll focus on. I'm going to give you five arguments. And at each stage of these arguments, as I posit them to you, I'm probably going to lose steadily a percentage of the audience's agreement with me.

But I do think that my argument is rational, logical, and consistent. You'll have to judge for yourself. But hear me out on this. Argument number one is simply this. There is an intersection often between money and morality. And at that intersection, between money and morality, you must always choose morality over money.

I'll give you my second argument and then I'll support these arguments one by one. I'm going to give you all five just so you can understand and have an idea of where I'm going. But argument two is that my previous statement that you must choose morality is only true if your worldview includes a provision for moral conduct.

If it doesn't include that, then there's no rational basis for any consideration of morality or right or wrong in any sphere of life. Number three is that you need a basis for morality. I propose in Christian theism, the Bible. Number four is a natural question, why believe the Bible?

And number five is, what does the Bible say about marriage? So that's where I'm going. But hear me out. I'll explain fully, I promise. Argument number one, there's an intersection between money and morality and you must always choose morality over money. There are actually a lot of areas in which morality and money cross and sometimes the line between them is a bit blurred.

Some examples that occur commonly in the work of a financial planner that I think various portions of the audience will relate to would include examples from business. So I get questions frequently about socially responsible investing. Investing in a way, is it okay to invest in a way that profits from harm to another person?

The most common examples here is, can I invest in a tobacco company? Am I gaining profit in my portfolio at the expense of somebody's health and somebody's life? Another common example would be, can I profit from the destruction of another person's business? So Walmart, when Walmart expands, that destroys the local store owner's profit.

So Walmart has single-handedly over its development as a company, has single-handedly resulted in many shopkeepers, small independent shopkeepers being put out of business. Is that right? That would be a fair question. Another common example would be, is it okay or should I lower my profit money in exchange for human gain?

So perhaps I would choose to buy so-called fair trade coffee and pay a higher price knowing that the farmer on the other end is getting a certain value. Or do I pay more for an item in order to do good in another place? So Tom's shoes, do I buy these little slipper things that are super fashionable but super overpriced because somebody else in the world gets a pair of shoes?

Do I have maybe some other goal that I'm supporting? Do I pay more to support a local business? And so now I'm choosing the moral support to build the fabric of my community by shopping local instead of getting a better bang for my buck in another place. Or am I paying more to support a sustainable business?

Or am I buying ethically treated animal meat or humanely raised or free-range animal meat? That's a common example. Another common example, do I choose to pay for a so-called licensed contractor to do work on my house as compared to an unlicensed one? Or do I choose to support an unlicensed contractor in an effort of voting with my dollar to break the cartel of government licensing?

Do I do business with an insured lawn care company or an uninsured one? These are all common questions that face us in our personal finance. I've tried to use examples that would apply on every spectrum of this question, excuse me, every political or philosophical or theological perspective or as investors, whether as consumers or investors.

And there'd be many more examples, many that are less common. So for example, do I participate in illegal markets or so-called black markets or some people would call that simply the free market? Do I do business in cash in order to get a better deal? Do I participate in the local drug trade either as a buyer or as a seller?

Do I participate when traveling? Do I go to the unlicensed money changer on the back alley to get a better deal? Or do I go to in the front door of the fancy bank where I get ripped off on my exchange rate? Do I participate in supporting informal or unregulated businesses?

Maybe to some of you, those transactions are common. To others, it's less common. Maybe in the corporatized world, do I make up information to get a job? Do I lie on my resume? Do I creatively pad the truth just a little bit? Hopefully, that's enough examples. I mean, we could go on and on.

But these are all areas in which money and morality cross. I think a lot about these types of issues. I do. Me personally, money and being rich is low on my list of priorities, which is probably ironic that I do a financial planning show. But it really is. I would personally rather choose morality every time.

I think a lot about--I guess an example, two examples occur to me. But probably the one that most people would know would be a movie like Schindler's List. And I think a lot about scenarios like that. And I wonder what I would do. I wonder what I do when I'm in those scenarios.

I hope--my hope is that I would do the same thing that the hero in that story did. I hope personally that I would spend every last dime I have in order to fight for human life, to protect human life. I think about things--I'm interested in and I've always enjoyed reading historical fiction from the Civil War and pre-Civil War period.

And I always loved stories when I was growing up about the Underground Railroad for helping slaves escape from the South to the North. What's interesting is if you think about that, that's a very, very thorny, sticky issue to think through from the perspective of what's right and wrong. When you actually look at it, especially economically speaking.

But I often wonder, would I have had the guts to potentially risk everything I had to care for human life? I ask myself that today. Do I have the guts to care for human life and to fight for what is right? When money and morality cross, you've got to think it through.

And I hope that I would always choose the moral position rather than the money position. But frankly, I'm not sure I always would. I always question and I hope I'm consistent and faithful throughout my life. Now, what's interesting is I think people--as an illustration, I think people actually expect this of financial advisors.

One of the themes that I often hear on this show is how terrible financial advisors are. And I often think to myself, although I don't generally raise it, is I often question the opposing--the person, my interlocutor, so to speak, the person with whom I'm talking. I think, what do they expect?

So, for example, people expect financial advisors to not be self-serving, to not self-deal, but rather to care for their clients, to be a fiduciary for their clients' interests. Now, I'm not sure that they necessarily should expect that, but they do. And the reason I'm not sure that they should is why.

On what basis do they expect someone like a financial advisor to put their clients' interests ahead of their own? So, let's start there, and that would be leading into my argument number two, which is simply that if you're going to choose morality, that's only true if your worldview includes a provision for moral conduct.

If it doesn't, then there's no rational basis for consideration of morality in any sphere of life. So, I would ask, what is the basis of your moral code of conduct? Is it the law? Or is it something external to the law? Now, very few people – this is not a question that comes up in common everyday language, and very few people that I've asked about this, actually, just in casual conversation.

I'm one of those really annoying friends that will bring up things like this in a completely non-connected scenario. But I ask people, and I say, "What is the basis for your conduct?" And so here, I would say, with regard to this question that you've asked, Adam, is marriage a question of law, or is it a question of morality?

If it's a question of law, then what is that law based on? I would argue that most people actually use a Christian system of morality – it's based on Christian theism – as their basis of right or wrong. But they don't acknowledge it, because they don't realize that they're doing it, and they're not usually true to it.

And so here's where I compare Christian theism with a worldview such as atheism. And again, I know that this is not the only continuum, but I'd be three hours if I tried to explore every continuum, and I'm not a philosopher, I'm just a financial planner. But if I start with those who just deny Christian theism and go to atheism, one of the challenges that atheists have often had is trouble with answering moral questions.

Many of the debates that happen in popular culture between theists and atheists focuses on questions like Darwinian evolution versus intelligent design or creationism. Leave that aside for a moment. Let's talk about ethics and morals. This has actually long been argued about. If you're a reader, you might enjoy Charles Darwin, the father of Darwinian evolution, wrote about it himself.

And he wrote about it in his second book on evolution, the first most well-known book is called The Origin of Species. That actually wasn't his first book, but that's the most popular one. He wrote another book called The Descent of Man, and he wrote a chapter on this subject.

This chapter was called On the Development of the Intellectual and Moral Faculties During Primeval and Civilized Times. And in many ways, actually, Darwin's arguments paved the way for much of modern thought. We live in a time of transition, and we're transitioning, at least in the United States, we're transitioning, seem to be, from a social culture that's woven based upon a, essentially, 1500-year history of Christian theism as the guiding principle.

And now, we're changing much more slowly, because that's how our legal system functions, to a system of seemingly evolutionary ethics, is what it's called in the world of philosophy. And so Darwin's arguments actually paved the way for this modern thought of what's called evolutionary ethics. And it paved the way for the ruling of one class over another, higher class over a lower class, paved the way for supremacy of one race over another, paved the way for the application of scientific evolution, scientifically controlled evolution of one people over another, paved the way for the practice of eugenics in all of its forms up to the present day, which is a debate that most people don't realize is going on.

But it's been going on for a very long time. And it's, anyway, leave that for another day. My point is simply that it's a long argued line of thought. By the way, every statement I just made is hotly argued and debated by many people that are far smarter than I am.

I'm aware of that. I just, again, I'm an amateur. I've read some of their essays on the subject, and I'm entirely unconvinced of their article. I see that this was the basis of it. Probably the best recent example that I can think of on this perspective would actually be Richard Dawkins' book.

He wrote a book called The God Delusion. And this was one of the more well-known ones in which he argues that morality can exist within an atheist worldview. I would summarize his argument, and if any of you disagree, this is how I would summarize it, just again, layperson here.

I would summarize his argument simply that he says that morality in an atheist worldview exists because human beings have evolved a genetic disposition for altruism because it serves our purposes. So we have a natural empathy for others. We have an altruism gene, in essence, that our societies work better, and people who are naturally altruistic tend to be more successful.

So thus, we are genetically predisposed towards altruism. He actually asks in that book a question, you know, he says, "Would you commit murder, rape, or would you rob if you knew that no god existed?" And he argues that very few people would answer yes. Now, interestingly, I can't argue for few people, but I can argue for myself.

I would personally answer yes to that question. If by murdering, raping, and robbing I could increase my pleasure in life, and there is no consequence beyond just the social sanctions imposed by the government, which I think I could probably pretty easily avoid, maybe not, who knows, there's lots of people smarter than me who have been caught over the years, I would say yes.

I would do it if there's no external law. Now, perhaps, you know, murdering, raping, and robbing are a bit extreme as examples. Those were his examples. But then the question is if there were no external law, then would I be willing to perhaps slightly shade the truth when dealing with a financial planning client for a personal monetary gain?

And I think that's, frankly, a fundamental reality in financial advice. I have sat through a number of ethics classes over the years. If you're in the financial business or practically any business these days, you're subjected to ethics classes. And I enjoy these ethics classes. One of the classes I enjoyed the most actually was as part of my master's degree in financial planning at the American College.

We did three days of ethics, two and a half days of ethics classes. It was fascinating to me. I loved it. It was an amazing class. I thought I was going to hate it, but I loved it. But one of the things that I often think about is I'm often shocked, you know, when somebody with a secular humanist teaches an ethics class.

I see this as, in my mind, just a fool's errand. All of these classes basically seem pointless to me with regard to just actually looking around and looking at the room of people sitting there because what makes the difference is not the class. What makes the difference is the individual and what their personal worldview is.

Do you have to avoid violating the law in order to avoid the negative sanctions of the law? Certainly. And so that's why it's very difficult, and I'm speaking trying to make this conversation applicable to an audience interested in financial planning, but it's very difficult to make a legal case against an advisor and say this advisor has violated the law.

That's a tough one to make stick. Perhaps you could make stick an allegation that, well, this advisor has slightly, you know, done a little bit of self-dealing, has slightly acted in their own interest, but my answer to that with some but for somebody from a secular humanist or an evolutionary ethics perspective, I would simply say why not self-deal?

Why shouldn't I as an individual, as a financial advisor, why shouldn't I serve my own interest as highly as possible? Or pretend for a moment that I do have a sense of moral altruism that is coded into my genetics based upon some evolutionary, you know, survival of the fittest, Darwinian system of evolutionary development.

At what point does that moral altruism cease? I certainly don't work for free, so should my moral altruism lead me to work for free? Most would say no. Well, then where should it kick in? At what level? At total denial of my own interest in favor of a client's interest?

Well, at partial denial, I'm going to get paid in favor of a client's interest. Point is it just doesn't work. I don't see it working, and that's why I bring in that example as I'm going back to marriage, and I personally, I just simply reject the system of thought.

My belief is simply that this idea, this inborn sense of moral altruism doesn't exist. I think we're all self-serving to the maximum extent possible, perhaps as curbed by the legal environment and the fear of negative sanctions in which we live, and that fear will vary. So this is why in some financial planning offices, these offices are very loosely run.

There is perhaps a director at the top who is a little bit shady, slipshod with their practices. Well, in their office, the studies in the financial business illustrate that there's a higher variation from the law than in other offices that are well run. So it's all about the sanctions, and that's originally the purpose of law in and of itself, which incidentally is another philosophical thought.

That's why an effective system of government should probably be one which allows for it to be true, which allows for each person to be focused on their own self-interest. And that was the philosophical origin of some of capitalism, of a democratic republic, of the structure upon which the United States of America is built.

I don't know, perhaps that's some reason why, in addition to various natural factors of geography, maybe that's some reason why it's become one of the wealthier places in the world. Now, I do think it's possible for someone to place others' interests higher than their own. That was what Christ commanded, but that's only possible after the complete regeneration of a person.

It's only after the transformation from a sinner to a saint. By the way, that's the entire point of Christian theology. I think you should actually expect a sense of altruism from a regenerated Christian. Perhaps not so much altruism as more of service. That's how Christians generally view it, but I don't see any rational reason to expect it from anybody else.

Now, I think you do see, if you look around you, you see some degrees of altruism from most people at various times. Just look around and you actually see this constantly. But it should be expected as part of the lifestyle of a Christian in response to God's commandment. And it should be probably an aberration of the norm for others who are not part of that.

That's why it often makes the news, perhaps. It's unusual. Nobody thinks it's – well, let's leave it there. I don't want to get too wordy. My point is that in an atheist universe, there's no objective morality. Or at least if there is, I can't figure out why, how that system of thinking gets there.

And perhaps I just haven't read the right argument, but I've looked for it. I promise. And I appreciate atheists who admit this. This makes the most sense to me when they do, because then you get to a point – at least we can look and essentially adopt a philosophy of pragmatism and say, "Well, what seems to work?" And there's no objective right or wrong.

It's just a simple of what's pragmatic or what seems to work now. I would say if there is no external objective morality, then there's no rational basis for so-called right or so-called wrong, except in that worldview, societal custom. And if there's no objective basis for right and wrong, then you can simply choose to ignore societal custom whenever you like, including – bringing it back to this question of marriage – including in how you treat your spouse, including how you treat your children.

So my question is a question of worldviews. And this is what most people don't ever think – seems to me many people don't think about. If you have a worldview that is based upon external objective so-called truth, then you need to stand in favor of what that worldview says.

If you have a worldview that is subjective, that is situationally appropriate, whatever is most convenient at that time, then you're free from any externally imposed scenario. So how this applies to marriage is that – well, in that worldview, from an atheist worldview, then there should be no reason why you can't simply ignore your child support payments, ignore your alimony payments, ignore that.

All you need to do is simply avoid the negative sanctions imposed by the law, and then your life will be happy and free. If you're halfway intelligent, it shouldn't be that hard to avoid the negative sanctions of the law, buy a book on how to disappear, move to Thailand, live on the beach, whatever you want to do.

It's not that tough. All you have to do is just simply adjust your thinking and downplay that sense of obligation and focus on how do I win, how do I get rich, get rid of the $500 a month payment. That would be consistent in that worldview. I think this is a big decision, and I start here because many people don't start here.

And again, I'm fully aware of all of the areas that – trust me, I argue with myself enough. I'm aware of all the rebuttals, but I'm trying to simply convey in maybe 15 or 20 minutes a logical system of thought, at least what I think seems to make sense to me, and convey that to you as something to make you think.

Now, my third argument is that – as I build here – is in a Christian universe, there is an objective morality. There is an objective standard of right or wrong in that worldview, in the worldview of Christian theism. Now, we'd have to find it. And this would be another area where you would say, "Well, where would you find such a thing?

What would it be?" Well, I would posit that it should be based upon the Bible. And the question then naturally would be, "Well, why believe the Bible?" Long, debatable, in-depth conversation that could happen. Probably the most concise answer that I would give is one that I read from a man named Vodie Bauckham.

If you want to go and search it out, just search "Vodie Bauckham, why believe the Bible," you'll find – I think it was a sermon of his I listened to or something. He simply say this, "I choose to believe the Bible because it is a reliable collection of historical documents written by eyewitnesses during the lifetime of other eyewitnesses.

They report supernatural events that took place in fulfillment of specific prophecies, and they claim to be divine rather than human in origin." Interesting, huh? Now, again, that's not original with me. I just thought that's the most concise way to convey something that makes sense to me. I'll repeat it in case you're interested.

"I choose to believe the Bible because it is a reliable collection of historical documents written by eyewitnesses during the lifetime of other eyewitnesses. They report supernatural events that took place in fulfillment of specific prophecies, and they claim to be divine rather than human in origin." Now, obviously, Adam, I don't know anything about you.

I don't know what your perspective is on worldview, which is why I started there, trying to answer your question but also make for an interesting discussion for the audience. I don't know what your perspective is on the idea of objective truth. I don't know what your perspective is on Christian theism, on the Bible, any of those things, but I do recommend investigating.

So I'm trying to build a discussion here that will be helpful at each stage for you. I recommend simply investigating this. Now, I do believe that there are some people who actually have deeply investigated the Bible and its teachings and have simply discarded it as a book of foolish lies and fables.

But my personal experience is that most people with whom I've interacted who have already discarded the Bible as a book of foolish lies and fables are simply ignorant. And I'm not being insulting with that. I'm simply saying that they're ignorant of the depth that is contained therein. They've simply not studied the Bible at any in-depth level at all.

They've not studied even about the Bible. They could hardly name a single prophecy. So in my statement from Vodie Bachum, they could hardly name a single prophecy that was given that took place in fulfillment. They're not aware of the controversies, the background. I commend to you, study it. I'm fascinated by it.

I continually try to study and think and find holes and satisfy my curiosity. I'm fascinated by some of these questions, as is probably apparent with even this answer. So on that basis, I would turn on the building on that, hopefully a logical argument, I would turn and I would say, "The way I would answer your question is not about money, but it's about marriage." And I would lead that to simply, "What does the Bible say about marriage?" Now I think if you look at the Bible, whether or not you agree with it, if you look at the Bible and study it through, it's very simple.

And there are two primary themes to it. Number one is God is the one who marries based upon what we do. There are actually only a couple of scriptures defining marriage in the Bible. You would think with such a massive text, there might be more. There's very few. There are only a couple of scriptures that actually define marriage.

What I'm aware of, God said in the beginning of the book of Genesis, said, "Therefore, a man shall leave his father and his mother and hold fast to his wife and they shall become one flesh." Then in Matthew, Jesus affirmed that. And he affirmed it with these words, quoting scripture, he says, "So they are no longer two, but one flesh.

What therefore God has joined together, let not man separate." Most of us are at least familiar with those words and those words in our culture are based upon biblical truth. So I would argue that man has no power to define marriage. For example, vowels often say, maybe a preacher or an officiant of a marriage ceremony will say, "By the power vested in me by the state of Florida, I now pronounce you man and wife." I think that's foolish.

Me personally, just telling you my personal standpoint, I reject any authority of the state over marriage. I reject any authority of the state to define marriage. The state has no authority in marriage, in my opinion. Now, in my marriage ceremony with my wife, very specifically and pointedly, we did not permit anyone to actually say those words.

We didn't permit anyone to say, "By the power vested in me by the state of Florida," because I don't acknowledge the power of the state of Florida over marriage. And actually, if you don't, you know, interestingly, if you're interested in this stuff, the laws of some states actually back me up.

For example, in the legal code of the United States, in some states, we have the idea of common law marriage. And common law marriage is the idea that even though no formal so-called legal ceremony has happened, that a couple is actually married based upon what they do, not based upon the ceremony.

So it's even backed up in our legal code. Now, if... Here are the two things I say. Number one, if God is the one who marries based upon what we do, then number two, man has no power to terminate marriage. And marriage is a union that is broken only by death.

If man has no power or ability to define marriage, then man has no power or authority to break marriage. And the scriptures are clear. Marriage is for this lifetime only. It continues until the death of one spouse, and then the marriage bond is broken, and marriage does not continue into the next life.

And so that's my thought process. Now, there are many arguments and questions. At this point in my thinking, I've lost, I would say, the vast majority. I don't know what the percentage is, but I've lost the vast majority of the audience in agreement, but that's my opinion. And I would...

So what proceeds from here? I would say two things. Generally, first, in general, to all of us, and then specifically to Adam. Generally, I think you need a consistent framework for anything that you do. You need a consistent framework for action. And I would argue that to be consistent from a perspective of Christian theism is very simple, especially in this issue with regard to marriage.

It doesn't matter a whit what the law of the land is. Marriage law has always been debated and has always been subject to politics. So in ancient Israel, Moses, in the scripture, Moses permitted divorce as a way to deal with the sinful hard hearts of the children of Israel.

It was a way of bringing legal structure to a civil society. In fact, the Jews of Jesus' time were still hotly debating that topic. If you're interested in these topics, feel free, go search out the teachings of the rabbis of that day to understand the historical context in which Jesus taught.

And you will find that the rabbis and the Pharisees among them, they were hotly divided over various teachings of reasons that a man could divorce his wife. He had the liberal perspective and the conservative perspective. And the main question was, can a husband divorce his wife for any reason at all?

That he wants to, or is it only for these specific reasons? And Jesus answered them clearly. He put them all squarely in their place. He clearly said, Matthew, feel free to go look it up. He clearly said that although Moses permitted divorce, it was not God's plan. He affirmed God's original intent.

And he stated that anyone who divorces his wife and marries another commits adultery. A few other examples of how politics and marriage and religion have all been intertwined throughout all of human history. We all know of King Henry VIII would be an example, who separated from the Catholic Church and built his own church, Church of England, because the Pope of the Catholic Church would not permit his divorce.

Somebody redefines something that's external and redefines the law and what's right to fit their own agenda. Make your own church in which you can allow divorce to marry others. Incidentally, you might remember that he also killed two of his wives. So just think of the old rhyme, King Henry VIII to six wives he was wedded.

One died, one survived, two divorced, two beheaded. So he defines marriage for himself and finds it acceptable to execute his wife. In the United States, if you look at the US historical context on marriage debates and definition of marriage and intersection between law and theology and all of this stuff, interracial marriage was banned in many places, including California until 1948 and in the deep south until 1967.

Interestingly, if you're interested in this type of history, there are actually three different efforts to introduce a constitutional amendment to the US national constitution banning interracial marriage. Many people aren't aware of that. So question, would you acknowledge that? No matter what your world view is, would you acknowledge that as right or wrong?

Historically, divorce and remarriage was shunned in our society. There was a strong negative social sanction, a shaming, a shunning in our society. Today it's commonplace and accepted. Today there's a massive battle taking place in the United States of America and some of the world, some of the world as far past the US concept, over the concept, US situation.

There's a battle over the concept of homosexual marriage. So I would ask three questions. If you're a Christian theist who believes that homosexual marriage is wrong because it violates God's law, then by definition, you reject the authority of the state to define marriage. If you reject the authority of the state to define marriage for homosexuals, then why do you accept the authority of the state to begin and to end your heterosexual marriage?

I ask you the question. If you're a Christian theist who believes that homosexual marriage is right because it's right in God's eyes and in God's law, then why do you not begin and end with God's definition of marriage? By definition in Genesis and in Matthew, God and God's son Jesus both define marriage as between a man and a wife, case closed.

Now if you're an atheist who believes that homosexual marriage should be accepted, then why do you accept any definition of marriage at all? Why is there any need of marriage in any form? There's no logical argument in the atheist worldview that I've ever heard that doesn't end in the logical termination of any value of marriage.

If marriage is historical in nature and it was needed for the survival of the species, then by definition it does not include homosexual marriage because there's no survival of the species. If marriage is convention only and thus we can adjust it as a convention to include the concept of homosexual marriage, then in a world where single, unwed parents are more common than not, then why don't we simply dismiss the idea of marriage and the idea of a two-parent nuclear family as antiquated and simply adopt the idea of a village raising a child?

Makes a lot more sense. By the way, this is actually one of the arguments that I most respect coming from the atheist philosophy camp. The in-between arguments don't make a lot of sense to me. So I just use that as an example because these issues affect all of us and we have to choose what we think.

I hope that this is at least thought-provoking. So that's my general advice. Now specifically, Adam, my advice to you, and again, this is probably not-- I would imagine this is nothing like what you were expecting when you wrote me an email. But I would stop arguing back and forth between worldviews.

The reason I did that was just to hopefully give you a little bit of background and give you something to think about. Let me say this. You've sinned against your wife and against God by leaving her. Stop sinning and go love your wife. Do not abandon her. Do not leave her.

Do not divorce her. There is no reason or justification for divorce ever. And there's no amount of money. There's no amount of financial independence. There's no happier life that will ever be worth paying that price. Living a righteous life is far preferable to any momentary happiness or self-gratification. Don't choose the path that seems easy, the path of self-pleasure and self-indulgence, reacting to whatever the problems were and choosing to say, "That's it.

I'm done. I'm out." Don't choose that path. Choose the path of righteousness, no matter how high the price, even if it could cost you your life, your physical life today, choose righteousness. Stand in the same way that I hope that I would stand in face of oppression of a people group, in the same way that I hope that I would stand and be willing to die for the lives of those Jews in Schindler's List, in the same way that I hope I would be willing to stand in the face of all of those things.

And none of that is about me. I often wonder if I would be willing. I hope I would. I said hope, hope, hope. But even if it costs you death today at the point of a sword, choose righteousness. If it costs you your physical life to live righteously, choose that.

And if it costs you your physical life to be poured out over the next 50 years, loving your wife with zero return of that love or zero acknowledgement of it in any way, choose that. Next, I would say this. It's impossible for you to live a righteous life without the transforming power of God.

It is not possible for you to do it. No man can do it. And that's why men fail. That's why they transform political systems to meet the sinful impulses of their own will. And yet that's the whole essence of Christianity. That's why Christ died. Christianity has very little to do with this ethereal concept of heaven or hell, someday going to heaven or hell in the future.

And it has everything to do with living righteously here, now. Now that righteousness continues with an eternal consequence or reward, but it's about now. The watered-down pop religion that most people in the United States understand as Christianity, the idea that if you simply accept Jesus into your heart, then your place in heaven is assured, but your life looks no different than anyone else's.

As a bumper sticker says, "Christians aren't perfect, just forgiven." At the most, that's utter hogwash. At the very least, it's the most tiny, insignificant, ineffective representation of the depth of Christianity. If that's true at all, that pop Christianity that we accept today, if it's true at all, then it's true in the sense that someone standing at the rim of the Grand Canyon remarks quietly, "Well, yeah, it is bigger than the drainage ditch in front of my house." That would be technically correct.

But an utter bastardization of the entire idea of the grandness and immensity of the Grand Canyon, if you've ever been there, you'd understand. It might be technically correct at the tiniest instance, but it's nothing like what the fullness is. You can actually know the transforming, overwhelming power of God to live uprightly in the face of overwhelming odds.

If you haven't experienced that transformation, go experience it. If you don't know how, go learn. If you don't accept even a bit of my argument today, then I would say consider your own understanding of life and prove it out. Frankly, I've thought, I've thought and I've thought and I've thought and I've thought and I've tried to figure out any way whatsoever that could be different than what I've just presented to you.

I can't personally find any way out. I can't find any logical way out. I can't find any consistent way out. Now, I certainly continue to think about everything that I believe to be true and I'm open to being wrong. But at this point, at least my experience so far, is either, number one, I'm entirely crazy, delusional and foolish to believe in any kind of external deity of any kind.

And in that case, in that scenario, then I'm free to cast off all restraint and live my life as I like without reference to anyone else, period. That's possible. I don't believe that to be true. I have thought about it carefully. I carefully worked through that worldview to see if it made rational sense to me.

But that's possible. I could be wrong. Or, number two, I'm right. And what I've just shared with you is correct. Now, I recognize, and certainly don't hear me wrong, I understand that there are many people, in fact, the vast majority of people, who are on a spectrum between those extremes that I hold.

And I understand that. I'm not saying you're crazy, if you're somewhere on that spectrum. I'm simply saying that I've probably considered your position and I can't find the logic in it. I can't find the consistency in it. That's why I tried to give a little bit of various thought and some examples that hopefully will help different people in the audience to think.

Every position I've thought through along that continuum at some point becomes irrational and leads me to the next point. If you don't support, I won't even go into it, whether we're talking serial polygamy, why would you support serial polygamy, which is divorce, remarriage, divorce, remarriage, divorce, remarriage, and not support concurrent polygamy?

If you support homosexual marriage, why would you not support polyamory? Doesn't make any sense to me. I've actually read essays. If you're interested, go read people's intellectual support and theological support if you give any weight to theology. But go and read people's perspectives and it just doesn't make any sense to me.

Why would you support monogamy and not bigamy or polygamy? Why would you not support polyandry? Why? It doesn't make any sense. That's why I'm as extreme as I am in my views and that's why I see those two things. Finally, I would say this. Adam, I don't know anything of the actual circumstances of your break with your wife.

The circumstances leading up to your breakup could be mild. Maybe you simply have financial trouble. If you owe money to a bill collector, that's certainly a contributing factor, if not the cause. Usually it's not the cause, but it's certainly a contributing factor. So maybe you're in financial trouble and that leads to stress.

Maybe you don't enjoy sex. Maybe you have trouble with the kids. They could be mild or they could be extreme. Maybe you're a drunk. Maybe she's cheating on you or you cheated on her. Or maybe she's abusing you or you're abusing her. Or she abused the kids or you abused the kids.

Whether mild or extreme, these things are all very, very difficult things to work through. I've never met a couple that arrives at the point where they've broken up, no matter how seemingly mild on the surface the cause of discontent was, where it's easy. It doesn't matter. They're all difficult, difficult things to work through.

Financial problems destroy marriages. Sexuality destroys homes. Abuse destroys people in all forms, abuse in all forms. Physical abuse, verbal abuse, emotional abuse, abuse destroys people. Hope that you weren't the abuser. But if you were or whatever the situation, I'm not singling that out, you need help. Go find it.

So I would say this is one of those times to lay aside your pride, humble yourself, go get help yourself and get help with your wife. As your financial advisor or as your surrogate financial advisor, what's the word that would be virtual financial advisor, I plead with you, ignore the money.

What does it profit you if you gain the whole world and lose your own soul? What does it profit you if you gain the whole world and lose your wife and your family? Ignore the money. If your wife won't have you back, you've got to spend the rest of your life loving her.

That would be the righteous course of action. Again, you can't do it by yourself. You need help. I don't know if I'll ever hear from you again or if not. I don't know. Like I said, I would much rather avoid these kinds of touchy subjects because in our society, it's very difficult to talk through certain things.

It's difficult to work through subjects like this and it's exposing. You expose your personality and you risk rejection. That's what's so tough about it. But again, I promised myself when I started doing this that I would not run from it. As tough as it is, I like to be liked.

I don't like to cause controversy. I like to sit back and have everybody love me. But as difficult as it is, I believe these things are important. I hope that you at least have something to think about. If I can be of any help, personally, I'm happy to do that.

Although there's probably little help I could be. If I can be of any help, I'm happy to do that. But I hope this is encouraging to you. I think that's my answer to your question. I have one more question from Joe on 401(k)s versus Roth 401(k)s. But I have to say that for next time.

I apologize to you all, but I can't put that much of myself out there and then just go on to talk about tax law. Frankly, it's pretty boring to me. But I hope that's helpful. I hope it's at least to some of you thought-provoking. I'm not particularly looking for feedback, although I'm happy to take it if any of you have feedback.

You're welcome to come by and comment. You're welcome to email me, Joshua@radicalpersonalfinance.com, if you have comments or if you have something that missed in my logic. I hope this was at least consistent. Again, I'm just one person. I'm doing my best, but that just seems consistent to me with everything that I can find, both factoring in logical thought, intellectual honesty, theological consistency.

All of those things is built on. I know I short-circuited a number of areas of those. I don't know how long that was, but it was 50 minutes. Wow. That's already a lot of areas, and each one of those steps has to go through a bunch of different things.

But anyway, I hope it's useful to you, Adam. I wish you the best, man. I hope to hear from you. And to the rest of you, focus on investing in your marriage. These things matter. That's it. Thanks for your support, guys. I appreciate it. See, I'll talk to you all tomorrow.

I've got some great interviews coming out this week and some good shows, too. Exciting stuff in the works. I need to talk with you guys a little bit about the business structure of the show. I've got some ideas. I'm going to be changing some things. If you want to join the member support program, fair warning, it is currently on sale, and it's the same price it always was, but it's about to be dramatically changed.

So fair warning, and I would appreciate any of your support now. The inflow of dollars from you guys joining, especially at the annual rate, is super helpful as I kind of renovate and regenerate this whole thing. I've got some things figured out. I've got some clarity. I've learned a lot doing this for the last six months, and I've got some clarity with where I'm going with it.

And I'm pretty excited. The feedback has been great. Anyway, that's it. I'm going to stop rambling. Talk to you tomorrow. Cheers, y'all. Thank you for listening to today's show. If you'd like to contact me personally, my email address is Joshua@radicalpersonalfinance.com. You can also connect with the show on Twitter, @radicalpf, and at facebook.com/radicalpersonalfinance.

This show is intended to provide entertainment, education, and financial enlightenment. But your situation is unique, and I cannot deliver any actionable advice without knowing anything about you. Please, develop a team of professional advisors who you find to be caring, competent, and trustworthy, and consult them, because they are the ones who can understand your specific needs, your specific goals, and provide specific answers to your questions.

I've done my absolute best to be clear and accurate in today's show, but I'm one person, and I make mistakes. If you spot a mistake in something I've said, please help me by coming to the show page and commenting, so we can all learn together. Until tomorrow, thanks for being here.

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