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Ralphs. Fresh for everyone. ♪ I'm back. I'm ready to go. And I've got a great show topic for you today. We're going to talk about the lifetime value of your income. And here's my promise. By the time we're done with today's show, you are going to not only feel rich, but you're going to understand why you are rich.

♪ Welcome to the Radical Personal Finance Podcast. My name is Joshua Sheets, and today is Monday, February 16, 2015. Thank you for being here. We're going to talk a little bit about income today. And since income is what drives every other part of your financial plan, I hope that you are ready.

I'm going to give you a bunch of ideas, and I'm going to give you a framework for how to think about your income so that you know that you are already rich. ♪ Sorry to be away for a couple of days last week. I would like to say that I'm rested and refreshed, but although I am, you know, I'm feeling pretty good.

I certainly wasn't away sitting on -- I guess, what fun things do you do in Dallas? I'm not sure. I was working, and I'll tell you about that another time. You'll hear about that later. But I was -- I'm sorry I was away without shows last week, Wednesday, Thursday, Friday.

I had an unexpected trip to Dallas. It was a good trip. I enjoyed it, and it was productive for the reasons that I went. You'll be hearing some of those reasons in coming days with a bunch of interviews that I recorded while I was there. That wasn't the primary reason that I went, to record interviews, but it was an extra bonus.

I was able to maximize the value or stack the benefits, as I like to say, and get as much benefits out of an expense as possible. This show is brought to you free of corporate sponsorship. Thanks to the patrons of Radical Personal Finance. As I record this on Monday afternoon at 4 o'clock p.m., we are up to 36 patrons and $375 per month for the show.

Thank you for those of you who signed up over the last few days to support the show. That makes a world of difference, as it allows me to continue to bring you the show commercials, ad, and sponsorship free, which means that I'm only focused on the value of the information.

So thank you. For those of you who are patrons at the irregulars level, that includes now those of you who are contributing on Patreon at $25 per month, and it also includes those of you who were contributing prior to the launch of the Patreon page, I have released for you a bonus episode with details on my recent trip to Dallas, why I went, and what I'm working on, the new business project that I'm working on.

You'll find that in our Facebook page. If you don't have access to the Facebook page yet, email me, Joshua@radicalpersonalfinance.com. I sent it all to you, but if you don't have access, just email me, Joshua@radicalpersonalfinance.com, and I will make sure to add you to that Facebook page. If you need a link, go ahead and click on Patreon.

If you are at $25 in a month or above, you will see a link to the Patreon page, and you'll have all those details of the trip. If you haven't joined the irregulars yet, you can do that on the Patreon page. Just go to radicalpersonalfinance.com/patron, and you'll find all of those details.

So let's get into today's show where we talk about income. I'm going to share with you that what I'm going to share with you today is something that I feel very strongly with, but I haven't always felt strongly about. This is actually something that I kind of just bumbled into when I was working as a financial planner.

This is something that I didn't really get, and it was pure happenstance that my financial planning software would run a sales illustration page for me in the plans. I started looking at it, and then I looked at it, and then I looked at it every time, and I realized it was probably one of the most valuable tools that I could use with financial planning.

That page was actually the lifetime value of income. Now, this page did a couple of things. Often what it was used for, actually, in the software that I used, is it was used as a page for establishing the sale of insurance products that would cover the value of your income.

For example, it would take what you're making today, and it would project it forward until the date of retirement, which I had run in the plan, and then it would usually grow it at whatever rate of inflation that I had set. Let's assume I'd set a 3% rate of inflation.

It would take that number of your income currently, and it would grow it at 3%, and it would say what the total value is of that income. That was great, and then it would follow it with a discounted value. It would say if the total value of your lifetime income is $2 million, and we're coming back a certain number of years, it would discount it and take a present value calculation and say, "If we had, say, $1.2 million and we could invest it at 6% for income, we could replace the value of your income." Now, this was actually for a very long time how life insurance and life insurance agents calculated the amount of life insurance that was appropriate for you.

The idea would be in the past. We do it a little bit differently now, but the idea would be, "Well, if you're going to earn, say, $3 million, and if I can replace that with $1.5 million of life insurance today, and if I can invest that and replace your income, then I've replaced your financial value for your family." That used to be how planning was done for life insurance.

Today we use a needs analysis approach, which I like a little bit better. I think it's a little bit more specific, but it's certainly a-- the lifetime value of income approach is certainly a valid way to do it. I don't have any problems with that. I prefer it over the multiple of income approach, which is the way that you hear much bandied about, which is buy 10 times your income or 15 times your income or 8 times your income of life insurance.

That is, in my opinion, the worst way to do it, but it's better than nothing. Better to have some life insurance than nothing. So, hey, if it gets people to buy life insurance, I'm okay with it. But what I started to look at it and see the value of that page is it would actually allow me to understand what somebody's income was.

Now, purely by happenstance, the financial planning software that I would use would insert this page immediately following somebody's balance sheet, their income--excuse me, their assets and their liabilities and their net worth. And when I started going through it, what would happen is oftentimes, especially with the demographic that I started working with when I was a young planner, I didn't know a lot of rich people and I wasn't probably qualified to do planning for them very well until I learned a little bit more.

And so I was working with a lot of people who were broke. And their balance sheet would show that they were broke. And oftentimes, if the number at the bottom of the page, the net worth number, would either be very low or it would be negative. And what I learned is I was always a little bit depressed presenting a number that was negative, and it was usually due to student loans.

Because when I started, I was 23 years old. I had a lot of young clients who were in their mid to late 20s. And it's not hard for a mid to late 20 person, especially if they've gone to college and taken out student loans, to have a low income number--excuse me, a low net worth number, a negative number because of the student loans.

There's not a corresponding asset that shows up on the balance sheet that offsets that number. So I would lead with the balance sheet, and then I would present next-- on the next page, the lifetime value of their income. And I would always try to encourage them and say, "Look, look, look how much your income is worth." And then finally what I realized is that that was the key number that was missing on the balance sheet.

After all, the reason somebody's net worth was negative was because they'd gone to college usually, and they had $50,000 of student loans. Well, the hope and the idea and the ideal for most of those people was that by investing, quote-unquote, into a college degree, they were going to be able to earn a higher wage.

And so it was actually that next page, the lifetime value of income, that would demonstrate that they had gotten a good investment. They'd gotten a good--getting a good return on their money. So then I learned to change my language a little bit, and I learned to demonstrate that to my clients and say, "Look at the value of your income.

If we just do a few things correct, you can build wealth." And once I cracked that code, I did that with every client, and what I learned was I loved to do it, and the clients understood it. Because what it focused on was not where they were today, but rather it focused on the few simple steps that they needed to do to make good progress toward their goals.

Let me give you an example here so that you understand more clearly. Assume that I'm doing planning for a young couple, a man and a woman are both age 30, and assume that this couple, each person has $50,000 of income. So it's about the median income in the United States of America.

I think it's about $52,000 currently. I like $50,000. So you've got $50,000 of income for each, so multiply that times two, that's $100,000 of household income. Now assume that the balance sheet looks like this. This would be a fairly average middle class, probably a median balance sheet. Assume that they own a $180,000 house.

They own $30,000 worth of cars. They have $5,000 in a savings account, and let's just say they have about $5,000 in a 401(k). Now that's the value of their assets, about $220,000 total, primarily in house and cars. Also assume that there's a $150,000 mortgage, $20,000 worth of car loans, and $15,000 worth of student loan debt.

So that would put liabilities of $185,000. Now on paper, this couple has a $35,000 net worth, but the problem is that that is primarily found in their home, their home equity. $30,000 of the $35,000 is actually house equity, and the challenge with having house equity is that most people who have house equity feel poor because you can't access it, myself included.

Too much money in house equity and not enough money in cash. So you can't access it, so it doesn't really make you feel that great. So even though this couple that I've described is probably doing pretty well and they're doing better than many people in society, they certainly don't feel rich by any means.

And to have a net worth of $35,000 does very little to make them feel rich. Now what if I talk about their income, however? And let's figure out how much their income is worth. In this scenario, assume that this 30-year-old person has a $50,000 income and assume that they are going to increase their income by 3% each year.

This is just going to be simple cost-of-living adjustments that are keeping pace with the rate of inflation. But look at the difference in the numbers. They start with $50,000 and then a year later they receive a 3% increase, and so they're earning $51,500. A year later, another 3% increase, compounding, they're earning $53,045.

And this happens each year. And fast forward and let's just say it's over a 40-year career from age 30 to age 70. Do you know what the total value of that income is? $50,000 income compounding at 3% annually from age 30 to age 70 would be $3,933,164.88. Let's call it $4 million among friends.

And that's for one spouse. What about the other? What if they both work? Well, it's about $8 million, $7,866,000 times two, and that's at a 3% growth rate. Isn't that amazing? Now, compare how you would feel in that situation as a member of that 30-year-old couple when I'm sitting there and demonstrating to you that you have a net worth of $35,000, of which $30,000 is locked up in home equity, so you really feel broke.

And I'm pointing out to you, however, that you can enjoy a household income of probably about $8 million between now and the age of 70. Pretty amazing, right? Super depressing if you--well, not super depressing. Moderately depressing if you focus only on net worth. But if you look at the value of that income, it should do a couple of things.

Number one, it should be encouraging to you. And that's key. When you're young, you should be looking forward--well, any time, you should be looking forward and looking at your income and be encouraged by that. And two, it should cause you to ask the question of saying, "What do I need to do with that income to make sure that I have some of it in my pocket in the fullness of time?" And that's key.

Because when I'm doing planning for a 55-year-old couple or for a 45-year-old couple, oftentimes that 45- or 55-year-old couple might be in exactly the same net worth statement as that 30-year-old. That's what statistics show. When you start looking at what the average person has saved for retirement, it's not that far off from that age 30 that I explained.

But the problem is they don't have 40 years of income in front of them. They only have 20 years of income in front of them. So however many years of income you have in front of you, I want you to focus on that number and ask yourself, "What do I need to do with that number to make sure that some of it stays in my pocket?" Now, remember that this client here has $220,000 of assets and $185,000 of liabilities.

Now, how easy would it be for this person to become really, really rich and acknowledge the fact that they have got $8 million of expected income over their lifetime? $8 million of expected income over their lifetime. And all they got to do is pay off $185,000 of debt and pile up a few million bucks for themselves.

It should be pretty doable, right? It's very doable. $8 million of income, $185,000 of debt. We got to pay off the debt and we got to set aside a couple or three or $4 million for ourselves. That is really doable. But it's only doable if you don't spend all that money.

It's only doable if you actually set aside some of that income and actually invest it wisely. But it should be a bit haunting to look at that number and recognize that I'm going to earn $8 million. It's disgraceful in that scenario, barring catastrophic events, it's disgraceful to not wind up with at least a million or two tucked away.

In the land of abundance that most of us live in, we should be ashamed of ourselves if we don't at least tuck some of that money aside. It's too easy in the land of abundance that we live in to not do that. Now, I'm not saying that you're going to feel it all up front.

The problem is we don't feel these numbers all up front. Rather, we see the income numbers. We don't see the $4 million total income number. We only see the $2,900 net income number that flows into our bank account each month from one of those $50,000 jobs. What I'm doing here, I'm just taking $50,000 divided by 12.

That comes out to be $4,166. Let's just plug in, say, 70% to account for employment taxes at 7.65% and account for a net effective tax rate of 7.65% to be--excuse me--of--I can't do podcast math--22.35%. 22.35% effective income tax rate, state, local, and federal. I'm just using a 30% total tax rate.

Again, $50,000 divided by 12 is $4,166 times 70%. Then what's worse is if you divide that by 2, let's say you're paid bimonthly, you wind up with a $1,500 paycheck. It's $1,458 paycheck. That doesn't feel like all that much money. But if you don't effectively manage the $1,458 net paycheck, you don't ever get to pile up the money.

So what I'd encourage you to do is to start thinking in terms of the lifetime value of your income in the context of your financial plan. First, calculate it. So sit down and make a spreadsheet for yourself and calculate how much is your lifetime value of your income. If you're good with math, you can do this on a calculator.

All you need to do is you need to take the number, inflate it, and then take the total value of those payments and calculate that. If you want to do it in Excel spreadsheet, it will be easier for you because you can just change it and you can clearly see it.

If you don't know how to make an Excel spreadsheet, I've prepared a very simple short video presentation of me doing that in preparation for this show. That spreadsheet is free. It's online. It's available for the patrons of the show. So if you'd like access to that, just make sure you become a patron of the show, radicalpersonalfinance.com/patron.

You can do that for as little as a buck a month, and you'll have access to that spreadsheet. I've done it with Google Spreadsheets, which is a free online spreadsheet program that you can use, and I'll just show you how to set that up. Very simple. Most of you could be able to do it for yourself, but if you need to know how to do that, just find that on the Patreon feed for that, radicalpersonalfinance.com/patrons, and then click on "Patron" and then click on "Activity." So calculate for yourself what is the lifetime value of your income, and then start thinking in terms of that number, thinking in terms of what you can do with that number.

Now, there are some bonus things that you can do, and these are natural corollaries of that lifetime value of number. Let's figure out how do we get this higher. Well, I can think of three ways that you can increase your income. Number one, the higher the starting value of income, the better.

So the higher the first wages that you start with, the better, because over time that will compound over a lifetime. Number two, the higher the annual increase on your wages, the better, because then your compounding will grow more over time. And number three, the more years of income, the better.

And all of these things are extremely valuable to recognize because these are the things that are under your control. Let me give you a couple of examples. Let's keep my scenario constant, and let's say we're starting with $50,000 of starting wages and 1.03%--excuse me, 3% of annual increases. And let's calculate what the total value of a lifetime wages would be if we could start at a higher number.

$50,000, our total earning power for a 40-year career from age 30 to age 70, is $3.9 million. What if we start at $55,000? Well, now at $55,000, we're at $4.3 million. So that's a difference of $400,000 of total lifetime income for just a measly difference of $5,000 of a starting point.

$400,000. So if all you did was start at a slightly higher rate and simply save that extra $5,000 per year, that will make a dramatic difference in your long-term financial security. What if you increase the annual growth rate? Well, I'm going to drop it back to $50,000, but now instead of increasing wages at 3% per year, let's increase wages at 5% per year.

Remember, wages at 3% is basically $3.9 million. What would it be at 5%? $6.4 million. So just simply increasing the rate of annual increase from 3% to 5%, which 5% is extremely doable, you raise your lifetime earnings from 30 to 70 from $3.9 million to $6.4 million. That's an extra $2.5 million of earned income.

That's dramatic, isn't it? What if you extend the amount of years? Let's drop this back to 3%. And let's just say you're starting at $50,000, 3% annual increases, and now instead of working over a 40-year career, you work over a 50-year career. So whether this is from 30 to 80 or from 20 to 70 or something like that, you're starting at $50,000.

The difference between age 70 at $3.9 million to age 80 is $5.8 million of earnings. Working an extra 10 years, you earn an extra $1.9 million by working an extra 10 years. It's amazing, huh? Now the key--and I'm going to talk about how to do each of these things-- but the key to wealth is by focusing on your income and then doing intelligent things with it.

But all three of those things are adjustable, and you can impact them. So as an example here, let's assume-- so let's start with starting with an income. We all know about, "Well, hey, if you can earn more money, then that's even better." So that's initially why college degrees have become so important in our culture is because the idea is if I go to college, yes, I'm deferring my income for a number of years, but now when I get out, I'm going to start at a higher wage.

Let's say you start at the age of 30, and you earn $60,000 instead of $50,000. And let's say that instead of earning a 3% annual increase, you earn a 6% annual increase. And do you know how much that is at age 70? It's $9.9 million. So just changing that, starting at $60,000 instead of $50,000, increasing wages at 6% annually instead of 3% annually, that's $9.9 million.

Now here's what's intriguing about this. A, multiply that times 2, that's $20 million of earned income. For an average median earning--that's slightly more than median income. For a mostly average, almost median earning household that's just simply working over a 40-year career, starting at a slightly higher wage, and increasing annual income at double the rate of inflation through the application of skill and intelligent career advancement.

It's $10 million for an individual and $20 million for a couple. What if you did it over a 50-year career instead of a 40-year career, and you worked from 30 to 80? Well, now for an individual starting at $60,000 per year, increasing income at 6% per year over a 50-year career, that's $18.5 million of earnings.

Couple, $37 million of earnings. Massive numbers. Massive numbers. Now, I recognize that many of you don't necessarily have a desire to work for a 50-year career, and that's fine. I recognize that many of you aren't earning $60,000 per year or aren't compounding your income at 6% per year, but all of these things are doable, and I'm going to cover some reasons why you might choose to do it or not choose to do it as I go through them.

But my point is these numbers get massive, and the starting point of any wealth plan is commanding a high income, increasing that income steadily and substantially, and earning that income for as long a period as possible. That's it. So how can you do this? Because I want to give you some tools.

So these three things, number one, the higher the income, the better. Focus on starting from a position of strength and focus on earning higher wages from as early a point in time as possible. So again, college degrees is the most common way, but that is not the only way, and that's becoming an increasingly less effective way.

But as a simple example, consider the starting income of a neurosurgeon versus a general medical doctor versus a frontline fast food worker. Their starting incomes are substantially different. Why? Because they have to invest more up front, and their income is higher because of that earlier investment because if they weren't able to get the higher wages, it would be foolish for them to make the longer investment of time, so they have to earn it out over a lifetime period.

So anytime you can start at a higher rate through education, that can be valuable, and a college degree might be the ticket. Advanced college degrees might be the ticket. Also, I say look for a high skill or high education industry. Skill matters. Skills matter. We're paid for skill and skills.

We're also paid for knowledge. The work that I do in creating this show is a combination of knowledge, where I need to demonstrate and apply specific financial planning knowledge. It's also a combination of applied skills, where I need to learn and apply interesting skills to create interesting and entertaining content that the audience will respond by listening.

It's the same in your business. You need to apply skill and knowledge, and natural ability is important. Knowledge, skills, and ability is what we get paid for. Another way to earn a higher income is, I would say, focus on a difficult industry. Hard work pays. I learned this, thankfully, when I was a kid, and my dad said, "If you do hard jobs, you get more money." The older I've gotten, the more I look around and realize that by doing hard jobs, I get more money.

Now, when I was young, I learned this doing construction, and I realized at a time when I was doing construction work and I had friends that were doing retail work, they were earning minimum wage, and I was earning far more than minimum wage. But when I looked at the difficulty, and not even necessarily a skill level, because I didn't have any major skills, I just looked at the difficulty of their job versus mine.

They were working in an air-conditioned store, hanging out, folding clothes at a clothing store, and I was sweating and carrying boxes of tile to a tile job and mixing up buckets of mud, and I realized hard work pays. So Joshua's tip, if you want to make more money, look for the hardest job you can find and learn how to do it.

You'll make more money. Always look to start with a higher income amount, and that will result in a much higher total lifetime earnings. That's step one. Start at higher wages. Number two, the more you can increase your income each year, the better. There are a couple ways to do this.

Number one, you could start with steady increases. So going from 3% to 6%, if you do that every year, that can be fantastic over a lifetime. Assume that you're just going to get 3% increasing, because in order to keep all things being equal from a technology perspective, in order to keep employees, an employer is going to have to maintain their wages with inflation.

Now, generally, this is why human costs are the biggest expense line item in most companies' budgets. So anytime an employer can automate you and outsource you, that's going to be very much in their interest for their own profit. So we can't necessarily control for that. But assuming that is controlled for, in order to retain employees over time, not every year, they're going to have to maintain wages with at least inflation.

So there's probably going to be a pretty good, consistent way for you to maintain your wages just with inflation. But you can get over inflation by building knowledge and applying it, and by gaining and applying skill, and by enhancing your abilities. And that is very doable and very controllable.

Just look for saying, "What is the knowledge that I need? What are the skills that I need? What are the abilities I need to develop?" And stay current with those things and improve them. Work hard, do a great job, be productive. Look all the time you're at work. There are studies that show that the average worker, when they're at work, works drastically less than the amount of time that they're actually being paid for.

I'm hedging just a little bit because I don't remember the average numbers, but my guess is that it's probably less than 50%. That the average person at work spends less than 50% of their actual time on the job actually working. I don't know that number. I didn't look it up in preparation for this show, so I could be wrong.

But my guess is probably around that number. If any of you can show data one way or the other, prove me wrong or prove me right, put that in the show notes for today's notes. But if you only did one thing, I'm convinced if you only did one thing, the entire time that you're at work, you work hard, you're probably going to command double the rate of inflation of annual increases.

Because the average worker simply does not work while they're at work, if you just work, that sets you apart. So if you start at 8, get there at 7.50 so you can be prepared to start work at 8. And if you finish at 5, finish at 5 and leave at 5.15 so you can work till 5.

Instead of spending time talking, browsing ESPN.com or whatever your version of your-- whatever distracts you, work. Focus on actually working. Easier in some jobs than others. If you have a job where you're paid on a piece rate, whether you're a driver and you're driving per mile or whether you're producing something, then it's easier there to measure your work.

I just think of many offices that I've worked in, I just noticed that it seems like the average person doesn't spend that much time working. Even if you do spend time working, work on the things that are most important. So congratulations by working when you're at work. Number two, work on the things that are most important.

Focus on the highest value-added activities first, not on the lowest. And that could do a whole show on that. I won't do it, but I just say that. Focus on building steady increases. Then you've got to make sure that you're in an industry or a position where you will be rewarded for those increases in output or increases in production.

Joshua's pro tip, avoid working in a government bureaucracy. I've-- all of the friends of mine who are government workers, there's not really much point in working in a government bureaucracy, at least if you expect your income to be affected by your work. The income is legislated, and because it can't be unfair, it has to be within a certain range.

And so there's very little incentive for you to increase your output. So if you-- that can be a great move from a lifestyle perspective. If you want to have a lifestyle where you don't do much work for more money, then look for a government or a bureaucratic position. But if you want to be paid for your output, look for a position where that's rewarded.

That's why I loved sales. That's why I love sales still, is I want to be paid not for-- I want to be paid for results, not for time. I want to be paid for making things happen. I want to be paid the true value of my work. So I'd like that work to be measured in a way where I can know that.

So 2A, 2 is higher the annual increase the better. A is make steady increases and increase those over time. 2B is big jump increases. And this is one of the biggest un-pursued forms of action that people don't really think about. Constantly be job hunting. Constantly be job hunting. One of the useful little metaphors that I think of is I'm self-employed.

All of us-- I run my own business. All of us run our own businesses. It just happens to be that the current high bidder, your one and only contract is the company that you're working for if you're working in a salaried position. That came out clumsily, but hopefully you get my point.

Don't see your employer as XYZ corporation. See yourself as your employer. You're running your own business, and you're just hiring out your services to whoever the highest bidder is. Employers are constantly bidding against each other for employees. The most difficult thing that employers have to do is find and attract and develop quality human talent.

That is tough. So you need to be constantly looking and marketing yourself to different employers and figuring out are there some opportunities to change. If you've been stagnant and your income has just been increasing by small percentage points for a few years, be hunting and be looking for saying, "How can I make a 20% increase?

How can I make a 50% increase? How can I double my pay?" If you are effective at your job, it might be possible for you to go in and tell your employer while negotiating salary that you would like a 50% increase, and you might be able to justify it such that your employer will pay you that money.

But it will be far easier if you can go to another job or another position at another company and speak to a different employer and negotiate for a salary or a pay structure that is 50% higher than what you're currently doing. So constantly be hunting for a better opportunity and look for those big jump increases.

I think it would be silly to transition from one job where you're earning X amount to another job where you're earning X amount plus 5%. And the reason would be because now you have to go and you have to build out your reputation, you have to build out your history, you don't have any seniority, you don't know who the people are that you're working with, you don't know those things.

So you have to start that process all over again. But if you can go from X to X plus 50% at another opportunity, that would be tremendous. So be constantly on the job hunt. Be constantly building and developing a network of people that you can work with, that you can be connected with so that you find out about the jobs long before they're ever posted.

I'm convinced at this point in 2015 that companies only ever post jobs to cover their butt legally speaking. Or if they do post a job, it's probably the last of the last. That's the last--like they're desperate for somebody so they've got to post a job. Because the challenge of figuring out how to wade through-- how on earth do you-- put yourself in the position of a hiring manager.

Let's say you post a job and you get 300 applications and resumes. How on earth do you have any chance of wading through those 300 applications and feeling confident with your decision? Wouldn't it be better to be able to fill the position before you need to advertise for it?

I can't prove that data. If any of you know of data that would demonstrate it, but from my knowledge and understanding of even the job hunt world, that's probably a pretty accurate guess. So the best jobs are never going to be advertised. You need to build a network. Let me give an example for myself.

There are a number of jobs that I could probably advertise for right now for my show, things I need help with. I need a podcast producer. I need somebody who can help me by actually listening to the show, editing my audio, helping to edit some of the content which gets too long-winded, where maybe I ramble or a guest rambles.

I need somebody who can splice things together, who can handle the technical aspects of actually going out and putting the audio files together, who can upload stuff. I need a writer who can write my show notes for me because that gets in my way. I need somebody who can help me with my website, with my marketing development, with the technical side of some of the businesses that I'm working on.

I can provide the content, but I need someone who can help with that. I need somebody who can help me just with my daily schedule, who can help me connect with guests, who can help me handle my email. I need somebody who can help me with my bookkeeping and my accounting.

I need some-- I probably need more than that. I need somebody who can help me with all of these things because, frankly, for me, the only things I should be doing is reading, writing, recording, and speaking because that's what I do better than anyone else in the world does, and I should be able to hire those other things done.

The problem is that it is so incredibly difficult to have any idea of how on earth I could find and vet the right people that I make the classic mistake that most entrepreneurs make, which is just bumbling along doing it all myself because I don't-- it's having done it before and having been forced to do it again.

I have to go and, you know, I have to advertise for a job. I've got to put a listing out there. I've got to make it public in some way, and then I've got to collect enough applicants, and it's very tough to feel confident when you're just going to, you know, pick the first one, so that means I've got to interview a certain number of people, and there's no way to gather from somebody's interview and just from a thing on paper if they're actually going to work with it, work with you.

Then I've got to establish the paperwork, and I've got to go through, and I don't want to do that multiple times, blah, blah, blah, blah, blah. It is a major hassle, and so in some ways it's easier, although it is short-sighted, it's easier to just keep bumbling along doing it myself and doing it poorly.

But if I came across the right person or I were recommended the right person who knew, even if that person knew nothing, but if that person were highly recommended for the quality and the content of their character and for their skill base, hired immediately. That's what has been the most effective for me.

Now, I'm just one tiny entrepreneur with a barely starting business, but I don't know any entrepreneur who's any different. I'll tell you, one of the best things about being in sales, like I was in full-time professional sales, I got offered more six-figure job opportunities than I ever would have dreamed of simply because the people that I was selling to said, "Joshua, man, you're doing a great job.

Can I hire you?" And I've had a list of backups for a long time, backup plans. You know, if I ever get fired, call this person. And that is so valuable, but that only happens through exposure, through building that network, through doing it proactively. Harvey McKay wrote that book, "Dig your well before you're thirsty." So if you want big jump increases, be out and available and be known.

Establish yourself as a leader so that opportunities come to you. Simple example I would say to you is be recruitable. I always like to joke about this with financial advisors because--and you talk to and ask a financial advisor and see if this isn't true. I think the majority of us experience this.

When we get into the industry, we have to go out and make phone calls and find out who we're going to work for. So we start interviewing all around, and what you find is all of a sudden, you've got to get in here, you've got to get in there, you've got to test an interview here, you've got to see if this one works, if that one works.

And so you're just--it's a lot of work, and you're trying to figure out, "Where do I get established?" And depending on your qualifications, sometimes you get offers and sometimes you don't. But if you're starting with no industry experience and no credentials, no--just qualifications other than I'm willing to work, it's tough to get started in a good position.

It's really tough. But I'll tell you, as soon as you put the letters CFP after your name on your LinkedIn profile, it's like your phone doesn't stop ringing, and you'll start to get at least one call a month-- excuse me, one call a week from a recruiter. Your email fills up with options, with your LinkedIn inbox.

I can hardly ever go in there anymore because it's so scary, and I just kind of ignore the whole thing and I pretend that the inbox doesn't exist. And everybody is out to get you. Now, this is--it gets you in a good way. They want--you're about to be recruited, and it becomes exhausting to deal with the recruiting calls.

Now, I think they're valuable. I think they're incredibly valuable as far as the potential of working with a recruiter. But a simple thing I would say is be recruitable. Be the kind of person that the recruiters are looking for, and then when the timing is right and the opportunity is right, they'll help you out.

I had a rule. I tried to take--I didn't-- I never take LinkedIn things because that requires too much effort for me, but I took all the phone calls because you never know. So get yourself into a position where you're recruitable, and then take the recruiting calls. You never know what kind of deal you might be offered.

Just tell the recruiter-- I've had a couple of recruiters as clients. It's a tough business, but it's also a very rewarding business. Just be straight with the recruiter. Tell them what you want. A lot of times what you can do, if you have a recruiter who doesn't have the right opportunity, just tell the recruiter, "Here's what I'm interested in.

"Here are the parameters that I would be willing to accept." And that recruiter, when they come up with another opportunity, will turn around and share that opportunity with you. It's tough to be a matchmaker in the recruiting business, and so they want to have files of people that need workers, and they want to have files of workers depending on what they need, and that's where the best choices are.

So be recruitable. Establish yourself as a leader in your industry so the opportunities come to you. Another example would be be an entrepreneur. An entrepreneur's skill sets will often transfer from one business to another. So once you've established yourself in one business and you know how to do that, then there can easily be a transition to another business.

Next, look for industries where competition is low. For the life of me, I can hardly figure out if anybody wants to be an attorney or a doctor. And there's others too, but why does anyone want to be an attorney or a doctor? Because the competition for those scenarios is so incredibly high that you have no chance of getting in unless you are an extremely bright, dedicated, focused person.

And then as an extremely bright, focused, dedicated person, you're going to face a lifetime of competition for extremely bright, motivated, focused people. Why don't you just turn and go where competition is low? As an example, years ago I read about -- I keep these lists of jobs, and there are a couple of the ones that come to me.

Years ago when I read Tom Stanley's books on millionaires, I read all his books. I read Millionaire Next Door, and then I went and read his Marketing to Millionaires and things like that. One of the things that he pointed out to me in those books -- the Millionaire Mind, I think, was another one -- is he talked about how many low-class, so-called low-class, industrial jobs have millionaires that are running them.

Take somebody who would be the average graduate from a high-end medical school and put them into an industry that is probably not known for very smart, focused, intense people. Rather, it's more known for people who are just simply doing the next thing and working and looking to make another buck.

And, man, the success potential is massive compared to competing in this highly competitive field. I read in his books years ago about junkyard owners, and I've proved it here in my town. I started trying to figure out a way to network in with junkyard owners. I started asking the incomes, "You know what?

The average well-established scrap dealer or junkyard owner in your town makes over a million bucks a year, and you'd never know it." Now, that might be an industry that's saturated with competition, but what's another industry that you can look at where your competitive environment is not very professional, where your competitive environment is low?

Another one, an example, years ago, I called on an executive in Wayne Huizenga's operation down in Fort Lauderdale, and this person had been with Wayne Huizenga as the guy. He was most famous for, I think, waste management and Blockbuster, a billionaire down here in South Florida, well-known, owns the, what are they called now, the Miami Dolphins or Miami Marlins.

Anyway, big shot down here in South Florida, and I was just interested that one of the foundational companies that he grew and built was waste management. Blue-collar industry, grew this company, had a family background in it, and built it and made a lot of money on it. Another one that I've always had on my radar screen was daycare centers.

Years ago, I read a manual for how to start and build daycare centers, and one of the major points of the manual was that there's little need for, there's not a lot of competition in that field. A lot of the organizations were small, local, a lot of them were run by ladies who weren't focused on it as a massive business, but were rather focused on it as a sideline way to make some income.

That's the type of scenario where you can bring some hardcore entrepreneurial talent and focus to that industry and have some massive growth. I would always rather be a junkyard dealer than an attorney myself, at least if that were my plan to get rich. If I'm doing it for other reasons, fine, but if it's my plan for getting rich, then look for a junkyard and run a junkyard business.

Don't go be an attorney. Look finally on this section here of big jump increases, look for exponential growth and leverage opportunities. Usually this is going to be found in leveraging other people's work. If you are making widgets, you might be able to get better at your widget making over time, but it's probably going to be a linear growth, and if it is a geometric growth, over time it's going to slow because there's going to be some limit somewhere on your ability to make widgets.

But if you can build the widget making machine, and then you can make more machines so that widgets are made all night while you sleep, or if you can build the organization that hires people to make the widgets, now you have the exponential growth and leverage opportunities. That's where the serious growth is.

Go back to my income. Let's say that you were doing something like following the 1,000% formula that I've talked about in past shows, which is going to play a role in actually tomorrow's interview. Let's go back to my starting income, and let's just say this person is making $50,000 per year over the course of a 40-year career, and they go from 3% annual increases, and remember that's $3.9 million, to 20, let's go with 25% annual increases because they can apply it to a business.

You know what that number comes out to be at a lifetime earnings of 70? It goes from $3.9 million to $1.8 billion, billion with a B, billion. You say, "That's impossible." Is it? Aren't there people who have started earning $50,000 a year at their first job and who've earned over $2 billion during the course of their working lifetime?

There's not many, but there are some. How did they do it? Leverage, business leverage. And that leverage can be found in, you know, the big, just can be found in leveraging other people and building large businesses. It can be found in finding a unique market opportunity and capitalizing on it.

There's lots of ways to do it. So look for those not only big jump increases, but those shoot for the moon increases. Look for the big ones with big leverage. Look for the, even the risky long shot opportunities. Some of those risky long shots pay off. Some of them don't.

Be careful, but some of them do. And remember that 1,000% formula. If you're interested in that, you can find that. It was one of the early episodes of the show, episode 10. RadicalPersonalFinance.com/10/10. You'll find that one where I go over Brian Tracy's 1,000% formula that just totally impacted me when I first heard it when I was in high school or college.

I can't remember. It made a massive difference in my life. The idea is that you can increase your income by 1,000% over 10 years simply by increasing your effectiveness and productivity by 1/10 of 1% every day. That's a formula that works. I've actually got an interesting example coming on tomorrow's show.

I'm going to share with you an interview with Michael Kitsis. He is a financial planner extraordinaire. One thing you'll hear in that interview, listen for it, I actually trapped him into answering the 1,000% question. In that interview, I talked to him about his history with conferences, and he kind of bumbled his way into it, as you'll hear in the interview.

Then I asked him how much he reads, how much he writes, how much time he spent doing these things. Then I trapped him and I asked him about his 1,000% formula. I asked him if he was making 10 times more income than he was making 10 years previously. Tune in tomorrow to hear the answer.

I think you'll find it interesting. Look for ways to increase your annual income. That's step two. Step three, finally here, the more years of income, the better. Now, this might have impact on either end of your career and probably on both. If you can start earlier, that's better. The question, can you start earlier?

If it's too late for you to start "earlier," can you help other people start earlier? I have this dream, as you know from listening to the show, why on earth do people wait until the age of 30 to get their careers established? Why don't young men and women have their careers established at 15?

Why are people only earning $100,000 through entrepreneurship at the age of 30? Why aren't they earning $100,000 through entrepreneurship at the age of 15? If it takes 10 years to learn a business and they start at 12 or 10, then why can't they be learned and be the leaders in their business by 20 or 22?

Why not? Some businesses you can't, some businesses you can. But why not start earlier? So can you help your kids get started earning as quickly as possible? Why is 22 the magic age at which you graduate from college? Or 23? Why not 18? Go back and look, I challenge you, go back and look at the academic achievements of past generations.

If you heard that your great-great-grandmother graduated only from the sixth grade, go back and research what the sixth grade exam was that your great-great-grandmother graduated with, or the eighth grade exam that your great-great-whichever, however many greats your grandmother, your ancestors, graduated with in eighth grade. And I'll tell you, I'm not sure I could have actually passed that exam at the age of 18.

Go and look at what the age-banded and age-based achievements are today and compare them to the past. Now, certainly many students can succeed in today's environment. Many students can start at 18 or start at 22 and do extremely well. But if you care about the ones that you're in contact with, that you're helping and that you're mentoring, do you think you might owe it to them to challenge them a little bit?

I wish I'd been challenged a little bit more. I wish I'd been challenged to, by the time I was 18, to have my college degree done. And if nothing else, and I could start at 18 or 20, let's say I finish my college degree by 18, then I went on a walkabout around the world for two years, and then I came back and started at 20, even that would make a difference in my career.

So can you get started now without waiting for formal credentials, and can you help your kids or other young men and women that you care about get started with their earning and their learning as quickly as possible? On the flip side, you can work longer. And this is a powerful thing that most people don't realize.

And in fact, this is the number one way that most people will, depending on the United States of America and probably the world, to be able to sustain their lifestyles. They're simply going to have to work longer. It is not possible for the average person to retire in comfort at the age of 65.

So what you see, working longer. The AARP in the United States has this whole program of redefining your life's goals and redefining your life's vision at the age of 65. So I say if that's the case, then why don't we just plan for that? Remember, back to my example here, let's assume that someone is just earning this $50,000 and they're making 3% annual increases.

The difference between working from 30 to 70, that's $3.9 million of income, and 30 to 80, that's $5.8 million of income. It's a big difference. That's an additional almost $2 million of income that you can earn from 70 to 80. And the reason for that is because those are the years at which you're at the highest paid, maybe, because there are some substantial problems with this model.

And you need to be thinking about them in advance if this is what you're going to do. Most people aren't at the highest years of their earnings from 70 to 80. Sadly, many people are in very low earnings at that period. You've got to make sure that if you're going to plan on this or if you're going to consider this, you need to be looking for work that you'll be able to do for longer.

This can be a real problem for people like laborers or any job where physical strength is a factor. I've worked in a fair number of construction environments, and you very rarely see an 80-year-old construction worker. There's a reason for that. If you're in the construction trade, you better be working.

If you're going to plan to be working longer than, say, 50 to 60, you either better, A, be in incredible health, B, be running the company, or C, be focusing on finding a new opportunity. So make sure you're doing work that you can do for longer. This can also be a problem if your industry or your company has some kind of mandatory retirement program.

I've had a couple people close to me face this. Their company has a mandatory retirement program at 65, and they're forced out, like it or not. It can be a major problem because at many times, men and women who are 65 years old are in the prime of their life.

They've accumulated the knowledge, the wisdom, the experience, the education that they need to be extremely successful. Physically, they're doing great. They've got a broad network. They're respected and admired as a leader in their industry. If at that point in time, you face mandatory retirement, that can be a real problem.

So make sure that's not staring you down. Look for work that you'll want to do for longer. If you hate your life and hate your job, you're not going to want to do it an instant longer than you have to. You're really not. So challenge. Can you find work that integrates with your lifestyle, that doesn't compete with your lifestyle?

Can you find work that gives you satisfaction and enjoyment for its own sake, a sense of purpose, a sense of mission, and still allows you to do well by doing good? Make sure that you're thinking about that. Because if you hate your job, hate your business, hate your life, you're not going to want to do it.

You can't reap that extra $2 million of earnings. But if you love it, it can make a massive difference in your wealth. That can be set out much earlier than age of 70. Look for work where your age and your wisdom will be an advantage to you rather than a disadvantage.

Ageism is a real thing. It's severe. I had the privilege of working with some clients in their mid-60s, and I've learned just how severe it can be. All the laws in the world don't do any good. Maybe they do some good. All the laws in the world do little good.

I'll hedge my statement a little bit. It doesn't matter if there's a law against ageism. If somebody doesn't want to hire you, there's always a way around the law. Now the question is, can you find a scenario where your age is a real benefit for you? This is one of the things that I loved about the field of financial advice.

The older you get, as long as you can satisfy your retirement succession plan, where if you die, your clients have the confidence that there's a whole team of younger advisors that they know and they like, the older you get, the more benefit you have, that you have more white hairs and you can give more wise counsel.

Now that's probably not always true, but it certainly can be true. So think about that. If you face the potential for ageism in your industry, you need to be planning ahead to make sure that you overcome that. Look for work where your lifetime knowledge and experience will accumulate and deliver great dividends of value in your older years.

Probably the most famous example of this in our society is Warren Buffett. It's his lifetime knowledge and investment experience give him a real edge over people. As long as he surrounds himself with a team of young, current people, he can bring that wisdom and they can bring the perspective of a different generation and they can make a powerful team.

And his grandfatherly image is a real benefit to him in his marketing efforts as compared to somebody who's just that young, brash, unproven person. When you get into the depths of the financial crisis and good old Grandfather Warren walks in with his checkbook out ready to write checks, people are glad that he's there and they're glad that he's got some white hair.

When good old Grandfather Warren writes something in his letter, everyone takes it as their gospel. That's different than when someone who's just equally smart, it doesn't have the experience and the platform that he's built. Some 30-year-old hot shot investment person writes it, doesn't have nearly the same weight that it does for him.

So plan ahead if you're going to work longer. Plan ahead because it can be a real benefit for you. Those are the primary thoughts that I wanted to share with you. So your homework, here would be what I would say is your homework. A couple of things. Number one, what is the expected value of your lifetime's worth of income?

Simple to do this. Look at how old you are, look at how long you expect to work, and then calculate in how much you expect your income to increase each year. Again, you can use a financial calculator for this, you can calculate it by hand, you can use a spreadsheet.

The spreadsheet is the simplest way. And then look at that number and say, "Is it enough?" Are you encouraged by that number? Let's say that you're $200,000 upside down, you have a negative net worth, but you have millions of dollars of expected income. Be encouraged by that and recognize that all I've got to do is throughout the course of my lifetime, make some simple steps and some simple changes, and I'll be able to apply this income to this scenario and it'll change over the coming decades.

Or if it's not encouraging, then figure out, "What do I need to change in this situation? What are the variables that are going to make the difference for me? Maybe I'm making $30,000 a year." Well, guess what? You can make more. Might require some planning, might require some job hunting, might require some all kinds of things.

You need to learn a whole new skill set, find a whole new industry, get established to move to another place. But you can go from $30,000 to $60,000 in reasonable time. Maybe your problem is you're just stuck in a place where there's not really much increase. Speaking with somebody that's recently, loves teaching, is a teacher in a government school, loves teaching.

There is zero chance whatsoever that he can make enough money to support his family going forward, simply because of the mess that it is, and he's riding on the wall. In that situation, he's got to get out of that profession. He's got to have the ability to keep current in a world where demand is going down and wages are stagnant.

So what variables should you focus on? What's going to make the biggest difference for you? Figure that out, write it down, and you'll be able to get started with your own unique plan. I hope this has been useful for you. Did my best. Income makes a big difference. Income is the biggest driver in your financial plan, and I hope these thoughts are helpful for you.

Check back tomorrow for the Michael Kitsis interview. I think you'll really enjoy that. And listen, now that I'm giving you a heads up, listen in advance for his journey to increasing his income, and listen for the application of that 1,000% formula. What you might want to do is go back and listen to episode 10 before actually listening to that interview tomorrow so you're refreshed on the details of that 1,000% formula.

You can find that at radicalpersonalfinance.com/10. If you need help actually sitting down and calculating the spreadsheet, remember that if you are a patron of the show, there's a simple video that I've set up for you, and you'll find it on the patron feed. You can find that at radicalpersonalfinance.com/patron.

Just go right there and click on "Activity," and you'll see the video set up for you. That's a screen capture. It's me showing you how to actually set this up for yourself using a simple, free Google spreadsheet. You can do this in Excel. It's very simple and straightforward, but that should help you to actually be able to see the lifetime value of it.

If you'd like to become a patron, follow that same link, radicalpersonalfinance.com/patron, and you'll find all the extra goodies that I've been setting up at different levels. For example, if you're in the $10 a month amount and up, I'll be scheduling our monthly Google Hangout before the end of the month.

Those of you who've gotten in now, you're getting an awesome deal because you're getting a lot of access to me with small numbers of people. Currently in the future, I expect those numbers to go up, but you're going to have tons of time to ask me anything you want, and I'll give you any answers that I can do.

If you're an irregular, make sure you check the Facebook page for that bonus episode that I posted today with the details of why I actually went to Dallas. And then for those of you, John, my single, at the moment, $200 and up supporter, I'll be getting you information on the details of our mastermind call this week, and John's got a great deal.

It's just him and me, and he gets a ton of time. If you'd like to join him, I've got room for four total people at the $200 and up level, so I've room for three more people at this level, and you'll be able to have access to me. I'll be catching up on all your private questions in the Facebook group today.

That's it for today's show. Thank you so much for listening. Check back tomorrow for the Michael Kitsis interview, and thank you for being here. 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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