If you're new to the Radical Personal Finance podcast, only been listening for a couple of weeks, you may be under the impression that this is an interview show. Well, today, I'm pleased to disabuse you of that notion because Friday Q&A is back. Welcome to the Radical Personal Finance podcast.

My name is Joshua Sheets and I'm your host. Thank you so much for being with me. I'm back. I'm back. I'm back. I'm back. Sitting in front of a microphone, kind of off my game a little bit. Doesn't feel so smooth, but man, is it good to be back.

Been too long. Too many interviews. Let's get to some Q&A. Let's get back to the show the way I've envisioned it. And I thank you for your patience. September was busy and challenging and stretching in many, many ways. One of the more challenging months of my life, but we're making progress.

Got back safely from FinCon up in Charlotte and really been able to make a lot of progress around the house last couple of weeks. My little girl is doing a lot better, so that really makes a huge difference. I spend all day holding a crying little baby, and so we're thankful that she's doing better and things are looking up.

Making a lot of progress on the show. Lots of changes around here. As you heard yesterday, we launched our first sponsor, YNAB. We're going to be launching a total of 10 sponsors over this month, and I'll talk a little bit about that, yes, in one of the questions today.

I'll mention a few more details on the sponsorship program. But I want to thank you all for your patience over the last month. I have been making progress all around to be able to free things up, free up my schedule to really improve Radical Personal Finance and really deepen the content, keep it more varied and more interesting, and also flesh out some of the things that need to really be developed.

Some of the courses I'm working on, I'm working on writing the book, getting that done here. So, lots of work all around, but today I am thrilled to get back to the podcast. I'm going to clear out the voicemail box today, and I've got a bunch of questions lined up.

I think it looks like about six. These are going to be fairly simple, fairly light questions. No heavy financial planning lifting today. I wasn't able to get into that. I've got email boxes full of questions of your heavy financial questions, and maybe next week we'll try to dig into some of the real meat there.

But you've got to ease me back in slowly, little by little. So today I'm going to do some fairly light questions. I also intend to be moving pretty fast today, and long-time listeners are rolling their eyes, but I really do mean it. I plan to move pretty fast. So let's see how we go.

First question comes from Richard. Hi Josh, this is Richard. I really appreciate your podcast and I'm learning a lot from listening to it. My wife and I have local bank accounts that we pay our bills out of. We're thinking of setting up a joint account with an online bank that we pay all our bills out of, and I'm particularly interested if you have any recommendations in this area.

I'm looking for a bank that might have features that allow rainy day funds to be set up so that a certain amount of money each month is set into a rainy day fund, or a refrigerator fund, or a new car fund, or a vacation fund, or a gift fund, or any other little accounts that we might set up to automatically save more money for future big expenses.

Again, appreciate your show and I'm curious to know if you have any recommendations. Thanks. Richard, the name you're looking for is Capital1360.com. To the best of my knowledge, they are the powerhouse in this area. Capital1360.com. This used to be a pretty revolutionary concept, and I used to bank with an online bank called ING Direct.

And ING Direct, they had a cute little orange branding and a cute little orange ball and all that. And they really pioneered this space by my memory. I'm sure there are competitors that were also involved, but they were the ones that seemed to be everywhere. And they really did a good job of establishing the online bank account with as many accounts as you want.

So you could have 20, I think 25 accounts if memory serves correctly. And they really did a good job. And I used to bank with ING Direct. I banked with them. My wife banked with them. After we were married, I think we – yeah. After we were married, we still banked with them.

But then they were acquired by Capital One, bought out. They changed their branding from ING Direct to Capital 1360. And so they're still a very large bank. They still do lots of business. All of those same features apply where you can set up as many accounts. There's no cost to them as possible.

I don't bank with them anymore because I – and I closed my accounts after Capital One bought them because I didn't want to do business with Capital One. Generally, I'm not a fan of any of the large financial services companies in the United States. I can't stand any of the banks.

And so I do my best not to work with them as much as I can avoid it. I don't like the stranglehold that they have over the political economy. I don't like how they basically control the government. I don't like a lot of their business practices. But that's just my own personal thing.

That doesn't need to affect you. They do a perfectly fine job as far as customer service. I've never heard any major complaints. So Capital1360.com is the website that you want to do and check them out. I'm sure there are competitors. Just do an internet search and see what other competitors are.

But they are definitely the big one in that space. If that works for you, setting up all the different accounts and automating it, that can work well. I have done that. I do think – and in fact, I thought this was a good segue into sponsor of the day number one, which is YNAB, who we introduced yesterday.

I do think that a system of managing one account and having something that's not separate bank accounts can be really, really good. So at this point, I used to do the – personally, I used to do the many, many accounts type of system. Now, I'm down to just two accounts, savings account and a checking account.

And with YNAB, it makes it easy. I used to keep a spreadsheet as well. You can just keep a spreadsheet and say, "OK, if I've got – let's say I've got $5,000 in this account. Of the $5,000, how is it allocated?" Now that I'm using YNAB, I'm able to do the same thing.

You can just simply budget the money into the account. So if you're saving for a new refrigerator, you can save for that consistently over time and you can set that aside. Now you know there's where the money is. And what the reason – the danger of just doing multiple accounts is that you might not have any kind of system of accounting.

And the challenge is – from doing multiple accounts is doing bookkeeping. And so if it's just all for savings, then that works fine. But what I've done and what I've seen people do is using the different accounts to save for things like car insurance. Well, car insurance is not a big picture – excuse me, a big purchase.

It's a budgeted item. And yes, it's simple enough to have a different account and put the money in every month so that you have it there after six months. But what happens is it's much harder to have any kind of system of reports where basically you're just looking at that account and saying, "Is there money there?" Because when you get into tracking six different bank accounts or eight different bank accounts, it's going to make it very challenging to manage all those transactions.

And what happens if you're using Quicken or using a spreadsheet, you basically always are having balance transfers everywhere. So I don't think it's necessarily an optimal system. Although if it works for you, go with it. I used to do it and who knows? Maybe I'll do it again in five years and I'll switch everything up.

But that's what I don't like about that approach is it's hard to track. So check out – if you haven't tried YNAB, you heard the interview yesterday. And again, they're sponsored the day, number one today. It's a budgeting software and it is absolutely the best budgeting software that I have ever found.

And I think that each and every one – it's – at this point in time, every financial client that I work with from now going forward, the very first step is going to be budgeting because it allows you to proactively set that money aside and it simply solves your issue without having to have multiple accounts.

So get a free copy, RadicalPersonalFinance.com/YNAB. YNAB stands for You Need a Budget. So it's Y-N-A-B. RadicalPersonalFinance.com/YNAB. You can download it, try it free for 30 days and if you like it, buy it. Next question comes from Rick. Kick it off, Rick. Hi, Joshua. This is Rick in California. In episode 204, you asked Todd if he knew of any insurance companies that do not pay a commission and there are at least two that I'm aware of.

One is Ameritask Direct has a no-load life insurance as well as annuity product. And then also Tia Kref who I would say is probably the leader in that particular space also has a no-load life insurance solution. And I believe there's at least one or two others as well. You're right.

There are definitely a few and far between. But I thought I'd pass that along. Take care. Rick, thanks for the tip. Tia Kref definitely is a unique scenario. They're a powerhouse and they have great life insurance products and they do a very good job. I guess I was aware of Tia Kref.

I wasn't aware of Ameritask Direct. So I went and looked up their website. It's AmeritaskDirect.com if anyone else is interested. And yeah, their advertisement right here at the top of the page is Ameritask Advisor Services, the no-load insurance pioneer. So they're out there on the lonely vanguard of offering no-commission insurance products.

And I think they're a good option. Again, I don't know anything about them. I'm only concerned with a company like this. I've never heard of them. And so the challenge is even for an advisor is you've got to make sure that your client is going to be served by the best product.

And with insurance, there are very much economies of scale. There's very much financial strength. There's a place of financial strength that really matters. And so this would be my biggest concern. I don't believe personally – maybe I'll change my mind in the future – but I don't believe that the payment of a commission on a life insurance policy is the indicator of whether or not that policy was well-built.

I think there's a lot more that matters in addition to the commission. So as an example, I just clicked over here to the ratings. And so Meritas, they advertise two ratings, one with AM Best for an A rating and then their Standard & Poor's rating with an A+ rating.

Now the first concern is they don't subscribe to the other two of the ratings agencies, which are Fitch and Moody's. And there's nothing wrong with an A rating. But if you were to compare that, an A rating with AM Best is the third highest of the best ratings and an A+ with Standard & Poor's is the fifth highest of S&P's ratings.

So compare that to some of the AAA-rated companies that are just AAA-rated across the board, Northwestern Mutual, New York Life, MassMutual. They probably, depending on what year, sometimes there's one of the four or two of the four for which they're not AAA across the board, the very highest with those three companies.

But there's a very large difference in ratings. There's a good difference there in ratings. And the bigger ones, there's a massive difference in terms of the economy, the scale of the company. So if you were to compare the balance sheet of any of those companies to the balance sheet of Meritas as a life insurance company or if you were to compare the balance sheet of Meritas to a company like MetLife or Prudential, some of just these huge, huge companies, there's a massive difference of scale.

And so whatever the insurance product is that you're buying, you've got to make sure that it's okay and that you're not losing something significant by playing with the small dog in the yard. A 10-year, 20-year term policy, it's no big deal. Anything else other than that, it might or might not be a big deal.

So I don't buy the idea that commissions are the only thing, but I thank you for making us aware of it. So I appreciate you guys helping me to learn. Next question, Julian. Hey, Josh. This is Julian. Cheers from Chicago. I've been a big fan of the show since day one and a Patreon for as long as that's been possible.

I really love the show and I really appreciate everything you do for the community and to advance the mission. Had a question about certifications. You don't have any certifications from the IMCA, either the CEMA certification or the CPWA certification. Definitely avoiding those certifications or never got around to it.

What are your thoughts? Money Julian, didn't want to pay for them. It's as simple as that. So all of the financial planning designations and certifications that I've accumulated through the years with the exception of the CFP designation, which is administered by the CFP board, all of them come from a college called the American College.

The American College is a college that is specifically exclusively focused on financial services education. But you need to understand the background of that college and the background of where their educational programs came from. Originally, I could be wrong on this, but I'm pretty confident about this. Originally, the American College started around a designation called the CLU, the Chartered Life Underwriter.

That was where they made their mark. Solomon Huebner was one of the major people who was involved in building out the academic framework around insurance. In the early days of the life insurance industry, there wasn't a lot of great professional training. As the life insurance industry developed, as the products developed, then there was a need for more training.

Solomon Huebner was one of the heroes of that business and they got involved in the educational business. The American College traditionally was built on that CLU designation and that was a designation exclusively for insurance agents. Now they went on and they developed other designations. They actually developed a more comprehensive financial planning designation called the CHFC, the Chartered Financial Consultant.

But over time, the insurance companies grew to have a very close relationship with the American College and to this day, that still exists. If you were to look, for example, at the American College website, you'll see that all of their different schools within the college are sponsored by insurance companies.

You've got the New York Life blah, blah, blah, the Met Life blah, blah, blah, the Northwestern Mutual blah, blah, blah, the different school that's sponsored by an insurance company. There's a very tight relationship there between the insurance companies and the American College. Merrill Lynch doesn't have a school named after them.

They don't sponsor a center at the American College. Morgan Stanley doesn't sponsor a center at the American College. So the wealth management folks have other places of learning and part of that has been the CFP board but then other areas of specialty have emerged. Well, because I was working for Northwestern Mutual, Northwestern Mutual had a relationship with the American College where they would actually – as part of my contract, they would pay 100% of the cost of any credentials or designations that I chose to pursue through the American College and also with the CFP board.

And so I just simply believed in maximizing my contract. Don't walk away from free money. Why walk away from – yeah, why walk away from free money? And so my responsibility was to pass the exams but I just lined them up and took them down in the most efficient and fastest way I could.

But I did it where – in the place where Northwestern Mutual was paying the bill. And if I wanted to go and pursue a SEMA designation or CPWA, the wealth advisor, private wealth advisor designation, then that comes out of my pocket and I would have to pay for it.

So I didn't see any reason to go and buy that stuff when I could – number one, I could get plenty of letters without paying for money and then I could just go get the education from reading the books and I didn't feel the need for – I mean I already have too many letters.

I don't need any more of that. I can just read the books and I don't need to prove anything by having more letters. I don't need the CPWA to make people think I'm smart. They think I'm smart just with everything that's already there. So that was my efficient way of skinning the cat.

But what I would say for you, number one, is are you paying for it or is somebody else? If you're paying for it, then you need to make sure that you're getting your bang for the buck. And so do you need it? Is it going to be helpful? Consumers – here's an example.

Consumers don't have a clue what any of those designations mean. The only financial designation that I think has any clout with consumers is the CFP. CFP aggressively markets it and they've done a good job of raising their – raising the knowledge and benefit of it. So if you're going to pursue it, there's got to be a reason for it.

Do you need the knowledge and is that an efficient way of capturing the knowledge? It might be. And then also if so, then choose the designation that's going to give you the most specific knowledge that's going to be helpful to you. And then make sure you're choosing the designation that's going to be helpful in your field.

So that answer should emerge fairly naturally. But simple answer was I never bought any of that stuff. It was all part of the contract and the contract covers stuff from the American College. It didn't cover stuff – it didn't cover the other designations. So cool question. Next question comes from Ty.

How's it going, Joshua? My name is Ty Walters and I have a blog at SustainableLifeFitness.com. I'm also a fan of the Survival Podcast with Jack Spierko. So kudos. I'm working towards financial independence and I believe that for me and my business model that podcasting is one of the best avenues to pursue.

I also believe in the quantity model of podcasting of producing a near daily show to finance my efforts. You've mentioned in previous episodes that although you receive above average participation in your Patreon program that you still remain doubtful as to the effectiveness to finance your efforts. In episode 166, you talked about the advantages of hosting a daily show in regards to the CPM model or cost per advertisers that will pay you for 1,000 listeners.

Based on your current statistics, you estimated that if you produced four shows a month, you could produce roughly $1,000 per month of revenue. But if you produced 20 shows per month that you could generate over $5,000 per month which is substantially different. My question is this, taking your listener feedback and earning potential into account, if you were to start from scratch, would you still produce a daily show?

Thanks Joshua and I look forward to your thoughts. Ty, that's a hard question to answer because with my business plan, if I were going to start from scratch, yes, I would still produce a daily show. But remember that the money aspect as far as advertisers is only one component of the show.

Rather, I was focused aggressively on trying to say how can I create content so that people will be aware of me because I didn't have any other platform to stand on. I didn't have any name recognition. I didn't have anything out there. So my strategy, if you go back and you obviously listen to that show, but my strategy was to say there's a need here that's not being fed with useful, in-depth, comprehensive financial content.

I see that that's not being met and so I think that I'm uniquely qualified to meet that need and I need to get as much of it out there as quickly as possible in order to hit that need. And so I also recognize that if the more breadth, the more different topics I could create shows on, that would allow me to build a broader net and so meeting that need but also kind of bringing more people into the fold.

And so recognize that it wasn't a matter of the daily aspect of it. It was a matter of me recognizing the broad, just the need that was there. And I think if you look at any podcast that's been effective in its growth, it's not so much the format. It's not daily or not daily.

It's that there's a hunger for interesting, unique information. So the good example would be, you mentioned Jack Spirico and his show, The Survival Podcast. What makes his show unique is not the daily nature of it. I think daily might contribute to it and he's in a good habit with his show creation but it's not the fact that he does a show every day.

It's the fact that he has an ability to think about a topic, survivalism, in a much more interesting way than most people. Most people that talk about survivalism, basically they're saying there's going to be an EMP flare and it's going to be the end of the world as we know it.

We got to head for the hills and so what we need to do is every day we need to focus on packing a bug out bag. And so they get obsessed with the nitty gritty of a bug out bag. Well guess what? There's a ton of mess out there that are on that.

It doesn't matter whether they're daily or not. At some point in time you've heard enough about the newest lightweight tent that you can use to pack up in your bag. Now I enjoy going on YouTube and watching their YouTube channels from time to time but you can't take that kind of thing every day and you certainly can't build it for an hour a day.

But what Jack does on his show is very different. He doesn't talk about any of that standard stuff. He talks about interesting concepts. He talks about lifestyle. He talks about things that are integrated. And so he – yeah, survivalism is kind of the hook that gets a certain type of person in.

But once they're there, they stick around because the content is so interesting and varied and useful. And that's what I do with Radical Personal Finance as well. I talk about finance but I try to think of ways that are really practical to integrate it and make it applicable to situations.

And so I think that's one of the major things as to why the show has grown effectively. So my challenge to you would not be to say, "Should I record a show every day or should I record a show once a week?" My challenge to you would be to say, "Do you have the breadth of information or the breadth of ideas that you could create that much content and effectively serve your audience?" It's okay if you don't.

There are many excellent shows that are going to be very, very focused on niche topics. I listen to some podcasts that are very, very focused on niche topics. I'm intentionally pursuing a different strategy than most people and I don't recommend my strategy. It's just what I think fits my abilities and what I think fits the market need that's out there.

But if I sign up for – let me give you an example. So I've been listening to a public speaking podcast recently. I'm working hard to build the back end of my business. One of those components is public speaking. I don't want to listen to this public – I'm tuned into this podcast because I care about that one specific subject, public speaking.

And so the type of content that I'm getting there, I would be really annoyed with that show if they went into all these different areas. That would not fit that need. So that podcast creator doesn't need to create a daily show. They just need to create – they do a weekly show, which is fine, or it can even be a biweekly show, but make it the best information on public speaking and keep it laser focused on public speaking.

Let me give you an example. Compare my show to a show like David Stein's, Money for the Rest of Us. I was just talking with David when we were up at FinCon. We were talking about him. His show is doing awesome. He is consistently in the top 10 in iTunes.

He is consistently doing his show. Audience size is about triple the size of this audience right now. He is just doing an incredible job, but he's laser focused on his topics. He is honed in and he produces more – I think he does more than – I can't remember what his publishing schedule is, but he produces a number of shows, but he's laser focused on one specific topic and he's very effective at it and it works really, really well.

I would be bored stiff trying to create that kind of show. I would be driven mad by trying to do that. That's not me. I don't want to actually do that. That's why I only do technical financial planning on this show once a week. I don't want to talk about it more than that.

I get really bored. I like all the rest of this stuff that I talk about. So a lot of people will skip my show and go to David's show. If they just want laser focused investment advice, they should go listen to David's show. The people that are going to stick around in my show are going to be interested in more of these different topics.

So look at your business and ask yourself, "What do you actually want to create and why are you actually creating it?" That would be the key. Final comment for you, podcasting as a business is a terrible business. Podcasting as a platform to support your business, I am convinced can be an amazing business.

So that is the model that I am pursuing. Let me just amplify so that you know. So Patreon ads, so recognize this. The median podcast downloads, 50% of podcasts that are out there have fewer than 160 downloads per episode. 50% of podcasts that exist have fewer than 160 downloads per episode.

The top 10% of podcasts have 4,412 downloads per episode. Top 5% is 11,565 downloads per episode. Top 1% is 51,282 downloads per episode. So you've got to get up to 5,000 downloads per episode to be in the top 9.2% of all podcast listenership audiences. That's basically where radical personal finance is at this point in time.

So if you look at that, recognize the fact that – run the numbers on that from an advertising perspective on everything that I told you in that other episode. Look at the numbers of the Patreon supporters. I'm so incredibly grateful to the Patreon supporters of this show because without them, everything has been built on that.

I've done that intentionally to align my interests in the best direction. But just recognize the fact that you've got to be in the top 10% and even there, you really can't make a living on podcasting. Now if you get in the top 1%, 50,000 downloads per episode, you're in one of these comedy podcasts or things like that, yes, you can make a living on ads.

So my challenge to you with just what I perceive from taking a quick look at your site, build your business, the backend business, and use podcasting as a gateway to that business rather than trying to build your business on podcasting. I think it's a much safer bet. Just the other thing finally I would say, recognize that to do a daily show is an absolutely exhausting amount of work.

It's absolutely exhausting. As I record these words right now, it is 1.33 a.m. on – this is – well, it's Friday night, Saturday morning now. It's 1.33 a.m. and I'm recording my Friday show. It won't be published till Saturday. It's an exhausting amount of work and I could never have done a daily podcast the way that I did it if I had been working a full-time job.

I did a daily podcast because that was the other thing. As I gave myself one year and I said, "I've got to pour everything on as hard as I can in order to make this work." So hopefully those are just some ideas that are useful. Build your backend business and then use your podcast as leverage as part of your total overall business.

But it's a bad idea, a bad business move to try to build everything on the backs of a podcast. I'm not even – I built it on the back of a podcast but now I'm working on the backend business. I'm working on developing the products and the services and the things that are going to effectively serve my audience with the specific answers that they need.

So Ty, I hope that is useful to you. Two more questions. Before I get to the last two questions though, let me take care of sponsor of the day number two. Sponsor of the day number two today is Audible. If you're not listening to audiobooks, number one, you should be.

If you want to be sold on that, I'll sell you on that in episode 219. Go back and listen to episode 219 of the show which was Hacking Audiobooks and the Audiobook Marketplace. You'll hear all the reasons why I think that you should make regular audiobook listening part of your learning strategy.

But today, I just want to give you two interesting Audible book recommendations that many of you might enjoy. So you all know with my strategy, I like to bring together Audible as my paid audiobook subscriptions with the other audiobook subscription services that I use, Scribd, Hoopla, and Overdrive that are cheaper or free.

Scribd is $9 a month. Hoopla and Overdrive are free. Audible is $15 a month. So why do I pay $15 a month? Well, it's because I get books on Audible that I can't get in those other places for free. So if I can find them on the library for free, I'll do that.

But I can't find a lot of the books that I need and want to read. So lately, I've been reading a lot in the area of monetary history. This is one of the themes I've really been wanting to dig into. I want to talk about money. I want to talk about monetary history.

I want to talk about some of these things from a macroeconomic perspective because there's a lot of stuff out there. But frankly, I often feel a little bit unsure of am I even prepared to talk about that. Do I even know what I'm talking about? And so I've been reading through and I picked out a trilogy and I finished two of them.

But I thought it would be interesting. So here are the two recommendations. The first one is good. The second one is better. But the first one is a book called Coined by Kabir Sehgal. And I actually just saw him speak at FinCon. He was one of the keynote speakers and he wrote this book called Coined.

It goes through the history of money. It's an excellent book. Different and I actually preferred it was a book – is a book called Money, an unauthorized biography by an author named Felix Martin. This book is awesome. If you only read one of them, the third trilogy was William Gravener's book Debt, the First 5,000 Years.

I haven't read that one yet. But this book is awesome. I listened to both of these while I was working on my house. I was painting, getting the house ready to list on the market, doing things like that. I was able to listen to these and I consumed I think nine books that week while I was working on house stuff.

So if you listen to my show while you're out working on a house, good for you and make sure that you house painters and house construction people should be the most – you should be the most knowledgeable and learned people just simply through listening to audio books. So the book that I would recommend for you, listen to a book called Money, an Unauthorized Biography by Felix Martin.

It goes through all the details of how money came to be and most importantly, it goes through how banking systems have grown and been created over time. And it's really, really fascinating because he explains clearly the question that I've had which is, okay, there's different banking systems. There's hard money.

There's soft money. I personally like think, wow, the hard money stuff makes a lot of sense. The reason I started reading these books is because I couldn't argue for the Federal Reserve System. I couldn't argue for the soft money approach. And what – personally, the way I try to approach an argument is I try to say, let me figure out how to argue my opponent's position better and see if it defeats my arguments.

And then if my arguments stand up to it, then it works out. So that was why I bought these books. So check out Audible. If you go to RadicalAudioBooks.com, you can get a free audio book download of your choice if you haven't signed up for a membership before. Sign up for a trial membership.

You can get a free audio book and make it money, an unauthorized biography. All right. Two more questions. Let's get to it. Question here from David. Hey, Joshua. My name is David. I'm a teacher from Chicago. Thank you so much. I've been a long-time listener and this is actually my first time calling.

I have two questions. Next year, I have gained a new position in a very lucrative district and I will be paid considerably more. I have the option of being able to max out my 403(b) for the first time. However, I'm also trying to save for a down payment. So my question is if I'm looking at a horizon of four years to save 20% for my down payment, should I cut that in half and put my priority toward a down payment or should I put my focus on maxing out my 403(b) to take advantage of the long-term compounding?

My second question is even though I'm 31 years old, I am hoping to start my master's degree here in about two years. So my other question is should I open a 509 for myself, therein allowing me to sock some money away and take advantage of my tax leveraging even more?

Any thoughts on that would be much appreciated. Thanks. David, congratulations, dude, on making some money and moving to a much more lucrative district. Good for you. So question number one, should I put money in the 403(b) or should I prioritize saving for the down payment? Here's my answer. The question properly framed is should I invest money for my future or should I save money for my consumption?

Recognize that at its base. The down payment is a consumption item. I'm assuming that you're wanting to buy a house for yourself or to house you and your family. You want to buy and own a house to live in. That's a consumption item. Putting money into the 403(b) assuming that you're investing it into the 403(b) is an investment.

So you're building capital to pay your expenses from. If that's accurate, then I personally would rather prioritize the investment rather than the consumption. If your goal or my goal, I can't remember whether I was talking to you or me, if the goal is to be wealthy, then I want to prioritize the investment and not the consumption.

Run the math and ask yourself what the net effect on your wealth will be of four years of maximized 403(b) contributions versus having money for a down payment. Now what about buying the house? Well, that's the problem is that life's not all about getting as rich as possible. And so if you do want to buy a house, then you're going to have to buy the house at some point.

But fundamentally recognize your question is investment versus consumption. When should you make the consumption decision? I don't know. That's your decision. And if you know that you're going to consume the money, then yes, you've got to plan for it. So two years, four years, I don't have any way to answer that question.

I will tell you that I learned a number of lessons in purchasing my house and I'm hoping that it gets sold. It's currently under contract as of yesterday. It's under contract and theoretically this closing is scheduled for the end of the month. We'll see if the deal holds up.

So far everything looks good. And then after the house sells, I will come back and I'll share a report. But a little teaser here. When I bought my house, I put 20% down. And up until actually doing that, I would always have encouraged people to put 20% down. And this is the standard financial advice.

It's advice I have given many times. It's advice I would have given and it's advice that I took myself. The idea behind the 20% down payment is a couple of things. Number one, it indicates that having a 20% down payment indicates that you've saved some money over time. So you're not buying at the limit of your ability.

You're not strapped for cash and just clawing and scraping to get a house. No, you have some cash and you've been planning for something for a while. So that's good. Number two, it gets you the most favorable financing rates. It gets you conventional mortgage rates. It's going to be very low.

It allows you – the big one is it allows you to avoid PMI, private mortgage insurance. So that saves you money and that can be a substantial cost depending on the actual numbers involved. So it can be a good decision. And that was always the advice I gave. Put 20% down.

My wife and I, we worked hard to put 20% down on our house. Here's what I learned through hard experience. Having a house 20% paid off is absolutely useless to me for my lifestyle. What I mean is that having a house that's 100% paid off, free and clear, that is incredibly useful to me because if I own my house and I don't owe any mortgage payments, that puts a dramatic decrease in my need for cash flow.

But having the house 20% paid off, what does it matter? I still have a mortgage payment. And that was the challenge that I was personally facing a year ago realizing this in the hard one way is, "Wait a second. This sucks. I've got to make a mortgage payment every month and I don't have access to this cash that's in my house and I didn't want to go and take out a home equity line of credit." So I took all my money and I took it out of the bank account and I put it into a house.

But I still had to make a mortgage payment. So now I've got the house but now I've got the debt and I've lost all my money because it's all in the house. That doesn't work so well. So what I determined for me is that I said, "In the future, one of the major changes I will make is I will put either the bare minimum down.

If I ever buy a house again," which I probably will, "I will either put the bare minimum down or I'll just pay cash because everything in the middle is basically no man's land." Now that's kind of unusual advice. Now here's why that advice is bad advice in the broad marketplace.

Most people aren't able to save money. And if they have – let's say your down payment is $50,000. If you got $50,000 in a checking account, most people will spend it. But if you're talking about investment, you're saying, "Should I invest this money or should I even just keep it in savings or should I put it into the house?" You are safer if you have the money in cash simply because what would you – okay, you lose your job.

Would you rather have a house that's 20% paid off and no money to make your mortgage payments that you still owe or rather have a house that's 3% paid off? You have a 97% mortgage balance and $50,000 in the bank. I'll take the $50,000 in the bank. It's a safer position.

I've got a buffer there. So the key caveat is you can't spend the money. But if you are a savior, if you're a disciplined savior, if you're an investor, then I'd keep the money. That's what I intend to do if I buy a house again is again, I'll either put the bare minimum down on it or I will and keep my money liquid, keep my money available to me, keep my money as a buffer, keep my money available to invest in businesses, keep my money available to buy rental houses or I'll just pay cash for the house which thus eliminates the mortgage payment which is really useful.

So hopefully that's even useful to you as well. So my point in all of that is that if you did prioritize putting money into your retirement account over the next few years and if you did buy a house under something like an FHA loan where you're putting a much smaller down payment on down, I wouldn't fault you for that.

That's what I would do if I were in your shoes. So hopefully that's useful. If you were saving money for a rental property, that was the only other aspect of the question that I would mention to you. If you were actually – if you met down payment on a rental property, skip the 403(b), put the down payment on a rental property, well-managed and effectively done, you should have far higher returns and I would do that.

Another question, should I open a 529 plan for myself if I'm saving for a master's degree? Let's see. So you live in the state of Illinois. Illinois allows a $10,000 in state income tax deduction for 529 plan contributions for a single person, $20,000 for a joint per beneficiary. So the answer is yes.

If you are going to spend the money on a master's degree and if you're going to finance it yourself, toss the money in through a 529, channel it through there and save a little bit of your state income taxes. That's my answer. The last question comes from Kyle. Hi, Josh.

This is Kyle. I have basically a three-part question for you and they're not really related to each other but I was hoping you can bang all of them out. First question is, what are your thoughts on leveraged index funds and also momentum funds, volatility funds? Do you think that's a good idea?

I mean, I know the volatility would be higher but if it's following the index, shouldn't that juice up your returns over the long run? Second question is, what are your thoughts on instead of buying, say, a total market index or even just the S&P 500, what are your thoughts on buying all the sector funds that make up the S&P 500, materials, utilities, financials, etc.

in equal amounts? That way it's more equally weighted and then I can also take advantage of the lows and highs of each sector. I think utilities are down this year so now I can invest more in that specific sector to try to take advantage of the lows and the highs.

What are your thoughts on that? Third question is, do you have any thoughts or do you know of any historical data on when the stock market always goes down or up in terms of major events such as presidential elections, certain holidays, things like that. I didn't know if there was any consistent data that showed certain sways in the market in one way or direction during those times.

Thanks so much, Josh. Feel free to answer all those or just one or two of them. But I'd love to hear your advice. Thanks so much. I'll answer all of them and I'll do it with quick hits because – well, partly because it's 1.49 a.m. and I want to go to bed.

But also I just think – I'll just give some quick answers here and I think it'll be – I'll just try to share some thoughts. But some of these trading strategies are – it's my weakest area of knowledge. It's where I – I try not to say something stupid.

So number one, leveraged index funds. I think they would make sense as a hedging strategy of some kind. That's the only way that I could see owning them myself. If you are trying to say I'm trying to hedge the bulk of my portfolio from some certain move and you are developing a trading strategy with a leveraged index fund as a hedge, that makes sense.

But if I was owning it and saying I'm going to buy this and own this, I wouldn't do it. I just don't see – I wouldn't do it. Number two, thoughts on buying the sector funds in equal amounts. I don't have a clue on that one. I kind of see what you're going towards.

But I would say test it or get in one of the trading forums and see if you can find some people who are more attuned to that side of the market who can share those thoughts with you. Final though, this was the one I did want to talk about, thoughts on when the stock market always goes up or always goes down on major events.

I don't think they exist. If they do exist, you're too late to the party. I look at this and I used to get excited by hearing about the dogs of the Dow or getting hearing about the – well, in the fall, this always happens or in the summer, this happens, blah, blah, blah.

I've never seen any proof that any of those things are predictable. What happens is you got so many people looking for that, that once you find a pattern, it's too late. So if you do find a pattern, don't tell anybody because if you find a pattern, you don't do it.

So I've just never seen any indication that those things are reliable or at least reliable enough to be traded upon. Is it possible that on a holiday weekend, a certain thing always happens? Well, it's possible and you'll hear the commentators talk about it. But I've never seen any compelling evidence that would indicate that it's something that could be acted upon, known in advance and acted upon.

So one thing to look through a data set and be able to say, "Oh, look. Hey, here's what happened in these certain things in the past." It's another thing to find something that you are able to actually put a trade in place on because of that. If you can't find the trade, then what's the point of the data?

The data just shows here's what happened in the last 70 years, but now we figured out that that's what happened and so now we've ironed out that inefficiency in the market. So that would be my commentary on it. I would love to be wrong. I wanted to play your question.

So if anybody else knows of any data or articles, come by the show notes for today's show and comment so that Kyle can get some of that information. But Kyle, I'm sorry, I don't have much more for you, but hopefully it's at least something. It's a start. So thank you all so much for listening.

I feel like my timing was a little bit off today. Hope you enjoyed the show. I missed these shows and I really wanted to get back to it. They're hard for me because, well, they're hard. They take a long time to prepare, but I really wanted to get back to it.

So if my timing was off, forgive me. I will keep working hard to do better. Make sure you check out our sponsor for today. Number one, you need a budget. YNAB. Find that link at radicalpersonalfinance.com/ynab. If you are not using YNAB budgeting software, it's a blanket statement. I don't make a lot of them, but if you are not using YNAB budgeting software, give it a try.

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