Friday Q&A show today, live Friday Q&A. These are fun. I've been enjoying these and based upon the feedback from y'all, the audience, y'all have been too. Basically it works like this. Got a conference line and I got callers there and they gave me a brief hint of what they want to talk about, but beyond that you show up, you ask questions, and we talk.

Welcome to the Radical Personal Finance Podcast. My name is Joshua Sheets and I'm your host. Thank you for being with me. This is the show where we work on a rich life now while building financial freedom in 10 years or less. We'll see what comes out. A lot of aspects to that.

But today and tomorrow are both important. I'm going to do my best to help these callers and vicariously help you get there a little quicker and more efficiently. I really enjoy doing these live Friday Q&A calls. They keep me on my toes and they're good training and good practice and get a little bit of feedback.

If you would like to join a call like this, feel free to become a patron of the show. Go to radicalpersonalfinance.com/patron. That's where you will find all of the details about that. That'll gain you access to the scheduled time, to the scheduled details and the scheduled information. You can call in and ask me whatever you want.

So at the moment as we start our recording here, there are two listeners on the line with questions and let me see who to pick first. You know what? We'll go with Jason. So Jason, welcome to the Friday Q&A call. Go ahead and kick us off with a question.

Hey, thanks. Good to be here. I was curious if you could talk about the differences in investing regarding compounding interest, the famous average rate of return that everybody always uses in their future value formulas, and a real rate of return and what they are. Okay. So I'll try to keep this simple, but it's a valuable question and let me make up some examples here.

So this is a little sales technique. I used to use this in talking about life insurance and one of the real strengths of whole life insurance, cash value life insurance, one of its real strengths is that it only goes up in value. Now, the weakness is how fast does it go up in value.

The other weakness is it starts pretty small because all the expenses come out first. But one of the strengths is that it only goes up in value. It is guaranteed by an insurance company to only go up in value. I think that is something that we often don't appreciate enough and so I used to in making presentations to potential clients regarding life insurance, I used to demonstrate it with a little bit of math and this is the example I used to use.

Pretend that we have an investment that goes up in value by 100% in the first year. Then in the second year, it goes up in value by 100%. Then in the third year, it goes down in value by 50%. And you ask, what is the rate of return that you get with that investment?

Now, what people will often do is they will run what we would do and I encourage if you haven't done this before, just hit pause and run the math and just ask yourself. I won't stretch it out into the dramatic sales presentation but it is a very useful question.

So if you do the math and you say, okay, well, it is 100, you would do 100 plus 100, that equals 200 and then it goes down 50 so you would subtract 50, that equals 150 and then you divide that by 3, you wind up with a 50% average rate of return.

And that is a really great rate of return. But what people often don't do, that is the average rate of return. What people often ignore, however, is what is the real rate of return. And so let's pretend that instead of using averages, let's actually do the math of the way that I presented it.

So you have $100 in an investment account and $100 goes up in value by 100%. So we do $100 times, let's just do it times 2, that is the simplest way to do it. So you wind up at the end of the first year, you have $200 in your account.

Then in the second year, if it goes up in value by 100%, then $200 times 2 doubles up and it is $400. And then in the third year, however, if it goes down by 50%, then you wind up in a situation where 50% decrease is down to $200. Now I can't remember what the numbers I used to use.

I used to use an example that was very simple math for people to do in their head. But what it actually would show that instead of their money going up, it would actually go down in value. And that would be the real rate of return. So if you start to compare these, you recognize there is a difference.

Now, this is often used by people who are going to be critical of rate of return calculations. And so usually how you hear it is to say, "If an investment goes down in value by 40%, it doesn't just have to go up in value by 40%, it's got to go up in value by 80% or whatever the inverse is.

It's got to go up in value by 80% in order just to break even." And that's the criticism. And this can be a substantial criticism of volatile investments. Where to take it? I think it's mathematically valid. What it demonstrates and whatever the numbers were that I used to use, I can't remember exactly, but it demonstrates the value of something that just consistently and steadily goes up.

That can be very valuable because if you just had an average of 5% increases per year, that can be really, really strong. But it also demonstrates the value of steady growth. But the issue that I have personally with it is that just because an investment goes down in value by 20% doesn't necessarily mean there was any real reason for it to go down in value by 20%.

And you only lock in that loss if you sell. So if I own a house that is worth $100,000 and it goes down in value by 20%, I'm not all of a sudden realizing it's got to go up by 40% in order, and I'm all freaked out about it.

No, I'm just recognizing like I still have the house. Yeah, it went down, but I'm not worried about it. And the next guy that comes along and wants to buy the house, is he just going to focus on what the change is from what the difference in the change is of what the value where it went down?

Or is he going to focus on something else? Is he going to go on and look at what's the value of the house for me to live in? If it were for comparing a stock, what's the current value of the company, et cetera? So that's just a quick overview of it.

Do you want to ask a more specific application of it, Jason? Or is that helpful just to see the difference? I appreciate the help in delineating the difference. I think the two things that I would follow up is that any time you run any sort of projection, whether it be a 401(k) or IRA or any sort of investment that has a requirement for a future projection for you, whether it be early retirement or financial independence, the calculations always assume an average rate of return or essentially a compounding interest.

So I'm curious to know the compounding interest average rate of return, there's no -- there's an assumed CVA basement of how far an investment would reduce. It doesn't account for the losses. So I'm wondering how accurate, if you will, a future value projection using an average rate of return, compounding interest type of formula versus a real rate of return, how accurate do you think those CVAs are a really good way to accurately run future projections?

Well, it does wind up being a problem, which is why this is most famous. And I'm not skillful enough on this topic to present to you a thought out, you know, one, two, three, here's the direct application. I would need to give some thought to an outline of answering this question more specifically.

So this is just the quick answer, and it's an area where perhaps I can address it in a future time with a prepared show outline where I'm ready to give you the pros and cons. The average -- when you're comparing averages versus real, the mistake that -- you can overstate something, which is why when you're working with a financial planner, the math -- when I just use an average rate of return, I wouldn't use that necessarily in a projection when planning a retirement income scenario for a 55-year-old.

That's why I developed things like Monte Carlo analysis. So Monte Carlo analysis is a statistical tool that is brought in to use the reality of the fact that returns will vary widely. They'll vary in amount. You'll have positive returns, negative returns. They'll vary in sequence. Sometimes you face a bear market in the beginning, and that wrecks everything.

Sometimes you face a bull market. And so when you're planning something specific like, "Can I live on this money for the rest of my life?" Personally, I'm going to be much more comfortable with using a Monte Carlo analysis or a simulation like that and modeling whatever portfolio I've constructed than I am just using the average rate of return.

But it's still useful. I mean, just an average rate of return is still a useful benchmark to demonstrate how the money can grow. If you get enough time, and if your time period goes out far enough, then the average rate of return is very meaningful. You can track the dollars, and you can track them through with what's the performance of an actual dollar, but you can't do that on the air, that type of thing.

So the average rate of return is useful, but it's not as precise as you'd like it. Let me give some thought. I will write this topic down on my list of shows to do and maybe try to present some more thought-out, prepared ideas and comments that would be more helpful on the subject.

Let's go ahead and switch to Kevin. Kevin, you're up next. Go ahead and ask a question or comment. Hey, Joshua. Thanks. My question deals with how do you approach friends and family that are making financial decisions that you're convinced are not good for them to make because you yourself have been in their very shoes?

I guess this could apply to lots of areas of life, not just financial. But I guess how do you and your wife approach your friends and your family and help speak truth and love and good wisdom into them, but not be overbearing, not be that guy and totally turn them off to even hearing the good you might have to say?

So... Big question. Sorry. Yeah. No. So I'll give you the honest answer. Very straightforward and it's very simple. We don't. I do not approach people and give them unsolicited advice. And I used to. But as a... Well, is there an exception? I'm sure there's an exception. I'm often bursting over with ideas that I want to tell people.

Recently, I'm often just bursting over because I see the things that other people often don't see. And so, real story. Recently, a friend of mine came over for dinner. And this is a long-time family friend. We've been friendly. We know each other. We had a long relationship. We're not extremely close.

But this friend had made some poor decisions and... This friend had made some poor decisions and had worked hard over the last couple years of building their life back together. But during the context of the conversation, I hadn't seen him in a while, I invited him over and we were talking.

During the context of that conversation, they started to share with me some unsolicited... Just some details of what they were doing, how they're getting their life put back together. And they had purchased a vehicle that I were paying... And they had bad credit. They purchased a vehicle. It was an expensive vehicle.

Financed it with the buy-here-pay-here financing and were paying a very high rate of interest for the purpose of building their credit. And I just look at that situation. I just think, "This is crazy. There's no reason for this. I could show you a better way." But on that topic, I kept my mouth shut.

I didn't say anything about it. I mean, what is there to say? And the problem is you can't say something to somebody because it's a rare person who's ready and able and willing to admit a mistake. And if you demonstrate... It's kind of like an argument. I have a general rule that I will almost never argue with people.

I almost never argue with friends. And the reason... Years ago, when I was a kid and I read "How to Win Friends and Influence People," chapter one of that book... Maybe it was chapter one, chapter two. The first few principles is that you can never win an argument because if you win an argument, you and I arguing subject matter A, and we win, you're going to feel...

And I win the point. You're going to feel belittled. You're going to feel humbled, and that's going to wreck our relationship and our friendship. If you win, I've lost the argument. So you can't win an argument. Now, I do think there is an exception. There are some friends of mine who are thoughtful people that are able to disconnect themselves from an opinion.

And those friends, I'll enjoy an argument back and forth, and we'll argue the point, but we're not emotionally invested in it. The problem is when you get into money, it's the same dynamic. If I tell somebody that they've made a mistake, they're not going to be open to that, and that's going to force them to admit it.

So they've got to learn it themselves. So as a general rule, I don't give advice to people unless it's solicited. Now, exceptions, yes. Sometimes I'll try, if I really sense that somebody is actually interested, I'll try to allow them to ask a question. And if there's a way I can...

Or I'll ask permission. Like, "Would you like some advice? I've thought a lot about this. Would you like some ideas?" And I did that with that friend. Not on the subject. I didn't actually talk to them about the car, but they were saying they were planning to buy a house.

And I said, "Would you like some ideas on how you could do that in a really intelligent way?" And then I go ahead and do it from there. But I'm just convinced that unless somebody's asking me a question, they don't want an answer. And so I've never seen it work well.

The times that I break my rules, I almost always regret it. I almost always wind up hurting somebody. And so I just... I have this general idea that, in general, I should simply live the way that I believe is best and allow people to see that. And if they want my opinion on something, they'll seek me out.

So as a general rule, I don't give advice. I have people in my life who are very close to me that I see them making many what I would consider to be financial mistakes. I don't open my mouth. There are positions of authority. For example, if you are working with somebody in a counseling setting, as a financial advisor, if somebody has solicited my services as a financial advisor, now, as Carl Richards says, may have your permission to be professionally candid.

OK, that's useful. If I'm working with somebody and there's a level of accountability, whether that's an employment situation, that's that one. You have to be careful. I'm not going to be involved there as far as telling someone what to do in an employment situation. But a good example, like in a church setting, where there's authority, in that situation there, I have a responsibility at times to engage with people even if they don't want it because I'm held accountable for that.

But as a general rule, I don't give unsolicited advice. Frustrating, huh? >>Yeah, I'm humbled by that answer. >>It does no good. If somebody's not asking a question, they have no interest in your answer. And then the other flip side of it, if somebody doesn't ask you a question, they don't care what you have to say.

And the other side is if somebody doesn't pay you for advice, they generally don't care what you have to say. They generally don't. I could give the same advice. This happened to me a couple weeks ago. I had an experience with a guy and I pushed – well, it was a couple weeks ago.

I was up in Tennessee. And while I was in Tennessee, I stayed at an Airbnb. And at this Airbnb, the person shared with me – we were just kind of friendly, a little bit of chatter. Relationship opened up and they started talking about some career decisions that they were making.

And I listened for a while and asked some questions. And then I asked their permission to say something. I said, "I know you don't know me, but would you be interested in some ideas?" because they were frustrated. They were stuck in their career. They didn't have the opportunity to progress.

I said, "Would you be interested in a couple of ideas of how – that you might be able to get where you're trying to go with a little bit of work and no money?" because they were stuck. They didn't have any money. And they said, "Yeah, OK." So on that basis, I asked the question first, asked permission.

That gave me a little bit. And I said, "I know you don't know much about me, but if I were in your shoes, here are the things that I would consider. I would consider doing A, B, C, D, E." And I gave them a whole – basically, I mean I probably pushed beyond what I should have.

I gave them about a 20-minute discussion of how they could transition from what they were doing to what they wanted to be doing in about two years with no money out of pocket and achieve worldwide notoriety and fame. And at the end of it, I could tell that I had pushed past that.

And who knows? Maybe they'll surprise me and not. But I sensed at the end of the discussion, I sensed that I had broken the relationship by pressing past what they had asked for. And that same content, I am building that into a course right now, something along the lines of how to become a noted expert in your field in two years or less.

I don't know what scammy marketing title I'll come up with. But I'm building that same content into a course right now. And I'll sell it for – I haven't decided on the price yet, but I'll sell the same content packaged in a course. And when I sell it and somebody buys it, they'll actually do it and they'll be happy to do it.

They'll buy it and because they're invested in the advice, they'll benefit from it. But the person I gave it to for free, there's no perceived value to it. So when you combine those two things together, I don't give advice. I come home and I talk to my wife and I say, "I don't want to be critical of that person, but I just wish they would ask me a question.

I see this, this, this, this." I tell her and then I let it go and I wait for them to ask a question. So is that helpful, Kevin? Kevin Patrick: Yeah, that is. Yeah, I like your perspective of asking them for permission first. I think that's helpful. So – Paul Matzko: Yeah, I think there are some times – and I'll tell you the other exception to that.

I think number one, if I'm going to give advice that's unsolicited, I at least need to ask for permission. And then number two, I do believe there are times when you see somebody – there are some things that I do with my children. There are some things that I give my child an option.

I try to give them a choice. Would you prefer to wear the blue jeans or would you prefer to wear the khaki shorts? If I'm OK with both options, it's nice to give my child options. But if they're going to run into the street, I'm not giving them an option.

And so I do reserve in that answer, I do believe we have at times a responsibility to give the difficult answer even when it's not solicited. Because we will give an account for people's – I will give an account for those who are in my life who are close to me.

I'll give an account for some of their souls. And so in that context, there are things that are so serious that are matters of life and death, both physical and spiritual, that at that point in time, I feel a responsibility to press past. But I have – in the times that that's occurred, I've had to be content with the fact that this may break the relationship.

And if it's so serious that I'm willing to break the relationship over it, I think there's a time to do that. But I personally have never found that to be the case with financial topics, only with topics that are more important than financial topics. So let's go on. And Richard, you've joined the call.

What would you like to talk about today? Hey, Josh. Can you hear me? Yes. Go ahead. Great. My wife and I have been trying to decide on purchasing both life insurance and long-term disability insurance for ourselves. The only question I have, though, is how to approach that in conjunction with the fact that we have employer-paid plans ready and policies ready for both life and long-term disability.

So it's pretty simple. Because they're in place already, you're not going to do anything with those plans. Let's tackle life insurance first. Have you calculated an appropriate amount of life insurance for you to have? Yes. I think we have. Tell me the number for you. How much life insurance do you need?

Based on the calculation I have, it's like 1.7. Okay. So how much insurance do you have at your job? 850. Okay. And are you paying extra money for that? Very, very little, if anything. Okay. So if you're paying very little, I would calculate that and get some assuming that, assume young guy, young family, that type of situation.

Yeah. I'm 38. She's 32. We have a one-year-old. And we'll be adding more. Cool. So you're going to be buying mainly term insurance. You're going to be buying a lot of term insurance. So what I would do in that situation is if you need 1.7, I would buy a million and a half of term life insurance outside of my job and I'd keep the 850 recognizing -- and these numbers are so fuzzy because we're talking the difference of $3 to $4 or $5 a month.

So I'm not going to worry about it too much. I'm going to go with how much they'll approve. The insurance company will take your income. At the age of 38, they'll give you somewhere probably around 20 times your annual earnings of total life insurance and they'll subtract off of it your work insurance.

So they might give you a million or a million and a half. Somewhere in that range, if it's a million, if you need a million seven based upon the calculations, then I'll get at least a million outside of my job. If they'll give me a million and a half, I'll consider doing that and I'll calculate the amount of the insurance at my job, see what I'm actually paying.

I'm being a little bit cavalier with the numbers simply because -- and it'll frustrate the engineers in the audience -- but the difference between having a million and a half or $2 million of coverage, for most people who are young and who are healthy, in term life insurance is relatively insignificant.

As long as you've got at least a million outside of your job, if I were your life insurance agent, I would be resting comfortably that if you got fired and you lost your insurance and in the meantime you'd gotten sick, at least you got a million dollars. I can get your family through on a million dollars.

It's not quite as luxurious as the million seven, but I can get you through on a million. To be honest, Josh, the interesting thing is I went through a formula that I found and it's the one that came up with that number. It's a number that seems ridiculously high to me, sitting here, to be honest.

It's just your point. It's not so cavalier after all. I feel like I'm right there. Let me tell you how to affect that. How much do you and your family spend every month or every year? It's about $10,000 a month. Okay. So you spend about $10,000 a month. And you say that a million seven sounds a little bit high to you, right?

Correct. Okay. So if I came to you with a check today and I forced you and I said, "You've got 30 seconds to make the option. Here is a check. You know it's good. Certified check. Whatever." For $1.7 million and today you're going to stop working and you're never going to work again for the rest of your life.

Here's $1.7 million. Would you feel comfortable instantly pulling the plug on your job and planning for your family's future based upon a check for $1.7 million? Would you instantly jump at that option? I could never work again, you're saying? Never work again. No. I don't think I would. I think I would pass.

Right. And I would pass too. And the reason I do that is because often people get – I've used the same example with clients. And the reason is we're not used to thinking in terms of $1.7 million. We're used to thinking in terms of $10,000 a month. But $1.7 million, if I – at 38 years old, in the situation that you are in, $1.7 million would run out on you.

Now, let's say that you died. Assume for a moment – I don't know what your wife's income is, etc. But what I encourage people to do is – again, term life insurance is cheap. I'll run a number here in a minute just to tell you. But what I encourage people to do is to say, "Pretend that you're going to plan for the fact that your spouse is never going to work again." Because if I die and leave my wife with two young kids, I don't want her to be thinking about, "OK.

I've got five years to stay at home and then I've got to go out and figure out a job. And what am I suited for? And what – I want her to know she's going to be set, that she's going to be fine. She's going to be OK." And so I want to make sure that she's got that confidence.

So if she wants to go back to work or if she wants to marry another man and she's not doing it because of financial pressure – and when I run the calculation of, "Oh, it costs me an extra $7 a month to have an extra few hundred thousand dollars of insurance, an extra half a million probably," it brings me a lot of pleasure to know that I've squared this thing away really, really well.

So if you wouldn't instantly jump at $1.7 million, then why do you think your wife would feel so comfortable maintaining your lifestyle? Now, the rebuttal that you should immediately make is, "But I'm gone." Yes, and there should be lower expenses. Yes. OK. So we'll get rid of one car and maybe instead of living on 10, your family is going to live on 8 or 7,500 or whatever.

I don't want to get too bogged down with the numbers. Your family is not going to go – she's not going to go from 10,000 to 3,000 a month. So if you had told me you're spending $3,000 a month and that was what your family was spending, then yeah, $1.7 million would be fine.

But if you're spending 10,000 a month, $1.7 million is going to be just about right. So I'm a little cavalier with the numbers simply because it's so cheap, man. And I'm telling you, do you have – other than the insurance that you have with your job, do you have any other life insurance or have you previously owned other life insurance?

No, I have not. Only since we've had our daughter and we started having those conversations. What is your – what month and year were you born? December 1977. Okay. So I just pulled up a life insurance quoting thing here and let's just see what $1.7 million of term life insurance is going to cost here.

Let's run 10, 20-year term. I don't have the ability to run annual renewable term. You should consider it 38. You should still consider having some annual renewable term and let's run this at the best non-tobacco rates. We'll prove the point. Let's move on to disability. So we're talking for $1.7 million bucks of 10-year term life insurance, we're talking $443 a year.

That's MetLife Mutual of Omaha, $487. For 20-year term, we're talking $885 a year. So if I were in your shoes, you're at the age – you're at the age and you should sit down with your insurance agent and look at some different numbers. But we're talking when you spend $10,000 a month, we're talking about for $1.7 million, $440 a year of cost.

So it fits into your budget really nicely. But the piece – and that's why I asked if you had it before. To be clear, this sounds like an insurance – a life insurance sales technique. It probably is. But I don't – I no longer have life insurance. If this helps new listeners, I no longer have a license.

I don't sell life insurance. I have no commission-related ideas in it. I just know that once you have life insurance, if I ask you to give it up, most people – not all, there are exceptions – most people don't want to give it up. I have $2.5 million of coverage.

As soon as I can rebuild my income to the point where I can get more, I'll consider getting more just because I don't like the idea of it going away. And I don't like the idea of it going down. Let's move on to the disability insurance. I want to answer that question.

With disability insurance, you already have coverage at work. The first thing you need to do – and I'm going to short-circuit this and just tell you what you need to do rather than going back and forth so we can handle some other questions. But the first thing you need to do is find out exactly what you have.

So the key questions you want to ask yourself is how much insurance do you have? Number two, you need to ask yourself what is it based on? The biggest mistake that I have seen is people say, "Okay, I've got 60% of my income, but when we ask the question, we ask the HR person to read the policy," you find out that it's based upon your base income.

And you have a $5,000 a month base salary, but you actually make $7,000 a month of commissions. And your long-term disability doesn't cover that. So that's the situation some people are in. Some people not. You just need to ask the question, what is it based on? How long is it in force?

Sometimes you'll have a really short, really bad disability policy. Sometimes you'll have a really long, really great one, but it only gives you coverage for two years or five years, something like that, instead of to age 65 or to age 70. How long is it in force? And then if I get the benefit, what's the benefit and is the benefit indexed for inflation, etc.?

Whatever insurance, even with all those questions, those will help you to know what you have. But then you still need to figure out, what can I get? The reality is whatever you have at your job, you're going to keep on having. And so what the insurance agent will do is they will calculate for you what's available.

And that'll be based upon your job. It'll be based upon the definition of disability that you choose. It'll be based upon that, and they'll tell you what's available for you. And you'll go from there. Have you already spoken with an insurance agent about what's available for you, or are you just at the beginning stages?

We have. So we've been working with policygenius.com. I don't know if that counts. But yeah, we've been working with them and talking with those guys. And do they make some recommendations to you? They certainly have. Yeah, they certainly have. So for example, you're right, 60% is what I get through my employer.

They pretty much give me the same advice you just did, finding out exactly what I have. And then also because of the limits on what insurance companies are willing to provide you with, they can get a supplemental policy on top of that of some sort, perhaps. Here's my rule.

I realize that the way that it comes across might sound a little bit cavalier. But if you're not yet financially independent, I think you should have as much disability insurance as you can get. And the reason I say it so confidently is the insurance company will not give you too much.

They won't give you more than you make, for example. Everything is calculated based upon your income and they won't give you more than you can make. There are some jobs at which you've got to – I mean, if you're in a very manual labor job, sometimes you're just forced by the reality of the premium to adjust it back, to pull the benefit back.

I mean, I've worked with people who are in the trades and you start saying, "Hey, you're 55 years old and you're going to spend $380 a month on premiums. It's not worth it. You've got to adjust it significantly." But for someone like you who's 38 years old, young family, my advice is get as much as you can get because the risk/reward scenario, the way I look at it is simple.

If you can't save that $100 a month into your retirement plan or into your kid's college plan, et cetera, there are always options. You can work another year. You can have your kid work while they're in college or whatever goals you have set for yourself. But if you get disabled, all of a sudden, all those options go away and worse, you've got to face next month's bills.

So when I compare them very simply, I'm generally in the early years until you've built up income and built up savings and are financially independent. Insurance is the best bang for the buck because it guarantees the stuff that you can't afford to lose. I would rather have first before any other kind of insurance, I'd rather have disability income insurance.

I'd rather have it before health insurance. I'd rather have it before life insurance. I'd rather have it before car and liability and homeowner's insurance. All those things are required and they're all nice, but first, I'd have disability income insurance because disability income insurance is what funds everything else. If I get sick and get cancer and have a million dollar hospital bill, all right, I've got to deal with it.

And I can figure out a way to deal with it. I'll work out a deal with my creditors. I may have to declare bankruptcy. I don't know. I'll figure out a way to deal with that. But while I'm dealing with the million dollar bills, I'm also dealing with the fact that I can't pay my landlord rent.

It becomes a lot more difficult to deal with the million dollars if I don't have $3,000 or $5,000 a month coming in while I'm disabled. So get your disability insurance squared away first, then life insurance, then you add on your health insurance, then you add on your car insurance and homeowner's insurance.

And the order doesn't hold up because some of those are required and you already have some of those. But in order of priority, that is the most important thing. There's a show, and I've had the outline for a while, but I have a listener. And this listener is a young man.

He's 26 years old. And I'm not saying it because it's a scare story. It's going to sound like that. I'm saying it because it's a real story. This is a listener of my show. And he's been very involved with the community. We've corresponded. He's working hard on financial independence.

He has a lot of financial acumen. I got an email eight months ago, 10 months ago, something like that. And he said, "Joshua, I got bad news. I've got cancer." And he said, "And I didn't do what you said. I didn't go and get disability insurance. And am I going to be okay?" Now, we've had some correspondence and we went back and forth.

He's doing better. He's in remission. I'm on his email newsletter, which is great. And so he's doing better. And I've been praying for him, and he's going to be okay. He's got family. He has assets. He's going to be okay. But the point was, is I've watched him work that way through and I've got the show outline.

I've got the artwork. It's all done. I just haven't done it. What's it like to actually be, you know, how does a -- the show is titled, "How Does a Diagnosis of Cancer Affect Your Financial Plan?" But if you can -- it makes a big difference when you're going through chemo and doing all that stuff.

If you can sit down and you know that you've got $3,500 or $4,000 a month that's going to hit your checking account on the first of the month every month, that helps a lot for you to focus on getting well. And that, as a husband and a father, that helps a lot for you to feel confident about fulfilling your responsibility towards your family.

There's no stress that's not made worse by financial stress. So I hope that -- I know it's a little bit salesy, but that's the reality of it. People hear the insurance agent say it and they're like, "Ah, it's an insurance agent. This one's selling me insurance." The reason insurance agents are usually so insistent about it is because we've seen it.

We've worked with clients who've died. We've worked with clients who were disabled. And when I was a life insurance agent and selling disability insurance as well, it was very difficult for me because I don't like to press -- I'm not a salesy guy. I don't like to press on people.

But I had a professional obligation to where when I got the call, I had to make sure that I wasn't wondering if I'd done everything I could. And one of my regrets was that in six years of being an insurance agent, one of my regrets was that I never had a death claim, nor did I have a disability claim.

And the regret sounds funny, but I'm glad that none of my clients ever died or became disabled. But I would talk to all these old-time insurance agents and they would say, "Once you have that first claim, it changes everything." And I'd talk with these guys who were in their 50s and their 60s and they talked about, "I've got 18 clients on disability claims right now," or, "I've had 24 death claims," et cetera.

And I had the privilege of being involved with paying some death claims for what are called orphan clients, people that their agent had left or whatever. And I'd been involved with helping them in that process. And so I got to taste a little bit of it. But the worst I had was I had a client who had bought insurance policies for their kids from me twice.

And they hadn't been able to keep them in force. But the first time they bought insurance for – they were in a very seasonal business, actually the construction business. They worked with me at first when times were good. They bought life insurance for mom, for dad. They bought life insurance for the two kids.

They bought primarily life insurance, I think disability insurance for dad. Business fell apart. They had to dump all the policies. A couple years later, called me back, said, "Hey, we want to go ahead and get those policies put in force again." Awesome. I got it in force again, life insurance for dad and mom.

And we did two little small life insurance policies for the kids. And then business got bad again. And they had to drop the policies. And the second time – it's not guilt, but the question I asked myself was there's always a balance between how hard do I work to get my clients to keep their policies because they're going to need them versus they need the money and I should just let them go.

And it's not about me keeping my commissions. The problem was a while later, the timing is unclear in my mind, I found out that one of the kids had been murdered. And it was the worst thing ever because seeing them go through the grief of that process and not having that policy in place for the kid and knowing the situation – it always haunted me.

I was like, "Did I do everything that I could?" So that's why insurance agents are so pushy. That's why insurance agents are so committed because when you've gone through that, the potential guilt of saying, "If I just made a call, if I just helped them save money somewhere, they could have kept this in force." And even though it was only, I don't know, $25,000, that $25,000 right now would make all the difference in the world.

That stuff builds on you and it causes you as an insurance agent to be pretty emotionally committed. So a bit of a spiel there. Hopefully it's useful. All right. Let's go on. And a couple more people have called. Carl, did you call in with a question today? Something you may have – I'm sure you've addressed on your podcast.

There was a short list of documents that one should have in order kind of the whole theme of the show today, how to call in in terms of a will and I'm sure there's other terminology like right to resuscitate or not. And I see there's four or five of them.

Can you go over those, highlight those? Yeah, the big four of these. You want to have a will. And the will says what happens to your stuff when you die and it also says who do you appoint as the guardian for your kids. That's all that a will says.

So that's a will. In fact, wills are important. I do not believe they're the most important. I differ with other people and they say everyone has got to have a will. No, everybody does not have to have a will. If you don't own property and you don't have kids, you don't need a will.

And if you don't own property that's going to pass through the probate court. So for example, if I'm working with somebody who's 20 years old and they have a checking account and they have a 401(k) and they don't have any kids and they're not married and they're just going to leave everything to their parents, they don't need a will.

They're going to die in test state and what happens is the 401(k) will go to the beneficiary listed on the 401(k), the checking account and their car will go to their parents or whatever their state's intestacy laws say and they don't have kids. So they don't necessarily have to have a will.

But when you have kids or when you own property, you need a will. The second document is a living will and a living will is essentially what – it's all the end of life stuff. It says, "Do I want to be kept on the – what's the thing called?

The ventilator. Do I want to be kept on life support? Do I want – what do I want at the end of my life?" That's the living will. The third document is a power of attorney and so there are two types of powers of attorneys, documents three and four.

Third is power of attorney for financial matters. You're incapacitated. You're in the hospital. Who has control over your affairs? This is very important for people who have affairs, who have significant financial dealings. If somebody has a business and they're trying to pay the employees and they're in the hospital and they can't authorize payroll, they need to have a power of attorney in place or they need to have a system in place.

It could be a springing power of attorney that on their incapacity, this person is authorized to do this, to sign the checks, to get the money out, to keep things going while they're recovering. So you need a power of attorney and then the healthcare – then the other form is a healthcare proxy, healthcare surrogate or healthcare power of attorney depending on how it's known in the local lingo.

That's just simply authorizing somebody to make medical decisions on your behalf. So those are the four basic documents. You can add to that trusts if you have them. Go ahead and establish them, but that's kind of separate. Those aren't the four basic documents. Okay, great. One follow-up question to that, how good or bad are the standard documents one might find on like a Nolo?

I think that's one of the places that produce this versus one customized to your situation. My thought is – I'm guessing that one that is customized is better, but in absence of anything as a placeholder, how bad are those Nolo type documents? So it would depend on probably two things, the complexity of one's affairs and the desire of control that you desire to exercise over the affairs when you're gone.

And so recognizing that a will does two important things. It establishes the guardianship of your child and it takes care of your financial affairs. We can kind of separate these things. So if a couple doesn't have a will and if all they do is write up a piece of paper that says we leave all of the money to – I, Joshua Sheets, hereby being of sound mind because we've heard that in the movies – leave all of the money to my wife if I die or to my kids if we pre-decease it.

And I assign Joe Smith to be the guardian for my child and I also assign Joe Smith to take over my financial affairs and to manage the money for the benefit of my kids. The fact that Joe Smith has been acknowledged in that document as the guardian of the kids, that is better than if Joe Smith is not acknowledged because it gives the probate judge, the court, the direction of what you're thinking.

Now, can these things be contested? Can the judge change that and strip that person's rights because a family member – yes. That's all dealing with the court. But the fact that you've acknowledged that Joe Smith is who you want to be the guardian, that's important. From the perspective of financial affairs, financial affairs are also going to be judged similarly.

If you've given an indication of what you want to happen to your financial affairs, then that's going to be sufficient. The way that fancier documents are valuable is that fancier documents are going to allow you to exercise more control over the money based upon what you believe is in the best interest of your family members.

So if I were to leave – let's say that my wife and I are out on date night and we die. We're dead. So we leave behind money. It would be a lot of money, especially because there would be insurance proceeds, and I leave all of that money to my kids.

Well, quite obviously, my two-and-a-half-year-old and seven-month-old children are not competent to manage that money. And so then the court is going to say, "Who is the person that Joshua assigned to manage the money?" I should have that stuff set up in a trusteeship, which I do. But I should have it set up with a trustee for the money to manage it for the benefit of the kids.

But what's going to happen is that once the kids become adults, on their age of majority, they're immediately going to have access to all of the money. Well, if my kids inherit a couple million bucks or more at their 18th birthday, depending on their character, that could destroy them.

And so what it might be wise for me to do is if I know that there's going to be some additional benefit there for them, it might be wise for me to put more safeguards in place. It might be wise for me to go ahead and put in place some things that are going to stretch it out.

They're going to receive a certain amount for their health and maintenance and support. They're going to receive a certain amount at 18 for expenses. They're going to receive the balance of it at 30. So it's all about the control. The other type of control would be for a spouse.

So let's say that whether it's because somebody is concerned about their spouse and their spouse's character or whether it's just out of a protection for their spouse. If you, as an example, just leave all of the money to your spouse if you die and then one, your spouse might spend it.

If you know that you have a spouse who's a spendthrift and you need to protect them, it might be wiser to put some things in place so that they receive a stream of income that they can't outspend as compared to receiving a lump sum. Or if you're trying to protect your spouse from, say, a future predatory relationship, you leave $10 million to your spouse and all of a sudden now she falls in love with another man and now she's in a situation that man leaves her, divorces her, and now she's left with the money that you left for her exposed potentially to the other man.

That's the type of situation that with good planning you can avoid through the use of designating a trust that's going to exist with certain agreements. So the whole point of having a more complicated will is to establish more control or also to do better planning. You recognize you've got some tax liability, whether that's accrued income taxes and you're going to do some intelligent tax planning or you've got some estate tax liability, etc.

So you want to make sure that your documents are going to carefully transfer things in the most advantageous way possible. -Okay. Good. Thank you. That answers my questions. You're welcome. Let's see. So I think that rounded out the first questions. I'll take maybe just one or two more. Let's go back to Jason.

Jason, would you like to ask another question? -Sure, I can. Just to continue in the traditional way of Q&A, see if we can get you in trouble here. You mentioned before that you are not heavily invested in the market much anymore and that you had some objections to the companies or markets for the fund that you were invested in.

I was wondering if you wanted to elaborate on that any more and give us some more information or insight as to what objections you were speaking of. -Um... -How brave are you, my brother? -So the short answer is no, I don't particularly want to, but I will briefly – I will briefly.

And just to give an example, and I don't – these things are not perfectly – I can't give a perfect intellectual defense of all of these things, so I'll just – if we were sitting down having a cold drink, I'll tell you what I would – the answer I would give.

First, I do not put my personal conviction in this area on anybody else. I do not say to anybody else what they should do. This is purely my own personal conviction. And I leave any listener completely free, especially in this area, because I have not – and the reason I say that was so important in this area is that I have not – I sold stocks.

I sold mutual funds. I've owned mutual funds since I was 18 up until, I don't know, a year or two ago, whenever I sold. And I've had a pretty clear system of morality for many years, and I – my conscience did not bother me in the past. And so I just have to acknowledge that this is me.

But the older I've grown, I grew up with this – I would say mainstream, very romantic ideal of the US system of government and the US system of capitalism. I was always a capitalist. I always liked business. I've always – I still feel that Walmart has done more good for people than many mainstream charities simply because they've made people's lives better by having low prices, better stuff, low prices.

And so I had these ideas that the world we lived in was somehow just. Growing up in the United States of America, it's very easy to gain that perspective. I had the idea taught to me in history that we only fight just wars. The United States of America, they're – we're involved in wars that have a moral cause.

We're going to eliminate Hitler or we're going to fight for freedom instead of communism. And so I had these fairly mainstream perspectives. But what happened is that systematically over the last decade or so, I started to actually do my own homework and I realized that most of what I was taught in a mainstream educational approach was more myth than reality.

And there were a number of things. So I've come to the conclusion that our global economy, specifically the US economy, is an economy that's built on war. I could never figure out why on earth does – why on earth have we been at war for decades? And it seems like it's one after another and after another.

And the most difficult one for me was in 2000 – or was it 2003 when the US invaded Iraq? And I was this – at the time, I would have called myself a Republican. And I was a very idealistic 18-ish year old thinking like, "Yeah, this is right. We got to get those terrorists." And when I was in college, the second time of George Bush's re-election, I thought it'd be fun to get involved with the – so I volunteered with the local Republican group and I went and knocked on doors and said, "Yeah, we're going to get George Bush elected." I remember how happy I was when he was elected.

And then the Iraq war, I remember being so in favor of the Iraq war. And at the time, I didn't – I wasn't open to other perspectives. And so I kept trying to justify things as things went by and it just came out, "Oh, WMDs, but wait a second, they're not there." And then, "Wait a second, why are we doing that?

Why are we not doing that?" And it was a very painful experience, but I ultimately came to the conclusion that I was bamboozled and I was completely wrong. And I said, "How could I be so wrong?" And so I started digging into war. I started digging into how was the global economy built and I've come to the conclusion that, again, there's a book written 50-plus years ago by a general and it's called War is a Racket.

And his whole point at that time was that war is a total, total racket. And I started reading some of Anthony Sutton's books where he goes through and he traces all of the things that I was so sure of that – he traces the Soviet Union. He talks about – and he traced specifically the specific parts and the specific amount of the Soviet Union military infrastructure that was provided by the United States.

And then I started digging through the history and started to study a little bit of the history of whether it was al-Qaeda or whether it was – we created al-Qaeda and then all of a sudden we're fighting them and, "Wait a second, where did ISIS come from?" And you start tracing this through and, "What happened in Iraq?" And it's such a muddled mess.

But yet as I dug into it, I started to find in so many circumstances that it was just all based upon generating income for the people who control the large corporations. And so then I dug in. I said, "Well, how much of our military budget – how much of our money do we spend on military?" And you find that our economy is fueled based upon this global war infrastructure.

And that was tough. That's tough. It was tough for me to admit. So personally, I don't feel all that good about having money put in my pocket that is based upon the output from a global war infrastructure. That's not what I want to make my money from. I'm OK with defense.

I'm OK with individuals having the right to arm and defend themselves. I'm not OK with on a global basis – I'm not OK with that. So then I – so that was just one simple example. The reason I say with that is most people get into – OK, we're going to – that's why investing in socially conscious funds doesn't work for me.

People say, "Oh, we're going to avoid tobacco companies," or "We're going to avoid companies that don't – that have unfair hiring practices in China." OK, cool. That's fine. But what about avoiding Lockheed Martin profits? I don't want to be involved in that. So there are other aspects as well.

When I was with a large insurance company, I just looked at how capitalism works, and we all – we throw this term of crony capitalism out there. But it's always somebody else's company. As long as it's ours – as long as it's not – it's always somebody else that's causing the problems.

And so you start to see, and it's across the board, is that every one of these major corporations, it's just we buy influence, and nobody in Washington is honest. Every company is just a matter of buying influence as quickly as they can. And step by step by step by step, it's just a matter of who can buy the most influence.

And it's so frustrating to me that you've got full-time lobbyists working for a company. Where was the "Mr. Smith goes to Washington" idea that I was taught? It's complete baloney. So we live in this economy that's built upon whoever has the most money buying the most influence, and now it's absurd.

Even the current presidential race, you've got – the people who are involved in it are just so utterly corrupt. It's laughable. Half of them have been bought off by – I mean – and I don't care whether it's Republicans or Democrats. I read – I strongly recommend – if anyone's interested, the best book – one of the best books I read last year was a book called Clinton Cash by Peter Schweitzer.

And if you want to know how the Clintons got rich, it's amazing. And I wasn't around – I was a kid during the Clintons, so I was never around for all the old scandals. I just read this one and said, "How did this family go from so-called being broke when they leave office to being mega rich?" And you start to read it and you start to understand.

Ah, OK, I see. And the author of that book is very careful. They only – he and his team, they only state precisely what they can prove. And same on this other side. Donald Trump, the man boasts about buying off politicians, but yet somehow he's supposed to be – it's just disgusting.

So it's endemic. And then when you get to – so I have major issues with many large corporations that the fact is you just buy off whatever government officials and you can't bribe people in other countries, but you can bribe everyone in your own country. And then when you get to deeply held moral issues, I have a major problem with – I would be OK.

I do not mind if – I don't think that companies need to make moral stands. It's up for people to make moral stands. I don't particularly believe that it's a – it's not a company's job to say this is right or this is wrong. It's the people that should be held accountable.

And there should be – they should be held completely accountable for their actions as individuals. So I'm not saying that every company out there has to say we somehow promote these positive things. But what is so frustrating to me is when I look at the majority of the – when I look at the majority of large corporations, they function based upon what's popular and they take their stands based upon what's popular instead of what's based upon what's right.

And a major eye-opening thing for me was when I studied the history of – when I dug into the history, the legal history and the history of the press and the promotion of homosexuality in our culture, I had never done any of that research. I just assumed things are kind of trundling along a little bit.

I started to research it. I started to find it. And all of a sudden it was like, wow, I've seen this. I see this. And then I watch all the companies that get involved and line up one by one. And it's basically – if you watch what happened last summer with the – after the Obergefell decision, when every single company is going to – when every single company is saying, OK, we're going to change our corporate logo and the White House is going to have rainbow colors on it and every single company is going to use this as their promotion – we're going to promote homosexuality and the acceptance of homosexual behavior.

That is – that's very difficult for me to deal with. Now, the challenge where these arguments usually get misheard is people often assume that I don't want to use companies to try to control other people's lives. And that's where people – this debate often goes. People say, well, you're just trying to tell other people what to do.

No, but I don't want – I'm not going to do business with a company that's openly, publicly advocating for sin. That – I'm not going to do it and I'm not going to profit from it. I'm not going to be involved in it. I'm not going to make purchasing decisions.

Now, how that should be regulated in a free society, hey, you know what? I'm pretty much a live and let live guy. I'm pretty much going to leave people alone. I'm not going to – I'm not going to advocate for new laws and whatnot. But what happens is that people like me have been – I think have pretty much been put on our heels more and more where it's like I'd love to just live and let live but now we're going to – it's not a matter of live and let live.

And so at this point, it's gone so far. So I reached a point in time and I just said like my conscience would no longer permit me to do it. So I just – it's across the board. It's not just one issue. I've just come to the – I've come to the conclusion that the majority of the way that corporate America acts is to completely corrupt.

It's filled with lies and – it's filled with lies and there's nobody – you get into this group think and I don't see any leaders standing there and saying we're willing to stand for it on a mass basis. Now, I think there are individuals. That's why when I sold all my mutual funds, I didn't do it because I wasn't willing to own stocks.

I just simply did it based upon the fact that I am not willing for somebody else to make those decisions. What was the story in the Wall Street Journal that came out about the number of people that were – the companies and their performance that had the highest percentage of email addresses registered with Ashley Madison?

It's the type of thing that – I guess it's instructive. It's instructive. The way that we act in one area of our life. An adulterer who breaks the bonds of their marriage is going to be the same type of person unless that person is reformed. It's the same type of person who's going to cheat on their taxes.

It's the same type of person who's going to pledge their hand in a contract and follow through. I guess I've come to the point where I'm disgusted with the whole thing and I don't want to profit from it. It's a little bit easier in that I have plenty of other ways that I can invest the money, but I just got to the point where I cannot take it anymore and I do not want to earn the money from it.

Now, what should be done on a social basis or anything? I don't have a clue. I mean I have ideas, but nothing I desire to talk about publicly. But that was the story. That's what happened, Jason. Thank you. I appreciate it. I have no idea how to handle these things.

All I know is that we're called to be stewards of the money that we have. We're called to be stewards of the money that we have and money plays a role. Money in and of itself is an amoral item. There's nothing inherently moral or immoral about money, but I am not going to commit the funds that I've been entrusted to into things that I believe are evil.

I'm not going to do it. Now, what are the good things to do with it? That's the challenge, but I'm not going to commit the things that I'm entrusted to to evil. So thank you all for listening to today's show. Man, we're getting some heavy questions. So hopefully they're at least thought-provoking.

And thank you all for calling in and for listening to today's show. If you'd like to join and participate in a show like this in the future, I'd be happy to have you here. Feel free to become a patron of the show. Details of that are at RadicalPersonalFinance.com/patron. I'd be happy to answer any question and provide any help that I can, have a dialogue.

If you're upset with me about something, you're welcome to do that. Then call and tell me. If you just want to ask a question, that'd be great. Thank you, each and every one of you who is listening. I consider it an honor that you would find value in some of the ideas that I'm sharing with you.

The time that we have is the most precious resource that any of us have. It's one of the most precious resources that any of us have. And as we're stewards of our time, we need to invest it into things that matter. And so I hope and I trust that some of these ideas and some of this content has been useful to you.

Thank you all for listening. Again, patron of the show, RadicalPersonalFinance.com/patron. If you have comments, questions, feel free to come by the show. I am also, quick announcements, I am doing more stuff on Facebook. So if you haven't come by, if you haven't liked and connected with the show on Facebook, go to Facebook.com/RadicalPersonalFinance.

I'm starting to do some live Facebook feeds of some shows. I'll probably do more of that in the future as well. I like to give you guys a peek behind the scenes and I'll probably do more little vignettes here and there. So if you haven't done that yet, come by the Facebook page and connect with us there.

Facebook.com/RadicalPersonalFinance. Thanks. I'll be back with you very soon. (music) (music) (music) (music) (music) (music) Sweet Hop is an online marketplace curating the best in premium seating at stadiums, arenas, and amphitheaters nationwide. With Sweet Hop's 100% ticket guarantee, no hidden fees, and the personal high-level service you expect with a premium purchase, you can relax knowing you'll receive the luxury experience you deserve.

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